betrf_ex992.htm

EXHIBIT 99.2

BETTERLIFE PHARMA INC.

Condensed Consolidated Interim Financial Statements

Three and six months ended July 31, 2026 and 2025

(Expressed in Canadian dollars)

(Unaudited)

BETTERLIFE PHARMA INC.

Condensed Consolidated Interim Statements of Financial Position

(Expressed in Canadian dollars)

(Unaudited)

	July 31, 2026 $			January 31, 2026 $
Assets

Current assets
Cash		973,593			12,570
Accounts receivable		49,540			2,856
Prepaids and other current assets		1,023,348			204,477

Total assets		2,046,481			219,903

Liabilities and Shareholders’ Deficit

Current liabilities
Accounts payable and accrued liabilities		3,781,627			3,951,133
Due to related parties (Note 13)		2,100,826			1,415,082
Financial guarantee liability (Note 14(b))		425,828			412,854
Convertible debentures (Note 5)		1,970,603			285,311
Loans payable (Note 6)		74,354			74,298
Promissory notes (Note 7)		437,647			425,418
Warrant liabilities (Notes 9(a) and 9(b))		886,915			115,013

Total current liabilities		9,677,800			6,679,109

Non-current liabilities
Loans payable (Note 6)		26,327			27,174

Total liabilities		9,704,127			6,706,283

Deficit
Common shares (Note 8)		83,092,339			81,962,334
Subscriptions received		–			241,291
Reserves (Note 10)		28,543,100			27,902,617
Accumulated other comprehensive income		205,210			201,193
Accumulated deficit		(122,785,512	)		(120,091,493	)

Deficit attributable to shareholders		(10,944,863	)		(9,784,058	)
Non-controlling interests		3,287,217			3,297,678

Total deficit		(7,657,646	)		(6,486,380	)

Total liabilities and shareholders’ deficit		2,046,481			219,903

Nature of operations and going concern (Note 1) and commitments and contingencies (Note 14)

Approved on behalf of the Board of Directors

“John LaRocca”		Director

“Ralph Anthony Pullen”		Director

(The accompanying notes are an integral part of these condensed consolidated interim financial statements)

BETTERLIFE PHARMA INC.

Condensed Consolidated Interim Statements of Loss and Comprehensive Loss

(Expressed in Canadian dollars)

(Unaudited)

	Three Months Ended						Six Months Ended
	July 31, 2026 $			July 31, 2025 $			July 31, 2026 $			July 31, 2025 $

Expenses
Consulting fees		147,425			45,458			198,745			104,850
Foreign exchange loss (gain)		91,492			10,175			115,216			(149,889	)
General and administrative		77,777			78,444			102,015			131,687
Professional fees		113,177			126,292			199,384			176,988
Promotion and marketing		4,000			–			4,000			–
Research and development		66,620			1,578			88,122			15,201
Wages, salaries and employment expenses		766,622			259,858			1,144,750			553,651

Total expenses		1,267,113			521,805			1,852,232			832,488

Loss from operations		(1,267,113	)		(521,805	)		(1,852,232	)		(832,488	)

Other income (expenses)
Accretion expense (Notes 5 and 6)		(13,618	)		(19,204	)		(20,173	)		(49,098	)
Change in financial guarantee liability (Note 14(b))		(6,487	)		–			(12,974	)		–
Changes in fair values of warrant liabilities (Notes 9(a) and 9(b))		(751,633	)		65,274			(771,902	)		96,586
Gains from extinguishment/forgiveness of debts (Note 8(f))		–			–			35,820			149,993
Loss from modification of debts (Notes 5(b) and 5(c))		–			–			(6,500	)		–
Interest expense		(52,693	)		(28,376	)		(75,933	)		(75,584	)
Other		–			–			(273	)		(575	)

Total other (expenses) income		(824,431	)		17,694			(851,935	)		121,322

Net loss for the period		(2,091,544	)		(504,111	)		(2,704,167	)		(711,166	)

Other comprehensive income (loss) to be reclassified to profit and loss subsequently
Foreign currency translation adjustment of foreign operations		755			735			3,704			(475	)

Comprehensive loss for the period		(2,090,789	)		(503,376	)		(2,700,463	)		(711,641	)

Net (loss) income attributable to:
Shareholders		(2,084,763	)		(494,476	)		(2,694,019	)		(705,931	)
Non-controlling interests (Note 11)		(6,781	)		(9,635	)		(10,148	)		(5,235	)

		(2,091,544	)		(504,111	)		(2,704,167	)		(711,166	)

Comprehensive (loss) income attributable to:
Shareholders		(2,084,052	)		(493,841	)		(2,690,630	)		(706,395	)
Non-controlling interests (Note 11)		(6,737	)		(9,535	)		(9,833	)		(5,246	)

		(2,090,789	)		(503,376	)		(2,700,463	)		(711,641	)

Net loss per share, basic and diluted		(0.013	)		(0.003	)		(0.017	)		(0.005	)

Weighted average shares outstanding, basic and diluted		162,322,501			149,707,356			158,422,534			140,038,341

(The accompanying notes are an integral part of these condensed consolidated interim financial statements)

BETTERLIFE PHARMA INC.

Condensed Consolidated Interim Statements of Changes in Shareholders’ Deficit

(Expressed in Canadian dollars)

(Unaudited)

	Common Shares				Subscriptions						Accumulated Other Comprehensive Income - Foreign Currency									Non-controlling			Total
	Shares #		Amount $		Received $			Reserves $			Translation $			Deficit $			Total $			Interests $			Deficit $

Balance – January 31, 2025		129,573,385		79,965,358		43,100			27,714,189			195,825			(118,596,001	)		(10,677,529	)		3,315,380			(7,362,149	)
Settlement of accounts payable and due to related parties (Notes 8(f) and 13)		14,999,303		1,349,937		–			–			–			–			1,349,937			–			1,349,937
Exercise of warrants (Note 8(g))		250,000		27,348		–			(2,348	)		–			–			25,000		– –				25,000
Common shares issued on conversion of debentures (Notes 5(a), 5(c), 5(d) and 8(h))		7,016,042		615,635		–			19,286			–			–			634,921		– –				634,921
Subscriptions received (Note 8(i) and 13)		–		–		150,000			–			–			–			150,000			–			150,000
Share-based payments (Note 10)		–		–		–			102,833			–			–			102,833			–			102,833
Foreign currency translation adjustment of foreign operations		–		–		–			–			(464	)		–			(464	)		(11	)		(475	)
Net loss		–		–		–			–			–			(705,931	)		(705,931	)		(5,235	)		(711,166	)

Balance – July 31, 2025		151,838,730		81,958,278		193,100			27,833,960			195,361			(119,301,932	)		(9,121,233	)		3,310,134			(5,811,099	)

Balance – January 31, 2026		151,896,675		81,962,334		241,291			27,902,617			201,193			(120,091,493	)		(9,784,058	)		3,297,678			(6,486,380	)
Common shares issued for services (Note 8(a))		700,000		42,500		–			–			–			–			42,500			–			42,500
Common shares and warrants issued for cash (Note 8(b))		7,137,144		435,229		(241,291	)		64,371			–			–			258,309			–			258,309
Exercise of warrants (Note 8(d))		2,650,000		374,750		–			(39,750	)		–			–			335,000			–			335,000
Exercise of options (Note 8(e))		250,000		31,140		–			(13,640	)		–			–			17,500			–			17,500
Equity component of convertible debenture (Note 5)		–		–		–			77,792			–			–			77,792			–			77,792
Common shares issued on conversion of debentures (Notes 5(b), 5(c), 5(e) and 8(c))		2,916,822		246,386		–			48,391			–			–			294,777		– –				294,777
Share-based payments (Note 10)		–		–		–			503,319			–			–			503,319			–			503,319
Foreign currency translation adjustment of foreign operations		–		–		–			–			4,017			–			4,017			(313	)		3,704
Net loss		–		–		–			–			–			(2,694,019	)		(2,694,019	)		(10,148	)		(2,704,167	)

Balance – July 31, 2026		165,550,641		83,092,339		–			28,543,100			205,210			(122,785,512	)		(10,944,863	)		3,287,217			(7,657,646	)

(The accompanying notes are an integral part of these condensed consolidated interim financial statements)

BETTERLIFE PHARMA INC.

Condensed Consolidated Interim Statements of Cash Flows

(Expressed in Canadian dollars)

(Unaudited)

	Six Months Ended
	July 31, 2026 $			July 31, 2025 $
Operating activities

Net loss		(2,704,167	)		(711,641	)
Adjustments to reconcile net loss to net cash used in operating activities:
Accretion		20,173			49,098
Change in financial guarantee liability		12,973			–
Changes in fair values of warrant liabilities		771,901			(96,586	)
Common shares issued for services		42,500			–
Foreign exchange loss (gain)		115,216			(149,889	)
Gain from extinguishment/forgiveness of debts		(35,820	)		(149,993	)
Interest expense		(11,379	)		(51,797	)
Loss on modification of debts		6,500			–
Share-based payments		503,319			102,833
Changes in working capital accounts:
Accounts receivable		(46,684	)		2,431
Prepaids and other current assets		(818,871	)		7,160
Accounts payable and accrued liabilities		(194,248	)		64,314
Due to related parties		695,135			747,514
Net cash used in operating activities		(1,643,452	)		(186,556	)

Financing activities
Proceeds from issuance of convertible debenture		2,000,000			–
Proceeds from issuance of units, net		258,309			–
Proceeds from exercise of warrants		335,000			25,000
Proceeds from exercise of options		17,500			–
Proceeds from promissory notes		–			25,000
Proceeds from subscriptions received		–			150,000
Repayment of loan payable		(6,509	)		–
Net cash provided by financing activities		2,604,299			200,000

Effects of exchange rate changes on cash		176			539

Net change in cash		961,023			13,983
Cash – beginning of period		12,570			8,180
Cash – end of period		973,593			22,163

Supplemental cash flow disclosures (Note 12)

(The accompanying notes are an integral part of these condensed consolidated interim financial statements)

BETTERLIFE PHARMA INC.

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended July 31, 2026 and 2025

(Expressed in Canadian dollars)

(Unaudited)

1. Nature of Operations and Going Concern

BetterLife Pharma Inc. (the “Company”) was incorporated in British Columbia under the Business Corporations Act on June 10, 2002 whose common shares are publicly traded on the Canadian Securities Exchange under the symbol “BETR” and on the OTCQB under the symbol “BETRF”. The Company is a biopharmaceutical company engaged in the development of patented pharmaceuticals.

These condensed consolidated interim financial statements have been prepared on the going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. Should the Company be unable to continue as a going concern, it may be unable to realize the carrying value of its assets and to meet its liabilities as they become due.

As at July 31, 2026, the Company has not earned any revenue and has an accumulated deficit of $122,785,512 (January 31, 2026 - $120,091,493). During the three and six months ended July 31, 2026, the Company incurred a net loss of $2,091,544 and $2,704,167, respectively (three and six months ended July 31, 2025 – $504,111 and $711,166, respectively). During the six months ended July 31, 2026, the Company also incurred negative cash flows from operating activities of $1,643,452 (six months ended July 31, 2025 - $186,556). As at July 31, 2026, the Company’s current liabilities exceeded its current assets by $7,631,319 (January 31, 2026 - $6,459,206).

To date, the Company has funded operations through equity offerings and debt financings. As the Company is pre-commercialization and has limited liquidity, it explores alternatives to address its limited liquidity, including potential merger or business combinations in addition to equity and debt financings. There can be no assurances that any of the explored alternatives would be successful.

The continued operations and future viability of the Company are dependent on the ability:

	·	To raise cash flows from financing activities to cover operating losses and liabilities as they come due;
	·	To negotiate flexible payment terms with suppliers; and
	·	To cut costs to achieve its plans.

These events or conditions indicate that a material uncertainty existed at July 31, 2026 that casts substantial doubt on the Company’s ability to continue as a going concern and ultimately on the appropriateness of the use of accounting policies applicable to a going concern. These condensed consolidated interim financial statements do not reflect the adjustments or reclassifications of assets and liabilities which would be necessary if the Company were unable to continue its operations. Such adjustments could be material. Subsequent to July 31, 2026, the Company closed on a public offering for gross proceeds of $138,748,920 (Note 19(b)).

The head office and principal address of the Company is located at 1275 West 6^th Avenue, #300, Vancouver, BC, Canada, V6H 1A6.

BETTERLIFE PHARMA INC.

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended July 31, 2026 and 2025

(Expressed in Canadian dollars)

(Unaudited)

2. Material Accounting Policies

(a)

Basis of Compliance

These condensed consolidated interim financial statements have been prepared in accordance with IFRS® Accounting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and interpretations of the IFRS Interpretations Committee (“IFRIC”).

These condensed consolidated interim financial statements are unaudited and have been prepared in accordance with International Accounting Standards (“IAS”) 34, Interim Financial Reporting, using accounting policies which are consistent with IFRS as issued by the IASB. They do not include all of the information required for full annual consolidated financial statements in compliance with IAS 1, Presentation of Financial Statements.

These condensed consolidated interim financial statements follow the same accounting policies and methods of application as the most recent annual audited consolidated financial statements for the year ended January 31, 2026 and should be read in conjunction with those audited consolidated financial statements. These condensed consolidated interim financial statements were approved by the Board of Directors and authorized for issue on September 29, 2026.

	(b)	Basis of Measurement and Presentation

		These condensed consolidated interim financial statements have been prepared on a historical cost basis, except for certain financial instruments which are measured at fair value and are presented in Canadian dollars.

(c)

Basis of Consolidation

Subsidiaries

The condensed consolidated interim financial statements incorporate the financial statements of the Company and entities controlled by the Company. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Subsidiaries are fully consolidated from the date on which the Company obtains control and continue to be consolidated until the date that such control ceases. The financial statements of the subsidiaries are prepared for the same period as the parent company, using consistent accounting policies. The Company has consolidated the assets, liabilities, revenues and expenses of its subsidiaries after the elimination of inter-company transactions and balances.

The consolidating entities include:

	% of ownership	Jurisdiction

BetterLife Pharma Inc.	Parent	Canada
MedMelior Inc.	91%	Canada
Blife Therapeutics Inc.	100%	Canada
Altum Pharma (Australia) Pty Ltd.	91%⁽¹⁾	Australia
Altum Pharmaceuticals (HK) Limited	91%⁽¹⁾	Hong Kong

		(1) Wholly-owned subsidiaries of MedMelior Inc.

BETTERLIFE PHARMA INC.

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended July 31, 2026 and 2025

(Expressed in Canadian dollars)

(Unaudited)

2. Material Accounting Policies (continued)

		Non-controlling interests Non-controlling interests (“NCI”) represents the non-controlling shareholders’ portion of the net assets and net loss of MedMelior Inc. (“MedMelior”) and its wholly-owned subsidiaries. Changes to the Company’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

	(d)	Use of Estimates and Judgments

		The preparation of the condensed consolidated interim financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. For critical judgments used by management, refer to the Company’s most recent annual consolidated financial statements for the year ended January 31, 2026.

(e)

Foreign Currency

The Company’s presentation currency is the Canadian dollar. The functional currency of the parent entity, BetterLife Pharma Inc., and its subsidiaries, MedMelior and Blife Therapeutics Inc., is the Canadian dollar. The functional currency of the Hong Kong subsidiary, Altum Pharmaceuticals (HK) Limited, is the Hong Kong dollar. The functional currency of the Australian subsidiary, Altum Pharma (Australia) Pty Ltd., is the Australian dollar.

Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of the Company and its subsidiaries at the exchange rate in effect at the transaction date. Monetary assets and liabilities denominated in other than the functional currency are translated at the exchange rates in effect at the financial position date. The resulting exchange gains and losses are recognized in the condensed consolidated interim statements of loss and comprehensive loss. Non-monetary assets and liabilities denominated in other than the functional currency that are measured at fair value are translated to the functional currency at the exchange rate at the date that the fair value is determined. Non-monetary items that are measured in terms of historical cost in other than the functional currency are translated using the exchange rate at the date of transaction.

Foreign operations

For consolidation purposes, the assets and liabilities of foreign operations are translated to the presentation currency using the exchange rate prevailing at the financial position date. The income and expenses of foreign operations are translated to the presentation currency using the average rates of exchange during the period. All resulting exchange differences are recorded as other comprehensive income or loss and accumulated in a separate component of shareholders’ equity or deficit, described as foreign currency translation adjustment.

BETTERLIFE PHARMA INC.

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended July 31, 2026 and 2025

(Expressed in Canadian dollars)

(Unaudited)

2. Material Accounting Policies (continued)

	(f)	Comprehensive Income (Loss)

		Comprehensive income or loss is the change in net assets arising from transactions and other events and circumstances from non-owner sources. Financial assets that are measured at fair value through other comprehensive income will have revaluation gains and losses included in other comprehensive income or loss until the asset is removed from the condensed consolidated interim statement of financial position. Certain gains and losses on the translation of amounts between the functional and presentation currency of the Company are included in other comprehensive income or loss. Gains and losses on translation of foreign subsidiaries are initially recognized in other comprehensive income or loss. Accumulated other comprehensive income or loss on translation of foreign subsidiaries are reclassified from equity to deficit on disposal of the subsidiary.

	(g)	Income (Loss) Per Share

		The Company presents the basic and diluted earnings or loss per share data for its common shares, calculated by dividing the earnings or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the year. Diluted earnings or loss per share is determined by adjusting the earnings or loss attributable to common shareholders and the weighted average number of common shares outstanding for the effects of all dilutive potential common shares. For the three and six months ended July 31, 2026 and 2025, basic net loss per share equals diluted net loss per share as the Company incurred net losses during these years and the Company’s stock options and warrants were anti-dilutive.

3. New Accounting Pronouncements

The following new accounting standard and interpretation will be adopted by the Company subsequent to July 31, 2026.

IFRS 18 – Presentation and Disclosure in Financial Statements

In April 2024, the IASB issued IFRS 18 Presentation and Disclosure in Financial Statements, which will replace IAS 1 Presentation of Financial Statements. IFRS 18 will establish a revised structure for the consolidated statements of comprehensive income and improve comparability across entities and reporting periods. IFRS 18 is effective for annual periods beginning on or after January 1, 2027, with early adoption permitted. The new standard is required to be adopted retroactively, with certain transition provisions. The Company is evaluating the impact of adopting IFRS 18 on the condensed consolidated interim financial statements.

The following new accounting standard and interpretation has been adopted by the Company effective February 1, 2026.

BETTERLIFE PHARMA INC.

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended July 31, 2026 and 2025

(Expressed in Canadian dollars)

(Unaudited)

3. New Accounting Pronouncements (continued)

IFRS 9 – Financial Instruments and IFRS 7 – Financial Instruments: Disclosures

In May 2024, the IASB issued amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures, to provide further guidance on the timing of recognition and derecognition of financial instruments at settlement date, except for regular way purchases or sales of financial assets, and certain financial liabilities meeting conditions for a new exception which permits companies to elect to derecognize certain financial liabilities settled via electronic payment systems earlier than the settlement date. Additional guidance was also provided on assessing whether a financial asset meets the solely payments of principal and interest criterion, and issued new disclosure requirements. This amendment was effective for annual periods beginning on or after January 1, 2026. The Company has determined that there is no material impact to its condensed consolidated interim financial statements on adoption.

4. Intangible Assets

The Company is currently developing several drug candidates and holds a portfolio of patents related to them. The relevant intangible assets have been fully impaired in prior years and currently are recorded at carrying values of $nil.

5. Convertible Debentures

	Convertible Debentures $

Balance, January 31, 2025		820,553
Accretion and interest		105,473
Conversion (Notes 5(a), 5(c), 5(d), 8(h) and 13)		(640,715	)

Balance, January 31, 2026		285,311
Proceeds from issuance of convertible debenture (Note 5(f))		2,000,000
Transfer of conversion component to equity (Note 5(f))		(77,792	)
Loss on modification (Notes 5(b) and 5(c))		6,500
Accretion and interest		51,361
Conversion (Notes 5(b), 5(c), 5(e), 8(c) and 13)		(294,777	)

Balance, July 31, 2026		1,970,603

	(a)	On December 31, 2023, the Company issued unsecured convertible debentures for $300,000. The debentures bear interest at 10% per annum, have a maturity date of June 30, 2025 and are convertible into units, with each unit consisting of one common share and one share purchase warrant, at a conversion price equal to $0.10 per unit. Each share purchase warrant received on conversion will have an exercise price of $0.10 per warrant and will expire on December 31, 2025. The effective interest rate had been determined to be 15.1% per annum.

		In May and July 2024, principal and accrued interest of $300,000 and $3,534, respectively, were converted into a total of 3,035,342 common shares and 3,035,342 share purchase warrants of the Company. Carrying value of $263,498 of convertible debentures was allocated to common shares. The residual method was used to allocate the proceeds between the common shares and the warrants which resulted in a value of $nil allocated to the warrants.

BETTERLIFE PHARMA INC.

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended July 31, 2026 and 2025

(Expressed in Canadian dollars)

(Unaudited)

5. Convertible Debentures (continued)

		In May 2025, accrued interest totaling $993 was converted into a total of 9,932 common shares and 9,932 share purchase warrants of the Company. Carrying value of $844 of accrued interest was allocated to common shares (Note 8(h)). The residual method was used to allocate the proceeds between the common shares and the warrants which resulted in a value of $149 allocated to the warrants (Note 9(c)).

		At July 31, 2026, no convertible debentures related to the December 31, 2023 issuance remain outstanding.

	(b)	On February 29, 2024, the Company issued unsecured convertible debentures for $65,000. The debentures bear interest at 10% per annum, have maturity date of February 28, 2026 and are convertible into units, with each unit consisting of one common share and one share purchase warrant, at a conversion price equal to $0.10 per unit. Each share purchase warrant received on conversion will have an exercise price of $0.10 per warrant and will expire on August 31, 2026. The effective interest rate had been determined to be 13.6% per annum.

		Transaction costs totaling $8,955 consisted of the following: 78,000 brokers’ warrants with fair value of $3,755 and brokers’ fee of $5,200. Brokers’ warrants entitle the holder to purchase one common share at an exercise price of $0.10 and expire on February 28, 2026. The fair values of brokers’ warrants were determined using the fair values of the common shares issued as values of services provided could not be estimated reliably. The Company used the Black-Scholes option pricing model to value the brokers’ warrants.

		In July 2024, principal of $35,000 was converted into 350,000 common shares and 350,000 share purchase warrants of the Company. Carrying value of $28,077 of convertible debentures was allocated to common shares. The residual method was used to allocate the proceeds between the common shares and the warrants which resulted in a value of $nil allocated to the warrants.

		In April 2026, maturity date for $30,000 in principal amount of convertible debentures was extended to February 28, 2027. During the three and six months ended July 31, 2026, the Company recorded a loss on modification of debts of $nil and $2,895, respectively, in its condensed consolidated interim statements of loss and comprehensive loss (three and six months ended July 31, 2025 - $nil and $nil, respectively).

		In July 2026, principal and accrued interest of $30,000 and $5,244, respectively, were converted into a total of 352,438 common shares and 352,438 share purchase warrants of the Company. Carrying value of $44,022 of convertible debentures was allocated to common shares (Note 8(c)). The residual method was used to allocate the proceeds between the common shares and the warrants which resulted in a value of $nil allocated to the warrants (Note 9(c)).

		At July 31, 2026, no convertible debentures related to the February 29, 2024 issuance remain outstanding.

	(c)	On March 28, 2024, the Company issued unsecured convertible debentures for $780,000. The debentures bear interest at 10% per annum, have maturity date of March 27, 2026 and are convertible into units, with each unit consisting of one common share and one share purchase warrant, at a conversion price equal to $0.10 per unit. Each share purchase warrant received on conversion will have an exercise price of $0.10 per warrant and will expire on September 27, 2026. The effective interest rate has been determined to be 13.4% per annum.

BETTERLIFE PHARMA INC.

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended July 31, 2026 and 2025

(Expressed in Canadian dollars)

(Unaudited)

5. Convertible Debentures (continued)

		Transaction costs totaling $19,906 consisted of the following: 168,000 brokers’ warrants with fair value of $8,706 and brokers’ fee of $11,200. Brokers’ warrants entitle the holder to purchase one common share at an exercise price of $0.10 and expire on March 27, 2026. The fair values of brokers’ warrants were determined using the fair values of the common shares issued as values of services provided could not be estimated reliably. The Company used the Black-Scholes option pricing model to value the brokers’ warrants.

		In July 2024, principal and accrued interest of $295,000 and $3,370, respectively, were converted into a total of 2,983,699 common shares and 2,983,699 share purchase warrants of the Company. Carrying value of $241,174 of convertible debentures was allocated to common shares. The residual method was used to allocate the proceeds between the common shares and the warrants which resulted in a value of $nil allocated to the warrants.

		In March 2025, principal and accrued interest of $50,000 and $4,233, respectively, were converted into a total of 542,329 common shares and 542,329 share purchase warrants of the Company. Carrying value of $54,233 of convertible debentures was allocated to common shares (Note 8(h)). The residual method was used to allocate the proceeds between the common shares and the warrants which resulted in a value of $5,093 allocated to the warrants (Note 9(c)).

		In May and October 2025, principal and accrued interest of $200,000 and $43,082, respectively, were converted into a total of 2,430,822 common shares and 2,430,822 share purchase warrants of the Company. Carrying value of $205,751 of convertible debentures was allocated to common shares. The residual method was used to allocate the proceeds between the common shares and the warrants which resulted in a value of $63,384 allocated to the warrants.

		In April 2026, maturity date for $35,000 in principal amount of convertible debentures was extended to March 27, 2027. During the three and six months ended July 31, 2026, the Company recorded a loss on modification of debts of $nil and $3,605, respectively, in its condensed consolidated interim statements of loss and comprehensive loss (three and six months ended July 31, 2025 - $nil and $nil, respectively).

		In March and July 2026, principal and accrued interest of $235,000 and $21,222, respectively, were converted into a total of 2,562,220 common shares and 2,562,220 share purchase warrants of the Company. Carrying value of $202,213 of convertible debentures was allocated to common shares (Note 8(c)). The residual method was used to allocate the proceeds between the common shares and the warrants which resulted in a value of $110,519 allocated to the warrants (Note 9(c)).

		At July 31, 2026, no convertible debentures related to the March 28, 2024 issuance remain outstanding.

	(d)	On April 2, 2024, the Company issued unsecured convertible debentures for $368,000. The debentures bear interest at 10% per annum, have maturity date of April 1, 2026 and are convertible into units, with each unit consisting of one common share and one share purchase warrant, at a conversion price equal to $0.10 per unit. Each share purchase warrant received on conversion will have an exercise price of $0.10 per warrant and will expire on October 1, 2026. The effective interest rate has been determined to be 13.6% per annum.

BETTERLIFE PHARMA INC.

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended July 31, 2026 and 2025

(Expressed in Canadian dollars)

(Unaudited)

5. Convertible Debentures (continued)

		In May 2025, principal and accrued interest of $368,000 and $41,090, respectively, were converted into a total of 4,090,904 common shares and 4,090,904 share purchase warrants of the Company. Carrying value of $358,863 of convertible debentures was allocated to common shares (Note 8(h)). The residual method was used to allocate the proceeds between the common shares and the warrants which resulted in a value of $97,935 allocated to the warrants (Note 9(c)).

		At July 31, 2026, no convertible debentures related to the April 2, 2024 issuance remain outstanding.

	(e)	On April 30, 2024, the Company issued unsecured convertible debentures for $30,000. The debentures bear interest at 10% per annum, have maturity date of April 29, 2026 and are convertible into units, with each unit consisting of one common share and one share purchase warrant, at a conversion price equal to $0.10 per unit. Each share purchase warrant received on conversion will have an exercise price of $0.10 per warrant and will expire on October 29, 2026. The effective interest rate has been determined to be 13.5% per annum.

		Transaction costs totaling $4,545 consisted of the following: 36,000 brokers’ warrants with fair value of $2,145 and brokers’ fee of $2,400. Brokers’ warrants entitle the holder to purchase one common share at an exercise price of $0.10 and expire on April 29, 2026. The fair values of brokers’ warrants were determined using the fair values of the common shares issued as values of services provided could not be estimated reliably. The Company used the Black-Scholes option pricing model to value the brokers’ warrants.

		In October and December 2024, principal totaling $30,000 was converted into 300,000 common shares and 300,000 share purchase warrants of the Company. Carrying value of $31,426 of convertible debentures was allocated to common shares. The residual method was used to allocate the proceeds between the common shares and the warrants which resulted in a value of $nil allocated to the warrants.

		In March 2026, accrued interest of $216 were converted into a total of 2,164 common shares and 2,164 share purchase warrants of the Company. The residual method was used to allocate the proceeds between the common shares and the warrants which resulted in a value of $65 allocated to the warrants (Note 9(c)).

		At July 31, 2026, no convertible debentures related to the April 30, 2024 issuance remain outstanding.

	(f)	On June 3, 2026, the Company issued an unsecured convertible debenture for $2,000,000 (Note 13). The debenture bears interest at 10% per annum, has a maturity date of June 1, 2027 and is convertible into units, with each unit consisting of one common share and one share purchase warrant, at a conversion price equal to $0.06 per unit. Each share purchase warrant received on conversion will have an exercise price of $0.10 per warrant and will expire on June 1, 2029. The effective interest rate had been determined to be 13.5% per annum.

BETTERLIFE PHARMA INC.

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended July 31, 2026 and 2025

(Expressed in Canadian dollars)

(Unaudited)

5. Convertible Debentures (continued)

The convertible debentures contained no financial covenants. The liability components of the convertible debentures were determined by using discounted cash flows to measure the fair values of similar liabilities that exclude convertibility features. Accretion expense on convertible debentures for the three and six months ended July 31, 2026 was $10,580 and $14,551, respectively (three and six months ended July 31, 2025 - $14,534 and $40,102, respectively). As at July 31, 2026, accrued interest of $36,808 (January 31, 2026 - $26,011) was included in convertible debentures.

6. Loans Payable

	BetterLife $			MedMelior $			Loans Payable $

Balance, January 31, 2025		49,206			49,962			99,168
Loan extinguishment		–			(9,949	)		(9,949	)
Interest payment		(3,000	)		(3,660	)		(6,660	)
Principal payment		–			(4,928	)		(4,928	)
Accretion and interest		12,492			11,349			23,841

Balance, January 31, 2026		58,698			42,774			101,472
Interest payment		(1,488	)		(1,290	)		(2,778	)
Principal payment		–			(6,510	)		(6,510	)
Accretion and interest		3,724			4,773			8,497

Balance, July 31, 2026		60,934			39,747			100,681
Current, July 31, 2026		60,934			13,420			74,354
Non-current, July 31, 2026		–			26,327			26,327

Balance, July 31, 2026		60,934			39,747			100,681

In February 2021, the Company and its subsidiary, MedMelior, each entered into Canada Emergency Business Account (“CEBA”) term loan agreements for $60,000 with an initial expiry date of December 31, 2022 (amended to January 18, 2024) and interest rate of nil% per annum during this initial term.

The Company’s CEBA term loan matures on December 31, 2026 and has an interest rate of 5% per annum. MedMelior’s CEBA term loan has an interest rate of 5% per annum. In September 2025, MedMelior’s CEBA term loan was modified with the following new terms: Repayment of $1,300 per month through September 2027 and repayment of $28,658 on October 15, 2027.

Accretion expense for the three and six months ended July 31, 2026 was $3,142 and $5,726, respectively (three and six months ended July 31, 2025 - $4,670 and $8,996, respectively). As at July 31, 2026, accrued interest of $274 (January 31, 2026 - $90) was included in loans payable.

BETTERLIFE PHARMA INC.

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended July 31, 2026 and 2025

(Expressed in Canadian dollars)

(Unaudited)

7. Promissory Notes

	Promissory Notes $
Balance, January 31, 2025		–
Proceeds from issuances of promissory notes (Notes 7(a) and 7(b))		411,000
Interest		14,418
Balance, January 31, 2026		425,418
Interest		12,229
Balance, July 31, 2026		437,647

	(a)	On June 5, 2025, the Company issued unsecured promissory notes for $275,000. The promissory notes bear interest at 6% per annum and have an original maturity date of May 31, 2026 (extended to December 31, 2026. In September 2026, principal and accrued interest on this promissory note was fully repaid (Note 19(c)).

	(b)	On October 31, 2025, the Company issued an unsecured promissory note of $136,000. The promissory note bear interest at 6% per annum and have an original maturity date of May 31, 2026 (extended to December 31, 2026. In September 2026, principal and accrued interest on this promissory note was fully repaid (Note 19(c)).

As at July 31, 2026, accrued interest of $26,647 (January 31, 2026 - $14,418) was included in promissory notes (Note 13).

8. Common Shares

Authorized: Unlimited number of common shares without par value

During the six months ended July 31, 2026:

	(a)	The Company issued 700,000 common shares valued at $42,500 to a third party for services provided.

	(b)	On April 15, 2026, the Company closed on a non-brokered private placement and issued 7,137,143 units at price of $0.07 per unit for gross proceeds of $499,600 (Note 13). Each unit consisted of one common share and one share purchase warrant entitling the holder to purchase one common share at an exercise price of $0.10 or US$0.075 and expiring on April 15, 2028. The residual method was used to allocate the proceeds between the common shares and the warrants which resulted in a value of $nil allocated to 700,000 liability-classified warrants (Note 9(a)) and $64,371 allocated to 6,437,143 equity-classified warrants (Note 9(c)).

	(c)	The Company issued units pursuant to conversion of convertible debentures at conversion price of $0.10 as follows (Notes 5(b), 5(c) and 5(e)):

BETTERLIFE PHARMA INC.

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended July 31, 2026 and 2025

(Expressed in Canadian dollars)

(Unaudited)

8. Common Shares (continued)

	Allocated To				Number of
Issuance Date of Convertible Debentures	Common Shares $		Warrants $		Common Shares Issued		Warrants Granted

February 29, 2024		44,022		–		352,438		352,438
March 28, 2024		202,213		110,519		2,562,220		2,562,220
April 30, 2024		151		65		2,164		2,164
		246,386		110,584		2,916,822		2,916,822

	(d)	The Company issued 2,650,000 common shares pursuant to the exercise of 2,650,000 share purchase warrants for gross proceeds of $335,000. $39,750 previously recorded as fair value of share purchase warrants were reclassified to common shares during the six months ended July 31, 2026.

	(e)	The Company issued 250,000 common shares pursuant to the exercise of 250,000 share purchase options for gross proceeds of $17,500. $13,640 previously recorded as fair value of share purchase options were reclassified to common shares during the six months ended July 31, 2026.

During the six months ended July 31, 2025:

	(f)	On April 30, 2025, the Company issued 14,999,303 common shares with a fair value of $1,349,937 pursuant to the settlement of accounts payable and amounts due to related parties totaling $1,499,930 (Note 13). A gain on settlement of debts of $149,993 was recorded within gains from extinguishment/forgiveness of debts on the condensed consolidated interim statements of loss and comprehensive loss.

	(g)	The Company issued 250,000 common shares pursuant to the exercise of 250,000 share purchase warrants for proceeds of $25,000. $2,348 previously recorded as fair value of share purchase warrants were reclassified to common shares during the six months ended July 31, 2025.

	(h)	The Company issued units pursuant to conversion of convertible debentures at conversion price of $0.10 as follows (Notes 5(a), 5(c) and 5(d)):

	Allocated To				Number of
Issuance Date of Convertible Debentures	Common Shares $		Warrants $		Common Shares Issued		Warrants Granted

December 31, 2023		844		149		9,932		9,932
March 28, 2024		255,927		66,739		2,915,205		2,915,205
April 2, 2024		358,863		97,935		4,090,905		4,090,905
		615,635		164,823		7,016,042		7,016,042

(i)

The Company received $150,000 in subscription proceeds.

BETTERLIFE PHARMA INC.

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended July 31, 2026 and 2025

(Expressed in Canadian dollars)

(Unaudited)

9. Share Purchase Warrants

	(a)	Warrant liabilities

		At July 31, 2026, the Company has 4,271,429 share purchase warrants with exercise prices denominated in U.S. dollars (January 31, 2026 – 3,571,429). When non-compensatory warrants have an exercise price denominated in a currency which is different from the functional currency of the Company (Canadian dollar), the warrants are treated as financial liabilities. These warrants are therefore classified as financial liabilities with changes in fair value recognized in the condensed consolidated interim statements of loss and comprehensive loss. The warrant liabilities are measured using Level 3 inputs within the fair value hierarchy.

		The following table summarizes the continuity of liability-classified warrants:

	Number of Warrants		Weighted Average Exercise Price US$		Weighted Average Remaining Contractual Life (Years)		Liability Amount $
Balance, January 31, 2025		3,571,429		0.11		3.12		304,438
Change in fair value		–		–		–		(189,425	)
Balance, January 31, 2026		3,571,429		0.11		2.12		115,013
Granted (Note 8(b))		700,000		0.075		2.00		–
Change in fair value		–		–		–		771,902
Balance, July 31, 2026		4,271,429		0.10		1.64		886,915

At July 31, 2026, the following liability-classified warrants were outstanding:

Number of Warrants		Exercise Price US$		Expiry Date
	3,571,429		0.11	March 14, 2028
	700,000		0.075	April 15, 2028
	4,271,429

The fair values of warrant liabilities at July 31, 2026 and January 31, 2026 were estimated using the Black-Scholes option pricing model with the following assumptions:

	July 31, 2026			January 31, 2026
Risk free interest rates		2.88	%		2.56	%
Volatilities	121% to 122		%		121	%
Market prices of common shares	US$0.21			US$0.038
Expected dividends	Nil		%	Nil		%
Expected lives	1.62 to 1.70 years			2.12 years
Exercise prices	US$0.075 to US$0.11			US$0.11
Fair values of warrants	US$0.15 to US$0.16			US$0.02

BETTERLIFE PHARMA INC.

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended July 31, 2026 and 2025

(Expressed in Canadian dollars)

(Unaudited)

9. Share Purchase Warrants (continued)

	(b)	Warrant liabilities of MedMelior

		When non-compensatory warrants have an exercise price denominated in a currency which is different from the functional currency of MedMelior (Canadian dollar), the warrants are treated as financial liabilities. These warrants were therefore classified as financial liabilities with changes in fair value recognized in the condensed consolidated interim statements of loss and comprehensive loss. The warrant liabilities were measured using Level 3 inputs within the fair value hierarchy.

		The following table summarizes the continuity of liability-classified warrants of MedMelior:

Number of Warrants

Weighted Average Exercise Price

US$

Weighted Average Remaining Contractual Life (Years)

Liability

Amount

Balance, January 31, 2025

221,333

1.25

0.31

8,498

Expired

(221,333

)

(1.25

)

–

Change in fair value

–

(8,498

)

Balance, January 31, 2026 and July 31, 2026

–

		At July 31, 2026, there were no liability-classified warrants of MedMelior outstanding (January 31, 2026 – nil).

	(c)	Equity-classified warrants

		The following table summarizes the continuity of equity-classified share purchase warrants:

	Number of Warrants			Weighted Average Exercise Price $			Weighted Average Remaining Contractual Life (years)

Balance, January 31, 2025		43,491,339			0.20			1.89
Granted (Notes 5(a), 5(c), 5(d) and 8(h))		7,073,987			0.10			1.33
Expired		(12,385,573	)		(0.36	)		–
Exercised		(250,000	)		(0.10	)		–
Balance, January 31, 2026		37,929,753			0.13			1.28
Granted (Notes 5(b), 5(c), 5(e), 8(b) and 8(c))		9,353,965			0.10			1.83
Exercised (Note 8(d))		(2,650,000	)		(0.13	)		–
Expired		(5,582,000	)		(0.13	)		–
Balance, July 31, 2026		39,051,718			0.12			1.40

BETTERLIFE PHARMA INC.

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended July 31, 2026 and 2025

(Expressed in Canadian dollars)

(Unaudited)

9. Share Purchase Warrants (continued)

At July 31, 2026, the following equity-classified warrants were outstanding:

Number of Warrants		Exercise Price $		Expiry Date

	1,750,000		0.13	July 1, 2027¹
	1,700,000		0.10	August 30, 2026
	702,439		0.10	August 31, 2027¹
	8,154,520		0.10	September 27, 2027¹
	4,090,904		0.10	October 1, 2027¹
	416,712		0.10	October 29, 2027¹
	13,600,000		0.15	March 14, 2028
	6,437,143		0.10	April 15, 2028
	2,200,000		0.15	July 9, 2028
	39,051,718

Maturity dates were extended for a further one-year period from original expiry dates in June 2026.

The fair values of equity-classified warrants issued pursuant to conversion of convertible debentures (Notes 5(b), 5(c), 5(e), 8(c) and 8(h)) and private placement (Note 8(b)) were estimated using the residual method.

During the six months ended July 31, 2026 and 2025, there were no equity-classified warrants issued pursuant to which fair values were required to be estimated using the Black-Scholes option pricing model.

10. Long-term Incentive Plans

Effective October 1, 2019, the Company adopted a long-term incentive plan. Under this plan, the Company may grant share purchase options, RSUs, PSUs or deferred share units to its directors, officers, employees and consultants up to an amount as determined by the Company and will be no more than 10% of its outstanding common shares on a fully-diluted basis. RSUs, PSUs and deferred share units are settled in common shares. The exercise price of the share purchase options will be determined by the Company and will be no less than market price on grant date.

Effective June 29, 2018, the Company’s subsidiary, MedMelior, adopted a stock option plan. Under this plan, MedMelior may grant options to its directors, officers, employees and consultants up to an amount as determined by MedMelior. The exercise price of the stock options will be determined by MedMelior.

	(a)	Performance Stock Units

		The following table summarizes the continuity of the Company’s PSUs:

	Number of PSUs

Outstanding, January 31, 2025		6,025,000
Forfeited (Note 13)		(800,000	)
Outstanding, January 31, 2026 and July 31, 2026		5,225,000

BETTERLIFE PHARMA INC.

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended July 31, 2026 and 2025

(Expressed in Canadian dollars)

(Unaudited)

10. Long-term Incentive Plans (continued)

At July 31, 2026, the following PSUs were outstanding:

Number of PSUs		Vesting Provisions

	25,000	Vested on March 31, 2021
	5,200,000	Volume weighted average common share price for five consecutive dates: $0.30 – 33.33%; $0.50 – 33.33%; $1.00 – 33.34%
	5,225,000

For the three and six months ended July 31, 2026, share-based payments related to PSUs totaled $128,082 and $163,272, respectively (three and six months ended July 31, 2025 - $18,817 and $80,093, respectively) and have been recorded in the Company’s condensed consolidated interim statements of loss and comprehensive loss.

PSUs are settled by delivery of a notice of settlement by the PSU holder. At July 31, 2026, 25,000 PSUs were vested but not yet settled (January 31, 2026 – 25,000).

The fair value of share-based payment expense was estimated using the Black-Scholes option pricing model and the following assumptions:

	July 31, 2026			January 31, 2026
Date of grant or valuation	July 31, 2026			January 31, 2026
Risk free interest rate		2.88	%		2.56	%
Volatilities		123	%		119	%
Fair value of common shares on grant date	$	0.29		$	0.05
Expected dividends	Nil		%		Nil	%
Expected life	1.38 years			1.87 years
Fair value of PSUs on grant date	$	0.22		$	0.05

(b)		Share Purchase Options

		The following table summarizes the continuity of the Company’s share purchase options:

	Number of Options			Weighted Average Exercise Price			Weighted Average Remaining Contractual Life (years)
Outstanding, January 31, 2025		12,345,000			0.15			1.24
Granted		900,000			0.09			4.33
Forfeited/expired (Note 13)		(4,150,000	)		(0.27	)		–
Outstanding, January 31, 2026		9,095,000			0.09			0.94
Granted (Note 13)		13,300,000			0.07			7.81
Exercised (Note 8(e))		(250,000	)		(0.07	)		–
Forfeited/expired (Note 13)		(6,095,000	)		(0.10	)		–
Outstanding, July 31, 2026		16,050,000			0.08			6.48

BETTERLIFE PHARMA INC.

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended July 31, 2026 and 2025

(Expressed in Canadian dollars)

(Unaudited)

10. Long-term Incentive Plans (continued)

Additional information regarding share purchase options as of July 31, 2026 is as follows:

Options Outstanding		Options Exercisable		Exercise Price $		Expiry Date	Vesting Terms

	2,050,000		2,050,000		0.14	October 7, 2027	100% on grant date
	700,000		525,000		0.09	July 1, 2030	25% every six months
	6,050,000		1,512,500		0.055	February 18, 2031	25% every six months
	3,500,000		291,666		0.065	May 11, 2036	Monthly over 24 months
	3,250,000		406,250		0.07	June 15, 2036	Quarterly over 24 months
	500,000		62,500		0.19	July 7, 2036	Quarterly over 24 months
	16,050,000		4,847,916

The fair value of share-based payment expense was estimated using the Black-Scholes option pricing model and the following assumptions:

	July 31, 2026	July 31, 2025
Dates of grant or valuation	February 18, May 11, June 15 and July 7, 2026	April 8, April 30 and July 2, 2025
Risk free interest rates	2.78% to 3.58%	2.45% to 2.91%
Volatilities	114% to 168%	107% to 129%
Market prices of common shares on grant or valuation dates	$0.055 to $0.19	$0.08 to $0.09
Expected dividends	Nil%	Nil%
Expected lives	5 to 10 years	1.9 to 5.0 years
Exercise prices	$0.055 to $0.19	$0.08 to $0.09
Fair values of options on grant or valuation dates	$0.04 to $0.19	$0.05 to $0.08

		For the three and six months ended July 31, 2026, share-based payment expense related to share purchase options totaled $222,306 and $340,047, respectively, and have been recorded in the Company’s condensed consolidated interim statements of loss and comprehensive loss (three and six months ended July 31, 2025 - $19,872 and $22,740, respectively). $489,176 of share-based payment expense has yet to be recognized and will be recognized in future periods.

	(c)	Share Purchase Options of MedMelior

		The following table summarizes the continuity of MedMelior’s share purchase options:

BETTERLIFE PHARMA INC.

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended July 31, 2026 and 2025

(Expressed in Canadian dollars)

(Unaudited)

10. Long-term Incentive Plans (continued)

	Number of Options			Weighted Average Exercise Price			Weighted Average Remaining Contractual Life (years)

Outstanding, January 31, 2025		2,200,000			0.10			0.73
Expired		(2,200,000	)		(0.10	)		–

Outstanding, January 31, 2026 and July 31, 2026		–			–			–

At July 31, 2026, there were no share purchase options of MedMelior outstanding (January 31, 2026 – nil).

11. Non-controlling Interests

At July 31, 2026, 9.14% of MedMelior’s ownership interest is held by NCI (January 31, 2026 – 9.14%).

During the three and six months ended July 31, 2026, net loss allocated to NCI totaled $6,781 and $10,148, respectively (three and six months ended July 31, 2025 – $9,635 and $5,235, respectively) and net comprehensive loss allocated to NCI totaled $6,737 and $9,833, respectively (three and six months ended July 31, 2025 – $9,535 and $5,246, respectively).

12. Supplemental Cash Flow Disclosures

	July 31, 2026 $		July 31, 2025 $
Supplemental disclosures:
Interest paid		2,778		3,575
Non-cash investing and financing activities:
Common shares issued for services (Note 8(a))		42,500		–
Common shares issued for settlement of debts (Notes 8(f) and 13)		–		1,349,937
Common shares and share purchase warrants issued for conversion of convertible debentures (Notes 8(c) and 8(h))		294,777		615,635

BETTERLIFE PHARMA INC.

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended July 31, 2026 and 2025

(Expressed in Canadian dollars)

(Unaudited)

13. Related Party Transactions

Key Management Compensation

Key management includes those persons having authority and responsibility for planning, directing and controlling the activities, directly or indirectly, of the Company and includes the chief executive officer, chief operating officer and chief financial officer. During the three and six months ended July 31, 2026, compensation of key management, directors and former directors of the Company, consisting of salaries, consulting fees, director fees and share-based payments, totaled $799,237 and $1,188,925, respectively (three and six months ended July 31, 2025 - $289,953 and $603,045, respectively), of which $146,169 and $427,994, respectively, were share-based payments related to long-term incentive plans (three and six months ended July 31, 2025 - $54,133 and $92,831, respectively). During the six months ended July 31, 2026:

	·	13,200,000 share purchase options were granted to directors and officers (six months ended July 31, 2025 – 900,000).
	·	300,000 share purchase options for former directors were forfeited (six months ended July 31, 2025 – nil).
	·	5,795,000 share purchase options for directors and officers expired (six months ended July 31, 2025 – 2,090,000).
	·	400,000 performance share units for a former director were forfeited (six months ended July 31, 2025 – nil).

Other Related Party Transactions

At July 31, 2026, the Company owed $2,100,826 to key management and directors (January 31, 2026 - $1,415,082), of which $384,476 bear interest at 8% per annum (January 31, 2026 - $258,484).

During the six months ended July 31, 2026:

	·	The Company issued convertible debenture of $2,000,000 to a director and recorded $31,781 in interest expense on this convertible debenture (Note 5(f)). At July 31, 2026, convertible debenture includes accrued interest of $31,781 (January 31, 2026 - $nil).
	·	The Company recorded $12,229 in interest expense on promissory owed to directors and the Chief Executive Officer (Note 7). At July 31, 2026, promissory notes include accrued interest of $26,647 (January 31, 2026 - $14,418).

During the six months ended July 31, 2025, the Company issued 10,308,039 common shares pursuant to the settlement of amounts due to directors and officers totaling $1,030,804 (Note 8(f)).

BETTERLIFE PHARMA INC.

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended July 31, 2026 and 2025

(Expressed in Canadian dollars)

(Unaudited)

14. Commitments and Contingencies

	(a)	In March 2021, Olymbec Development Inc. (“Olymbec”) filed a judicial demand before the Superior Court (Civil Division) of Quebec and a judgement for a safeguard order was obtained by Olymbec against Pivot Pharmaceuticals Manufacturing Corp. (“Pivot”), a former subsidiary, and the Company, as guarantor of the lease at 285-295 Kesmark Street, Quebec (the “Lease”), ordering Pivot and the Company to jointly pay the full amount of the Lease on the first day of each month. In May 2021, a judgement for a safeguard order was issued ordering Pivot and the Company to provide post-dated cheques for monthly lease payments for the months of June through November 2021. In June 2021, a judgement granted Pivot and the Company until June 30, 2021 to pay the outstanding lease totaling $124,223 and to deliver post-dated cheques each in the amount of $49,410.51 for monthly lease payments for the months of July through November 2021, which were completed. On October 25, 2023, due to non-payment of rent by Pivot, Olymbec terminated the Lease. An order for Pivot’s bankruptcy was granted on December 11, 2023 by the Superior Court (Commercial Division) of Quebec. On December 16, 2024, the Superior Court (Civil Division) of Quebec issued a judgment ordering the Company to pay Olymbec $367,428, representing lease unpaid by Pivot and administrative charges, plus $15,000 as punitive damages (Note 14(b)). On March 17, 2025, this judgment was registered with the Supreme Court of British Columbia.

	(b)	The Company is a guarantor on the Lease (Note 14(a)), which was assigned together with the sale of Pivot in October 2020 pursuant to which the Company has recorded a financial guarantee liability of $425,828 (January 31, 2026 - $412,854).

		The following table summarizes the continuity of financial guarantee liability:

	Financial Guarantee Liability $
Balance, January 31, 2025		382,428
Change in carrying value		30,426
Balance, January 31, 2026		412,854
Change in carrying value		12,974
Balance, July 31, 2026		425,828

Current, July 31, 2026		425,828
Non-current, July 31, 2026		–
Balance, July 31, 2026		425,828

	(c)	At July 31, 2026, certain of the Company’s research and development programs, with a total contracted amount of approximately $1,076,700, were in progress of which the Company has paid approximately $589,600 and a further $487,100 remains to be paid in future periods.

	(d)	At July 31, 2026, there may be a contingent liability related to potential interest or penalties that vendors may charge on the Company’s aged accounts payables. Due to the absence of reliable estimates for this amount, no provisions have been recorded by the Company.

15. Operating Segment

The Company operates in one industry segment, development of patented pharmaceuticals within one geographical area. All of the Company’s long-lived assets are located in Canada.

BETTERLIFE PHARMA INC.

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended July 31, 2026 and 2025

(Expressed in Canadian dollars)

(Unaudited)

16. Fair Value Measurements

Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair values.

Financial assets and liabilities measured at fair value in the condensed consolidated interim statements of financial position are grouped into three levels of fair value hierarchy. Assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the placement within the fair value hierarchy level.

The carrying values of accounts receivable excluding tax receivables, due to related parties, amounts payable and accrued liabilities and promissory notes approximate the fair values due to the short-term nature of these items. The fair value of the convertible debentures and loans payable is partially derived from market interest rates. The risk of material change in fair value is not considered to be significant due to a relatively short-term nature. The Company does not use derivative financial instruments to manage this risk.

The following is an analysis of the Company’s financial assets and liabilities at fair value as at July 31, 2026 and January 31, 2026:

As at July 31, 2026

Level 1

Level 2

Level 3

Cash

973,593

–

Warrant liabilities

–

886,915

As at January 31, 2026

Level 1

Level 2

Level 3

Cash

12,570

–

Warrant liabilities

–

115,013

There were no transfers between level 1, 2 and 3 inputs during the year.

17. Management of Financial Risk

The Company’s financial instruments are exposed to certain risks as summarized below:

	(a)	Credit risk

		Credit risk is the risk of loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The Company’s cash is held through reputable financial institutions in Canada and Australia. The carrying amounts of cash represent the maximum exposure to credit risk. As at July 31, 2026, this amounted to $973,593.

BETTERLIFE PHARMA INC.

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended July 31, 2026 and 2025

(Expressed in Canadian dollars)

(Unaudited)

17. Management of Financial Risk (continued)

	(b)	Interest rate risk

		Interest rate risk is the risk that fair values of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not exposed to significant interest rate risk.

	(c)	Liquidity risk

		Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company manages liquidity risk through the management of its capital structure (Note 18). Accounts payable and accrued liabilities, due to related parties, financial guarantee liability, convertible debentures, current portion of loans payable and promissory notes are due within the current operating period.

		The table below summarizes the maturity profile of the Company’s financial liabilities at July 31, 2026 based on contractual undiscounted payments:

	0 – 12 Months $		Over 12 Months $
Accounts payable and accrued liabilities		3,781,627		–
Due to related parties		2,100,826		–
Financial guarantee liability		425,828		–
Convertible debentures		1,970,603		–
Loans payable		74,354		26,327
Promissory notes		437,647		–
Warrant liabilities		886,915		–

	(d)	Currency risk

		Currency risk is the risk of loss due to fluctuation of foreign exchange rates and the effects of these fluctuations on foreign currency denominated monetary assets and liabilities. A 5% change in exchange rates will increase or decrease the Company’s loss by approximately $172,000. The Company does not invest in derivatives to mitigate these risks.

18. Management of Capital

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue the development and commercialization of patented pharmaceuticals and to maintain a flexible capital structure. The Company considers its capital to be its shareholders’ equity.

The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of its assets. To maintain or adjust its capital structure, the Company may issue new common shares or debentures, acquire or dispose of assets or adjust the amount of cash.

BETTERLIFE PHARMA INC.

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended July 31, 2026 and 2025

(Expressed in Canadian dollars)

(Unaudited)

18. Management of Capital (continued)

In order to facilitate the management of its capital requirements, the Company prepares expenditure budgets that are updated as necessary depending on various factors, including successful capital deployment and general industry conditions. In order to maximize ongoing development efforts, the Company does not pay out dividends. There are no external restrictions on the Company’s capital.

19. Events After the Reporting Date

	(a)	On August 16, 2026, the Company granted 500,000 share purchase options with quarterly vesting over 24 months, exercise price of $0.285 and expiry date of August 15, 2036.

		On September 2, 2026, the Company granted 500,000 share purchase options with quarterly vesting over 24 months, exercise price of $0.285 and expiry date of September 2, 2036. The Company also granted 125,000 share purchase options with monthly vesting over three months, exercise price of $0.285 and expiry date of September 2, 2036.

	(b)	On September 17, 2026, the Company issued 447,041,840 common shares at a price of $0.25 per common share and 107,958,160 pre-funded warrants at a price of $0.24999 per pre-funded warrant, for gross proceeds of $138,748,920 (the “Offering”). Each pre-funded warrant entitles the holder to acquire one common share at an exercise price of $0.00001 per common share and does not have a maturity date.

		Pursuant to the Offering, the Company paid agents’ fee of $9,605,879 and issued 38,284,189 broker warrants. Each broker warrant entitles the holder to acquire one common share at an exercise price of $0.25 per common share until September 17, 2029.

	(c)	In September 2026, the Company paid, in full, principal and accrued interest on promissory notes (Notes 7 and 13) totaling $440,890.

	(d)	Subsequent to July 31, 2026, the Company has repaid all outstanding interest on its $2,000,000 convertible debenture. The convertible debenture was issued to a director of the Company in June 2026 (Notes 5(f) and 13). On September 11, 2026, the Company filed a final short form prospectus which disclosed a plan to repay the convertible debenture and accrued interest using proceeds from the offering. On September 17, 2026, the Company provided a notice of repayment (“Notice of Repayment”). Subsequent to the Notice of Repayment being provided, the convertible debtholder disputed the right of the Company to repay the convertible debenture. On September 19, 2026, the Company initiated a payment of $2,058,082, representing principal and interest to September 17, 2026. On September 22, 2026, a further $2,192 was paid, representing interest to September 21, 2026. The convertible debtholder accepted payment of interest and returned the principal repayment of $2,000,000 to the Company on September 22, 2026. Also on September 22, 2026, the Company received a notice of conversion from the convertible debtholder to convert the principal amount of the convertible debenture. Both parties are seeking legal advice on options available to amicably resolve the remaining principal amount of the convertible debenture.

	(e)	Subsequent to July 31, 2026, the Company issued 5,414,697 common shares pursuant to the exercise of 5,414,697 share purchase warrants for gross proceeds of $658,970.