Mr. Jerry Trent reports

PRINCIPAL TECHNOLOGIES ANNOUNCES NEW STOCK OPTION PLAN

Principal Technologies Inc.'s board of directors has approved the adoption of a new 20-per-cent fixed stock option plan.

On July 11, 2023, the board adopted a 10-per-cent fixed stock option plan (see press release date July 11, 2023). The considered plan was subject to approval by the TSX Venture Exchange and would be in addition to the company's 10-per-cent rolling stock option plan that was last approved by shareholders at their annual general and special meeting held on Nov. 30, 2022. Upon review and consultation with the exchange, the board has subsequently adopted the new option plan.

The new option plan will reserve for issuance 4,575,092 common shares of the company under similar terms and conditions as the existing option plan. The maximum term of each stock option shall not be greater than 10 years. The exercise price of each option shall not be less than the market price of the company's shares at the date of grant. Options granted to consultants performing investor relations activities shall vest over a minimum of 12 months with no more than one-quarter of such options vesting in any three-month period. All other options vest at the discretion of the board. If approved by shareholders, all issued and outstanding stock options granted under the option plan will be ratified, continued and governed by the new option plan.

The company has granted 2,125,000 conditional stock options under the new option plan to the chief executive officer of the company at an exercise price of 12 cents per share. The conditional options will vest immediately and be exercisable for a 10-year term expiring July 10, 2033. The conditional options granted under the new option plan may not be exercised until disinterested shareholder approval has been received.

If approved by shareholders, the 2,125,000 conditional options will replace the existing performance bonus of the CEO that was approved by shareholders on June 30, 2021. This annual performance bonus is payable to a company controlled by the CEO and is calculated as 20 per cent of the increase in the market value of the company, if any, and is payable in treasury common stock. Moving the CEO to an approved stock-option-based compensation plan is better understood and accepted in the Canadian capital markets.

Shareholders will be asked to approve of the new option plan at the annual general and special meeting of shareholders to be held on Dec. 12, 2023. A copy of the management information circular for this meeting is available on SEDAR+.

We seek Safe Harbor.