Securities Registration (foreign Private Issuer) (f-1)

Filed with the Securities and Exchange Commission on ____________

Registration No.

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

____________________

F ORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

____________________

N ATCORE T ECHNOLOGY , I NC .

(Exact Name of Registrant as Specified in its Charter)


British Columbia, Canada	3674	Not Applicable
(State or Other Jurisdiction of Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

189N. Water Street, Suite 700
Rochester, New York, 14604-1163
(585) 286-9180

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

LoPresti Law Group, P.C.

45 Broadway, Suite 610

New York, New York10006

(212) 732-4029

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

Copies of Communications to:


	Marc X. LoPresti, Esq.		Shauna Hartman
	LoPresti Law Group, P.C.		Armstrong Simpson
	45 Broadway, Suite 610		2080-777 Hornby Street
	New York, NY 10006		Vancouver, B.C.
	Tel: 212-732-4029		Canada V6Z 1S4
			Tel: 604-683-7361

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), check the following box. x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earliest effective registration statement for the same offering. o

If delivery of the prospectus is expected to be made pursuant to Rule 434 under the Securities Act, check the following box. o

CALCULATION OF REGISTRATION FEE

Title of Each Class of
Securities to be
Registered

Amount to be
Registered ¹

Proposed
Offering
Price

Maximum
Aggregate Offering Amount

Amount of Registration Fee ⁴

Common Shares

Shares offered by the Company

5,000,000

0.31

1,550,000.00

156.09

Shares offered bySellingShareholders ³

3,061,111

0.37

1,132,611.07

114.05

Total

8,061,111

—

2,682,611.07

270.14

_______________________


	(1)	The shares of common stock of Natcore Technology, Inc. (“Natcore” or the “Company”) to be registered includes: (i) the offer to sell, by the Company, up to 5,000,000 newly issued shares;(ii) the resale of up to 2,661,111 shares by the shareholders listed on the Selling Shareholder Table (p22) that have been previously issued in private placement transactions and/or as part of executive compensation; and (iii) 400,000 shares of the Company’s common shares by LoPresti Law Group, P.C. (“LLG”) to be paid to LLG in exchange for the provision of legal services rendered.

	(2)	The offering price for the shares to be offered by the Company has been arbitrarily determined by the Board of Directors.

	(3)	With regard to the shares offered by the Selling Shareholders, the offering price and registration fee are estimated pursuant to Rule 457(c) under the Securities Act of 1933, as amended, based upon thecalculation of the average closing price over a two-week period for the common shares of Natcore, as reported by theOTCQB® marketplace, on June 6, 2016

	(4)	Fee calculation based on Rule 457(a), determined by the number of shares offered multiplied by the proposed offering price (the maximum aggregate offering amount) multiplied by $0.0001007.

DETERMINATION OF OFFERING PRICE

The Company’s Board of Directors arbitrarily determined the offering price for the newly issued shares in this offering at $0.31 per share. The Selling Shareholders will determine the price at which they sell their offered shares, which may be sold at prices as quotedon the OTCQB® marketplace or privately negotiated prices.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the SEC, acting pursuant to said Section 8(a), may determine .

The information contained in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

(MESSAGE)

8,061,111 Common Shares

This prospectus relates to the offering and sale, on a best efforts basis, of up to8,061,111 common shares of Natcore Technology, Inc, a corporation incorporated under the laws of British Columbia (the “Company”), consisting of (i) 5,000,000 newly issued common shares offered by the Company; (ii) 2,661,111 shares for resale by selling shareholders ( See Selling Shareholder Table p22); and (iii)400,000 shares of the Company’s Common shares by LoPresti Law Group, P.C. (“LLG”) to be paid to LLG in exchange for the provision of legal services rendered (hereinafter, the shareholders listed on the Selling Shareholder Table and LoPresti Law Group, P.C. shall be collectively referred to as the “Selling Shareholders”).

The Company will receive approximately $1,550,000 in proceeds from the sale of the newly issued sharesand intends to use such proceeds for research and development, working capital and general corporate purposes. The Company will not receive any of the proceeds from sale of shares by the Selling Shareholders.

Although proceeds may be up to $1,550,000, this offering is being conducted on a “no minimum” basis, meaning that no aggregate minimum offering amount is required to be raised by the Company in this offering. As such, the actual public offering amount and proceeds to the Company, if any, are not presently determinable and net proceeds may be substantially less than the total maximum offering set forth above. The offering will terminate 180 days after the effective date of this registration statement unless the offering is fully subscribed before that date or the Company decides to terminate the offering prior to that date. The Company may conduct multiple closings of the offering until the offering is fully subscribed or terminated. In either event, the offering may be closed without further notice to investors. All costs associated with the registration will be borne by the Company. All net proceeds will be available to the Company for use as set forth in “Use of Proceeds” herein. Offering proceeds will not be held in escrow and may be utilized by the Company immediately on a subscription-by-subscription basis upon satisfaction of the closing conditions set forth in a subscription agreementto be entered into between the Company and the investors in this offering.

This prospectus will permit the Company’s Officers and Directors to offer and sell the Company’s securities directly to the public, with no commission or other remuneration payable for any Shares sold. In offering the securities on the Company’s behalf, the Company’s Officers and Directors will rely on the safe harbor from broker-dealer registration set out in Rule 3a4-1 under the Securities Exchange Act of 1934, as amended (referred to herein as the Exchange Act). Notwithstanding the foregoing, the Company reserves the right to engage FINRA member broker-dealers as finders in connection with this offering.

Natcore’s common shares are quoted on the TSX Venture Exchange under the symbol “NXT” and on the OTCQB® marketplace under symbol “NTCXF.” The Company will sell the newly issued shares at a fixed price of $0.31 , which was arbitrarily determined by Board of Directors of the Company. The Selling Shareholders may resell their shares at OTCQB® marketplacequoted prices or in transactions that are not in the public market at privately negotiated prices.

Investing in Natcore common shares involves a high degree of risk. See “Risk Factors” beginning on page 15.

____________________________

Neither the Securities and Exchange Commission nor any state securities commission or other regulatory body has approved or disapproved of these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

____________________________

Natcore is an “Emerging Growth Company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and is subject to reduced public company reporting requirements. Natcore has chosen not to take advantage of the extended transition period for new accounting standards. While the decision to opt out of the extended period to comply with new or revised accounting standards is irrevocable, the Company may in the future elect to avail itself of other reduced reporting obligations available as an emerging growth company.

__________________________

Unless otherwise indicated all currency figures are stated in US ($) dollars.

Prospectus Dated June 6, 2016

TABLE OF CONTENTS


	Page

Prospectus Summary	7

The Offering	12

Risk Factors	15

Note Regarding Forward-looking Statements	22

Use of Proceeds	23

Listing of Common shares	23

Dividend Policy	23

Dilution	24

Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

Business	43

Management	51

Related Party Transactions	69

Principal Shareholders	71

Taxation and Government Programs	74

Plan of Distribution	77

Legal Matters	79

Experts	79

Enforceability of Civil Liabilities	79

Where You Can Find Additional Information	80

Index to Financial Statements	F-1

Investors should rely only on the information contained in this prospectus and in any free writing prospectus that Natcore authorizes to be delivered to the investor. Natcore has not authorized anyone to provide investors with additional, different or inconsistent information from that contained in this prospectus or such free writing prospectus, if any. Natcore and the Selling Shareholders are offering to sell, and seeking offers to buy, the Company’scommon shares only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the common shares.

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus and provides an overview of the material aspects of this offering. This summary does not contain all of the information you should consider before making an investment decision. This summary contains forward-looking statements that contain risks and uncertainties. Natcore’s actual results may differ significantly from future results due to factors such as those set forth in the sections “Risk Factors” and “Forward-Looking Statements.” Investors should read this entire prospectus carefully before making an investment decision.

This prospectus is part of a registration statement that the Company has filed with the Securities and Exchange Commission, (the “SEC”). Under this registration process, the Company may offer and sell from time to time, on a best efforts basis, of up to8,061,111 common shares of Natcore Technology, Inc, a corporation incorporated under the laws of British Columbia (the “Company”), consisting of (i) 5,000,000 newly issued common shares offered by the Company; (ii) 2,661,111 shares for resale by selling shareholders ( See Selling Shareholder Table p22); and (iii)400,000shares of the Company’s Common shares by LoPresti Law Group, P.C. (“LLG”) to be paid to LLG in exchange for the provision of legal services rendered (hereinafter, the shareholders listed on the Selling Shareholder Table and LoPresti Law Group, P.C. shall be collectively referred to as the “Selling Shareholders”). The Company will not receive any of the proceeds from sale of shares by the Selling Shareholders. The Company will receive approximately $1,550,000 in proceeds from the sale of the newly issued shares. The Company has agreed to pay all expenses incurred in connection with the registration of the shares of common stock covered by this prospectus. Information about the Company and Selling Shareholders may change over time. Any changed information given to the Company by the Selling Shareholders will be set forth in a prospectus supplement if and when necessary. Further, in some cases, the Selling Shareholders will also be required to provide a prospectus supplement containing specific information about the terms on which they are offering and selling the Company’s common stock. If a prospectus supplement is provided and the description of the offering in the prospectus supplement varies from the information in this prospectus, you should rely on the information in the prospectus supplement.

THERE MAY BE SITUATIONS WHERE ALL SOURCES OF REVENUE DESCRIBED BELOW (OR ANY REVENUE AT ALL) MAY NOT BE AVAILABLE GIVEN MARKET CONDITIONS AND CUSTOMER REQUIREMENTS. THE COMPANY HAS HAD NET LOSSES IN EACH OF THE LAST THREE FISCAL YEARS 2015, 2014, 2013 OF $3,488,129 $2,193,532, AND $3,938,828, RESPECTIVELY. AS OF DECEMBER 31, 2015 THE COMPANY HAS HAD RECURRING LOSSES FROM OPERATIONS AND A CUMULATIVE DEFICIT OF APPROXIMATELY $19,916,942. THE COMPANY IS STILL CONSIDERED A DEVELOPMENT STAGE COMPANY AND HAS RECEIVED AN OPINION LETTER FROM ITS AUDITOR EXPRESSING MATERIAL UNCERTAINTY THAT MAY GIVE RISE TO SIGNIFICANT DOUBT ABOUT THE COMPANY’S ABILITY TO CONTINUE AS A GOING CONCERN.IN DECEMBER 2015 AND MARCH 2016, THE COMPANY COMPLETED NON-BROKERED PRIVATE PLACEMENTS ISSUING 2,552,112 UNITS FOR GROSS PROCEEDS OF $1,143,507. AS OF MARCH 31, 2016, THE COMPANY HAD $587,636 IN CASH. THE COMPANY ANTICIPATES ITS CURRENT CASH AND CASH EQUIVALENTS WILL BE SUFFICIENT TO FUND OPERATIONS FOR APPROXIMATELY 6 MONTHS AND IS PURSUING ADDITIONAL FINANCING ALTERNATIVES, INCLUDING COMPLETING ANOTHER PRIVATE PLACEMENT, TO FUND OPERATIONS BEYOND ONE YEAR.

The Company

Natcore is a research and development company pioneering solar cells with improved efficiency and reduced cost. Natcore’s intellectual property is currently protected by 63 patents granted or pending. Natcore does not plan to manufacture solar cells, but rather to license its technology to manufacturers through partnerships that will ultimately yield licensing and royalty revenue.

Natcore’s primary technology is laser-processed back-contact cells. The vast majority of solar cells produced today limit cell efficiency to about 19%. This is due to the use of front contact and thermally diffused emitters. Many front contact cells have a grid of thin metal lines that block light and thus reduce efficiency. In addition, standard solar cells are made using a thermally diffused emitter, which requires very high process temperatures (>800C). The combination of front contact and thermally diffused emitters limits current cell efficiency.

Recently, a company reported 25.6% efficiency – the highest efficiency ever reached for a silicon solar cell – using only back contact and a silicon heterojunction (SHJ) emitter, eliminating the high-temperature diffusion steps. While this achievement showed the value of these approaches, the cell was produced using a complicated, high-cost process.

Natcore’s process uses highly defined regions of heavily doped silicon to form a base contact of the solar cell. Natcore then uses a powerful, focused laser beam to melt small regions of the silicon surface, which allows a specially applied dopant to penetrate the silicon matrix. Natcore has also discovered a method to laser-form the dopant regions without disturbing the high-quality emitter already present on the solar cell. This process is rapid, and thus can be performed with low-capital equipment at atmospheric conditions.

In addition, Natcore has developed technology which eliminates the need for high-cost silver from mass-manufactured silicon solar cells. Currently, silver is used in the metallization process as it is highly conductive and easy to process. However, silver can represent 30% to 50% of the fabrication cost of a solar cell. Natcore’s unique approach to metallization relies on a simple multilayer structure, which uses inexpensive aluminum as its main conductor, and thus results in lower production costs. This cell technology may also result in cost savings when incorporated into other modules. Generally, cell-to-module loss is 8%-10%. However, when Natcore’s cells have been incorporated into the production of photovoltaic modules the cell-to-module loss was 0%, resulting in cost savings.

The Company continues to be in the research and development stage and its potential products are not yet at the stage of commercial production. The Company anticipates generation of initial revenues within the fiscal year 2016, but plans to continue its research and development programs for the purposes of developing additional applications for its technologies. The Company is currently conducting its own research and development but does anticipate subcontracting certain work with joint venture partners, as described below. The Company’s long-term objective is to commercialize its technologies in order to generate commercial revenues. In order for the Company to meet this long-term objective, the following events must occur:


Event	Target Date	Cost

Research and development for the Company’s technologies, including identifying additional applications	Ongoing	Not known
Additional patent and other intellectual property applications	Ongoing	Not known

The short-term objectives of the Company over the next 12 months are to improve the efficiencies of the Company’s technologies and commence licensing of the Company’s technologies. In order to complete same, the Company anticipates spending between $470,000 and $670,000 outsourcing certain work with joint developer partners, including use of equipment. At this stage, it is not anticipated that the Company must expend further funds to commence licensing, but may consider allocating funds towards marketing in the future.

The solar cell market is one of the fastest growing sectors of the United States economy. A significant shift is underway in the world-wide silicon solar cell industry, driven by the rising prices of silicon feedstock material. Cell producers are now moving to produce thinner solar cells to reduce their requirements for silicon feedstock. Technologies that reduce or eliminate high temperatures will be required and will be in demand. Making this long-term shift will enable the silicon solar cell industry to sustain its historic annual growth rates well into the future.

New developments in technology may negatively affect the development or sale of the Company’s products or make the Company’s technologies obsolete. Natcore intends to maintain its competitive position and prevent the impacts of obsolescence by continuing to develop and perfect its technologies and find additional commercial usages for its technologies.

Natcore is not aware of any material market controls or regulations within the technology sector which might affect the marketing of its technologies.

Natcore is not aware of any material regulatory approvals necessary for its research and development work, other than approval of appropriate patent applications in the jurisdictions the Company intends to do business.

Company History

Natcore was a capital pool company ^[1] until it completed a Qualifying Transaction on May 8, 2009. The Qualified Transaction involved a reverse take-over of Syracuse Capital Corp. by Natcore Technology Inc., a Delaware company, which is now a wholly owned subsidiary of the Company. Syracuse Capital Corp. was a company incorporated under the British Columbia Business Corporations Act and a Capital Pool Company, having its common shares listed on the TSX Venture Exchange under the trading symbol “SYU.P.”

Natcore completed its Qualifying Transaction by acquiring all of the issued and outstanding securities of Natcore Technology, Inc. a private Delaware company in consideration of the issuance of 12,960,686 common shares of the Company having a deemed price of CDN$0.40 per share and the issuance of 2,145,000 share purchase warrants, each warrant exercisable into one additional common share at a price of CDN$0.40 per share for a period of five years expiring May 9, 2014. The Company’s Shares are quoted on the TSX Venture Exchange under the ticker symbol “NXT and on the OTCQB® marketplace under symbol “NTCXF”.

On December 11, 2009, Natcore completed the acquisition of NewCyte, Inc. (“NewCyte”), a private Delaware company. NewCyte’s portfolio of intellectual property included issued and pending patents covering the coating of fullerenes (including carbon nanotubes) with silica, dielectric and semiconducting films for a variety of potential applications, including photon, chemical and biomolecule sensing. As consideration for the purchase of NewCyte, Natcore had issued NewCyte shareholders a total of 200,000 share purchase warrants entitling the holders to acquire Natcore shares at strike prices ranging from CDN $0.75/share to CDN $2.00/share, all of which warrants have since expired.

On May 19, 2010, the Company completed the acquisition of Vanguard Solar, Inc. (“Vanguard”), a private Delaware company controlling key intellectual property in the field of solar energy. Vanguard was focused on the development of a flexible, thin-film photovoltaic material believed to be capable of silicon solar cell-like efficiency performance. Vanguard employed a proprietary chemical bath process similar to Natcore’s liquid phase deposition technology, although Vanguard planned to grow II-VI compound semiconductor thin films on carbon nanotubes at room temperature and ambient pressure, while Natcore has thus far concentrated on growing silicon dioxide films on silicon substrates. As consideration for the purchase of Vanguard, Natcore issued to Vanguard shareholders 375,236 common shares.

In March 2012, the Company opened its Research and Development Center (the “R&D Center”) in Rochester, NY. The R&D Center is enabling Natcore to develop applications based on the company’s proprietary liquid phase deposition technology.

The Company also entered into an exclusive worldwide licensing agreement with the National Renewable Energy Laboratory (NREL) to commercialize Black Silicon. NREL and the Company are working together to reduce solar cell costs and increase solar panel energy output. On October 25, 2012, the Company announced that its scientists created the world’s first Black Silicon solar cell using processes amenable to low-cost mass production. After having previously treated a wafer to make it the “blackest” silicon solar cell surface ever recorded, Natcore’s technicians used their scalable liquid phase deposition process to create the Black Silicon solar cell, from wafer to finished cell, in their R&D Center.

The Company has taken steps to form an Australian solar panel joint venture. After having signed a Memorandum of Understanding in September 2013, the Company and the Australian group Denzo Pty Limited have begun planning for Natcore Australia, a joint venture that would produce solar cells and solar panels in Australia, with Australia as the headquarters for this activity. The joint venture would move initially with currently available technologies. Future technologies would be deployed as they become available. Natcore Australia would have exclusive access to Natcore’s intellectual property portfolio in Australia. Financing for the venture would come from government and private sources.

The Company made its first commercial offering with turnkey solar manufacturing programs in November 2014. The Company established a program through which it would design, supervise and build facilities to produce solar cells, solar panels and power plants for third party clients. Natcore plans to serve on these projects as a consultant or general contractor, hiring subcontractors and selecting the optimum components, prices and quality available. Clients would also gain exclusive access, on a geographical basis, to Natcore’s technologies- including black silicon, laser-processing and rear contact technology- as they come on line.

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¹ The Capital Pool Company program is a two-step listing process offered by the TSX Venture Exchange. In step one, a new company(a “Capital Pool Company”) is listed on the TSX Venture Exchange as an initial public offering. In step two (the “Qualifying Transaction”), the Capital Pool Company acquires an asset or completes a transaction with a private business which results in the listing of the acquired business on the TSX Venture Exchange. If the acquired business can meet the minimum listing requirements of the Toronto Stock Exchange (the “TSX”); it can be directly listed on the TSX at the closing of the Qualifying Transaction. The listing of a business via the Capital Pool Company program can be more cost and time efficient than a listing through a traditional initial public offering.

On January 27, 2015, Natcore announced that it had used its proprietary advances in laser technology to produce an all-low-temperature laser-doped solar cell with all of its electrical contacts on the back of the cell. Eliminating the contacts from the cell increases output by a similar amount. While other all-back-contact cells have been produced, those cells use high-temperature diffusion in their doping steps and highly complex multi-step patterning processes to apply the electrical contacts. Natcore’s all-back-contact cell, on the other hand, uses only high-speed, inexpensive laser processing to define the doping regions and the contacts.

On February 17, 2015, the Company announced that it had formed a heterojunction solar sell using germanium quantum dots on an ordinary n-type silicon wafer. Quantum-dot solar cells have the potential to be transformational for terrestrial solar energy, with efficiencies far above anything available commercially as of the date of their formation. One month later, Natcore produced an all-back-contact silicon “HIT-structure” (heterojunction with intrinsic thin layer) solar cell using their proprietary laser technology. On July 9, 2015, Natcore developed a new solar cell structure that was expected to completely eliminate high-cost silver from mass-manufactured silicon solar cells. By August 2015 the Company was able to build an all-back-contact silicon heterojunction cell structure in which the use of silver was eliminated. This substitution was accomplished with no loss of performance and a substantial decrease in the metallization cost of a solar cell and total raw material cost of a solar module.In March 2016, the Company announced that it had reached an efficiency level of 17.5% for its laser processed cells through further refinement of its all-back contact silicon cell structure.

Natcore is currently focused on using its proprietary nanotechnology discoveries to enable a variety of compelling applications including laser processing, tandem quantum-dot solar cells and its all-back-contact silicon heterojunction (HIT) cell structure, the development of which eliminates the need to use high-cost silver in mass-manufactured silicon solar cells. Natcore’s laser and all-back-contact cell technologies are also aimed at replacing traditional high cost processes, while also allowing for cell efficiencies well above today’s standard products. This technology combines two traditional steps in the manufacturing process thus reducing cost. To protect the Company’s exclusive rights in such technologies, as of June 6, 2016, Natcore had licensed or owns 27 granted and 36 pending patents.

Implications of being an Emerging Growth Company

As a company with less than $1 billion in annual gross revenue during last fiscal year, Natcore qualifies as an “emerging growth company” pursuant to the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise generally applicable to public companies. These provisions include an exemption from the auditor attestation requirement in the assessment of the emerging growth company’s internal control over financial reporting. The JOBS Act also provides that an emerging growth company need not comply with any new or revised financial accounting standard until such date that a non-reporting company is required to comply with such new or revised accounting standard. Furthermore, Natcore is not required to present selected financial information or any management’s discussion herein for any period prior to the earliest audited period presented in connection with this prospectus.

Natcore will remain an emerging growth company until the earliest of (1) the last day of Natcore’s fiscal year during which it has total annual gross revenue of at least $1 billion; (2) the last day of its fiscal year following the fifth anniversary of the completion of this offering; (3) the date on which Natcore, during the previous three-year period, issued more than $1 billion in non-convertible debt; or (4) the date that Natcore is deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, or the Exchange Act. When Natcore is no longer deemed to be an emerging growth company, Natcore will not be entitled to the exemptions provided in the JOBS Act discussed above however reduced reporting obligations may still be available as a small company. If Natcore chooses to take advantage of any of these reduced reporting burdens, the information that Natcore provides shareholders may be different than what investors might get from other public companieswhich may make its common stock less attractive to investors. Natcore has opted out of the extended transition period provided in Securities Act Section 7(a)(2)(B) for complying with new accounting standards; this election is irrevocable.

Competitive Landscape

Given the complex nature and cost of the systems now in use by the solar cell industry, Natcore expects to offer value to its customers. Natcore’s black silicon technology is expected to replace an expensive, energy and manpower intensive, thermal vacuum process with a simple wet chemistry process that will make an improved anti-reflection surface on silicon solar cells. In addition, the Company’s all-back contact cell will increase efficiency and power output without an increase in manufacturing cost.

An independent engineering study comparing Natcore’s technology to that now used by the solar cell industry shows conclusively that solar cell manufacturing costs can be reduced by up to 23.5%. The study included both capital and lifecycle costs when making the comparison. Other studies completed by the Company have shown that Natcore’s LPD technology can be tailored to solar cell technologies other than silicon, and while costs savings have not been quantified, preliminary results indicate they will result in at least single digit percentage cost reductions.

The Company expects to see growing demand for low-temperature, non-vacuum, anti-reflective coating systems for the emerging solar cell market. The Company is unaware of any competing room temperature anti-reflective coating technology in development or commercial use. While current thermal and vacuum systems are adequate, Natcore’s technology will enable cell producers to improve their profit margins by offering lower cost and higher throughput rates. In addition, while there are some companies that manufacture high-efficiency HIT cells, those companies use a very complicated and costly process to produce such cells. Typically, the production costs of such companies are twice as expensive as the standard commercial cells currently available.

Independent industry studies also confirm substantial global growth in the production of monocrystalline silicon (“mono-silicon”) and the oversupply in the market. This is particularly important since Natcore’s technologies are particularly suited to maximize the efficiencies of mono-silicon, n-type solar cells. In particular, industry studies project global mono-silicon demand will top out at less than 10GW in 2015, but global mono-silicon wafer capacity has already reached 14GW. This oversupply has led to a substantial price drop in the mono-silicon wafer market. In 2016, wafer manufacturers have been expanding their mono-silicon capacity as they are optimistic about the market prospects. In sum, industry analysts project that the global mono-silicon capacity will surpass 17GW in 2016, with the annual growth rate exceeding 20%. Nonetheless, oversupply will persist in the mono-silicon wafer market next year unless end-market demand increases substantially. Therefore, Natcore will be able to maximize the efficiencies of mono-silicon, n-type solar cells at a lower cost.

Given the increasing demand for solar cell technology, competition can be expected to increase substantially. Accordingly, there can be no assurances that the Company will compete successfully with existing or new competitors, or that the competition will not have a material adverse effect on the business, operating results or financial condition of the Company. At the same time, this increased competition could also benefit Natcore since manufacturers would be anxious to access a technology that would give them cost or efficiency advantages.

THE OFFERING


Common Shares Offered		8,061,111 common shares ²

Common shares currently outstanding prior to this offering		58,864,302 common shares ³

Common shares to be outstanding after giving effect to the issuance of common shares under this prospectus		64,264,302common shares

Use of Proceeds		The net proceeds from the sale of the newly issued shares offered by the Companywill be approximately $1,550,000.

		The Company will not receive any of the proceeds from sale of shares by the Selling Shareholders .

		The Company intends to use the net proceeds from this offering for research and development, working capital and general corporate purposes. See “Use of Proceeds.”

Symbol		Natcore common shares currently trade on the TSX Venture Exchange under the symbol “NXT” and OTCQB® marketplace under symbol “NTCXF”.

Dividends		Natcore currently intends to retain any future earnings to fund the development and growth of the Company’s business. Therefore, the Company does not currently anticipate paying cash dividends on Natcore common shares.

Suitability Requirements		The Company reserves the right in its sole and absolute discretion to reject the subscription of any subscriber for any reason at all, including the subscriber’s failure to meet the suitability requirements prescribed by the state of such subscriber’s residence. If the Company rejects such subscription, the Company will do so promptly and any cash payments and copies of all executed subscription documents will be promptly returned, without interest or deduction, in the case of cash payments.

Risk factors		See “RISK FACTORS” section, and other information included in this prospectus for a discussion of factors investors should consider before deciding to invest in Natcore common shares.

^{________________________________________}

² Consisting of (i) 5,000,000 shares issued by the Company; (ii) 2,661,111 shares for resale from Selling Shareholders (See Selling Shareholder Table p22); and (iii) 400,000 shares of the Company’s Common shares by LoPresti Law Group, P.C. (“LLG”) to be paid to LLG in exchange for the provision of legal services rendered (hereinafter, the shareholders listed on the Selling Shareholder Table and LoPresti Law Group, P.C. shall be collectively referred to as the “Selling Shareholders”).

³ As of May 31, 2016.

Summary Consolidated Financial Data

The following tables set forth the Company’s summary consolidated financial data. Investors should read the following summary consolidated financial data in conjunction with “ Management’s Discussion and Analysis of Financial Condition and Results of Operations, ” and Natcore’s consolidated financial statements and related notes included elsewhere in this prospectus. Historical results are not indicative of the results to be expected in the future. Natcore’s consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and interpreted by the International Financial Reporting Interpretations Committee (“IFRIC”).

Since Natcore began preparing its financial statements in accordance with IFRS, having reviewed significant transactions and compared them to United States generally accepted accounting principles (“GAAP”), Natcore concluded that there are no material differences that would impact the users of the accompanying financial statements other than terminology and headings.

The Company has derived the consolidated statements of financial position as of March 31, 2016 and December 31, 2015 from its unaudited and unreviewed March 31, 2016 quarterly financial statements and the 2015 audited consolidated financial statements (both are included elsewhere in this prospectus), respectively. The Company has derived the summary consolidated statements of comprehensive income data for each of the three months ended March 31, 2016 and 2015 from its unaudited and unreviewed consolidated March 31, 2016 financial statements (included elsewhere in this prospectus) and for the years ended December 31, 2015 and 2014 from its audited consolidated financial statements (included elsewhere in this prospectus).

CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS


	For the 3 Months Ended March 31, (unaudited)						For the Years Ended December 31,

	2016			2015			2015			2014			2013

Expenses
Consulting		31,146			43,478			181,589			229,792			108,657
Depreciation and amortization		48,106			94,729			279,527			412,492			359,178
Filing fees		7,783			3,834			25,016			34,090			32,082
Foreign exchange (gain) loss		(19,991	)		(30,385	)		5,159			41,344			90,060
Interest and bank charges		787			413			2,383			1,581			1,269
Marketing		66,008			53,438			268,853			81,401			96,641
Office and miscellaneous		48,946			46,082			216,811			273,264			267,532
Professional fees		73,086			18,768			335,762			213,888			129,499
Research and development		231,722			206,284			1,203,716			1,634,864			1,480,058
Stock-based compensation		481,675			79,954			387,648			301,732			325,686
Travel		8,374			9,107			45,858			73,922			126,668
Wages and salaries		188,568			224,989			778,339			770,105			855,853

		1,166,210			750,691			(3,730,661	)		(4,068,475	)		(3,873,183	)
Other Income (Expense)
Fair value adjustment on warrants		(1,315,770	)		(474,354	)		226,827			1,842,317			(79,353	)
Other income		—			—			14,124			—			—
Interest income		5			301			1,581			32,626			13,708

		(1,315,765	)		(474,053	)		242,532			1,874,943			(65,645	)

Net and Comprehensive Income (loss)		(2,481,975	)		(1,224,744	)		(3,488,129	)		(2,193,532	)		(3,938,828	)


Loss per share - basic and diluted		(0.04	)		(0.03	)		(0.07	)		(0.05	)		(0.10	)
Weighted average number of shares outstanding - basic and diluted		56,851,190			48,895,966			51,329,138			42,294,310			41,097,726


	March 31,			December 31,

	2016			2015			2014			2013
	(unaudited)

ASSETS
Current Assets
Cash and cash equivalents		587,636			521,521			548,387			2,849,022
Receivables		3,145			29,057			5,939			26,016
Prepaid expenses		124,577			148,076			60,395			94,000

		715,358			698,654			614,721			2,969,038

Equipment		319,918			366,729			582,503			680,353
Intangibles		—			—			36,568			171,623

		319,918			366,729			619,071			851,976


TOTAL ASSETS:		1,035,276			1,065,383			1,233,792			3,821,014


LIABILITIES AND EQUITY (DEFICIT)
Current Liabilities
Trade payables and accrued liabilities		726,854			749,985			289,688			201,521
Derivative liability		2,992,304			1,135,157			124,823			1,967,140

		3,719,158			1,885,142			414,511			2,168,661

Equity (Deficit)
Share capital		15,852,538			15,690,371			13,977,256			13,030,362
Share-based payment reserve		3,862,497			3,375,710			2,956,964			2,857,272
Share subscriptions receivable		—			31,102			313,874			—
Deficit		(22,398,917	)		(19,916,942	)		16,428,813	)		14,235,281	)

		(2,683,882	)		(819,759	)		819,281			1,652,353

		1,035,276			1,065,383			1,233,792			3,821,014

RISK FACTORS

An investment in Natcore common shares involves a high degree of risk. Investors should consider carefully the risks described below, together with the financial and other information contained in this prospectus, before investors decide to invest in Natcore common shares. The occurrence of the risks described below could have a material adverse impact on Natcore’s business, financial condition or results of operations. In any such case, the trading price of Natcore common stock could decline and investors may lose part or all of his or her investment. Various statements in this prospectus, including the following risk factors, contain forward-looking statements.

Risks Related to Natcore’s Business

There is no assurance that the Company will turn a profit.

The Company is currently not profitable. There is no assurance as to whether the Company will be profitable, earn revenues or whether the Company will be able to return any investment funds, to make cash distributions or to meet its operating expenses and debt service, if any.

The Company’s independent auditor’s reports on the Company’s financial statements for the years ended December 31, 2015 and 2014 includes a “going concern” explanatory paragraph.

The Company’s independent auditor has presented the Company’s financial statements on the basis that we are a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable length of time. This means that we may not generate enough funds to pay the Company’s general operating expenses and bills from professionals and other advisors that we are obligated to pay. Since we have not generated any revenues from operations management intends to finance operating costs over the next twelve months with existing cash resources and the private placement of common stock. There may be situations where all sources of revenue described (or any revenue at all) may not be available given market conditions and customer requirements. The Company has had net losses in each of the last three fiscal years and as of December 31, 2015; the Company has had recurring losses from operations and a cumulative deficit of approximately $19,916,942.

There is no assurance that the Company will generate immediate revenues; the Company projects cash on hand sufficient to fund operations for approximately 6 months.

The Company anticipates that it will incur substantial expenses relating to the implementation of its business plan and cost overruns may be incurred. The Company currently expects the initial expenses it incurs to result in operating losses for the Company for the foreseeable future. Furthermore, no assurance can be made that a shareholder will realize any return on his or her investment, or that such shareholder will not lose his or her entire investment. In 2016 the Company completed non-brokered private placements issuing 2,517,555 units for gross proceeds of $676,104. As of March 31, 2016, the Company had $587,636 in cash. The Company anticipates its current cash and cash equivalents will be sufficient to fund operations for approximately 6 months. The company has entered into a structured financing agreement with Dutchess Opportunity Fund, II, LP that has committed $5,000,000 in exchange for equity shares to be exercised at the Company’s discretion, to fund operations over the next 36 months. Pursuant to the offering being registered on the registration statement that this prospectus is a part of, the Company is registering for sale 5,000,000 new sharesas described elsewhere in this prospectus.Additionally, the company may pursue additional financing alternatives, including completing another private placement.

Financial projections provided may prove inaccurate.

The Company’s Management may prepare financial projections concerning the estimated operating results of the Company. These projections would be based on certain assumptions that may prove to be inaccurate and that are subject to future conditions be beyond the control of the Company, such as changes in the condition of the national and international financial markets, fluctuations in interest rates, changes in rules and regulations pertaining to the securities markets and market participants, variations in the local and national economy, acts of terrorism and occurrences of natural disasters or other such disasters. The Company may experience unanticipated costs, or anticipated agreements or contracts may not materialize, resulting in lower revenues than forecasted. There is no assurance that the results that may be illustrated in financial projections would in fact be realized by the Company. The financial projections would be prepared by Management of the Company and would not be examined or compiled by independent certified public accountants. Accordingly, neither independent certified public accountants nor counsel to the Company could provide any level of assurance on them.

The Company is in research and development stage

Substantial corporate resources are currently being expended on the development of the Company’s technologies. These technologies remain in the development stages and have not yet been commercialized. There can be no guarantee that the Company’s technologies will achieve the objectives which Natcore believes are necessary for successful products in the market. In addition, there are risks associated with commercializing any product including the risk that full scale production may not be achieved at an acceptable cost level. In addition, since the Company’s technologies are in the development stage, there can be no guarantee that technical milestones can be achieved. Failure to successfully commercialize the Company’s technologies may materially and adversely affect the Company’s financial condition and results of operations.

The Company is entirely dependent on its Management team.

The Company’s Management makes all decisions with respect to the Company’s assets, including investment decisions and the day-to-day operations of the Company. Other than as specified in the Company’s notice of articles and articles, the shareholders have no right or power to take part in the management of the Company. As a result, the success of the Company for the foreseeable future will depend largely upon the ability of Management.

PROSPECTIVE INVESTORS ARE HEREBY ADVISED THAT THE SUCCESS OF PREVIOUS VENTURES OR PROJECTS UNDERTAKEN BY THE COMPANY’S MANAGEMENT OR THE MANAGEMENT OF ANY ACQUIRED COMPANY CANNOT BE CONSTRUED AS A GUARANTEE OF THE SUCCESS OF THE VENTURE OUTLINED HEREIN.

The Company’s Management may be subject to conflicts of interest.

The Company’s Management may in the future become associated with or employed by other companies, which are engaged, or may become engaged, in operations similar to the operations engaged in by the Company. Conflicts of interest between the Company’s officers and/or directors and the Company may arise by reason of such relationships. Management intends to resolve any conflicts with respect to such operations in a manner equitable to the shareholders of the Company, its management, and any of the Company’s affiliates. Officers and all employees are required to sign a proprietary inventions agreement which means that anything that is invented while employed at Natcore is owned by Natcore. Additionally all employees are required annually to complete an outside employment disclosure which allows the registrant to better control if there are any outside interests. Directors are not required to do either and may pursue opportunities independently of the registrant.

The President and CEO of Natcore, Charles Provini, will partake in the Offering as a Selling Shareholder. Mr. Provini is registering 1,300,000 common shares of Natcore, which is approximately 0.23% of the Company’s outstanding shares prior to the Offering.

The Company may not achieve its goals and objectives.

All investments in the Company risk the loss of capital. While the Company’s Management believes that its experience and relationships will moderate this risk to some degree, no representation is made that the Company’s projects will be successful.

The Company is subject to the possibility of future litigation that may have a significant adverse effect on the Company’s financial condition, operations and plans for expansion.

There are many risks incident to providing the types of services provided by the Company that may give rise to future litigation. Under such circumstances, the Company may be named as a defendant in a lawsuit or regulatory action. The Company may also incur uninsured losses for liabilities which arise in the ordinary course of business, or which are unforeseen. There is no assurance that the Company’s shareholders will not lose their entire investment in the Company as a result of unforeseen litigation.

The Company will indemnify its officers and directors.

The Company’s articles, as amended, provide that the Company will, within the limits of capital contributions and retained assets, hold its directors and officers harmless against certain claims arising from Company activities, other than losses or damages incurred by it as a result of its gross negligence, fraud or bad faith. If the Company were called upon to perform under its indemnification agreements, then the portion of its assets expended for such purpose would reduce the amount otherwise available for the implementation of its business plan, or for distributions to its shareholders, if any.

The enforcement of civil liabilities against the Company and its officers and directors may be difficult to obtain.

We are incorporated under the laws of the Province of British Columbia, Canada. Service of process upon the Companyand upon the Company’s directors and officers and the Canadian experts named in this Prospectus, some of whom reside outside the United States, may be difficult to obtain within the United States. Furthermore, some of the Company’s assets and some of the Company’s directors and officers are located outside the United States, any judgment obtained in the United States against the Company or any of the Company’s directors and officers, including one predicated on the civil liability provisions of the U.S. federal securities laws, may not be collectible within the United States.

The Company is subject to certain institutional risks.

The institutions with which the Company (directly or indirectly) does business may encounter financial difficulties that impair or would impair the operational capabilities or the capital position of the Company.

There may be changes in laws applicable to the Company.

The Company must comply with various legal requirements, including requirements imposed by the state and federal securities laws and pension laws. Should any of those laws change over the scheduled term of the Company, the legal requirements to which the Company and its shareholders may be subject could differ materially from current requirements.

The Company may face adverse tax consequences and may be audited by the Internal Revenue Service or the Canada Revenue Agency.

While the Company is advised in tax matters by its accountants, the Internal Revenue Service (the “IRS”) or the Canada Revenue Agency (“CRA”) may not accept the tax positions taken by the Company. As a result, the IRS or CRA could audit the Company’s information and adjustments to the Company’s tax returns may result. Any such adjustment could subject the shareholders to additional tax, interest and penalties, as well as incremental accounting and legal expenses. In addition, an audit of the Company’s tax returns could lead to audits of the individual tax returns of the shareholders, resulting in adjustments and additional tax with respect to non-Company items.

Government Regulation – General.

The Company may be subject to regulation by county, state and federal governments, governmental agencies, and regulatory authorities from several different countries. Failure to obtain regulatory approvals or delays in obtaining regulatory approvals by the Company, its collaborators, customers, vendors or service providers would adversely affect the marketing of products and services developed by the Company, and the Company’s ability to generate product and service revenues. Further, there can be no assurance that the Company, its customers, vendors, or service providers will be able to obtain necessary regulatory approvals. Although the Company does not anticipate problems satisfying any of the regulations involved, the Company cannot foresee the possibility of new regulations, which could adversely affect the business of the Company. While the Company anticipates that all regulatory approvals required will be granted, violations by the Company and/or its customers of, and/or non-compliance with, such regulations and approvals may adversely affect the Company’s ability to acquire capital, or adversely affect the Company’s ability to conduct its business as intended.

The Company is subject to various economic risks.

Local, national and international economic conditions may have a substantial adverse effect on the efforts of the Company. The Company cannot guarantee its anticipated results of operations against the possible eventuality of any of these potential adverse conditions.

The Company is subject to foreign exchange risk

The Company operates in the United States but typically raises funds in Canadian dollars which creates exposure to changes in exchange rates, primarily as between the US dollar and the Canadian dollar. Changes in the exchange rates faced by the Company may have a material adverse impact on its future financial performance. In recent years, the Canadian dollar has dropped in value as against the U.S. dollar and has performed with increased volatility relating to general economic conditions.

The Company may suffer uninsured losses.

The Company plans to obtain comprehensive insurance coverage, including liability, fire and extended coverage, as is customarily obtained for businesses similar to the Company. Certain types of losses of a catastrophic nature, such as losses resulting from floods, tornadoes, thunderstorms, and earthquakes, are uninsurable or not economically insurable to the full extent of potential loss. Such Acts of God, work stoppages, regulatory actions or other causes, could interrupt or delay the Company’s development or expansion, and would adversely affect the Company’s business, results of operations, and profitability.

Dependence on Management and absence of Key Man Insurance.

The Company’s business, to date, and for the foreseeable future, will be significantly dependent on the Company’s management team, directors and key consultants, including but not limited to Charles Provini, Brien Lundin, and David Levy.

The loss of any one of these officers could have a material adverse effect on the Company. If the Company lost the services of one or more of its executive officers or key employees, it would need to devote substantial resources to finding replacements, and until replacements were found, the Company would be operating without the skills or leadership of such personnel, any of which could have a significant adverse effect on the Company’s business. The Company currently does not carry key-man life insurance policies covering any of these officers.

Risks associated with expansion.

Any expansion plans undertaken by the Company to increase or expand its operations entail risks, which may negatively impact the profitability of the Company. Consequently, investors must assume the risk that (i) such expansion may ultimately involve expenditures of funds beyond the resources available to the Company at that time, and (ii) management of such expanded operations may divert Management’s attention and resources away from its existing operations, all of which factors may have a material adverse effect on the Company’s present and prospective business activities. The Company cannot assure investors that its products, procedures or controls will be adequate to support the anticipated growth of its operations.

Inability to protect proprietary and technology rights.

The Company’s success will depend in part on its ability to protect its proprietary rights and technologies, including, but not limited to, Patent 7,999,176, Patent 8,431,818, Patent 8,433,417, Patent 7,718,550, Patent 7,253,014, Patent 7,682,527, Patent 7,491,376, and Patent 7,692,218 . The Company relies on a combination of patents, trademark laws, trade secrets, confidentiality provisions and other contractual provisions to protect its proprietary rights. However, not all of these measures may apply or may afford only limited protection. The Company’s failure to adequately protect its proprietary rights may adversely affect the Company. Despite the Company’s efforts to protect its proprietary rights, unauthorized parties may attempt to copy aspects of the Company’s services or to obtain and use trade secrets or other information that it regards as proprietary. Based on the nature of its business, it may or may not be able to adequately protect its rights through patent, copyright and trademark laws. The Company’s means of protecting its proprietary rights abroad may not be adequate, and competitors may independently develop similar technologies. The Company may become involved in litigation over proprietary rights. In the event of an adverse result in any future litigation with third parties relating to proprietary rights, the Company could be required to pay substantial damages, including treble damages if the Company is held to have willfully infringed or to expend significant resources to develop non-infringing technology. In addition, litigation frequently involves substantial expenditures and can require significant management attention, even if the Company ultimately prevails. However, there can be no assurance that the Company would be able to successfully resolve such disputes in the future.

No assurance of profitability.

The Company may experience operating losses as it develops, produces and distributes its products and services. As a result, the Company may not be able to achieve profitability in a commercially acceptable time frame, if ever.

Natcore is an “emerging growth company” with reduced reporting requirements that may make its common shares less attractive to investors.

Natcore is an “emerging growth company,” as defined in the JOBS Act. Although the Company has elected not to take advantage of certain reporting exemptions available it, for so long as Natcore remains an “emerging growth company,” it will not be subject to the provision of Section 404(b) of the Sarbanes-Oxley Act, applicable to non-emerging growth companies, that requires that an independent registered public accounting firm provide an attestation report on the effectiveness of the Company’s internal control over financial reporting. This may increase the risk that the Company will fail to detect and remedy any weaknesses or deficiencies in its internal control over financial reporting. In general, these reduced reporting requirements may allow the Company to refrain from disclosing information that investors may find important. It is also possible that investors may generally find Natcore’s common shares less attractive due to its status as an “emerging growth company” and its limited disclosures. Any of the foregoing could adversely affect the price and liquidity of the Company’s common shares.

Natcore may take advantage of these disclosure exemptions until it is no longer an “emerging growth company” however it may still take advantage of certain reduced reporting requirements if it remains a small company. The Company will cease to be an “emerging growth company” upon the earliest of:


	•	the last day of the fiscal year in which the fifth anniversary of this offering occurs;

	•	the last day of the fiscal year in which the Company’s annual gross revenues are $1 billion or more;

	•	the date on which the Company, during the previous three-year period, issued more than $1 billion in non-convertible debt securities; or

	•	the last day of any fiscal year in which the market value of the Company’s common shares held by non-affiliates exceeds $700 million as of the end of the second quarter of that fiscal year.

Risk Factors Associated withthe Industry in which the Company Operates

The demand for solar power products is dependent on volatile market and industry trends that can affect demand for Natcore’s products and negatively impact its revenue.

The global economic downturn that began in the fourth quarter of 2008 highlighted the volatility associated with the solar power industry. The capital-intensive nature of implementation requiring access to capital sources caused an overall reduction in demand for solar power technology. While global markets have stabilized and access to capital has returned the demand for solar power products, the potential for soft demand and the trend of reduced cost of production could again have the effect of an over-supplied market place. The effects of a supply driven market place due to soft demand would be adverse to the Company’s margins and in turn revenues.

In addition, macroeconomic and geopolitical events influence the demand for solar power products. Specifically, currency exchange rates and governmental regulation affect the price of other energy resources like oil, natural gas and coal. A reduction in the price of these traditional energy resources, such as the recent significant decrease in the oil and natural gas markets, couldwell result in a reduction in the demand for alternative energy sources such as solar power; which in turn could reduce the margins of the Company’s products and result in a decrease in revenue.

Unforeseen technological failings that increase the cost of adoption of solar products may inhibit widespread implementation of solar solutions that would result in reduced revenue or the inability for the Company to maintain Natcore’s profitability.

The recent discovery of hardware failure and technical issues related to solar power equipment that occurred earlier in product life that had been expected could alter the associated cost of implementation of solar power products that could in turn lead to a drop in demand. Historical data is not as readily available for the solar industry as it is for the traditional sources of energy limiting the ability to determine a reliable trend upon which to base future results. Increased costs associated with implementation could lead to the failure of solar power technology being widely adopted resulting in Natcore’s inability to sustain revenue growth and profitability.

If third parties claim that the Company’s products infringe their intellectual property rights, the Company may be forced to expend significant financial resources and management time, and operating results would suffer.

The Company’s portfolio of intellectual property is significant to its financial condition and operations. Third parties may claim that the Company’s products and systems infringe their patents or other intellectual property rights. Identifying third-party patent rights can be particularly difficult, especially since patent applications are not published until 18 months after their filing dates. If a competitor were to challenge the Company’s patents, or assert that its products or processes infringe its patent or other intellectual property rights, the Company could incur substantial litigation costs, be forced to design around their patents, pay substantial damages or even be forced to cease operations, any of which could be expensive and/or have an adverse effect on the Company’s operating results.

Third-party infringement claims, regardless of their outcome, would not only drain financial resources, but also would divert the time and effort of management, and could result in customers or potential customers deferring or limiting their purchase or use of the affected products or services until resolution of the litigation.

The Company is subject to certification requirements and other regulations. Future more stringent regulations may impair the Company’s ability to market its products.

The Company must obtain product certification from governmental agencies, such as the EPA, to sell certain products in the United States, and must comply with other product certification requirements in other countries. A portion of the Company’s future sales will depend upon sales of solar power products and technologies that are certified to meet existing and future air quality and energy standards. The Company cannot assure that its products will meet these standards. The failure to comply with these certification requirements could result in the recall of the Company’s products, or civil or criminal penalties.

Any new government regulation that affects solar power products and technologies, whether at the foreign, federal, state, or local level, including any regulations relating to installation and service of these systems, may increase the Company’s costs and the price of its systems. As a result, these regulations may have a negative impact on the Company’s revenue and profitability and thereby harm its business, prospects, results of operations, or financial condition.

Changes in tax policies may reduce or eliminate the economic benefits that make the Company’s products attractive to consumers.

In some jurisdictions, such as the United States, governments provide tax benefits for solar cell technologies, including tax credits, rebates and reductions in applicable tax rates. In certain markets of the Company these benefits extend to users of the Company’s products. From time to time, governments change tax policies in ways that create benefits such as those for the Company’s customers. Reductions or eliminations in these benefits may adversely affect the Company’s revenue.

New technologies could render the Company’s existing products obsolete.

New developments in technology may negatively affect the development or sale of some or all of the Company’s products or make its products obsolete. The Company’s inability to enhance existing products in a timely manner or to develop and introduce new products that incorporate new technologies, conform to increasingly stringent emission standards and performance requirements, and achieve market acceptance in a timely manner could negatively impact the Company’s competitive position. New product development or modification is costly, involves significant research, development, time and expense, and may not necessarily result in the successful commercialization of any new products.

Risks Related to the Company’s Common Shares and the Offering

Authorized capital consists of an unlimited number of shares of one class designated as common shares

The Company’s authorized capital consists of an unlimited number of shares of one class designated as common shares. The directors may create any class or series of shares by resolution but may not make any modification to the provisions attaching to the Company’s common shares without the affirmative vote of two-thirds of the votes cast by the holders of the common shares. Natcore’s common shares do not have pre-emptive rights to purchase additional shares. Shareholders should be aware that the exercise of warrants described herein will dilute the value of current holdings.

Volatility of the market price of the Company’s common shares could adversely affect its shareholders and Natcore.

The market price of the Company’s common shares could be highly volatile and could be subject to wide fluctuations in response to numerous factors, including the following:


	•	actual or anticipated variations in Natcore’s operating results or those of Natcore’s competitors,

	•	technological enhancements or developments by Natcore or its competitors,

	•	regulatory changes effecting Natcore’s industry,

	•	changes in the roles of key personnel,

	•	geopolitical events effecting Natcore’s industry,

	•	disputes concerning proprietary rights concerning patents that Natcore holds.

Risk Associated with OTCQB listing

Currently, the Company’s common stock trades on the OTCQB venture stage marketplace for early stage and developing U.S. and international companies. Investors may find it difficult to obtain accurate quotations as to the market value of the Company’s common stock. In addition, there is currently only a limited public market for the Company’s common stock and there can be no assurance that a trading market will develop further or be maintained in the future. Trading in stocks quoted on the OTCQB is often thin and is characterized by wide fluctuations in trading prices due to many factors that may be unrelated to a company’s operations or business prospects. As a result, the trading prices of the Company’s common stock may not reflect the price that would result if the Company’s stock was actively traded. There is no assurance that a regular trading market in the Company’s common stock will develop, or if developed, that it will be sustained. Therefore, stockholders may be unable to resell their shares of the Company’s common stock.

Natcore has not paid dividends in the past and does not expect to pay dividends in the future. Any return on an investment could be limited to the value of the common stock.

Natcore has never paid cash dividends on its common shares and do not anticipate paying cash dividends in the foreseeable future. The payment of dividends depends on the financial condition of the Company, with other business and economic factors influencing the decision by the board of directors in determining the issuance of a dividend. If dividends are not issued, the Company’s common shares may be considered less valuable because a return on an investment will only occur if the Company’s stock price appreciates.

Stockholder ownership interest in Natcore may be diluted as a result of future financings or additional acquisitions.

Natcore may seek to raise funds from time to time in public or private issuances of equity in the near future or over the longer term. Sales of the Company’s securities offered through future equity offerings may result in substantial dilution to the interests of the Company’s current shareholders. The sale of a substantial number of securities to investors, or anticipation of such sales, could make it more difficult for the Company to sell equity or equity-related securities in the future at a time and at a price that the Company might otherwise wish to effect sales. In addition, the Company has issued shares of its common stock for various acquisitions in the past and may do so in the future, which may also result in substantial dilution to the interests of the Company’s current shareholders.

Investors may experience dilution as a result of future purchases exercised on outstanding options and warrants.

As of June 6, 2016, the Company had 5,426,500 options outstanding. Each option entitles the holder to purchase one additional common share at exercise prices ranging from CDN$0.40 to CDN$1.11 and expiring on dates ranging from August16, 2016 to February 15,2021.

As of June 6, 2016, the Company had 20,822,070 warrants outstanding. Each warrant entitles the holder to purchase one additional common share at an exercise prices ranging from CDN$0.55 to CDN$0.95 and US$0.62 and with expiration dates ranging from August 20, 2016 to March 17, 2019.

To the extent these options or warrants are ultimately exercised, investors will sustain future dilution.

SELLING SHAREHOLDERS INFORMATION

The Selling Shareholders may offer and sell up to 3,061,111 shares of Natcore common shares consisting of (i) 2,661,111 shares that have been previously issued in private placement transactions and/or part of executive compensation ( See Selling Shareholder Table below);and (ii) 400,000shares of the Company’s Common shares by LoPresti Law Group, P.C. (“LLG”) to be paid to LLG in exchange for the provision of legal services rendered (hereinafter, the shareholders listed on the Selling Shareholder Table and LoPresti Law Group, P.C. shall be collectively referred to as the “Selling Shareholders”). The names, the amount and percentage of the securities beneficially held by the Selling Shareholders before and immediately after the offering are also included in the chart below.


Name of Beneficial Owner	Date of Purchase or Issuance	Common Shares beneficially owned prior to the offering	Beneficial Ownership Percentage Prior to Offering		Number of Warrants/Options beneficially owned prior to the offering	Common Shares being registered in this offering	Common Shares Issuable Upon Exercise of Warrants/Options being registered in this offering

Charles Provini ¹	May 8, 2009 ²	1,300,000	0.23	%	650,000	1,300,000	—
Chris Dandurand	April 14, 2015 July 23, 2015 December 23, 2015 March 17, 2016	1,901,141	0.33	%	2,802,941	1,361,111	—
LoPresti Law Group ³	March 27, 2014 October 6, 2015	467,500	0.08		—	400,000	—

TOTAL		3,668,641	0.64	%	3,452,941	3,061,111	—

Note:
_____________________


	(1)	Mr. Provini is the President and CEO of the Company.
	(2)	Date of issuance of common shares of parent company in exchange for shares of the subsidiary company, originally issued as part of executive compensation.
	(3)	Shares of the Company’s common shares owned by LoPresti Law Group, P.C. (“LLG”) were issued to LLG, or result from the exercise of warrants issuedto LLG, in exchange for the provision of legal services rendered.

LoPresti Law Group, P.C.

On April 4, 2014, 137,500 shares of the Company’s Common Stock were issued to Marc X. LoPresti, Esq. pursuant to the exercise of warrants issued to Mr. LoPresti in March 2009, in his individual capacity, for legal services rendered. The aforementioned shares are still held by Mr. LoPresti.

On October 6, 2015, 325,000 shares of Common Stock were issued to LoPresti Law Group, PC (“LLG”)in exchange for legal services rendered. LLG’s offices are located at 45 Broadway, Suite 610, New York, New York, 10006. The aforementioned shares are still held by LLG.

The Company is registering400,000shares of Common Stock, to be issued to LoPresti Law Group, PC (“LLG”)in exchange for legal services rendered, in order to permit LLG to offer the shares for resale from time to time. The firm’s managing partner, Marc X. LoPresti, has sole voting and investment power over the previously issued shares and the shares being offered by LLG under this Prospectus. The 400,000 shares to be issued to LLG and the 467,500previously issued shares described hereinabove reflect the total number of shares held by Mr. LoPresti and LLG, as of the date of this Prospectus.

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus includes forward-looking statements that involve known and unknown risks and uncertainties. Forward-looking statements include statements regarding the Company’s, anticipated future business strategy, expected future financial condition or results of operations and market data, as well as any other statements that are not historical facts. These statements reflect beliefs of Natcore’s management, as well as assumptions made by the Management and information currently available to the Company. Although the Company believes that these beliefs and assumptions are reasonable, these statements are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected. Investors can identify these and other forward-looking statements by the use of words such as “may,” “will,” “should,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “intends,” “potential” or the negative of such terms, or other comparable terminology.

Such statements reflect the Company’s current views with respect to future events and are subject to certain risks, uncertainties and assumptions. Actual results may differ materially from those expressed in these forward-looking statements due to a number of uncertainties and risks, including the risks described in this prospectus and other unforeseen risks, including, without limitation:


	•	Inability of Selective Emitter function achieving improved efficiency,

	•	Black Silicon’s power output not resulting in the expected power output increase,

	•	Liquid Phase Deposition Passivation technology not creating the expected production savings,

	•	Tandem Quantum Dot Solar cell not producing the expected increased efficiency that would reduce expected added revenue to the Company,

	•	License agreements and Royalties not being practically obtainable or being executed with terms not as favorable as predicted, and

	•	The Company’s reporting exemptions under the JOBS Act as an emerging growth company being extinguished in the future (as discussed above) resulting in more onerous reporting standards that could impact Natcore’s results.

Natcore’s ability to predict the results of its operations or the effects of various events on its operating results is inherently uncertain. Therefore, Natcore cautions investors to consider carefully the matters described under the caption “Risk Factors” and certain other matters discussed in this prospectus and other publicly available sources. In addition, this prospectus contains information concerning the semiconductor industry and business segments generally, which is forward-looking in nature and is based on a variety of assumptions regarding the ways in which the semiconductor industry, the Company’s market and business segments will develop. Although Natcore believes that this information is reliable, it has not independently verified and cannot guarantee its accuracy or completeness. These factors and many other factors beyond the Company’s control could cause its actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by the forward-looking statements. The Company is not under any obligation, and expressly disclaims any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise. All subsequent forward-looking statements attributable to the Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section, and investors are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date of this prospectus.

USE OF PROCEEDS

The Company estimates that the net proceeds it will receive from this offering will be approximately $1,550,000. The Company will not receive any of the proceeds from sale of shares by the Selling Shareholders.

The Company expects to use any proceeds that it receives for working capital, and for other general corporate purposes, including capital expenditures related to the Company’s research and development activities. This expected use of proceeds from this offering represents the Company’s intentions based upon its current plans and business conditions. As of the date of this Prospectus, the Company cannot predict with certainty the particular uses for the net proceeds to be received upon the completion of this offering or the actual amounts that it will spend on the uses set forth above.

LISTING OF COMMON SHARES

Natcore became a publicly traded company on the TSX-V, the TSX Venture Exchange, on March 7, 2008. (Symbol: NXT.V). In addition, the Company is traded on the OTCQB® marketplace under symbol “NTCXF”.

DIVIDEND POLICY

Natcore has never paid cash dividends on its common shares and does not anticipate paying cash dividends in the foreseeable future. The Company intends to retain all available funds and any future earnings for use in the operation of the Company’s business and do not anticipate paying any cash dividends in the foreseeable future. Any future determination to declare cash dividends will be made at the discretion of the Company’s Board of Directors in accordance with applicable law and will depend on the Company’s financial condition, results of operations, capital requirements, general business conditions and other factors that the Board of Directors may deem relevant.

DILUTION

If one invests in Natcore’s common shares, an investor’s interest will be diluted to the extent of the difference between the public offering price per ordinary share and the pro forma as adjusted net tangible book value per ordinary share if any of the outstanding options or warrants are exercised.

Natcore’s net tangible book value as of March 31, 2016 was approximately ($2,683,882), or ($0.04) per share. Net tangible book value per share represents the amount of Natcore’s total tangible assets less its total liabilities, divided by 63,864,302 the number of its common shares outstanding upon consummation of this offering.

As of June 6, 2016, the Company had outstanding options to purchase a total of 5,426,500 of its common shares at a weighted average exercise price of CDN$0.59 per share. Also as of June 6, 2016, the Company had outstanding warrants to purchase a total of 14,736,330of its common shares at a weighted average exercise price of CDN$0.72 per share and had outstanding warrants to purchase a total of 6,085,740 of its common shares at a weighted average exercise price of US$0.62 per share. To the extent these options or warrants are ultimately exercised, investors will sustain future dilution.

Below are details of Natcore’s outstanding options and warrants as of June 6, 2016:


Details of options outstanding as of				Details of warrants outstanding as of
June 6, 2016 (unaudited)				June 6, 2016 (unaudited)

Exercise price		Expiry date	Number of outstanding	Exercise price		Expiry date	Number of outstanding

CDN$	0.59	August 16, 2016	400,000	CDN$	0.90	July 20, 2017	3,840,700
CDN$	0.51	April 17, 2017	120,000	CDN$	0.70	January 21, 2018	1,356,312
CDN$	1.11	September 4, 2017	200,000	CDN$	0.95	April 14, 2018	1,209,080
CDN$	0.80	December 20, 2017	295,000	CDN$	0.95	April 27, 2018	421,500
CDN$	0.57	December 20, 2017	80,000	CDN$	0.74	July 23, 2018	70,000
CDN$	0.80	January 4, 2018	20,000	CDN$	0.74	July 31, 2018	1,825,500
CDN$	0.71	April 5, 2018	40,000	CDN$	0.74	November 30, 2018	1,764,444
CDN$	0.83	June 3, 2018	25,000	CDN$	0.74	December 18, 2018	1,707,789
CDN$	0.58	July 31, 2018	100,000	CDN$	0.55	February 2, 2019	273,058
CDN$	1.08	January 10, 2019	315,000	CDN$	0.55	March 17, 2019	2,267,947

CDN$	0.75	December 17, 2019	405,000				14,736,330
CDN$	0.65	December 20, 2019	80,000	US$	0.62	August 20, 2016	6,085,740
CDN$	0.58	April 30, 2020	1,236,500			Grand Total	20,822,070
CDN$	0.54	June 15, 2020	15,000
CDN$	0.40	January 13, 2021	1,975,000
CDN$	0.51	February 15, 2021	120,000

		Total	5,426,500

Selected Financial Data

The following tables set forth the Company’s summary consolidated financial data. Investors should read the following summary consolidated financial data in conjunction with “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and Natcore’s consolidated financial statements and related notes included elsewhere in this prospectus. Historical results are not indicative of the results to be expected in the future. Natcore’s consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and interpreted by the International Financial Reporting Interpretations Committee (“IFRIC”).

CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS


	For the 3 Months Ended
	March 31,						For the Years Ended
	(unaudited)						December 31,
	2016			2015			2015			2014			2013

Expenses
Consulting		31,146			43,478			181,589			229,792			108,657
Depreciation and amortization		48,106			94,729			279,527			412,492			359,178
Filing fees		7,783			3,834			25,016			34,090			32,082
Foreign exchange (gain) loss		(19,991	)		(30,385	)		5,159			41,344			90,060
Interest and bank charges		787			413			2,383			1,581			1,269
Marketing		66,008			53,438			268,853			81,401			96,641
Office and miscellaneous		48,946			46,082			216,811			273,264			267,532
Professional fees		73,086			18,768			335,762			213,888			129,499
Research and development		231,722			206,284			1,203,716			1,634,864			1,480,058
Stock-based compensation		481,675			79,954			387,648			301,732			325,686
Travel		8,374			9,107			45,858			73,922			126,668
Wages and salaries		188,568			224,989			778,339			770,105			855,853

		1,166,210			750,691			(3,730,661	)		(4,068,475	)		(3,873,183	)
Other Income (Expense)
Fair value adjustment on warrants		(1,315,770	)		(474,354	)		226,827			1,842,317			(79,353	)
Other income		—			—			14,124			—			—
Interest income		5			301			1,581			32,626			13,708

		(1,315,765	)		(474,053	)		242,532			1,874,943			(65,645	)

Net and Comprehensive Income (loss)		(2,481,975	)		(1,224,744	)		(3,488,129	)		(2,193,532	)		(3,938,828	)


Loss per share - basic and diluted		(0.04	)		(0.03	)		(0.07	)		(0.05	)		(0.10	)
Weighted average number of shares outstanding - basic and diluted		56,851,190			48,895,966			51,329,138			42,294,310			41,097,726


	March 31,			December 31,
	2016			2015			2014			2013
	(unaudited)

ASSETS
Current Assets
Cash and cash equivalents		587,636			521,521			548,387			2,849,022
Receivables		3,145			29,057			5,939			26,016
Prepaid expenses		124,577			148,076			60,395			94,000

		715,358			698,654			614,721			2,969,038

Equipment		319,918			366,729			582,503			680,353
Intangibles		—			—			36,568			171,623

		319,918			366,729			619,071			851,976


TOTAL ASSETS:		1,035,276			1,065,383			1,233,792			3,821,014


LIABILITIES AND EQUITY (DEFICIT)
Current Liabilities
Trade payables and accrued liabilities		726,854			749,985			289,688			201,521
Derivative liability		2,992,304			1,135,157			124,823			1,967,140

		3,719,158			1,885,142			414,511			2,168,661

Equity (Deficit)
Share capital		15,852,538			15,690,371			13,977,256			13,030,362
Share-based payment reserve		3,862,497			3,375,710			2,956,964			2,857,272
Share subscriptions receivable		—			31,102			313,874			—
Deficit		(22,398,917	)		(19,916,942	)		16,428,813	)		14,235,281	)

		(2,683,882	)		(819,759	)		819,281			1,652,353

		1,035,276			1,065,383			1,233,792			3,821,014

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following information should be read together with Natcore’s selected consolidated financial and operating data and the consolidated financial statements and notes included elsewhere in this prospectus. The following discussion contains forward-looking statements that reflect Natcore’s plans, estimates and beliefs. The Company’s actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this prospectus particularly in “Risk Factors” and “Note Regarding Forward-looking Statements.”

Overview

This Management Discussion and Analysis (“MD&A”) of Natcore Technology Inc. (“Natcore” or the “Company”) should be read in conjunction with the financial statements of the Company for the three months ended March 31, 2016 and the year ended December 31, 2015 and related notes. The Company prepares its financial statements in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and Interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”). The Company’s Board of Directors have reviewed and approved this MD&A. This discussion has been prepared by management as of May 30, 2016.

This MD&A may contain “forward-looking statements” which reflect the Company’s current expectations regarding the future results of operations, performance and achievements. The Company has tried, wherever possible, to identify these forward-looking statements by, among other things, using words such as “anticipate”, “believe”, “estimate”, “expect” and similar expressions. The statements reflect the current beliefs of the management of the Company, and are based on currently available information. Accordingly, these statements are subject to known and unknown risks, uncertainties and other factors, which could cause the actual results, performance, or achievements of the Company to differ materially from those expressed in, or implied by, these statements.

The Company undertakes no obligation to publicly update or review the forward-looking statements whether as a result of new information, future events or otherwise. Historical results of operations and trends that may be inferred from the following discussions and analysis may not necessarily indicate future results from operations.

All figures in this MD&A are in United States dollars, unless otherwise noted.

Revenue resources:

Natcore has four planned sources of revenue.


1.	License agreements
	Each customer, before having access to the technology, will be required to have some type of non-exclusive license agreement or an exclusive license agreement unique to some specific jurisdiction.

2.	Royalties
	Royalty rights will entitle the Company to benefit from residual income on each product that utilizes the Company’s technology

3.	Equipment sales
	Natcore will sub-contract the manufacturing of wet-bench equipment necessary for the Liquid Phase Deposition process. There will be a mark-up to Natcore on each piece of equipment.

4.	Ch emical sales
	Natcore will engage a third-party chemical company to mix and drop-ship the patented chemical mixture for the various applications. This will be a source of recurring revenue.

The Company understands that there may be situations where all four sources of revenue may not be available given market conditions and the appetite of different customers.

Financial Performance

For the Three Months Ended March 31, 2016 (unaudited)

As the Company is in the development stage, it is expected the Company will continue to generate losses for this fiscalyear.

During the three months ended March 31, 2016, the Company did not generate any revenue. The principal activity of the Company during the three months ended March 31, 2016 and the three months ended 2015, was that of research giving rise to normal recurringcosts.

The Company reported a net loss of $2,481,975 for the three months ended March 31, 2016 compared to a net loss of $1,224,744 for the prior year three months ended. The primary reasons for the change were a result of non-cash revaluations of the Company’s derivative liabilities resulting from additional warrants being issued in 2016 and an increase in the Company’s stock price at March 31, 2016 compared to March 31, 2015, as well as a an increase in stock compensation of $401,721 from the prior year three months ended resulting from options being issued during the current quarter that vested immediately.

The Company’s operational expenses for the three months ended March 31, 2016 were $1,166,210 compared to $750,691 for the prior year three months ended March 31, 2015. Significant expense changes in the three months ended compared to prior three months ended are in the following table.

Significant expense changes in the three months ended March 31, 2016 and 2015 were as follows:


	2016			2015			$ Change			% Change

Expenses
Consulting		31,146			43,478			(12,332	)		-28	%
Depreciation and amortization		48,106			94,729			(46,623	)		-49	%
Filing fees		7,783			3,834			3,949			103	%
Foreign exchange (gain) loss		(19,991	)		(30,385	)		10,394			-34	%
Interest and bank charges		787			413			374			91	%
Marketing		66,008			53,438			12,570			24	%
Office and miscellaneous		48,946			46,082			2,864			6	%
Professional fees		73,086			18,768			54,318			289	%
Research and development		231,722			206,284			25,438			12	%
Stock-based compensation		481,675			79,954			401,721			502	%
Travel		8,374			9,107			(733	)		-8	%
Wages and salaries		188,568			224,989			(36,421	)		-16	%

		1,166,210			750,691			415,519			55	%

Other Income (Expense)
Fair value adjustment on warrants		(1,315,770	)		(474,354	)		(841,416	)		177	%
Interest income		5			301			(296	)		-98	%

Net income (loss)		(2,481,975	)		(1,224,744	)		(1,257,231	)		103	%

As a result of the acquisitions of Natcore US and the Company’s operations in the United States, the Company and its financial results are exposed to fluctuations between the Canadian and United States dollars. The foreign exchange loss results from certain monetary items, primarily cash equivalents, being denominated in Canadian dollars.

Stock-based compensation relates to options granted under the Company’s stock option plan to directors, officers, employees and consultants. Compensation expense is recorded using the fair value method over the vesting periods of the options. The fair value of each option granted is estimated as at the date of grant using the Black-Scholes option pricingmodel.

For the Year Ended December 31, 2015

As the Company is in the development stage, it is expected the Company will continue to generate losses for the upcoming of the fiscal year.

During the year ended December 31, 2015, the Company did not generate any revenue. The principal activity of the Company during year ended 2015 and the year ended 2014 was that of research giving rise to normal recurring costs.

The Company reported a net loss of ($3,488,129) for the year ended December 31, 2015 compared to a net loss of ($2,193,532) for the year ended December 31, 2014. The primary reason for the change was a result of non-cash revaluations of our derivative liabilities (income of $226,827 in the year ended December 31, 2015 compared to income of $1,842,317 in the prior year ended December 31, 2014). The change in expense and income from the expiration and addition of warrants being valued in the derivative liability during the year

Our operational expenses for year ended December 31, 2015 were $3,730,661 compared to $4,068,475 for the prior year ended December 31, 2014.

Significant expense changes in 2015 compared to 2014 are as follows:


	Year Ended December 31,

	2015			2014			Variance

Expenses

Consulting		181,589			229,792			(48,203	)
Depreciation and amortization		279,527			412,492			(132,965	)
Filing fees		25,016			34,090			(9,074	)
Foreign exchange (gain) loss		5,159			41,344			(36,185	)
Interest and bank charges		2,383			1,581			802
Marketing		268,853			81,401			187,452
Office and miscellaneous		216,811			273,264			(56,453	)
Professional fees		335,762			213,888			121,874
Research and development		1,203,716			1,634,864			(431,148	)
Stock-based compensation		387,648			301,732			85,916
Travel		45,858			73,922			(28,064	)
Wages and salaries		778,339			770,105			8,234

		(3,730,661	)		(4,068,475	)		337,814

Other Income (Expense)
Fair value adjustment on warrants		226,827			1,842,317			(1,615,490	)
Other income		14,124			—			14,124
Interest income		1,581			32,626			(31,045	)

		242,532			1,874,943			(1,632,411	)

Net income (loss)		(3,488,129	)		(2,193,532	)		(1,294,597	)

As a result of the acquisitions of Natcore US and the Company’s operations in the United States, the Company and its financial results are exposed to fluctuations between the Canadian and United States dollars. The foreign exchange (gains) or loss present for above, results from certain monetary items, primarily cash equivalents, being denominated in Canadian dollars.

Recent Financial Events

On March 17, 2016, the Company completed a non-brokered private placement of 2,244,497 units at a price of CDN$0.36 per unit for gross proceeds of CDN$808,019. Each unit comprised one common share and one share purchase warrant, with each whole warrant exercisable at a price of CDN$0.55 per share and expiring on March 17, 2019.

Between November 30, 2015 and February 5, 2016, the Company completed a non-brokered private placement of 3,648,691 units at a price of CDN$0.36 per unit for gross proceeds of CDN$1,313,529. Each unit comprised one common share and one share purchase warrant, with each whole warrant exercisable at a price of CDN$0.55 per share and expiring on dates between November 30, 2018 and February 5, 2019.

On July 15, 2015, the Company entered into an investment agreement, as amended on August 21, 2015, for the provision of an up to $5 million investment facility by Dutchess Opportunity Fund II. During the 36-month term of the agreement, Dutchess will be required, at the option of Natcore, to purchase up to $5 million of Natcore common stock. Natcore will control the timing and amount of any share sales to Dutchess and a minimum price of the common stock to be issued. Under the agreement, Dutchess is required to purchase Natcore shares at a discount of 5% from the market price of the shares on the OTCQB at the time of each transaction. No commissions or compensation is to be paid by Natcore as a result of signing the agreement. As of the date hereof, the Company has not drawn upon the investment agreement.

Between July 23-31, 2015, the Company completed a non-brokered private placement of 1,822,000 units at a price of CDN$0.54 per unit for gross proceeds of CDN$983,880. Each unit comprised one common share and one share purchase warrant, with each whole warrant exercisable at a price of CDN$0.74 per share and expiring on dates between July 23-31, 2018.

On April27, 2015, the Company completed a non-brokered private placement and issued 1,597,050 units at a price of CDN$0.70 per unit for gross proceeds of $895,018 (CDN$1,117,935). Each unit comprised one common share and one share purchase warrant, with each warrant exercisable at a price of $0.70 per share for a period of three years from the date of closing. The Company also issued 33,530 finders’ warrants in connection with this private placement exercisable at a price of CDN$0.95 per share for a period of three years from the date of closing and $6,321.

On January 23, 2015 the Company issued 95,278 common shares at a price of CDN$0.43 per share and 95,278 warrants eligible to purchase 95,278 common shares at a price of CDN$0.70 per share for a period of 36 months.

On January 21, 2015 we issued 1,256,784 common shares at a price of CDN$0.43 per share and 1,256,784 warrants eligible to purchase 1,256,784 common shares at a price of CDN$0.70 per share for a period of 36 months.

In December 2014, the Company issued 525,000 stock options at an exercise price of CDN$0.75 per share.

In November 2014, the Company issued 80,000 stock options at an exercise price of CDN$0.57 per share.

In July 2014, 166,850 common shares were issued for the exercise of warrants. 14,850 of these warrants were issued with an exercise price of US$0.62 per share for cash proceeds of $9,207 (CDN$9,812) and 152,000 of these warrants were issued with an exercise price of CDN$0.60 per share, for cash proceeds of $91,200.

During March 2014 through May 8, 2014, the Company issued 1,328,620 shares of common stock for cash proceeds of $487,945 (CND $531,448) in connection with exercise of 1,328,620 warrants that had an exercise price of CND $0.40.

In May 2014, 100,000 common shares were issued for the exercise of options with an exercise price of CDN$0.40 per share, for cash proceeds of $36,726 (CDN$40,000).

On February 3, 2014, we granted 60,000 stock options eligible for purchase 60,000 common shares at a price of US$0.99 per share for a period of five years. Som Dahal was granted 60,000 shares. The grants were approved in the Stock Option Plan by shareholders on June 17, 2013. Issuer relied upon Section 2.24 of National Instrument 45-106.

On January 10, 2014, we granted 345,000 stock options eligible for purchase 345,000 common shares at a price of US$1.08 per share for a period of five years. 11 purchasers were granted 345,000 shares, including: Wendy Ahearn, David Levy, Evangeline Parsons, Liz Provini, Helen Rudich, David Rutkin, Tom Scarpa, Rich Topel, Pat Zubil, Ted Zubil and Brian Zucker. The grants were approved in the Stock Option Plan by shareholders on June 17, 2013. Issuer relied upon Section 2.24 of National Instrument 45-106.

On January 7, 2014, and March 9, 2014 the Company issued a total 100,000 shares of common stock for cash proceeds of $62, in connection with exercise of 100,000 warrants that had an exercise price of $0.62

On January 6, 2014, the Company issued 70,913 shares of common stock for cash proceeds of $66,644 (CND $70,913) in connection with exercise of 70,913 warrants that had an exercise price of CND $1.00.

In December 2013, the Company issued 150,000 shares of common stock for cash proceeds of $93,000 USD in connection with exercise of 150,000 warrants that had an exercise price of USD $0.62 per share.

During October through November 2013, the Company issued 225,000 shares of common stock for cash proceeds of $96,246 (CND $90,000) in connection with exercise of 225,000 options that had an exercise price of CND $0.40.

During October, through December 2013, the Company issued 655,530 shares of common stock for cash proceeds of $484,414 (CND $452,977) in connection with exercise of 655,530 warrants that had an exercise price between CND $0.40 and CND $1.00 per share.

On August 20, 2013, The Company completed a private placement of 6,290,740 shares at a price of $0.50 per share for gross proceeds of $3,145,370. Each unit comprised one common share and one share purchase warrant, with each whole warrant exercisable at a price of USD$0.62 per share and expiring August 20, 2016. The Company paid finder’s fees of $82,022 for the financing. A total of 59,850 finder’s warrants were issued.

In April 2013, the Company issued 25,000 shares of common stock for cash proceeds of $10,694 (CND $10,000) in connection with exercise of 25,000 warrants that had an exercise price of CND $0.40.

In January 2013, the Company issued 168,000 shares of common stock for cash proceeds of $161,693 (CND $151,200) in connection with exercise of 168,000 warrants that had an exercise price of CND $0.90.

On July 20, 2012, The Company completed a private placement of 4,166,700 units at a price of CDN $0.60 per unit generating aggregate gross proceeds of $2,478,020 (CDN$2,500,000). Each unit comprised one common share and one share purchase warrant, with each whole warrant exercisable at a price of CDN$0.90 per share until July 20, 2014. In the event that the Company’s common shares close at over CDN$1.60 for 20 consecutive trading days, the warrants will be subject to accelerated conversion within 30 days’ notice of the Company disseminating a press release providing notice of that circumstance. Finder’s fees were paid on a portion of the financing, such that an aggregate of $102,815 was paid in cash and 22,516 finder’s warrants were issued, having the same terms as the warrants forming part of the units and 152,000 finder’s unit warrants were issued exercisable to acquire units on the same terms as the units issued in the financing at an exercise price of CDN$0.60 per unit for until July 20, 2014. An additional 152,000 finder’s warrants were issued with an exercise price of CDN$0.90 until July 20, 2014.

On August 16, 2013 the Company granted 400,000 stock options to a consultant. The options vest immediately. The options are exercisable at CDN$0.59 and expire August 16, 2016.

On July 31, 2013 the Company granted 100,000 stock options to two consultants. The options vest 50% in six month, and 50% in eighteen months thereafter.

On June 3, 2013 the Company granted 25,000 stock options to an employee. The options vest 50% on September 3, 2013 and 50% on September 3, 2014. The options are exercisable at CDN$0.83 and expire June 4, 2018.

On June 1, 2013 the Company granted 100,000 stock options to an employee. The options vest 25% immediately, and 25% every three months thereafter. The options are exercisable at CDN$0.79 and expire June 1, 2016.

On April 5, 2013 the Company granted 40,000 stock options to an employee. The options vest immediately at the grant date. The options are exercisable at CDN$0.71 and expire April 5, 2018.

On January 4, 2013 the Company granted 20,000 stock options to an employee. The options vest immediately at the grant date. The options are exercisable at CDN$0.80 and expire January 4, 2018.

On December 20, 2012 the Company granted 80,000 stock options to employees. 50% of the options vest six months following the grant date and the remaining 18 months from the grant date.

On December 20, 2012 the Company granted 272,000 stock options to employees and consultants of the Company which vested immediately. The options are exercisable at CDN$0.80 and expire December 20, 2017.

On April 17, 2012, the Company granted 120,000 stock options to employees. 50% of the options vested on October 17, 2012 and the remaining vest on October 17, 2013. The options are exercisable at CDN$0.51 and expire on April 17, 2017.

On August 16, 2012, the Company granted 200,000 stock options to an employee. 50% of the options vest six months following the grant date and the remaining in twelve months from the grant date. The options are exercisable at CDN$1.11 and expire September 4, 2017.

On February 8, 2011, the Company granted 2,190,000 stock options to directors, employees and consultants. The options vest over a three year period, and are exercisable at CDN$0.97 expiring in five years. During fiscal year 2012 117,000 of the options were forfeited.

Selling and Marketing Expenses

The Company currently has not recognized any revenue, as it is still in the development stage for many of its applications. The Company plans to have its black silicon technology available to the solar industry in the next 20-26 months; Natcore will not need a direct sales force in the foreseeable future. Natcore will market its technology though the industry with its current management staff.As the company moved through the proof of concept phase and closer to commercialization for the Company’s applications, it began making more presentations to manufacturers and potential customers as well as equipment builders who would adapt existing machinery to accommodate Natcore’s process.

General and Administrative Expenses

Natcore’s general and administrative expenses consist primarily of costs associated with marketing activities, outside professional fees, travel costs, facilities costs and other corporate expenses.The Company’s professional and consulting fees for the quarter ended March 31, 2016 increased approximately $42,000 over the prior year quarter resulting from increased costs relating to patents and accounting,and legal fees and the Company using additional consultants for marketing purposes. For the quarter ended March 31, 2016 the Company’s depreciation decreased from the prior year quarter due to assets becoming fully amortized. For the quarter ended March 31, 2016 the Company’s stock-based compensation increased by approximately $402,000 due to options being issued in the 2016 quarter that vested immediately. See schedule above which summarize changes by expense line for the Company’s operating expenses.Natcore’s wages and salaries expenses consist of compensation costs for management, finance and other administrative personnel, these costs also include payroll taxes and benefits associated with its personnel functions. For the quarter ended March 31, 2016 compared to the prior year, the changes in wages and salaries expense versus the prior quarter decreased approximately $36,000 due to a lower headcount. This increase was a result of wage increases.

Research and Development Expenses

Natcore’s research and development expenses consisted of all expenses incurred in research and development activities, including compensation associated with its research staff. The Company’s increase in R & D expense of approximately $25,000 over the prior year quarter ended were primarily due to timing.

Other Income (Expense)

Other income (expense) primarily consists of gains and losses related to Natcore’s investment activities from its cash equivalent investments and the change in the derivative liability.The primary reasons for the change in the derivative liability were a result of non-cash revaluations of the Company’s derivative liabilities resulting from additional warrants being issued in 2016 and an increase in the Company’s stock price at March 31, 2016 compared to March 31, 2015.

Operating (Loss)

Natcore currently does not have any sales revenue, consequently it has generated only operating losses. Natcore’s operating expenses consist of general and administrative expenses, wages and salaries expenses, research and development expenses, depreciation and amortization costs and stock-based compensation expenses discussed above.

Critical Accounting Policies and Estimates

Statement of compliance with International Financial Reporting Standards

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

As a result of the Accounting Standards Board of Canada’s decision to adopt IFRS for publicly accountable entities for financial reporting periods beginning on or after January 1, 2011, the Company adopted IFRS for the 2011 and 2010 annual financial statements. The December 31, 2010 financial statements were restated to conform to IFRS.

Basis of preparation

The consolidated financial statements of the Company have been prepared on an accrual basis and are based on historical costs, modified where applicable. The consolidated financial statements are presented in United States dollars unless otherwise noted.

Consolidation

The consolidated financial statements include the accounts of the Company and its controlled entities. Details of controlled entities are as follows:


		Percentage owned*

	Jurisdiction of incorporation	March 31, 2016 (unaudited)			December 31, 2015

Natcore Technology, Inc.	United States		100	%	100	%
Newcyte, Incorporated	United States		100	%	100	%
Vanguard Solar, Inc.	United States		100	%	100	%
Natcore Asia Technology, Limited	Hong Kong		100	%	100	%

__________________

	*Percentage of voting power is in proportion to ownership.
	Inter-company balances are eliminated on consolidation.

Significant accounting judgments, estimates and assumptions

The preparation of consolidated financial statements in accordance with IFRS requires the Company to make estimates and assumptions concerning the future. The Company’s management reviews these estimates and underlying assumptions on an ongoing basis, based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are adjusted for prospectively in the period in which the estimates are revised.

Estimates and assumptions where there is significant risk of material adjustments to assets and liabilities in future accounting periods include the useful lives of equipment, impairment considerations for equipment and intangible assets, determination of fair value for stock-based compensation and other share-based payments, valuations and assumptions used to determine deferred income taxes and the fair value of financial instruments.

Foreign currency translation

The functional currency of each of the Company’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in United States dollars, which is the functional currency of the Company and its subsidiaries.

Transactions and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the period-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items or on settlement of monetary items are recognized in profit or loss in the statement of comprehensive loss in the period in which they arise, except where deferred in equity as a qualifying cash flow or net investment hedge.

Exchange differences arising on the translation of non-monetary items are recognized in other comprehensive loss in the statement of comprehensive loss to the extent that gains and losses arising on those non-monetary items are also recognized in other comprehensive loss. Where the non-monetary gain or loss is recognized in profit or loss, the exchange component is also recognized in profit or loss.

The financial results and position of foreign operations whose functional currency is different from the Company’s presentation currency are translated as follows:


	•	assets and liabilities are translated at period-end exchange rates prevailing at that reporting date; and

	•	income and expenses are translated at average exchange rates for the period.

Intangible assets

Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.

Internally-generated intangible assets - Research and development expenditure

Expenditure on research activities is recognized as an expense in the period in which it is incurred. An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognized if, and only if, all of the following have been demonstrated:


	1.	The technical feasibility of completing the intangible asset so that it will be available for use or sale;

	2.	The intention to complete the intangible asset and use or sell it;

	3.	The ability to use or sell the intangible asset;

	4.	How the intangible asset will generate probable future economic benefits;

	5.	The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

	6.	The ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognized for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognized, development expenditure is recognized in loss in the period in which it is incurred.

Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

As of March 31, 2016 and December 31, 2015, the Company has not recognized any internally-generated intangible assets.

Share-based payments

The Company operates a stock option plan. Share-based payments to employees are measured at the fair value of the instruments issued and amortized over the vesting periods. Share-based payments to non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The corresponding amount is recorded to the share-based payment reserve. The fair value of options is determined using the Black–Scholes Option Pricing Model. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognized for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest.

Financial instruments

The Company classifies its financial instruments in the following categories: at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale and financial liabilities. The classification depends on the purpose for which the financial instruments were acquired. Management determines the classification of its financial instruments at initial recognition.

Financial assets are classified at fair value through profit or loss when they are either held for trading for the purpose of short-term profit taking, derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Such assets are subsequently measured at fair value with changes in carrying value being included in profit or loss.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortized cost. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets.

Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the Company’s intention to hold these investments to maturity. They are subsequently measured at amortized cost. Held-to-maturity investments are included in non-current assets, except for those which are expected to mature within 12 months after the end of the reporting period.

Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not suitable to be classified as financial assets at fair value through profit or loss, loans and receivables or held-to-maturity investments and are subsequently measured at fair value. These are included in current assets. Unrealized gains and losses are recognized in other comprehensive loss, except for impairment losses and foreign exchange gains and losses.

Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortized cost. Derivative financial liabilities are classified at fair value through profit and loss and are subsequently measured at fair value with changes in carrying value being included in profit or loss.

Regular purchases and sales of financial assets are recognized on the trade-date – the date on which the Company commits to purchase the asset.

Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership.

At each reporting date, the Company assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a significant and prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen.

Impairment of long-lived assets

The carrying amount of the Company’s long-lived assets (which include equipment and intangible assets) is reviewed at each reporting date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. An impairment loss is recognized whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognized in the statement of comprehensive loss.

The recoverable amount of assets is the greater of an asset’s fair value less cost to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

An impairment loss is only reversed if there is an indication that the impairment loss may no longer exist and there has been a change in the estimates used to determine the recoverable amount, however, not to an amount higher than the carrying amount that would have been determined had no impairment loss been recognized in previous years.

Assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment.

Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less.

Income taxes

Current income tax:

Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from, or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date, in the countries where the Company operates and generates taxable income.

Current income tax relating to items recognized directly in other comprehensive loss or equity is recognized in other comprehensive loss or equity and not in profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred income tax:

Deferred income tax is provided using the asset and liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and recognized only to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

Equipment

Equipment is stated at historical cost less accumulated depreciation and accumulated impairment losses.

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 the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the statement of comprehensive loss during the financial period in which they are incurred.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized in profit or loss.

Depreciation and amortization are calculated on a straight-line method to write off the cost of the assets to their residual values over their estimated useful lives.

Liquidity and Capital Resources

The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management processes, inclusive of documented investment policies, counterparty limits, and controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows:

Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company’s primary exposure to credit risk is on its cash held in bank accounts. The majority of cash is deposited in bank accounts held with major banks in Canada and the United States. As most of the Company’s cash is held by two banks there is a concentration of credit risk. This risk is managed by using major banks that are high credit quality financial institutions as determined by rating agencies. The Company’s exposure to credit risk on its receivables is considered minimal as the balances are not significant.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis. The Company ensures that there are sufficient funds to meet its short-term business requirements, taking into account its anticipated cash flows from operations and its holdings of cash and cash equivalents.

Historically, the Company’s sole source of funding has been the issuance of equity securities for cash, primarily through private placements. The Company’s access to financing is always uncertain. There can be no assurance of continued access to significant equity funding. All of the Company’s non-derivative financial liabilities are due within one year.

The following is an analysis of the contractual maturities of the Company’s non-derivative financial liabilities as at March 31, 2016:


	Within one year		Between one and five years		More than five years

Trade payables and accrued liabilities	$	726,854	$	—	$	—

Foreign exchange risk

Foreign currency 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 does not hedge its exposure to fluctuations in foreign exchange rates.

The following is an analysis of the United States dollar equivalent of financial assets and liabilities that are denominated in Canadian dollars:


	March 31, 2016 (unaudited)			December 31, 2015

Cash and cash equivalents	$	428,021	$	295,019

Based on the above net exposures, a 1% change in the Canadian dollar to United States dollar exchange rate would impact the Company’s net loss by $4,280 and $2,905 at March 31, 2016 and December 31, 2015, respectively

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk on its cash equivalents as these instruments have original maturities of three months or less and are therefore exposed to interest rate fluctuations on renewal. A 1% change in market interest rates would have an impact on the Company’s net loss of approximately $1,000.

Capital Management

The Company’s policy is to maintain a strong capital base so as to maintain investor and creditor confidence and to sustain future development of the business. The capital structure of the Company consists of equity, comprising share capital, net of accumulated deficit. There were no changes in the Company’s approach to capital management during the period. The Company is not subject to any externally imposed capital requirements.

Fair Value

The fair value of the Company’s financial assets and liabilities approximates the carrying amount. Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:


•	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 or indirectly; and

•	Level 3 – Inputs that are not based on observable market data.

Financial liabilities measured at fair value at December 31, 2015 and2014 consisted of the derivative financial liability, which is measured using level 3 inputs.

Classification of financial instruments

Financial assets included in the statement of financial position are as follows:


Current Assets:	March 31, 2016 (unaudited)		December 31, 2015

Cash, cash equivalents and receivables
Cash and cash equivalents	$	587,636	$	521 521
Subscription receivable on share issuance		—		18,174

	$	587,636	$	539,695

_____________________
*The Goods and Services (“GST”) receivable is comprised of input taxes the Company has been charged by vendors on purchases of goods and services obtained in Canada. The Company is entitled to a refund of these input taxes from the Canada Revenue Agency, which is receives on a quarterly basis.

Financial liabilities included in the statement of financial position are as follows:


	March 31, 2016 (unaudited)		December 31, 2015

Non-derivative financial liabilities:
Trade payables	$	726,854	$	749,985
Derivative liabilities
Derivative financial liability – warrants		2,992,304		1,135,157

	$	3,719,158	$	1,885,142

Cash Flows

The following table summarizes the Company’s cash flows by activity and cash on hand for the three months ended March 31, 2016 and the year ended December 31, 2015:


Activity	Three Months Ended March 31, 2016 (Unaudited)			Year Ended December 31, 2015 (Audited)

Net cash used in operatingactivities		(610,144	)		(2,588,345	)
Net cash used in investingactivities		(1,295	)		(27,185	)
Net cash provided by financingactivities		677,554			2,588,664

Net increase (decrease) incash		66,115			(26,866	)
Cash at the beginning of theperiod		521,521			548,387

Cash at the end of theperiod		587,636			521,521

The Company reported working capital (deficit) of ($3,003,800) as of March 31, 2016 and ($1,186,488) at December 31, 2015. At March 31, 2016, the Company had cash of $587,636 compared to cash of $521,521 as of December 31, 2015. The increase of $66,115 for the three months ended March 31, 2016 is the result of a net loss for operational expenses and cash paid for equipment which are offset by proceeds of issuances of common stock shares in 2016. The Company anticipates its current cash and cash equivalents will be sufficient to fund operations for the next six months and is currently pursuing additional financing alternatives, including completing another private placement, to fund operations beyond one year.

Current assets excluding cash and cash equivalents at March 31, 2016 consisted of receivables of $3,145 and prepaid expenses of $124,577.

Current liabilities at March 31, 2016 consisted of accounts payable and accrued liabilities of $726,854 and the derivative financial liability of $2,992,304.

The Company may continue to have capital requirements in excess of its currently available resources. In the event the Company’s plans change, its assumptions change or prove inaccurate, or its capital resources in addition to projected cash flow, if any, prove to be insufficient to fund operations, the Company may be required to seek additional financing. There can be no assurance that the Company will have sufficient financing to meet its future capital requirements or that additional financing will be available on terms acceptable to the Company in the future.

Commitments

Employment Agreement

The Company has an agreement (the “Employment Agreement”) dated October 1, 2007, and amended July 31, 2008, with an officer of the Company under which the Company pays a fee for employee services at a base salary of $220,000 per annum. On April 30, 2010, the Board of Directors passed a resolution to increase this to $250,000 per annum and on May 13, 2011 passed a resolution to increase this to $275,000 per annum. The employee is entitled to receive options under the terms and conditions of the Company’s stock option plan. The employee will serve as the President and Chief Executive Officer of the Company. On April 5, 2012, the employment agreement was extended for an additional two years under the same terms. On April 5, 2014 the employment agreement was extended for an additional three years under the same terms.

The employee has the right, upon 30 days’ notice, to terminate the Employment Agreement. The Company may terminate the Employment Agreement on 10 days’ notice if for cause or on 60 days’ notice if without cause. Should the Company terminate the contract without cause, it is obligated to pay the employee an amount equal to three month’s base salary.

License Agreement

On March 31, 2004 the Company entered into a License Agreement with Rice University under which the University is entitled to receive: (i) 2% of the Company’s adjusted gross sales as defined in the License Agreement, and (ii) 2% of the adjusted gross sales of any sublicense as defined in the License Agreement.

Upon effectiveness of the agreement, the University also received common shares that corresponded to 10% of the Company’s outstanding capital stock on that date. To date, the Company has not generated any revenue; as such, the University has yet to receive compensation from the terms of the License Agreement. As per the agreement, the University was initially issued 1,000 shares at par value. Later, the Company subsidiary split its stock 555 to 1. As such, the University was issued a new certificate for 555,556 Natcore Delaware shares on October 5, 2007. Additionally, pursuant to the Company’s acquisition agreement regarding Syracuse Capital Group, the Company allowed shareholders to convert their Natcore Delaware shares into Syracuse shares at a ratio of 1 to 1.1. As a result, the University was issued 611,112 Syracuse shares, which eventually became the Company’s current shares after the corresponding name change. The License Agreement gives the Company an exclusive license to a certain United States patent and the related technology for low temperature growth of inorganic materials from solution using catalyzed growth and re-growth. The U.S. Provisional Patent Application for “Method for Low Temperature Growth of Inorganic Materials from Solution using Growth and Re-Growth” was filed on November 19, 2002 under Serial No. 60/427,392.

The following milestones were set forth in the preceding License Agreement. It was stipulated that first round funding would be secured within six months after the agreement was signed. Additionally, a milestone was set to award product development contract within nine months. Specifically, the milestone states that Phase 1, which involves the demonstration of film growth on large area wafers and the improvement of purity, should be completed in seven months. In addition, Phase 2, which involves the development of multiple wafer, high throughput process within two and a half years. Milestone 3 dictates that second round funding should be secured within two and a half years. Finally, milestones 4 and 5 detail certain staffing requirements. Milestone 4 requires that a Director of Product Development and Manufacturing, three in-house R&D staff and two business/operations managers, on the premise that money is available. Milestone 5 requires that a product qualification program be initiated within two and a half years, in which Natcore R&D personnel would be located on-site at performing organization. In turn, the qualification program should be completed within three years. While Milestones 1, 2 and 3 have been met, the milestones in all the license agreements with Rice University are considered best efforts projected to be achieved within the business and economic environment at the time they were formulated and are eligible to be renegotiated at any time.

Sponsored Research Agreement

On September 1, 2009, the Company has entered into a sponsored research agreement with Rice University to develop thin films incorporating silicon quantum dots. The initial term of the agreement is one year and the proposed budget is $100,000. Both the term and the funding can be extended by mutual agreement. As of the date of this filing the agreement has not been extended and no money has been paid to Rice University beyond the original $100,000.

China Joint Venture

On June 22, 2010 the Company formed a joint venture (“Natcore Technology (Zhuzhou) Co., Ltd.”) with a consortium in China to develop and manufacture film-growth equipment and materials using the Company’s proprietary Liquid Phase Deposition technology licensed from Rice University. Natcore Technology (Zhuzhou) Co., Ltd. will be 55% owned by the Company, with the Zhuzhou Hi-Tech Industrial Development Zone and a Chinese firm that is currently a producer of polysilicon and a manufacturer of industrial equipment used in the solar industry (together, the “Chinese Partnership”) holding the remaining 45% ownership position. Natcore Technology (Zhuzhou) Co., Ltd. will be funded by an initial $3 million investment consisting of $500,000 contributed by the Company and $2,500,000 contributed by the Chinese Partnership. Natcore Technology (Zhuzhou) Co., Ltd. will have the exclusive right to develop, manufacture and sell AR film-growth equipment in China, and a five-year exclusive right to manufacture such equipment for sale outside of China. The Company’s Board of Directors has not approved funding for the joint venture consequently no funding has been made, the joint venture has not taken place as of this filing.

Research and Development Facility

On June 1, 2013, the Company entered into a new two year lease for its research and development facility in Rochester, New York, pursuant to which the Company agreed topay a base rent of $103,596 per year in monthly installments of $8,633. The lease was set to expire on June 30, 2015. On June 26, 2015, the Company extended the lease from July 1, 2015 to June 30, 2017 at a base rent of $105,212 per year in monthly installments of $8,768.

Administrative Office Lease

On August 1, 2013, the Company entered into a new three year lease agreement for its administrative office. The Company will pay a base rent of $22,000 per year in monthly installments of $1,833. After year one the annual rent will increase 3% for each year of the lease, the lease expires on July 31, 2016. The Company is in negotiations to extend this lease agreement.

Patent License Agreement

On December 12, 2011 the Company entered into a Patent License Agreement with the National Renewable Energy Laboratory (“NREL”) to use certain licensed patents for technologies for creating a black silicon antireflection layer integrated into high efficiency solar cells. The patents include: “Nanoparticle-Based Etching of Silicon Surfaces” under Patent Application No. 8,075,792; “Anti-reflection Etching of Silicon Surfaces Catalyzed with Ionic Metal Solutions” under Application No. 12/053,445; “Wet-Chemical Systems and Methods for Producing Black Silicon Substrates” under Application No. PCT/US10/56417; “Forming High-Efficiency Silicon Solar Cells Using Density-Graded Anti-Reflection Surfaces” under Application No. 12/797,590; “Efficient Black Silicon Photovoltaic Devices with Enhanced Blue Response” under Application No. PCT/US11/27479; and “Copper-Assisted, Anti-Reflection Etching of Silicon Surfaces under Application No. 13/423,745. The Company agrees to pay a running royalty of two and one half percent (2.5%) on all Net Sales of Licensed Products (excluding Licensed Chemicals) sold by or on behalf of Licensee. The Company also agrees to pay an annual running royalty of ten percent (10%) of Net Sales of Licensed Chemicals sold by or on behalf of Licensee.Should the running royalty not achieve $25,000, then the Company would have to pay the difference up to $25,000. The License Agreement estimates that the Company’s estimated contribution is $100,000 a year. NREL’s estimated in-kind contribution is $50,000, conditioned on available funding. While neither party will have an obligation to continue performance of its work at a contribution in excess of the estimated amount, each party shall provide at least thirty days’ notice if complete performance will exceed the estimated costs.

The License Agreement was amended on July 27, 2012 in order to modify a section of the License pertaining to Licensed Intellectual Property. The modification entailed the specific titles and application numbers of the licensed patents. The License Agreement was further amended on January 30, 2014 to delete and replace Exhibit C, 2) Market Milestones.

The License Agreement gives the Company an exclusive license to the aforementioned patents for the development of a commercial manufacturing process for both multicrystalline and monocrystalline solar cells that combines the Company’s passivation technology.All patent license agreements are for the duration of the life of the patent as established by the USPTO when the patent is granted.

The License Agreement is subject to early termination. Either the Company or NREL has the right to terminate the License Agreement with cause and without judicial resolution upon written notice to the other in the case of a breach of the License Agreement. The Company shall provide NREL will sufficient advance funds to maintain approximately 90-day advance of funds during the entire period of work. No work shall begin before the receipt of a sufficient cash-advance. If the Company fails to provide the necessary advance funds is cause for termination by NREL. Further, the License Agreement shall terminate automatically upon a final adjudication of invalidity, unenforceability, or the extinguishment of all Licensed Patents, for any reason. In addition, NREL may terminate the License Agreement if the Company fails to satisfy the requirements set forth in Exhibit B and C of the License Agreement, attempts to transfer the Company’s rights under the License Agreement or the Company becomes a party to a Bankruptcy proceeding. Exhibit B outlines the financial considerations of the License Agreement: specifically concerning the Fields of Use, the Upfront Fee of $20,000, the Continuous Royalty Rate Structure due by the Company, the Subleasing Royalties due by potential Sub-Licensees, and states the minimum annual payment must be at least $25,000.Exhibit C outlines the technical and marketing milestones pursuant to this agreement. Specifically, the agreement also outlines certain market milestones for the parties. The first milestone stipulates the achievement of cumulative Net Sales of Licensed Products in excess of $1 million on or before December 1, 2014. This milestone has not been met by the company. Milestones for cumulative Net Sales of Licensed Products in excess of $2 million and $3 million are set for December 1, 2015 and December 1, 2016, respectively. The Company believes, based on conversation with representatives from NREL, that all such milestones are eligible for renegotiation as desired by the Company. The License Agreement shall automatically terminate if the Company attempts to pledge its rights under the License Agreement as collateral to a third party. The Company may terminate the License Agreement upon sixty days prior notice to NREL provided that all outstanding fees, reimbursements and royalties (as detailed in the License Agreement) are satisfied.

In March 2012, the Company opened its Research and Development Center (the “R&D Center”) in Rochester, NY. The R&D Center enables Natcore to develop applications based on the company’s proprietary liquid phase deposition technology. On June 1, 2013, the Company entered into a new two year lease for its research and development facility in Rochester, New York. The Company will pay a base rent of $103,596 per year in monthly installments of $8,633. The lease was set to expire on June 30, 2015. On June 26, 2015, the Company extended the lease from July 1, 2015 to June 30, 2017 at a base rent of $105,212 per year in monthly installments of $8,768.

Depiction of Contractual Obligations – Tabular disclosure of Contractual Obligations


			Payments by periods as of March31, 2016 (unaudited)
	Total		less than 1 year		1 - 3 years		3 - 5 years		> 5 years

Contractual Obligations:
Operating lease	$	139,299	$	112,995	$	26,304
Contract payments obligations		175,000		50,000		50,000		50,000		25,000

Total	$	314,299	$	162,995	$	76,304	$	50,000	$	25,000


Type	Description of Commitment	Amount	Exhibit

Employment Agreement	President and CEO’s employment agreement	$275,000/year plus stock options,	10.1

License Agreement & Amendments	Gives Company exclusive license from Rice University for certain patents.	2% Company’s adjusted Gross Sales under License and Sublicense agreement	10.2, 10.3

Sponsored Research Agreement & Amendments	Rice University to develop products.	$100,000/year	10.4, 10.5

Research & Development Facility Lease	Two (2) year renewable lease for facility beginning June 1, 2013 and expiring June 30, 2015	$103,596/year	10.6, 10.7

Administrative Office Lease	Three (3) year lease beginning August 1, 2013 and expiring on July 31, 2016	$22,000 per year with a 3% increase each year	10.15

Exclusive Patent License Agreement& Amendments	Agreement to use certain licensed patents. Agreement with National Renewable Energy Laboratory for exclusive use of patent.	$25,000 per annum plus royalties	10.8, 10.9, 10.10

Cooperative Research and Development Agreement	Agreement to develop a commercial manufacturing process for both multicrystalline and monocrystalline solar cells	$100,000 initial contribution	10.11

China Joint Venture	Agreement to develop and manufacture film-growth equipment and materials	Not Applicable at this time	10.12, 10.13

Related party transactions and balances

As of March 31, 2016 and December 31, 2015 there was $204,060 and $204,060, respectively, owed to directors, officers, and companies controlled by directors that has been included in trade payables and accrued liabilities.

Key Management Personnel Compensation


	Three Months Ended March 31, 2016 (unaudited)		Year Ended December 31, 2015

Administrative fees	$	15,000	$	60,000
Consulting		—		100,200
Wages and benefits		104,698		558,320

	$	119,698	$	718,520

Quantitative and Qualitative Disclosure about Market Risk

Natcore is exposed to market risks arising from its normal business activities. These market risks, which are beyond the Company’s control, principally involve the possibility that changes in interest rates, exchange rates or commodity prices will adversely affect the value of its financial assets and liabilities or future cash flows and earnings. Market risk is the potential loss arising from adverse changes in market rates and prices.

Impact of Inflation and Currency Fluctuations

Because the majority of Natcore’s revenue is paid in or linked to the U.S. dollar, Natcore believes that inflation and fluctuation in the CAD/dollar exchange rate has limited effect on its results of operations. However, a portion of the cost of its Canadian operations, mainly personnel, is incurred in CAD. Because some of Natcore’s costs are in CAD, inflation in CAD/dollar exchange rate fluctuations does have some impact on the Company’s expenses and, as a result, on its net income. Natcore’s CAD costs, as expressed in dollars, are influenced by the extent to which any increase in the rate of inflation in Canada is not offset, or is offset on a delayed basis, by a devaluation of the CAD in relation to the dollar.

Natcore does not engage in any hedging or other transactions intended to manage risks relating to foreign currency exchange rate or interest rate fluctuations. However, Natcore may in the future undertake hedging or other similar transactions or invest in market risk-sensitive instruments if its management determines that it is necessary or advisable to offset these risks.

BUSINESS

Overview

Event	Target Date	Cost

Research and development for the Company’s technologies, including identifying additional applications	Ongoing	Not known
Additional patent and other intellectual property applications	Ongoing	Not known

Natcore is not aware of any material market controls or regulations within the technology sector which might affect the marketing of its technologies.

The Company’s History and Development

Natcore was a capital pool company ⁴ until it completed a Qualifying Transaction on May 8, 2009. The Qualified Transaction involved a reverse take-over of Syracuse Capital Corp. by Natcore Technology Inc., a Delaware company, which is now a wholly owned subsidiary of the Company. Syracuse Capital Corp. was a company incorporated under the British Columbia Business Corporations Act and a Capital Pool Company, having its common shares listed on the TSX Venture Exchange under the trading symbol “SYU.P.”

___________________
⁴ The Capital Pool Company program is a two-step listing process offered by the TSX Venture Exchange. In step one, a new company(a “Capital Pool Company”) is listed on the TSX Venture Exchange as an initial public offering. In step two (the “Qualifying Transaction”), the Capital Pool Company acquires an asset or completes a transaction with a private business which results in the listing of the acquired business on the TSX Venture Exchange. If the acquired business can meet the minimum listing requirements of the Toronto Stock Exchange (the “TSX”); it can be directly listed on the TSX at the closing of the Qualifying Transaction. The listing of a business via the Capital Pool Company program can be more cost and time efficient than a listing through a traditional initial public offering.

Competitive Landscape

Competitive Strengths

Natcore is a research and development company utilizing nanotechnology with a variety of applications in the solar industry. Although there are many potential applications of its research, the Company has focused on three opportunities that are the closest to commercialization and revenue.

Black Silicon

Firstly, the Company’s black silicon process stands to revolutionize solar energy production. For example, its black silicon has demonstrated the least amount of reflectance ever recorded, with 99.7% absorption. The Company has also recently demonstrated, in conjunction with CETC in China, that its black silicon process is perhaps the only such process suited for a commercial production line.

Methods for making black silicon can be divided into two broad categories: dry processes and wet processes. The dry processes can be further subdivided into two types: reactive ion etching (RIE) and laser ablation (L-A). The wet process is a metal assisted chemical etch, or MACE, process. A variety of research organizations and companies are actively working in each of the three principle areas. Natcore has licensed the MACE process developed and patented by NREL and has moved it from a laboratory process for making small area solar cells (typically 1cm x 1cm or 2cm x 2cm) to a commercially scalable process on full size (15.6cm x 15.6cm) solar cells. While there have been (and still are) several universities and research institutes releasing results on making black silicon by any of several variations of the dry processes, there is as yet no announcement by any company of a commercial scale-up of any of those approaches.

The principle reasons for the lack of scale-up using reactive ion etching or laser ablation are that the equipment for either one is costly and can process only a few wafers at a time. The Natcore-scaled MACE process, on the other hand, is inherently capable of standard solar cell wet chemical processing rates using much simpler and lower cost equipment. Using black silicon will move an 18% standard cell to the 18.5% range while at the same time potentially lowering its cost by as much as 10%, a very significant result in a large competitive market.

The benefit of black silicon is that it is projected to reduce the cost of solar cell manufacturing by approximately 20%. This is done by replacing the antireflective step in manufacturing and by eliminating one of the high- temperature furnaces currently involved in the process.

Laser / HIT ™ Cell —Back Contact

With its black silicon processing technology now in hand, Natcore has turned its attention to coupling that technology with a process for eliminating the top contacts on solar cells. Doing so will eliminate the reflectance losses from the metal fingers and bus bars that usually sit on the top of the cell. That in turn will increase cell efficiency by 3 to 4 percentage points. The company’s laser processing program is focused on a certain style of solar cell known as the silicon heterojunction (SHJ) solar cell, often referred to as a HIT™ cell. The highest efficiency solar cells require high levels of surface passivation to eliminate unwanted loss of electrical current. This requirement for passivation is often at odds with the fact that electrical contacts, needed to extract electricity from the cell, are regions that are very poorly passivated. In the SHJ cell, the contacts to the cell involve a heterojunction between crystalline and amorphous silicon, and this heterojunction can simultaneously function as an excellent passivation and an electrical contact.

Recently, an all-back-contact SHJ-structure with a 25.6% conversion efficiency was reported — the highest efficiency ever reached for a silicon solar cell. That cell, however, was produced using a relatively complicated, higher-cost process. Natcore believes that with its laser process it can significantly simplify the processing of such cells, while retaining the performance and efficiency benefits.

Natcore’s recent breakthroughs with lasers include a first laser-processed, all low-temperature solar cell, and a back-contact solar cell using laser processing.

Applying both improvements to today’s standard 18% cells will move the efficiency to the mid-20% range and potentially lower the cost by up to another 10%.

Combining Natcore’s black silicon application with its laser processing techniques will eliminate both of the high-temperature furnaces currently used in solar cell manufacturing. As a result, the Company’s applications promise to not only drastically reduce manufacturing costs, but also eliminate the need for toxic and highly dangerous silane gas, enabling manufacturers to reduce toxic waste and produce cells in a much safer and more environmentally friendly way.

“Best-Of-Breed” Consulting Function

The best-of-breed business model entails Natcore contracting as a consultant on the design and construction of solar cell/solar panel fabrication facilities and power plants, with compensation on a “cost-plus” basis as well as unencumbered equity in the project.

Natcore will guide clients in procuring components of the highest available quality at highly competitive prices, taking advantage of the Company’s preferential status in the industry. Because the Company has no biases as to which components to buy or which vendors to employ, it believes it has a competitive advantage in providing best-of-breed products with appropriate warranties and efficiencies.

The Company is entering this arena due to numerous requests by companies and countries to aid them in developing solar cell facilities. These requests have come as Natcore’s technology has moved dramatically closer to commercialization and gained a high profile in the industry.

This is why the Company developed its best-of-breed business model — to give companies and countries an opportunity to have, as a worst case scenario, the best and most efficient solar cells and modules that exist with current technology. Additionally, its partners will enjoy some level of exclusive access to the Companies technologies as they are commercialized.

Tandem Quantum Dot Solar Cell

In addition to its three near-term opportunities, Natcore is pursuing research into tandem, quantum-dot solar cells that, while longer term, holds the potential to be a disruptive application for solar energy.

Multiple depositions of Liquid Phase Deposition layers with appropriate quantum dots distributed in them to form two p-n junctions will create a structure called a tandem solar cell. Such cells were first proposed shortly after the first commercially useful solar cell was invented in 1956. Solid theoretical understanding of how such solar cells work and how to construct them was developed by the early 1970s, and they are now commercial products for earth-orbiting satellite power systems.

Predictions are that two junction tandem cells can be as much as 35% efficient in terrestrial sunlight and three junction tandem cells can reach the lower 40% range. Creating a two-junction tandem cell by adding a quantum dot upper cell to the top of a standard silicon cell can theoretically increase the efficiency of the structure to the 30% range. Allowing for real-world losses in such a structure, the output of a quantum-dot-on-silicon, two- junction device should in the 27% to 28% range and will be at least 50% higher than a conventional silicon cell at today’s average commercial efficiencies (about 18% in production). Adding a two-junction quantum dot tandem cell to a standard silicon cell should create a three-junction device with efficiencies up to twice that of a standard silicon cell by itself.

Revenue Sources

The Company anticipates the following potential sources of revenue from the implementation of its solar cell manufacturing processes:

License Agreements & Royalties

Customers will be required to execute non-exclusive license agreement or exclusive license agreement unique to specified jurisdictions. Royalty rights will entitle the company to benefit from residual income on each product that utilizes the company’s technology.

Equipment Sales

Natcore will sub-contract the manufacturing of the equipment necessary to apply the black silicon process and the laser equipment for the all back contact HIT cell. There will be a royalty payable to Natcore on each piece of equipment.

Chemical and Material Sales

The Company will produce recurring revenue by engaging third-parties to manufacture and ship the patented chemical mixtures and other materials for the various applications. The company understands that there may be situations where all four sources of revenue may not be available given market conditions and the appetite of different customers.

THERE MAY BE SITUATIONS WHERE ALL FOUR SOURCES OF REVENUE (OR ANY REVENUE AT ALL) MAY NOT BE AVAILABLE GIVEN MARKET CONDITIONS AND CUSTOMER REQUIREMENTS.

Intellectual Property Assets

As of June 6, 2016, the Company had 27 granted patents and 36 patents pending, including but not limited to the following:

Patent 7,999,176 - Expiration date: 5/18/2029 – Nanostructured solar cells.

Patent 8,431,818 - Expiration date: 5/5/2030 – Solar cells and photodetectors with semiconducting nanostructures .

Improved photovoltaic devices and methods are disclosed. In one embodiment, an exemplary photovoltaic device includes a semiconductor layer and a light-responsive layer (which can be made, for example, of a semiconductor material) which form a junction, such as a p-n junction. The light-responsive layer can include a plurality of carbon nanostructures, such as carbon nanotubes, located therein. In many cases, the carbon nanostructures can provide a conductive pathway within the light-responsive layer. In another embodiment, an exemplary photovoltaic device can include a light-responsive layer made of a semiconductor material in which is embedded a plurality of semiconducting carbon nanostructures (such as p-type single-wall carbon nanotubes). The interfaces between the semiconductor material and the semiconducting carbon nanostructures can form p-n junctions. In yet other embodiments, exemplary photovoltaic devices include semiconductor nanostructures, which can take a variety of forms, in addition to the carbon nanostructures. Further embodiments include a wide variety of other configurations and features. Methods of fabricating photovoltaic devices, as well as nanostructured photodetectors, as also disclosed.

Patent 8,433,417 - Expiration date: 12/12/2029 – Carbon nanostructure artificial retinal implant.

A retinal implant can include an array of photoreceptors adapted for positioning in the eye. Each photoreceptor can include a core, for example a carbon nanostructure, and a shell. The shell can include a light-responsive layer, and in many cases, the light-responsive layer can be formed of two semiconductor layers forming a heterojunction. The photoreceptors can be adapted to generate an electric field in response to incident light so as to stimulate a retinal neuron in its vicinity. The photoreceptors can be micron-sized or nano-sized, and can be arranged in densities similar to the density of rods and cones in the human eye. In one embodiment, an exemplary sensor for an imaging device can include a plurality of photosensors disposed on a substrate. Each photosensor can include a carbon nanostructure, a light-responsive layer coating at least a portion of the carbon nanostructure.

Patent 7,718,550 - Expiration date: 1/16/2026 – Method for Low Temperature Growth of Inorganic Materials from Solution Using Catalytic Growth and Re-growth.

The present invention involves a method and apparatus for depositing a silicon oxide onto a substrate from solution at low temperatures in a manner that produces homogeneous growth of the silicon oxide. The method generally comprises the following steps: (a) chemically treating a substrate to activate it for growth of the silicon oxide, (b) immersing the treated substrate into a bath with a reactive solution, (c) regenerating the reactive solution to allow for continued growth of the silicon oxide. In another embodiment of the present invention, the apparatus includes a first container holding a reactive solution, a substrate on which the silicon oxide is deposited, a second container holding silica, and a means for adding silica to the reactive solution

Patent 7,253,014 - Expiration date: 11/19/2023 –Fabrication of light emitting film coated fullerenes and their application for in-vivo light emission.

A nanoparticle coated with a semiconducting material and a method for making the same. In one embodiment, the method comprises making a semiconductor coated nanoparticle comprising a layer of at least one semiconducting material covering at least a portion of at least one surface of a nanoparticle, comprising: (A) dispersing the nanoparticle under suitable conditions to provide a dispersed nanoparticle; and (B) depositing at least one semiconducting material under suitable conditions onto at least one surface of the dispersed nanoparticle to produce the semiconductor coated nanoparticle. In other embodiments, the nanoparticle comprises a fullerene. Further embodiments include the semiconducting material comprising Cadmium Sulfide (CdS) or Cadmium Selenide (CdSe).

Patent 7,682,527 - Expiration date: 11/19/2023 – Fabrication of light emitting film coated fullerenes and their application for in-vivo light emission.

Patent 7,491,376 - Expiration date: 3/5/2027 – Chemical derivatization of silica coated fullerenes and use of derivatized silica coated fullerenes.

This invention is directed to a new composition of matter in the form of chemically derivatized silica coated fullerenes, including silica coated C.sub.60 molecules and silica coated carbon nanotubes, processes for making the same and to uses for the derivatized silica coated fullerenes. (Derivatization of silica coated fullerenes refers to chemically modifying surface of the silica to have a similar chemical structure but different chemical reactions with specifically chosen reagents.) Included among many uses in chemical, physical or biological fields of use, but not limited thereto, are high speed, low loss electrical interconnects for nanoscale electronic devices, components and circuits. In one embodiment, this invention also provides a method for preparing silica coated fullerenes having substituents attached to the surface of silica coated fullerenes by reacting silica coated fullerenes with a wide range of organic or inorganic chemical species in a gaseous or liquid state. Preferred substituents include but are not limited to organic groups and organic groups containing heteroatoms (i.e. non-carbon atoms) such as oxygen, nitrogen, sulfur, and halogens. The identity of the surface functional group is chosen to provide desirable properties to the silica coated fullerenes including but not limited to solubility, miscibility, stickiness, and melting point. The present invention also describes the application of surface functionalized silica coated fullerenes as components of polymer blends and composites (i.e. the surface is treated with certain substances that allow the silica to react to certain other specific materials).

Patent 7,692,218 - Expiration date: 8/21/2025 – Method for creating a functional interface between a nanoparticle, nanotube or nanowire, and a biological molecule or system.

A field effect transistor and a method for making the same. In one embodiment, the field effect transistor comprises a source; a drain; a gate; at least one carbon nanotube on the gate; and a dielectric layer that coats the gate and a portion of the at least one carbon nanotube, wherein the at least one carbon nanotube has an exposed portion that is not coated with the dielectric layer, and wherein the exposed portion is functionalized with at least one indicator molecule (i.e. has a specific molecule attached to the nanoparticle that will attach only to certain desired molecules out of a broad mixture of molecules). In other embodiments, the field effect transistor is a biochem-FET.

Research and Development

Natcore’s research and development efforts have produced technological advancements in the solar wafer production arena as detailed in other parts of this prospectus. The Company has spent approximately $1.2 million for the year ended December 31, 2015and $1.6 million for the year ended December 31, 2014 on research and development. These amounts were spent on the development or improvement of its technologies primarily in Selective Emitter, Black Silicon, Liquid Phase Deposition Passivation and Laser Processed Back Contact Solar Cells. The Company intends to continue to research and develop these technologies for the next 36-48 months, with an increasing focus on laser processing methods. There can be no assurance that the Company can achieve any or all of its research and development goals.

Sales and Marketing

At this time Natcore’s focus is primarily on research and development as described in other parts of this Prospectus. The Company currently has not produced any products that have recognized any revenue, as it is still in the development stage for many of its applications. The Company plans to continue to research and develop these various technologies to commercial readiness in stages over the next 36-48 months; as a result the Company does not need a direct sales force in the foreseeable future. Natcore will market its technology though the industry with its current management and research and development staff.

Government Regulation

Any new government regulation that affects solar power products and technologies, whether at the foreign, federal, state, or local level, including any regulations relating to installation and service of these systems, may increase its costs and the price of its systems. As a result, these regulations may have a negative impact on the Company’s revenue and profitability and thereby harm its business, prospects, results of operations, or financial condition.

Employees

As of May 31, 2016 the Company had 13 full-time employeescompared to 14 full-time employees as of December 31, 2014. Natcore’s ability to succeed depends, among other things, upon the Company’s continuing ability to attract and retain highly qualified technical specialists, administrative and managerial personnel.

Facilities

The Company’s administrative offices are located at 189 N. Water Street, Rochester, New York, New York, 14604-1163. The Company also maintains a research and development laboratory in the Eastman Kodak Company’s Eastman Business Park, in the City of Rochester, New York.

Environmental

Natcore believes that its operations comply in all material respects with applicable laws and regulations concerning the environment. While it is impossible to predict accurately the future costs associated with environmental compliance and potential remediation activities, compliance with environmental laws is not expected to require significant capital expenditures and has not had, and is not expected to have, a material adverse effect on the Company’s earnings or competitive position.

Legal Proceedings

The Company is not currently involved in any litigation believed to be material to the development of the Company’s business objectives or the Offering. To the best of the Company’s knowledge, no litigation is pending or threatened.

Administrative Proceedings

The Company is not currently involved in any administrative proceedings to be material to the development of the Company’s business objectives or the Offering. To the best of the Company’s knowledge, no such proceedings are pending or threatened.

MANAGEMENT

British Columbia Law as it Relates to Directors

The Business Corporations Act (British Columbia) (the “BCBCA”) requires that every director who is a party to a material contract or transaction or a proposed material contract or transaction with a corporation, or who is a director or officer of, or has a material interest in, any person who is a party to a material contract or transaction or a proposed material contract or transaction with the corporation, shall disclose in writing to the corporation or request to have entered in the minutes of the meetings of directors the nature and extent of his or her interest, and shall refrain from voting in respect of the material contract or transaction or proposed material contract or transaction unless the contract or transaction is: (a) an arrangement by way of security for money lent to or obligations undertaken by the director for the benefit of the corporation or an affiliate; (b) one relating primarily to his or her remuneration as a director, officer, employee or agent of the corporation or an affiliate; (c) one for indemnity of or insurance for directors as contemplated under the BCBCA; (d) one relating to a loan to the corporation and the director or senior office, or person in whom the director or senior officer has a material interest is or is to be a guarantor of some of all of the loan; or (e) one with an affiliate. However, a director who is prohibited by the BCBCA from voting on a material contract or proposed material contract may be counted in determining whether a quorum is present for the purpose of the resolution, if the director disclosed his or her interest in accordance with the BCBCA and the contract or transaction was reasonable and fair to the corporation at the time it was approved.

Natcore’s articles of incorporation provide that the directors shall from time to time determine by resolution the remuneration to be paid to the directors, which shall be in addition to the salary paid to any officer or employee who is also a director. The directors may also by resolution award special remuneration to any director in undertaking any special services on its behalf other than the normal work ordinarily required of a director of Natcore.

Natcore’s articles of incorporation also provide that the Company may, if authorized by the directors: (a) borrow money upon the credit of the Company’s company; (b) issue, reissue, sell or pledge bonds, debentures, notes or other evidences of indebtedness or guarantee, whether secured or unsecured; (c) to the extent permitted by the BCBCA, guarantee the repayment of money by any other person or the performance of the obligation of any other person; and (d) mortgage, charge or otherwise create a security interest in the whole or any part of the present and future assets and undertaking of the Company.

Directors and Executive Officers of Natcore Technology, Inc.

The directors and executive officers of the Company, as of the date of this Prospectus, as well as their positions, are listed below:

Charles Provini, Director, President & Chief Executive Officer

Mr. Provini holds an Engineering degree from The U.S. Naval Academy in Annapolis, Maryland and a Masters from the University of Oklahoma. Previously, he was the President of Ladenburg Thalmann Asset Management and a Director of Ladenburg Thalmann, Inc., one of the oldest members of the New York Stock Exchange from 11/1997- 10/2000. He served as President of Laidlaw Asset Management as well as Chairman and Chief Investment Officer of Howe & Rusling, Laidlaw’s Portfolio Management Advisory Group from 11/1995- 09/1997. Prior to this, he served as President of Rodman & Renshaw’s Advisory Services from 02/1994- 08/1995 and President of LaSalle Street Corporation, a wholly-owned subsidiary of Donaldson, Lufkin & Jenrette from 01/1983-04/1985. Mr. Provini has been a leadership instructor at the U.S. Naval Academy, Chairman of the U.S. Naval Academy’s Honor Board, and is a former Marine Corp. officer. Mr. Provini has been a director, President and Chief Executive officer of the Company since May 8, 2009.

John Meekison , Director

Mr. Meekison has been a director of the Company since August 9, 2007 and is a founder and Chief Financial Officer of Vancouver based iCo Therapeutics Inc. (“iCo”) (from 03/2005- Present), a biopharmaceutical company developing clinical stage drugs for ophthalmic (eye) diseases. In his capacity as Chief Financial Officer, he manages all accounting, finance, risk management, investor relations and human resource activities for iCo. He also works closely with the rest of the iCo’s executive team in business strategy, license renegotiations and merger and acquisitions activities. Mr. Meekison was an investment banker with a specialization in both the life sciences and technology sector at Haywood Securities Inc. (10/1991-02/2000), Diouhy Merchant Group Inc. (10/2001-12/2002), and Pacific International Securities Inc., now PI Financial group (03/2004-03/2005). He has also acted as the Chief Financial Officer for a TSX listed company developing a novel clinical diagnostic platform from 02/2003-2004, where Mr. Meekison supervised all public reporting functions and accounting and finance functions. He is also the director of Pacific Cascade Minerals Inc. and a member of the audit committee and the Chief Financial Officer, a director, and member of the audit committee for Sojourn Ventures, Inc. Mr. Meekison received his Bachelor of Arts from the University of British Columbia and is a certified Investment Manager and Professional Logistician.

Brien F. Lundin , Chairman of the Board

Brien Lundin has been a director of the Company since May 8, 2009. He was appointed as Chairman of the Board on September 30, 2013. The president/CEO of Jefferson Financial, Inc. since 2003, Mr. Lundin is a marketer, investor and investment banker with experience in financing and advising early-stage technology and natural resource enterprises. Mr. Lundin has been the operator of the New Orleans Investment Conference since 2003. Mr. Lundin is also a director and member of the audit committee for Thunderstruck Resources Ltd. and Sojourn Ventures, Inc.

John C. Calhoun , Director

Mr. Calhoun has over 20 years of experience in corporate finance. Mr. Calhoun has served as managing director of Fort Hill Resources since 1997, president/director of North American Water from 1998-2004, president/director of Grammercy Investments from 2000-presemt, president/director of Vignette Publications, treasurer/director of Computer Wholesale Corporation from 1995-2001, and managing director of the Shadows Bend Court long-term care facility from 2001-present. He is the founder/director of FNBC Bank (2005-present), the largest, De Novo bank in Louisiana and the founder and managing director of the Suites at Sugar Mill Point and Oak Grove Senior Living (2002-present), long term care facilities. Mr. Calhoun has been a director of the Company since May 8, 2009.

Richard Childs , Chief Financial Officer

Mr. Childs has a forensic accounting practice that serves more than 100 lawyers across the United States. He is a member of the American Institute of Certified Public Accountants and the Society of Certified Fraud Examiners, as well as a member of the New Jersey State Society of CPAs. In the private sector, he served for six years as Vice President, Director of Finance and Internal Security for Deak-Perera, the foreign exchange, Swiss banking and precious metals company. In the government sector, he has served as a fraud investigator for the Office of the (NJ) Attorney General; the Supervising Accountant for the Essex County (NJ) Division of Accounts and Control; and, most recently, as the Chief of the Union County (NJ) Sheriff’s Department Economic Crime/Inspection Bureau. He has frequently provided expert testimony in economic crime cases in Federal and New Jersey state courts and the New Jersey grand jury. Mr. Childs holds a Bachelor of Science degree in accounting from Rutgers University.

Dennis J. Flood, Chief Technology Officer

Dennis Flood, PhD, is a co-founder of and technical consultant to Natcore. He is also President and CEO of North Coast Initiatives, Ltd. (05/2001-present), a consulting firm providing management and technical services to the photovoltaic (PV) energy conversion industry. Dr. Flood has more than 30 years of experience in developing solar cell and array technology. Prior, Dr. Flood was Chief of the Photovoltaic and Space Environments Branch at the NASA Glenn Research Center in Cleveland, Ohio (from 06/1985-06/2000), where he lead Agency programs in advanced photovoltaic systems development. He served as Chair of the Institute of Electrical and Electronics Engineers (IEEE) Photovoltaic Devices Technical Committee from 1998-2005. And he currently serves on the International Advisory Committees of the European, the U.S., the Japan/Asia and the World Photovoltaic Conference organizing committees (from 1992-present).

Shauna Hartman , Corporate Secretary.

Shauna Hartman obtained her law degree from the University of British Columbia in 2001 and holds a Bachelor of Commerce from Saint Mary’s University. She has practiced corporate and securities law for Canadian listed companies with Armstrong Simpson since 2003. She also held the title of corporate secretary at International Enexco Ltd. (02/2008-06/2014), Elissa Resources Ltd.(03/2011-present), and Doxa Energy Ltd.(04/2010-present), all listed on the TSX Venture Exchange.

Interests of Directors, Executive Officers, Promoters and Principal Holders

The following table provides the specified information about each director, executive officer and promoter of the Issuer and each person who directly or indirectly beneficially owns or control 10% or more of any class of voting securities of the Company.


Name and Municipality of Principal Residence	Positions held with the Issuer	Number of Common Shares ⁽¹⁾

Charles Provini, Delray Beach, Florida, USA	Director, President and CEO	1,300,000
John Meekison, Vancouver, B.C., Canada	Director	10,000	⁽²⁾
Brien Lundin, Metairie, LA, USA	Chairman of the Board	3,006,223	⁽³⁾
John Calhoun, New Orleans, LA, USA	Director	640,900
Dennis Flood, Columbus, OH, USA	Chief Technology Officer	985,500	⁽⁴⁾
Shauna Hartman, Surrey, B.C., Canada	Corporate Secretary	Nil

Notes:
________________________


(1)	Does not include options or warrants held by directors and officers of the Company.
(2)	All of which shares are held by Mr. Meekison’s spouse.
(3)	Of which 1,906,223 shares are held directly and 1,100,000 shares are held through Jefferson Financial Inc.
(4)	Of which 15,500 shares are held directly and 970,000 shares are held through North Coast Initiatives Ltd.

There are no loans or debentures due to or from the directors, management, promoters and principal holders of the Company.

Corporate Governance Practices

General

The Board believes that good corporate governance improves corporate performances and benefits all shareholders. The Canadian Securities Administrators (the “CSA”) have adopted NP58-201, which provides non-prescriptive guidelines on corporate governance practices for reporting issuers such as the Company. In addition, the CSA have implemented NI58-101, which prescribes certain disclosure by the Company of its corporate governance practices.

This section sets out the Company’s approach to corporate governance and addresses the Company’s compliance with NI 58-101.

B oard of Directors

The Board of Directors (the “Board”) facilitates its exercise of independent supervision over management by ensuring that the Board is composed of a majority of independent directors. Directors are considered to be independent if they have no direct or indirect material relationship with the Company. A “material relationship” is a relationship which could, in the view of the Company’s board of directors, be reasonably expected to interfere with the exercise of a director’s independent judgment. The Board is comprised of four directors, three of which are considered to be independent. Mr. Lundin, Calhoun and Meekison are considered to be independent directors for the purposes of NI 58-101and the Company’s president and CEO, Mr. Provini, is not considered to be independent.

The mandate of the Board is to act in the best interests of the Company and to supervise management. The Board is responsible for approving long-term strategic plans and annual operating budgets recommended by management. Board consideration and approval is also required for material contracts and business transactions, and all debt and equity financing transactions. Any responsibility which is not delegated to management or to the committees of the Board remains with the Board. The Board meets on a regular basis consistent with the state of the Company’s affairs and also from time to time as deemed necessary to enable it to fulfill its responsibilities.

The number of directors of the Company is fixed at four. If there are more nominees for election then there are vacancies to fill, those nominees receiving the greatest number of votes will be elected until all such vacancies have been filled. Each director of the Company is elected annually and holds office until the next Annual General Meeting of the Shareholders unless that person ceases to be a director before then. In the absence of instructions to the contrary, the shares represented by proxy will, on a poll, be voted for the nominees here enlisted.

Directorship

The following is a list of each director of the Company who is also a director of other reporting issuers (or equivalent) in a Canadian or foreign jurisdiction:


	Name of Director		Other Reporting Issuer

	John Meekison		Pacific Cascade Minerals Inc.
			Sojourn Ventures Inc.

	Brien Lundin		Thunderstuck Resources Ltd.
			Sojourn Ventures Inc.

Orientatio n and Continuing Education

When new directors are appointed, they receive orientation, commensurate with their previous experience, on the Company’s properties, business and industry, and on the responsibilities of directors. Board meetings may also include presentations by the Company’s management and employees to give the directors additional insight into the Company’s business.

Ethica l Business Conduct

The Board has found that the fiduciary duties placed on individual directors by the Company’s governing corporate legislation, the common law and the restrictions placed by the applicable corporate legislation on an individual directors’ participation in decisions of the Board in which the director has an interest have been sufficient to ensure that the Board operates independently of management and in the best interests of the Company.

Nominatio n of Directors

The Board considers its size each year when it considers the number of directorstorecommend to the shareholders for election at the annual meeting of shareholders, taking into account the number required to carry out the Board’s duties effectively and to maintain a diversity of views and experience.

The Board does not have a nominating committee. The Board currently performs those functions as a whole. However, if there is a change in the number of directors required by the Company, this policy will be reviewed.

Compensation

The Board determines the compensation for the directors and CEO. A summary of the compensation received by the Named Executive Officers of the Company for the financial year ended December 31, 2015is provided in this management section under the heading: “Statement of Executive Compensation.” A summary of the compensation received by the directors for the financial year ended December 31, 2015is provided in this management section under the heading: “Compensation to Directors”

Other Board Committees

Other than the audit committee described in this Management section under the heading “Audit Committee”, the Board has no other committees.

Assessments

The Board regularly assesses its own effectiveness and the effectiveness and contribution of each Board committee and Director.

Statement of Executive Compensation

Compensation Discussion and Analysis

This compensation discussion and analysis describes and explains the Company’s policies and practices with respect to the compensation of its named executive officers, being its President and Chief Executive Officer (the “CEO”), Charles Provini, and the former Chief Financial Officers (the “CFO”) of the Corporation, Richard Childs and Brian Zucker (each, a “Named Executive Officer” or “NEO”).

Executive compensation is based upon the need to provide a compensation package that will allow the Company to attract and retain qualified and experienced executives, balanced with a pay-for performance philosophy. Compensation for this fiscal year and prior fiscal years have historically been based upon a negotiated salary, with stock options and bonuses potentially being issued and paid as an incentive for performance.

Option-based Awards

The Board recognizes that the Company operates in a competitive environment and that its performance depends on the quality of its employees. The board has the responsibility to administer compensation policies related to executive management of the Company, including option-based awards.

Shareholders have approved a stock option plan pursuant to which the Board has granted stock options to executive officers. The stock option plan provides compensation to participants and an additional incentive to work toward long-term company performance.

Executive compensation is based upon the need to provide a compensation package that will allow the Company to attract and retain qualified and experienced executives, balanced with a pay-for-performance philosophy. The stock option plan has been and will be used to provide share purchase options that are granted in consideration of the level of responsibility of the executive, as well as his or her impact and/or contribution to the longer-term operating performance of the Company. In determining the number of options to be granted to the executive officers, the Board takes into account the number of options, if any, previously granted to each executive officer and the exercise price of any outstanding options to ensure that such grants are in accordance with the policies of the TSX Ventures Exchange, and closely align the interests of the executive officers with the interests of the Company’s shareholders.

Summary Compensation Table

In accordance with the provisions of applicable securities legislation, the Company had three “Named Executive Officers” during the financial year ended December 31, 2015, namely Charles Provini, President and CEO, Richard Childs and Brian Zucker, former CFOs. For the purpose of this information management section:

“CEO” of the Company means an individual who acted as Chief Executive Officer of the Company, or acted in a similar capacity, for any part of the most recently completed financial year;

“CFO” of the Company means an individual who acted as Chief Financial Officer of the Company, or acted in a similar capacity, for any part of the most recently completed financial year;

“Executive Officer” of an entity means an individual who is:


a.	the chair of the Company, if any;

b.	the vice-chair of the Company, if any;

c.	the president of the Company;

d.	a vice-president of the Company in charge of a principal business unit, division or function including sales, finance or production;

e.	an officer of the Company (or subsidiary, if any) who performs a policy-making function in respect of the Company; or

f.	any other individual who performs a policy-making function in respect of the Company;

“Named Executive Officers or NEOs” means:

a.	the CEO of the Company;

b.	the CFO of the Company;

	i.	each of the Company’s three most highly compensated executive officers, or the three most highly compensated individuals acting in a similar capacity, other than the CEO and CFO, at the end of the most recently completed financial year whose total compensation was, individually, more than $150,000;

	ii.	any additional individuals for whom disclosure would have been provided under paragraph (i) above except that the individual was not serving as an executive officer of the Company, nor in a similar capacity, as at the end of the most recently completed financial year end.

Al l amounts presented in this section are presented in US dollars.

The following table sets forth all annual and long-term compensation for services in all capacities to the Company for the years ended December 31, 2015, 2014, 2013, 2012 and 2011.

Summary Compensation Table

Years Ended Decem ber312015, 2014, 2013, 2012 and 2011


									Non-equity incentive plan compensation

Name and Principal Position	Period Ended Dec. 31		Salary ($)(1)		Share-based awards ($)		Option-based awards ($)(2)		Annual incentive plans ($)		Long term incentive plans ($)		Pension value ($)		All other compensation ($)		Total compensation ($)

Charles Provini President/Chief Executive Officer (6)		2015	$	275,000		Nil	$	102,000		Nil		Nil		Nil	$	60,000	$	437,000
		2014	$	275,000		Nil		Nil		Nil		Nil		Nil	$	60,000	$	335,000
		2013	$	275,000		Nil		Nil		Nil		Nil		Nil	$	60,000	$	335,000
		2012	$	275,000		Nil		Nil		Nil		Nil		Nil	$	60,000	$	335,000
		2011	$	366,666		Nil	$	226,116		Nil		Nil		Nil		Nil	$	592,782
Richard Childs Chief Financial Officer (4)		2015		Nil		Nil		Nil		Nil		Nil		Nil	$	6,000	$	6,000
		2014		Nil		Nil		Nil		Nil		Nil		Nil	$	3,000	$	3,000
		2013		Nil		Nil		Nil		Nil		Nil		Nil	$	10,000	$	10,000
		2012	$	16,000		Nil		Nil		Nil		Nil		Nil	$	8,200	$	24,200
		2011	$	28,000		Nil		Nil		Nil		Nil		Nil		Nil	$	28,000
Brian Zucker(3) Former Chief Financial Officer		2015	$	48,000		Nil		Nil		Nil		Nil		Nil		Nil	$	48,000
		2014	$	48,000		Nil	$	18,300		Nil		Nil		Nil		Nil	$	66,300
		2013	$	48,000	$	12,450		Nil		Nil		Nil		Nil		Nil	$	60,450
		2012	$	48,000		Nil		Nil		Nil		Nil		Nil		Nil	$	48,000
		2011	$	48,000		Nil	$	67,836		Nil		Nil		Nil		Nil	$	115,836
John Meekison (5) Chief Financial Officer		2015		Nil		Nil	$	102,000		Nil		Nil		Nil	$	40,000	$	142,000
		2014		Nil		Nil		Nil		Nil		Nil		Nil	$	48,000	$	48,000
		2013		Nil		Nil		Nil		Nil		Nil		Nil	$	28,000	$	28,000
Dennis Flood Chief Technology Officer		2015	$	82,500		Nil		Nil		Nil		Nil		Nil		Nil	$	82,500
		2014	$	165,000		Nil		Nil		Nil		Nil		Nil		Nil	$	165,000
		2013	$	165,000		Nil		Nil		Nil		Nil		Nil		Nil	$	165,000
		2012	$	123,750		Nil		Nil		Nil		Nil		Nil		Nil	$	123,750

Notes:
________________________


	1.	The value of perquisites and benefits, if any, for each Named Executive Officer was less than the lesser of $50,000 and 10% of the total annual salary and bonus.
	2.	The value of the option-based award was determined using the Black-Scholes option-pricing model.
	3.	Appointed as Chief Financial Officer on April 27, 2012; Resigned as Chief Financial Officer on June 7, 2013. After resignation as CFO, Mr. Zucker continues to perform tax and administrative functions for which he is compensated $4,000 per month.
	4.	Appointed as Chief Financial Officer on April 28, 2011; Resigned as Chief Financial Officer on April 27, 2012. After resignation as CFO, Mr. Childs continued to perform consulting services for the Company, on an as needed basis, specifically in the area of performing due diligence. Mr. Childs was appointed CFO on November 5, 2015.
	5.	Appointed as Chief Financial Officer on June 7, 2013; Resigned as Chief Financial Officer on November 5, 2015. Certain payments were requested by Mr. Meekison to go to Tanum Holdings of which he is an owner, instead of directly to him
	6.	Mr. Provini has an employment agreement for $275,000 per year. He also receives $60,000 in other compensation for administrative functions performed for NewCyte, which is a subsidiary that gets consolidated in the financial statements.

The Company has calculated the “grant date fair value” amounts in the ‘Option-based Awards’ column using the Black-Scholes model, a mathematical valuation model that ascribes a value to a stock option based on a number of factors in valuing the option-based awards, including the exercise price of the options, the price of the underlying security on the date the option was granted, and assumptions with respect to the volatility of the price of the underlying security and the risk-free rate of return. Calculating the value of stock options using this methodology is very different from simple “in-the-money” value calculation. Stock options that are well out-of-the-money can still have a significant “grant date fair value” based on a Black-Scholes valuation. Accordingly, caution must be exercised in comparing grant date fair value amounts with cash compensation or an in-the-money option value calculation. The total compensation show in the last column is total compensation of each NEO reported in the other columns. The value of the in-the-money options currently held by each director (based on share price less option exercise price) is set forth in the ‘Value of Unexercised in-the-money Options’ column of the “Outstanding Share- Based and Option-Based Awards” table below.

Incentive Plan Awards

Outstanding share-based awards and option-based awards

The Plan has been established to attract and retain employees, consultants, officers or directors to the Company and to motivate them to advance the interests of the Company by affording them with the opportunity to acquire an equity interest in the Company. The directors and Compensation Committee of the Company administer the Plan. The Plan provides that the number of Shares issuable under the Plan, together with all of the Company’s other previously established or proposed share compensation arrangements may not exceed 10% of the total number of issued and outstanding shares of the Company. All options expire on a date not later than five years after the date of grant of such option.

The following table sets for the details of all awards outstanding as at June 6, 2016, including awards granted prior to the most recently completed financial year to the Named Executive Officers (“NEOs”).

(unaudited)

Option-Based Awards

Share-Based Awards

Name

Number of Securities Underlying Unexercised Options (#)

Option Exercise Price (CDN$)

Option Expiration Date

Value of Unexercised In-the-Money Options ¹
(CDN$)

Number of Shares or Units of Shares That Have Not Vested (#)

Market or Payout Value of Share-Based Awards That Have Not Vested (CDN$)

Charles Provini

350,000

0.40

January 13, 2021

35,000

Nil

President and CEO

300,000

0.58

April 30, 2020

Nil

Brian Zucker
Former CFO

10,000

0.40

January 13, 2021

1,000

Nil

20,000

0.80

January 4, 2018

Nil

10,000

1.08

January 10, 2019

Nil

10,000

0.75

December 17, 2019

Nil

John Meekison.
Chief Financial Officer

350,000

0.40

January 13, 2021

35,000

Nil

286,500

0.58

April 30, 2020

Nil

Dennis Flood
Chief Technology Officer

Nil

______________________


1.	This amount is based on the difference between the market value CDN$0.50 of the Company’s common shares underlying the options as at June 6, 2016 and the exercise price of the option.

Value Vested or Earned During the FiveMonths Ended May31, 2016

(unaudited)


Name	Option-based awards – Value vested during the period(1) ($)	Share-based awards – Value vested during the period ($)	Non-equity incentive plan compensation – Value earned during the period ($)

Charles Provini President and CEO	70,000	Nil	Nil
Richard Childs, Chief Financial Officer	Nil	Nil	Nil
John Meekison Former Chief Financial Officer	70,000	Nil	Nil
Dennis Flood Chief Technology Officer	Nil	Nil	Nil

______________________


1.	Dollar value that would have been realized if calculated by determining the difference between the market price of the underlying securities at exercise and the exercise or base price of the options under the option-based award on the vesting date.

Option-based Awards Exercised During the FiveMonths Ended May 31, 2016

(unaudited)


Name	Securities Acquired on Exercise (#)	Exercise Price CDN$	Date of Exercise (m/d/y)	Aggregate Value Realized(1) (CDN$)

Charles Provini President and CEO	Nil	N/A	N/A		0
Richard Childs Chief Financial Officer	Nil	N/A	N/A		0
John Meekison Former Chief Financial Officer	13,500	0.58	March 30, 2016		7,830
	25,000	0.40	May 17, 2016	$	10,000
Dennis Flood Chief Technology Officer	Nil	N/A	N/A		0

_____________________


1.	Calculated using the closing market price of the common shares on the date(s) of exercise less the exercise price of the stock options multiplied by the number of shares acquired.

Option-based Awards Granted During the Five Months Ended May 31, 2016

(unaudited)


Name	Date of Grant	Number of Option-Based Awards Granted	Exercise Price	Expiry Date (m/d/y)

Charles Provini
President and CEO	01/13/16	350,000	0.40	01/13/21

Richard Childs
Chief Financial Officer	N/A	Nil	Nil	N/A

John Meekison
Former Chief Financial Officer	01/13/16	350,000	0.40	01/13/21

Dennis Flood
Chief Technology Officer	N/A	Nil	Nil	N/A

Pensio n Plan Benefits

The Company does not have a pension plan that provides for payments or benefits to the Named Executive Officers at, following or in connection with retirement.

Termination of Employment, Change in Responsibilities and Employment Contracts

Other than disclosed below, the Company does not have an employment contract with any of its Named Executive Officers. Each Named Executive Officer devotes a portion of his or her time to the Company and a portion of his or her time to other companies where he or she is a director and/or officer. Accordingly, the Named Executive Officers invoice the Company based on the percentage of time devoted to the Company.

Other than as disclosed below, neither the Company nor any of its subsidiaries have any plan or arrangement with respect to compensation to its executive officers which would result from the resignation, retirement or any other termination of the executive officers’ employment with the Company and its subsidiaries or from a change of control of the Company or any subsidiary of the Company or a change in the executive officers’ responsibilities following a change in control.

The Company entered into an Employment Agreement dated April 5, 2012 with Charles Provini for his services as President and Chief Executive Officer and such other capacities as the board of directors of the Company may designate from time to time. Pursuant to the Employment Agreement, Mr. Provini is be paid a base salary of US $275,000 per year. After the first anniversary of the date of the Employment Agreement, the base salary of US $275,000 per year may be reviewed periodically and increases in such base salary may be granted at the sole discretion of the Company’s board of directors.

The Employment Agreement ends on the earliest of two years from the date of the Employment Agreement or any extension thereafter. On April 5, 2014, the employment agreement was extended for an additional three years. Mr. Provini is entitled to certain option grants upon the achievement of certain revenue milestones by the Company. Mr. Provini shall also be entitled to receive options to purchase up to Five Hundred Thousand (500,000) shares of the Company’s common stock (the “Stock Options”) as follows: He shall receive Stock Options to purchase One Hundred Thousand (100,000) shares of the Company’s common stock upon the Company’s receipt of One Million Dollars ($1,000,000) of net revenue during the Term of his employment, and he shall receive Stock Options to purchase One Hundred Thousand (100,000) shares of the Company’s common stock for each additional One Million Dollars ($1,000,000) of net revenue received by the Company during the Term of his employment (up to a maximum of Five Hundred Thousand (500,000) shares of the Company’s common stock). Options granted under this incentive plan will be priced at the lowest possible strike price approved by the TSX Venture Exchange at the time of the grant. Mr. Provini may terminate the Employment Agreement at any time upon 30 days’ written notice to the Company or immediately for cause. Should the Company terminate the Employment Agreement without cause, it is obligated to pay to Mr. Provini a lump sum payment of an amount equal to three month’s base salary, plus one year’s benefits. The Employment Agreement contains certain non-competition and non-solicitation provisions during the employment term. For a period of one year following the employment term, Mr. Provini cannot solicit business from current or potential clients or customers of Natcore or induce employees, consultants, etc. of the Company to terminate or not renew with the Company and may not directly or indirectly, engage in any business in the state of New Jersey or any other location in which the Company is then doing business, for the development, sale, service or distribution of process or equipment for the manufacture of solar panels (or any component thereof) or other alternative energy technology products or any similar business that is competitive with the business of the Company or its affiliates, including as a proprietor, principal, agent, partner, officer, director, shareholder, employee, member, consultant or otherwise.

Compensation of Directors

The following table sets forth all amounts of compensation provided to directors who were not NEOs of the Company duringthe fivemonths ended May 31, 2016.

(unaudited)

Name

Fees Earned ($)

Share-Based Awards ($)

Option-Based Awards ($)

Non-Equity Incentive Plan Compensation ($)

Pension Value ($)

All Other Compensation ($)

Total Compensation ($)

John Calhoun

Nil

70,000

Nil

Brien Lundin ¹

Nil

70,000

Nil

25,000

______________________


1.	Chairman of the Board

Directors are also eligible to participate in the Plan. Directors are entitled to be reimbursed for expenses incurred by them in their capacity as directors.

Outstanding Share-based Awards and Option-based Awards

The following table sets forth information concerning all awards outstanding under share-based or option-based incentive plans of the Company as of June 6, 2016, including awards granted prior to the most recently completed financial year to each of the Directors of the Company who were not Named Executive Officers.

(unaudited)

Option-Based Awards

Share-Based Awards

Name

Number of Securities Underlying Unexercised Options (#)

Option Exercise Price ¹ (CDN$)

Option Expiration Date

Value(1) of Unexercised In- The-Money Options ¹ ($)

Number of Shares or Units of Shares That Have Not Vested (#)

Market or Payout Value ¹ of Share-Based Awards That Have Not Vested ($)

Brien Lundin

350,000

0.40

01/13/21

35,000

Nil

300,000

0.58

04/30/20

Nil

John Calhoun

350,000

0.40

01/13/21

35,000

Nil

300,000

0.58

04/30/20

Nil

______________________


1.	This amount is based on the difference between the market value of the Company’s common shares underlying the options as at June 6, 2016, which was $0.50, and the exercise price of the option.

Value Vested or Earned During the FiveMonths Ended May31, 2016

(unaudited)


Name	Option-based awards – Value vested during the year ¹ (CDN$)	Share-based awards – Value vested during the year (CDN$)	Non-equity incentive plan compensation – Value earned during the year (CDN$)

Brien Lundin	70,000	Nil	Nil
John Calhoun	70,000	Nil	Nil

______________________


1.	Dollar value that would have been realized if calculated by determining the difference between the market price of the underlying securities at exercise and the exercise or base price of the options under the option-based award on the vesting date

Option-based Awards Exercised During the FiveMonths Ended May31, 2016

(unaudited)


Name	Securities Acquired on Exercise (#)	Exercise Price	Date of Exercise (m/d/y)	Aggregate Value Realized ¹ ($)

John Calhoun	Nil	N/A	N/A	0
Brien Lundin	Nil	N/A	N/A	0

_______________________


1.	Calculated using the closing market price of the common shares on the date(s) of exercise less the exercise price of the stock options multiplied by the number of shares acquired.

Option-based Awards Granted During the FiveMonths Ended May 31, 2016

(unaudited)


Name	Date of Grant	Number of Option-Based Awards Granted	Exercise Price	Expiry Date (m/d/y)

Brien Lundin	01/13/21	350,000	CDN$0.40	01/13/21
John Calhoun	01/13/21	350,000	CDN$0.40	01/13/21

Securities Authorized for Issuance Under Equity Compensation Plans

The only equity compensation plan that the Company has in place is its stock option plan (the “Plan”), which was previously adopted by the Company. As of May 31, 2016, the Stock Option Plan reserves a maximum of 10,520,000 Common Shares for issuance upon the exercise of options. Options granted under the Stock Option Plan will comply with the rules and regulations of the Exchange regarding share incentive arrangements.

The purpose of the Stock Option Plan is to attract and retain employees, consultants, officers and directors to the Company and to motivate them to advance the interests of the Company by affording them with the opportunity, through share options, to acquire an equity interest in the Company and benefit from its growth. The Stock Option Plan authorizes the Board to grant, in its absolute discretion, stock options to directors, officers, employees or consultants on such terms, limitations, conditions and restrictions, as it deems necessary and advisable, subject to terms of the Plan and regulatory and TSX Venture Exchange approval.

Equity Compensation Plan Information as of May 31, 2016

(unaudited)


Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

Equity compensation plans approved by security holders	4,579,167 common shares	CDN$0.60	5,940,833 common shares
Equity compensation plans not approved by security holders	N/A	N/A	N/A
Total	4,579,167 common shares	CDN$0.60	5,940,833 common shares

Audit Committee

Item 306 of Regulation S-K requires the Company’s audit committee (in this section the “Audit Committee”) to meet certain requirements. It also requires the Company to disclose in this Management section certain information regarding the Audit Committee. That information is disclosed below.

Ove r view

The Audit Committee is principally responsible for:


	i.	recommending to the Board the external audit or to be nominated for election by the shareholders at each annual general meeting and negotiating the compensation of such external auditor,

	ii.	overseeing the work of the external auditor,

	iii.	reviewing the Company’s annual and interim financial statements, MD&A and press releases regarding earnings before they are reviewed and approved by the Board and publicly disseminated by the Company, and

	iv.	reviewing the Company’s financial reporting procedures and internal controls to ensure adequate procedures are in place for the Company’s public disclosure of financial information extracted or derived from its financial statements, other than disclosure described in the previous paragraph.

Th e Audit Committee’s Charter

The Audit Committee has various responsibilities as set forth inItem 306 of Regulation S-K. The Board has adopted a Charter for the Audit Committee which sets out the Audit Committee’s mandate, organization, powers and responsibilities. The complete Charter is below:

Purpose of the Committee

The Audit Committee represents the Board in discharging its responsibility relating to the accounting, reporting and financial practices of the Company and its subsidiaries, and has general responsibility for oversight of internal controls, accounting and auditing activities, and legal compliance of the Company and its subsidiaries.

Members of the Committee

The Audit Committee shall consist of no less than three Directors a majority of whom shall be “independent” as defined under Exchange Act Rule 10A-3, while the Company is in the developmental stage of its business. The members of the Committee shall be selected annually by the Board and shall serve at the pleasure of the Board.

At least one Member of the Audit Committee must be “financially literate” as defined under Canadian private placement law, National Instrument 52-110, having sufficient accounting or related financial management expertise to read and understand a set of financial statements, including the related notes, that present a breadth and level of complexity of the accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company’s financial statements.

Meeting Requirements/Quorum

The Committee will, where possible, meet on a regular basis at least once every quarter, and will hold special meetings as it deems necessary or appropriate. Meetings may be held in person or telephonically, and shall be at such times and places as the Committee determines. Without meeting, the Committee may act by unanimous written consent of all members, which shall constitute a meeting for the purposes of this charter.

A majority of the members of the Committee shall constitute a quorum.

Dutie s and Responsibilities

The Audit Committee’s function is one of oversight only and shall not relieve the Company’s management of its responsibilities for preparing financial statements that accurately and fairly present the Company’s financial results and conditions or the responsibilities of the external auditors relating to the auditor review of financial statements. Specifically, the Audit Committee will:


	(a)	have the authority with respect to the appointment, retention or discharge of the independent public accountants as auditors of the Company (the “Auditors”) who perform the annual audit in accordance with applicable securities laws, and who shall be ultimately accountable to the Board through the Audit Committee;

	(b)	review with the Auditors the scope of the audit and the results of the annual audit examination by the auditors, including any reports of the auditors prepared in connection with the annual audit;

	(c)	review information, including written statements from the Auditors, concerning any relationships between the Auditors and the Company, or any other relationships that may adversely affect the independence of the Auditors and assess the independence of the Auditors;

	(d)	review and discuss with management and the Auditors the Company’s audited financial statements and accompanying Management’s Discussion and Analysis of Financial Conditions (“MD&A”), including a discussion with the Auditors of their judgments as to the quality of the Company’s accounting principles and report on them to the Board;


	(e)	review and discuss with management the Company’s interim financial statements and interim MD&A and report on them to the Board;

	(f)	pre-approve all auditing services and non-audit services provided to the Company by the Auditors to the extent and in the manner required by applicable law or regulation. In no circumstances shall the Auditors provide any non-audit services to the Company that are prohibited by applicable law or regulation;

	(g)	evaluate the external Auditor’s performance for the preceding fiscal year, reviewing their fees and making recommendations to the Board;

	(h)	periodically review the adequacy of the Company’s internal controls and ensure that such internal controls are effective;

	(i)	review changes in the accounting policies of the Company and accounting and financial reporting proposals that are provided by the Auditors that may have a significant impact on the Company’s financial reports, and report on them to the Board;

	(j)	oversee and annually review the Company’s Code of Business Conduct and Ethics;

	(k)	approve material contracts where the Board of Directors determines that it has a conflict;

	(l)	establish procedures for the receipt, retention and treatment of complaints received by the Company regarding the audit or other accounting matters;

	(m)	where unanimously considered necessary by the Audit Committee, engage independent counsel and/or other advisors at the Company’s expense to advise on material issues affecting the Company which the Audit Committee considers are not appropriate for the full Board;

	(n)	satisfy itself that management has put into place procedures that facilitate compliance with the provisions of applicable securities laws and regulation relating to insider trading, continuous disclosure and financial reporting;

	(o)	review and monitor all related party transactions which may be entered into by the Company; and

	(p)	periodically review the adequacy of its charter and recommending any changes thereto to the Board.

Miscellaneous

Nothing contained in this Charter is intended to extend applicable standards of liability under statutory or regulatory requirements for the directors of the Company or members of the Committee. The purposes and responsibilities outlined in this Charter are meant to serve as guidelines rather than as in flexible rules and the Committee is encouraged to adopt such additional procedures and standards as it deems necessary from time to time to fulfill its responsibilities.

Co m position of the Audit Committee

The Audit Committee consists of three directors. Unless a company is a ‘venture issuer’ (an issuer the securities of which are not listed or quoted on any of the TSX Venture Exchange, a market in the United States of America other than the over-the-counter market, or a market outside of Canada and the U.S.A.) as of the end of its last financial year, Exchange Act Rule 10A-3 requires each of the members of the Committee to be independent and financially literate. Since the Company is a ‘venture issuer’ (its securities are listed on the TSX Venture Exchange, but are not listed or quoted on any other exchange or market) it is exempt from this requirement. In addition, the Company’s governing corporate legislation requires the Company to have an Audit Committee composed of a minimum of three directors, a majority of whom are not officers or employees of the Company.

As noted above, the members of the audit committee are John Meekison, John Calhoun and Brien Lundin. All of the members of the Audit Committee are considered independent, with the exception of Mr. Provini, who is a member of management. All members are considered financially literate.

A member of the audit committee is i ndependent if the member has no direct or indirect material relationship with the Company. A material relationship means a relationship that could, in the view of the Company’s board of directors, reasonably interfere with the exercise of a member’s independent judgment.

A member of the audit committee is considered fin ancially literate if he or she has the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company.

There are no other management functions of the Company, which are to any substantial degree performed by a person or company other than the directors or senior officers of the Company.

Pursuant to the provisions of the Busines s Corporations Act of British Columbia, the Company is required to have an audit committee, which at the present time, is comprised of Charles Provini, Brien Lundin andJohn Calhoun. For additional information regarding the Company’s Audit Committee, please see below. The Company does not have an executive committee.

As at the date of this Information Management section and within the ten years before the date of this Information Management section, no proposed director:


(a)	is or has been a director or executive officer of any company (including the Company), that while that person was acting in that capacity:

	•	was the subject of a cease trade order or similar order or an order that denied the relevant company access to any exemption under securities legislation, for a period of more than 30 consecutive days;

	•	was subject to an event that resulted, after the director or executive officer ceased to be a director or executive officer, in the company being the subject of a cease trade or similar order or an order that denied the relevant company access to any exemption under securities legislation, for a period of more than30 consecutive days;

	•	within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or

(b)	has within 10 years before the date of the Information Management section became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold the assets of the director, officers or shareholders.

RELATED PARTY TRANSACTIONS

Registration Rights

In connection with the Company’s Private Placement concluded in August 2013, Natcore provided registration rights to investors who participated in the Private Placement of common shares. Pursuant to the registration rights such investors could require the Company to file a registration statement under the Securities Act with respect to such shares. This registration statement shall serve as a fulfillment of the Company’s obligation to such investors.

Transactions with Related Parties

The Company has an agreement (the “Employment Agreement”) dated October 1, 2007, and amended July 31, 2008, with Mr. Charles Provini under which the Company pays a fee for employee services at a base salary of $220,000 per annum. On April 30, 2010, the Board of Directors passed a resolution to increase this to $250,000 per annum and on May 13, 2011 the Board of Directors passed a resolution to increase this to $275,000 per annum. The Company was not obligated to commence payments until the Company raised at least $1,000,000, which occurred during the year ended December 31, 2009. Mr. Provini is entitled to receive options under the terms and conditions of the Company’s stock option plan. Mr. Provini will serve as the President and Chief Executive Officer of the Company. On April 5, 2012, the employment agreement was extended for an additional two years under the same terms. On April 5, 2014, the agreement was extended for an additional three years under the same terms.

Mr. Provini has the right, upon 30 days’ notice, to terminate the Employment Agreement. The Company may terminate the Employment Agreement on 10 days’ notice if for cause or on 30 days’ notice if without cause. Should the Company terminate the contract without cause, it is obligated to pay Mr. Provini an amount equal to three months base salary.

In addition to his employment agreement, Mr. Provini, receives $60,000 per year for various administrative functions performed for the NewCyte subsidiary which is consolidated in the financial statements.

On June 1, 2013, the Company entered into a consulting agreement with Mr. John Meekison under which the Company pays a fee for consulting services in relation to Mr. Meekison’s appointment as Chief Financial Officer of the Company at a rate of CDN$4,000 per month. The consulting agreement has a three-month term, extendable by the parties. Either party may terminate the agreement on 30 days’ notice unless there is a material breach, in which case the agreement may be terminated on seven days’ notice.

Mr. Brian Zucker personally received a salary of $48,000 for the year 2012 and 2013. On May 8, 2009, Mr. Zucker bought 50,000 shares of common stock at CDN$0.40 through the exercise of stock options. After his resignation as CFO, Mr. Zucker continues to perform tax and administrative functions for which he receives annual compensation of $48,000.

Armstrong Simpson, the Law Firm for which Ms. Shauna Hartman is an employee received $84,467 during 2012 and $6,516 during 2013. On May 8, 2009, the Law Firm bought 50,000 shares of common stock at CDN$0.40 through the exercise of stock options.

Finally, each of Charles Provini, President, Chief Executive Officer and a director of the Company and Brien Lundin and John Calhoun, directors of the Company participated in the acquisition of shareholders of Natcore US and Brien Lundin participated in the concurrent as well as the recent private financing as a subscriber for units. Natcore (Canadian parent company) used to be called Syracuse Capital Corp. and was a capital pool company on the TSX Venture Exchange.

On May 8, 2009, Syracuse Capital Corp. acquired all of the shares of Natcore Technology, Inc. (the Delaware now subsidiary company). At the time, each of John Calhoun, Brien Lundin and Charles Provini were shareholders, either directly or indirectly, of the Delaware company and received consideration from Natcore parent.

John Calhoun (as the controlling shareholder of Fort Hill Resources Inc.) held 1,000,000 shares of the Delaware company and received in consideration therefore 1,100,000 Natcore parent shares (at a deemed price of CDN$0.40 per share). Mr. Calhoun had also held at the time warrants to acquire shares in the Delaware company (225,000 to be specific) which were exchanged for 247,500 warrants of Natcore parent. The warrants were exercisable at CDN$0.40 per share and were all exercised on May 5, 2014.

Brien Lundin held 926,112 shares of the Delaware company directly and a further 1,000,000 shares through Jefferson Direct, LLC. As a result, he received 1,018,723 common shares of Natcore parent directly and 1,100,000 common shares of Natcore parent indirectly through Jefferson (at a deemed price of CDN$0.40 per share). Mr. Lundin had also held at the time warrants to acquire shares in the Delaware company (225,000 to be specific) which were exchanged for 247,500 warrants of Natcore parent. The warrants were exercisable at CDN$0.40 per share and were all exercised on May 2, 2014.

Charles Provini (as the controlling shareholder of Hawk Partnership LP) held 1,050,000 shares of the Delaware company which were exchanged for 1,155,000 common shares of Natcore parent (at a deemed price of CDN$0.40 per share). Mr. Provini had also held at the time warrants to acquire shares in the Delaware company (225,000 to be specific) which were exchanged for 247,500 warrants of Natcore parent. The warrants were exercisable at CDN$0.40 per share and were all exercised on May 7, 2014. Since that time, neither Mr. Provini nor Mr. Calhoun have subscribed for shares in a Natcore placement. Mr. Lundin, however, has bought in Natcore private placements as follows:

On May 9, 2009 – as part of a financing completed in conjunction with the ‘Qualifying Transaction’ noted above – Mr. Lundin, in his individual capacity, purchased 300,000 units of Natcore parent at a price of CDN$0.40 per unit. This entitled him to 300,000 shares and 300,000 warrants exercisable until May 9, 2011 at a price of CDN$0.75 per share. The warrants were exercised on April 11, 2014.

On December 22, 2010, Mr. Lundin, in his individual capacity, bought 40,000 units of Natcore (at a price of CDN$0.75 per unit). This entitled him to 40,000 shares and 20,000 warrants (exercisable until December 22, 2015 at a price of $1.00 per share – originally the expiry date was December 22, 2013, but we extended the term of all the then outstanding warrants in that batch to December 22, 2015). The warrants are still outstanding as of the date of this filing.

PRINCIPAL SHAREHOLDERS

Disclosure of Share Ownership

Natcore’s securities are recorded on the books of the Company’s transfer agent in registered form. The majority of the shares are, however, registered in the name of intermediaries such as brokerage houses and clearing-houses and clearing-houses on behalf of their respective clients. Beneficial ownership of shares is determined under the rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment power. Natcore does not have knowledge of all the beneficial owners due to adopted policies and instruments under Canadian securities legislation which allows shareholders owning less than 10% beneficial ownership to provide instructions to an intermediary holding the securities in an account on behalf of the beneficial owner that the beneficial owner objects, for that account, to the intermediary disclosing ownership information about the beneficial owner. Natcore is incorporated in British Columbia, Canada and subject to the laws thereof. Multilateral Instrument 62-104 of the Canadian Securities Administrations, in Section 5.2 requires that shareholders holding beneficial ownership, control, or direction over, voting or equity securities of any class of a reporting issuer, or securities convertible into voting or equity securities of any class of a reporting issuer, constituting ten-percent (10%) or more of the outstanding shares of that class disclose such holdings. MI 62-104 also provides that a person or company that acquires (whether or not by way of a take-over bid, issuer bid or offer to acquire) beneficial ownership of voting or equity securities or securities convertible into voting or equity securities of a reporting issuer that, together with previously held securities brings the total holdings of such holder to 10% or more of the outstanding securities of that class, must (a) issue and file forthwith a news release containing the prescribed information and (b) file a report within two business days containing the same information set out in the news release. The acquiring person or company must also issue a press release and file a report each time it acquires an additional 2% or more of the outstanding securities of the same class and every time there is a “material change” to the contents of the news release and report previously issued and filed.

The Company is not aware of any beneficial shareholder of ten (10%) percent or more nor is it aware of any beneficial shareholder of five (5%) percent or more.

The following table provides the specified information about each director, executive officer and promoter of the Issuer.


Name and Municipality of Principal Residence	Positions held with the Issuer	Number of Common Shares, Options and Warrants

Charles Provini , Delray Beach, Florida, USA	Director, President and CEO	1,300,000 ⁽¹⁾ common shares, 650,000 options
Richard Childs, Clark, NJ, USA	Chief Financial Officer	[nil]
John Meekison , Vancouver, B.C., Canada	Director	10,000 ⁽²⁾ common shares, 611,500 options
Brien Lundin , Metairie, LA, USA	Director	3,006,223 ⁽³⁾ common shares, 650,000 options
John Calhoun , New Orleans, LA, USA	Director	640,900 common shares, and 650,000 options
Dennis Flood , Columbus, OH, USA	Chief Technology Officer	985,500common shares, Nil options
Shauna Hartman , Surrey, B.C., Canada	Corporate Secretary	100,000 options

Currently there are 62 U.S. Shareholders representing 15.68% of the outstanding shares.

Authorized Capital

As of the date of this filing, the Company had outstanding options to purchase a total of 5,426,500 of its common shares at a weighted average exercise price of CDN$0.59 per share. Also as of June 6, 2016, the Company had outstanding warrants to purchase a total of 14,736,330 of its common shares at a weighted average exercise price of CDN$0.72 per share and had outstanding warrants to purchase a total of 6,085,740 of its common shares at a weighted average exercise price of US$0.62 per share. To the extent these options or warrants are ultimately exercised, investors will sustain future dilution.

Dividend Rights

Dividends are payable only when declared by the Board, and in accordance with the applicable laws of British Columbia, Canada. The Company will declare cash dividends when the funds are legally available, and the Board has determined, in its sole discretion, that dividends should be paid.

Annual Meetings

The Business Corporations Act (British Columbia) (the “BCBCA”) requires the Company to call an annual shareholders’ meeting at least once in every calendar year and not later than 15 months after holding the last preceding annual meeting and permits the Company to call a special shareholders’ meeting at any time. A shareholder’s meeting may be held at any location determined by the directors. In addition, in accordance with the BCBCA, the holders of no less than 5% of Natcore’s shares carrying the right to vote at a meeting sought to be held may requisition Natcore’s directors to call a special shareholders’ meeting for the purposes stated in the requisition. The Company is required to mail a notice of meeting and management information circular to registered shareholders no less than 21 days and not more than two months prior to the date of any annual or special shareholders’ meeting. These materials also are filed with Canadian securities regulatory authorities. Natcore’s articles provide that a quorum of one or more shareholders in person or represented by proxy is required to transact business at a shareholders’ meeting. Shareholders, and their duly appointed proxies and corporate representatives are entitled to be admitted to the Company’s annual and special shareholders’ meetings.

Voting Rights

Each shareholder of the Company is entitled to one vote for each common share held. The approval threshold required for any resolution required to be approved by the shareholder varies in accordance with the requirements of the BCBCA, but pursuant to Natcore’s articles, any matter requiring the approval of the Company’s shareholders with an approval requirement not specified by the BCBCA must be passed by simple majority of the votes cast, other than in the case of any amendments to the special rights and restrictions of a class or series of shares which must receive the approval of at least two-thirds of the votes cast. Under the BCBCA, matters which require the approval of at least two-thirds of the votes cast by shareholders, including, but are not limited to, amalgamations (other than certain short form amalgamations with subsidiary companies), continuations into a foreign jurisdictions, plans of arrangement, disposal of all or substantially all of the Company’s undertaking and voluntary dissolution.

Access to Corporate Records

Under the BCBCA and Natcore’s articles, shareholders are provided access during statutory business hours to the following corporate records: Natcore’s certificate of incorporation and any certificates of conversion, amalgamation, continuation, name change or restoration, the Company’s central securities register, the Company’s register of directors; copies of each consent to act as a director or written resignation received by the Company, minutes of the Company’s shareholder meetings or copies of any shareholder consent resolutions; the Company’s audited financial statements and certain other documents that are outlined in the BCBCA.

Restrictions on Share Ownership by Non-Canadians

There are no limitations under the laws of Canada or in the Company’s constitutive documents on the right of foreigners to hold or vote the Company’s securities, except that the Investment Canada Act (Canada) may require review and approval by the Minister of Industry (Canada) of certain acquisitions of “control” of the company by a “non-Canadian”. The threshold for acquisitions of control is generally defined as being one-third or more of the voting shares. “Non-Canadian” generally means an individual who is not a Canadian citizen, or a corporation, partnership, trust or joint venture that is ultimately controlled by non-Canadians.

Transfer of Common shares and Notices

Fully paid common shares are issued in registered form and may be freely transferred under the Company’sarticles unless the transfer is restricted or prohibited by another instrument, United States Federal or State law or the rules of a stock exchange on which the shares are traded.

Transfer Agent and Registrar

The transfer agent and registrar for the Company’s common shares is Computershare Investor Services Inc., Canada, 510 Burrard Street, 2nd Floor Vancouver, British Columbia V6C 3B9.

Listing

The Company’s Common Stock is quoted on the TSX Venture Exchange under the ticker symbol “NXT and on the OTCQB® market under the symbol “NTCXF”.

TAXATION AND GOVERNMENT PROGRAMS

The following description is not intended to constitute a complete analysis of all tax consequences relating to the acquisition, ownership and disposition of Natcore common shares. Investors should consult his or her own tax advisor concerning the tax consequences of the investor’s particular situation, as well as any tax consequences that may arise under the laws of any state, local, foreign or other taxing jurisdiction.

Canadian Income Taxation

The following is a general discussion of all material Canadian federal income tax consequences under current law, generally applicable to U.S. Holders (as defined below) in respect of purchasing, owning and disposition of Natcore common shares. This discussion is not a complete analysis or listing of all of the possible Canadian federal income tax consequences and does not address all tax considerations that may be relevant to investors in light of their particular circumstances.

This summary applies only to U.S. Holders who at all times for the purposes of the Income Tax Act (Canada) (the “Tax Act”) is a non-resident of Canada, does not hold his shares in the course of carrying on a business in Canada, holds his common shares as capital property and deals at arm’s length with the Company and is restricted to such circumstances. In addition, the summary does not describe all of the Canadian federal income tax consequences that may be relevant to U.S. Holders subject to special rules, such as:


	-	Bank and other financial institutions,

	-	Insurance companies,

	-	Traders and dealers in securities, or

	-	Tax-exempt organizations or entities.

This summary is based on the current provisions of the Tax Act and the regulations there under, all specific proposals to amend the Tax Act and the regulations there under publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the “Proposed Amendments”), and the current published administrative practices and assessing policies of the Canada Revenue Agency.

This summary assumes that the Proposed Amendments will be enacted as currently proposed, although no assurance can be given that the Proposed Amendments will be enacted in the form proposed or at all. Except for the Proposed Amendments, this summary does not take into account nor anticipate any changes in law or administrative practice, whether by judicial, legislative, governmental or administrative decisions or action, nor does it take into account any provincial, territorial or foreign tax considerations, which may differ significantly from the Canadian federal income tax considerations discussed herein.

This summary is not and is not intended to be, nor should it be construed to be, legal or tax advice to any particular U.S. Holder. Prospective U.S. Holders should consult their own tax advisors regarding the Canadian tax consequences to them of purchasing, owning and disposing of common shares in their particular circumstances.

Dividends

A U.S. Holder will be subject to Canadian withholding tax (“Part XIII Tax”) equal to 25%, or such lower rate as may be available under a tax treaty, of the gross amount of any dividend paid or deemed to be paid on the common shares. Under the Canada-U.S. Income Tax Convention (1980) (the “Treaty”) the rate of Part XIII Tax applicable to a dividend on common shares paid to a U.S. Holder who is a resident of the United States and a “qualifying person” for purposes of the Treaty is reduced from the 25% rate. Under the Treaty, the Company will be required to withhold Part XIII Tax at a rate of 15% from each dividend so paid and will be required to remit the amount withheld directly to the Receiver General of Canada on behalf of the U.S. Holder. The 15% rate is further reduced to 5% if the Holder is a company owning at least 10% of the voting shares of the Company.

Disposition of Common Shares

A U.S. Holder who disposes of a common share, including a deemed disposition on death, will not be subject to Canadian tax on any capital gain (or capital loss) thereby realized unless the common share constitutes “taxable Canadian property” as defined by the Act. Generally, a common share will not constitute taxable Canadian property of a U.S. Holder unless the U.S. Holder held the common shares as property used by the U.S. Holder in carrying on a business in Canada, or at any time within 60 months preceding the disposition, 25% or more of the issued shares of any class of stock of the Company were owned by or belonged to the U.S. Holder, persons with whom the U.S. Holder did not deal at arm’s length and/or partnerships in which the U.S. Holder and non-arm’s length persons held a membership interest, and more than 50% of the value of the common share is derived from real property situated in Canada, Canadian resource properties, timber resource properties or any option or interest in respect of such property.

A U.S. Holder who is a resident of the United States and realizes a capital gain on the disposition of a common share that is taxable Canadian property will nevertheless, by virtue of the Treaty, generally be exempt from Canadian tax thereon unless (a) more than 50% of the value of the common share is derived from real property situated in Canada (including any option or similar right in respect thereof), rights to explore for or exploit Canadian mineral deposits, sources and other natural resources and rights to amounts computed by reference to the amount or value of production from such resources, (b) the common share formed part of the business property of a permanent establishment that the U.S. Holder has or had in Canada within the 12 months preceding the disposition, or (c) the Holder (i) is an individual who was a resident of Canada at any time within the ten years immediately preceding, and for a total of 120 months during the 20 years preceding the disposition, (ii) owned the common share when the individual ceased to be resident in Canada, and (iii) was not a property that the individual was deemed to have disposed of when the individual ceased to be a resident of Canada and became a resident of the United States.

A Holder who is subject to Canadian tax in respect of a capital gain realized on disposition of a common share must include one half of the capital gain (taxable capital gain) in computing the Holder’s taxable income earned in Canada. This Holder may, subject to certain limitations, deduct one half of any capital loss (allowable capital loss) arising on the disposition of other taxable Canadian property (other than treaty protected property) realized in the year of disposition and may deduct the capital loss (after taking into account any differencein inclusion rates between the particular year and year of disposition) realized in any preceding year or any of the three subsequent years from dispositions of other taxable Canadian property (other than treaty protected property) to the extent the capital loss was not deducted in any other year.

United States federal income taxation

The following discussion sets forth the material U.S. federal income tax consequences to U.S. Holders (as defined below) of purchasing, owning, and disposing of common shares as of the date hereof. This discussion is not a complete analysis or listing of all of the possible tax consequences and does not address all tax considerations that may be relevant to investors in light of their particular circumstances. This summary applies only to U.S. Holders that hold common shares as capital assets for U.S. federal income tax purposes (generally, property held for investment), and it does not describe all of the U.S. federal income tax consequences that may be relevant to U.S. Holders subject to special rules, such as:


1.	banks and other financial institutions;

2.	insurance companies;

3.	regulated investment companies;

4.	real estate investment trusts;

5.	dealers and traders in securities that use mark-to-market accounting for U.S. federal income tax purposes;

6.	U.S. Holders holding common shares as part of a hedging transaction, straddle, conversion transaction or other integrated transaction;

7.	U.S. Holders whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;

8.	U.S. Holders liable for the alternative minimum tax;


9.	tax-exempt organizations or entities, including an “individual retirement account” or “Roth IRA” as defined in Section 408 or 408A of the Code, respectively;

10.	U.S. Holders that received the common shares as compensation for the performance of services;

11.	U.S. Holders holding common shares that own or are deemed to own 10% or more of the voting shares of the Company; or

12.	former citizens and residents of the United States subject to tax as expatriates.

This summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations, all as currently in effect and available. These authorities are subject to change, possibly with retroactive effect. U.S. Holders should consult their own tax advisers concerning the U.S. federal, state, local, and foreign tax consequences of purchasing, owning and disposing of common shares in their particular circumstances.

For purposes of this summary, a “U.S. Holder” is a beneficial owner of common shares who is, for U.S. federal income tax purposes:


1.	a citizen or individual resident of the United States;

2.	a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

3.	an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

4.	a trust that (1) is subject to the primary supervision of a U.S. court and one or more U.S. persons that have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person.

If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) holds the common shares, the tax treatment of a partner in such partnership generally will depend upon the status of the partner and upon the activities of the partnership. Prospective investors who are partners in a partnership should consult their tax advisers as to the particular U.S. federal income tax consequences of purchasing, owning and disposing of common shares in their particular circumstances.

This summary does not address the U.S. federal estate and gift, state, local or non-U.S. tax consequences to U.S. Holders of purchasing, owning, and disposing of common shares. Prospective investors should consult their own tax advisors regarding the U.S. federal, state and local, as well as non-U.S. income and other tax consequences of purchasing, owning and disposing of common shares in their particular circumstances.

Taxation of distributions

Distributions paid on common shares will be treated as dividends to the extent paid out of the Company’s current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Such dividends paid to a U.S. Holder with respect to common shares generally will be taxable as ordinary income at the time of receipt by a U.S. Holder. Distributions in excess of the Company’s current and accumulated earnings and profits will be treated first as a non-taxable return of capital, thereby reducing such U.S. Holder’s adjusted tax basis in common shares (but not below zero), and thereafter as either long-term or short-term capital gain depending upon whether the U.S. Holder has held common shares for more than one year as of the time such distribution is received. Because we do not maintain calculations of the Company’s earnings and profits under U.S. federal income tax principles, it is expected that distributions generally will be reported to U.S. Holders as dividends. Distributions of additional common shares to U.S. Holders that are part of a pro rata distribution to all of the Company’s shareholders generally will not be subject to U.S. federal income tax. The amount of any distribution of property other than cash will be the fair market value of such property on the date of distribution. As used below, the term “dividend” means a distribution that constitutes a dividend for U.S. federal income tax purposes.

With respect to non-corporate U.S. Holders, dividends received may be subject to reduced rates of taxation provided that the Company’s common shares are readily tradable on a qualifying U.S. securities market and that (i) such U.S. Holder holds such common shares for 61 days or more during the 121-day period beginning on the date which is 60 days before the date on which such shares become ex-dividend with respect to such dividends and (ii) the U.S. Holder is not under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to existing or substantially similar or related property. The Company’s common shares are expected to be readily tradable 12 months after this registration.

Dividends received on the common shares will be treated as foreign source income and will not be eligible for the dividends-received deduction generally allowed to U.S. corporations under the Code.

Sale or other taxable disposition of shares

For U.S. federal income tax purposes, gain or loss realized on the sale or other taxable disposition of common shares will be capital gain or loss, and will be long-term capital gain or loss if a U.S. Holder held common shares for more than one year. Non-corporate U.S. Holders may be eligible for preferential rates of U.S. federal income tax in respect of long-term capital gains. The deductibility of capital losses is subject to limitations under the Code.

The amount of the gain or loss realized will be equal to the difference between a U.S. Holder’s adjusted tax basis in the common shares disposed of and the amount realized on the disposition. Such gain or loss generally will be U.S.-source gain or loss for U.S. foreign tax credit purposes. A U.S. Holder’s initial tax basis in its common shares will be the amount paid for the common shares.

Medicare tax

Certain U.S. Holders that are individuals, estates or trusts are subject to a 3.8% tax on all or a portion of their “net investment income,” which may include all or a portion of their dividend income and net gains from the disposition of common shares. Each U.S. Holder that is an individual, estate or trust is urged to consult its tax advisors regarding the applicability of the Medicare tax to its income and gains in respect of its investment in the common shares.

Information reporting and backup withholding

Payments of dividends and proceeds from the sale or other taxable disposition that are made within the United States or through certain U.S.-related financial intermediaries generally are subject to information reporting, and may be subject to backup withholding, unless (1) the U.S. Holder is a corporation or other exempt recipient or (2) in the case of backup withholding, the U.S. Holder provides a correct taxpayer identification number and certifies that it is not subject to backup withholding.

The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against a U.S. Holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided that the required information is timely furnished to the United States Internal Revenue Service.

Foreign asset reporting

Certain U.S. Holders who are individuals are required to report information relating to an interest in common shares, subject to certain exceptions (including an exception for common shares held in accounts maintained by U.S. financial institutions). U.S. Holders are urged to consult their tax advisors regarding their information reporting obligations, if any, with respect to their ownership and disposition of common shares.

PLAN OF DISTRIBUTION

The Offering

This prospectus relates to the: (i) offering up to 5,000,000 shares of common stock by the Company at a fixed price of $0.31 per share with aggregate proceeds of up to $1,550,000; and(ii) the resale of up to 3,061,111 shares by the Selling Shareholders ( See Selling Shareholder List pg. 22).The Company is offering shares through its Officers and Directors on a “best efforts/no minimum” basis without a placement agent.The Selling Shareholders may offer all or part of the shares for resale from time to time through public or private transactions, at either prevailing market prices or privately negotiated prices.

The Company is paying all of the registration expenses incurred in connection with the registration of the newly offered shares and the Selling Shareholder shares. The Company will not pay any of the selling commissions, brokerage fees and related expenses related to the Selling Shareholder transactions. Although the gross proceeds of this offering may be up to $1,550,000, this offering is being conducted on a “no minimum” basis, meaning that no aggregate minimum offering amount is required to be raised by the Company. As such, the actual public offering amount and proceeds to the Company, if any, are not presently determinable and net proceeds may be substantially less than the total maximum offering set forth above.

The Company cannot assure that all or any of the shares offered under this Prospectus will be sold.The Company may sell only a nominal number of shares, in which case the Company’s ability to execute its business plan might be negatively impacted.

Terms of the Offering

This offering will terminate 180 days after the effective date of this registration statement unless the offering is fully subscribed before that date or the Company decides to terminate the offering prior to that date. The Company may conduct multiple closings of the offering until the offering is fully subscribed or terminated. In either event, the offering may be closed without further notice. All costs associated with the registration will be borne by the Company. All net proceeds will be available to the Company for use as set forth in “Use of Proceeds” herein. Offering proceeds will not be held in escrow and may be utilized by the Company immediately on a subscription-by-subscription basis upon the Company’s acceptance of a subscriber’s subscription made by way of the subscription agreement to be entered into between the Company and the investors in this offering.

In order to comply with the applicable securities laws of certain states, the securities may not be offered or sold unless they have been registered or qualified for sale in such states or an exemption from such registration or qualification requirement is available and with which the Company has complied. The purchasers in this offering and in any subsequent trading market must be residents of such states where the shares have been registered or qualified for sale or an exemption from such registration or qualification requirement is available.

Offering by the Company’s Officers and Directors

This Prospectus will permit the Company’s Officers and Directors to offer and sell the Company’s securities directly to the public, with no commission or other remuneration payable to them for any shares sold. In offering the securities on the Company’s behalf, the Officers and Directors will rely on the safe harbor from broker-dealer registration set out in Rule 3a4-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Rule 3(a)4-1 sets forth those conditions under which a person associated with an issuer may participate in an offering of the issuer’s securities and not be deemed to be a broker-dealer. The Company’s Officers and Directors satisfy the requirements of Rule 3(a) 4-1 in that:


	•	They are not subject to a statutory disqualification, as that term is defined in Section 3(a)(39) of the Securities Act, at the time of his or her participation;

	•	They are not compensated in connection with their participation by the payment of commissions or other remuneration based either directly or indirectly on transactions in securities;

	•	They are not, at the time of their participation, an associated person of a broker-dealer; and

	•	They meet the conditions of Paragraph (a)(4)(ii) of Rule 3(a)4-1 of the Exchange Act, in that they (A) primarily perform, or are intended primarily to perform at the end of the offering, substantial duties for or on behalf of the issuer otherwise than in connection with transactions in securities; and (B) are not brokers or dealers, or an associated person of a broker or dealer, within the preceding 12 months; and (C) do not participate in selling and offering of securities for any issuer more than once every 12 months other than in reliance on Paragraphs (a)(4)(i) or (a)(4)(iii).

As long as the Officers and Directors satisfies all of these conditions, the Company believesthat it satisfies the requirements of Rule 3(a)4-1 of the Exchange Act.

In view of the fact that the Company’s Officers and Directors will sell the shares being offered, Regulation M prohibits the Company and its Officers and Directors from certain types of trading activities during the time of distribution of its securities. Specifically, Regulation M prohibits the Company’s Officers and Directors from bidding for or purchasing any common stock or attempting to induce any other person to purchase any common stock, until the distribution of the securities pursuant to this offering has ended.

No Deposit of Offering Proceeds

This is a direct primary, self-underwritten offering, and thusthe Company is not required to sell any specific number or dollar amount of securities, but will use its best efforts to sell the securities offered. The Company has made no arrangements to place subscription funds in an escrow, trust or similar account, which means that all funds collected from accepted subscriptions, will be immediately available to the Company for use in the implementation of the Company’s business plan.

Procedures and Requirements for Subscription

This is a direct public offering and, as such, payment for the sale of the shares in this offering will be payable to the Company, Natcore Technology, Inc., and will thus have immediate access to these funds. Investors can purchase common stock in this offering by completing a subscription agreement, a copy of which is filed as an exhibit to the registration statement of which this Prospectus is a part. All payments are to be made to the Company and are required in the form of United States currency (or Canadian currency, giving effect to the current United States / Canadian dollar exchange rate on the date of thepayment) either by personal check, bank draft, cashier’s check, ACH or wire transfer (as described in the subscription agreement). All subscription agreements and payments are irrevocable and should be delivered to Armstrong Simpson, Suite 2080-777 Hornby Street, Vancouver, B.C., V6Z 1S4, Attention: Shauna Hartman, Corporate Secretary.The Company reserves the right to reject any subscription. Any subscription rejected by the Company will be returned to the subscriber within five (5) business days of the rejection date. Once a subscription agreementis accepted, it will be executed without reconfirmation to or from the subscriber. Subscriptions, once received and accepted by the Company, are irrevocable.

The Company’s transfer agent, Computershare Investor Services Inc., Vancouver B.C., Canadawill issue certificates evidencing the common stock subscribed for in this offering promptly after the Company accepts subscriptions from investors. Securities purchased by investors in this offering will remain outstanding upon its termination regardless of the number of shares subscribed for.

LEGAL MATTERS

Certain legal matters in connection with this offering relating to United States law will be passed upon for the Company by LoPresti Law Group, P.C., New York, New York. Certain legal matters in connection with this offering relating to British Columbia, Canadian law will be passed upon for the Company by S. Paul Simpson Law Corporation, Vancouver, Canada.

EXPERTS

The financial statements for the years ended December 31, 2015 and 2014, included in this prospectus have been audited by Dale Matheson Carr-Hilton Labonte LLP, an independent registered public accounting firm, as stated in their report appearing herein. Such financial statements are included in reliance upon the report of such firm given upon their authority as experts in accounting.

ENFORCEABILITY OF CIVIL LIABILITIES

We are incorporated under the laws of the Province of British Columbia, Canada. Service of process upon the Company and upon the Company’s directors and officers and the Canadian experts named in this Prospectus, many of whom reside outside the United States, may be difficult to obtain within the United States. Furthermore, some of the Company’s assets and some of the Company’s directors and officers are located outside the United States, any judgment obtained in the United States against the Company or any of the Company’s directors and officers, including one predicated on the civil liability provisions of the U.S. federal securities laws, may not be collectible within the United States.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

You may read and copy any document we file or furnish with the SEC at the reference facilities located at the SEC Headquarters at 100 F Street, NE, , Washington, DC 20549. You may also obtain copies of the documents at prescribed rates by writing to the U.S. Securities and Exchange Commission, Office of FOIA/PA Operations at100 F Street, NE, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities. You can review the Company’s SEC filings and the registration statement by accessing the SEC’s internet site at http://www.sec.gov.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Natcore Technology Inc.

Unaudited and Unreviewed Consolidated Financial Statements
(Expressed in United States Dollars)
Three months ended March 31, 2016 and 2015


Consolidated Statements of Financial Position	F-4
Nature and Continuance of Operations	F-10
Significant Accounting Policies and Basis of Preparation	F-10
Accounting Standards Issued But Not Yet Effective	F-15
Cash and Cash Equivalents	F-15
Receivables	F-15
Equipment	F-16
Intangible Assets	F-16
Trade Payables and Accrued Liabilities	F-17
Derivative Financial Liability	F-17
Share Capital	F-19
Reserves	F-24
Financial Risk and Capital Management	F-24
Commitments	F-26
Related Party Transactions and Balances	F-27

Audited Consolidated Financial Statements
(Expressed in United States Dollars)
Years ended December 31, 2015 and 2014


Independent Auditor’s Report for 2015	F-29
Consolidated Statements of Financial Position	F-30
Nature and Continuance of Operations	F-34
Significant Accounting Policies and Basis of Preparation	F-34
Accounting Standards Issued But Not Yet Effective	F-39
Cash and Cash Equivalents	F-39
Receivables	F-39
Equipment	F-40
Intangible Assets	F-40
Trade Payables and Accrued Liabilities	F-41
Derivative Financial Liability	F-41
Share Capital	F-43
Reserves	F-47
Financial Risk and Capital Management	F-48
Commitments	F-50
Related Party Transactions and Balances	F-50
Income Taxes	F-51
Research and Development Expense	F-51
Subsequent Event	F-52

F-1

Audited Consolidated Financial Statements
(Expressed in United States Dollars)
Years ended December 31, 2014 and 2013


Independent Auditor’s Report for 2014	F-53
Consolidated Statements of Financial Position	F-54
Nature and Continuance of Operations	F-58
Significant Accounting Policies and Basis of Preparation	F-58
Accounting standards issued but not yet effective	F-63
Cash and Cash Equivalents	F-63
Receivables	F-64
Equipment	F-64
Intangible Assets	F-65
Trade Payables and Accrued Liabilities	F-65
Derivative Financial Liability	F-65
Share Capital	F-67
Reserves	F-71
Financial Risk and Capital Management	F-71
Commitments	F-73
Related Party Transactions and Balances	F-74
Income Taxes	F-74
Research and Development Expense	F-75
Subsequent Event	F-75

Audited Consolidated Financial Statements
(Expressed in United States Dollars)
Years ended December 31, 2013 and 2012


Independent Auditor’s Report for 2013	F-76
Consolidated Statements of Financial Position	F-77
Nature and Continuance of Operations	F-81
Significant Accounting Policies and Basis of Preparation	F-81
Accounting standards issued but not yet effective	F-86
Cash and Cash Equivalents	F-87
Receivables	F-87
Equipment	F-87
Intangible Assets	F-88
Trade Payables and Accrued Liabilities	F-88
Derivative Financial Liability	F-88
Share Capital	F-90
Reserves	F-95
Financial Risk and Capital Management	F-96
Commitments	F-97
Related Party Transactions and Balances	F-97
Income Taxes	F-98
Subsequent Event	F-98

F-2

Audited Consolidated Financial Statements
(Expressed in United States Dollars)
Years ended December 31, 2012 and 2011


Independent Auditor’s Report for 2012	F-99
Consolidated Statements of Financial Position	F-100
Nature and Continuance of Operations	F-104
Significant Accounting Policies and Basis of Preparation	F-104
Accounting standards issued but not yet effective	F-109
Cash and Cash Equivalents	F-111
Receivables	F-111
Equipment	F-111
Derivative Financial Liability	F-112
Share Capital	F-114
Reserves	F-117
Financial Risk and Capital Management	F-118
Segmented information	F-120
Commitments	F-120
Related Party Transactions and Balances	F-121
Income Taxes	F-122
Restatement	F-123
Subsequent Event	F-123

F-3

NATCORE TECHNOLOGY INC.

Consolidated Financial Statements
For Three Months EndedMarch 31, 2016 and 2015

Expressed in United States Dollars

F-4

NOTICE TO READER

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

The accompanying unaudited interim condensed consolidated financial statements have been prepared by and are the responsibility of management.

The Company’s independent auditor has not performed a review of these financial statements in accordance with the standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by an entity’s auditor.

F-5

Natcore Technology Inc.
Consolidated Statements of Financial Position
(Expressed in United States Dollars)


	Notes	(Unaudited) March 31, 2016			(Audited) December 31, 2015

ASSETS
Current assets
Cash and cash equivalents	4	$	587,636		$	521,521
Receivables	5		3,145			29,057
Prepaid expenses			124,577			148,076

			715,358			698,654

Non-current assets
Equipment	6		319,918			366,729


TOTAL ASSETS		$	1,035,276		$	1,065,383


LIABILITIES
Current liabilities
Trade payables and accrued liabilities	8	$	726,854		$	749,985
Derivative liability	9		2,992,304			1,135,157

TOTAL LIABILITIES			3,719,158			1,885,142


EQUITY (DEFICIT)
Share capital	10		15,852,538			15,690,371
Share-based payment reserve	10,11		3,862,497			3,375,710
Share subscriptions received	10		—			31,102
Deficit			(22,398,917	)		(19,916,942	)

TOTAL EQUITY (DEFICIT)			(2,683,882	)		(819,759	)

TOTAL LIABILITIES AND EQUITY (DEFICIT)		$	1,035,276		$	1,065,383


Nature and continuance of operations	1
Commitments	13
Subsequent events	15

Approved on behalf of the Board:


“John Calhoun”		“Brien Lundin”



– Director		– Director

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

F-6

Natcore Technology Inc.

Consolidated Statements of Comprehensive Income (Loss)
(Expressed in United States Dollars)


		For the Three Months Ended March 31,

	Notes	2016			2015


Expenses
Consulting		$	31,146		$	43,478
Depreciation and amortization	6		48,106			94,729
Filing Fees			7,783			3,834
Foreign exchange (gain) loss			(19,991	)		(30,385	)
Interest and bank charges			787			413
Marketing			66,008			53,438
Office and other operational expenses			48,946			46,082
Professional fees			73,086			18,768
Research and development	16		231,722			206,284
Stock-based compensation	10		481,675			79,954
Travel			8,374			9,107
Wages and salaries			188,568			224,989

			1,166,210			750,691

Other income (expense)
Fair value adjustment on warrants	9		(1,315,770	)		(474,354	)
Interest income			5			301

Net and comprehensive income (loss) for the period		$	(2,481,975	)	$	(1,224,744	)

Income (loss) per share – basic and diluted	10	$	(0.04	)	$	(0.03	)

Weighted average number of shares outstanding – basic and diluted	10		56,851,190			48,895,966

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

F-7

Natcore Technology Inc.
Consolidated Statement of Changes in Equity
(Expressed in United States Dollars)


		Share capital

	Notes	Number of shares		Amount			Share-based payment reserve		Share subscriptions received			Deficit			Total

Balance at December 31, 2014			47,861,502	$	13,977,256		$	2,956,964	$	313,874		$	(16,428,813	)	$	819,281
Comprehensive loss for the period			—		—			—		—			(1,224,744	)		(1,224,744	)
Stock-based compensation	10		—		—			79,954		—						79,954
Transactions with owners, in their capacity as owners, and other transfers:
Shares issued for cash – private placement	10		1,352,062		471,479			—		(313,874	)		—			157,605
Issuance costs – warrants	10		—		(885	)		885					—			—
Issuance costs – cash	10		—		(2,538	)				—			—			(2,538	)
Subscriptions received on pending private placement	10		—		—			—		409,238			—			409,238

Balance at March 31, 2015			49,213,654	$	14,445,312		$	3,037,803	$	409,238		$	(17,653,557	)	$	238,796


Balance at January 1, 2016			56,333,247	$	15,690,371		$	3,375,710	$	31,102		$	(19,916,942	)	$	(819,759	)
Comprehensive loss for the period			—		—			—		—			(2,481,975	)		(2,481,975	)
Stock-based compensation	10		—		—			481,675		—			—			481,675
Transactions with owners, in their capacity as owners, and other transfers:
Shares issued for cash – private placement	10		2,517,555		707,206			—		(31,102	)		—			676,104
Shares issued for cash – options exercise	10		13,500		5,947			—		—			—			5,947
Derivative liability – warrants issued	10		—		(541,377	)		—		—			—			(541,377	)
Issuance costs – finders’ warrants	10		—		(5,112	)		5,112		—			—			—
Issuance costs – cash	10		—		(4,497	)		—		—			—			(4,497	)

Balance at March 31, 2016			58,864,302		15,852,538			3,862,497		—			(22,398,917	)		(2,683,882	)

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

F-8

Natcore Technology Inc.
Consolidated Statements of Cash Flows
(Expressed in United States Dollars - Unaudited)


	For the Three Months Ended

	March 31, 2016			March 31, 2015

Operating Activities
Netloss	$	(2,481,975	)	$	(1,224,744	)
Adjustments for non-cash items:
Depreciation and amortization		48,106			94,729
Fair value adjustment on warrants		1,315,770			474,354
Stock-based compensation		481,675			79,954
Changes in non-cash working capital items:
Receivables		25,912			5,837
Prepaid expenses		23,499			—
Trade payables and accrued liabilities		(23,131	)		54,453

Net cash flows used in operating activities		(610,144	)		(515,417	)

Investing Activities
Expenditures on equipment		(1,295	)		(4,053	)

Net cash flows used in investing activities		(1,295	)		(4,053	)

Financing Activities
Proceeds on subscriptions received for pending private placement		—			409,238
Proceeds on exercise of stock options		5,947			—
Proceeds on issuance of common shares – net of issuance costs		671,607			155,067

Net cash flows provided by financing activities		677,554			564,305

Increase in cash and cash equivalents		66,115			44,835
Cash and cash equivalents, beginning		521,521			548,387

Cash and cash equivalents, ending		587,636		$	593,222

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

F-9

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Three Months Ended March 31, 2016 and 2015


1.	Nature and Continuance of Operations

	Natcore Technology Inc. (the “Company”) was incorporated under the British Columbia Business Corporations Act on August 9, 2007. The Company’s common shares are listed on the TSX Venture Exchange (the “Exchange”) under the symbol NXT. Effective May 26, the Company became a fully-reporting issuer in the United States. The Company develops and owns technology for the manufacturing of solar cells.

	The Company’s head office address is 87 Maple Avenue, 1 ^st Floor, Red Bank, New Jersey, 07701. The Company’s registered office is 2080 - 777 Hornby Street, Vancouver British Columbia V6Z 1S4.

	These unaudited consolidated interim financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. Different bases of measurement may be appropriate if the Company is not expected to continue operations for the foreseeable future. As at March 31, 2016 the Company has had recurring losses from operations and a cumulative deficit of $22,398,917. The Company’s continuation as a going concern is dependent upon its ability to attain profitable operations and generate funds there from and/or raise equity capital or borrowings sufficient to meet current and future obligations. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern. Management intends to finance operating costs over the next twelve months with existing cash resources and the private placement of common shares.

2.	Significant Accounting Policies and Basis of Preparation

	*Statement of Compliance with International Financial Reporting Standards*

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

	This 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, 2015.

	The consolidated interim financial statements were authorized for issue by the Board of Directors on May 30, 2016.

	*Basis of Preparation*

	The consolidated financial statements of the Company have been prepared on an accrual basis and are based on historical costs, modified where applicable. The consolidated financial statements are presented in United States dollars unless otherwise noted.

	*Consolidation*

	The consolidated financial statements include the accounts of the Company and its controlled entities. Details of controlled entities are as follows:


		Percentage Owned*

	Jurisdiction of Incorporation	March 31, 2016 (unaudited)	December 31, 2015

Natcore Technology, Inc.	United States	100%	100%
Newcyte, Incorporated	United States	100%	100%
Vanguard Solar, Inc.	United States	100%	100%
Natcore Asia Technology, Limited	Hong Kong	100%	100%

_______________

*Percentage of voting power is in proportion to ownership.

Inter-company balances are eliminated on consolidation.

F-10

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Three Months Ended March 31, 2016 and 2015


2.	Significant Accounting Policies and Basis of Preparation (cont’d)

	*Significant Accounting Judgments, Estimates and Assumptions*

	The preparation of consolidated financial statements in accordance with IFRS requires the Company to make estimates and assumptions concerning the future. The Company’s management reviews these estimates and underlying assumptions on an ongoing basis, based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are adjusted for prospectively in the period in which the estimates are revised.

	Estimates and assumptions where there is significant risk of material adjustments to assets and liabilities in future accounting periods include the useful lives of equipment, impairment considerations for equipment and intangible assets, determination of fair value for stock-based compensation and other share-based payments, valuations and assumptions used to determine deferred income taxes and the fair value of financial instruments.

	*Foreign Currency Translation*

	The functional currency of each of the Company’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in United States dollars which is the functional currency of the Company and its subsidiaries.

	Transactions and Balances:

	Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the period-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

	Exchange differences arising on the translation of monetary items or on settlement of monetary items are recognized in profit or loss in the statement of comprehensive loss in the period in which they arise, except where deferred in equity as a qualifying cash flow or net investment hedge.

	Exchange differences arising on the translation of non-monetary items are recognized in other comprehensive loss in the statement of comprehensive loss to the extent that gains and losses arising on those non-monetary items are also recognized in other comprehensive loss. Where the non-monetary gain or loss is recognized in profit or loss, the exchange component is also recognized in profit or loss.

	*Intangible Assets*

	Intangible Assets Acquired Separately

	Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.

F-11

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Three Months Ended March 31, 2016 and 2015


2.	Significant Accounting Policies and Basis of Preparation (cont’d)

	Internally-Generated Intangible Assets - Research and Development Expenditure

	Expenditure on research activities is recognized as an expense in the period in which it is incurred.

	An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognized if, and only if, all of the following have been demonstrated:


	•	The technical feasibility of completing the intangible asset so that it will be available for use or sale;

	•	The intention to complete the intangible asset and use or sell it;

	•	The ability to use or sell the intangible asset;

	•	How the intangible asset will generate probable future economic benefits;

	•	The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

	•	The ability to measure reliably the expenditure attributable to the intangible asset during its development.


	The amount initially recognized for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognized, development expenditure is recognized in loss in the period in which it is incurred.

	Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

	At March 31, 2016 and December 31, 2015, the Company has not recognized any internally-generated intangible assets.

	*Share-Based Payments*

	The Company operates a stock option plan. Share-based payments to employees are measured at the fair value of the instruments issued and amortized over the vesting periods. Share-based payments to non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The corresponding amount is recorded to the share-based payment reserve. The fair value of options is determined using the Black–Scholes Option Pricing Model. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognized for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest.

	*Financial Instruments*

	The Company classifies its financial instruments in the following categories: at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale and financial liabilities. The classification depends on the purpose for which the financial instruments were acquired. Management determines the classification of its financial instruments at initial recognition.

	Financial assets are classified at fair value through profit or loss when they are either held for trading for the purpose of short-term profit taking, derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Such assets are subsequently measured at fair value with changes in carrying value being included in profit or loss.

F-12

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Three Months Ended March 31, 2016 and 2015


2.	Significant Accounting Policies and Basis of Preparation (cont’d)

	*Financial Instruments (cont’d)*

	Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortized cost. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets.

	Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the Company’s intention to hold these investments to maturity. They are subsequently measured at amortized cost. Held-to-maturity investments are included in non-current assets, except for those which are expected to mature within 12 months after the end of the reporting period.

	Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not suitable to be classified as financial assets at fair value through profit or loss, loans and receivables or held-to-maturity investments and are subsequently measured at fair value. These are included in current assets. Unrealized gains and losses are recognized in other comprehensive loss, except for impairment losses and foreign exchange gains and losses.

	Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortized cost. Derivative financial liabilities are classified at fair value through profit and loss and are subsequently measured at fair value with changes in carrying value being included in profit or loss.

	Regular purchases and sales of financial assets are recognized on the trade-date – the date on which the Company commits to purchase the asset.

	Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership.

	At each reporting date, the Company assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a significant and prolonged decline in the value of the instrument is considered to determine whether impairment has arisen.

	*Impairment of Long-Lived Assets*

	The carrying amount of the Company’s long-lived assets (which include equipment and intangible assets) is reviewed at each reporting date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. An impairment loss is recognized whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognized in the statement of comprehensive loss.

	*Impairment of Long-Lived Assets (cont’d)*

	The recoverable amount of assets is the greater of an asset’s fair value less cost to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

	An impairment loss is only reversed if there is an indication that the impairment loss may no longer exist and there has been a change in the estimates used to determine the recoverable amount, however, not to an amount higher than the carrying amount that would have been determined had no impairment loss been recognized in previous years.

	Assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment.

F-13

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Three Months Ended March 31, 2016 and 2015


2.	Significant Accounting Policies and Basis of Preparation (cont’d)

	*Cash and Cash Equivalents*

	Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term highly liquid investments, such as guaranteed investment certificates with original maturities of three months or less. Guaranteed investment certificates are investments with Canadian banks that are the equivalent of a certificate of deposit.

	Income Taxes

	Current Income Tax:

	Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date, in the countries where the Company operates and generates taxable income.

	Current income tax relating to items recognized directly in other comprehensive loss or equity is recognized in other comprehensive loss or equity and not in profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

	Deferred Income Tax:

	Deferred income tax is provided using the asset and liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

	The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and recognized only to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.

	Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

	Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

	*Equipment*

	Equipment is stated at historical cost less accumulated depreciation and accumulated impairment losses.

	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 the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the statement of comprehensive loss during the financial period in which they are incurred.

	Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized in profit or loss.

	Depreciation and amortization are calculated on a straight-line method to write off the cost of the assets to their residual values over their estimated useful lives.

	*Comparative Information*

	Certain expenses have been reclassified to conform with the presentation in the current year.

F-14

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Three Months Ended March 31, 2016 and 2015


3.	Accounting Standards Issued But Not Yet Effective

	*New standard IFRS 16 “Leases”*

	This new standard replaces IAS 17 “Leases” and the related interpretative guidance. IFRS 16 applies a control model to the identification of leases, distinguishing between a lease and a service contract on the basis of whether the customer controls the asset being leased. For those assets determined to meet the definition of a lease, IFRS 16 introduces significant changes to the accounting by lessees, introducing a single, on-balance sheet accounting model that is similar to current finance lease accounting, with limited exceptions for short-term leases or leases of low value assets. Lessor accounting is not substantially changed. The standard is effective for annual periods beginning on or after January 1, 2019, with early adoption permitted for entities that have adopted IFRS 15.

	The Company has not early adopted this new standard and is currently assessing the impact that these standards will have on its consolidated financial statements.

	Other accounting standards or amendments to existing accounting standards that have been issued but have future effective dates are either not applicable or are not expected to have a significant impact on the Company’s consolidated financial statements.

4.	Cash and Cash Equivalents


	March 31, 2016 (unaudited)		December 31, 2015

Cash at Bank	$	587,551	$	391,421
Savings Certificates in Banks		85		130,100
Guaranteed Investment Certificates		—		—

	$	587,636	$	521,521


5.	Receivables


	March 31, 2016 (unaudited)		December 31, 2015

GST receivable	$	3,145	$	10,883
Subscription receivable on share issuance		—		18,174

	$	3,145	$	29,057

F-15

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Three Months Ended March 31, 2016 and 2015


6.	Equipment


	Furniture and Office Equipment		Production Equipment		Total

Cost:
At December 31, 2014	$	355,018	$	911,347	$	1,266,365
Additions		5,724		21,461		27,185

At December 31, 2015		360,742		932,808		1,293,550


Depreciation:
At December 31, 2014		217,118		466,744		683,862
Charge for the Period		58,753		184,206		242,959

At December 31, 2015		275,871		650,950		926,821


Net Book Value:

At December 31, 2015	$	84,871	$	281,858	$	366,729

Cost:
At December 31, 2015	$	360,742	$	932,808	$	1,293,550
Additions		1,295		—		1,295

At March 31, 2016		362,037		932,808		1,294,845


Depreciation:
At December 31, 2015		275,871		650,950		926,821
Charge for the Period		1,756		46,350		48,106

At March 31, 2016		277,627		697,300		974,927


Net Book Value:

At March 31, 2016	$	84,410	$	235,508	$	319,918


7.	Intangible Assets


	Issued and Pending Patents

Cost:
At December 31, 2015, 2014 and 2013	$	711,814


Amortization:
At December 31, 2014		675,246
Charge for the Period		36,568

At December 31, 2015		711,814
Charge for the Period		—

At March 31, 2016 (unaudited)		711,814


Net Book Value:
At December 31, 2015	$	—

At March 31, 2016 (unaudited)	$	—

F-16

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Three Months Ended March 31, 2016 and 2015


8.	Trade Payables and Accrued Liabilities


	March 31, 2016 (unaudited)		December 31, 2015

Trade Payables and Accrued Liabilities	$	726,854	$	749,985


9.	Derivative Financial Liability


	Three Months Ended March 31, 2016 (unaudited)		Year Ended December 31, 2015

Balance, Beginning	$	1,135,157	$	124,823
Fair value of warrants issued during the year		541,377		1,237,161
Change in fair value of warrants outstanding		1,315,770		(226,827	)

Balance, Ending	$	2,992,304	$	1,135,157


	The derivative financial liability consists of the fair value of share purchase warrants that have exercise prices that differ from the functional currency of the Company and are within the scope of IAS 32 “Financial Instruments: Presentation”. Details of these warrants and their fair values are as follows:


Expiration Date	Exercise Price		Number of Warrants Outstanding at March 31, 2016 (unaudited)		Fair Value at March 31, 2016 (unaudited)		Number of Warrants Outstanding at December 31, 2015		Fair Value at December 31, 2015

	CDN $				US $				US $
December 22, 2015		1.00		—		—		—		—
January 4, 2016		1.00		—		—		429,867		—
July 20, 2017*		0.90		3,840,700		542,900		3,840,700		233,201
January 21, 2018		0.70		1,352,062		140,262		1,352,062		133,002
April 14, 2018		0.95		1,200,050		220,875		1,200,050		92,959
April 27, 2018		0.95		397,000		74,210		397,000		31,577
July 23, 2018		0.74		1,000,000		224,193		1,000,000		101,545
July 31, 2018		0.74		822,000		191,996		822,000		84,296
November 30, 2018		0.55		1,694,444		455,796		1,694,444		228,926
December 18, 2018		0.55		1,681,189		454,086		1,681,189		229,651
February 2, 2019		0.55		273,058		74,369		—		—
March 17, 2019		0.55		2,244,497		613,617		—		—
				14,505,000		2,992,304		12,417,312		1,135,157

_______________

*During the year ended December 31, 2015 the Company extended the expiration date of these warrants from July 20, 2015 to July 20, 2017. The Company determined the increase in fair value as a result of the extension was $417,115 which was included in the net change in fair value of the derivative financial liability recognized in net loss.


	The fair values of these warrants were estimated using the Black-Scholes Option Pricing Model using the following assumptions.

	•	The stock price was based upon the publicly traded price at the time of issuance;

	•	The risk-free interest rate assumption is based on the government of Canada marketable bonds for a period consistent with the expected term of the option in effect at the time of the grant;

	•	The Company does not pay dividends on common stock and does not anticipate paying dividends on its common stock in the foreseeable future. Therefore, the expected dividend rate was 0%;

	•	The expected life of the warrants was estimated to be 75% of the remaining contractual term which is based on the historical exercise patterns of warrant holders; and

	•	The expected volatility was based off of the historical trading prices of the Company’s common stock price over a period equivalent to the expected life of the warrants.

F-17

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Three Months Ended March 31, 2016 and 2015


9.	Derivative Financial Liability (cont’d)


	The fair values of these warrants as at March 31, 2016 (unaudited) were estimated using the Black-Scholes Option Pricing Model using the following inputs:


Expiration Date	July 20, 2017	January 21, 2018

Exercise price	CDN$0.90	CDN$0.70
Share price	CDN$0.65	CDN$0.65
Expected volatility	101%	98%
Expected life	0.98 years	1.36 years
Dividends	0.00%	0.00%
Risk-free interest rate	0.49%	0.57%


Expiration Date	April 14, 2018	April 27, 2018	July 23, 2018

Exercise price	CDN$0.95	CDN$0.95	CDN$0.74
Share price	CDN$0.65	CDN$0.65	CDN$0.65
Expected volatility	101%	101%	98%
Expected life	1.51 years	1.56 years	1.73 years
Dividends	0.00%	0.00%	0.00%
Risk-free interest rate	0.55%	0.55%	0.55%


Expiration Date	July 31, 2018	November 30, 2018	December 18, 2018

Exercise price	CDN$0.74	CDN$0.55	CDN$0.55
Share price	CDN$0.65	CDN$0.65	CDN$0.65
Expected volatility	101%	94%	94%
Expected life	1.75 years	2.00 years	2.03 years
Dividends	0.00%	0.00%	0.00%
Risk-free interest rate	0.55%	0.55%	0.55%


Expiration Date	February 2, 2019	March 17, 2019

Exercise price	CDN$0.55	CDN$0.55
Share price	CDN$0.65	CDN$0.65
Expected volatility	93%	91%
Expected life	2.13 years	1.22 years
Dividends	0.00%	0.00%
Risk-free interest rate	0.63%	0.63%


	The fair values of these warrants as at December 31, 2015 were estimated using the Black-Scholes Option Pricing Model using the following inputs.


Expiration Date	January 4, 2016	July 20, 2017	January 21, 2018

Exercise price	CDN$1.00	CDN$0.90	CDN$0.70
Share price	CDN$0.44	CDN$0.44	CDN$0.44
Expected volatility	39%	94%	92%
Expected life	0.01 years	1.17 years	1.55 years
Dividends	0.00%	0.00%	0.00%
Risk-free interest rate	0.00%	0.49%	0.57%


Expiration Date	April 14, 2018	April 27, 2018	July 23, 2018

Exercise price	CDN$0.95	CDN$0.95	CDN$0.74
Share price	CDN$0.44	CDN$0.44	CDN$0.44
Expected volatility	90%	90%	87%
Expected life	1.70 years	1.74 years	1.92 years
Dividends	0.00%	0.00%	0.00%
Risk-free interest rate	0.55%	0.55%	0.55%


Expiration Date	July 31, 2018	November 30, 2018	December 18, 2018

Exercise price	CDN$0.74	CDN$0.55	CDN$0.55
Share price	CDN$0.44	CDN$0.44	CDN$0.44
Expected volatility	87%	87%	87%
Expected life	1.94 years	2.19 years	2.22 years
Dividends	0.00%	0.00%	0.00%
Risk-free interest rate	0.55%	0.55%	0.55%

F-18

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Three Months Ended March 31, 2016 and 2015


10.	Share Capital

	*Authorized Share Capital*

	Unlimited number of common shares without par value.

	*Issued Share Capital*

	At March 31, 2016 (unaudited), there were 58,864,302issued and fully paid common shares (December 31, 2015 – 56,333,247).

	*Private Placements*

	In January 2015, the Company completed a non-brokered private placement and issued 1,352,062 units at a price of CDN$0.43 per unit for gross proceeds of $471,479 (CDN$581,387). Each unit comprised one common share and one share purchase warrant, with each warrant exercisable at a price of CDN$0.70 per share for a period of three years from the date of closing. The Company also issued 4,250 finders’ warrants with a fair value of $885 in connection with this private placement exercisable at a price of CDN$0.43 per share for a period of three years from the date of closing, and incurred issuance costs of $2,538.

	In April 2015, the Company completed a non-brokered private placement and issued 1,200,050 units at a price of CDN$0.70 per unit for gross proceeds of $672,028 (CDN$840,035). Each unit comprised one common share and one share purchase warrant, with each warrant exercisable at a price of $0.70 per share for a period of three years from the date of closing. The Company also issued 9,250 finders’ warrants in connection with this private placement exercisable at a price of CDN$0.95 per share for a period of three years from the date of closing and $6,321.

F-19

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Three Months Ended March 31, 2016 and 2015


10.	Share Capital (cont’d)

	*Private Placements (cont’d)*

	In July 2015, the Company completed a non-brokered private placement and issued 1,822,000 units at a price of CDN$0.54 per unit for gross proceeds of $982,227 (CDN$1,275,400). Each unit comprised one common share and one purchase warrant, with each warrant exercisable at a price of CDN$0.74 per share for a period of three years from the date of closing. The Company also issued 73,500 finders’ warrants in connection with this private placement exercisable at a price of CDN$0.74 per share for a period of three years from the date of closing.

	In November 2015, the Company completed a non-brokered private placement and issued 1,694,444 units at a price of CDN$0.36 per unit for gross proceeds of $456,018 (CDN$610,000). Each unit comprised one common share and one purchase warrant, with each warrant exercisable at a price of CDN$0.55 per share for a period of three years from the date of closing. The Company also issued 70,000 finders’ warrants in connection with this private placement exercisable at a price of CDN$0.55 per share for a period of three years from the date of closing.

	In December 2015, the Company completed a non-brokered private placement and issued 1,681,189 units at a price of CDN$0.36 per unit for gross proceeds of $437,096 (CDN$605,228). Each unit comprised one common share and one purchase warrant, with each warrant exercisable at a price of CDN$0.55 per share for a period of three years from the date of closing. The Company also issued 26,600 finders’ warrants in connection with this private placement exercisable at a price of CDN$0.55 per share for a period of three years from the date of closing.

	The Company incurred other share issue costs of $147,680 in connection with the above private placements.

	For the year ended December 31, 2015, the Company determined the fair value at the time of issuance of the warrants included in the derivative liability and the finders’ warrants using the Black-Scholes Option Pricing Model using the following inputs:


Input	Range

Expected volatility	84% - 87%
Expected life	2.25 years
Dividends	0.00%
Risk-free interest rate	0.55% - 0.63%


	In February 2016, the Company completed a non-brokered private placement and issued 273,058 units at a price of CDN$0.36 per unit for gross proceeds of $70,187 (CDN$98,301). Each unit comprised one common share and one purchase warrant, with each warrant exercisable at a price of CDN$0.55 per share for a period of three years from the date of closing.

	In March 2016, the Company completed a non-brokered private placement and issued 2,244,497 units at a price of CDN$0.36 per unit for gross proceeds of $605,917 (CDN$808,019). Each unit comprised one common share and one purchase warrant, with each warrant exercisable at a price of CDN$0.55 per share for a period of three years from the date of closing.


	The Company incurred other share issue costs of $4,497 in connection with the above private placements.

	For the three months ended March 31, 2016, the Company determined the fair value at the time of issuance of the warrants included in the derivative liability and the finders’ warrants using the Black-Scholes Option Pricing Model using the following inputs:


Input	Range

Expected volatility	86% - 89%
Expected life	2.25 years
Dividends	0.00%
Risk-free interest rate	0.63%


	*Share Subscriptions Received*

	As part of a private placement closed in February 2016 (above), the Company had received subscriptions of $31,102 at December 31, 2015. The shares for these subscriptions were issued in the close of the February private placement.

	*Basic and Diluted Loss Per Share*

	The calculation of basic and diluted loss per share for the three months ended March 31, 2016 and 2015 was based on the loss attributable to common shareholders of ($2,481,975) and ($1,224,744), respectively, and the weighted average number of common shares outstanding of 56,851,190 and 48,895,966, respectively, for basic and diluted. Diluted loss per share did not include the effect of stock options and warrants as the effect would be anti-dilutive.

	*Stock Options*

	The Company has adopted an incentive stock option plan, which provides that the Board of Directors of the Company may from time to time, at its discretion, and in accordance with the Exchange requirements, grant to directors, officers, employees and technical consultants to the Company, non-transferable options to purchase common shares, provided that the number of common shares reserved for issuance will not exceed 6,779,255 common shares. Such options will be exercisable for a period of up to 10 years from the date of grant. In connection with the foregoing, the number of common shares reserved for issuance to any one optionee will not exceed five percent (5%) of the issued and outstanding common shares and the number of common shares reserved for issuance to all technical consultants will not exceed two percent (2%) of the issued and outstanding common shares. Options may be exercised no later than 90 days following cessation of the optionee’s position with the Company or 30 days following cessation of an optionee conducting investor relations activities’ position.

	Stock-based compensation expense has been calculated using the Black-Scholes option pricing model. The expected life of the options has been estimated to be the contractual term of the option given the limited history of early exercise. Future volatility has been determined based on historical volatility for a period equivalent to the expected life of the option.

F-20

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Three Months Ended March 31, 2016 and 2015


10.	Share Capital (cont’d)

	*Stock Options (cont’d)*

	During the three months ended March 31, 2016 and 2015, the Company recorded stock-based compensation expense of $481,675and $79,954, respectively.

	On January 10, 2014, the Company granted 345,000 stock options to employees. 50% of the options vest six months following the grant date and the remaining in eighteen months from the grant date. The options are exercisable at CDN$1.08 and expire January 10, 2019. The options had a grant date fair value of $259,224 (CDN$282,995) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.73%; Expected life of 5 years; Volatility of 103%; and a Dividend yield of 0%.

	On February 3, 2014, the Company granted 60,000 stock options to employees. 50% of the options vest six months following the grant date and the remaining in eighteen months from the grant date. The options are exercisable at CDN$0.99 and expire February 3, 2019. The options had a grant date fair value of $40,706 (CDN$45,084) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.51%; Expected life of 5 years; Volatility of 103%; and a Dividend yield of 0%.

	On November 14, 2014, the Company granted 80,000 stock options to a consultant. 50% of the options vest six months following the grant date and the remaining in eighteen months from the grant date. The options are exercisable at CDN$0.57 and expire December 20, 2017. The options had a grant date fair value of $24,108 (CDN$27,229) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.14%; Expected life of 3.10 years; Volatility of 94%; and a Dividend yield of 0%.

	On December 17, 2014, the Company granted 525,000 stock options to employees. 50% of the options vest six months following the grant date and the remaining in eighteen months from the grant date. The options are exercisable at CDN$0.75 and expire December 17, 2019. The options had a grant date fair value of $140,026 (CDN$162,840) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.73%; Expected life of 5 years; Volatility of 93%; and a Dividend yield of 0%.

	The weighted average grant date fair value of options granted during the year ended December 31, 2014 was $0.46 per option (2013 - $0.36).

	On April 30, 2015, the Company granted 1,250,000 stock options to directors. The options vest 1/3 each calendar year from the grant date. The options are exercisable at CDN$0.58 and expire April 30, 2020. The options had a grant date fair value of $427,310 (CDN$513,742) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 0.98%; Expected life of 5 years; Volatility of 93%; and a Dividend yield of 0%.

	On June 15, 2015, the Company granted 15,000 stock options to employees. 50% of the options on September 15, 2015 and the remaining options vest eighteen months from the grant date. The options are exercisable at CDN$0.54 and expire June 15, 2020. The options had a grant date fair value of $4,621 (CDN$5,691) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 0.98%; Expected life of 5 years; Volatility of 92%; and a Dividend yield of 0%.

	On July 13, 2015, the Company granted 80,000 stock options to a consultant. The options vested immediately. The options are exercisable at CDN$0.65 and expire December 20, 2019. The options had a grant date fair value of $27,780 (CDN$35,193) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 0.76%; Expected life of 4.44 years; Volatility of 93%; and a Dividend yield of 0%.

	On January 31, 2016, the Company granted 1,975,000 stock options to employees. The options vested immediately. The options are exercisable at CDN$0.40 and expire January 13, 2021. The options had a grant date fair value of $395,116 (CDN$562,580) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 0.92%; Expected life of 5.00 years; Volatility of 94%; and a Dividend yield of 0%.

	On February 15, 2016, the Company granted 120,000 stock options to an employee. The options vest accordingly: 80,0000 after 6 months, and 40,000 after 1 year. The options are exercisable at CDN$0.51 and expire February 15, 2021. The options had a grant date fair value of $31,489 (CDN$43,622) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 0.92%; Expected life of 5.00 years; Volatility of 94%; and a Dividend yield of 0%.

F-21

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Three Months Ended March 31, 2016 and 2015


10.	Share Capital (cont’d)

	*Stock Options (cont’d)*

	The changes in options during the three months ended March 31, 2016 and the year ended December 31, 2015 are as follows:


	March 31, 2016 (unaudited)					December 31, 2015

	Number of options			Weighted average exercise price		Number of options			Number of options			Weighted average exercise price

Options outstanding, beginning		5,275,000			CDN$0.80		4,182,000			4,182,000			CDN$0.90
Options granted		2,095,000			CDN$0.41		1,345,000			1,345,000			CDN$0.86
Options exercised		(13,500	)		CDN$0.58		—			—			CDN$0.40
Options expired		(1,830,000	)		CDN$0.97		(252,000	)		(252,000	)		CDN$1.20

Options outstanding, ending		5,526,500			CDN$0.59		5,275,000			5,275,000			CDN$0.87

Options exercisable, ending		3,920,000			CDN$0.59		3,775,000			3,775,000			CDN$0.89


	The weighted average remaining life of the options outstanding as at March 31, 2016 is 3.52 years.

	Details of options outstanding as of March 31, 2016 are as follows:


Exercise Price	Expiration Date	Number of Options Outstanding

CDN$ 0.79	June 1, 2016	100,000
CDN$ 0.59	August 16, 2016	400,000
CDN$ 0.51	April 17, 2017	120,000
CDN$ 1.11	September 4, 2017	200,000
CDN$ 0.80	December 20, 2017	295,000
CDN$ 0.57	December 20, 2017	80,000
CDN$ 0.80	January 4, 2018	20,000
CDN$ 0.71	April 5, 2018	40,000
CDN$ 0.83	June 3, 2018	25,000
CDN$ 0.58	July 31, 2018	100,000
CDN$ 1.08	January 10, 2019	315,000
CDN$ 0.75	December 17, 2019	405,000
CDN$ 0.65	December 20, 2019	80,000
CDN$ 0.58	April 30, 2020	1,236,500
CDN$ 0.54	June 15, 2020	15,000
CDN$ 0.40	January 13, 2021	1,975,000
CDN$ 0.51	February 15, 2021	120,000

		5,526,500


	Each option entitles the holder to purchase one common share of the Company.

	*Shares Issued For Services*

	In October 2015, the Company issued 325,000 shares of common stock for professional services. The value of the shares issued was $111,469 (CDN$146,250).

F-22

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Three Months Ended March 31, 2016 and 2015


10.	Share Capital (cont’d)

	*Warrants*

	The changes in warrants during the three months ended March 31, 2016 and the year ended December 31, 2015 are as follows:


	March 31, 2016 (unaudited)					December 31, 2015

	Number of Warrants			Weighted Average Exercise Price		Number of Warrants			Weighted Average Exercise Price

Warrants outstanding, beginning		18,710,932			CDN$0.69		11,490,974			CDN$0.77
Warrants issued		2,541,005			CDN$0.55		8,354,625			CDN$0.70
Warrants expired		(429,867	)		CDN$1.39		(1,134,667	)		CDN$1.00
Warrants exercised		—			—		—			—
Warrants exercised		—			—		—			—

Warrants outstanding, ending		20,822,070			CDN$0.69		18,710,932			CDN$0.72


	The weighted average remaining life of the warrants outstanding as at March 31, 2016 is 1.65 years.

	Details of warrants outstanding as March 31, 2016 are as follows:


Exercise Price	Expiration Date	Number of Warrants Outstanding and Exercisable

US$ 0.62	August 20, 2016	6,085,740
CDN$ 0.90	July 20, 2017	3,840,700
CDN$ 0.70	January 21, 2018	1,356,312
CDN$ 0.95	April 14, 2018	1,209,080
CDN$ 0.95	April 27, 2018	421,500
CDN$ 0.74	July 23, 2018	70,000
CDN$ 0.74	July 31, 2018	1,825,500
CDN$ 0.74	November 30, 2018	1,764,444
CDN$ 0.74	December 18, 2018	1,707,789
CDN$ 0.55	February 2, 2019	273,058
CDN$ 0.55	March 17, 2019	2,267,947

		20,822,070

Other

On August 21, 2015, the Company entered into an Investment Agreement (the “Investment Agreement”) and Registration Rights Agreement (the “Registration Rights Agreement”) with Dutchess Opportunity Fund, II, LP (“Dutchess”). Pursuant to the Investment Agreement, Dutchess committed to purchase, subject to certain restrictions and conditions, up to $5 million of the Company’s Common Stock upon issuance by the company of a Put to Dutchess at a price equal to ninety five percent (95%) of the lowest daily VWAP (volume weighted average price) of the Company’s Common Stock during the five (5) consecutive Trading Days beginning on the Put Notice Date and ending on and including the date that is four (4) Trading Days after such Put Notice Date. Pursuant to the terms of the Registration Rights Agreement, the Company is obligated to file one or more registration statements with the SEC to register the resale by Dutchess of shares of Common Stock issued or issuable under the Investment Agreement. To date the Company has not utilized this facility.

F-23

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Three Months Ended March 31, 2016 and 2015


11.	Reserves

	*Share-Based Payment Reserve*

	The share-based payment reserve records the fair value of options and warrants recorded in accordance with IFRS 2 “Share-based payments” until such time that the stock options or warrants are exercised, at which time the corresponding amount will be transferred to share capital.

12.	Financial Risk and Capital Management

	The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management processes, inclusive of documented investment policies, counterparty limits, and controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows:

	*Credit Risk*

	Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company’s primary exposure to credit risk is on its cash, and cash equivalents. The majority of cash is deposited in bank accounts held with major banks in Canada and the United States. As most of the Company’s cash is held by two banks there is a concentration of credit risk. This risk is managed by using major banks that are high credit quality financial institutions as determined by rating agencies. The Company’s secondary exposure to risk is on its receivables. The risk is considered to be minimal.

	*Liquidity Risk*

	Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis. The Company ensures that there are sufficient funds to meet its short-term business requirements, taking into account its anticipated cash flows from operations and its holdings of cash and cash equivalents.

	Historically, the Company’s sole source of funding has been the issuance of equity securities for cash, primarily through private placements. The Company’s access to financing is always uncertain. There can be no assurance of continued access to significant equity funding.

	The following is an analysis of the contractual maturities of the Company’s non-derivative financial liabilities as at March 31, 2016:


	Within One Year		Between One and Five Years		More Than Five Years

Trade Payables and Accrued Liabilities	$	726,854	$	—	$	—


	*Foreign Exchange 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 does not hedge its exposure to fluctuations in foreign exchange rates.

F-24

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Three Months Ended March 31, 2016 and 2015


12.	Financial Risk and Capital Management (cont’d)

	The following is an analysis of the United States dollar equivalent of financial assets and liabilities that are denominated in Canadian dollars:


	March 31,2016 (unaudited)		December 31,2015

Cash and cash equivalents	$	428,021	$	295,019


	Based on the above net exposures, a 1% change in the Canadian dollar to United States dollar exchange rate would impact the Company’s net loss by $4,280 and $2,905 at March 31, 2016 and December 31, 2015, respectively.

	*Interest Rate Risk*

	Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk on its cash equivalents as these instruments have original maturities of three months or less and are therefore exposed to interest rate fluctuations on renewal. A 1% change in market interest rates would have an impact on the Company’s net loss of approximately $1,000.

	*Capital Management*

	The Company’s policy is to maintain a strong capital base so as to maintain investor and creditor confidence and to sustain future development of the business. The capital structure of the Company consists of equity, comprising share capital, net of accumulated deficit. There were no changes in the Company’s approach to capital management during the period.

	The Company is not subject to any externally imposed capital requirements.

	*Classification of Financial Instruments*

	Financial assets included in the statement of financial position are as follows:


Current Assets:		March 31, 2016 (unaudited)		December 31,2015

Cash, cash equivalents and receivables
Cash and cash equivalents	$	587,636	$	521,521
Subscription receivable on share issuance		—		18,174

	$	587,636	$	539,695


	Financial liabilities included in the statement of financial position are as follows:


	March 31, 2016 (unaudited)		December 31,2015

Non-derivative financial liabilities:
Trade payables	$	726,854	$	749,985
Derivative liabilities
Derivative financial liability – warrants		2,992,304		1,135,157

	$	3,719,158	$	1,885,142

F-25

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Three Months Ended March 31, 2016 and 2015


12.	Financial Risk and Capital Management (cont’d)

	*Fair Value*

	The fair value of the Company’s financial assets and liabilities approximates the carrying amount.

	Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:

	•	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 or indirectly; and

	•	Level 3 – Inputs that are not based on observable market data.

	Financial liabilities measured at fair value at March 31, 2016 and December 31, 2015 consisted of the derivative financial liability, which is measured using level 3 inputs.

	The fair value of the derivative liability is determined by the Black-Scholes option pricing model using the historical volatility as an estimate of future volatility. At March 31, 2016, if the volatility used was increased by 10% the impact would be an increase to the derivative liability of $267,350, with a corresponding decrease to comprehensive loss.


13.	Commitments

	*Employment Agreement*

	The Company has an agreement (the “Employment Agreement”) dated October 1, 2007, and amended July 31, 2008, with an officer of the Company under which the Company pays a fee for employee services at a base salary of $220,000 per annum. On April 30, 2010, the Board of Directors passed a resolution to increase this to $250,000 per annum and on May 13, 2011 passed a resolution to increase this to $275,000 per annum. The employee is entitled to receive options under the terms and conditions of the Company’s stock option plan. The employee will serve as the President and Chief Executive Officer of the Company. On April 5, 2012, the employment agreement was extended for an additional two years under the same terms. On April 5, 2014, the employment agreement was extended for an additional three years under the same terms.

	Pursuant to the Employment Agreement, the Company has committed to granting 500,000 stock options based on the Company achieving certain consolidated net revenue targets. The exercise price and term of the options will be set at time the targets are met.

	The employee has the right, upon 30 days notice, to terminate the Employment Agreement. The Company may terminate the Employment Agreement on 10 days notice if for cause or on 60 days notice if without cause. Should the Company terminate the contract without cause, it is obligated to pay the employee an amount equal to three month’s base salary.

	*License Agreement*

	In 2004, the Company entered into a License Agreement with a university under which the university is entitled to receive: (i) 2% of the Company’s adjusted gross sales as defined in the License Agreement, and (ii) 2% of the adjusted gross sales of any sub licensee as defined in the License Agreement. The License Agreement gives the Company an exclusive license to a certain United States patent and the related technology for low temperature growth of inorganic materials from solution using catalyzed growth and re-growth.

F-26

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Three Months Ended March 31, 2016 and 2015


13.	Commitments (cont’d)

	*Research and Development Facility Lease*

	On June 1, 2013, the Company entered into a new two year lease for its research and development facility in Rochester, New York. The Company will pay a base rent of $103,596 per year in monthly installments of $8,633. The lease was set to expire on June 30, 2015. On June 26, 2015, the Company extended the lease from July 1, 2015 to June 30, 2017 at a base rent of $105,212 per year in monthly installments of $8,768.

	*Administrative Office Lease*

	On August 1, 2013, the Company entered into a new three year lease agreement for its administrative office. The Company will pay a base rent of $22,000 per year in monthly installments of $1,833. After year one the annual rent will increase 3% for each year of the lease, the lease expires on July 31, 2016.

	*Patent License Agreement*

	On December 9, 2011, the Company entered into a Patent License Agreement to use certain licensed patents. The Company is required to pay an annual fee of $25,000 for as long as the Company uses the patents.

14.	Related Party Transactions and Balances

	*Related Party Balances*

	As of March 31, 2016 and December 31, 2015 there was $204,060 and $204,060, respectively, owed to directors, officers, and companies controlled by directors that has been included in trade payables and accrued liabilities.

	*Key Management Personnel Compensation*


	Three Months Ended March 31, 2016 (unaudited)		Year Ended December 31, 2015

Administrative fees	$	15,000	$	60,000
Consulting		—		100,200
Wages and benefits		104,698		558,320

	$	119,698	$	718,520

F-27

NATCORE TECHNOLOGY INC.

Consolidated Financial Statements

For Years EndedDecember 31, 2015 and 2014

Expressed in United States Dollars

F-28

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of Natcore Technology Inc.

We have audited the accompanying consolidated financial statements of Natcore Technology Inc., which comprise of the consolidated statements of financial position as at December 31, 2015 and 2014, and the consolidated statements of comprehensive loss, changes in equity and cash flows for the years ended December 31, 2015, 2014 and 2013, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Natcore Technology Inc. as at December 31, 2015 and 2014, and its financial performance and its cash flows for the years ended December 31, 2015, 2014 and 2013 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Emphasis of Matter

Without qualifying our opinion, we draw attention to Note 1 in the consolidated financial statements which describes certain conditions that indicate the existence of a material uncertainty that cast substantial doubt about the Natcore Technology Inc.’s ability to continue as a going concern.




	CHARTERED PROFESSIONAL ACCOUNTANTS

Vancouver, Canada
April 28, 2016

(MESSAGE)

Natcore Technology Inc.
Consolidated Statements of Financial Position
(Expressed in United States Dollars)


	Notes	December 31, 2015			December 31, 2014

ASSETS
Current assets
Cash and cash equivalents	4	$	521,521		$	548,387
Receivables	5		29,057			5,939
Prepaid expenses			148,076			60,395

			698,654			614,721

Non-current assets
Equipment	6		366,729			582,503
Intangible assets	7		—			36,568

			366,729			619,071

TOTAL ASSETS		$	1,065,383		$	1,233,792


LIABILITIES
Current liabilities
Trade payables and accrued liabilities	8	$	749,985		$	289,688
Derivative liability	9		1,135,157			124,823

TOTAL LIABILITIES			1,885,142			414,511


EQUITY (DEFICIENCY)
Share capital	10		15,690,371			13,977,256
Share-based payment reserve	10,11		3,375,710			2,956,964
Share subscriptions received	10		31,102			313,874
Deficit			(19,916,942	)		(16,428,813	)

TOTAL EQUITY (DEFICIENCY)			(819,759	)		819,281

TOTAL LIABILITIES AND EQUITY (DEFICIENCY)		$	1,065,383		$	1,233,792


Nature and continuance of operations	1
Commitments	13
Subsequent events	17

Approved on behalf of the Board:


“John Calhoun”		“Brien Lundin”



– Director		– Director

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

F-30

Natcore Technology Inc.
Consolidated Statements of Comprehensive Loss
(Expressed in United States Dollars)


		For the Years Ended

	Notes	December 31, 2015			December 31, 2014			December 31, 2013

Expenses
Consulting		$	181,589		$	229,792		$	108,657
Depreciation and amortization	6, 7		279,527			412,492			359,178
Filing fees			25,016			34,090			32,082
Foreign exchange (gain) loss			5,159			41,344			90,060
Interest and bank charges			2,383			1,581			1,269
Marketing and investor relations			268,853			81,401			96,641
Office and other operational expenses			216,811			273,264			267,532
Professional fees			335,762			213,888			129,499
Research and development	15		1,203,716			1,634,864			1,480,058
Stock-based compensation	10		387,648			301,732			325,686
Travel			45,858			73,922			126,668
Wages and salaries			778,339			770,105			855,853

			(3,730,661	)		(4,068,475	)		(3,873,183	)

Other income (expense)
Fair value adjustment on warrants	9		226,827			1,842,317			(79,353	)
Other income			14,124			—			—
Interest income			1,581			32,626			13,708


Net and comprehensive loss for the year		$	(3,488,129	)	$	(2,193,532	)	$	(3,938,828	)


Loss per share – basic and diluted		$	(0.07	)	$	(0.05	)	$	(0.10	)

Weighted average number of shares outstanding – basic and diluted			51,329,138			42,294,310			41,097,726

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

F-31

Natcore Technology Inc.
Consolidated Statement of Changes in Equity
(Expressed in United States Dollars)


		Share capital

	Notes	Number of shares		Amount			Share-based payment reserve			Share subscriptions received			Deficit			Total

Balance at January 1, 2013			38,580,849	$	8,970,743		$	2,616,511		$	—		$	(10,296,453	)	$	1,290,801
Comprehensive loss for the year			—		—			—			—			(3,938,828	)		(3,938,828	)
Stock-based compensation	10		—		—			325,686			—			—			325,686
Transactions with owners, in their capacity as owners, and other transfers:
Shares issued for cash – private placement	10		6,290,740		3,145,370			—			—			—			3,145,370
Shares issued for cash – options exercise			225,000		144,589			(58,272	)		—			—			86,317
Shares issued for cash – warrants exercise			998,530		728,685			(43,437	)		—			—			685,248
Issuance costs – cash	10		—		(82,022	)		—			—			—			(82,022	)
Issuance costs – warrants	10		—		(16,784	)		16,784			—			—			—
Derivative liability – warrants exercised			—		139,781			—			—			—			139,781

Balance at December 31, 2013			46,095,119		13,030,362			2,857,272			—			(14,235,281	)		1,652,353
Comprehensive loss for the year			—		—			—			—			(2,193,532	)		(2,193,532	)
Stock-based compensation	10		—		—			301,732			—			—			301,732
Transactions with owners, in their capacity as owners, and other transfers:
Shares issued for cash – options exercise			100,000		62,624			(25,898	)		—			—			36,726
Shares issued for cash – warrants exercise			1,666,383		884,270			(176,142	)		—			—			708,128
Subscriptions received			—		—			—			313,874			—			313,874

Balance at December 31, 2014			47,861,502		13,977,256			2,956,964			313,874			(16,428,813	)		819,281
Comprehensive loss for the year			—		—			—			—			(3,488,129	)		(3,488,129	)
Shares issued for services	10		325,000		111,764			—			—			—			111,764
Stock-based compensation	10		—		—			387,648			—			—			387,648
Transactions with owners, in their capacity as owners, and other transfers:
Shares issued for cash – private placements	10		8,146,745		3,017,290			—			(313,874	)		—			2,703,416
Derivative liability – warrants issued	10		—		(1,237,161	)		—			—			—			(1,237,161	)
Issuance costs – finders’ warrants	10		—		(31,098	)		31,098			—			—			—
Issuance costs – cash	10		—		(147,680	)		—			—			—			(147,680	)
Subscriptions received			—		—			—			31,102			—			31,102

Balance at December 31, 2015			56,333,247	$	15,690,371		$	3,375,710		$	31,102		$	(19,916,942	)	$	(819,759	)

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

F-32

Natcore Technology Inc.
Consolidated Statements of Cash Flows
(Expressed in United States Dollars)


	For the Years Ended

	December 31, 2015			December 31, 2014			December 31, 2013

Operating Activities
Netloss	$	(3,488,129	)	$	(2,193,532	)	$	(3,938,828	)
Adjustments for non-cash items:
Depreciation and amortization		279,527			412,492			359,178
Fair value adjustment on warrants		(226,827	)		(1,842,317	)		79,353
Stock-based compensation		387,648			301,732			325,686
Shares issued for services		111,764			—
Changes in non-cash working capital items:
Receivables		(4,944	)		20,077			7,195
Prepaid expenses		(87,681	)		33,605			(49,282	)
Trade payables and accrued liabilities		440,297			88,167			118,839

Net cash flows used in operating activities		(2,588,345	)		(3,179,776	)		(3,097,859	)


Investing Activities
Expenditures on equipment		(27,185	)		(179,587	)		(176,702	)
Research and development equipment tax credit		—			—			82,961

Net cash flows used in investing activities		(27,185	)		(179,587	)		(93,741	)


Financing Activities
Subscriptions received for pending private placement		31,102			313,874			3,834,913
Proceeds on issuance of common shares – net of issue costs		2,557,562			744,854			—

Net cash flows provided by financing activities		2,588,664			1,058,728			3,834,913

Decrease in cash and cash equivalents		(26,866	)		(2,300,635	)		643,313
Cash and cash equivalents, beginning		548,387			2,849,022			2,205,709

Cash and cash equivalents, ending	$	521,521		$	548,387		$	2,849,022

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

F-33

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Years Ended December 31, 2015 and 2014


1.	Nature and Continuance of Operations

	Natcore Technology Inc. (the “Company”) was incorporated under the British Columbia Business Corporations Act on August 9, 2007. The Company’s common shares are listed on the TSX Venture Exchange (the “Exchange”) under the symbol NXT. Effective May 26, 2015, the Company became a fully-reporting issuer in the United States. The Company develops and owns technology for the manufacturing of solar cells.

	The Company’s head office address is 87 Maple Avenue, 1 ^st Floor, Red Bank, New Jersey, 07701. The Company’s registered office is 2080 - 777 Hornby Street, Vancouver British Columbia V6Z 1S4.

	These consolidated financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. Different bases of measurement may be appropriate if the Company is not expected to continue operations for the foreseeable future. As at December 31, 2015 the Company has had recurring losses from operations and a cumulative deficit of $19,916,942. The Company’s continuation as a going concern is dependent upon its ability to attain profitable operations and generate funds there from and/or raise equity capital or borrowings sufficient to meet current and future obligations. These conditions indicate the existence of a material uncertainty that casts substantial doubt about the Company’s ability to continue as a going concern. Management intends to finance operating costs over the next twelve months with existing cash resources and the private placement of common shares.

2.	Significant Accounting Policies and Basis of Preparation

	*Statement of Compliance with International Financial Reporting Standards*

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

	The consolidated interim financial statements were authorized for issue by the Board of Directors on April 28, 2016.

	*Basis of Preparation*

	The consolidated financial statements of the Company have been prepared on an accrual basis and are based on historical costs, modified where applicable. The consolidated financial statements are presented in United States dollars unless otherwise noted.

	*Consolidation*

	The consolidated financial statements include the accounts of the Company and its controlled entities. Details of controlled entities are as follows:


		Percentage Owned*

	Jurisdiction of Incorporation	December 31, 2015	December 31, 2014

Natcore Technology, Inc.	United States	100%	100%
Newcyte, Incorporated	United States	100%	100%
Vanguard Solar, Inc.	United States	100%	100%
Natcore Asia Technology, Limited	Hong Kong	100%	100%

_______________

*Percentage of voting power is in proportion to ownership.

Inter-company balances are eliminated on consolidation.

F-34

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Years Ended December 31, 2015 and 2014


2.	Significant Accounting Policies and Basis of Preparation (cont’d)

	*Significant Accounting Judgments, Estimates and Assumptions*

	The preparation of consolidated financial statements in accordance with IFRS requires the Company to make estimates and assumptions concerning the future. The Company’s management reviews these estimates and underlying assumptions on an ongoing basis, based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are adjusted for prospectively in the period in which the estimates are revised.

	Estimates and assumptions where there is significant risk of material adjustments to assets and liabilities in future accounting periods include the useful lives of equipment, impairment considerations for equipment and intangible assets, determination of fair value for stock-based compensation and other share-based payments, valuations and assumptions used to determine deferred income taxes and the fair value of financial instruments.

	*Foreign Currency Translation*

	The functional currency of each of the Company’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in United States dollars which is the functional currency of the Company and its subsidiaries.

	Transactions and Balances:

	Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the period-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

	Exchange differences arising on the translation of monetary items or on settlement of monetary items are recognized in profit or loss in the statement of comprehensive loss in the period in which they arise, except where deferred in equity as a qualifying cash flow or net investment hedge.

	Exchange differences arising on the translation of non-monetary items are recognized in other comprehensive loss in the statement of comprehensive loss to the extent that gains and losses arising on those non-monetary items are also recognized in other comprehensive loss. Where the non-monetary gain or loss is recognized in profit or loss, the exchange component is also recognized in profit or loss.

	*Intangible Assets*

	Intangible Assets Acquired Separately

	Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.

F-35

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Years Ended December 31, 2015 and 2014


2.	Significant Accounting Policies and Basis of Preparation (cont’d)

	Internally-Generated Intangible Assets - Research and Development Expenditure

	Expenditure on research activities is recognized as an expense in the period in which it is incurred.

	An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognized if, and only if, all of the following have been demonstrated:

	•	The technical feasibility of completing the intangible asset so that it will be available for use or sale;

	•	The intention to complete the intangible asset and use or sell it;

	•	The ability to use or sell the intangible asset;

	•	How the intangible asset will generate probable future economic benefits;

	•	The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

	•	The ability to measure reliably the expenditure attributable to the intangible asset during its development.


	The amount initially recognized for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognized, development expenditure is recognized in loss in the period in which it is incurred.

	Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

	At December 31, 2015 and December 31, 2014, the Company has not recognized any internally-generated intangible assets.

	*Share-Based Payments*

	The Company operates a stock option plan. Share-based payments to employees are measured at the fair value of the instruments issued and amortized over the vesting periods. Share-based payments to non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The corresponding amount is recorded to the share-based payment reserve. The fair value of options is determined using the Black–Scholes Option Pricing Model. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognized for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest.

	*Financial Instruments*

	The Company classifies its financial instruments in the following categories: at fair value through profit or loss, loans and receivables, and other financial liabilities. The classification depends on the purpose for which the financial instruments were acquired. Management determines the classification of its financial instruments at initial recognition.

	Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortized cost. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets.

F-36

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Years Ended December 31, 2015 and 2014


3.	Significant Accounting Policies and Basis of Preparation (cont’d)

	*Financial Instruments (cont’d)*

	Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortized cost. Derivative financial liabilities are classified at fair value through profit and loss and are subsequently measured at fair value with changes in carrying value being included in profit or loss.

	At each reporting date, the Company assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a significant and prolonged decline in the value of the instrument is considered to determine whether impairment has arisen.

	*Impairment of Long-Lived Assets*

	The carrying amount of the Company’s long-lived assets (which include equipment and intangible assets) is reviewed at each reporting date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. An impairment loss is recognized whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognized in the statement of comprehensive loss.

	The recoverable amount of assets is the greater of an asset’s fair value less cost to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

	An impairment loss is only reversed if there is an indication that the impairment loss may no longer exist and there has been a change in the estimates used to determine the recoverable amount, however, not to an amount higher than the carrying amount that would have been determined had no impairment loss been recognized in previous years.

	Assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment.

	*Cash and Cash Equivalents*

	Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term highly liquid investments, such as guaranteed investment certificates with original maturities of three months or less. Guaranteed investment certificates are investments with Canadian banks that are the equivalent of a certificate of deposit.

	*Income Taxes*

	Current Income Tax:

	Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date, in the countries where the Company operates and generates taxable income.

	Current income tax relating to items recognized directly in other comprehensive loss or equity is recognized in other comprehensive loss or equity and not in profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

F-37

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Years Ended December 31, 2015 and 2014


2.	Significant Accounting Policies and Basis of Preparation (cont’d)

	*Income Taxes (cont’d)*

	Deferred Income Tax:

	Deferred income tax is provided using the asset and liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

	The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and recognized only to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.

	Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

	Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

	*Equipment*

	Equipment is stated at historical cost less accumulated depreciation and accumulated impairment losses.

	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 the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the statement of comprehensive loss during the financial period in which they are incurred.

	Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized in profit or loss.

	Depreciation and amortization are calculated on a straight-line method to write off the cost of the assets to their residual values over their estimated useful lives.

	*Comparative Information*

	Certain expenses have been reclassified to conform with the presentation in the current year.

F-38

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Years Ended December 31, 2015 and 2014


8.	Accounting Standards Issued But Not Yet Effective

	*New standard IFRS 16 “Leases”*

	This new standard replaces IAS 17 “Leases” and the related interpretative guidance. IFRS 16 applies a control model to the identification of leases, distinguishing between a lease and a service contract on the basis of whether the customer controls the asset being leased. For those assets determined to meet the definition of a lease, IFRS 16 introduces significant changes to the accounting by lessees, introducing a single, on-balance sheet accounting model that is similar to current finance lease accounting, with limited exceptions for short-term leases or leases of low value assets. Lessor accounting is not substantially changed. The standard is effective for annual periods beginning on or after January 1, 2019, with early adoption permitted for entities that have adopted IFRS 15.

	The Company has not early adopted this new standard and is currently assessing the impact that these standards will have on its consolidated financial statements.

	Other accounting standards or amendments to existing accounting standards that have been issued but have future effective dates are either not applicable or are not expected to have a significant impact on the Company’s consolidated financial statements.

9.	Cash and Cash Equivalents


	December 31, 2015		December 31, 2014

Cash at Bank	$	391,421	$	412,996
Savings Certificates in Banks		130,100		18,731
Guaranteed Investment Certificates		—		116,660

	$	521,521	$	548,387


10.	Receivables


	December 31, 2015		December 31, 2014

GST Receivable	$	10,883	$	5,939
Subscription receivable on share issuance		18,174

	$	29,057	$	5,939

F-39

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Years Ended December 31, 2015 and 2014


11.	Equipment


	Furniture and Office Equipment		Production Equipment		Total

Cost:
At December 31, 2013	$	345,168	$	741,610	$	1,086,778
Additions		9,850		169,737		179,587

At December 31, 2014		355,018		911,347		1,266,365


Depreciation:
At December 31, 2013		114,556		291,869		406,425
Charge for the year		102,562		174,875		277,437

At December 31, 2014		217,118		466,744		683,862


Net Book Value:
At December 31, 2014	$	137,900	$	444,603	$	582,503


Cost:
At December 31, 2014	$	355,018	$	911,347	$	1,266,365
Additions		5,724		21,461		27,185

At December 31, 2015		360,742		932,808		1,293,550


Depreciation:
At December 31, 2014		217,118		466,744		683,862
Charge for the year		58,753		184,206		242,959

At December 31, 2015		275,871		650,950		926,821


Net Book Value:
At December 31, 2015	$	84,871	$	281,858	$	366,729


12.	Intangible Assets


	Issued and Pending Patents

Cost:
At December 31, 2015, 2014 and 2013	$	711,814


Amortization:
At December 31, 2013		540,191
Charge for the year		135,055

At December 31, 2014		675,246
Charge for the year		36,568

At December 31, 2015		711,814


Net Book Value:
At December 31, 2014	$	36,568

At December 31, 2015	$	—

F-40

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Years Ended December 31, 2015 and 2014


11.	Trade Payables and Accrued Liabilities


	December 31, 2015		December 31, 2014

Trade Payables and Accrued Liabilities	$	749,985	$	289,688


12.	Derivative Financial Liability


	Year Ended December 31, 2015			Year Ended December 31, 2014			Year Ended December 31, 2013

Balance, Beginning	$	124,823		$	1,967,140		$	2,027,568
Fair value of warrants issued during the year		1,237,161			—			(139,781	)
Change in fair value of warrants outstanding		(226,827	)		(1,842,317	)		79,353

Balance, Ending	$	1,135,157		$	124,823		$	1,967,140


	The derivative financial liability consists of the fair value of share purchase warrants that have exercise prices that differ from the functional currency of the Company and are within the scope of IAS 32 “Financial Instruments: Presentation”. Details of these warrants and their fair values are as follows:


Expiration Date	Exercise Price	Number of Warrants Outstanding at December 31, 2015		Fair Value at December 31, 2015		Number of Warrants Outstanding at December 31, 2014		Fair Value at December 31, 2014

	CDN $			US $				US $
December 22, 2015	1.00		—		—		1,134,667		29,943
January 4, 2016	1.00		429,867		—		429,867		9,579
July 20, 2017*	0.90		3,840,700		233,201		3,840,700		85,301
January 21, 2018	0.70		1,352,062		133,002		—		—
April 14, 2018	0.95		1,200,050		92,959		—		—
April 27, 2018	0.95		397,000		31,577		—		—
July 23, 2018	0.74		1,000,000		101,545		—		—
July 31, 2018	0.74		822,000		84,296		—		—
November 30, 2018	0.55		1,694,444		228,926		—		—
December 18, 2018	0.55		1,681,189		229,651		—		—

			12,417,312		1,135,157		5,405,234		124,823

_______________


	The fair values of these warrants were estimated using the Black-Scholes Option Pricing Model using the following assumptions.

	•	The stock price was based upon the publicly traded price at the time of issuance;

	•	The risk-free interest rate assumption is based on the government of Canada marketable bonds for a period consistent with the expected term of the option in effect at the time of the grant;

	•	The Company does not pay dividends on common stock and does not anticipate paying dividends on its common stock in the foreseeable future. Therefore, the expected dividend rate was 0%;

	•	The expected life of the warrants was estimated to be 75% of the remaining contractual term which is based on the historical exercise patterns of warrant holders; and

F-41

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Years Ended December 31, 2015 and 2014


12.	Derivative Financial Liability (cont’d)

	•	The expected volatility was based off of the historical trading prices of the Company’s common stock price over a period equivalent to the expected life of the warrants.

	The fair values of these warrants as at December 31, 2015 were estimated using the Black-Scholes Option Pricing Model using the following inputs:


Expiration Date	January 4, 2016	July 20, 2017	January 21, 2018

Exercise price	CDN$1.00	CDN$0.90	CDN$0.70
Share price	CDN$0.44	CDN$0.44	CDN$0.44
Expected volatility	39%	94%	92%
Expected life	0.01 years	1.17 years	1.55 years
Dividends	0.00%	0.00%	0.00%
Risk-free interest rate	0.00%	0.49%	0.57%


Expiration Date	April 14, 2018	April 27, 2018	July 23, 2018

Exercise price	CDN$0.95	CDN$0.95	CDN$0.74
Share price	CDN$0.44	CDN$0.44	CDN$0.44
Expected volatility	90%	90%	87%
Expected life	1.70 years	1.74 years	1.92 years
Dividends	0.00%	0.00%	0.00%
Risk-free interest rate	0.55%	0.55%	0.55%


Expiration Date	July 31, 2018	November 30, 2018	December 18, 2018

Exercise price	CDN$0.74	CDN$0.55	CDN$0.55
Share price	CDN$0.44	CDN$0.44	CDN$0.44
Expected volatility	87%	87%	87%
Expected life	1.94 years	2.19 years	2.22 years
Dividends	0.00%	0.00%	0.00%
Risk-free interest rate	0.55%	0.55%	0.55%


	The fair values of these warrants as at December 31, 2014 were estimated using the Black-Scholes Option Pricing Model using the following inputs.


Expiration Date	December 22, 2015	January 4, 2016	July 20, 2015

Exercise price	CDN$1.00	CDN$1.00	CDN$0.90
Share price	CDN$0.46	CDN$1.11	CDN$1.11
Expected volatility	81%	76%	94%
Expected life	0.73 years	0.76 years	0.41 years
Dividends	0.00%	0.00%	0.00%
Risk-free interest rate	0.96%	0.96%	1.00%

F-42

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Years Ended December 31, 2015 and 2014


13.	Share Capital

	*Authorized Share Capital*

	Unlimited number of common shares without par value.

	*Issued Share Capital*

	At December 31, 2015, there were 56,333,247issued and fully paid common shares (December 31, 2014 – 47,861,502).

	*Private Placements*

	In January, 2015, the Company completed a non-brokered private placement and issued 1,352,062 units at a price of CDN$0.43 per unit for gross proceeds of $466,447 (CDN$581,387). Each unit comprised one common share and one share purchase warrant, with each warrant exercisable at a price of CDN$0.70 per share for a period of three years from the date of closing. On issue the fair value of the warrants was determined to be $191,855 and included in derivative liability (note 9). The Company also issued 4,250 finders’ warrants with a fair value of $603 in connection with this private placement exercisable at a price of CDN$0.43 per share for a period of three years from the date of closing.

	In April 2015, the Company completed a non-brokered private placement and issued 1,597,050 units at a price of CDN$0.70 per unit for gross proceeds of $895,018 (CDN$1,117,935). Each unit comprised one common share and one share purchase warrant, with each warrant exercisable at a price of CDN$0.95 per share for a period of three years from the date of closing. On issue the fair value of the warrants was determined to be $388,320 and included in derivative liability (note 9). The Company also issued 33,530 finders’ warrants with a fair value of $7,745 in connection with this private placement exercisable at a price of CDN$0.95 per share for a period of three years from the date of closing.

	In July 2015, the Company completed a non-brokered private placement and issued 1,822,000 units at a price of CDN$0.54 per unit for gross proceeds of $746,470 (CDN$983,880). Each unit comprised one common share and one purchase warrant, with each warrant exercisable at a price of CDN$0.74 per share for a period of three years from the date of closing. On issue the fair value of the warrants was determined to be $282,513 and included in derivative liability (note 9). The Company also issued 73,500 finders’ warrants with a fair value of $12,133 in connection with this private placement exercisable at a price of CDN$0.74 per share for a period of three years from the date of closing.

	In November 2015, the Company completed a non-brokered private placement and issued 1,694,444 units at a price of CDN$0.36 per unit for gross proceeds of $456,463 (CDN$610,000). Each unit comprised one common share and one purchase warrant, with each warrant exercisable at a price of CDN$0.55 per share for a period of three years from the date of closing. On issue the fair value of the warrants was determined to be $184,119 and included in derivative liability (note 9). The Company also issued 70,000 finders’ warrants with a fair value of $7,605 in connection with this private placement exercisable at a price of CDN$0.55 per share for a period of three years from the date of closing.

	In December 2015, the Company completed a non-brokered private placement and issued 1,681,189 units at a price of CDN$0.36 per unit for gross proceeds of $452,892 (CDN$605,228). Each unit comprised one common share and one purchase warrant, with each warrant exercisable at a price of CDN$0.55 per share for a period of three years from the date of closing. On issue the fair value of the warrants was determined to be $190,354 and included in derivative liability (note 9). The Company also issued 26,600 finders’ warrants with a fair value of $3,012 in connection with this private placement exercisable at a price of CDN$0.55 per share for a period of three years from the date of closing. At December 31, 2015, included in receivables is 18,174 (CDN$25,200) relating to this private placement.

	The Company incurred other share issue costs of $147,680 in connection with the above private placements.

F-43

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Years Ended December 31, 2015 and 2014


13.	Share Capital (cont’d)

	*Private Placements (cont’d)*

	For the year ended December 31, 2015, the Company determined the fair value at the time of issuance of the warrants included in the derivative liability and the finders’ warrants using the Black-Scholes Option Pricing Model using the following inputs:


Input	Range

Expected volatility	84% - 87%
Expected life	2.25 years
Dividends	0.00%
Risk-free interest rate	0.55% - 0.63%


	On August 20, 2013, the Company completed a private placement of 6,290,740 units at a price of $0.50 per unit for gross proceeds of $3,145,370. Each unit comprised one common share and one share purchase warrant, with each whole warrant exercisable at a price of USD$0.62 per share and expiring August 20, 2016. The Company paid finder’s fees of $16,313 for the financing as well as incurring other share issuance costs of $65,709. A total of 59,850 finders’ warrants were issued with a fair value of $16,784 determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 0.70%; Expected life of 3 years; Volatility of 90.6%; and a Dividend yield of 0%.

	*Shares Issued For Services*

	In October 2015, the Company issued 325,000 shares of common stock for professional services. The fair value of the shares issued was $111,764

	*Stock Options*

	The Company has adopted an incentive stock option plan, which provides that the Board of Directors of the Company may from time to time, at its discretion, and in accordance with the Exchange requirements, grant to directors, officers, employees and technical consultants to the Company, non-transferable options to purchase common shares, provided that the number of common shares reserved for issuance will not exceed 6,779,255 common shares. Such options will be exercisable for a period of up to 10 years from the date of grant. In connection with the foregoing, the number of common shares reserved for issuance to any one optionee will not exceed five percent (5%) of the issued and outstanding common shares and the number of common shares reserved for issuance to all technical consultants will not exceed two percent (2%) of the issued and outstanding common shares. Options may be exercised no later than 90 days following cessation of the optionee’s position with the Company or 30 days following cessation of an optionee conducting investor relations activities’ position.

	Stock-based compensation expense has been calculated using the Black-Scholes option pricing model. The expected life of the options has been estimated to be the contractual term of the option given the limited history of early exercise. Future volatility has been determined based on historical volatility for a period equivalent to the expected life of the option.

	For the years ended December 31, 2015, the Company recorded stock-based compensation expense of $387,648(2014 - $301,732, 2013 - $325,686).

	On January 4, 2013 the Company granted 20,000 stock options to an employee. The options vested immediately. The options are exercisable at CDN$0.80 and expire January 4, 2018. The options had a fair value of $12,847 (CDN$12,665) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 0.27%; Expected life of 5 years; Volatility of 107%; and a Dividend yield of 0%.

	On April 5, 2013 the Company granted 40,000 stock options to an employee. 50% of the options vest six months following the grant date and the remaining in twelve months from the grant date. The options are exercisable at CDN$0.71 and expire April 5, 2018. The options had a grant date fair value of $21,496 (CDN$21,801) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 0.71%; Expected life of 5 years; Volatility of 106%; and a Dividend yield of 0%.

F-44

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For Years Ended December 31, 2015 and 2014


13.	Share Capital (cont’d)

	*Stock Options (cont’d)*

	On June 1, 2013 the Company granted 100,000 stock options to an employee. 25% of the options vested immediately, and 25% vest every three months thereafter. The options are exercisable at CDN$0.79 and expire June 1, 2016. The options had a grant date fair value of $48,167 (CDN$49,755) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 0.71%; Expected life of 3 years; Volatility of 94%; and a Dividend yield of 0%.

	On June 3, 2013 the Company granted 25,000 stock options to an employee. 50% of the options vest six months following the grant date and the remaining in twelve months from the grant date. The options are exercisable at CDN$0.83 and expire June 3, 2018. The options had a grant date fair value of $15,416 (CDN$15,981) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.20%; Expected life of 5 years; Volatility of 106%; and a Dividend yield of 0%.

	On July 31, 2013 the Company granted 100,000 stock options to two consultants. 50% of the options vest six months following the grant date and the remaining in twelve months from the grant date. The options are exercisable at CDN$0.58 and expire July 18, 2018. The options had a grant date fair value of $42,209 (CDN$43,757) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.40%; Expected life of 5 years; Volatility of 102%; and a Dividend yield of 0%.

	On August 16, 2013 the Company granted 400,000 stock options to a consultant. The options vested immediately. The options are exercisable at CDN$0.59 and expire August 16, 2016. The options had a grant date fair value of $128,191 (CDN$132,332) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.20%; Expected life of 3 years; Volatility of 90%; and a Dividend yield of 0%.

	On January 10, 2014, the Company granted 345,000 stock options to employees. 50% of the options vest six months following the grant date and the remaining in eighteen months from the grant date. The options are exercisable at CDN$1.08 and expire January 10, 2019. The options had a grant date fair value of $259,224 (CDN$282,995) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.73%; Expected life of 5 years; Volatility of 103%; and a Dividend yield of 0%.

	On February 3, 2014, the Company granted 60,000 stock options to employees. 50% of the options vest six months following the grant date and the remaining in eighteen months from the grant date. The options are exercisable at CDN$0.99 and expire February 3, 2019. The options had a grant date fair value of $40,706 (CDN$45,084) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.51%; Expected life of 5 years; Volatility of 103%; and a Dividend yield of 0%.

	On November 14, 2014, the Company granted 80,000 stock options to a consultant. 50% of the options vest six months following the grant date and the remaining in eighteen months from the grant date. The options are exercisable at CDN$0.57 and expire December 20, 2017. The options had a grant date fair value of $24,108 (CDN$27,229) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.14%; Expected life of 3.10 years; Volatility of 94%; and a Dividend yield of 0%.

	On December 17, 2014, the Company granted 525,000 stock options to employees. 50% of the options vest six months following the grant date and the remaining in eighteen months from the grant date. The options are exercisable at CDN$0.75 and expire December 17, 2019. The options had a grant date fair value of $140,026 (CDN$162,840) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.73%; Expected life of 5 years; Volatility of 93%; and a Dividend yield of 0%.

	On April 30, 2015, the Company granted 1,250,000 stock options to directors. The options vest 1/3 each calendar year from the grant date. The options are exercisable at CDN$0.58 and expire April 30, 2020. The options had a grant date fair value of $427,310 (CDN$513,742) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 0.98%; Expected life of 5 years; Volatility of 93%; and a Dividend yield of 0%.

F-45

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

For Years Ended December 31, 2015 and 2014


13.	Share Capital (cont’d)

	*Stock Options (cont’d)*

	On June 15, 2015, the Company granted 15,000 stock options to employees. 50% of the options on September 15, 2015 and the remaining options vest eighteen months from the grant date. The options are exercisable at CDN$0.54 and expire June 15, 2020. The options had a grant date fair value of $4,621 (CDN$5,691) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 0.98%; Expected life of 5 years; Volatility of 92%; and a Dividend yield of 0%.

	On July 13, 2015, the Company granted 80,000 stock options to a consultant. The options vested immediately. The options are exercisable at CDN$0.65 and expire December 20, 2019. The options had a grant date fair value of $27,780 (CDN$35,193) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 0.76%; Expected life of 4.44 years; Volatility of 93%; and a Dividend yield of 0%.

	The weighted average grant date fair value of options granted during the year ended December 31, 2015 was $0.34 per option (2014 - $0.46, 2013 - $0.36).

	The changes in options during the years ended December 31, 2015 and 2014 are as follows:


	December 31, 2015					December 31, 2014

	Number of options			Weighted average exercise price		Number of options			Weighted average exercise price

Options outstanding, beginning		4,182,000			CDN$0.97		3,772,000			CDN$0.90
Options granted		1,345,000			CDN$0.58		1,010,000			CDN$0.86
Options exercised		—			—		(100,000	)		CDN$0.40
Options expired		(252,000	)		CDN$0.85		(500,000	)		CDN$1.20

Options outstanding, ending		5,275,000			CDN$0.80		4,182,000			CDN$0.87


Options exercisable, ending		3,775,000			CDN$0.88		3,324,500			CDN$0.89

The weighted average remaining life of the options outstanding as at December 31, 2015 is 2.00 years.

Details of options outstanding as of December 31, 2015 are as follows:


Exercise Price	Expiration Date	Number of Options Outstanding

CDN$ 0.97	February 8, 2016	1,830,000
CDN$ 0.79	June 1, 2016	100,000
CDN$ 0.59	August 16, 2016	400,000
CDN$ 0.51	April 17, 2017	120,000
CDN$ 1.11	September 4, 2017	200,000
CDN$ 0.80	December 20, 2017	295,000
CDN$ 0.57	December 20, 2017	80,000
CDN$ 0.80	January 4, 2018	20,000
CDN$ 0.71	April 5, 2018	40,000
CDN$ 0.83	June 3, 2018	25,000
CDN$ 0.58	July 31, 2018	100,000
CDN$ 1.08	January 10, 2019	315,000
CDN$ 0.75	December 17, 2019	405,000
CDN$ 0.65	December 20, 2019	80,000
CDN$ 0.58	April 30, 2020	1,250,000
CDN$ 0.54	June 15, 2020	15,000

		5,275,000

F-46

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

For Years Ended December 31, 2015 and 2014


13.	Share Capital (cont’d)

	*Warrants*

	Each option entitles the holder to purchase one common share of the Company.

	The changes in warrants during the years ended December 31, 2015 and 2014are as follows:


	December 31, 2015					December 31, 2014

	Number of Warrants			Weighted Average Exercise Price		Number of Warrants			Weighted Average Exercise Price

Warrants outstanding, beginning		11,488,474			CDN$0.77		13,517,067			CDN$0.72
Warrants issued		8,354,625			CDN$0.70		—			—
Warrants expired		(1,134,667	)		CDN$1.00		(362,210	)		CDN$0.65
Warrants exercised		—			—		(114,850	)		US$0.62
Warrants exercised		—			—		(1,551,533	)		CDN$0.45

Warrants outstanding, ending		18,708,432			CDN$0.72		11,488,474			CDN$0.77

The weighted average remaining life of the warrants outstanding as at December 31, 2015 is 1.68 years.

Details of warrants outstanding as December 31, 2015 are as follows:


Exercise Price	Expiration Date	Number of Warrants Outstanding and Exercisable

CDN$ 1.00	January 4, 2016	429,867
US$ 0.62	August 20, 2016	6,083,240
CDN$ 0.90	July 20, 2017	3,840,700
CDN$ 0.70	January 21, 2018	1,356,312
CDN$ 0.95	April 14, 2018	1,209,080
CDN$ 0.95	April 27, 2018	421,500
CDN$ 0.74	July 23, 2018	70,000
CDN$ 0.74	July 31, 2018	1,825,500
CDN$ 0.74	November 30, 2018	1,764,444
CDN$ 0.74	December 18, 2018	1,707,789

		18,708,432


	*Other*

	On August 21, 2015, the Company entered into an Investment Agreement (the “Investment Agreement”) and Registration Rights Agreement (the “Registration Rights Agreement”) with Dutchess Opportunity Fund, II, LP (“Dutchess”). Pursuant to the Investment Agreement, Dutchess committed to purchase, subject to certain restrictions and conditions, up to $5 million of the Company’s Common Stock upon issuance by the company of a Put to Dutchess at a price equal to ninety five percent (95%) of the lowest daily VWAP (volume weighted average price) of the Company’s Common Stock during the five (5) consecutive Trading Days beginning on the Put Notice Date and ending on and including the date that is four (4) Trading Days after such Put Notice Date. Pursuant to the terms of the Registration Rights Agreement, the Company is obligated to file one or more registration statements with the SEC to register the resale by Dutchess of shares of Common Stock issued or issuable under the Investment Agreement. To date the Company has not utilized this facility.

14.	Reserves

	*Share-Based Payment Reserve*

	The share-based payment reserve records the fair value of options and warrants recorded in accordance with IFRS 2 “Share-based payments” until such time that the stock options or warrants are exercised, at which time the corresponding amount will be transferred to share capital.

F-47

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

For Years Ended December 31, 2015 and 2014

Financial Risk and Capital Management


	The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management processes, inclusive of documented investment policies, counterparty limits, and controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows:

	*Credit Risk*

	Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company’s primary exposure to credit risk is on its cash, and cash equivalents. The majority of cash is deposited in bank accounts held with major banks in Canada and the United States. As most of the Company’s cash is held by two banks there is a concentration of credit risk. This risk is managed by using major banks that are high credit quality financial institutions as determined by rating agencies. The Company’s secondary exposure to risk is on its receivables. The risk is considered to be minimal.

	*Liquidity Risk*

	Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis. The Company ensures that there are sufficient funds to meet its short-term business requirements, taking into account its anticipated cash flows from operations and its holdings of cash and cash equivalents.

	Historically, the Company’s sole source of funding has been the issuance of equity securities for cash, primarily through private placements. The Company’s access to financing is always uncertain. There can be no assurance of continued access to significant equity funding.

	The following is an analysis of the contractual maturities of the Company’s non-derivative financial liabilities as at December 31, 2015:


	Within One Year		Between One and Five Years		More Than Five Years

Trade Payables and Accrued Liabilities	$	749,985	$	—	$	—


	*Foreign Exchange 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 does not hedge its exposure to fluctuations in foreign exchange rates.

	The following is an analysis of the United States dollar equivalent of financial assets and liabilities that are denominated in Canadian dollars:


	December 31, 2015		December 31, 2014

Cash and cash equivalents	$	295,019	$	432,656


	Based on the above net exposures, a 1% change in the Canadian dollar to United States dollar exchange rate would impact the Company’s net loss by $2,950 and $4,327 at December 31, 2015 and 2014, respectively.

	*Interest Rate Risk*

	Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk on its cash equivalents as these instruments have original maturities of three months or less and are therefore exposed to interest rate fluctuations on renewal. A 1% change in market interest rates would have an impact on the Company’s net loss of approximately $1,000.

F-48

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

For Years Ended December 31, 2015 and 2014


12.	Financial Risk and Capital Management (cont’d)

	*Capital Management*

	The Company’s policy is to maintain a strong capital base so as to maintain investor and creditor confidence and to sustain future development of the business. The capital structure of the Company consists of equity, comprising share capital, net of accumulated deficit. There were no changes in the Company’s approach to capital management during the period.

	The Company is not subject to any externally imposed capital requirements.

	*Classification of Financial Instruments*

	Financial assets included in the statement of financial position are as follows:


	December 31, 2015		December 31, 2014

Current Assets:
Cash, cash equivalents and receivables
Cash and cash equivalents	$	521,521	$	548,387
Subscription receivable on share issuance		18,174		—

	$	539,695	$	548,387

Financial liabilities included in the statement of financial position are as follows:


Non-derivative financial liabilities:	December 31, 2015		December 31, 2014

Trade payables	$	749,985	$	289,688
Derivative liabilities
Derivative financial liability – warrants		1,135,157		124,823

	$	1,885,142	$	414,511


	*Fair Value*

	The fair value of the Company’s financial assets and liabilities approximates the carrying amount.

	Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:

	•	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 or indirectly; and

	•	Level 3 – Inputs that are not based on observable market data.

	Financial liabilities measured at fair value at December 31, 2015 and 2014 consisted of the derivative financial liability, which is measured using level 3 inputs.

	The fair value of the derivative liability is determined by the Black-Scholes option pricing model using the historical volatility as an estimate of future volatility. At December 31, 2015, if the volatility used was increased by 10% the impact would be an increase to the derivative liability of $167,000, with a corresponding decrease to comprehensive loss.

F-49

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

For Years Ended December 31, 2015 and 2014


15.	Commitments

	*Employment Agreement*

	The Company has an agreement (the “Employment Agreement”) dated October 1, 2007, and amended July 31, 2008, with an officer of the Company under which the Company pays a fee for employee services at a base salary of $220,000 per annum. On April 30, 2010, the Board of Directors passed a resolution to increase this to $250,000 per annum and on May 13, 2011 passed a resolution to increase this to $275,000 per annum. The employee is entitled to receive options under the terms and conditions of the Company’s stock option plan. The employee will serve as the President and Chief Executive Officer of the Company. On April 5, 2012, the employment agreement was extended for an additional two years under the same terms. On April 5, 2014, the employment agreement was extended for an additional three years under the same terms.

	Pursuant to the Employment Agreement, the Company has committed to granting 500,000 stock options based on the Company achieving certain consolidated net revenue targets. The exercise price and term of the options will be set at time the targets are met.

	The employee has the right, upon 30 days notice, to terminate the Employment Agreement. The Company may terminate the Employment Agreement on 10 days notice if for cause or on 60 days notice if without cause. Should the Company terminate the contract without cause, it is obligated to pay the employee an amount equal to three month’s base salary.

	*License Agreement*

	In 2004, the Company entered into a License Agreement with a university under which the university is entitled to receive: (i) 2% of the Company’s adjusted gross sales as defined in the License Agreement, and (ii) 2% of the adjusted gross sales of any sub licensee as defined in the License Agreement. The License Agreement gives the Company an exclusive license to a certain United States patent and the related technology for low temperature growth of inorganic materials from solution using catalyzed growth and re-growth.

	*Research and Development Facility Lease*

	On June 1, 2013, the Company entered into a new two year lease for its research and development facility in Rochester, New York. The Company will pay a base rent of $103,596 per year in monthly installments of $8,633. The lease was set to expire on June 30, 2015. On June 26, 2015, the Company extended the lease from July 1, 2015 to June 30, 2017 at a base rent of $105,212 per year in monthly installments of $8,768.

	*Administrative Office Lease*

	On August 1, 2013, the Company entered into a new three year lease agreement for its administrative office. The Company will pay a base rent of $22,000 per year in monthly installments of $1,833. After year one the annual rent will increase 3% for each year of the lease, the lease expires on July 31, 2016.

	*Patent License Agreement*

	On December 9, 2011, the Company entered into a Patent License Agreement to use certain licensed patents. The Company is required to pay an annual fee of $25,000 for as long as the Company uses the patents.

16.	Related Party Transactions and Balances

	*Related Party Balances*

	As of December 31, 2015 and 2014 there was $204,060 and $60,760, respectively, owed to directors, officers, and companies controlled by directors that has been included in trade payables and accrued liabilities.

F-50

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

For Years Ended December 31, 2015 and 2014

Related Party Transactions and Balances (cont’d)

Key Management Personnel Compensation


	Year Ended December 31, 2015		Year Ended December 31, 2014		Year Ended December 31, 2013

Administrative fees	$	60,000	$	60,000	$	60,000
Consulting		100,200		108,000		58,000
Wages and benefits		558,230		558,500		12,847
Stock-based compensation		239,875		38,222		488,000

	$	958,305	$	764,722	$	618,847


14.	Research and Development Expense

	Details of this expense account by nature are as follows:


	Year Ended December 31, 2015		Year Ended December 31, 2014		Year Ended December 31, 2013

Consulting	$	18,676	$	136,753	$	83,280
Equipment rental, rent and facility costs		284,533		352,809		405,530
Professional fees		123,313		257,856		222,459
Royalty and other		71,239		103,562		143,965
Wages and salaries		705,953		783,884		624,824

	$	1,203,714	$	1,634,864	$	1,480,058


15.	Income Taxes

	A reconciliation of the expected income tax recovery to the actual income tax recovery is as follows:


	Year Ended December 31, 2015			Year Ended December 31, 2014			Year Ended December 31, 2013

Net loss	$	(3,488,129	)	$	(2,193,532	)	$	(3,938,828	)
Tax rate		34	%		34	%		34	%

Expected income tax recovery		(1,185,964	)		(745,801	)		(1,339,202	)
Derivative liability		(38,927	)		(646,622	)		123,034
Non-deductible items and other		83,288			(572,181	)		(91,271	)
Share issuance costs not recognized		—			—			(27,786	)
Effect of different foreign tax rates		30,448			(2,399	)		33,522
Temporary differences not recognized		1,111,155			1,967,003			1,301,703

	$	—		$	—		$	—

The Company has the following deductible temporary difference for which no deferred tax asset has been recognized and that can be carried forward indefinitely.


	December 31, 2015		December 31, 2014

Non-capital losses – Canada	$	1,506,002	$	1,456,057
Tax losses – United States		17,842,058		15,065,669
Equipment tax pools		956,023		713,064
Share issuance costs		156,111		92,659

	$	20,460,194	$	17,327,449

The Canadian and US non-capital losses expire between 2022 and 2035.

F-51

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

For Years Ended December 31, 2015 and 2014

Subsequent Events


	In January 2016, the Company granted 1,975,000 stock options to employees. All of the options vest immediatelyon the grant date. The options are exercisable at CDN$0.40 and expire January 13, 2021.

	In February 2016, the Company completed a non-brokered private placement and issued 273,058 units at a price of CDN$0.36 per unit for gross proceeds of $70,187 (CDN$98,301). Each unit comprised one common share and one purchase warrant, with each warrant exercisable at a price of CDN$0.55 per share for a period of three years from the date of closing.

	In April 2016, the Company completed a non-brokered private placement and issued 2,244,497 units at a price of CDN$0.36 per unit for gross proceeds of $628,396 (CDN$808,019). Each unit comprised one common share and one purchase warrant, with each warrant exercisable at a price of CDN$0.55 per share for a period of three years from the date of closing.

F-52

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of Natcore Technology Inc.

We have audited the accompanying consolidated financial statements of Natcore Technology Inc., which comprise of the consolidated statements of financial position as at December 31, 2014 and 2013, and the consolidated statements of comprehensive loss, changes in equity and cash flows for the years then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

Auditor’s Responsibility

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Natcore Technology Inc. as at December 31, 2014 and 2013, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Emphasis of Matter

Without qualifying our opinion, we draw attention to Note 1 in the consolidated financial statements which describes certain conditions that indicate the existence of a material uncertainty that cast substantial doubt about the Company’s ability to continue as a going concern.



	DALE MATHESON CARR-HILTON LABONTE LLP
Vancouver, Canada	CHARTERED ACCOUNTANTS
April 20, 2015

(MESSAGE)

Natcore Technology Inc.

Consolidated Statements of Financial Position

(Expressed in United States Dollars)


	Notes	December 31, 2014			December 31, 2013

ASSETS

Current assets
Cash and cash equivalents	4	$	548,387		$	2,849,022
Receivables	5		5,939			26,016
Prepaid expenses			60,395			94,000

			614,721			2,969,038

Non-current assets
Equipment	6		582,503			680,353
Intangible assets	7		36,568			171,623

			619,071			851,976

TOTAL ASSETS		$	1,233,792		$	3,821,014


LIABILITIES
Current liabilities
Trade payables and accrued liabilities	8	$	289,688		$	201,521
Derivative liability	9		124,823			1,967,140

TOTAL LIABILITIES			414,511			2,168,661


EQUITY
Share capital	10		13,977,256			13,030,362
Share-based payment reserve	10,11		2,956,964			2,857,272
Share subscriptions received	10		313,874			—
Deficit			(16,428,813	)		(14,235,281	)

TOTAL EQUITY			819,281			1,652,353

TOTAL LIABILITIES AND EQUITY		$	1,233,792		$	3,821,014


Nature and continuance of operations	1
Commitments	13
Subsequent events	17

Approved on behalf of the Board:


“John Calhoun”		“Brien Lundin”




– Director		– Director

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

F-54

Natcore Technology Inc.

Consolidated Statements of Comprehensive Loss

(Expressed in United States Dollars)


		For the Years Ended
		December 31,			December 31,

	Notes	2014			2013

Expenses
Consulting		$	229,792		$	108,657
Depreciation and amortization	6,7		412,492			359,178
Filing fees			34,090			32,082
Foreign exchange loss			41,344			90,060
Interest and bank charges			1,581			1,269
Marketing			81,401			96,641
Office and other operational expenses			273,264			267,532
Professional fees			213,888			129,499
Research and development	16		1,634,864			1,480,058
Stock-based compensation	10		301,732			325,686
Travel			73,922			126,668
Wages and salaries			770,105			855,853

			(4,068,475	)		(3,873,183	)

Other items
Fair value adjustment on warrants	9		1,842,317			(79,353	)
Interest income			32,626			13,708


Net and comprehensive loss for the year		$	(2,193,532	)	$	(3,938,828	)


Loss per share – basic and diluted	10	$	(0.05	)	$	(0.10	)

Weighted average number of shares outstanding – basic and diluted	10		42,294,310			41,097,726

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

F-55

Natcore Technology Inc.

Consolidated Statement of Changes in Equity

(Expressed in United States Dollars)


		Share capital					Share-based			Share

	Notes	Number of shares		Amount			payment reserve			subscriptions received		Deficit			Total

Balance at December 31, 2012			38,580,849	$	8,970,743		$	2,616,511		$	—	$	(10,296,453	)	$	1,290,801
Comprehensive loss for the year			—		—			—			—		(3,938,828	)		(3,938,828	)
Transactions with owners, in their capacity as owners, and other transfers:
Shares issued for cash – private placement	10		6,290,740		3,145,370			—			—		—			3,145,370
Shares issued for cash – options exercise			225,000		144,589			(58,272	)		—		—			86,317
Shares issued for cash – warrants exercise			998,530		728,685			(43,437	)		—		—			685,248
Issuance costs – cash	10		—		(82,022	)		—			—		—			(82,022	)
Issuance costs – warrants	10		—		(16,784	)		16,784			—		—			—
Derivative liability – warrants exercised	9, 10		—		139,781			—			—		—			139,781
Stock-based compensation	10		—		—			325,686			—		—			325,686

Balance at December 31, 2013			46,095,119		13,030,362			2,857,272			—		(14,235,281	)		1,652,353
Comprehensive loss for the year			—		—			—			—		(2,193,532	)		(2,193,532	)
Transactions with owners, in their capacity as owners, and other transfers:
Shares issued for cash – options exercise			100,000		62,624			(25,898	)		—		—			36,726
Shares issued for cash – warrants exercise			1,666,383		884,270			(176,142	)		—		—			708,128
Subscriptions received	10		—		—			—			313,874		—			313,874
Stock-based compensation	10		—		—			301,732			—		—			301,732

Balance at December 31, 2014			47,861,502	$	13,977,256		$	2,956,964		$	313,874	$	(16,428,813	)	$	819,281

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

F-56

Natcore Technology Inc.

Consolidated Statement of Cash Flows

(Expressed in United States Dollars)


	For the Year Ended

	December 31, 2014			December 31, 2013

Operating Activities
Net loss	$	(2,193,532	)	$	(3,938,828	)
Adjustments for non-cash items:
Depreciation and amortization		412,492			359,178
Fair value adjustment on warrants		(1,842,317	)		79,353
Stock-based compensation		301,732			325,686
Changes in non-cash working capital items:
Receivables		20,077			7,195
Prepaid expenses		33,605			(49,282	)
Trade payables and accrued liabilities		88,167			118,839

Net cash flows used in operating activities		(3,179,776	)		(3,097,859	)


Investing Activities
Expenditures on equipment		(179,587	)		(176,702	)
Research and development equipment tax credit		—			82,961

Net cash flows used in investing activities		(179,587	)		(93,741	)


Financing Activities
Proceeds on issuance of common shares – net of issuance costs		744,854			3,834,913
Subscriptions received for pending private placement		313,874			—

Net cash flows provided by financing activities		1,058,728			3,834,913

Increase (decrease) in cash and cash equivalents		(2,300,635	)		643,313
Cash and cash equivalents, beginning		2,849,022			2,205,709

Cash and cash equivalents, ending	$	548,387		$	2,849,022

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

F-57

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

For the Years Ended December 31, 2014 and 2013


6.	Nature and Continuance of Operations

	Natcore Technology Inc. (the “Company”) was incorporated under the British Columbia Business Corporations Act on August 9, 2007. The Company’s common shares are listed on the TSX Venture Exchange (the “Exchange”) under the symbol NXT. The Company develops and owns technology for the manufacturing of solar cells.

	The Company’s head office address is 87 Maple Avenue, 1 ^st Floor, Red Bank, New Jersey, 07701. The Company’s registered office is 2080 - 777 Hornby Street, Vancouver British Columbia V6Z 1S4.

	These consolidated financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. Different bases of measurement may be appropriate if the Company is not expected to continue operations for the foreseeable future. As at December 31, 2014, the Company has had recurring losses from operations and a cumulative deficit of $16,428,813. The Company’s continuation as a going concern is dependent upon its ability to attain profitable operations and generate funds there from and/or raise equity capital or borrowings sufficient to meet current and future obligations. These conditions indicate the existence of a material uncertainty that cast substantial doubt about the Company’s ability to continue as a going concern. Management intends to finance operating costs over the next twelve months with existing cash resources and the private placement of common shares.

7.	Significant Accounting Policies and Basis of Preparation

	*Statement of Compliance with International Financial Reporting Standards*

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

	The consolidated financial statements were authorized for issue by the Board of Directors on April 20, 2015.

2	*Basis of Preparation*
	The consolidated financial statements of the Company have been prepared on an accrual basis and are based on historical costs, modified where applicable. The consolidated financial statements are presented in United States dollars unless otherwise noted.

	*Consolidation*

	The consolidated financial statements include the accounts of the Company and its controlled entities. Details of controlled entities are as follows:


			Percentage Owned*

	Jurisdiction of Incorporation		December 31, 2014		December 31, 2013

Natcore Technology, Inc.		United States		100%		100%
Newcyte, Incorporated		United States		100%		100%
Vanguard Solar, Inc.		United States		100%		100%
Natcore Asia Technology, Limited		Hong Kong		100%		100%


_______________
*	Percentage of voting power is in proportion to ownership.

Inter-company balances are eliminated on consolidation.

F-58

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

For the Years Ended December 31, 2014 and 2013


5.	Significant Accounting Policies and Basis of Preparation (cont’d)

	*Significant Accounting Judgments, Estimates and Assumptions*

	The preparation of consolidated financial statements in accordance with IFRS requires the Company to make estimates and assumptions concerning the future. The Company’s management reviews these estimates and underlying assumptions on an ongoing basis, based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are adjusted for prospectively in the period in which the estimates are revised.

	Estimates and assumptions where there is significant risk of material adjustments to assets and liabilities in future accounting periods include the useful lives of equipment, impairment considerations for equipment and intangible assets, determination of fair value for stock-based compensation and other share-based payments, valuations and assumptions used to determine deferred income taxes and the fair value of financial instruments.

	*Foreign Currency Translation*

	The functional currency of each of the Company’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in United States dollars which is the functional currency of the Company and its subsidiaries.

	Transactions and Balances:

	Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the period-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

	Exchange differences arising on the translation of monetary items or on settlement of monetary items are recognized in profit or loss in the statement of comprehensive loss in the period in which they arise, except where deferred in equity as a qualifying cash flow or net investment hedge.

	Exchange differences arising on the translation of non-monetary items are recognized in other comprehensive loss in the statement of comprehensive loss to the extent that gains and losses arising on those non-monetary items are also recognized in other comprehensive loss. Where the non-monetary gain or loss is recognized in profit or loss, the exchange component is also recognized in profit or loss.

	Intangible Assets

	Intangible Assets Acquired Separately

	Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.

F-59

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

For the Years Ended December 31, 2014 and 2013


2.	Significant Accounting Policies and Basis of Preparation (cont’d)

	Intangible Assets (cont’d)

	Internally-Generated Intangible Assets - Research and Development Expenditure

	Expenditure on research activities is recognized as an expense in the period in which it is incurred.

	An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognized if, and only if, all of the following have been demonstrated:

	•	The technical feasibility of completing the intangible asset so that it will be available for use or sale;

	•	The intention to complete the intangible asset and use or sell it;

	•	The ability to use or sell the intangible asset;

	•	How the intangible asset will generate probable future economic benefits;

	•	The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

	•	The ability to measure reliably the expenditure attributable to the intangible asset during its development.

	The amount initially recognized for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognized, development expenditure is recognized in loss in the period in which it is incurred.

	Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

	At December 31, 2014 and 2013, the Company has not recognized any internally-generated intangible assets.

	*Share-Based Payments*

	The Company operates a stock option plan. Share-based payments to employees are measured at the fair value of the instruments issued and amortized over the vesting periods. Share-based payments to non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The corresponding amount is recorded to the share-based payment reserve. The fair value of options is determined using the Black–Scholes Option Pricing Model. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognized for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest.

F-60

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

For the Years Ended December 31, 2014 and 2013


2.	Significant Accounting Policies and Basis of Preparation (cont’d)

	*Financial Instruments*

	The Company classifies its financial instruments in the following categories: at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale and financial liabilities. The classification depends on the purpose for which the financial instruments were acquired. Management determines the classification of its financial instruments at initial recognition.

	Financial assets are classified at fair value through profit or loss when they are either held for trading for the purpose of short-term profit taking, derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Such assets are subsequently measured at fair value with changes in carrying value being included in profit or loss.

	Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortized cost. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets.

	Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the Company’s intention to hold these investments to maturity. They are subsequently measured at amortized cost. Held-to-maturity investments are included in non-current assets, except for those which are expected to mature within 12 months after the end of the reporting period.

	Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not suitable to be classified as financial assets at fair value through profit or loss, loans and receivables or held-to-maturity investments and are subsequently measured at fair value. These are included in current assets. Unrealized gains and losses are recognized in other comprehensive loss, except for impairment losses and foreign exchange gains and losses.

	Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortized cost. Derivative financial liabilities are classified at fair value through profit and loss and are subsequently measured at fair value with changes in carrying value being included in profit or loss.

	Regular purchases and sales of financial assets are recognized on the trade-date – the date on which the Company commits to purchase the asset.

	Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership.

	At each reporting date, the Company assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a significant and prolonged decline in the value of the instrument is considered to determine whether impairment has arisen.

	*Impairment of Long-Lived Assets*

	The carrying amount of the Company’s long-lived assets (which include equipment and intangible assets) is reviewed at each reporting date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. An impairment loss is recognized whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognized in the statement of comprehensive loss.

F-61

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

For the Years Ended December 31, 2014 and 2013


2.	Significant Accounting Policies and Basis of Preparation (cont’d)

	*Impairment of Long-Lived Assets (cont’d)*

	The recoverable amount of assets is the greater of an asset’s fair value less cost to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

	An impairment loss is only reversed if there is an indication that the impairment loss may no longer exist and there has been a change in the estimates used to determine the recoverable amount, however, not to an amount higher than the carrying amount that would have been determined had no impairment loss been recognized in previous years.

	Assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment.

	*Cash and Cash Equivalents*

	Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term highly liquid investments, such as guaranteed investment certificates with original maturities of three months or less. Guaranteed investment certificates are investments with Canadian banks that are the equivalent of a certificate of deposit.

	Income Taxes

	Current Income Tax:

	Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date, in the countries where the Company operates and generates taxable income.

	Current income tax relating to items recognized directly in other comprehensive loss or equity is recognized in other comprehensive loss or equity and not in profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

	Deferred Income Tax:

	Deferred income tax is provided using the asset and liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

	The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and recognized only to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.

	Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

	Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

F-62

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

For the Years Ended December 31, 2014 and 2013


2.	Significant Accounting Policies and Basis of Preparation (cont’d)

	*Equipment*

	Equipment is stated at historical cost less accumulated depreciation and accumulated impairment losses.

	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 the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the statement of comprehensive loss during the financial period in which they are incurred.

	Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized in profit or loss.

	Depreciation and amortization are calculated on a straight-line method to write off the cost of the assets to their residual values over their estimated useful lives.

	*Comparative Information*

	Certain expenses for the year ended December 31, 2013 have been reclassified to conform with the presentation in the current year.

13.	Accounting Standards Issued But Not Yet Effective

	*New Standard IFRS 9 “Financial Instruments”*

	This new standard is a partial replacement of International Accounting Standard (“IAS”) 39 “Financial Instruments: Recognition and Measurement”. IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. The new standard also requires a single impairment method to be used, replacing the multiple impairment methods in IAS 39. IFRS 9 is effective for annual periods beginning on after December 31, 2018. Early adoption is permitted.

	The Company has not early adopted this new standard and is currently assessing the impact that these standards will have on its financial statements.

	Other accounting standards or amendments to existing accounting standards that have been issued but have future effective dates are either not applicable or are not expected to have a significant impact on the Company’s financial statements.

14.	Cash and Cash Equivalents


	December 31, 2014		December 31, 2013

Cash at Bank	$	412,996	$	877,147
Savings Certificates in Banks		18,731		1,906,141
Guaranteed Investment Certificates		116,660		65,734

	$	548,387	$	2,849,022

F-63

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

For the Years Ended December 31, 2014 and 2013


15.	Receivables


	December 31, 2014		December 31, 2013

GST Receivable	$	5,939	$	15,458
Due From Related Party (Note 14)		—		10,558

	$	5,939	$	26,016


16.	Equipment


	Furniture and Office Equipment		Production Equipment			Total

Cost:
At December 31, 2012	$	285,050	$	707,988		$	993,038
Additions		60,118		116,584			176,702
Government Tax Credit		—		(82,962	)		(82,692	)

At December 31, 2013		345,168		741,610			1,086,778

Depreciation:
At December 31, 2012		52,584		131,144			183,728
Charge for the Period		61,972		160,725			222,697

At December 31, 2013		114,556		291,869			406,425

Net Book Value:

At December 31, 2013	$	230,612	$	449,741		$	680,353


Cost:
At December 31, 2013	$	345,168	$	741,610		$	1,086,778
Additions		9,850		169,737			179,587

At December 31, 2014		355,018		911,347			1,266,365

Depreciation:
At December 31, 2013		114,556		291,869			406,425
Charge for the Period		102,562		174,875			277,437

At December 31, 2014		217,118		466,744			683,862

Net Book Value:

At December 31, 2014	$	137,900	$	444,603		$	582,503

F-64

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

For the Years Ended December 31, 2014 and 2013


17.	Intangible Assets


	Issued and Pending Patents

Cost:
At December 31, 2014, 2013 and 2012	$	711,814


Amortization:
At December 31, 2012		403,710
Charge for the Period		136,481

At December 31, 2013		540,191
Charge for the Period		135,055

At December 31, 2014		675,246


Net Book Value:
At December 31, 2013	$	171,623

At December 31, 2014	$	36,568

The balance will be fully amortized during the year ended December 31, 2015.


17.	Trade Payables and Accrued Liabilities


	December 31, 2014		December 31, 2013

Trade Payables and Accrued Liabilities	$	289,688	$	201,521


18.	Derivative Financial Liability


	Year Ended December 31, 2014			Year Ended December 31, 2013

Balance, Beginning	$	1,967,140		$	2,027,568
Fair value of warrants exercised during the year		—			(139,781	)
Change in fair value of warrants outstanding		(1,842,317	)		79,353

Balance, Ending	$	124,823		$	1,967,140

F-65

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

For the Years Ended December 31, 2014 and 2013


9.	Derivative Financial Liability (cont’d)

	The derivative financial liability consists of the fair value of share purchase warrants that have exercise prices that differ from the functional currency of the Company and are within the scope of IAS 32 “Financial Instruments: Presentation”. Details of these warrants and their fair values are as follows:


Expiration Date	Exercise Price	Number of Warrants Outstanding at December 31, 2014		Fair Value at December 31, 2014		Number of Warrants Outstanding at December 31, 2013		Fair Value at December 31, 2013

	CDN $			US $				US $
December 22, 2015	1.00		1,134,667		29,943		1,134,667		583,399
January 4, 2016	1.00		429,867		9,579		429,867		163,634
July 20, 2015	0.90		3,840,700		85,301		3,840,700		1,220,107

			5,405,234		124,823		5,405,234	$	1,967,140


	The fair values of these warrants were estimated using the Black-Scholes Option Pricing Model using the following assumptions.

	•	The stock price was based upon the publicly traded price at the time of issuance;

	•	The risk-free interest rate assumption is based on the government of Canada marketable bonds for a period consistent with the expected term of the option in effect at the time of the grant;

	•	The Company does not pay dividends on common stock and does not anticipate paying dividends on its common stock in the foreseeable future. Therefore, the expected dividend rate was 0%;

	•	The expected life of the warrants was estimated to be 75% of the remaining contractual term which is based on the historical exercise patterns of warrant holders; and

	•	The expected volatility was based off of the historical trading prices of the Company’s common stock price over a period equivalent to the expected life of the warrants.

	The fair values of these warrants as at December 31, 2014 were estimated using the Black-Scholes Option Pricing Model using the following inputs:


Expiration Date	December 22, 2015		January 4, 2016		July 20, 2015

Exercise price		CDN$1.00		CDN$1.00		CDN$0.90
Share price		CDN$0.46		CDN$0.46		CDN$0.46
Expected volatility		81%		76%		94%
Expected life		0.73 years		0.76 years		0.41 years
Dividends		0.00%		0.00%		0.00%
Risk-free interest rate		0.96%		0.96%		1.00%

F-66

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

For the Years Ended December 31, 2014 and 2013


9.	Derivative Financial Liability (cont’d)

	The fair values of these warrants as at December 31, 2013 were estimated using the Black-Scholes Option Pricing Model using the following inputs.


Expiration Date	December 22, 2015		January 4, 2016		July 20, 2014*

Exercise price		CDN$1.00		CDN$1.00		CDN$0.90
Share price		CDN$1.11		CDN$1.11		CDN$1.11
Expected volatility		91%		96%		86%
Expected life		1.48 years		1.51 years		0.42 years
Dividends		0.00%		0.00%		0.00%
Risk-free interest rate		1.07%		1.01%		1.02%


_______________
*	During the year ended December 31, 2014, the expiration date of these warrants was extended to July 20, 2015.


19.	Share Capital

	*Authorized Share Capital*

	Unlimited number of common shares without par value.

	*Issued Share Capital*

	At December 31, 2014, there were 47,861,502issued and fully paid common shares (December 31, 2013 – 46,095,119).

	*Private Placements*

	On August 20, 2013, the Company completed a private placement of 6,290,740 units at a price of $0.50 per unit for gross proceeds of $3,145,370. Each unit comprised one common share and one share purchase warrant, with each whole warrant exercisable at a price of USD$0.62 per share and expiring August 20, 2016. The Company paid finder’s fees of $16,313 for the financing as well as incurring other share issuance costs of $65,709. A total of 59,850 finders’ warrants were issued with a fair value of $16,784 determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 0.70%; Expected life of 3 years; Volatility of 90.6%; and a Dividend yield of 0%.

	*Share Subscriptions Received*

	As part of a private placement closed in January 2015, the Company had received subscriptions of $313,874 at December 31, 2014 (Note 17).

	*Basic and Diluted Loss Per Share*

	The calculation of basic and diluted loss per share for the year ended December 31, 2014 and 2013 was based on the loss attributable to common shareholders of $2,193,532 and $3,938,828 and the weighted average number of common shares outstanding of 42,294,310 and 41,097,726, respectively.

	Diluted loss per share did not include the effect of stock options and warrants as the effect would be anti-dilutive.

F-67

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

For the Years Ended December 31, 2014 and 2013


10.	Share Capital (cont’d)

	*Stock Options*

	The Company has adopted an incentive stock option plan, which provides that the Board of Directors of the Company may from time to time, at its discretion, and in accordance with the Exchange requirements, grant to directors, officers, employees and technical consultants to the Company, non-transferable options to purchase common shares, provided that the number of common shares reserved for issuance will not exceed 6,779,255 common shares. Such options will be exercisable for a period of up to 10 years from the date of grant. In connection with the foregoing, the number of common shares reserved for issuance to any one optionee will not exceed five percent (5%) of the issued and outstanding common shares and the number of common shares reserved for issuance to all technical consultants will not exceed two percent (2%) of the issued and outstanding common shares. Options may be exercised no later than 90 days following cessation of the optionee’s position with the Company or 30 days following cessation of an optionee conducting investor relations activities’ position.

	Stock-based compensation expense has been calculated using the Black-Scholes option pricing model. The expected life of the options has been estimated to be the contractual term of the option given the limited history of early exercise. Future volatility has been determined based on historical volatility for a period equivalent to the expected life of the option.

	During the year ended December 31, 2014, the Company recorded stock-based compensation expense of $301,732(2013 - $325,686) relating to options that vested during the year.

	On January 4, 2013 the Company granted 20,000 stock options to an employee. The options vested immediately. The options are exercisable at CDN$0.80 and expire January 4, 2018. The options had a fair value of $12,847 (CDN$12,665) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 0.27%; Expected life of 5 years; Volatility of 107%; and a Dividend yield of 0%.

	On April 5, 2013 the Company granted 40,000 stock options to an employee. 50% of the options vest six months following the grant date and the remaining in twelve months from the grant date. The options are exercisable at CDN$0.71 and expire April 5, 2018. The options had a grant date fair value of $21,496 (CDN$21,801) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 0.71%; Expected life of 5 years; Volatility of 106%; and a Dividend yield of 0%.

	On June 1, 2013 the Company granted 100,000 stock options to an employee. 25% of the options vested immediately, and 25% vest every three months thereafter. The options are exercisable at CDN$0.79 and expire June 1, 2016. The options had a grant date fair value of $48,167 (CDN$49,755) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 0.71%; Expected life of 3 years; Volatility of 94%; and a Dividend yield of 0%.

	On June 3, 2013 the Company granted 25,000 stock options to an employee. 50% of the options vest six months following the grant date and the remaining in twelve months from the grant date. The options are exercisable at CDN$0.83 and expire June 3, 2018. The options had a grant date fair value of $15,416 (CDN$15,981) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.20%; Expected life of 5 years; Volatility of 106%; and a Dividend yield of 0%.

	On July 31, 2013 the Company granted 100,000 stock options to two consultants. 50% of the options vest six months following the grant date and the remaining in twelve months from the grant date. The options are exercisable at CDN$0.58 and expire July 18, 2018. The options had a grant date fair value of $42,209 (CDN$43,757) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.40%; Expected life of 5 years; Volatility of 102%; and a Dividend yield of 0%.

F-68

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

For the Years Ended December 31, 2014 and 2013


10.	Share Capital (cont’d)

	*Stock Options (cont’d)*

	On August 16, 2013 the Company granted 400,000 stock options to a consultant. The options vested immediately. The options are exercisable at CDN$0.59 and expire August 16, 2016. The options had a grant date fair value of $128,191 (CDN$132,332) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.20%; Expected life of 3 years; Volatility of 90%; and a Dividend yield of 0%.

	On January 10, 2014, the Company granted 345,000 stock options to employees. 50% of the options vest six months following the grant date and the remaining in eighteen months from the grant date. The options are exercisable at CDN$1.08 and expire January 10, 2019. The options had a grant date fair value of $259,224 (CDN$282,995) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.73%; Expected life of 5 years; Volatility of 103%; and a Dividend yield of 0%.

	On February 3, 2014, the Company granted 60,000 stock options to employees. 50% of the options vest six months following the grant date and the remaining in eighteen months from the grant date. The options are exercisable at CDN$0.99 and expire February 3, 2019. The options had a grant date fair value of $40,706 (CDN$45,084) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.51%; Expected life of 5 years; Volatility of 103%; and a Dividend yield of 0%.

	On November 14, 2014, the Company granted 80,000 stock options to a consultant. 50% of the options vest six months following the grant date and the remaining in eighteen months from the grant date. The options are exercisable at CDN$0.57 and expire December 20, 2017. The options had a grant date fair value of $24,108 (CDN$27,229) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.14%; Expected life of 3.10 years; Volatility of 94%; and a Dividend yield of 0%.

	On December 17, 2014, the Company granted 525,000 stock options to employees. 50% of the options vest six months following the grant date and the remaining in eighteen months from the grant date. The options are exercisable at CDN$0.75 and expire December 17, 2019. The options had a grant date fair value of $140,026 (CDN$162,840) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.73%; Expected life of 5 years; Volatility of 93%; and a Dividend yield of 0%.

	The weighted average grant date fair value of options granted during the year ended December 31, 2014 was $0.46 per option (2013 - $0.36).

	The changes in options during years ended December 31, 2014 and 2013 are as follows:


	December 31, 2014					December 31, 2013

	Number of options			Weighted average exercise price		Number of options			Weighted average exercise price

Options outstanding, beginning		3,772,000			CDN$0.90		3,507,000			CDN$0.93
Options granted		1,010,000			CDN$0.86		685,000			CDN$0.64
Options exercised		(100,000	)		CDN$0.40		(225,000	)		CDN$0.40
Options forfeited		—			—		(195,000	)		CDN$0.96
Options expired		(500,000	)		CDN$1.20		—			—

Options outstanding, ending		4,182,000			CDN$0.87		3,772,000			CDN$0.90

Options exercisable, ending		3,324,500			CDN$0.89		3,562,000			CDN$0.92

The weighted average remaining life of the options outstanding as at December 31, 2014 is 2.33 years.

F-69

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

For the Years Ended December 31, 2014 and 2013


10.	Share Capital (cont’d)

	*Stock Options (cont’d)*

	Details of options outstanding as at December 31, 2014 are as follows:


Exercise Price	Expiration Date	Number of Options Outstanding

CDN$ 0.97	February 8, 2016	1,830,000
CDN$ 0.79	June 1, 2016	100,000
CDN$ 0.59	August 16, 2016	400,000
CDN$ 0.51	April 17, 2017	120,000
CDN$ 1.11	September 4, 2017	200,000
CDN$ 0.80	December 20, 2017	337,000
CDN$ 0.57	December 20, 2017	80,000
CDN$ 0.80	January 4, 2018	20,000
CDN$ 0.71	April 5, 2018	40,000
CDN$ 0.83	June 3, 2018	25,000
CDN$ 0.58	July 31, 2018	100,000
CDN$ 1.08	January 10, 2019	345,000
CDN$ 0.99	February 3, 2019	60,000
CDN$ 0.75	December 17, 2019	525,000

		4,182,000

Each option entitles the holder to purchase one common share of the Company.

Warrants

The changes in warrants during the year ended December 31, 2014 and 2013 are as follows:


	December 31, 2014					December 31, 2013

	Number of Warrants			Weighted Average Exercise Price		Number of Warrants			Weighted Average Exercise Price

Warrants outstanding, beginning		13,517,067			CDN$0.72		8,362,107			CDN$0.80
Warrants issued		—			—		6,350,590			US$0.62
Warrants expired		(362,210	)		CDN$0.65		(197,100	)		CDN$1.00
Warrants exercised		(114,850	)		US$0.62		(150,000	)		US$0.62
Warrants exercised		(1,551,533	)		CDN$0.45		(848,530	)		CDN$0.72

Warrants outstanding, ending		11,488,474			CDN$0.77		13,517,067			CDN$0.72

The weighted average remaining life of the warrants outstanding as at December 31, 2014 is 1.19 years.

Details of warrants outstanding as December 31, 2014 are as follows:


Exercise Price	Expiration Date	Number of Warrants Outstanding and Exercisable

CDN$ 0.90	July 20, 2015	3,840,700
CDN$ 1.00	December 22, 2015	1,134,667
CDN$ 1.00	January 4, 2016	429,867
US$ 0.62	August 20, 2016	6,083,240

		11,488,474

F-70

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

For the Years Ended December 31, 2014 and 2013


15.	Reserves

	*Share-Based Payment Reserve*

	The share-based payment reserve records the fair value of options and warrants recorded in accordance with IFRS 2 “Share-based payments” until such time that the stock options or warrants are exercised, at which time the corresponding amount will be transferred to share capital.

16.	Financial Risk and Capital Management

	The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management processes, inclusive of documented investment policies, counterparty limits, and controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows:

	*Credit Risk*

	Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company’s primary exposure to credit risk is on its cash, and cash equivalents. The majority of cash is deposited in bank accounts held with major banks in Canada and the United States. As most of the Company’s cash is held by two banks there is a concentration of credit risk. This risk is managed by using major banks that are high credit quality financial institutions as determined by rating agencies. The Company’s secondary exposure to risk is on its receivables. The risk is considered to be minimal.

	*Liquidity Risk*

	Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis. The Company ensures that there are sufficient funds to meet its short-term business requirements, taking into account its anticipated cash flows from operations and its holdings of cash and cash equivalents.

	Historically, the Company’s sole source of funding has been the issuance of equity securities for cash, primarily through private placements. The Company’s access to financing is always uncertain. There can be no assurance of continued access to significant equity funding.

	The following is an analysis of the contractual maturities of the Company’s non-derivative financial liabilities as at December 31, 2014:


	Within One Year		Between One and Five Years		More Than Five Years

Trade Payables and Accrued Liabilities	$	289,688	$	—	$	—

Foreign Exchange 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 does not hedge its exposure to fluctuations in foreign exchange rates.

The following is an analysis of the United States dollar equivalent of financial assets and liabilities that are denominated in Canadian dollars:


	December 31, 2014		December 31, 2013

Cash and cash equivalents	$	432,656	$	558,067

F-71

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

For the Years Ended December 31, 2014 and 2013


	Based on the above net exposures, as at December 31, 2014, a 1% change in the Canadian dollar to United States dollar exchange rate would impact the Company’s net loss by $4,327 (2013 - $5,581).

12.	Financial Risk and Capital Management (cont’d)

	*Interest Rate Risk*

	Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk on its cash equivalents as these instruments have original maturities of three months or less and are therefore exposed to interest rate fluctuations on renewal. A 1% change in market interest rates would have an impact on the Company’s net loss of approximately $1,000.

	*Capital Management*

	The Company’s policy is to maintain a strong capital base so as to maintain investor and creditor confidence and to sustain future development of the business. The capital structure of the Company consists of equity, comprising share capital, net of accumulated deficit. There were no changes in the Company’s approach to capital management during the period.

	The Company is not subject to any externally imposed capital requirements.

	*Classification of Financial Instruments*

	Financial assets included in the statement of financial position are as follows:


	December 31, 2014		December 31, 2013

Current Assets:
Loans and receivables
Cash and cash equivalents	$	548,387	$	2,849,022
Receivables		5,939		26,016

	$	554,326	$	2,875,038

Financial liabilities included in the statement of financial position are as follows:


	December 31, 2014		December 31, 2013

Non-derivative financial liabilities:
Trade payables	$	289,688	$	201,521
Derivative liabilities
Derivative financial liability – warrants		124,823		1,967,140

	$	414,511	$	2,168,661


	*Fair Value*

	The fair value of the Company’s financial assets and liabilities approximates the carrying amount.

	Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:

	•	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 or indirectly; and

	•	Level 3 – Inputs that are not based on observable market data.

	Financial liabilities measured at fair value at December 31, 2014 and 2013 consisted of the derivative financial liability, which is measured using level 3 inputs.

	The fair value of the derivative liability is determined by the Black-Scholes option pricing model using the historical volatility as an estimate of future volatility. At December 31, 2014, if the volatility used was increased by 10% the impact would be an increase to the derivative liability of $45,395 with a corresponding decrease to comprehensive loss.

F-72

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

For the Years Ended December 31, 2014 and 2013


13.	Commitments

	*Employment Agreement*

	The Company has an agreement (the “Employment Agreement”) dated October 1, 2007, and amended July 31, 2008, with an officer of the Company under which the Company pays a fee for employee services at a base salary of $220,000 per annum. On April 30, 2010, the Board of Directors passed a resolution to increase this to $250,000 per annum and on May 13, 2011 passed a resolution to increase this to $275,000 per annum. The employee is entitled to receive options under the terms and conditions of the Company’s stock option plan. The employee will serve as the President and Chief Executive Officer of the Company. On April 5, 2012, the employment agreement was extended for an additional two years under the same terms. On April 5, 2014, the employment agreement was extended for an additional three years under the same terms.

	Pursuant to the Employment Agreement, the Company has committed to granting 500,000 stock options based on the Company achieving certain consolidated net revenue targets. The exercise price and term of the options will be set at time the targets are met.

	The employee has the right, upon 30 days notice, to terminate the Employment Agreement. The Company may terminate the Employment Agreement on 10 days notice if for cause or on 60 days notice if without cause. Should the Company terminate the contract without cause, it is obligated to pay the employee an amount equal to three month’s base salary.

	*License Agreement*

	In 2004, the Company entered into a License Agreement with a university under which the university is entitled to receive: (i) 2% of the Company’s adjusted gross sales as defined in the License Agreement, and (ii) 2% of the adjusted gross sales of any sublicensee as defined in the License Agreement. The License Agreement gives the Company an exclusive license to a certain United States patent and the related technology for low temperature growth of inorganic materials from solution using catalyzed growth and re-growth.

	*Research and Development Facility Lease*

	On June 1, 2013, the Company entered into a new two year lease for its research and development facility in Rochester, New York. The Company will pay a base rent of $103,596 per year in monthly installments of $8,633. The lease expires on June 30, 2015.

	*Administrative Office Lease*

	On August 1, 2013, the Company entered into a new three year lease agreement for its administrative office. The Company will pay a base rent of $22,000 per year in monthly installments of $1,833. After year one the annual rent will increase 3% for each year of the lease, the lease expires on July 31, 2016.

	*Patent License Agreement*

	On December 9, 2011, the Company entered into a Patent License Agreement to use certain licensed patents. The Company is required to pay an annual fee of $25,000 for as long as the Company uses the patents.

F-73

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

For the Years Ended December 31, 2014 and 2013


14.	Related Party Transactions and Balances

	*Related Party Balances*

	As ofDecember 31, 2014 there was $Nil (2013 - $10,558) owed from an officer of the Company that has been included in receivables.

	As at December 31, 2014 there was $60,760 (2013 - $Nil) owing to directors, officers, and companies controlled by directors that has been included in trade payables and accrued liabilities.

	*Key Management Personnel Compensation*


	December 31, 2014		December 31, 2013

Administrative fees	$	60,000	$	60,000
Consulting		108,000		58,000
Stock-based compensation		—		12,847
Wages and benefits		558,500		488,000

	$	726,500	$	618,847


15.	Income Taxes

	A reconciliation of the expected income tax recovery to the actual income tax recovery is as follows:


	Year Ended December 31, 2014			Year Ended December 31, 2013

Net loss	$	(2,193,532	)	$	(3,938,828	)
Tax rate		34	%		34	%

Expected income tax recovery		(745,801	)		(1,339,202	)
Derivative liability		(646,622	)		123,034
Non-deductible items and other		(572,181	)		(91,271	)
Effect of share issuance costs not recognized		—			(27,786	)
Effect of different foreign tax rates		(2,399	)		33,522
Temporary differences not recognized		1,967,003			1,301,703

	$	—		$	—


	The Company has the following deductible temporary difference for which no deferred tax asset has been recognized and that can be carried forward indefinitely.


	December 31, 2014		December 31, 2013

Non-capital losses – Canada	$	1,456,057	$	1,507,061
Tax losses – United States		15,065,669		12,003,312
Equipment tax pools		713,064		391,418
Share issuance costs		92,659		209,992

	$	17,327,449	$	14,111,783

The Canadian and US non-capital losses expire between 2015 and 2034.

F-74

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States Dollars)

For the Years Ended December 31, 2014 and 2013


16.	Research and Development Expense

	Details of this expense account by nature are as follows:


	Year Ended December 31, 2014		Year Ended December 31, 2013

Consulting	$	136,753	$	83,280
Equipment rental, rent and other facility costs		352,809		405,530
Professional fees		257,856		222,459
Royalty and other		103,562		143,965
Wages and salaries		783,884		624,824

	$	1,634,864	$	1,480,058


17.	Subsequent Events

	*Private Placements*

	In January 2015, the Company completed a non-brokered private placement and issued 1,352,062 units at a price of CDN$0.43 per unit for gross proceeds of $471,479 (CDN$581,387). Each unit comprised one common share and one share purchase warrant, with each warrant exercisable at a price of CDN$0.70 per share for a period of three years from the date of closing. The Company also issued 4,250 finders’ warrants in connection with this private placement exercisable at a price of CDN$0.43 per share for a period of three years from the date of closing.

	In April 2015, the Company completed a non-brokered private placement and issued 1,200,050 units at a price of CDN$0.70 per unit for gross proceeds of $672,028 (CDN$840,035). Each unit comprised one common share and one share purchase warrant, with each warrant exercisable at a price of $0.70 per share for a period of three years from the date of closing. The Company also issued 9,250 finders’ warrantsin connection with this private placement exercisable at a price of CDN$0.95 per share for a period of three years from the date of closing and $6,321.

F-75

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of Natcore Technology Inc.;

We have audited the accompanying consolidated financial statements of Natcore Technology Inc., which comprise of the consolidated statements of financial position as at December 31, 2013 and 2012, and the consolidated statements of comprehensive loss, changes in equity and cash flows for the years then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

Auditor’s Responsibility

We believe that the audit evidence that we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Natcore Technology Inc. as at December 31, 2013 and 2012, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Emphasis of Matter

Without qualifying our opinion, we draw attention to Note 1 in the consolidated financial statements which describes certain conditions that indicate the existence of a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern.




	DALE MATHESON CARR-HILTON LABONTE LLP
	CHARTERED ACCOUNTANTS
Vancouver, Canada
April 30, 2014

(MESSAGE)

Natcore Technology Inc.

Consolidated Statements of Financial Position

(Expressed in United States dollars)


	Notes	December 31, 2013			December 31, 2012

ASSETS

Current assets
Cash and cash equivalents	4	$	2,849,022		$	2,205,709
Receivables	5		26,016			33,211
Prepaid expenses			94,000			44,718

			2,969,038			2,283,638

Non-current assets
Equipment	6		680,353			809,309
Intangible assets	7		171,623			308,104

			851,976			1,117,413

TOTAL ASSETS		$	3,821,014		$	3,401,051


LIABILITIES
Current liabilities
Trade payables and accrued liabilities	8	$	201,521		$	82,682
Derivative liability	9		1,967,140			2,027,568

TOTAL LIABILITIES			2,168,661			2,110,250


EQUITY
Share capital	10		13,030,362			8,970,743
Share-based payment reserve	10, 11		2,857,272			2,616,511
Deficit			(14,235,281	)		(10,296,453	)

TOTAL EQUITY			1,652,353			1,290,801

TOTAL LIABILITIES AND EQUITY		$	3,821,014		$	3,401,051


Nature and continuance of operations	1
Commitments	13
Subsequent events	16

Approved on behalf of the Board:


“John Calhoun”		“Brien Lundin”



– Director		– Director

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

F-77

Natcore Technology Inc.

Consolidated Statements of Comprehensive Loss

(Expressed in United States dollars)


		For the years ended

	Notes	December 31, 2013			December 31, 2012

Expenses
Consulting	14	$	108,657		$	70,410
Depreciation and amortization	6, 7		359,178			325,648
Filing fees			32,082			26,743
Foreign exchange (gain)/loss			90,060			(62,086	)
Interest and bank charges			1,269			2,056
Marketing			96,641			56,553
Office and miscellaneous	14		546,427			500,322
Professional fees			129,499			204,442
Research and development			1,161,691			781,042
Stock-based compensation	10, 14		325,686			609,400
Travel	166,140		216,725
Wages and salaries	14		855,853			821,365

			(3,873,183	)		(3,552,620	)

Other items
Fair value adjustment on warrants	9		(79,353	)		1,690,715
Interest income			13,708			23,550

Net and comprehensive loss for the year		$	(3,938,828	)	$	(1,838,355	)


Loss per share – basic and diluted		$	(0.10	)	$	(0.05	)


Weighted Average Number of Shares Outstanding– basic and diluted	10		41,097,726			36,014,144

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

F-78

Natcore Technology Inc.

Consolidated Statement of Changes in Equity

(Expressed in United States dollars)


		Share capital					Share-based

	Notes	Number of shares		Amount			payment reserve			Deficit			Total

			33,935,776	$	9,629,882		$	1,811,022		$	(8,458,098	)	$	2,982,806
Comprehensive loss for the year			—		—			—			(1,838,355	)		(1,838,355	)
Transactions with owners, in their capacity as owners, and other transfers:
Shares issued for cash – private placement	10		4,166,700		2,478,020			—			—			2,478,020
Derivative liability – warrants granted	9, 10		—		(3,341,782	)		—			—			(3,341,782	)
Derivative liability – warrants exercised	9, 10		—		89,052			—			—			89,052
Issuance costs – cash	10		—		(102,815	)		—			—			(102,815	)
Issuance costs – warrants	10		—		(273,617	)		273,617			—			—
Shares issued for cash – options exercise			110,000		136,138			(55,911	)		—			80,227
Shares issued for cash – warrants exercise			368,373		355,865			(21,617	)		—			334,248
Stock-based compensation	10		—		—			609,400			—			609,400

Balance at December 31, 2012			38,580,849	$	8,970,743		$	2,616,511		$	(10,296,453	)	$	1,290,801
Comprehensive loss for the year			—		—			—			(3,938,828	)		(3,938,828	)
Transactions with owners, in their capacity as owners, and other transfers:
Shares issued for cash – private placement	10		6,290,740		3,145,370			—			—			3,145,370
Shares issued for cash – options exercise			225,000		144,589			(58,272	)		—			86,317
Shares issued for cash – warrants exercise			998,530		728,685			(43,437	)		—			685,248
Issuance costs – cash	10		—		(82,022	)		—			—			(82,022	)
Issuance costs – warrants	10		—		(16,784	)		16,784			—			—
Derivative liability – warrants exercised	9, 10		—		139,781			—			—			139,781
Stock-based compensation	10		—		—			325,686			—			325,686

Balance at December 31, 2013			46,095,119	$	13,030,362		$	2,857,272		$	(14,235,281	)	$	1,652,353

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

F-79

Natcore Technology Inc.

Consolidated statements of cash flows

(Expressed in United States dollars)


	For the years ended

	December 31, 2013			December 30, 2012

Operating activities
Net loss	$	(3,938,828	)	$	(1,838,355	)
Adjustments for non-cash items:
Depreciation and amortization		359,178			325,648
Fair value adjustment on warrants		79,353			(1,690,715	)
Stock-based compensation		325,686			609,400
Changes in non-cash working capital items:
Receivables		7,195			3,615
Prepaid expenses		(49,282	)		(3,061	)
Trade payables and accrued liabilities		118,839			(85,160	)

Net cash flows used in operating activities		(3,097,859	)		(2,678,628	)


Investing activities
Expenditures on equipment		(176,702	)		(266,195	)
Research and development equipment tax credit		82,961			—

Net cash flows used in investing activities		(93,741	)		(266,195	)


Financing activities
Proceeds on issuance of common shares - net of share issue costs		3,834,913			2,789,680

Net cash flows provided by financing activities		3,834,913			2,789,680

Increase (Decrease) in cash and cash equivalents		643,313			(155,143	)
Cash and cash equivalents, beginning		2,205,709			2,360,852

Cash and cash equivalents, ending	$	2,849,022		$	2,205,709

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

F-80

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States dollars)

For the years December 31, 2013 and 2012


1.	Nature and continuance of operations

	Natcore Technology Inc. (the “Company”) was incorporated under the British Columbia Business Corporations Act on August 9, 2007. The Company’s common shares are listed on the TSX Venture Exchange (the “Exchange”) under the symbol NXT. The Company develops and owns technology for the manufacturing of solar cells.

	The Company’s head office address is 87 Maple Avenue, 1 ^st Floor, Red Bank, New Jersey, 07701. The Company’s registered office is 2080 - 777 Hornby Street, Vancouver British Columbia V6Z 1S4.

	These consolidated financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. Different bases of measurement may be appropriate if the Company is not expected to continue operations for the foreseeable future. As at December 31, 2013 the Company has had recurring losses from operations and a cumulative deficit of $14,235,281. The Company’s continuation as a going concern is dependent upon its ability to attain profitable operations and generate funds there from and/or raise equity capital or borrowings sufficient to meet current and future obligations. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern. Management intends to finance operating costs over the next twelve months with existing cash resources and the private placement of common shares.

2.	Significant accounting policies and basis of preparation

	*Statement of compliance with International Financial Reporting Standards*

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

	The consolidated financial statements were authorized for issue by the Board of Directors on April 30, 2014.

	*Basis of preparation*

	The consolidated financial statements of the Company have been prepared on an accrual basis and are based on historical costs, modified where applicable. The consolidated financial statements are presented in United States dollars unless otherwise noted.

	*Consolidation*

	The consolidated financial statements include the accounts of the Company and its controlled entities. Details of controlled entities are as follows:


		Percentage owned*

	Jurisdiction of incorporation	December 31, 2013	December 31, 2012

Natcore Technology, Inc.	United States	100%	100%
Newcyte, Incorporated	United States	100%	100%
Vanguard Solar, Inc.	United States	100%	100%
Natcore Asia Technology, Limited	Hong Kong	100%	100%


_______________
*	Percentage of voting power is in proportion to ownership.

Inter-company balances are eliminated on consolidation.

F-81

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States dollars)

For the years December 31, 2013 and 2012


2.	Significant accounting policies and basis of preparation (cont’d)

	*Significant accounting judgments, estimates and assumptions*

	The preparation of consolidated financial statements in accordance with IFRS requires the Company to make estimates and assumptions concerning the future. The Company’s management reviews these estimates and underlying assumptions on an ongoing basis, based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are adjusted for prospectively in the period in which the estimates are revised.

	Estimates and assumptions where there is significant risk of material adjustments to assets and liabilities in future accounting periods include the useful lives of equipment, impairment considerations for equipment and intangible assets, determination of fair value for stock-based compensation and other share-based payments, valuations and assumptions used to determine deferred income taxes and the fair value of financial instruments.

	*Foreign currency translation*

	The functional currency of each of the Company’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in United States dollars which is the functional currency of the Company and its subsidiaries.

	Transactions and balances:

	Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the period-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

	Exchange differences arising on the translation of monetary items or on settlement of monetary items are recognized in profit or loss in the statement of comprehensive loss in the period in which they arise, except where deferred in equity as a qualifying cash flow or net investment hedge.

	Exchange differences arising on the translation of non-monetary items are recognized in other comprehensive loss in the statement of comprehensive loss to the extent that gains and losses arising on those non-monetary items are also recognized in other comprehensive loss. Where the non-monetary gain or loss is recognized in profit or loss, the exchange component is also recognized in profit or loss.

	*Intangible assets*

	Intangible assets acquired separately

	Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.

F-82

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States dollars)

For the years December 31, 2013 and 2012


2.	Significant accounting policies and basis of preparation (cont’d)

	*Intangible assets* (cont’d)

	Internally-generated intangible assets - Research and development expenditure

	Expenditure on research activities is recognized as an expense in the period in which it is incurred.

	An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognized if, and only if, all of the following have been demonstrated:

	•	The technical feasibility of completing the intangible asset so that it will be available for use or sale;

	•	The intention to complete the intangible asset and use or sell it;

	•	The ability to use or sell the intangible asset;

	•	How the intangible asset will generate probable future economic benefits;

	•	The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

	•	The ability to measure reliably the expenditure attributable to the intangible asset during its development.

	The amount initially recognized for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognized, development expenditure is recognized in loss in the period in which it is incurred.

	Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

	At December 31, 2013 and 2012, the Company has not recognized any internally-generated intangible assets.

	*Share-based payments*

	The Company operates a stock option plan. Share-based payments to employees are measured at the fair value of the instruments issued and amortized over the vesting periods. Share-based payments to non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The corresponding amount is recorded to the share-based payment reserve. The fair value of options is determined using the Black–Scholes Option Pricing Model. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognized for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest.

	*Financial instruments*

	The Company classifies its financial instruments in the following categories: at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale and financial liabilities. The classification depends on the purpose for which the financial instruments were acquired. Management determines the classification of its financial instruments at initial recognition.

F-83

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States dollars)

For the years December 31, 2013 and 2012


2.	Significant accounting policies and basis of preparation (cont’d)

	*Financial instruments* (cont’d)

	Financial assets are classified at fair value through profit or loss when they are either held for trading for the purpose of short-term profit taking, derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Such assets are subsequently measured at fair value with changes in carrying value being included in profit or loss.

	Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortized cost. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets.

	Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the Company’s intention to hold these investments to maturity. They are subsequently measured at amortized cost. Held-to-maturity investments are included in non-current assets, except for those which are expected to mature within 12 months after the end of the reporting period.

	Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not suitable to be classified as financial assets at fair value through profit or loss, loans and receivables or held-to-maturity investments and are subsequently measured at fair value. These are included in current assets. Unrealized gains and losses are recognized in other comprehensive loss, except for impairment losses and foreign exchange gains and losses.

	Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortized cost. Derivative financial liabilities are classified at fair value through profit and loss and are subsequently measured at fair value with changes in carrying value being included in profit or loss.

	Regular purchases and sales of financial assets are recognized on the trade-date – the date on which the Company commits to purchase the asset.

	Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership.

	At each reporting date, the Company assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a significant and prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen.

	*Impairment of long-lived assets*

	The carrying amount of the Company’s long-lived assets (which include equipment and intangible assets) is reviewed at each reporting date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. An impairment loss is recognized whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognized in the statement of comprehensive loss.

F-84

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States dollars)

For the years December 31, 2013 and 2012


2.	Significant accounting policies and basis of preparation (cont’d)

	*Impairment of long-lived assets* (cont’d)

	The recoverable amount of assets is the greater of an asset’s fair value less cost to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

	An impairment loss is only reversed if there is an indication that the impairment loss may no longer exist and there has been a change in the estimates used to determine the recoverable amount, however, not to an amount higher than the carrying amount that would have been determined had no impairment loss been recognized in previous years.

	Assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment.

	*Cash and cash equivalents*

	Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term highly liquid investments, such as guaranteed investment certificates with original maturities of three months or less. Guaranteed investment certificates are investments with Canadian banks that are the equivalent of a certificate of deposit.

	Income taxes

	Current income tax:

	Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date, in the countries where the Company operates and generates taxable income.

	Current income tax relating to items recognized directly in other comprehensive loss or equity is recognized in other comprehensive loss or equity and not in profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

	Deferred income tax:

	Deferred income tax is provided using the asset and liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

	The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and recognized only to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.

	Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

F-85

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States dollars)

For the years December 31, 2013 and 2012


2.	Significant accounting policies and basis of preparation (cont’d)

	*Income taxes (cont’d)*

	Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

	*Equipment*

	Equipment is stated at historical cost less accumulated depreciation and accumulated impairment losses.

	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 the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the statement of comprehensive loss during the financial period in which they are incurred.

	Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized in profit or loss.

	Depreciation and amortization are calculated on a straight-line method to write off the cost of the assets to their residual values over their estimated useful lives.

3.	Accounting standards issued but not yet effective

	*New standard IFRS 9 “Financial Instruments”*

	This new standard is a partial replacement of IAS 39 “Financial Instruments: Recognition and Measurement”. IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets.

	The new standard also requires a single impairment method to be used, replacing the multiple impairment methods in IAS 39. The proposed effective date of IFRS 9 is for annual periods beginning on or after January 31, 2018.

	*Amendments to IAS 32 “Financial Instruments: Presentation”*

	These amendments address inconsistencies when applying the offsetting requirements, and is effective for annual periods beginning on or after January 1, 2014.

	The Company has not early adopted these revised standards and is currently assessing the impact that these standards will have on its consolidated financial statements.

	Other accounting standards or amendments to existing accounting standards that have been issued but have future effective dates are either not applicable or are not expected to have a significant impact on the Company’s financial statements.

F-86

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States dollars)

For the years December 31, 2013 and 2012


4.	Cash and cash equivalents


	December 31, 2013		December 31, 2012

Cash at bank	$	877,147	$	371,401
Saving certificates in banks		1,906,141		—
Guaranteed investment certificates		65,734		1,834,308

	$	2,849,022	$	2,205,709


5.	Receivables


	December 31, 2013		December 31, 2012

GST receivable*	$	15,458	$	16,957
Due from related party (Note 14)		10,558		5,097
Interest receivable		—		11,157

	$	26,016	$	33,211


_________________
*	The Goods and Services (“GST”) receivable is comprised of input taxes the Company has been charged by vendors on purchases of goods and services obtained in Canada. The Company is entitled to a refund of these input taxes from the Canada Revenue Agency, which it receives on a quarterly basis.


6.	Equipment


	Furniture and office equipment		Production equipment			Total

Cost:
At December 31, 2011	$	123,389	$	603,453		$	726,842
Additions		161,661		104,534			266,195

At December 31, 2012		285,050		707,987			993,037

Depreciation:
At December 31, 2011		14,561		—			14,561
Charge for the year		38,023		131,144			169,167

At December 31, 2012		52,584		131,144			183,728

Net book value:
At December 31, 2012	$	232,466	$	576,843		$	809,309


Cost:
At December 31, 2012	$	285,050	$	707,988		$	993,038
Additions		60,118		116,583			176,702
Government tax credit		—		(82,961	)		(82,961	)

At December 31, 2013		345,168		741,610			1,086,778

Depreciation:
At December 31, 2012		52,584		131,144			183,728
Charge for the year		61,972		160,725			222,697

At December 31, 2013		114,556		291,869			406,425


Net book value:
At December 31, 2013	$	230,613	$	449,740		$	680,353

F-87

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States dollars)

For the years December 31, 2013 and 2012


7.	Intangible assets


	Issued and pending patents

Cost:
At December 31, 2011	$	711,814
Additions		—

At December 31, 2012		711,814


Amortization:
At December 31, 2011		247,229
Charge for the year		156,481

At December 31, 2012		403,710


Net book value:
At December 31, 2012	$	308,104


Cost:
At December 31, 2012	$	711,814
Additions		—

At December 31, 2013		711,814


Amortization:
At December 31, 2012		403,710
Charge for the year		136,481

At December 31, 2013		540,191


Net book value:
At December 31, 2013	$	171,623


8.	Trade payables and accrued liabilities


	December 31, 2013		December 31, 2012

Trade Payables	$	201,521	$	82,682


9.	Derivative liability


	Year ended December 31, 2013			Year ended December 31, 2012

Balance, beginning	$	2,027,568		$	465,553
Fair value of warrants issued during the year		—			3,341,782
Fair value of warrants exercised during year		(139,781	)		(89,052	)
Change in fair value of warrants outstanding		79,353			(1,690,715	)

Balance, ending	$	1,967,140		$	2,027,568

F-88

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States dollars)

For the years December 31, 2013 and 2012


9.	Derivative liability (cont’d)

	The derivative financial liability consists of the fair value of share purchase warrants that have exercise prices that differ from the functional currency of the Company and are within the scope of IAS 32 “Financial Instruments: Presentation”. Details of these warrants and their fair values are as follows:


Expiry Date	Exercise Price	Number of warrants outstanding at December 31, 2013		Fair value at December 31, 2013		Number of warrants outstanding at December 31, 2012		Fair value at December 31, 2012

	CDN $			US $				US $
December 22, 2015	1.00		1,234,667		583,399		1,234,667		355,987
January 4, 2016	1.00		329,867		163,634		499,867		144,124
July 20, 2014	0.90		3,821,170		1,220,107		4,166,700		1,527,457

			5,385,704		1,967,140		5,901,234		2,027,568


	The fair values of these warrants were estimated using the Black-Scholes Option Pricing Model using the following assumptions.

	•	The stock price was based upon the publicly traded price at the time of issuance

	•	The risk-free interest rate assumption is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant.

	•	The Company does not pay dividends on common stock and does not anticipate paying dividends on its common stock in the foreseeable future. Therefore, the expected dividend rate was 0%.

	•	The expected life of the warrants was estimated at 75% of the remaining term until expiry, which is based on the length of time similar warrants have remained outstanding in the past.

	•	The expected volatility was based off on the historical trading prices of the Company’s common stock price over the expected life of the warrant.

	•	The forfeiture rate is based on the historical forfeiture rate for the Company’s unvested warrants, which was 0%.

	The fair values of these warrants as at December 31, 2013 were estimated using the Black-Scholes Option Pricing Model using the following inputs.


Expiry Date	December 22, 2013	January 4, 2014	July 20, 2014

Exercise price	CDN $1.00	CDN $1.00	CDN $0.90
Share price	CDN $1.11	CDN $1.11	CDN $1.11
Expected volatility	91%	96%	86%
Expected life	1.48 years	1.51 years	0.42 years
Dividends	0.00%	0.00%	0.00%
Risk-free interest rate	1.07%	1.01%	1.02%

F-89

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States dollars)

For the years December 31, 2013 and 2012


9.	Derivative liability (cont’d)

	The fair values of these warrants as at December 31, 2012 were estimated using the Black-Scholes Option Pricing Model using the following inputs.


Expiry Date	December 22, 2013	January 4, 2014	July 20, 2014

Exercise price	CDN $1.00	CDN $1.00	CDN $0.90
Share price	CDN $0.79	CDN $0.79	CDN $0.79
Expected volatility	113%	113%	106%
Expected life	1.0 year	1.0 years	1.55 years
Dividends	0.00%	0.00%	0.00%
Risk-free interest rate	1.07%	1.07%	1.12%


10.	Share capital

	*Authorized share capital*

	Unlimited number of common shares without par value.

	*Issued share capital*

	At December 31, 2013 there were 46,095,119 issued and fully paid common shares (December 31, 2012 – 38,580,849).

	*Private placements*

	On August 20, 2013, The Company completed a private placement of 6,290,740 shares at a price of $0.50 per share for gross proceeds of $3,145,370. Each unit comprised one common share and one share purchase warrant, with each whole warrant exercisable at a price of USD$0.62 per share and expiring August 20, 2016. The Company paid finder’s fees of $16,313 for the financing as well as incurring other share issuance costs of $65,709. A total of 59,850 finder’s warrants were issued with a fair value of $16,784 determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 0.70%; Expected life of 3 years; Volatility of 90.6%; and a Dividend yield of 0%.

	On July 20, 2012, The Company completed a private placement of 4,166,700 units at a price of CDN $0.60 per unit for gross proceeds of $2,478,020 (CDN$2,500,000). Each unit comprised one common share and one share purchase warrant, with each whole warrant exercisable at a price of CDN$0.90 and expire July 20, 2014. On issue the fair value of the warrants was determined to be $3,341,782 using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 0.97%; Expected life of 2 years; Volatility of 93%; and a Dividend yield of 0%. In the event that the Company’s common shares close at over CDN$1.60 for 20 consecutive trading days, the warrants will be subject to accelerated conversion within 30 days notice of the Company disseminating a press release providing notice of that circumstance. Finder’s fees were paid on a portion of the financing, such that an aggregate of $102,815 was paid in cash and 22,516 finder’s warrants were issued, having the same terms as the warrants forming part of the units and 152,000 finder’s unit warrants were issued exercisable to acquire units on the same terms as the units issued in the financing at an exercise price of CDN$0.60 per unit for until July 20, 2014. An additional 152,000 finder’s warrants were issued with an exercise price of CDN$0.90 until July 20, 2014. The fair value of the finder’s warrants was $273,617 determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 0.97%; Expected life of 2 years; Volatility of 93%; and a Dividend yield of 0%.

F-90

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States dollars)

For the years December 31, 2013 and 2012


10.	Share capital (cont’d)

	*Basic and diluted loss per share*

	The calculation of basic and diluted loss per share for the years ended December 31, 2013 and 2012 was based on the loss attributable to common shareholders of $3,938,828 and $1,838,355 and the weighted average number of common shares outstanding of 41,097,726 and 36,014,144, respectively.

	Diluted loss per share did not include the effect of stock options and warrants as the effect would be anti-dilutive.

	*Stock options*

	The Company has adopted an incentive stock option plan, which provides that the Board of Directors of the Company may from time to time, at its discretion, and in accordance with the Exchange requirements, grant to directors, officers, employees and technical consultants to the Company, non-transferable options to purchase common shares, provided that the number of common shares reserved for issuance will not exceed 6,779,255 common shares. Such options will be exercisable for a period of up to 10 years from the date of grant. In connection with the foregoing, the number of common shares reserved for issuance to any one optionee will not exceed five percent (5%) of the issued and outstanding common shares and the number of common shares reserved for issuance to all technical consultants will not exceed two percent (2%) of the issued and outstanding common shares. Options may be exercised no later than 90 days following cessation of the optionee’s position with the Company or 30 days following cessation of an optionee conducting investor relations activities’ position.

	Stock-based compensation expense has been calculated using the Black-Scholes option pricing model. The measurement date fair values of the stock options were estimated using the Black-Scholes Option Pricing Model using the following assumptions.

	•	The stock price was based upon the publicly traded price at the time of issuance

	•	The risk-free interest rate assumption is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant.

	•	The Company does not pay dividends on common stock and does not anticipate paying dividends on its common stock in the foreseeable future. Therefore, the expected dividend rate was 0%.

	•	The expected life of the warrants was estimated at 75% of the remaining term until expiry, which is based on the length of time similar warrants have remained outstanding in the past.

	•	The expected volatility was based off on the historical trading prices of the Company’s common stock price over the expected life of the warrant.

	•	The forfeiture rate is based on the historical forfeiture rate for the Company’s unvested warrants, which was 0%.

	During the year ended December 31, 2013, the Company recorded stock based compensation of $nil (2012 - $300,170) relating to the vesting of options granted prior to January 1, 2012.

	On April 17, 2012, the Company granted 120,000 stock options to employees. 50% of the options vest six months following the grant date and the remaining vest eighteen months from the grant date. The options are exercisable at CDN$0.51 and expire on April 17, 2017. The options had a grant date fair value of $43,545 (CDN$43,359) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.63%; Expected life of 5 years; Volatility of 92%; and a Dividend yield of 0%. During the years ended December 31, 2013 and 2012, the Company recorded stock-based compensation expense of $11,523 and $32,022, respectively, relating to the vesting of these options.

F-91

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States dollars)

For the years December 31, 2013 and 2012


10.	Share capital (cont’d)

	*Stock options* (cont’d)

	On August 16, 2012, the Company granted 200,000 stock options to an employee. 50% of the options vest six months following the grant date and the remaining in twelve months from the grant date. The options are exercisable at CDN$1.11 and expire September 4, 2017. The options had a grant date fair value of $170,047 (CDN$168,112) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.51%; Expected life of 5 years; Volatility of 97%; and a Dividend yield of 0%. During the years ended December 31, 2013 and 2012, the Company recorded stock-based compensation expense of $53,111 and $116,936 relating to the vesting of these options.

	On December 20, 2012 the Company granted 80,000 stock options to employees. 50% of the options vest six months following the grant date and the remaining vest eighteen months from the grant date. The options are exercisable at CDN$0.80 and expire December 20, 2017. The options had a grant date fair value of $46,306 (CDN$45,780) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.39%; Expected life of 5 years; Volatility of 97%; and a Dividend yield of 0%. During the years ended December 31, 2013 and 2013, the Company recorded stock-based compensation expense of $36,856 and $1,980 relating to the vesting of these options.

	On December 20, 2012 the Company granted 272,000 stock options to employees and consultants of the Company which vested immediately. The options are exercisable at CDN$0.80 and expire December 20, 2017. During the year ended December 31, 2012 the Company recorded stock-based compensation of $158,292 (CDN$156,497) determined using the Black-Scholes Option Pricing Model with the assumptions: Risk free rate of 1.39%; Expected life of 5 years; Volatility of 97%; and a Dividend yield of 0%. These options were fully expensed in 2012.

	On January 4, 2013 the Company granted 20,000 stock options to an employee. The options vested immediately. The options are exercisable at CDN$0.80 and expire January 4, 2018. The options had a fair value of $12,847 (CDN$12,665) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 0.27%; Expected life of 5 years; Volatility of 107%; and a Dividend yield of 0%.

	On April 5, 2013 the Company granted 40,000 stock options to an employee. 50% of the options vest six months following the grant date and the remaining in twelve months from the grant date. The options are exercisable at CDN$0.71 and expire April 5, 2018. The options had a grant date fair value of $21,496 (CDN$21,801) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 0.71%; Expected life of 5 years; Volatility of 106%; and a Dividend yield of 0%. During the year ended December 31, 2013 the

	Company recorded stock-based company recorded stock-based compensation expense of $16,048 relating to the vesting of these options.

	On June 1, 2013 the Company granted 100,000 stock options to an employee. 25% of the options vested immediately, and 25% vest every three months thereafter. The options are exercisable at CDN$0.79 and expire June 1, 2016. The options had a grant date fair value of $48,167 (CDN$49,755) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 0.71%; Expected life of 3 years; Volatility of 94%; and a Dividend yield of 0%. During the year ended December 31, 2013, the Company recorded stock-based compensation expense of $45,503 relating to the vesting of these options.

F-92

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States dollars)

For the years December 31, 2013 and 2012


10.	Share capital (cont’d)

	*Stock options* (cont’d)

	On June 3, 2013 the Company granted 25,000 stock options to an employee. 50% of the options vest six months following the grant date and the remaining in twelve months from the grant date. The options are exercisable at CDN$0.83 and expire June 3, 2018. The options had a grant date fair value of $15,416 (CDN$15,981) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.20%; Expected life of 5 years; Volatility of 106%; and a Dividend yield of 0%. During the year ended December 31, 2013, the Company recorded stock-based compensation expense of $10,433 relating to the vesting of these options.

	On July 31, 2013 the Company granted 100,000 stock options to two consultants. 50% of the options vest six months following the grant date and the remaining in twelve months from the grant date. The options are exercisable at CDN$0.58 and expire July 18, 2018. The options had a grant date fair value of $42,209 (CDN$43,757) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.40%; Expected life of 5 years; Volatility of 102%; and a Dividend yield of 0%. During the year ended December 31, 2013, the Company recorded stock-based compensation expense of $11,174 relating to the vesting of these options.

	On August 16, 2013 the Company granted 400,000 stock options to a consultant. The options vested immediately. The options are exercisable at CDN$0.59 and expire August 16, 2016. The options had a grant date fair value of $128,191 (CDN$132,332) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.20%; Expected life of 3 years; Volatility of 90%; and a Dividend yield of 0%.

	The changes in options during the years ended December 31, 2013 and 2012 are as follows:


	December 31, 2013					December 31, 2012

	Number of options			Weighted average exercise price		Number of options			Weighted average exercise price

Options outstanding, beginning		3,507,000			CDN$ 0.93		3,065,000			CDN$ 0.87
Options granted		685,000			CDN$ 0.64		672,000			CDN$ 0.84
Options exercised		(225,000	)		CDN$ 0.40		(110,000	)		CDN$ 0.72
Options forfeited		(195,000	)		CDN$ 0.96		(120,000	)		CDN$ 0.97

Options outstanding, ending		3,772,000			CDN$ 0.90		3,507,000			CDN$ 0.93

Options exercisable, ending		3,562,000			CDN$ 0.92		2,497,000			CDN$ 0.91


	The weighted average measurement date fair value of the options granted during the year ended December 31, 2013 was $0.39 (2012 - $0.62). The weighted average remaining life of the options outstanding as at December 31, 2013 is 2.29 years.

F-93

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States dollars)

For the years December 31, 2013 and 2012


10.	Share capital (cont’d)

	*Stock options* (cont’d)

	Details of options outstanding as at December 31, 2013 are as follows:


Exercise price	Expiry date	Number of options outstanding

CDN$ 0.40	May 7, 2014	100,000
CDN$ 1.00	May 7, 2014	300,000
CDN$ 1.50	May 7, 2014	200,000
CDN$ 0.97	February 8, 2016	1,830,000
CDN$ 0.51	April 17, 2017	120,000
CDN$ 1.11	September 4, 2017	200,000
CDN$ 0.80	December 20, 2017	337,000
CDN$ 0.80	January 4, 2018	20,000
CDN$ 0.71	April 5, 2018	40,000
CDN$ 0.79	June 1, 2016	100,000
CDN$ 0.83	June 3, 2018	25,000
CDN$ 0.58	July 31, 2018	100,000
CDN$ 0.59	August 16, 2016	400,000

		3,772,000


	*Share purchase warrants*

	Each warrant entitles the holder to purchase one common share of the Company.

	The changes in warrants during the years ended December 31, 2013 and 2012 are as follows:


	December 31, 2013					December 31, 2012

	Number of warrants			Weighted average exercise price		Number of warrants			Weighted average exercise price

Warrants outstanding, beginning		8,362,107			CDN$0.80		4,427,869			CDN$0.76
Warrants issued		6,350,590			US$0.62		4,493,216			CDN$0.89
Warrants expired		(197,100	)		CDN$1.00		(190,605	)		CDN$1.34
Warrants exercised		(150,000	)		US$0.62		—			—
Warrants exercised		(848,530	)		CDN$0.72		(368,373	)		CDN$0.95

Warrants outstanding, ending		13,517,067			CDN$0.72		8,362,107			CDN$0.80


	The weighted average remaining life of the warrants outstanding as at December 31, 2013 is 1.69 years.

	Details of warrants outstanding as at December 31, 2013 are as follows:


Exercise price	Expiry date	Number of warrants outstanding and exercisable

CDN$ 0.40	May 7, 2014	1,512,500
CDN$ 1.00	December 22, 2015	1,234,667
CDN$ 1.00	January 4, 2014	91,760
CDN$ 1.00	January 4, 2016	329,867
CDN$ 0.90	July 20, 2014	3,995,683
CDN$ 0.60	July 20, 2014	152,000
US$ 0.62	August 20, 2016	6,200,590

		13,517,067

F-94

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States dollars)

For the years December 31, 2013 and 2012


11.	Reserves

	*Share-based payment reserve*

	The share-based payment reserve records the fair value of options and warrants recorded in accordance with IFRS 2 “Share-based payments” until such time that the stock options or warrants are exercised, at which time the corresponding amount will be transferred to share capital.

12.	Financial risk and capital management

	The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management processes, inclusive of documented investment policies, counter party limits, and controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows:

	*Credit risk*

	Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company’s primary exposure to credit risk is on its cash, and cash equivalents. The majority of cash is deposited in bank accounts held with major banks in Canada and the United States. As most of the Company’s cash is held by two banks there is a concentration of credit risk. This risk is managed by using major banks that are high credit quality financial institutions as determined by rating agencies. The Company’s secondary exposure to risk is on its receivables. The risk is considered to be minimal.

	*Liquidity risk*

	Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis. The Company ensures that there are sufficient funds to meet its short-term business requirements, taking into account its anticipated cash flows from operations and its holdings of cash and cash equivalents.

	Historically, the Company's sole source of funding has been the issuance of equity securities for cash, primarily through private placements. The Company’s access to financing is always uncertain. There can be no assurance of continued access to significant equity funding.

	The following is an analysis of the contractual maturities of the Company’s non-derivative financial liabilities as at December 31, 2013:


	Within one year		Between one and five years		More than five years

Trade payables	$	201,521	$	—	$	—

	*Foreign exchange 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 does not hedge its exposure to fluctuations in foreign exchange rates. The following is an analysis of the United States dollar equivalent of financial assets and liabilities that are denominated in Canadian dollars:


	December 31, 2013		December 31, 2012

Cash and cash equivalents	$	558,067	$	1,869,056


	Based on the above net exposures, as at December 31, 2013, a 1% change in the Canadian dollar to United States dollar exchange rate would impact the Company’s net loss by $5,581 (2012 $18,691).

F-95

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States dollars)

For the years December 31, 2013 and 2012


12.	Financial risk and capital management (cont’d)

	*Interest rate risk*

	Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk on its cash equivalents as these instruments have original maturities of three months or less and are therefore exposed to interest rate fluctuations on renewal. A 1% change in market interest rates would have an impact on the Company’s net loss of approximately $19,747.

	*Capital Management*

	The Company’s policy is to maintain a strong capital base so as to maintain investor and creditor confidence and to sustain future development of the business. The capital structure of the Company consists of equity, comprising share capital, net of accumulated deficit. There were no changes in the Company’s approach to capital management during the period. The Company is not subject to any externally imposed capital requirements.

	*Classification of financial instruments*

	Financial assets included in the statement of financial position are as follows:


	December 31, 2013		December 31, 2012

Loans and receivables:
Cash and cash equivalents	$	2,849,022	$	2,205,709
Receivables		26,016		33,211

	$	2,875,038	$	2,238,920


	Financial liabilities included in the statement of financial position are as follows:


	December 31, 2013		December 31, 2012

Non-derivative financial liabilities:
Trade payables	$	201,521	$	82,682
Derivative liabilities
Derivative financial liability – warrants		1,967,140		2,027,568

	$	2,168,661	$	2,110,250


	*Fair value*

	The fair value of the Company’s financial assets and liabilities approximates the carrying amount.

	Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:

	•	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 or indirectly; and

	•	Level 3 – Inputs that are not based on observable market data.

	Financial liabilities measured at fair value at December 31, 2013 and 2012 consist of the derivative liability, which is measured using level 3 inputs. The fair value of the derivative liability is determined by the Black-Scholes option pricing model using the historical volatility as an estimate of future volatility. At December 31, 2013, if the volatility used was increased by 10% the impact would be an increase to the derivative liability of $127,817 with a corresponding increase to comprehensive loss.

F-96

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States dollars)

For the years December 31, 2013 and 2012


13.	Commitments

	*Employment Agreement*

	The Company has an agreement (the “Employment Agreement”) dated October 1, 2007, and amended July 31, 2008, with an officer of the Company under which the Company pays a fee for employee services at a base salary of $220,000 per annum. On April 30, 2010, the Board of Directors passed a resolution to increase this to $250,000 per annum and on May 13, 2011 passed a resolution to increase this to $275,000 per annum. The employee is entitled to receive options under the terms and conditions of the Company’s stock option plan. The employee will serve as the President and Chief Executive Officer of the Company. On April 5, 2012, the employment agreement was extended for an additional two years under the same terms.

	Pursuant to the Employment Agreement, the Company has committed to granting 500,000 stock options based on the Company achieving certain consolidated net revenue targets. The exercise price and term of the options will be set at time the targets are met.

	The employee has the right, upon 30 days’ notice, to terminate the Employment Agreement. The Company may terminate the Employment Agreement on 10 days’ notice if for cause or on 60 days’ notice if without cause. Should the Company terminate the contract without cause, it is obligated to pay the employee an amount equal to three month’s base salary.

	*License Agreement*

	In 2004 the Company entered into a License Agreement with a university under which the university is entitled to receive: (i) 2% of the Company’s adjusted gross sales as defined in the License Agreement, and (ii) 2% of the adjusted gross sales of any sub licensee as defined in the License Agreement. The License Agreement gives the Company an exclusive license to a certain United States patent and the related technology for low temperature growth of inorganic materials from solution using catalyzed growth and re-growth.

	*Research and Development Facility Lease*

	On June 1, 2013, the Company entered into a new two year lease for its research and development facility in Rochester, New York. The Company will pay a base rent of $103,596 per year in monthly installments of $8,633. The lease expires on June 30, 2015.

	*Administrative Office Lease*

	On August 1, 2013, the Company entered into a new three year lease agreement for its administrative office. The Company will pay a base rent of $22,000 per year in monthly installments of $1,833. After year one the annual rent will increase 3% for each year of the lease, the lease expires on July 31, 2016.

	*Patent License Agreement*

	On December 9, 2011 the Company entered into a Patent License Agreement to use certain licensed patents. The Company is required to pay an annual fee of $25,000 for as long as the Company uses the patents.

14.	Related party transactions and balances

	*Related party balances*

	As at December 31, 2013, there was $10,558 (2012 - $5,097) owing from an officer of the Company and has been included in receivables.

F-97

Natcore Technology Inc.

Notes to the Consolidated Financial Statements

(Expressed in United States dollars)

For the years December 31, 2013 and 2012


14.	Related party transactions and balances (cont’d)

	*Key management personnel compensation*


	December 31, 2013		December 31, 2012

Administrative fees	$	60,000	$	60,000
Consulting		58,000		30,200
Stock-based compensation		12,847		28,768
Wages and benefits		488,000		446,750

	$	618,847	$	565,718


15.	Income taxes

	A reconciliation of the expected income tax recovery to the actual income tax recovery is as follows:


	December 31, 2013			December 31, 2012

Net loss	$	(3,938,828	)	$	(1,838,355	)
Tax rate		34	%		34	%
Expected income tax recovery		(1,339,202	)		(625,040	)
Derivative liability		123,034			(574,843	)
Non-deductible items and other		(91,271	)		58,361
Effect of share issuance costs not recognized		(27,786	)		(35,246	)
Effect of different foreign tax rates		33,522			24,897
Temporary differences not recognized		1,301,703			1,151,871

	$	—		$	—


	The Company has the following deductible temporary difference for which no deferred tax asset has been recognized and that can be carried forward indefinitely.


	December 31, 2013		December 31, 2012

Non-capital losses – Canada	$	1,507,061	$	1,173,191
Tax losses – United States		12,003,312		8,860,293
Equipment tax pools		391,418		123,977
Share issuance costs		209,992		257,205

	$	14,111,783	$	10,414,666


	The Canadian and US non-capital losses expired between 2015 and 2033.

16.	Subsequent events

	In January 2014, 50,000 common share purchase warrants with an exercise price of US$0.62 were exercised for gross proceeds of $31,000.

	In January 2014, 70,913 common share purchase warrants with an exercise price of CDN$1.00 were exercised for cash proceeds of $67,365 (CDN$70,913).

	In March 2014, 137,500 common share purchase warrants with an exercise price of CDN$0.40 were exercised for cash proceeds of (CDN$55,000).

	In March 2014, 50,000 common share purchase warrants with an exercise price of US$0.62 were exercised for gross proceeds of $31,000.

	In April 2014, 110,000 common share purchase warrants with an exercise price of CDN$0.40 were exercised for cash proceeds of (CDN$44,000)

F-98

(MESSAGE)

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of Natcore Technology Inc.

We have audited the accompanying consolidated financial statements of Natcore Technology Inc., which comprise of the consolidated statements of financial position as at December 31, 2012, 2011 and 2010, and the consolidated statements of comprehensive loss, changes in shareholders’ equity and cash flows for the years ended December 31, 2012 and 2011 and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

Auditor’s Responsibility

We believe that the audit evidence that we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of Natcore Technology Inc. as at December 31, 2012, 2011 and 2010 and its financial performance and its cash flows for the years ended December 31, 2012 and 2011, in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Emphasis of Matter

Without modifying our opinion, we draw attention to Note 1 to the consolidated financial statements, which describes certain conditions that indicate the existence of a material uncertainty that give rise to significant doubt about the entity’s ability to continue as a going concern.

Other Matter

As discussed in Note 17 to the consolidated financial statements, the consolidated financial statements as at December 31, 2011 and 2010 and for the year ended December 31, 2011 have been restated to correct a misstatement.



	DALE MATHESON CARR-HILTON LABONTE LLP
	CHARTERED ACCOUNTANTS

Vancouver, BC
April 29, 2013

(MESSAGE)

Natcore Technology Inc.
Consolidated statements of financial position
(Expressed in United States dollars)


	Notes	December 31, 2012			December 31, 2011 (Note 17)			December 31, 2010 (Note 17)

ASSETS
Current assets
Cash and cash equivalents	4	$	2,205,709		$	2,360,852		$	2,450,611
Receivables	5		33,211			36,826			41,799
Prepaid expenses			44,718			41,657			67,581

			2,283,638			2,439,335			2,559,991

Non-current assets
Equipment	6		809,309			712,281			8,935
Intangible assets	7		308,104			464,585			582,947

			1,117,413			1,176,866			591,882

TOTAL ASSETS		$	3,401,051		$	3,616,201		$	3,151,873


LIABILITIES
Current liabilities
Trade payables and accrued liabilities	8	$	82,682		$	167,842		$	405,016
Due to related parties			—			—			140,000
Derivative financial liability	9		2,027,568			465,553			1,850,012

TOTAL LIABILITIES			2,110,250			633,395			2,395,028


SHAREHOLDERS’ EQUITY
Share capital	10		8,970,743			9,629,882			4,663,058
Subscriptions received			—			—			386,666
Share-based payment reserve	11		2,616,511			1,811,022			470,587
Deficit			(10,296,453	)		(8,458,098	)		(4,763,466	)

TOTAL SHAREHOLDERS’ EQUITY			1,290,801			2,982,806			756,845

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	3,401,051		$	3,616,201		$	3,151,873


Nature and continuance of operations	1
Commitments	14
Subsequent event	18

Approved on behalf of the Board:


“John Calhoun”		“Brien Lundin”



– Director		– Director

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

F-100

Natcore Technology Inc.
Consolidated statements of comprehensive loss
(Expressed in United States dollars)


		For the years ended

	Notes	December 31, 2012			December 31, 2011 (Note 17)

Expenses
Consulting	15	$	70,410		$	46,607
Depreciation and amortization	6, 7		325,648			143,848
Filing fees			26,743			10,920
Foreign exchange (gain)/loss			(62,086	)		151,504
Interest and bank charges			2,056			4,102
Marketing			56,553			216,267
Office and miscellaneous	15		500,322			286,998
Professional fees			204,442			247,946
Research and development			781,042			452,959
Stock-based compensation	10, 15		609,400			1,287,021
Travel			216,725			275,822
Wages and salaries	10, 15		821,365			947,111

			(3,552,620	)		(4,071,105	)


Other items
Fair value adjustment on warrants	9, 17		1,690,715			349,711
Interest income			23,550			26,762

Net and comprehensive loss for the year		$	(1,838,355	)	$	(3,694,632	)


Loss per share – basic and diluted	10	$	(0.05	)	$	(0.11	)


Weighted Average Number of Shares Outstanding– basic and diluted	10		36,014,144			32,756,376

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

F-101

Natcore Technology Inc.
Consolidated statement of changes in shareholders’ equity
(Expressed in United States dollars)


		Share capital

	Notes	Number of shares		Amount			Subscriptions received			Share-based payment reserve			Deficit			Total

Balance at December 31, 2010			28,517,000	$	4,663,058		$	386,666		$	470,587		$	(4,763,466	)	$	756,845
Comprehensive loss for the year			—		—			—			—			(3,694,632	)		(3,694,632	)
Transactions with owners, in their capacity as owners, and other transfers:
Shares issued for cash – private placement	10		1,563,233		1,215,866			(386,666	)		—			—			829,200
Derivative liability – warrants granted	9, 10		—		(366,113	)		—			—			—			(366,113	)
Derivative liability – warrants exercised	9, 10		—		1,400,861			—			—			—			1,400,861
Issuance costs – cash	10		—		(78,834	)		—			—			—			(78,834	)
Issuance costs – warrants	10		—		(53,413	)		—			53,413			—			—
Shares issued for cash – warrants exercised			3,855,543		2,848,458			—			—			—			2,848,458
Stock-based compensation	10		—		—			—			1,287,021			—			1,287,021

Balance at December 31, 2011			33,935,776		9,629,883			—			1,811,021			(8,458,098	)		2,982,806
Comprehensive loss for the year			—		—			—			—			(1,838,355	)		(1,838,355	)
Transactions with owners, in their capacity as owners, and other transfers:
Shares issued for cash – private placement	10		4,166,700		2,478,020			—			—			—			2,478,020
Derivative liability – warrants granted	9, 10		—		(3,341,782	)		—			—			—			(3,341,782	)
Derivative liability – warrants exercised	9, 10		—		89,052			—			—			—			89,052
Issuance costs – cash	10		—		(102,815	)		—			—			—			(102,815	)
Issuance costs – warrants	10		—		(273,617	)		—			273,617			—			—
Shares issued for cash – options exercise			110,000		136,138			—			(55,911	)		—			80,227
Shares issued for cash – warrants exercise			368,373		355,865			—			(21,617	)		—			334,248
Stock-based compensation	10		—		—			—			609,400			—			609,400

Balance at December 31, 2012			38,580,849	$	8,970,743		$	—		$	2,616,511		$	(10,296,453	)	$	1,290,801

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

F-102

Natcore Technology Inc.
Consolidated statements of cash flows
(Expressed in United States dollars)


	For the years ended

	December 31, 2012			December 30, 2011

Operating activities
Net loss	$	(1,838,355	)	$	(3,694,632	)
Adjustments for non-cash items:
Depreciation and amortization		325,648			143,848
Fair value adjustment on warrants		(1,690,715	)		(349,711	)
Stock-based compensation		609,400			1,287,021
Changes in non-cash working capital items:
Receivables		3,615			4,974
Prepaid expenses		(3,061	)		25,924
Trade payables and accrued liabilities		(85,160	)		(237,173	)

Net cash flows used in operating activities		(2,678,628	)		(2,819,749	)


Investing activities
Expenditures on equipment		(266,195	)		(708,832	)
Expenditures on intangible assets		—			(20,000	)

Net cash flows used in investing activities		(266,195	)		(728,832	)


Financing activities
Proceeds on issuance of common shares - net of share issue costs		2,789,680			3,598,822
Repayment of amounts due to related parties		—			(140,000	)

Net cash flows provided by financing activities		2,789,680			3,458,822

Decrease in cash and cash equivalents		(155,143	)		(89,759	)
Cash and cash equivalents, beginning		2,360,852			2,450,611

Cash and cash equivalents, ending	$	2,205,709		$	2,360,852


Supplementary cash flow information:
Cash received for interest	$	33,343		$	5,604
Cash paid for interest	$	6		$	1,679

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

F-103

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States dollars)
For the years ended December 31, 2012 and 2011


1.	Nature and continuance of operations

	Natcore Technology Inc. (the “Company”) was incorporated under the British Columbia Business Corporations Act on August 9, 2007. The Company’s common shares are listed on the TSX Venture Exchange (the “Exchange”) under the symbol NXT.

	The Company’s head office address is 87 Maple Avenue, 1 ^st Floor, Red Bank, New Jersey, 07701. The Company’s registered office is 2080 - 777 Hornby Street, Vancouver British Columbia V6Z 1S4.

	On May 8, 2009, the Company acquired all of the issued and outstanding share capital of a private Delaware company (the “Acquisition”), also called Natcore Technology, Inc. (“Natcore US”). Natcore US was incorporated in Delaware in 2002, to exploit the patent pending technology over which it owns the exclusive license from Rice University. The licensed intellectual property (the “Technology”) controls the growth of thin and thick film of silicon dioxide and mixed silicon oxides on silicon and other substrates from aqueous bath at room temperature and pressure.

	These consolidated financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. Different bases of measurement may be appropriate if the Company is not expected to continue operations for the foreseeable future. As at December 31, 2012 the Company has had recurring losses from operations and a cumulative deficit of $10,296,453. The Company’s continuation as a going concern is dependent upon its ability to attain profitable operations and generate funds there from and/or raise equity capital or borrowings sufficient to meet current and future obligations. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern. Management intends to finance operating costs over the next twelve months with existing cash resources and the private placement of common shares.

2.	Significant accounting policies and basis of preparation

	*Statement of compliance with International Financial Reporting Standards*

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

	The consolidated financial statements were authorized for issue by the Board of Directors on April 29, 2013.

	*Basis of preparation*

	The consolidated financial statements of the Company have been prepared on an accrual basis and are based on historical costs, modified where applicable. The consolidated financial statements are presented in United States dollars unless otherwise noted.

F-104

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States dollars)
For the years ended December 31, 2012 and 2011


2.	Significant accounting policies and basis of preparation (cont’d)

	*Consolidation*

	The consolidated financial statements include the accounts of the Company and its controlled entities. Details of controlled entities are as follows:


		Percentage owned

	Jurisdiction of incorporation	December 31, 2012	December 31, 2011

Natcore Technology, Inc.	United States	100%	100%
Newcyte, Incorporated	United States	100%	100%
Vanguard Solar, Inc.	United States	100%	100%
Natcore Asia Technology, Limited	Hong Kong	100%	100%

______________

*Percentage of voting power is in proportion to ownership.

Inter-company balances are eliminated on consolidation.


	*Significant accounting judgments, estimates and assumptions*

	The preparation of consolidated financial statements in accordance with IFRS requires the Company to make estimates and assumptions concerning the future. The Company’s management reviews these estimates and underlying assumptions on an ongoing basis, based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are adjusted for prospectively in the period in which the estimates are revised.

	Estimates and assumptions where there is significant risk of material adjustments to assets and liabilities in future accounting periods include the useful lives of equipment, impairment considerations for equipment and intangible assets, determination of fair value for stock-based compensation and other share-based payments, valuations and assumptions used to determine deferred income taxes and the fair value of financial instruments.

	*Foreign currency translation*

	The functional currency of each of the Company’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in United States dollars which is the functional currency of the Company and its subsidiaries.

	Transactions and balances:

	Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the period-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

	Exchange differences arising on the translation of monetary items or on settlement of monetary items are recognized in profit or loss in the statement of comprehensive loss in the period in which they arise, except where deferred in equity as a qualifying cash flow or net investment hedge.

F-105

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States dollars)
For the years ended December 31, 2012 and 2011


2.	Significant accounting policies and basis of preparation (cont’d)

	*Foreign currency translation* (cont’d)

	Exchange differences arising on the translation of non-monetary items are recognized in other comprehensive loss in the statement of comprehensive loss to the extent that gains and losses arising on those non-monetary items are also recognized in other comprehensive loss. Where the non-monetary gain or loss is recognized in profit or loss, the exchange component is also recognized in profit or loss.

	The financial results and position of foreign operations whose functional currency is different from the Company’s presentation currency are translated as follows:

	•	assets and liabilities are translated at period-end exchange rates prevailing at that reporting date; and

	•	income and expenses are translated at average exchange rates for the period.

	Intangible assets

	Intangible assets acquired separately

	Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.

	Internally-generated intangible assets - Research and development expenditure

	Expenditure on research activities is recognized as an expense in the period in which it is incurred.

	An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognized if, and only if, all of the following have been demonstrated:

	•	The technical feasibility of completing the intangible asset so that it will be available for use or sale;

	•	The intention to complete the intangible asset and use or sell it;

	•	The ability to use or sell the intangible asset;

	•	How the intangible asset will generate probable future economic benefits;

	•	The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

	•	The ability to measure reliably the expenditure attributable to the intangible asset during its development.


	The amount initially recognized for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognized, development expenditure is recognized in loss in the period in which it is incurred.

	Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

	At December 31, 2012, the Company has not recognized any internally-generated intangible assets.

F-106

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States dollars)
For the years ended December 31, 2012 and 2011


2.	Significant accounting policies and basis of preparation (cont’d)

	*Share-based payments*

	The Company operates a stock option plan. Share-based payments to employees are measured at the fair value of the instruments issued and amortized over the vesting periods. Share-based payments to non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The corresponding amount is recorded to the share-based payment reserve. The fair value of options is determined using the Black–Scholes Option Pricing Model. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognized for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest.

	*Financial instruments*

	The Company classifies its financial instruments in the following categories: at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale and financial liabilities. The classification depends on the purpose for which the financial instruments were acquired. Management determines the classification of its financial instruments at initial recognition.

	Financial assets are classified at fair value through profit or loss when they are either held for trading for the purpose of short-term profit taking, derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Such assets are subsequently measured at fair value with changes in carrying value being included in profit or loss.

	Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortized cost. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets.

	Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the Company’s intention to hold these investments to maturity. They are subsequently measured at amortized cost. Held-to-maturity investments are included in non-current assets, except for those which are expected to mature within 12 months after the end of the reporting period.

	Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not suitable to be classified as financial assets at fair value through profit or loss, loans and receivables or held-to-maturity investments and are subsequently measured at fair value. These are included in current assets. Unrealized gains and losses are recognized in other comprehensive loss, except for impairment losses and foreign exchange gains and losses.

	Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortized cost. Derivative financial liabilities are classified at fair value through profit and loss and are subsequently measured at fair value with changes in carrying value being included in profit or loss.

	Regular purchases and sales of financial assets are recognized on the trade-date – the date on which the Company commits to purchase the asset.

F-107

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States dollars)
For the years ended December 31, 2012 and 2011


2.	Significant accounting policies and basis of preparation (cont’d)

	*Financial instruments* (cont’d)

	Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership.

	At each reporting date, the Company assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a significant and prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen.

	*Impairment of long-lived assets*

	The carrying amount of the Company’s long-lived assets (which include equipment andintangible assets) is reviewed at each reporting date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. An impairment loss is recognized whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognized in the statement of comprehensive loss.

	The recoverable amount of assets is the greater of an asset’s fair value less cost to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

	An impairment loss is only reversed if there is an indication that the impairment loss may no longer exist and there has been a change in the estimates used to determine the recoverable amount, however, not to an amount higher than the carrying amount that would have been determined had no impairment loss been recognized in previous years.

	Assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment.

	*Cash and cash equivalents*

	Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term highly liquid investments, such as guaranteed investment certificates with original maturities of three months or less. Guaranteed investment certificates are investments with Canadian banks that are the equivalent of a certificate of deposit.

	Income taxes

	Current income tax:

	Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date, in the countries where the Company operates and generates taxable income.

F-108

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States dollars)
For the years ended December 31, 2012 and 2011


2.	Significant accounting policies and basis of preparation (cont’d)

	*Income taxes* (cont’d)

	Current income tax (cont’d)

	Current income tax relating to items recognized directly in other comprehensive loss or equity is recognized in other comprehensive loss or equity and not in profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

	Deferred income tax:

	Deferred income tax is provided using the asset and liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

	The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and recognized only to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.

	Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

	Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

	*Equipment*

	Equipment is stated at historical cost less accumulated depreciation and accumulated impairment losses.

	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 the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the statement of comprehensive loss during the financial period in which they are incurred.

	Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized in profit or loss.

	Depreciation and amortization are calculated on a straight-line method to write off the cost of the assets to their residual values over their estimated useful lives.

3.	Accounting standards issued but not yet effective

	*New standard IFRS 9 “Financial Instruments”*

	This new standard is a partial replacement of IAS 39 “Financial Instruments: Recognition and Measurement”. IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets.

	The new standard also requires a single impairment method to be used, replacing the multiple impairment methods in IAS 39. IFRS 9 is effective for annual periods beginning on or after January 1, 2015.

F-109

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States dollars)
For the years ended December 31, 2012 and 2011


3.	Accounting standards issued but not yet effective (cont’d)

	*New standard IFRS 10 “Consolidated Financial Statements”*

	This new standard will replace IAS 27 “Consolidated and Separate Financial Statements”, and Standing Interpretations Committee abstract (“SIC”) 12 “Consolidation – Special Purpose Entities”. Concurrent with IFRS 10, the IASB issued IFRS 11 “Joint Ventures”; IFRS 12 “Disclosures of Involvement with Other Entities”; IAS 27 “Separate Financial Statements”, which has been amended for the issuance of IFRS 10 but retains the current guidance for separate financial statements; and IAS 28 “Investments in Associates and Joint Ventures”, which has been amended for conforming changes based on the issuance of IFRS 10 and IFRS 11.

	IFRS 10 uses control as the single basis for consolidation, irrespective of the nature of the investee, eliminating the risks and rewards approach included in SIC-12, and requires continuous assessment of control over an investee. The above consolidation standards are effective for annual periods beginning on or after January 1, 2013.

	*New standard IFRS 11 “Joint Arrangements”*

	This new standard requires a venturer to classify its interest in a joint arrangement as a joint venture or joint operation. Joint ventures will be accounted for using the equity method of accounting whereas for a joint operation the venture will recognize its share of the assets, liabilities, revenue and expenses of the joint operation. Under existing IFRS, entities have the choice to proportionately consolidate or equity account for interests in joint ventures. IFRS 11 supersedes lAS 31, Interests in Joint Ventures, and SIC-13, Jointly Controlled Entities-Non-monetary Contributions by Venturers.

	*New standard IFRS 12 “Disclosure of Interests in Other Entities”*

	This new standard establishes disclosure requirements for interests in other entities, such as joint arrangements, associates, special purpose vehicles and off balance sheet vehicles. The standard carries forward existing disclosures and also introduces significant additional disclosure requirements that address the nature of, and risks associated with, an entity’s interests in other entities.

	New standard IFRS 13 “Fair value measurement”

	This new standard replaces the fair value measurement guidance currently included in various other IFRS standards with a single definition of fair value and extensive application guidance. IFRS 13 provides guidance on how to measure fair value and does not introduce new requirements for when fair value is required or permitted. It also establishes disclosure requirements to provide users of the financial statements with more information about fair value measurements. IFRS 13 is effect for annual periods beginning on or after January 1, 2013.

	*Amendments to IAS 32 “Financial Instruments: Presentation”*

	These amendments address inconsistencies when applying the offsetting requirements, and is effective for annual periods beginning on or after January 1, 2014.

	*Financial statement presentation*

	In June 2011, the IASB and the Financial Accounting Standards Board (“FASB”) issued amendments to standards to align the presentation requirements for other comprehensive income (“OCI”). The IASB issued amendments to IAS 1 “ Presentation of Financial Statements” to require companies preparing financial statements under IFRS to group items within OCI that may be reclassified to the profit or loss.

F-110

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States dollars)
For the years ended December 31, 2012 and 2011


3.	Accounting standards issued but not yet effective (cont’d)

	The amendments also reaffirm existing requirements that items in OCI and profit or loss should be presented as either a single statement or two consecutive statements. The amendments are effective for fiscal years beginning on or after July 1, 2012.

	The Company has not early adopted these new and revised standards and is currently assessing the impact that these standards will have on its consolidated financial statements. Other accounting standards or amendments to existing accounting standards that have been issued but have future effective dates are either not applicable or are not expected to have a significant impact on the Company’s financial statements.

4.	Cash and cash equivalents


	December 31, 2012		December 31, 2011

Cash at bank	$	371,401	$	260,852
Guaranteed investment certificates		1,834,308		2,100,000

	$	2,205,709	$	2,360,852


5.	Receivables


	December 31, 2012		December 31, 2011

HST receivable*	$	16,957	$	12,970
Due from related party (Note 15)		5,097		2,862
Interest receivable		11,157		20,994

	$	33,211	$	36,826

_______________

*The Harmonized Sales Tax (“HST”) receivable is comprised of input taxes the Company has been charged by vendors on purchases of goods and services obtained in Canada. The Company is entitled to a refund of these input taxes from the Canada Revenue Agency, which it receives on a quarterly basis.


6.	Equipment


	Furniture and office equipment		Production equipment		Total

Cost:
At December 31, 2010	$	18,010	$	—	$	18,010
Additions		105,379		603,453		708,832

At December 31, 2011		123,389		603,453		726,842


Depreciation:
At December 31, 2010		9,075		—		9,075
Charge for the period		5,486		—		5,486

At December 31, 2011		14,561		—		14,561


Net book value:

At December 31, 2011	$	108,828	$	603,453	$	712,281

Cost:
At December 31, 2011	$	123,389	$	603,453	$	726,842
Additions		161,661		104,534		266,195

At December 31, 2012		285,050		707,987		993,037

Depreciation:
At December 31, 2011		14,561		—		14,561
Charge for the period		38,023		131,144		169,167

At December 31, 2012		52,584		131,144		183,728

Net book value:

At December 31, 2012	$	232,466	$	576,843	$	809,309

F-111

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States dollars)
For the years ended December 31, 2012 and 2011


7.	Intangible assets


	Issued and pending patents

Cost:
At December 31, 2010	$	691,814
Additions		20,000

At December 31, 2011		711,814


Amortization:
At December 31, 2010		108,867
Charge for the period		138,362

At December 31, 2011		247,229


Net book value:

At December 31, 2011	$	464,585


Cost:
At December 31, 2011	$	711,814
Additions		—

At December 31, 2012		711,814


Amortization:
At December 31, 2011		247,229
Charge for the period		156,481

At December 31, 2012		403,710


Net book value:

At December 31, 2012	$	308,104


8.	Trade payables and accrued liabilities


	December 31, 2012		December 31, 2011

Trade payables	$	82,682	$	102,087
Accrued liabilities		—		65,755

	$	82,682	$	167,842


9.	Derivative financial liability


	Year ended December 31, 2012			Year ended December 31, 2011

Balance, beginning	$	465,553		$	1,850,012
Fair value of warrants issue during the year		3,341,782			366,113
Fair value of warrants exercised during year		(89,052	)		(1,400,861	)
Change in fair value of warrants outstanding		(1,690,715	)		(349,711	)

Balance, ending	$	2,027,568		$	465,553

F-112

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States dollars)
For the years ended December 31, 2012 and 2011


9.	Derivative financial liability (cont’d)

	The derivative financial liability consists of the fair value of share purchase warrants that have exercise prices that differ from the functional currency of the Company and are within the scope of IAS 32 “Financial Instruments: Presentation”. Details of these warrants and their fair values are as follows:


Expiry Date	Exercise Price	Number of warrants outstanding at December 31, 2012		Fair value at December 31, 2012		Number of warrants outstanding at December 31, 2011		Fair value at December 31, 2011

	CDN $				US $				US $
December 22, 2013	1.00		1,234,667		355,987		1,234,667		285,080
January 4, 2014	1.00		499,867		144,124		781,617		180,473
July 20, 2014	0.90		4,166,700		1,527,457		—		—

			5,901,234		2,027,568		2,016,284		465,553


	The fair values of these warrants were estimated using the Black-Scholes Option Pricing Model using the following assumptions.

	•	The stock price was based upon the publicly traded price at the time of issuance

	•	The risk-free interest rate assumption is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant.

	•	The Company does not pay dividends on common stock and does not anticipate paying dividends on its common stock in the foreseeable future. Therefore, the expected dividend rate was 0%.

	•	The warrant term is the life of the warrant.

	•	The expected volatility was based off of the historical trading prices of the Company’s common stock price over the expected life of the warrant.

	•	The forfeiture rate is based on the historical forfeiture rate for the Company’s unvested warrants, which was 0%.

	The fair values of these warrants as at December 31, 2012 were estimated using the Black-Scholes Option Pricing Model using the following inputs.


Expiry Date	December 22, 2013	January 4, 2014	July 20, 2014

Exercise price	CDN $1.00	CDN $1.00	CDN $0.90
Share price	CDN $0.79	CDN $0.79	CDN $0.79
Expected volatility	113%	113%	106%
Expected life	1.0 year	1.0 years	1.55 years
Dividends	0.00%	0.00%	0.00%
Risk-free interest rate	1.07%	1.07%	1.12%

F-113

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States dollars)
For the years ended December 31, 2012 and 2011


9.	Derivative financial liability (cont’d)

	The fair values of these warrants as at December 31, 2011 were estimated using the Black-Scholes Option Pricing Model using the following inputs.


Expiry Date	December 22, 2013	January 4, 2014

Exercise price	CDN $1.00	CDN $1.00
Share price	CDN $0.79	CDN $0.79
Expected volatility	106%	106%
Expected life	2.0 years	2.0 years
Dividends	0.00%	0.00%
Risk-free interest rate	0.97%	0.97%


10.	Share capital

	*Authorized share capital*

	Unlimited number of common shares without par value.

	*Issued share capital*

	At December 31, 2012 there were 38,580,849 issued and fully paid common shares (December 31, 2011 – 33,935,776).

	*Private placements*

	On January 4, 2011, the Company completed the second tranche of a non-brokered private placement and issued 1,563,233 units at CDN$0.75 per unit for aggregate gross proceeds of $1,215,866 (CDN$1,172,425).Each unit was comprised of one common share and one half share purchase warrant exercisable at CDN$1.00 expiring in three years. On issue the fair value of the warrants was determined to be $366,113 using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.78%; Expected life of 3 years; Volatility of 118%; and a Dividend yield of 0%.Finder’s fees were paid on portions of the private placement in the amount of 10% of the gross proceeds placed by such finders, payable in cash ($78,834) and 10% of the total units placed by such finders, payable through the issuance of finder’s warrants, exercisable into one common share of the Company on the same terms as the warrants issued as part of the aforementioned units. A total of 113,988 finder’s warrants were issued with a fair value of $53,413 determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.78%; Expected life of 3 years; Volatility of 118%; and a Dividend yield of 0%.

	On July 20, 2012, The Company completed a private placement of 4,166,700 units at a price of CDN $0.60 per unit generating aggregate gross proceeds of $2,478,020(CDN$2,500,000). Each unit comprised one common share and one share purchase warrant, with each whole warrant exercisable at a price of CDN$0.90 per share until July 20, 2014. On issue the fair value of the warrants was determined to be $3,341,782 using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 0.97%; Expected life of 2 years; Volatility of 93%; and a Dividend yield of 0%. In the event that the Company’s common shares close at over CDN$1.60 for 20 consecutive trading days, the warrants will be subject to accelerated conversion within 30 days notice of the Company disseminating a press release providing notice of that circumstance. Finder’s fees were paid on a portion of the financing, such that an aggregate of $102,815 was paid in cash and 22,516 finder’s warrants were issued, having the same terms as the warrants forming part of the units and 152,000 finder’s unit warrants were issued exercisable to acquire units on the same terms as the units issued in the financing at an exercise price of CDN$0.60 per unit for until July 20, 2014. An additional 152,000 finder’s warrants were issued with an exercise price of CDN$0.90 until July 20, 2014. The fair value of the finder’s warrants was $273,617 determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 0.97%; Expected life of 2 years; Volatility of 93%; and a Dividend yield of 0%.

F-114

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States dollars)
For the years ended December 31, 2012 and 2011


10.	Share capital (cont’d)

	*Basic and diluted loss per share*

	The calculation of basic and diluted loss per share for the years ended December 31, 2012and 2011 was based on the loss attributable to common shareholders of $1,838,355 and $3,694,632 and the weighted average number of common shares outstanding of 36,014,144and 32,756,376, respectively.

	Diluted loss per share did not include the effect of stock options and warrants as the effect would be anti-dilutive.

	*Stock options*

	The Company has adopted an incentive stock option plan, which provides that the Board of Directors of the Company may from time to time, at its discretion, and in accordance with the Exchange requirements, grant to directors, officers, employees and technical consultants to the Company, non-transferable options to purchase common shares, provided that the number of common shares reserved for issuance will not exceed 6,779,255 common shares. Such options will be exercisable for a period of up to 10 years from the date of grant. In connection with the foregoing, the number of common shares reserved for issuance to any one optionee will not exceed five percent (5%) of the issued and outstanding common shares and the number of common shares reserved for issuance to all technical consultants will not exceed two percent (2%) of the issued and outstanding common shares. Options may be exercised no later than 90 days following cessation of the optionee’s position with the Company or 30 days following cessation of an optionee conducting investor relations activities’ position.

	Stock-based compensation expense has been calculated using the Black-Scholes option pricing model. The measurement date fair values of the stock options were estimated using the Black-Scholes Option Pricing Model using the following assumptions.


	•	The stock price was based upon the publicly traded price at the time of issuance

	•	The risk-free interest rate assumption is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant.

	•	The Company does not pay dividends on common stock and does not anticipate paying dividends on its common stock in the foreseeable future. Therefore, the expected dividend rate was 0%.

	•	The expected life of the warrants was estimated at 75% of the remaining term until expiry, which is based on the length of time similar warrants have remained outstanding in the past.

	•	The expected volatility was based off on the historical trading prices of the Company’s common stock price over the expected life of the warrant.

	•	The forfeiture rate is based on the historical forfeiture rate for the Company’s unvested warrants, which was 0%.

	On February 8, 2011, the Company granted 2,190,000 stock options to directors, employees and consultants. The options vest over a three year period, and are exercisable at CDN$0.97 expiring in five years. The options had a grant date fair value of $1,666,332 (CDN$1,650,651) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 2.44%; Expected life of 5 years; Volatility of 118%; and a Dividend yield of 0%. During the year ended December 31, 2012, the Company recorded stock-based compensation expense of $340,825 (2011 - $1,287,021) relating to the vesting of these options. During the year ended December 31, 2012, 117,000 of the options were forfeited. The related share based payment relating to these cancelled options of $40,655 was reversed in the statement of comprehensive loss.

F-115

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States dollars)
For the years ended December 31, 2012 and 2011


10.	Share capital (cont’d)

	*Stock options (cont’d)*

	On April17, 2012, the Company granted 120,000 stock options to employees. 50% of the options vested on October 17, 2012 and the remaining vest on October 17, 2013. The options are exercisable at CDN$0.51and expire on April 17, 2017. The options had a grant date fair value of $43,545 (CDN$43,359) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.63%; Expected life of 5 years; Volatility of 92%; and a Dividend yield of 0%. During the year ended December 31, 2012 the Company recorded stock-based compensation expense of $32,022 relating to the vesting of these options.

	On August 16, 2012, the Company granted 200,000 stock options to an employee. 50% of the options vest six months following the grant date and the remaining in twelve months from the grant date. The options are exercisable at CDN$1.11and expire September 4, 2017. The options had a grant date fair value of $170,047 (CDN$168,112) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.51%; Expected life of 5 years; Volatility of 97%; and a Dividend yield of 0%. During the year ended December 31, 2012, the Company recorded stock-based compensation expense of $116,936 relating to the vesting of these options.

	On December 20, 2012 the Company granted 80,000 stock options to employees. 50% of the options vest six months following the grant date and the remaining 18 months from the grant date. The options are exercisable at CDN$0.80 and expire December 20, 2017. The options had a grant date fair value of $46,306 (CDN$45,780) determined using the Black-Scholes Option Pricing Model with the following assumptions: Risk free rate of 1.39%; Expected life of 5 years; Volatility of 97%; and a Dividend yield of 0%. During the year ended December 31, 2012, the Company recorded stock-based compensation expense of $1,980 relating to the vesting of these options.

	On December 20, 2012 the Company granted 272,000 stock options to employees and consultants of the Company which vested immediately. The options are exercisable at CDN$0.80 and expire December 20, 2017. During the year ended December 31, 2012 the Company recorded stock-based compensation of $158,292 (CDN$156,497) determined using the Black-Scholes Option Pricing Model with the assumptions: Risk free rate of 1.39%; Expected life of 5 years; Volatility of 97%; and a Dividend yield of 0%.

	The changes in options during the years ended December 31, 2012 and 2011 are as follows:


	December 31, 2012					December 31, 2011

	Number of options			Weighted average exercise price		Number of options		Weighted average exercise price

Options outstanding, beginning		3,065,000			CDN$0.87		875,000		CDN$0.72
Options granted		672,000			CDN$0.84		2,190,000		CDN$0.93
Options exercised		(110,000	)		CDN$0.72		—		—
Options forfeited		(120,000	)		CDN$0.97		—		—

Options outstanding, ending		3,507,000			CDN$0.93		3,065,000		CDN$0.87

Options exercisable, ending		2,497,000			CDN$0.91		1,605,000		CDN$0.72


	The weighted average measurement date fair value of the options granted during the year ended December 31, 2012 was $0.62 (2012 - $0.76).

	The weighted average remaining life of the options outstanding as at December 31, 2012 is 2.76 years.

F-116

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States dollars)
For the years ended December 31, 2012 and 2011


10.	Share capital (cont’d)

	*Stock options (cont’d)*

	Details of options outstanding as at December 31, 2012 are as follows:


Exercise price	Expiry date	Number of options outstanding

CDN$ 0.40	May 7, 2014	325,000
CDN$ 1.00	May 7, 2014	300,000
CDN$ 1.50	May 7, 2014	200,000
CDN$ 0.97	February 8, 2016	2,010,000
CDN$ 0.51	April 17, 2017	120,000
CDN$ 1.11	September4, 2017	200,000
CDN$ 0.80	December20, 2017	352,000

		3,507,000


	Share purchase warrants

	Each warrant entitles the holder to purchase one common share of the Company. The changes in warrants during the year ended December 31, 2012 and 2011 are as follows:


	December 31, 2012					December 31, 2011

	Number of warrants			Weighted average exercise price		Number of warrants			Weighted average exercise price

Warrants outstanding, beginning		4,427,869			CDN$0.76		10,542,369			CDN$0.86
Warrants issued		4,493,216			CDN$0.89		895,605			CDN$0.93
Warrants expired		(190,605	)		CDN$1.34		(3,154,562	)		CDN$0.75
Warrants exercised		(368,373	)		CDN$0.95		(3,855,543	)		CDN$0.75

Warrants outstanding, ending		8,362,107			CDN$0.80		4,427,869			CDN$0.76


	Details of warrants outstanding as at December 31, 2012 are as follows:


Exercise price	Expiry date	Number of warrants outstanding and exercisable

CDN$ 0.40	May 7, 2014	1,845,500
CDN$ 1.00	December 22, 2013	1,431,767
CDN$ 1.00	January 4, 2014	591,624
CDN$ 0.90	July 20, 2014	4,341,216
CDN$ 0.60	July 20, 2014	152,000

		8,362,107


11.	Reserves

	*Share-based payment reserve*

	The share-based payment reserve records the fair value of options and warrants recorded in accordance with IFRS 2 “Share-based payments” until such time that the stock options or warrants are exercised, at which time the corresponding amount will be transferred to share capital.

F-117

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States dollars)
For the years ended December 31, 2012 and 2011


12.	Financial risk and capital management

	The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management processes, inclusive of documented investment policies, counter party limits, and controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows:

	*Credit risk*

	Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company’s primary exposure to credit risk is on its cash, and cash equivalents. The majority of cash is deposited in bank accounts held with major banks in Canada and the United States. As most of the Company’s cash is held by two banks there is a concentration of credit risk. This risk is managed by using major banks that are high credit quality financial institutions as determined by rating agencies. The Company’s secondary exposure to risk is on its receivables. The risk is considered to be minimal.

	*Liquidity risk*

	Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis. The Company ensures that there are sufficient funds to meet its short-term business requirements, taking into account its anticipated cash flows from operations and its holdings of cash and cash equivalents.

	Historically, the Company’s sole source of funding has been the issuance of equity securities for cash, primarily through private placements. The Company’s access to financing is always uncertain. There can be no assurance of continued access to significant equity funding.

	The following is an analysis of the contractual maturities of the Company’s non-derivative financial liabilities as at December 31, 2012:


	Within one year		Between one and five years		More than five years

Trade payables	$	82,682	$	—	$	—


	*Foreign exchange 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 does not hedge its exposure to fluctuations in foreign exchange rates.

	The following is an analysis of the United States dollar equivalent of financial assets and liabilities that are denominated in Canadian dollars:


	December 31, 2012		December 31, 2011

Cash and cash equivalents	$	1,869,056	$	2,124,582
Trade payables		—		(43,178	)

	$	1,869,026	$	2,081,404


	Based on the above net exposures, as at December 31, 2012, a 1% change in the Canadian dollar to United States dollar exchange rate would impact the Company’s net loss by $18,691 (2011 - $20,814).

F-118

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States dollars)
For the years ended December 31, 2012 and 2011


12.	Financial risk and capital management (cont’d)

	*Interest rate risk*

	Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk on its cash equivalents as these instruments have original maturities of three months or less and are therefore exposed to interest rate fluctuations on renewal. A 1% change in market interest rates would have an impact on the Company’s net loss of approximately $18,000.

	*Capital Management*

	The Company’s policy is to maintain a strong capital base so as to maintain investor and creditor confidence and to sustain future development of the business. The capital structure of the Company consists of equity, comprising share capital, net of accumulated deficit. There were no changes in the Company’s approach to capital management during the period.

	The Company is not subject to any externally imposed capital requirements.

	*Classification of financial instruments*

	Financial assets included in the statement of financial position are as follows:


Loans and receivables:	December 31, 2012		December 31, 2011

Cash and cash equivalents	$	2,205,709	$	2,360,852
Loans and receivables:
Due from related party		5,097		2,862
Interest receivable		11,157		20,994

	$	2,221,963	$	2,384,708


	Financial liabilities included in the statement of financial position are as follows:


	December 31, 2012		December 31, 2011

Non-derivative financial liabilities:
Trade payables	$	82,682	$	102,087
Derivative liabilities
Derivative financial liability - warrants		2,027,568		465,553

	$	2,110,250	$	567,640


	*Fair value*

	The fair value of the Company’s financial assets and liabilities approximates the carrying amount.

	Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:


	•	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 or indirectly; and

	•	Level 3 – Inputs that are not based on observable market data.


	Financial liabilities measured at fair value at December 31, 2012 and 2011 consist of the derivative financial liability. These are classified as Level 3.

F-119

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States dollars)
For the years ended December 31, 2012 and 2011


12.	Financial risk and capital management (cont’d)

	*Fair value (cont’d)*

	The fair value of the derivative liability is determined by the Black-Scholes option pricing model using the historical volatility as an estimate of future volatility. At December 31, 2012, if the volatility used was increased by 10% the impact would be an increase to the derivative liability of $201,413 with a corresponding increase to comprehensive loss.

13.	Segmented information

	*Operating segments*

	The Company operates in a single reportable operating segment being the production and sale of thin and thick film of silicon dioxide and mixed silicon oxides on silicon and other substrates from aqueous bath at room temperature and pressure. Substantially all assets of the business support these operations.

	*Geographic segments*

	At December 31, 2012 and 2011, all of the Company’s equipment and intangible assets are located in the United States.

14.	Commitments

	*Employment Agreement*

	The Company has an agreement (the “Employment Agreement”) dated October 1, 2007, and amended July 31, 2008, with an officer of the Company under which the Company pays a fee for employee services at a base salary of $220,000 per annum. On April 30, 2010, the Board of Directors passed a resolution to increase this to $250,000 per annum and on May 13, 2011 passed a resolution to increase this to $275,000 per annum. The employee is entitled to receive options under the terms and conditions of the Company’s stock option plan. The employee will serve as the President and Chief Executive Officer of the Company. On April 5, 2012, the employment agreement was extended for an additional two years under the same terms.

	The employee has the right, upon 30 days notice, to terminate the Employment Agreement. The Company may terminate the Employment Agreement on 10 days notice if for cause or on 60 days notice if without cause. Should the Company terminate the contract without cause, it is obligated to pay the employee an amount equal to three month’s base salary.

	*License Agreement*

	In 2004 the Company entered into a License Agreement with a university under which the university is entitled to receive: (i) 2% of the Company’s adjusted gross sales as defined in the License Agreement, and (ii) 2% of the adjusted gross sales of any sublicensee as defined in the License Agreement. The License Agreement gives the Company an exclusive license to a certain United States patent and the related technology for low temperature growth of inorganic materials from solution using catalyzed growth and re-growth.

	*Sponsored Research Agreement*

	On September 1, 2009, the Company has entered into a sponsored research agreement with the same university to develop thin films incorporating silicon quantum dots. The initial term of the agreement is one year and the proposed budget is $100,000. Both the term and the funding can be extended under mutual agreement.

F-120

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States dollars)
For the years ended December 31, 2012 and 2011


14.	Commitments (cont’d)

	*China Joint Venture*

	On June 22, 2010 the Company formed a joint venture (“Natcore Technology (Zhuzhou) Co., Ltd.”) with a consortium in China to develop and manufacture film-growth equipment and materials using the Company’s proprietary Liquid Phase Deposition (LPD) technology licensed from Rice University. Natcore Technology (Zhuzhou) Co., Ltd. will be 55% owned by the Company, with the Zhuzhou Hi-Tech Industrial Development Zone and a Chinese firm that is currently a producer of polysilicon and a manufacturer of industrial equipment used in the solar industry (together, the “Chinese Partnership”) holding the remaining 45% ownership position. Natcore Technology (Zhuzhou) Co., Ltd. will be funded by an initial $3 million investment consisting of $500,000 contributed by the Company and $2,500,000 contributed by the Chinese Partnership. Natcore Technology (Zhuzhou) Co., Ltd. will have the exclusive right to develop, manufacture and sell AR film-growth equipment in China, and a five-year exclusive right to manufacture such equipment for sale outside of China. Our Board of Directors has not approved funding for the joint venture and consequently no funding has been made and the joint venture has not taken place as of this filing.

	*Research and Development Facility Lease*

	On July 18, 2011, the Company entered into a lease agreement for a research and development facility. The lease is for two years expiring June 30, 2013. The Company will pay a base rent of $36,477 during the six months ended June 30, 2013.

	*Patent License Agreement*

	On December 9, 2011 the Company entered into a Patent License Agreement to use certain licensed patents. The Company is required to pay an annual fee of $25,000 for as long as the Company uses the patents.

15.	Related party transactions and balances

	*Related party balances*

	As at December 31, 2012, there was $5,097 (2011 - $2,862) owing from an officer of the Company and has been included in receivables.

	*Key management personnel compensation*


	December 31, 2012		December 31, 2011

Administrative fees	$	60,000	$	60,000
Consulting		30,200		44,500
Stock-based compensation		28,768		282,086
Wages and benefits		446,750		509,667

	$	565,718	$	896,253

F-121

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States dollars)
For the years ended December 31, 2012 and 2011


16.	Income taxes

	A reconciliation of the expected income tax recovery to the actual income tax recovery is as follows:


	December 31, 2012			December 31, 2011

Net loss	$	(1,838,355	)	$	(3,694,632	)
Tax rate		34	%		34	%

Expected income tax recovery		(625,040	)		(1,256,175	)
Derivative liability		(574,843	)		(118,902	)
Non-deductive items and other		58,361			533,801
Effect of share issuance costs not recognized		(35,246	)		(27,047	)
Effect of different foreign tax rates		24,897			23,029
Temporary differences not recognized		1,151,871			845,294

	$	—		$	—


	The Company has the following deductible temporary differences for which no deferred tax asset has been recognized:


	December 31, 2012		December 31, 2011

Non-capital losses – Canada	$	1,173,191	$	868,277
Tax losses – United States		8,860,293		6,140,600
Equipment tax pools		123,977		71,945
Share issuance costs		257,205		280,192

	$	10,414,666	$	7,361,014


	The tax pools relating to these deductible temporary differences expire as follows:


	Non-capital losses – Canada		Tax losses – United States		Equipment tax pools		Share issue costs

2022	$	—	$	60	$	—	$	—
2023		—		534		—		—
2024		—		36,334		—		—
2025		—		105,744		—		—
2026		—		112,823		—		—
2027		3,735		176,830		—		—
2028		96,687		557,073		—		—
2029		200,883		861,988		—		—
2030		282,584		1,976,987		—		—
2031		284,388		2,312,227		—		—
2032		304,914		2,719,693		—		—
No expiry		—		—		123,977		257,205

	$	1,173,191	$	8,860,293	$	123,977	$	257,205

F-122

Natcore Technology Inc.

Notes to the Consolidated Financial Statements
(Expressed in United States dollars)
For the years ended December 31, 2012 and 2011


17.	Restatement

	The Company determined the number of warrants outstanding used in the valuation of the derivative liability in the prior years was incorrect. In consideration of the effect of the difference in the number of warrants, the consolidated statements of financial position as at December 31, 2011 and 2010 and the consolidated statement of comprehensive loss and cash flows for the years ended December 31, 2011 and 2010 have been restated. As required by International Accounting Standard 8, the Company included the re-stated statement of financial position as at December 31, 2010 as the error occurred during the year ended December 31, 2010.

	The following adjustments were made to the consolidated statement of financial position as at December 31, 2011:


	As previously stated			Adjustment			As restated

Derivative financial liability	$	232,777		$	232,776		$	465,553
Share capital		10,096,966			(467,084	)		9,629,882
Share-based payment reserve		1,784,315			26,707			1,811,022
Deficit	$	(8,665,699	)	$	207,601		$	(8,458,098	)


	The following adjustments were made to the consolidated statement of financial position as at December 31, 2010:


	As previously stated			Adjustment			As restated

Derivative financial liability	$	1,579,621		$	270,391		$	1,850,012
Share capital		4,920,379			(257,321	)		4,663,058
Deficit	$	(4,750,397	)	$	(13,069	)	$	(4,763,466	)


	The following adjustments were made to the consolidated statement of comprehensive loss for the year ended December 31, 2011:


	As previously stated		Adjustment		As restated

Fair value adjustment on warrants	$	129,041	$	220,670	$	349,711


	The comprehensive loss decreased by $220,670. Loss per share changed from $0.12 to $0.11 as at December 31, 2011 due to the restatement.

	The following adjustments were made to the consolidated statement of cash flow for the year ended December 31, 2011:


	As previously stated			Adjustment			As restated

Net loss	$	3,915,302		$	(220,670	)	$	3,694,632
Fair value adjustment on warrants	$	(129,041	)	$	(220,670	)	$	(349,711	)


18.	Subsequent event

	On April 5, 2013, the Company granted 40,000 stock options to consultants. The options have an exercise price of CDN$0.71. 50% of the options vest within six months of hire and the balance vest 18 months following the hire date.

F-123

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company’s articles provide, to the fullest extent permitted by the laws of British Columbia, that the officers and directors of the Company who was or is a party to or is threatened to be made a party to, any threatened, or pending or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative, by reason of fact that he/she is or was acting as the incorporator, officer, director or nominee officer/director or was serving in any capacity at any time. Furthermore, it is the responsibility of the Company to pay for all legal expenses that may occur on behalf of the party who may come under any such type of action.

Management of the Company has entered into indemnity agreements consistent with the foregoing to all officers and directors of the Company. In this regard, investors should be aware of the position of the United States Securities and Exchange Commission respecting such indemnification, which position is as follows: “Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the “Act”) may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.”

ITEM 7. RECENT SALES OF UNREGISTERED SECURITIES

The following information is furnished with regard to all securities issued by the registrant within the last four years that were not registered under the Securities Act. The issuance of such shares was deemed exempt from registration requirements of the Securities Act as such securities were offered and sold pursuant to Regulation D, Rule 506 of the Securities Act and outside of the United States to persons who were neither citizens nor residents of the United States or such sales were exempt from registration under Section 4(2) of Securities Act. No underwriting discounts or commissions were paid with respect to any of the issuances listed below.


	From August 1, 2009, through July 31, 2012, we have issued the following securities, none of which involved a change in voting rights attached to the securities at issue:

	On August 31, 2009 we issued 3,201,750 common shares at a price of CDN$0.40 per share and 2,932,500 warrants eligible to purchase 2,912,500 common shares at a price of CDN$0.75 per share for a period of 24 months. 41 non-US, accredited investors and one (1) consultant received shares at $0.40 per share. Issuer relied upon Canadian private placement law, specifically Section 2.3 of National Instrument 45-106 and upon U.S. law Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

	On September 15, 2009 we issued 20,000 common shares at a price of CDN$0.40 per share and 2,932,500 warrants eligible to purchase 20,000 common shares at a price of CDN$0.75 per share for a period of 24 months. One (1) US, accredited investor bought shares at $0.40 per share. Issuer relied upon Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

	On December 11, 2009, there were 200,000 warrants issued by the company as consideration for all of the issued and outstanding shares of New Cyte, Inc. There were eight (8) New Cyte, Inc. shareholders that received these warrants. Issuer relied upon Canadian private placement law, specifically exemptions in BC Instrument 72-503 and Sections 2.3 and 2.5 of National Instrument 45-106 and upon U.S. law Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

II-1


	From August 1, 2009 to December 31, 2009, the Company received net proceeds of CDN$17,025.00 from the exercise of 110,650 agent’s warrants.

	From January 1 to June 30, 2010, the Company received net proceeds of CDN$493,410 from the exercise of 657,880 warrants.

	On April 9, 2010, we granted 50,000 stock options eligible to purchase 50,000 common shares at a price of CDN$0.50 per share for a period of five years. One (1) consultant was granted stock, pursuant to shareholder approval of a Stock Option Plan on July 3, 2009. Issuer relied upon Canadian private placement law, specifically Section 2.24 of National Instrument 45-106 and upon U.S. law Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

	On May 19, 2010, we issued 375,236 common shares at a deemed price of CDN$0.62 per share for the acquisition of all of the issued and outstanding securities of Vanguard Solar Inc. May 19, 2010, there were 515,311 warrants issued to thirteen (13) Vanguard Solar Inc. shareholders. Issuer relied upon Canadian private placement law, specifically BC Instrument 72-503 and upon U.S. law Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

	On May 19, 2010, we issued 120,075 common shares at a deemed price of CDN$0.62 per share in settlement of an arrangement of legal services incurred by Vanguard Solar Inc. The 120,075 shares were issued to Vanguard Solar Inc.’s intellectual property legal counsel. Issuer relied upon Canadian private placement law, specifically BC Instrument 72-503 and upon U.S. law Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

	On May 19, 2010, we issued 20,000 common shares at a deemed price of CDN$1.00 per share in settlement of services provided to the Company. The 20,000 shares were issued to United States securities counsel. Issuer relied upon Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

	From July 1, 2010 to December 31, 2010, the Company received net proceeds of CDN$169,654.75 from the exercise of 242,873 warrants and stock options.

	Pursuant to a private placement, on December 22, 2010, we issued 2,469,333 common shares at a price of CDN$0.75 per share and 1,234,667 warrants eligible to purchase 1,431,667 common shares at a price of CDN$1.00 per share for a period of 36 months. There were 2,469,333 shares purchased by twenty (20) investors in the private placement. For Canadian investors, Issuer relied upon Canadian private placement law, specifically Section 2.3 of National Instrument 45-106 and for United States investors, Issuer relied upon Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

	Pursuant to a private placement, on January 4, 2011 we issued 1,563,233 common shares at a price of $0.75 per share and 895,602 warrants eligible to purchase 895,602common shares at a price of $1.00 per share for a period of 36 months. There were 1,563,233 shares purchased by thirty-one (31) investors in the private placement. For Canadian investors, Issuer relied upon Canadian private placement law, specifically Section 2.3 of National Instrument 45-106 and for United States investors, Issuer relied upon Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

	On February 8, 2011, we granted 2,190,000 stock options eligible to purchase 2,190,000 common shares at a price of CDN$0.97 per share. The grants were made to fourteen (14) employees and consultants. Grants were made pursuant to shareholder approval of a Stock Option Plan in May 2009. Issuer relied upon Canadian private placement law, specifically Section 2.24 of National Instrument 45-106 and upon U.S. law Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

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	From January 1, 2011 to June 30, 2011, the Company received net proceeds of CDN$2,807,915 from the exercise of 3,845,543 warrants.

	From July 1, 2011 to December 31, 2011, the Company received net proceeds of CDN$7,500.00 from the exercise of 10,000 warrants.

	On April 17, 2012, we granted 120,000 stock options eligible to purchase 120,000 common shares at a price of CDN$0.51 per share for a period of five years. The two (2) recipients were an employee and a consultant. Grants were made pursuant to shareholder approval of a Stock Option Plan on June 6, 2011. Issuer relied upon Canadian private placement law, specifically Section 2.24 of National Instrument 45-106 and upon U.S. law Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

	Pursuant to a private placement, on July 20, 2012 we issued 4,166,700 common shares at a price of CDN$0.60 per share and 4,189,216 warrants eligible to purchase 4,189,216 common shares at a price of CDN$0.90 per share for a period of 24 months. We also issued 152,000 finder’s options entitling the holder to acquire one common share and one share purchase warrant of the Company at a price of CDN$0.60 per unit for a period of 24 months. Each warrant underlying the unit entitles the holder to acquire one common share at a price of CDN$0.90 per share for a period of 24 months from the issuance of the finder’s options. There were 4,166,700 shares purchased by twenty-six (26) investors in the private placement. For Canadian investors, Issuer relied upon Canadian private placement law, specifically Section 2.3 and 2.5 of National Instrument 45-106 and for United States investors, Issuer relied upon Rule 506 of Regulation D and Regulation S.

	On September 4, 2012, we granted 200,000 stock options eligible to purchase 200,000 common shares at a price of CDN$1.11 per share for a period of five years. One (1) employee received 200,000 shares, pursuant to shareholder approval of Stock Option Plan on June 6, 2011. Issuer relied upon Canadian private placement law, specifically Section 2.24 of National Instrument 45-106 and upon U.S. law Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

	On December 20, 2012, we granted 352,000 stock options eligible to purchase 352,000 common shares at a price of CDN$0.80 per share for a period of five years. This grant was made to twelve (12) employees and consultants. The grants were made pursuant to shareholder approval of Stock Option Plan on June 6, 2011. Issuer relied upon Canadian private placement law, specifically Section 2.24 of National Instrument 45-106 and upon U.S. law Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

	From July 1, 2012 to December 31, 2012, the Company received net proceeds of CDN$411,134 from the exercise of 478,373 options and warrants.

	On January 4, 2013, we granted 20,000 stock options eligible to purchase 20,000 common shares at a price of CDN$0.80 per share for a period of five years. One (1) consultant was granted options pursuant to shareholder approval of Stock Option Plan on June 6, 2011. Issuer relied upon Canadian private placement law, specifically Section 2.24 of National Instrument 45-106 and upon U.S. law Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

	On April 5, 2013, we granted 40,000 stock options eligible to purchase 40,000 common shares at a price of CDN$0.71 per share for a period of five years. Two (2) consultants were granted options pursuant to shareholder approval on June 6, 2011. Issuer relied upon Canadian private placement law, specifically Section 2.24 of National Instrument 45-106 and upon U.S. law Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

	On June 1, 2013, we granted 100,000 stock options eligible to purchase 100,000 common shares at a price of CDN$0.79 per share for a period of five years. One (1) consultant was granted options pursuant to shareholder approval on June 6, 2011. Issuer relied upon Canadian private placement law, specifically Section 2.24 of National Instrument 45-106 and upon U.S. law Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

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	On June 3, 2013, we granted 25,000 stock options eligible to purchase 25,000 common shares at a price of CDN$0.83 per share for a period of five years. One (1) employee of the Issuer was granted options pursuant to shareholder approval on June 6, 2011. Issuer relied upon Canadian private placement law, specifically Section 2.24 of National Instrument 45-106 and upon U.S. law Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

	On July 31, 2013, we granted 100,000 stock options eligible to purchase 100,000 common shares at a price of CDN$0.58 per share for a period of five years. Two (2) consultants were granted options pursuant to shareholder approval on June 6, 2011. Issuer relied upon Canadian private placement law, specifically Section 2.24 of National Instrument 45-106 and upon U.S. law Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

	On August 16, 2013, we granted 400,000 stock options eligible to purchase 400,000 common shares at a price of US$0.59 per share for a period of three years. One (1) consultant was granted options pursuant to shareholder approval of Stock Option Plan on June 17, 2013. Issuer relied upon Canadian private placement law, specifically Section 2.24 of National Instrument 45-106 and upon U.S. law Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

	In connection with the August 2013 private placement:

	On August 20, 2013, we issued 4,705,240 common shares at a price of US$0.50 per share and 4,705,240 warrants eligible to purchase 4,705,240 common shares at a price of US$0.62 per share for a period of 36 months. Twenty-one (21) investors purchased 4,705,240 shares in the private placement. For Canadian investors Issuer, relied upon Canadian private placement law, specifically Section 2.3 of National Instrument 45-106 and for United States investors, Issuer relied upon Rule 506 of Regulation D and Regulation S.

	On August 23, 2013, we issued 465,000 common shares at a price of US$0.50 per share and 465,000 warrants eligible to purchase 465,000 common shares at a price of US$0.62 per share for a period of 36 months. Four (4) investors purchased 465,000 shares in the private placement. Issuer relied upon Canadian private placement law, specifically Section 2.3 of National Instrument 45-106 and upon U.S. law Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

	On August 27, 2013, we issued 1,077,850 common shares at a price of US$0.50 per share and 1,077,850 warrants eligible to purchase 1,077,850 common shares at a price of US$0.62 per share for a period of 36 months. Sixteen (16) investors purchased 1,077,850 shares in the private placement. For Canadian investors, Issuer relied upon Canadian private placement law, specifically Section 2.3 of National Instrument 45-106 and for United States investors, Issuer relied upon Rule 506 of Regulation D and Regulation S.

	On August 28, 2013, we issued 100,000 common shares at a price of US$0.50 per share and 100,000 warrants eligible to purchase 100,000 common shares at a price of US$0.62 per share for a period of 36 months. One (1) investor purchased 100,000 shares in the private placement. Issuer relied upon Canadian private placement law, specifically Section 2.3 of National Instrument 45-106 and upon U.S. law Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

	From January 1, 2013 to December 31, 2013, the Company received net proceeds of CDN$707,177 from the exercise of 998,530 warrants.

	From January 1, 2013 to December 31, 2013, the Company received net proceeds of CDN$225,000 from the exercise of 225,000 options.

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	On January 10, 2014, we granted 345,000 stock options eligible for purchase 345,000 common shares at a price of US$1.08 per share for a period of five years. Eleven (11) employees and consultants were granted 345,000 shares. The grants were approved in the Stock Option Plan by shareholders on June 17, 2013. Issuer relied upon Canadian private placement law, specifically Section 2.24 of National Instrument 45-106 and upon U.S. law Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

	On February 3, 2014, we granted 60,000 stock options eligible for purchase 60,000 common shares at a price of US$0.99 per share for a period of five years. One (1) consultant was granted 60,000 shares. The grants were approved in the Stock Option Plan by shareholders on June 17, 2013. Issuer relied upon Canadian private placement law, specifically Section 2.24 of National Instrument 45-106 and upon U.S. law Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

	From January 1, 2014 to July 31, 2014, the Company received net proceeds of US$708,428 from the exercise of 1,666,383 warrants.

	From January 1, 2014 to July 31, 2014, the Company received net proceeds of US$36,726 from the exercise of 100,000 options.

	On January 21, 2015 we issued 1,256,784 common shares at a price of US$0.43 per share and 1,256,784 warrants eligible to purchase 1,256,784 common shares at a price of US$0.70 per share for a period of 36 months. Fifteen (15) investors purchased 1,256,784 shares in the private placement. Issuer relied upon Canadian private placement law, specifically Sections 2.3 and 2.9 of National Instrument 45-106 and upon U.S. law Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

	On January 23, 2015 we issued95,278 common shares at a price of US$0.43 per share and 95,278 warrants eligible to purchase 95,278 common shares at a price of US$0.70 per share for a period of 36 months. Two (2) investors purchased 95,278 shares in the private placement. Issuer relied upon Canadian private placement law, specifically Sections 2.3 and 2.9 of National Instrument 45-106 and upon U.S. law Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

	On April 27, 2015 we issued 1,597,050common shares at a price of CDN$0.70 per share and 1,597,050 warrants eligible to purchase 1,597,050 common shares at a price of $0.70 for gross proceeds of $891,686 (CDN$1,117,935). Twenty (22) investors purchased 1,597,050 shares in the private placement. Issuer relied upon Canadian private placement law, specifically Sections 2.3 and 2.9 of National Instrument 45-106 and upon U.S. law Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

	On July 15, 2015, the Company entered into an investment agreement, as amended on August 21, 2015, for the provision of an up to $5 million investment facility by Dutchess Opportunity Fund II. During the 36-month term of the agreement, Dutchess will be required, at the option of Natcore, to purchase up to $5 million of Natcore common stock. Natcore will control the timing and amount of any share sales to Dutchess and a minimum price of the common stock to be issued. Under the agreement, Dutchess is required to purchase Natcore shares at a discount of 5% from the market price of the shares on the OTCQB at the time of each transaction. No commissions or compensation is to be paid by Natcore as a result of signing the agreement. As of the date hereof, the Company has not drawn upon the investment agreement.

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	Between July 23-31, 2015, the Company completed a non-brokered private placement of 1,822,000 units at a price of CDN$0.54 per unit for gross proceeds of CDN$983,880. Each unit comprised one common share and one share purchase warrant, with each whole warrant exercisable at a price of CDN$0.74 per share and expiring on dates between July 23-31, 2018.7 investors purchased 1,822,000 shares in the private placement. Issuer relied upon Canadian private placement law, specifically Sections 2.3 and 2.9 of National Instrument 45-106 and upon U.S. law Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

	Between November 30, 2015 and February 5, 2016, the Company completed a non-brokered private placement of 3,648,691 units at a price of CDN$0.36 per unit for gross proceeds of CDN$1,313,529. Each unit comprised one common share and one share purchase warrant, with each whole warrant exercisable at a price of CDN$0.55 per share and expiring on dates between November 30, 2018 and February 5, 2019.22 investors purchased 3,648,691 shares in the private placement. Issuer relied upon Canadian private placement law, specifically Sections 2.3 and 2.9 of National Instrument 45-106 and upon U.S. law Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

	On March 17, 2016, the Company completed a non-brokered private placement of 2,244,497 units at a price of CDN$0.36 per unit for gross proceeds of CDN$808,019. Each unit comprised one common share and one share purchase warrant, with each whole warrant exercisable at a price of CDN$0.55 per share and expiring on March 17, 2019. 13 investors purchased 2,244,497 shares in the private placement. Issuer relied upon Canadian private placement law, specifically Sections 2.3 and 2.9 of National Instrument 45-106 and upon U.S. law Rule 506 of Regulation D and Regulation S of the Securities Act of 1933.

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ITEM 8. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following is a list of exhibits filed as part of this registration statement:


#		Description


2.1		Acquisition Agreement between Syracuse Capital Corp. and Natcore Technology, Inc. (incorporated herein by reference to Exhibit 2.1 to the Registrant’s Registration Statement on Form F-1 (file No. 333-20666), as amended, filed with the Securities and Exchange Commission on September 25, 2015)

3.1		Articles of Syracuse Capital Corp. (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form F-1 (file No. 333-20666), as amended, filed with the Securities and Exchange Commission on September 25, 2015)

4.1-4.12		Warrant Agreements issued in Private Placements (incorporated herein by reference to Exhibit 4.1-4.12 to the Registrant’s Registration Statement on Form F-1 (file No. 333-20666), as amended, filed with the Securities and Exchange Commission on September 25, 2015)

5.1		Opinion of LoPresti Law Group, P.C

10.1		Employment Agreement Between Charles Provini and Natcore (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form F-1 (file No. 333-20666), as amended, filed with the Securities and Exchange Commission on September 25, 2015)

10.2		March 31, 2004 License Agreement Between Natcore and William Marsh Rice University (incorporated herein by reference to Exhibit 10.2 to the Registrant’s Registration Statement on Form F-1 (file No. 333-20666), as amended, filed with the Securities and Exchange Commission on September 25, 2015)

10.3		July 29, 2008 Amendment to License Agreement Between Natcore and William Marsh Rice Universit y (incorporated herein by reference to Exhibit 10.3 to the Registrant’s Registration Statement on Form F-1 (file No. 333-20666), as amended, filed with the Securities and Exchange Commission on September 25, 2015)

10.4		September 1, 2009 Sponsored Research Agreement Between Natcore and William Marsh Rice University (incorporated herein by reference to Exhibit 10.4 to the Registrant’s Registration Statement on Form F-1 (file No. 333-20666), as amended, filed with the Securities and Exchange Commission on September 25, 2015)

10.5		May 10, 2012 Amendment to License Agreement Between Natcore and William Marsh Rice University (incorporated herein by reference to Exhibit 10.5 to the Registrant’s Registration Statement on Form F-1 (file No. 333-20666), as amended, filed with the Securities and Exchange Commission on September 25, 2015)

10.6		March 1, 2013 Amendment to Lease Agreement Between Natcore and Eastman Kodak Company (incorporated herein by reference to Exhibit 10.6 to the Registrant’s Registration Statement on Form F-1 (file No. 333-20666), as amended, filed with the Securities and Exchange Commission on September 25, 2015)

10.7		July 18, 2011 Lease Agreement Between Natcore and Eastman Kodak Company (incorporated herein by reference to Exhibit 10.7 to the Registrant’s Registration Statement on Form F-1 (file No. 333-20666), as amended, filed with the Securities and Exchange Commission on September 25, 2015)

10.8		January 5, 2012 License Agreement Between Alliance for Sustainable Energy, LLC and Natcore (incorporated herein by reference to Exhibit 10.8 to the Registrant’s Registration Statement on Form F-1 (file No. 333-20666), as amended, filed with the Securities and Exchange Commission on September 25, 2015)


10.9		July 27, 2012 Amendment to License Agreement Between Alliance for Sustainable Energy, LLC and Natcore (incorporated herein by reference to Exhibit 10.9 to the Registrant’s Registration Statement on Form F-1 (file No. 333-20666), as amended, filed with the Securities and Exchange Commission on September 25, 2015)

10.10		January 22, 2014 Amendment to License Agreement Between Alliance for Sustainable Energy, LLC and Natcor e (incorporated herein by reference to Exhibit 10.10 to the Registrant’s Registration Statement on Form F-1 (file No. 333-20666), as amended, filed with the Securities and Exchange Commission on September 25, 2015)

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10.11		February 21, 2012 Cooperative Research and Development Agreement Between Alliance for Sustainable Energy, LLC and Natcore (incorporated herein by reference to Exhibit 10.11 to the Registrant’s Registration Statement on Form F-1 (file No. 333-20666), as amended, filed with the Securities and Exchange Commission on September 25, 2015)

10.12		September 21, 2010 Cooperative Joint Venture Contract Between Zhuzhou Hexing Industrial Company and Natcore Asia Technology, Limited (Chinese Version) (incorporated herein by reference to Exhibit 10.12 to the Registrant’s Registration Statement on Form F-1 (file No. 333-20666), as amended, filed with the Securities and Exchange Commission on September 25, 2015)

10.13		September 21, 2010 Cooperative Joint Venture Contract Between Zhuzhou Hexing Industrial Company and Natcore Asia Technology, Limited (American Version) (incorporated herein by reference to Exhibit 10.13 to the Registrant’s Registration Statement on Form F-1 (file No. 333-20666), as amended, filed with the Securities and Exchange Commission on September 25, 2015)

10.14		September 19, 2013 Australian Joint Venture Memorandum of Understanding between Denzo Pty Limited and Natcore Technology, Inc. (incorporated herein by reference to Exhibit 10.14 to the Registrant’s Registration Statement on Form F-1 (file No. 333-20666), as amended, filed with the Securities and Exchange Commission on September 25, 2015)

10.15		June 20, 2013 Lease Agreement between North Water Street Realty and Natcore (incorporated herein by reference to Exhibit 10.15 to the Registrant’s Registration Statement on Form F-1 (file No. 333-20666), as amended, filed with the Securities and Exchange Commission on September 25, 2015)

10.16		Investment Agreement dated August 21, 2015 between Natcore Technology, Inc. and Dutchess Opportunity Fund, II, LP (incorporated herein by reference to Exhibit 10.16 to the Registrant’s Registration Statement on Form F-1 (file No. 333-20666), as amended, filed with the Securities and Exchange Commission on September 25, 2015)

10.17		Registration Rights Agreement dated August 21, 2015 between Natcore Technology, Inc. and Dutchess Opportunity Fund, II, LP (incorporated herein by reference to Exhibit 10.17 to the Registrant’s Registration Statement on Form F-1 (file No. 333-20666), as amended, filed with the Securities and Exchange Commission on September 25, 2015)

10.18		Second Amendment to Lease Agreement dated June 26, 2015 Between Eastman Kodak Company and Natcore Technology, Inc. (incorporated herein by reference to Exhibit 10.18 to the Registrant’s Registration Statement on Form F-1 (file No. 333-20666), as amended, filed with the Securities and Exchange Commission on September 25, 2015)

10.19		Subscription Agreement

23.1		Consent of Dale Matheson Carr-Hilton LaBonte LLP (DMCL) Chartered Accountants

23.2		Consent of LoPresti Law Group, P.C. (included in Exhibit 5.1)

24.1		Powers of Attorney (included hereinafter)

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ITEM 9. UNDERTAKINGS

(a) The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales of securities are being made, a post-effective amendment to this registration statement to:

(i) Include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement; and notwithstanding the forgoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectuses filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.

(iii) Include any additional or changed material information on the plan of distribution;

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) If the registrant is a foreign private issuer, to file a post-effective amendment to the registration statement to include any financial statements required by “Item 8.A. of Form 20-F (17 CFR 249.220f)” at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Act need not be furnished, provided that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (a)(4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements. Notwithstanding the foregoing, with respect to registration statements on Form F-3 (§ 239.33 of this chapter), a post-effective amendment need not be filed to include financial statements and information required by Section 10(a)(3) of the Act or § 210.3-19 of this chapter if such financial statements and information are contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Form F-3.

(5) For determining liability of the undersigned small business issuer under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned small business issuer undertakes that in a primary offering of securities of the undersigned small business issuer pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned small business issuer will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of the undersigned small business issuer relating to the offering required to be filed pursuant to Rule 424 (§230.424 of this chapter);

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned small business issuer or used or referred to by the undersigned small business issuer;

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(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned small business issuer or its securities provided by or on behalf of the undersigned small business issuer; and

(iv) Any other communication that is an offer in the offering made by the undersigned small business issuer to the purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described herein, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(c) that, for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of this registration statement relating to the offering, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in the registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Rochester, New York on June 14, 2016.


	NATCORE TECHNOLOGY, INC.

	By: /s/ CHARLES R. PROVINI
	Name: Charles R. Provini
	Title: President & CEO
	Authorized Representative in the United States

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POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each director and officer of Natcore Technology, Inc. whose signature appears below hereby appoints Charles R. Provini , and each of them severally, acting alone and without the other, his/her true and lawful attorney-in-fact with full power of substitution or re-substitution, for such person and in such person’s name, place and stead, in any and all capacities, to sign on such person’s behalf, individually and in each capacity stated below, any and all amendments, including post-effective amendments to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as such person might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the described capacities and on June 14, 2016.


Name		Title


/s/ CHARLES R. PROVINI		Authorized Representative in the United States, Director,

Charles R. Provini		President & Chief Executive Officer,
		Natcore Technology, Inc.

/s/ JOHN MEEKISON		Director, Chief Financial Officer & Controller

John Meekison		Natcore Technology, Inc.

/s/ BRIEN F. LUNDIN		Director

Brien F. Lundin		Natcore Technology, Inc.

/s/ JOHN C. CALHOUN		Director

John C. Calhoun		Natcore Technology, Inc.

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