Photon Control : Annual Information Form 2020

DATED March 18, 2021

ANNUAL INFORMATION FORM

For the fiscal year ended December 31, 2020

TABLE OF CONTENTS

GENERAL MATTERS AND FORWARD-LOOKING STATEMENTS ................................................................................ 4

Forward-Looking Statements ................................................................................................................................... 4

CORPORATE STRUCTURE ....................................................................................................................................... 6

GENERAL DEVELOPMENT OF THE BUSINESS .......................................................................................................... 7

Recent Developments .............................................................................................................................................. 7

Three Year History ................................................................................................................................................... 7

NARRATIVE DESCRIPTION OF THE BUSINESS .......................................................................................................... 9

Products and Industries ........................................................................................................................................... 9

Sales, Marketing and Distribution .......................................................................................................................... 10

Market Landscape .................................................................................................................................................. 10

Production and Services ......................................................................................................................................... 11

Specialized Skill and Knowledge ............................................................................................................................ 11

Competitive Conditions ......................................................................................................................................... 11

New Products ......................................................................................................................................................... 11

Components ........................................................................................................................................................... 12

Intellectual Property .............................................................................................................................................. 12

Cycles ..................................................................................................................................................................... 12

Economic Dependence .......................................................................................................................................... 12

Employees .............................................................................................................................................................. 12

Foreign Operations ................................................................................................................................................ 13

RISK FACTORS ...................................................................................................................................................... 13

DIVIDENDS ........................................................................................................................................................... 20

DESCRIPTION OF CAPITAL STRUCTURE ................................................................................................................. 20

MARKET FOR SECURITIES ..................................................................................................................................... 21

Trading Price and Volume ...................................................................................................................................... 21

Prior Sales .............................................................................................................................................................. 21

DIRECTORS AND EXECUTIVE OFFICERS ................................................................................................................. 22

Cease Trade Orders, Bankruptcies, Penalties or Sanctions .................................................................................... 24

Conflicts of Interest ................................................................................................................................................ 25

PROMOTERS ........................................................................................................................................................ 25

LEGAL PROCEEDINGS AND REGULATORY ACTIONS .............................................................................................. 25

Legal Proceedings .................................................................................................................................................. 25

Regulatory Actions ................................................................................................................................................. 25

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS ........................................................... 26

REGISTRAR AND TRANSFER AGENT ...................................................................................................................... 26

MATERIAL CONTRACTS ........................................................................................................................................ 26

EXPERTS ............................................................................................................................................................... 26

ADDITIONAL INFORMATION ................................................................................................................................ 26

AUDIT COMMITTEE .............................................................................................................................................. 27

Audit Committee Charter ....................................................................................................................................... 27

Composition of the Audit Committee .................................................................................................................... 27

Relevant Education and Experience ....................................................................................................................... 27

Audit Committee Oversight ................................................................................................................................... 28

Pre-Approval Policies and Procedures ................................................................................................................... 28

External Auditor Service Fees ................................................................................................................................ 28

SCHEDULE "A" PHOTON CONTROL INC. AUDIT COMMITTEE MANDATE .............................................................. 29

GENERAL MATTERS AND FORWARD-LOOKING STATEMENTS

Information contained in this Annual Information Form ("AIF") is provided as at December 31, 2020, unless otherwise specified. Unless the context otherwise requires, all references in this AIF to "PHOTON", "we", "us", "our" and the "Company" refer to Photon Control Inc. and its subsidiaries. In this AIF, references to "$", "Cdn$", "dollars" or "Canadian dollars" are to Canadian dollars. Unless otherwise indicated, all dollar amounts are expressed in Canadian dollars.

This AIF is prepared as of March 18, 2021 and should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2020 and management's discussion and analysis for the three months and year ended December 31, 2020. Additional information about the Company is available on SEDAR atwww.sedar.com.

Forward-Looking Statements

This AIF contains certain statements and information that are not based on historical facts and constitute forward-looking statements or forward-looking information within the meaning of Canadian securities laws (collectively, "forward-looking statements"), including our business outlook for the short and longer-term and statements regarding our strategy, plans and future operating performance. Forward-looking statements are provided to help you understand our views of our short and longer-term plans, expectations and prospects. We caution you that forward-looking statements may not be appropriate for other purposes.

Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, identified by words or phrases such as "expects", "is expected", "anticipates", "believes", "plans", "projects", "estimates", "assumes", "intends", "strategy", "goals", "objectives", "potential", "possible" or variations thereof or stating that certain actions, events, conditions or results "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements. Forward-looking statements are not promises or guarantees of future performance; they represent our current views and may change significantly. Forward-looking statements are based on a number of material assumptions, including, but not limited to, those listed below, which could prove to be significantly incorrect:

•  our ability to develop, manufacture and sell new products that meet the needs of our customers and gain commercial acceptance;

•  our ability to continue to sell our products in line with expected quantity, price and delivery times;

•  our ability to attract new business;

•  continued and future demand for the Company's products;

•  continued sales to the Company's major customers;

•  our operations not being adversely affected by supply, operating, cyber security, litigation or regulatory risks;

•  our ability to react to the cyclical nature of the semiconductor industry;

•  our ability to enhance revenue diversification and open new market opportunities; and

•  our expectations regarding market risk, including interest rate changes, tax changes and foreign currency fluctuations.

The forward-looking statements included in this report include, without limitation, statements relating to:

•  factors that we expect to drive continued demand for the Company's products;