Net Zero Renewable Energy Inc. - Audit Report / Information 2021

This is an unofficial consolidation of Form 51-102F4 Business Acquisition Report reflecting amendments made effective January 1, 2011 in connection with Canada’s changeover to IFRS. The amendments apply for financial periods relating to financial years beginning on or after January 1, 2011. This document is for reference purposes only and is not an official statement of the law.

Form 51-102F4

Business Acquisition Report

Item 1 Identity of Company

1.1 Name and Address of Company

EnerDynamic Hybrid Technologies Corp. (“ EHTC ”) 6040 Progress Street Niagara Falls, ON L2G 0C4

1.2 Executive Officer

Form more information, please contact: John Gamble, Chief Executive Officer at (289) 488-1699

Item 2 Details of Acquisition

2.1 Nature of Business Acquired

Effective August 25, 2021, EHTC acquired, by way of a three-cornered amalgamation, all of the issued and outstanding shares of Windular Research and Technologies Inc. (“ WRT ”) (the “ WRT Acquisition ”) pursuant to the terms of a business combination agreement between EHTC, WRT, EHT Subco 1 Inc., 2833123 Ontario Inc., 2833127 Ontario Inc., 2833137 Ontario Inc. and 2833150 Ontario Inc. dated May 11, 2021 and amended on July 27, 2021 (the “ BCA ”).

WRT is a privately held renewable energy technology company whose origins were founded in telecom tower engineering, design and implementation. WRT provides reliable, cost-efficient, disruptive renewable technology solutions to the global telecom tower industry, significantly reducing or eliminating its reliance on costly, dirty diesel fuel. WRT has state-of-the-art “Smart Tracking” wind and solar turbine systems designed for the global telecom tower industry.

WRT’s wind and solar technology applications are installed on telecom and other tower assets, thereby eliminating the need for additional infrastructure,

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permitting and land leases. WRT’s unique rail-and-carriage system and proprietary power electronics allow its systems to circumnavigate the tower seeking out the most efficient solar and wind resources available. With the smart-tracking technology, WRT’s systems achieve power production that’s unmatched by traditional ground/fixed-mounted applications and, more importantly, the systems are protected when weather conditions become too extreme. WRT’s innovation technologies enable telecom companies to harness wind and solar energy using their own tower assets.

The combination of EHTC and WRT will offer a comprehensive suite of clean energy technology solutions to the world’s “Tower” market.

2.2 Acquisition Date

The WRT Acquisition was completed on August 25, 2021 (the “ Acquisition Date ”).

2.3 Consideration

Under the terms of the BCA, EHTC issued 21,428,572 common shares (the “ Issued Shares ”) to the WRT shareholders at a deemed per share price of $0.70 for a total of $15 million. Certain holders of the Issued Shares have agreed to enter into lock-up agreements whereby 25% of their Issued Shares will be free-trading on the closing of the Acquisition, 25% of their Issued Shares will be held for a period of four months and one day after the closing of the Acquisition, and the balance of their Issued Shares will become freetrading eight months after the closing of the Acquisition.

Concurrently to the WRT Acquisition, EHTC raised net proceeds of approximately $3.5 million from the sale of subscription receipts through EHTC’s special purpose vehicle, EHT Financing Inc. (“ Finco ”), which subscription receipts were automatically converted into units of EHTC (“ Units ”) on closing of the WRT Acquisition. Each Unit consisted of one common share and one common share purchase warrant with each common share purchase warrant exercisable for a period of 24 months after closing at a per share exercise price of $1.00.

As a condition of closing the Transaction, the Company also entered into agreements with certain of its debtors and creditors, including certain debentureholders to settle an aggregate of $14,228,109.94 in debt through the issuance of 20,325,871 common shares of the Company (the “ Settlement Shares ”), at a deemed price of CAD $0.70 per Settlement Share.

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2.4 Effect on Financial Position

Through this set of transactions, EHTC has been able to significantly clean up its balance sheet and will continue to work on cleaning up the balance sheet by voluntarily putting its subsidiary, EnerDynamic Hybrid Technologies Inc. (“ EHTI ”), into bankruptcy to reduce the consolidated liabilities by over $12 million. EHTI has not done any business over the last few years. EHTC’s audited financial statements have been filed on SEDAR at www.sedar.com on April 6, 2021.

EHTC presently has no plans for material changes in the business or affairs of WRT that may have a significant effect on the financial performance or financial position of EHTC.

2.5 Prior Valuations

To the knowledge of EHTC, there has not been any valuation opinion obtained within the last 12 months by either EHTC or WRT required by securities legislation or a Canadian exchange or market to support the consideration paid by EHTC for the WRT Acquisition.

2.6 Parties to Transaction

WRT was not an informed person (as such term is defined in section 1.1 of National Instrument 51-102 Continuous Disclosure Obligations ), associate or affiliate of EHTC prior to the WRT Acquisition.

2.7 Date of Report

September 10, 2021.

Item 3 Financial Statements and Other Information

The following financial statements required by Part 8 of National Instrument 51-102 Continuous Disclosure Obligations are included in this report:

1. Audited Financial Statements of WRT

The audited comparative consolidated financial statements of WRT as at and for the year ended December 31, 2020, together with the notes thereto are included in this business acquisition report. The auditor was not engaged to consent to the inclusion of their audit report in this business acquisition report.

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2. Audited Financial Statements of EHTC

The audited annual consolidated financial statements of EHTC for the year ended November 30, 2020, together with the notes thereto, and the management discussion and analysis related to the financial statements are included in this business acquisition report. The auditor was not engaged to consent to the inclusion of their audit report in this business acquisition report.

NOTE REGARDING FORWARD-LOOKING STATEMENTS

The statements herein that are not historical facts are forward-looking statements. Forward-looking information relating to sales of the products (the “Opportunities”) involves risk, uncertainties and other factors that could cause actual events, results, performance, prospects, for the Opportunities to differ materially from those expressed or implied by such forward-looking information. Although EHTC believes that the assumptions used in preparing the forward-looking information on the Opportunities outlined in this business acquisition report are reasonable, undue reliance should not be placed on such information, which only applies as of the date of this business acquisition report, and no assurance can be given that such events will occur in the disclosed time frames or at all. EHTC disclaims any intention or obligation to update or revise any forward-looking information, whether a result of new information, future events or otherwise, other than as required by applicable securities laws.

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Financial Statements of

WINDULAR RESEARCH AND TECHNOLOGIES, INC.

And Independent Auditors’ Report thereon Years ended December 31, 2020 and 2019

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KPMG LLP Claridge Executive Centre 144 Pine Street Sudbury Ontario P3C 1X3 Canada Telephone (705) 675-8500 Fax (705) 675-7586

INDEPENDENT AUDITORS’ REPORT

To the Shareholders of Windular Research and Technologies, Inc.

Qualified Opinion

We have audited the financial statements of Windular Research and Technologies, Inc. (the “Company”), which comprise:

the statements of financial position as at December 31, 2020 and December 31, 2019
• the statements of loss and comprehensive loss for the years then ended
the statements of changes in shareholder’s equity for the years then ended
the statements of cash flows for the years then ended
and notes to the financial statements, including a summary of significant accounting policies

(Hereinafter referred to as the “financial statements”).

In our opinion, except for the possible effects on the comparative information of the matter described in the “Basis for Qualified Opinions” section of our auditors’ report, the accompanying financial statements present fairly, in all material respects, the financial positions of the Company as at December 31, 2020 and December 31, 2019, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards (IFRS).

Basis for Qualified Opinion

We were not able to observe the counting of the physical inventories at December 31, 2018 and December 31, 2019 or to be satisfied concerning those inventory quantities by alternative means.

Therefore, since opening inventories as of January 1, 2020 and January 1, 2019 enter into the determination of results of operations and cashflows, we were not able to determine whether adjustments might be necessary to:

the carrying amount of inventory reported in the statement of financial position as at December 31, 2019
the cost of sales and loss and comprehensive loss reported in the statement of loss and comprehensive loss for the years ended December 31, 2020 and December 31, 2019
the loss and comprehensive loss reported in the changes in shareholder’s equity for the years ended December 31, 2020 and December 31, 2019
the components of cash flows from operating activities reported in the statement of cash flows for the year ended December 31, 2019.

© 2020 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

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Our opinion on the statements of financial position, statements of loss and comprehensive loss and cash flows for the years ended December 31, 2020 and December 31, 2019 were qualified accordingly because of the possible effects of this limitation in scope.

We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the “ Auditors’ Responsibilities for the Audit of the Financial Statements ” section of our auditors’ report.

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

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

Responsibilities of Management and Those Charged with Governance

for the Financial Statements

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

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

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

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists.

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

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

We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.

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The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

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Chartered Professional Accountants, Licensed Public Accountants

Sudbury, Canada March 25, 2021

WINDULAR RESEARCH AND TECHNOLOGIES, INC.

Statements of Financial Position

December 31, 2020, December 31, 2019 and January 1, 2019

		December 31,		December 31,		January 1,
		2020		2019		2019
						(unaudited)
Assets
Current assets:
Cash	$	403,147	$	631,648	$	1,473,310
Accounts receivable		215,027		320,684		143,672
Inventory (note 3)		172,660		532,753		369,025
		790,834		1,485,085		1,986,007
Equipment (note 4)		46,109		53,769		38,523
Intangible asset (note 5)		382,300		382,300		382,300
	$	1,219,243	$	1,921,154	$	2,406,830
Liabilities and Shareholder's Equity
Current liabilities:
Accounts payable and accrued liabilities (note 6)	$	56,682	$	33,848	$	110,541
Notes payable		-		-		53,000
Deposits payable		-		452,193		260,757
Currentportion of long-term debt(note 7)		185,371		95,184		155,382
		242,053		581,225		579,680
Long-term debt(note 7)		100,463		200,273		295,457
		342,516		781,498		875,137
Shareholder's equity
Share capital (note 8)		3,326,640		3,326,640		3,270,640
Deficit		(2,449,913)		(2,186,984)		(1,738,947)
		876,727		1,139,656		1,531,693
Commitments and contingencies (note 9)
Effects of COVID-19 (note 15)
	$	1,219,243	$	1,921,154	$	2,406,830

See accompanying notes to financial statements.

Approved on behalf the Board:

Director

WINDULAR RESEARCH AND TECHNOLOGIES, INC.

Statements of Loss and Comprehensive Loss

Years ended December 31, 2020 and December 31, 2019

		2020		2019
Sales	$	742,010	$	154,070
Cost of sales		557,164		122,608
		184,846		31,462
Expenses:
Consulting fees (note 12)		201,657		192,000
Project development costs (note 12)		156,000		148,000
Rent (note 12)		47,480		47,480
Travel		23,275		37,120
Professional fees		49,892		12,307
Amortization of equipment		21,027		15,402
Advertising		6,500		9,592
Office and general		14,470		8,812
Interest on long-term debt and notes payable		10,151		17,273
Insurance		10,075		6,537
Repairs and maintenance		1,996		-
Meals and entertainment		1,902		3,764
Interest and bank charges		865		908
Bad debts		16,932		-
		562,222		499,195
Loss before undernoted items		(377,376)		(467,733)
Other income (expenses):
Scientific research and development tax credits		81,467		57,437
Realized gain (loss) on foreign exchange		25,145		(52,913)
Unrealizedgain on foreign exchange		7,835		15,172
		114,447		19,696
Loss and comprehensive loss for theyears	$	(262,929)	$	(448,037)

See accompanying notes to financial statements.

WINDULAR RESEARCH AND TECHNOLOGIES, INC.

Statements of Changes in Shareholder's Equity

Years ended December 31, 2020 and December 31, 2019

	Number of		Share
	Shares		Capital		Deficit		Total
Balance, January 1, 2019 (unaudited)	191,528,203	$	3,270,640	$	(1,738,947)	$	1,531,693
Conversion of note payable	1,611,947		56,000		-		56,000
Loss and comprehensive loss for the year	-		-		(448,037)		(448,037)
Balance, December 31, 2019	193,140,150		3,326,640		(2,186,984)		1,139,656
Loss and comprehensive loss for the year	-		-		(262,929)		(262,929)
Balance, December 31, 2020	193,140,150	$	3,326,640	$	(2,449,913)	$	876,727

See accompanying notes to financial statements.

WINDULAR RESEARCH AND TECHNOLOGIES, INC.

Statements of Cash Flows

Years ended December 31, 2020 and December 31, 2019

		2020		2019
Cash provided by (used in):
Operating activities:
Loss and comprehensive loss for the year	$	(262,929)	$	(448,037)
Items not involving cash:
Amortization of equipment		21,027		15,402
Implicit interest expense		9,500		15,443
Unrealized foreign exchangegain		(7,835)		(15,172)
		(240,237)		(432,364)
Changes in non-cash working capital:
Decrease (increase) in accounts receivable		105,657		(177,012)
Decrease (increase) in inventory		360,093		(163,728)
Increase (decrease) in accounts payable and accrued liabilities		22,834		(76,693)
Increase(decrease)in depositspayable		(452,193)		191,436
		(203,846)		(658,361)
Investing activities:
Purchase of equipment		(13,367)		(30,648)
Financing activities:
Repayment of long-term debt		(11,288)		(152,653)
Increase in cash during the years		(228,501)		(841,662)
Cash, beginning of years		631,648		1,473,310
Cash, end ofyears	$	403,147	$	631,648

See accompanying notes to financial statements.

WINDULAR RESEARCH AND TECHNOLOGIES, INC.

Notes to Financial Statements

Years ended December 31, 2020 and December 31, 2019

1. Nature of Operations:

Windular Research and Technologies, Inc. (the "Company" or "WRTI") was incorporated on November 13, 2012 under the laws of Ontario. The Company provides energy solutions to telecom tower owner, operators and carriers utilizing existing tower assets as a benefit.

The Company's head office is located at Chelmsford, Ontario, Canada.

The financial statements are for the Company as at and for the years ended December 31, 2020 and December 31, 2019.

2. Significant accounting policies:

The accounting policies set out below have been applied consistently in all years presented in these financial statements.

(a) Statement of compliance:

These are the Company’s first financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (the IASB).

(b) Adoption of IFRS:

These are the Corporation’s first financial statements prepared in accordance with IFRS and IFRS1 First-time Adoption of International Financial Reporting Standards has been applied. The Company did not prepare previous audited financial statements. As a result, a transition note has not been included within these financial statements.

The financial statements were approved by the shareholders on March 25, 2021.

These financial statements were prepared using the historical cost basis of measurement.

(d) Functional and presentation currency:

The Company’s functional and presentation currency is the Canadian dollar.

(e) Use of estimates and judgments:
(i) Assumptions and estimation uncertainty:

The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses and disclosure of contingent assets and liabilities. Actual results may differ from those estimates.

WINDULAR RESEARCH AND TECHNOLOGIES, INC.

Notes to Financial Statements

Years ended December 31, 2020 and December 31, 2019

2. Significant accounting policies (continued):

(e) Use of estimates and judgments (continued):
(i) Assumptions and estimation uncertainty (continued):

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimates are revised and in any future periods affected. Information about assumptions and estimation uncertainties that have a significant risk of resulting in material adjustment is included in the following notes:

Note 4 – Equipment
Note 9 – Commitments and contingencies
(f) Cash:

Cash is defined as cash on hand, deposits with banks and other highly liquid investments with terms to maturity of ninety days or less at the date of purchase.

(g) Revenue recognition:

Sale of goods:

The revenue standard has established a five step model for recognizing revenue from customer contracts. It requires revenue to be recognized when control of goods and services are transferred to the customer. The supply of goods and services comprises manufacturing and installation of energy system solutions.

The Company's revenues are recognized at a point in time upon completion of the installation of the system. The transfer of control is identified taking place by considering indicators such as, but not limited to: significant risks and rewards of ownership, transferred physical possession, the customer has accepted the asset, present right to payment and legal title of goods and services and the customer has accepted the goods.

Government contributions:

Government grants are recognized when there is reasonable assurance that the grant will be received, and that the entity will comply with the conditions attached to them. Grants are recognized in profit or loss over the same periods as the related costs that they are intended to compensate, on a systematic basis.

Grants related to capital assets are presented by deducting the grant from the carrying amount of the capital asset.

(h) Intangible asset:

Intangible asset, which represents the license agreement for a patent, is stated at cost less accumulated impairment losses.

Subsequent expenditures are capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditures, including expenditures on research and internally generated goodwill is recognized as an expense as incurred.

The intangible asset is not amortized as it is considered an indefinite life intangible as the purchase agreement allows for five year extensions in perpetuity.

WINDULAR RESEARCH AND TECHNOLOGIES, INC.

Notes to Financial Statements

Years ended December 31, 2020 and December 31, 2019

2. Significant accounting policies (continued):

(i) Equipment:

Equipment is stated at cost less accumulated amortization and impairment losses. Cost includes expenditures that are directly attributable to the acquisition or construction of the asset when those costs are necessarily incurred for the asset to function in the manner intended by management and the net costs of dismantling and removing the leased items and restoring the site on which they are located. When parts of an item of property and equipment have different useful lives, they are accounted for as separate items of property and equipment.

All assets having limited useful lives are depreciated using the straight-line or declining balance method over their estimated useful lives. In the year of acquisition, assets depreciated at one half of the annual rate. Assets under development are not amortized until they are put in use.

The methods of amortization and amortization rates applicable for each class of asset are as follows:

Equipment	20% declining balance
Computer hardware	55% declining balance
Wind turbine	50% declining balance

The cost of replacing a component of property and equipment is capitalized if it is probable that future economic benefits embodied within the component will flow to the Company. The carrying amount of the replaced component is derecognized. Depreciation methods, useful lives, and residual values are reviewed at each reporting date and adjusted prospectively if appropriate.

Costs of routine maintenance and repair are expensed in the period they are incurred.

(j) Impairment:
(i) Financial assets measured at amortized cost:

A loss allowance for expected credit losses on financial assets measured at amortized cost is recognized at the reporting date. The loss allowance is measured at an amount equal to the lifetime expected credit losses for that asset.

WINDULAR RESEARCH AND TECHNOLOGIES, INC.

Notes to Financial Statements

Years ended December 31, 2020 and December 31, 2019

2. Significant accounting policies (continued):

(j) Impairment (continued):
(ii) Non-financial assets:

Non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Indefinite life intangible assets are assessed for impairment on an annual basis.

Where the carrying value of an asset exceeds its recoverable amount, which is the higher of value in use and fair value less cost to sell, the asset is written down accordingly.

For the purpose of determining value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

When it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the asset's cash-generating unit, which is the lowest group of assets in which the asset belongs for which there are separately identifiable cash flows. Impairment charges are included in operations.

(k) Financial instruments:

All financial assets and all financial liabilities are recognized initially at fair value plus any directly attributable transaction costs. Subsequently, they are measured at amortized cost using the effective interest method less any impairment for the financial assets as described in note 2 (j).

Hedge accounting has not been used in the preparation of these financial statements.

(l) Foreign currency transactions:

At the transaction date, each asset, liability, revenue and expense denominated in a foreign currency is translated into Canadian dollars by the using the exchange rate in effect at that date.

At the year-end date, unsettled monetary assets and liabilities are translated into Canadian dollars by using the exchange rate in effect at the year-end date and the related translation differences are recognized in operations. Exchange rate gains and losses arising on the retranslation of monetary financial assets are treated as a separate component of the change in fair value and recognized in operations. Exchange gains and losses on non-monetary financial assets form part of the overall gain or loss recognized in respect of that financial asset.

Non-monetary assets and liabilities that are measured at historical cost are translated into Canadian dollars by using the exchange rate in effect at the date of the initial transaction and are not subsequently restated.

WINDULAR RESEARCH AND TECHNOLOGIES, INC.

Notes to Financial Statements

Years ended December 31, 2020 and December 31, 2019

2. Significant accounting policies (continued):

(m) Income taxes:

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income.

Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at period end, adjusted for amendments to tax payable with regards to previous years.

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit; and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. Deferred tax is measured at the tax rates expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

3. Inventory:

	December 31,	December 31,	December 31,	December 31,	January 1,	January 1,
		2020		2019		2019
						(unaudited)
Raw materials	$	172,660	$	146,537	$	67,635
Work in progress		–		386,216		301,390
	$	172,660	$	532,753	$	369,025

WINDULAR RESEARCH AND TECHNOLOGIES, INC.

Notes to Financial Statements

Years ended December 31, 2020 and December 31, 2019

4. Equipment:

Cost:

				Computer		Wind
		Equipment		Hardware		Turbine		Total
Balance, January 1, 2019 (unaudited)	$	94,679	$	735	$	17,445	$	112,859
Additions		4,900		25,748		-		30,648
Balance, December 31, 2019		99,579		26,483		17,445		143,507
Additions		-		13,367		-		13,367
Balance, December 31, 2020	$	99,579	$	39,850	$	17,445	$	156,874

Accumulated amortization:

				Computer		Wind
		Equipment		Hardware		Turbine		Total
Balance, January 1, 2019 (unaudited)	$	56,575	$	724	$	17,037	$	74,336
Additions		8,111		7,087		204		15,402
Balance, December 31, 2019		64,686		7,811		17,241		89,738
Additions		6,979		13,946		102		21,027
Balance, December 31, 2020	$	71,665	$	21,757	$	17,343	$	110,765

Net book value:

				Computer		Wind
		Equipment		Hardware		Turbine		Total
At January 1, 2019 (unaudited)	$	38,104	$	11	$	408	$	38,523
At December 31, 2019		34,893		18,672		204		53,769
At December 31, 2020		27,914		18,093		102		46,109

WINDULAR RESEARCH AND TECHNOLOGIES, INC.

Notes to Financial Statements

Years ended December 31, 2020 and December 31, 2019

5. Intangible asset:

The cost of the intangible asset, which relates to a license agreement for patents is $382,300. This amount has not changed from the date of purchase on July 20, 2018. The intangible has been classified as an indefinite life intangible asset given that the agreement for this license will be extended every five years in perpetuity. As a result, an impairment assessment is completed annually for this intangible asset.

The recoverable amount for this asset was based on fair value less costs of disposal, estimated using discounted cash flows. The fair value measurement was categorized as a level 3 fair value based in the inputs in the valuation technique.

In completing the impairment assessment, the carrying amount was compared to the recoverable amount. The recoverable amount was determined based on the estimated future cash flows the Company expects to derive from the asset from both continuing use and from its ultimate disposal. Based on the assessment completed an impairment was not required as of December 31, 2020.

6. Accounts payable and accrued liabilities:

	December 31,	December 31,	December 31,	December 31,	January 1,
		2020		2019	2019
					(unaudited)
Accounts payable and accrued liabilities	$	51,329	$	33,848	$ 110,541
Government remittances		5,353		–	–
	$	56,682	$	33,848	$ 110,541

WINDULAR RESEARCH AND TECHNOLOGIES, INC.

Notes to Financial Statements

Years ended December 31, 2020 and December 31, 2019

7. Long-term debt:

	December 31,	December 31,	December 31,	December 31,	January 1
		2020		2019	2019
					(unaudited)
EJB LLC, unsecured, interest-free loan, calculated
with interest at 3.7% per annum using the effective
interest rate method, with annual principal payments
of $70,000 (USD)	$	257,804	$	253,783	$ 396,699
3.7%, Northern Ontario Heritage Fund (“NOHFC”)
term loan, repayable in monthly installments of
$1,191 including interest, due January 2023		28,030		41,674	54,140
		285,834		295,457	450,839
Less: current portion		185,371		95,184	155,382
	$	100,463	$	200,273	$ 295,457

As part of the agreement with NOHFC, the Company had received an original contribution in the amount of $48,000 and a loan of $65,160. The contribution and loan was received in 2016 to finance eligible project costs as detailed in the agreement. As a result, the contribution received was received as revenue in the year the contribution was received. In the event of default or receivership, the NOHFC may demand immediate repayment of the outstanding balance of the term loan and the original contribution provided in the amount of $48,000 plus accrued interest at 3.7% per annum.

The classification of the loan balance between current and non-current in the statement of financial position, as well as the disclosure of principal payments required over the next five years are as follows:

2021	$	185,371
2022		99,876
2023		587

8. Share capital:

The Company is authorized for an unlimited number of common shares.

9. Commitments and contingencies:

The Company will pay royalties to EJB LLC commencing on July 20, 2023 at a rate of $100 (USD) per licensed product sold by the Company and $100 (USD) per licensed product sold by an authorized sublicensee of the licensee.

WINDULAR RESEARCH AND TECHNOLOGIES, INC.

Notes to Financial Statements

Years ended December 31, 2020 and December 31, 2019

10. Deferred income taxes:

The provision for income taxes recorded in the statement of loss and comprehensive loss differs from the amount which would be obtained by applying the statutory income tax rate of 26.5% (December 31, 2019 – 26.5%) to the earnings for the years as follows:

		2020		2019
Loss for theyear before income taxes	$	(262,929)	$	(448,037)
Anticipated income tax recovery	$	(70,000)	$	(119,000)
Tax effect of the following:
Change in valuation allowance		70,000		119,000
Income tax recovery	$	–	$	–

The Significant components of Company’s deferred income tax balances are as follows:

	December 31,	December 31,	December 31,	December 31,	January 1,	January 1,
		2020		2019		2019
					(unaudited)
Deferred tax assets:
Non-capital loss carry-forwards	$	571,000	$	488,000	$	372,000
Intangible assets		3,000		10,000		9,000
Unrealizedforeignexchange		–		–		4,000
		574,000		498,000		385,000
Deferred tax liability:
Equipment		(6,000)		(7,000)		(4,000)
Long-term debt		(3,000)		(5,000)		(9,000)
Research and development credits		(22,000)		(15,000)		(20,000)
Unrealized foreign exchange		(2,000)		–		–
		(33,000)		(27,000)		(33,000)
Valuation Allowance		(541,000)		(471,000)		(352,000)
Net deferred tax asset (liability)	$	–	$	–	$	–

The Company has certain temporary differences that have not been recognized as a deferred tax asset as at December 31, 2020 and December 31, 2019. It was determined, that in the opinion of management, it is not probable that tax benefit will be realized in the foreseeable future.

‐ The company has non capital tax losses of approximately $2,150,000 (December 31, 2019 - $1,840,000) carried forward from prior years which can be applied to reduce future years' taxable income. These noncapital losses will begin to expire in 2033. The portion of non-capital tax losses included in the table above have not been recognized as deferred tax assets within these financial statements. The unrecognized portion of the tax losses will be reviewed on an annual basis and the tax benefit recognized when it is determined to be probable that they will be realized.

WINDULAR RESEARCH AND TECHNOLOGIES, INC.

Notes to Financial Statements

Years ended December 31, 2020 and December 31, 2019

11. Critical accounting estimates and judgments:

The Company makes estimates and assumptions about the future that affect the reported amounts of its assets and liabilities. Estimates and judgments are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions.

The effect of a change in accounting estimate is recognized prospectively by including it in operations in the period of the change, if the change affects that period only or in the period of change and future periods, if the change affects both.

The estimates and assumptions that have significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows:

(a) Income and sales taxes:

The Company periodically assesses its liabilities and contingencies related to current and deferred income taxes as well as sales taxes for all years open to audit based on the latest information available. For matters where it is probable that an adjustment will be made, the Company records its best estimate of the tax liability including the related interest and penalties. Management believes that they have adequately provided for the probable outcome of these matters, however, the final outcome may result in a materially different outcome than the amount included in the tax liabilities.

(b) Amortization expense:

In the determination of amortization rates, the Company makes judgments about the useful lives of its property and equipment. Management has based these judgments on information provided by the manufacturer of the equipment.

The Company determines that its property and equipment and its investments are impaired when there has been a significant or prolonged decline in fair value below its carrying amount. The determination of what is significant or prolonged requires judgment. In making these judgments, the Company considers, among other factors, the financial health of the investee, future power generation potential and forecasted maintenance costs.

(d) Impairment of financial assets:

The Company determines that its financial assets are impaired when there is objective evidence of a decline in fair value below the carrying amount. The interpretation of the objective evidence requires judgment. In making these judgments, the Company considers, among other factors, the financial health of the investee and default or delinquency in interest or principal payments.

WINDULAR RESEARCH AND TECHNOLOGIES, INC.

Notes to Financial Statements

Years ended December 31, 2020 and December 31, 2019

11. Critical accounting estimates and judgments (continued):

(e) Impairment of intangible assets:

The Company determines that its intangible asset is impaired when the carrying value of the intangible asset exceeds the recoverable amount which is defined as higher of the fair value less disposal costs and the value-in-use. The determination of the recoverable amount requires judgment. In making these judgments the Company considers, among other factors, forecasted sales and forecasted cash flows associated with the disposition of the intangible asset.

12. Related party transactions:

The Company made the following purchases from and payments to certain Directors and Officers or from companies controlled by these parties:

		2020		2019
Reimbursement of travel expenditures	$	22,875	$	37,120

Included in accounts payable and accrued liabilities is $7,976 (December 31, 2019 - $10,594) of amounts owing to the above-referenced related parties.

During the year, the Company rented office and warehouse space from a related party. The total rent for 2020 was $47,480 (December 31, 2019 - $47,480). There was no payable at year-end for the rent for the year ended December 31, 2020 or December 31, 2019.

During the year, the Company purchased services from companies owned by the directors of the company. The total amounts paid during 2020 was $1,495 (December 31, 2019 - $13,226).

Key management personnel compensation:

The remuneration of the managing directors were as follows:

		2020		2019
Consulting fees	$	201,657	$	192,000
Project development fees		156,000		148,000

WINDULAR RESEARCH AND TECHNOLOGIES, INC.

Notes to Financial Statements

Years ended December 31, 2020 and December 31, 2019

13. Capital management:

The Company's objectives with respect to capital management are to maintain a sufficient capital base to meet its obligations under its long-term debt and to maintain or increase current operating levels. A secondary objective is to accumulate additional capital to allow the Company to pursue new alternative energy development projects in its operating region. The Company considers its capital structure to be the shareholders’ equity at December 31, 2020 of $876,727 (December 31, 2019 - $1,139,656) and long-term debt of $285,834 (December 31, 2019 - $295,457).

Funds have been primarily secured through equity capital raised and long-term debt.

The Company invests all capital that is surplus to its immediate operational needs in short-term, liquid and highly-rated financial instruments, such as cash and other short-term guaranteed deposits, and all are held in a major Canadian chartered bank.

The Company is not subject to any externally imposed capital requirements and has not changed its objectives, policies or processes for managing capital during the current year.

14. Financial risk factors:

A summary of the Company’s risk exposures as it relates to financial instruments are reflected below:

(a) Credit risk:

Credit risk relates to cash and accounts receivable.

The Company is not exposed to major credit risks attributable to customers.

The Company’s cash is held in a major Canadian chartered bank and the Company has no investments in non-bank asset-backed commercial paper.

The Company’s exposure to credit risk at December 31, 2020 and December 31, 2019 was the carrying value of the cash and accounts receivable.

(b) Liquidity risk:

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. At December 31, 2020, the Company has cash and accounts receivable of $618,174 (December 31, 2019 - $952,332) to meet its planned operating and capital expenditures, cover its administrative costs, and meet current liabilities of $242,053 (December 31, 2019 - $581,225).

Interest rate risk - The Company had $403,147 in cash (December 31, 2019 - $631,648). The Company holds cash in an interest-bearing account held in a major Canadian chartered bank. The Company periodically assesses the quality of its investments with the bank and is satisfied with the credit rating of the bank.

WINDULAR RESEARCH AND TECHNOLOGIES, INC.

Notes to Financial Statements

Years ended December 31, 2020 and December 31, 2019

14. Financial risk factors (continued):

(d) Foreign currency risk:

Foreign currency risk is the risk that a variation in the exchange rates between the Canadian dollar and foreign currencies could affect the Company’s operating and financial results. The Company is exposed to foreign currency risk as the Company holds cash in foreign currencies and has other financial assets and liabilities that are denominated in foreign currencies. The Company’s management monitors the exchange rate fluctuations on a regular basis and does not use currency derivative instruments to manage its exposure to foreign currency fluctuations.

At December 31, 2020, the carrying amounts of the Company’s foreign currencydenominated net financial liabilities are approximately as follows:

				Effect of 10%
			change in exchange
	Net	financial liabilities		rate on loss
U.S. dollar	$	202,596	$	25,780

15. Effects of COVID-19:

The COVID-19 outbreak was declared a pandemic by the World Health Organization in March of 2020 and has continued to have a significant financial, market and social dislocating impact.

At the time of approval of these financial statements, the Company has experienced the following indicators of financial implications and undertaken the following activities in relation to the COVID-19 pandemic;

The implementation of working from home requirements for those able to do so

At this time, these factors present uncertainty over future cash flows, which could potentially cause changes to the assets or liabilities and may have an impact on future operations. An estimate of the financial effect is not practicable at this time.

April 6, 2021

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NOTICE TO READER

The accompanying consolidated financial statements of EnerDynamic Hybrid Technologies Corp. for the year ended November 30, 2020, which includes comparison period information for the year ended November 30, 2019, have been revised to comply with the Canadian Auditing Standard (CAS) 720, The Auditor’s Responsibilities relating to Other Information .

The consolidated financial statements, filed on March 30, 2021, did not include a clause related to “Other Information” within the Independent Auditor’s Report issued by the Company’s auditors.

The accompanying revised consolidated financial statements for the year ended November 30, 2020, which includes comparison period information for the year ended November 30, 2019, contains the amended Independent Auditor’s Report.

The revised consolidated financial statements reflect only the addition of the above clause to the Independent Auditor’s Report.

Except as set forth in this notice to reader, no other changes have been made.

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EnerDynamic Hybrid Technologies Corp.

Consolidated Financial Statements For the Year Ended November 30, 2020

(Expressed in Canadian Dollars)

EnerDynamic Hybrid Technologies Corp.

Consolidated Financial Statements For the Year Ended November 30, 2020 and 2019 (Expressed in Canadian Dollars)

Independent Auditor’s Report
Consolidated Statements of Financial Position	1
Consolidated Statements of Operations and Comprehensive Loss	2
Consolidated Statements of Changes in Shareholders’ Equity	3
Consolidated Statements of Cash Flow	4
Notes to the Consolidated Financial Statements	5-32

COVID-19

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INDEPENDENT AUDITOR'S REPORT

To the Shareholders of EnerDynamic Hybrid Technologies Corp.

Opinion

We have audited the accompanying consolidated financial statements of EnerDynamic Hybrid Technologies Corp. (the "Company") which comprise the statements of financial position as at November 30, 2020 and 2019, and the statements of operations and comprehensive loss, changes in shareholders' deficiency and cash flows for the years then ended, and a summary of significant accounting policies and other explanatory information.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at November 30, 2020, and 2019, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards ("IFRS").

Basis for Opinion

We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audits of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note 2 to the consolidated financial statements, which indicates that the Company incurred a net loss of $5,500,096 during the year ended November 30, 2020 and, as of that date, the Company had a deficit of $93,311,494 and a shareholders' deficiency of $32,393,281. These conditions, along with other matters as set forth in Note 2 indicate the existence of a material uncertainty that cast significant doubt about the ability of the Company to continue as a going concern. The consolidated financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified in respect of this matter.

INDEPENDENT AUDITOR'S REPORT

Other information

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

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

In connection with our audits of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audits or otherwise appears to be materially misstated. We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

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

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

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

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

INDEPENDENT AUDITOR'S REPORT

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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

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

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

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MISSISSAUGA, Ontario March 30, 2021

Chartered Professional Accountants Licensed Public Accountants

EnerDynamic Hybrid Technologies Corp. Consolidated Statements of Financial Position As at November 30, 2020 and 2019

As at November 30, 2020 and 2019
		2020	2019
	Notes	$	$
Assets
Current Assets
Cash		184,889	132,825
Accounts receivable	7	113	11,014
Inventories	8	392,090	609,411
Prepaid expenses	9	246,369	168,915
Other current assets	10	77,889	303,678
Due from relatedparty	14	144,548	-
		1,045,898	1,225,843
Non-Current Assets
Property and equipment (net)	11	176,363	324,062
Right-of-Use asset (net)	19	1,015,034	-
Intangible assets(net)		1	1
		1,191,398	324,063
		2,237,296	1,549,906
Liabilities and Shareholders’ Equity (Deficiency)
Current Liabilities
Accounts payable and accrued liabilities		10,936,288	11,461,598
Current portion of lease liability	19	280,512	-
Debenture interest payable	16	8,308,007	6,559,001
Due to related parties	14	1,025,788	1,000,119
Convertible 6.5% debenture payable	16	3,000,000	3,000,000
18% debenturespayable	16	10,070,500	10,070,500
		33,621,095	32,091,218
Non-Current Liabilities
Canada government loan	17	80,000	-
Lease liability	19	929,482	-
		1,009,482	-
		34,630,577	32,091,218
Shareholders’ Equity (Deficiency)
Share capital	13	36,832,886	35,420,461
Contributed surplus		6,368,889	5,895,889
Warrants	13	17,716,438	15,953,736
Deficit		(93,311,494)	(87,811,398)
		(32,393,281)	(30,541,312)
		2,237,296	1,549,906

Approved on behalf of the board

“Signed” “Signed”

John Gamble, Director

Bruce Bent, Director

See accompanying notes

EnerDynamic Hybrid Technologies Corp. Consolidated Statements of Operations and Comprehensive Income (Loss) For the Years Ended November 30, 2020 and 2019

		2020	2019
	Note	$	$
Revenue
Product revenues	4	219,269	135,714
		219,269	135,714
Direct Cost of Revenue
Cost of goods sold		208,118	78,836
Production related costs		176,147	249,172
Production related occupancy		43,602	362,933
Production related amortization	11,12	238,425	301,540
Inventory and license fee written down	8	63,055	216,385
Government wage subsidy		(270,071)	-
		459,276	1,208,866
Gross Loss		(240,007)	(1,073,152)
Expenses
General and administrative		944,060	803,874
Marketing and promotion		64,344	1,108
Travel		65,669	98,897
Stock-based compensation expense	13	473,000	323,000
Administrative related occupancy		71,269	96,520
Administrative related amortization	11	29,245	16,511
Research and development	4	846,491	966,170
Legal and professional		296,753	312,176
Regulatory		183,951	134,657
Bad debt expense		288	163,158
Loss (gain) on foreign exchange		(65,641)	(21,683)
Interest expense	16,19	2,194,822	1,918,438
Total Expenses		5,104,251	4,812,826
Loss Before Other Income(Expenses)		(5,344,258)	(5,885,978)
(Gain)/Loss on disposal of assets	4	(10,632)	58,790
Re-location expense		647	41,106
Project Advance write-down		-	300,000
Legal settlementprovision		165,823	4,183,739
Total Other(Income) Expenses		155,838	4,583,635
Net and Comprehensive Loss		(5,500,096)	(10,469,613)
Basic and diluted weighted average number of shares: 15		387,559,653	312,739,003
Basic and diluted loss per share:		($0.01)	($0.03)

See accompanying notes

EnerDynamic Hybrid Technologies Corp. Consolidated Statements of Changes in Shareholders’ Equity (Deficiency) For the Years Ended November 30, 2020 and 2019

	Common Shares Amount	2020 $ Common Shares Amount	2019 $
Common share capital Balance at the beginning of the year Common shares issued for private placements Common shares issuance on conversion of debts Share issue costs Balance at the end of the year Equity Portion of Debentures Balance at the beginning of the year Addition and/or adjustments Balance at the end of the year Total Share Capital Contributed surplus Balance at the beginning of the year Issuance of stock-based compensation Balance at the end of the year Warrants capital Balance at the beginning of the year Warrants issued for private placements Issuance of warrants on account of debt Balance at the end of the year Accumulated deficit Balance at the beginning of the year Net and comprehensive loss for the year Balance at the end of the year Total shareholders’ deficiency		35,272,434 275,698,215 866,429 49,500,000 788,471 14,778,000 (242,475) - 36,684,859 339,976,215 148,027 - 148,027 36,832,886 5,895,889 473,000 6,368,889 15,953,736 763,987 998,715 17,716,438 (87,811,398) (5,500,096) (93,311,494) (32,393,281)	33,960,941 1,099,613 367,287 (155,407)
	339,976,215
	36,059,400
	47,938,601
	-
	423,974,216		35,272,434
			148,027 -
			148,027

			35,420,461
			5,572,889 323,000
			5,895,889
			14,314,524 1,262,599 376,613
			15,953,736
			(77,341,785) (10,469,613)
			(87,811,398)

			(30,541,312)

EnerDynamic Hybrid Technologies Corp. Consolidated Statements of Cash Flows For the Years Ended November 30, 2020 and 2019

Consolidated Statements of Cash Flows For the Years Ended November 30, 2020 and 2019
	2020	2019
	$	$
Operating activities
Net loss for the year	(5,500,096)	(10,469,613)
Amortization	267,670	318,051
Non-cash stock-based compensation expense	473,000	323,000
Gain on sale of equipment	(10,632)	-
Non-cash interest	308,317	-
	(4,461,741)	(9,828,562)
Changes in non-cash working capital
Accounts receivable	10,901	165,487
Inventories	217,321	270,979
Prepaid expenses	(77,454)	113,123
Other current assets	225,789	(24,673)
Accounts payable and accrued liabilities	1,261,876	5,171,629
Debenture interest payable	1,749,006	1,807,586
Due from related parties	(144,548)	-
Due to related parties	25,669	(114,403)
	3,268,560	7,389,728
Investing activities
Capital asset additions	(2,310)	(53,590)
Proceeds on sale of equipment	19,850	-
	17,540	(53,590)
Financing activities
Common shares and warrants issued	1,387,941	2,206,805
Lease rent paid	(240,236)	-
Canada emergency loan	80,000	-
	1,227,705	2,206,805
Net increase (decrease) in cash	(52,064)	(285,619)
Cash, beginning of year	132,825	418,444
Cash, end ofyear	184,889	132,825

EnerDynamic Hybrid Technologies Corp. Notes to the Consolidated Financial Statements For the Year Ended November 30, 2020

1. Company Information

EnerDynamic Hybrid Technologies Corp. (“EHT Corp”, the “Company”) has its manufacturing facilities located at 6040 Progress Street, Niagara Falls, Ontario, L2G0C4. The Company is involved in the advancement of production and wholesale distribution of modular homes/buildings which integrate hybrid solar systems.

The common shares of the Company are traded under the symbol “EHT” on the Toronto Venture Exchange.

The Consolidated Financial Statements were approved by the Board of Directors on March 30, 2021.

2. Reporting Entity and Going Concern

Going Concern

During the year ended November 30, 2020 the Company reported a comprehensive loss of $5,500,096 (2019: $10,469,613) and, as of that date, the Company had a deficit of $93,311,494 (2019: $87,811,398), and a shareholders’ deficiency of $32,393,281 (2019: $30,541,312). These factors create material uncertainties that cast significant doubt on the Company’s ability to continue as a going concern.

Financial statements are required to be prepared on a going concern basis unless management either intends to liquidate the Company, or cease trading, or has no realistic alternative but to do so within the foreseeable future. These consolidated financial statements have been prepared on a going concern basis. The going concern basis of presentation assumes that the Company will continue in operation for the foreseeable future and be able to realize its assets and discharge its liabilities and commitments in the normal course of operations. Management has no plans to liquidate the Company or cease trading, nor does Management feel it has no alternative but to do so within the foreseeable future.

The Company’s operations and projects are funded through a combination of operational revenues, debt and equity financing. The Company’s ability to fund future operations and commitments could be dependent upon market conditions that influence its ability to obtain additional financing. Management believes that it can access capital through the issuance of financial instruments to the public markets to meet its working capital needs.

There is no assurance that the working capital will be sufficient to meet the Company’s future needs. There are uncertainties related to market conditions and events that may cast significant doubt about the Company’s ability to continue as a going concern, therefore, it may be unable to realize its assets or discharge its liabilities in the normal course of business.

3. Basis of Presentation

Statement of Compliance with International Financial Reporting Standards

These consolidated financial statements have been prepared in accordance with accounting policies consistent with International Accounting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”) in effect for the Company’s reporting year ended November 30, 2020. The accounting policies adopted are consistent with those of the previous financial year in addition to the adoption of IFRS 16 Leases policy.

EnerDynamic Hybrid Technologies Corp. Notes to the Consolidated Financial Statements For the Year Ended November 30, 2020

3. Basis of Presentation (continued)

Basis of Measurement, Functional and Presentation Currency

The Company’s consolidated financial statements have been prepared on the historical cost basis except for certain non-current assets and financial instruments, which are measured at fair value, as explained in Note 4 Summary of Significant Accounting Policies.

The consolidated financial statements are presented in Canadian dollars which is the Company’s functional currency.

Critical Accounting Judgments, Estimates and Assumptions

The preparation of these consolidated financial statements conforms with IFRS requirements that management make certain estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, and reported expenses during the period. These estimates and judgments are at times uncertain. The impacts of such estimates are pervasive throughout the consolidated financial statements and may result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from estimates made.

Revisions to accounting estimates are recognized in the period in which the estimate is revised and future years, if the revision affects both current and future years. These estimates are based on historical experience, current and future economic conditions and other factors which include expectations of future events that are believed to be reasonable under the circumstances.

Management has made estimates which relate to, but are not limited to, the following:

(i) The recoverability of accounts receivable that are included in the consolidated statements of financial position;
(ii) The net realizable value of the finished product inventories reported on the consolidated statements of financial position;
(iii) The useful lives of property and equipment used to depreciate the assets in the consolidated statements of financial position;
(iv) The assumptions underlying the Right of Use calculations associated with the premises lease that is included in the consolidated statements of financial position;
(v) The Company uses Black-Scholes for the purpose of warrant and stock option valuation.

4. Summary of Significant Accounting Policies

The consolidated financial statements have been prepared using accounting policies consistent with those used in preparing the annual financial statements for the year ended November 30, 2019 as well as IFRS 16 Leases policy adopted in the current fiscal year. Any significant accounting policies are presented to assist the reader in evaluating the financial results and, together with the following notes to the consolidated financial statements, should be considered an integral part of the consolidated financial statements.

Cash and Cash Equivalents

Cash consists of balances held with financial institutions, and other short-term highly liquid investments with maturities of three months or less from the purchase date.

EnerDynamic Hybrid Technologies Corp. Notes to the Consolidated Financial Statements For the Year Ended November 30, 2020

4. Summary of Significant Accounting Policies (continued)

Basis of Consolidation

The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries EHT Ontario Solar PV LP, EnerDynamic Hybrid Technologies Inc. (“EHT Inc.”) and EnerDynamic Building Systems Inc.(“EBS”). EHT Inc. has its own wholly-owned subsidiary EnerDynamic Corporation (“EC”). All subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operational policies of the entity so as to obtain benefits from its activities. Subsidiaries are fully consolidated from the date that control commenced until the date that such control ceases.

EnerDynamic Lux S. à r. l. ceased business on October 6, 2020 and was struck from the Luxembourg Business Registers. This company operated as a flow through entity and was deemed no longer necessary.

Inter-company balances, transactions, and any unrealized income and expenses, are eliminated in preparing the consolidated financial statements. Unrealized gains arising from transactions with subsidiaries are eliminated against the investment to the extent of the Company’s interest. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

Leases

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-ofuse asset is initially measured at cost and is subsequently amortized using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. The lease liability is subsequently measured at amortized cost using the effective interest method. The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a term of 12 months or less. The Company recognizes the lease payments associated with these leases as an operating expense on a straight-line basis over the lease term.

Property and Equipment

Property and equipment are reported at acquisition cost less depreciation and impairment losses. Depreciation rates and methods are reviewed annually and reported on a straight-line basis, at the following rates and period unless otherwise indicated:

	Method	Rates and period
Computer Equipment	Straight Line	30%
Office Equipment	Straight Line	15%
Production Equipment	Straight Line	15%
Warehouse Equipment	Straight Line	15%
Motor vehicle	Straight Line	3 years
Leaseholds	Straight Line	10 years
Right-of-Use asset	Straight Line	9 years

EnerDynamic Hybrid Technologies Corp. Notes to the Consolidated Financial Statements For the Year Ended November 30, 2020

4. Summary of Significant Accounting Policies (continued)

An item of property and equipment is derecognized upon disposal when held for sale or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on disposal of the asset, determined as the difference between the net disposal proceeds and the book value of the asset, is recognized in the consolidated statements of operations and comprehensive income or loss.

The Company conducts an annual review and assessment of the residual balances, useful lives and depreciation methods used for property and equipment. Any changes arising from the review is applied by the Company prospectively.

Research and Development

Research and development expenditures are recognized in the period in which they are incurred unless a development project meets the criteria under IFRS for deferral and amortization. The Company has not deferred any such development expenditures to date.

Related Parties

A related party is a person or an entity that is related to the Company.

a. A person or a close member of that person’s family is related to the Company if that person:
i. Has control or joint control over the Company, with the power to govern the Company’s financial and operating policies;
ii. Has significant influence over the Company, participating in financial and operating policy decisions, but not control over these policies; or
iii. Is a member of the key management personnel of the Company. Key management personnel, consistent with the definition under IAS 24, Related Party Disclosures , are persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, including any director of the Company.
b. An entity is related to a reporting entity if any of the following conditions applies:
i. The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).
ii. One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).
iii. Both entities are joint ventures of the same third party.
iv. One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
v. The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity.
vi. The entity is controlled or jointly controlled by a person identified in (a).
vii. A person identified in (a) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

EnerDynamic Hybrid Technologies Corp. Notes to the Consolidated Financial Statements For the Year Ended November 30, 2020

4. Summary of Significant Accounting Policies (continued)

Foreign Currency Translation

Items included in the consolidated financial statements are measured using the currency of the primary country in which the entity operates (the "base currency"). The Company’s consolidated financial statements are presented in Canadian dollars, the base currency of the Company. Foreign currency transactions are translated into the base currency using the noon exchange rates prevailing on the dates of the transaction. Historic rates, if required, are based on the Bank of Canada historic noon day rate tables. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities not reported in the base currency of an entity are recognized in the consolidated statements of operations and comprehensive income or loss.

Inventories

As outlined under IAS 2, inventories are measured at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the product ready for sale. The cost of inventories comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to the manufacturing location and final condition. The cost of inventories is assigned by using weighted average cost method.

Provisions

Provisions are recognized when determination is made that there is a present obligation (legal or constructive) as a result of a past event. It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

Share Based Payments

IFRS 2 requires equity-based payments to employees and others providing similar services to be measured at the fair value of goods or services received unless that fair value cannot be estimated with confidence. If the entity cannot estimate the fair value of the goods or services received, the Company measures the value and the corresponding increase in equity, indirectly, by reference to the fair value of the equity instruments granted. The Company uses the Black-Scholes option-pricing model for valuation. The fair value of the equity instrument granted is as at the grant date.

Revenue Recognition

The Company generates revenues from two material sources:

a. the production and sale of building wall panels, emergency shelters, solar panels and solar trailers, and,
b. the provision of services in installing solar modular structures and energy production systems.

Revenue is measured by reference to the fair value of the consideration received or receivable, net of returns and trade discounts. Revenue is recognized in the case of the production revenue when the significant risks and rewards of ownership, legal title and effective control and management over the products have transferred to the customer, collection of the relevant receivable is probable, the sale price is fixed and the revenues and the associated incurred costs can be measured reliably.

The timing of the transfers of risks and rewards of ownership varies depending on the individual terms of the contract of sale but are primarily on the shipment of the product. In the case of service-based revenue, the timing of the transfers of risks and rewards of ownership varies depending on the individual terms of the contract but generally the Company recognizes revenue using the percentage of completion method.

EnerDynamic Hybrid Technologies Corp. Notes to the Consolidated Financial Statements For the Year Ended November 30, 2020

4. Summary of Significant Accounting Policies (continued)

In May 2014, the IASB issued IFRS 15, Revenue from Contracts with Customers which establishes principles for reporting the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The core principle of IFRS 15 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. IFRS 15 also includes a cohesive set of disclosure requirements that would result in an entity providing comprehensive information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers. Effective December 1, 2018, the Company adopted this standard and there is no material impact on the Company’s consolidated financial statements.

Trade Payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.

Income Taxes

Tax expense comprises current and deferred taxes and is recognized in the consolidated statements of operations and comprehensive income or loss except to the extent it relates to items recognized in other comprehensive income or loss directly in equity.

Debentures Payable

Debentures and the incremental issuance costs are split between liabilities and shareholder equity based on the allocation of the equity component (if any) of the debenture. Incremental costs directly attributable to the issuance of debentures are amortized and recognized in comprehensive income (loss), net of any tax effects over the maturity period of the debenture.

Share Capital

Common shares are classified as equity. Incremental costs directly attributable to the issuance of common shares are recognized as a deduction from equity, net of any tax effects.

Segment Reporting

Operating segments, as defined within IFRS 8, are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the chief executive officer that makes strategic decisions. The Company has determined that it operates in a single industry segment, which involves the development and production of modular structures with solar systems, including installation.

Financial Instruments: Initial Recognition and Subsequent Measurement

The Company's financial instruments consist of cash, accounts receivable, due from related parties, accounts payable and accrued liabilities, debentures payable, lease liability and due to related parties. The carrying value of the financial instruments noted above is considered to approximate fair value.

EnerDynamic Hybrid Technologies Corp. Notes to the Consolidated Financial Statements For the Year Ended November 30, 2020

4. Summary of Significant Accounting Policies (continued)

Effective December 1, 2018, the Company adopted IFRS 9. In July 2014, the IASB issued the final publication of the IFRS 9 standard, which supersedes IAS39-Financial Instruments: Recognition and Measurement (“IAS39”). IFRS 9 includes revised guidance on the classification and measurement of financial instruments, new guidance for measuring impairment on financial assets, and new hedge accounting guidance. The Company has adopted IFRS 9 on a retrospective basis, however, this guidance had no impact on the Company’s financial statements. Under IFRS 9, financial assets are classified and measured based on the business model in which they are held and the characteristics of their contractual cash flows. IFRS 9 contains the primary measurement categories for financial assets: measured at amortized cost, fair value through other comprehensive income (FVTOCI) and fair value through profit and loss (FVTPL).

Financial Assets

Initial Recognition and Measurement

Non-derivative financial assets within the scope of IFRS 9 are classified and measured as “financial assets at fair value”, as either FVPL or FVOCI, and “financial assets at amortized costs”, as appropriate. The Company determines the classification of financial assets at the time of initial recognition based on the Company’s business model and the contractual terms of the cash flows.

All financial assets are recognized initially at fair value plus, in the case of financial assets not at FVPL, directly attributable transaction costs on the date at which the Company becomes a party to the contractual provisions of the instrument.

Amounts receivable held for collection of contractual cash flows are measured at amortized cost.

Subsequent measurement-financial assets at amortized cost

After initial recognition, financial assets measured at amortized cost are subsequently measured at the end of each reporting period at amortized cost using the Effective Interest Rate (“EIR”) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and any fees or costs that are an integral part of the EIR.

Subsequent measurement -financial assets at FVPL

Financial assets measured at FVPL include financial assets management intends to sell in the short term and any derivative financial instrument that is not designated as a hedging instrument in a hedge relationship. Financial assets measured at FVPL are carried at fair value in the statements of financial position with changes in fair value recognized in other income or expense in the statements of loss. The Company does not measure any financial assets at FVPL.

Subsequent measurement-financial assets at FVOCI

Financial assets measured at FVOCI are non-derivative financial assets that are not held for trading and the Company has made an irrevocable election at the time of initial recognition to measure the assets at FVOCI. The Company does not measure any financial assets at FVOCI. After initial measurement, investments measured at FVOCI are subsequently measured at fair value with unrealized gains or losses recognized in other comprehensive income or loss in the statements of comprehensive loss. When the investment is sold, the cumulative gain or loss remains in accumulated other comprehensive income or loss and is not reclassified to profit or loss.

EnerDynamic Hybrid Technologies Corp. Notes to the Consolidated Financial Statements For the Year Ended November 30, 2020

4. Summary of Significant Accounting Policies (continued)

Derecognition

A financial asset is derecognized when the contractual rights to the cash flows from the asset expire, or the Company no longer retains substantially all the risks and rewards of ownership.

Impairment of financial assets

The Company’s only financial assets subject to impairment are accounts receivable, which are measured at amortized cost. The Company has elected to apply the simplified approach to impairment as permitted by IFRS 9, which requires the expected lifetime loss to be recognized at the time of initial recognition of the receivable. To measure estimated credit losses, accounts receivable has been grouped based on shared credit risk characteristics, including the number of days past due. An impairment loss is reversed in subsequent periods if the amount of the expected loss decreases and the decrease can be objectively related to an event occurring after the initial impairment was recognized.

Financial liabilities

Initial recognition and measurement

Financial liabilities are measured at amortized cost, unless they are required to be measured at FVPL as is the case for held for trading or derivative instruments, or the Company has opted to measure the financial liabilities at FVPL. The Company’s financial liabilities include accounts payable and accrued liabilities, and subscription receipts which are each measured at amortized cost. All financial liabilities are recognized initially at fair value and in the case of long-term debt, net of directly attributable transaction costs.

Subsequent measurement-financial liabilities at amortized cost

After initial recognition, financial liabilities measured at amortized cost are subsequently measured at the end of each reporting period at amortized cost using the EIR method. Amortized cost is calculated by taking into account any discount or premium on acquisition and any fees or costs that are an integral part of the EIR.

Derecognition

A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expires with any associated gain or loss recognized in other income or expense in the statements of loss.

Financial Instruments Recorded at Fair Value

Financial instruments recorded at fair value on the consolidated statements of financial position are required to be classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

Level 1 - valuation based on quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - valuation techniques based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3 - valuation techniques using inputs for the asset or liability that are not based on observable market data (unobservable inputs).

None of the Company’s financial instruments are recorded at fair value on the consolidated statements of financial position.

EnerDynamic Hybrid Technologies Corp. Notes to the Consolidated Financial Statements For the Year Ended November 30, 2020

4. Summary of Significant Accounting Policies (continued)

Earnings (Loss) per Share

Basic earnings (loss) per share is computed by dividing the net income (loss) attributable to common shareholders of the Company by the weighted average number of common shares issued and outstanding during the period. Diluted earnings (loss) per share is determined by adjusting the weighted average number of common shares outstanding during the period for the effects of dilutive instruments such as stock options granted.

The number of additional shares is calculated by assuming that all convertible securities outstanding were exercised and that the proceeds from such exercises were used to acquire common shares at the average market price during the reporting period. Diluted earnings (loss) per share considers the dilutive impact of the exercise of warrants and broker warrants, as if the event has occurred at the beginning of the period. Diluted loss per share has not been presented in the accompanying consolidated financial statements as the results would be antidilutive.

5. Risk Management

Capital Risk Management

The Company’s objectives are to safeguard its ability to continue as a going concern in order to support its normal operating requirements, continue the development and expansion of its production capacity, expansion of markets for its products and review of opportunities that complement current operations and products. These objectives are to be achieved through a continued flexible capital structure which optimizes the costs of capital at an acceptable level of risk.

The Company monitors its capital structure and makes adjustments according to market conditions in an effort to meet its objectives given the current outlook of the business and the industry. The Company may manage its capital structure by issuing securities, financial instruments, repurchasing outstanding shares, adjusting capital spending or disposing of assets. The capital structure is reviewed by management and the Board of Directors on an ongoing basis.

The Company reviews its working capital and forecasts its future cash flows based on operational needs and other investing and financing activities. The forecast is updated based on activities related to its production, sales and expansions. Information is provided to the Board of Directors by Management on a monthly or ad hoc basis.

As of November 30, 2020, the Company’s capital structure consists of related party payables, debentures payable, share capital and warrants the Company issued for financial value. The Company is not subject to any externally imposed capital covenants. In order to maximize ongoing development efforts, the Company has no short-term plans to pay dividends.

The following amounts, included in the consolidated statements of financial position, make up the Company’s capital:

	2020	2019
	$	$
Due to related parties (net)	(881,240)	(1,000,119)
Share capital	36,832,886	35,420,461
Warrants	17,716,438	15,953,736
Convertible 6.5% debentures	(3,000,000)	(3,000,000)
8% and 18% debentures	(10,070,500)	(10,070,500)
Total Capital	40,597,584	37,303,578

EnerDynamic Hybrid Technologies Corp. Notes to the Consolidated Financial Statements For the Year Ended November 30, 2020

6. Financial Instruments

Financial Risk Management

The Company’s activities expose it to various types of risk which are associated with the financial instruments held by the Company. These risks include market risk (including currency risk and interest rate risk), liquidity risk and credit risk. The following summary is not intended to be a comprehensive summary of all risks inherent in the Company.

Market Risk

Foreign Currency Risk

The Company is mainly exposed to foreign exchange risk in United States dollars. Foreign exchange risk is the risk that the exchange rate that was in effect on the date that an obligation in a foreign currency was incurred to the Company by a customer, or that an obligation in a foreign currency was made by the Company to a supplier, is different at the time of settlement than it was at time that the obligation was determined. The Company reduces its exposure to foreign exchange risk by carefully monitoring exchange rates on obligations that are made to the Company. The Company does not utilize derivative instruments to manage its foreign exchange risk. The Company maintains adequate foreign currency balances in its bank, provided by its revenues in the related currency and used to settle its foreign currency purchases. In the opinion of management, the foreign exchange risk exposure to the Company is low.

A ten percent increase in the U.S. dollar versus the Canadian dollar at the end of the period would have increased the comprehensive loss for the year immaterially (2019: immaterial) with all other variables held constant.

Interest Rate Risk

Interest rate risk is the risk that changes in market interest rates may have an effect on the cash flows or fair value associated with some of the Company’s financial assets. The Company is not exposed to significant interest rate risk on its financial liabilities as they are short term in nature.

A one percentage point increase (decrease) in interest rates would have increased (decreased) the comprehensive income by a nominal amount in the period, with all other variables held constant given the Company’s borrowings are fixed rates.

Credit Risk

Credit risk arises from the unexpected default of a customer in meeting its financial obligation to the Company. The Company does not extend credit terms to all customers thus credit is considered on an exception transaction. The Company is continually developing credit evaluation, approval and monitoring processes which are intended to mitigate potential credit risk.

The carrying amount of the Company’s cash and accounts receivable represent the maximum credit risk. As at November 30, 2020, the Company’s cash is held with reputable institutions, from which management believes the risk of loss to be remote.

EnerDynamic Hybrid Technologies Corp. Notes to the Consolidated Financial Statements For the Year Ended November 30, 2020

6. Financial Instruments (continued)

Liquidity Risk

Liquidity risk considers the possibility that the Company may not be able to meet its financial obligations as they fall due. The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. Generally, the Company’s financial liabilities have contractual maturities of less than 30 days. Some larger projects require substantial outlays of capital to fund the upfront cost of raw materials and work in progress. Such risks are identified and to some degree reduced through customer contract deposits.

Carrying Amount $	Cash Flows $ <1 year $ 1-2 years $	2-5 years $
Accounts payable and accrued liabilities 10,936,288 Due to related parties 1,025,788 Office equipment lease 17,410 Convertible 6.5% debentures 3,000,000 18% Debentures Payable 10,070,500	10,936,288 10,936,288 - 1,025,788 1,025,788 - 17,410 4,445 8,890 3,000,000 3,000,000 - 10,070,500 10,070,500 -	- - 4,075 - -
25,049,986	25,049,986 25,037,021 8,890	4,075

7. Accounts Receivable

The Company extends credit on an exception basis and only for product sales and through the normal course of business as it relates to system installation.

	2020	2019
Detail	$	$
Less than 30 Days	113	5,716
More than 90 Days	34,437	39,734
Allowance for bad and doubtful debts	(34,437)	(34,436)
	113	11,014

During the year ended November 30, 2020, the Company’s revenues were mainly generated from customers in Canada and less than 3% came from those in overseas countries (2019:19% from United States; 7% from West Africa and 37% from Asia) and all the accounts receivable was related to customers in Canada (2019: 89% and 10% of accounts receivable relating to customers in the United States and Africa respectfully).

EnerDynamic Hybrid Technologies Corp. Notes to the Consolidated Financial Statements For the Year Ended November 30, 2020

8. Inventories

Inventories
	2020	2019
	$	$
Raw Materials	334,972	426,456
Finished Goods	137,118	257,955
Provision for Obsolescence	(80,000)	(75,000)
	392,090	609,411

Management has opted to institute a reserve against obsolescence targeted specifically at the finished goods inventory of $80,000 (2019:$75,000). There is no specific evidence of decreased value of specific inventory items however, the potential exists for modest declines due to market fluctuations and therefore management has instituted a reserve.

9. Prepaid Expenses

Prepaid expenses include the following:

epaid expenses include the following:
	2020	2019
	$	$
Landlords and utilities	68,308	68,308
Raw materials	109,803	60,762
Other expenses	68,258	39,845
	246,369	168,915

10. Other Current Assets

As at November 30, 2020, other current assets of $77,889 (2019: $303,678) represents HST recoverable of $28,345 (2019: $236,178) and other receivable or assets of $49,544 (2019: $67,500).

EnerDynamic Hybrid Technologies Corp. Notes to the Consolidated Financial Statements For the Year Ended November 30, 2020

11. Property and Equipment

		Office	Warehouse	Production	Premises
Cost	Automobile	Equipment	Equipment	Equipment	Leaseholds	Total
	$	$	$	$	$	$
Balance at November 30, 2019	13,523	43,096	46,293	1,970,611	95,237	2,168,760
Additions	-	-	-	2,310	-	2,310
Disposals	-	-	-	(49,162)	-	(49,162)
Balance at November 30, 2020	13,523	43,096	46,293	1,923,759	95,237	2,121,908
Accumulated Amortization
Balance at November 30, 2019	6,761	39,767	38,090	1,750,376	9,704	1,844,698
Amortization for the year	4,508	2,527	5,786	118,446	9,524	140,791
Disposal	-	-	-	(39,944)	-	(39,944)
Balance at November 30, 2020	11,269	42,294	43,876	1,828,878	19,228	1,945,545
Net Book Value
Balance at November 30, 2019	6,762	3,329	8,203	220,235	85,533	324,062
Balance at November 30, 2020	2,254	802	2,417	94,881	76,009	176,363

Included in the Consolidated Statements of Operations and Comprehensive loss is amortization of $140,791 for the year ended November 30, 2020 (2019: $318,051).

EnerDynamic Hybrid Technologies Corp. Notes to the Consolidated Financial Statements For the Year Ended November 30, 2020

12. Right-of-Use Assets

The Company has recognized a right-of-use asset in respect of its premises lease as described in Note 4. The following is a continuity of the right-of-use asset:

	2020
Cost	$
Balance at December 1, 2019	-
Impact of adoption of IFRS 16	1,141,913
Addition	-
Balance at November 30,2020	1,141,913
	2020
Accumulated amortization	$
Balance at December 1, 2019	-
Amortization for the year	126,879
Balance at November 30,2020	126,879
	2020
Carrying amounts	$
As at November 30, 2019	-
As at November 30,2020	1,015,034

13. Share Capital

i) Common Shares Authorized:

Unlimited number of common shares.

ii) Common Share Rights:

The holders of common shares are entitled to vote at meetings of shareholders, receive dividends, and are subject to the prior rights, privileges and conditions attaching to the special shares, to receive the remaining property of the Company upon dissolution, liquidation or winding up of the Company.

iii) Common Shares Issued:

423,974,216 (2019: 339,976,215) common shares with no par value.

On December 20, 2018, the Company completed a private placement which raised $583,900 proceeds from the sale of 11,678,000 units at $0.05 per unit, each unit consists of one common share and one common share purchase warrant. Each purchase warrant entitles the holder to acquire one common share at an exercise price of $0.075 per common share. The warrants expire 36-months from the date of issue.

On January 2, 2019, the Company completed a private placement which raised $240,000 proceeds from the sale of 3,000,000 units at $0.08 per unit, each unit consists of one common share and one common share purchase warrant. Each purchase warrant entitles the holder to acquire one common share at an exercise price of $0.12 per common share. The warrants expire 36-months from the date of issue.

On February 14, 2019, the Company completed a private placement which raised $450,000 proceeds representing $400,000 cash plus $50,000 debt settlement from the sale of 9,000,000 units at $0.05 per unit, each unit consists of one common share and one common share purchase warrant. Each purchase warrant entitles the holder to acquire one common share at an exercise price of $0.075 per common share. The warrants expire 36months from the date of issue.

EnerDynamic Hybrid Technologies Corp. Notes to the Consolidated Financial Statements For the Year Ended November 30, 2020

13. Share Capital (continued)

On April 5, 2019, the Company completed a private placement which raised $345,000 proceeds representing $295,000 cash plus $50,000 debt settlement from the sale of 6,900,000 units at $0.05 per unit, each unit consists of one common share and one common share purchase warrant. Each purchase warrant entitles the holder to acquire one common share at an exercise price of $0.06 per common share. The warrants expire 36-months from the date of issue.

On May 17, 2019, the Company completed a private placement which raised $400,000 proceeds from the sale of 8,000,000 units at $0.05 per unit, each unit consists of one common share and one common share purchase warrant. Each purchase warrant entitles the holder to acquire one common share at an exercise price of $0.07 per common share. The warrants expire 36-months from the date of issue.

On June 19, 2019, the Company completed a private placement which raised $500,000 proceeds representing $400,000 cash and $100,000 debt settlement from the sale of 10,000,000 units at $0.05 per unit, each unit consists of one common share and one common share purchase warrant. Each purchase warrant entitles the holder to acquire one common share at an exercise price of $0.06 per common share. The warrants expire 36-months from the date of issue.

On September 24, 2019, the Company settled an outstanding debt of $300,000 with a creditor by issuance of 6,000,000 units at a deemed value of $0.05 per unit and each unit consisting of one common share and one common share purchase warrant. Each warrant is exercisable into one common share at $0.07 for a period of 36months.

On October 2, 2019, the Company completed a private placement which raised $485,000 proceeds representing $425,000 cash and $60,000 debt settlement from the sale of 9,700,000 units at $0.05 per unit by, each unit consists of one common share and one common share purchase warrant. Each purchase warrant entitles the holder to acquire one common share at an exercise price of $0.06 per common share. The warrants expire 36months from the date of issue.

On December 31, 2019, the Company completed a private placement which raised $1,030,400 proceeds representing $485,000 cash and $545,400 debt settlements from the sale of 20,608,000 units at $0.05 per unit, each unit consists of one common share and one common share purchase warrant. Each purchase warrant entitles the holder to acquire one common share at an exercise price of $0.05 per common share. The warrants expire 36-months from the date of issue.

On February 5, 2020, the Company settled an outstanding debt of $150,000 with a creditor by issuance of 3,000,000 units at a deemed value of $0.05 per unit, each unit consists of one common share and one common share purchase warrant. Each purchase warrant entitles the holder to acquire one common share at an exercise price of $0.07 per common share. The warrants expire 36-months from the date of issue.

On February 14, 2020, the Company completed a private placement which raised $350,000 proceeds representing $249,010 cash and $100,990 debt settlement from the sale of 7,000,000 units at $0.05 per unit, each unit consists of one common share and one common share purchase warrant. Each purchase warrant entitles the holder to acquire one common share at an exercise price of $0.05 per common share. The warrants expire 36months from the date of issue.

On April 14, 2020, the Company announced to complete a non-brokered private placement which raised $500,000 proceeds representing $257,980 cash and $242,020 debt settlement from the sale of 20,000,000 units at $0.025 per unit, each unit consists of one common share and one common share purchase warrant. Each purchase warrant entitles the holder to acquire one common share at an exercise price of $0.05 per common share. The warrants expire 36-months from the date of issue.

EnerDynamic Hybrid Technologies Corp. Notes to the Consolidated Financial Statements For the Year Ended November 30, 2020

13. Share Capital (continued)

On August 24, 2020, the Company announced to complete a non-brokered private placement which raised $1,000,000 proceeds representing $503,000 cash and $497,000 debt settlement from the sale of 20,000,000 units at $0.05 per unit, each unit consists of one common share and one common share purchase warrant. Each purchase warrant entitles the holder to acquire one common share at an exercise price of $0.05 per common share. The warrants expire 36-months from the date of issue.

On September 16, 2020, the Company settled an outstanding debt of $669,500 with debtholders by issuance of up to 13,390,001 units of the Company at a deemed price of $0.05 per unit. Each unit consists of one common share and one common share purchase warrant. Each purchase warrant entitles the holder to acquire one common share at a price of $0.05 per common share. The warrants expire 36-months from the date of issue.

Convertible Securities

During the year ended November 30, 2020, there were issuances of 83,998,001 (2019: 64,278,000) warrants and 48,857,229 (2019: 20,727,259) warrants expired and nil exercised (2019: nil) . The assumptions used to value the warrants under the Black-Scholes model were as follows:

	2020	2019
Total	83,998,001	64,278,000
Share Price	$0.020-$0.045	$0.03-$0.05
Exercise Price	$0.05-$0.07	$0.06-$0.12
Interest Rate	$0.26%-1.69%	1.35%-1.92%
Term (years)	3	3
Volatility	141-193%	126%-147%
Warrant Value	$0.015-$0.033	$0.020-$0.036

EnerDynamic Hybrid Technologies Corp. Notes to the Consolidated Financial Statements For the Year Ended November 30, 2020

13. Share Capital (continued)

Warrants: Share Purchase Warrants Summary

					Outstanding
		Exercise			at Nov 30,
Holder	Issue Date	Price	Expiry Date	Issued	2020
Private Placement Unit Holders	July 18, 2016	$0.30	07/18/21	4,000,000	4,000,000
Conversion of Convertible Notes	July 20, 2016	$0.30	07/20/21	24,166,667	24,166,667
Debenture Conversion	April 10, 2018	$0.15	04/10/21	27,028,580	27,028,580
Private Placement Unit Holders	April 17, 2018	$0.15	04/17/21	3,200,000	3,200,000
Debenture Conversion	May 3, 2018	$0.15	05/03/23	5,017,500	5,017,500
Private Placement Unit Holders	June 22, 2018	$0.075	06/22/21	26,164,000	24,164,000
Settlement of Debts	July 17, 2018	$0.075	07/17/21	7,156,000	7,156,000
Private Placement Unit Holders	Sept 27, 2018	$0.075	09/27/23	10,460,000	10,460,000
Private Placement Unit Holders	Oct 9, 2018	$0.075	10/09/23	4,528,810	4,528,810
Private Placement Unit Holders	Dec 20 2018	$0.05	12/20/21	11,678,000	11,678,000
Private Placement Unit Holders	Jan 02, 2019	$0.12	01/02/22	3,000,000	3,000,000
Private Placement Unit Holders	Feb 14, 2019	$0.075	02/14/22	9,000,000	9,000,000
Private Placement Unit Holders	Apr 05, 2019	$0.06	04/05/22	6,900,000	6,900,000
Private Placement Unit Holders	May 17, 2019	$0.07	05/17/22	8,000,000	8,000,000
Private Placement Unit Holders	June 19, 2019	$0.06	06/19/22	10,000,000	10,000,000
Private Placement Unit Holders	Sep 24, 2019	$0.07	09/24/22	6,000,000	6,000,000
Private Placement Unit Holders	Oct 03, 2019	$0.06	10/03/22	9,700,000	9,700,000
Private Placement Unit Holders	Dec 31, 2019	$0.05	12/31/22	20,608,000	20,608,000
Settlement of Debts	Feb 05, 2020	$0.07	02/05/23	3,000,000	3,000,000
Private Placement Unit Holders	Feb 14, 2020	$0.05	02/14/23	7,000,000	7,000,000
Private Placement Unit Holders	Apr 14, 2020	$0.05	04/14/23	20,000,000	20,000,000
Private Placement Unit Holders	Aug 24, 2020	$0.05	08/24/23	20,000,000	20,000,000
Settlement of Debts	Sep16,2020	$0.05	08/16/23	13,390,001	13,390,001
				259,997,558	257,997,558

During the year, a total of 48,857,229 (2019:20,727,259) common share purchase warrants have expired without being exercised.

EnerDynamic Hybrid Technologies Corp. Notes to the Consolidated Financial Statements For the Year Ended November 30, 2020

13. Share Capital (continued)

Warrant and Option Valuation

The Company uses the Black-Scholes fair valuation option pricing model when calculating a share option grant or common share purchase warrant value when the common share purchase warrant forms part of a unit of securities. The valuation is dependent on a number of estimates, including the risk-free interest rate and the level of share volatility. Option and warrant pricing models require the input of highly subjective assumptions including the expected price volatility. The level of share volatility was calculated with reference to the historic traded daily closing share price of the Company. Changes in the subjective input assumptions can materially affect the fair value estimate, and therefore the existing models do not necessarily provide a reliable measure of the fair value of the Company's common share purchase warrants.

Stock Options

The Company has a Stock Option Plan (the "Plan") which it is authorized to grant options to purchase common shares of the Company to directors, senior officers, employees and/or consultants of the Company. The aggregate number of shares of the Company which may be issued and sold under the Plan will not exceed 10% of the total number of common shares issued and outstanding from time to time. Share options are granted with a maximum term of five years with vesting requirements at the discretion of the Board of Directors.

The following tables provides information about outstanding stock options at November 30, 2020:

	2020		2019
		Weighted		Weighted
		Average		Average
	Number of	Exercise	Number of	Exercise
	Options	Price	options	Price
		$		$
Beginning balance	15,455,011	0.12	13,095,375	0.54
Issued	13,500,000	0.05	10,450,000	0.10
Exercised	-	-	-	-
Forfeited	-	-	(8,090,364)	0.54
Ending balance	28,955,011	0.09	15,455,011	0.12

Exercisable options

Weighted average
outstanding maturity	Number of	Exercise price
period (years)	options	$
0.58	3,405,011	0.15
1.79	1,600,000	0.15
3.13	10,450,000	0.10
4.18	13,500,000	0.05
3.25	28,955,011	0.09

EnerDynamic Hybrid Technologies Corp. Notes to the Consolidated Financial Statements For the Year Ended November 30, 2020

13. Share Capital (continued)

On January 15, 2019, the Company granted 10,450,000 incentive stock options under its stock option plan to several directors, employees and consultants. The stock options are exercisable until January 15, 2024.

On February 03, 2020, the Company granted 13,500,000 incentive stock options under its stock option plan to several directors, employees and consultants. The stock options are exercisable until February 03, 2025.

	2020	2019
Total	13,500,000	10,450,000
Expected volatility	141%	127%
Expected life	5 Years	5 Years
Expected forfeiture rate	5%	5%
Risk-free interest rate	1.28%	1.91%
Dividend yield	Nil	Nil
Share price	$0.04	$0.04
Weighted average fair value of options at grant date	$0.035	$0.03

14. Related Party Transactions and Balances

Amounts receivable from and payable to related parties are as follows:

	2020	2019
	$	$
Receivable
Due from a related party	144,548	-
Payable
Due to director – Bruce Bent	-	267,921
Due to director - John Gamble	176,678	127,261
Due to non-executive employee	50,000	73,748
Due to MSW/MDA (lenders related to Bruce Bent)	799,110	531,189
	1,025,788	1,000,119

The amount due to MSW/MDA is a secured loan advanced from a party related to a director, Bruce Bent. The loans are for working capital purposes and are secured with a general security agreement. The amounts are due on demand.

The amounts due to a director - Bruce Bent are due on demand. Management expects to repay the amounts within the next 12 months.

The amounts due to a director/CEO - John Gamble are for authorized expenses and includes a bonus of $100,000 granted for the financial support to the Company and unpaid management wages during the year. The amounts due are non-interest bearing and are due on demand. Management expects to repay the amounts within the next 12 months.

EnerDynamic Hybrid Technologies Corp. Notes to the Consolidated Financial Statements For the Year Ended November 30, 2020

14. Related Party Transactions and Balances (continued)

The amounts due to a non-executive employee for a bonus granted for the financial support during the year. The amounts due are non-interest bearing and are due on demand. Management expects to repay the amounts within the next 12 months.

During the year, the Company advanced funds to a corporation owned by Mr. Gamble, CEO/Director of the Company. The funds are repayable on demand, without interest and are expected to be repaid within 12 months.

Summary of Management Fees and Compensation

	2020	2019
Title	$	$
Management Salaries and Fees	330,000	330,000
Other Benefits	7,825	8,087
Total	337,825	338,087

15. Earnings/Loss Per Share

Basic and diluted loss per share has been calculated as follows:

		2020	2019
Numerator	Net Profit /(Loss) Allocated to Common Shareholders	($5,500,096)	($10,469,613)
Denominator	Weighted Average Number of Outstanding Shares	387,559,653	312,739,003
Profit/(Loss)Per	Share	($0.01)	($0.03)

Diluted loss per share did not include the effect of the share options and warrants outstanding respectively as they are anti-dilutive.

16. Debentures Payable

a) Convertible 6.5% Debenture

On March 4, 2015, the Company closed the financing of a 6.5% Convertible Debenture maturing March 4, 2018, raising $3,000,000. The Debenture allows for the conversion of $1 dollar of principal into 1 common share of EHT Corp. until maturity date. Kingsdale received $195,000 in cash and 225,000 broker warrants exercisable at $1.00 per warrant for a 2-year period.

The Convertible Debenture contains an equity element representing the conversion option. In accordance with IFRS, these two elements were split and classified separately as debt and equity. The fair value of the debentures amounting to $2,840,000 was based on the discounted cash flows using an estimated cost of borrowing of 8.5% representing the Company's cost of borrowing with similar terms but without the conversion option. The residual of $160,000 was assigned to the conversion option. The fair value of the broker warrants amounting to $16,898 was based on Black-Scholes option valuation model.

EnerDynamic Hybrid Technologies Corp. Notes to the Consolidated Financial Statements For the Year Ended November 30, 2020

16. Debentures Payable (continued)

The Company accreted the carrying value of the convertible debentures at an effective interest rate of 11.5% per annum so that at maturity on March 4, 2018 the Debenture payable amounted to $3,000,000. The debenture has matured and remains outstanding while management negotiates the terms of extension. Interest continues to be accrued at the original rate.

b) 18% Debentures

On June 11, 2015, the company announced its intention to raising up to $20 million by way of secured debentures to provide capital required for a milestone payment and to fund potential acquisition opportunities. The debentures would have a two-year term with an 18% coupon and be issued with up to 400 bonus common shares for each $1,000 principal amount in debenture issued.

Kingsdale was engaged as the lead agent for this financing and would receive commission consisted of cash representing 7% of the gross proceeds of the brokered purchases of debenture plus 2.0% of the non-brokered purchases, as well as consideration in the form of 1,258,692 agent warrants exercisable at $1.00 per warrant for a 2-year period. The Debentures are secured by a General Security Agreement over the assets of the Company.

On July 3, 2015, the Company completed the first closing of offered debentures and raised a gross amount $8,796,000 and 3,518,400 bonus common shares were issued along with the debentures. Kingsdale received $615,720 in cash and 700,800 broker warrants exercisable at $1.00 per warrant for a 2-year period.

On July 20, 2015, the Company raised an additional gross amount of $3,915,000 of secured debentures and 1,566,000 bonus common shares were issued. Kingsdale received $274,050 in cash and 313,200 broker warrants exercisable at $1.00 per warrant for a 2-year period.

On July 24, 2015, the Company raised an additional $351,000 principal amount secured debentures and 140,400 bonus common shares were also issued. Kingsdale received $24,570 in cash and 28,080 broker warrants exercisable at $1.00 per warrant for a 2-year period.

The 18% secured debentures issued does not include $6,937,650 of debentures adjusted via cancellation as no value was tendered to the Company. The related bonus shares, commission and broker warrants have been expensed as a period cost.

The debentures contain an equity element representing the bonus common shares and warrants. In accordance with IFRS, these three elements were split and classified separately as debt and equity. The fair value assigned to the 5,224,800 bonus common shares issued amounted to $2,649,500 and was based on the trading price of EHT common shares on the debenture issuance dates. The fair value of the broker warrants amounting to $246,000 was based on Black-Scholes option valuation model. The residual after assigning fair values to the common shares and warrants was assigned to the Debentures.

The Company accreted the carrying value of the Debentures at effective interest rates ranging from 38.7% to 54% per annum.

During the prior years, $2,991,500 of 18% debenture principal and $2,634,391 of accrued interest were converted to equity. In addition, accrued interest of $1,802,451 was waived by the debenture holders.

As at November 30, 2020, there remains $10,070,500 of 18% debenture principal outstanding. During the year ended November 30, 2017, the 18% debentures matured but were unpaid. As a result, the company remains in default under the terms of the debenture agreement. During prior periods, some 18% debenture holders opted to convert some or all principal and interest into common share units in the capital of the company and some of the debenture holders agreed to waive outstanding debenture interest as well.

EnerDynamic Hybrid Technologies Corp. Notes to the Consolidated Financial Statements For the Year Ended November 30, 2020

16. Debentures Payable (continued)

Those debenture holders also agreed to an adjusted annual interest rate of 8% per annum. In September 2018, three debenture holders filed suit against the Company seeking to unwind a settlement agreement related to the conversion of a $1,003,500 of their total $3,345,000 of debenture principal into common shares of the company. If the plaintiffs are successful, the parties could be entitled to exchange the common shares issued for the original debentures that were cancelled and the related accrued interest. The final outcome of the case is not determinable at present, however, management has accrued for a potential settlement obligation. Litigation has progressed to discoveries.

I. The aggregate principal amount of the particular 18% debentures that were not exchanged for units pursuant to the debt settlement agreements is $4,226,000. *
II. The aggregate remaining principal amount of particular 18% debentures that were modified pursuant to debt settlement agreements is $3,503,000.
III. Aggregate remaining principal amount of the particular 18% debentures that are the subject of the litigation is $2,341,500. **
IV. The aggregate principal amount of all the 18% debentures that remain outstanding is $10,070,500. *

* In the absence of a negotiated settlement, the remaining unmodified debentures continue to accrue interest at 18% per annum per the original agreement.

** Does not include $1,003,500 of aggregate principal of the particular 18% debentures that are subject of litigation that have been converted into common share units.

* The aggregate principal amount of the particular 18% debentures that were previously exchanged for units pursuant to the debt settlement agreements was $2,991,500.

The total interest expense for the year ended November 30, 2020 on the debentures amounted to $1,763,812 (2019:$1,807,586).

17. Canada Government Loan

During the year ended November 30, 2020, the Company and its subsidiary EBS each obtained an interest-free and unsecured loan of $40,000 (2019: nil) from the Canada Emergency Business Account. The loan is repayable on or before December 31, 2022, payment of which would result in forgiving of up to $10,000 in loan principle.

18. Adoption of New International Financial Reporting Standards (“IFRS”)

IFRS 16 Leases

IFRS 16, Leases (“IFRS 16”), sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, the customer (“lessee”) and the supplier (“lessor”). This replaces IAS 17, Leases , and related interpretations. IFRS 16 provides revised guidance on identifying a lease and for separating lease and non-lease components of a contract. IFRS 16 introduces a single accounting model for all leases and requires a lessee to recognize (i) right-of-use assets and lease liabilities for leases with terms of more than 12 months, unless the underlying asset is of low value; and (ii) depreciation of lease assets separately from interest on lease liabilities on the consolidated statements of loss and comprehensive loss.

EnerDynamic Hybrid Technologies Corp. Notes to the Consolidated Financial Statements For the Year Ended November 30, 2020

18. Adoption of New International Financial Reporting Standards (“IFRS”) (continued)

Under IFRS 16, lessor accounting for operating and finance leases is substantially unchanged. IFRS 16 is effective for annual periods beginning on or after January 1, 2019, with earlier application permitted for entities that apply IFRS 15. The guidance allows for either a full retrospective or modified retrospective transition method. The Company has selected to apply the modified retrospective transition method. Further, the Company has selected to apply the practical expedients to (i) grandfather the assessment of which transactions are leases; (ii) recognition exemption of short-term leases; and (iii) recognition exemption leases of low-value items. From December 1, 2019, leases are recognized as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Company.

Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is amortized over the shorter of the asset's useful life and the lease term on a straight-line basis. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

fixed payments (including in-substance fixed payments), less any lease incentives receivable;
variable lease payments that are based on an index or a rate;
amounts expected to be payable by the lessee under residual value guarantees;
the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions. Right-of-use assets are measured at cost comprising the following:

the amount of the initial measurement of lease liability;
any lease payments made at or before the commencement date less any lease incentives received;
any initial direct costs; and - restoration costs.

Adjustments recognized on adoption of IFRS 16

On December 1, 2019, the Company adopted IFRS 16 using the modified retrospective approach, with the cumulative effect of initially applying the new standard recognized in deficit on December 1, 2019. The comparative figures for fiscal 2019 have not been restated. On adoption of IFRS 16, the Company recognized lease liabilities in relation to leases, which had previously been classified as ‘operating leases’ under the principles of IAS 17 , Leases . These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of December 1, 2019. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities was 27%. The lease commitments expire in August 2028.

The following table reconciles the Company’s operating lease commitments as at November 30, 2019, as previously disclosed in the audited consolidated financial statements of the Company, to the lease liability recognized on initial application of IFRS 16 on December 1, 2019:

Item	Value
Operating lease commitments as at November 30, 2019	3,919,688
Modifications	(474,995)
Effect of discounting using the incremental borrowing rate	(2,302,780)
Lease liabilityrecognized as at December 1,2019	$1,141,913

EnerDynamic Hybrid Technologies Corp. Notes to the Consolidated Financial Statements For the Year Ended November 30, 2020

18. Adoption of New International Financial Reporting Standards (“IFRS”) (continued)

In applying IFRS 16 for the first time, the Company has used the following practical expedients permitted by the standard:

reliance on previous assessments on whether leases are onerous; and
the exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application.

The adoption of the new standard affected the following items in the statement of financial position on December 1, 2019:

Item	Value
Right-of-use assets	recorded as $1,141,913
Lease liability	recorded as$1,141,913

19. Commitments and Contingencies

The Company is committed to royalty payments, under the terms of license agreement, to pay 2% of total revenue commencing on October 1, 2013. The licensee has deferred payment of the royalty obligations as at November 30, 2020. The amount has been accrued, as in prior periods, with no fixed payment date.

The Company is engaged in legal proceedings, claims and counterclaims that have arisen in the ordinary course of business. The outcome of all of the proceedings and claims against the Company is subject to future resolution, including the uncertainties of litigation. Based on information currently known to the Company and after consultation with outside legal counsel, management believes that the probable ultimate resolution of any such proceedings and claims, individually or in the aggregate, will not have a material adverse effect on the financial condition of the Company, taken as a whole.

On May 15, 2019, the Company entered into a lease agreement for an office equipment for 66 months with a lease payment of $983 per quarter plus tax. The remaining lease payments will be $17,410 and payable as follows:

	Less than one year	Between 1 and 5 years	More than five years	Total
	$	$	$	$
Office Equipment Lease	4,445	12,965	-	17,410

EnerDynamic Hybrid Technologies Corp. Notes to the Consolidated Financial Statements For the Year Ended November 30, 2020

19. Commitments and Contingencies (continued)

Lease liability

The Company leases its premises under a lease agreement expiring on August 31, 2028, which was recognized at a discount rate of 27%. The following is a continuity of activity in leases during the year.

	2020
Cost	$
Balance at December 1, 2019	-
Impact of adoption of IFRS 16	1,141,913
Payment made	(240,236)
Interest on lease liabilities	308,317
Balance at November 30,2020	1,209,994
Current portion	280,512
Long-term	929,482

The following table outlines the total contractual undiscounted lease payments as at November 30, 2020:

2021	356,250
2022	356,250
2023	370,313
2024	412,500
2025	421,874
Thereafter	1,237,500
Less: future interest expenses	(1,944,693)
Total lease liabilities at November 30,2020	1,209,994

20. Segmentation

Management has determined that the Company carries on business in one operating segment only. All assets are currently located in Canada except accounts receivable from customers located in the United States and West Africa (See Note 7 Accounts Receivable ) and during the year ended November 30, 2020, substantially all business activities were conducted in Canada other than revenue from customers in the United States.

21. Income Tax

Income taxes reported differ from the amount computed by applying the statutory rate to the net loss due to the following items:

	2020	2019
	$	$
Canadian statutory tax rate	26.5%	26.5%
Statutory income taxes	(1,390,306)	(1,567,292)
Permanent differences	82,895	114,591
Change in tax assets not recognized	1,307,411	1,452,701
Effective Income Taxes	-	-

EnerDynamic Hybrid Technologies Corp. Notes to the Consolidated Financial Statements For the Year Ended November 30, 2020

21. Income Tax (continued)

Deferred income tax assets and liabilities result primarily from differences in recognition of certain timing differences that give rise to the Company’s future tax assets (liabilities) and are as follows:

	2020	2019
	$	$
Temporary differences
Share issue costs	209,296	191,549
Amortization	1,709,322	1,943,814
Non-capital loss	16,433,269	15,042,962
Tax assets not recognized	(18,351,887)	(17,178,325)

As at November 30, 2020, there were approximately $62,012,000 (2019: $56,765,000) in tax losses that may be applied against earnings of future years, not later than as follows:

	Losses	Expiration
	$	$
2013	292,000	2033
2014	3,602,000	2034
2015	14,808,000	2035
2016	14,288,000	2036
2017	8,979,000	2037
2018	8,882,000	2038
2019	5,914,000	2039
2020	5,247,000	2040
	62,012,000

22. Subsequent Events

January 8, 2021, the company announced that it completed a non-brokered private placement of $1,000,000. The private placement is comprised of 20,000,000 units at a price of $0.05 per unit. Each unit consists of one common share and one common share purchase warrant, with each whole warrant being exercisable for one common share of the Company at a price of $0.05 per share for a term of 36 months

On January 19, 2021, the company held its annual general and special shareholders meeting. At that meeting the shareholders approved a consolidation of the issued and outstanding shares of the company on a basis of up to 20:1 within 12 months at the Board of Directors discretion.

January 28, 2021, the company announced the signing of an agreement to acquire Windular Research and Technologies Inc. ("WRT") on January 22, 2021, and its plans to concomitantly consolidate its shares 20-for-1, convert its existing debentureholders' debts, and raise up to $18 million in financing by way of a private placement, all subject to the approval of the TSX Venture Exchange.

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EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis For the Year Ended November 30, 2020 (Expressed in Canadian Dollars)

Dated

March 30, 2021

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

This Management Discussion and Analysis of financial position and results of operations (the “MD&A”) of EnerDynamic Hybrid Technologies Corp. (“the Company” or “EHT”) is prepared as of March 30, 2021. The following information should be read in conjunction with the consolidated financial statements and accompanying notes of EnerDynamic Hybrid Technologies Corp. for the year ended November 30, 2020, copies of which are available on SEDAR at www.sedar.com.

The Company’s certifying officers, based on their knowledge, having exercised reasonable diligence, are also responsible to ensure that these filings do not contain any untrue statement of a 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 was made, with respect to the period covered by these filings, and these financial statements together with the other financial information included in these filings. The Board of Directors approves the Financial Statements and MD&A and ensures that management has discharged its financial responsibilities.

All dollar figures stated herein are expressed in Canadian dollars, unless otherwise specified.

Forward Looking Statements

This MD&A includes certain forward-looking information and forward-looking statements (collectively "Forward-Looking Statements") concerning the future performance of the Company’s business, operations and financial performance and condition, as well as management's objectives, strategies, beliefs and intentions. Forward-Looking Statements are frequently identified by such words as "may", "will", "plan", "expect", "anticipate", "estimate", "intend" and similar words referring to future events and results.

Forward-Looking Statements are based on the current opinions and expectations of management based on currently available information. All Forward-Looking Statements are inherently uncertain and subject to a variety of risks and uncertainties, some of which are described throughout this MD&A. Such Forward-Looking Statements are based on a number of assumptions, including but not limited to, information or statements concerning the Company’s expectations for its ability to raise capital and meet the Company’s obligations. Should one or more risks and uncertainties materialize, or should any assumptions prove incorrect, then actual events or results may differ materially from those expressed or implied in the Forward Looking-Statements. Investors are cautioned against placing undue reliance thereon. The Company will provide the reader with revised or updated Forward-Looking Statements in accordance with section 5.8(2) of National Instrument 51-102.

Statement of Compliance with International Financial Reporting Standards

The consolidated financial statements upon which this Management Discussion and Analysis is based have been prepared in accordance with accounting policies consistent with International Accounting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”) in effect for the Company’s reporting year ended November 30, 2020. The accounting policies adopted are consistent with those of the previous financial year in addition to the adoption of IFRS 16 Right of Use policy.

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

I. Our Business
II. Corporate Strategy
III. Corporate Update IV. Operations
V. Results of Operations
VI. Financial Position
VII. Protection of Intellectual Property
VIII. Risk and Uncertainties
IX. Off Balance Sheet Arrangements
X. Related Party Transactions
XI. Disclosure Controls
XII. Subsequent Events

Appendix “A” Narrative Description of Business

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

I. Our Business

EnerDynamic Hybrid Technologies Corp. designs, develops, manufactures, assembles, and distributes structural building systems including modular building/home systems with integrated hybrid alternative energy systems known as the ENERTEC Product Line.

The ENERTEC product line includes patent pending, ultra-light solar panels, modular buildings/homes, controlled environment growing pods and alternative energy producing mobile trailers. When augmented with inverter and battery energy solutions, ENERTEC products create self-sufficient energy production in off-grid or damaged-grid environments.

Modular buildings and homes can be either revenue generating/cost reducing, by sending the electrical output into the electrical grid, or a self-contained system that stores electricity in batteries for current and future use. In either scenario, the building or home is designed to generate and provide emergency power in the event of grid failure. Products just reaching commercialization include the ENERTEC PWR Wagon and the ENERTEC controlled environment growing pod. The PWR Wagon site trailers/portable energy trailers provide generation and supply on construction sites, outdoor events, weddings, and remote locations on a small trailer haulable by virtually any vehicle with a hitch. The ENERTEC controlled environment growing pod provides self-contained, energy producing, off grid, contaminant free growing environments for high value crops.

Additional information is provided in Appendix “A” to this MD&A document.

COVID-19

The worldwide pandemic situation of Covid-19 has caused significant future uncertainty. Business interruption due to government mandated closure of non-essential services, self-isolation, quarantine and other measures by businesses and people in general have led to disruption to worldwide commercial activity. The impact of the pandemic situation to the economy, various industries, and the environment in which the company currently operates cannot be assessed at present. Federal and Provincial Governments are taking bold measures to bring it under control, however, the timeframe as to when the pandemic will be brought under control and the return to normalcy is not determinable at present.

The impact of Covid-19 may materially impact any forward-looking portions of this MD&A.

II. Corporate Strategy

The ENERTEC products are based around expanded polystyrene foam (“EPS”) which is light weight but can be expensive to ship. To address these cost issues, management has created a joint venture strategy to reach distant markets. The Company seeks out EPS manufacturers within targeted territories and looks to partner with a suitable organization. This allows for the ENERTEC products to be produced and assembled in geographically advantageous areas through the supply of proprietary components by EHT to the manufacturer. The solar portions of the ENERTEC line are patent pending and represent the portion of the ENERTEC product content exclusively produced by EHT. The Company is targeting governments and NGOs around the globe where proximity to market is critical in maintaining margins. Management is currently focussed on West Africa, Puerto Rico, and Canada.

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

III. Corporate Update

Business Advances During COVID-19 Pandemic

On July 2, 2020, the company announced a technology advancement on one of its new ENERTEC products that can be assembled in an hour or less. EHT has completed the design of a lightweight Unit that can be delivered to a home and assembled in one hour. The Unit measures 8' X 12' and can be used for: sleeping quarters; a quarantine unit; an office; a workshop and/or a playroom.

On July 9, 2020, the company announced a project finance agreement with Brevet Capital ("Brevet"), a leading global credit investment and specialty finance firm with a focus on the government sector. Under the terms of the agreement, Brevet will become EHT's exclusive capital provider to finance all EHT Grow Units sold to Canadian federal and provincial governments as well as other provincial agencies and institutions. The contemplated US$250 million lease financing facility will allow EHT to fulfill Grow Unit sales orders that are currently being negotiated and to pursue new orders.

On October 8, 2020, the company, through its Puerto Rico JV, signed a definitive agreement with WG Pitts Caribbean LLC ("Pitts") for the supply of the JV's building products initially for 100 homes. Pitts is an authorized government contractor in Puerto Rico for the Government of Puerto Rico and the United States Government and is currently working on projects that fall under the CDBG-DR-PR R3 program ("R3 Program") where payment is made by a US Government body to the Government of Puerto Rico. Pitts will work with the JV to build a greater volume of homes than it is currently able to build by utilizing the JV's innovative and unique building systems and part of the $100m line of credit that the JV has with Brevet Capital.

On October 19, 2020, the company signed an exclusive sales agreement with Matrix Inc., a national services company that focuses on the resource and services sectors, for the sale of 9' x 12' Heli-Units. These units are deployed by helicopter to resource development sites as required for living accommodations.

January 28, 2021, the company announced the signing of an agreement to acquire Windular Research and Technologies Inc. on January 22, 2021, and its plans to concomitantly consolidate its shares 20for-1 (the "Share Consolidation"), convert its existing debenture holders' debts and raise up to $18 million in financing by way of a private placement of EHT shares, all of which are subject to the approval of the TSX Venture Exchange.

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

Corporate Update by Region

The Company has made progress in bringing the ENERTEC products into new markets:

EBS (Domestic Market)

• Agreement with Cannadore College for synergistic activities around use of controlled environment grow pods. Cannadore College has launched a program to use the pods to facilitate the growth of fresh food for northern Ontario first nations communities. Management has moved this forward and have furthered the relationship with the Federal and Provincial Governments. Technology advancement continues within the growing pod at Cannadore and a staff researcher. Trials to date demonstrate a 20 to 40 percent faster growth rate of most fruits and vegetables in the controlled environment growing pods. Work continues with the Federal and Provincial Governments but due to covid-19, governments have not been as able to move on new initiatives as quickly as in the past.

• Application is in process to receive a license for a company to operate a Micro Grow on site at Company’s Niagara Falls facility. The license has been issued from Health Canada but the license from CRA has not been received. Both licenses are required before growing can commence.

• The company received an order from Matrix Aviation for 10 (9ft x 12ft) units for mining camps in the fall of 2020 and has manufactured and ship these units. It has received and now delivered a further order of 8 (9ftx12ft) units in the last weeks with additional units still to be processed and shipped.

• The Company sign a JV agreement with Apothio LLC., a US Hemp research company to build 2 grow units. EHT has received a deposit on the first unit and is completing drawings and engineering. The balance of the payment for the first unit and start of construction is expected in the third quarter of fiscal 2021 as site permitting has been delayed.

West Africa

• Burkina Faso government officials issued an open order for ENERTEC houses. EHT can deliver and build as many units as possible. EHT was targeting 1,200 units per annum by late 2019. Currently, EHT has put the order on hold due to political unrest in the country. Reassessment takes place on a monthly basis. Due to Covid-19, all projects are now on hold in Burkina Faso. No update is available as lockdown restrictions have stopped all travel.

• Advancement of Ivory Coast government orders followed management visits. EHT anticipated commencement of building in the fall of 2019. Regulators had advised that the site services required to commence construction would be completed by then however, the site continues to wait for final approval. Due to Covid-19 all projects in Ivory Coast are on hold. No update is available as lockdown restrictions have stopped all travel.

• Potential Ghana order related to Community Based Health Services units has advanced. The government has selected a site for the first unit and EHT expected to build the unit in 2019. It is now expected the project will be ready to advance in early 2021. No update is available as lockdown restrictions have stopped all travel.

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

Ghana order for UN Operations project has received funding and was expected to place the initial orders for rooftop solar on existing homes in the prior quarter. At meetings in January 2020, management determined the developer was 8 months behind in the project. Therefore, management expected to move forward with this project in late 2020. That has now moved to mid-fiscal 2021. No update is available as lockdown restrictions have stopped all travel.
Ghana project to build 100,000 homes with Unified Construction has moved ahead. Surveys are complete, appraisal of the land that came in at 64.3M USD. A lender has been arranged to supply project financing and a model house is ready to build. The project was slated to start middle of April 2020. Project financer has pushed financing approval until a new start date is established with a current target of mid-fiscal 2021. No update is available as lockdown restrictions have stopped all travel.
Due to the Covid-19 crisis all projects are on hold in Ghana with Management targeting midfiscal 2021 to resume. We are in constant contact with our JV partners in Ghana. We hope to start projects in the fall of this year, case counts and travel restrictions allowing.

United States-Puerto Rico

Extended delays in recovery funding have pushed the market expectations into the next fiscal year with funds only starting to flow into the marketplace in late 2020.
Planning for ENERTEC manufacturing/assembly in Puerto Rico is currently targeting June/July 2021 depending on travel restrictions.
EHT has an approved house design and has been certified by the government of Puerto Rico for all structural components of the home.
Signed LOI for $100M funding in July from Brevet Capital in New York. Management is currently working on the definitive agreements to supply the first block of homes. We have moved these agreements along and hope to have finalized in the next 60 days.
With the change in the US administration in January funds for the housing projects have been flowing steadily. Projecting to start the first homes in April/May fiscal 2021.

Proposed Financing

The Company continues to work on the proposed equity financing, the acquisition of Windular Research and a debt restructuring. The company anticipates being able to have this transaction completed in April 2021.

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

IV. Operations

The production capacity of the new facility has enabled the manufacturing of the controlled environment growing pods and various structure products. The ENERTEC products are divided into “Passive” and “Active” components. Passive components include wall, floor and roof panels that do not contain solar energy generation components.

The passive components are generally large sections of EPS foam encapsulated in the proprietary fiberglass skin. Each section is intended to be a roof, wall or floor in the final assembly. These components are expensive to ship due to their size and are the primary operational manufacturing supplied by joint venture partners within geographic regions outside of Canada.

Passive component manufacturing is available in Ghana, West Africa and is sufficient to service all West African markets. Additionally, further capacity will be available in Puerto Rico during fiscal 2021 when required.

Active components include the ENERTEC ultra-light solar panels. These patent-pending panels are exclusively manufactured in the Niagara Falls, Ontario facility and then shipped to the joint venture partners for finishing via integration into a passive component. Due to their light weight and size, the cost of shipping these components is significantly less than shipment of the passive components.

V. Results of Operations

The following tables set forth selected annual financial information for the years ended November 30, 2020 and 2019 respectively.

	Year Ended Nov 30, 2020	Year Ended Nov 30, 2019
	$	$
Revenue	219,269	135,714
Cost of Revenue	459,276	1,208,866
Gross Income (Loss)	(240,007)	(1,073,152)
Total Expenses	5,104,251	4,812,826
Net Loss	(5,344,258)	(5,885,978)
Other Expenses	155,838	4,583,635
Net and Comprehensive Income or (Loss)	(5,500,096)	(10,469,613)

During the fiscal year ended November 30, 2020, as indicated below, management utilized the federal wage subsidy program, rent subsidy program and the federal business loan program in efforts to maintain the human resources of the business. Management will continue to evaluate ongoing federal and provincial financial support programs and utilize those that benefit the organization.

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

Results of Operations (continued)

Revenue for the year ended November 30, 2020 was $219,269 (2019:$135,714). Revenues reflected growth despite currently strained and unpredictable economic conditions. During the year, revenue representing ENERTEC branded product sales was significantly impacted by the effects of Covid-19 on both customers and suppliers. These effects are pervasive and material across all operations and financial results.

Current year cost of revenue of $459,276 (2019:$1,208,866) reflects primarily the fixed overheads which could not be eliminated during Covid-19 and adjustments to rent related to the subsidy program. The government wage subsidy, representing an expense recovery, reduced the cost of revenue by $270,071 (2019:nil). Cost of revenues will remain distortive for an additional several quarters due to remaining low production volumes based on order through put and the impacts of Covid-19. Steady production of ENERTEC wall and roof panels will materially increase the margins by matching fixed overheads to higher production levels and capacity utilization rates. This is expected to occur during late fiscal 2021 but depends on the effectiveness of government vaccination programs.

Cost of revenues for the year includes $238,425 (2019:$301,540) in amortization and $43,602 (2019: $362,933) in occupancy costs. Amortization of production related assets, while constant in following unchanging amortization policies, reflects the sale of an asset and the age of the solar manufacturing equipment. The equipment remains fully functional, but its value continues to be written down as appropriate. Occupancy costs reflect credits related to the Covid-19 rent subsidy program. Rental costs were realized in prior periods due to uncertainty of eligibility but have now been adjusted following qualification for the rent subsidy program. Production related costs increased immaterially over the same period year over year to $176,147 (2019:$249,172).

Inventory and license fee expense was $63,055 (2019:$216,385) excludes any license fee related costs in the current year but reflects the ongoing net realisable value analysis of unused production inventory. Expenses reflect downward adjustments to material inventories tied to market changes in purchasing costs.

Gross margin of $(240,007) [2019:$(1,073,152)] provides little insight into business operations and reflects government wage and rent subsidy program impacts. Between Covid-19 impacts and continuing research and development, resulting commercial revenues fall well below those necessary to cover operating normal costs associated with the manufacturing/production facility. These margins are highly unlikely to be reflective of future business activities.

Expenses for the year of $5,104,251 were nominal changes from $4,812,826 in 2019 for several reasons. Overall, similar expenses were realized in most areas except for higher general and administrative expenses, regulatory and interest expenses while foreign exchange gains offset these higher costs.

General and administrative costs increased to $944,060 (2019:$803,874) due to Covid-19 controls and the addition of human resources in the product development area. General and Administrative expenses are expected to continue to rise in the next fiscal periods at an estimated annual rate of 20%30% and in step with economic activity increases. Contraction of human resources during the transition to ENERTEC products cannot be sustained if management is expected to deliver sustained growth, the increase of which will add further costs.

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

Results of Operations (continued)

Travel costs year to date of $65,669 (2019:$98,897) decreased with the majority of travel costs incurred in the third quarter of the year while Covid-19 was in retreat. Fiscal 2021 is likely to show limited travel expense but with the eventual return of general business travel, management believes that the use of technology during Covid-19 has permanently changed travel policies to limit travel to essential purposes only.

Non-cash, stock-based compensation expense of $473,000 (2019:$323,000) reflects stock options issued in the first quarter of the year and the associated Black Scholes calculated costs within the period.

Research and development costs of $846,491 (2019:$966,170) continue to reflect the expansion of ENERTEC product offerings. During the Covid-19 period, management turn the company’s workforce back towards research/development to create products that could tap into broader markets. The result was an immediate sale of the helicopter delivered, remote energy development site sleeping cabins. These did not exist prior to Covid-19 but now represent material revenue potential. Several versions were demolished testing structural strength, discarded due to redesign for production efficiencies and modified for user comfort and air flow management.

Regulatory costs increased to $183,951 (2019:$ 134,657) as a result of increased fees associated with capital raising to provide cashflow support required due to reduced business activity associated with Covid-19 and market conditions. Also included are costs associated with the shutdown and windup of the Luxenberg subsidiary.

Foreign exchange gains of $(65,641) [2019:$(21,683)] reflect fluctuations in Canadian dollar value against both the US dollar and Euro related primarily to historic accrued liabilities.

Interest expense increased to $2,194,822 (2019:$1,918,438) as a result of the adoption of IFRS 16 Leases which realizes the net present value of the lease on the premises in which the organization is located. While the vast majority of interest expenses are associated with debenture financing instruments representing $1,763,812 (2019:$1,807,586), in this initial period of adoption of IFRS 16, a total of $308,317 (2019:$nil) was reported.

A comprehensive expense item of gain or loss on disposal of a fixed asset reflects the profitable sale of a redundant piece of solar production equipment where the sale price exceeded book value by $10,632. In 2019 a disposal represented a loss of $58,790. This disposal of fixed production assets is likely to continue over the coming two fiscal periods as aging equipment is replaced with more efficient production technology. Current interest rates will continue to make financing capital expenditures attractive from a cash management standpoint.

Comprehensive legal settlement provision represents an accrual taken by management of $165,823 related to potential exposure in a litigation case where such exposure can be reasonably assessed. In the prior period of fiscal 2019, a significant provision of $4,183,739 was taken related to litigation involving certain debenture holders.

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

Broadly analysed, the Statement of Operations and Comprehensive Loss reflects the material impact of Covid-19 and the conscious decision to add new ENERTEC products to facilitate domestic business activities.

Inventory decreased to $392,090 (2019:$609,411) as a result of year end write-downs and consumption of materials in the product development process and order production. While prepaid expenses of $246,369 (2019:$ 168,915) reflects long lead time inventory in transit protracted by Covid19 issues.

The addition of a right of use non-current asset of $1,015,034 (2019:nil) reflects the value of the premises lease under IFRS 16 adoption. The corresponding current liability of $280,512 (2019:nil) and non-current liability of $929,482 (2019:nil) reflect the offset against the non-current asset.

A decrease in Accounts Payable and Accrued liabilities to $10,936,288 (2019:$11,461,598) reflects normal business activities.

VI. Financial Position

Below is a summary of the position of the Company for the year ended November 30, 2020 and 2019.

As At	2020	2019
	$	$
Financial Assets
Cash and cash equivalents	184,889	132,825
Accounts receivable	113	11,014
Inventories	392,090	609,411
Prepaid expenses	246,369	168,915
Other current assets	77,889	303,678
Due from related party	144,548	-
Financial Liabilities
Amounts payable and accrued liabilities	10,936,288	11,461,598
Current portion of lease liability	280,512	-
Debenture interest payable	8,308,007	6,559,001
Due to related parties	1,025,788	1,000,119
Debentures payable 18%	3,000,000	10,070,500
Debenture Payable 6.5%	10,070,500	3,000,000

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

Debentures Payable

Those debenture holders also agreed to an adjusted annual interest rate of 8% per annum. In September 2018, three debenture holders filed suit against the Company seeking to unwind a settlement agreement related to the conversion of a $1,003,500 of their total $3,345,000 of debenture principal into common shares of the company. If the plaintiffs are successful, the parties could be entitled to exchange the common shares issued for the original debentures that were cancelled and the related accrued interest. The final outcome of the case is not determinable at present, however, the likelihood of a settlement has increased and as a result, management has accrued for a potential settlement obligation. Litigation has progressed to discoveries.

I.The aggregate principal amount of the particular 18% debentures that were not exchanged for units pursuant to the debt settlement agreements is $4,226,000. *

II.The aggregate remaining principal amount of particular 18% debentures that were modified pursuant to debt settlement agreements is $3,503,000.
III.Aggregate remaining principal amount of the particular 18% debentures that are the subject of the litigation is $2,341,500. **

IV.The aggregate principal amount of all the 18% debentures that remain outstanding is * $10,070,500.

* In the absence of a negotiated settlement, the remaining unmodified debentures continue to accrue interest at 18% per annum per the original agreement.

** Does not include $1,003,500 of aggregate principal of the particular 18% debentures that are subject of litigation that have been converted into common share units.

* The aggregate principal amount of the particular 18% debentures that were previously exchanged for units pursuant to the debt settlement agreements was $2,991,500.

The total interest expense for the year ended November 30, 2020 on the debentures amounted to $1,763,812 (2019:$1,807,586).

VII. Protection of Intellectual Property

Management of EHT intends to protect its intellectual property and secure proprietary protection by obtaining various patents and trademarks. EHT currently has pending patents that it expects will provide the necessary protection of its “know how”, trade secrets, and other intellectual property. Specifically, the Company has filed patents and patent applications for an embedded solar panel technology which supports its structural building products line, the PWR wagon and the ultra-light solar panels. Management is not aware of any infringement issues or challenges related to the Company’s proprietary property.

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

VIII. Risks and Uncertainties

The Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to market conditions and the Company’s activities. The Company has exposure to credit risk, liquidity risk and foreign exchange risk as a result of its use of financial instruments. Below information presents information about the Company’s exposure to various risks and the Company’s objectives, policies and processes for measuring and managing these risks. Further quantitative disclosures are included throughout this MD&A. The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Board has implemented and monitors compliance with the risk management policies as set out herein:

Investing in the securities of EHT involves a high degree of risk. Prospective investors should carefully consider the risks described below, together with all the other information included in the consolidated financial statement, before purchasing shares of EHT securities. There are numerous and varied risks, known and unknown, that may prevent EHT from achieving its goals. The risks described below are not the only ones EHT will face. If any of these risks actually occurs, EHT’s business, financial condition or results of operations may be materially adversely affected. In that case, the trading price of EHT’s securities could decline and investors in securities of EHT could lose all or part of their investment.

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

The significant risks include the following:

Market Risk/Market Price of Securities

The market price of the Company’s common shares could be subject to significant fluctuations and may decline below the purchase price of the common shares. Some of the factors that may cause the market price of the shares to fluctuate include:

(a) volatility in the market price and trading volume of comparable companies;
(b) actual or anticipated changes or fluctuations in our operating results or in the expectations of market analysts;
(c) adverse market reaction to any indebtedness the Company may incur or securities that may be issue in the future;
(d) short sales, hedging and other derivative transactions in the shares;
(e) litigation or regulatory action against the Company;
(f) investors’ general perception of the Company and the public’s reaction to press releases, other public announcements and filings with Canadian securities regulators, including the Company’s financial statements;
(g) publication of research reports or news stories about the Company, its competitors or its industry;
(h) positive or negative recommendations or withdrawal of research coverage by securities analysts;
(i) changes in general political, economic, industry and market conditions and trends;
(j) recruitment or departure of key personnel;
(k) significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving the Company or its competitors.

These factors, as well as other related factors, may cause decreases in asset values that are deemed to be other than temporary, which may result in impairment losses. Certain institutional investors may base their investment decisions on consideration of our environmental, governance and social practices and performance against such institutions’ respective investment guidelines and criteria, and failure to satisfy such criteria may result in limited or no investment in the Company by those institutions, which could materially adversely affect the trading price of the common shares of the Company. There can be no assurance that continuing fluctuations in price and volume will not occur. If such increased levels of volatility and market turmoil continue for a protracted period of time, our operations and the trading price of the common shares may be materially adversely affected.

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

Risks and Uncertainties (continued)

Broad market and industry factors may affect the market price of the common shares. Hence, the price of the common shares could fluctuate based upon factors over which the Company has no control, and these fluctuations could materially affect the price of the common shares regardless of operating performance.

Competition

Solar Panels and Structural Building Products

Because the Company’s industry is highly competitive and has relatively low barriers to entry, the Company may lose market share to larger companies that are better equipped to weather deterioration in market conditions due to increased competition. The Company may in the future compete for potential customers with solar energy providers and structural product manufacturers. Some of these competitors may have significantly greater financial, technical, and marketing resources and greater name recognition than the Company. The Company believes the principal competitive factors in the renewable energy and structural products industries include:

(a) responsiveness to customer needs;
(b) availability of technical personnel;
(c) supply and pricing of system components;
(d) speed of system design and installation;
(e) quality of service and price;
(f) project management capabilities;
(g) technical expertise and installation technology;
(h) company reputation; and

The Company believes that its ability to compete also depends in part on a number of factors beyond its control, including:

(a) the ability of the Company’s competitors to hire, retain and motivate qualified technical personnel;
(b) the ownership by competitors of proprietary tools to customize systems to the needs of a particular customer;
(c) the price at which others offer comparable services and equipment;
(d) the extent of the Company’s competitors’ responsiveness to client needs; and
(e) the ability of competitors to manufacture greater volumes of products.

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

Risks and Uncertainties (continued)

Ability to Protect Intellectual Property

The Company relies to some degree upon its intellectual property rights to protect its proprietary technologies. Risks associated with the Company’s ability to protect such rights include changes to intellectual property laws, patent rights not being granted or construed as expected, steps taken to prevent misappropriation or infringement of the Company’s proprietary rights may not be successful, and third parties may be able to develop or obtain patents for similar competing technology.

Dependence on and Retention of Key Personnel

The success of the Company’s business depends on the continuing contributions of John Gamble and other key personnel. The Company relies heavily on the services of John Gamble, the Company’s Chief Executive Officer as well as several other management personnel. Loss of the services of any of such individuals would adversely affect the Company’s operations. In addition, the Company believes its technical personnel represent a significant asset and provide the Company with a competitive advantage over many of the Company’s competitors. The Company believes its future success will depend upon its ability to retain these key employees and its ability to attract and retain other skilled financial, engineering, technical and managerial personnel.

Reliance on Third Party Manufacturers and Availability of Raw Materials

The Company is dependent upon its suppliers for the components used in the systems it designs and products that it produces. Its major suppliers are dependent upon the continued availability and pricing of silicon, neodymium, and other raw materials used in solar modules and fiberglass reinforced Fire Retardant Structural Insulated Panel (“ FRSIP ”). The components used in the Company’s systems are currently purchased from a limited number of manufacturers.

The Company is subject to market prices for the components that it purchases for its installations, which are subject to fluctuation. In particular, China currently controls over ninety percent (90%) of the global supply of neodymium, which is a rare-earth metal in limited supply. Accordingly, the market price of neodymium is subject to significant fluctuation. This fluctuation impacts the costs of solar cells, a component in some of the Company’s products.

The Company cannot ensure that the prices charged by its suppliers will not increase because of changes in market conditions or other factors beyond its control. An increase in the price of components used in the Company’s systems could result in an increase in costs and could have a material adverse effect on the Company’s revenues and demand for its services.

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

Risks and Uncertainties (continued)

Regulatory Environment

Existing regulations, and changes to such regulations, may present technical, regulatory and economic barriers to the purchase and use of structural products and solar power products, which may significantly reduce demand for the Company’s products.

Installation of structural building systems and solar systems are subject to oversight and regulation in accordance with national and local ordinances, building codes, zoning, environmental protection regulation, utility interconnection requirements for metering and other rules and regulations. The Company intends to keep up-to-date with respect to these requirements on a national, provincial, and local level, and must design systems to comply with varying standards. Certain cities may have ordinances that prevent or increase the cost of installation of its solar systems. In addition, new government regulations or utility policies pertaining to solar power systems are unpredictable and may result in significant additional expenses or delays and, as a result, could cause a significant reduction in demand for solar energy systems and the Company’s services.

The performance of the Company’s business depends largely upon whether the applicable regulatory environment is favourable, particularly with respect to continuing operations and the future growth of the alternative energy industry in Canada, North America in general and throughout global target markets including the West Africa region. Government regulations, incentives, and market design in some markets currently have a favourable impact on the building of structural building systems and solar power systems. In the event that the current governmental regulations, incentive programs or market design in some markets undergo change, the Company’s business may be adversely affected, resulting in an adverse effect on the Company’s financial condition, results of operations, and the value of its securities.

Reliance on Distributors and Key Customers

The Company expects to use a direct selling strategy for its primary products being the ENERTEC structural building systems and the ENERTEC ultra-light solar panels. Management has yet to determine the distribution model for its ENERTEC PWR Wagon and ENERTEC Carport products. Licencing revenue models in connection with these products is an option that includes licencing its products to OEMs and distributors that have established businesses and customers in each target market and establishing joint ventures and global alliances to licence or acquire complementary technologies and undertake co-development programs. There is some risk that these relationships could be terminated or cancelled by distributors or licensees, which would result in material adverse effects on the Company’s financial condition and business.

Success of New Products

The Company is in the business of developing innovative products. As such, it is difficult to anticipate how the market will receive such products and whether sustainable demand for the Company’s products will emerge. There are risks associated with the Company’s ability to generate demand for its innovative structural building systems and solar power systems, as further set out below.

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

Risks and Uncertainties (continued)

Management of Growth

The Company may be unable to achieve profitability by increasing net sales, expanding the range of its products and services or entering new markets in the future. There can be no assurance that the Company will be able to expand the sales of its business or any subsequently acquired businesses. Various factors, including demand for the Company’s products and services and its ability to expand the range of the Company’s product and service offerings and to successfully enter new markets, may affect the Company’s ability to maintain or increase the net sales of its business or any subsequently acquired businesses. In addition, to manage growth effectively the Company must expand and improve its operational, financial, and other internal systems and attract, train, motivate and retain qualified employees. Expenditures related to the Company’s growth initiatives may negatively affect its operating results, and the Company may not realize any incremental profitability from its growth and expansion efforts.

Managing Customer Expectations

The Company’s failure to meet a client’s expectations in the performance of its services, and the risks and liabilities associated with serving clients could give rise to claims against the Company.

Attraction and Retention of Employees

If the Company is unable to attract, train and retain highly qualified personnel, the quality of the Company’s services may decline, and it may not successfully execute its internal growth strategies.

The Company’s success depends in large part upon its ability to continue to attract, train, motivate and retain highly skilled and experienced employees, including technical personnel. Qualified technical employees periodically are in great demand and may be unavailable in the time frame required to satisfy the Company’s customers’ requirements. While the Company currently has available technical expertise sufficient for the requirements of its business, expansion of its business could require the Company to employ additional highly skilled technical personnel. The Company expects competition for such personnel to increase as the market for structural building systems and solar systems expands. There can be no assurance that the Company will be able to attract and retain sufficient numbers of highly skilled technical employees in the future. The loss of personnel or the Company’s inability to hire or retain sufficient personnel at competitive rates of compensation could impair the Company’s ability to secure and complete customer engagements and could harm the Company’s business.

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

Risks and Uncertainties (continued)

Litigation, Regulatory Proceedings, and Warranty Claims

Although the Company undertakes to ensure that its products and services comply with applicable regulatory requirements, internal standards, contractual obligations, and that its products perform effectively and safely, customers may claim that products do not meet contractual requirements and customers may be harmed by the use or misuse of such products. This could give rise to breach of contract, warranty or recall claims, or claims for negligence, product liability, strict liability, personal injury or property damage. Insurance coverage may not be available or adequate in all circumstances. Claims may also arise in connection with patent infringement, environmental liabilities, commercial agreements, competition law, employment law and employee benefits issues, as well as other regulatory matters. As such, there can be no assurance that the Company will not incur significant costs to defend or resolve potential claims. The final outcome with respect to outstanding, pending or future actions cannot be predicted with certainty, and therefore there can be no assurance that their resolution will not have an adverse effect on the financial condition or results of operation of the Company in a particular quarter or fiscal year.

Expansion Across Borders

Geographical business expansion efforts the Company makes could result in difficulties in successfully managing its business and consequently harm its financial condition.

As part of the Company’s business strategy, it may seek to expand by acquiring competing businesses or customer contracts in its current or other geographic markets. The Company cannot accurately predict the timing, size and success of its expansion efforts and the associated capital commitments that might be required. The Company expects to face competition for expansion candidates, which may limit the number of expansion opportunities available to the Company and may lead to higher expansion costs. There can be no assurance that the Company will be able to identify, acquire or profitably manage additional businesses/contracts or successfully integrate acquired businesses/contracts, if any, into its company, without substantial costs, delays or other operational or financial difficulties. In addition, expansion efforts involve a number of other risks, including:

failure of the expansion efforts to achieve expected results;
diversion of management’s attention and resources to expansion efforts;
failure to retain key customers or personnel of the acquired businesses; and
risks associated with unanticipated events, liabilities or contingencies.

Client dissatisfaction or performance problems at a single acquired business could negatively affect the Company’s reputation. The inability to acquire businesses on reasonable terms or successfully integrate and manage acquired companies, or the occurrence of performance problems at acquired companies, could result in dilution, unfavourable accounting charges and difficulties in successfully managing the Company’s business.

Currency risks arise with the possible expansion of the Company’s business across borders and into emerging markets. Fluctuations in exchange rates will give rise to foreign currency exchange exposure. The Company does not hedge against foreign exchange risk and there can be no assurance that any hedging undertaken by the Company will be successful and this may result in a material adverse effect on the Company’s financial condition and business.

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

Risks and Uncertainties (continued)

Technological Advances

The Company will experience technological changes in its industry; some new technologies may prove inappropriate and result in liability to the Company or may not gain market acceptance by its customers.

The renewable energy industry is subject to technological change. The Company’s future success will depend upon its ability to respond appropriately to changing technologies and changes in function of products and quality. If the Company adopts products and technologies that are not attractive to consumers, the Company may not be successful in capturing or retaining a significant share of its market. In addition, some new technologies are relatively untested and unperfected and may not perform as expected or as desired, in which event the Company’s adoption of such products or technologies may give rise to material adverse effects.

Uncertainty in Solar Panel and Structural Buildings Products Markets

The structural building system and solar system markets are at an early stage of development, and market data is not readily available. There is no assurance that these technologies will be commercially viable and gain market acceptance in the long-term.

Sector Specific

A drop in the retail price of conventional energy, or non-solar energy sources may have a negative effect on the Company’s business.

The Company believes that a customer’s decision to purchase or install solar systems is primarily driven by the cost and resultant return on investment from solar power systems. Fluctuations in economic and market conditions that impact the prices of conventional and non-solar alternative energy sources, such as decreases in the prices of oil and other fossil fuels, could cause the demand for solar systems to decline, which would have a negative impact on the Company’s business and results of operations. Changes in utility electric rates or net metering policies could also have a negative effect on its business.

The Company believes that a customer’s decision to purchase or install structural building products, in the case of its primary targeted national governments, is a social advancement-based decision. Providing housing and power of any kind in many of the African target markets is a broad social mandate but there remain no assurances that the financial capability to align those mandates will materialize.

Climate Risks

The effectiveness of solar systems depends heavily upon local weather conditions. Solar systems are necessarily impacted by the levels of sunshine. Accordingly, local weather conditions will make it difficult for the Company to accurately forecast production levels.

Additionally, there can be no assurance that the Company’s products will be able to withstand extreme weather conditions, particularly in remote areas, which present further risks in preventing the supply, delivery, and installation of products.

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

Risks and Uncertainties (continued)

Foreign Jurisdiction Political Risks

The Company’s growth strategy includes expansion into emerging markets. Operating in foreign jurisdictions subjects the Company to such jurisdiction’s regulatory environment as well as political climate. Political risks include discriminatory governmental actions, acts of expropriation or nationalization, currency inconvertibility and non-transfer, political violence including war and terrorism, and contract frustration due to political events. Operating in environments that experience extreme poverty presents further risks with respect to theft or extortionist tactics applied to extract money or other goods from the Company. Such political risks are outside of the control of the Company and the materialization of any one of the aforementioned risks may have an adverse effect on the operations of the Company.

Termination of Key Agreements

In the event that any key agreements or any other material agreements are terminated, the payment of penalties or fees by the Company may be required. The payment of any such penalties or fees or the termination of such contracts could have a material adverse effect on the business, financial position, or results of operation of the Company or the value of the Company’s securities.

Force Majeure

The occurrence of a significant event which disrupts the ability of the Company to produce or sell its products may have a material adverse effect on the business, financial position, or results of operations of the Company or the value of the Company's securities. Covid-19 may fall into this category.

Health, Safety and Environmental Risks

The ownership and operation of the Company's business carries a risk of liability related to worker health and safety and the environment. The occurrence of any government orders, investigations, inquiries or other proceedings relating to health, safety and environmental matters could have a material adverse effect on operations and/or result in additional material expenditures.

Uncertainty of Additional Funding

Further operations will require additional capital and will depend on the Company's ability to obtain financing through debt, equity, or other means. The Company's ability to meet its obligations and maintain operations is contingent upon successful completion of additional financing arrangements. Although the Company has been successful in raising funds to date, there is no assurance that the Company will be successful in obtaining the required financing or refinancing its existing financing in the future or that such financing or refinancing will be available on terms acceptable to the Company. In addition, any future financing may also be dilutive to existing shareholders of the Company.

IX. Off-Balance Sheet Arrangements

The Company has not entered into any off-balance sheet transactions.

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

X. Related Party Transactions and Balances

Amounts receivable from and payable to related parties are as follows:

	2020	2019
	$	$
Receivable
Due from a related party	144,548	-
Payable
Due to director – Bruce Bent	-	267,921
Due to director - John Gamble	176,678	127,261
Due to non-executive employee	50,000	73,748
Due to MSW/MDA (lenders related to Bruce Bent)	799,110	531,189
	1,025,788	1,000,119

The amounts due to a director - Bruce Bent are due on demand. Management expects to repay the amounts within the next 12 months.

Summary of Management Fees and Compensation

	2020	2019
Title	$	$
Management Salaries and Fees	330,000	330,000
Other Benefits	7,825	8,087
Total	337,825	338,087

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

XI. Disclosure Controls

Management and the Board of Directors have instituted review procedures on all the periodic filings. The Board has established a Disclosure Committee consisting of two Directors. Committee charters have been developed and ratified by the Board of Directors.

The Board of Director’s engages legal counsel as required to provide guidance and commentary on our news releases.

Management has determined that its disclosure controls and procedures meet required standards at November 30, 2020. The disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in its various reports is recorded, processed, summarized, and reported accurately. In spite of its evaluation, management does recognize that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance and not absolute assurance of achieving the desired control objectives.

XII. Subsequent Events

Additional Information

Additional information relating to EnerDynamic Hybrid Technologies Corp. can be found on the Company’s website including contact information at www.ehthybrid.com and www.sedar.com

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

APPENDIX “A” Narrative Description of the Business

EHT Structural Building Line

Understanding the ENERTEC Product

Modular buildings and homes as well as some traditional construction can be based upon or utilize prefabricated panels classified as structural insulated panels (“ SIP ”). The Structural Insulated Panel Association defines a SIP as:

Structural insulated panels (SIPs) are a high-performance building system for residential and light commercial construction. The panels consist of an insulating foam core sandwiched between two structural facings, typically oriented strand board (OSB). SIPs are manufactured under factorycontrolled conditions and can be fabricated to fit nearly any building design. The result is a building system that is extremely strong, energy efficient and cost effective. Building with SIPs will save you time, money, and labor.

A typical SIP consists of oriented strand board (“ OSB ”) skins on both the interior and exterior side of the molded expanded polystyrene (“ EPS ”) insulation core. However, for interior wall applications this type of SIP must be finished on the interior with drywall or another building code approved 15-minute thermal barrier that protects the foam. This means a mandatory additional building material layer is required on every inside surface significantly increasing cost, construction time and minimum worker skill requirements.

Example of a traditional SIP indicating the need for interior thermal protection:

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The ENERTEC structural insulated panel has expanded the traditional definition to become a Fiberglass Reinforced Fire Retardant Structural Insulated Panel (“ FRSIP ”). Utilizing a proprietary formula in creating and fireproofing a fiberglass sheet, the expanded polystyrene (“ EPS ”) insulation core is sandwiched between two layers of the sheet material, also known as the “skin”.

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

Narrative Description of the Business (continued)

Below is a close-up of a thin ENERTEC FRSIP (2 inches) showing the thin “skin” on each side of the EPS core. The FRSIP can be produced in much thicker dimensions for added insulation value.

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This ENERTEC FRSIP is up to 40% lighter than a traditional SIP and up to 60% lighter than one with a mandatory interior covering. Requiring no such additional interior covering, the ENERTEC panel is rapid to install, easier to transport, incurs lower direct labour installation costs and is tool friendly. The FRSIP can easily accept any inner covering like drywall or tiles should the customer wish to install them.

The ENERTEC FRSIP recently received its UL Class II or class B fire rating, meeting Canadian National Building Code (“ CNBC ”) requirements for virtually all building applications. Meeting the CNBC requirements ensures the ENERTEC FRSIP will meet or exceed virtually all international codes as the CNBC is considered one of the strongest and comprehensive building codes in the world.

Not only is the ENERTEC system simplistic and easy/fast to install but the ENERTEC FRSIP's further advances the goal of eliminating mould in cold and/or damp environments while enhancing fire resiliency.

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

Narrative Description of the Business (continued)

Below is information on the proprietary fire-retardant fiberglass “skin” materials and production line:

==> picture [229 x 165] intentionally omitted <==

ENERTEC Product Line

The ENERTEC FRSIP product line consists of several components, each classified as one of two types:

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The Passive Components

The passive components include floor panels, interior or exterior wall panels and basic/passive roof sections of ENERTEC FRSIP’s. These components provide structure and immense insulation value to conserve energy but do not themselves generate energy.

The FRSIP components are available in standard thicknesses of 1, 4, and 6 inches, however, thicknesses up to 12 inches are available. The Company can produce FRSIP sections up to 40 feet in length and up to 10 feet in width with greater widths available for custom applications.

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

Narrative Description of the Business (continued)

A “wall” or “floor” or “passive roof” module simply identifies the purpose with which a FRSIP has been produced, cut and customized to suit a particular product or application. A wall becomes a wall when a window or door opening is cut, and a passive roof becomes that when the intersecting angles are cut.

An ENERTEC modular building begins with an engineered drawing or blueprint, either custom to a customer’s needs or one of the stock ENERTEC models. The FRSIP modules are then produced to the thickness, length, and width to meet the engineered requirements. Thereafter, customization takes place to each module including the cutting of door and window openings after which the product is ready to ship with a one-story building shipping in a single 40-foot container.

ENERTEC modules are joined with advance, application specific adhesives and joint sealing membranes.

The Active Components

At the core of the active ENERTEC product line is the ENERTEC FRSIP Embedded Solar Roof Module. Traditional solar cells are embedded in the proprietary fireproof skin of the FRSIP. Generally, the embedded solar cells are used in roof panels however, customers may request embedded solar panels on side, front and/or back walls of a structure to increase the amount of energy generated in a daily sun cycle.

The ENERTEC embedded solar cells result in substantial cost savings by eliminating heavy glass panels and aluminum racking required for traditional solar panels including expensive rooftop labour. Two barriers to the greater application of solar energy are weight limitations of the roof on which solar panels could be deployed and onerous shipping and labour costs. ENERTEC FRSIP modules would need to be much thicker and thus more expensive if traditional panels were to be used. The development of embedded solar panels was intended to address this market limiting factor.

Furthermore, an ENERTEC home having embedded solar on its entire roof becomes a massive solar panel capable of producing significantly more energy than the home requires, allowing the structure to then become an important source of power for the local micro grid or large battery storage systems.

Manufactured using traditional solar panel production processes combined with customized assembly processes, the Company produces a leading-edge solar product representing a new generation of solar panels and solar panel installation methods.

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

Narrative Description of the Business (continued)

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Above: ENERTEC Roof Panels enduring long term quality control testing in the extreme Canadian environment.

The image below depicts an ENERTEC portable shelter capable of been moved and erected in a new location. Thanks to an integrated click-connect system, these passive and active panels can be rapidly connected for a semi-permanent, weatherproof, highly insulated building. The Company is refining specific models to permitted transportation by snowmobile in northern hemisphere markets.

==> picture [323 x 262] intentionally omitted <==

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

Narrative Description of the Business (continued)

The image below depicts a complete two-bedroom ENERTEC home installed in Ivory Coast, West Africa. This fully airconditioned house is entirely off-grid.

==> picture [397 x 248] intentionally omitted <==

The ENERTEC Ultra-light Solar Panel (EHT-SET 250/300)

The ENERTEC Ultra-light solar panel is a significant advancement in solar panel design and solar energy application. The Company has manufactured traditional solar panels for several years and ultimately has been moving away from this business segment due to low margins. The creation of the ENERTEC ultra-light panel has again created an expanded market for solar panels which will support panel production for sale as a standalone product.

The initial primary application of the ENERTEC ultra-light solar panel, known as “embedded” solar, was in the integration into the ENERTEC FRSIP creating the active panels in the modular structural building line. Through the addition of light weight framing, the “embedded” solar application deployed in the ENERTEC modular structural product line has been transformed into this advanced panel.

The two critical factors that make an effective solar panel are the level of created power output and the diverse application within the target markets. The ENERTEC panel generates expected and stable energy consistent with a traditional 60-cell or 72-cell panel (depending on the panel purchased). The critical evolution is the elimination of the heaviest components of any traditional solar system: the panel weight created by the thick tempered glass facing and the heavy, expensive, and labour-intensive racking system necessary to support and secure the traditional panel.

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

Narrative Description of the Business (continued)

==> picture [308 x 218] intentionally omitted <==

The ENERTEC ultra-light 250-watt panel weighs approx. 7.5kg compared to a traditional 250-watt panel which weighs approx. 18.5kg, a massive weight reduction in real world application.

The ENERTEC ultra-light panels are installed using small clips, stainless steel screws or building adhesive depending on the existing roof. No extruded aluminum racks penetrating the roof membrane, elevating the roof line and trapping organic matter to promote rot.

Tempered glass in traditional solar panels is costly as a raw material and costly to handle requiring the obvious handling, packing, stacking and loading/unloading precautions and limitations associated with glass logistics. The ENERTEC ultra-light solar panel contains no glass, there is nothing to crack or shatter and in fact, the ENERTEC solar panel demonstrates a massive decrease in post installation panel damage. From falling ice to children throwing rocks (the two most common sources of post installation damage), the ENERTEC panel now materially reduces that risk.

The glass in traditional panels also increases the surface and internal heat within a panel which in turn reduces actual energy production of the panel. Solar panels function best at temperatures in the 20.5C22.5C degree range while energy output decreases as temperature rises. A solar panel will see as much as a 20% reduction in energy generation when panel temperatures reach 36C. The ENERTEC solar panel reduces the product generated internal heat and thus increases energy output from exactly the same solar cell.

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

Narrative Description of the Business (continued)

The image below depicts ENERTEC solar panels on an outbuilding roof, the panels are attached with adhesive while cedar shake singles are added around the panels.

==> picture [329 x 161] intentionally omitted <==

The image below depicts ENERTEC ultra-light panels on a FRSIP roof clearly demonstrating the flat, tight layout provided by the embedded solar panels.

==> picture [426 x 186] intentionally omitted <==

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

Narrative Description of the Business (continued)

The PWR Wagon

The Company has recently finalized its “ PWR Wagon ” which generates solar power from every side and stores it in the onboard battery and power distribution system. Sides open upwards tripling the sky facing surface generating maximum power.

==> picture [295 x 245] intentionally omitted <==

The image below depicts the inside of the PWR Wagon containing batteries, inverters, charge controllers and a rack of power receptacles waiting to distribute power.

==> picture [391 x 212] intentionally omitted <==

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

Narrative Description of the Business (continued)

The PWR Wagon is a stock trailer customized to provide a remote site power source via its selfcontained solar energy system. All sides of the trailer are constructed of solar panels, feeding into an integrated battery bank. The trailer can provide up to 10kw of solar energy depending on the size of trailer and can store up to 10 kwh battery charging depending on the weight of the trailer, while a full charge requires 2 to 3 hours of daylight. Designed to allow for construction site charging of cordless tool battery packs, operation of power washers, fans, work lights and overnight charging of electric lifts, the applications are limited to the imagination of the site crew. The wagon is capable of powering a microwave oven or a low voltage cooler. A single PWR Wagon can charge over 1,000 smartphones simultaneously when outfitted for emergency services applications.

All day the wagon is continually charging and then maintaining the onboard battery banks. On most days, the energy input to the battery banks will exceed demand thus leaving the power available for overnight charging. When the flip up side walls are locked in the closed position tools are safely charging in a secure trailer.

Beyond the construction industry, the wagon can be used for outdoor events including camping, weddings, street parties and more. The logical access to the Wagon for these applications would be via local equipment rental agencies which can add the wagon to their rental stock.

The e trailer has been carefully balanced to allow for towing by virtually any vehicle with a hitch which includes cars and pickup trucks. Further, the trailer can be towed by ATV and even snowmobile to a remote site to power a cabin, homestead or emergency shelter.

ENERTEC Controlled Environment Growing Pod

The image below depicts a controlled environment growing pod which generates power to run growing lights, fans and irrigation for high value crop growing in a contaminant free environment.

==> picture [259 x 222] intentionally omitted <==

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

Narrative Description of the Business (continued)

The ENERTEC controlled environment grow pod is designed to allow the self contained growing of high value crops in locations that have neither a building nor grid power. These pods also make sense inside existing buildings were cross contamination of crops and strains are at issue.

Products in Development

The Company has now commercializing its worksite and emergency power trailer which is a selfcontained energy supply that can be pulled behind a pickup truck or weather emergency transport. This unit is capable of generating sufficient energy to charge tool batteries/forklifts/radios/fans and even a microwave oven on site or hundreds of smartphones: day or night. The Company has historically continually advanced its product offerings though internal research and development activities to ensure a steady pipeline of enhanced current products and new future products.

The target markets are broadly defined as commercial, local and regional governments and nongovernmental aid (NGO) organizations globally in addition to some retail distribution. The primary markets include Africa, South America, and North America.

The process by which the ENERTEC Ultra-light solar panel is manufactured is constantly under development to reduce material costs and increase production rates. Development includes trialing materials sourced globally, most of which fail the environmental endurance testing. This research will be perpetual as new materials develop. Management looks across industries and specifically beyond the energy markets for such advancements.

Method of Production and Distribution

ENERTEC Structural Building Product Line Manufacturing

The Company designs and manufactures all the structural building products from its manufacturing facility in Niagara Falls, Ontario. Various raw materials, including some custom produced components, are purchased from both local and international suppliers.

Primary and secondary raw materials are sourced from manufacturers that have multiple location production capacity while other components are easily sourced or produced at alternative suppliers. This ensures a stable and secure supply chain while reducing risk of interruption.

The Company intends to utilize regional manufacturing partners to produce its product in foreign markets and has established some relations which await product demand. In its target foreign market, the Company has established a West African manufacturing relationship which is intended to reduce product delivery lead time and logistics costs which would positively impacts margins.

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

Narrative Description of the Business (continued)

ENERTEC Ultra-light Solar Panel Assembly

Solar panel assembly involves the acquisition of a variety of components, sourced both locally and internationally, and then assembling such components to produce the desired finished product. There is limited but technical fabrication involved in the process.

ENERTEC PWR Wagon

The Company presently manufactures the PWR Wagon within its Niagara Falls manufacturing facility. It is anticipated that more stages in production will be outsources as demand for the product increases. Much of the basic work on the product is traditional fabrication and thus can be contracted externally for more efficient production cycles. Specific technical installations, finishing, quality control and packaging will remain within the Company’s direct control via its skilled workforce in Niagara Falls.

Operations

The operations of EHT are located at its head office and administration facility in Niagara Falls, Ontario. The Company operates entirely out of a 71,000 square foot facility that meets all of its needs and it is anticipated that it will continue to meet these needs for the foreseeable future.

The premises lease expires in September 2028, with annual rents payable totaling approximately $360,000.

The raw materials for all the Company’s products are generally available within modern economies. Much of the raw materials and components are imported from Europe and Korea for cost purposes, however, replacement of capacity can be undertaken within a short period of time in the event of disruption.

EHT is continually advancing its product offerings through internal research and development activities to ensure a steady pipeline of enhanced current products and new future products. The alternative energy industry is relatively new with rapid expansion and evolution expected. The Company aims to stay at the forefront of innovation through internally developed technologies or acquisitions of complementary products that would be accretive to its business. The transition to production of structural building products with hybrid energy products integration is an example of advancement and response to market demand.

EHTI produces its primary product, being its ENERTEC structural building products with integrated alternative energy technologies. The Company manufactures its Fiberglass Reinforced Structural Insulted Panels (“FRSIP) based on customer specific engineering drawings. Thereafter, contractors install the ENERTEC products on site. Additionally, the Company produces the ENERTEC ultra-light solar panel, the ENERTEC PWR Wagon and the ENERTEC Carport. All manufactured in the same Niagara Falls facility.

EnerDynamic Hybrid Technologies Corp. Management Discussion and Analysis

Narrative Description of the Business (continued)

The primary regulatory regime impacting the Company is the National Building Code of Canada which regulates the quality and safety of construction methods, design and product integrity within the construction industry. The ENERTEC FRSIP meets all requirements and has a Class II fire rating.

Environmental regulatory regimes can have a positive impact on education and product demand. There are no known planned regulatory changes anticipated to impact the Company in the short term.

EHT employed a total of 16 employees as at November 30, 2020 between administration and production positions. The Company makes extensive use of contractors across all operational segments where specialized knowledge is required.

Competitive Conditions

The Company, due to its diverse structural modular technology utilizing proprietary inputs and its embedded solar cell products (with a patent pending) has limited direct competitors at present. Competition comes from the modular building sector as well as the self-contained alternative energy segment of the energy market.

The Company is expected to hold a competitive advantage because of its proprietary technologies and market development advantage.

Notwithstanding the foregoing, there is some risk that the Company may lose market share to larger companies that are better equipped to weather deterioration in market conditions due to increased competition. The Company’s industry is subject to change and while barriers to entry do exist, they may not be sufficient to deter competition. The Company believes the principal competitive factors in the structural building and renewable energy sectors include:

(a) responsiveness to customer needs;
(b) availability of technical personnel;
(c) availability and prices of system components;
(d) speed of system design and installation;
(e) price;
(f) project management capabilities;
(g) company reputation; and
(h) installation technology.

It is possible that competition in the renewable energy segment could increase in the future, partly due to lower barriers to entry, as well as from other alternative energy resources now in existence or developed in the future. The structural building segment has higher barriers to entry but there is no assurance another party would not overcome them.

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Net Zero Renewable Energy Inc. — Audit Report / Information 2021

46651_rns_2021-09-10_eb574cb7-b5e6-493d-859b-8dd69b5fc450.PDF

Form 51-102F4

Business Acquisition Report

Item 1 Identity of Company

1.1 Name and Address of Company

1.2 Executive Officer

Item 2 Details of Acquisition

2.1 Nature of Business Acquired

2.2 Acquisition Date

2.3 Consideration

2.4 Effect on Financial Position

2.5 Prior Valuations

2.6 Parties to Transaction

2.7 Date of Report

Item 3 Financial Statements and Other Information

1. Audited Financial Statements of WRT

2. Audited Financial Statements of EHTC

NOTE REGARDING FORWARD-LOOKING STATEMENTS

WINDULAR RESEARCH AND TECHNOLOGIES, INC.

INDEPENDENT AUDITORS’ REPORT

Qualified Opinion

Basis for Qualified Opinion

Responsibilities of Management and Those Charged with Governance

for the Financial Statements

Auditors’ Responsibilities for the Audit of the Financial Statements

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WINDULAR RESEARCH AND TECHNOLOGIES, INC.

WINDULAR RESEARCH AND TECHNOLOGIES, INC.

WINDULAR RESEARCH AND TECHNOLOGIES, INC.

WINDULAR RESEARCH AND TECHNOLOGIES, INC.

1. Nature of Operations:

2. Significant accounting policies:

2. Significant accounting policies (continued):

Government contributions:

WINDULAR RESEARCH AND TECHNOLOGIES, INC.

2. Significant accounting policies (continued):

2. Significant accounting policies (continued):

WINDULAR RESEARCH AND TECHNOLOGIES, INC.

2. Significant accounting policies (continued):

(m) Income taxes:

3. Inventory:

WINDULAR RESEARCH AND TECHNOLOGIES, INC.

4. Equipment:

5. Intangible asset:

6. Accounts payable and accrued liabilities:

WINDULAR RESEARCH AND TECHNOLOGIES, INC.

7. Long-term debt:

8. Share capital:

9. Commitments and contingencies:

10. Deferred income taxes:

11. Critical accounting estimates and judgments:

(a) Income and sales taxes:

(b) Amortization expense:

(d) Impairment of financial assets:

11. Critical accounting estimates and judgments (continued):

(e) Impairment of intangible assets:

12. Related party transactions:

13. Capital management:

14. Financial risk factors:

(a) Credit risk:

(b) Liquidity risk:

14. Financial risk factors (continued):

15. Effects of COVID-19:

NOTICE TO READER

EnerDynamic Hybrid Technologies Corp.

EnerDynamic Hybrid Technologies Corp.

Table of Contents

COVID-19

INDEPENDENT AUDITOR'S REPORT

Opinion

Basis for Opinion

Material Uncertainty Related to Going Concern

INDEPENDENT AUDITOR'S REPORT

Other information

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

INDEPENDENT AUDITOR'S REPORT

EnerDynamic Hybrid Technologies Corp. Consolidated Statements of Financial Position As at November 30, 2020 and 2019

Net Zero Renewable Energy Inc. Audit Report / Information 2021