Acceleware : Annual Report - MD&A (Q4 - 2023)

ACCELEWARE LTD.

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2023

This management's discussion and analysis of financial condition and results of operations ("MD&A") should be read together with Acceleware Ltd.'s ("Acceleware" or the "Company") audited financial statements and the accompanying notes for the year ended December 31, 2023, which were prepared in accordance with International Financial Reporting Standards ("IFRS"). Additional information relating to the Company is available on SEDAR+ at www.sedarplus.ca under Acceleware Ltd.

This MD&A is presented as of March 20,2024. All financial information contained herein is expressed in Canadian dollars unless otherwise indicated.

FORWARD LOOKING STATEMENTS

Certain statements contained in this MD&A constitute forward-looking statements. These statements relate to future events or the Company's future performance. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believes" and similar expressions. These statements involve known and unknown risks, uncertainties, and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Company believes that the expectations reflected in these forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this MD&A should not be unduly relied upon by investors. These statements speak only as of the date of this MD&A and are expressly qualified, in their entirety, by this cautionary statement.

In particular, this MD&A may contain forward-looking statements, pertaining to the following:

• the expectation of Acceleware's ability to continue operating as a going concern, fund its operations through the sale of its products and services, and access external financing when required;
• the future growth prospects for radio frequency ("RF") heating technology for heavy oil and oil sands based on technical and economic feasibility analyses and testing performed to date;
• the expectation that RF heating technology can be economically applied to industrial heating and drying applications;
• the patentability of concepts developed through RF heating research and development ("R&D") efforts;
• the expectation that the positive economic and technical analyses and testing to date will be reinforced by future results of subsequent testing of the RF heating technology;
• the successful completion of the workover for the RF heating technology at Marwayne, Alberta (the "RF XL Pilot");
• potential benefits of the Company's software to customers, including cost savings and increases to cash flow and productivity;
• oil and natural gas commodity prices;
• advantages to using Acceleware's products and technology;
• the demand for new products currently under development at the Company;
• ease and efficiency of implementing Acceleware's products; and
• supply and demand for Acceleware's primary software products.

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With respect to forward-looking statements contained in this MD&A, the Company has assumed, among other things:

• that the future revenue and resulting cash flow expected by the Company's management ("Management") and ability to attract new financing will be sufficient to fund future operations - this assumption being subject to the risk and uncertainty that the Company may not generate enough cash flow from operating activities to meet its capital requirements and that the Company may not be able to secure additional capital resources from external sources to fund any shortfall. Operating cash flow may be negatively affected by general economic conditions, increased competition, increased equipment or labour costs, and adverse movements in foreign currencies. Should the Company experience a cash flow shortfall from operating activities, Management's contingency plan may not be sufficient to reverse the shortfall;
• that industry and government environmental interest in reducing greenhouse gas ("GHG") emissions, reducing industrial water use, and minimizing land disturbance remains a priority;
• that the long-term oil and natural gas commodity price trend and its effect on the Company's products, services, and R&D efforts will be manageable;
• that the long-term effect of any sentiment, law or policy regarding future investment in new heavy oil or oil sands projects will be manageable;
• that the analyses coupled with lab and field testing that the Company has performed to date regarding the technical and economic feasibility of RF heating technology for heavy oil and oil sands will be confirmed in future pilot testing and in commercial products;
• that the analyses coupled with lab testing that the Company has performed to date regarding the technical and economic feasibility of RF heating technology for industrial heating and drying applications will be confirmed in future field testing and in commercial products;
• that the Company will maintain all regulatory approvals required to carry out the pilot testing of its RF heating technology at the RF XL Pilot;
• that the RF heating concepts developed by the Company are unique, novel and non-infringing of intellectual property owned by others;
• that the Company will be able to maintain sales of its software products and services which is subject to the risks that sales in core vertical markets may be negatively affected by general economic conditions, and that the Company's R&D efforts may be unable to develop continuous improvements; and
• that the Company will be able to withstand the impact of increasing competition.

The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth below and elsewhere in this MD&A.

Investors should not place undue reliance on forward-looking statements as the plans, intentions or expectations upon which they are based might not occur. Forward-looking statements include statements with respect to the timing and amount of estimated future revenue and sales and the Company's ability to protect and commercially exploit its intellectual property. Readers are cautioned that the foregoing lists of factors are not exhaustive. The forward-looking statements contained in this MD&A are expressly qualified by this cautionary statement. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law.

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BUSINESS OVERVIEW

Acceleware is an innovator of transformative technologies leading to a new era of responsible and cost-effective energy development focused within two business segments:

• RF Heating: intelligent electric heating using RF energy generated by the Company's proprietary Clean Tech Inverter ("CTI") for industrial applications including enhanced oil recovery ("RF XL"), and
• HPC: high-performance computing scientific software.

Acceleware's patented CTI heating 'engine' can provide intelligent, reliable, scalable, on-demand, decarbonized heat via RF energy. CTI is extremely efficient, it can be adapted to multiple industrial clean heating applications, and it may be able to displace fossil fuel reliant heating systems that are GHG intensive and costly.

The CTI has been successfully field tested over many months, including over six months of operation at the RF XL Pilot. The CTI uses leading edge silicon carbide ("SiC") transistor technology that results in over 98 percent efficiency converting AC or DC electricity to RF energy. By delivering this energy directly (and with minimal losses) to the material being heated, a CTI-powered RF heating system could reduce energy intensity by up to an estimated 50 percent versus fossil fuel reliant heating.* Acceleware has been granted two patents relating to CTI and multiple additional CTI patents are pending.

RF XL is Acceleware's patented RF heating technology designed to improve the extraction of heavy oil and bitumen. RF XL features a cost effective and environmentally friendly alternative to other thermal extraction methods such as steam assisted gravity drainage ("SAGD"). When applied, RF XL has the potential to reduce both capital and operating costs, while offering significant environmental benefits when compared to other extraction techniques, including:

• immediate GHG emission reductions;
• the elimination of external water use;
• a substantial decrease in land use;
• no requirement for solvents;
• substantial elimination of water treatment facilities; and
• no need for tailings ponds.

The Company believes that electrification through RF XL can provide a clear pathway to low-to-zero GHG production of heavy oil and oil sands and provide optimal alignment between industry and government to recognize innovation as a meaningful component of the oil and gas industry's overall emission reduction plans.*

Acceleware's HPC segment helps customers meet their oil and gas exploration needs with seismic imaging software that provides the most accurate and advanced imaging available for oil exploration in complex geological zones and

*This paragraph contains forward looking information. Please refer to "Forward Looking Statements" and "Risk Factors and Uncertainties" for a discussion of the risks and uncertainties related to such information.

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formations, and also helps customers meet their electronic and medical product development needs with state-of-the-artelectro-magnetic ("EM") simulation software.

RF Heating for Enhanced Oil Recovery

In 2010, Acceleware began investigating the use of RF energy for in-situ heating of heavy oil and bitumen. Since then, Acceleware has vigorously developed RF heating technology, securing the intellectual property with patents where appropriate.

Through the Company's RF Heating segment, Acceleware developed sophisticated simulation software tools based on its proprietary AxFDTD solution coupled with third party reservoir simulation software. In late 2013, Acceleware commercialized and introduced these simulation tools as AxHEATTM, a product aimed at oil and gas companies that are investigating the effectiveness of RF heating to increase the efficiency of heavy oil and oil sands production.

RF heating for oil production is not a new concept, as failed trials were conducted in Russia and North America as far back as 1948. Acceleware believes that these early failures were a result of technology limitations imposed by adapting radio communications technology for RF heating. Acceleware believes these limitations can be overcome with an entirely new approach to RF heating technology. The Company's R&D efforts in RF heating for oil production have focused on reducing the capital cost of the technology, increasing its efficiency (and therefore reducing its operating cost), and improving its scalability to very long horizontal wells commonly used in Alberta, Latin America, Africa, Asia, the Middle East and elsewhere. Acceleware's proprietary RF heating technology for long horizontal wells is marketed as RF XL. Acceleware's unique expertise with RF heating technology has resulted in feasibility study revenue and software revenue both locally and abroad. A major step in achieving these goals was the development of a low-capital cost and highly efficient electronics platform - the CTI.

CTI Decarbonization of Other Industrial Heating Applications

The Company has R&D projects underway with partners to quantify the benefits of using CTI-produced RF energy: in "turquoise" hydrogen production (whereby hydrogen is produced from the pyrolysis of natural gas and carbon is sequestered in solid form); in food and agricultural product drying; and in mining applications. Other applications in drying and industrial heating are being explored.

High-Performance Computing Software

Acceleware's traditional HPC market has centered around EM simulation software, and the Company continues to provide products to this industry. Its first software commercialized was an accelerated finite difference time domain ("FDTD") solution for the EM simulation industry. AxFDTD™ has been used by many Fortune 500 companies such as GE, Apple, Samsung, LG, Blackberry, Foxconn, Nikon, Renault, Mitsubishi, Merck, Boeing and Lockheed Martin, many of which continue to use the software today. With AxFDTD, Acceleware was a pioneer in the graphics processing unit ("GPU") computing revolution as most of the major mobile phone manufacturers in the world are using Acceleware's EM design solutions which facilitate more rapid design of their products. Acceleware's fourth-

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generation software acceleration solutions, which support multi-board GPU systems, can accelerate entire industrial simulation and processing applications by more than 35 times.

The EM solutions developed by Acceleware can be easily integrated by software developers, saving them the expense and time of migrating applications to high performance multi-core platforms. Acceleware improves the overall experience for end users of these applications by providing greater computing speed without the need for end users to learn new skills or change their work processes.

In the EM market, software developers choose to partner with Acceleware to increase the speed of their software. Such partners currently include SPEAG, ZMT Zurich MedTech and Keysight Technologies. Acceleware reaches the EM market through a combination of partner channels and direct sales. Investment in AxFDTD continues for traditional markets because it is an enabling technology for AxHEAT.

Acceleware recognized the similarity between EM FDTD and certain seismic imaging algorithms, which led the Company to enter the seismic imaging market in 2008. The Company's first product was a GPU accelerated Kirchhoff Time Migration solution, followed closely by AxRTM™ in 2009, a central processing unit ("CPU") and GPU enabled Reverse Time Migration ("RTM") library.

In 2013, Acceleware introduced AxWaveTM, a forward modelling variant of AxRTM which allows customers to accurately model seismic acquisition and perform data characterization.

In late 2014, Acceleware added AxFWITM a revolutionary modular full waveform inversion ("FWI") application to its seismic imaging suite. AxFWI allows geophysicists to create high quality subsurface velocity models in dramatically less time than before. In 2019, Acceleware began accessing the oil and gas geoscience software market with innovative licensing structures through a direct sales model that targets oil and gas exploration companies and seismic service providers.

Seismic forward modelling in complex subsurface geology using AxWave

In February 2004, Acceleware was founded by a group of graduate students and professors from the University of Calgary's Electrical Engineering department for the purpose of building software solutions that targeted the GPU as a compute platform. Since 2006, Acceleware's common shares have been listed on the TSX Venture Exchange (symbol: AXE). Acceleware is headquartered in Calgary, Alberta.

On December 31, 2023, Acceleware had 15 employees and long-term contractors, including three in administration; two in sales, marketing and product management; and ten in R&D and engineering.

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The Company now has 22 patents granted or allowed to protect various proprietary technologies related to Acceleware's intellectual property, and 38 patent applications pending or under development. The Company uses an integrated strategy for IP protection involving a combination of patenting and trade secrets, working closely with the patent offices and intellectual property advisors.

Acceleware also continues to focus on driving external awareness of the Company and on positioning its RF heating and CTI technology more prominently within both the oil and gas and clean-tech communities. The Company has been featured in several news stories by Business News Network,The Power Play by The Market Herald,Energi Media,and CBC (television,radio,and online)and most recently in the 2024 edition of Potash Works Magazine(page 40).

Several blog posts and videos have been released via social media which feature discussions on the RF heating technology by Acceleware's engineering team. The collection of videos is available for viewing here: Acceleware Video Posts,and an example of a Q1 2024 social media video post can be viewed here.Acceleware Chief Executive Officer, Geoff Clark, presented at the Clean Resource Innovation Network (CRIN) Project Cafe in February 2024. Mike Tourigny, Acceleware's Chief Operations Officer, attended the Prospectors & Developers Association of Canada (PDAC) mining conference in Toronto in March 2024.

RF XL PILOT UPDATE

Operations at Acceleware's RF XL Pilot began in early March 2022, and operated until July 2022. At that time, the fibre optic distributed temperature sensing ("DTS") system in the heating well was damaged during a maintenance operation. After the DTS break, RF power was reduced for safety and a plan for a heating well workover was developed. The workover commenced in October 2022, and included numerous upgrades of critical RF XL components. During redeployment of the system in Q1 2023 and Q3 2023 Acceleware identified degradation of some additional downhole components due to water ingress. The Company has now determined with our industry partners that the most practical path forward involves a redeployment of all subsurface components.

During the successful operation of the RF XL Pilot, performance data shows that the operation of the Clean Tech Inverter ("CTI") met or exceeded specifications. The CTI is the radio frequency ("RF") electronic 'engine' critical to RF XL Pilot success. A primary objective of the RF XL Pilot was to demonstrate the operation of the CTI and its effectiveness in transmitting RF energy downhole to increase temperature and improve oil production. Significant milestones achieved include:

• Acceleware drilled and completed the first of its kind multilateral heating well and associated production well in a previously produced heavy oil reservoir.
• The RF XL system (including the CTI) demonstrated unprecedented performance with the longest continuous run (142 days) and highest power (up to 250 kW) of any RF heating system.
• Maximum design current was transmitted from the CTI, through the proprietary transmission line, and radiated to the reservoir.
• Increased reservoir temperature and oil production were observed in the RF XL Pilot.
• The temperature profile and oil production increase matched simulated predictions given the levels of power radiated.

Additionally, critical components of the proprietary RF XL subsurface technology functioned as designed and expected.

The workover was undertaken to address the DTS failure, during which time the engineering team took the opportunity to examine downhole components. As the workover progressed, an issue was discovered with the downhole RF XL system resulting from water ingress into the RF transmission line during deployment and operation of the RF XL Pilot. Some moisture had been anticipated and was initially addressed via the RF XL Pilot's nitrogen purge and pressurization system which is designed to remove and prevent the return of fluids. Further analysis following the workover suggests that this system was not able to manage the moisture levels encountered, resulting in degradation of some proprietary downhole components. For clarity, the moisture ingress issue pertained to tubing connections, not to core RF XL technology nor RF XL electronics. Acceleware has recreated the problem in lab tests

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and has designed and tested a solution. The damage is believed to be the primary impediment to Acceleware's ability to achieve full power in the first phase of heating at the RF XL Pilot. As mentioned on November 22, 2023, Acceleware planned to develop several solutions to this challenge and proceed with the option with the highest probability of success and the lowest risk. The Acceleware team, in consultation with industry partners, has developed what is believed to be a permanent, resilient solution for the issue.

Acceleware now plans to continue a second phase of heating after a significant subsurface upgrade plan to address the moisture ingress issue. Subsurface components not removed during the workover will be removed, refurbished, or upgraded, and then redeployed along with the components already upgraded during the original workover program. This plan was developed in consultation with industry partners and service providers and among the alternatives examined, it is expected to have the highest probability of achieving higher power injected into the reservoir for a sustained period. An additional $5 million of funding is required to complete the redeployment, and Acceleware is actively working to raise these funds. The final timing and cost of the redeployment and subsequent heating remains dependent on financing, partner investment, and the successful deployment of repairs and components. Additional risks include the availability of service rigs, weather conditions at site, supply chain reliability, and material delivery timing. Upgrades have been specifically designed to eliminate the moisture ingress issue. In addition, measures will be taken to add resilience to the system to ensure long-term operation if moisture does return. Upgrades will also be made to augment success of the CTI function, including providing more accurate monitoring of broadband voltage, current and power.*

As at December 31, 2023, total RF XL Pilot net costs incurred were approximately $28.5 million since the start of the RF XL Pilot in early 2018. Using the most likely scenario moving forward, Acceleware estimates a range of net cost for the RF XL Pilot of between $30 million and $35 million prior to the offset of proceeds from the sale of produced oil. There is uncertainty in the cost estimate stemming from the deployment outcome of repairs and components, fluctuating commodity prices, in particular electricity, supply chain and workforce disruption costs and any additional unforeseen mechanical or electrical engineering costs that could still potentially be encountered in a complex, commercial scale pilot program of this nature.*

As of March 20, 2024, total direct funding committed to the RF XL Pilot was $25.4 million and included $5.9 million from Alberta Innovates, $5.5 million from Sustainable Development Technology Canada ("SDTC"), $5.0 million from Emissions Reduction Alberta ("ERA"), $3.0 million from CRIN and up to $6.0 million from three consortium members. The Company has received $22.8 million to the end of December 31, 2023 and as such has $2.6 million remaining as committed but not yet received. The three consortium members of the RF XL Pilot each committed up to $2.0 million in funding and technical expertise, payable upon completion of certain milestones. In exchange for this funding, Acceleware has provided exclusive access to detailed technical data and test results, prioritized rights to host a subsequent test, preferred pricing on pre-commercial products and preferred access to RF XL products. These three consortium members are three major oil sands producers and represent well over one million barrels of oil sands and heavy oil production per day.

FINANCIAL SUMMARY

Overall spending in 2023 remained conservative as the Company continued to determine thoughtful and cost- conscious next steps in the workover for the RF XL Pilot. A workover program began in late 2022 and continues to date. Construction work on the RF XL Pilot was completed in early March 2022, followed by commencement of operations which continued throughout most of 2022 until operations were paused for the workover. The workover continued for all of 2023. RF XL Pilot expenses as at December 31, 2023 were approximately $28.5 million (December 31, 2022 - $25.9 million). The remaining cash committed but not yet received from ERA and CRIN including holdbacks receivable was $1.2 million as at December 31, 2023 (December 31, 2022 - $1.0 million from SDTC, ERA and Alberta Innovates) and amounts committed but not yet received or receivable from three major oil-sands producers were $1.4 million as at December 31, 2023 (December 31, 2022 - $1.4 million).

• this paragraph contains forward looking information. Please refer to "Forward Looking Statements" and "Risk Factors and Uncertainties" for a discussion of the risks and uncertainties related to such information.

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YEAR TO DATE IN REVIEW

Revenue of $0.3 million was generated from the Company's software, maintenance and services revenue streams for the year ended December 31, 2023 compared to $0.3 million for the year ended December 31, 2022. Although revenue is more diversified in 2023 with a significant contribution from services revenue, revenue was lower due to lower demand for HPC software and maintenance revenue. Services revenue relates to RF simulation and experimental studies paid by customers interested in applying CTI for their industrial heating needs. Industries outside heavy oil have also become interested in utilizing CTI for industrial heating, including mining, agriculture, and hydrogen. Acceleware did not receive any non-refundable milestone cash payments during the year ended December 31, 2023 compared to $1.3 million received during the year ended December 31, 2022. When received, these payments are recorded in deferred revenue.

Total comprehensive loss for the year ended December 31, 2023 was $2.0 million compared to $5.1 million for the year ended December 31, 2022 due to lower R&D spending for the RF XL Pilot and higher government grant funding. There are fluctuations in both periods related to changes in fair value of the derivative financial instruments embedded in the convertible debentures and interest expense due to short- and long-term debt financing.

Gross R&D expenses for the year ended December 31, 2023 were $2.9 million compared to $5.7 million incurred during the year ended December 31, 2022 due to lower cost R&D activity on the RF XL Pilot workover during the year ended December 31, 2023. There was a significant amount of non-recurring installation costs for the RF XL Pilot incurred in the early part of 2022. Federal and provincial government assistance of $2.6 million was recognized in the year ended December 31, 2023 compared to $2.2 million for the year ended December 31, 2022. While the ERA, SDTC and Alberta Innovates grants for the RF XL Pilot were completed in 2023, CRIN awarded up to $3 million and the Company received approximately $2.0 million of that in the year ended December 31, 2023.

General and administrative ("G&A") expenses incurred during the year ended December 31, 2023 were $2.0 million compared to $2.1 million for the year ended December 31, 2022. While salaries were lower as the Company continues to prioritize cost management, there were higher legal and related professional fees for the equity offerings and higher non-cash payroll related costs for option grants.

As at December, 2023, Acceleware had negative working capital of $2.0 million (December 31, 2022 - negative working capital of $0.6 million) including cash and cash equivalents of $1.0 million (December 31, 2022 - $1.1 million). As at December 31, 2023 there is $1.2 million included in working capital for amounts due to management for services provided (December 31, 2022 - $0.8 million). The negative working capital for both periods is attributable to the timing of receipt and recognition of government and partner funding and related R&D spending. Not included in working capital is $2.6 million of funding that is committed but not yet received (December 31, 2022 - $2.4 million). Every funder, except ERA and SDTC, reimburses Acceleware for the RF XL Pilot costs in arrears, after the spending has occurred.

Increasing the deficit is deferred revenue of $4.4 million as at December 31, 2023 (December 31, 2022 - $4.4 million). Despite receiving non-refundable cash payments for these amounts, the milestone payments have not met all requirements for revenue recognition under IFRS 15 Revenue from Contracts with Customers. These amounts will be recognized as revenue and increase shareholders' equity when RF XL Pilot heating is complete or the data revenue contracts are terminated, whichever is earlier.

In the interests of matching cash requirements with a combination of cash generated from operations, external funding, and capital raising activities, the Company actively manages its cash flow and investments in new products. Acceleware intends to maximize cash generated from operations through several initiatives which include continuing to focus on higher gross margin software products that are marketed through a combination of direct and reseller models; minimizing operating expenses where possible; and limiting capital expenditures. As the Company continues to develop its RF Heating technology, new R&D investments will be financed through a combination of internal cash

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flow from the HPC business, project funding agreements, government assistance and external financing, when available.*

QUARTER IN REVIEW

Revenue of $0.04 million was generated in the three months ended December 31, 2023 compared to $0.1 million in the three months ended December 31, 2022 ("Q4 2022") and $0.1 million in the previous quarter ended September 30, 2023 ("Q3 2023"). Revenue in Q4 2023 included software and maintenance revenue. Revenue was lower in Q4 2023 and Q3 2023 due to less demand in the HPC segment for FDTD maintenance compared to Q4 2022. There continues to be variability in the RF Heating segment for revenue related to services in applying CTI to industrial heating. While interest has increased in the intelligent electric heating service offering, there was no revenue in Q4 2023 or Q3 2023. Acceleware did not receive any data revenue payments during Q4 2023 or Q3 2023 but received $0.2 million in Q4 2022 for the RF XL Pilot. These payments, when received, are recorded in deferred revenue. Data revenue equal to the amount recorded in deferred revenue will be recognized as revenue at the end of the RF XL Pilot or when the data contracts are terminated, whichever is earlier.

Total comprehensive income for Q4 2023 was $0.6 million compared to a comprehensive loss of $1.3 million for Q4 2022 and a comprehensive loss of $1.3 million for Q3 2023. Comprehensive income was higher in Q4 2023 due to receipt of government assistance from CRIN relating to costs incurred from January 1, 2022 to June 30, 2023 and lower R&D spending. Theses increases are offset by higher interest costs related to current liabilities funding the Company's working capital. Comprehensive income/(loss) in all periods was impacted by changes in value of the derivative financial instruments embedded within the convertible debenture. The changes in derivative value are driven primarily by the fluctuation in the Company's share price.

Gross R&D expenses incurred in Q4 2023 were $0.7 million compared to $1.2 million in Q4 2022 and $0.8 million in Q3 2023. R&D spending was lower in Q4 2023 compared to Q4 2022 and Q3 2023 due to a change in the nature of the workover activities. Most of the workover activity in Q4 2023 was related to lab engineering, designing and testing, data analysis, and partner consultations. Government assistance received in Q4 2023 was $2.1 million and $0.9 million in Q4 2022 and $0.1 million in Q3 2023. The Government of Alberta's Innovation Employment Grant ("IEG") to support research and development was effective January 1, 2021 and provides a grant of up to 20% of eligible R&D expenses incurred in Alberta. This new grant effectively replaced Alberta's 10% scientific research and experimental development refundable tax credit that was eliminated as at December 31, 2019. The Company met the eligibility criteria, claimed eligible R&D expenditures and received $0.4 million in Q1 2023 related to 2021 eligible expenditures and $0.1 million in Q3 2023 related to 2022 eligible expenditures and $nil in Q4 2022. As at December 31, 2023 and 2022 there was $nil million government assistance receivable. Government assistance offsets gross R&D costs.

G&A expenses incurred in Q4 2023 were $0.6 million compared to $0.6 million in Q4 2022 and $0.6 million in Q3 2023. There were higher non-cash payroll related costs incurred in Q4 2023 due to the timing of option grants, higher professional fees and lower salaries as the Company continues to prioritize cost control given uncertain economic conditions.

STRATEGIC UPDATE

In 2024, Acceleware will focus on completing the commercialization of RF XL while pursuing additional applications for the use of the CTI to decarbonize industrial heating across a wide range of heavy emitting industries. Development work has begun in the mining sector for the drying of potash ore and other minerals. The Company has identified a range of other drying and heating processes in mining, agriculture, and other industries that would be well suited to the use of the CTI. Acceleware has a proven track record for successful development and commercialization of revolutionary technologies.

• this paragraph contains forward looking information. Please refer to "Forward Looking Statements" and "Risk Factors and Uncertainties" for a discussion of the risks and uncertainties related to such information.

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