# EDGAR Filing Document

**Accession Number:** 0001919776
**File Stem:** 0001104659-26-068610
**Filing Date:** 2026-6
**Character Count:** 173006
**Document Hash:** a78f78f41868a0cbfff1391e67802a35
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001104659-26-068610.hdr.sgml**: 20260601

**ACCESSION NUMBER**: 0001104659-26-068610

**CONFORMED SUBMISSION TYPE**: 6-K

**PUBLIC DOCUMENT COUNT**: 9

**CONFORMED PERIOD OF REPORT**: 20260331

**FILED AS OF DATE**: 20260601

**DATE AS OF CHANGE**: 20260601

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** LIBERTY DEFENSE HOLDINGS, LTD.
- **CENTRAL INDEX KEY:** 0001919776
- **STANDARD INDUSTRIAL CLASSIFICATION:** SEARCH, DETECTION, NAVIGATION, GUIDANCE, AERONAUTICAL SYS [3812]
- **ORGANIZATION NAME:** 04 Manufacturing
- **EIN:** 000000000
- **STATE OF INCORPORATION:** A1
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 6-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-43241
- **FILM NUMBER:** 261047389

**BUSINESS ADDRESS:**
- **STREET 1:** 187 BALLARDVALE STREET
- **STREET 2:** SUITE 110
- **CITY:** WILMINGTON
- **STATE:** MA
- **ZIP:** 01887
- **BUSINESS PHONE:** 888-617-7226

**MAIL ADDRESS:**
- **STREET 1:** 187 BALLARDVALE STREET
- **STREET 2:** SUITE 110
- **CITY:** WILMINGTON
- **STATE:** MA
- **ZIP:** 01887

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**Form 6-K**

**REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16<br> UNDER THE SECURITIES EXCHANGE ACT OF 1934**

For the month of: <u>June, 2026</u>

Commission File Number: <u>001-43241</u>

---

| |
|:---|
| **Liberty Defense Holdings, Ltd.** |
| (Translation of registrant's name into English) |
| **187 Ballardvale Street, Suite 110, Wilmington, Massachusetts 01887** |
| (Address of principal executive office) |

---

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ⌧ Form 40-F ◻

**EXHIBIT INDEX**

---

| | |
|:---|:---|
| **Exhibit** | **Description** |
| [99.1](tm2616094d1_ex99-1.htm) | [Condensed Interim Consolidated Financial Statements (Unaudited) for the Three Months Ended March 31, 2026 and 2025](tm2616094d1_ex99-1.htm) |
| [99.2](tm2616094d1_ex99-2.htm) | [Management's Discussion and Analysis for the Three Months Ended March 31, 2026](tm2616094d1_ex99-2.htm) |
| [99.3](tm2616094d1_ex99-3.htm) | [Form 52-109FV2 Certification of Interim Filings of CEO for the Three Months Ended March 31, 2026](tm2616094d1_ex99-3.htm) |
| [99.4](tm2616094d1_ex99-4.htm) | [Form 52-109FV2 Certification of Interim Filings of CFO for the Three Months Ended March 31, 2026](tm2616094d1_ex99-4.htm) |

---

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: June 1, 2026

---

| | |
|:---|:---|
| **LIBERTY DEFENSE HOLDINGS, LTD.** | **LIBERTY DEFENSE HOLDINGS, LTD.** |
| By: | /s/ William Frain |
| Name: | William Frain |
| Title: | Chief Executive Officer |

---

## Exhibit 99.1

**Exhibit 99.1**

![](tm2616094d1_ex99-1img001.jpg)

**Liberty Defense Holdings, Ltd.**

**Condensed Interim Consolidated Financial Statements**

**(Unaudited)**

**For the Three Months Ended March 31, 2026 and 2025**

**Prepared by Management**

**(Expressed in U.S. dollars)**

**LIBERTY DEFENSE HOLDINGS, LTD.**

Condensed Interim Consolidated Financial Statements

For the Three Months Ended March 31, 2026 and 2025

NOTICE OF NO AUDITOR REVIEW

The accompanying unaudited condensed interim consolidated financial statements of Liberty Defense Holdings, Ltd., (the "Company") have been prepared by and are the responsibility of Company's management and approved by the Company's Audit Committee and Board of Directors.

The Company's independent auditor has not performed a review of these condensed interim consolidated financial statements in accordance with the standards established by CPA Canada for a review of interim financial statements by the entity's auditor.

27-May-26

**Liberty Defense Holdings, Ltd.**

**Condensed Consolidated Interim Statements of Financial Position**

(Unaudited - Expressed in U.S. dollars)

---

| | | | |
|:---|:---|:---|:---|
| **As at:** | **Note** | **March 31, <br> 2026** | **December 31, <br> 2025** |
|  |  | **$** | **$** |
| **Assets** |  |  |  |
| Current assets: |  |  |  |
| &nbsp;&nbsp;&nbsp;Cash |  |  |  |
| &nbsp;&nbsp;&nbsp;Accounts receivable, prepaids and deposits | 4 |  |  |
| &nbsp;&nbsp;&nbsp;Inventory | 5 |  |  |
| &nbsp;&nbsp;&nbsp;Contract costs | 16 |  |  |
| &nbsp;&nbsp;&nbsp;Deferred financing costs | 24 |  |  |
| Non-current assets: |  |  |  |
| &nbsp;&nbsp;&nbsp;Property and equipment | 6 |  |  |
| &nbsp;&nbsp;&nbsp;Intangible assets | 7 |  |  |
| &nbsp;&nbsp;&nbsp;Available |  |  |  |
| **Total assets** |  |  |  |
| **Liabilities** |  |  |  |
| Current liabilities: |  |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities | 17 |  |  |
| &nbsp;&nbsp;&nbsp;Loans payable | 8 & 17 |  |  |
| &nbsp;&nbsp;&nbsp;Parabilis term-loan | 9 |  |  |
| &nbsp;&nbsp;&nbsp;Factoring and credit line liability | 10 |  |  |
| &nbsp;&nbsp;&nbsp;Deferred revenue | 15 |  |  |
| &nbsp;&nbsp;&nbsp;Lease liabilities | 11 |  |  |
| Non-current liabilities: |  |  |  |
| &nbsp;&nbsp;&nbsp;Non-current lease liabilities | 11 |  |  |
| &nbsp;&nbsp;&nbsp;Non-current Parabilis term loan | 9 |  |  |
| **Total liabilities** |  |  |  |
| **Shareholders' deficiency** |  |  |  |
| &nbsp;&nbsp;&nbsp;Share capital | 12 |  |  |
| &nbsp;&nbsp;&nbsp;Equity reserves | 13 |  |  |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive income |  |  |  |
| &nbsp;&nbsp;&nbsp;Deficit |  |  |  |
| Total shareholders' deficiency |  |  |  |
| **Total liabilities and shareholders' deficiency** |  |  |  |

---

---

| |
|:---|
| Nature of operations and going concern (note 1) |
| Subsequent events (note 24) |
| Approved on behalf of the Board of Directors: |

---

"William Frain" "Jason Burinescu" <br> Director Director

The accompanying notes form an integral part of these condensed consolidated interim financial statements.

**Liberty Defense Holdings, Ltd.**

**Condensed Consolidated Interim Statements of Loss and Comprehensive Loss**

(Unaudited - Expressed in U.S. dollars, except number of shares)

---

| | |
|:---|:---|
|  | **Note** |
| **Revenue** | 15 & 16 |
| &nbsp;&nbsp;&nbsp;HEXWAVE revenue |  |
| &nbsp;&nbsp;&nbsp;Contract revenue |  |
| &nbsp;&nbsp;&nbsp;**Total Revenue** |  |
| **Cost of revenue** |  |
| &nbsp;&nbsp;&nbsp;HEXWAVE cost of revenue |  |
| &nbsp;&nbsp;&nbsp;Contract cost of revenue |  |
| **Total cost of revenue** |  |
| **Gross income (loss)** |  |
| **Engineering and Research and Development Expenses:** |  |
| &nbsp;&nbsp;&nbsp;Product development & technology Costs |  |
| &nbsp;&nbsp;&nbsp;Salaries and consulting fees | 18 |
| &nbsp;&nbsp;&nbsp;Stock-based compensation | 13 & 18 |
| &nbsp;&nbsp;&nbsp;Depreciation | 6 |
| &nbsp;&nbsp;&nbsp;Office, rent & administration, travel, and miscellaneous |  |
| **General & Administration Expenses** |  |
| &nbsp;&nbsp;&nbsp;Salaries and consulting fees | 18 |
| &nbsp;&nbsp;&nbsp;Legal and professional fees |  |
| &nbsp;&nbsp;&nbsp;Stock-based compensation | 13 & 18 |
| &nbsp;&nbsp;&nbsp;Office, rent & administration, travel, and miscellaneous |  |
| **Operating Loss** |  |
| **Other expense:** |  |
| &nbsp;&nbsp;&nbsp;Other income, net | 12) |
| &nbsp;&nbsp;&nbsp;Interest expense |  |
| &nbsp;&nbsp;&nbsp;Foreign exchange loss |  |
| **Net loss for the period** |  |
| **Other comprehensive loss** |  |
| &nbsp;&nbsp;&nbsp;Items that may be reclassified subsequently to profit or (loss) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign currency translation adjustment |  |
| **Total loss and comprehensive loss for the period** |  |
| Weighted average number of common shares outstanding |  |
| &nbsp;&nbsp;&nbsp;Basic and diluted |  |
| Loss per share |  |
| &nbsp;&nbsp;&nbsp;Basic and diluted loss per common share | 14) |

---

The accompanying notes form an integral part of these condensed consolidated interim financial statements.

**Liberty Defense Holdings, Ltd.**

**Condensed Consolidated Interim Statements of Changes in Shareholders' Deficiency**

(Expressed in U.S. dollars, except number of shares)

---

| | | |
|:---|:---|:---|
|  | <br>**Note** | **Number of**<br>**common**<br>**shares** |
|  |  | # |
| **Balance as at December 31, 2024** |  | 962919) |
| &nbsp;&nbsp;&nbsp;Issue of private placement, net of share issue cost | 12 | 67356 |
| &nbsp;&nbsp;&nbsp;Residual value allocated to warrants | 13 | –) |
| &nbsp;&nbsp;&nbsp;Fair value of broker warrants allocated to share capital | 12 | –) |
| &nbsp;&nbsp;&nbsp;Warrants exercised for cash | 12 | 120317 |
| &nbsp;&nbsp;&nbsp;Restricted share units issued | 13 | 4202) |
| &nbsp;&nbsp;&nbsp;Stock based compensation | 12 |  |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustment | 12 |  |
| &nbsp;&nbsp;&nbsp;Loss for the period |  | –) |
| **Balance as at March 31, 2025** |  | 1154794) |
| **Balance as at December 31, 2025** |  | 1896677) |
| &nbsp;&nbsp;&nbsp;Issue of private placement, net of share issue cost | 12 | 87626 |
| &nbsp;&nbsp;&nbsp;Residual value allocated to warrants | 12 | –) |
| &nbsp;&nbsp;&nbsp;Restricted shares units exercised | 12 |  |
| &nbsp;&nbsp;&nbsp;Fair value of broker warrants allocated to share capital | 13 | –) |
| &nbsp;&nbsp;&nbsp;Stock based compensation | 13 |  |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustment |  |  |
| &nbsp;&nbsp;&nbsp;Loss for the year |  | –) |
| **Balance as at March 31, 2026** |  | 1984303) |

---

The accompanying notes form an integral part of these condensed consolidated interim financial statements.

**Liberty Defense Holdings, Ltd.**

**Condensed Consolidated Interim Statements of Cash Flows**

(Unaudited - Expressed in U.S. dollars)

---

| | |
|:---|:---|
|  | **Note** |
| **Cash (used in) provided by:** |  |
| **Operating activities:** |  |
| &nbsp;&nbsp;&nbsp;Loss and comprehensive loss for the period) |  |
| &nbsp;&nbsp;&nbsp;Items not involving cash: |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease liability interest | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued interest | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation | 6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization recorded in cost of revenue | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on disposal of lease | 6) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock based compensation | 13 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of inventory | 5) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Credit line Parabilis interest and fees | 10 |
| &nbsp;&nbsp;&nbsp;Changes in non-cash working capital | 18 |
| **Cash used in operating activities** |  |
| **Investing activities:** |  |
| &nbsp;&nbsp;&nbsp;Additions to property and equipment | 6 |
| **Cash used in investing activities** |  |
| **Financing activities:** |  |
| &nbsp;&nbsp;&nbsp;Proceeds from issuance of units, net of share issue costs | 12 |
| &nbsp;&nbsp;&nbsp;Repayment of working capital loans - Related Parties | 8) |
| &nbsp;&nbsp;&nbsp;Proceeds from working capital loans | 8 |
| &nbsp;&nbsp;&nbsp;Repayments from working capital loans | 8) |
| &nbsp;&nbsp;&nbsp;Proceeds from factoring and credit lines | 9 |
| &nbsp;&nbsp;&nbsp;Repayments on factoring and credit lines | 10) |
| &nbsp;&nbsp;&nbsp;Proceeds from warrants exercised | 12 |
| &nbsp;&nbsp;&nbsp;Repayment of leases liabilities | 11 |
| **Cash provided by financing activities** |  |
| &nbsp;&nbsp;&nbsp;Effect of foreign exchange rate changes on cash |  |
| **Effect of foreign exchange rate changes on cash** |  |
| **(Decrease) increase in cash** |  |
| **Cash, beginning of the period** |  |
| **Cash, end of the period** |  |

---

During the three months ended March 31, 2026 and 2025, the Company paid $nil and $nil in income taxes, and paid $26,960 and $36,882 in interest respectively.

The accompanying notes form an integral part of these condensed consolidated interim financial statements.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

(Unaudited - Expressed in U.S. dollars, unless otherwise stated and per share amounts)

For the three months ended March 31, 2026, and 2025

**1.** **Nature of operations and going concern** 

Liberty Defense Holdings, Ltd. ("Liberty" or the "Company") is a publicly traded company listed on NASDAQ (NASDAQ: DETX), the TSX Venture Exchange (TSXV: SCAN), the Frankfurt Stock Exchange (Frankfurt: L2D), and the OTCQB (OTCQB: LDDFF). The Company was incorporated under the Business Corporations Act (Ontario) on June 8, 2012. On July 27, 2020, Liberty continued its jurisdiction of incorporation from Ontario to British Columbia and is now governed by the Business Corporations Act (British Columbia).

The Company's registered and records office is located at 1055 West Georgia Street, Suite 1500, Royal Centre, P.O. Box 11117, Vancouver, British Columbia, V6E 4N7, Canada. Its head office is located at 187 Ballardvale Street, Suite 110, Wilmington, Massachusetts, 01887, USA.

The Company is engaged in the development and commercialization of advanced security detection technologies. Liberty's flagship product, HEXWAVE, utilizes millimeter wave technology and advanced 3D imaging to detect concealed threats. In addition to HEXWAVE, the Company has licensed High-Definition Advanced Imaging Technology (HD-AIT) for body and shoe scanning.

**Going concern**

These unaudited condensed consolidated interim financial statements have been prepared using IFRS Accounting Standards ("IFRS") as issued by the International Accounting Standards Board applicable to a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business. The Company incurred in a total loss during the three months ended March 31, 2026, of $2,697,469 and had cash outflows from operating activities of $886,876. Given the current stage of operations, the Company's ability to continue as a going concern is contingent on its ability to obtain additional financing. While the Company has been successful in arranging financing in the past, the success of such initiatives cannot be assured. These events and conditions indicate that a material uncertainty exists that might cast significant doubt upon the Company's ability to continue as a going concern.

These unaudited condensed consolidated interim financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and consolidated statement of financial position classifications that would be necessary were the going concern assumption deemed to be inappropriate. These adjustments could be material.

**2.** **Basis of presentation** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(a)** **Statement of compliance**

These unaudited condensed consolidated interim financial statements have been prepared in conformity with International Accounting Standard ("IAS") 34, Interim Financial Reporting, using the same accounting policy information as detailed in the Company's audited annual consolidated financial statements for the year ended December 31, 2024, and do not include all the information required for full annual financial statements in accordance with IFRS Accounting Standards ("IFRS"), as issued by the International Accounting Standards Board ("IASB"). It is suggested that these financial statements be read in conjunction with the annual audited consolidated financial statements.

These condensed consolidated interim financial statements were approved for issuance by the Board of Directors on May 27, 2026.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(b)** **Basis of measurement**

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. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

(Unaudited - Expressed in U.S. dollars, unless otherwise stated and per share amounts)

For the three months ended March 31, 2026, and 2025

**2.** **Basis of presentation** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(c)** **Functional and presentation currency**

The functional currency of the Company is the Canadian dollar and the functional currencies of its subsidiaries are outlined in Note 2(d), and the presentation currency of these consolidated financial statements is the U.S. dollar ("USD"); therefore, references to $ means USD and CAD$ are to Canadian dollars.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(d)** **Basis of consolidation**

These condensed consolidated interim financial statements include the financial statements of Liberty Defense Holdings, Ltd., and the entities controlled by the Company (its subsidiaries), as follows:

---

| | | | |
|:---|:---|:---|:---|
| **Subsidiary** | **Place of<br> Incorporation** | **Functional<br> Currency** | **Beneficial<br> Interest** |
| Liberty Defense Technologies, Inc. ("LDT") | &nbsp;&nbsp;United States | &nbsp;&nbsp;USD | 100% |
| LDH GS Amalco Corp. ("LDH") | &nbsp;&nbsp;Canada | &nbsp;&nbsp;CAD | 100% |
| DrawDown Detection, Inc. ("DDD") | &nbsp;&nbsp;Canada | &nbsp;&nbsp;CAD | 100% |
| DrawDown Technologies, Inc. ("DDT") | &nbsp;&nbsp;United States | &nbsp;&nbsp;CAD | 100% |

---

Control exists when the Company has power over an investee, exposure, or rights, to variable returns from its involvement with the investee and the ability to use its power over the investee to affect the amount of the Company's returns. All intercompany balances and transactions have been eliminated upon consolidation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(e)** **Critical accounting estimates and judgments**

The preparation of financial statements in conformity with IFRS, requires management to select accounting policies and make estimates and judgments that may have a significant impact on the consolidated financial statements. Estimates are continuously evaluated and are based on management's experience and expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

The Company's critical accounting judgements and estimates were presented in Note 2 of the annual audited consolidated financial statements and have been consistently applied in the preparation of these condensed consolidated interim financial statements. No new estimates and judgements were applied for the period ended March 31, 2026.

**3.** **Material Accounting Policy Information** 

These condensed consolidated interim financial statements do not include all note disclosures required by IFRS for annual financial statements and, therefore, should be read in conjunction with the audited financial statements for the year ended December 31, 2025. In the opinion of management, all adjustments considered necessary for fair presentation of the Company's financial position, results of operations and cash flows have been included. Operating results for the three months ended March 31, 2026, are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

(Unaudited - Expressed in U.S. dollars, unless otherwise stated and per share amounts)

For the three months ended March 31, 2026, and 2025

**4.** **Accounts Receivable, Prepaids and Deposits** 

---

| | | |
|:---|:---|:---|
|  | **March 31, <br> 2026** | **December 31, <br> 2025** |
| Trade accounts receivables | $595350 | $470263 |
| Other accounts receivables | 12338 | 114980 |
| Prepaids and deposits | 223731 | 663124 |
|  | $**831419** | $**1248367** |

---

The Company provides credit to its customers in the normal course of business and has mitigated this risk by managing and monitoring the underlying business relationships. The Company recognized $nil in expected credit losses during the three months ended March 31, 2026 (December 31, 2025 - $13,910).

**5.** **Accounts Payable** 

---

| | | |
|:---|:---|:---|
|  | **March 31, <br> 2026** | **December 31, <br> 2025** |
| Accounts payable | $3543793 | $2546832 |
| Accrued liabilities | 2051490 | 2335545 |
|  | $**5595283** | $**4882377** |

---

Accounts payable of the Company relates to amounts owed to suppliers for goods and services, as well as vendors in relation to legal services, consulting, and credit cards payable. Accrued liabilities of the Company are principally comprised of amounts professional fees, payroll-related obligations, professional fees, royalties, warranty provision, and other expenses incurred but not yet invoiced as of the reporting date.

Amounts payable to Viken were originally due within 120 days and bore interest at a rate of 1.5% per month on overdue balances. As at March 31, 2026, the amount payable to Viken was $603,379 (December 31, 2025 – $510,000). On March 19, 2026, the parties entered into an amendment requiring the Company to repay the outstanding balance on the earlier of the date the Company's common shares commenced trading on the Nasdaq Stock Market and March 31, 2026. The amendment also resulted in the recognition of $93,379 of interest expense, increasing the total amount payable to $603,379. As of May 27, 2026, the outstanding balance had been fully repaid and the amount due to Viken was $nil.

As at March 31, 2026, the Company recognized deferred financing costs of $1,024,030 (December 31, 2025 – $803,698) related to its initial public offering on the Nasdaq Capital Market (Note 24).

**6.** **Inventory** 

---

| | | |
|:---|:---|:---|
|  | **March 31, <br> 2026** | **December 31, <br> 2025** |
| Raw materials | $506820 | $532604 |
| Work-in-progress | 197388 | 283656 |
| Finished Goods | 135333 | 124550.00 |
| Right of return on finished goods | 135333 | 249100 |
|  | $**974875** | $**1189910** |

---

The Company reclassified finished goods inventory of $nil (December 31, 2025 - $85,803) to property and equipment related to HEXWAVE demo unit.

During the three months ended March 31, 2026, the Company recognized an impairment expense of $293,840 (December 31, 2025 - $475,024).

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

(Unaudited - Expressed in U.S. dollars, unless otherwise stated and per share amounts)

For the three months ended March 31, 2026, and 2025

**6.** **Inventory** (continued)

During the three months ended March 31, 2026, the Company expensed $521,786 of inventory to HEXWAVE cost of revenue (December 31, 2025, $976,050).

During the three months ending March 31, 2026, the Company recognized $38,362 of warranty provision expense to HEXWAVE cost of revenue (December 31, 2025, $271,036).

During the three months ending March 31, 2026, the Company recorded $68,707 of amortization capitalized to inventory (December 31, 2025, $53,509).

**7.** **Property and Equipment** 

The continuity of the Company's property and equipment is as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Equipment** | **Right of Use<br> Asset** | **Prototype & Demo <br> Untis** | **Construction in<br> Process** | **Total** |
| **Cost** | | | | | |
| At December 31, 2024 | $248254 | $1186874 | $774566 | $119388 | $2329082 |
| Additions |  |  |  | 87119 | 87119 |
| Transfers |  |  | 292310 | (206507) | 85803 |
| Disposals | (8453) | - | - | - | (8453) |
| At December 31, 2025 | $239801 | $1186874 | $1066876 | $- | $2493551 |
| Additions |  |  |  | 8983 | 8983 |
| Disposals | - | - | - | - | - |
| **At March 31, 2026** | $239801 | $1186874 | $1066876 | $8983 | $2502534 |
| **Accumulated Depreciation** |  |  |  |  |  |
| At December 31, 2024 | $189564 | $617062 | $762519 | $- | $1569145 |
| Depreciation for disposal |  |  |  |  |  |
| Depreciation for the period | 22791 | 193417 | 36405 | - | 252613 |
| At December 31, 2025 | $212355 | $810479 | $798924 | $- | $1821758 |
| Depreciation for disposal |  |  |  |  |  |
| Depreciation for the period | 2193 | 42509 | 55916 | - | 100618 |
| **At March 31, 2026** | $214548 | $852988 | $854840 | $- | $1922376 |
| **Net Book Value** |  |  |  |  |  |
| At December 31, 2024 | $27446 | $376395 | $267952 | $- | $671793 |
| **At March 31, 2026** | $**25253** | $**333886** | $**212036** | $**8983** | $**580158** |

---

During the three months ended March 31, 2026, equipment depreciation recorded to cost of revenue was $1,268 (December 31, 2025 - $126,568).

During the three months ended March 31, 2026, the Company disposed of assets with a carrying value of $nil (December 31, 2025 - $8,453) for $nil proceeds (December 31, 2025 - $nil).

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

(Unaudited - Expressed in U.S. dollars, unless otherwise stated and per share amounts)

For the three months ended March 31, 2026, and 2025

**8.** **Intangible Assets** 

The continuity of the Company's intangible assets is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **MIT licenses** | **Battelle license** | **Intellectual<br> property** | **Total** |
| Balance, December 31, 2024 | $373009 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | $2198684 | $2571693 |
| Additions |  |  |  |  |
| Amortization | (34108) | - | (538453) | (572561) |
| Balance, December 31, 2025 | $338901 | $- | $1660231 | $1999132 |
| Additions |  |  |  |  |
| Amortization | (8527) | - | (134613) | (143140) |
| **Balance, March 31, 2026** | $**330374** | $**-** | $**1525618** | $**1855992** |

---

Intangible assets including MIT license and Battelle license, encompassing payments in connection to reimbursement of global patent filing costs and annual maintenance fees. Additionally, intellectual property was generated through the reverse take over ("RTO") transaction closed during the year ended December 31, 2021, and became ready for use during the year ended December 31, 2022. The remaining useful life of the intangible assets are as follows: MIT license 9.75 years, Battelle license nil years, and intellectual property 2.75 years.

During the three months ended March 31, 2026, $143,140 of amortization expense was allocated to HEXWAVE cost of revenues (December 31, 2025 - $519,052).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) MIT License Agreements**

The Company, through its wholly owned subsidiary Liberty Defense Technologies Inc. ("LDT"), has entered into agreements with the Massachusetts Institute of Technology ("MIT") and MIT's Lincoln Laboratory ("MIT LL"), including an exclusive patent licence agreement between MIT and LDT dated September 10, 2018, as amended from time to time (the "Licence Agreement"), a technology transfer agreement between LDT and MIT LL, effective August 24, 2018 (the "Technology Transfer Agreement"), and a cooperative research and development agreement between LDT and MIT dated as of December 21, 2018 ("CRADA"), such agreements providing LDT with an exclusive licence for patents, design assets and MIT LL technical expertise related to active three-dimensional imaging technology that are the technology behind the HEXWAVE product.

The obligations under the Technology Transfer Agreement and the CRADA have now been completed. Liberty may consider extending the CRADA (and therefore changing its scope) if it determines that additional MIT LL technical expertise related to active three-dimensional imaging technology is required. Pursuant to the License Agreement, LDT has been granted the exclusive rights to MIT's patent in "multistatic sparse array topology for FFT-based field imaging" (MIT Case No. l 8409L) (the "Patent"), which is being utilized in the development and application of the HEXWAVE product. The License Agreement is to be in effect until the expiration of the Patent, which is 10 years (December 2035). In granting LDT such patent rights, the Company shall pay MIT, in addition to patent filling costs, an annual fees as follows: 1) $20,000 for 2019 (paid); $50,000 for 2020 (paid); $60,000 for 2021 (paid); $100,000 for 2022 (paid); $nil for 2023, $40,000 for 2024 (payable), $200,000 for 2025 (payable), and $350,000 for 2026 and thereafter; and 2) a royalty of 5.7% of all gross amount billed licensed products (HEXWAVE) of the Company.

During the three months ended March 31, 2026, the Company accrued royalty payments of $32,490 (December 31, 2025, $44,916).

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

(Unaudited - Expressed in U.S. dollars, unless otherwise stated and per share amounts)

For the three months ended March 31, 2026, and 2025

**8.** **Intangible Assets** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) Battelle Memorial License Agreement**

On March 22, 2021, the Company, through its wholly owned subsidiary DrawDown Detection, Inc. has entered into an agreement ("Battelle License Agreement") with Battelle Memorial Institute ("Battelle"), which operates the Pacific Northwest National Laboratory ("PNNL"), to license the millimeter wave-based, High-Definition Advanced Imaging Technology (HD-AIT) body scanner and shoe scanner technologies. The agreement, as amended from time to time, provides the Company with a three-year exclusive license for certain patents which will convert to a non-exclusive license for the remaining life of the patents. The agreement also provides the Company with non-exclusive license for certain patents for life.

As consideration for the Battelle License Agreement, the Company paid $30,000 upon signing and $30,000 six months after.

Under the Battelle License Agreement, the Company shall pay a five percent royalty on gross sales less any returns, repayments, or rejections, that pertain to the production utilizing the license agreement (HD-AIT), and a twenty-five percent royalty on all sublicensing revenues if permitted under the contract guidelines.

During the three months ended March 31, 2026, the Company accrued royalty payments of $nil (December 31, 2025, $nil).

The Company is required to pay a minimum royalty amount as follows, unless the agreement is terminated:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) Battelle Memorial License Agreement** (continued)

---

| | |
|:---|:---|
|  | **Amounts** |
| Year 2021 (paid) | $50000 |
| Year 2022 (paid) | 50000 |
| Year 2023 (paid) | 100000 |
| Year 2024 (paid) | 200000 |
| Year 2025 (payable) | 200000 |
| Year 2026 and each year thereafter (payable) | 200000 |

---

The Company is obligated reimburse Battelle for ongoing patenting expenses, as well as past patenting expenses in the total amount of $50,000, from which $50,000 has been paid.

As at March 31, 2026, the Company has a balance payable of $400,000 (December 31, 2025, $200,000).

**9.** **Loans Payable** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) Related Party Loans**

During the three months ended March 31, 2026, the Company received working capital loans from related parties in the amount of $193,647. The Company did not receive working capital loans from related parties during the fiscal year ended December 31, 2025. These loans, unsecured and non-interest bearing, lack specified maturity dates. As of May 27, 2026, all loans were fully repaid.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

(Unaudited - Expressed in U.S. dollars, unless otherwise stated and per share amounts)

For the three months ended March 31, 2026, and 2025

**9.** **Loans Payable** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) Related Party Loans** (continued)

---

| | |
|:---|:---|
|  | **Amounts** |
| **Balance, December 31, 2024** | $**74658** |
| Additions |  |
| Repayments | (74658) |
| **Balance, December 31, 2025** | $**-** |
| Additions | 193647 |
| Repayments | (143441) |
| **Balance, March 31, 2026** | $**50206** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) Short Term Loans**

During the year ended December 31, 2024, the Company obtained a secured business loan of $420,000 from Blade Funding with a 32-week term. The loan carries an annual interest rate of 11.50%, requires weekly payments of $13,125. The loan matured on January 19, 2025. As at March 31, 2026, the balance outstanding was $nil (December 31, 2025 - $nil). During the year ended December 31, 2025, the Company fully repaid this loan.

---

| | |
|:---|:---|
|  | **Amounts** |
| **Balance, December 31, 2024** | $**26250** |
| Repayments | (26250) |
| **Balance, December 31, 2025** | $**-** |
| Additions | - |
| **Balance, March 31, 2026** | $**-** |

---

**10.** **Parabilis Term Loan** 

On August 22, 2024, the Company secured a $1,800,000 business term loan from PFF, LLC ("Parabilis"). The loan has a term of 104 weeks with an annual interest rate of 17.99% and is scheduled to mature on August 15, 2026. The agreement was amended on March 15, 2025, July 15, 2025, August 14, 2025, and September 1, 2025, with additional advancements totaling $650,000 and amending the payment schedule. Repayments of principal commenced in October 2025 with interest only payments through September 2025. The remaining contractual repayments approximate the carrying value of the term loan and are payable in eight months. See Note 10(a) regarding collateral.

---

| | |
|:---|:---|
|  | **Amounts** |
| **Balance, December 31, 2024** | $**1921687** |
| Additions | 650000 |
| Accrued factoring Fee | 384047 |
| Repayments | (333017) |
| **Balance, December 31, 2025** | $**2622717** |
| Additions |  |
| Accrued factoring Fee | 76357 |
| Repayments | (1148443) |
| **Balance, March 31, 2026** | $**1550631** |
| Current | $1550631 |
| Non-current | - |

---

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

(Unaudited - Expressed in U.S. dollars, unless otherwise stated and per share amounts)

For the three months ended March 31, 2026, and 2025

**11.** **Factoring and Credit Line Liabilities** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(a)** **Parabilis Credit Line**

On August 22, 2024, the Company entered into a secured revolving credit line agreement with Parabilis for up to $2,500,000. The borrowing base for the credit line is determined based on the following percentages: 90% of eligible billed receivables, 65% of eligible unbilled receivables, and 30% of eligible delivery orders. The aggregate of eligible billed and unbilled receivables, along with eligible delivery orders, establishes the Company's borrowing capacity under the credit line.

When invoicing occurs, payments on the invoices are applied directly to the outstanding principal and interest on the credit line. The revolving credit facility had a maturity date of August 31, 2025, which was then amended on September 1, 2025, to mature on May 31, 2026, and will automatically renew for one-year periods unless the lender has notified the borrower at least 90 days in advance of the current maturity date will not renew. The facility carries an interest rate of 14.99% per annum. The Company shall pay a monthly commitment fee equal to 0.083% multiplied by the line of credit balance at the end of each month.

The Parabilis term loan and credit line are secured by all tangible and intangible personal property of the Company, wherever located, whether currently owned or acquired in the future.

---

| | |
|:---|:---|
|  | **Amounts** |
| **Balance, December 31, 2024** | $**983671** |
| Additions | 683017 |
| Accrued factoring Fee | 169279 |
| Repayments | (1056136) |
| **Balance, December 31, 2025** | $**779831** |
| Additions | 1148443 |
| Accrued factoring Fees & interest | 46656 |
| Repayments | - |
| **Balance, March 31, 2026** | $**1974930** |

---

**12.** **Leases** 

The Company's lease liabilities as at March 31, 2026, and December 31, 2025, are as follows:

---

| | |
|:---|:---|
|  | **Right of use liability** |
| Balance, December 31, 2024 | $708825 |
| Finance costs | 44882 |
| Lease cancelation | (18514) |
| Lease payments | (198958) |
| **Balance, December 31, 2025** | $**536235** |
| Finance costs | 7574 |
| Lease payments | (39160) |
| **Balance, March 31, 2026** | $**504649** |
| Less current portion | 147167 |
| **Non-current lease liability** | $**357482** |

---

During the year ended December 31, 2025, the Company was notified one of the leases being nulled due to the owners selling the building. The lease was canceled but the Company's right to the building was retained until September 30, 2025.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

(Unaudited - Expressed in U.S. dollars, unless otherwise stated and per share amounts)

For the three months ended March 31, 2026, and 2025

**12.** **Leases** (continued)

Minimum lease payments are as follows:

---

| | | |
|:---|:---|:---|
|  | **March 31, <br> 2026** | **December 31, <br> 2025** |
| Maturity analysis - contractual undiscounted cash flows |  |  |
| One year or less | $239807 | $238567 |
| Two to five years | 318550 | 358949 |
| Six and thereafter | - | - |
| Total lease liabilities | $558357 | $597516 |
| **Lease liabilities included in the statement of financial position** | $**504649** | $**536235** |
| Current | $147167 | $235834 |
| Non-current | $357482 | $300401 |

---

During the three months ended March 31, 2026, the Company recorded a lease expense of $4,500 (December 31, 2025-$6,000) related to short-term leases not meeting the criteria for capitalization under IFRS 16.

**13.** **Share Capital** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) Common share transactions for the three months ended March 31, 2026**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i) On
 January 15, 2026, the Company closed the second and final tranche of the December 2025
 non-brokered private placement for additional gross proceeds of $624,002 (CAD$867,506) through
 the issuance of 87,626 units at a price of CAD$9.90 per unit. Each unit comprised one common
 share and one common share purchase warrant, with each warrant entitling the holder to acquire
 one additional common share at an exercise price of CAD$13.50 per share, exercisable from
 March 17, 2026, to January 15, 2028. The warrants were allocated a residual value
 of $283,638. In connection with the private placement, the Company issued an aggregate of
 5,045 broker warrants to agents under terms and conditions substantially identical to those
 of the unit warrant . The broker warrants were allocated
 a fair value of $13,087 (CAD$18,194). Additionally, the Company paid commissions and legal
 expenses of $57,252 (CAD$79,390).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) Common share transactions for the year ended December 31, 2025**

ii) On January 6, 2025, the Company received $2,071,851 (CAD$2,977,851) from the exercise of 120,317 share purchase warrants after electing, on December 31, 2024, to exercise its acceleration right for a total of 277,778 warrants granted on December 19, 2024, pursuant to a private placement. As a result, the remaining 157,461 unexercised warrants expired.

iii) On March 20, 2025, the Company closed a non-brokered private placement for gross proceeds of $3,479,351 (CAD$5,001,183). The Company issued 67,356 units (each a "Unit") of the Company at a price of CAD$74.25 per Unit. Each Unit comprised of one common share and one-half common share purchase warrant. Each warrant entitles the holder thereof to purchase one additional common share of the Company at a price of CAD$92.25 for a period of 24 months and is subject to an accelerated expiry at the Company's election under certain conditions. The warrants were allocated a residual value of $263,584. In connection with the non-brokered private placement, the Company issued 4,715 finder warrants. Each finder's warrant will be exercisable to purchase one common share for a period of 24 months at an exercise price of CAD$74.25. The broker warrants were allocated a fair value of $84,183 (CAD$121,004). Additionally, the Company paid commissions and legal expenses of $420,424 (CAD$600,650).

iv) On April 1, 2025, a total of 78 shares were issued pursuant to the exercise of 78 warrants, resulting in proceeds of $3,704 (CAD$5,285). Residual value in the amount of $nil was reversed.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

(Unaudited - Expressed in U.S. dollars, unless otherwise stated and per share amounts)

For the three months ended March 31, 2026, and 2025

**13.** **Share Capital** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;v) On
 April 13, 2025, a total of 478 finder warrants expired with an exercise price of $135.00.
 These broker warrants had a fair value of $5,498 and the reserve value was reclassified to
 share capital.

vi) On May 9, 2025, a total of 309 finder warrants expired with an exercise price of $135.00. These broker warrants had a fair value of $3,816 and the reverse value was reclassified to share capital.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i) On
 June 6, 2025, a total of 206 finder warrants expired with an exercise price of $135.00.
 These broker warrants had a fair value of $1,892 and the reverse value was reclassified to
 share capital.

ii) On July 29, 2025, the Company closed a non-brokered private placement for gross proceeds of $3,199,767 (CAD$4,399,996). The Company issued 444,444 units (each a "Unit") of the Company at a price of CAD$9.90 per Unit. Each Unit comprised of one common share and one common share purchase warrant. Each warrant entitles the holder thereof to purchase one additional common share of the Company at a price of CAD$15.75 for a period of 12 months and is subject to an accelerated expiry at the Company's election under certain conditions. The warrants were allocated a residual value of $nil. Additionally, the Company issued 16,000 broker warrants with a fair value of $38,472 (CAD$52,902). The Company paid commissions and legal expenses of $137,898 (CAD$189,781).

iii) On October 31, 2025, the Company received gross proceeds of $1,353,116 (CAD$1,895,093) from the exercise of 120,323 warrants.

iv) On December 31, 2025, the Company closed the first tranche of a non-brokered private placement for gross proceeds of $1,274,365 (CAD$1,747,172), through the issuance of 176,482 units at a price of CAD$9.90 per unit. Each unit comprised one common share and one common share purchase warrant, with each warrant entitling the holder to acquire one additional common share at an exercise price of CAD$13.50 per share, exercisable from March 2, 2026, to December 31, 2027. The Company issued an aggregate of 7,915 broker warrants with a fair value of $20,866 (CAD$28,608). The warrants were allocated a residual value of $115,851 (CAD$158,833). The Company paid commissions and legal expenses of $57,331 (CAD$78,356).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;v) During
 the year ended December 31, 2025, a total of 4,758 common shares were issued pursuant
 to the RSUs with a fair value of $383,471.

**14.** **Equity Reserves** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) Share-based compensation**

The Company maintains an Omnibus Equity Incentive Plan (the "Incentive Plan") which is comprised of stock options, restricted share units ("RSUs"), performance share units ("PSUs"), and deferred share units ("DSUs"). The maximum number of common shares reserved for issuance, in the aggregate, under the Incentive Plan is 10% of the aggregate number of common shares issued and outstanding to be granted to directors, officers, employees, and consultants under certain restrictions.

Unless the Board decides, or the grant agreement specifies otherwise, the stock options will vest in two years with quarterly intervals following the date of such grant. The Board shall fix the exercise price of any stock option when such stock option is granted, which shall not be less than the closing price of the common shares on the Exchange on the day prior to the date of grant (the "Market Value"). A stock option shall be exercisable during a period established by the Board, which shall commence on the date of the grant and shall terminate no later than ten (10) years after the date of grant of the award or such shorter period as the Board may determine.

With respect to RSUs, the specific provisions of the RSU plan, eligibility, vesting period, terms of the RSUs and the number of RSUs granted are to be determined by the Board of Directors at the time of the grant.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

(Unaudited - Expressed in U.S. dollars, unless otherwise stated and per share amounts)

For the three months ended March 31, 2026, and 2025

**14.** **Equity Reserves** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) Share-based compensation** (continued)

With respect to PSUs, the specific provisions of the PSU plan, eligibility, vesting period, terms of the PSUs and the number of PSUs granted are to be determined by the Board of Directors at the time of the grant.

The continuity of the number of stock options issued and outstanding are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Number of stock<br> options** | **Weighted average <br> exercise price** | **Weighted average <br> exercise price** |
| **Outstanding, December 31, 2024** | **71717** | **CAD$** | **58.05** |
| Cancelled | (15329) |  | 59.96 |
| Granted | 54444 |  | 13.69 |
| **Outstanding, December 31, 2025** | **110832** | **CAD$** | **35.85** |
| **Outstanding, March 31, 2026** | **110832** | **CAD$** | **35.85** |

---

As at March 31, 2026, the number of stock options outstanding and exercisable were:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Outstanding** | **Outstanding** | **Outstanding** | **Exercisable** | **Exercisable** |
| <br>**Expiry date** | **Number of stock<br> options** | **Exercise price** | **Exercise price** | **Remaining<br> contractual life<br> (years)** | **Number of stock<br> options** |
| 7-Apr-26 | 1844 | CAD$ | 225.00 | 0.02 | 1844 |
| 28-Jul-26 | 278 | CAD$ | 247.50 | 0.33 | 278 |
| 28-Jul-26 | 111 | CAD$ | 292.50 | 0.33 | 111 |
| 1-Nov-26 | 944 | CAD$ | 207.00 | 0.59 | 944 |
| 14-Jan-27 | 222 | CAD$ | 162.00 | 0.79 | 222 |
| 15-Apr-27 | 1111 | CAD$ | 26.55 | 1.04 | 1111 |
| 26-Apr-27 | 2633 | CAD$ | 184.50 | 1.07 | 2633 |
| 2-Jul-27 | 5556 | CAD$ | 10.80 | 1.25 | 2083 |
| 21-Nov-27 | 133 | CAD$ | 99.00 | 1.64 | 133 |
| 26-Apr-28 | 111 | CAD$ | 81.00 | 2.07 | 111 |
| 16-Oct-28 | 1778 | CAD$ | 85.50 | 2.55 | 1778 |
| 30-Dec-29 | 51667 | CAD$ | 38.25 | 3.75 | 35209 |
| 2-Apr-30 | 3333 | CAD$ | 37.80 | 4.01 | 1667 |
| 30-Sep-30 | 41111 | CAD$ | 12.15 | 4.50 | 10278 |
| **March 31, 2026** | **110832** |  |  |  | **58402** |

---

During the three months ended March 31, 2026, the Company recognized stock-based compensation related to stock options totaling $124,288 (March 31, 2025 – $548,391). Of this amount, $4,851 was recorded as stock-based compensation in the HEXWAVE cost of revenue (March 31, 2025 – $9,487), and $7,522 was recorded as stock-based compensation in cost of contract revenue (March 31, 2025 - $2,355).

The fair value of the stock options granted were estimated using the Black-Scholes option valuation model with the following weighted average assumptions:

---

| | | | |
|:---|:---|:---|:---|
|  | **March 31, <br> 2026** | **December 31, <br> 2025** | **December 31, <br> 2025** |
| Risk-free interest rate | Nil |  | 2.52% |
| Expected dividend yield | Nil |  | Nil |
| Stock price volatility | Nil |  | 155.49% |
| Expected life (in years) | Nil |  | 5 years |
| Stock price | Nil | CAD$ | 13.50 |

---

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

(Unaudited - Expressed in U.S. dollars, unless otherwise stated and per share amounts)

For the three months ended March 31, 2026, and 2025

**14.** **Equity Reserves** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) Restricted share units ("RSU")**

**Restricted share units granted for the three months ended March 31, 2026**:

The estimated fair value of the equity settled RSUs granted as of March 31, 2026, was $nil (December 31, 2025 – $60,998) and will be recognized as an expense over the vesting period of the RSUs. The fair value of the equity settled RSUs as at the grant date was determined with reference to the market value of the common shares of the Company at the grant date.

**Restricted share units granted for the year ended December 31, 2025**:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i) During
 the year ended December 31, 2025, a total of 4,758 common shares were issued pursuant
 to the exercise of RSUs.

ii) On August 7, 2025, the Company granted 1,111 RSUs to consultants; these RSUs shall be settled with common shares of the Company, have an exercise period that expires on January 1, 2029, and vest at 100% on January 1, 2026.

iii) On December 12, 2025, the Company granted 7,149 RSUs to a contractor; these RSUs shall be settled with common shares of the Company, have an exercise period that expires December 12, 2029, and vests 100% on December 12, 2026.

The following table summarizes the movements in outstanding RSUs:

---

| | | | |
|:---|:---|:---|:---|
|  | **Number of equity<br> settled RSUs** | **Grant Price** | **Grant Price** |
| **Outstanding, December 31, 2024** | **11918** | **CAD$** | **180.45** |
| Granted | 8260 |  | 10.91 |
| Exercised | (4758) |  | 115.88 |
| **Outstanding, December 31, 2025 and March 31, 2026** | 15420 | **CAD$** | **55.51** |

---

---

| | | | |
|:---|:---|:---|:---|
| | **Outstanding** | **Exercisable** | **Exercisable** |
| <br>**Expiry date** | **Number of restricted<br> share units** | **Remaining<br> contractual life<br> (years)** | **Number of restricted <br> share units** |
| 7-Apr-26 | 556 | 0.02 | 556 |
| 10-Jun-26 | 464 | 0.19 | 464 |
| 15-Jan-27 | 333 | 0.79 | 333 |
| 26-Apr-27 | 444 | 1.07 | 444 |
| 16-Oct-28 | 2752 | 2.55 | 2752 |
| 28-Feb-29 | 2611 | 2.92 | 2611 |
| 1-Jan-29 | 1111 | 2.76 | 1111 |
| 12-Dec-29 | 7149 | 3.70 | 2315 |
| **March 31, 2026** | **15420** |  | **10586** |

---

A total of 8,272 RSU's were vested as at March 31, 2026.

During the three months ended March 31, 2026, the Company recognized stock-based compensation related to RSUs in the amount of $13,639 (March 31, 2025 – $22,320).

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

(Unaudited - Expressed in U.S. dollars, unless otherwise stated and per share amounts)

For the three months ended March 31, 2026, and 2025

**14.** **Equity Reserves** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c) Share purchase warrants**

The continuity of the number of share purchase warrants outstanding is as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Warrants <br> outstanding** | **Exercise <br> Price** | **Exercise <br> Price** |
| **Outstanding, December 31, 2024** | **446109** | **CAD$** | **54.90** |
| Issued | 683234 |  | 19.32 |
| Expired | (169855) |  | 32.79 |
| Exercised | (240718) |  | 20.27 |
| **Outstanding December 31, 2025** | **718770** | **CAD$** | **36.45** |
| Issued | 92672 |  | 13.50 |
| **Outstanding March 31, 2026** | **811442** | **CAD$** | **33.83** |

---

The fair value of the compensation warrants was estimated using the Black-Scholes option valuation model with the following weighted average assumptions:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **March 31,** | **March 31,** | **December 31,** | **December 31,** |
|  | **2026** | **2026** | **2025** | **2025** |
| Risk-free interest rate |  | 2.90% |  | 2.88% |
| Expected dividend yield |  | Nil |  | Nil |
| Stock price volatility |  | 93.11% |  | 94.42% |
| Expected life (in years) |  | 2 years |  | 1.4 years |
| Share price on grant date | CAD$ | 13.50 | CAD$ | 41.04 |
| Fair value share purchase warrants | CAD$ | 3.61 | CAD$ | 7.38 |

---

The outstanding number of share purchase warrants is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Outstanding** | **Outstanding** | **Outstanding** | **Outstanding** |
| <br>**Expiry date** | **Number of warrants** | **Exercise price** | **Exercise price** | **Remaining<br> contractual life<br> (years)** |
| 28-Jul-26 | 324121 | CAD$ | 15.75 | 0.33 |
| 28-Jul-26 | 15999 | CAD$ | 15.75 | 0.33 |
| 5-Oct-26 | 39617 | CAD$ | 135.00 | 0.52 |
| 5-Oct-26 | 1349 | CAD$ | 90.00 | 0.52 |
| 18-Dec-26 | 45162 | CAD$ | 24.75 | 0.72 |
| 12-Jan-27 | 12116 | CAD$ | 67.95 | 0.79 |
| 5-Feb-27 | 2222 | CAD$ | 90.00 | 0.85 |
| 28-Feb-27 | 20202 | CAD$ | 67.50 | 0.92 |
| 27-Jun-27 | 423 | CAD$ | 90.00 | 1.24 |
| 27-Jun-27 | 10256 | CAD$ | 67.95 | 1.24 |
| 20-Mar-27 | 33678 | CAD$ | 92.25 | 0.97 |
| 20-Mar-27 | 4715 | CAD$ | 74.25 | 0.97 |
| 27-Oct-27 | 3215 | CAD$ | 123.75 | 1.58 |
| 27-Oct-27 | 21296 | CAD$ | 225.00 | 1.58 |
| 31-Dec-27 | 176482 | CAD$ | 13.50 | 1.75 |
| 31-Dec-27 | 7915 | CAD$ | 13.50 | 1.75 |
| 15-Jan-28 | 87627 | CAD$ | 13.50 | 1.79 |
| 15-Jan-28 | 5045 | CAD$ | 13.50 | 1.79 |
| **March 31, 2026** | **811442** |  |  |  |

---

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

(Unaudited - Expressed in U.S. dollars, unless otherwise stated and per share amounts)

For the three months ended March 31, 2026, and 2025

**14.** **Equity Reserves** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d) Performance Shares**

On March 17, 2021, Liberty deposited into escrow, and held in escrow, Operational Performance Shares ("OPS") and Capital Market Performance Shares ("CMPS") for certain directors, officers, and consultants of the Company upon the Company achieving certain performance milestones. Once these milestones were achieved the shares would be released. These performance shares included 4,444 of OPS and 19,496 of CMPS. In order to fair value these performance shares, management estimated the probability that the Company would issue the performance shares.

All CMPS have been issued in previous years upon the completion of all required milestones.

<u>Operational Performance Shares</u>

As at March 31, 2026, none of the 4,444 OPS have been issued as neither of the two milestones have been met. The estimated fair value of the OPS is CAD$800,000 which had an estimated vesting period between December 2024 and December 2025. The estimated vesting period has been adjusted to December 2026. During the three months ended March 31, 2026, the Company recorded stock-based compensation in connection to OPS in the amounts of $23,579 (March 31, 2025 – $24,936). For the three months ended March 31, 2026, and year ended December 31, 2025, none of the operational performance shares have been released from escrow.

**15.** **Loss Per Share** 

Basic loss per share amount is calculated by dividing the net loss for the year by the weighted average number of common shares outstanding during the year.

---

| | | |
|:---|:---|:---|
|  | **Three months ended March 31,** | **Three months ended March 31,** |
|  | **2025** | **2024** |
| Loss attributable to common shareholders | $(2718647) | $(3784695) |
| Weighted average number of shares | 1969699 | 1085752 |
| Basic and diluted loss per share | $(1.38) | $(3.49) |

---

The Company incurred net losses for the three months ended March 31, 2026, and March 31, 2025, therefore all outstanding stock options share purchase warrants, restricted share units, and performance share units, if any, have been excluded from the calculation of diluted loss per share since the effect would be anti-dilutive.

**16.** **Revenue** 

Revenue recognized for the three months ended March 31, 2026, and 2025, relates to contract revenue from the Transportation Security Administration ("TSA") (Note 17), as well as sales of HEXWAVE units.

Deferred revenue as of March 31, 2026, was $165,289 (December 31, 2025 - $95,541).

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

(Unaudited - Expressed in U.S. dollars, unless otherwise stated and per share amounts)

For the three months ended March 31, 2026, and 2025

**16.** **Revenue** (continued)

---

| | |
|:---|:---|
| **Deferred Revenue** | **Amounts** |
| **Outstanding, December 31, 2024** | 180000 |
| Additions | 189725 |
| Refunds | (180000) |
| Recongnized revenue | (94254) |
| **Outstanding, December 31, 2025** | **95541** |
| Additions | 82241 |
| Refunds |  |
| Recongnized revenue | (12493) |
| **Outstanding, March 31, 2026** | **165289** |

---

---

| | | |
|:---|:---|:---|
| | **Three months ended March 31,** | **Three months ended March 31,** |
| <br>**Revenue** | **2026** | **2025** |
| TSA Contract Award HD-AIT |  | 100000 |
| TSA OA Development |  | 175000 |
| HD-AIT Phase II B | 275000 |  |
| HEXWAVE units | 601928 | 623500 |
| HEXWAVE Software, Training & Warranty | 42493 | 156858 |
| **Total Revenue** | $**919421** | $**1055358** |

---

**17.** **Contract Awards** 

During the three months ended March 31, 2026, the Company recognized total contract revenue of $275,000, recorded in revenue (March 31, 2025 – $275,000). Future revenue related to these contracts will be recognized as performance obligations are satisfied. It is estimated that future revenues will be recognized on the same basis according to the following timelines:

---

| | | |
|:---|:---|:---|
| | **Year ended December 31,** | **Year ended December 31,** |
| <br>**Contract Award Revenue Expected in Future Years** | **2026** | **2027** |
| HD-AIT Phase II B | $82759 | $- |
| **Total estimated contract revenues** | $**82759** | $**-** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) TSA HD-AIT Upgrade**

On September 30, 2022, the Company received a contract award of $1,747,905 from the Transportation Security Administration ("TSA") for the HD-AIT Wide Band Upgrade Kit. On September 28, 2023, the contract was modified to include an additional milestone, increasing the total contract value to $1,922,905. The contract award supports the development of millimeter-wave imaging system prototypes to enhance and upgrade the current imaging technology used in passenger security screening applications.

As of March 31, 2026, the Company received $nil and recorded a receivable of $nil (March 31, 2025 – $nil and $100,000, respectively). The remaining contract balance as of March 31, 2026, was $nil (December 31, 2025 – $nil).

The Company is required to submit quarterly invoices as follows:

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

(Unaudited - Expressed in U.S. dollars, unless otherwise stated and per share amounts)

For the three months ended March 31, 2026, and 2025

**17.** **Contract Awards** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) TSA HD-AIT Upgrade** (continued)

---

| | |
|:---|:---|
| **TSA HD-AIT Upgrade** | **Amounts** |
| **Year 2023** | $1265000 |
| **Year 2024** | 200000 |
| **Year 2025** | 457905 |
| **Total Contract Value** | $**1922905** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) TSA Open Architecture**

On September 29, 2023, the Company received a contract award for $1,116,944 from TSA for the Open Architecture Development. The contract award is to develop a system-level approach that addresses TSA's request for implementation of a Checkpoint Open Architecture for On-Person Screening (OPS) systems that enable modularity and enhances security effectiveness. The project will be performed over a period of twenty-one months, and invoices will be issued once the milestones are reached based on the agreed upon timeline. During the three months ended March 31, 2026, the Company received $nil and had a receivable of $nil (March 31, 2025 – $nil and $175,000, respectively). The balance remaining on the contract as of March 31, 2026, was $nil (December 31, 2025 – $nil).

---

| | |
|:---|:---|
| **TSA Open Architecture** | **Amounts** |
| **Year 2023** | $75000 |
| **Year 2024** | 795000 |
| **Year 2025** | 246944 |
| **Total Contract Value** | $**1116944** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c) TSA HD-AIT Phase II A**

On September 5, 2024, the Company received a contract award for $446,944 from TSA for the HD-AIT Phase II A option. The contract award is a follow-on option to the current HD-AIT development program to execute phase II to drive to a final hardware design capable of supporting future compliance efforts. The project will be performed over a period of twelve months, and invoices will be issued once the milestones are reached based on the agreed upon timeline. During the three months ended March 31, 2026, the Company received $nil and had a receivable of $nil (March 31, 2025 - $nil, and $nil respectively). The balance remaining on the contract as of March 31, 2026, was $nil (December 31, 2025 - $nil).

---

| | |
|:---|:---|
| **TSA HD-AIT Phase II A** | **Amounts** |
| **Year 2024** | $296944 |
| **Year 2025** | $150000 |
| **Total Contract Value** | $**446944** |

---

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

(Unaudited - Expressed in U.S. dollars, unless otherwise stated and per share amounts)

For the three months ended March 31, 2026, and 2025

**17.** **Contract Awards** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d) TSA HD-AIT Phase II B**

On September 29, 2025, the Company received a contract award for $357,759 from TSA for the HD-AIT Phase II B option. The contract award is a follow-on option to the current HD-AIT development program to execute phase II to drive to a final hardware design capable of supporting future compliance efforts. Invoices will be issued once the milestones are reached based on the agreed upon timeline. As at March 31, 2025, the Company received $nil and had a receivable of $275,000 (March 31, 2025 - $nil, and $nil respectively). The balance remaining on the contract as of March 31, 2026, was $82,759 (December 31, 2025 - $357,759).

---

| | |
|:---|:---|
| **TSA HD-AIT Phase II B** | **Amounts** |
| **Year 2026** |  |
| &nbsp;&nbsp;&nbsp;Milestone 3 (Q1 2026) (payable) | $100000 |
| &nbsp;&nbsp;&nbsp;Milestone 4 (Q1 2026) (payable) | $175000 |
| &nbsp;&nbsp;&nbsp;Milestone 5 (Q2 2026) | 82759 |
| **Total Contract Value** | $**357759** |

---

As of March 31, 2026, the Company recorded contract costs of $nil, representing costs incurred for contract milestones not yet achieved less related impairment charges (December 31, 2025 - $152,421). As of March 31, 2025, the Company recorded an impairment of the contract costs of $nil (December 31, 2025 - $192,951).

**18.** **Supplemental Disclosure with Respect to Cash Flows** 

During the three months ended March 31, 2026, and 2025, the Company paid $nil in income taxes in both periods, and paid interest of $149,974 and $117,543, respectively.

---

| | | |
|:---|:---|:---|
|  | **Three months ended March 31,** | **Three months ended March 31,** |
|  | **2026** | **2025** |
| **Changes in non-cash working capital** |  |  |
| &nbsp;&nbsp;&nbsp;Amounts receivable and prepaids | $416948 | $(605091) |
| &nbsp;&nbsp;&nbsp;Inventory | 85237 | 551310 |
| &nbsp;&nbsp;&nbsp;Contract cost | 101614 | 268952 |
| &nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities | 712906 | (852810) |
| &nbsp;&nbsp;&nbsp;Deferred financing fee | (220332) |  |
| &nbsp;&nbsp;&nbsp;Deferred revenue | 69748 | (60000) |
| **Net changes in non-working capital** | $**1166121** | $**(697639)** |
| **Supplemental cash flow information** |  |  |
| &nbsp;&nbsp;&nbsp;Fair value of compensation brokers warrants | $13087 | $84183 |
| &nbsp;&nbsp;&nbsp;Residual value allocated to warrants | 283638 | 263584 |
| &nbsp;&nbsp;&nbsp;Restricted share units issued for cash |  | 364880 |
| &nbsp;&nbsp;&nbsp;Intangible assets included in accounts payable |  | 200000 |

---

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

(Unaudited - Expressed in U.S. dollars, unless otherwise stated and per share amounts)

For the three months ended March 31, 2026, and 2025

**19.** **Related Party Transactions** 

**Compensation of key management personnel:**

Key management personnel include persons having the authority and responsibility for planning, directing, and controlling the activities of the Company as a whole. The key management personnel of the Company are the members of the Company's executive management team and Board of Directors. Compensation provided to key management personnel is as follows:

---

| | | |
|:---|:---|:---|
|  | **Three months ended March 31,** | **Three months ended March 31,** |
|  | **2026** | **2025** |
| G&A Salaries | $282032 | $355017 |
| G&A Stock-based compensation | 128255 | 312337 |
|  | $**410286** | $**667354** |

---

As of March 31, 2026, the Company had a balance payable of $429,585 to key management personnel (March 31, 2025, – $176,537). This payable balance includes accounts payable and accrued liabilities relating to compensation to directors, officers, or their related companies, included in compensation of key management personnel. These related party balances are unsecured, non-interest bearing and have no specific terms of settlement.

During the three months ended March 31, 2026, the Company received working capital loans in the amount of $193,647 (March 31, 2025 - $nil) from members of key management personnel or their related parties and repaid $143,441 (March 31, 2025 - $74,658). As at March 31, 2026, the outstanding balance is $50,206 (Note 8(a)) (March 31, 2025 – $nil).

**20.** **Financial Instruments** 

As at March 31, 2026, the Company's financial instruments comprise cash, trades receivables, accounts payable and accrued liabilities, term loan, lease liabilities and line of credit. The fair values of the Company's financial instruments approximate their carrying values due to their short-term maturity or market interest rates.

Fair value of financial instruments:

Financial instruments recorded at fair value on the consolidated statements of financial position are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The three levels of the fair value hierarchy are:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Level 3 – Inputs that are not based on observable market data.

The Company's activities expose it to financial risks of varying degrees of significance, which could affect its ability to achieve its strategic objectives for growth and shareholder returns. The principal financial risks to which the Company is exposed are credit risk, liquidity risk and currency risk. The Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework and reviews the Company's policies on an ongoing basis.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

(Unaudited - Expressed in U.S. dollars, unless otherwise stated and per share amounts)

For the three months ended March 31, 2026, and 2025

**20.** **Financial Instruments** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) Credit risk**

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations, including accounts receivable terms. The Company's cash is held through large Canadian, international, and foreign national financial institutions. The Company's receivables primarily consist of GST receivable due from the Canadian government and trade receivables that the Company continues to collect. These trade receivables are primarily with continuing customers and are not subject to significant credit risk. As at March 31, 2026, the Company's trade receivables totalling $595,350 are from four customers (December 31, 2025 - $470,263). The Company's maximum exposure to credit risk is limited to the carrying amount of cash and accounts receivables.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) Liquidity risk**

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity risk through the management of its capital structure. To mitigate this risk, the Company has a planning and budgeting process in place to determine the funds required to support its ongoing operations and capital expenditures. The Company ensures that sufficient funds are raised from equity offerings or debt financings to meet its operating requirements, after considering existing cash balances, expected exercise of share purchase warrants, and stock options. The Company's ability to continue as a going concern involves significant judgements and estimates while determining forecasted cashflows and is dependent on the Company's ability to obtain financing (Note 1). As at March 31, 2026, the Company had cash of $22,409 (December 31, 2025 – $319,294) to settle current liabilities of $9,483,506 (December 31, 2025 – $8,616,300).

As of March 31, 2026, the Company had granted security interests over substantially all of the assets of Liberty Defense Technologies, Inc., its wholly owned subsidiary, in connection with multiple agreements, including the Company's credit facilities with Parabilis and its distributor arrangement with Viken Detection (a commercial agreement). These arrangements include multiple security interests over the same underlying assets, each of which claim to be a first-ranking security interest.

As of March 31, 2026, no intercreditor agreement or similar arrangement had been executed to establish the priority or ranking of these competing security interests. Accordingly, the relative rights of the secured parties with respect to the collateral have not been formally determined and may be subject to legal interpretation. As of that date, neither Parabilis nor Viken Detection had asserted a default nor exercised any remedies under their respective agreements in connection with this matter.

If the matter is not resolved, Parabilis and/or Viken Detection may assert their respective rights and remedies under the applicable agreements, including declaring outstanding amounts immediately due and payable and enforcing their rights against the collateral. The existence of competing security interests over the same assets may affect the priority of claims and the outcome of any enforcement proceedings.

The Company's exposure to liquidity risk related to the competing security interests is limited to the carrying amounts to the Parabilis and Viken Detection agreements. As at March 31, 2026, the amount due to Viken is $608,379 (December 31, 2025 - $510,000), included in Accounts Payable and Accrued Liabilities, in the Statement of Financial Position. As at March 31, 2025, the amount due to Parabilis is $3,525,561 (December 31, 2025 - $3,402,548), included in Parabilis Term Loan and Factoring and Credit Line Liability, in the Statement of Financial Position. See Notes 10 and 11(a) for activity related to the Parabilis loans during the three months ended March 31, 2026.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c) Market risk**

This risk refers to the potential fluctuations in the fair value or future cash flows of a financial instrument due to changes in market prices. The Company is exposed to the following significant market risks:

Interest rate risk

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

(Unaudited - Expressed in U.S. dollars, unless otherwise stated and per share amounts)

For the three months ended March 31, 2026, and 2025

**20.** **Financial Instruments** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c) Market risk** (continued)

Interest rate risk arises from changes in market rates of interest that could adversely affect the Company. The Company currently has interest-bearing financial instruments in relation to loans and line of credit (Note 9 and 10). The Company's exposure to interest rate risk is minimal as the interest rates are at a fixed percentage on the term loan and credit line liability.

Foreign currency risk

The Company is exposed to currency risk by having balances and transactions in currencies that are different from its functional currency. The Company operates in foreign jurisdictions, which uses the U.S. dollar. The Company does not use derivative instruments to reduce upward, and downward risk associated with foreign currency fluctuations. The Company's exposure to foreign currency risk is minimal.

Price risk

The Company is exposed to price risk with respect to equity prices. Equity price risk is defined as the potential adverse impact on the Company's earnings due to movements in individual equity prices or general movements in the level of the stock market.

The Company closely monitors individual equity movements, and the stock market to determine the appropriate course of action to be taken by the Company.

**21.** **Capital Risk Management** 

The Company manages common shares, stock options, performance share units, restricted share units, and share purchase warrants as 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 of its products and to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk.

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

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. The Company's investment policy is to keep its cash treasury on deposit in an interest-bearing chartered bank account. Cash consists of cash on held with banks.

The Company expects its current capital resources will be sufficient to carry its operations, and product development plans for the foreseeable future. Except for the security pledged in certain term loans and credit lines as outlined in Notes 10 and 11(a) and liquidity risk with Viken Detection (Note 5) respectively, the Company is not subject to externally imposed capital requirements.

There has been no change to the Company's approach to capital management during the three months ended March 31, 2026.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

(Unaudited - Expressed in U.S. dollars, unless otherwise stated and per share amounts)

For the three months ended March 31, 2026, and 2025

**22.** **Segmented Information** 

The Company operates through three distinct segments: Corporate, HEXWAVE and Contract. The operating segments of the Company are based on the reports which are reviewed by the chief operating decision maker ("CODM") in making strategic resource allocation decisions. The Company considers its CODM to be its CEO, who evaluate the operations of each reportable segment.

The CODM reviews the net income (loss) of each of these segments in allocating resources and evaluating operating performance. The corporate reporting segment covers the Company's non-allocated, general overhead expenses, such as legal, compliance, accounting, head-office staff, and other such items. This reporting segment is reviewed for cost control and budgetary considerations.

The following tables summarize the Company's segments for the three months ended March 31, 2026, and 2025:

---

| |
|:---|
| Revenue |
| Cost of revenue |
| Expenses |
| &nbsp;&nbsp;&nbsp;Salaries and consulting |
| &nbsp;&nbsp;&nbsp;General and administrative |
| &nbsp;&nbsp;&nbsp;Product development & tech |
| &nbsp;&nbsp;&nbsp;Stock-based compensation) |
| &nbsp;&nbsp;&nbsp;Depreciation |
| &nbsp;&nbsp;&nbsp;Legal and professional fees |
| **Total expenses** |
| Consolidation Expenses |
| Other) |
| **Net loss for the period** |

---

---

| |
|:---|
| Revenue |
| Cost of revenue |
| Expenses |
| &nbsp;&nbsp;&nbsp;Salaries and consulting |
| &nbsp;&nbsp;&nbsp;General and administrative |
| &nbsp;&nbsp;&nbsp;Product development & tech |
| &nbsp;&nbsp;&nbsp;Stock-based compensation) |
| &nbsp;&nbsp;&nbsp;Depreciation |
| &nbsp;&nbsp;&nbsp;Legal and professional fees |
| **Total expenses** |
| Consolidation Expenses |
| Other |
| **Net loss for the period** |

---

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

(Unaudited - Expressed in U.S. dollars, unless otherwise stated and per share amounts)

For the three months ended March 31, 2026, and 2025

**22.** **Segmented Information** (continued)

**Geographic Breakdown**

As at March 31, 2026, and March 31, 2025, all non-current assets are in the United States.

All revenue from contract segment was earned from one customer in the United States (March 31, 2025 – one customer).

For the three months ended March 31, 2026, revenues from the HEXWAVE segment attributable to the Company's country of domicile, Canada, were approximately $nil, (March 31, 2025, $nil). Revenues attributable to customers in the United States totaled approximately $644,421 (March 31, 2025 - $780,358). Revenues from all other foreign countries in aggregate totaled $nil (March 31, 2025 - $nil). The determination of revenues by geographic area is based on the location of the customer.

For the three months ended March 31, 2026, the Company reported HEXWAVE revenues from major customers over 10% of its total HEXWAVE revenues as follows: $315,000 (March 31, 2025 - $nil), $170,000 (March 31, 2025 - $nil), $85,000 (March 31, 2025 - $nil), $nil (March 31, 2025 - $403,910), $nil (March 31, 2025 - $185,000) and $nil (March 31, 2025 - $108,500).

**23.** **Reverse Stock Split** 

On March 3, 2026, the Company's Board of Directors approved a one-for-forty-five reverse stock split of its common stock. The reverse stock split became effective as of March 13, 2026. In accordance with TSX Venture Exchange, the Consolidation was approved by shareholders of the Company at a special meeting of shareholders held on February 6, 2026. Upon the effectiveness of the reverse stock split, (i) every forty-five shares of outstanding common stock were reclassified and combined into one share of common stock and (ii) the number of shares of common stock for which each outstanding option and warrant to purchase common stock is exercisable was proportionately decreased and the exercise price of each outstanding option and warrant to purchase common stock was proportionately increased. No fractional shares were issued as a result of the reverse stock split. The total number of authorized shares of common stock and the par value per share of common stock did not change as a result of the reverse stock split. Accordingly, all share and per share amounts for all periods presented in these financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect the reverse stock split and exercise price of each outstanding option and warrant as if the transaction had occurred as of the beginning of the earliest period presented.

**24.** **Subsequent Events** 

Subsequent to March 31, 2026, the Company:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) Recorded
 the expiry of 555 RSUs on April 7, 2026.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Recorded
 the expiry of 1,844 stock options on April 7, 2026.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) On
 April 21, 2026, the Company priced an initial public offering in the United States of
 3,673,638 common shares at a price of $4.50 per share and certain investors, in lieu of common
 shares, pre-funded warrants to purchase 770,807 common shares at a purchase price of $4.4999
 pre-funded warrant. The common shares began trading on Nasdaq Capital Market on April 22,
 2026, under the symbol "DETX". The total offering closed on April 23, 2026,
 with gross proceeds of $19,999,925.

## Exhibit 99.2

**Exhibit 99.2**

![](tm2616094d1_ex99-2img001.jpg)

&nbsp;&nbsp; **INNOVATIVE & REVOLUTIONARY Threat DETECTION**<br>**MANAGEMENT'S DISCUSSION AND ANALYSIS**<br> **THREE MONTHS ENDED MARCH 31, 2026**<br> (*Expressed in U.S. dollars, unless otherwise stated and per share amounts)*<br>***Dated: May 29, 2026***<br>

Liberty Defense Holdings, Ltd., ("Liberty" or the "Company") has prepared this Management's Discussion and Analysis ("MD&A") as of May 29, 2026, and should be read in conjunction with the Company's condensed consolidated interim financial statements for the three months ended March 31, 2026. Unless otherwise stated, all financial information has been prepared in accordance with IFRS Accounting Standards ("IFRS") as issued by the International Accounting Standards Board. All dollar amounts herein are expressed in U.S. dollars unless stated otherwise. References to $ means U.S. dollars, and CAD$ are to Canadian dollars.

This MD&A may contain forward looking statements based on assumptions and judgments of management regarding events or results that may prove to be inaccurate as a result of development or other risk factors beyond its control. Actual results may differ materially from the expected results. Management is ultimately responsible for the financial information.

This MD&A also contains future-oriented financial information and financial outlook information (collectively, "FOFI") regarding the Company's prospective revenue, operating losses, expenses and research and development operations, which are subject to the same assumptions, risk factors, limitations and qualifications as set forth above. FOFI contained in this MD&A was prepared using the same accounting principles that the Company expects to use in preparing its financial statements for the applicable periods covered by such FOFI. FOFI was made as of the date of this MD&A and is provided for the purpose of describing anticipated sources, amounts and timing of revenue generation, and is not an estimate of profitability or any other measure of financial performance. In particular, revenue estimates do not take into account the cost of such estimated revenue, including the cost of goods and the cost of sales. In addition, and for greater certainty, revenue estimates do not take into account the operating costs of the Company. The Company disclaims any intention or obligation to update or revise any FOFI contained in this MD&A, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law. FOFI contained in this MD&A should not be used for purposes other than for which it is disclosed herein.

Additional information on the Company is available at the Company's website *<u>www.libertydefense.com</u>* and under the Company's profile at *<u>www.sedarplus.ca</u>*.

---

| | | |
|:---|:---|:---|
| **Q1-2026 MD&A** <br> (Expressed in U.S. dollars) | ![](tm2616094d1_ex99-2img004.jpg) | Page\| 1 |

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| | | |
|:---|:---|:---|
| **Table of Contents** | **Table of Contents** | <br> Page |
| **1** | Overview | 2 |
| **2** | Results of Operations and selected annual information | 7 |
| **3** | Summary of Quarterly Results | 10 |
| **4** | Liquidity and Capital Transactions Resources | 11 |
| **5** | Commitments | 18 |
| **6** | Revenue | 18 |
| **7** | Contract Awards | 19 |
| **8** | Off-balance Sheet Arrangements | 21 |
| **9** | Transaction Between Related Parties | 21 |
| **10** | Subsequent Events | 21 |
| **11** | Financial Instruments | 22 |
| **12** | Other Requirements | 24 |
| **13** | Disclosure Controls and Procedures and Internal Controls over Financial Reporting | 25 |

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**1.** **Overview** 

**(a)** **Description of Business** 

Liberty Defense Holdings, Ltd. ("Liberty" or the "Company") is a publicly traded company listed on NASDAQ (NASDAQ: DETX), the TSX Venture Exchange: (TSXV: SCAN), the Frankfurt Stock Exchange (Frankfurt: L2D), and the OTCQB (OTCQB: LDDFF). The Company was incorporated under the Business Corporations Act of Ontario on June 8, 2012. On July 27, 2020, Liberty continued its jurisdiction of incorporation from Ontario to British Columbia and is now governed by the Business Corporations Act of British Columbia.

The Company's registered and records office is located at 1055 West Georgia Street, Suite 1500, Royal Centre, P.O. Box 11117, Vancouver, British Columbia, V6E 4N7, Canada. Its head office is located at 187 Ballardvale Street, Suite 110, Wilmington, Massachusetts, 01887, USA.

The Company is engaged in the development and commercialization of advanced security detection technologies. Liberty's flagship product, HEXWAVE™, utilizes millimeter wave technology and advanced 3D imaging to detect concealed threats. In addition to HEXWAVE™, the Company has licensed High-Definition Advanced Imaging Technology (HD-AIT) for body and shoe scanning.

**(b)** **Board Changes** 

a. Effective April 21, 2026, William Hamilton was appointed as a member of the Board of Directors.

Mr. Hamilton is a partner at Kestrel Merchant Partners, LLC and has over 20 years of experience in equity research and portfolio management. He was previously a Partner at Manatuck Hill Partners, a small-cap focused hedge fund, and has also held positions at Granite Point Capital, Sanders Morris Harris, and Pershing. Mr. Hamilton holds a B.A. from Duke University and is a CFA Charter holder.

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| **Q1-2026 MD&A** <br> (Expressed in U.S. dollars) | ![](tm2616094d1_ex99-2img004.jpg) | Page\| 2 |

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**(c)** **License Agreements** 

Licence agreements values and descriptions:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **MIT licenses** | **Battelle license** | **Intellectual<br> property** | **Total** |
| Balance, December 31, 2024 | $373009 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | $2198684 | $2571693 |
| Additions |  |  |  |  |
| Amortization | (34108) | - | (538453) | (572561) |
| Balance, December 31, 2025 | $338901 | $- | $1660231 | $1999132 |
| Additions |  |  |  |  |
| Amortization | (8527) | - | (134613) | (143140) |
| **Balance, March 31, 2026** | $**330374** | $**-** | $**1525618** | $**1855992** |

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**i)** **HEXWAVE™ Technology** (intellectual property)

a. Active real-time 3D imaging technology licensed from MIT LL

Active video rate imaging technology was developed by the Massachusetts Institute of Technology Lincoln Labs ("MIT LL") and the technology has been in development since 2014. In October 2017, a concept demonstrator (pre-prototype) of the core technology was successfully tested under environmental conditions by MIT LL.

MIT LL undertook 4 years of research and development, including building a working prototype and testing the technology in both lab and real electromagnetic environments. LDT worked with MIT LL to transfer the active imaging technology starting in Q4 2018. In September 2019, Liberty and MIT LL were recognized by the FLC (Federal Laboratory Consortium) for the 2019 Excellence in Technology Transfer Northeast Region.

With the exclusive global license agreement (the "License Agreement") for the use of the active imaging technology, the Company has continued to develop HEXWAVE™ using the technology and concepts demonstrated by MIT LL. MIT LL, through the Technology Transfer Agreement ("TTA") has transferred the intellectual property and understanding to Liberty's Center of Excellence ("COE") in order for the technology to be further refined and developed. As part of the commercialization and go to market strategy, the Company had identified certain required changes and entered into a Cooperative Research and Development Agreement (CRADA) with MIT LL to leverage off their existing experience and accelerate the development of certain aspects of HEXWAVE™. In addition to active imaging technology, the Company is also developing Automatic Threat Detection technology with the help of rich 3-dimension data and deep learning algorithms.

HEXWAVE™ Overview:

![](tm2616094d1_ex99-2img003.jpg)

Since acquiring the License Agreement from MIT LL, Liberty has significantly advanced HEXWAVE™ which includes the active imaging technology, automated threat detection ("ATD") and smart IoT technologies. This culminated in the demonstration of the four principal subsystems in September 2019. This step represented a significant de-risking of the product development phase.

b. Artificial intelligence and Deep Learning – Automatic Threat Recognition ("ATR")

Automatic Threat Recognition utilizing deep learning algorithms was developed by Liberty to recognize person-borne concealed metal and non-metal threats. The 3-D data and images produced by the HEXWAVE™ are used to train and enhance the artificial intelligence engine using deep-learning algorithms.

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| **Q1-2026 MD&A** <br> (Expressed in U.S. dollars) | ![](tm2616094d1_ex99-2img004.jpg) | Page\| 3 |

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At a frame capture rate of 20 images per second, the algorithms can exploit the changes in person's positioning from frame-to-frame, thus maximizing the total coverage area and threat detection performance.

ATR improves detection accuracy, reduces resources required for screening, and allows the security personnel to take necessary action instantly. As additional field data and images are collected by the system over time, our goal will be to continuously improve HEXWAVE™ and its threat detection performance by receiving real time updates to its algorithms as new and emerging threats are identified.

Global License Agreement – September 2018

The License Agreement for the use of the technology behind HEXWAVE™ with MIT is to be in effect until December 2035. Under the License Agreement, several milestones are required to be met to keep it in good standing. MIT continues to work closely with Liberty on developing this technology and amended the timeline to develop a beta prototype from on or before December 31, 2019, to removing the deadline entirely and replacing it with an in-plant inspection by MIT at regular intervals with at least six months between each such inspection. The amendment also included additional details in relation to changes on required commercial sales dates, required total net sales by year, and payment dates on its license agreement. Refer to <u>SEDAR+</u> (<u>www.sedarplus.ca</u>) for further details on the MIT amendment.

HEXWAVE™ Key Discriminators

Central to positioning HEXWAVE™ is building on its key discriminators. These are enabled by the system architecture that aligns to key market needs. These include:

&nbsp;&nbsp;&nbsp;&nbsp;· Detects metal & non-metal threat objects

· Operates in both indoor and outdoor locations
including both overt and covert applications

· Protects privacy (no personal data is collected
or analyzed)

· ATD in real-time using rich 3D data and deep
learning algorithms

· Smart functionality provides connectivity to
existing security systems (VMS, door locks, networks)

· Routine software & artificial intelligence
updates

· Operationally agile (mobile and deployable across
detection space)

· High throughput (over 700 screens per hour) with
precise secondary screening

About the Explosives and Weapon Detection Market

The aggregate markets associated with the explosives and weapon detection market are expected to total over $11 billion by 2025. The verticals most relevant to the growing Urban Security Market ("USM") are public venues, secured perimeters & buildings, land transportation, government, and others (schools, hotels, casinos, places of worship, malls, workplace & community screening).

The complexity of the urban security threat environment has dramatically changed over the last decade, requiring a more proactive approach to preventing violent attacks against communities. Since the 9/11 events, the air transportation community has effectively deployed a combination of detection technologies that are being consistently upgraded in an attempt to "stay ahead" of evolving threats. The array of detection tools has largely been protecting access to aircraft systems as gated or "point" solutions. The public is forced to tolerate the delays associated with such inspections due to the extreme risks that explosives or weapons can have on an aircraft and its passengers.

In contrast, urban communities are largely unprotected against random acts of violence or use systems that significantly impede the flow of customers into and within business facilities. While the occasional violent act was more often considered an anomaly, the frequency and magnitude of violent attacks is forcing both businesses and governments to rethink how to move to more proactive measures. Since 2015, there have been over 300 mass shootings per year in the United States ("US") at a pace of nearly one per day. There is a market-driven need for security detection that can be broadly deployed across nearly all public and private facilities. The base requirements are that they be both highly accurate and nonintrusive to our daily lives.

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| **Q1-2026 MD&A** <br> (Expressed in U.S. dollars) | ![](tm2616094d1_ex99-2img004.jpg) | Page\| 4 |

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Current Alternatives

The current alternatives in the United States market are typically restricted to:

&nbsp;&nbsp;&nbsp;&nbsp;· principally focusing on metal threats, therefore
non-metal threats can potentially go undetected

· airport solutions which are not able to be used
across other verticals and do not have the requisite throughput

· limited outdoor application and therefore hinder
the capability of providing a layered defense for proactive threat detection

· requiring large, dedicated areas or space versus
integration into existing infrastructure

· limited capability for integration into existing
security systems command & control

About Liberty's Management Team

Central to Liberty's team is the technical and management expertise are: CEO and Director, Bill Frain, former Senior Vice President for L-3 Security & Detection Systems (NYSE – LHX), the world's leading supplier of security inspection systems. In this role Bill led global sales, business development and key account management. CTO, Jeffrey Gordon, who spent his last five years working at General Electric Global Research developing roadmaps for imaging and sensor technologies and over 35 years experience leading the development of ground-breaking sensing products for the military, medical, industrial, and commercial markets, including body scanners that can be seen deployed across most United States and European Union airport checkpoints.

Liberty's Advisors

Liberty has assembled a group of Advisors that can provide unprecedented market access to several of our identified market verticals including the National Football League, law enforcement, federal and state government facilities, and former airport executives. A key aspect to Liberty's success will be gaining access and developing the market for HEXWAVE™.

**ii)** **MIT License Agreement Description and Commitments**

The Company, through its wholly owned subsidiary Liberty Defense Technologies Inc. ("LDT"), has entered into agreements with the Massachusetts Institute of Technology ("MIT") and MIT's Lincoln Laboratory ("MIT LL"), including an exclusive patent licence agreement between MIT and LDT dated September 10, 2018, as amended from time to time (the "Licence Agreement"), a technology transfer agreement between LDT and MIT LL, effective August 24, 2018 (the "Technology Transfer Agreement"), and a cooperative research and development agreement between LDT and MIT dated as of December 21, 2018 ("CRADA"), such agreements providing LDT with an exclusive licence for patents, design assets and MIT LL technical expertise related to active three-dimensional imaging technology that are the technology behind the HEXWAVE product.

The obligations under the Technology Transfer Agreement and the CRADA have now been completed. Liberty may consider extending the CRADA (and therefore changing its scope) if it determines that additional MIT LL technical expertise related to active three-dimensional imaging technology is required. Pursuant to the License Agreement, LDT has been granted the exclusive rights to MIT's patent in "multistatic sparse array topology for FFT-based field imaging" (MIT Case No. l 8409L) (the "Patent"), which is being utilized in the development and application of the HEXWAVE product. The License Agreement is to be in effect until the expiration of the Patent, which is 10 years (December 2035). In granting LDT such patent rights, the Company shall pay MIT, in addition to patent filling costs, an annual fees as follows: 1) $20,000 for 2019 (paid); $50,000 for 2020 (paid); $60,000 for 2021 (paid); $100,000 for 2022 (paid); $nil for 2023, $40,000 for 2024 (payable), $200,000 for 2025 (payable), and $350,000 for 2026 (payable) and thereafter; and 2) a royalty of 5.7% of all gross amount billed licensed products (HEXWAVE) of the Company.

During the three months ended March 31, 2026, the Company accrued royalty payments of $32,490 (December 31, 2025, $44,916).

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| **Q1-2026 MD&A** <br> (Expressed in U.S. dollars) | ![](tm2616094d1_ex99-2img004.jpg) | Page\| 5 |

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**iii)** **Battelle Memorial Institute License Agreement Description and Commitments**

On March 22, 2021, the Company, through its wholly owned subsidiary DrawDown Detection, Inc. has entered into an agreement ("Battelle License Agreement") with Battelle Memorial Institute ("Battelle"), which operates the Pacific Northwest National Laboratory ("PNNL"), to license the millimeter wave-based, High-Definition Advanced Imaging Technology (HD-AIT) body scanner and shoe scanner technologies. The agreement, as amended from time to time, provides the Company with a three-year exclusive license for certain patents which will convert to a non-exclusive license for the remaining life of the patents. The agreement also provides the Company with non-exclusive license for certain patents for life.

As consideration for the Battelle License Agreement, the Company paid $30,000 upon signing and $30,000 six months after.

Under the Battelle License Agreement, the Company shall pay a five percent royalty on gross sales less any returns, repayments, or rejections, that pertain to the production utilizing the license agreement (HD-AIT), and a twenty-five percent royalty on all sublicensing revenues if permitted under the contract guidelines.

During the three months ended March 31, 2026, and December 31, 2025, the Company accrued royalty payments of $nil.

The Company is required to pay a minimum royalty amount as follows, unless the agreement is terminated:

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| | |
|:---|:---|
|  | **Amounts** |
| Year 2021 (paid) | $50000 |
| Year 2022 (paid) | 50000 |
| Year 2023 (paid) | 100000 |
| Year 2024 (paid) | 200000 |
| Year 2025 (payable) | 200000 |
| Year 2026 and each year thereafter (payable) | 200000 |

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The Company is obligated reimburse Battelle for ongoing patenting expenses, as well as past patenting expenses in the total amount of $50,000, from which $50,000 has been paid.

As at March 31, 2026, the Company has a balance payable of $400,000 (December 31, 2025, $200,000).

**(d)** **HD-AIT Upgrade Kit** 

The HD-AIT Upgrade Kit is being developed pursuant to contracts awarded by the U.S. Transportation Screening Administration ("TSA") to create a solution to aging high-definition advanced imaging technology ("HD-AIT") systems currently in use in airports throughout North America and also can be implemented to upgrade HD-AIT systems around the globe. The TSA plans to upgrade over 1,000 body scanners installed at U.S. airports over the next five years, which we believe creates a near-term market opportunity.

**(e)** **Recent Developments** 

From inception, Liberty set itself an aggressive product development timeline by pursuing a concurrent engineering and development approach and prior to its financial constraints had managed to deliver upon this timeline.

In addition to advancing HEXWAVE™ and the market for it, Liberty achieved several significant corporate milestones which include:

· <u>Liberty Announces Closing of Final Tranche of LIFE Private Placement Raising a Total of $2.6 Million (January 2026)</u> 

· <u>Liberty Defense Announces Confidential Submission of Draft Registration Statement for Proposed U.S. Initial Public Offering (January 2026)</u> 

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| **Q1-2026 MD&A** <br> (Expressed in U.S. dollars) | ![](tm2616094d1_ex99-2img004.jpg) | Page\| 6 |

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· <u>Liberty Defense Secures New Major U.S. Airport Contract, Fueling Momentum in Aviation Security (February 2025)</u> 

· <u>Liberty Defense Announces Public Filing of Registration Statement for Proposed U.S. Initial Public Offering (February 2026)</u> 

· <u>Liberty Defense Secures Contract with Acclaimed Infectious Disease Laboratory for HEXWAVE Walkthrough Screening System (February 2026)</u> 

· <u>Liberty Defense Announces Pricing of its U.S. Initial Public Offering (April 2026)</u> 

· <u>Liberty Defense Appoints Seasoned Capital Markets Executive Will Hamilton to its Board of Directors (April 2026)</u> 

**(e)** **Outlook and** **Going Concern** 

Expenditure in research and development activities undertaken with the prospect of gaining new scientific or technological knowledge and understanding is recognized in the statement of loss as an expense when incurred.

The Company's expenditures in development activities where research results are used in planning and designing the production of new or substantially improved products and processes are recognized under intangible assets if the product or process is technically and commercially feasible, if there is an intention and ability to complete the project and then use or sell it and expect economic benefits from the project, if the Company has sufficient resources to complete development and if it is able to measure reliably the cost during development. The recognized research and development expenditures incurred are recognized in the statement of loss as an expense when incurred.

The Company incurred in a total loss during the three months ended March 31, 2026, of $2,697,469 and had cash outflows from operating activities of $886,876. Given the current stage of operations, the Company's ability to continue as a going concern is contingent on its ability to obtain additional financing. While the Company has been successful in arranging financing in the past, there can be no assurance that it will be able to do so in the future.

During the three months ended March 31, 2025, and subsequent to quarter end through the date of this MD&A, the Company completed financing transactions, including private placements and a public offering, for aggregate gross proceeds more than approximately $20.0 million. Management believes the Company's current cash resources are sufficient to fund planned operations for at least the next twelve months.

The application of the going concern concept is dependent upon the Company's ability to generate future profitable operations and receive continued financial support from its creditors and shareholders. These consolidated financial statements do not give effect to any adjustments that might be required should the Company be unable to continue as a going concern. If the company cannot generate positive future cashflows, this will delay the production timeline and shipments to backlogged orders, in addition to delaying necessary product cost reductions and improvements caused by the lack of funds to hire, produce, and execute the necessary product updates / revisions. Continued equity and/or debt financing is critical in order to ramp production up in order to become profitable.

Management plans to continue to pursue equity and/or debt financing to support operations. There can be no assurance that these financing efforts will be successful. Failure to maintain the support of creditors and obtain additional external financing will cause the Company to curtail operations and the Company's ability to continue as a going concern will be impaired. The outcome of these matters cannot be predicted at this time.

**2.** **Results of Operations** 

Certain comparatives in prior periods may have been revised to conform to the current presentation.

During the three months ended March 31, 2026, the Company reported a total loss and comprehensive loss of $2,697,469 respectably (three months ended March 31, 2025 – $3,629,323), and basic and diluted loss per share of $1.38 (three months ended March 31, 2054 – $3.49). Despite the accumulated losses, the Company's management is confident in scaling up production and commercialization of its primary technology, HEXWAVE™, and advancing the research and development of various potential technologies currently under review.

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| **Q1-2026 MD&A** <br> (Expressed in U.S. dollars) | ![](tm2616094d1_ex99-2img004.jpg) | Page\| 7 |

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The net loss for the three months ended March 31, 2026, and 2025 is comprised of the following items:

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| | |
|:---|:---|
|  | **Note** |
| **Revenue** | 15 & 16 |
| &nbsp;&nbsp;&nbsp;&nbsp;HEXWAVE revenue |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Contract revenue |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total Revenue** |  |
| **Cost of revenue** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;HEXWAVE cost of revenue |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Contract cost of revenue |  |
| **Total cost of revenue** |  |
| **Gross income (loss)** |  |
| **Engineering and Research and Development Expenses:** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Product development & technology Costs |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Salaries and consulting fees | 18 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 13 & 18 |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation | 6 |
| &nbsp;&nbsp;&nbsp;&nbsp;Office, rent & administration, travel, and miscellaneous |  |
| **General & Administration Expenses** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Salaries and consulting fees | 18 |
| &nbsp;&nbsp;&nbsp;&nbsp;Legal and professional fees |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 13 & 18 |
| &nbsp;&nbsp;&nbsp;&nbsp;Office, rent & administration, travel, and miscellaneous |  |
| **Operating Loss** |  |

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i) Revenue

Three months ended March 31, 2026, vs 2025

During the three months ended March 31, 2026, revenue was $919,421 compared to $1,055,358 during the three months ended March 31, 2025, representing a decrease of $135,937, or 12.8%. The decrease was primarily attributable to lower HEXWAVE revenue recognized during the period due to lower unit deliveries compared to the comparative period.

The Company expects revenue activity to increase during the second half of 2026 as a result of increased production capacity and inventory availability following the completion of financing transactions in April 2026, which are expected to support future customer shipments and deployments.

HEXWAVE™ revenue for the three months ended March 31, 2026, was US$644,421, compared to US$780,358 for the three months ended March 31, 2025, representing a decrease of US$135,937 or 17.4%. During the three months ended March 31, 2026, the Company delivered 6 HEXWAVE™ units at an average selling price of approximately $95,000 per unit, compared to 9 units delivered during the comparable period in 2025 at an average selling price of approximately $84,157 per unit. The lower volume of deliveries during the period, was primarily attributable to timing-related factors, including customer site readiness, installation scheduling, and the deferral of certain customer deployments into subsequent periods, as well as management's focus on manufacturing optimization and operational efficiency initiatives.

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| **Q1-2026 MD&A** <br> (Expressed in U.S. dollars) | ![](tm2616094d1_ex99-2img004.jpg) | Page\| 8 |

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Contract Revenue for the three months ended March 31, 2026, was $275,000 consistent with the three months ended March 31, 2025. Contract revenue relates primarily to ongoing development programs, which are nearing completion. The Company expects contract revenue from the current program to decline as the remaining performance obligations are satisfied, although additional contract revenue may be generated from future customer and development opportunities.

ii) Cost of Revenues

Cost of revenues for the three months ended March 31, 2026, was $898,331, compared to $1,345,832 for the three months ended March 31, 2025, representing a decrease of $447,501, or 33.3%. The decrease primarily reflects lower contract cost of revenue associated with the near completions of the Company's development program, as well as lower production and delivery volumes of HEXWAVE™ units during the period compared to the prior year comparative period.

iii) Engineering and Research & Development

Engineering and research and development expenses for the three months ended March 31, 2026, were $720,217, compared to $760,799, for the three months ended March 31, 2025, representing a decrease of $40,582 or 5.3%. The decrease was mainly attributable to lower salaries and consulting fees and stock-based compensation, partially offset by higher product development and technology costs and higher office, rent, and administration, travel and miscellaneous expenses.

During the three months ended March 31, 2026, engineering and research and development expenses included $72,655 of product development and technology costs, $67,262 of office, rent and administration, travel and miscellaneous expenses, and $99,350 of depreciation expense.

iv) General and Administrative

General and administrative expenses for the three months ended March 31, 2026, were $1,871,194 compared to $2,560,318, for the three months ended March 31, 2025, representing a decrease of $689,124 or 26.9%. The decrease was primarily attributable to lower salaries and consulting fees, lower stock-based compensation, and lower office, rent, and administration, travel and miscellaneous expenses compared to the prior year comparative period. The decrease was partially offset by higher legal and professional fees incurred during the period.

During the three months ended March 31, 2026, general and administrative expenses included $1,078,102 of office, rent and administration, travel and miscellaneous expenses, $457,831 of salaries and consulting fees, and $186,128 of legal and professional fees.

v) Finance Costs and Foreign Exchange

Finance costs for the three months ended March 31, 2026, were $149,974, compared to $154,424, for the three months ended March 31, 2025. The decrease was primarily attributable to lower average outstanding borrowings during the period, including lower utilization of factoring arrangements.

The Company recorded a foreign exchange loss of $284 during the three months ended March 31, 2026, compared to a foreign exchange loss of $18,788 during the three months ended March 31, 2025. The decrease in foreign exchange loss was primarily attributable to lower volatility in exchange rates and fewer U.S. dollar-denominated transactions during the period.

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| **Q1-2026 MD&A** <br> (Expressed in U.S. dollars) | ![](tm2616094d1_ex99-2img004.jpg) | Page\| 9 |

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**3.** **Summary of Quarterly Results** 

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| | | | | |
|:---|:---|:---|:---|:---|
| **Three months ended** | **Working capital (deficiency)** | **Total assets** | **Total loss and<br> comprehensive<br> income loss** | **Loss per share** |
|  | $ | $ | $ | $ |
| 31-Mar-26 |  | 5339690 |  |  |
| 31-Dec-25 |  | 6384615 |  |  |
| 30-Sep-25 |  | 6754164 |  |  |
| 30-Jun-25 |  | 6352896 |  |  |
| 31-Mar-25 |  | 8522470 |  |  |
| 31-Dec-24 |  | 7286501 |  |  |
| 30-Sep-24 |  | 4377411 |  |  |
| 30-Jun-24 |  | 5370395 |  |  |

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**Discussion of Quarterly Trends**

Q1 2026 (March 31, 2026):

Net loss for the three months ended March 31, 2026, was $2.7 million, or loss per share – $1.38. During the quarter, the Company continued its efforts related to the production of the HEXWAVE™ units and the completion of the TSA related programs, resulting in revenue of $919,421. In addition, the Company incurred costs associated with the financing and uplisting activities completed subsequent to the quarter end, while continuing to invest in marketing initiatives, trade shows, and customer demonstrations intended to support future commercial growth.

Q4 2025 (December 31, 2025):

Net loss was $3.5 million (loss per share - $2.15). During the quarter, the Company continued production of HEXWAVE™ however, no shipments occurred. Backlog orders continued, however customers preferred shipment during Q1 - 2026. Marketing and investor relations efforts also continued to increase to support sales initiatives. The working capital increased slightly to $4.9 million. The Company also closed a private placement on December 31, 2025, generating gross proceeds of $1.7 million.

Q3 2025 (September 30, 2025):

Net loss was $3.1 million (loss per share – $2.03). During the quarter, the Company continued production of HEXWAVE™ while advancing research and development on other licensed technologies. HEXWAVE™ shipments continued, with TSA contract performance remaining on schedule. Marketing and investor relations efforts also increased to support sales initiatives. The working capital deficiency remained flat at $4.4 million. The Company als closed a private placement on July 29, 2025, generating gross proceeds of $3.2 million.

Q2 2025 (June 30, 2025):

Net loss was $3.7 million (loss per share – $3.25). During the quarter, the Company continued production of HEXWAVE™ while advancing research and development on other licensed technologies. HEXWAVE™ shipments continued, with TSA contract performance remaining on schedule. Marketing and investor relations efforts also increased to support sales initiatives. The working capital deficiency increased to $4.4 million, reflecting continued cash usage in operations.

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| **Q1-2026 MD&A** <br> (Expressed in U.S. dollars) | ![](tm2616094d1_ex99-2img004.jpg) | Page\| 10 |

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Q1 2025 (March 31, 2025):

Net loss was $3.8 million (loss per share – $3.49). The Company closed a private placement on March 20, 2025, generating gross proceeds of $3.48 million, which increased total assets to $8.5 million. The results also reflected higher operating expenses associated with commercialization activities.

Prior's years quarters (December 31, 2024 – June 30, 2024):

Net losses for these periods ranged between $2.7 million and $6.3 million per quarter, with loss per share ranging from $5.40 to $6.60. These results primarily reflected ongoing investment in HEXWAVE™ production and commercialization, research and development on licensed technologies, stock-based compensation, and financing-related expenses. Detailed discussions of these quarters were provided in the Company's MD&A filings for those periods, available on SEDAR+.

**Overall Trends**

The Company has consistently incurred net losses over the past eight quarters as it continues to invest in the development and commercialization of HEXWAVE™ and related technologies. Quarterly operating results have been influenced by the timing of contract revenue recognition, fluctuations in research and development and general and administration expenses including stock-based compensation, as well as increased investor relations, marketing and financing-related activities. Private placements completed in 2024 and 2025 provided additional liquidity; however, the Company continued to experience a working capital position as operating expenditures exceed revenues.

**4.** **Liquidity and Capital Transactions Resources** 

**(a)** **Liquidity** 

As of Marh 31, 2026, the Company maintained a cash balance of $22,409 and experienced a working capital deficiency of $6,579,966. Current liabilities amounted to $9,483,506 as of the same date, primarily attributed to loans and expenses associated with commencing production, ongoing development of the Company's licensed technologies, and maintaining licenses and the Company's public registry in good standing.

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| | | |
|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
|  | **2026** | **2025** |
| **Cash (used in) provided by:** |  |  |
| **Operating activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss and comprehensive loss for the period | $(2718647) | $(3784695) |
| &nbsp;&nbsp;&nbsp;&nbsp;Items not involving cash: | 665650 | 929012 |
| &nbsp;&nbsp;&nbsp;&nbsp;Changes in non-cash working capital: | 1166121 | (697639) |
| **Cash used in operating activities** | (886876) | (3553322) |
| **Cash provided by (used in) investing activities** | (8983) | (151460) |
| **Cash provided by (used in) financing activities** | 577796 | 5046264 |
| **Effect of foreign exchange rate changes on cash** | 21178 | 162300 |
| **Increase in cash** | (296885) | 1503782 |
| **Cash, beginning of the period** | 319294 | 1153229 |
| **Cash, end of the period** | $**22409** | $**2657011** |

---

During the three months ended March 31, 2026, the Company used net cash of $886,876 in operating activities, compared to $3,553,322 during the same period in 2025. The decrease in cash used in operating activities primarily reflects a lower net during the period and favorable changes in working capital compared to the prior year comparative period.

---

| | | |
|:---|:---|:---|
| **Q1-2026 MD&A** <br> (Expressed in U.S. dollars) | ![](tm2616094d1_ex99-2img004.jpg) | Page\| 11 |

---

Non-cash items during the period included stock-based compensation of $161,507 (March 31, 2025 — $595,648), amortization recorded in cost of revenues of $143,140 (March 31, 2025 — $143,140), depreciation of $100,618 (March 31, 2025 — $106,060), inventory impairment of $129,798 (March 31, 2025 — $29,807), lease liability interest of $7,574 (March 31, 2025 — $14,942), accrued interest of $76,357 (March 31, 2025 — $70,840), credit line fees of $46,656 (March 31, 2025 — $46,703), and a loss on disposal of lease assets of $nil (March 31, 2025 — $18,514).

Changes in non-cash working capital provided cash of $1,166,121 during the three months ended March 31, 2026, compared to cash used of $697,639 during the same period in 2025. The positive working capital changes in 2026 were primarily attributable to decreases in accounts receivable and prepaids of $416,948, inventory of $85,237, and contract costs of $101,614, together with an increase in accounts payable and accrued liabilities of $712,906. These changes were partially offset by increases in deferred financing costs of $220,332 and deferred revenue of $69,748.

The change in working capital during the period were primarily driven by lower production and shipment volumes, timing differences related to customer deployments and collections, and reduced contract activity compared to the prior year comparative period.

Operating cash flows for the three months ended March 31, 2026, and 2025 reflect ongoing investments in operations including research and development activities, and general and administrative expenditures such as salaries, consulting fees, and promotional and investor relations activities.

Investing Activities

Cash used in investing activities was $8,983 (March 31, 2025 – $151,460), relating to additions to property and equipment.

Financing Activities

Net cash provided by financing activities was $577,796 (March 31, 2025 – $5,046,264). In 2026, this consisted mainly of:

&nbsp;&nbsp;&nbsp;&nbsp;· Net proceeds of $566,750 (March 31, 2025
- $3,157,007) from the issuance of common shares through private placements;

· Proceeds of $nil (March 31, 2025 - $2,071,851)
from warrants exercised;

· Proceeds of $1,148,443 (March 31, 2025 -
$nil) from Parabilis term loan;

· Proceeds of $50,206 (March 31, 2025 - $nil)
from working capital loan;

· Offset by repayments of: loans and factoring
of $1,148,443 (March 31, 2025 - $nil), including related party loans of $nil (March 31, 2025 - $74,658) third-party working
capital loans of $nil (March 31, 2025 - $26,249), and Parbilis factoring and credit lines $1,148,443 (March 31, 2025 - $nil);

· Repayments of lease liabilities of $39,160 (March 31,
2025 – $81,687).

In comparison, financing cash flows during the three months ended March 31, 2025 primarily reflected net proceeds of $3,157,007 from private placements and $2,071,851 from the exercise of 120,317 warrants. These financing inflows were partially offset by repayments of related-party working capital loans of $74,658, working capital loans of $26,249, and lease liabilities of $81,687.

Dividends

The Company has not declared or paid dividends to date and has no current plans to do so in the foreseeable future.

Contractual Obligations

At March 31, 2026, the Company had contractual obligations totaling $9,840,988, of which $9,433,300 are due within one year. These short-term obligations include:

&nbsp;&nbsp;&nbsp;&nbsp;· Accounts payable and accrued liabilities of $5,595,283;

· Loans payable of $1,550,631;

---

| | | |
|:---|:---|:---|
| **Q1-2026 MD&A** <br> (Expressed in U.S. dollars) | ![](tm2616094d1_ex99-2img004.jpg) | Page\| 12 |

---

&nbsp;&nbsp;&nbsp;&nbsp;· Credit line liability of $1,974,930;

· Deferred Revenue of $162,289;

· Short term loan of $50,206; and

· Lease liabilities of $147,167.

Contractual obligations in the one-to-three-year period includes:

&nbsp;&nbsp;&nbsp;&nbsp;· Lease liabilities of $357,482

There were no contractual obligations due in the four-to-five year or greater than periods.

**(b)** **Capital Transactions and Resources** 

**Common share transactions for the three months ended March 31, 2026**

i) On January 15, 2026, the Company closed the second and final tranche of the December 2025 non-brokered
private placement for additional gross proceeds of $624,002 (CAD$867,506) through the issuance of 87,626 units at a price of CAD$9.90
per unit. Each unit comprised one common share and one common share purchase warrant, with each warrant entitling the holder to acquire
one additional common share at an exercise price of CAD$13.50 per share, exercisable from March 17, 2026, to January 15, 2028.
The warrants were allocated a residual value of $283,638. In connection with the private placement, the Company issued an aggregate of
5,045 broker warrants to agents under terms and conditions substantially identical to those of the unit warrant .
The broker warrants were allocated a fair value of $13,087 (CAD$18,194). Additionally, the Company paid commissions and legal expenses
of $57,252 (CAD$79,390).

**Common share transactions for the year ended December 31, 2025**

i) On January 6, 2025, the Company received $2,071,851 (CAD$2,977,851)
from the exercise of 120,317 share purchase warrants after electing, on December 31, 2024, to exercise its acceleration right for
a total of 277,778 warrants granted on December 19, 2024, pursuant to a private placement. As a result, the remaining 157,461 unexercised
warrants expired.

ii) On March 20, 2025, the Company closed a non-brokered private placement for gross proceeds of $3,479,351 (CAD$5,001,183). The Company issued 67,356 units (each a "Unit") of the Company at a price of CAD$74.25 per Unit. Each Unit comprised of one common share and one-half common share purchase warrant. Each warrant entitles the holder thereof to purchase one additional common share of the Company at a price of CAD$92.25 for a period of 24 months and is subject to an accelerated expiry at the Company's election under certain conditions. The warrants were allocated a residual value of $263,584. In connection with the non-brokered private placement, the Company issued 4,715 finder warrants. Each finder's warrant will be exercisable to purchase one common share for a period of 24 months at an exercise price of CAD$74.25. The broker warrants were allocated a fair value of $84,183 (CAD$121,004). Additionally, the Company paid commissions and legal expenses of $420,424 (CAD$600,650).

iii) On April 1, 2025, a total of 78 shares were issued pursuant to the exercise of 78 warrants, resulting in proceeds of $3,704 (CAD$5,285). Residual value in the amount of $nil was reversed.

iv) On April 13, 2025, a total of 478 finder warrants expired with an exercise price of $135.00. These broker warrants had a fair value of $5,498 and the reverse value was reclassified to share capital.

v) On May 9, 2025, a total of 309 finder warrants expired with
an exercise price of $135.00. These broker warrants had a fair value of $3,816 and the reverse value was reclassified to share capital.

vi) On June 6, 2025, a total of 206 finder warrants expired with an exercise price of $135.00. These broker warrants had a fair value of $1,892 and the reverse value was reclassified to share capital

vii) On July 29, 2025, the Company closed a non-brokered private placement for gross proceeds of $3,199,767 (CAD$4,399,996). The Company issued 444,444 units (each a "Unit") of the Company at a price of CAD$9.90 per Unit. Each Unit comprised of one common share and one common share purchase warrant. Each warrant entitles the holder thereof to purchase one additional common share of the Company at a price of CAD$15.75 for a period of 12 months and is subject to an accelerated expiry at the Company's election under certain conditions. The warrants were allocated a residual value of $nil. Additionally, the Company issued 16,000 broker warrants with a fair value of $38,472 (CAD$52,902). The Company paid commissions and legal expenses of $137,898 (CAD$189,781).

---

| | | |
|:---|:---|:---|
| **Q1-2026 MD&A** <br> (Expressed in U.S. dollars) | ![](tm2616094d1_ex99-2img004.jpg) | Page\| 13 |

---

viii) On October 31, 2025, the Company received gross proceeds of $1,353,116 (CAD$1,895,093) from the exercise of 120,323 warrants.

ix) On December 31, 2025, the Company closed the first tranche of a non-brokered private placement for gross proceeds of $1,274,365 (CAD$1,747,172), through the issuance of 176,482 units at a price of CAD$9.90 per unit. Each unit comprised one common share and one common share purchase warrant, with each warrant entitling the holder to acquire one additional common share at an exercise price of CAD$13.50 per share, exercisable from March 2, 2026, to December 31, 2027. The Company issued an aggregate of 7,915 broker warrants with a fair value of $20,866 (CAD$28,608). The warrants were allocated a residual value of $115,851 (CAD$158,833). The Company paid commissions and legal expenses of $57,331 (CAD$78,356).

x) During the year ended December 31, 2025, a total of 4,758 common
shares were issued pursuant to the RSUs with a fair value of $383,471 .

Other sources of funds:

Other sources of funds potentially available to the Company are through the exercise of outstanding stock options, and share purchase warrants with the following terms:

As at March 31, 2026, the number of stock options outstanding and exercisable was:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Outstanding** | **Outstanding** | **Outstanding** | **Exercisable** | **Exercisable** |
| <br>**Expiry date** | **Number of stock<br> options** | **Exercise price** | **Exercise price** | **Remaining<br> contractual life<br> (years)** | **Number of stock<br> options** |
| 7-Apr-26 | 1844 | CAD$ | 225.00 | 0.02 | 1844 |
| 28-Jul-26 | 278 | CAD$ | 247.50 | 0.33 | 278 |
| 28-Jul-26 | 111 | CAD$ | 292.50 | 0.33 | 111 |
| 1-Nov-26 | 944 | CAD$ | 207.00 | 0.59 | 944 |
| 14-Jan-27 | 222 | CAD$ | 162.00 | 0.79 | 222 |
| 15-Apr-27 | 1111 | CAD$ | 26.55 | 1.04 | 1111 |
| 26-Apr-27 | 2633 | CAD$ | 184.50 | 1.07 | 2633 |
| 2-Jul-27 | 5556 | CAD$ | 10.80 | 1.25 | 2083 |
| 21-Nov-27 | 133 | CAD$ | 99.00 | 1.64 | 133 |
| 26-Apr-28 | 111 | CAD$ | 81.00 | 2.07 | 111 |
| 16-Oct-28 | 1778 | CAD$ | 85.50 | 2.55 | 1778 |
| 30-Dec-29 | 51667 | CAD$ | 38.25 | 3.75 | 35209 |
| 2-Apr-30 | 3333 | CAD$ | 37.80 | 4.01 | 1667 |
| 30-Sep-30 | 41111 | CAD$ | 12.15 | 4.50 | 10278 |
| **March 31, 2026** | **110832** |  |  |  | **58402** |

---

Total stock-based compensation expense arising from options granted and vested during the three months March 31, 2026, was $124,288 (three months ended March 31, 2025 – $548,391). Of this amount, $4,851 was recorded as stock-based compensation in the HEXWAVE cost of revenue (March 31, 2025 – $9,487), and $7,522 was recorded as stock-based compensation in cost of contract revenue (March 31, 2025 - $2,355).

---

| | | |
|:---|:---|:---|
| **Q1-2026 MD&A** <br> (Expressed in U.S. dollars) | ![](tm2616094d1_ex99-2img004.jpg) | Page\| 14 |

---

As at March 31, 2026, the number of restricted share units ("RSU") outstanding and exercisable are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Number of<br> equity settled<br> RSUs** | **Grant Price** | **Grant Price** |
| **Outstanding, December 31, 2024** | **11918** | **CAD$** | **180.45** |
| Granted | 8260 |  | 10.91 |
| Exercised | (4758) |  | 115.88 |
| **Outstanding, December 31, 2025 and March 31, 2026** | **15420** | **CAD$** | **55.51** |
| **Outstanding, March 31, 2026** | **15420** | **CAD$** | **55.51** |

---

The estimated fair value of the equity settled RSUs granted as of March 31, 2026, was $nil (December 31, 2025 - $60,998) and will be recognized as an expense over the vesting period of the RSUs. The fair value of the equity settled RSUs as at the grant date was determined with reference to the market value of the common shares of the Company at the grant date.

During the three months ended March 31, 2026, the Company recognized stock-based compensation related to RSUs in the amount of $13,639 (three months ended March 31, 2025 - $22,320).

**Restricted share units granted for the three months ended March 31, 2026**:

No transactions occurred during the three months ended March 31, 2026, in regard to restricted share units**.**

**During the year ended December 31, 2025, the following transactions occurred in connection to restricted share units:**

i) During the year ended December 31, 2025, a total of 4,758 common shares were issued pursuant to the
exercise of RSUs.

ii) On August 7, 2025, the Company granted 1,111 RSUs to consultants; these RSUs shall be settled with common shares of the Company, have an exercise period that expires on January 1, 2029, and vest at 100% on January 1, 2026.

iii) On December 12, 2025, the Company granted 7,149 RSUs to a contractor; these RSUs shall be settled with common shares of the Company, have an exercise period that expires December 12, 2029, and vests 100% on December 12, 2026.

**As at March 31, 2026, the outstanding number of share purchase warrants are as follows:**

---

| | | | |
|:---|:---|:---|:---|
|  | | **Exercise** | **Exercise** |
|  | **Warrants**<br>**outstanding** | **Price** | **Price** |
| **Outstanding, December 31, 2024** | **446109** | **CAD$** | **54.90** |
| Issued | 683234 |  | 19.32 |
| Expired | (169855) |  | 32.79 |
| Exercised | (240718) |  | 20.27 |
| **Outstanding December 31, 2025** | **718770** | **CAD$** | **36.45** |
| Issued | 92672 |  | 13.50 |
| **Outstanding March 31, 2026** | **811442** | **CAD$** | **33.83** |

---

**(c)** **Performance Shares** 

On March 17, 2021, Liberty deposited into escrow, and held in escrow, Operational Performance Shares ("OPS") and Capital Market Performance Shares ("CMPS") for certain directors, officers, and consultants of the Company upon the Company achieving certain performance milestones. Once these milestones were achieved the shares would be released. These performance shares included 4,444 of OPS and 19,496 of CMPS. In order to fair value these performance shares, management estimated the probability that the Company would issue the performance shares.

All CMPS have been issued in previous years upon the completion of all required milestones.

---

| | | |
|:---|:---|:---|
| **Q1-2026 MD&A** <br> (Expressed in U.S. dollars) | ![](tm2616094d1_ex99-2img004.jpg) | Page\| 15 |

---

<u>Operational Performance Shares</u>

As at March 31, 2026, none of the 4,444 OPS have been issued as neither of the two milestones have been met. The estimated fair value of the OPS is CAD$800,000 which had an estimated vesting period between December 2024 and December 2025. The estimated vesting period has been adjusted to December 2026. During the three months ended March 31, 2026, the Company recorded stock-based compensation in connection to OPS in the amounts of $23,579 (three months ended March 31, 2025 – $24,936). For the three months ended March 31, 2026, and 2025, none of the operational performance shares have been released from escrow.

**(a)** **Reconciliation of use of proceeds from the non-brokered private placement closed on January 15, 2026 ("PP Q1 2026")** 

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Intended use of proceeds of PP Q1 2026** | **Intended use of proceeds of PP Q1 2026** | **Actual use of proceeds<br> from PP Q4 2025** | **(Over)/under<br> expenditure** | **Explanation of<br> Variance and<br> impact on<br> business objectives** |
| Agent's legal fees, expenses and disbursements | $21225 | $21225 | $- | N/A |
| Cash portion of Agent's corporate finance fee | $36027 | $36027 | $- | N/A |
| Further the production of HEXWAVE™ to support the increase in demand and deliver units in backlog to customers | $566750 | $544341 | $22409 | Balance to be used for HEXWAVE support and production. |
| **Total** | $**624002** | $**601593** | $**22409** | **N/A** |

---

**(b)** **Reconciliation of use of proceeds from the non-brokered private placement closed on December 31, 2025 ("PP Q4 2025")** 

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Intended use of proceeds of PP Q4 2025** | **Intended use of proceeds of PP Q4 2025** | **Actual use of proceeds<br> from PP Q4 2025** | **(Over)/under<br> expenditure** | **Explanation of<br> Variance and<br> impact on<br> business objectives** |
| Cash portion of Agent's corporate finance fee | $56029 | $56029 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | N/A |
| Further the production of HEXWAVE™ to support the increase in demand and deliver units in backlog to customers | $1274365 | $1274365 | $- | N/A |
| **Total** | $**1330394** | $**1330394** | $**-** | **N/A** |

---

---

| | | |
|:---|:---|:---|
| **Q1-2026 MD&A** <br> (Expressed in U.S. dollars) | ![](tm2616094d1_ex99-2img004.jpg) | Page\| 16 |

---

**(c)** **Reconciliation of use of proceeds from the non-brokered private placement closed on July 29, 2025 ("PP Q3 2025")** 

---

| | | | | |
|:---|:---|:---|:---|:---|
| **PP Q3 2025Intended use of proceeds of PP Q3 2025** | **PP Q3 2025Intended use of proceeds of PP Q3 2025** | **Actual use of proceeds<br> from PP Q3 2025** | **(Over)/under<br> expenditure** | **Explanation of<br> Variance and<br> impact on<br> business objectives** |
| Agent's legal fees, expenses and disbursements | $21043 | $21043 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | N/A |
| Cash portion of Agent's corporate finance fee | $115187 | $115187 | $- | N/A |
| Consulting and Investor Relations from Private Placement | $1150000 | $1150000 | $- | N/A |
| Further the production of HEXWAVE™ to support the increase in demand and deliver units in backlog to customers | $1913537 | $1913537 | $- | N/A |
| **Total** | $**3199767** | $**3199767** | $**-** | **N/A** |

---

**(d)** **Reconciliation of use of proceeds from the non-brokered private placement closed on March 20, 2025 ("PP Q1 2025")** 

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Intended use of proceeds of PP Q1 2025** | **Intended use of proceeds of PP Q1 2025** | **Actual use of proceeds<br> from PP Q1 2025** | **(Over)/under<br> expenditure** | **Explanation of<br> Variance and<br> impact on<br> business objectives** |
| Agent's legal fees, expenses and disbursements | $78790 | $78790 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | N/A |
| Cash portion of Agent's corporate finance fee | $243555 | $243555 | $- | N/A |
| Consulting and Investor Relations from Private Placement | $498374 | $498374 | $- | N/A |
| Further the production of HEXWAVE™ to support the increase in demand and deliver units in backlog to customers | $2658632 | $2658632 | $- | N/A |
| **Total** | $**3479351** | $**3479351** | $**-** | **N/A** |

---

---

| | | |
|:---|:---|:---|
| **Q1-2026 MD&A** <br> (Expressed in U.S. dollars) | ![](tm2616094d1_ex99-2img004.jpg) | Page\| 17 |

---

**5.** **Commitments** 

i) As at March 31, 2026, and December 31, 2025, the minimum lease payments are as follows:

---

| | | |
|:---|:---|:---|
|  | **March 31,**<br>**2026** | **December 31,**<br>**2025** |
| Maturity analysis - contractual undiscounted cash flows |  |  |
| One year or less | $239807 | $238567 |
| Two to five years | 318550 | 358949 |
| Six and thereafter | - | - |
| Total lease liabilities | $558357 | $597516 |
| **Lease liabilities included in the statement of financial position** | $**504649** | $**536235** |
| Current | $147167 | $235834 |
| Non-current | $357482 | $300401 |

---

**6.** **Revenue** 

Revenue recognized for the three March 31, 2026, and 2025, relates to contract revenue from the Transportation Security Administration ("TSA"), as well as sales of HEXWAVE™ units.

---

| | | |
|:---|:---|:---|
| **Revenue** | **Three months ended March 31,** | **Three months ended March 31,** |
|  | **2026** | **2025** |
| TSA Contract Award HD-AIT |  | 100000 |
| TSA OA Development |  | 175000 |
| HD-AIT Phase II B | 275000 |  |
| HEXWAVE units | 601928 | 623500 |
| HEXWAVE Software, Training & Warranty | 42493 | 156858 |
| **Total Revenue** | $**919421** | $**1055358** |

---

As of March 31, 2026, the Company continued its efforts to try and achieve year-over-year revenue growth, with a backlog of $1 million from signed purchase orders and contract revenue in 2026.

During the three months ended March 31, 2026, the Company delivered 6 HEXWAVE™ units at an average selling price per unit of approximately $95,000, compared to 9 units delivered at an average selling price per unit of approximately $84,157 during the three months ended March 31, 2025. The lower volume of deliveries in the current period, was primarily attributable to timing-related factors, including customer site readiness, installation scheduling, and the deferral of certain customer deployments into subsequent periods, as well as management's focus on manufacturing optimization and operational efficiency initiatives during the period.

Future revenue for the Company consists of HEXWAVE™ purchasers, existing and expected additional Transportation Security Administration ("TSA") contract revenue and other sources. For the three months ended March 31, 2026, the Company recorded total revenue of $919,421, primarily from HEXWAVE™ sales and TSA contract revenue. Based on current orders, anticipated contract revenue, and expected customer deployments, the Company currently projects fiscal year 2026 revenue in the range of approximately $5.5 million to $8.5 million, with the majority of such revenue expected to be recognized during the second half of fiscal 2026. The Company's ability to achieve this revenue range is dependent on several factors, including the timing of customer procurement decisions, government budget approvals and funding availability, the timing of customer deployments, and the successful execution of existing and anticipated contracts. The projected revenue range is dependent on several material factors outlined below:

Backlog Orders:

The Company has shipped a total of $635,000 in backlog orders, with a remaining amount of $1,015,000 in backlog for the HEXWAVE™. With production levels increasing the backlog orders are expected to increase during fiscal year 2026. Inventory constraints and limited funding continue to be a challenge in fulfilling orders.

---

| | | |
|:---|:---|:---|
| **Q1-2026 MD&A** <br> (Expressed in U.S. dollars) | ![](tm2616094d1_ex99-2img004.jpg) | Page\| 18 |

---

HEXWAVE™ Sales Projections:

As a new product with no historical sales data or comparable benchmarks, HEXWAVE™'s revenue projections for 2026 are conservative due to the political implications of customers. Several quotes to prospective customers support optimistic projections, for fiscal year 2026. Limited funding may impact and delay the Company's ability to follow up with clients, invest in marketing, and promote the HEXWAVE™ product effectively, delaying its visibility and adoption by potential customers. Additionally, the implementation deadline for the TSA employee screening mandate was postponed by one year, from April 2025 to April 2026. The Company is still anticipating receiving a significant number of orders in 2026 to meet the demand.

**TSA Contract Revenue:**

The Company has experienced delays in TSA contract revenue projects, as well as in additional contract line items that the TSA had planned to exercise in 2025 and 2026. As a result, revenue of $357,759 will be recognized in Q1 and Q2 of 2026.

**Global Economic Challenges:**

The Company continues to operate in a challenging global economic environment, characterized by constrained capital markets and slower customer procurement cycles. These conditions, which began in 2024, have persisted through 2025 and early 2026 and continue to affect the timing of purchase orders for HEXWAVE™ units.

While interest rates remain elevated, recent signals of potential monetary policy easing in 2026 may improve access to capital markets and support increased customer activity. Management expects that any improvement in financing conditions could positively impact order volumes in future periods.

In response, the Company has undertaken proactive measures to mitigate these challenges and position itself for growth. These include:

&nbsp;&nbsp;&nbsp;&nbsp;· Increasing product awareness through targeted
marketing and investor relations activities;

· Focusing on advancing customer pilots and demonstrations
to strengthen the sales pipeline; and

· Maintaining operational readiness to scale production
as purchase commitments are secured.

Management also recognizes that current capital market conditions directly affect the Company's liquidity and working capital position. As at March 31, 2026, the Company had a working capital deficiency of $6.6 million and contractual obligations of $9.8 million, of which $9.4 million are due within the next 12 months. Continued access to external financing will therefore be critical to support operations and growth initiatives until the Company is able to generate sustainable revenues from commercial sales.

**7.** **Contract Awards** 

During the three months ended March 31, 2026, the Company recognized total contract revenue of $275,000, recorded in revenue (March 31, 2025 - $275,000). Future revenue related to these contracts will be recognized as performance obligations are satisfied. It is estimated that future revenues will be recognized on the same basis according to the following timelines:

---

| | | |
|:---|:---|:---|
| **Contract Award Revenue Expected in Future Years** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2026** | **2027** |
| HD-AIT Phase II B | $82759 | $- |
| **Total estimated contract revenues** | $**82759** | $**-** |

---

i) Transportation Security Administration's ("TSA")
HD-AIT Upgrade

On September 30, 2022, the Company received a contract award of $1,747,905 from the Transportation Security Administration ("TSA") for the HD-AIT Wide Band Upgrade Kit. On September 28, 2023, the contract was modified to include an additional milestone, increasing the total contract value to $1,922,905. The contract award supports the development of millimeter-wave imaging system prototypes to enhance and upgrade the current imaging technology used in passenger security screening applications.

---

| | | |
|:---|:---|:---|
| **Q1-2026 MD&A** <br> (Expressed in U.S. dollars) | ![](tm2616094d1_ex99-2img004.jpg) | Page\| 19 |

---

As of March 31, 2026, the Company received $nil and recorded a receivable of $nil (March 31, 2025 – $nil and $100,000, respectively). The remaining contract balance as of March 31, 2026, was $nil (December 31, 2025 – $nil).

The Company is required to submit quarterly invoices as follows:

---

| | |
|:---|:---|
| **TSA HD-AIT Upgrade** | **Amounts** |
| **Year 2023** | $1265000 |
| **Year 2024** | 200000 |
| **Year 2025** | 457905 |
| **Total Contract Value** | $**1922905** |

---

ii) TSA Open Architecture

On September 29, 2023, the Company received a contract award for $1,116,944 from TSA for the Open Architecture Development. The contract award is to develop a system-level approach that addresses TSA's request for implementation of a Checkpoint Open Architecture for On-Person Screening (OPS) systems that enable modularity and enhances security effectiveness. The project will be performed over a period of twenty-one months, and invoices will be issued once the milestones are reached based on the agreed upon timeline. During the three months ended March 31, 2026, the Company received $nil and had a receivable of $nil (March 31, 2025 – $nil and $175,000, respectively). The balance remaining on the contract as of March 31, 2026, was $nil (December 31, 2025 – $nil).

---

| | |
|:---|:---|
| **TSA Open Architecture** | **Amounts** |
| **Year 2023** | $75000 |
| **Year 2024** | 795000 |
| **Year 2025** | 246944 |
| **Total Contract Value** | $**1116944** |

---

iii) TSA HD-AIT Phase II A

On September 5, 2024, the Company received a contract award for $446,944 from TSA for the HD-AIT Phase II A option. The contract award is a follow-on option to the current HD-AIT development program to execute phase II to drive to a final hardware design capable of supporting future compliance efforts. The project will be performed over a period of twelve months, and invoices will be issued once the milestones are reached based on the agreed upon timeline. During the three months ended March 31, 2026, the Company received $nil and had a receivable of $nil (March 31, 2025 - $nil, and $nil respectively). The balance remaining on the contract as of March 31, 2026, was $nil (December 31, 2025 - $nil).

---

| | |
|:---|:---|
| **TSA HD-AIT Phase II A** | **Amounts** |
| **Year 2024** | $296944 |
| **Year 2025** | $150000 |
| **Total Contract Value** | $**446944** |

---

v) TSA HD-AIT Phase II B

On September 29, 2025, the Company received a contract award for $357,759 from TSA for the HD-AIT Phase II B option. The contract award is a follow-on option to the current HD-AIT development program to execute phase II to drive to a final hardware design capable of supporting future compliance efforts. Invoices will be issued once the milestones are reached based on the agreed upon timeline. As at March 31, 2025, the Company received $nil and had a receivable of $275,000 (March 31, 2025 - $nil, and $nil respectively). The balance remaining on the contract as of March 31, 2026, was $82,759 (December 31, 2025 - $357,759).

---

| | | |
|:---|:---|:---|
| **Q1-2026 MD&A** <br> (Expressed in U.S. dollars) | ![](tm2616094d1_ex99-2img004.jpg) | Page\| 20 |

---

---

| | |
|:---|:---|
| **TSA HD-AIT Phase II B** | **Amounts** |
| **Year 2026** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Milestone 3 (Q1 2026) (payable) | $100000 |
| &nbsp;&nbsp;&nbsp;&nbsp;Milestone 4 (Q1 2026) (payable) | $175000 |
| &nbsp;&nbsp;&nbsp;&nbsp;Milestone 5 (Q2 2026) | 82759 |
| **Total Contract Value** | $**357759** |

---

As of March 31, 2026, the Company recorded contract costs of $nil, representing costs incurred for contract milestones not yet achieved less related impairment charges (December 31, 2025 - $152,421). As of March 31, 2025, the Company recorded an impairment of the contract costs of $nil (December 31, 2025 - $192,951).

**8.** **Off-balance Sheet Arrangements** 

The Company does not utilize off-balance sheet arrangements.

**9.** **Transactions Between Related Parties** 

**Compensation of key management personnel:**

Key management personnel include persons having the authority and responsibility for planning, directing, and controlling the activities of the Company as a whole. The key management personnel of the Company are the members of the Company's executive management team and Board of Directors. Compensation provided to key management personnel is as follows:

---

| | | |
|:---|:---|:---|
|  | **Three months ended March 31,** | **Three months ended March 31,** |
|  | **2026** | **2025** |
| G&A Salaries | $282032 | $355017 |
| G&A Stock-based compensation | 128255 | 312337 |
|  | $**410286** | $**667354** |

---

As of March 31, 2026, the Company had a balance payable of $429,585 to key management personnel (March 31, 2025, – $176,537). This payable balance includes accounts payable and accrued liabilities relating to compensation to directors, officers, or their related companies, included in compensation of key management personnel. These related party balances are unsecured, non-interest bearing and have no specific terms of settlement.

During the three months ended March 31, 2026, the Company received working capital loans in the amount of $193,647 (March 31, 2025 - $nil) from members of key management personnel or their related parties and repaid $143,441 (March 31, 2025 - $74,658). As at March 31, 2026, the outstanding balance is $50,206 (Note 8(a)) (March 31, 2025 – $nil).

**10.** **Subsequent Events** 

Subsequent to March 31, 2026, the Company:

&nbsp;&nbsp;&nbsp;&nbsp;· Recorded the expiry of 555 RSUs on April 7,
2026. &nbsp;&nbsp;&nbsp;&nbsp;· Recorded the expiry of 1,844 stock options on
April 7, 2026.

&nbsp;&nbsp;&nbsp;&nbsp;· On April 21, 2026, the Company priced an
initial public offering in the United States of 3,673,638 common shares at a price of $4.50 per share and certain investors, in lieu of
common shares, pre-funded warrants to purchase 770,807 common shares at a purchase price of $4.4999 pre-funded warrant. The common shares
began trading on Nasdaq Capital Market on April 22, 2026, under the symbol "DETX". The total offering closed on April 23,
2026, with gross proceeds of $19,999,925.

---

| | | |
|:---|:---|:---|
| **Q1-2026 MD&A** <br> (Expressed in U.S. dollars) | ![](tm2616094d1_ex99-2img004.jpg) | Page\| 21 |

---

**11.** **Financial Instruments** 

As of March 31, 2026, the Company's financial instruments comprise cash, accounts receivables, accounts payable and accrued liabilities, loans payable, and factoring liability. The fair values of the Company's financial instruments approximate their carrying values due to their short-term maturity.

The Company's financial instruments are exposed to certain financial risks including, credit risk, liquidity risk, foreign currency risks, equity price risk and capital risk management. Details of each risk are laid out in the notes to the Company's condensed interim consolidated financial statements as at March 31, 2026. Details of each risk are summarized below:

a) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity risk through the management of its capital structure. To mitigate this risk, the Company has a planning and budgeting process in place to determine the funds required to support its ongoing operations and capital expenditures. The Company ensures that sufficient funds are raised from equity offerings or debt financings to meet its operating requirements, after considering existing cash balances, expected exercise of share purchase warrants, and stock options. The Company's ability to continue as a going concern involves significant judgements and estimates while determining forecasted cashflows and is dependent on the Company's ability to obtain financing (Note 1). As at March 31, 2026, the Company had cash of $22,409 (December 31, 2025 – $319,294) to settle current liabilities of $9,483,506 (December 31, 2025 – $8,616,300).

As of March 31, 2026, the Company had granted security interests over substantially all of the assets of Liberty Defense Technologies, Inc., its wholly owned subsidiary, in connection with multiple agreements, including the Company's credit facilities with Parabilis and its distributor arrangement with Viken Detection (a commercial agreement). These arrangements include multiple security interests over the same underlying assets, each of which claim to be a first-ranking security interest.

As of March 31, 2026, no intercreditor agreement or similar arrangement had been executed to establish the priority or ranking of these competing security interests. Accordingly, the relative rights of the secured parties with respect to the collateral have not been formally determined and may be subject to legal interpretation. As of that date, neither Parabilis nor Viken Detection had asserted a default nor exercised any remedies under their respective agreements in connection with this matter.

If the matter is not resolved, Parabilis and/or Viken Detection may assert their respective rights and remedies under the applicable agreements, including declaring outstanding amounts immediately due and payable and enforcing their rights against the collateral. The existence of competing security interests over the same assets may affect the priority of claims and the outcome of any enforcement proceedings.

The Company's exposure to liquidity risk related to the competing security interests is limited to the carrying amounts to the Parabilis and Viken Detection agreements. As at March 31, 2026, the amount due to Viken is $608,379 (December 31, 2025 - $510,000), included in Accounts Payable and Accrued Liabilities, in the Statement of Financial Position. As at March 31, 2025, the amount due to Parabilis is $3,525,561 (December 31, 2025 - $3,402,548), included in Parabilis Term Loan and Factoring and Credit Line Liability, in the Statement of Financial Position. See Notes 10 and 11(a) for activity related to the Parabilis loans during the three months ended March 31, 2026.

b) Credit risk

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations, including accounts receivable terms. The Company's cash is held through large Canadian, international, and foreign national financial institutions. The Company's receivables primarily consist of GST receivable due from the Canadian government and trade receivables that the Company continues to collect. These trade receivables are primarily with continuing customers and are not subject to significant credit risk. As at March 31, 2026, the Company's trade receivables totalling $595,350 are from four customers (December 31, 2025 - $470,263). The Company's maximum exposure to credit risk is limited to the carrying amount of cash and accounts receivables.

---

| | | |
|:---|:---|:---|
| **Q1-2026 MD&A** <br> (Expressed in U.S. dollars) | ![](tm2616094d1_ex99-2img004.jpg) | Page\| 22 |

---

c) Market risk

Market risk is the risk of loss that may arise from changes in market factors such as interest rates and foreign exchange rates.

Interest rate risk

Interest rate risk arises from changes in market rates of interest that could adversely affect the Company. The Company currently has interest-bearing financial instruments in relation to loans, a credit line and factoring. The Company's exposure to interest rate risk is minimal as the interest rates are at a fixed percentage on the loans payable, term loans and factoring liability.

Foreign currency risk

The Company is exposed to currency risk by having balances and transactions in currencies that are different from its functional currency. The Company operates in foreign jurisdictions, which uses the U.S. dollar. The Company does not use derivative instruments to reduce upward, and downward risk associated with foreign currency fluctuations. The Company's exposure to foreign currency risk is minimal.

Price risk

The Company is exposed to price risk with respect to equity prices. Equity price risk is defined as the potential adverse impact on the Company's earnings due to movements in individual equity prices or general movements in the level of the stock market.

The Company closely monitors individual equity movements, and the stock market to determine the appropriate course of action to be taken by the Company.

<u>Capital Risk Management</u>

The Company manages common shares, stock options, performance share units, restricted share units, and share purchase warrants as 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 of its products and to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk.

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

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. The Company's investment policy is to keep its cash treasury on deposit in an interest-bearing chartered bank account. Cash consists of cash on held with banks.

The Company expects its current capital resources will be sufficient to carry its operations, and product development plans for the foreseeable future. Except for the security pledged in certain term loans and credit lines as outlined in Notes 10 and 11(a) and liquidity risk with Viken Detection (Note 5) respectively, the Company is not subject to externally imposed capital requirements.

There has been no change to the Company's approach to capital management during the three months ended March 31, 2026.

---

| | | |
|:---|:---|:---|
| **Q1-2026 MD&A** <br> (Expressed in U.S. dollars) | ![](tm2616094d1_ex99-2img004.jpg) | Page\| 23 |

---

**12.** **Other requirements** 

Outstanding common share data:

Authorized: Unlimited number of common shares

Number of common shares issued and outstanding as at March 31, 2026: 1,984,303

Number of common shares issued and outstanding as at May 29, 2026: 5,657,941

Number of stock options outstanding and exercisable as at May 29, 2026, is as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Outstanding** | **Outstanding** | **Outstanding** | **Exercisable** | **Exercisable** |
| <br>**Expiry date** | **Number of stock<br> options** | **Exercise price** | **Exercise price** | **Remaining<br> contractual life<br> (years)** | **Number of stock<br> options** |
| 28-Jul-26 | 278 | CAD$ | 247.50 | 0.57 | 278 |
| 28-Jul-26 | 111 | CAD$ | 292.50 | 0.57 | 111 |
| 1-Nov-26 | 944 | CAD$ | 207.00 | 0.84 | 944 |
| 14-Jan-27 | 222 | CAD$ | 162.00 | 1.04 | 222 |
| 15-Apr-27 | 1111 | CAD$ | 26.55 | 1.29 | 1111 |
| 26-Apr-27 | 2633 | CAD$ | 184.50 | 1.32 | 2633 |
| 2-Jul-27 | 5556 | CAD$ | 10.80 | 1.50 | 2083 |
| 21-Nov-27 | 133 | CAD$ | 99.00 | 1.89 | 133 |
| 26-Apr-28 | 111 | CAD$ | 81.00 | 2.32 | 111 |
| 16-Oct-28 | 1778 | CAD$ | 85.50 | 2.79 | 1778 |
| 30-Dec-29 | 51667 | CAD$ | 38.25 | 4.00 | 35209 |
| 2-Apr-30 | 3333 | CAD$ | 37.80 | 4.25 | 1667 |
| 30-Sep-30 | 41111 | CAD$ | 12.15 | 4.75 | 10278 |
| **May 29, 2026** | **108988** |  |  |  | **56558** |

---

Number of share purchase warrants as at May 29, 2026, is as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | | **Exercise** | **Exercise** |
|  | **Warrants**<br>**outstanding** | **Price** | **Price** |
| **Outstanding, December 31, 2024** | **446109** | **CAD$** | **54.90** |
| Issued | 683234 |  | 19.32 |
| Expired | (169855) |  | 32.79 |
| Exercised | (240718) |  | 20.27 |
| **Outstanding December 31, 2025** | **718770** | **CAD$** | **36.45** |
| Issued | 92672 |  | 13.50 |
| **Outstanding March 31, 2026** | **811442** | **CAD$** | **33.83** |
| Issued | 770807 |  | 4.50 |
| **Outstanding May 29, 2026** | **1582249** | **CAD$** | **19.54** |

---

Number of restricted share units as at May 29, 2026, is as follows:

---

| | | | |
|:---|:---|:---|:---|
| **Outstanding, December 31, 2024** | **11918** | **CAD$** | **180.45** |
| Granted | 8260 |  | 10.91 |
| Exercised | (4758) |  | 115.88 |
| **Outstanding December 31, 2025** | **15420** | **CAD$** | **55.51** |
| **Outstanding, March 31, 2026** | **15420** | **CAD$** | **55.51** |
| Expired | (555) |  | 261.00 |
| **Outstanding May 29, 2026** | **14865** | **CAD$** | **47.81** |

---

---

| | | |
|:---|:---|:---|
| **Q1-2026 MD&A** <br> (Expressed in U.S. dollars) | ![](tm2616094d1_ex99-2img004.jpg) | Page\| 24 |

---

Number of performance share deposited and held in escrow as at May 29, 2026:

---

| | | |
|:---|:---|:---|
|  | **Number of <br> equity settled<br> performance share units** | **Weighted average<br> price** |
| Outstanding, December 31, 2024 and 2025 | 4444 | CAD$180.00 |
| Released from escrow | - | - |
| **Outstanding, March 31, 2026 & May 29, 2026** | **4444** | **CAD$180.00** |

---

**13.** **Disclosure Controls and Procedures and Internal Controls over Financial Reporting** 

Disclosure controls and procedures are intended to provide reasonable assurance that information required to be disclosed is recorded, processed, summarized, and reported within the time periods specified by securities regulations and that the information required to be disclosed is accumulated and communicated to management. Internal controls over financial reporting are intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. In connection with National Instrument 52-109 (Certificate of Disclosure in Issuer's Annual and Interim Filings) ("NI 52-109"), the Chief Executive Officer and Chief Financial Officer of the Company have filed a Venture Issuer Basic Certificate with respect to the financial information contained in the condensed consolidated interim financial statements for the three months ended March 31, 2026 and 2025, and this accompanying MD&A (together, the "Interim Filings").

In contrast to the full certificate under NI 52-109, the Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures and internal control over financial reporting, as defined in NI 52-109. For further information, the reader should refer to the Venture Issuer Basic Certificates filed by the Company on SEDAR+ at www.sedarplus.ca.

---

| | | |
|:---|:---|:---|
| **Q1-2026 MD&A** <br> (Expressed in U.S. dollars) | ![](tm2616094d1_ex99-2img004.jpg) | Page\| 25 |

---

## Exhibit 99.3

**Exhibit 99.3**

**Form 52-109FV2**

***Certification of Interim Filings<br> Venture Issuer Basic Certificate***

I, **William Frain**, Chief Executive Officer of **Liberty Defense Holdings, Ltd.**, certify the following:

**1.**  ***Review:*** I have reviewed the interim financial report and interim MD&A (together, the
 "interim filings") of **Liberty Defense Holdings, Ltd.** (the "issuer") for the interim period ended **March 31, 2026.** 

2.  ***No misrepresentations:*** Based on my knowledge, having exercised reasonable diligence, the
interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that
is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered
by the interim filings.

3.  ***Fair presentation:*** Based on my knowledge, having exercised reasonable diligence, the interim
financial report together with the other financial information included in the interim filings fairly present in all material respects
the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim
filings.

Date: **June 1, 2026**

---

| |
|:---|
| /s/ William Frain |
| William Frain |
| Chief Executive Officer |

---

<u>**NOTE TO READER**</u>

In contrast to the certificate required for non-venture issuers under National Instrument 52-109 *Certification of Disclosure in Issuers' Annual and Interim Filings* (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of

i) controls and other procedures designed to provide reasonable
assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted
under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation;
and

ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.

The issuer's certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52- 109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.

## Exhibit 99.4

**Exhibit 99.4**

**Form 52-109FV2**

***Certification of Interim Filings<br> Venture Issuer Basic Certificate***

I, **Omar Garcia Abrego**, Chief Financial Officer of **Liberty Defense Holdings, Ltd.**, certify the following:

**1.**  ***Review:*** I have reviewed the interim financial report and interim MD&A (together, the
 "interim filings") of **Liberty Defense Holdings, Ltd.** (the "issuer") for the interim period ended **March 31, 2026.** 

2.  ***No misrepresentations:*** Based on my knowledge, having exercised reasonable diligence, the
interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that
is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered
by the interim filings.

3.  ***Fair presentation:*** Based on my knowledge, having exercised reasonable diligence, the interim
financial report together with the other financial information included in the interim filings fairly present in all material respects
the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim
filings.

Date: **June 1, 2026**

---

| |
|:---|
| /s/ Omar Garcia Abrego |
| Omar Garcia Abrego |
| Chief Financial Officer |

---

<u>**NOTE TO READER**</u>

In contrast to the certificate required for non-venture issuers under National Instrument 52-109 *Certification of Disclosure in Issuers' Annual and Interim Filings* (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of

i) controls and other procedures designed to provide reasonable
assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted
under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation;
and

ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.

The issuer's certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52- 109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.