CHARTECH

Decarbonizing the Circular Economy through Advanced Design, Technology & Environmental Services.

MANAGEMENT'S DISCUSSION & ANALYSIS

Fiscal Year

2024

INTRODUCTION...2
OUR BUSINESS...3
OPERATIONS...9
CORPORATE HIGHLIGHTS...12
TRENDS...14
EIGHT QUARTER SUMMARY...15
DISCUSSION OF OPERATIONS...16
CASH FLOW...21
LIQUIDITY AND FINANCIAL POSITION...22
COMMITMENTS...24
LICENSE AGREEMENT & TERMINATION...24
TRANSACTIONS WITH RELATED PARTIES...26
OUTSTANDING SHARE DATA...27
OFF-BALANCE SHEET ARRANGEMENTS...27
PROPOSED TRANSACTIONS...27
SUBSEQUENT EVENTS...28
CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY...29
CAPITAL MANAGEMENT...30
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT...31
RISK FACTORS...32
CAUTION NOTE REGARDING FORWARD-LOOKING STATEMENTS...34
DISCLOSURE OF INTERNAL CONTROLS...35

Management's Discussion & Analysis
for the Year Ended: September 30, 2024
Discussion Dated: January 27, 2025
chartechnologies.com

INTRODUCTION

This Management's Discussion and Analysis ("MD&A") of the financial condition and results of operation of CHAR Technologies Ltd. (the "Company" or "CHAR Tech") should be read in conjunction with CHAR Tech's audited consolidated financial statements and notes thereto as at and for the years ended September 30, 2024, and 2023.

The Company's audited consolidated financial statements and the financial information contained in the MD&A are prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board and interpretations of the IFRS Interpretations Committee.

Results are reported in Canadian dollars, unless otherwise noted and information contained herein is presented as of January 27, 2025, unless otherwise indicated. These audited consolidated financial statements were approved for issuance by the Board of Directors on January 27, 2025.

For the purposes of preparing this MD&A, management, in conjunction with the Board of Directors (the "Board"), considers the materiality of information. Information is considered material if: (i) such information results in, or would reasonably be expected to result in, a significant change in the market price or value of the Company common shares; (ii) there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision; or (iii) it would significantly alter the total mix of information available to investors. Management, in conjunction with the Board, evaluates materiality with reference to all relevant circumstances, including potential market sensitivity.

Further information about the Company and its operations can be obtained from the offices of the Company or on SEDAR at https://www.sedarplus.ca/.

Management's Discussion & Analysis

for the Year Ended: September 30, 2024

Discussion Dated: January 27, 2025

chartechnologies.com

OUR BUSINESS

CHAR Tech is a leading cleantech development company, specializing in high temperature pyrolysis (HTP), converting woody biomass and organic materials into renewable energy (renewable natural gas (RNG) or green hydrogen) and valuable biocarbons ("CleanFyre™", biochar, or activated biochar "SulfaCHAR™"). The Company continues to be listed on the Exchange trading under the symbol YES.V. The Company's head office address is Morneau Shepell Centre II, 895 Don Mills Road, Suite 400, Toronto, Ontario, M3C 1W3.

Working to advance the future of green steelmaking

Amongst the different applications for which high temperature pyrolysis (HTP) is suited, steelmaking is a pivotal focus area for the Company. Since 2023, CHAR Tech has established strategic partnership with the industry leading ArcelorMittal, who have both invested in the Company and committed to procuring CHAR Tech's biocarbon ("CleanFyre™") to support their facilities' decarbonization efforts. Considering that steel, cement, and chemicals sectors account for 32% of emissions in Canada, the demand for biocarbon is set to grow significantly, aligning with Canada's commitment to decarbonize industries. Along with steelmaking, key focus areas include other metallurgical industries which currently use GHG-heavy fossil coal for their ongoing processing and operations.

CHAR Tech's coal replacement, biocarbon "CleanFyre™", has been proven through rigorous testing, and stands out with a fixed carbon content exceeding 85% (equal to or better than metallurgical grade coal), offering a 91% reduction in greenhouse gas emissions, positioning it as a compelling drop-in replacement for metallurgical coal. SulfaCHAR™, another innovative biocarbon product, derived from digestate/compost, serves as a supplement to activated carbon, effectively reducing hydrogen sulfide and odours in biogas operations.

As presented by ArcelorMittal in their July 2021 Climate Action Report, biocarbon (termed "circular carbon") is a crucial element of their decarbonization pathway.

Management's Discussion & Analysis

for the Year Ended: September 30, 2024

Discussion Dated: January 27, 2025

chartechnologies.com

Courtesy of ArcelorMittal's Climate Action Report 2021

Along with biocarbon, biomass-to-energy applications also exist. CHAR Tech is actively developing the conversion of its produced clean syngas to fuel industrial needs or to generate renewable energy in many forms, including heat, electricity, green hydrogen, and renewable natural gas (RNG).

A leading solution advancing green hydrogen and RNG

As the HTP process produces high quality biocarbon, it simultaneously produces a “pyrolysis gas,” which can be cleaned into “syngas” – a gas that is rich in hydrogen. This hydrogen can then be extracted from the syngas and sold as green hydrogen. The hydrogen (and remaining syngas) can also be reacted through a process called methanation to produce renewable natural gas (“RNG”). Renewable natural gas is in significant demand around the world as heavy industries and various jurisdictions look to reduce their carbon footprints associated with fossil natural gas consumption. High demand for RNG, and the resulting high price per gigajoules, is being driven by Provincial government mandates to increase the supply of renewable energy in the existing natural gas grid.

Québec’s natural gas utility, Énergir, states¹:

“Since 2019, the Regulation Respecting the Quantity of Renewable Natural Gas to be Delivered by Distributor (c. R -6.01, r.4.3) requires gas distributors to deliver 7% of their RNG volumes for the fiscal year beginning October 2028 and 10% for the fiscal year beginning October 2030.

As a key player in Quebec’s energy transition, and in accordance with this regulation, Énergir is pursuing its supply of RNG to meet these targets while reducing its GHG emissions.”

¹ https://energir.com/en/rngrfi

Management’s Discussion & Analysis
for the Year Ended: September 30, 2024
Discussion Dated: January 27, 2025

chartechnologies.com

The Government of British Columbia states²:

“British Columbia generates nearly all of its electricity by harnessing the power of flowing water, a clean and renewable source. The rest comes from forest biomass, wind, natural gas, solar, and landfill gas.

The Resource Supply Potential for Renewable Natural Gas in B.C. Study (PDF, 975.1KB) was completed to inform Renewable Natural Gas-related amendments under the Greenhouse Gas Reduction Regulation (GGRR). Natural gas utilities are allowed to acquire up to 15% of their supply using renewable natural gas.”

Transitioning from a successful pilot to commercialization

To reinforce the importance of biocarbon production, CHAR Tech is building a state-of-the-art facility in Thorold, Ontario. Set to be one of the largest facilities of its kind in Canada, and the only one in the country to exclusively process woody biomass waste, the facility will process approximately 72,000 tonnes of woody waste per year, generate 10,000 tonnes of biocarbon, and produce 425,000 GJ/year of RNG annually. With an operational pilot on-site, the full commercial facility is currently in construction.

In June 2024, CHAR Tech commenced a production run of 500 tonnes of pelletized biocarbon. The pelletized biocarbon is destined for use at various heavy industrial facilities, including ArcelorMittal sites to fulfill a portion of the Company's previously announced biocarbon offtake agreement. Pelletization of biocarbon is a critical step in meeting the industry specifications, including physical properties, of steel making to allow the biocarbon to be a fully direct drop in-replacement for metallurgical coal. It can also be a tricky step with several different operational factors at play to be able to create a pelletized material that can be used in heavy industrial applications, and that can withstand handling, transportation and weather. The production run is an important milestone in the ongoing commercial upgrades at CHAR Tech's state-of-the-art Thorold facility. Achieving proper pellet size and density are crucial for its use in heavy industrial applications, including steelmaking and mining, as well as for ensuring effective transportation, handling, and weather resilience.

The global demand for pelletized biocarbon is substantial. CHAR Tech continues to advance its capabilities in meeting this demand with multiple production facilities under development

Strategic Realignment and Transition of Consulting Operations

As of September 30, 2024, CHAR Tech was in the process of realigning its strategic priorities to better position the Company for sustainable growth and enhanced operational efficiency. As part of this strategic realignment, CHAR Tech decided to discontinue its consulting operations and transition these activities to a new partner. This decision was formalized through an Asset Purchase Agreement (APA) that was finalized on October 30, 2024.

The decision to exit the consulting business aligns with CHAR Tech's focus on its core Build-Own-Operate (BOO) projects, which are central to the Company's long-term growth strategy. By streamlining operations, CHAR Tech aims to enhance operational efficiency, reduce overhead costs, and reallocate resources to higher-value initiatives. This transition also optimizes financial performance by addressing underperforming segments, improving cash flow stability, and strengthening the Company's market positioning.

2 https://www2.gov.bc.ca/gov/content/industry/electricity-alternative-energy/renewable-energy

Management's Discussion & Analysis

for the Year Ended: September 30, 2024

Discussion Dated: January 27, 2025

chartechnologies.com

Concentrating on its core competencies will allow CHAR Tech to deliver greater value to its stakeholders and ensure sustainable growth, consistent with its broader strategic objectives.

The planned transaction aimed to integrate the consulting activities into the new partner's operations while ensuring continuity for clients and ongoing projects. The proposed agreement included the transfer of key assets, including client contracts, intellectual property, software, and selected equipment, essential for the continued operation of the consulting division. To ensure uninterrupted service delivery and maintain strong client relationships, the agreement included provisions for the continuation of existing consulting projects and the pursuit of pipeline opportunities. Additionally, the new partner committed to offering new employment contracts to the consulting staff to maintain staffing continuity.

Attracting investors and collaborators

CHAR Tech has secured significant funding commitments and investments, totaling over C$19 million from corporate and government institutions.

To date, the company secured total commitments of $12.8M of funding from the Governments of Canada and Ontario for the commercial build out of its Thorold facility. Notably, our collaboration with ArcelorMittal also resulted in C$6.6 million investment from their XCarb® Innovation Fund, signifying a vote of confidence in the HTP technology to produce high-quality biocarbon for steelmaking and other metallurgical applications.

On July 17, 2024, the company entered into unsecured financing agreements in the form of term promissory notes with lenders for a total amount of $850,000, repayable within 90 days. The loan was intended for short-term working capital purposes. The lenders included existing shareholders, current and former directors, executive officers, business associates, and employees. As part of the loan agreements, CHAR Tech agreed to issue 850,000 non-transferable share purchase warrants ("bonus warrants") alongside the promissory notes. Each warrant is exercisable into one common share at a strike price of $0.38 per share for a period of one year. Subsequent to September 30, 2024, a total of $568,989, including accrued interest, was converted into common shares. The remaining balance of $302,435, also inclusive of accrued interest, has been fully settled.

On July 15, 2024, the Company became a member of the Ontario Forest Industries Association (OFIA), providing opportunities for collaboration with industry leaders and addressing the renewable energy needs of Ontario's forest sector.

On March 15th, 2024, CHAR Tech announced the appointment of Irina Gorbounova to its Board of Directors. Ms. Gorbounova, Vice President of M&A and Head of the XCarb® Innovation Fund at ArcelorMittal, brings extensive expertise in sustainable steelmaking. Her appointment follows a strategic investment of CAD$6.6M from ArcelorMittal's XCarb® Innovation Fund in July 2023, enhancing CHAR Tech's commitment to sustainable energy solutions. Her appointment will contribute to the company's decarbonization and sustainability initiatives.

On March 13, 2024, CHAR Tech formalized a partnership agreement with the First Nations co-operative Lake Nipigon Forest Management Inc. (LNFMI), advancing forestry sustainability programs in Northern Ontario. The partnership, Lake Nipigon Forest Sustainable Energy Solutions, builds upon a Memorandum of Understanding (MOU) signed in April 2023. LNFMI, a forest management co-operative comprised of four local First Nation Communities who hold the Sustainable Forest License (SFL) on the Lake Nipigon Forest, will oversee the annual wood fiber harvest, ensuring a consistent wood waste feedstock supply for the wood waste-to-renewable energy facility. This jointly-owned facility, modeled after CHAR Tech's Thorold facility, is projected to initially produce 15,000 tonnes of biocarbon per year, followed by upgrades to allow for

Management's Discussion & Analysis

for the Year Ended: September 30, 2024

Discussion Dated: January 27, 2025

chartechnologies.com

annual production of 750,000 gigajoules of Renewable Natural Gas (RNG), with operations beginning by 2026. The Partnership supports initial production goals and sets the stage for significant scalable expansion beyond CHAR Tech's Thorold revenue capacity.

CHAR Tech is well-positioned to address various environmental challenges. The company operates through services that range from high temperature pyrolysis (HTP) plant design and engineering, biocarbon development and marketing, as well as HTP system operations, driven by the following service units:

"The system engineers"

"The biocarbon experts"

"The system operators"

CHAR Tech is now intensifying efforts to expand its build-own-operate facilities, ensuring alignment with the burgeoning pipeline of projects in North America. A summary of our all of our ongoing projects is below.

Management's Discussion & Analysis

for the Year Ended: September 30, 2024

Discussion Dated: January 27, 2025

chartechnologies.com

Deploying Active Projects

Thorold, Ontario

CHAR Tech project to process 72,000 tonnes per year woody waste
Est. Output: 425,000 GJ/yr RNG & 10,000 tonnes/yr biocarbon
In Construction (biocarbon pilot currently operating)

Lake Nipigon, Ontario

Project with First Nations co-operative Lake Nipigon Forest Management Inc. ("LNFMI") who hold the Sustainable Forest License (SFL) to the Lake Nipigon Forest to process over 100,000 tonnes per year woody waste
Est. Output: 750,000 GJ/yr RNG & 15,000 Tonnes/yr biocarbon
In Development with ongoing site preparation/construction by LNFMI

Saint-Félicien, Québec

In collaboration with the emerging Écosystème Énergétique Régional (EER) in Saint-Félicien
Est. Output: 250,000 GJ/yr syngas; 5,000 tonnes/yr biocarbon
In Development

Synagro

Add-on to existing Synagro Facilities
Est. output: Eliminate PFAS and produce biochar (soil amendment & carbon credits)
In Construction

Additional Project Pipeline

Kirkland Lake, Ontario

CHAR Tech feasibility study to explore wood waste to renewable natural gas and biocarbon production
In Development

La Sarre, Québec

Feasibility study to explore wood waste to energy and biochar production.
In Development

Management's Discussion & Analysis

for the Year Ended: September 30, 2024

Discussion Dated: January 27, 2025

chartechnologies.com

OPERATIONS

CHAR Tech continues to focus on commercial opportunities to deploy CHAR Tech's pyrolysis process, used to produce various biocarbons, including CleanFyre™ and SulfaCHAR™ utilizing low value or waste streams as feedstock, including woody biomass, compost and biosolids. The Company is focused on developing, building, owning and operating pyrolysis systems. The company is advancing the commercial phase of its proprietary High Temperature Pyrolysis (HTP) process.

In 2024, CHAR Tech achieved several key milestones across its projects and operations:

Synagro PFAS Elimination Project: CHAR Tech and Synagro Technologies, Inc. reached a pivotal milestone in their collaboration to eliminate PFAS "forever chemicals" from wastewater biosolids. Major civil works were completed on site, and CHAR Tech delivered the majority of the HTP process equipment to the project site. This project, marking CHAR Tech's first HTP deployment in the United States, is set to begin commissioning early in 2025. Once complete, it will serve as a benchmark for environmental and economic benefits, supporting further deployments of this innovative system.

Thorold Renewable Energy Facility: Significant progress was made at the Thorold facility in 2024. Key feedstock handling and processing equipment, including receiving bins, storage bins, magnet separator, and hammermill, were delivered to the site. Additionally, the biomass dryer successfully passed factory acceptance testing and is ready for installation. These developments are foundational to completing the commercial biocoal production line, with full-scale operations targeted for 2025.

Biocarbon Pelletization Process: CHAR Tech advanced the biocarbon pelletization process at the Company's Thorold facility, validating the pelletizing line's readiness to integrate with the commercial HTP reactor. The line transforms relatively light biochar into dense, durable pellets, accelerating the transition to full-scale operations. A significant achievement was the development of water-resistant pellets using a new binder chemistry to meet client delivery requirements. This innovation ensures the pellets can withstand outdoor handling and storage. By producing commercial-scale test quantities, CHAR Tech is securing long-term offtake agreements, supporting the facility's financial sustainability and scalability.

Compact Pellet Production Line at CHAR Tech's Thorold Facility

Management's Discussion & Analysis

for the Year Ended: September 30, 2024

Discussion Dated: January 27, 2025

chartechnologies.com

Biocarbon Offtake Agreements: CHAR Tech made significant strides in strengthening its position as a commercially validated biocarbon supplier. Building on this momentum, the company continues to forge key global relationships with major players in steel manufacturing and other heavy industry. CHAR Tech is well-positioned to capitalize on increasing demand for biocarbon and is projecting the execution of additional biocarbon offtake agreements to support the development of additional facilities, including the Lake Nipigon Forest Sustainable Energy Systems Facility

Lake Nipigon Forest Sustainable Energy Systems Facility: CHAR Tech advanced its partnership with Lake Nipigon Forest Management Inc. (LNFMI) through the completion of an initial engineering package, a critical step toward the development of its second build-own-operate renewable energy facility. The project, located north of Thunder Bay, remains on track to begin construction in 2025. A long-term wood waste feedstock supply agreement is expected to be finalized in Q2 2025, further strengthening the project's development pace.

Lake Nipigon Forest Sustainable Energy Solutions Site Preparation Ongoing

These FY2024 milestones highlight CHAR Tech's ability to execute on its strategic priorities, leveraging its proprietary HTP technology to create sustainable energy solutions while expanding its footprint in the renewable energy sector.

On July 12, 2024, the company announced changes in the senior management team, including the appointment of Anton Szpitalak as the new Chief Development Officer and the departure of Lewis Smith (Chief Commercial Officer) and Robert Sinyard (Chief Operating Officer).

On March 13, 2024, CHAR Technologies formalized a partnership with Lake Nipigon Forest Management Inc. ("LNFMI"), which will involve developing a new production facility aimed at sustainable forestry and renewable energy solutions. This facility is expected to produce significant amounts of Renewable Natural Gas (RNG) and biocarbon annually.

On March 8, 2024, CHAR Technologies announced $6.6 million from Natural Resources Canada's Clean Fuels Fund to support the expansion and replication of its Thorold facility across several new sites in Canada. The Fund will help deliver on early actions outlined in the Hydrogen Strategy for Canada and help support the implementation of the Clean Fuel Regulations. The funds are disbursed based on a structured

Management's Discussion & Analysis
for the Year Ended: September 30, 2024
Discussion Dated: January 27, 2025

chartechnologies.com

claim process that ensures funding disbursement aligns with project milestones and compliance with governmental oversight.

During the fiscal year 2024, CHAR Technologies received $75,000 (2023: $NIL) in grant revenue from the National Research Council of Canada's Industrial Research Assistance Program (NRC IRAP). This funding supports the Company's innovation and research and development initiatives, enhancing its financial stability and reinforcing its commitment to advancing sustainable technologies in Canada's clean energy sector.

On July 4th, 2023, the company closed a CAD$6.6M strategic investment by world's leading steel and mining company, ArcelorMittal S.A., through ArcelorMittal XCarb S.à r.l. ("ArcelorMittal") and ArcelorMittal's XCarb® Innovation Fund (the "Fund"). With a presence in 60 countries and primary steelmaking facilities in 16 countries, including ArcelorMittal Dofasco in Hamilton, Ontario. The Company also signed a Memorandum of Understanding under which ArcelorMittal Dofasco will purchase biocarbon produced at CHAR Tech's cutting-edge facility in Thorold, Ontario.

On December 21st, 2022, CHAR Tech completed the transfer of its existing HTP pilot equipment from the former facility in London, Ontario, to the new facility in Thorold, Ontario. The equipment was shortly after recommissioned and producing biocarbon in January 2023.

On November 7th, 2022, the Company signed a non-refundable contribution agreement with the Department of Natural Resources, under the Investments in Forest Industry Transformation program. During the fiscal year 2023 the Company received a tranche of funding from the program in the amount of $4,938,168 for CHAR Tech's Thorold, Ontario commercial HTP project.

On September 29th, 2022, the Federal Economic Development Agency for Southern Ontario ("FedDev") and CHAR Tech entered into a contribution agreement, in respect to the Thorold Project of up to $1,500,000. During the fiscal year 2023 and 2024, the Company had received FedDev Agency funding of $1,500,000 in respect to the costs incurred up to September 30, 2024.

On April 20, 2022, CHAR Tech signed a $6,438,168 Conditional Loan Agreement with the Forest Sector Investment and Innovation Program ("FSIIP"). The Province of Ontario agreed to make available a nonrevolving term loan up to $6,438,168 for CHAR Tech's Thorold Project. Under the Agreement there are performance incentives that relate to loan forgiveness amounts relating to the successful completion of stages and the ultimate completion of the Project. The maximum annual disbursement amounts are: $1,287,634 for Year 1, $4,635,481 for Year 2, and $515,052 for Year 3. The Year 1 disbursement payment was made in full in April 2023, and the Company submitted the required reporting for a partial disbursement of Year 2.

The Company initially obtained funding in previous years from the SD Natural Gas Fund, supported by Sustainable Development Technology Canada ("SDTC") and the Canadian Gas Association ("CGA"), for a project to build and run a 1-tonne per day pilot scale pyrolysis system for producing biocarbon. This early funding was instrumental in enabling the commercial production of SulfaCHAR and the first test production of CleanFyre.

Management's Discussion & Analysis
for the Year Ended: September 30, 2024
Discussion Dated: January 27, 2025
chartechnologies.com

CORPORATE HIGHLIGHTS

Equity Financing and Other Transactions

On July 4, 2023, CHAR Technologies Ltd. closed a $6.6 million equity investment by Arcelor Mittal and signed an annual biocarbon supply contract. The offering was a non-brokered private placement of 11,000,000 units at a price of $0.60 per unit. Each unit consists of one common share and ¼ of a warrant at $0.70 expiring in two years.

During fiscal 2023, 988,891 warrants were exercised at $0.60 per common share. The warrants were issued in connection with CHAR Tech's unit offering that was completed in March of 2022. That financing was a non-brokered private placement whereby the Company issued 10,877,514 units at a price of $0.45 per unit for gross proceeds of $4,894,881. Each unit is comprised of one common share and one half of a warrant exercisable at $0.60 within eighteen months and expire in September of 2023. As of September 30th, 2023, 4,449,856 warrants and 335,372 broker warrants expired without being exercised.

In February of 2023, 3,515,494 warrants were exercised at $0.40 per common share and 914,967 broker warrants were exercised at $0.325 per common share. The warrants were issued in connection with CHAR Tech's unit offering that was completed in February of 2021.

Stock option grants - update option grants (RSU's, SAR's, Long Term Incentive Prog)

On September 12, 2024, the Board approved the grant of 38,217 stock options to a consultant of the Company which are exercisable into common shares of CHAR at a price of $0.29 per common share and expire on September 11, 2029.

On July 2nd, the Board approved the grant of 155,453 stock options to an officer of CHAR, which are exercisable into common shares of CHAR at a price of $0.45 per common share and expire on July 2nd, 2029. The Company also announced the grant of 153,235 Restricted Stock Units ("RSUs") to the same officer of CHAR. The options and RSU vested immediately.

On April 16, 2024, the Board approved the grant of 1,116,159 stock options to employees, consultants, directors and officers of CHAR, which are exercisable into common shares of CHAR at a price of $0.42 per common share and expire on April 19th, 2029. Of the grant, 312,500 options vest immediately, and the remaining 803,659 vest with time and performance milestones over the next 48 months.

The Company also announced the grant of 968,933 Restricted Stock Units ("RSUs") to employees, consultants and officers of CHAR. Of the grant, 174,020 RSUs vest immediately, and the remaining 794,913 vest with time and performance milestones over the next 48 months.

On December 20, 2023, the Company granted 988,213 stock options to employees and consultants of the Company. The stock options may be exercised for a period of five years at a price of $0.42 per common share. These stock options vested: 732,999 stock options; 25% January 1st, 2024, 25% July 1st, 2024, 25% January 1st, 2025, 25% July 1st, 2025. 155,214 vests on performance milestones and time, 25% January 1st, 2025, 25% July 1st, 2025, 25% January 1st, 2026, 25% July 1st, 2026. 50,000 stock options vest equally over the next 6 months, and 50,000 stock options vest in 6 months and on performance.

On December 20, 2023, the Company granted a total of 485,342 RSUs to employees, and consultants of the Company. The RSUs may be exercised for a period of five years.

Management's Discussion & Analysis

for the Year Ended: September 30, 2024

Discussion Dated: January 27, 2025

chartechnologies.com

During the Year Ended September 30, 2024, a total of 680,727 stock options and 609,807 RSUs were exercised by officers, consultants and employees of the Company and 1,665,267 stock options and 528,015 RSUs were cancelled or expired.

On September 29th, 2023, the Company made an additional grant of 500,000 stock options to a consultant of the Company that vested in six equal monthly tranches commencing on Oct 1, 2023. The stock options may be exercised for a period of five years at a price of $0.50 per common share.

On April 25th, 2023, the Company granted 500,000 stock options to a consultant of the Company who subsequently joined the Board of Directors on June 2, 2023. The stock options were issued in two tranches of 250,000 exercisable into common shares of CHAR Tech at prices of $0.75 and $1.00. The options vest upon the completion of deliverables in both phases.

On February 22, 2023, the Company made an additional grant of 1,000,000 stock options to a consultant of the Company that vested immediately. The stock options may be exercised for a period of five years at a price of $0.66 per common share.

On February 6th of 2023, the Company granted 1,991,391 stock options to employees, consultants, directors and officers of the Company. The stock options are exercisable into common shares of CHAR Tech at a price $0.4125 per common share for a period of five years. The options vested immediately except for officers of the Company whose options primarily vest with time and performance milestones over 12 months. The Company also granted 712,114 RSU’s to employees, consultants and officers of the Company that vest after one year from the date of issue.

On November 15, 2022, the Company granted 40,000 stock options to a consultant of the Company. The stock options may be exercised for a period of five years at a price of $0.36 per share. The stock options vested immediately.

On November 15, 2022, the Company granted 40,000 RSUs to a consultant of the Company.

Management's Discussion & Analysis
for the Year Ended: September 30, 2024
Discussion Dated: January 27, 2025
chartechnologies.com

TRENDS

Management regularly monitors economic conditions and estimates their impact on the Company's operations and incorporates these estimates in both short-term operating and longer-term strategic decisions. Volatile capital markets present a challenge for equity financings. However, as conditions continue to improve, opportunities will likely present themselves for equity financings. Apart from these and the risk factors noted under the heading "Risk Factors", management is not aware of any other trends, commitments, events, or uncertainties that would have a material effect on the Company's business, financial condition, or results of operations. See "Risk Factors" below.

Selected Annual Financial Information

Selected financial information pertaining to continuing operations and discontinued operations from the Consolidated Statements of Net Loss and Comprehensive Loss for the year ended September 30, 2024, and 2023 is presented below:

	Year Ended September 30, 2024 ($)	Year Ended September 30, 2023 ($)
Discontinued operations	672,571	897,516
Continued operations	3,161,996	1,102,810
Total revenue	3,834,567	2,000,326
Net loss and comprehensive loss for the year	(8,332,512)	(8,429,820)
Net loss per share – basic and diluted	(0.08)	(0.08)
	As at September 30, 2024 ($)	Year Ended September 30, 2023 ($)
---	---	---
Total assets	15,352,471	18,868,473
Total liabilities	14,880,781	11,934,508

Selected financial information pertaining to continuing operations from the Consolidated Statements of Loss and Comprehensive Loss for the year ended September 30, 2024, and 2023 is presented below:

	Year Ended September 30, 2024 ($)	Year Ended September 30, 2023 ($)
Revenue	3,161,996	1,102,810
Net loss from continuing operations	(7,524,006)	(8,208,982)
Net loss per share – basic and diluted	(0.07)	(0.09)
	As at September 30, 2024 ($)	Year Ended September 30, 2023 ($)
---	---	---
Total assets	15,053,671	18,659,641
Total liabilities	14,852,823	11,934,508

Management's Discussion & Analysis

for the Year Ended: September 30, 2024

Discussion Dated: January 27, 2025

chartechnologies.com

EIGHT QUARTER SUMMARY

The Company has elected to present a summary that includes both continuing and discontinued operations.

		Net income or (loss)
Period	Revenue ($)	Total ($)	Basic & diluted income (loss) per share ($)	Total Assets ($)
September 30, 2024	1,374,947	(2,270,900) (1)	(0.02)	15,352,471
June 30, 2024	1,163,919	(1,313,590) (2)	(0.01)	16,826,809
March 31, 2024	881,015	(2,377,177) (3)	(0.02)	16,878,443
December 31, 2023	414,686	(2,370,845) (4)	(0.02)	17,046,837
September 30, 2023	672,401	(3,367,414) (5)	(0.04)	18,868,473
June 30, 2023	427,326	(1,928,450) (6)	(0.02)	13,793,152
March 31, 2023	401,798	(2,182,166) (7)	(0.02)	14,941,617
December 31, 2022	498,801	(951,788) (8)	(0.01)	12,015,271

1) Net Loss of $2,270,900 consists of professional fees of $461,675, $246,654 for depreciation, $30,765 for amortization, $204,387 for office expenses, $162,957 for R&D expenses, consulting fees of $274,715, non-cash share-based expenses of $293,386. In addition, the company had a loss recorded from impairment of property, plant and equipment of $1,019,377 and an impairment of goodwill of $398,005, partially offset by gross profit of $530,572 and a grant income of $648,240.
2) Net Loss of $1,313,591 consists of professional fees of $227,819, $107,268 for depreciation, $30,765 for amortization, $1,215,845 for office expenses, $71,871 for R&D expenses, consulting fees of $102,756, non-cash share-based expenses of $535,028 and offset by interest income of $5,708 and partially offset by gross profit of $160,081 and a grant income of $821,905.
3) Net Loss of $2,377,177 consists of professional fees of $131,814, $90,521 for depreciation, $174,963 for amortization, $1,326,696 for office expenses, $68,473 for R&D expenses, consulting fees of $266,702 non-cash share-based expenses of $422,859 and offset by Interest income of $33,949 and partially offset by gross profit of $96,000.
4) Net Loss of $2,370,845 consists of professional fees of $274,651, $78,098 for depreciation, $339,063 for amortization, $1,201,826 for office expenses, $101,895 for R&D expenses, consulting fees of $227,985 non-cash share-based expenses of $441,437 and offset by grant income of $23,614 and Interest income of $87,733 and partially offset by gross profit of $184,121.
5) Net Loss of $3,367,414 consists of professional fees of $381,786 $147,638 for depreciation, $339,062 for amortization, $1,077,913 for office expenses, $212,347 for R&D expenses, non-cash share-based expenses of $540,620 and offset by grant income of $590,301 and partially offset by gross profit of $-29,489.
6) Net Loss of $1,928,450 consists of professional fees of $355,236, $150,180 for depreciation, $335,712 for amortization, $963,932 for office expenses, $194,210 for R&D expenses, non-cash share-based expenses of $252,564 and intangible asset write down of 1,148,341 offset by grant income of $110,204 and a reduction of financial liability of $1,148,341 and partially offset by gross profit of $219,320.
7) Net Loss of $2,182,166 consists of professional fees of $462,392, $159,574 for depreciation, $332,401 for amortization, $1,061,166 of office expenses, $175,163 for R&D expenses, non-cash share-based expenses of $862,325, offset by grant income of $672,391 and Gross Profit of $230,622.
8) Net Loss of 951,788 consisted of professional fees of $243,182, $112,590 of depreciation, $340,957 for amortization, $743,718 of office expenses, $148,848 of R&D expenses, non-cash share-based expenses of $182,398, offset by grant income of $606,695 and Gross Profit of $219,713.

Management's Discussion & Analysis

for the Year Ended: September 30, 2024

Discussion Dated: January 27, 2025

chartechnologies.com

DISCUSSION OF CONTINUED OPERATIONS

Selected financial information pertaining to continuing operations from the Consolidated Statements of Loss and Comprehensive Loss for the year ended September 30, 2024, and 2023 is presented below:

| | Year Ended
September 30, | |
| --- | --- | --- |
| | 2024 | 2023 |
| | $ | $ |
| Revenue | | |
| Total revenue | 3,161,996 | 1,102,809 |
| Cost of revenue | (2,530,414) | (935,305) |
| Gross profit | 631,582 | 167,504 |
| Expenses | | |
| Accretion and Interest | 353,064 | 158,481 |
| Research and development | 405,196 | 730,568 |
| Professional fees | 1,055,067 | 1,382,596 |
| Consulting fees | 872,158 | 124,520 |
| Office expenses | 3,248,708 | 2,992,263 |
| Regulatory and filing fees | 39,047 | 43,655 |
| Depreciation | 515,804 | 566,628 |
| Amortization | 573,536 | 1,343,972 |
| Share-based payments | 1,692,710 | 1,837,907 |
| | 8,755,290 | 9,180,590 |
| Loss from operations | (8,123,708) | (9,013,085) |
| Interest Income | 125,321 | - |
| Grant income (notes 5 and 9) | 1,493,758 | 798,989 |
| Impairment of property plant and equipment (note 5) | (1,019,377) | - |
| Net loss before income taxes | (7,524,006) | (8,214,096) |
| Income tax recovery (note 18) | - | 5,114 |
| Net loss from continuing operations | (7,524,006) | (8,208,982) |

For the year ended September 30, 2024, compared with the year ended September 30, 2023.

The Company reported a net loss of $7,524,006 for continued operations in the fiscal year ending September 30, 2024. This equates to a basic and diluted loss per share of $0.07. In comparison, the previous year's net loss was $8,208,982, with a loss per share of $0.09. The decrease in net loss of $684,982 was principally because:

Revenue from continuing operations increased from $1,102,809 in the same period last year to $3,161,996—an overall rise of $2,059,187. This increase was primarily driven by the percentage-of-completion progress on turnkey technology sales projects and higher engineering service fees for feasibility studies. Although the surge in technology sales activity contributed to stronger results, part

Management's Discussion & Analysis

for the Year Ended: September 30, 2024

Discussion Dated: January 27, 2025

chartechnologies.com

of the potential gains was offset by the allocation of staff toward proposal generation and by the Company's internal focus on its BOO high-temperature pyrolysis initiatives.

During the year ended September 30, 2024, the Company recognized a grant income of $1,493,758 compared to $798,989 for the same year ended in 2023. The grant income recognized in the year ended September 30, 2024, was related to the NRCan Clean Fuel Funds funding initiatives, the Federal Economic Development Agency for Southern Ontario ("FedDev") contribution agreement and the National Research Council of Canada's Industrial Research Assistance Program ("NRC IRAP"). The grant income recognized in the year ended September 30, 2023, was related to the OCE and SDTC funding initiatives.
During the year ended September 30, 2024, the Company achieved a gross profit of $631,582 from continued operations, compared to $167,504 in 2023. This increase was primarily driven by a higher volume of feasibility studies and an expansion of detailed engineering design services for future projects in collaboration with partners. These higher-value services not only generated increased revenue but also improved resource utilization and margins, reflecting the Company's ability to align its offerings with market demand and operational efficiencies.
Depreciation decreased to $515,804 or 9% less, during the year ended September 30, 2024, compared to $566,628 at September 30, 2023. This decrease is attributable to lower capital expenditures on in use equipment. The remainder of capital expenditures relate to current and future technology projects that have not been commissioned at this point in time and have not started depreciating while under construction.
Amortization decreased to $573,536 during the year ended September 30, 2024, compared to $1,343,972. The amortization expense is mainly attributable to intangible assets acquired through an exclusive licensing agreement with its original kiln supplier which was entered into in fiscal 2021. No more payments for royalties are expected to be made as the parties terminated the agreement.
Accretion and interest increased to $353,064 during the year ended September 30, 2024, compared to $158,481 due to the present value of the additional $150,000 received from FedDev on the contribution loan and the present value of promissory notes.
During the year ended September 30, 2024, office expenses increased by $256,445 or 9% over the year ended September 30, 2023, due to cost increases incurred during the first two quarters in hiring additional engineering staff and key executive management positions, new equipment and facility leases at Thorold and new facility leased for the head office and to a lesser extent: travel, insurance, advertising, and marketing initiatives. In the latter half of the year, these costs were primarily attributable to restructuring activities undertaken to align operational costs with a lean structure focused on the Company's BOO projects. Office expenses include salaries, rent, insurance, travel, accretion or leased facilities and administrative services.
During the year ended September 30, 2024, the Company incurred $405,196 in research and development expenses, a decrease from $730,568 for the year ended September 30, 2023. Over the past three fiscal years, the Company has significantly advanced its research and development initiatives, focusing on rolling out the pyrolysis technology for commercialization and demonstrating this technology to potential partners. The decrease in R&D expenditures is attributed to a strategic shift from experimental research to the integration of successful R&D outcomes into commercial products and projects. Notably, this fiscal year saw the successful validation of the biocarbon pelletization process at the Thorold facility, readying the pelletizing line for integration with the Company's commercial High-Temperature Pyrolysis (HTP) reactor.

Management's Discussion & Analysis
for the Year Ended: September 30, 2024
Discussion Dated: January 27, 2025

chartechnologies.com

Professional fees decreased by $327,529 to $1,055,067 during the year ended September 30,2024, compared to $1,382,596 for the year ended September 30, 2023. The decrease is due to a reduction of services related to recruiting fees, legal services, marketing, and others. Consulting fees increased to $872,158 for the year ended September 30, 2024, compared to $124,520 for the year ended September 30,2023. This increase is attributed to the reclassification of certain costs previously included under professional fees and the need for external expertise to support the implementation of the Build-Own-Operate (BOO) model in the company's operations. The BOO model requires specialized knowledge and industry experience, which necessitated the engagement of consultants with focused expertise to ensure its successful integration into the company's strategic framework.
The Company incurred noncash share-based payments of $1,692,710 For the year ended September 30,2024, for employees, officers and directors and consultants from its Omnibus long-term incentive plan that was introduced in fiscal 2021. This is a reduction of 8% from the expense recognized of $1,837,907 for year ended September 30, 2023.
Regulatory expenses decreased to $39,047 in the year ended September 30, 2024, compared to $43,655 for the same period in last year, primarily because of a lower number of transactions incurred during this fiscal year.
The interest income of $125,321 earned during the year ended September 30, 2024, was generated from the maturity of a $4,000,000 deposit.
During the year ended September 30,2024 the company recorder an impairment of property, plant and equipment of $1,019,377 of costs associated with its SLO project with a subsidiary of Kanadevia EN (formerly known as "HZI"). Due to delays in physical deployment and limited future applicability of certain project-specific expenditures. The impaired amount primarily pertains to project-specific costs related to site preparation, early-phase designs, and expenditures that lack scalability or relevance to future projects.

Management's Discussion & Analysis

for the Year Ended: September 30, 2024

Discussion Dated: January 27, 2025

chartechnologies.com

DISCUSSION OF DISCONTINUED OPERATIONS

As of September 30, 2024, CHAR Tech was in the process of realigning its strategic priorities to better position the company for sustainable growth and operational efficiency. In line with this realignment, CHAR Tech decided to discontinue the consulting operations of Altech Environmental Consulting Ltd. (Altech) and transition these activities to Cambium Inc. This decision, formalized on October 30, 2024, through an Asset Purchase Agreement (APA), reflects CHAR Tech's commitment to focusing on its core Build-Own-Operate (BOO) projects, which are central to the company's long-term growth strategy.

The decision to exit the consulting business aligns with CHAR Tech's goals of enhancing operational efficiency, reducing overhead costs, and reallocating resources to higher-value initiatives. This transition also optimizes financial performance by addressing underperforming segments, improving cash flow stability, and strengthening the company's market positioning. Concentrating on its core competencies allows CHAR Tech to deliver greater value to stakeholders and ensures sustainable growth while advancing its broader strategic objectives.

The planned transition aimed to integrate Altech's consulting activities seamlessly into Cambium's operations while ensuring continuity for clients and ongoing projects. The agreement included the transfer of key assets, such as assigned client contracts, intellectual property, software, and selected equipment, critical to the division's functionality. Cambium committed to offering new employment contracts to Altech's consulting staff to maintain staffing continuity and preserve strong client relationships. Cambium assumed liabilities directly tied to ongoing contracts after closing, while CHAR Tech retained liabilities related to past operations, including employee severance and accrued obligations, ensuring a clear division of responsibilities.

In compliance with IFRS 5, the consulting division was classified as "held for sale" and as a discontinued operation as of September 30, 2024. This classification resulted in the reclassification of associated assets to "Assets Held for Sale" in the consolidated financial statements. An impairment test assessed asset recoverability, using a valuation method called Fair Value Less Costs to Sell (FVLCTS). The carrying amount of the cash-generating unit (CGU), including goodwill of $652,917 and other assets totaling $15,928, was $668,843. The FVLCTS valuation of $270,840 resulted in a goodwill impairment of $398,005, recognized as of September 30, 2024, and reported under Net Loss and Comprehensive Loss from discontinued operations in the Statement of Comprehensive Loss.

By focusing on its BOO projects and divesting its consulting division, CHAR has strategically streamlined its operations to support long-term growth and better address opportunities in the cleantech industry.

Management's Discussion & Analysis
for the Year Ended: September 30, 2024
Discussion Dated: January 27, 2025
chartechnologies.com

Selected financial information pertaining to discontinued operations from the Consolidated Statements of Net Loss and Comprehensive Loss for the year ended September 30, 2024, and 2023 is presented below:

| Year Ended
September 30, | | |
| --- | --- | --- |
| | 2024
$ | 2023
$ |
| Revenue | | |
| Consulting Revenue | 672,571 | 897,517 |
| Cost of Revenue | (335,449) | (424,855) |
| Gross Margin | 337,122 | 472,662 |
| Office and general | 700,046 | 625,986 |
| Professional Fees | 40,891 | 60,000 |
| Amortization | 2,020 | 4,160 |
| Depreciation | 6,737 | 3,354 |
| Interest income | (2,069) | - |
| | 747,625 | 693,500 |
| Net Loss before impairment loss | (410,503) | (220,838) |
| Impairment loss on goodwill | (398,005) | - |
| Net loss and comprehensive loss on discontinued operations | (808,508) | (220,838) |

Management's Discussion & Analysis

for the Year Ended: September 30, 2024

Discussion Dated: January 27, 2025

chartechnologies.com

CASH FLOW

The Company has elected to present a consolidated statement of cash flows that includes an analysis of all cash flows in total including both continuing and discontinued operations.

On September 30, 2024, the Company had cash of $948,689 compared to $2,093,154 at September 30, 2023. The company also had invested in a Term Deposit for $4,000,000 on September 30th, 2023. The decrease in cash of $5,144,465 over the twelve-month period ending September 30, 2024, resulted from the following:

Operating activities were affected by non-cash items of depreciation of $523,535, amortization of $575,557, and share-based payments of $1,692,710, accretion and interest of $353,064, an impairment of goodwill of $398,003 and an impairment of property plant and equipment of $1,019,377. The net change in non-cash working capital balances used cash in operating activities of $1,285,163 was comprised of an increase in amounts receivable of $223,514, an increase in work-in-progress of $22,386, a decrease in prepaid expenses of $45,457, an increase in accounts payable and accrued liabilities of $1,998,603, a reduction of inventory of ($8,933) and a decrease in deferred revenue of $521,930. For the twelve-month period net cash provided by operating activities was ($3,988,861) compared to ($4,858,773) used in operations for the comparable period last year. The Company spent $3,451,573 for capital expenditures during the twelve-months ended September 2024, primarily for the purchase of equipment for its production facility in Thorold. Last year, the company spent $4,587,273 on capital expenditures. The company also used funds from the Term Deposit for $4,000,000, compared to none for the comparable period last year. Net cash used in investing activities in total amounted to $548,427 compared to ($8,595,495) for the year ending September 30, 2023

The Company had financing activities during the year ended September 30, 2024, with cash generated by financing activities of $2,295,970 with majority cash inflows related to $1,728,729 of grant revenues, $817,572 from net repayable loans received during the period and $111,712 proceeds from options exercised in the year ended September 30, 2024. Most of the cash applied to financing activities in the prior year was to invest in the term deposit and advance on the construction in progress. Cash provided by financing activities was $15,086,939 at the end of September 30, 2023.

Management's Discussion & Analysis
for the Year Ended: September 30, 2024
Discussion Dated: January 27, 2025
chartechnologies.com

LIQUIDITY AND FINANCIAL POSITION

The Company's total assets on September 30, 2024, were $15,352,471 (September 30, 2023 - $18,868,473) against total liabilities of $14,880,781 (September 30, 2023 - $11,934,508). The decrease in total assets of $(3,516,002) resulted primarily from an increase of $1,267,633 in property and equipment, a decrease in cash and term deposit of $(5,144,465) an increase in accounts receivable of $223,514 and an decrease of $(6,403) in Work-in-Progress, and increase in right of use assets of $216,074 offset by an increase of $338,748 on intangibles due to amortization. The asset expenditures for the right of use assets of $216,074 were offset by increased lease liabilities of $173,533.

The activities of the Company have been primarily financed by private placements of securities, the exercise of warrants and options and its initial public offering as well as Government funding programs.

On March 8, 2024, CHAR Technologies was granted a $5.2 million from Natural Resources Canada's Clean Fuels Fund, in addition to the $1.43 million from Natural Resources Canada's Clean Fuels Fund announced on June 28th, for a total of $6.6M, to support the expansion and replication of its Thorold facility across several new sites in Canada. The total contribution will cover 50% of total project engineering and development costs incurred or a specified maximum amount. The company received a total of $1,383,493 less 10% holdback in the year ended September 30, 2024.

During the year ended September 30, 2024, CHAR Technologies received $75,000 in grant revenue from the National Research Council of Canada's Industrial Research Assistance Program (NRC IRAP). This funding supports the Company's innovation and research and development initiatives, enhancing its financial stability and reinforcing its commitment to advancing sustainable technologies in Canada's clean energy sector.

In November 2022, the Company signed a non-refundable contribution contract with the Department of Natural Resources, under the Investments in Forest Industry Transformation program. During the fiscal year ended September 30, 2023, the Company received a tranche of funding from the program in the amount of $4,444,350 for CHAR Tech's Thorold, Ontario HTP project.

On September 29, 2022, the Federal Economic Development Agency for Southern Ontario ("FedDev") and CHAR Tech entered into a Contribution Agreement where the Minister will make a repayable Contribution to CHAR Tech in respect to the Thorold Project for 50% of eligible costs, starting from the date of April 19, 2021, up to $1,500,000. During the year ended September 30, 2023, the Company received $1,350,000 under the Contribution Agreement above. In July 2024 the company fulfilled the requirements of use of funds and received the remaining $150,000.

$1,287,634 for Year 1, $4,635,481 for Year 2, and $515,052 for Year 3. The Year 1 disbursement payment was made in full as of September 30, 2024.

The SD Natural Gas Fund pyrolysis pilot project included a $750,000 non-repayable grant from SDTC and the Canadian Gas Association (CGA), and a $1,000,000 non-repayable grant from the Ontario Centres of Excellence. The project built on the previous research and development work conducted by CHAR Tech. The project was split into 3 milestones. The first milestone, which was the design and fabrication of a 1-tonne per day biocarbon (including SulfaCHAR) production system was completed. The second milestone,

Management's Discussion & Analysis

for the Year Ended: September 30, 2024

Discussion Dated: January 27, 2025

chartechnologies.com

which was the commissioning and initial operation of the 1-tonne per day biocarbon (including SulfaCHAR) production system was completed. The third and final milestone, which was testing of the use of SulfaCHAR for gas cleaning and agricultural applications was completed.

On September 22, 2021, the Company entered into a contribution agreement with the Natural Gas Innovation Fund ("NGIF"), under which NGIF agreed to provide $300,000 in non-repayable grant funding for the installation of a renewable natural gas ("RNG") production system at CHAR Tech's Thorold site. The grant includes a 10% holdback, to be disbursed upon project completion, with the remaining funds distributed at the commencement of each of three milestones. The first milestone, the completion of the detailed engineering design, was achieved during the year ended September 30, 2024. As of September 30, 2024, the Company has received a total of $210,000 of the contribution agreement, less a 10% holdback, enabling the start of fabrication and commissioning as part of the second milestone.

On September 30, 2024, the Company's cash, working capital and access to the capital and debt markets, government programs and other funding sources is anticipated to be sufficient to fund its operations for the remainder of fiscal 2024 and 2025.

Management's Discussion & Analysis
for the Year Ended: September 30, 2024
Discussion Dated: January 27, 2025
chartechnologies.com

COMMITMENTS

The Company's original operating lease agreement for its kiln building location expired on December 11, 2020, and was terminated on June 30, 2023. A new lease was entered into at the Company's new production facility in Thorold, Ontario for a seventeen thousand square foot facility.

On June 19, 2023, the Company entered into a three-year office lease agreement commencing on November 1, 2023. The lease is the office where the Company is currently located in Morneau Shepell Centre II, 895 Don Mills Road, Toronto. The term of the new lease expires on October 30, 2026, with a total commitment of payments of $150,021 remaining and monthly lease payments of approximately $5,700.

On November 23, 2023, the Company entered a six-year equipment lease commencing on November 23, 2023. The lease is for a wheel loader located at the Thorold plant. The lease required a downpayment of $22,050 and expires on November 23, 2029, with a total commitment of payments of $245,012 remaining and it requires monthly lease payments of $3,952.

The Company's minimum rental payments for its production facility and equipment in Thorold, Ontario and the Head Office are as follows:

Yearly Minimum Rental Payments

Fiscal Year	Amount
2025	359,137
2026	371,979
2027	292,243
2028	280,530
2029	283,297
2030	248,497
2031	245,405
2032	186,801
Total	2,267,889

LICENSE AGREEMENT & TERMINATION

During the year ended September 30, 2021, CHAR Biocarbon Inc., ("CHAR Biocarbon") a wholly-owned subsidiary of the Company, signed an exclusive technology licensing agreement ("the ELA") with Actinon Pte Ltd, ("Actinon") the parent company of CHAR's former principal kiln technology supplier, Anergy Pte Ltd. ("Anergy"). Under the ELA, CHAR Biocarbon had the technology rights to all the equipment intellectual property, including patents and designs. The effective date of the ELA is July 1, 2021, and it was due to be effective for 3 years (and any further extension of the term was subject to the satisfaction of certain conditions). Pursuant to the ELA, CHAR Biocarbon was to make minimum advance royalty payments of US$3,000,000, in respect of the first 3 years of the term, broken down as follows: US$500,000 in respect of year 1, US$1,000,000 in respect of year 2 and US$1,500,000 in respect of year 3. The payment of these minimum royalties was due to take place under the ELA as follows: US$750,000 in 2021 and US$2,250,000 in 2022.

CHAR Biocarbon paid Actinon US$750,000 during the year end September 30, 2021, and US$1,253,502 during the year ended September 30, 2022. These payments were in respect of the first two years of the contract and part of year three that was due to end on June 30th, 2024.

Management's Discussion & Analysis

for the Year Ended: September 30, 2024

Discussion Dated: January 27, 2025

chartechnologies.com

The ELA was terminated by CHAR Biocarbon by written notice on August 27th, 2022, and a further purported notice of termination was provided by Actinon effective July 1, 2023.

CHAR Biocarbon and Actinon are currently engaged in litigation relating to amounts which Actinon alleges are owed to it pursuant to the ELA, as well as amounts which CHAR Biocarbon alleges are repayable to it as a result of its counterclaim against Actinon for recission of the ELA.

The amounts accrued and disclosed relating to the ELA and Actinon in the FY2023 consolidated financial statements were on a contingent basis, pending the outcome of the dispute, as they have been, and continue to be, disputed by CHAR Biocarbon.

For Fiscal Year 2024, by virtue of the extant litigation, there is a risk that CHAR Biocarbon may be deemed to owe liabilities to Actinon in excess of the sums already paid. Reflective of that, and solely on a contingent basis, the Company has provided for a potential liability in the sum of approximately $US675,000. The technology license value was fully amortized as at September 30,2024.

Management's Discussion & Analysis

for the Year Ended: September 30, 2024

Discussion Dated: January 27, 2025

chartechnologies.com

TRANSACTIONS WITH RELATED PARTIES

Transactions with Related Parties Breakdown

Related parties include the Board of Directors, close family members and enterprises that are controlled by these individuals as well as certain persons performing similar functions.

The transactions with related parties are as follows:

	Year Ended September 30, 2024 ($)	Year Ended September 30, 2023 ($)
DSA Corporate Services (“DSA”) (1)	11,028	14,507
1456087 Ontario Inc (“1456087”) (2)	120,000	126,000
Anton Szpitalak (3)	110,000	84,262
Mark Korol, CFO (3)	78,000	151,200

(1) DS DSA is affiliated with the Company through a common officer. DSA provides corporate secretarial services. As at September 30, 2024, DSA was owed $1,780 (September 30, 2023 $1,610). These amounts are included in accounts payable and accrued liabilities.
(2) 1456087 is a company controlled by James Sbrolla, a director of the Company. 1456087 provides consulting services to the Company. As at September 30, 2024, 1456087 was owed $51,027 related to the promissory note plus interest accrued. (note 9) (September 30, 2023: $nil).
(3) Anton Szpitalak, a director of the Company, provides consulting services to the Company. As at September 30, 2024, Anton Szpitalak, was owed $10,205 related to the promissory note plus interest accrued. (note 9) (September 30, 2023: $nil).
(4) Mark Korol was appointed Chief Financial Officer as of April 1, 2020. As at September 30, 2024, Mark Korol was owed $nil (September 30, 2023: $nil). Mark Korol ceased to be the CFO on November 20, 2023. The fees charged during the year are for management and consulting fees.

As at September 30, 2024, the Company had an outstanding amount of $86,747 for the principal and accrued interest related to promissory notes issued to directors of the Company. (September 30, 2023: $nil).

Remuneration of Directors and Key Management

Remuneration of directors and key management of the Company was as follows:

	Year Ended September 30, 2024 ($)	Year Ended September 30, 2023 ($)
Salaries	708,350	572,900
Stock based compensation	1,025,238	900,545

Management's Discussion & Analysis

for the Year Ended: September 30, 2024

Discussion Dated: January 27, 2025

chartechnologies.com

OUTSTANDING SHARE DATA

The number of common shares of the Company outstanding and the number of common shares issuable pursuant to other outstanding securities of CHAR Tech as of January 27, 2025, is as follows:

Total Securities

Securities	As of January 27, 2024
Common Shares	118,299,105
Stock Options Outstanding	7,510,401
Unit Warrants	11,779,725
Broker Warrants	-
RSUs	1,992,062
SARs	580,000
Total Securities	140,161,293

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the results of operations or financial condition of CHAR Tech.

PROPOSED TRANSACTIONS

There are no proposed material transactions relating to assets or business acquisitions or dispositions as of January 27, 2025.

Management's Discussion & Analysis

for the Year Ended: September 30, 2024

Discussion Dated: January 27, 2025

chartechnologies.com

SUBSEQUENT EVENTS

On October 30, 2024, the Company completed a non-brokered private placement, issuing 16,359,451 units at $0.20 per unit for gross proceeds of CDN$3,271,890. Each unit consists of one common share and one-half of one common share purchase warrant. Each whole warrant entitles the holder to purchase one additional share at CDN$0.30 until October 31, 2026. A total of $568,989 representing promissory notes payable together with the accrued interest from the unsecured financing transaction closed in July 2024, were converted into subscriptions to the private placement. The reminder, $302,435 of the promissory notes payable together with the accrued interest were paid after the year-end. The company plans to use the net proceeds for general working capital and to advance the Thorold Project.

Finder's fees totaling CDN$155,100 and 775,500 warrants were issued to Leede Financial Inc. in connection with this offer. Each finder's warrant is exercisable at CDN$0.30 per share until October 30, 2026. The offering is subject to TSX Venture Exchange approval, with securities under a statutory hold period of four months and one day from issuance.

On October 31, 2024, the Company entered into and executed an Asset Purchase Agreement (APA) with Cambium Inc. to sell its consulting practice for a total purchase price of $275,000. The transition of the Altech Environmental Consulting team and assets to Cambium Inc. aligns with the Company's strategic focus on renewable energy projects, ensuring continuity for Altech's clients and supporting Cambium's environmental consulting services across Ontario. The Company has received full payment in connection with this transaction.

On December 18, 2024, the Company announced the approval of an additional $2.5M in funding from the Government of Québec, through the Programme Innovation Bois, to support the advancement of its build, own, and operate project to convert wood waste and residuals into both biocarbon for metallurgical coal replacement and green hydrogen, which the project intends to upgrade further into renewable natural gas. The non-repayable grant funding will be disbursed on predetermined project milestones.

Management's Discussion & Analysis

for the Year Ended: September 30, 2024

Discussion Dated: January 27, 2025

chartechnologies.com

CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

The preparation of these consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, and revenue and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and further periods if the review affects both current and future periods.

Critical areas of estimation and judgments in applying accounting policies include the following:

Going concern

As discussed above, these consolidated financial statements have been prepared in accordance with IFRS on a going concern basis, which assumes the realization of assets and discharge of liabilities in the normal course of business within the foreseeable future. Management uses judgment in determining assumptions for cash flow projections, such as anticipated financing, anticipated sales, and future commitments to assess the Company's ability to continue as a going concern. A critical judgment is that the Company continues to raise funds going forward and satisfy their obligations as they become due.

Work in Progress (WIP) and Percentage of Completion

The Company applies the percentage-of-completion method to recognize revenue from engineering contracts. This method relies on estimates of contract budgets, progress, and costs incurred. The calculation of WIP requires significant judgment and estimation by management. WIP reflects the portion of the contract price earned to date, less amounts billed, based on the percentage of completion method. The percentage of completion is determined by using an input measure, typically the ratio of contract costs incurred to total estimated costs.

The total estimated costs to complete a contract are subject to management's judgment, considering factors such as changes in project scope, unforeseen costs, and the accuracy of labor and material tracking. These estimates are regularly reviewed and updated as the project progresses. Adjustments to WIP are recognized in the period when the estimates are revised, which may significantly impact the timing and amount of revenue and cost recognition.

WIP is considered a critical estimate because changes in contract budgets or progress assessments can lead to material adjustments in revenue, costs, and the financial position of the Company.

Useful lives of property and equipment and intangibles

As described above, the Company reviews the estimated useful lives of property and equipment and intangibles with definite useful lives at the end of each year and assesses whether the useful lives of certain items should be shortened or extended, due to various factors including technology, competition and revised service offerings. During the year ended September 30,2024, the Company was not required to adjust the useful lives of any assets based on the factors described above.

Management's Discussion & Analysis

for the Year Ended: September 30, 2024

Discussion Dated: January 27, 2025

chartechnologies.com

Business combinations

In a business combination, all identifiable assets, liabilities, and contingent liabilities acquired are recorded at their fair values. One of the most significant estimates relates to the determination of the fair value of these assets and liabilities. For any intangible asset identified, depending on the type of intangible asset and the complexity of determining its fair value, an independent valuation expert or management may develop the fair value, using appropriate valuation techniques, which are closely to the assumptions made by management regarding the future performance of the assets concerned and any changes in the discount rate applied.

Share-based payments

The Company estimates the fair value of convertible securities such as warrants and options using the Black-Scholes option-pricing model which requires significant estimation around assumptions and inputs such as expected term to maturity, expected volatility and expected dividends.

Impairment testing goodwill

The Company performs annual impairment tests for impairment of goodwill at the end of each fiscal year or when events occur or circumstances change that would, more likely than not, indicate an impairment loss is present. Key assumptions in the impairment assessment include underlying recoverable amounts of respective CGUs, the discount rates applied, future growth rates and forecast cash flows

Discontinued Operations

Management exercises significant judgment when determining whether an operation qualifies for classification as a discontinued operation and how the comparative information should be presented in the consolidated financial statements. In evaluating the requirements under IFRS 5, Non-current Assets Held for Sale and Discontinued Operations, the Company concluded it was appropriate to classify the operation as discontinued without restating the prior-year figures. This approach balances the need for clear current-year disclosure with the practical challenges and risks associated with restating previously issued financial information. As a result, all pertinent financial information related to the discontinued operation for the current year has been included in a separate note to these consolidated financial statements.

CAPITAL MANAGEMENT

The Company includes equity comprised of share capital, reserves, and deficit, in the definition of capital.

The Company's objective when managing its capital is to safeguard the ability to continue as a going concern in order to provide returns for its shareholders, and other stakeholders and to maintain a strong capital base to support the Company's core activities. The Company has no externally imposed capital requirements. To secure the additional capital necessary to pursue these plans, the Company may attempt to raise additional funds through the issuance of equity or by securing strategic partners.

Management's Discussion & Analysis

for the Year Ended: September 30, 2024

Discussion Dated: January 27, 2025

chartechnologies.com

FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Risk management

In the normal course of its business, the Company is exposed to a number of financial risks that can affect its operating performance. These risks, and the actions taken to manage them, are as noted below.

Credit Risk

Credit risk is the risk that one party to a financial instrument fails to discharge an obligation and causes financial loss to another party. Financial instruments that potentially subject the Company to credit risk consist primarily of cash and accounts receivable. The risk related to cash is managed through the use of a major financial institution which has high credit quality as determined by the rating agencies. Accounts receivable mainly consists of receivables from its customers and have historically been subject to very few bad debts. Credit risk is assessed as low.

Market risk

Market risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuate because of changes in the market prices. The Company's cash includes cash held in bank accounts that earn interest at variable interest rates. Due to the short-term nature of these financial instruments, fluctuations in market rates do not have a significant impact on estimated fair values.

Interest rate risk

Interest rate risk is the risk the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company does not hold any significant interest-bearing assets or liabilities.

Liquidity risk

Liquidity risk is the risk that the Company may not be able to generate sufficient cash resources to settle its obligations as they fall due. The Company's strategy is to satisfy its liquidity needs using cash on hand, and cash flow provided by financing activities. As at September 30, 2024 the Company had cash $948,689 to settle current liabilities of $5,781,818 of which $24,750, can be deferred. The Company's accounts payable and accrued liabilities, and deferred grant income are generally due within one year from the date of the statement of financial position.

Fair value

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction. The fair value of the Company's cash, amounts receivable, accounts payable and loans payable are estimated by management to approximate their carrying values due to their short-term nature.

Management's Discussion & Analysis
for the Year Ended: September 30, 2024
Discussion Dated: January 27, 2025

chartechnologies.com

RISK FACTORS

Investment Risk

An investment in the securities of the Company is highly speculative and involves numerous and significant risks. In addition to the risks identified therein, additional risks not presently known to the Company may arise from time and may cause a material adverse effect on the Company and any investment in the Company. Investors are cautioned not to rely upon any forward-looking statements in this MD&A as such statements are subject known and unknown risks.

No History of Profits

To date, CHAR Tech has not generated profits and there is no guarantee of future profitability. The company's success hinges on generating significant revenue to finance operations independently of external funding. There is no certainty that future revenues will be adequate to sustain operations without additional external funding. Insufficient capital may compel CHAR Tech to pass up potential business opportunities.

Future Capital Requirements

CHAR Tech will require additional financing in order to grow and expand its operations. It is possible that required future financing will not be available, or if available, will not be available on favourable terms. There can be no assurances that CHAR Tech will be able to raise additional capital if its capital resources are exhausted.

Management of Growth

CHAR Tech may be subject to growth-related risks including capacity constraints and pressure on its internal systems and controls. Any expansion of CHAR Tech's business may place a significant strain on its financial, operational, and managerial resources. There is no guarantee that CHAR Tech can manage this growth effectively.

Limited Operating History

CHAR Tech began operations in February 2011 and has now begun to commercialize its proprietary technology across North America. Common to emerging technology companies like CHAR Tech, however, there are inherent risks in advancing new designs and processes.

Reliance on Management

The success of CHAR Tech is dependent upon the ability, expertise, judgment, discretion and good faith of their respective senior management. CHAR Tech's management team possesses critical industry knowledge and relationships that we depend on to implement our business plan.

Additional Financing

To realize its growth strategies, CHAR Tech may need to secure additional equity or debt financing. This financing is necessary to support ongoing operations, capital expenditures, and potential acquisitions or business combinations.

Management's Discussion & Analysis

for the Year Ended: September 30, 2024

Discussion Dated: January 27, 2025

chartechnologies.com

Competition

CHAR Tech operates in a competitive environment and may face challenges from companies with longer histories, greater financial resources, and more experience in manufacturing and marketing.

Operating Risk and Insurance Coverage

CHAR Tech has insurance to protect its assets, operations, and employees. While CHAR Tech believes its insurance, coverage addresses all material risks to which it is exposed and is adequate and customary in its current state of operations, such insurance is subject to coverage limits and exclusions and may not be available for the risks and hazards to which CHAR Tech is exposed.

Fluctuation of Market Price

The market price of the Company's Shares may be subject to wide fluctuations in response to many factors.

Dividends

The Company has no earnings or dividend record and does not anticipate paying any dividends on the Common Shares in the foreseeable future.

Limited Market for Securities

The Company's are listed on the Exchange, however, there can be no assurance that an active and liquid market for the Company's Shares will develop or be maintained, and an investor may find it difficult to resell any securities of the Company.

Environmental and Employee Health and Safety Regulations

CHAR Tech's operations are subject to environmental and safety laws and regulations concerning, among other things, emissions and discharges to water, air and land, the handling and disposal of hazardous and non-hazardous materials and wastes, and employee health and safety.

Management's Discussion & Analysis

for the Year Ended: September 30, 2024

Discussion Dated: January 27, 2025

chartechnologies.com

CAUTION NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this MD&A and in certain documents incorporated by reference in this MD&A, contain "forward-looking information" for the purposes of applicable Canadian securities laws (the "forward-looking statements"). All statements other than statements of historical fact are forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "continues", "forecasts", "projects", "predicts", "intends", "anticipates" or "believes", or variations of, or the negatives of, such words and phrases, or statements that certain actions, events or results "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those anticipated in such forward-looking statements, including those risk factors identified below in the section "Risk Factors. The forward-looking statements in this MD&A speak only as of the date of this MD&A unless an alternative date is specified in such statement. Certain forward-looking statements contained in this MD&A relate to the Company's ability to continue its business activities and to execute on its business plan as currently anticipated. These forward look-statements as well as the other forward-looking statements contained herein, are based upon certain material assumptions, including the Company's expectation that its costs will remain consistent with the costs currently anticipated and that financing through equity raises, debt financing or a combination thereof will continue to be available to the Company and on terms anticipated and reasonably acceptable to the Company. The risk factors identified in the "Risk Factors" section below may cause such assumptions and/or the forward-looking statements to be untrue.

Inherent in forward-looking statements are risks, uncertainties, and other factors beyond the Company's ability to predict or control. Please see the "Risk Factors" section included in this MD&A. Readers are cautioned that actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this MD&A.

The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements whether as a result of new information or future events or otherwise, except as may be required by law. If the Company does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements, unless required by law.

Management's Discussion & Analysis
for the Year Ended: September 30, 2024
Discussion Dated: January 27, 2025
chartechnologies.com

DISCLOSURE OF INTERNAL CONTROLS

Management has established processes to provide them with sufficient knowledge to support representations that they have exercised reasonable diligence to ensure that (i) the consolidated financial statements do not contain any untrue statement of material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it is made, as of the date of and for the periods presented by the consolidated financial statements; and (ii) the consolidated financial statements fairly present in all material respects the financial condition, financial performance and cash flows of the Company, as of the date of and for the periods presented.

In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Filings ("NI 52-109"), the Venture Issuer Basic Certificate filed by the Company does not include representations relating to the establishment and maintenance of disclosure controls and procedures ("DC&P") and internal control over financial reporting ("ICFR"), as defined in NI 52-109. In particular, the certifying officers filing such certificate are not making any representations relating to the establishment and maintenance of:

Controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, filings or other reports filed or submitted under securities legislation is recorded, processed, summarized, and reported within the time periods specified in securities legislation; and
A process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with the issuer's generally accepted accounting principles (IFRS).

The Company's certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in such certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost-effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of annual filings and other reports provided under securities legislation.

Management's Discussion & Analysis

for the Year Ended: September 30, 2024

Discussion Dated: January 27, 2025

chartechnologies.com

CHARTECH

HEAD OFFICE
Morneau Shepell Centre II, 895 Don Mills Road, Suite 400, Toronto, Ontario, M3C 1W3

CONTACT
1-800-323-4937
[email protected]

Management's Discussion & Analysis
for the Year Ended: September 30, 2024
Discussion Dated: January 27, 2025
chartechnologies.com

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CHAR Technologies Ltd. — Management Reports 2025

47171_rns_2025-01-28_cd659029-ab14-47f3-862a-c34d39eb79ae.pdf

MANAGEMENT'S DISCUSSION & ANALYSIS

TABLE OF CONTENTS

INTRODUCTION

OUR BUSINESS

Working to advance the future of green steelmaking

A leading solution advancing green hydrogen and RNG

Transitioning from a successful pilot to commercialization

Strategic Realignment and Transition of Consulting Operations

Attracting investors and collaborators

Deploying Active Projects

Additional Project Pipeline

Kirkland Lake, Ontario

La Sarre, Québec

OPERATIONS

CORPORATE HIGHLIGHTS

Equity Financing and Other Transactions

Stock option grants - update option grants (RSU's, SAR's, Long Term Incentive Prog)

TRENDS

Selected Annual Financial Information

EIGHT QUARTER SUMMARY

DISCUSSION OF CONTINUED OPERATIONS

DISCUSSION OF DISCONTINUED OPERATIONS

CASH FLOW

LIQUIDITY AND FINANCIAL POSITION

COMMITMENTS

Yearly Minimum Rental Payments

LICENSE AGREEMENT & TERMINATION

TRANSACTIONS WITH RELATED PARTIES

Transactions with Related Parties Breakdown

Remuneration of Directors and Key Management

OUTSTANDING SHARE DATA

Total Securities

OFF-BALANCE SHEET ARRANGEMENTS

PROPOSED TRANSACTIONS

SUBSEQUENT EVENTS

CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Going concern

Work in Progress (WIP) and Percentage of Completion

Useful lives of property and equipment and intangibles

Business combinations

Share-based payments

Impairment testing goodwill

Discontinued Operations

CAPITAL MANAGEMENT

FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Risk management

Credit Risk

Market risk

Interest rate risk

Liquidity risk

Fair value

RISK FACTORS

Investment Risk

No History of Profits

Future Capital Requirements

Management of Growth

Limited Operating History

Reliance on Management

Additional Financing

Competition

Operating Risk and Insurance Coverage

Fluctuation of Market Price

Dividends

Limited Market for Securities

Environmental and Employee Health and Safety Regulations

CAUTION NOTE REGARDING FORWARD-LOOKING STATEMENTS

DISCLOSURE OF INTERNAL CONTROLS

More from CHAR Technologies Ltd.

CHAR Technologies Ltd. Management Reports 2025