Selling, general and administrative (“SG&A”) expenses for 2017 of $13.7 million were greater by $2.9 million, or
27%, compared to $10.8 million for the year ended December 31, 2016. Excluding: i) the impact of the reversal of
an indemnification liability of $0.5 million associated with an acquisition in 2004 included within the year ended
2016; and ii) the reversal of previously charged compensation expense for PSUs of $0.2 million also included within
the year ended 2016, SG&A expenses increased $2.2 million. This increase was due to: i) mark-to-market expenses 
totaling $1.2 million as a result of the increase in our share price for the year ended December 31, 2017 as compared
to the year ended December 31, 2016 (to C$14.00 from C$5.75); ii) an increase of $0.5 million in allowance for
doubtful accounts related to the collectability of a receivable related to a energy storage project; and iii) an increase
of $0.4 million relating to increased business activity, such as compensation costs tied to the achievement of targets,
legal fees and insurance costs. 
Research and product development (“R&D”) expenses were $6.4 million for the year ended December 31, 2017
compared to $3.6 million in 2016, an increase of $2.8 million, or 78%. In the Power Systems segment, the increase
represents increased spending on R&D, primarily for multi-megawatt energy storage projects specifically for our
Power-to-Gas facility with our Enbridge joint venture in Toronto, Canada, and mobility applications such as ongoing
development on the next generation of our fuel cell stack platform for mobility applications such as rail, trucks and
buses. While net R&D expenses also increased in the OnSite Generation segment, this increase was principally
due to a decline in funded R&D as there was a significant power-to-gas demonstration project ongoing in Denmark
in 2016. Overall gross R&D spending levels at OnSite Generation declined year-over-year. 
Net loss for the year ended December 31, 2017 was $11.1 million, or $0.80 per share, compared to a net loss of
$9.9 million, or $0.79 per share, for the prior year. While gross profit increased over $5.4 million, the increase in
SG&A expenses and R&D expenses, as discussed above, resulted in a consistent loss from operations when
compared to the year ended December 31, 2016. The increase in net loss in the current period reflects an increase
in other finance losses of $1.0 million. There was a $0.7 million loss on fair value adjustments relating to outstanding
and exercised warrants in the year ended December 31, 2017, whereas the year ended December 31, 2016
included a $0.8 million fair value gain related to outstanding warrants. This was offset by an increase in net foreign
currency gains (losses) from a loss of $0.3 million for the year ended December 31, 2016 to a gain of $0.6 million
in the current year.