Questor Technology Inc. — Annual Report 2025

Apr 21, 2026

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Stated in Canadian dollars

	Notes	December 31, 2025	December 31, 2024
ASSETS
Current assets
Cash and cash equivalents		\$3,331,778	\$5,261,348
Investments	4	874,208	1,669,410
Trade, contract assets and other receivables	21	1,371,593	2,152,840
Inventory	5	472,688	448,307
Prepaid expenses and deposits	6	160,899	212,663
Current tax assets		32,144	16,896
Total current assets		6,243,310	9,761,464
Non-current assets
Property and equipment	7	5,152,732	5,973,801
Right-of-use assets	8	754,267	901,341
Intangible assets	9,18	10,575,844	7,453,726
Total non-current assets		16,482,843	14,328,868
Total assets		\$22,726,153	\$24,090,332
LIABILITIES AND EQUITY
Current liabilities
Trade payables, accrued liabilities and provisions	22	\$1,698,657	\$1,565,046
Deferred revenue	10	440,624	151,854
Current portion of lease obligations	11	207,706	150,643
Current portion of repayable government grant	12	-	302,869
Current portion of deferred grant benefits	12	-	20,118
Current tax liabilities		18,924	-
Total current liabilities		2,365,911	2,190,530
Non-current liabilities
Lease obligations	11	642,254	789,726
Total non-current liabilities		642,254	789,726
Total liabilities		3,008,165	2,980,256
Shareholders' equity
Issued capital	14	9,611,008	9,486,894
Contributed surplus		1,605,268	1,473,882
Retained earnings		8,504,053	10,127,803
Accumulated other comprehensive (loss) income		(2,341)	21,497
Total shareholders' equity		19,717,988	21,110,076
Total liabilities and shareholders' equity		\$22,726,153	\$24,090,332
Commitments and contingencies	22

Subsequent event 24

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

Approved by the Board of Directors:

(signed) Paul Huizinga (signed) Mike Lindsay Paul Huizinga, Director Mike Lindsay, Interim President and CEO

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Stated in Canadian dollars except per share data

For the years ended December 31,	Notes	2025	2024
Revenue	18	\$6,795,952	\$4,520,580
Cost of sales	17	4,137,224	3,287,170
Gross profit		2,658,728	1,233,410
Administration expenses	17	3,410,685	3,554,844
Research and development expenses	9	250,356	57,117
Share based payments	15	276,127	248,907
Depreciation expense	7,8	85,138	111,185
Amortization of intangible assets	9	-	2,077
Net foreign exchange losses (gains)		168,388	(225,901)
Impairment reversal	7	(128,446)	(82,663)
Other expenses (income)	17	183,731	(97,056)
Loss before tax		(1,587,251)	(2,335,100)
Income tax expense	13	35,157	898,897
Loss for the year		\$(1,622,408)	\$(3,233,997)
Other comprehensive loss
Items that may be reclassified to profit and loss in subsequent
periods:
Exchange (losses) gains on translating foreign operations		(23,838)	60,716
Total comprehensive loss		\$(1,646,246)	\$(3,173,281)
Loss per share	16
Basic		\$(0.06)	\$(0.12)
Diluted		\$(0.06)	\$(0.12)

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

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

				Accumulated
					Total
	Issued	Contributed	Retained	comprehensive	shareholders'
					equity
	\$9,486,894	\$1,473,882	\$10,127,803	\$21,497	\$21,110,076
	-	-	(1,622,408)	-	(1,622,408)
14	(20,627)	-	(1,342)	-	(21,969)
15	-	276,127	-	-	276,127
14,15	124,851	(124,851)	-	-	-
14,15	19,890	(19,890)	-	-	-
	-	-	-	(23,838)	(23,838)
	\$9,611,008	\$1,605,268	\$8,504,053	\$(2,341)	\$19,717,988
	\$9,519,917	\$1,420,061	\$13,456,893	\$(39,219)	\$24,357,652
	-	-	(3,233,997)	-	(3,233,997)
14	(228,109)	-	(95,093)	-	(323,202)
15	-	248,907	-	-	248,907
14,15	179,156		-	-	-
14,15	15,930	(15,930)	-	-	-
	-	-	-	60,716	60,716
	\$9,486,894	\$1,473,882	\$10,127,803	\$21,497	\$21,110,076
	Notes	capital	surplus (179,156)	earnings	other (loss) income

Stated in Canadian dollars

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

CONSOLIDATED STATEMENTS OF CASH FLOWS

Stated in Canadian dollars

For the years ended December 31,	Notes	2025	2024
Cash flows from (used in) operating activities
Loss for the year		\$(1,622,408)	\$(3,233,997)
Adjustments for:
Income tax expense	13	35,157	898,897
Depreciation of property and equipment and right-of-use assets	7,8	1,041,569	1,263,930
Amortization of intangible assets	9	-	2,077
Loss on sale of property and equipment	7	33,272	4,482
Lease interest	11	65,200	33,272
Share-based payments	15	276,127	248,907
Government grant allocation to R&D expenses	9	-	(281,238)
Accrued investment interest	4	32,633	56,452
Realized interest on investment	4	(91,772)	(329,848)
Movements in non-cash working capital	20	1,476,305	(408,683)
Reversal of impairment of non-financial assets	7	(128,446)	(82,663)
Net income tax paid		(31,481)	(9,092)
Net cash provided by (used in) operating activities		1,086,156	(1,837,504)
Cash flows (used in) from investing activities
Payments for property and equipment	7	(177,463)	(157,713)
Payments for intangible assets	9	(3,101,917)	(4,389,464)
Net redemptions (additions) of investments	4	741,300	6,498,450
Interest received from investments	4	91,772	329,848
Unrealized translation on investment	4	21,269	(40,419)
Net cash (used in) provided by investing activities		(2,425,039)	2,240,702
Cash flows from (used in) financing activities
Receipt of government grant	12	-	1,393,246
Payment of government grant	12	(322,987)	(321,600)
Repurchase of shares Lease obligations payments	11	(21,969) (223,666)	(323,202) (276,081)
Net cash (used in) provided by financing activities		(568,622)	472,363
Net (decrease) increase in cash		(1,907,505)	875,561
Cash and cash equivalents beginning of the year		5,261,348	4,327,048
Effects of exchange rate changes on the balance of cash held in foreign currencies		(22,065)	58,739
Cash and cash equivalents at end of the year		\$3,331,778	\$5,261,348

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

1. DESCRIPTION OF BUSINESS

Questor Technology Inc., incorporated in Canada under the Business Corporations Act (Alberta) is an environmental emissions reduction technology company founded in 1994, with global operations. The Company is focused on clean air technologies that safely and cost-effectively improve air quality, support energy efficiency and greenhouse gas emission reductions. The Company designs, manufactures and services high-efficiency clean combustion systems that destroy harmful pollutants, including Methane, Hydrogen Sulfide gas, volatile organic hydrocarbons, hazardous air pollutants and BTEX (Benzene, Toluene, Ethylbenzene and Xylene) gases within waste gas streams at 99.99 percent efficiency. This enables its clients to meet emission regulations, reduce greenhouse gas emissions, address community concerns and improve safety at industrial sites. The Company also has proprietary heat-to-power generation technology and is currently targeting new markets including landfill biogas, syngas, waste engine exhaust, geothermal and solar, cement plant waste heat in addition to a wide variety of oil and gas projects. The Company is also doing research and development on data solutions to deliver an integrated system that amalgamates all the emission detection data available and demonstrates how Questor's clean combustion and power generation technologies can be used to help clients achieve zero-emission targets.

The Company's common shares are traded on the TSX Venture Exchange under the symbol "QST". The address of the Company's corporate and registered office is 1920, 707 – 8th Avenue S.W. Calgary, Alberta, Canada, T2P 1H5.

2. BASIS OF PREPARATION

Statement of compliance

These consolidated financial statements have been prepared in accordance with IFRS® Accounting Standards as issued by the International Accounting Standards Board ("IASB") and interpretations of the IFRS Interpretations Committee ("IFRS").

These consolidated financial statements were authorized for issue by the Company's Board of Directors on April 20, 2026.

Basis of measurement

These consolidated financial statements have been prepared on the historical cost basis except for certain items measured at fair value as detailed in the accounting policies disclosed below.

Basis of consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries which are consolidated from the date of acquisition, being the date on which the Company obtained control, and continue to be consolidated until the date that such control ceases. Control exists when the Company has power to govern the financial and operating policies of the entity so as to obtain benefits from its activities. In assessing control, potential voting rights that currently are exercisable are taken into account. The financial statements of the subsidiaries are prepared for the same reporting period as the parent, using consistent accounting policies. All intercompany balances and transactions are eliminated upon consolidation. Details of the entities contained in the consolidated financial statements are as follows:

		Place of business and	Equity
Company name	Principal activity	operations	percentage
Questor Technology Inc.	Parent and operating company	Canada
Questor Solutions & Technology Inc.	Operating company	United States	100%
ClearPower Systems Inc.	Research and development company	United States	100%

Functional and presentation currency

These consolidated financial statements are presented in Canadian dollars which is the Company's functional currency. The functional currency of the Company's subsidiaries, ClearPower Systems Inc. and Questor Solutions & Technology Inc. is U.S. dollars.

Critical accounting estimates and judgments

The preparation of the consolidated financial statements in accordance with IFRS requires management to make judgments, estimates and assumptions that affect the reported assets, liabilities, revenues, expenses and the disclosure of contingencies. Actual results may differ significantly from these estimates.

The 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 if the revision affects only that year or in the year of the revision and future years if the revision affects both current and future years.

Critical estimates and judgements made in the preparation of the consolidated financial statements are outlined below:

Revenue recognition

Revenues are recorded when products have been delivered or services have been performed, the amount of revenue can be reliably measured and collectability is reasonably assured. Customer creditworthiness is assessed prior to agreement signing, as well as throughout the contract duration. Equipment sales revenue for custom units is recognized based on performance over-time. Performance is measured primarily based on the milestones achieved throughout the contract which approximates the value to the customer relative to the total expected value. Where the outcome of performance obligations cannot be reliably measured, contract revenue is either deferred on the consolidated statements of financial position or recognized in the current year to the extent that costs have been incurred until such time that the outcome of the performance obligations can be reasonably measured. Critical judgement is required to assess whether there is an alternative use for the input materials before the commencement of the manufacturing process. Critical estimation assumptions are required to estimate total contract costs, which are recognized as expenses in the year in which they are incurred.

Componentization and useful lives of property and equipment and intangible assets

Amounts recorded for depreciation and amortization expense are based on the Company's componentization of its property and equipment and intangible assets and management's estimates of the useful life, pattern of consumption of future economic benefits and residual value of the Company's property and equipment and intangible assets. These estimates affect the carrying amount of property and equipment and intangible assets.

Determining cash generating units

For the purpose of assessing impairment of non-financial assets, the Company must determine its cash-generating units (CGUs). Assets and liabilities are grouped into CGUs at the lowest level of separately identified cash flows. The determination of a CGU is based on management's judgment and is an assessment of the smallest group of assets that generate cash inflows independently of other assets.

Impairment of non-financial assets

The determination of whether indicators of impairment exist is based on management's judgment of whether there are internal and external factors that would indicate that a non-financial asset is impaired. Intangible assets that are not yet available for use are tested for impairment annually, irrespective of whether there is any indication of impairment. Such impairment test is performed by comparing the carrying amount of the asset with its recoverable amount. The recoverable amounts used for impairment calculations may require estimates of future net cash flows related to the assets or CGU's, probability of successful contract proposals and estimates of discount rates applied to these cash flows, or consideration of the Company's market capitalization as compared to the CGU's carrying amount. The Company also assesses whether there are circumstances that indicate that previously impaired assets are now recoverable and need to be increased to their original carrying values.

Impairment of inventories

The Company regularly reviews the nature and quantities of inventory on hand and evaluates the net realizable value of items based on historical usage patterns, known changes to equipment or processes and customer demand for specific products. Significant or unanticipated changes in business conditions could impact the magnitude and timing of impairment recognized.

Share-based payments

The Company's share‐based compensation expense is subject to measurement uncertainty as a result of estimates and assumptions related to the expected performance multiplier, forfeiture rates, expected life, and underlying volatility of the price of the Company's common shares.

Taxation

Deferred tax assets and liabilities contain estimates about the nature and timing of future permanent and temporary differences as well as the future tax rates that will apply to those differences. Changes in Canadian and foreign tax laws and rates as well as changes to the expected timing of reversals may have a significant impact on the amounts recorded for deferred tax assets and liabilities. Management monitors current and potential changes to Canadian and foreign tax laws and bases its estimates on the best available information at each reporting date. The Company is subject to assessments by various taxation authorities in the tax jurisdictions in which it operates, and these taxation authorities may interpret the tax legislation and regulations differently. In addition, the calculation of income taxes involves many complex factors. As such, income taxes are subject to measurement uncertainty and actual amounts of taxes may vary from the estimates made by management.

Allowance for doubtful accounts

The Company's trade and other receivables are typically short-term in nature and the Company recognizes an amount equal to the lifetime expected credit losses (ECL) on receivables for which there has been a significant increase in credit risk since initial recognition. The Company measures loss allowances based on historical experience and including forecasted economic conditions. The amount of ECLs is sensitive to changes in circumstances of forecast economic conditions.

Provisions and contingencies

The Company is required to exercise judgment in assessing whether the criteria for recognition of a provision or a contingency has been met. The Company considers whether a present obligation exists, the probability of loss, and if a reliable estimate can be formulated. By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. Management also uses judgment to assess the likelihood of the occurrence of one or more future events.

Right-of-use assets and lease liabilities

Lease liabilities and ROU assets require the use of judgment and estimates which are applied in determining the term of a lease, appropriate discount rates, whether an arrangement contains a lease, whether there are any indicators of impairment for ROU assets and whether any ROU assets should be grouped with other long-lived assets for impairment testing.

Capitalization of research and development costs

Determining the commencement of capitalization of development costs requires critical judgement to determine when the criteria for capitalization in accordance with IFRS has been met.

Government grants

The recovery of government grants requires judgement to determine when reasonable assurance exists that the Company has met the conditions contained in the applicable agreements.

3. SUMMARY OF MATERIAL ACCOUNTING POLICIES

Changes in Accounting Standards and Disclosures

There were no new standards that became effective on or after January 1, 2025 that had a material impact on the Company.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and short-term deposits with original maturities of three months or less and are recorded at cost, which approximates fair value.

Investments

Highly liquid investments held for a period longer than three months and not exceeding one year are classified as short-term investments. Shortterm investments are recorded at amortized cost with interest earned while holding them reported as interest income in the consolidated statement of comprehensive loss.

Foreign currency translation and transaction

For entities whose functional currency is the Canadian dollar, transactions in currencies other than the Company's functional currency are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are translated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated. Exchange differences on monetary items are recognized in profit or loss in the year in which they arise.

The financial results of foreign operations that have a functional currency different from the presentation currency are translated into the presentation currency. Income and expenditures of foreign operations are translated at the average rate of the exchange for the period. All assets and liabilities are translated at the rate of exchange at the reporting date. Differences arising on translation are recognized as other comprehensive income (loss).

Inventory

Inventory is measured at the lower of cost and net realizable value. Inventory cost is recorded on a weighted-average basis and the balance includes all costs of purchase, costs of conversion and other costs incurred in bringing the inventory to its existing location and condition.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and selling expenses. Inventories are written down to net realizable value when the cost of inventories is estimated to be unrecoverable due to obsolescence, damage, and slow moving or declining selling prices. When circumstances that previously caused inventories to be written down below cost no longer exist or when there is clear evidence of an increase in selling prices, the amount of the write down previously recorded is reversed. Inventory write downs are recorded in cost of sales.

Right-of-use assets

Leases are recognized as a right-of-use ("ROU") asset with a corresponding liability at the date the leased asset is available for use by the Company. The ROU assets are subsequently measured at cost, net of accumulated depreciation and accumulated impairment losses. The ROU asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. Depreciation of the ROU asset is recognized in depreciation of property and equipment expense.

Lease liabilities are subsequently measured at amortized cost using the effective interest rate method. The interest expense associated with the lease obligation is charged to the consolidated statements of comprehensive loss over the lease period with a corresponding increase to the lease obligation. The lease obligation is reduced as payments are made against the principal portion of the lease.

The Company does not recognize short-term leases with a term of 12 months or less, or leases of low-value assets.

Property and equipment

Property and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset, and subsequent expenditures to the extent that they can be measured, and future economic benefit is probable. The carrying values of replaced parts are derecognized when they are replaced. The cost of replacing part of an item of property and equipment is recognized in the carrying amount of the property and equipment if it is probable that the future economic benefits embodied within the part will flow to the Company, and its cost can be measured reliably. Repairs and maintenance expenditures, which do not extend the useful life of the property and equipment, are expensed in the year in which they are incurred. Management bases the estimate of the useful life and salvage value of property and equipment on expected utilization, technological change and effectiveness of maintenance programs. When parts of an item of property or equipment have different useful lives, they are accounted for as separate items (major components) of property and equipment.

Depreciation is recorded so as to recognize the cost of assets over their useful lives, using the method specified for the particular assets:

Asset	Rate	Method
Rental equipment and trailers	5 – 20 years	Straight-line
Light vehicles, tools & equipment	20 - 30%	Declining balance
Office equipment & leasehold improvements	20 - 30%	Declining balance

Property and equipment are carried at cost, less any recognized impairment loss. The estimated useful lives and depreciation methods are reviewed at the end of each financial year end, with the effect of any changes in estimate accounted for on a prospective basis.

An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.

When an incinerator from the rental fleet is sold to a customer, the depreciated cost of the incinerator is transferred from property and equipment to inventory. Any additional costs to ready the unit for the customer are transferred to inventory when completed and then to cost of sales once the incinerator is transported to the customer's site and/or legal title passes.

Warranties

Provisions for the expected cost of warranty obligations are recorded in cost of sales at the date of sale of equipment. The provision is estimated based on several factors including historical warranty claims and cost experience, the type and duration of warranty coverage and the nature of products sold and in service. The Company reviews its recorded product warranty provisions quarterly and any adjustment is recorded in cost of sales.

Intangible assets

Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over the estimated useful lives. The estimated useful lives and amortization method are reviewed at the end of each financial year end, with any changes in estimate being accounted for on a prospective basis.

Internally generated intangible assets - research and development expenditures

Expenditures on research activities are recognized as an expense in the period incurred.

An internally generated intangible asset arising from development (or from the development phase of an internal project) is recognized if all of the following have been demonstrated:

• The technical feasibility of completing the intangible asset so that it will be available for use or sale;
• The intention to complete the intangible asset and use or sell it;
• The ability to use or sell the intangible asset;
• Understanding of how the intangible asset will generate probable future economic benefits;
• Availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and,
• The ability to reliably measure the expenditure attributable to the intangible asset during its development.

The amount initially recognized for internally generated intangible assets is the sum of the expenditures incurred from the date when the intangible asset first meets the recognition criteria listed above. Subsequent to initial recognition, internally generated intangible assets are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately. Where no internally generated intangible asset can be recognized, development expenditures are recognized in profit or loss in the period incurred.

Amortization is recorded so as to recognize the cost of assets over their useful lives, using the method specified for the particular assets:

Intangible assets	Useful life	Method
Heat to power development	5 years	Straight-line
Software and data systems	3 years	Straight-line
Patents	Shorter of estimated useful life and patent life	Straight-line

Derecognition of intangible assets

An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognized in profit or loss when the asset is derecognized.

Impairment of non-financial assets

At the end of each reporting period, the Company reviews the carrying amounts of its non-financial assets, other than inventories, to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. Intangible assets that are not yet available for use are tested for impairment annually, irrespective of whether there is any indication of impairment. Such impairment test is performed by comparing the carrying amount of the asset with its recoverable amount. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the CGU to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are allocated to individual CGUs. Otherwise, they are allocated to the smallest group of CGUs for which a reasonable and consistent allocation basis can be identified.

Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future net 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 for which the estimates of future cash flows have not been adjusted. In determining fair value less costs of disposal, recent market transactions are taken into account if available. In the absence of such transaction, an appropriate valuation model is used such as a discounted cash flow model with a post-tax discount rate.

If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount.

When an impairment loss subsequently reverses, the carrying amount of the asset (or CGU) is increased to the revised estimate of its recoverable amount. The increased carrying amount must not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or CGU) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.

Provisions

Provisions are recognized when the Company has a present legal or constructive obligation as a result of a past event, it is probable that the Company will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When it is virtually certain that some or all the economic benefits required to settle a provision are expected to be recovered from a third party, and the amount can be reliably measured, a receivable is recognized as an asset.

Financial Instruments

Financial assets and liabilities are recognized in the consolidated statements of financial position when the Company becomes a party to the contractual provisions of a financial instrument contract. All financial assets and financial liabilities are initially measured at fair value, net of transaction costs, except for financial instruments classified as fair value through profit and loss ("FVTPL"), where transaction costs are recognized immediately in profit or loss.

Financial assets that meet the following conditions are subsequently measured at amortized cost: (i) assets held for the collection of contractual cash flows; and (ii) contractual cash flows that consist solely of principal and interest payments on the principal amount outstanding. All other

financial assets are subsequently measured at FVTPL. Financial liabilities are classified as FVTPL when held for trading. All other financial liabilities are subsequently measured at amortized cost. The Company's investments in short-term deposits and guaranteed investment certificates are measured at amortized cost, as they are held to collect contractual cash flows. These cash flows consist solely of principal and fixed interest.

The Company classifies its financial instruments according to IFRS 9 - Financial Instruments ("IFRS 9") into the following:

Financial Instrument	Classification
Cash and cash equivalents	Amortized cost
Investments	Amortized cost
Trade, contract assets and other receivables	Amortized cost
Deposits	Amortized cost
Trade payables, accrued liabilities and provisions	Amortized cost
Repayable government grant	Amortized cost

Impairment of Financial Assets

The carrying amount of the Company's financial assets includes cash and cash equivalents, investments, trade and other receivables and contract assets. A lifetime expected credit loss (ECL) is recognized on financial assets when there is objective evidence of a significant increase in credit risk as a result of one or more events that occurred after the initial recognition of the asset. Evidence of impairment would include default or delinquency by a debtor, restructuring of an amount based upon terms that the Company would not consider otherwise, indications that a debtor will enter bankruptcy, adverse changes in the payment status of borrowers or economic conditions that correlate with defaults.

Trade, contract assets and other receivables are recorded at original invoice value less any amounts estimated to be uncollectable. Loss allowances are measured at fair value in the consolidated statement of financial position, with value changes recognized in profit or loss. Changes in ECL at the end of each reporting date involves a two-stage approach:

• 12-month ECL credit risk has not increased significantly since initial recognition
• Lifetime ECL credit risk has increased significantly since initial recognition

Impairment is assessed using historical trends of default, timing of recoveries and the amount of loss incurred, adjusted for management's judgment in relation to how the current economic and credit environment will impact losses being greater or less than historical trends. An impairment loss is determined as the difference between an asset's carrying amount and the present value of future cash flows. Losses are recognized in profit and loss and reflected in a provision account against carrying amount of the financial assets carried at amortized cost. When an event occurring after the impairment was recognized causes the amount of impairment to decrease, the recovery is reversed and recognized in consolidated profit and loss.

Derecognition

A financial asset is derecognized when the rights to receive cash flows from the asset have expired or when the Company transfers its rights to receive cash flows from the asset and the associated risks and rewards to a third party. The Company derecognizes a financial liability when its contractual obligations are discharged, cancelled or expire.

Offsetting of financial instruments

Financial assets and liabilities are offset and the net amount presented in the statement of financial position once the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

Revenue recognition

Revenue is recognized at the point in time that the Company transfers control of goods or services to a customer in the amount to which the Company expects to be entitled. The Company has two revenue streams accounted for as follows:

• Equipment sales Revenue on equipment sales is recognized when control passes to the customer based on the stated contract value. If the equipment is a standard unit, control passes generally when equipment is delivered to the customer. When the equipment is a custom unit which does not have an alternate buyer and there is an enforceable right to collection, the revenue is recognized on a percentage of completion basis in accordance with the performance obligations in the contract.The Company measures progress using either input methods, such as costs incurred relative to total estimated costs, or output methods, such as milestones achieved, or work certified, depending on which best reflects the transfer of control to the customer. The selected method is applied consistently to similar performance obligations.
• Where the outcome of performance obligations cannot be reliably measured, contract revenue is either deferred on the consolidated statement of financial position or recognized in the current year to the extent that costs have been incurred until such time that the outcome of the performance obligations can be reasonably measured, depending on whether there is an alternative use for the input materials before the commencement of the manufacturing process.
• Equipment rental revenue is recognized based on actual usage over the rental period, using agreed daily, weekly, monthly, or other applicable rates. Revenue is recognized over time as the equipment is used.
• Equipment services and repairs revenue is recognized upon completion of the equipment installation or for time and material contracts, based on the contractual hourly rates and direct expenses as incurred.

If it is expected that the unavoidable costs required to satisfy the remaining performance obligations of a revenue contract will exceed its expected economic benefits, the Company will recognize an onerous provision with a corresponding loss in cost of sales in the consolidated statement of comprehensive loss.

A contract asset is recognized when a performance obligation is satisfied (and the revenue is recognized), but the payment is conditional not only on the passage of time but on other contractual obligations and milestones.

At contract inception, the Company expects that the period between when the Company transfers control of a promised service to a customer and when the customer pays for that service will be one year or less. As a practical expedient, the consideration is not adjusted for the effects of a significant financing component.

Deposits received upon signing of contracts for equipment purchases where revenue recognition criteria have not been met, are recorded as deferred revenue.

Interest income

Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Company and the amount of income can be reliably measured. Interest income is accrued on a calendar basis referencing the principal outstanding at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition.

Government grants and investment tax credits

Government grants, Scientific Research and Experimental Development (SR&ED) and investment tax credits are recognized when there is reasonable assurance that the Company will comply with the relevant conditions and that the grants and/or investment tax credits will be received. Government grants are recognized as a reduction in the carrying value of the related asset or expense to which they relate. Investment tax credits are included in the tax pool balances calculations.

For repayable government grants that have a below market rate of interest, the Company recognizes the benefit as the difference between the initial carrying value of the loan and the proceeds received. The deferred grant benefit is recognized on a systematic basis over the period in which the Company expects to recognize the expenses for which the grants are intended to compensate.

Cost of sales

Cost of sales includes direct materials, direct labour, warranties, indirect overhead related to field offices, and depreciation relating to rental incinerators, detachable trailers for rental incinerators, light vehicles and tools and equipment. Timing of the recognition of the cost of sales is consistent with the timing of the revenue recognition.

When the contract with the fabricator for customized units requires payment for materials in advance of fabrication and there is an alternative use for these input materials before the commencement of the manufacturing process, the Company recognizes a deposit on the consolidated statement of financial position up until the commencement of the fabrication process.

Employee benefits

Short-term benefits

Short-term benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability for the amount expected to be paid as a short-term cash bonus, is recognized if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be reliably estimated.

Share-based payment arrangements

The Company has the following equity settled share-based payment arrangements:

Stock options

The Company has a stock option plan and accounts for stock options by expensing the fair value of stock options measured using a Black Scholes option pricing model. The fair value of the stock options is determined on their grant date and is recognized as share-based compensation expense in the consolidated statement of comprehensive loss over the vesting period.

Performance, restricted and deferred share units

The Company has performance share unit (PSU), restricted share unit (RSU) and deferred share unit (DSU) plans. As the Company intends to settle the units in shares, the plan is accounted for as "equity‐settled". Under the terms of the Plans, the awards of PSUs and RSUs will vest in three equal portions annually based upon the grant date. Each RSU will be settled in common shares based upon a one-to-one conversion of RSU to Company share. Each PSU will be settled in common shares based on a multiplier, which is dependent on the achievement of specific performance measures,

between zero and 2.75 shares per PSU. The settlement of RSUs and PSUs must be done within 60 days of the vesting date. DSU's will vest one year following of the grant date but the DSU's are not eligible for settlement until such time that the participant ceases to be a director of the Company. The fair value of the RSU's and DSU's is determined on their grant date based on the closing market price of the shares and is recognized as share-based compensation expense in the consolidated statement of comprehensive loss over the vesting period. The fair value of the PSU's is measured using a Monte Carlo simulation model on their grant date and is recognized as share-based compensation expense in the consolidated statement of comprehensive loss over the vesting period.

Taxation

The Company uses the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities are recognized as the difference between the carrying amounts of assets and liabilities and its respective tax basis (temporary differences).

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated statements of comprehensive loss due to items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

The carrying amount of deferred tax assets is reviewed at the end of each reporting year and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Current and deferred tax for the period

Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income (loss) or directly in equity.

Earnings (loss) per share

Basic earnings (loss) per share is calculated by dividing the profit or loss attributable to equity holders of the Company by the weighted average number of common shares outstanding during the year. Diluted earnings per share is calculated by using the treasury stock method for equitybased compensation arrangements. The treasury stock method assumes that any proceeds obtained on exercise of equity-based compensation arrangements would be used to purchase common shares at the average market price during the period. The weighted average number of shares outstanding is then adjusted by the difference between the number of shares issued from the exercise of equity-based compensation arrangements and shares repurchased from the related proceeds.

Operating segments

The Company generates revenue primarily from equipment sales and equipment rentals. Management has determined that the Company has one reportable operating segment as the Company does not have any segment managers who are directly accountable to and maintain regular contact with the chief operating decision maker to discuss operating activities, financial results, forecasts or plans broken down by the different types of products/services. The Company reports revenue for two locations being Canada and the United States. Any International sales revenue is included in the Canadian segment as the revenue is driven by and recorded in the Canadian legal entity.

Future accounting pronouncements

The Company is assessing certain new accounting standards that will be applicable for annual reporting periods after December 31, 2025, with early adoption permitted.

The amendment to IFRS 9, Financial Instruments ("IFRS 9") and IFRS 7, Financial Instruments: Disclosures ("IFRS 7") clarifies the date of recognition and derecognition of some financial assets and liabilities, including a new exception for certain financial liabilities settled through an electronic payment system before the settlement date. The amendment is effective for annual periods beginning on or after January 1, 2026. The company does not anticipate any significant impact from these amendments on the consolidated financial statements.

In April 2024, the IASB issued new IFRS 18 - Presentation and Disclosure in Financial Statements ("IFRS 18") replacing IAS 1. The new standard establishes a revised structure for the consolidated statements of comprehensive loss with the intention to improve comparability across entities. IFRS 18 is effective for annual reporting periods beginning on or after 1 January 2027, with early adoption permitted. The Company is currently assessing the impact of this new IFRS accounting standard on its consolidated financial statements.

4. INVESTMENTS AND BORROWING FACILITIES

The Company has invested in Canadian redeemable guaranteed investment certificates and US dollar redeemable term deposits with varying maturity dates from 91 days to one year. Interest is paid at maturity and ranges from a fixed annual rate of 2.37 to 5.18 percent.

\$1,669,410
3,923,344
(4,664,644)
59,139
(91,772)
(21,269)
\$874,208

The Company has \$300,000 letter of credit guarantee facility for use with suppliers and a general security for corporate card credit program of CND\$100,000 and USD\$40,000. There are no standby fees and no specified facility expiration or renewal date. As at December 31, 2025, the Company holds CND\$400,000 (2024 - CND\$200,000) and USD\$40,000 (2024 - USD \$40,000) of cash in one-year redeemable term deposits which will expire in January 2026 and July 2026, as general security for its corporate credit card program and letter of credit facility.

5. INVENTORY

For the years ended December 31,	2025	2024
Materials and supplies	\$449,418	\$418,978
Work in progress	23,270	29,329
Total inventory	\$472,688	\$448,307

Materials and supplies expensed in cost of sales during the year were \$188,354 (2024 - \$97,478).

In accordance with IFRS, the Company reviews the carrying value of inventory to net realizable value and any impairment is recorded in cost of sales. There was no impairment recorded against slow‑moving inventory items during the twelve months ended December 31, 2025 and 2024.

6. PREPAID EXPENSES AND DEPOSITS

For the years ended December 31,	2025	2024
Building and utility deposits	\$89,016	\$125,397
Vendor deposits and other prepaid expenses	71,883	87,266
	\$160,899	\$212,663

7. PROPERTY AND EQUIPMENT

	Office equipment &
	Rental equipment	Light vehicles,	leasehold
Cost	and trailers	tools & equipment	improvements	Total
Balance at January 1, 2024	\$22,424,944	\$1,303,751	\$362,074	\$24,090,769
Additions	37,027	110,909	32,776	180,712
Transfers	(524,650)	-	-	(524,650)
Disposals	-	(55,706)	(124,928)	(180,634)
Foreign currency translation	-	74,145	2,370	76,515
Balance at December 31, 2024	\$21,937,321	\$1,433,099	\$272,292	\$23,642,712
Additions	162,398	5,372	9,693	177,463
Transfers	(497,175)	-	-	(497,175)
Disposals	(131,884)	-	-	(131,884)
Foreign currency translation	-	(43,752)	(524)	(44,276)
Balance at December 31, 2025	\$21,470,660	\$1,394,719	\$281,461	\$23,146,840
Accumulated depreciation
Balance at January 1, 2024	\$15,565,540	\$1,164,571	\$305,115	\$17,035,226
Depreciation charges included in:
Cost of sales	942,883	57,941	1,253	1,002,077
Depreciation expense	-	-	9,907	9,907
Transfers	(214,053)	-	-	(214,053)

Disposal	-	(47,917)	(100,664)	(148,581)
Impairment	(82,663)	-	-	(82,663)
Foreign currency translation	-	65,475	1,523	66,998
Balance at December 31, 2024	\$16,211,707	\$1,240,070	\$217,134	\$17,668,911
Depreciation charges included in:
Cost of sales	764,856	46,550	-	811,406
Depreciation expense	-	-	12,621	12,621
Transfers	(231,680)	-	-	(231,680)
Disposals	(98,612)	-	-	(98,612)
Impairment reversal	(128,446)	-	-	(128,446)
Foreign currency translation	-	(39,567)	(525)	(40,092)
Balance at December 31, 2025	\$16,517,825	\$1,247,053	\$229,230	\$17,994,108
Carrying amounts
Balance at December 31, 2024	\$5,725,614	\$193,029	\$55,158	\$5,973,801
Balance at December 31, 2025	\$4,952,835	\$147,666	\$52,231	\$5,152,732

Impairment Assessment of Non-Financial Assets

At December 2025, the Company performed its assessment of potential impairment indicators for its non-financial assets and noted the Company's net asset value was greater than its market capitalization. As a result of the impairment indicator noted, the Company performed an impairment test in accordance with IFRS for its one cash generating unit. No impairment was recognized in 2025 as the estimated recoverable amount exceeds the carrying value of the non-financial assets (2024 - nil).

For the purposes of impairment testing, the recoverable amount of the cash generating unit was estimated based on fair value less costs of disposal, using a discounted cash flow model that incorporates cash flow projections based on forecast revenue and gross margin assumptions reflecting expected future performance over a five-year period. Cash flows beyond the five-year forecast period were extrapolated using a terminal growth rate of 2%. A post-tax discount rate of 16% was applied to reflect the time value of money and the risks specific to the cash generating unit. This approach is considered a level three hierarchy in determination of the recoverable value of the non-financial assets.

A 1% increase in the post-tax discount rate would not result in an impairment.

The partial reversal of previously recognized impairment of \$128,446 (2024 - \$82,663) has been recorded for certain units sold during the year, reflecting the recoverable value of these assets upon their disposal.

8. RIGHT OF-USE ASSETS

Cost
Balance, January 1, 2024	\$1,528,411
Additions	925,394
Derecognitions	(1,268,752)
Contract modification	(29,663)
Foreign currency translation	27,007
Balance at December 31, 2024	\$1,182,397
Additions	90,957
Foreign currency translation	(26,277)
Balance at December 31, 2025	\$1,247,077
Accumulated Depreciation
Balance, January 1, 2024	\$1,295,374
Depreciation charged in:
Cost of sales	150,668
Depreciation expense	101,278
Derecognitions	(1,269,751)
Foreign currency translation	3,487
Balance at December 31, 2024	\$281,056
Depreciation charged in:
Cost of sales	145,025
Depreciation expense	72,517
Foreign currency translation	(5,788)
Balance at December 31, 2025	\$492,810
Carrying Amounts
Balance at December 31, 2024	\$901,341
Balance at December 31, 2025	\$754,267

The Company renewed its lease for the Grand Prairie facility for an additional two-year term, commencing in October 2025. The lease agreement contains a termination clause of a two months' notice.

9. INTANGIBLE ASSETS

	Heat to power	Software and data
Cost	development	systems	Patents	Total
Balance at January 1, 2024	\$6,676,504	\$238,010	\$360,524	\$7,275,038
Additions	4,603,326	-	-	4,603,326
Government grant allocation	(1,862,217)	-	-	(1,862,217)
Balance at December 31, 2024	\$9,417,613	\$238,010	\$360,524	\$10,016,147
Additions	3,122,118	-	-	3,122,118
Balance at December 31, 2025	\$12,539,731	\$238,010	\$360,524	\$13,138,265
Accumulated Amortization
Balance at January 1, 2024	\$1,963,887	\$238,010	\$358,447	\$2,560,344
Amortization(1)	-	-	2,077	2,077
Balance at December 31, 2024	\$1,963,887	\$238,010	\$360,524	\$2,562,421
(1) Amortization	-	-	-	-
Balance at December 31, 2025	\$1,963,887	\$238,010	\$360,524	\$2,562,421
Carrying Amounts
Balance at December 31, 2024	\$7,453,726	\$-	\$-	\$7,453,726
Balance at December 31, 2025	\$10,575,844	\$-	\$-	\$10,575,844

(1) Previously developed ORC technology is amortized under Heat to power development. Amortization of the technology currently under development has not yet commenced.

In 2025, the Company has capitalized costs of \$3,122,118 (2024 - \$4,603,326) associated with its waste heat to power project that is being partially funded by Sustainable Development Technology Canada ("SDTC").

The Company has also expensed certain administrative costs relating to this waste heat to power project and other research, along with other development project costs that do not yet meet the criteria for capitalization, in the amount of \$250,356 in 2025 (2024 - \$338,355, representing total research and development costs before applying \$281,238 of SDTC funding received and allocated to reduce research and development expense upon the completion of the milestone one of the waste heat to power development project).

Intangible assets related to heat-to-power development are not yet available for use and are therefore subject to annual impairment testing in accordance with IFRS. For the purpose of impairment testing, these assets are assessed together with property, plant and equipment as a single cash-generating unit. No impairment loss was recognized in 2025, as the estimated recoverable amount exceeds the carrying value of the nonfinancial assets (2024 - nil). Refer to Note 7 for key assumptions used in the impairment assessment.

10. DEFERRED REVENUE

For the years ended December 31,	2025	2024
Balance, beginning of year	\$151,854	\$10,000
Additions from new contracts	4,540,508	1,461,187
Deferred revenue recognized as revenue	(4,251,738)	(1,319,333)
Balance, end of year	\$440,624	\$151,854

11. LEASE OBLIGATIONS

The Company's leasing activities comprise buildings and yard leases. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. The following table sets out the movement in the right-of-use assets by class of underlying asset:

\$256,230
925,394
(25,508)
33,272
(276,081)
27,062
\$940,369
90,957
65,200
(223,666)

Foreign currency translation	(22,900)
Balance at December 31, 2025	\$849,960

Lease obligations due within one year	\$207,706
Lease obligations due beyond one year	642,254
	\$849,960

Operating costs and property tax paid by the Company that are not included in the lease obligation above are \$132,286 (2024 - \$169,687) and are expensed as incurred.

The Company has elected not to recognise a lease liability for short term leases (leases of expected term of 12 months or less) and records the payments made of \$296,458 (2024 - \$230,150) directly to the consolidated statement of comprehensive loss.

12. REPAYABLE GOVERNMENT GRANTS AND DEFERRED GRANT BENEFITS

(a) Repayable government grant

During 2020, the Company received an interest-free loan of \$966,186 from Western Diversification to help fund its operating costs. The total amount of the repayable government assistance was recognized at fair value using an interest rate of 12 percent, which was considered a market rate of interest for similar unsecured loans at the date of inception. The Company is required to repay the contribution in 35 consecutive monthly installments of \$26,800, commencing January 1, 2023 with a final installment of \$28,187 paid on December 31, 2025.

Balance at January 1, 2024	\$570,418
Accretion – at effective interest rate (12%)	54,051
Repayments	(321,600)
Balance at December 31, 2024	\$302,869
Accretion – at effective interest rate (12%)	20,118
Repayments	(322,987)
Balance at December 31, 2025	\$-
Current portion	\$-
Long-term portion	-
	\$-

(b) Deferred grant benefits

	Sustainable Development Technology Canada(1)	Western Economic Diversification(2)	Total
Balance at January 1, 2024	\$750,209	\$74,169	\$824,378
Additions	1,393,246	-	1,393,246
Recognized	(2,143,455)	(54,051)	(2,197,506)
Balance at December 31, 2024	\$-	\$20,118	\$20,118
Additions	-	-	-
Recognized	-	(20,118)	(20,118)
Balance at December 31, 2025	\$-	\$-	\$-
Current portion	\$-	\$-	\$-
Long-term portion	-	-	-
	\$-	\$-	\$-

(1)The Company has an agreement with Sustainable Development Technology Canada (SDTC) to receive up to \$4.5 million of funding to develop the Company's CPS 50-1500 kW modular, reliable, high efficiency waste-heat-to-power generation systems. In 2022, the Company received premilestone payment of \$750,209 followed by milestone one completion payment of \$1,393,246 in 2024. With the achievement by the Company of the specific conditions set out in the agreement, the received funds have been recognized as a reduction in the associated project costs and assets.

(2)The Company recognizes the benefit of the interest free loan from Western Economic Diversification as the difference between the initial fair value of the repayable government assistance and the proceeds received as a deferred grant benefit over the term of the loan. As at December 31, 2025, the loan was fully repaid and there are no outstanding deferred grant benefits.

13. TAXES

For the years ended December 31,	2025	2024
Loss before tax	\$(1,587,251)	\$(2,335,100)
Statutory income tax rate (%)	23	23
Expected tax recovery at statutory rate	\$(365,068)	\$(537,073)
Increase (decrease) in taxes resulting from:

Non-deductible expenses/non-taxable (income)	(98,116)	8,570
Tax rate differences	(5,235)	5,112
Deferred tax benefits not recognised	430,566	1,487,490
Tax return to provision adjustments	54,086	(65,202)
Withholding tax	18,924	-
Income tax expense	\$35,157	\$898,897

The provision for income taxes is comprised of the following:
For the years ended December 31,	2025	2024
Current	\$35,157	\$47,613
Deferred	-	851,284
Income tax expense	\$35,157	\$898,897
Canadian deferred tax assets are composed of the following:
As at December 31,	2025	2024
Intangible assets	\$251,038	\$251,038
Property and equipment and right-of-use assets	195,000	88,756
Allowance for doubtful accounts	13,375	13,375
Contract assets	-	96,779
Non-capital losses carry forward	1,134,917	760,702
Other	9,530	18,458
Deferred tax assets not recognised	(1,603,860)	(1,229,108)
Deferred tax assets	\$-	\$-

United States deferred tax assets are composed of the following:

As at December 31,	2025	2024
Intangible assets	\$45,393	\$62,022
Property and equipment and right-of-use assets	(5,671)	(15,267)
Allowance for doubtful accounts	1,510	23,484
Non-capital losses carry back/ forward	112,337	60,916
Unpaid equipment rent	98,231	97,349
Other	27,054	29,878
Deferred tax assets not recognised	(278,854)	(258,382)
Deferred tax assets	\$-	\$-

Unrecognized deductible temporary differences are composed of the following:

As at December 31,	2025	2024
Intangible assets	1,265,659	1,334,412
Property and equipment and right-of-use assets	4,287,417	3,787,447
Contract assets	-	420,778
Unpaid equipment rent	376,942	381,311
Allowance for doubtful accounts	63,946	150,139
Non-capital losses carry back/ forward	5,365,493	3,545,379
Other	145,247	196,959
	\$11,504,704	\$9,816,425

At December 31, 2025, the Company has estimated non-capital losses carry forwards in Canada of \$4,934,422 (December 31, 2024 - \$3,307,400) which, if not utilized, will expire between 2043 and 2045. In the United States, the Company has estimated non-capital loss carry forwards of \$431,071 (December 31, 2024 - \$237,979), which can be carried forward indefinitely, subject to a limitation of utilizing up to 80% of taxable income in any given year.

14. ISSUED CAPITAL

The Company is authorized to issue an unlimited number of common shares.

Shares issued and outstanding	Number of shares	Share capital
Shares issued and outstanding, December 31, 2023	28,037,194	\$9,519,917
Shares purchased and cancelled under Normal Course Issuer Bid	(671,500)	(228,109)
Shares issued on the settlement of RSUs and PSUs	230,666	195,086
Shares issued and outstanding, December 31, 2024	27,596,360	\$9,486,894
Shares purchased and cancelled under Normal Course Issuer Bid	(60,000)	(20,627)
Shares issued on the settlement of RSUs and PSUs	236,763	144,741
2025 Consolidated Financial Statements and Notes		17

Shares issued and outstanding, December 31, 2025	27,773,123	\$9,611,008

On February 9, 2024, Questor commenced Normal Course Issuer Bid ("NCIB") allowing Questor to purchase a maximum of 1,400,000 common shares over the 12-month period for cancellation. The Company's NCIB expired and was formally concluded on February 7, 2025. As a result of the NCIB, which was active from February 9, 2024 to February 7, 2025, the Company repurchased and cancelled a total of 731,500 shares at a weighted average price of \$0.47 per share.

15. SHARE-BASED PAYMENTS

The Company has a stock option plan for the directors, officers, consultants and key employees and affiliates of the Company. The maximum number of equity-based compensation units including stock options, PSUs, RSUs and DSUs that may be reserved for issuances shall not exceed 10 percent of the outstanding common shares of the Company. At December 31, 2025, there were 1,195,214 (2024 – 820,716) share based payments issued and outstanding out of 2,777,312 (2024 – 2,759,636) available for issuance. Share-based payment expense for the year ended December 31, 2025 was \$276,127 (2024 – \$248,907).

(a) Stock options

At December 31, 2025
Number			Remaining		Fair value at	Number
outstanding	Grant date	Expiry date	contractual life	Exercise price	grant date	exercisable
100,000	28-Nov-23	28-Nov-28	2.91	0.76	0.44	50,000
25,000	23-Sep-24	23-Sep-29	3.73	0.60	0.20	6,250
125,000			3.08(1)	0.73(2)		56,250

At December 31, 2024
Number			Remaining		Fair value at grant
outstanding	Grant date	Expiry date	contractual life	Exercise price		date Number exercisable
100,000	28-Nov-23	28-Nov-28	3.91	0.76	0.44	25,000
25,000	23-Sep-24	23-Sep-29	4.73	0.60	0.20	-
125,000			4.08(1)	0.73(2)		25,000

		As at December 31, 2025		As at December 31, 2024
The stock options outstanding and exercisable:	Number	Exercise price (2)	Number	Exercise price (2)
Balance at beginning of the year	125,000	0.73	129,000	1.01
Granted	-	-	25,000	0.60
Forfeited	-	-	(25,000)	1.36
Expired	-	-	(4,000)	5.09
Balance at end of the year	125,000	0.73	125,000	0.73
Exercisable at end of the year	56,250	0.74	25,500	0.76

(1) Weighted average number of years.

(2) Weighted average.

There were no stock options exercised during the years ended December 31, 2025 and 2024.

(b) Performance Share Unit (PSU), Restricted Share Unit (RSU) and Deferred Share Unit (DSU) Plans

The following table provides a summary of the Company's PSU, RSU and DSU plans in units:

	PSUs	RSUs	DSUs
Balance at January 1, 2024	293,333	472,332	184,212
Granted	100,000	273,610	-
Forfeited	(128,333)	(121,666)	(92,106)
Settled	(55,000)	(230,666)	-
Balance at December 31, 2024	210,000	393,610	92,106

Granted	-	-	682,928
Settled	(88,334)	(220,096)	-
Balance at December 31, 2025	121,666	173,514	775,034

During the year ended December 31, 2025, the Company granted nil PSUs (2024 – 100,000), nil RSU's (2024 – 273,610) to its officers and employees, and 682,928 (2024 - nil) DSU's to its independent directors as part of their annual compensation for fiscal years 2024 and 2025. Each of the four directors received DSU's valued at \$70,000, vesting after one year. The grant date fair value of the DSUs was \$0.41 per unit.

During the year ended December 31, 2025, 88,334 (2024 – 55,000) PSUs, 220,096 (2024 – 230,666) RSU's, and nil (2024 – nil) DSU's were settled. The fair value on the grant date of these PSUs and RSUs of \$144,741 (2024 - \$195,086), was transferred from contributed surplus to issued capital upon the settlement.

16. LOSS PER SHARE

For the years ended December 31,	2025	2024
Loss for the year attributable to ordinary equity holders	\$(1,622,408)	\$(3,233,997)
Weighted average number of common shares for the purpose of:
Basic and diluted	27,577,128	27,787,164
Basic and diluted loss per share	\$(0.06)	\$(0.12)

The calculation of diluted loss per share for the year ended December 31, 2025 and December 31, 2024 excludes the effects of Stock Options, PSUs, RSUs, and DSUs, as their impacts would be anti-dilutive.

17. COST OF SALES, ADMINISTRATIVE EXPENSES AND OTHER EXPENSES (INCOME)

Cost of Sales
For the years ended December 31,	2025	2024
Employee costs	\$455,868	\$371,960
Depreciation (Note 7,8)	956,431	1,152,745
Direct and operating costs	2,724,925	1,762,465
	\$4,137,224	\$3,287,170
Administration Expenses
For the years ended December 31,	2025	2024
Employee costs	\$2,172,690	\$2,229,822
Corporate costs, professional fees, insurance and other office costs	1,237,995	1,325,022
	\$3,410,685	\$3,554,844
Other expenses (income)
For the years ended December 31,	2025	2024
Interest income	(127,682)	(326,186)
Legal expenses	387,638	221,955
Other income (expense)	(76,225)	7,175
	\$183,731	\$(97,056)

The legal expenses relate to the intellectual property litigation with respect to Emission Rx (Note 22).

18. REVENUE BY GEOGRAPHIC SEGMENT

The Company reports its financial results as one reportable segment as this is how the financial information is reviewed by the chief decision makers of the Company.

The following table provides information regarding revenue on a geographic basis as determined by the location of the customer or third party:

For the year ended December 31, 2025	Canada (1)	United States	Consolidated
Equipment sales	\$5,107,478	\$350,542	\$5,458,020
Equipment rentals	811,012	526,920	1,337,932
	\$5,918,490	\$877,462	\$6,795,952
For the year ended December 31, 2024	Canada (1)	United States	Consolidated
Equipment sales	\$2,197,477	\$250,447	\$2,447,924
Equipment rentals	162,017	1,910,639	2,072,656
	\$2,359,494	\$2,161,086	\$4,520,580

(1) International revenue included within Canada is comprised of the following: equipment sales to total revenue — Iraq 38 percent (2024 – 0 percent), Libya 13 percent (2024 – 20 percent), and Nigeria 5 percent (2024 – 12 percent). Rental revenue to total revenue — Mexico 10 percent (2024 – 0 percent).

The following tables provide information regarding the location of the Company's non-current assets on a geographic basis.

Intangible assets

For years ended December 31,	2025	2024
Canada	\$10,575,844	\$7,453,726
United States	-	-
	\$10,575,844	\$7,453,726
Property and equipment and right-of-use assets
For years ended December 31,	2025	2024
Canada	\$1,096,264	\$736,253
United States and international	4,810,735	6,138,889
	\$5,906,999	\$6,875,142

19. CAPITAL MANAGEMENT

The Company's objectives when managing capital are to:

• Deploy capital to provide an appropriate return on investment to its shareholders;
• Maintain financial flexibility in order to preserve the Company's ability to meet financial obligations; and
• Maintain a capital structure that provides financial flexibility to execute on strategic opportunities.

The Company's strategy is formulated to maintain a flexible capital structure consistent with the objectives as stated above and to respond to changes in economic conditions and the risk characteristics of the underlying assets. The Board of Directors does not establish quantitative return on capital criteria for management, but rather promotes year-over-year sustainable profitable growth. The Company is not subject to any externally imposed capital requirements other than the financial tests and covenants associated with its repayable government grant from Western Economic Diversification that is described in Note 12. As at December 31, 2025, the loan was fully repaid.

The Company's capital structure consists of equity, cash and equivalents and short-term highly liquid investments. In order to maintain or alter the capital structure, the Company may adjust capital spending, refinance existing credit facilities, raise new debt and issue common shares. The Company expects that cash and short-term investments and funds generated from operations will provide sufficient capital resources and liquidity to fund current operations in 2026.

A key measure the Company utilizes in evaluating its capital structure is the ratio of debt-to-total capitalization. Debt-to-total capitalization is calculated as debt divided by total capitalization. Debt is defined as total short and long-term borrowings adjusted for cash balances. The only loan that the Company has is a repayable government grant from Western Economic Diversification that is described in Note 12, which was fully repaid in 2025 and is no longer outstanding. Equity is defined as issued capital and reserves attributable to equity holders. Total capitalization is defined as the sum of debt unadjusted for cash balances and the book value of equity.

For the years ended December 31,	2025	2024
Repayable government grant	-	302,869
Shareholders' equity	19,717,988	21,110,076
Total capitalization	19,717,988	21,412,945
Total debt to total capitalization	N/A	1.41%

20. MOVEMENTS IN NON-CASH WORKING CAPITAL

The change in non-cash working capital for the year ended December 31, 2025 and 2024 pertain to operating activities.

For the years ended December 31,	2025	2024
Trade, contract assets and other receivables	\$858,626	\$(630,767)
Inventory	(24,381)	(101,563)
Prepaid expenses and deposits	51,764	(62,248)
Trade payables, accrued liabilities and provisions	214,302	244,041
Deferred revenue	375,994	141,854
	\$1,476,305	\$(408,683)

21. FINANCIAL RISK MANAGEMENT

The Company's financial instruments consist of cash and cash equivalents, investments, deposits, trade contract assets and other receivables, trade payables, accrued liabilities and provisions, and a repayable government grant. The Company did not hold any derivative financial instruments during the year.

Fair values

IFRS establishes a three-level hierarchy that prioritizes the inputs relative to the valuation techniques used to measure fair value. Fair values of assets and liabilities included in Level 1 of the hierarchy are determined by reference to quoted prices in active markets for identical assets and liabilities. Fair value of assets and liabilities in Level 2 are determined using inputs other than quoted prices for which all significant outputs are observable, either directly or indirectly. Fair value of assets and liabilities in Level 3 are determined based on inputs that are unobservable and significant to the overall fair value measurement. Accordingly, the Company has categorized its financial instruments carried at fair value into one of three different levels depending on the observability of the inputs employed in the measurement.

As at December 31, 2025 there were no significant differences between the carrying amounts of the current financial assets and current financial liabilities recognized in the Company's consolidated financial statements and their estimated fair values due to their short period to maturity. Judgment is required in interpreting market data to develop the estimates of fair value. These estimates are not necessarily indicative of the amounts we could realize in current markets.

Credit risk

Credit risk arises from the potential that one or more counterparties fail to meet their obligations. A substantial amount of the Company's trade and contract receivables, which relate to the Company's revenues, are with customers in the oil and gas industry and are subject to normal industry credit risks. The Company mitigates this risk through its credit policies and practices including the use of credit limits and approvals, and by monitoring the financial condition of its customers. Payment terms with customers vary by contract. Standard payment terms are 30 days from the invoice date. The maximum exposure to credit risk of cash, trade receivables, unbilled contract assets and other receivables is their respective carrying values.

The Company's aged trade, contract assets and other receivables net of allowance at December 31, 2025 and 2024 are as follows:

For the years ended December 31,	2025	2024
Current(1)	\$877,242	\$1,281,592
31 – 60 days	199,094	286,464
61 – 90 days	72,058	66,022
Greater than 90 days	184,525	310,877
Total trade, contract assets and other receivables. Net of allowance	\$1,332,919	\$1,944,955

(1)Contract assets of \$509,528 (2024 - \$800,529) comprise \$470,854 of unbilled accounts receivable related to customer equipment sales contracts, which is included in the current receivable balance above, and deferred costs exceeding the percentage of completion on custom equipment sales contracts of \$38,674 (2024 - \$207,885) which are not incorporated herein.

IFRS 9, Financial Instruments, requires an entity to estimate its expected credit loss for all trade accounts receivable and contract assets even when they are not past due based on the expectation that certain receivables and contract assets will be uncollectible. For accounts receivable numbers and contract assets, a loss allowance matrix is utilized to measure expected credit losses. The matrix contemplates historical credit losses by age of receivables, adjusted for any forward-looking information and management expectations. The total expected credit loss allowance as at December 31, 2025 and 2024, to receivables not specifically provided for is \$24,692.

The Company is also exposed to the risk of dependence on a few customers for a significant amount of the Company's revenue. The Company notes that equipment sales revenue, which comprises a significant portion of total revenue, generally relates to a small number of customers each year but these customers change each year. The Company bills and collects equipment revenue throughout the contract which reduces collection risk. There is a concentration of equipment sales and equipment rental and related service revenue that is associated with the equipment and rental revenue. For the year ended December 31, 2025, there were four customers represented 74 percent of total revenue (2024 – four customers represented 60 percent).

Liquidity risk

The Company's principal sources of liquidity are cash and cash equivalents, investments, operating cash flows, existing or new credit facilities and new share equity. The Company monitors its liquidity to ensure it has sufficient funds to complete planned capital and other expenditures. The Company mitigates liquidity risk by maintaining adequate banking and credit facilities and monitoring its forecast and actual cash flows. The Company may also adjust its capital spending to maintain liquidity. See Note 19 for further details on the Company's capital structure and Note 22 for contractual maturities of financial liabilities. The Company has positive net working capital as at December 31, 2025 of \$3,877,399 (2024 - \$7,570,934).

Foreign currency risk

The Company is exposed to foreign exchange risk associated with foreign operations where assets, liabilities, revenue and costs are denominated in USD. The impact of this exposure is recorded as a cumulative translation adjustment in other comprehensive income (loss). The net exchange difference in 2025 is a loss of \$23,838 (2024 - gain of \$60,716).

The Company is also exposed to the impact of foreign currency fluctuations in its Canadian operations on sales and purchases of products and services from vendors primarily in the United States which resulted in a foreign exchange loss of \$168,388 for the year ended December 31, 2025 (2024 – gain of \$225,901). The Company mitigates some of the foreign currency risk by keeping a US dollar bank account to receive US payments and fund US dollar purchases in the Canadian entity.

Assuming all other variables remain constant, a fluctuation of +/- 1 percent in the exchange rate between the Canadian dollar and the foreign currencies would impact net income (loss) before tax by approximately \$14,805 (2024 - \$14,177).

22. COMMITMENTS AND CONTINGENCIES

At December 31, 2025 the Company had the following contractual undiscounted cash outflows:

As at December 31, 2025	1 Year	2-5 Years	Total
Trade payables, accrued liabilities	\$1,698,657	\$ -	\$1,698,657
Lease obligations (principal and interest)	262,842	714,200	977,042
Lease obligations (operating costs, insurance and property tax) (1)	200,183	648,010	848,193
	\$ 2,161,682	\$ 1,362,210	\$3,523,892

(1)The Company is required under its lease commitments to pay annual operating costs. The amounts can vary each year based on inflation.

As at December 31, 2024	1 Year	2-5 Years	Total
Trade payables, accrued liabilities	\$1,565,046	\$ -	\$1,565,046
Purchase commitments (1)	122,541	-	122,541
Lease obligations (principal and interest)	215,938	915,375	1,131,313
Lease obligations (operating costs, insurance and property tax) (2)	189,226	804,486	993,712
Repayable government assistance	322,987	-	322,987
	\$ 2,415,738	\$ 1,719,861	\$4,135,599

(1)Purchase commitments for materials required to build the 1500kw prototype unit for its waste heat to power research and development project. (2)The Company is required under its lease commitments to pay annual operating costs. The amounts can vary each year based on inflation.

The Company filed a claim against three former employees and their company, Emission Rx. The three former employees left the Company over a period of two months, in 2018. After the former employees left, the Company learned that the former employees had incorporated Emission Rx on November 14, 2017, several months prior to their departures, and had developed a low-pressure burner technology which they then marketed and sold through Emission Rx. The Company sought injunctive relief to prevent Emission Rx from competing in the market against the Company and infringing the Company's intellectual property.

The Company asserts ownership of Emission Rx's LP Burner Technology, through: (i) the terms of the employment agreements signed by the three former employees; or (ii) the application of the common law. In June 2024, the Court of King's Bench of Alberta held the former employees in contempt of court for withholding and giving false sworn evidence to the Court. In August 2025, the Court of Appeal of Alberta upheld the contempt finding. The "sanction" or "penalty" phase of the contempt hearing was heard in December 2025. In January 2026, the Court of King's Bench of Alberta issued its sanction decision, fining the former employees \$150,000 plus solicitor-client costs of the contempt proceedings.

The litigation is ongoing. Notwithstanding the uncertainty as to the outcome, based on the information currently available, the Company does not believe the outcome of this litigation will have a material adverse effect on its consolidated financial position.

From time to time, the Company is also subject to other legal proceedings, settlements, investigations, claims and actions arising in the normal course of business. While the final outcome of such actions and proceedings cannot be predicted with certainty, the Company believes that the resolution of such matters will not have a material impact on the Company's financial position or results of operations as at December 31, 2025.

23. RELATED PARTY TRANSACTIONS

The Company defines key management personnel as members of the Board of Directors, Chief Executive Officer ("CEO"), Chief Financial Officer ("CFO"), VP Operations and Engineering ("VP"). In addition to their salaries and directors' fees, the Company also provides non-cash benefits including participation in the Company's stock option, RSU, PSU and DSU plans. Total expense for the year ended December 31, 2025 including salaries, director fees, benefits and share-based compensation, termination pay and signing bonuses is \$853,089 (2024 - \$996,961).

Employment terms agreed between the Company and the CEO have a severance clause of eighteen months annual base salary, entitlement to any unpaid annual base salary and all accrued but unpaid bonuses and vacation pay through to the date of termination and accelerated vesting of any share options not then exercisable but which would have become exercisable within six months of the date of termination. In the event of a change of control, all share options that are not then exercisable shall vest immediately and become exercisable.

Employment terms with the CFO include severance benefits in the event of termination without cause in the amount of six months of annual base salary plus an additional one month of base salary for each full year of service, up to a maximum of twelve months of base salary.

24. SUBSEQUENT EVENT

In February 2026, the Company received \$784,634 in cash related to the Emission RX litigation, consisting of a \$150,000 court-ordered fine and \$634,634 of solicitor-client costs awarded by the Court of King's Bench, gross of the costs of the appeal. In April 2026, the Company received \$151,494.97 as the balance of the costs award for the Court of King's Bench of Alberta contempt proceedings, as well as an additional \$345,000 related to the costs of the application to compel production of documents.