First Hydrogen Corp. — Interim / Quarterly Report 2022

Aug 31, 2021

PURE EXTRACTION CORP. Management’s Discussion and Analysis For the Three Months Ended June 30, 2021 and 2020

Form 51-102F1

The following discussion is management’s assessment and analysis of the results of operations and financial conditions of Pure Extraction Corp. (the “Company”) and should be read in conjunction with the Company’s unaudited consolidated financial statements for the three months ended June 30, 2021 and audited annual consolidated financial statements and related notes thereto for the year ended March 31, 2021. These unaudited financial statements have been prepared in accordance with International Financial Reports Standards (“IFRS”) as issued by the International Accounting Standards Board and can be found on SEDAR at www.sedar.com.

Additional information relating to the Company is available on SEDAR at www.sedar.com.

All amounts are in Canadian dollars unless otherwise indicated.

The effective date of this MD&A is August 27, 2021.

Forward-Looking Statements

This MD&A contains forward-looking statements that are based on the Company’s current expectations and estimates. Forward-looking statements are frequently characterized by words such as “plan”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “suggest”, “indicate” and other similar words or statements that certain events or conditions “may” or “will” occur. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause actual events or results to differ materially from estimated or anticipated events or results implied or expressed in such forward-looking statements. Such factors include, among others: the actual results of current exploration activities; conclusions of economic evaluations; changes in project parameters as plans to continue to be refined; possible variations in ore grade or recovery rates; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing; and fluctuations in metal prices. There may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise. Forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein.

Overview

Description of the Business

The Company is in the business of engineering, research & development, manufacturing and selling equipment.

On June 12, 2020, the Company changed its name to Pure Extraction Corp., and through its subsidiaries Pure Extraction Inc. and Pure Extraction Ltd. which are in the business of engineering, research & development, manufacturing and selling CO2 extraction equipment in the botanical oil industry. Botanical oils, also called volatile oils, are natural oils extracted from plants. Historically, they have been used in medicine, cosmetics, perfumes, food and more recently, aromatherapy. Botanical oils are “essential” because they contain the “essence” of the plant, meaning the taste or odor.

On June 12, 2020, the Company changed its name to Pure Extraction Corp.

On June 11, 2021, the Company entered into definitive agreements with AVL Powertrain UK Limited and Ballard Power Systems Inc. to assist in the design and development of a fuel-cell powered vehicle that the Company will own the commercial rights for the vehicle design.

PURE EXTRACTION CORP. Management’s Discussion and Analysis For the Three Months Ended June 30, 2021 and 2020

Form 51-102F1

Highlights from April 1, 2021 to August 27, 2021

Since March 31, 2020, the outbreak of the novel strain of coronavirus, specifically identified as “COVID19”, has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and social distancing, have caused material disruption to businesses globally resulting in an economic slowdown. Global equity markets have experienced significant volatility and weakness. Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions. The duration and impact of the COVID- 19 outbreak is unknown at this time, as is the efficacy of the government and central bank interventions. It is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the Company and its operations in future periods.

On April 1, 2021, the Company entered into two non-binding letters of intent with a company specializing in the energy, zero-emissions mobility and renewable sectors for the assignment of two non-binding letters of intent to design and produce a zero-emissions prototype van.

On April 30, 2021, the Company closed a fully subscribed non-brokered private placement of units for gross proceeds of $3.0 million. The private placement consists of 7.5 million units at $0.40 per unit, where each unit consists of one common share and a half of a common share purchase warrant. Each full warrant is exercisable at $0.90 into one common share, for a period of two years.

In addition, the Company has issued unsecured convertible debentures for gross proceeds of up to $2.0 million. Each convertible debenture will bear interest from their issue date at 8 per cent per annum and mature on the date that is 24 months. The principal amount of the debenture will be convertible into units of the Company at the option of the holder at any time prior to the close of business on the last business day immediately proceeding the maturity date. The conversion price per unit will be $0.40 per unit. The unit is comprised of a share and a half of a common share purchase warrant, each full warrant is exercisable at $0.90 into one common share, for a period of two years.

In connection with the financings, the Company paid finder’s fees to arm’s length third parties consisting of $400,000 cash and issued 1,000,000 finder’s warrants. Each finder’s warrant is exercisable at $0.40 into one common share for a period of two years.

On June 11, 2021, the Company announced it had entered into definitive agreements with AVL Powertrain UK Limited (“AVL”) and Ballard Power Systems Inc. (“Ballard”). The definitive agreements, with the company’s wholly-owned subsidiary First Hydrogen Corp. (“First Hydrogen”), will assist in the design and development of a fuel-cell powered vehicle that First Hydrogen will own the commercial rights for the vehicle design.

Ballard is a leading global provider of innovative clean energy and fuel cell solutions. Ballard develops and manufactures proton exchange membrane fuel cell products for markets such as heavy-duty motive, portable power, material handling as well as providing technology solutions services. Ballard will be providing support and integration of its hydrogen fuel cell module for First Hydrogen’s prototype light commercial vehicle.

AVL Powertrain UK Limited is part of the AVL Group which is the world’s largest independent company for development, simulation and testing in the automotive industry, and in other sectors. As a global technology leader, AVL provides concepts, solutions and methodologies in the fields of e-mobility, ADAS and autonomous driving, vehicle integration, digitalization, virtualization, Big Data, and much more. AVL will plan and execute the integration of all powertrain components including developing vehicle components and control software.

PURE EXTRACTION CORP. Management’s Discussion and Analysis For the Three Months Ended June 30, 2021 and 2020

Form 51-102F1

The Company was assigned two non-binding letters of intent from Nova Light Capital Limited (“Nova Light”), an arm’s length company, which were ratified into the definitive agreements. Nova Light will be issued 3,000,000 shares of Purx for the assignment of the two non-binding letters of intent. These shares are subject to a voluntary escrow and pooling agreement released over a 36-month period.

Finder’s fees of 249,590 shares of Purx are payable to an arm’s length party in accordance with Exchange policies upon approval of the transaction.

On August 6, 2021, the Company announced it has arranged a non-brokered private placement for $3.0 million. The private placement will consist of 2.4 million units at $1.25 per unit, where each unit will consist of one common share and one common share purchase warrant. Each warrant is exercisable at $2.00 into one common share, for a period of two years from the date of closing. Finders’ fees may be paid by the Company in conjunction with the completion of the financing.

Selected Financial Information

The following financial data is derived from the Company’s audited annual financial statements for the years ended March 31, 2021, 2020 and 2019 respectively.

Years Ended March 31,	2021	2020	2019
	$	$	$
Net revenues	302,110	-	-
Net loss	(2,461,014)	(597,047)	(87,261)
Total assets	2,621,965	587,378	483,384
Loss per Share	(0.06)	(0.04)	(0.01)
Cash dividends per share	0.00	0.00	0.00

Summary of Quarterly Results

The following is a summary of the results from the eight previously completed financial quarters:

	Jun. 30, 2021	Mar. 31,	Dec. 31,	Sep. 30,
		2021	2020	2020
Revenues	$nil	$nil	$302,110	$Nil
Net loss	(1,737,820)	(1,925,626)	(102,229)	(366,141)
Net comprehensive loss	(1,739,680)	(1,925,626)	(102,229)	(366,141)
Loss per share (basic and diluted)	(0.04)	(0.05)	(0.00)	(0.01)
Total assets	7,725,787	2,621,965	4,301,557	4,728,729
Equity (deficiency)	4,920,153	1,166,288	2,873,914	2,976,143
	Jun. 30,	Mar. 31,	Dec. 31,	Sep. 30,
	2020	2020	2019	2019
Revenues	$Nil	$Nil	$Nil	$Nil
Net loss	(67,018)	(42,789)	(50,589)	(338,765)
Net comprehensive loss	(67,018)	(42,789)	(50,589)	(338,765)
Income (Loss) per share (basic and diluted)	(0.00)	(0.00)	(0.00)	(0.025)
Total assets	4,967,389	587,378	601,698	667,299
Equity (deficiency)	3,147,284	516,702	529,461	580,050

PURE EXTRACTION CORP. Management’s Discussion and Analysis For the Three Months Ended June 30, 2021 and 2020

Form 51-102F1

Results of Operations for the Three Months ended June 30, 2021 and 2020

For the three months ended June 30, 2021, the Company incurred an operating loss of $1,737,820 (2020 - $66,8565).

Major expenses and their prior comparative period amount as follow:

• Accounting, audit and legal $68,145 (2020 – $nil)

• Accretion $52,795 (2020 – $nil)

• Advertising and marketing $109,801 (2020 – $nil)

• Consulting and management fees $52,500 (2020 – $17,500)

• General and administrative of $105,574 (2020 – $40,547)

• Research and development $66,757 (2020 - $7,601)

• Stock-based compensation $1,255,000 (2020 - $nil)

Increased expenses in the three-month ended June 30, 2021, compared to June 30, 2020, were due to the acquisition of the non-binding letters of intent and sequent definite agreements with AVL Powertrain UK and Ballard Powers Systems Inc. The Company incurred non-cash expenses of $1,255,000 for stock options granted and $52,795 for accretion during the three months ended June 30, 2021.

Liquidity

As at June 30, 2021, the Company had net working capital of $5,234,627 (March 31, 2021 - $1,129,565). The Company has a cash balance of $5,821,684 (March 31, 2021 - $1,637,380). The Company does not have any material expenditure commitments over the near term or long term.

Contractual Obligations

The Company has no material contractual obligations.

Share Capital

The following tables summarize the Company’s common share, warrants and stock option transactions for the years ended March 31, 2020, March 31, 2021 and July 29, 2021:

Common Shares:

Balance, March 31, 2020	16,755,785
Issued for acquisition	3,000,000
Issued for cash	18,000,000
Issued for finders’fee	345,454
Balance, March 31, 2021	38,101,239
Issued for cash	7,500,000
Broker’s options exercised	588,296
Balance, June 30, 2021	46,189,535
Broker’s options exercised	425,000
Balance, August 27, 2021	46,614,535

During the year ended March 31, 2021, the Company completed the acquisitions of Pure Extraction Inc. and Pure Extraction Ltd. The Company issued 3,000,000 common shares to the shareholders of Pure Extraction Inc. and Pure Extraction Ltd. The Company completed a financing concurrent with the acquisition, issuing 18,000,000 common shares for gross proceeds of $2,430,000. The Company paid a finders’ fee consisting of $194,400 and issued 1,440,000 brokers’ options, each option allowing the holder to acquire one common

PURE EXTRACTION CORP. Management’s Discussion and Analysis For the Three Months Ended June 30, 2021 and 2020

Form 51-102F1

shares at a price of $0.135 for a period of 24 months. A finder’s fee of 345,454 shares were issued as part of the acquisition.

During the three-month period ended June 30, 2021, the Company closed a non-brokered private placement of units for gross proceeds of $3.0 million. The private placement consisted of 7.5 million units at $0.40 per unit, where each unit consists of one common share and a half of a common share purchase warrant. Each full warrant is exercisable at $0.90 into one common share, for a period of two years.

In addition, the Company issued unsecured convertible debentures for gross proceeds of up to $2.0 million. Each convertible debenture will bear interest from their issue date at 8 per cent per annum and mature on the date that is 24 months. The principal amount of the debenture will be convertible into units of the Company at the option of the holder at any time prior to the close of business on the last business day immediately preceding the maturity date. The conversion price per unit will be $0.40 per unit. The unit is comprised of a share and a half of a common share purchase warrant, each full warrant is exercisable at $0.90 into one common share, for a period of two years.

In connection with the financings, the Company paid finder’s fees to arm’s length third parties consisting of $400,000 cash and issued 1,000,000 finder’s warrants. Each finder’s warrant is exercisable at $0.40 into one common share for a period of two years.

During the three-month period ended June 30, 2021, the Company received $79,420 from the exercise of 588,296 broker’s options.

Subsequent to the period ended June 30, 2021, the Company received $57,375 from the exercise of 425,000 broker’s options.

Warrants:

During the three-month period ended June 30, 2021, the Company issued 3,750,000 share purchase warrants exercisable at $0.90 per warrant, expiring in two years.

Warrant activity as follows:

Balance, March 31, 2021 Issued Balance at June 30, 2021	Number of Warrants Weighted Average Exercise Price Years to Expiry
	- $ - - 3,750,000 0.90 2.00
	3,750,000 $ 0.90 1.83

As at June 30, 2021 and August 27, 2021, the following share purchase warrants were outstanding:

	Exercise
Number of Warrants	Price	Expiring
3,750,000	$ 0.90	April 30, 2023

Broker’s options:

During the year ended March 31, 2021, the Company issued 1,440,000 broker’s options as finders’ fees. The brokers’ options allowed the holder to acquire for $0.135 per option, one common share for a period of 24 months. The fair value of these options was calculated at $220,000 and was determined on the date of issuance using the Black-Scholes Option Pricing Model with the following assumptions: 0.26% risk-free interest rate, expected life of 2 years, 192% annualized volatility and 0% dividend rate.

PURE EXTRACTION CORP. Management’s Discussion and Analysis For the Three Months Ended June 30, 2021 and 2020

Form 51-102F1

During the three-month period ended June 30, 2021, broker’s options activity was as follows:

	Number	Weighted Average Price
Number outstanding at March 31, 2020	296,296	$ 0.135
Granted	1,440,000	$ 0.135
Number outstanding at March 31, 2021	1,736,296	$ 0.135
Exercised	(588,296)	$ 0.135
Number outstanding at June 30, 2021	1,148,000	$ 0.135

As at June 30, 2021, the following broker’s options were outstanding:

	Weighted	Number of
	Average Exercise	brokers’	Weighted Average
Expiry Date	Price	options	Remaining Years
May 29, 2022	$0.135	1,148,000	0.91

As at August 27, 2021, the following broker’s options were outstanding:

	Weighted	Number of
	Average Exercise	brokers’	Weighted Average
Expiry Date	Price	options	Remaining Years
May 29, 2022	$0.135	723,000	0.75

Finders’ warrants:

During the three-month ended June 30, 2021, the Company issued 1,000,000 finder’s warrants as finders’ fees. The finder’s warrants allowed the holder to acquire for $0.40 per finder warrant, one common share for a period of 24 months.

During the three-month period ended June 30, 2021, finder’s warrants activity was as follows:

	Number	Weighted Average Price
Number outstanding at March 31, 2020	-	-
Granted	-	-
Number outstanding at March 31, 2021	-	-
Granted	1,000,000	$ 0.400
Number outstanding at June 30, 2021	1,000,000	$ 0.400

As at June 30, 2021, f the following finders’ warrants were outstanding:

	Weighted	Number of
	Average Exercise	brokers’	Weighted Average
Expiry Date	Price	options	Remaining Years
April 30, 2023	$0.40	1,000,000	1.83

PURE EXTRACTION CORP. Management’s Discussion and Analysis For the Three Months Ended June 30, 2021 and 2020

Form 51-102F1

As at August 27, 2021, the following finders’ warrants were outstanding:

	Weighted	Number of
	Average Exercise	brokers’	Weighted Average
Expiry Date	Price	options	Remaining Years
April 30, 2023	$0.40	1,000,000	1.67

Stock Options:

During the three-month period ended June 30, 2021, the Company granted 620,000 incentive stock options. The stock options allowed the holder to acquire for $2.35 per option, one common share for a period of 5 years.

During the year ended March 31, 2021, the Company issued 500,000 incentive stock options. The stock options allowed the holder to acquire for $0.30 per option, one common share for a period of 5 years.

During the year ended March 31, 2021, the Company issued 100,000 incentive stock options. The stock options allowed the holder to acquire for $0.40 per option, one common share for a period of 5 years.

Balance at March 31, 2020 Granted Balance at March 31, 2021 Granted Balance at June 30, 2021	Number of Options Weighted Average Exercise Price
	1,260,000 $ 0.165 600,000 0.320
	1,860,000 $ 0.210 620,000 2.350
	2,480,000 $ 0.748

As at June 30, 2021, the following stock options were outstanding and exercisable:

	Weighted Average	Number of options	Weighted Average
Expiry Date	Exercise price	outstanding	Remaining Years
July 19, 2024	$ 0.165	1,260,000	3.05
July 23, 2025	$ 0.300	500,000	4.07
March 3, 2026	$ 0.400	100,000	4.68
June 11, 2026	$ 2.350	620,000	4.95
		2,480,000	3.80

At August 27, 2021, the following stock options were outstanding and exercisable:

	Weighted Average	Number of options	Weighted Average
Expiry Date	Exercise price	outstanding	Remaining Years
July 19, 2024	$ 0.165	1,260,000	2.90
July 23, 2025	$ 0.300	500,000	3.91
March 3, 2026	$ 0.400	100,000	4.52
June 11, 2026	$ 2.350	620,000	4.79
		2,480,000	3.64

As at August 27, 2021, the Company had 46,614,535 common shares, 3,750,000 warrants, 723,000 broker’s options, 1,000,000 finders’ warrants, and 2,480,000 incentive stock options outstanding. If the warrants, finders’ warrants, brokers’ options, incentive stocks options were exercised, the Company would have 54,567,535 common shares outstanding.

PURE EXTRACTION CORP. Management’s Discussion and Analysis For the Three Months Ended June 30, 2021 and 2020

Form 51-102F1

Related Party Transactions

The Company incurred the following fees and expenses charged by directors and officers of the Company or by entities controlled by them for the three-month period ended June 30, 2021 and 2020:

	June	30, 2021	June 30 , 2020
CEO		$ 45,000	$ 15,000
CFO		7,500	2,500
Rent		18,000	13,500
		$ 70,500	$ 31,000

These transactions have been recorded at the fair value which is the amount of consideration established and agreed to by the related parties.

Risk and Uncertainties

The Company’s business, results of operations, financial condition, and the trading price of its common shares could be materially adversely affected by any of the foregoing risks and by other risks, including risks related to development of mineral deposits, metal prices, title matters, reclamation costs, competition, additional funding requirements, insurance, currency fluctuations, conflicts of interest, and share trading volatility. Any of these risks could have a material adverse effect on the business, operations or financial condition of the Company.

Critical Accounting Estimates

The financial statements were prepared in accordance with IFRS which requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the year. Significant areas requiring the use of management estimates relate to determination of impairment of assets, exploration and evaluation assets’ carrying values, useful lives for depreciation and amortization, and the value of deferred income tax assets and liabilities. Actual results could differ from these estimates.

Off-Balance-Sheet Arrangements

The Company does not have any off-balance sheet transactions.

New and amended standards adopted by the Company

The Company has adopted IFRS 9, Financial Instruments. A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

• IFRS 16, Leases

In January 2016, the International Accounting Standards Board (IASB) issued a new International Financial Reporting Standard (IFRS) on lease accounting which was incorporated into Part I of the CPA Canada Handbook – Accounting by the Accounting Standards Board (AcSB) in June 2016. IFRS 16 supersedes IAS 17 Leases, IFRIC 4 Determining Whether an Arrangement Contains a Lease, SIC-15

Operating Leases - Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. IFRS 16 introduces a single lessee accounting model that requires a lessee to recognize assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. Lease assets and liabilities are initially recognized on a present value basis and subsequently, similarly to other non-financial assets and financial liabilities, respectively. The lessor accounting requirements are substantially unchanged and, accordingly, continue to require classification and measurement as either

PURE EXTRACTION CORP. Management’s Discussion and Analysis For the Three Months Ended June 30, 2021 and 2020

Form 51-102F1

operating or finance leases. The new standard also introduces detailed disclosure requirements for both the lessee and lessor. The new standard is effective for annual periods beginning on or after January 1, 2019. This standard has been adopted without material effect to these financial statements.

Subsequent Events

On August 4, 2021, the Company received $20,250 from the exercise of 150,000 broker’s option at $0.135.

On August 6, 2021, the Company announced a non-brokered private placement for $3,000,000. The private placement consists of 2.4 million units at $1.25 per unit, where each unit will consist of one common share and one common share purchase warrant. Each warrant is exercisable at $2.00 into one common share, for a period of two years from the date of closing.

On August 10, 2021, the Company received $37,125 from the exercise of 275,000 broker’s option at $0.135.

Financial Instruments and Related Risks

All significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk.

The Company’s financial instruments include cash and cash equivalents, receivables, and accounts payable and accrued liabilities. The carrying values of these financial instruments approximate their fair value due to their short-term maturity. The fair value of cash and cash equivalents are measured based on level 1 input of the fair value hierarchy.

Management believes that the Company is not exposed to significant interest rate risk, currency risk and credit risk.

ADDITIONAL INFORMATION

Additional information related to the Company can be found on SEDAR at www.sedar.com.

List of Directors and Officers

Balraj Mann CEO, and Director Nancy Zhao, CFO Alicia Milne, Director Barry Hartley, Director