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Basis of presentation These condensed interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on April 15, 2026. In the opinion of our management, the information in these condensed consolidated financial statements reflects all adjustments, all of which are of a normal and recurring nature necessary for a fair statement of the financial position and results of operations for the reported interim periods. We consider events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. The results of operations for interim periods are not necessarily indicative of results to be expected for the full year or any other interim period.

Functional and presentation currency These consolidated financial statements are presented in United States dollars, unless otherwise noted, which is the functional currency of the Company and its subsidiaries. The functional currency of our operating subsidiaries is generally the currency of the economic environment in which the subsidiary primarily does business. Our foreign subsidiaries’ financial statements are translated into U.S. dollars using the foreign exchange rates applicable to the dates of the financial statements. Assets and liabilities are translated using the end-of-period spot foreign exchange rates. Income, expenses, and cash flows are translated at the average foreign exchange rates for each period. Equity accounts are translated at historical foreign exchange rates. The effects of these translation adjustments are reported as a component of accumulated other comprehensive income (loss) (“AOCI”) in the consolidated statements of shareholders’ equity.

Basis of consolidation These condensed interim consolidated financial statements include the accounts of Versus Systems Inc. and its subsidiaries, from the date control was acquired. Control exists when the Company possesses power over an investee, has exposure to variable returns from the investee and has the ability to use its power over the investee to affect its returns. All inter-company balances and transactions, and any unrealized income and expenses arising from inter-company transactions, are eliminated on consolidation.

Use of estimates The preparation of these condensed interim consolidated statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements. Estimates and assumptions are continually evaluated and are based on historical experience and management’s assessment of current events and other facts and circumstances that are considered to be relevant. Actual results could differ from these estimates. Significant assumptions about the future and other sources of estimation uncertainty could result in material adjustments if actual results differ from management’s assumptions. These estimates and assumptions include valuing equity securities in share-based payments and warrants; and the impairment of intangible assets.

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%;"><tbody><tr style="vertical-align: top; text-align: justify;"><td style="width: 0.5in; text-align: left;">3.</td> <td style="text-align: justify;">SIGNIFICANT ACCOUNTING POLICIES</td> </tr></tbody></table> Basic and diluted loss per share Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common shareholders by the weighted average number of shares outstanding during the reporting periods. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share, except that the weighted average shares outstanding are increased to include additional shares for the assumed exercise of stock options and warrants, if dilutive. The number of additional shares is calculated by assuming that outstanding stock options and warrants were exercised and that the proceeds from such exercises were used to acquire common stock at the average market price during the reporting periods. The following shares have been excluded from earnings per share as their inclusion would be anti-dilutive, which include options as of June 30, 2026 of 320,557 (June 30, 2025 – 401,633) and warrants of 1,726,701 (June 30, 2025 – 1,733,741). Share-based compensation The Company grants stock options to acquire common shares of the Company to directors, officers, employees and consultants. An individual is classified as an employee when the individual is an employee for legal or tax purposes, or provides services similar to those performed by an employee. The fair value of stock options is measured on the date of grant, using the Black-Scholes option pricing model, and is recognized over the vesting period. Consideration paid for the shares on the exercise of stock options is credited to capital stock. In situations where equity instruments are issued to non-employees and some or all of the goods or services received by the Company as consideration cannot be specifically identified, they are measured at fair value of the share-based payment. Otherwise, share-based payments are measured at the fair value of goods or services received. Non-controlling interest Non-controlling interest in the Company’s less than wholly owned subsidiaries is classified as a separate component of equity. On initial recognition, non-controlling interest is measured at the fair value of the non-controlling entity’s contribution into the related subsidiary. Subsequent to the original transaction date, adjustments are made to the carrying amount of non-controlling interest for the non-controlling interest’s share of changes to the subsidiary’s equity. Provision for Credit Losses The Company accounts for credit losses on accounts receivable in accordance with ASC 326, Financial Instruments—Credit Losses. The Company evaluates its receivables based on shared risk characteristics and assesses the collectibility of the related balances. The allowance for expected credit losses is based on relevant available information, which may include historical collection experience, the aging of receivables, customer-specific factors, current conditions, and reasonable and supportable forecasts. Receivables may be evaluated individually when appropriate. Accounts are written off against the allowance when they are considered uncollectible. Changes in the allowance are recognized in the statement of operations. As of June 30, 2026, the Company recorded a receivable and a corresponding allowance for credit losses for the full amount of the receivable, as collection is not expected as it pertains to the $829,895 owed by the former CFO of the Company. Income Taxes The Company accounts for income taxes using the asset and liability method; under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax reporting basis of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. Realization of deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain. In evaluating the ability to recover its deferred income tax assets, the Company considers all available positive and negative evidence, including its operating results, ongoing tax planning and forecasts of future taxable income on a jurisdiction-by-jurisdiction basis. In the event the Company determines that it would be able to realize its deferred income tax assets in the future in excess of their net recorded amount, it would make an adjustment to the valuation allowance that would reduce the provision for income taxes. Conversely, if all or part of the net deferred tax assets are determined not to be realizable in the future, an adjustment to the valuation allowance would be charged to the provision of income taxes in the period when such determination is made. Tax benefits related to uncertain tax positions are recognized when it is more likely than not that a tax position will be sustained during an audit. Tax positions that meet the more-likely-than-not threshold are measured at the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement with the taxing authority. Interest and penalties related to unrecognized tax benefits are included within the provision for income tax. Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control are recorded as equity transactions. The carrying amount of non-controlling interest is adjusted to reflect the change in the non-controlling interest’s relative interest in the subsidiary, and the difference between the adjustment to the carrying amount of non-controlling interests and the Company’s share of proceeds received and/or consideration paid is recognized directly in equity and attributed to owners of the Company. No tax provision was recorded for the three and six months ended June 30, 2026 as a result of the forecasted loss for the full fiscal year and the availability of net operating losses to offset any potential income recognized, if any in fiscal 2026. The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Accounting Standards Codification ASC 606, Revenue from Contracts with Customers (“ASC 606”), the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only recognizes revenue from contracts when it is probable that the entity will collect substantially all the consideration it is entitled to in exchange for the goods or services it transfers to the customer. The Company earns revenue in two primary ways: 1) the sales of functional IP or 2) development and maintenance of custom-built software or other professional services. The Company recognizes revenue when or as the performance obligations in the contract are satisfied. For performance obligations that are fulfilled at a point in time, revenue is recognized at the fulfillment of the performance obligation. Since the IP is determined to be a functional license, the value of the grant of use is recognized in the first period of the contract term in which the license agreement is in force. The Company recognizes revenues received from the development and maintenance of custom-built software and other professional services provided upon the satisfaction of its performance obligation in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services. Performance obligations can be satisfied either at a single point in time or over time. For those performance obligations that are satisfied at a single point in time, the revenue is recognized at that time. For each performance obligation satisfied over time, the Company recognizes revenue by measuring the progress toward complete satisfaction of that performance obligation. The Company generally measures progress comparing hours incurred to total estimated hours. For revenues received from the sales of advertising, the Company is deemed the agent in its revenue agreements. The Company does not own or obtain control of the digital advertising inventory. The Company recognizes revenues upon the achievement of agreed-upon performance criteria for the advertising inventory, such as a number of views, or clicks. As the Company is acting as an agent in the transaction, the Company recognizes revenue from sales of advertising on a net basis, which excludes amounts payable to partners under the Company’s revenue sharing agreements. The Company’s contracts with customers may include promises to transfer multiple products and services. For these contracts, the Company accounts for individual performance obligations separately if they are capable of being distinct and distinct within the context of the contract. Determining whether products and services are considered distinct performance obligations may require significant judgment. Judgment is also required to determine the stand-alone selling price, for each distinct performance obligation. During the three months ended June 30, 2026 and 2025, the Company recognized $6,821 and no revenue attributed to its legacy Xcite business. During the six months ended June 30, 2026 and 2025, the Company recognized $24,121 and $23,348 of revenue attributed to its legacy Xcite business. During the three months ended June 30, 2026 and 2025 the Company recognized $1,485,000 and $1,980,000 of revenue attributed to its Technology License and Software Development Agreement with ASPIS. During the six months ended June 30, 2026 and 2025 the Company recognized $1,485,000 and $2,156,000 of revenue attributed to its agreement with ASPIS. License Revenue On April 30, 2025, pursuant to the Technology License and Software Development Agreement (the “License Agreement”) with ASPIS Cyber Technologies, Inc. (“ASPIS”), the Company delivered a functional license for its gamification, engagement, and QR code technology. ASPIS is an affiliate of Cronus Equity Capital Group, LLC (“CECG”), a significant shareholder of the Company. As of June 30, 2026, CECG beneficially owned approximately 15.94% of the Company’s outstanding common shares, and ASPIS beneficially owned approximately 55.79% of the Company’s outstanding common shares. Under the License Agreement, as amended by a side letter executed on August 11, 2025 and supported by a legal opinion and confirmation, the Initial Term is non-cancellable for twelve (12) months commencing April 30, 2025, with monthly license fees of $165,000 payable regardless of use. ASPIS will pay for any required technology modifications, improvements, and developments to Versus’ technology in addition to the license fee. The Company retains ownership of the technology, and ASPIS holds an exclusive license to use it in the cybersecurity industry so long as ASPIS continues to pay the monthly license fee. Since the license is a functional license and the performance obligation was satisfied upon delivery on April 30, 2025, the Company recognized the entire transaction price of $1,980,000 as revenue in the quarter ended June 30, 2025. Any required technology modifications, improvements, and developments are separately payable by ASPIS and are not included in the fixed monthly license fee. The remaining fixed consideration is billed monthly over the remaining term in accordance with the contract’s billing schedule and, because only the passage of time is required before payment is due, unpaid amounts are presented as receivables rather than contract assets. The Company invoices ASPIS with 30 day payment terms. On May 15, 2026, ASPIS renewed and extended its Technology License and Software Development Agreement with the Company. ASPIS will pay the Company a license fee of $165,000 per month through at least January 31, 2027. Since the license is a functional license and the performance obligation was satisfied upon delivery, the Company recognized the entire transaction price of $1,485,000 as revenue in the quarter ended June 30, 2026. The Company has elected the practical expedient under ASC 606-10-32-18 and does not adjust the consideration for the effects of a significant financing component if the Company expects that the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. Recent accounting pronouncements not yet adopted In November 2024, the FASB issued ASU No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (“Subtopic 220-40”). This ASU improves financial reporting by requiring that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. This ASU will be effective for annual periods beginning after December 15, 2026, for interim reporting periods beginning after December 15, 2027, with early adoption permitted. We are evaluating the potential impact of this guidance on our consolidated financial statements and related disclosures. In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). ASU 2025-06 was issued to modernize the accounting for software costs that are accounted for under Subtopic 350-40, Intangibles—Goodwill and Other—Internal-Use Software (referred to as “internal-use software”). ASU 2025-06 removes all references to prescriptive and sequential software development stages (referred to as “project stages”) throughout Subtopic 350-40. Therefore, an entity is required to start capitalizing software costs when both of the following occur: 1. Management has authorized and committed to funding the software project. 2. It is probable that the project will be completed and the software will be used to perform the function intended (referred to as the “probable-to-complete recognition threshold”). ASU 2025-06 is effective for the Company January 1, 2028. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s consolidated financial position and results of operations. Management does not believe any other recently issued but not yet effective accounting pronouncement, if adopted, would have a material effect on the Company’s present or future consolidated financial statements.

Basic and diluted loss per share Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common shareholders by the weighted average number of shares outstanding during the reporting periods. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share, except that the weighted average shares outstanding are increased to include additional shares for the assumed exercise of stock options and warrants, if dilutive. The number of additional shares is calculated by assuming that outstanding stock options and warrants were exercised and that the proceeds from such exercises were used to acquire common stock at the average market price during the reporting periods. The following shares have been excluded from earnings per share as their inclusion would be anti-dilutive, which include options as of June 30, 2026 of 320,557 (June 30, 2025 – 401,633) and warrants of 1,726,701 (June 30, 2025 – 1,733,741).

320557

401633

1726701

1733741

Share-based compensation The Company grants stock options to acquire common shares of the Company to directors, officers, employees and consultants. An individual is classified as an employee when the individual is an employee for legal or tax purposes, or provides services similar to those performed by an employee. The fair value of stock options is measured on the date of grant, using the Black-Scholes option pricing model, and is recognized over the vesting period. Consideration paid for the shares on the exercise of stock options is credited to capital stock. In situations where equity instruments are issued to non-employees and some or all of the goods or services received by the Company as consideration cannot be specifically identified, they are measured at fair value of the share-based payment. Otherwise, share-based payments are measured at the fair value of goods or services received.

Non-controlling interest Non-controlling interest in the Company’s less than wholly owned subsidiaries is classified as a separate component of equity. On initial recognition, non-controlling interest is measured at the fair value of the non-controlling entity’s contribution into the related subsidiary. Subsequent to the original transaction date, adjustments are made to the carrying amount of non-controlling interest for the non-controlling interest’s share of changes to the subsidiary’s equity.

Provision for Credit Losses The Company accounts for credit losses on accounts receivable in accordance with ASC 326, Financial Instruments—Credit Losses. The Company evaluates its receivables based on shared risk characteristics and assesses the collectibility of the related balances. The allowance for expected credit losses is based on relevant available information, which may include historical collection experience, the aging of receivables, customer-specific factors, current conditions, and reasonable and supportable forecasts. Receivables may be evaluated individually when appropriate. Accounts are written off against the allowance when they are considered uncollectible. Changes in the allowance are recognized in the statement of operations. As of June 30, 2026, the Company recorded a receivable and a corresponding allowance for credit losses for the full amount of the receivable, as collection is not expected as it pertains to the $829,895 owed by the former CFO of the Company.

829895

Income Taxes The Company accounts for income taxes using the asset and liability method; under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax reporting basis of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. Realization of deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain. In evaluating the ability to recover its deferred income tax assets, the Company considers all available positive and negative evidence, including its operating results, ongoing tax planning and forecasts of future taxable income on a jurisdiction-by-jurisdiction basis. In the event the Company determines that it would be able to realize its deferred income tax assets in the future in excess of their net recorded amount, it would make an adjustment to the valuation allowance that would reduce the provision for income taxes. Conversely, if all or part of the net deferred tax assets are determined not to be realizable in the future, an adjustment to the valuation allowance would be charged to the provision of income taxes in the period when such determination is made. Tax benefits related to uncertain tax positions are recognized when it is more likely than not that a tax position will be sustained during an audit. Tax positions that meet the more-likely-than-not threshold are measured at the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement with the taxing authority. Interest and penalties related to unrecognized tax benefits are included within the provision for income tax. Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control are recorded as equity transactions. The carrying amount of non-controlling interest is adjusted to reflect the change in the non-controlling interest’s relative interest in the subsidiary, and the difference between the adjustment to the carrying amount of non-controlling interests and the Company’s share of proceeds received and/or consideration paid is recognized directly in equity and attributed to owners of the Company. No tax provision was recorded for the three and six months ended June 30, 2026 as a result of the forecasted loss for the full fiscal year and the availability of net operating losses to offset any potential income recognized, if any in fiscal 2026.

The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Accounting Standards Codification ASC 606, Revenue from Contracts with Customers (“ASC 606”), the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only recognizes revenue from contracts when it is probable that the entity will collect substantially all the consideration it is entitled to in exchange for the goods or services it transfers to the customer. The Company earns revenue in two primary ways: 1) the sales of functional IP or 2) development and maintenance of custom-built software or other professional services. The Company recognizes revenue when or as the performance obligations in the contract are satisfied. For performance obligations that are fulfilled at a point in time, revenue is recognized at the fulfillment of the performance obligation. Since the IP is determined to be a functional license, the value of the grant of use is recognized in the first period of the contract term in which the license agreement is in force. The Company recognizes revenues received from the development and maintenance of custom-built software and other professional services provided upon the satisfaction of its performance obligation in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services. Performance obligations can be satisfied either at a single point in time or over time. For those performance obligations that are satisfied at a single point in time, the revenue is recognized at that time. For each performance obligation satisfied over time, the Company recognizes revenue by measuring the progress toward complete satisfaction of that performance obligation. The Company generally measures progress comparing hours incurred to total estimated hours. For revenues received from the sales of advertising, the Company is deemed the agent in its revenue agreements. The Company does not own or obtain control of the digital advertising inventory. The Company recognizes revenues upon the achievement of agreed-upon performance criteria for the advertising inventory, such as a number of views, or clicks. As the Company is acting as an agent in the transaction, the Company recognizes revenue from sales of advertising on a net basis, which excludes amounts payable to partners under the Company’s revenue sharing agreements. The Company’s contracts with customers may include promises to transfer multiple products and services. For these contracts, the Company accounts for individual performance obligations separately if they are capable of being distinct and distinct within the context of the contract. Determining whether products and services are considered distinct performance obligations may require significant judgment. Judgment is also required to determine the stand-alone selling price, for each distinct performance obligation. During the three months ended June 30, 2026 and 2025, the Company recognized $6,821 and no revenue attributed to its legacy Xcite business. During the six months ended June 30, 2026 and 2025, the Company recognized $24,121 and $23,348 of revenue attributed to its legacy Xcite business. During the three months ended June 30, 2026 and 2025 the Company recognized $1,485,000 and $1,980,000 of revenue attributed to its Technology License and Software Development Agreement with ASPIS. During the six months ended June 30, 2026 and 2025 the Company recognized $1,485,000 and $2,156,000 of revenue attributed to its agreement with ASPIS. License Revenue On April 30, 2025, pursuant to the Technology License and Software Development Agreement (the “License Agreement”) with ASPIS Cyber Technologies, Inc. (“ASPIS”), the Company delivered a functional license for its gamification, engagement, and QR code technology. ASPIS is an affiliate of Cronus Equity Capital Group, LLC (“CECG”), a significant shareholder of the Company. As of June 30, 2026, CECG beneficially owned approximately 15.94% of the Company’s outstanding common shares, and ASPIS beneficially owned approximately 55.79% of the Company’s outstanding common shares. Under the License Agreement, as amended by a side letter executed on August 11, 2025 and supported by a legal opinion and confirmation, the Initial Term is non-cancellable for twelve (12) months commencing April 30, 2025, with monthly license fees of $165,000 payable regardless of use. ASPIS will pay for any required technology modifications, improvements, and developments to Versus’ technology in addition to the license fee. The Company retains ownership of the technology, and ASPIS holds an exclusive license to use it in the cybersecurity industry so long as ASPIS continues to pay the monthly license fee. Since the license is a functional license and the performance obligation was satisfied upon delivery on April 30, 2025, the Company recognized the entire transaction price of $1,980,000 as revenue in the quarter ended June 30, 2025. Any required technology modifications, improvements, and developments are separately payable by ASPIS and are not included in the fixed monthly license fee. The remaining fixed consideration is billed monthly over the remaining term in accordance with the contract’s billing schedule and, because only the passage of time is required before payment is due, unpaid amounts are presented as receivables rather than contract assets. The Company invoices ASPIS with 30 day payment terms. On May 15, 2026, ASPIS renewed and extended its Technology License and Software Development Agreement with the Company. ASPIS will pay the Company a license fee of $165,000 per month through at least January 31, 2027. Since the license is a functional license and the performance obligation was satisfied upon delivery, the Company recognized the entire transaction price of $1,485,000 as revenue in the quarter ended June 30, 2026. The Company has elected the practical expedient under ASC 606-10-32-18 and does not adjust the consideration for the effects of a significant financing component if the Company expects that the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

6821

24121

23348

1485000

1980000

1485000

2156000

0.1594

0.5579

165000

1980000

165000

1485000

Recent accounting pronouncements not yet adopted In November 2024, the FASB issued ASU No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (“Subtopic 220-40”). This ASU improves financial reporting by requiring that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. This ASU will be effective for annual periods beginning after December 15, 2026, for interim reporting periods beginning after December 15, 2027, with early adoption permitted. We are evaluating the potential impact of this guidance on our consolidated financial statements and related disclosures. In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). ASU 2025-06 was issued to modernize the accounting for software costs that are accounted for under Subtopic 350-40, Intangibles—Goodwill and Other—Internal-Use Software (referred to as “internal-use software”). ASU 2025-06 removes all references to prescriptive and sequential software development stages (referred to as “project stages”) throughout Subtopic 350-40. Therefore, an entity is required to start capitalizing software costs when both of the following occur: 1. Management has authorized and committed to funding the software project. 2. It is probable that the project will be completed and the software will be used to perform the function intended (referred to as the “probable-to-complete recognition threshold”). ASU 2025-06 is effective for the Company January 1, 2028. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s consolidated financial position and results of operations. Management does not believe any other recently issued but not yet effective accounting pronouncement, if adopted, would have a material effect on the Company’s present or future consolidated financial statements.

0.819

668374

1492412

120976

270126

-80220

416551

-14520

75396

The following table presents summarized financial information before intragroup eliminations for the non-wholly owned subsidiary as of June 30, 2026 and December 31, 2025, respectively. <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">June 30, 2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">December 31, 2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td style="text-align: justify;"> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">($)</td> <td style="font-weight: bold;"> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">($)</td> <td style="font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td style="font-weight: bold; text-align: justify;">Assets</td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-align: justify;">Current</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">3,049,004</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">1,381,959</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: justify; padding-bottom: 1.5pt;">Non-current(1)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">1,263,000</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">609,000</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: justify; padding-bottom: 1.5pt;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right;">4,312,004</td> <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right;">1,990,959</td> <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"><td style="text-align: justify;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"><td style="font-weight: bold; text-align: justify;">Liabilities</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: justify;">Current</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">732,397</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">101,758</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: justify; padding-bottom: 1.5pt;">Non-current(2)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">45,877,727</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">45,877,726</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: justify;"> </td> <td style="font-weight: bold;"> </td> <td style="font-weight: bold; text-align: left;"> </td> <td style="font-weight: bold; text-align: right;">46,610,124</td> <td style="font-weight: bold; text-align: left;"> </td> <td style="font-weight: bold;"> </td> <td style="font-weight: bold; text-align: left;"> </td> <td style="font-weight: bold; text-align: right;">45,979,484</td> <td style="font-weight: bold; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="font-weight: bold; text-align: justify; padding-bottom: 1.5pt;">Net liabilities</td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right;">(42,298,120</td> <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;">)</td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right;">(43,988,525</td> <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;">)</td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="font-weight: bold; text-align: justify; padding-bottom: 1.5pt;">Non-controlling interest</td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right;">(8,287,138</td> <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;">)</td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right;">(8,272,619</td> <td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;">)</td> </tr></tbody></table>

3049004

1381959

1263000

609000

4312004

1990959

732397

101758

45877727

45877726

46610124

45979484

42298120

43988525

-8287138

-8272619

609000

2500000

0.5579 0.1594

1700000

1.05 1.05

1310969

1700000

165000

1485000

0.995 1 0.984 0.989 1

1596000

836000

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%;"><tbody><tr style="vertical-align: top; text-align: justify;"><td style="width: 0.5in; text-align: left;">7.</td> <td style="text-align: justify;">SHARE CAPITAL</td> </tr></tbody></table> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: top;"><td style="width: 0.5in;"> </td> <td style="width: 0.5in;">a)</td> <td style="text-align: justify;">Authorized share capital</td> </tr></tbody></table> The Company is authorized to issue three hundred million (300,000,000) shares, of which two hundred million (200,000,000) shares shall be Common Stock, and one hundred million (100,000,000) shares shall be Preferred Stock. <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: top;"><td style="width: 0.5in;"> </td> <td style="width: 0.5in;">b)</td> <td style="text-align: justify;">Issued share capital</td> </tr></tbody></table> During the three-and-six month periods ended June 30, 2026, the Company issued 1,310,969 shares of common stock for total proceeds of $1.7 million. During the three and six month periods ended June 30, 2025, the Company did not issue share capital. <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: top;"><td style="width: 0.5in;"> </td> <td style="width: 0.5in;">c)</td> <td style="text-align: justify;">Stock options</td> </tr></tbody></table> The Company may grant incentive stock options to its officers, directors, employees, and consultants. The Company has implemented a rolling Stock Option Plan (the “Plan”) whereby the Company can issue up to 15% of the issued and outstanding common shares of the Company. Options have a maximum term of ten years and vesting is determined by the Board of Directors. A continuity schedule of outstanding stock options is as follows: <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Number Outstanding</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Weighted Average Exercise Price</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td style="text-align: justify;"> </td> <td> </td> <td colspan="2" style="text-align: justify;"> </td> <td> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">($)</td> <td style="font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-align: justify;">Balance – December 31, 2025</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">401,557</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">2.57</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: justify; padding-left: 9pt;">Granted</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: justify; padding-left: 9pt;">Exercised</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: justify; padding-bottom: 1.5pt; padding-left: 9pt;">Forfeited</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(81,000</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">2.18</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: justify; padding-bottom: 1.5pt;">Balance – June 30, 2026</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">320,557</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">2.67</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: justify; padding-bottom: 1.5pt;">Vested and exercisable</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">250,557</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">2.80</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr></tbody></table> For the three months ended June 30, 2026 and 2025 the Company recorded share-based compensation of $15,619 and $21,476, respectively, relating to options vested during the period. For the six months ended June 30, 2026 and 2025 the Company recorded share-based compensation of $37,095 and $387,476, respectively, relating to options vested during the period. As of June 30, 2026, the remaining share-based compensation of $109,333 is expected to be recognized over 2.0 years. The remaining weighted average contractual term of the options outstanding as of June 30, 2026 is 8.70 years. The intrinsic value represents the difference between the fair market value of the Company’s common stock on the date of exercise and the exercise price of each option. Based on the fair market value of the Company’s common stock at June 30, 2026 the total intrinsic value of all outstanding options was none. The Company used the following assumptions in calculating the fair value of stock options for the period ended: <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: bottom;"><td style="text-align: center;"> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center;">June 30, 2025</td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: #CCEEFF;"> <td style="width: 89%;">Risk-free interest rate</td> <td style="width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="width: 8%; text-align: right;">4.03</td> <td style="width: 1%;">%</td> </tr><tr style="vertical-align: bottom;"> <td>Expected life of options</td> <td> </td> <td> </td> <td style="text-align: right;">5 years</td> <td style="text-align: center;"> </td> </tr><tr style="vertical-align: bottom; background-color: #CCEEFF;"> <td>Expected dividend yield</td> <td> </td> <td> </td> <td style="text-align: right;">Nil</td> <td> </td> </tr><tr style="vertical-align: bottom;"> <td>Volatility</td> <td> </td> <td> </td> <td style="text-align: right;">98.83</td> <td>%</td> </tr></tbody></table> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: top;"><td style="width: 0.5in;"> </td> <td style="width: 0.5in;">d)</td> <td style="text-align: justify;">Share purchase warrants</td> </tr></tbody></table> At June 30, 2026, the Company had share purchase warrants outstanding as follows: <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: bottom;"><td style="border-bottom: black 1.5pt solid;">Expiration Date</td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center;">Warrants Outstanding</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center;">Exercise Price</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center;">Weighted Average Remaining Life</td> <td> </td> </tr><tr style="vertical-align: bottom;"><td style="text-align: center;"> </td> <td> </td> <td colspan="2" style="text-align: center;"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: center;">($)</td> <td> </td> <td> </td> <td colspan="2" style="text-align: center;">(years)</td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: #CCEEFF;"> <td style="width: 67%;">February 28, 2027</td> <td style="width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="width: 8%; text-align: right;">20,689</td> <td style="width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="width: 8%; text-align: right;">460.80</td> <td style="width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="width: 8%; text-align: right;">0.57</td> <td style="width: 1%;"> </td> </tr><tr style="vertical-align: bottom;"> <td>December 6, 2027</td> <td> </td> <td> </td> <td style="text-align: right;">13,781</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;">20.00</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;">1.33</td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: #CCEEFF;"> <td>December 9, 2027</td> <td> </td> <td> </td> <td style="text-align: right;">9,876</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;">17.60</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;">1.00</td> <td> </td> </tr><tr style="vertical-align: bottom;"> <td>January 18, 2028</td> <td> </td> <td> </td> <td style="text-align: right;">25,906</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;">124.80</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;">1.58</td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: #CCEEFF;"> <td>February 2, 2028</td> <td> </td> <td> </td> <td style="text-align: right;">10,938</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;">14.40</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;">1.58</td> <td> </td> </tr><tr style="vertical-align: bottom;"> <td>October 17, 2028</td> <td> </td> <td> </td> <td style="text-align: right;">543,468</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;">3.68</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;">2.08</td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: #CCEEFF;"> <td>October 17, 2028</td> <td> </td> <td> </td> <td style="text-align: right;">24,457</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;">4.05</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;">2.08</td> <td> </td> </tr><tr style="vertical-align: bottom;"> <td>December 24, 2029</td> <td> </td> <td style="border-bottom: black 1.5pt solid;"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right;">1,077,586</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid;"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right;">4.00</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid;"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right;">3.17</td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: #CCEEFF;"> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid;"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right;">1,726,701</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid;"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right;">11.46</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid;"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right;">2.95</td> <td> </td> </tr></tbody></table>

300000000

200000000

100000000

1310969

1700000

0.15

A continuity schedule of outstanding stock options is as follows: <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Number Outstanding</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Weighted Average Exercise Price</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td style="text-align: justify;"> </td> <td> </td> <td colspan="2" style="text-align: justify;"> </td> <td> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">($)</td> <td style="font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-align: justify;">Balance – December 31, 2025</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">401,557</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">2.57</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: justify; padding-left: 9pt;">Granted</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: justify; padding-left: 9pt;">Exercised</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: justify; padding-bottom: 1.5pt; padding-left: 9pt;">Forfeited</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(81,000</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">2.18</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: justify; padding-bottom: 1.5pt;">Balance – June 30, 2026</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">320,557</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">2.67</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: justify; padding-bottom: 1.5pt;">Vested and exercisable</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">250,557</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">2.80</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr></tbody></table>

401557

2.57

81000

2.18

320557

2.67

250557

2.8

15619

21476

37095

387476

109333

P2Y

P8Y8M12D

The Company used the following assumptions in calculating the fair value of stock options for the period ended: <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: bottom;"><td style="text-align: center;"> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center;">June 30, 2025</td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: #CCEEFF;"> <td style="width: 89%;">Risk-free interest rate</td> <td style="width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="width: 8%; text-align: right;">4.03</td> <td style="width: 1%;">%</td> </tr><tr style="vertical-align: bottom;"> <td>Expected life of options</td> <td> </td> <td> </td> <td style="text-align: right;">5 years</td> <td style="text-align: center;"> </td> </tr><tr style="vertical-align: bottom; background-color: #CCEEFF;"> <td>Expected dividend yield</td> <td> </td> <td> </td> <td style="text-align: right;">Nil</td> <td> </td> </tr><tr style="vertical-align: bottom;"> <td>Volatility</td> <td> </td> <td> </td> <td style="text-align: right;">98.83</td> <td>%</td> </tr></tbody></table>

0.0403

P5Y

0.9883

At June 30, 2026, the Company had share purchase warrants outstanding as follows: <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: bottom;"><td style="border-bottom: black 1.5pt solid;">Expiration Date</td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center;">Warrants Outstanding</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center;">Exercise Price</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center;">Weighted Average Remaining Life</td> <td> </td> </tr><tr style="vertical-align: bottom;"><td style="text-align: center;"> </td> <td> </td> <td colspan="2" style="text-align: center;"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: center;">($)</td> <td> </td> <td> </td> <td colspan="2" style="text-align: center;">(years)</td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: #CCEEFF;"> <td style="width: 67%;">February 28, 2027</td> <td style="width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="width: 8%; text-align: right;">20,689</td> <td style="width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="width: 8%; text-align: right;">460.80</td> <td style="width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%;"> </td> <td style="width: 8%; text-align: right;">0.57</td> <td style="width: 1%;"> </td> </tr><tr style="vertical-align: bottom;"> <td>December 6, 2027</td> <td> </td> <td> </td> <td style="text-align: right;">13,781</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;">20.00</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;">1.33</td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: #CCEEFF;"> <td>December 9, 2027</td> <td> </td> <td> </td> <td style="text-align: right;">9,876</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;">17.60</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;">1.00</td> <td> </td> </tr><tr style="vertical-align: bottom;"> <td>January 18, 2028</td> <td> </td> <td> </td> <td style="text-align: right;">25,906</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;">124.80</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;">1.58</td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: #CCEEFF;"> <td>February 2, 2028</td> <td> </td> <td> </td> <td style="text-align: right;">10,938</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;">14.40</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;">1.58</td> <td> </td> </tr><tr style="vertical-align: bottom;"> <td>October 17, 2028</td> <td> </td> <td> </td> <td style="text-align: right;">543,468</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;">3.68</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;">2.08</td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: #CCEEFF;"> <td>October 17, 2028</td> <td> </td> <td> </td> <td style="text-align: right;">24,457</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;">4.05</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;">2.08</td> <td> </td> </tr><tr style="vertical-align: bottom;"> <td>December 24, 2029</td> <td> </td> <td style="border-bottom: black 1.5pt solid;"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right;">1,077,586</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid;"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right;">4.00</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid;"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right;">3.17</td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: #CCEEFF;"> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid;"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right;">1,726,701</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid;"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right;">11.46</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid;"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right;">2.95</td> <td> </td> </tr></tbody></table>

20689

460.8

P0Y6M25D

13781

P1Y3M29D

9876

17.6

P1Y

25906

124.8

P1Y6M29D

10938

14.4

P1Y6M29D

543468

3.68

P2Y29D

24457

4.05

P2Y29D

1077586

P3Y2M1D

1726701

11.46

P2Y11M12D

Our chief operating decision maker (“CODM”), the Chief Executive Officer, manages the Company’s business activities as a single operating and reportable segment at the consolidated level. Accordingly, our CODM uses consolidated net loss to measure segment profit or loss, allocate resources and assess performance. Further, the CODM reviews and utilizes functional expenses (cost of revenues, research and development, and general and administrative) at the consolidated level to manage the Company’s operations.

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: top;"><td style="width: 0.5in;">9.</td> <td style="text-align: justify;">COMMITMENTS AND CONTINGENCIES</td> </tr></tbody></table> From time to time the Company may become involved in other legal proceedings or be subject to claims arising in the ordinary course of business. Although the results of ordinary course litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these ordinary course matters will not have a material adverse effect on its business, financial condition, results of operations or cash flows. Regardless of the outcome, litigation can have an adverse impact because of defense and settlement costs, diversion of management resources and other factors. During the first quarter of 2026, the Audit Committee of the Board of Directors, with the assistance of outside advisors, completed an investigation into the misappropriation of Company assets by the Company’s former Chief Financial Officer. The investigation determined that, between the fourth quarter of 2024 and the first quarter of 2026, approximately $829,895 of Company funds had been misappropriated as follows for the quarters ended December 31, 2024, March 31, 2025, June 30, 2025, September 30, 2025, December 31, 2025 and March 31, 2026: $10,995, $124,868, $196,711, $155,792, $298,568, and $42,961, respectively. Management, under the oversight of the Audit Committee, evaluated the quantitative and qualitative significance of this matter, including the fact that it involved a former executive officer, in accordance with Staff Accounting Bulletin No. 99, Materiality, and Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. Based on that evaluation, management concluded that the amounts were not material to any previously issued annual or interim financial statements, individually or in the aggregate. Accordingly, the Company has not restated or revised any previously issued financial statements in connection with this matter. The Company determined that the misappropriated amounts related to historical operating expenditures and were recorded within operating expenses in the periods in which they were incurred; accordingly, no adjustments to previously issued financial statements were required. In March 2026, the Company’s former Chief Financial Officer executed a promissory note dated March 23, 2026 to repay the misappropriated funds. Under the terms of the promissory note, the principal amount was payable to the Company in two installments due on April 22, 2026 and June 21, 2026. The former Chief Financial Officer did not make the scheduled payments, therefore the Company is pursuing recovery of the amounts misappropriated; however, there can be no assurance that the Company will collect the promissory note in part or in full. No amounts have been repaid on the promissory note and no receivable was recorded as of June 30, 2026 as collection was not reasonably assured.

829895 10995 124868 196711 155792 298568 42961

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: top;"><td style="width: 0.5in;">10.</td> <td style="text-align: justify;">SUBSEQUENT EVENTS</td> </tr></tbody></table> The Company has evaluated subsequent events after the balance sheet date of June 30, 2026 through August 14, 2026, the date the consolidated financial statements were issued. Based upon its evaluation, management has determined that no subsequent events have occurred that would require recognition in the accompanying consolidated financial statements or disclosure in the notes thereto, except as described below: Nasdaq Deficiency Letter On April 29, 2026, the Nasdaq Stock Market, LLC (“Nasdaq”) issued a deficiency letter to the Company. The basis of the letter is that as of December 31, 2025, the Company did not maintain a minimum of $2,500,000 in stockholders’ equity as required for continued listing by Nasdaq Listing Rule 5550(b)(1). As disclosed in the Company’s Form 10-K for the period ended December 31, 2025, the Company had stockholders’ equity of $1,918,303. As of April 29, 2026, the Company did not meet the alternatives of market value of listed securities or net income from continuing operations. The deficiency letter has no immediate effect on the listing of the Company’s securities on Nasdaq. Nasdaq has provided the Company with 45 calendar days, or until June 13, 2026, to submit a plan to regain compliance with stockholders’ equity requirement. If the Company’s plan to regain compliance is accepted, Nasdaq may grant an extension until October 26, 2026, for the Company to regain compliance. The Company submitted its plans to regain compliance in June 2026. As disclosed in a Form 8-K filed on June 26, 2026, on that date, the Company consummated the transaction contemplated by its Stock Purchase Agreement with ASPIS dated April 15, 2026. Specifically, the Company issued 1,310,969 shares of Company common stock for total consideration of $1,700,000. In addition, on May 15, 2026, ASPIS renewed and extended its Technology License and Software Development Agreement with the Company. Pursuant to this amendment, the Company delivered a functional license for its gamification, engagement, and QR code technology, and ASPIS will pay the Company a license fee of $165,000 per month through at least January 31, 2027. Since the license is a functional license and the performance obligation was satisfied upon delivery, the Company recognized the entire transaction price of $1,485,000 as revenue in the quarter ended June 30, 2026. Nasdaq has advised the Company that Nasdaq will continue to monitor the Company’s ongoing compliance with the stockholders’ equity requirement and, if at the time of its next periodic report, the Company does not evidence compliance, that it may be subject to delisting. As a result of these transactions, as of July 27, 2026, the Company received a notice from Nasdaq noting the Company has regained compliance with the stockholders’ equity requirement.

2500000

1918303

1310969

1700000

165000

1485000

false false false false The Company reclassed $609,000 into long-term for the year ended December 31, 2025 attributable to intangible assets. Non-current liabilities primarily relate to intercompany balances within the consolidated group.