Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the notes to those statements included elsewhere in this Quarterly Report and the audited consolidated financial statements and the other information set forth in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the U.S. Securities and Exchange Commission on March 30, 2026.

Forward-Looking Statements

This Quarterly Report includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, (the "Exchange Act") that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding the Company's financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as "expect," "believe," "anticipate," "intend," "estimate," "seek" and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management's current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company's registration statement on Form S-1 filed with the U.S. Securities and Exchange Commission (the "SEC"). The Company's securities filings can be accessed on the EDGAR section of the SEC's website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Organization and Overview of Operations

PMGC currently manages and operates a diverse portfolio of wholly owned subsidiaries:

●

NorthStrive BioSciences Inc. ("NorthStrive Bio") - a biopharmaceutical company focusing on the development and acquisition of cutting-edge aesthetic medicines and therapeutic products. Our lead asset, EL-22, is leveraging a first-in-class engineered probiotic approach to address obesity's pressing issue of preserving muscle while on weight loss treatments, including GLP-1 receptor agonists.

●

PMGC Capital LLC - a multi-strategy investment firm focused on direct investments, strategic lending, and acquiring undervalued companies and assets across diverse markets. Our mission is to identify and seize high-potential opportunities, delivering sustainable growth and maximizing returns on capital.

●

ELAB Opportunity Holdings LLC - a wholly owned Utah subsidiary - was formed to facilitate and hold assets related to the Company's secured pre-paid purchase and financing collateral arrangements. ELAB Opportunity supports the Company's strategic financing structure and related treasury activities.

●

Pacific Sun Packaging Inc. ("Pacific Sun") - a California-based custom IT packaging company providing innovative, sustainable, and technology-driven packaging solutions to industrial and consumer markets.

●

AGA Precision Systems LLC. ("AGA") - a California-based precision engineering and CNC machining company specializing in the design and production of high-tolerance components for industrial and technology applications. In October 2025, AGA acquired substantially all the operating assets of Indarg Engineering, Inc. AGA expands PMGC's advanced manufacturing footprint and enhances its capacity to deliver vertically integrated engineering and production solutions across multiple sectors. On July 2, 2026, subsequent to the reporting period, AGA merged into A&B Aerospace, Inc., another wholly owned subsidiary of the Company, with A&B continuing as the surviving entity.

●

SVM Machining, Inc. ("SVM") - a California-based precision machining and aerospace manufacturing company specializing in high-precision components and complex machining solutions for aerospace, defense, and industrial applications. SVM enhances PMGC's advanced manufacturing capabilities and expands the Company's footprint in the aerospace and defense sectors.

	●	NorthStrive Defense Tech LLC - a wholly owned subsidiary focused on defense technology, including drone technology, autonomous systems, and next-generation unmanned defense solutions. NorthStrive Defense Tech was formed to identify, acquire, license, and commercialize advanced defense technologies.
	●	A&B Aerospace, Inc. ("A&B") - a California-based precision machining company producing high-tolerance machined components and assemblies for aerospace customers. A&B further extends PMGC's aerospace manufacturing capacity and its qualification and certification base. A&B was acquired on May 11, 2026 (Note 5). On July 2, 2026, subsequent to the reporting period, AGA Precision Systems LLC merged into A&B, with A&B continuing as the surviving entity.
	●	NorthStrive Sponsor I LLC - a wholly owned subsidiary that acts as the sponsor of NorthStrive Acquisition Corp I, a special purpose acquisition company. The Sponsor was formed to hold the Company's sponsor interest in, and to fund the formation and offering costs of, that special purpose acquisition company.
	●	NorthStrive Acquisition Corp I - a special purpose acquisition company incorporated as an exempted company with limited liability under the laws of the Cayman Islands with effect from April 27, 2026, formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. PMGC holds a 51% interest in NorthStrive Acquisition Corp I; the remaining 49% interest is held by others.

Outlook

Management's Plans

Over the next twelve months, we intend to focus on:

	●	Increasing revenue by achieving successful returns on capital through PMGC Capital LLC, our multi-strategy investment vehicle, by acquiring and managing undervalued assets, public and private investments, and structured financing opportunities.
	●	Establishing new wholly owned subsidiaries to develop and commercialize newly acquired or licensed assets across various industries.
	●	Utilizing clinical validation studies to strengthen the commercial potential and scientific credibility of our portfolio companies' technologies.
	●	Advancing clinical development to progress NorthStrive Biosciences' clinical assets toward Investigational New Drug (IND) applications.
	●	Pursuing additional acquisitions of operating business-to-business companies with positive EBITDA.
	●	Evaluating potential opportunities such as out licensing our biotechnology applications, potential spin-offs, and creating new publicly traded companies, such as Special Purpose Acquisition Corporations ("SPACs")

Results of Operations

Comparison of the six months ended June 30, 2026 and 2025.

The following table provides certain selected financial information for continuing operations for the periods presented and does not include activity from the skincare business of the Company:

		Six Months Ended June 30, 2026				Six Months Ended June 30, 2025				Change
Revenue		$	1,988,604			$	-			$	1,988,604
Cost of goods sold		$	1,372,439			$	-			$	1,372,439
Gross margin		$	616,165			$	-			$	616,165
Consulting Fees		$	2,435,215			$	745,902			$	1,689,313
Office and Administration		$	2,987,056			$	528,870			$	2,458,186
Professional Fees		$	1,144,579			$	550,643			$	593,936
Investor Relations		$	45,398			$	116,777			$	(71,379	)
Research and Development		$	357,280			$	99,108			$	258,172
Marketing and Promotion		$	59,767			$	117,923			$	(58,156	)
Repairs and Maintenance		$	112,647			$	-			$	112,647
Travel and Entertainment		$	171,778			$	55,411			$	116,367
Foreign Exchange (Gain) Loss		$	20,580			$	(497	)		$	21,077
Bad Debt Expense		$	1,567			$	-			$	1,567
Total operating expenses		$	7,776,548			$	2,215,242			$	5,561,306
Other income (expense)1		$	(785,349	)		$	54,941			$	(840,290	)
Net loss from continuing operation		$	(7,945,732	)		$	(2,160,301	)		$	(5,785,431	)
Basic and dilutive loss per common share- continuing operations		$	(2.973	)		$	(202.484	)		$	199.51
Weighted average number of shares outstanding - basic and diluted			2,672,745				10,669

1

Other income (expense) relates to finance cost, interest income, interest expense, dividend income, unrealized fair value gain/loss on investments, realized gain/loss on sale of investments, fair value change on derivative liabilities, gain on the termination of the intangible asset, gain and loss on disposal of PP&E, and other income.

Revenue

Revenue for the six months ended June 30, 2026, was $1,988,604 as compared to $nil for the six months ended June 30, 2025, an increase of $1,988,604. Revenue was generated by the Company's newly acquired subsidiaries - Pacific Sun Packaging, AGA Precision Systems, SVM Machining and A&B Aerospace - none of which formed part of the Company in the comparative period, when the Company had no continuing revenue-generating operations following the disposal of the skincare business.

Our revenue by category is as follows:

		For the six months ended June 30, 2026
Pacific Sun - Sale of IT packaging		$	364,567
AGA - Machine work			496,645
SVM-Machine work			832,104
A&B - Aerospace components			295,288
Total Revenue		$	1,988,604

Cost of Revenue

Cost of revenue for the six months ended June 30, 2026, was $1,372,439 as compared to $nil for the six months ended June 30, 2025

The increase in cost of revenue is directly attributed to the revenue recognized by the newly acquired manufacturing subsidiaries during the six months ended June 30, 2026, compared to 2025. The following is a breakdown of the components of the cost of revenue:

For the six months ended June 30, 2026		Pacific Sun - Sale of IT packaging				AGA - Machine work				SVM - Machine work				A&B - Aerospace components				Total
Cost of inventory		$	132,884			$	344,109			$	602,451			$	226,300			$	1,305,744
Sales commission			10,361				-				-				-				10,361
Assembly and manufacturing expense			4,216				-				-				-				4,216
Shipping and handling cost			45,607				164				7,963				3,007				56,741
Inventory write down and wastage			(4,623	)			-				-				-				(4,623	)
Total Cost of Revenue		$	188,445			$	344,273			$	610,414			$	229,307			$	1,372,439

Gross Profit

Gross profit for the six months ended June 30, 2026, was $616,165, as compared to $nil for the six months ended June 30, 2025, an increase of $616,165. This represents an overall gross margin percentage of 30.98% for the six months ended June 30, 2026, compared to $nil in 2025. The increase in gross profit and gross margin percentage was primarily attributable to the inclusion of revenues generated from the newly acquired subsidiaries.

The following is a breakdown of gross profit percentage by category:

		For the six months ended June 30, 2026
Pacific Sun - Sale of IT packaging			48.31	%
AGA - Machine work			30.68	%
SVM-Machine work			26.64	%
A&B - Aerospace components			22.34	%
Overall Gross Profit Percentage			30.98	%

Research and Development Expenses

Research and development expenses for the six months ended June 30, 2026, were $357,280 compared to $99,108 for the six months ended June 30, 2025, an increase of $258,172. Research and development relates to the Company's spending on clinical validation studies and product development. The increase is primarily attributable to research and professional services provided by INmune Bio Inc. to NorthStrive BioSciences at $12,000 per month, the continued advancement of the EL-22 research program, and development activity at the newly acquired subsidiaries, none of which were part of the Company in the comparative period.

Office and Administrative Expenses

Office and administrative expenses for the six months ended June 30, 2026 were $2,987,056, compared to $528,870 for the six months ended June 30, 2025, an increase of $2,458,186. The increase was primarily due to higher corporate activity at PMGC Holdings, including the costs of the Company's financing initiatives and the management and integration of the newly acquired businesses, which drove general office and administrative costs to $2,405,949 from $458,639. Rent expense increased to $398,346 from $33,627, reflecting the leased premises of Pacific Sun, AGA, SVM and A&B Aerospace, none of which were part of the Company in the comparative period. Share-based compensation included in office and administration increased to $182,761 from $36,604, principally in respect of the options granted on June 1, 2026.

Consulting Fees

Consulting fees for the six months ended June 30, 2026 were $2,435,215, compared to $745,902 for the six months ended June 30, 2025, an increase of $1,689,313. The Company's Chief Executive Officer, Chief Financial Officer, and Chairman provide services in a consulting capacity. The increase was primarily driven by bonus-related consulting expenses of $2,082,415, compared to $300,000 in the prior-year period, representing contractual bonuses approved by the Board of Directors and the Compensation Committee. The increases were partially offset by a decrease in external consulting services.

Professional Fees

Professional fees for the six months ended June 30, 2026 were $1,144,579, compared to $550,643 for the six months ended June 30, 2025, an increase of $593,936. The increase was primarily due to higher legal fees of $510,892 (2025 - $291,933) incurred on the acquisitions completed during the period, the equity line of credit financings and intellectual property matters; higher audit fees of $183,005 (2025 - $113,500) and accounting and tax fees of $93,937 (2025 - $61,856) reflecting the increased level of compliance activity; and $300,618 (2025 - $nil) of acquisition-related professional services, including staff placement fees, valuation fees, IT contracting, ISO management services and business transition consulting. This increase was partially offset by lower filing fees of $56,127 (2025 - $83,354).

Investor Relations

Investor relations expenses for the six months ended June 30, 2026 were $45,398, compared to $116,777 for the six months ended June 30, 2025, a decrease of $71,379. The decrease was primarily due to the reduction in the NASDAQ listing fee to $4,666 per month from $7,166 per month, together with the absence of certain investor relations costs incurred in the prior-year period, including $36,142 related to Broadridge and $10,000 related to Investor Hub.

Marketing and Promotion

Marketing and promotion expenses for the six months ended June 30, 2026 were $59,767, compared to $117,923 for the six months ended June 30, 2025, a decrease of $58,156. The decrease is attributable to the absence of comparable marketing agreements in the current period; the comparative period included two $125,000 promotional agreements that were not renewed.

Repairs and Maintenance

Repairs and maintenance expenses for the six months ended June 30, 2026 were $112,647, compared to $nil for the six months ended June 30, 2025. The increase reflects repairs and maintenance on the plant and machinery of the newly acquired manufacturing subsidiaries. The Company held no manufacturing assets in the comparative period.

Travel and Entertainment

Travel and entertainment expenses for the six months ended June 30, 2026 were $171,778, compared to $55,411 for the six months ended June 30, 2025, an increase of $116,367. The increase is due to a higher volume of business travel during the current period, primarily related to the acquisitions completed and the financing activities undertaken.

Other income (expense)

Other income (expense) for the six months ended June 30, 2026 was a net expense of $785,349, compared to net income of $54,941 for the six months ended June 30, 2025, an unfavorable variance of $840,290. The variance was primarily due to interest expense of $1,056,411 (2025 - $10,476), representing accretion of discount and contractual interest on the convertible debt host under the pre-paid purchases issued under the Company's two equity line of credit facilities together with interest on the equipment financing obligations; finance costs of $620,909 (2025 - $nil) representing the original issue discount and transaction costs allocated to the bifurcated derivatives on those pre-paid purchases; and a loss on disposal of property and equipment of $63,345 (2025 - $nil). The unfavorable variance was partially offset by a fair value gain on derivative liabilities of $701,920 (2025 - $nil), a realized gain on investments of $86,392, compared to a realized loss of $371,494 in the prior-year period, and higher interest income of $146,080 (2025 - $65,383) earned on the substantially higher cash balances held following the financings. The prior-year period also included a $129,613 gain on the termination of an intangible asset and an unrealized gain on investments of $238,899, compared to $5,322 in the current period.

Comparison of the three months ended June 30, 2026 and 2025.

The following table provides certain selected financial information for continuing operations for the periods presented and does not include activity from the skincare business of the Company:

		Three Months Ended June 30, 2026				Three Months Ended June 30, 2025				Change
Revenue		$	1,306,610			$	-			$	1,306,610
Cost of goods sold		$	920,919			$	-			$	920,919
Gross margin		$	385,691			$	-			$	385,691
Consulting Fees		$	1,225,200			$	198,345			$	1,026,855
Office and Administration		$	1,605,320			$	319,839			$	1,285,481
Professional Fees		$	552,556			$	284,175			$	268,381
Investor Relations		$	29,265			$	46,827			$	(17,562	)
Research and Development		$	310,219			$	66,675			$	243,544
Depreciation and Amortization		$	281,237			$	20			$	281,217
Marketing and Promotion		$	25,403			$	82,329			$	(56,926	)
Repairs and Maintenance		$	111,233			$	-			$	111,233
Travel and Entertainment		$	63,437			$	16,191			$	47,246
Foreign Exchange (Gain) Loss		$	9,030			$	(883	)		$	9,913
Total operating expenses		$	4,212,900			$	1,013,518			$	3,199,382
Other income (expense)1		$	868,237			$	434,028			$	434,209
Net loss from continuing operation		$	(2,958,972	)		$	(579,490	)		$	(2,379,482	)
Basic and dilutive loss per common share- continuing operations		$	(0.607	)		$	(39.138	)		$	38.532
Weighted average number of shares outstanding - basic and diluted			4,876,498				14,806

1	Other income (expense) relates to finance cost, interest income, interest expense, dividend income, unrealized fair value gain/loss on investments, realized gain/loss on sale of investments, fair value change on derivative liabilities, gain and loss on disposal of PP&E, and other income.

Revenue, Cost of Revenue and Gross Margin

Refer to the analysis under the six months ended June 30, 2026 above.

Research and Development Expenses

Research and development expenses for the three months ended June 30, 2026 were $310,219, compared to $66,675 for the three months ended June 30, 2025, an increase of $243,544. The increase is primarily attributable to research and professional services provided by INmune Bio Inc. to NorthStrive BioSciences at $12,000 per month, together with development activity at the newly acquired subsidiaries.

Office and Administrative Expenses

Office and administrative expenses for the three months ended June 30, 2026 were $1,605,320, compared to $319,839 for the three months ended June 30, 2025, an increase of $1,285,481. The increase was primarily due to higher corporate activity at PMGC Holdings, including the costs of the financing initiatives and the management and integration of the newly acquired businesses, which drove general office and administrative costs to $1,243,205 from $296,806. Rent expense increased to $187,570 from $7,191, reflecting the leased premises of the newly acquired subsidiaries, including the A&B Aerospace facility taken on during the quarter. Share-based compensation included in office and administration increased to $174,545 from $15,842.

Consulting Fees

Consulting fees for the three months ended June 30, 2026 were $1,225,200, compared to $198,345 for the three months ended June 30, 2025, an increase of $1,026,855. The Company's Chief Executive Officer, Chief Financial Officer, and Chairman provide services in a consulting capacity. The increase was primarily attributable to bonus-related consulting expenses of $1,050,000 (2025 - $nil), representing contractual bonuses approved by the Board of Directors and the Compensation Committee. The increases were partially offset by a decrease in external consulting services.

Professional Fees

Professional fees for the three months ended June 30, 2026 were $552,556, compared to $284,175 for the three months ended June 30, 2025, an increase of $268,381. The increase was primarily due to higher legal fees of $254,379 (2025 - $154,816) incurred on the A&B Aerospace acquisition, the new equity line of credit facility and intellectual property matters; higher audit fees of $82,000 (2025 - $53,500); and $157,330 (2025 - $nil) of acquisition-related professional services, including staff placement fees, valuation fees and business transition consulting. These increases were partially offset by lower accounting and tax fees of $33,920 (2025 - $61,856).

Investor Relations

Investor relations expenses for the three months ended June 30, 2026 were $29,265, compared to $46,827 for the three months ended June 30, 2025, a decrease of $17,562. The decrease is primarily attributable to the reduction in the NASDAQ listing fee to $4,666 per month from $7,166 per month in the comparative quarter.

Marketing and Promotion

Marketing and promotion expenses for the three months ended June 30, 2026 were $25,403, compared to $82,329 for the three months ended June 30, 2025, a decrease of $56,926. The decrease is attributable to the absence in the current quarter of the promotional agreements incurred in the comparative quarter, which were not renewed.

Repairs and Maintenance

Repairs and maintenance expenses for the three months ended June 30, 2026 were $111,233, compared to $nil for the three months ended June 30, 2025. The increase reflects repairs and maintenance on the plant and machinery of the newly acquired manufacturing subsidiaries.

Travel and Entertainment

Travel and entertainment expenses for the three months ended June 30, 2026 were $63,437, compared to $16,191 for the three months ended June 30, 2025, an increase of $47,246. The increase is due to a higher volume of business travel in the current quarter, primarily related to the A&B Aerospace acquisition and the equity line of credit financing.

Other income (expense)

Other income (expense) for the three months ended June 30, 2026 was net income of $868,237, compared to net income of $434,028 for the three months ended June 30, 2025, a favorable variance of $434,209. The favorable variance was primarily due to a fair value gain on derivative liabilities of $1,383,046 (2025 - $nil), partially offset by interest expense of $582,241 (2025 - $2), comprising accretion of discount and contractual interest on the convertible debt host under the pre-paid purchases together with interest on the equipment financing obligations; finance costs of $58,987 (2025 - $nil) on Secured Pre-Paid Purchase #1 issued in April 2026 under the new $40 million equity line of credit facility; and an unrealized loss on investments of $32,265, compared to an unrealized gain of $299,303 in the comparative quarter. These items were partially offset by interest income of $83,159 (2025 - $36,527) and a realized gain on investments of $63,241 (2025 - $95,184).

Liquidity and Capital Resources

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and ultimately the attainment of profitable operations.

As of June 30, 2026, we had cash of $18,141,758 and as of December 31, 2025, we had cash of $5,402,333. The increase between December 31, 2025 and June 30, 2026 was attributable to cash provided by financing activities exceeding cash used in operating and investing activities. As of June 30, 2026 and December 31, 2025, the Company had a net working capital of $5,504,403 and $2,928,959, respectively, and has an accumulated deficit of $28,926,081 and $21,017,440, respectively. Furthermore, for the six months ended June 30, 2026, and 2025, the Company incurred a net loss of $7,908,641 and $2,170,810, respectively and used $4,967,374 and $2,693,714, respectively of cash flows for operating activities. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company believes it will have sufficient funds for at least the next 12 months from the issuance date of the unaudited condensed consolidated financial statements.

Our principal liquidity requirements are for working capital, capital expenditure and research and development. We fund our liquidity requirements primarily through cash on hand and the issuance of common and preferred stock.

Management's plans that alleviate substantial doubt about the Company's ability to continue as a going concern include: (a) raising additional debt or equity financing and (b) the acquisition of cash flow generating assets or businesses. Although the Company has been successful in raising funds in the past, and expects to do so in the future, there are no guarantees that it will be able to raise funds as anticipated.

The following table provides selected financial data as of June 30, 2026, and December 31, 2025, respectively

		June 30, 2026				December 31, 2025				Change
Current assets		$	20,832,950			$	6,871,255			$	13,961,695
Current liabilities		$	15,328,547			$	3,942,296			$	11,386,251
Working capital		$	5,504,403			$	2,928,959			$	2,575,444

The following table summarizes our cash flows from operating, investing and financing activities from continuing operations:

		Six Months Ended June 30, 2026				Six Months Ended June 30, 2025				Change
Cash used in operating activities		$	(4,967,374	)		$	(2,693,714	)		$	(2,273,660	)
Cash used in investing activities		$	(6,168,540	)		$	(18,479	)		$	(6,150,061	)
Cash provided by financing activities		$	23,873,000			$	4,410,768			$	19,462,232

Cash Flow from Operating Activities

For the six months ended June 30, 2026, net cash flows used in operating activities was $4,967,374 compared to $2,693,714 used during the six months ended June 30, 2025, respectively, primarily due to the net loss for the period and the timing of settlement of assets and liabilities.

Cash Flows from Investing Activities

During the six months ended June 30, 2026, net cash used in investing activities was $6,168,540, compared to $18,479 for the same period in 2025. The increase was primarily driven by the Company's acquisition of SVM for cash consideration of $2,019,909, the acquisition of A&B Aerospace for cash consideration of $3,826,283, purchases of investment securities through PMGC Capital, and purchases of property and equipment, partially offset by cash proceeds from the sale of investments. In comparison, investing activities during the six months ended June 30, 2025 were limited, with no business acquisitions; the Company made strategic investments in publicly traded companies of $995,100 and advanced $127,300 under a short-term promissory note, offset by proceeds from the sale of investments of $1,109,921.

Cash Flows from Financing Activities

During the six months ended June 30, 2026, net cash provided by financing activities was $23,873,000, compared to $4,410,768 for the same period in 2025. The increase was primarily attributable to net cash proceeds of approximately $14.09 million from the second, third and fourth Pre-Paid Purchases under the Company's $20 million equity line of credit facility, a further $9.73 million from the first Pre-Paid Purchase and the concurrent sale of registered shares under the new $40 million facility entered into on April 16, 2026, and $353,468 of equipment financing proceeds.

These inflows were partially offset by the settlement in full of the promissory notes payable on April 16, 2026 and repayments made toward the equipment financing loan during the period. During the six months ended June 30, 2025, financing activities consisted primarily of $1,245,306 in proceeds from the issuance of common stock and pre-funded warrants, $1,698,058 in proceeds from the exercise of Series A warrants and $1,467,583 from the sale of common shares under the At-the-Market share sales agreement.

Critical Accounting Policies and Significant Judgments and Estimates

This discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to revenue recognition, the collectability of receivables, valuation of inventory, fair value of investments in securities, derivative liabilities and stock options, useful lives and recoverability of long-lived assets, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgements about the carrying value of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from those estimates. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the consolidated financial statements in the period they are determined.

The Company's policy for intangible assets require judgement in determining whether the present value of future expected economic benefits exceeds capitalized costs. The policy requires management to make certain estimates and assumptions about future economic benefits related to its operations. Estimates and assumptions may change if new information becomes available. If information becomes available suggesting that the recovery of capitalized cost is unlikely, the capitalized cost is written off/impaired to the consolidated statement of operations.

The assessment of whether the going concern assumption is appropriate requires management to take into account all available information about the future, which is at least, but not limited to, 12 months from the date the financial statements are issued. The Company is aware that material uncertainties related to events or conditions may cast substantial doubt upon the Company's ability to continue as a going concern.

Foreign Currency Translation

The Company's functional and reporting currency is the U.S. dollar. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets, liabilities, and items recorded in income arising from transactions denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income.

Stock-Based Compensation

Employees - The Company accounts for share-based compensation under the fair value method which requires all such compensation to employees, including the grant of employee stock options, to be calculated based on its fair value at the measurement date (generally the grant date), and recognized in the consolidated statement of operations over the requisite service period.

Nonemployees - During June 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting ("ASU 2018-07") to simplify the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees. Under the requirements of ASU 2018-07, the Company accounts for share-based compensation to non-employees under the fair value method which requires all such compensation to be calculated based on the fair value at the measurement date (generally the grant date) and recognized in the statement of operations over the requisite service period.

During the six months ended June 30, 2026 and 2025, the Company recorded $182,761 and ($42,996), respectively, in share-based compensation expense, of which $182,761 and $36,604, is included in office and administration and $nil and ($79,600), respectively, is included in discontinued operations. Within discontinued operations for the six months ended June 30, 2025, ($73,768) and ($5,832) is included in office and administration and research and development, respectively. Share-based compensation recognized in the current period relates principally to the 1,125,692 options granted on June 1, 2026 at an exercise price of $1.77, having a grant-date fair value of $1,520,085 and vesting monthly over 36 tranches.

Determining the appropriate fair value model and the related assumptions requires judgment. During the six months ended June 30, 2026 and the year ended 2025, the fair value of each option grant was estimated using a Black-Scholes option-pricing model.

The expected volatility represents the historical volatility of comparable publicly traded companies in similar industries, adjusted for variables such as stock price, market capitalization and life cycle. Due to limited historical data, the expected term for options granted is equal to the contractual life. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of stock options. The Company has not paid and does not anticipate paying cash dividends on its shares of common stock; therefore, the expected dividend yield is assumed to be zero.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditure or capital resources that is material to investors.

JOBS Act

On April 5, 2012, the Jumpstart Our Business Startups Act (the "JOBS Act") was signed into law. The JOBS Act contains provisions that, among other things, eases certain reporting requirements for qualifying public companies. We will qualify as an "emerging growth company" and under the JOBS Act will be allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

Future Related Party Transactions

The Board of Directors is required to approve all related party transactions. All related party transactions are made or entered into on terms that are no less favorable to use than can be obtained from unaffiliated third parties.

Impact of Inflation

We do not believe the impact of inflation on our Company is material.

Inflation Risk

We are also exposed to inflation risk. Inflationary factors, such as increases in labor costs, could impair our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and operating expenses.

Market Risk

Market risk is the risk of loss arising from adverse changes in market rates and prices. Our market risk exposure is generally limited to those risks that arise in the normal course of business, as we do not engage in speculative, non-operating transactions, nor do we utilize financial instruments.