HTC Purenergy : 2022 Third Quarter Report - MDA

MANAGEMENTS DISCUSSION & ANALYSIS

RD QUARTER END SEPTEMBER ,

Introduction

The following Management's Discussion and Analysis ("MD&A") is prepared as of September 30, 2022, and should be read together with the HTC Purenergy Inc. dba HTC Extraction SystemsTM ("HTC" or the "Corporation") unaudited consolidated interim financial statements for the nine-month period ending September 30, 2022 (the "Period") and related notes

attached thereto (collectively referred to as the "Financial Statements"), which are prepared in accordance with International Financial Reporting Standards ("IFRS"). All amounts are

stated in Canadian dollars unless otherwise indicated. The Corporation has adopted National Instrument 51-102F1 as the guideline in representing the MD&A. Terms used but not defined in this MD&A shall bear the meaning as set out in Part 1 of National Instruments ("NI") 51-102

and NI 14-101Definitions and accounting terms that are not defined herein shall bear the meaning as described or used in IFRS applicable to publicly accountable enterprises.

This MD&A is dated November 28, 2022.

FORWARD-LOOKING STATEMENTS DISCLAIMER

Statements in this MD&A that are not historical facts are forward-looking statements involving known and unknown risks and uncertainties that may cause the Corporation's actual results or outcomes to be materially different from those anticipated and discussed herein. In assessing forward-looking statements contained herein,readers are urged to read carefully all cautionary statements contained in this MD&A and accompanying Financial Statements, and in those other filings with the Corporation's Canadian regulatory authorities as found at 'www.sedar.com' and to not put undue reliance on such forward-looking statements. Forward- looking statements in this MD&A include statements with respect to: the expected performance of the Corporation's business and operations and the Corporation's intentions to expand its business and operations; the Corporation's expectations regarding revenue, expenses and anticipated cash needs; the Corporation's plans to expand its extraction capabilities; the ability of the Corporation to meet consumer demand; the ability of the Corporation to execute on its strategic priorities and objectives; the size of the market that the Corporation operates in; the Corporation's business strategy for the extraction and purification of hemp biomass; the receipt of all necessary regulatory and other third-party approvals to conduct its CBD extraction operations; future processing expectations; the Corporation's ability to enter into new hemp biomass tolling agreements; and the Corporation's expectations regarding the future operations and objectives of KF Hemp Corp. Although HTC's management ("Management") believes that the expectations reflected in the forward-looking statements are reasonable, Management cannot guarantee future results, levels of activity, performance or achievements, or other future events. Forward-looking statements in this MD&A speak only as of the date on which they are made and Management is under no duty to update any of its forward-looking statements after the date of this MD&A, other than as required and governed by applicable securities laws.

Additional information related to the Corporation is available for view on SEDAR at www.sedar.com.

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Corporate Overview

HTC Extraction Systems™ Group has developed proprietary extraction and purification systems, that have been designed to extract from biomass, liquids, and gas, as well as for the

distillation and purification of ethanol and ethanol solvents,used for this extraction in the Hemp- Biofibre/Protein/Plant Oil business sector.

HTC's Hemp - Biofibre/Protein/Plant Oil - Business Unit

HTC's business strategies include: the production contracting of broad acre industrial hemp for

Biofibre for Bioplastics, Biochar and Cellulose, Hemp Seeds for Protein and Hemp Seed Oil, and cannabinoid extraction;as well as equity investments in Delta CleanTech Inc. ("Delta") and Starling Brands Inc. ("Starling").

Effective June 30, 2020, HTC acquired KF Hemp Corp. ("HempCo"), a company that is qualified

to cultivate, process, dry, store and sell hemp under the Industrial Hemp Regulations of the Cannabis Act (Canada) ("Hemp License"). HempCo owns hemp shredding, handling, drying, sizing and sorting equipment, which have been installed in its hemp processing facility, located

in Lajord, Saskatchewan.

Investments in ESG companies

Delta CleanTech Inc.

The Corporation owns a minority interest of Delta, the proprietor of 17-year old, ESG driven, recognized global technology IP, and leader in Carbon Credit Origination and Aggregation, through CO2 Capture & Decarbonization of Energy, Blue Hydrogen Production, and Methane Collection & Destruction. Delta continues to provide solutions to clients all over the world in capturing, sequestering, and reducing CO2, while producing high quality fungible Carbon Credits.

HTC // Management's Discussion & Analysis	Q3 2022

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Delta has shown leadership in the compliance and voluntary carbon offset market through its extensive origination and aggregation experience in CO2 capture, landfill and oilfield methane

destruction and zero tillage agricultural carbon credits.

SELECTED ANNUAL INFORMATION

		In Canadian Dollars		Year ending	Year ending	Year ending
			Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
		Total Revenue		737,847	-	200,385
		Loss from Operations		(775,521)	(1,746,057)	(1,683,957)
		Gain (Loss) from asset disposition,		(3,590,074)	(32,381,121)	(1,621,437)
		valuation and impairment adjustments
		Net (Loss)		(4,623,663)	(34,405,455)	(5,518,038)
		Loss per share, basic and diluted		(0.02)	(0.22)	(0.08)
		Loss per share from continued		(0.04)	(0.19)	(0.025)
		operations, basic and diluted
		Comprehensive Net Income (Loss)		(4,408,894)	(34,410,273)	(5,602,036)
		Total Assets		7,652,435	11,135,149	46,739,123
		Total Long-Term Financial Liabilities		6,814,187	5,594,108	12,312,926
		Increase (Decrease) in Cash		(83,666)	(4,999,156)	3,623,775
		Cash Dividends Declared per-share		NIL	NIL	NIL

HTC // Management's Discussion & Analysis	Q3 2022

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DISCUSSIONS OF HTC's

QUARTER END FINANCIAL RESULTS

	In Canadian			3 months			3 months			3 months			3 months			3 months			3 months			3 months			3 months
			ending			ending			ending			ending			ending			ending			ending			ending
	Dollars (other
			Sept. 30,			Sept. 30,			Jun. 30,			Jun. 30,			Mar. 31,			Mar. 31,			Dec. 31,			Dec. 31,
	than share
			2022			2021			2022			2021			2022			2021			2021			2020
	amounts)
			Unaudited			Unaudited			Unaudited			Unaudited			Unaudited			Unaudited			Audited			Audited
	Total Revenues		8,500			6,485			105,570			70,000			143,461			319,490			341,872			-
	Net Income
	(Loss) from		(199,780)			109,095			(230,740)			(537,370)			(336,452)			(454,119)			126,163			(28,684,277)
	Operations
	Net Income		(275,951)			(409,846)			(593,866)			(1,228,741)		(609,574)			2,055,971			(5,041,758)		(35,402,855)
	(Loss)
	Total Assets		4,992,282			12,540,155		6,659,432			12,912,842		7,383,064			13,903,092		7,652,435			11,135,149
	Long Term		6,461,912			6,064,925			7,059,019			5,938,680			6,945,515			5,737,180			6,814,187			5,594,108
	Liabilities
	Shareholders'		(3,853,026)		2,641,980			(3,577,075)		5,479,427			(3,031,946)		6,598,396			(2,370,634)		4,289,144
Equity
	Cash Flow from		(107,043)			(224,158)			(397,125)			(101,653)			137,169			(182,761)			(366,940)			17,618,908
	Operations
	Increase		49,738			(27,532)			(140,998)			(16,118)			33,049			(124,237)			(30,470)			(2,866)
	(Decrease) in
	Cash
	Net Income
	(Loss), in total,
	on a per-share		0.00			0.00			0.00			0.00			0.00			0.01			(0.02)			(0.22)
	basis1 (See
	discussion
	below)
	Net Income
	(Loss), in total,		0.00			0.00			0.00			0.00			0.00			0.01			(0.02)			(0.21)
	on a diluted per-
	share basis
	Weighted
	Average		206,973,741		206,973,741		206,973,741		206,973,741		206,973,741		206,973,741		206,983,741		159,088,563
	Common Shares

-2020 and 2021 comparative amounts have been reclassified to consider the impact of the sale of Delta and Kase

-Net Income (Loss) per common share for the periods has been calculated using the weighted average number of common shares outstanding during the respective periods.

HTC // Management's Discussion & Analysis	Q3 2022