May 10, 2023

04:46p 05/10/2023 | 05:22pm EDT Message : For the three and nine-month periods ended March 31, 2023 and 2022 INTERIM MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THREE AND NINE-MONTH PERIODS ENDED MARCH 31, 2023 AND 2022 ________________________________________________________________________________________ [Unless specified otherwise, all amounts are expressed in Canadian dollars] This interim Management's discussion and analysis ("MD&A") provides a review of NanoXplore Inc.'s operations, performance and financial position for the three and nine-month periods ended March 31, 2023 and 2022 and should be read in conjunction with the unaudited condensed interim consolidated financial statements for the three and nine-month periods ended March 31, 2023 and 2022 and with the audited consolidated financial statements for the years ended June 30, 2022 and 2021. The purpose of this document is to provide information on our activities. The information contained herein is dated as of May 10, 2023, date on which the MD&A was approved by the Corporation's board of directors. You will find more information about us on NanoXplore's website at www.nanoxplore.ca and on SEDAR at www.sedar.com, including all press releases. The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") applicable to the preparation of interim financial statements including IAS 34, Interim Financial Reporting. The Corporation has consistently applied the accounting policies used in the preparation of its IFRS financial statements, including the comparative figures. We occasionally refer to non-IFRS financial measures in the MD&A. See the Non-IFRS measures section for more information. The terms "we", "our", "us", ''NanoXplore'' or the "Corporation" mean NanoXplore Inc. and its subsidiaries, unless otherwise indicated. "Q3-2023" and "Q3-2022" refer to the three-month periods ended March 31, 2023 and 2022 respectively, and "YTD 2023" and "YTD 2022" refer to the nine-month periods ended March 31, 2023 and 2022 respectively. 1. FORWARD-LOOKING STATEMENTS This MD&A contains certain forward-looking statements within the meaning of applicable Canadian securities laws with respect to the Corporation. Such forward-looking statements are dependent upon a certain number of factors and are subject to risks and uncertainties. Actual results may differ from those expected. The Corporation considers the assumptions on which these forward- looking statements are based to be reasonable, but it advises the reader that these assumptions with regard to future events, many of which are beyond the Corporation's control, could prove incorrect as they are subject to risks and uncertainties inherent in the Corporation's activities. Management does not assume any obligation to update or revise any forward-looking statements, whether as a result of new information of future events, except when required by the regulatory authorities. This MD&A contains forward-looking statements. When used in this MD&A, the words ''may'', ''would'', ''could'', ''will'', ''intend'', ''plan'', ''anticipate'', ''believe'', ''seek'', ''propose'', ''estimate'', ''project'', ''expect'' and similar expressions are intended to identify forward-looking statements. In particular, this MD&A contains forward-looking statements with respect to, among other things, business objectives, expected growth, results of operations, performance, business projects and opportunities and financial results. 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. Such statements reflect NanoXplore's then current views with respect to future events based on certain facts and assumptions and are subject to certain risks and uncertainties, including without limitation changes in the risk factors described under the section "Risks and Uncertainties" of this MD&A. The forward-looking statements are based on certain key expectations and assumptions made by NanoXplore, including expectations and assumptions concerning availability of capital resources, business performance, market conditions and customer demand. Although NanoXplore believes that the expectations and assumptions on which such forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements since no assurance can be given that they will prove to be correct. Many factors could cause NanoXplore's actual results, performance or achievements to vary from those described in this MD&A, including without limitation those listed above, those described under the section "Risks and Uncertainties" of this MD&A as well as the assumptions upon which they are based proving incorrect. These factors should not be construed as exhaustive. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this MD&A as intended, planned, anticipated, believed, sought, proposed, estimated or expected, and such forward-looking statements should not be unduly relied upon. NanoXplore does not intend, and does not assume any obligation, to update these forward-looking statements except as required by law. The forward-looking statements contained in this MD&A are expressly qualified by these cautionary statements. Forward-looking statements contained in this MD&A about prospective results of operations, financial position or cash flows are based on assumptions about future events, including economic conditions and proposed courses of action, based on NanoXplore's management's assessment of the relevant information currently available. Readers are cautioned that outlook information contained in this MD&A should not be used for the purposes other than for which it is disclosed herein or therein, as the case may be. 1 FOR THREE AND NINE-MONTH PERIODS ENDED MARCH 31, 2023 AND 2022 ________________________________________________________________________________________ CORPORATION OVERVIEW NanoXplore is a graphene company, a manufacturer and supplier of high-volume graphene powder for use in transportation and industrial markets. Also, the Corporation provides standard and custom graphene-enhanced plastic and composite products to various customers in transportation, packaging, electronics, and other industrial sectors. The Corporation was formed by amalgamation under the Canada Business Corporations Act by Certificate of Amalgamation dated September 21, 2017 and is headquartered at 4500 Thimens Blvd, Montreal, QC, Canada. On July 15, 2021, NanoXplore Inc. graduated from the Toronto Stock Exchange ("TSX") Venture Exchange to the TSX. NanoXplore is traded under "GRA" on the TSX and is also listed on the OTCQX and traded under "NNXPF". The Corporation has the following subsidiaries: NanoXplore Switzerland Holding SA ("NanoXplore Switzerland"), based in Switzerland, with an equity interest of 100% [2022 - 100%]. NanoXplore Switzerland holds 100% of CEBO Injections SA ("CEBO"). NanoXplore Holdings USA, Inc. ("NanoXplore Holdings USA"), based in the United States, with an equity interest of 100% [2022 - 100%]. NanoXplore Holdings USA holds 100% of NanoXplore USA, Inc. Sigma Industries Inc. ("Sigma"), based in Canada, with an equity interest of 100% [2022 - 100%]. Sigma has two active wholly owned subsidiaries; Faroex Ltd., based in Manitoba, and Rene Composite Materials Ltd., based in Quebec. Rene Composite Materials Ltd. has one active wholly owned subsidiary; RMC Advanced Technologies Inc., based in the United States. Canuck Compounders Inc. ("Canuck"), based in Canada, with an equity interest of 100% [2022 - 100%]; VoltaXplore Inc. ("VoltaXplore"), based in Canada, with an equity interest of 100% [2022 - 50%]. KEY FINANCIAL HIGHLIGHTS Higher revenues from customers during Q3-2023 of $31,125,291 compared to $27,997,816 during Q3-2022, representing an 11% increase; Record gross margin on revenues from customers of 18.3% in Q3-2023 compared to 9.7% in Q3-2022; Record adjusted EBITDA(1) of $451,705 in Q3-2023 compared to -$2,384,227 in Q3-2022; Cash flows from operating activities were once again positive by $1,593,497 in Q3-2023 bringing our YTD to $751,847, a significant improvement over YTD 2022 and past years; Total liquidity of $47,775,756 as at March 31, 2023, including cash and cash equivalents of $37,422,456; Total long-term debt of $8,312,297 as at March 31, 2023. BUSINESS HIGHLIGHTS During the nine-month period ended March 31, 2023, the Corporation continued to focus on developing markets for its graphene products and to develop down stream pre-mixed additives and products that facilitate such introduction. The Corporation has been successful in integration of GrapheneBlack in a few streams of products, both internally and externally. The Corporation continues its engagement with many potential customers that are currently validating GrapheneBlack and GrapheneBlack improved masterbatches, concentrates, and products. During the quarter, the Corporation announced its 5-year strategic and investment plan and has begun executing it. The plan represents an increase in the production capacity of graphene, battery materials and graphene enhanced masterbatch, compound and composite products. The Corporation will provide a regular update to its shareholders on the progress of the plan. The Corporation is actively working to set up its battery focused research and development facility. It has leased a location in the vicinity of its headquarters and is setting up pilot scale production systems for anode active materials and for conductive and performance additives. Adjusted EBITDA is a non-IFRS measure and that the reconciliation can be found in the section "Overall Results" 2 FOR THREE AND NINE-MONTH PERIODS ENDED MARCH 31, 2023 AND 2022 ________________________________________________________________________________________ Macroeconomics and Supply chain issues The COVID-19 pandemic and its negative collateral effects on the supply of materials and labour availability along with the armed conflict between Russia and Ukraine continue to be part of today's macro-economic landscape. In recent months, the resulting negative impacts have stabilized and are less disruptive to our operations than they have been. A material deterioration in any of the foregoing could have a material adverse effect on the Corporation's business and results of operations. The Corporation expects to be able to continue to respond to these external forces in a measured, prudent and decisive manner with continued emphasis on health and safety, cash conservation and the maintenance of its liquidity position. VoltaXplore On March 24, 2023, NanoXplore Inc. purchased Martinrea Innovation Developments Inc.'s 50% equity stake in VoltaXplore for an aggregate equity consideration of $9,987,586. NanoXplore now owns 100% of VoltaXplore, a graphene-enhancedLi-ion battery manufacturer for the Electric Vehicle and grid storage markets. The Government of Canada has recognized the critical importance of clean technology manufacturing by introducing a 30% refundable investment tax credit ("ITC") in its 2023 Budget. This federal government initiative, along with the provincial financial support, is in line with NanoXplore's decision to move forward with the construction of a 2GWh battery cell gigafactory in Quebec. At nameplate capacity, the facility may produce up to 130 million cells per year. The ITC along with the provincial financial support were major milestones for NanoXplore and VoltaXplore. VoltaXplore anticipates finalizing remaining funding in the next few months to potentially start construction in early calendar 2024. S&P/TSX Small Cap Index Inclusion On September 16, 2022, after the close of trading, the Corporation was added to the S&P/TSX Small Cap index as part of the semi-annual rebalancing. Purchase of assets of XG Sciences Inc. On August 25, 2022, the Corporation purchased a significant portion of the assets of XG Sciences Inc. ("XG" or "XG Sciences") for an amount of US$3,000,000 in a sale conducted by XG's senior secured creditor pursuant to Article 9 of Michigan's enactment of the Uniform Commercial Code. The Corporation and the senior creditor entered into an asset purchase agreement pursuant to which the Corporation acquired XG's mechanical milling platform, research and development lab and all issued and pending patents and trademarks, among other items. As a result of the transaction, the Corporation now owns all patents and patent applications including a portfolio of 7 patents (6 issued and 1 pending) of silicon-graphene battery materials and all XG trademarks. This complements the Corporation's existing intellectual properties and know-how related to graphene and graphene-silicon composite materials for Li-ion batteries. The Corporation has moved all the assets from Lansing, Michigan to Canada to establish a dedicated battery material R&D facility. The Corporation has leased a location in the vicinity of its headquarters and has already installed some of XG's R&D assets in this facility. This facility will include pilot scale production systems for anode active materials and for conductive and performance additives and will incorporate trade secrets and know how acquired from XG into existing knowledge of the Corporation. Moreover, the Corporation plans to use these assets to build a silicon-graphene anode material facility with a production capacity of 100-200 tons per year during 2023. Total liquidity As at March 31, 2023, the Corporation had total liquidity of $47,775,756, including cash and cash equivalents and availability under the Corporation's operating loans. Long-term debt The total long-term debt decreased from $9,450,814 as at June 30, 2022 to $8,312,297 as at March 31, 2023 for a variation of $1,138,517. Repayment amounted to $1,303,613 during the nine-month period ended March 31, 2023. 3 FOR THREE AND NINE-MONTH PERIODS ENDED MARCH 31, 2023 AND 2022 ________________________________________________________________________________________ HIGHLIGHTS The following table sets out certain highlights of the Corporation's performance for the three and nine-month periods ended March 31, 2023 and 2022. Refer to the Corporation's unaudited condensed interim consolidated financial statements for the three and nine-month periods ended March 31, 2023 and 2022 for a detailed account of the Corporation's performance for the periods presented in the tables below. Q3-2023 (1,384,027) Results of operations may include certain unusual and other items which have been separately disclosed, where appropriate, in order to provide a clear assessment of the underlying Corporation results. In addition to IFRS measures, management uses non- IFRS measures in the Corporation's disclosures that it believes provide the most appropriate basis on which to evaluate the Corporation's results. NON-IFRSMEASURES This MD&A was prepared using results and financial information determined under IFRS. However, the Corporation considers certain non-IFRS financial measures as useful additional information in measuring the financial performance and condition of the Corporation. These measures, which the Corporation believes are widely used by investors, securities analysts and other interested parties in evaluating the Corporation's performance, do not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similarly titled measures presented by other publicly traded companies, nor should they be construed as an alternative to financial measures determined in accordance with IFRS. Non-IFRS measures include "Adjusted EBITDA". The following table provides a reconciliation of IFRS "Loss" to Non-IFRS "Adjusted EBITDA" for the three and nine-month periods ended March 31, 2023 and 2022. Q3-2023