CVW CleanTech : 2022 Year End Report FS

CVW CleanTech Inc.

(Previously Titanium Corporation Inc.)

Financial Statements

Years Ended December 31, 2022 and December 31, 2021

Independent auditor's report

To the Shareholders of CVW CleanTech Inc.

Our opinion

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of CVW CleanTech Inc. (the Company) as at December 31, 2022 and 2021, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS).

What we have audited

The Company's financial statements comprise:

• the statements of financial position as at December 31, 2022 and 2021;
• the statements of loss and comprehensive loss for the years then ended;
• the statements of changes in shareholders' equity (deficit) for the years then ended;
• the statements of cash flow for the years then ended; and
• the notes to the financial statements, which include significant accounting policies and other explanatory information.

Basis for opinion

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

Independence

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

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2022. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

PricewaterhouseCoopers LLP

111-5th Avenue SW, Suite 3100, Calgary, Alberta, Canada T2P 5L3 T: [phone], F: [phone]

"PwC" refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.

Key audit matter

Initial recognition and vesting of stock-based compensation

Refer to note 3 - Significant accounting policies and note 8 - Equity-based compensation to the financial statements.

As at December 31, 2022, the Company recognized $1.44 million and $0.65 million of stock-based compensation expense related to options that were granted in January 2022 and September 2022, respectively. The compensation cost for options with market and non-market performance criteria is based upon estimated fair value of those instruments at the time of grant using Monte Carlo simulations.

The significant assumption used by management in the Monte Carlo simulations was the expected volatility rate.

The options require either market or non-market performance criteria to be met in order to vest. The non-market performance criteria of the September options require the Company to move through a series of successive milestones that culminate in the construction and commissioning of an oil sands facility. Where an option grant includes non-market performance criteria as a vesting condition, the number of options expected to vest is considered at each reporting date. Significant judgment is used to determine the likelihood the specific performance criteria will be achieved.

We considered this a key audit matter due to

1. the judgment made by management in determining both the initial fair value of the options granted during the year and the number of options to vest related to the September option grants based on certain non-market performance criteria;
2. a high degree of auditor judgment and subjectivity in performing procedures; and (iii) the

How our audit addressed the key audit matter

Our approach to addressing the matter included the following procedures, among others:

• With the assistance of professionals with specialized skill and knowledge in the field of valuation, developed an independent point estimate of the initial fair value of the options granted based on data and assumptions used by management and:
• • Tested the underlying data used in developing the independent point estimate.
• Compared the independent point estimate to management's estimate to evaluate the reasonableness of management's estimate.
• Tested how management determined the number of options to vest related to the September option grants when certain non- market performance criteria will be achieved, which included the following:
• • Evaluated the reasonableness of the number of options to vest, which is based on the determination of the achievement of non-market performance criteria related to the Company completing a series of successive milestones that culminate in the construction and commissioning of an oil sands facility by considering (i) the information obtained from discussions with executives and corroborating that information to supporting documents;
    (ii) the Board of Directors approved budgets; and (iii) the Company's ability to source government funding by considering historic funding achieved.

Key audit matter	How our audit addressed the key audit matter

audit effort which involved the use of professionals with specialized skill and knowledge in the field of valuation.

Other information

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

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

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed, 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 financial statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with 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.

Auditor's 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 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 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.
• 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 financial statements, including the disclosures, and whether the 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.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter