Quadrise : Annual Report & Accounts, year ended 30 June 2023

ANNUAL REPORT

& ACCOUNTS

For the year ended 30 June 2023

TABLE OF CONTENTS

Highlights	1
Proven Technology	2
Progress to a Net-Zero Fuel	5
Our Commitment to ESG	6
Chairman's Statement	8
Chief Executive's Statement	10
Strategic Report	16
Directors' Section 172 Statement	22
Directors	24
Directors' Report	26
Statement of Directors' Responsibilities	29
Report on Directors' Remuneration	30
Corporate Governance Statement	31
Independent Auditor's Report	45
Consolidated Statement of Comprehensive Income	53
Consolidated Statement of Financial Position	54
Consolidated Statement of Changes in Equity	55
Consolidated Statement of Cash Flows	56
Company Statement of Financial Position	57
Company Statement of Changes in Equity	58
Company Statement of Cash Flows	59
Notes to the Financial Statements	60
Corporate Information	88

HIGHLIGHTS

Quadrise is positioning itself to be one of the key decarbonisation solution providers in a rapidly changing global energy market, with each of our projects now nearing a key milestone. Preparatory steps for the MSC fuel trials are now complete, with fuel supply agreements nearing finalisation. Our first licensing revenues will be achieved upon successful completion of Valkor's project financing and our trial in Morocco is set to resume in early Q4 2023. We are making good progress in formulating a net-zero fuel to support clients' decarbonisation strategies, and along with Valkor revenues, the funds raised post year-end will enable us to progress our projects up to mid 2024.

Project Progress

The MSC bioMSAR™ vessel trials are planned to commence in Q1 2024 following the finalisation of agreements and installation of our equipment at

the terminal site. Upon completion of our site trial in Morocco, commercial supply discussions are expected to commence in Q4 2023. US$1.0m of license revenue will be due upon successful completion of Valkor's project financing with a further US$0.5m due following the transfer of our equipment to Utah.

Innovations in bioMSAR™

There is growing interest in our bioMSAR™ product and variations based on this technology, where other low emission feedstocks can be combined to produce Net-zero or near-zero fuels.

Over the past year, we have identified and researched multiple feedstock options and developed partnerships with companies who have advantaged technologies. Our goal is to have a commercially viable net-zero fuel by 2030.

Funding in Place

Quadrise raised £1.94 million in July 2023 via a placing and open offer, which together with existing funds and expected revenues from Valkor, will enable

us to finance our projects through to mid-2024. This accomplishment amidst difficult market conditions speaks to the confidence of new and existing investors in the potential of our technology. We remain hugely grateful to our investors for their continued support.

The sectors that we serve - Marine, Heavy Industry and Utilities - contribute 59% of global (GHG) gas emissions and face increasing regulatory and customer pressures to decarbonise. Our technologies are a potential changer, enabling decarbonisation rapidly and at lower cost.

Page 1

PROVEN TECHNOLOGY

Our technology draws on over 30 years of experience in the production of oil-in-water emulsion- based fuels. MSAR® and bioMSAR™ are direct substitutes for fuel oil (also called Heavy Fuel Oil or "HFO") and biofuel respectively, and we have established a strong reputation with market leading companies.

HFO vs MSAR® and bioMSAR™

Crude oil production and refining often result in heavy residual oils that require expensive refined distillates to reduce viscosity and meet pipeline and HFO specifications. HFO is sold at a discount to crude oil, resulting in a loss for the producer.

Our technology is a potential game changer for oil refiners and heavy oil producers. It frees up valuable distillates traditionally used for fuel viscosity control, increasing profitability. This is achieved rapidly and without incurring significant expenditure or costs - which differentiates our technology from alternative upgrading solutions.

Cost-effective MSAR® technology enables additives and water to replace these high value distillates, which can then be sold at a premium. MSAR® technology can also be used to produce bioMSAR™, that incorporates renewable fuel-grade glycerine to provide an economic biofuel solution offering over 20% lower CO2 emissions today.

Quadrise is further developing our bioMSAR™ technology to incorporate a number of other potential

The global fuel oil market currently is approximately 7 million barrels per day

(386 million tons per annum), up 13.5% from 2021.

low-carbon / carbon negative1 feedstocks, to produce bioMSAR™ Zero, a Net Zero fuel.

30% Distillates	30% Water	10% Water
(incl. <1% additives)	(incl. <1% additives)

HEAVY	MSAR®		bioMSAR™
FUEL OIL
(HFO)
70%	70%	40-50%	40-50%
Residuals	Residuals	Residuals	Glycerine

1 Feedstocks from products that have a net effect of removing carbon dioxide from the atmosphere rather than adding it, over their lifecycle.

Page 2

Both MSAR® and bioMSAR™ fuels are extremely stable, with storage and handling possible

at ambient conditions which is a significant difference from HFO that has to be continually heated. MSAR® and bioMSAR™ from different refineries are compatible with each other and with a variety of hydrocarbons, and they are transported using existing fuel infrastructure.

Economic Benefits

Because premium distillate fuels are replaced with low-cost water and a small amount (<1%) of additives, a higher proportion of the valuable components of the oil barrel can be sold as higher-margin refined products.

In a refinery producing HFO, typically just 50-60% of the crude processed is sold as premium value transport oils, whereas in a refinery producing MSAR® or bioMSAR™, this can increase to up to 70%.

Quadrise's technology is modular and can be integrated for production in under 12 months, with any tie-ins incorporated into scheduled maintenance shutdowns.

Environmental

Benefits

MSAR® and bioMSAR™ fuel solve key environmental problems including CO2, Black Soot, NOx & SOx.

Our fuels offer enhanced combustion performance when compared to conventional fuel oil due to

their inherent physical characteristics; pre-atomised micro fuel droplets suspended in water.

This results in less ash and black carbon particulate matter (PM) and nitrogen oxide (NOx) reductions of typically 30%, significant in improving local air quality and lowering the global warming potential of fuel oil use. In addition, bioMSAR™ offers reductions of over 20% in CO2 emissions due to its incorporation of renewable glycerine and improved engine efficiency.

H2O H2O

INJECTION

COMBUSTION

The water phase carries tiny	The water evaporates,	Nano droplets combust
atomised oil droplets, 5-10	dispersing the oil droplets to	completely, providing near-
microns which are invisible to	sub-micron sizes.	perfect energy conversion.
the human eye.

Page 3

Operational Benefits

MSAR® and bioMSAR™ are extremely stable, with storage and handling possible at much lower temperatures than HFO. These characteristics make our products safer for crew to handle and reduce cost and complexity. As emulsion fuels, MSAR® and bioMSAR™ both readily disperse in water in the unlikely event of a spill; a characteristic which is very different to conventional HFO or biofuels.

Quadrise's modular technology can be installed in under 12 months and is compatible with existing fuel oil and biofuel infrastructure, resulting in a low cost solution. The simple production process is as follows:

1 Oil residues are taken from the refinery or heavy oil production and cooled to under 200ºC to achieve the required viscosity.

1. Water, which can be derived from several utility or waste-water sources is added to the residue.
2. Special additives provided by our long term chemical technology partner Nouryon are included in the water phase to stabilise the emulsion for long-term storage and transport, and to promote complete combustion.

1. The mixture is processed in a proprietary emulsion module to produce a highly-stable oil-in-water emulsion with enhanced fuel properties.
2. A biofuel component like renewable glycerine can be added to produce bioMSAR™ as an alternative to MSAR® for further carbon dioxide savings. bioMSAR™ and MSAR® can be made interchangeably and are compatible with each other.

1

4

5

3

2

Page 4

PROGRESS TO A NET-ZERO FUEL

We specialise in low-carbon emulsion fuels for marine, heavy industry, and utilities. Our core MSAR® technology has been tested with leading players across multiple sectors and proven to deliver up to 9% CO2 reductions compared to HFO.

bioMSAR™

In 2021, we developed bioMSAR™, building on our original MSAR® technology to incorporate biofuels. To-date, our formulation of bioMSAR™ includes up to 70% of renewable glycerine, resulting in a 50% reduction in GHG emissions.

Operational simplicity is crucial in the global sectors that we serve. In response to this, and as an option, Quadrise has developed and commissioned a prototype emulsion system to blend MSAR® and bioMSAR™ on board a marine vessel.

This blend-on-board ("BoB") technology gives additional routing flexibility as well as simplifying the supply chain. We filed a patent application jointly with Nouryon in April 2023 covering BoB and have already received customer enquiries.

bioMSAR™ Zero

To meet rising demand for a net-zero fuel, we started work on 'bioMSAR™ Zero', a net-zero fuel that we aim to launch by 2030.

Whilst net-zero fuels do technically exist, none are yet commercially competitive nor globally scalable. We are therefore directing our efforts with commerciality at the forefront of our minds.

Over the past year, we have researched, shortlisted and tested multiple renewable feedstocks with potential to be incorporated into bioMSAR™. These include bio-methanol, Methyl Esters, Lignin, Wood Pyrolysis Oil (WPO), Tyre Pyrolysis Oil (TPO), Straight Vegetable Oil (SVO) and bio-lactic acid.

In addition to the physical and chemical properties of these components, our criteria includes robust and competitive supply, GHG emission profile and social impacts related to cultivation and production.

Our work is most advanced with Methyl Esters (like Fatty Acid Methyl Esters, FAME) and Lignin (in the form of sugars). Both show promising early success in being incorporated into bioMSAR™. WPO and TPO have also shown potential.

We are developing a bioMSAR™ blend in collaboration with Vertoro BV who produce crude sugar oils ("CSO™") from lignin, and we will be performing diesel engine tests on this blend at Aquafuel in Q4 2023. Quadrise has also entered into a Joint Development Agreement with BTG Bioliquids BV

to explore the use of their pyrolysis bio-oils ("FPBO"), derived from agricultural and sawmill waste.

Biofuels are not without their challenges. They are derived from agricultural crops and could compete with food crops. There are concerns around changes in land use, increase in water use and the 'Food vs Fuel' debate. We are fully aware of these challenges and believe that biofuels should be derived from waste streams to mitigate against these risks for the highest environmental and social benefits. Further detail will be provided in our upcoming Sustainability Report 2023.

Page 5

OUR COMMITMENT TO ESG

In the ever-evolving landscape of corporate responsibility, Quadrise is proud to highlight our commitment to Environmental, Social, and Governance ("ESG")

avoidance and reduction of our own emissions, and our sustainable practices in our operations are key drivers in realising these goals.

In our pursuit of sustainability, we are also conducting a comprehensive lifecycle assessment (LCA) of our bioMSAR™ aligned with

the IMO interim guidelines,

principles. We believe that a sustainable and responsible approach to business is not just a choice; it is our duty as a company whose purpose is to deliver innovative energy solutions for a cleaner planet.

Quadrise is an active member of the UK Chamber of Shipping (UK CoS) and International Bunker Industry Association (IBIA), working together to drive innovation, share knowledge, and create solutions that address decarbonisation of shipping.

Environmental

Responsibility

Environmental responsibility is deeply woven into the fabric of Quadrise. It is not just a corporate obligation but the driving force behind our innovation and growth.

We are committed to advancing our lower-carbon MSAR® and bioMSAR™ emulsion fuels, which can play a pivotal role in reducing GHG emissions, enhancing fuel efficiency, and reducing harmful pollutants.

In our Sustainability Report 2022, we set a target

to become a net-zero company in our Scope 1 and Scope 2 emissions by 2030, adopting a hierarchy of Avoiding, Reducing and finally Compensating our emissions. Our efforts in developing 'bioMSAR™ Zero', our investments in

Our commitment to environmental responsibility extends beyond our organisation. We engage in collaborations with industry peers to spearhead sustainability initiatives and the adoption of our technology, primarily in the marine sector.

Quadrise is an active member of the UK Chamber of Shipping (UK CoS) and International Bunker Industry Association (IBIA), working together to drive innovation, share knowledge, and create solutions that address decarbonisation of shipping. Through these partnerships, we seek to foster a broader commitment to sustainability within our industry and contribute to the global shift toward responsible energy practices.

to provide our clients with the assurance of the GHG benefits of our technology.

Quadrise CEO Jason Miles (second from right) in a panel discussion at the TradeWinds Green Seas Fuels Forum in New York, March 2023.

Page 6

Social Responsibility

Our commitment to social responsibility encompasses several crucial aspects.

The well-being of our employees is paramount. We prioritise their safety, health and professional development with regular training at our research facility, 'QRF'.

We firmly believe that diversity is a source of innovation. As such, Quadrise is deeply committed

to promoting diversity and inclusion within our organisation.

We recognise there is a gender skew in our sector, and have recently updated our employment policies to stipulate at least a third of candidates being interviewed for a position should be women or from a minority ethnic group.

Our commitment to social responsibility includes upholding human rights and labour standards. Adherence to international labour conventions and guidelines is a non-negotiable aspect of our operations, ensuring the highest ethical standards are met.

Governance

Responsibility

Since admission to trading on AIM in 2006, Quadrise has voluntarily adopted the UK Corporate Governance Code (the 'Code'), that establishes standards for good corporate governance in accordance with five clear principles of board leadership, effectiveness, accountability, appropriate remuneration and good relations with shareholders. Companies which adhere to the Code must set out how they comply, or explain instances of non-compliance.

Quadrise's disclosures under the Code are on our website: https://www.quadrise. com/ investor-relations/corporategovernance/.

Our commitment to governance responsibility is evident in multiple aspects:

Our board of directors is composed of highly experienced individuals from diverse backgrounds, ensuring independent oversight and strategic guidance for our operations.

Upholding the highest ethical standards is paramount. We maintain a comprehensive code of conduct and ethics that governs the behaviour of all our employees, directors, and partners.

We actively engage with our shareholders to gather insights and feedback. This ongoing dialogue helps us improve our governance practices and align our strategies with shareholder expectations.

Transparency in financial reporting and operations is a fundamental commitment. We aim to maintain

the highest levels of accountability, ensuring our stakeholders have complete confidence in our practices.

Rigorous risk management practices are ingrained

in our corporate culture. We continuously identify, assess, and mitigate risks to protect our business and stakeholders.

Page 7

CHAIRMAN'S STATEMENT

The cost of energy and the transition to secure sustainable fuels continue to be top priorities for governments, businesses and communities. During the year ended 30 June 2023, Quadrise has continued to position itself as a provider of innovative decarbonisation solutions and the Board remains confident in both the quality of the Company's solutions and the commercial opportunities that they provide.

"The accomplishment of financing under difficult market conditions demonstrated the continuing confidence of new and existing investors in the potential of the Quadrise technology and its applicability

to our real-world problems."

In July 2023 the Company announced that it had raised gross proceeds of £1.94 million via a placing of new ordinary shares in the Company and subsequent open offer to qualifying shareholders at an issue price of 1.25 pence per share. The funds raised will, together with receipts from contracted but conditional

payments in respect of the Company's Utah project with Valkor, enable the Company to continue to finance its projects through to mid-2024 and thereby to achieve further milestones that add shareholder value.

The successful completion of the fundraising under difficult market conditions demonstrated the continuing confidence of new and existing investors in the potential of our technology and its applicability to real-world problems. The result is that the current financial year is pivotal for Quadrise, with our key objectives being:

• To progress business in North America, building on a bridgehead to be established in Utah.
• To contract sources of heavy residues and glycerine for product supply outside North America.
• To be ready to scale-up our marine business following the planned completion of the trials with MSC.

Our near-term strategy remains to focus on the key projects in Morocco, Utah and with MSC, which represent the most efficient use of our financial resources and provide the fastest and

most material pathways to commercialisation. Important milestones are expected to be achieved in Q4 2023 in each of these key projects:

• Following the signing of a Site License & Supply Agreement with Valkor Technologies LLC in June 2023, commercial revenues are now expected from Valkor subject to successful completion
  of their heavy oil project financing. This is a critical milestone in attracting new customers, investors and strategic partners. We now look forward to the commencement of Valkor's pilot drilling operations ahead of the winter season.
• The trial with our customer in Morocco is anticipated to resume in early October 2023 after a series of technical delays caused by feed pump problems, with commercial discussions then to take place following confirmation of a successful trial.

Page 8