Green Impact Partners : MD&A year ended Dec. 31 2024

Published: 2025-05-01 12:05:06 ET GIP.V

Published on 05/01/2025 at 12:05

For the Years Ended December 31, 2024 and 2023

April 30, 2025

This Management's Discussion and Analysis ("MD&A") for the years ended December 31, 2024 and 2023 is prepared as of April 30, 2025 and provides information concerning the financial condition and results of operations of Green Impact Partners Inc. ("GIP" or the "Company"). This MD&A should be read in conjunction with the Company's audited consolidated financial statements as at and for the years ended December 31, 2024 and 2023, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. These consolidated financial statements and additional information relating to GIP are available on SEDAR+ at https://www.sedarplus.ca. The Company's shares are listed for trading on the TSX Venture Exchange under the symbol "GIP".

Unless otherwise indicated, all dollar amounts presented herein are in thousands of Canadian dollars.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION

This MD&A contains "forward-looking statements" and "forward-looking information" (collectively referred to herein as "forward-looking statements") within the meaning of applicable securities legislation. Certain information and statements contained in this MD&A constitute forward-looking statements, including: the Company's plans, prospects and opportunities; expectations regarding future revenue, EBITDA and generation of free cash flow; the anticipated production, inputs, carbon capture, performance, capital expenditures and methods of operations in relation to the Company's projects, including its relationships with current and potential future joint venture partners; the expected timing of project construction, milestones and operations; the timing of regulatory approval in respect of Carbon Intensity ("CI") certifications of the GreenGas Colorado Joint Venture (the "Colorado JV"); the timing of and ability to secure various regulatory approvals from the Government of Alberta and municipal permits from the City of Calgary for the Future Energy Park project (the "FEP"); the expected capital structure and organization of the FEP; the costs associated with the Company's projects and funding of such costs, including the potential divestiture of a minority interest in one or more of the Company's projects; closing of definitive documentation with the FEP Lead Equity Partner (as defined herein); anticipated cash distributions of the FEP project if completed; the anticipated costs associated with capital spending, expectations for the Company's future operations, including the generation of free cash flow and increases in share-based compensation; expectations in respect of Investment Tax Credits ("ITC"), Production Tax Credits ("PTC") and the potential benefits thereof to the Company; the Company's ability to source additional capital from external financing sources, including funds available under the Option Agreement (as defined below), debt, equity, strategic partnership, or potentially asset dispositions; anticipated developments in respect of the Clean Fuel Regulations; potential benefits in respect to the Alberta Technology Innovation and Emissions Reduction Regulation; and the potential benefits on the value of the Company's portfolio; expectations concerning the nature and timing of additional growth opportunities and the benefits thereof; additional partnership opportunities involving the Company's New Zealand-based energy company; expectations respecting the Company's competitive position; anticipated supply and demand for the Company's products and services; reliance on third-party reports for project financing involves risks related to assumptions, timelines, and outcomes that may vary, potentially impacting the Company's financial position and project development; expectations concerning the financing of future business activities; the expected benefits of entering into financial hedging contracts; anticipated acquisitions and divestitures; the anticipated carbon impacts associated with the Company's projects and statements as to future economic and operating conditions. Readers should review the cautionary statement respecting forward-looking statements that appears below.

The information and statements contained in this MD&A that are not historical facts are forward-looking statements. Forward-looking statements (often, but not always, identified by the use of words such as "seek", "plan", "continue", "estimate", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe", "expect", "may", "anticipate" or "will" and similar expressions) may include plans,

expectations, opinions, or guidance that are not statements of fact. Forward-looking statements are based upon the opinions, expectations and estimates of management as at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking statements.

Forward-looking information concerning the nature and timing of growth is based on the current budget of the Company (which is subject to change), factors that affected the historical growth of the Company, including sources of historic growth opportunities, in addition to our ability to successfully complete our projects and negotiate contracts, expectations relating to future economic, regulatory and operating conditions and adequate access to funding for our projects and ongoing operations. Forward-looking statements concerning the current and future competitive position of the Company's business and partnership relationships is based upon the current competitive environment in which the Company operates, management expectations relating to future economic and operating conditions, current and announced build programs, and the expansion plans of other organizations. Forward-looking statements concerning the financing of future business activities is based upon the financing sources on which the Company and its predecessors have historically relied, prospects for obtaining potentially new financing sources, and expectations relating to future economic and operating conditions, including interest rates, supply chains, global supply and demand, energy and commodity prices. Forward-looking statements concerning future economic and operating conditions is based upon historical economic and operating conditions, as well as opinions of third-party analysts reflecting anticipated economic and operating conditions. Although management of the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Accordingly, readers should not place undue reliance upon any of the forward-looking statements set out in this MD&A.

All the forward-looking statements of the Company contained in this MD&A are expressly qualified, in their entirety, by this cautionary statement. Except as required by law, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

This MD&A contains certain financial measures that do not have any standardized meaning prescribed by IFRS. Therefore, these financial measures may not be comparable to similar measures presented by other issuers. Investors are cautioned these measures should not be construed as an alternative to net and comprehensive income or to cash from (used in) operating, investing, and financing activities determined in accordance with IFRS, as indicators of our performance. We use non-IFRS measures, including EBITDA and Adjusted EBITDA, to assist investors in determining our ability to generate income and cash provided by operating activities and to provide additional information on how these cash resources are used. Non-IFRS measures are further discussed in the Non-IFRS Measures section of this MD&A.

BUSINESS OVERVIEW

Our Business

GIP, publicly traded on the TSX Venture Exchange ("TSXV"), is focused on acquiring, developing, building, and operating renewable natural gas ("RNG") and other bioenergy projects. The Company participates in a wide range of low-carbon opportunities during all stages of the project lifecycle - from idea generation through to operations ("Bioenergy Production"). Moreover, alongside its primary focus, GIP possesses a network of assets located throughout western Canada and the United States that comprises facilities for processing and disposing of wastewater and hydrocarbons, industrial landfill and recycling facilities, oil and water gathering pipelines, and oil terminals for blending and sales ("Water & Solids Recycling & Energy Product Optimization").

The Company reports operating results for the following reportable segments:

Water & Solids Recycling & Energy Product Optimization - The Water & Solids Recycling & Energy Product Optimization segment is currently comprised of operational and cash flowing assets in Canada and the United States that provide services to safely recycle and/or dispose of water and solids waste from third party operations as well as optimizing, safely transporting, and marketing the associated oil products.

Bioenergy Production (formerly Clean Energy Production) - The Bioenergy Production segment includes bioenergy projects under construction, development, and pre-development located in Canada, the United States and New Zealand. The current portfolio of bioenergy projects within this operating segment includes RNG, biofuel and hydrogen distribution projects.

2024 Highlights

Key highlights and accomplishments for 2024 and as of the date of this MD&A include:

Insider Investment: In 2024, the Company entered into an option agreement (the "Option Agreement") with corporate entities controlled by both current and previous directors for the Company (the "Optionees") to provide access to, at the Company's sole discretion, $10.0 million of capital to provide additional liquidity to the Company as it continues to progress its bioenergy development portfolio. As of the date of this MD&A,

$4.0 million has been drawn under the Option Agreement.

Closed Sale of Colorado JV ITCs for Gross Proceeds of $28.9 Million: On June 27, 2024, Colorado JV closed the Purchase and Sale Agreement ("PSA") for the ITCs for total sales proceeds of $28.9 million (US$21.1 million). GIP received a net distribution from the Colorado JV of $17.8 million (US$13.0 million) after the replenishment of the debt service reserve account for the Colorado JV.

Commenced Commercial Gas Production at Colorado JV: Following resolution of the local utility technical issues, the Colorado JV began commercial gas production and sales in 2024. Over the course of the year, the Colorado JV identified ongoing equipment and design deficiencies and is actively pursuing corrective measures available under its Engineering, Procurement & Construction ("EPC") contract.

Finalized Carbon Credit Pathways for FEP: In July 2024, the Company finalized the carbon credit pathways under the Alberta Technology Innovation and Emissions Reduction ("TIER") program for FEP.

Received Conditional Development Permit for FEP: In December 2024, the Company received its conditional Development Permit from the City of Calgary. This approval enables the initial site work to begin, following financial close, when construction commences.

Project Construction and Development Updates

Colorado Joint Venture

Following resolution of the local utility technical issues, the Colorado JV has experienced operational challenges through the ramp up period due to EPC commissioning, design and equipment failures. Throughout 2024, the Colorado JV continued to work with the EPC contractor, who committed to rectify the issues, however, ongoing EPC failures are still required to be addressed. The Company engaged a third-party independent engineering firm to assess the facilities and provide recommendations to rectify the issues. The Colorado JV is progressing through the remedies available under its EPC contract over the remainder of 2025 and early 2026 to correct the EPC failures. Subsequent to year end, the Colorado JV issued a Notice of Default to the EPC contractor.

Due to the uncertainty of timing of the correction of the EPC failures, the Company is not providing and is withdrawing its EBITDA guidance at this time (2025 EBITDA was previously estimated at $12.3 million, of which GIP would retain a 50% net interest).

The Colorado JV has received its temporary pathway approval for both sites under the California Air Resources Board Low Carbon Fuel Standard ("LCFS") program and as such, is now monetizing its environmental credits for its production to date. The temporary pathway provides a temporary CI score of -150 for monetization of LCFS credits until the provisional pathway is approved for each site, expected in the next 12-18 months. Based on preliminary analysis, the projected CI score for the facilities is expected to be improved over the previously estimated CI score of -189.

Due to the challenges identified above, the Colorado JV did not meet its covenant production targets and did not achieve successful completion of the performance tests under the EPC agreement required under the Colorado JV project debt facility ("Colorado JV Debt Facility") during the fourth quarter of 2024. The covenant breach cannot be cured, and as a result, the project lender has the right to demand repayment and/or realize on the security at any time under the Colorado JV Debt Facility. The Colorado JV is working with the project lender of the Colorado JV Debt Facility to both provide a waiver of the production covenant breach and to amend the terms of the credit facility, including future performance covenants, to enable the Colorado JV to work through design improvements and repairs. There can be no assurances that the Colorado JV will be successful in obtaining the waiver and amending the Colorado JV Debt Facility to avoid future defaults.

As previously disclosed, on June 27, 2024, the Colorado JV closed the sale of its ITCs for gross proceeds of $28.9 million (US$21.1 million). The Company and its Colorado JV partner, Amber Infrastructure Group ("Amber Infrastructure") entered into an agreement to structure the transaction whereby the Company received all the net proceeds from the ITC sale, and the parties terminated and waived the payment of the deferred consideration originally contemplated under the unit purchase agreement between Amber Infrastructure and the Company (the "Deferred Consideration"), in addition to the related ITC distribution agreement and the associated funding of the ITC distribution account. As part of this transaction, a parent guaranty was provided, which was backed by ITC tax insurance, subject to certain exclusions. Please refer to Risks and Uncertainties below - Operating Risks and Insurance. Pursuant to the terms of the Colorado JV Debt Facility, $8.2 million (US$6.0 million) of the ITC proceeds were used to fund the debt service reserve account. GIP received $17.8 million (US$13.0 million) in net cash proceeds, following the replenishment of the debt service reserve account and the payment of certain transaction costs for the Colorado JV ITCs (within the previously provided range of $16.2 million (US$12.3 million) and $21.8 million (US$16.5 million) which included the Deferred Consideration). With the net ITC proceeds, the Company also initially injected $2.1 million (US$1.5 million) into the Colorado JV as a preferred capital contribution for working capital purposes, with an additional $1.1 million (US$0.8 million) injected throughout the remainder of 2024. This preferred capital contribution does not have an impact on the respective ownership percentages of the partners but rather will carry a preferred return of an estimated 5% annually, to be repaid prior to any other distributions to the partners.

Future Energy Park

The Company has been working to progress financing. Total capital costs for FEP, including contingencies, financing and transaction costs are estimated at approximately $2 billion, of which construction costs with contingency is approximately $1.5 billion. FEP is expected to be financed with a capital structure of 25% equity and 75% project-level senior and subordinated debt.

FEP is expected to have an estimated annual production of four million gigajoules of RNG, over 300 million litres of cellulosic equivalent ethanol, approximately 595,000 tonnes of wet distillers' grain, approximately 400,000 tonnes of carbon credits, and approximately 300,000 tonnes of clean, biogenic CO2. Based on updated contract terms and independent third-party price forecasts for FEP's various revenue streams, the anticipated annual run-rate EBITDA is $325 million to $460 million based on current contractual arrangements and independent third-party pricing assumptions.

FEP will utilize non-food grade wheat that will be processed through a bio-fermentation process to generate ethanol. The by-product from the bio-fermentation process will then be converted into RNG through an anerobic digestion process. In addition, to support the facility's power, steam and hot water requirements, the project will also include a high-efficiency cogeneration (combined heat and power) facility. Any excess power from the cogeneration facility will be sold into the Alberta electricity market. In addition, high protein wet distillers' grain ("WDG") (a by-product of the anaerobic digestion process) is produced, along with a pure stream of captured biogenic CO2.

In 2024, the Company incurred approximately $6.5 million in costs (out of a total of approximately $38.5 million) to further advance FEP. The Company estimates it will cost approximately $2.9 million to advance the project to financial close and commencement of construction.

Feedstock

FEP has entered into a long-term supply agreement (the "Feedstock Contract") with a large creditworthy counterparty to purchase 750,000 tonnes annually of non-food grade wheat, which, depending on starch content, is expected to supply all the feedstock required for the facility on an annual basis. The Company has the option to purchase any additional waste wheat supply if needed, dependent on starch content, from the same supplier or other sources. The Feedstock Contract secures supply at market rates determined by the quality of the wheat. In early 2025, FEP entered into a secondary long-term supply agreement with an Alberta based grain aggregator for up to 250,000 additional tonnes of non-food grade wheat. The secondary contract supports the Company's strategy to procure the lowest quality of wheat available that meets plant specifications, which is further expected to enhance the competitive price environment for the feedstock. Based on an independent third-party forecast of market rates, the Company estimates average wheat supply costs of approximately $200 million annually over the first ten years of operations.

Offtake Agreements

RNG

The Company is near final on the definitive agreement for the sale of 100% of FEP's RNG produced on a long-term basis to a highly creditworthy counterparty for a fixed price, with upside sharing on any environmental attributes expected to be generated by FEP under applicable federal and provincial clean fuel programs. Based on an expected run-rate production of approximately four million gigajoules of RNG annually, and using independent price forecasts for federal and provincial clean fuel credits, the Company anticipates annual revenue of $140 million to $175 million in annual revenue for the sale of its RNG. Of this, approximately $120 million is expected to be on a fixed-price basis. After estimated transportation charges of approximately $5 million annually, and the allocation of both direct and indirect operating expenses of

approximately $15 million annually, the resulting EBITDA is projected to be between $120 million to $155 million per year for the sale of its RNG.

Carbon Credits

The Company has finalized the carbon credit pathways under the Alberta TIER program and FEP is expected to generate approximately 400,000 tonnes annually of carbon credits (previously estimated at 650,000 tonnes annually). In an effort to maximize senior debt availability and economics of the project, the Company is currently pursuing a long-term fixed price contract for the TIER credits. The Company expects to generate between $35.0 million and $25.0 million in annual revenue for the TIER carbon credits, resulting in annual run-rate EBITDA for the sale of these credits of $17.5 million to $27.5 million, after the allocation of both direct and indirect operating expenses of approximately $7.5 million per annum.

Ethanol

FEP intends to sell 100% of its ethanol production, consisting of over 300 million litres annually of cellulosic equivalent ethanol, to two independent creditworthy counterparties. The Company has executed a binding contract with a large, international, integrated energy company to sell 50% of its ethanol production, including the associated environmental attributes, for eight years at merchant prices, less a marketing fee. The Company has executed a non-binding term sheet and is currently finalizing a definitive agreement for the sale of its remaining 50% of ethanol production to a multi-national commodity trading company for an initial five-year term, mutually extendable for additional one-year periods thereafter.

The ethanol is anticipated to be sold into North American markets and is expected to generate revenue through both the sale of the underlying fuel and the sale of associated environmental attributes under various low carbon and clean fuel standards across North America. The Company estimates it will generate between $390 million to $460 million in revenue annually over the initial decade of operation. This forecast is based on the facility's expected annual run-rate production of over 300 million litres of cellulosic equivalent ethanol, along with independent third-party price forecasts and average ethanol revenue incorporating attributable environmental attributes. This is expected to result in approximately $140 million to $210 million in EBITDA per year for FEP, net of wheat supply costs disclosed above of $200 million annually, as well as approximately $50 million allocated for both direct and indirect operating expenses.

Distillers Grain

FEP is expected to produce approximately 595,000 tonnes annually of WDG, which has been contracted for sale on a merchant price basis to a local marketer of agricultural commodities for an initial 10-year period. Based on independent price forecasts for WDG, the Company expects FEP to receive between

$57.5 million to $77.5 million in annual revenue for the sale of its WDG, resulting in approximately $50 million to $70 million in annual EBITDA for the sale of this product, after the allocation of both direct and indirect operating expenses of approximately $7.5 million per year.

Engineering & Procurement Contract & Construction Contract

The engineering & procurement ("E&P") contract and the construction contract for FEP are complete and will be executed prior to the close of project-level debt financing. The E&P contract will be executed under a fixed-price contract with a Canada-based engineering firm, renowned for its global track record in delivering sustainable energy projects. The construction contract will be completed under a fixed-price contract with a global, creditworthy engineering and construction firm.

Carbon Capture & Sequestration

To meet certain minimum CI requirements under various offtake agreements for FEP, the Company has executed a term sheet and is currently negotiating a long-term definitive agreement for the permanent sequestration of its captured CO2. The agreement is for a 20-year term and provides a base fee for sequestration. Under the sequestration agreement, FEP is responsible for transportation of the CO2 to the sequestration facility. All costs related to carbon capture and sequestration have been allocated to the various revenue streams above as indirect costs.

Material Permits & Approvals

The project has obtained all material permits and approvals required to move forward with construction, having received its conditional Development Permit from the City of Calgary in December 2024. The final development permit is expected in the third quarter of 2025. In early 2024, FEP received its stripping and grading permit, the first of its construction permits, from the City of Calgary. This approval enables the initial site work to begin as construction commences.

Iowa RNG Project

There have been no material developments during 2024 on the Company's Iowa RNG project. The Company continues to pursue a viable long-term offtake agreement, which is required to proceed to final investment decisions. Until such an agreement is executed, no additional capital will be allocated to this project.

New Zealand Green Hydrogen

The Company's green hydrogen opportunity in New Zealand progressed meaningfully during 2024. Three of the first four facilities are now operational and trucks are being filled with hydrogen. Each operational site is at its electrolyser design capacity of the 1 MW required to generate the hydrogen used for fueling. The next four facilities are currently under construction. The Company continues to hold a 12% equity interest and a board seat in the New Zealand opportunity and is not required to, nor does it plan to acquire more equity in the entity. Given that the entity remains in the early-stage growth phase, no cash distributions to shareholders are expected in the near to medium term.

Material Policy Developments

The Company has reviewed and assessed material policy developments, including updated federal and provincial legislation, in draft or final form, which impacts the Company's projects as further described below.

Canada

Clean Technology ITC

The Clean Technology ITC is a federal program providing an up to 30% refundable tax credit for eligible property acquired and available for use after March 28, 2023 in various categories of non-fossil fuel energy generation and storage. A waste biomass expansion was also announced in the 2023 Fall Economic Statement. Draft legislation was released in 2024. The Company had previously estimated that certain property of FEP would be eligible for this program with an estimated potential refundable tax credit between

$33.0 million and $50.0 million; however, based on the draft legislation, the Company determined through work with third-party advisors that FEP was not eligible as the program is targeted to clean technologies that produce and sell power, and does not include biofuels.

Carbon Capture Utilization and Storage ("CCUS") ITC

As previously disclosed, the CCUS ITC is a federal program providing an up to 60% refundable tax credit for direct air capture equipment (60%), other capture equipment (50%) and carbon transportation and pipeline infrastructure (37.5%). Certain labour requirements must be met to achieve the maximum refundable rate, with a 10% reduction if not met. The CCUS ITC will be reduced by half from 2031 to 2040. Certain property of FEP is expected to be eligible for this program. The Company currently estimates a potential refundable tax credit between $25.0 million and $39.0 million, subject to meeting the program qualifications.

Alberta Carbon Capture Incentive Program ("ACCIP")

As previously disclosed, the ACCIP offers a 12% grant on new eligible CCUS capital expenditures. The grant is expected to be payable in three installments over three years, following the first year of operations. This provincial funding will be available once the federal government legislates the CCUS ITC. The Company currently estimates an ACCIP grant between $7.7 million and $9.2 million for FEP once operational, subject to finalization of the legislation.

Alberta Agri-Processing ITC ("APITC")

As previously disclosed, the APITC offers a 12% non-refundable tax credit on eligible capital expenditures related to the transformation of agricultural inputs, with a maximum tax credit amount of $175 million. A tax credit can be claimed against Alberta corporate taxes and may be carried forward up to 10 years. As FEP transforms non-food grade wheat into ethanol, RNG and WDG, certain property of FEP is expected to be eligible for this program, subject to receiving conditional approval and obtaining the tax credit certificate once the facility is operational. The Company is currently in the process of estimating the potential APITC for FEP.

British Columbia ("BC") Renewable Fuel Requirements

On February 27, 2025, the Government of BC announced updates to the province's renewable fuel requirements under the Low Carbon Fuels Act, including:

Beginning January 1, 2026, the minimum 5% renewable fuel requirement for gasoline must be met with eligible renewable fuels produced in Canada; and

Effective April 1, 2025, the renewable fuel blending requirement for diesel will increase from 4% to 8%. To meet this new target, the renewable fuel must be produced within Canada.

These updates are anticipated to be positive with respect to the demand for renewable fuels generated by the Company, including FEP.

Alberta Government Draft Quantification Protocol for CO2 Capture and Permanent Geologic Sequestration

On November 1, 2024, the Government of Alberta under the TIER program issued a draft quantification protocol that included captured CO2 from a biogenic source that is permanently sequestered in a targeted geological storage zone capable of permanent storage, to qualify as offset credits. This draft protocol would apply to FEP given it's Carbon Capture and Sequestration plans discussed above. The benefit of the credit under TIER has been included in the estimate of carbon credits under TIER as disclosed above. The protocol was finalized and published on January 7, 2025.

United States

Production Tax Credits

Starting on January 1, 2025, the sustainable aviation fuel, biodiesel renewable fuels, and alternative fuels credits will transition to the clean fuel production credit under Section 45Z (the "45Z Credit") of the U.S. Inflation Reduction Act ("IRS"), which terminates on December 31, 2027. The 45Z Credit applies to transportation fuel produced and sold from December 31, 2024 through December 31, 2027 and that meets

a particular emissions reduction factor. GIP expects its RNG facilities to meet the criteria to qualify for these PTCs. The Inflation Reduction Act provides a base credit of US$0.20 per gallon or US$1.00 per gallon if prevailing wage and apprentices requirements are met. The actual credit amount is determined using a formula that takes into account the base credit amount and the greenhouse gas ("GHG") emissions factor. The IRS released guidance on the 45Z Credit in early 2025 that included a Section 45Z model for determining the project specific GHG emissions factor for purposes of calculating the credit. Based on the anticipated project specific GHG emissions factor under the Section 45Z model, the Company estimates the impact of these PTCs to be approximately US$8 per MMBtu of production for the Colorado JV. The Company has not estimated the GHG emissions factor for the Iowa RNG Project at this time. Similar to the ITC, the Company may sell the PTCs to a third-party for cash proceeds.

FINANCIAL HIGHLIGHTS

($000)

As at and for the year ended

December 31,

2024

December 31,

2023

December 31,

2022

Revenue

145,022

161,162

213,738

Gross margin

9,646

7,650

5,401

Income (loss) from operations

(5,105)

(4,732)

(5,463)

Net income (loss)

(22,149)

1,293

(9,361)

Comprehensive income (loss)

(20,575)

1,092

(7,558)

Funds from (used in) operations

(617)

6,904

(122)

Cash from (used in) operations

(2,610)

8,219

(2,519)

Purchase of property, plant and equipment

(7,868)

(23,966)

(52,927)

Total assets

170,806

188,512

226,977

Total liabilities

72,240

71,641

109,307

RESULTS OF OPERATIONS

Revenue

For The Three Months Ended December December Change

31, 2024 31, 2023 ($)

($000)

Energy product optimization

31,626

31,593

Fee for service - Water treatment and disposal

2,233

2,532

(299)

Fee for service - Solids disposal and recycling

3,111

3,265

(154)

Total Revenue

36,970

37,390

(420)

Revenue Volumes:

Energy product optimization (m3)

53,287

52,673

614

Fee for service - Water treatment and disposal (m3)

173,779

130,998

42,781

Fee for service - Solids disposal and recycling (tonnes)

31,205

48,286

(17,081)

Direct Costs

For The Three Months Ended December December

31, 2024 31, 2023 Change ($)

($000)

Energy product optimization

29,969

30,847

(878)

Fee for service

4,206

4,337

(131)

Total Direct Costs

34,175

35,184

(1,009)

Gross Profit

For The Three Months Ended December December

31, 2024 31, 2023 Change ($)

($000)

Energy product optimization

1,657

746

911

5.2%

2.4%

2.8%

Fee for service

1,138

1,460

(322)

21.3%

25.2%

(3.9%)

Total Gross Profit

2,795

2,206

589

7.6%

5.9%

1.7%

Revenue decreased by $0.4 million or 1% for the three months ended December 31, 2024, compared to the same period in 2023.

The Company's Energy Product Optimization Services revenue was consistent compared to the same period in 2023. Benchmark oil prices realized decreased 10% period over period, however this was offset by a 1% increase in volumes sold. The weighted average price sold was $593.55/m3 for the three months ended December 31, 2024, as compared to $621.97/m3 for the same period in 2023.

Fee for service revenue for the three months ended December 31, 2024, decreased $0.5 million or 8%, compared to the same period in 2023. This is due to a decrease in water treatment and disposal revenue of 12% despite an increase in volume processed of 33%. This is due to a lower value for the product mix of volumes processed in the three months ended December 31, 2024, as compared to the same period in 2023. Furthermore, there was a decrease in the solid's disposal and recycling revenue of 5% which was due to a reduction in volumes processed of 35%. This is due to the composition of the differences between the Company's two solids disposal and recycling sites where one of the sites with the lower revenue per unit experienced a 36% decrease in volumes. However, 27% of solids revenue is attributable to this facility while it comprises 95% of the overall volume for the segment. Therefore, the impact of this volume decrease did not result in a corresponding decrease to revenue. Meanwhile, the other solids disposal and recycling site, which accounts for 73% of the solid's revenue with only 5% of the overall volume contribution, experienced a 5% decrease in volume and a 2% decrease in revenue over the same period due mainly to timing. Each site processes different materials and therefore have different underlying pricing for their services.

Direct costs decreased by $1 million or 3% for the three months ended December 31, 2024, compared to the same period in 2023.

Energy Product Optimization Services direct costs were consistent compared to the same period in 2023, for the same reasons discussed in the revenue commentary above, with the volume purchased increasing 4% coupled with 10% lower benchmark prices for oil acquired from producers to be optimized, shipped and sold. The weighted average price purchased was $575.80/m3 for the three months ended December 31, 2024, as compared to $599.11/m3 for the same period in 2023.

Fee for service direct costs were consistent compared to the same period in 2023.

Gross profit for the three months ended December 31, 2024, increased by $0.6 million, or 1.7% in absolute terms, compared to the same period in 2023.

Energy Product Optimization Services gross profit percentage has improved by 2.8% in absolute terms compared to the prior period, despite consistent revenues over the same period. This improved profitability is a result of a number of factors including:

Enhanced processes over managing crude oil positions in order to optimize trades and inventory volumes;

Optimized blending to improve quality and pricing realized for energy products sold;

Although overall volumes have remained consistent, those volumes have been high graded by a focus on turning away volumes of a quality that, when combined with other volumes, impairs the overall quality of the stream that is eventually sold to the market and thereby impacting realized sales prices; and

Skim oil volumes (the byproduct of water processing and disposal) sold have increased over the prior period, which is a very high margin product.

Fee for service gross profit percentage has decreased by 3.9% in absolute terms compared to the prior period. This is due to the same reasons discussed above for the decrease in revenue and partially offset by the decrease in direct costs.

Revenue

For The Year Ended December December

31, 2024 31, 2023 Change ($)

($000)

Energy product optimization

124,101

140,392

(16,291)

Fee for service - Water treatment and disposal

10,461

9,897

564

Fee for service - Solids disposal and recycling

10,460

10,873

(413)

Total Revenue

145,022

161,162

(16,140)

Revenue Volumes:

Energy product optimization (m3)

210,716

234,270

(23,554)

Fee for service - Water treatment and disposal (m3)

623,787

542,895

80,892

Fee for service - Solids disposal and recycling (tonnes)

112,742

151,195

(38,453)

Direct Costs

For The Year Ended December December

31, 2024 31, 2023 Change ($)

($000)

Energy product optimization

118,574

136,235

(17,661)

Fee for service

16,802

17,277

(475)

Total Direct Costs

135,376

153,512

(18,136)

Gross Profit

For The Year Ended December December

31, 2024 31, 2023 Change ($)

($000)

Energy product optimization

5,527

4,157

1,370

4.5%

3.0%

1.5%

Fee for service

4,119

3,493

626

19.7%

16.8%

2.9%

Total Gross Profit

9,646

7,650

1,996

6.7%

4.7%

2.0%

Revenue decreased by $16.1 million or 10% for the year ended December 31, 2024, compared to the same period in 2023.

The Company's Energy Product Optimization Services revenue decreased $16.3 million or 12% compared to the same period in 2023. This is due to a combination of a 10% decrease in volumes

sold in conjunction with a 3% decrease in benchmark oil prices period over period. The weighted average price sold was $608.73/m3 for the year ended December 31, 2024, as compared to

$627.81/m3 for the same period in 2023.

Fee for service revenue increased $0.2 million or 1% compared to the same period in 2023. This is due to a 6% increase in water treatment and disposal revenue as a result of a 15% increase in volumes processed. Fee for service solids disposal and recycling revenue decreased 4% as a result of a 25% decrease in volume processed. This is due to the composition of the differences between the Company's two solids disposal and recycling sites where one of the sites with the lower revenue per unit experienced a 26% decrease in volumes. However, 25% of solids revenue is attributable to this facility while it comprises 97% of the overall volume for the segment. Meanwhile, the other solids disposal and recycling site, which accounts for 75% of the solid's revenue with only 3% of the overall volume contribution, experienced a 2% decrease in volume and a 1% decrease in revenue over the same period due mainly to timing. Each site processes different materials and therefore have different underlying pricing for their services.

Direct costs decreased $18.1 million or 12% for the year ended December 31, 2024, compared to the same period in 2023.

Energy Product Optimization Services costs decreased by $17.7 million or 13% for the same reasons discussed in the revenue commentary above, with the volume processed decreasing 10% coupled with 3% lower price for oil acquired from producers to be optimized, shipped and sold. The weighted average price purchased was $586.40/m3 for the year ended December 31, 2024, as compared to $605.04/m3 for the same period in 2023.

Fee for service direct costs decreased by $0.5 million or 3%. The main driver of this decrease was lower utility costs in line with historical averages as compared to the same period in the prior year, which experienced abnormally high utility costs. However, this positive trend was more than offset by a disposal well workover required during the first quarter of 2024 at the Company's Grande Cache facility. This workover amounted to approximately $0.7 million and was all recorded within direct costs. The workover was completed, and the well was put back into full operation in January 2024.

Gross profit for the year ended December 31, 2024, increased $2.0 million or 2.0% in absolute terms, as a percentage of revenue, compared to the same period in 2023.

Energy Product Optimization Services gross profit percentage has improved by 1.5% in absolute terms compared to the prior period, despite a 12% reduction in revenue over the same period. This improved profitability is a result of the reasons discussed above.

Fee for service gross margins have steadily improved with a 2.9% increase in gross profit percentage, in absolute terms, over the year ended December 31, 2024, as compared to the same period in the prior year. This is due to the same reasons discussed above for the increase in revenue and decrease in direct costs.

Operating Expenses

($000)

For The Three Months Ended December 31, December 31,

2024 2023

$ Change

Depreciation and amortization

1,532

1,284

248

Salaries and wages

1,455

709

746

Selling, general and administration

900

1,214

(314)

Total Operating Expenses

3,887

3,207

680

Depreciation and amortization Salaries and wages

Selling, general and administration

6,062

4,824

3,865

5,090 972

2,624 2,200

4,668 (803)

Total Operating Expenses

14,751

12,382 2,369

For The Year Ended

($000)

December 31,

2024

December 31,

2023

$ Change

Operating expenses for the three months and year ended December 31, 2024, have increased by $0.7 million or 21% and $2.4 million or 19%, respectively, compared to the same periods in 2023.

Depreciation and amortization for the three months and year ended December 31, 2024, have increased by $0.2 million or 19% and $1.0 million or 19%, respectively, compared to the same periods in 2023. This is due to additional right of use assets related to new office and equipment leases added throughout the year, which have increased the overall property, plant, and equipment base subject to depreciation.

Salaries and wages for the three months and year ended December 31, 2024, have increased by $0.7 million or 105% and $2.2 million or 84%, respectively, compared to the same period of 2023. This increase is result of salary adjustments that became effective in July 2024, severance costs paid out in the fourth quarter of 2024, increased salaries and wages to support the Company's joint venture, and the transition of certain consultants to full time permanent employees, which increased salaries and wages over the comparable period, partially offset by lower selling, general and administrative expenses, as discussed below.

Selling, general and administrative expenses, including the following items: rental costs; vehicle costs; insurance expenses; office costs; advertising and promotion; and professional and consulting fees, for the three months and year ended December 31, 2024, have decreased by $0.3 million or 26% and $0.8 million or 17%, respectively, compared to the same periods in 2023. This decrease was mainly due to decreased consultant costs as discussed above, reduced legal expenses on development projects, and reduced training and development costs.

Non-Operating Expenses (Income)

($000)

For The Three Months Ended December December

31, 2024 31, 2023

$ Change

Finance costs

645

665

(20)

Share-based compensation

1,013

1,452

(439)

Impairment expense

501

Equity (earnings) loss from joint venture

1,965

1,082

883

Unrealized (gain) loss on foreign exchange

106

447

(341)

Realized (gain) loss on foreign exchange

(219)

(33)

(186)

Total Non-operating Expenses (Income)

4,011

3,613

398

($000)

For The Year Ended December December

31, 2024 31, 2023

$ Change

Finance costs

2,854

2,485

369

Unrealized (gain) loss on risk management contracts

(555) 555

Share-based compensation

3,844

5,258

(1,414)

Impairment expense

501

Equity (earnings) loss from joint venture

7,461

784

6,677

Gain on sale of interest in subsidiary

(10,142)

10,142

Transaction costs

1,327

Management fee

(6,745)

6,745

Unrealized (gain) loss on foreign exchange

(442)

462

(904)

Realized (gain) loss on foreign exchange

126

113

Total Non-operating Expenses (Income)

15,671

(8,440)

24,111

Finance Costs

Finance costs are comprised of a combination of interest on long-term debt, interest on the Option Agreement, accretion expense on the asset retirement obligation liability and the amortization of deferred financing costs. Finance costs for the three months ended December 31, 2024, have remained consistent, and for the year ended December 31, 2024, increased $0.4 million or 15%, compared to the same periods in 2023. Although consistent for the respective three-month periods, the composition has changed with a decrease to interest on long-term debt, due to declining interest rates, offset by an increase related to interest accrued on the Option Agreement, which was entered into in 2024. The Company's corporate credit facility (the "Facility") changed from an average drawn balance of $25.1 million and $25.0 million, respectively, for the three months and year ended December 31, 2023, to an average drawn balance of

$25.7 million and $26.6 million, respectively, for the three months and year ended December 31, 2024. Interest costs were slightly higher for the three-month period ended December 31, 2024, compared to the same period of 2023 despite the lower average drawn credit facility balance due to higher interest expenses relating to new leases in 2024 coupled with approximately $0.4 million of interest accrued on the Option Agreement, when compared to the same period in 2023.

Unrealized Loss on Risk Management Contracts

The unrealized loss on risk management contracts relates to a fixed-price interest rate swap that was entered into in 2022 by a previously consolidated subsidiary of the Company, GreenGas Colorado, LLC. The Company has not applied hedge accounting to account for this financial instrument and, therefore, the swap is marked to market each reporting period with any unrealized gains and losses being recognized in earnings or losses. As outlined in the previously mentioned updates on the Colorado JV, the Company disposed of 50% of the Colorado JV in the first quarter of 2023 and now jointly controls the entity with another partner and no longer exercises control. Consequently, the entity is no longer consolidated within the Company's consolidated financial statements. As a result, the realized and unrealized gains and losses associated with the swap are now recognized through the equity (earnings) loss from joint venture in the statement of operations. The unrealized gain for the year ended December 31, 2023, represents the gain for the period prior to the sale of the Colorado JV.

Share-based Compensation

Share-based compensation costs for the three months and year ended December 31, 2024, have decreased by $0.4 million or 30% and $1.4 million or 27%, respectively, compared to the same periods in 2023. This decrease is directly correlated to the graded vesting method used for restricted share units and performance share units, which decreases the amount of share-based compensation costs recognized as tranches vest, offset by the impacts of a new grant of performance share units in the third quarter of 2024.

Impairment Expense

Impairment expense for the three months and year ended December 31, 2024, have increased by $0.5 million or 100%, compared to the same periods in 2023. This increase is a result of the write-off of costs previously capitalized to assets under construction for projects the company had in the development pipeline that are no longer being pursued.

Equity (Earnings) Loss from Joint Venture

As previously discussed, effective February 23, 2023, following the sale of the 50% interest in the Colorado JV, the Company no longer controlled the entity but is rather in a joint control arrangement with another partner. Consequently, the assets, liabilities and results of operations are no longer presented within the consolidated results of the Company. For the three months and year ended December 31, 2024, equity loss from joint venture have increased by $0.9 million and $6.7 million, respectively, compared to the same periods in 2023. This is due to the fact that the Colorado JV was operational in 2024 as opposed to still under construction in 2023. The earnings in the prior periods in 2023 were reflective of mark to market gains on interest rate swaps. The Colorado JV incurred operating costs for the three months and year ended December 31, 2024 in excess of recognized revenue for the reasons discussed above.

Gain on Sale of Subsidiary

As previously discussed, the Company sold a 50% interest in the Colorado JV for gross proceeds of $59.3 million. A gain on sale of $10.1 million was recognized in the first quarter of 2023 associated with this disposition of interest, representing the difference between the net proceeds after transaction costs of $38.7 million and the carrying value of the net assets sold.

Transaction Costs

As part of the ITC transaction closed in June 2024, the Company incurred $1.3 million of transaction costs that were not attributable to the Colorado JV and are therefore presented on the Statement of Income (Loss) and Comprehensive Income (Loss).

Management Fee

Subsequent to the completion of the sale of a 50% interest in the Colorado JV, GIP, through is wholly owned subsidiary GIP U.S., Inc. as partner, received a $6.7 million (US $5.0 million) one-time management fee in the second quarter of 2023 from the partnership as compensation for the services rendered to date in development of the Colorado JV. The payment of this management fee was subject to certain project performance milestones, all of which were met during 2023.

SUMMARY OF NON-IFRS MEASURES

Below is a description and composition of each non-IFRS measure disclosed in this MD&A , together with:

(i) the most directly comparable financial measure that is specified, defined and determined in accordance with IFRS to which each non-IFRS measure relates; (ii) an explanation of how each non-IFRS measure provides useful information to investors and the additional purposes for which management uses each non-IFRS measure; and (iii) a quantitative reconciliation of each non-IFRS measure to the most directly comparable IFRS financial measure.

EBITDA is defined as earnings before interest, taxes, depreciation, and amortization. EBITDA is a non-IFRS measure, calculated by adding back the impacts of income tax, finance costs, depreciation and amortization to net income (loss) for the period. Income (loss) from Operations before amortization and depreciation is the most directly comparable IFRS financial measure. EBITDA does not have a standardized meaning prescribed by IFRS and is not necessarily comparable to similar measures provided by other issuers. Management believes EBITDA is an important performance metric that measures recurring cash flows before changes in non-cash working capital.

Adjusted EBITDA is defined as EBITDA adjusted for certain non-operating, non-recurring and non-cash items. Adjusted EBITDA is used by management to evaluate the earnings and performance of the Company before consideration of capital, financing and tax structures. Net income (loss) is the most directly comparable IFRS financial measure. Adjusted EBITDA does not have a standardized meaning prescribed by IFRS and is not necessarily comparable to similar measures provided by other issuers. Prior period Adjusted EBITDA has been calculated and presented in accordance with the current period calculation and presentation.

Management believes that in addition to net income (loss), Adjusted EBITDA is a useful supplemental measure to enhance investors' understanding of the results generated by the Company's principle business activities prior to consideration of how those activities are financed, how the results are taxed, how the results are impacted by non-cash charges, and charges that are irregular in nature or not reflective of the Company's core operations. Management calculates these adjustments consistently from period to period. Adjusted EBITDA is used by management to determine the Company's ability to service debt and finance capital expenditures. Management believes that Adjusted EBITDA as a measure is indicative of how the fundamental business is performing.

($000)

For The Three Months Ended December 31, December 31,

2024 2023

$ Change

Net income (loss)

(5,446)

(5,066)

(380)

Income tax expense (recovery)

343

449

(106)

Depreciation and amortization

1,532

1,284

248

Finance costs

645

665

(20)

EBITDA

(2,926)

(2,668)

(258)

Share-based compensation

1,013

1,452

(439)

Impairment expense

501

Adjusted loss from joint venture (1)

910

1,009

(99)

Adjusted EBITDA(2)

(502)

(207)

(295)

Adjusted loss from joint venture reflects the Adjusted EBITDA at the joint venture level at the Company's 50% ownership. This includes adjustments for interest expense, interest rate swaps, depreciation, impairments and other finance costs.

To ensure consistency, the prior period Adjusted EBITDA has been amended from previously presented Adjusted EBITDA to adjust for the Company's portion of the Colorado JV's interest expense, interest rate swaps, depreciation and other finance costs.

($000)

For The Year Ended

December 31, December 31,

2024 2023

$ Change

Net income (loss)

(22,149)

1,293

(23,442)

Income tax expense (recovery)

1,373

2,415

(1,042)

Depreciation and amortization

6,062

5,090

972

Finance costs

2,854

2,485

369

EBITDA

(11,860)

11,283

(23,143)

Share-based compensation

3,844

5,258

(1,414)

Impairment expense

501

Adjusted loss from joint venture (1)

4,118

692

3,426

Unrealized gain on risk management

(555) 555

contracts

Gain on sale of interest in subsidiary

(10,142)

10,142

Transaction costs

1,327

Management fee

(6,745)

6,745

Adjusted EBITDA(2)

(2,070)

(209)

(1,861)

SUMMARY OF QUARTERLY RESULTS

($000)

Dec 31, 2024

Sep 30, 2024

Jun 30, 2024

Mar 31, 2024

Revenue

36,970

33,591

41,139

33,322

Adjusted EBITDA

(502)

(1,092)

944

(1,420)

Net income (loss)

(5,446)

(5,834)

(5,524)

(5,345)

Net income (loss) per share-Basic

(0.24)

(0.27)

(0.26)

(0.25)

Net income (loss) per share-Diluted

(0.24)

(0.27)

(0.26)

(0.25)

($000)

Dec 31, 2023

Sep 30, 2023

Jun 30, 2023

Mar 31, 2023

Revenue

37,390

46,141

39,132

38,499

Adjusted EBITDA

(207)

875

(348)

(529)

Net income (loss)

(5,066)

(1,986)

3,853

4,492

Net income (loss) per share-Basic

(0.25)

(0.09)

0.19

0.21

Net income (loss) per share-Diluted

(0.24)

(0.09)

0.18

0.21

The variation of Adjusted EBITDA over the trailing eight quarters is highly dependent on commodity pricing volatility. The Company's energy product optimization services revenue is generated through the sale of hydrocarbon products which have been blended with an additive that improves the quality of the finished product that is sold to third parties for a profit. The input cost of the additive is largely a fixed cost and therefore any fluctuations in the price of the blended product sold impacts gross profit realized. As such, this purchase and sale arrangement is subject to commodity pricing volatility. Net income for the first quarter of 2023 was abnormally high due to the gain on sale of the Colorado JV. Net income for the second quarter of 2023 was abnormally high due to the one-time management fee earned in the quarter. Net loss for the third quarter 2023 results were more in line with expectations. Net loss for the fourth quarter of 2023 is abnormally high due to the derecognition of $4.6 million in deferred tax assets. Net loss for the first quarter of 2024 was lower than previous quarters due to a combination of the loss realized for the investment in the Colorado JV along with the previously discussed well workover in the Company's Grande Cache facility. Net loss for the second, third, and fourth quarters of 2024 were lower than expectations due to the loss realized in the Colorado JV. Adjusted EBITDA for the first quarter of 2024 was again mostly impacted by the loss realized from the Colorado JV and the well workover as discussed above. Adjusted EBITDA for the second quarter of 2024 was more in line with expectations. Adjusted EBITDA for the third and fourth

quarter of 2024 experienced strong results from the Water & Solids Recycling & Energy Product segment, however this was offset by realized losses from the Colorado JV. General economic and industry conditions have not substantially changed from the prior quarter.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity risk is the risk that the Company will not be able to meet its obligations associated with financial liabilities. The Company's Facility matures on July 31, 2025 and will not be extended beyond the maturity date, and as a result, the full balance of the outstanding Facility as at December 31, 2024 has been reclassified from long-term to current liabilities. As a result of the Company's going concern disclosure within the financial statements for the year ended December 31, 2024, and corresponding Audit Report, the Company, as of the date of this MD&A, is in default under the Facility. Under the Facility Agreement, the Facility lender will have the right to demand repayment and/or realize on the security at any time under the Facility. A copy of the Facility agreement was filed on September 8, 2023 under the Company's profile on SEDAR at sedarplus.ca. The Facility lender has been advised of the default, and the Company will be seeking to come to a constructive resolution with the Facility lender.

The working capital deficiency as of December 31, 2024 is $33.7 million. The Company is in the process of actively seeking alternatives to repay the Facility, including different financing options and the potential disposition of assets. As of the date of this MD&A, the Facility has not been replaced or repaid, and as disclosed above, the Facility lender has the right to demand repayment and/or realize on the security at any time under the Facility. As a result, there is material uncertainty and significant doubt that the Company will have access to sufficient capital within the next twelve months to service its current working capital deficit. These events and conditions form a material uncertainty that may raise significant doubt regarding the Company's ability to continue as a going concern.

As such, the Company's ability to continue as a going concern is dependent on reaching a constructive resolution from the Facility lender and obtaining additional external financings, which may include debt, equity, strategic partnership, or potentially asset dispositions.

This MD&A does not reflect the adjustments that might be necessary to the carrying amount of the reported assets, liabilities, expenses, and statement of financial position classifications used if the Company was unable to continue operation in accordance with this assumption. Such adjustments may be material.

GIP is required to maintain certain financial covenants associated with its corporate credit facility, which includes maintaining a debt to tangible net worth of less than 3.00:1.00 and cash flow coverage ratio for GIP's main operating subsidiary ("GIP Opco") of greater than 1.25:1:00. GIP Opco represents the consolidated results of GIP's main operating subsidiaries that hold ownership in the Water and Solids Treatment business and the Colorado JV. As at December 31, 2024, GIP was in compliance with all debt covenants.

During the year ended December 31, 2024, the Company generated negative cash flow from operations. This was primarily due to a combination of increased salaries and wages to support the Company's strategic initiatives, including the Colorado JV, and the Company's continued focus on expanding its bioenergy production business. This shortfall primarily reflects the Company's continued investment in operational growth. As a result, cash flows from operations were not sufficient to fund all of the Company's operating and capital expenditure requirements in the year. The Company anticipates that this trend may continue in the near term, particularly as the Colorado JV works to remediate prior EPC-related challenges. In parallel, the Company is actively advancing the financial close of the FEP project, which, subject to closing, is expected to provide near-term liquidity.

To provide near-term liquidity to the Company, on April 29, 2025 and April 30, 2025, the Company issued notice to the Optionees to draw a total of $4.0 million under the Option Agreement. Under the terms of the Option Agreement, $2.0 million is required to be funded within 30 days of receipt of notice and $2.0 million is required to be funded within 60 days of receipt of notice. Please refer to Risks and Uncertainties below -

Risks Related to Insider Investment and Change of Control. There is a degree of uncertainty with respect to either counterparty's future performance under the agreement.

To continue to advance the FEP, the Company anticipates that $2.9 million will be required to progress to financial close and construction start. The pace of this discretionary spend will depend on both accomplishment of key project milestones and available capital as discussed above. Prior to incurring additional development costs or material construction costs for FEP, GIP will need to secure adequate sources of financing.

($000)

For The Three Months Ended December 31, December 31,

2024 2023

$ Change

Cash from (used in) operating activities

(108)

2,539

(2,647)

Cash from (used in) investing activities

(4,213)

(3,118)

(1,095)

Cash from (used in) financing activities

3,916

886

3,030

Impact of foreign currency translation on cash

(185)

(198)

Increase (decrease) in cash

(590)

320

(910)

($000)

For The Year Ended December 31, December 31,

2024 2023

$ Change

Cash from (used in) operating activities

(2,610)

8,219

(10,829)

Cash from (used in) investing activities

3,557

(17,772)

21,329

Cash from (used in) financing activities

(911)

8,363

(9,274)

Impact of foreign currency translation on cash

(74)

113

(187)

Increase (decrease) in cash

(38)

(1,077)

1,039

Operating Activities

Cash from operating activities for the three months and year ended December 31, 2024 have decreased by $2.6 million or 104% and $10.8 million or 132%, respectively, compared to the same periods in 2023. For the three-month period ended December 31, 2024, the decrease is due to changes in non-cash working capital with a substantial settlement of accounts payable with the receipt of the ITC proceeds from the Colorado JV in the second half of 2024. For the twelve-month period ended December 31, 2024, in conjunction with the discussion for the three-month period above, this decline is mainly due to a management fee received by the Company from the Colorado JV in 2023, with no similar fee in 2024, combined with changes in non-cash working capital period over period. In addition, in the second quarter of 2024, the Company incurred $0.1 million in asset retirement expenditures.

Investing Activities

Cash from (used in) investing activities for the three months ended December 31, 2024, have decreased by $1.1 million or 35%, compared to the same periods in 2023. For the three-month period ended December 31, 2024, this decrease is mainly due to lower capital additions in 2024 of $2.2 million, when compared to the same period in 2023 of $3.7 million, offset by a preferred equity contribution to the Colorado JV of $1.1 million in 2024. Cash from (used in) investing activities for the year ended December 31, 2024, have increased by $21.3 million or 120%, compared to the same periods in 2023. This increase is directly attributable to the distribution received from the Colorado JV in June 2024 for $17.8 million related to the sale of the ITCs, combined with lower capital spend period over period. This is offset slightly by the preferred equity contribution made to the Colorado JV for $3.1 million in the second and fourth quarters of 2024, $1.3 million in transaction costs directly related to the sale of the ITC's, and the net proceeds received from the sale of a 50% interest in the Colorado JV that occurred in the comparable period in the prior year.

Financing Activities

Cash from (used in) financing activities for the three months ended December 31, 2024, have increased by

$3.0 million or 342%, compared to the same period in 2023. The increase is due to higher draws on the outstanding debt during the current period as compared to a lower draw on the debt in the comparable period, partially offset by the purchase of shares held in trust pursuant to the Company's long-term compensation plans in 2024. Cash from (used in) financing activities for the year ended December 31, 2024, have decreased by $9.3 million or 111%, compared to the same periods in 2023. The decrease in the year ended December 31, 2024, as compared to the same period in the prior year, was primarily a result of the $21.5 million in proceeds from the sale of the 50% interest in the Colorado JV in 2023 compared to $nil in 2024. Further, there was $3.5 million in funding under the Option Agreement, offset by the previously mentioned repayments of outstanding debt and acquisition of shares in 2024.

($000)

December 31,

2024

December 31,

2023

$ Change

Current assets

22,539

21,059

1,480

Current liabilities

(56,225)

(28,066)

(28,159)

Working capital surplus (deficit)

(33,686)

(7,007)

(26,679)

Current liabilities include the entire outstanding balance of the Facility, which matures on July 31, 2025.

Current liabilities also include $8.6 million related to liabilities associated with FEP and Iowa RNG that only become due and payable upon Final Notice to Proceed ("FNTP"). FNTP will not occur until adequate financing is in place to fund construction of the project and settle these liabilities. These have been classified as current liabilities as the Company has assessed that financing will likely be secured and FNTP is expected to occur within the next year. In addition, current liabilities also include $3.9 million related to drawn proceeds from the Option Agreement and associated interest. There are no required repurchases under the Option Agreement until certain events are met such as the financial close and FNTP on FEP or Iowa RNG or the sale of the Iowa project. Excluding these liabilities and the $2.4 million in deferred transaction costs disclosed in Note 7 of the consolidated annual financial statements, which are not an immediately available source of liquidity, the Company has a working capital deficit of approximately $23.5 million. As at December 31, 2024, there is also an undrawn balance of approximately $2.0 million from the Facility to cover obligations. As at the date of this MD&A, the Company has an approximate cash balance of $1.3 million and an undrawn balance from the Facility is $0.3 million. As a result of the default disclosed above, the Company may not continue to have access to the undrawn balance from the Facility.

The following are undiscounted contractual maturities of financial liabilities, including estimated interest at December 31, 2024:

(As at December 31, 2024

$000)

Total

< 1 Year

1-3 Years

4-5 Years

After 5 Years

AP and accrued liabilities

15,613

Other current liabilities

12,481

Long-term debt

28,577

28,131

446

Other long-term liabilities

2,123

Lease liabilities

930

458

357

115

Total financial liabilities

59,724

56,683

2,926

115

As at December 31, 2023 ($000)

Total

< 1 Year

1-3 Years

4-5 Years

After 5 Years

AP and accrued liabilities

19,214

Other current liabilities

8,583

Long-term debt

28,528

28,481

Other long-term liabilities

2,001

Lease liabilities

658

228

430

Total financial liabilities

58,984

28,072

30,912

Capital Management and Resources

The Company's objectives when managing capital are to: (i) monitor forecasted and actual cash flows from operating, financing and investing activities; (ii) ensure the Company has the financial capacity to execute on its strategy to increase market share through organic growth or strategic acquisitions; (iii) maintain financial flexibility to meet financial commitments and maintain the confidence of shareholders, creditors and the market; (iv) optimize the use of capital to provide an appropriate return on investment to shareholders; and (v) to repay the Facility which has a final maturity date of July 31, 2025.

As disclosed above, the Company requires additional capital from external financing sources, including funds available under the Option Agreement, debt, equity, strategic partnership, or potentially asset dispositions, to satisfy its current liabilities.

($000)

December 31, 2024

December 31, 2023

Current assets

22,539

21,059

Current liabilities

(56,225)

(28,066)

Long-term debt

446

28,945

Other long-term liabilities

2,123

2,001

Shareholders' equity

85,020

103,182

53,903

127,121

FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

The Company's revenues come from a diverse customer base, which includes municipalities, governments, utilities, infrastructure, industrial, energy and mining industries in North America. The Company believes there is no unusual exposure associated with the collection of accounts receivable outside of the normal risk associated with contract audits and normal trade terms. The Company performs regular credit assessments of its customers and provides allowances for potentially uncollectible accounts receivable.

The Company is primarily exposed to credit risk from customers. The maximum exposure to credit risk is equal to the carrying value of the accounts receivable and notes receivable. The Company's trade receivables are with customers in the industrial sector and are subject to industry credit risk. To reduce credit risk, the Company reviews a new customer's credit history before extending credit and conducts regular reviews of its existing customers' credit performance.

Additionally, the Company continuously reviews individual customer trade receivables taking into consideration payment history and aging of the trade receivables to monitor collectability. In accordance with IFRS 9 - Financial Instruments, the Company reviews impairment of its trade and accrued receivables at each reporting period and its allowance for expected future credit losses. An allowance for doubtful accounts is established based upon factors surrounding the credit risk of specific accounts, historical trends, and other information. Monitoring procedures are in place to ensure that follow up action is taken to recover overdue amounts. The Company reviews receivables on a regular basis to ensure that an adequate loss allowance is made. Provisions recorded by the Company are reviewed regularly to determine if any balances should be written off. The allowance for doubtful accounts could materially change as a result of fluctuations in the financial position of the Company's customers. The Company completes a detailed review of its historical credit losses as part of its impairment assessment.

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements in the current or prior periods.

RELATED PARTY TRANSACTIONS

Option Agreement

On March 7, 2024, the Company entered into the Option Agreement with the "Optionees, wherein the Optionees agreed to fund an amount of up to $6.0 million to GIP, available in tranches, at GIP's sole discretion, to provide additional liquidity to GIP.

On April 28, 2024 the Company entered into an amendment to the Option Agreement whereby one of the Optionees agreed to fund to the Company an additional $4.0 million (the "Additional Option").

In April 2025, the Company drew an additional $0.6 million under the Option Agreement. As of the date of this MD&A, $4.0 million has been drawn under the Option Agreement.

On April 29, 2025 and April 30, 2025, the Company issued notice to the Optionees to draw a total of $4.0 million under the Option Agreement. Under the terms of the Option Agreement, $2.0 million is required to be funded within 30 days of receipt of notice and $2.0 million is required to be funded within 60 days of receipt of notice. For further information on potential uncertainties with respect to either counterparty's future performance under the Option Agreement, refer to "Risks and Uncertainties - Risks Related to Insider Investment and Change of Control" section below.

In exchange, the Company has granted the Optionees an option to purchase certain ITCs that the Company may receive from future renewable natural gas projects (excluding the Colorado JV) (the "Option"). Pursuant to the Option Agreement, the Optionees shall have the right, for a period of five years, to purchase the ITCs from the Company. During the term of the Option Agreement, the Company may, at its sole option, repurchase the Option from the Optionees by paying all amounts previously funded to the Company by the Optionees along with interest accrued at a rate of 1.25% per month and additional commitment fees on the Additional Option of 10% per annum. There are certain circumstances that oblige the Company to repurchase the Option from the Optionees including change in control or financial close on either Iowa RNG or FEP.

At December 31, 2024

Proceeds from related party option agreement Interest accrued

3,450

409

Total (included in other current liabilities)

3,859

The Option is classified as a financial liability that is measured at fair value through profit and loss upon issuance and at each subsequent reporting period. The fair value of the Option was determined to be nil on December 31, 2024, mainly given the probability of being exercised was determined to be nil.

Wolverine

Wolverine Energy and Infrastructure Inc. ("Wolverine") owned approximately 18% of the issued and outstanding shares of the Company and was considered to be a related party of the Company.

On August 16, 2024, the Court of King's Bench of Alberta approved the transfer of Wolverine's shareholdings in the Company to an arm's length third party.

Three Months Ended

Year Ended

December 31, December 31, December 31, December 31,

2024 2023 2024 2023

Key Management Personnel Compensation

Short-term compensation (1)

Share-based compensation (2)

466

454

1,198

1,799

982

2,534

4,288

466

1,652

2,781

6,822

Notes:

Short-term compensation includes annual salaries, management bonuses and employee benefits provided to key management personnel as well as directors' fees. There were no bonuses during the three months or year ended December 31, 2024.

Based on the grant date fair value of the applicable awards. The fair value of options granted is estimated at the date of grant using a Black-Scholes Option- Pricing Model. The total share-based payment of PSU's issued in July 2024 is based on a fair value of $3.25 and $3.41 per share.

Key management personnel short-term compensation and share-based compensation were higher for the year ended December 31, 2023, relative to the same period in December 31, 2024, as a result of short-term bonus payments and the granting of new performance share units and stock options in the first and fourth quarters of 2023.

CRITICAL ACCOUNTING ESTIMATES

In the preparation of the Company's annual consolidated financial statements, management has made judgments, estimates and assumptions that affect the recorded amounts of revenues, expenses, assets, liabilities and the disclosure of commitments, contingencies and guarantees. Estimates and judgments used are based on management's experience and the assumptions used are believed to be reasonable given the circumstances that exist at the time the financial statements are prepared. Actual results could differ from these estimates. The most significant estimates and judgments used in the preparation of the Company's annual consolidated financial statements have been set out in Note 5 of the annual consolidated financial statements.

CHANGES IN ACCOUNTING POLICIES

There have been no changes to the accounting policies of the Company during the year ended December 31, 2024.

OUTSTANDING SHARE DATA

On April 30, 2025, the Company had the following common shares, stock options and share units outstanding:

Common shares

Stock options (vested and unvested) Share units

21,557,602

1,182,279

1,159,019

23,898,900

RISKS AND UNCERTAINTIES

Due to the nature of the Company's business, the legal and economic climate in which it operates and its present stage of development, the Company's business segments are subject to significant risks. The following information describes certain significant risks and uncertainties inherent in the Company's business that are the most material and relevant to the Company's current operating and financial condition as at the date of this MD&A. This section and the Risks and Uncertainties section of the annual MD&A do not describe all risks applicable to the Company, our industry or our business, and is intended only as a summary of certain material risks. If any of such risks or uncertainties actually materializes, the Company's business, financial condition or operating results could be harmed substantially and could differ materially 24

from the plans and other forward-looking statements discussed in this MD&A.

The Company also faces many operating risks and uncertainties, including but not limited to:

The Company lacks a significant operating history, especially as it relates to the development of bioenergy projects. Prospective investors have a limited basis upon which to evaluate the Company's ability to achieve a principle business objective of developing bioenergy projects.

The Company experienced a loss from operations of $5.4 million ($4.7 million - 2023) for the year ended December 31, 2024. The Company incurred significant losses in connection with the development of its bioenergy projects within the Bioenergy Production segment. In addition, as a result of the EPC failures, the Colorado JV continues to operate at a loss. The Company expects its operating losses to continue until the EPC failures are corrected. The Company's capital position may be adversely affected by low liquidity, which could impact its ability to meet financial obligations and pursue growth opportunities. Operating losses and their corresponding effect on liquidity may have an impact on construction timelines. The Company cannot provide assurance when the Bioenergy Production segment will reach profitability or that the bioenergy projects will ever become profitable.

There can be no assurance the Company will be able to raise the additional funding necessary to carry out its business objectives, repay debt and to complete the planned development of bioenergy projects. The development of the bioenergy business depends upon the Company's ability to generate cash flow from operations, prevailing market conditions for bioenergy projects and pricing for the environmental attributes associated with RNG and other bio-fuels, its business performance and its ability to obtain financing through debt financing or equity financing. If additional financing is raised by the issuance of common shares from treasury, Shareholders may suffer additional dilution. As of the date of this MD&A, the Facility has not been replaced or repaid, and as disclosed above, the Facility lender has the right to demand repayment and/or realize on the security at any time under the Facility. As a result, there is material uncertainty and significant doubt that the Company will have access to sufficient capital within the next twelve months to service its current working capital deficit. These events and conditions form a material uncertainty that may raise significant doubt regarding the Company's ability to continue as a going concern.

The Company's success may be substantially impacted by its ability to negotiate feedstock supply agreements with organic material suppliers (i.e., dairy manure and forestry products), arrange engineering, procurement and construction contracts to develop the Company's projects, negotiate sale agreements for ITCs, PTC and other environmental attributes, and enter into offtake agreements with utilities, clean energy traders and customers to support clean energy projects under development, as the clean energy business is dependent on these suppliers, contractors, purchasers and offtake counterparties. For a number of reasons, a supplier may fail to supply materials or components that meet the clean energy business' requirements or to supply any at all. If the Company's clean energy business is not able to resolve these issues or obtain substitute sources for these materials in a timely manner or on terms acceptable to it, the clean energy business' ability to produce clean energy from such affected projects may be harmed, which could have a material adverse effect on its business and financial results.

Certain projects and assets are currently, or may, in the future, be jointly owned. Co-ownership and joint ventures agreements, such as those with Amber Infrastructure, contain a range of matters which may not be progressed without the approval of all parties, which may influence the strategy which the Company pursues in respect of certain projects or assets. There is no guarantee that the Company will be able to execute its preferred business or operational strategy at facilities which are jointly owned. In addition, agreements for the ownership and operation of the projects contain mutual rights of first refusal which require a transferor who is proposing to transfer an ownership interest to offer such interest on the same commercial terms to the co-owner of the assets prior to completing the transfer. Such provisions restrict

the Company's ability to transfer its interests in the assets and may limit the Company's ability to maximize the value of a sale of its interest. In addition, the Company is dependent on third parties to fund cash calls of the Colorado JV. In the event such funding does not occur, there is a risk that the Colorado JV would be in default under certain project agreements. In addition, if certain events of default occur and are continuing under its joint venture agreement for the Colorado JV, Amber Infrastructure may have the right to purchase GIP's 50% ownership in Colorado JV for 80% of the fair market value, as determined by an independent third party.

The Company's financial outlook and performance is significantly affected by the cost of developing, sustaining, and operating clean energy projects. The development, design and construction process for clean energy projects is expected to range from approximately 24 to 48 months. This process includes identifying and assessing whether prospective feedstock sources and sites will satisfy the Company's investment criteria, including the net zero requirements and commercial viability. This extended development process requires the dedication of significant time and resources from management, with no certainty of success or recovery of expenses. Development and operating costs are affected by a number of factors including, but not limited to: development, adoption and success of new technologies; inflationary price pressure; changes in regulatory compliance costs; failure to maintain quality construction and manufacturing standards; access to feedstock; and supply chain disruptions, including access to skilled labour.

The Company's focus on the clean energy sector exposes the Company to risks related to the supply of and demand for clean energy, government incentives, the cost of capital expenditures, government regulation, international and regional events and economic conditions, and the acceptance of clean energy sources. The expectations of the operating performance of the Company's projects are based on assumptions and estimates made without the benefit of operating history. A number of other factors related to the development and operation of individual clean energy projects could adversely affect the Company's business, including: regulatory changes and government policy shifts by existing administrations or following changes in government that affect the demand for or supply of clean energy and the prices thereof, which could have a significant effect on the financial performance of clean energy projects and the number of potential projects with attractive economics; restrictions on fossil fuel-based energy use, cross-border economic activity, and development of new infrastructure can impact the Company's opportunities for continued growth; changes in energy commodity prices, such as natural gas and wholesale electricity prices, which could have a significant effect on revenues; changes in pipeline gas quality standards or other regulatory changes that may limit the ability to transport RNG and other bio-fuels on pipelines for delivery to third parties or increase the costs of processing RNG and other bio-fuels to allow for such deliveries; changes in the broader biogas (i.e., dairy and other feedstock) industry; substantial construction risks, including the risk of delay; operating risks and the effect of disruptions on the clean energy business, including the effects of the COVID-19 pandemic on the Company, the clean energy business' customers, suppliers, distributors and subcontractors; the need for substantially capital to complete projects, including more capital than initially budgeted, and exposure to liabilities as a result of unforeseen environmental, construction, technological or other complications; failures or delays in obtaining desired or necessary land rights, including ownership, leases or easements; a decrease in the availability, pricing and timeliness of delivery of feedstock and other raw materials and components, necessary for the projects to function; obtaining and keeping in good standing permits, authorizations and consents from local, provincial, state and federal governments; and the consent and authorization of local utilities or other energy development off-takers to ensure successful interconnection to end-users. Any of these factors could prevent the Company from completing or operating clean energy projects, or otherwise adversely affect the business, financial condition, and results of operations of the Company.

The Company's operating results and cash flow will fluctuate substantially from quarter to quarter and as a result in the fluctuation in demand for water treatment, recycling and waste services and also clean energy

and the development of clean energy. Timing of new contract awards varies due to customer-related factors such as finalizing technical specifications and securing project funding, permits, feedstock agreements and offtake agreements. The Clean Energy Business will recognize revenue, costs and profits over the period of the contract by reference to the stage of completion of the contract. The stage of completion of a contract is determined by internal estimates, with reference to the proportion of costs incurred and the proportion of work performed. Revenue is recognized in proportion to the total revenue expected on the contract. Such estimates may differ from actual results. Accordingly, the inherent uncertainty in these estimates could cause the Company's Investment in Joint Venture to fluctuate and such fluctuations may be material.

The Company's capital projects remain subject to various operating risks that may cause them to generate lower output levels than currently projected. Various factors, including equipment malfunctions, technical issues, labor shortages, or supply chain disruptions may contribute to production levels or quality being lower than expected. Such variations from projections could result in decreased revenues, increased operating costs, impairment of assets, and diminished competitiveness in the market. Consequently, the Company's profitability, financial condition, and ability to meet contractual obligations may be materially affected if its production facility projects do not perform as anticipated.

If the Company's development, operation or labor costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through corresponding increases in the costs of our products and services to our customers. The inability or failure to do so could harm the Company's business, financial condition and results of operations.

The development and operation of water treatment and recycling and waste management facilities and clean energy projects requires the Company and/or its customers to obtain regulatory permits, authorizations, or other approvals. There is no assurance that regulatory authorities will provide such approvals, which could adversely affect the business, financial condition, and results of the Company's operations.

There can be no guarantee that the applicable authorities will issue these permits or authorizations. Should the authorities fail to issue the necessary permits or authorizations to the Company or its customers, the Company may be limited or prohibited from proceeding with its business plans as proposed and the business, financial condition and results operations of the Company may be materially adversely affected.

The Company and its businesses, partnerships, joint ventures, and projects are subject to risks associated with ownership and operation of facilities, such as, equipment defects, malfunctions, failures, explosions, fires, damage or loss from inclement weather, accidents, spills, the handling, blending and transportation of dangerous goods, natural disasters, and ITC recapture risk. These risks and hazards could expose the Company to substantial liability for personal injury, loss of life, business interruption, property damage or destruction, pollution, and other environmental and financial damages. Although the Company will obtain insurance against certain of these risks, such insurance is subject to coverage limits and exclusions and may not be available for the risks and hazards to which the Company is exposed. No assurance can be given that such insurance will be adequate to cover the Company's liabilities or will be generally available in the future or, if available, that premiums will be commercially justifiable. In addition, the ITC tax insurance policy for the Colorado JV includes certain exclusions which have been guaranteed by the Company related to ITC recapture triggered events by certain transfers of ownership, actions of the insured companies, or foreclosure. If the Company incurs substantial liability and such damages are not covered by insurance or are in excess of policy limits, or if the Company incurs such liability at a time when it is not able to obtain liability insurance, the Company's business, results of operations and financial condition could be materially adversely affected.

Clean energy and clean energy projects are subject to evolving regulatory requirements. Changes in regulatory requirements may require the clean energy business to incur substantial costs associated with compliance or alter certain aspects of its business plan or may adversely affect government incentives associated with using clean energy and developing clean energy projects. We cannot predict the nature of any future laws, regulations, interpretations or applications towards renewable energy policies, nor can we determine what effect additional governmental regulations or administrative policies and procedures, when and if promulgated, could have on the clean energy business. Compliance with any such legislation may have a material adverse effect on the Company's business, financial condition, and results of operations. Management expects that the legislative and regulatory environment in the renewable energy industry globally will continue to positively develop but still be dynamic for the foreseeable future.

In addition, if current laws and regulations in jurisdictions internationally are not kept in force or if further environmental laws and regulations are not adopted in these jurisdictions as well as in other jurisdictions, demand for clean energy and clean energy projects may diminish. Public opinion can also exert a significant influence over the regulation of the renewable energy industry. A negative shift in the public's perception of the feasibility of clean energy projects or clean energy, could affect future legislation or regulations in jurisdictions around the world.

The Company cannot predict with any certainty the future market pricing of LCFS, RIN, and other environmental attributes associated with RNG and other bio-fuels. The profitability of the Company's operations will be seriously affected by changes in prices of such environmental attributes. Volatility or decrease in price may have a significant and negative impact on the value of the Company's assets, its financial condition and its ability to execute on its capital projects.

The Company earns LCFS, RIN, and other environmental attributes associated with RNG and other biofuels by both (i) supplying a fuel with a CI below the prescribed CI limit and (ii) taking actions that would have a reasonable possibility of reducing GHG emissions. Upon earning such environmental credits, the Company may monetize the environmental credits and sell validated credits to purchasers who wish to achieve compliance with the low carbon fuel requirements.

The Company maintains a

The Company's high level of indebtedness could adversely impact it in several ways. For example, it could:

make it more difficult for the Corporation to conduct its operations;

increase the Corporation's vulnerability to general adverse economic and industry conditions;

require the Corporation to dedicate a portion of its cash flow from operations to service payments on its indebtedness, thereby reducing the availability of the Corporation's cash flow to fund working capital, capital expenditures and other general corporate purposes including impacting the ability of the Corporation to pay dividends to shareholders;

limit the Corporation's flexibility in planning for, or reacting to, changes in its business and the industry in which it operates;

place the Corporation at a competitive disadvantage compared to its competitors that have less

debt; and

limit the Corporation's ability to borrow additional funds on commercially reasonable terms, if at all, to meet its operating expenses and for other purposes.

An increase in interest rates could result in a significant increase in the amount the Company pays to service debt, resulting in a reduced amount available to fund its activities and could negatively impact the market price of the common shares.

The Company requires sufficient cash flow in order to service and repay its indebtedness. The debt agreements governing the Facility contain financial and operational covenants, including requirements related to debt service ratios and operational performance metrics. Non-compliance with these covenants, whether due to insufficient cash flow, operational challenges, or other factors, could result in an event of default, which may trigger the acceleration of the Facility. Upon such an event, the lender has the right to demand immediate repayment of the full outstanding amount or realize on the security provided under the Facility, significantly increasing the Company's liquidity constraints. As of the date of this MD&A, the Facility remains outstanding, and the lender may also demand repayment at any time, further exacerbating the risk of acceleration.

The Company's ability to generate sufficient cash flow to meet its debt obligations depends on its financial condition, which may be influenced by factors beyond its control, such as volatility in energy markets, pricing for environmental attributes associated with renewable natural gas (RNG) and other biofuels, and general economic conditions. If the Company is unable to generate adequate cash flow from operations or secure additional borrowings, it may default under the agreements governing its indebtedness. Such a default, or the acceleration of the Facility, could force the Company to reduce or delay investments and capital expenditures, dispose of material assets, curtail operations, or seek creditor protection, any of which could have a material adverse effect on the Company's business, financial condition, results of operations, and cash flows.

Variations in interest rates, particularly if the Facility is not repaid by its maturity date, could significantly increase the cost of servicing the Company's variable-rate debt. Additionally, scheduled principal repayments and potential covenant breaches could result in substantial changes in the amount required to service debt, further straining the Company's liquidity. An increase in debt service obligations could also negatively impact the market price of the Company's common shares.

The Company's Facility matures on July 31, 2025. The Company requires additional capital from external financing sources, including debt, equity, strategic partnership, or potentially asset dispositions, to repay its Facility. There are no assurances that the Company will be able to access capital from external financing sources resulting in material uncertainty and significant doubt that the Company will have access to sufficient capital within the next twelve months to service its current working capital deficit. These events and conditions form a material uncertainty that may raise significant doubt regarding the Company's ability to continue as a going concern.

As such, the Company's ability to continue as a going concern is dependent on obtaining additional external financings, including debt, equity, strategic partnership, or potentially asset dispositions.

The Company relies now and in the future on debt financing for some of its business activities, including capital and operating expenditures. The Company's credit facilities may limit, among other things, its ability to incur additional debt, issue certain equity securities or enter into sale transactions. The Company is also required to maintain specified financial ratios and satisfy specified financial tests. The Company's ability to meet these financial ratios and tests can be affected by events beyond its control. As a result of these covenants, the Company's ability to respond to changes in business and economic conditions and to obtain additional financing, if needed, may be restricted, and the Company may be prevented from engaging in

transactions that might otherwise be considered beneficial.

A failure to comply with the obligations in the credit facility, including financial ratios and specified financial tests, could result in a default. If not cured or waived, such default would permit acceleration of the repayment of the relevant indebtedness as the respective lenders could elect to declare all amounts outstanding to be immediately due and payable and terminate all commitments to extend further credit. If such lenders were to accelerate the repayment of outstanding borrowings, the Company may not have sufficient cash to repay balances owing which may permit the Company's creditors to realize upon collateral granted to secure the indebtedness. Even if the Company is able to obtain new financing, it may not be on commercially reasonable terms or on terms that are acceptable to the Company.

The market price of the Company's Common Shares may be volatile, which may affect the ability of holders to sell the Company's Common Shares at an advantageous price. Market price fluctuations in the Company's Common Shares may be due to the Company's operating results failing to meet the expectations of securities analysts or investors in any quarter, downward revision in securities analysts' estimates, governmental regulatory action, adverse change in general market conditions or economic trends, acquisitions, dispositions or other material public announcements by the Company or its competitors, along with a variety of additional factors, including, without limitation, those set forth under the heading "Cautionary Note Regarding Forward-Looking Information". In addition, the market price for securities on stock exchanges, including the TSXV, may experience significant price and trading fluctuations, which are often unrelated or disproportionate to changes in operating performance or financial outlook.

The Company has several substantial holders of its common shares. Each of the substantial holders of common shares could have a significant influence on the Company and their interests may not be aligned with other shareholders' interests. If any substantial holder of common shares were to dispose of a substantial number of its common shares, or if it were perceived that such sales have occurred or might occur, this could have a negative impact on the price of the common shares. Further, the failure of the substantial holders of common shares to dispose of common shares may result in a limited level of liquidity in daily trading of the Company's common shares. Significant shareholders may also be able to exercise considerable influence over any matter requiring shareholder approval in the future.

As the Company is pursuing the development of bioenergy production facilities, it utilizes and anticipates utilizing third-party reports in connection with securing project financing and into construction. These reports, which may include engineering studies, environmental assessments, feasibility analysis, market forecasts, and other technical or economic evaluations, are prepared for the benefit of the Company and its financing and construction efforts. However, there are inherent risks associated with reliance on such reports.

Third-party reports are often based on assumptions, models, and projections that reflect certain conditions, timelines, and market factors. Actual results may differ materially from these projections due to unforeseen changes in economic conditions, project timelines, regulatory requirements, construction costs, market demand, or other variables. These reports are typically prepared at a specific point in time and may not account for subsequent developments or changes in project circumstances. As the project progresses, updated reports or assessments may be required, and any discrepancies between earlier and later evaluations could impact financing terms or lender confidence.

While the Company strives to engage reputable third-party experts, there is no assurance that the reports will be free from errors, omissions, or misinterpretations. Any inaccuracies could lead to delays or difficulties in securing financing or proceeding with construction. Additionally, the Company's reliance on third-party consultants and advisors introduces a degree of dependency. Any failure by these parties to deliver

Disclaimer

Green Impact Partners Inc. published this content on May 01, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 01, 2025 at 16:04 UTC.