CVW CleanTech : 2023 Year End Report FS

CVW CleanTech Inc.

(Previously Titanium Corporation Inc.)

Financial Statements

Years Ended December 31, 2023 and December 31, 2022

Independent auditor's report

To the Shareholders of CVW CleanTech Inc.

Our opinion

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of CVW CleanTech Inc. (the Company) as at December 31, 2023 and 2022, 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 (IFRS Accounting Standards).

What we have audited

The Company's financial statements comprise:

• the statements of financial position as at December 31, 2023 and 2022;
• the statements of loss and comprehensive loss for the years then ended;
• the statements of changes in equity for the years then ended;
• the statements of cash flows for the years then ended; and
• the notes to the financial statements, comprising material accounting policy information and other explanatory information.

Basis for opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2023. These matters were addressed in

PricewaterhouseCoopers LLP

Suncor Energy Centre, 111 5th Avenue South West, Suite 3100, Calgary, Alberta, Canada T2P 5L3 T.: [phone], F.: [phone], Fax to mail: [e-mail]

"PwC" refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.

the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter

Initial recognition of option grants and the amount of stock-based compensation expense to be recognized

Refer to note 3 - Material accounting policies and note 8 - Equity-based compensation to the financial statements.

For the year ended December 31, 2023, the Company recognized $1.57 million of stock-based compensation expense related to options that were granted in June 2023 and September 2022. The stock-based compensation expense for options with market and non-market performance criteria is based upon the estimated fair value of those instruments at the time of grant using Monte Carlo simulations.

The significant assumption used by management in the Monte Carlo simulation for the options granted in June 2023 was the expected volatility rate.

The options require either market or non-market performance criteria (together the specific performance criteria) to be met in order to vest. Where an option grant includes non-market performance criteria as a vesting condition, the number of options expected to vest each year is considered at each reporting date to determine the stock-based compensation expense for the year. Significant judgment is used to determine the likelihood the specific performance criteria will be achieved.

We considered this a key audit matter due to (i) the judgment made by management in determining both the initial fair value of the options granted during the year and the stock-based compensation expense for the year; (ii) a high degree of auditor

How our audit addressed the key audit matter

Our approach to addressing the matter included the following procedures, among others:

• With the assistance of professionals with specialized skill and knowledge in the field of valuation, developed an independent point estimate of the initial fair value of the options granted in June 2023 based on data and assumptions used by management as well as tested the underlying data and significant assumptions used in developing the independent point estimate.
• Compared the independent point estimate to management's estimate to evaluate the reasonableness of management's estimate.
• Tested how management determined the stock-based compensation expense for the year related to the options granted in June 2023 and September 2022, which included the following:
• • For non-market performance criteria, evaluated the reasonableness of the number of options expected to vest each year, which is based on the determination of the likelihood that the non-market performance criteria will be achieved, by considering (i) the information obtained from discussions with executives and corroborating that information to supporting documents; (ii) the Board of Directors approved budgets; and (iii) historic funding achieved.

judgment and subjectivity in performing procedures; and (iii) the audit effort which involved the use of professionals with specialized skill and knowledge in the field of valuation.

Other information

Management is responsible for the other information. The other information comprises the Management's Discussion and Analysis.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the financial statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a

material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit 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 Company's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter

should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor's report is Kory Wickenhauser.

/s/PricewaterhouseCoopers LLP

Chartered Professional Accountants

Calgary, Alberta

April 18, 2024

CVW CleanTech Inc.

(Previously Titanium Corporation Inc.)

Statements of Financial Position

Expressed in Canadian dollars

				As at December 31, 2023		As at December 31, 2022
		Notes	$		$
Assets
Current assets
Cash and cash equivalents		6,003,340	6,958,336
Prepaid expenses and other assets		54,572	30,348
Accounts receivable	4	216,803	73,347
Total current assets			6,274,715		7,062,031
Long-term assets
Property, plant and equipment	5		16,107		6,635
Total assets		6,290,822	7,068,666
Liabilities
Current liabilities
Accounts payable and accrued liabilities	6	673,716	326,856
Current portion of lease liabilities	1,596	-
Total current liabilities			675,312		326,856
Non-current liabilities	6
Lease liabilities		3,948	-
Total liabilities		679,260	326,856
Equity
Share capital	7	86,079,458	83,739,554
Contributed surplus		23,409,252	23,178,065
Deficit		(103,877,148)		(100,175,809)
Total equity			5,611,562			6,741,810
Total liabilities and equity		6,290,822	7,068,666
Commitments	14
Subsequent events	18
Approved by the Board of Directors
(signed) "Darren Morcombe", Director					(signed) "Jennifer Kaufield", Director

Page 1 of 20

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

CVW CleanTech Inc.

(Previously Titanium Corporation Inc.)

Statements of Loss and Comprehensive Loss

Expressed in Canadian dollars

		Year ended		Year ended
		December 31, 2023		December 31, 2022
	Notes	$	$
				(Reclassified - see Note 16)
Expenses
Compensation and benefits		1,235,572	1,370,299
Professional fees		290,091	275,671
Consulting fees		238,354	109,799
Director fees		217,730	234,251
Investor communication and marketing		188,888	54,473
Office and administration		134,499	172,894
Transfer agent and regulatory fees		115,368	94,819
Engineering and analysis		2,670	81,622
Stock-based compensation		1,569,539	2,109,946
Amortization	5	4,928		-
Operating loss		3,997,639	4,503,774
Interest and other expenses	17	2,481	2,376
Interest income		(298,781)	(101,547)
Net loss and comprehensive loss
	(3,701,339)		(4,404,603)
Basic and diluted loss per share	9	(0.03)		(0.04)

Page 2 of 20

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

CVW CleanTech Inc.

(Previously Titanium Corporation Inc.)

Statements of Changes in Equity

Expressed in Canadian dollars

			Contributed
	Share capital		surplus				Deficit				Total equity
	$		$		$		$
Balance - January 1, 2022	75,641,635	19,247,886	(95,771,206)	(881,685)
Loss for the year ended
December 31, 2022	-	-	(4,404,603)	(4,404,603)
Private placements - shares and warrants	6,345,091	-	-	6,345,091
Proceeds allocated to warrants	(4,707,735)	4,707,735	-	-
Stock-based compensation expense	-	2,109,946	-	2,109,946
Stock options exercised	4,266,187	(1,715,586)	-	2,550,601
Conversion of warrants	2,259,761	(742,160)	-	1,517,601
Expiry of warrants	215,946	(215,946)	-	-
Conversion of DSUs	511,138	(511,138)	-	-
Equity issuance costs	(792,469)		297,328		-		(495,141)
Balance - December 31, 2022	83,739,554	23,178,065	(100,175,809)	6,741,810
			Contributed
	Share capital		surplus				Deficit				Total equity
	$		$			$			$
Balance - January 1, 2023	83,739,554	23,178,065	(100,175,809)	6,741,810
Loss for the year ended
December 31, 2023	-	-	(3,701,339)	(3,701,339)
Stock-based compensation expense	-	1,569,539	-	1,569,539
Stock options exercised	1,328,304	(541,949)	-	786,355
Conversion of warrants	430,499	(215,302)	-	215,197
Conversion of DSUs	476,652	(476,652)	-	-
Conversion of RSUs	104,449		(104,449)			-			-
Balance - December 31, 2023	86,079,458		23,409,252			(103,877,148)			5,611,562

Page 3 of 20

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

CVW CleanTech Inc.

(Previously Titanium Corporation Inc.)

Statements of Cash Flows

Expressed in Canadian dollars

			Year ended		Year ended
			December 31, 2023		December 31, 2022
	Notes	$	$
Operating activities
Net loss for the year		(3,701,339)	(4,404,603)
Items not affecting cash:
Stock-based compensation		1,569,539	2,109,946
Amortization	5	4,928	-
Interest on lease liabilities	17	91	-
Total items not affecting cash			1,574,558		2,109,946
Net change in non-cash working capital items
Prepaid expenses and other assets		(24,224)	(4,303)
Accounts receivable		(143,456)	109,660
Accounts payable and accrued liabilities		346,860	(20,087)
Deferred compensation		-	(1,151,576)
Total net change in non-cash working capital
items			179,180		(1,066,306)
Cash used in operating activities			(1,947,601)		(3,360,963)

Investing activities

Purchase of property, plant and equipment	5
Cash used in investing activities
Financing activities
Private placements - shares and warrants	8
Stock options exercised
Conversion of warrants	7

Payment of lease liabilities

Equity issuance costs

Cash generated by financing activities

(Decrease) increase in cash and cash equivalents

Cash and cash equivalents - beginning of year

Cash and cash equivalents - end of year

(8,565)		(6,635)
(8,565)		(6,635)
-	6,345,091
786,355	2,550,601
215,197	1,517,601
(382)	-
-		(495,141)
1,001,170		9,918,152
(954,996)	6,550,554
6,958,336		407,782
6,003,340		6,958,336

Page 4 of 20

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