# EDGAR Filing Document

**Accession Number:** 0001821866
**File Stem:** 0001062993-25-015797
**Filing Date:** 2025-9
**Character Count:** 968788
**Document Hash:** 9e3bb0e8f04f5a2cdf947d8045bf1600
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001062993-25-015797.hdr.sgml**: 20250925

**ACCESSION NUMBER**: 0001062993-25-015797

**CONFORMED SUBMISSION TYPE**: F-10

**PUBLIC DOCUMENT COUNT**: 42

**FILED AS OF DATE**: 20250925

**DATE AS OF CHANGE**: 20250925

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** BTQ Technologies Corp.
- **CENTRAL INDEX KEY:** 0001821866
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370]
- **ORGANIZATION NAME:** 06 Technology
- **EIN:** 000000000
- **STATE OF INCORPORATION:** A1
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** F-10
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 333-290517
- **FILM NUMBER:** 251344466

**BUSINESS ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** 700 WEST GEORGIA STREET, SUITE 2500
- **CITY:** VANCOUVER
- **PROVINCE COUNTRY:** A1
- **ZIP:** V7Y 1B3
- **BUSINESS PHONE:** (416) 479 9547

**MAIL ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** 700 WEST GEORGIA STREET, SUITE 2500
- **CITY:** VANCOUVER
- **PROVINCE COUNTRY:** A1
- **ZIP:** V7Y 1B3

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Sonora Gold & Silver Corp.
- **DATE OF NAME CHANGE:** 20200820

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**As filed with the Securities and Exchange Commission on September 25, 2025.**

**Registration No.** 

**UNITED STATES**<br>**SECURITIES AND EXCHANGE COMMISSION**<br>Washington, D.C. 20549

**FORM F-10**

**REGISTRATION STATEMENT UNDER** <br>**THE SECURITIES ACT OF 1933**

<u>**BTQ Technologies Corp.**</u><br>*(Exact name of Registrant as specified in its charter)*

<u>**British Columbia, Canada**</u><br>(Province or other jurisdiction of incorporation or organization)

<u>**7370**</u><br>(Primary Standard Industrial Classification Code Number, if applicable)

<u>**N/A**</u><br>(I.R.S. Employer Identification No., if applicable)

**700 West Georgia Street, Suite 2500**

**Vancouver, British Columbia, V7Y 1B3**

<u>**(416) 479 9547**</u><br>*(Address and telephone number of Registrant's principal executive offices)*

**C T Corporation System**

**1015 15<sup>th</sup>** **Street N.W., Suite 1000**

**Washington, DC 20005**

<u>**(202) 572-3133**</u>

*(Name, address (including zip code) and telephone number (including area code) of agent for service in the United States)*

**Copies to:**

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| | | |
|:---|:---|:---|
| **Olivier Roussy Newton**<br>**BTQ Technologies Inc.**<br>**700 West Georgia Street,** <br>**Suite 2500,** <br>**Vancouver, British Columbia<br>Canada V7Y 1B3**<br>**(416) 479 9547** | &nbsp;&nbsp;&nbsp;**James Guttman**<br>**Dorsey & Whitney LLP**<br>**66 Wellington St West,** <br>**Suite 3400,**<br>**Toronto, Ontario Canada,<br>M5K 1E6**<br>**(416) 367-7376** | &nbsp;&nbsp;&nbsp;**Daniel Everall**<br>**Farris LLP**<br>**700 West Georgia Street,** <br>**Suite 2500,** <br>**Vancouver, British Columbia<br>Canada V7Y 1B3**<br>**(604) 661-1733** |

---

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**Approximate date of commencement of proposed sale of the securities to the public:**<br>From time to time after this Registration Statement becomes effective.

<u>**Province of British Columbia, Canada**</u><br> *(Principal jurisdiction regulating this offering)*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is proposed that this filing shall become effective (check appropriate box below):

A. ☐ upon filing with the Commission pursuant to Rule 467(a) (if in connection with an offering being made contemporaneously in the United States and Canada).

B. ☒ at some future date (check the appropriate box below):

1. ☐ pursuant to Rule 467(b) on () at (** ) (designate a time not sooner than 7 calendar days after filing).

2. ☐ pursuant to Rule 467(b) on (** ) at (** ) (designate a time 7 calendar days or sooner after filing) because the securities regulatory authority in the review jurisdiction has issued a receipt or notification of clearance on ().

3. ☒ pursuant to Rule 467(b) as soon as practicable after notification of the Commission by the Registrant or the Canadian securities regulatory authority of the review jurisdiction that a receipt or notification of clearance has been issued with respect hereto.

4. ☐ after the filing of the next amendment to this Form (if preliminary material is being filed).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to the home jurisdiction's shelf prospectus offering procedures, check the following box. ☒

**The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registration Statement shall become effective as provided in Rule 467 under the Securities Act or on such date as the Commission, acting pursuant to Section 8(a) of the Securities Act, may determine.**

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**PART I**

**INFORMATION REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS**

**AMENDMENT NO.1 DATED SEPTEMBER 22, 2025**

**TO THE SHORT FORM BASE SHELF PROSPECTUS DATED APRIL 29, 2025**

**BTQ TECHNOLOGIES CORP.**

![](formf10xm001.jpg)

This amendment no. 1 dated September 22, 2025, to the short form base shelf prospectus (the "**Shelf Prospectus**") of BTQ Technologies Corp. (the "**Company**") dated April 29, 2025, provides certain additional information relating to the Company. The Shelf Prospectus should be read subject to this information.

The Shelf Prospectus is amended such that each reference to "$100,000,000" contain on the cover page of the Shelf Prospectus is hereby deleted and replaced with a reference to "$300,000,000" in each instance.

Manfred Knof, Philippe Lucet, and Mansour Al Suwaidi, each a director of the Company, and Olivier Roussy Newton, the Chief Executive Officer and a director of the Company, reside outside of Canada and have each appointed the Company as their agent for service of process at its head office, listed below. Purchasers of securities issuable pursuant to the Shelf Prospectus are advised that it may not be possible for purchasers to enforce judgments obtained in Canada against any individual who reside outside of Canada, even if the party has appointed an agent for service of process.

The Company's registered and head office is located at 2500 - 700 West Georgia Street, Vancouver, British Columbia, V7Y 1B3.

The following legends are added to the cover page of the Shelf Prospectus:

This offering is made by a foreign issuer that is permitted, under a multijurisdictional disclosure system adopted by the United States, to prepare this Prospectus in accordance with the disclosure requirements of its home country. Prospective investors should be aware that such requirements are different from those of the United States. Financial statements included or incorporated herein, if any, have been prepared in accordance with foreign generally accepted accounting principles, and may be subject to foreign auditing and auditor independence standards, and thus may not be comparable to financial statements of United States companies.

Information contained herein is subject to completion or amendment. A registration statement relating to these Securities has been filed with the SEC. These Securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This Prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these Securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

The following is added as the fourth to last paragraph in the section under the heading "DOCUMENTS INCORPORATED BY REFERENCE":

In addition, to the extent any such document is included in any annual report on Form 40-F or 20-F (or any respective successor form) filed with the SEC during the 25-month period that this Prospectus remains valid, such document shall be deemed to be incorporated by reference as exhibits to the Registration Statement on Form F-10 (the "**Registration Statement**") of which this Prospectus forms a part. In addition, any other report on Form 6-K and the exhibits thereto filed or furnished by the Company with the SEC, and any other reports filed, under the United States Securities Exchange Act of 1934, as amended (the "**Exchange Act**"), during the 25-month period that this Prospectus remains valid, shall be deemed to be incorporated by reference as exhibits to the Registration Statement of which this Prospectus forms a part, but only if and to the extent expressly so provided in any such report.

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The following are added as new sections immediately following the section under the heading "DOCUMENTS INCORPORATED BY REFERENCE":

**DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT**

The following documents have been or will be filed with the SEC as part of the Registration Statement of which this Prospectus forms a part: (i) the documents referred to in "Documents Incorporated by Reference"; (ii) the consents of auditors, counsel and any experts identified herein, if applicable; (iii) powers of attorney of the directors and officers of the Company; and (iv) a copy of the form of indenture for Debt Securities. A copy of any applicable form of warrant indenture, subscription receipt agreement, agreement with respect to debt securities, or statement of eligibility of trustee on Form T-1, as applicable, will be filed by post-effective amendment or by incorporation by reference to documents filed or furnished with the SEC under the Exchange Act.

**WHERE YOU CAN FIND MORE INFORMATION**

The Company is subject to the full informational requirements of the securities commissions or similar regulatory authority in all provinces and territories of Canada. Purchasers are invited to read and copy any reports, statements or other information, other than confidential filings, that the Company files with the Canadian provincial and territorial securities commissions or similar regulatory authority. These filings are also electronically available from SEDAR+ at <u>www.sedarplus.ca</u> and from EDGAR at <u>www.sec.gov/edgar</u>. Except as expressly provided herein, documents filed on SEDAR+ or on EDGAR are not, and should not be considered, part of this Prospectus.

As a "foreign private issuer" (as defined in Rule 405 under the United States Securities Act of 1933, as amended, a "**foreign private issuer**"), the Company is exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements, and the Company's officers and directors are exempt from the reporting and short swing profit recovery provisions contained in Section 16 of the Exchange Act. The Company's reports and other information filed or furnished with or to the SEC are available from EDGAR at <u>www.sec.gov/edgar</u>, as well as from commercial document retrieval services.

The following risk factors are added to the end of the section under the heading "RISK FACTORS":

***We will incur increased costs as a result of being a public company in the United States, and our management will be required to devote substantial time to United States public company compliance efforts.***

As a public company in the United States, we will incur additional legal, accounting, reporting and other expenses that we did not incur as a public company in Canada. The additional demands associated with being a United States public company may disrupt regular operations of our business by diverting the attention of some of our senior management team away from revenue-producing activities to additional management and administrative oversight, adversely affecting our ability to attract and complete business opportunities and increasing the difficulty in both retaining professionals and managing and growing our business. Any of these effects could harm our business, results of operations and financial condition.

If our efforts to comply with new United States laws, regulations and standards differ from the activities intended by regulatory or governing bodies, such regulatory bodies or third parties may initiate legal proceedings against us and our business may be adversely affected. As a public company in the United States, it is more expensive for us to obtain director and officer liability insurance, and we will be required to accept reduced coverage or incur substantially higher costs to continue our coverage. These factors could also make it more difficult for us to attract and retain qualified directors.

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The United States Sarbanes-Oxley Act of 2002, as amended (the "**Sarbanes-Oxley Act**"), requires that we maintain effective disclosure controls and procedures and internal control over financial reporting. In the event that we are not able to demonstrate compliance with the Sarbanes-Oxley Act, that our internal control over financial reporting is perceived as inadequate, or that we are unable to produce timely or accurate financial statements, investors may lose confidence in our operating results and the price of our Common Shares may decline. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on Nasdaq.

Following a transition period permitted for a newly-public company in the United States, our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting. Even if our management concludes that our internal controls over financial reporting are effective, our independent registered public accounting firm may issue a report that is qualified if it is not satisfied with our controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently than we do.

***As a foreign private issuer, we are subject to different United States securities laws and rules than a U.S. domestic issuer, which may limit the information publicly available to our shareholders.***

We are a foreign private issuer, and are permitted, under the multijurisdictional disclosure system adopted by the United States and Canada, to prepare our disclosure documents filed under the Exchange Act in accordance with Canadian disclosure requirements. Under the Exchange Act, we are subject to reporting obligations that, in certain respects, are less detailed and less frequent than those of U.S. domestic reporting companies. As a result, we will not file the same reports that a U.S. domestic issuer would file with the SEC, although we will be required to file or furnish to the SEC the continuous disclosure documents that we are required to file in Canada under Canadian securities laws. In addition, our officers, directors, and principal shareholders are exempt from the reporting and "short swing" profit recovery provisions of Section 16 of the Exchange Act. Therefore, our shareholders may not know on as timely a basis when our officers, directors and principal shareholders purchase or sell shares, as the reporting deadlines under the corresponding Canadian insider reporting requirements are longer.

As a foreign private issuer, we are exempt from the rules and regulations under the Exchange Act related to the furnishing and content of proxy statements. We are also exempt from Regulation FD, which prohibits issuers from making selective disclosures of material non-public information. While we expect to comply with the corresponding requirements relating to proxy statements and disclosure of material non-public information under Canadian securities laws, these requirements differ from those under the Exchange Act and Regulation FD and shareholders should not expect to receive in every case the same information at the same time as such information is provided by U.S. domestic issuers.

In addition, as a foreign private issuer, we have the option to follow certain Canadian corporate governance practices, except to the extent that such laws would be contrary to United States securities laws, and provided that we disclose the requirements we are not following and describe the Canadian practices we follow instead. We plan to rely on this exemption. As a result, our shareholders may not have the same protections afforded to shareholders of U.S. domestic issuers that are subject to all United States corporate governance requirements.

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***The Company is governed by the corporate and securities laws of Canada which in some cases have a different effect on shareholders than the corporate laws of Delaware, U.S. and U.S. securities laws***.

The Company is governed by the *Business Corporation Act* (British Columbia) (the "**BCBCA**") and other relevant laws, which may affect the rights of shareholders differently than those of a company governed by the laws of a United States jurisdiction, and may, together with the Company's constating documents, have the effect of delaying, deferring or discouraging another party from acquiring control of the Company by means of a tender offer, a proxy contest or otherwise, or may affect the price an acquiring party would be willing to offer in such an instance. The material differences between the BCBCA and Delaware General Corporation Law ("**DGCL**") that may have the greatest such effect include, but are not limited to, the following: (i) for material corporate transactions (such as mergers and amalgamations, other extraordinary corporate transactions or amendments to the Company's articles) the BCBCA generally requires a two-thirds majority vote by shareholders, whereas DGCL generally requires only a majority vote; and (ii) under the BCBCA, holders of 5% or more of the Company's shares that carry the right to vote at a meeting of shareholders can requisition a special meeting of shareholders, whereas such right does not exist under the DGCL.

***As the Company is a Canadian corporation and most of its directors and officers reside or are organized in Canada or the provinces thereof, it may be difficult for United States shareholders to effect service on the Company to realize on judgments obtained in the United States. Similarly, it may be difficult for Canadian investors to enforce civil liabilities against our directors and officers residing outside of Canada.***

The Company is governed by the BCBCA with its principal place of business in Canada, most of its directors and officers reside or are organized in Canada or the provinces thereof and the majority of the Company's assets and all or a substantial portion of the assets of these persons may be located outside the United States. Consequently, it may be difficult for investors who reside in the United States to effect service of process in the United States upon the Company or upon such persons who are not residents of the United States, or to realize upon judgments of courts of the United States predicated upon the civil liability provisions of the United States federal securities laws. A judgment of a United States court predicated solely upon such civil liabilities may be enforceable in Canada by a Canadian court if the United States court in which the judgment was obtained had jurisdiction, as determined by the Canadian court, in the matter. Investors should not assume that Canadian courts: (i) would enforce judgments of United States courts obtained in actions against the Company or such persons predicated upon the civil liability provisions of United States federal securities laws or the securities or blue sky laws of any state within the United States, or (ii) would enforce, in original actions, liabilities against the Company or such persons predicated upon United States federal securities laws or any such state securities or blue sky laws. Similarly, some of the Company's directors and officers are residents of countries other than Canada and all or a substantial portion of the assets of such persons are located outside Canada. As a result, it may be difficult for Canadian investors to initiate a lawsuit within Canada against these persons. In addition, it may not be possible for Canadian investors to collect from these persons judgments obtained in courts in Canada predicated on the civil liability provisions of securities legislation of certain of the provinces and territories of Canada. It may also be difficult for Canadian investors to succeed in a lawsuit in the United States based solely on violations of Canadian securities laws.

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*This prospectus is a base shelf prospectus. This short form base shelf prospectus has been filed under legislation in each of the provinces and territories of Canada that permits certain information about these securities to be determined after this prospectus has become final and that permits the omission from this prospectus of that information. The legislation requires the delivery to purchasers of a prospectus supplement containing the omitted information within a specified period of time after agreeing to purchase any of these securities.* 

*No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. This short form prospectus constitutes a public offering of these securities only in those jurisdictions where they may be lawfully offered for sale and therein only by persons permitted to sell such securities.* 

***Information has been incorporated by reference in this short form base shelf prospectus from documents filed with securities commissions or similar authorities in Canada.** Copies of the documents incorporated herein by reference may be obtained on request without charge from the Company at 16-113 555 Burrard Street, Vancouver, British Columbia, Canada, V7X 1M8 and are also available electronically at* <u>*www.sedarplus.ca.*</u>

***This short form base shelf prospectus may qualify an "at-the-market distribution" (as such term is defined in National Instrument 44-102 - Shelf Distributions).***

**SHORT FORM BASE SHELF PROSPECTUS**

<u>*New Issue*</u> April 29, 2025

**BTQ TECHNOLOGIES CORP.**

![](formf10xm002.jpg)

**$100,000,000**<br>**Common Shares**<br>**Warrants**<br>**Subscription Receipts**<br>**Units**<br>**Share Purchase Contracts**<br>**Debt Securities**

BTQ Technologies Corp. ("**BTQ**" or the "**Company**" or the "**Issuer**") may offer and sell from time to time common shares of the Company ("**Common Shares**"), warrants ("**Warrants**") to purchase any of the other securities that are described in this short form base shelf prospectus (the "**Prospectus**"), subscription receipts ("**Subscription Receipts**"), units ("**Units**") comprised of one or more of any of the other securities that are described in this Prospectus, share purchase contracts obligating holders to purchase a specified number of Common Shares at a future date or dates, or similar contracts which may be issued on a prepaid basis (in each case, "**Share Purchase Contracts**"), debt securities ("**Debt Securities**") or any combination of such securities (all of the foregoing collectively, the "**Securities**" and individually, a "**Security**") for up to an aggregate offering price of $100,000,000 (or its equivalent in other currencies), in one or more transactions during the 25-month period that this Prospectus, including any amendments hereto, remains effective.

**The Company prepares its annual financial statements in accordance with IFRS Accounting Standards.** 

**Purchasers of Securities should be aware that the acquisition of Securities may have tax consequences in Canada. Such consequences for purchasers who are citizens of, or resident in, the United States are not described fully herein and may not be fully described in any applicable Prospectus Supplement. Purchasers of Securities should read the tax discussion contained in the applicable Prospectus Supplement with respect to a particular offering of Securities.**

**The enforcement by investors of civil liabilities under United States federal securities laws may be affected adversely by the fact that the Company is incorporated under the laws of the Province of British Columbia, Canada, that most of its officers and directors are residents of Canada, that some of the experts named in this Prospectus are residents of Canada and that all or a substantial portion of the assets of the Company and said persons are located outside of the United States.**

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**THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE "SEC") NOR HAS THE SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.**

The Company will provide the specific terms of any offering of Securities, including the specific terms of the Securities with respect to a particular offering and the terms of such offering, in one or more prospectus supplements (each a "**Prospectus Supplement**") to this Prospectus. The Securities may be offered separately or together or in any combination, and as separate series.

In addition, Securities may be offered and issued in consideration for the acquisition of other businesses, assets or securities by the Company or a subsidiary of the Company. The consideration for any such acquisition may consist of any of the Securities separately, a combination of Securities or any combination of, among other things, Securities, cash and assumption of liabilities.

**An investment in Securities involves significant risks that should be carefully considered by prospective investors before purchasing Securities. The risks outlined in this Prospectus and in the documents incorporated by reference herein, including the applicable Prospectus Supplement, should be carefully reviewed and considered by prospective investors in connection with any investment in Securities. See "*****Cautionary Statement on Forward-Looking Information*****" and "*****Risk Factors*****".**

An investor should read this Prospectus and the applicable Prospectus Supplement carefully before investing in any Securities.

**All dollar amounts in this Prospectus are in Canadian dollars, unless otherwise indicated. See "*****Currency Presentation and Exchange Rate Information*****".**

All information permitted under applicable securities laws to be omitted from this Prospectus will be contained in one or more Prospectus Supplements that will be delivered to purchasers together with this Prospectus, except in cases where an exemption from such delivery requirements has been obtained. For the purposes of applicable securities laws, each Prospectus Supplement will be incorporated by reference into this Prospectus as of the date of the Prospectus Supplement and only for the purposes of the distribution of the Securities to which that Prospectus Supplement pertains.

The Securities may be sold pursuant to this Prospectus directly to investors or through underwriters, dealers or agents designated from time to time, at amounts and prices and other terms determined by the Company. A Prospectus Supplement will set out the names of any underwriters, dealers or agents involved in the sale of the Securities, the amounts, if any, to be purchased by underwriters, and the plan of distribution for such Securities, including the net proceeds the Company expects to receive from the sale of such Securities, the amounts and prices at which such Securities are sold and the compensation of such underwriters, dealers or agents. In connection with any offering (unless otherwise specified in a Prospectus Supplement), the underwriters or agents may, subject to applicable law, over-allot or effect transactions that stabilize or maintain the market price of the Securities offered at levels other than that which might otherwise exist in the open market. Such transactions, if commenced, may be interrupted or discontinued at any time. See "*Plan of Distribution*". As of the date of this Prospectus, no underwriter or dealer is in a contractual relationship with the Company requiring the underwriter or dealer to distribute Securities under this Prospectus. **Accordingly, no underwriter has been involved in the preparation of this Prospectus nor has any underwriter performed any review of the contents of this Prospectus.**

See "*Purchasers' Statutory Rights of Withdrawal and Rescission*" for information about the right to withdraw or rescind from an agreement to purchase Securities.

The Company will file an undertaking with each of the securities regulatory authorities in each of the provinces and territories of Canada in which this Prospectus is filed that it will not distribute Securities that, at the time of distribution, are novel specified derivatives or novel asset-backed securities, without first pre-clearing with the applicable regulator the disclosure to be contained in the Prospectus Supplement pertaining to the distribution of such Securities.

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The Common Shares are listed and posted for trading on Cboe Canada Inc. ("**Cboe Canada**") under the symbol "BTQ", the OTCQX under the symbol "BTQQF" and the Frankfurt Stock Exchange under the symbol "NG3". On April 28, 2025, the last trading day prior to the date of this Prospectus, the closing price of the Common Shares on the Cboe Canada exchange was C$2.44, the closing price of the Common Shares on the OTCQX was US$1.77, and the closing price of the Common Shares on the Frankfurt Stock Exchange was EUR 1.45. **Unless otherwise specified in the applicable Prospectus Supplement, Securities other than Common Shares will not be listed on any securities exchange. There is currently no market through which such Securities other than Common Shares may be sold and purchasers may not be able to resell any such Securities purchased under this Prospectus and the Prospectus Supplement relating to such Securities. This may affect the pricing of such Securities in the secondary market, the transparency and availability of trading prices, the liquidity of such Securities and the extent of issuer regulation. See "*****Risk Factors*****". No assurances can be given that a market for trading in Securities of any series or issue will develop or as to the liquidity of any such market, whether or not the Securities are listed on a securities exchange.**

The head office and principal address of the Company is located at 16-113 555 Burrard Street, Vancouver, British Columbia, Canada, V7X 1M8. The registered and records office of the Company is located at 2500 - 700 West Georgia Street, Vancouver, British Columbia, V7Y 1B3.

Directors and officers of the Company filing consents in respect of this Prospectus residing outside of Canada have appointed the Company at 16-113 555 Burrard Street, Vancouver, British Columbia, Canada V7X 1M8 as agent for service of process. Purchasers are advised that it may not be possible for investors to enforce judgments obtained in Canada against any person that resides outside of Canada, even if the person has appointed an agent for service of process.

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| | |
|:---|:---|
| **Name of Person** | **Name and Address of Agent** |
| **Olivier Roussy Newton**<br>Zug, Switzerland <br>Chief Executive Officer and Director | BTQ Technologies Corp.<br>16-113 555 Burrard Street, Vancouver, British Columbia, Canada V7X 1M8 |
| **Nicolas Roussy Newton**<br>Hong Kong Island, Hong Kong<br>Chief Operating Officer and Director | BTQ Technologies Corp.<br>16-113 555 Burrard Street, Vancouver, British Columbia, Canada V7X 1M8 |
| **Johan Wattenstrom**<br>Zug, Switzerland<br>Director | BTQ Technologies Corp.<br>16-113 555 Burrard Street, Vancouver, British Columbia, Canada V7X 1M8 |

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**TABLE OF CONTENTS**

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| | |
|:---|:---|
|  | **Page** |
| [ABOUT THIS SHORT FORM PROSPECTUS](#page_11) | [1](#page_11) |
| [CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION](#page_11) | [1](#page_11) |
| [ENFORCEMENT OF CERTAIN CIVIL LIABILITIES](#page_12) | [2](#page_12) |
| [CURRENCY PRESENTATION AND EXCHANGE RATE INFORMATION](#page_12) | [2](#page_12) |
| [DOCUMENTS INCORPORATED BY REFERENCE](#page_12) | [2](#page_12) |
| [BTQ TECHNOLOGIES CORP.](#page_14) | [4](#page_14) |
| [CONSOLIDATED CAPITALIZATION](#page_16) | [6](#page_16) |
| [PLAN OF DISTRIBUTION](#page_16) | [6](#page_16) |
| [USE OF PROCEEDS](#page_18) | [8](#page_18) |
| [DESCRIPTION OF COMMON SHARES](#page_19) | [9](#page_19) |
| [DESCRIPTION OF WARRANTS](#page_19) | [9](#page_19) |
| [DESCRIPTION OF SUBSCRIPTION RECEIPTS](#page_20) | [10](#page_20) |
| [DESCRIPTION OF UNITS](#page_22) | [12](#page_22) |
| [DESCRIPTION OF SHARE PURCHASE CONTRACTS](#page_23) | [13](#page_23) |
| [DESCRIPTION OF DEBT SECURITIES](#page_23) | [13](#page_23) |
| [EARNINGS COVERAGE RATIOS](#page_24) | [14](#page_24) |
| [PRIOR SALES](#page_24) | [14](#page_24) |
| [CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS](#page_25) | [15](#page_25) |
| [CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS](#page_25) | [15](#page_25) |
| [RISK FACTORS](#page_25) | [15](#page_25) |
| [TRANSFER AGENT AND REGISTRAR](#page_27) | [17](#page_27) |
| [AUDITORS](#page_27) | [17](#page_27) |
| [EXPERTS](#page_27) | [17](#page_27) |

---

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**ABOUT THIS SHORT FORM PROSPECTUS**

In this Prospectus, the Company and its subsidiaries are collectively referred to as the "Company" or "BTQ", unless the context otherwise requires. Readers should rely only on the information contained or incorporated by reference in this Prospectus. The Company has not authorized anyone to provide readers with information that is different or additional information from that contained in this Prospectus. If anyone provides you with any different, additional, inconsistent or other information, you should not rely on it. The Company takes no responsibility for, and can provide no assurance as to the reliability of any other information that others may give readers of this Prospectus. The Company is not making an offer to sell or seeking an offer to buy the Securities in any jurisdiction where the offer or sale is not permitted.

Readers should not assume that the information contained in this Prospectus, any applicable Prospectus Supplement or any document incorporated by reference herein and therein is accurate as of any date other than the date on the front cover of this Prospectus, any applicable Prospectus Supplement or the respective dates of the documents incorporated by reference herein and therein, regardless of the time of delivery or of any sale of the Securities pursuant thereto. It should be assumed that the information appearing in this Prospectus, any Prospectus Supplement and the documents incorporated by reference herein and therein are accurate only as of their respective dates. The business, financial condition, results of operations and prospects of the Company may have changed since those dates.

This Prospectus shall not be used by anyone for any purpose other than in connection with an offering of Securities as described in one or more Prospectus Supplements. The Company does not undertake to update the information contained or incorporated by reference herein, including any Prospectus Supplement, except as required by applicable securities laws. Information contained on, or otherwise accessed through, the website of the Company, <u>https://www.btq.com/</u>, shall not be deemed to be a part of this Prospectus, any applicable Prospectus Supplement or document incorporated by reference herein or therein, and should not be relied upon by prospective investors for the purpose of determining whether to invest in the Securities.

**CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION**

All statements, other than statements of historical fact, contained or incorporated by reference in this Prospectus constitute "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information herein and in the documents incorporated by reference herein are provided as of the date of such documents only, and the Company does not intend, and does not assume any obligation, to update this forward-looking information and statements, except as required by law. Generally, forward-looking information and statements can be identified by the use of forward-looking terminology such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes", or the negative connotation thereof or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved" or the negative connotation thereof. Forward-looking information and statements contained or incorporated by reference in this Prospectus include, but are not limited to, information with respect to amounts and use of available funds; anticipated developments in operations in future periods; planned asset acquisitions; future business operations; the adequacy of financial resources; the costs and timing of development of the Company's business; the costs, timing and receipt of approvals, consents and permits under applicable legislation; executive compensation approaches and practices; the growth of the quantum technology and security market; the future applications of Company products; the timeline for a quantum computer hitting the market; the use of Company office space; the development of and applicability of quantum technologies; the commercialization of the Company's intellectual property; the general adoption of quantum technologies; the Company's research and development plan; the results from Company research and development; future intellectual property registrations of the Company; the future availability of Company products; and the composition of directors and committees.

Forward-looking information and statements are based on the then current expectations, beliefs, assumptions, estimates and forecasts of BTQ about BTQ's business and the industry and markets in which it operates. Forward-looking information and statements are made based upon numerous assumptions, as contemplated below. Although the assumptions made by the Company in providing forward-looking information or making forward-looking statements are considered reasonable by management at the time, there can be no assurance that such assumptions will prove to be accurate.

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Forward-looking information and statements also involve known and unknown risks and uncertainties and other factors, which may cause actual results, performances and achievements of BTQ to differ materially from any projections of results, performances and achievements of BTQ expressed or implied by such forward-looking information or statements, including, among others, the performance of BTQ's business and operations; the intention to grow BTQ's business and operations; the introduction and continued offering of services and product features; the market for BTQ's products and services and competitive conditions; BTQ's pricing and revenue models; the future liquidity and financial capacity; the treatment of the Company and its subsidiaries under government regulatory and taxation regimes; BTQ's intellectual property; BTQ's ability to operate in certain markets; BTQ's ability to meet current and future obligations; BTQ's ability to obtain services in a timely matter or at all; BTQ's ability to obtain financing on acceptable terms or at all; BTQ's targeted business milestones and related timelines and costs; expectations of the blockchain, quantum computing and cryptocurrency markets and associated regulations; and other factors discussed or referred to in this Prospectus under "*Risk Factors*".

Although BTQ has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information or statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended.

There can be no assurance that such information or statements will prove to be accurate, as actual results and future events and actions could differ materially from those anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking information or statements. The forward-looking information and statements contained in this Prospectus are made as of the date of this Prospectus and, accordingly, are subject to change after such date.

**All of the forward-looking statements made in this Prospectus are qualified by these cautionary statements and those made in the Company's other filings with the securities regulators of Canada including, but not limited to, the cautionary statements made in the "*****Risk Factors*****" section of this Prospectus, the "*****Risk Factors*****" section of the AIF (as defined below) and the** ***"Financial Instruments and Risk Management"*** **and** ***"Risk Factors"*** **sections of the 2024 MD&A (as defined below). These factors are not intended to represent a complete list of the factors that could affect BTQ. BTQ disclaims any intention or obligation to update or revise any forward-looking statements or to explain any material difference between subsequent actual events and such forward-looking statements, except to the extent required by applicable law. The Company's public filings with the securities commissions or similar authorities in each of the provinces and territories of Canada can be found through SEDAR+ on the Company's profile at** <u>**www.sedarplus.ca.**</u>

**ENFORCEMENT OF CERTAIN CIVIL LIABILITIES**

The Company is a corporation existing under the laws of the Province of British Columbia, Canada. A majority of the directors and officers of the Company are not residents of Canada or the United States and a majority of their assets are located outside of Canada the United States. As a result, it may be difficult for Canadian and United States investors to effect service of process within Canada and the United States upon those directors and officers who are not residents of Canada or the United States, or to realize in Canada or the United States upon judgments of courts of Canada or the United States predicated upon civil liability of such directors, officers or experts under Canadian or United States federal securities laws. There is substantial doubt whether an action could be brought in Canada in the first instance on the basis of liability predicated solely upon such laws.

**CURRENCY PRESENTATION AND EXCHANGE RATE INFORMATION**

All references to "$" in this Prospectus are to Canadian dollars and all references to "US$" are to United States dollars. On April 28, 2025, the Bank of Canada daily rate of exchange was US$1.00 = C$1.385 or C$1.00 = US$0.722

**DOCUMENTS INCORPORATED BY REFERENCE**

**Information has been incorporated by reference in this Prospectus from documents filed with the securities commissions or similar authorities in each of the provinces and territories of Canada**. Copies of the documents incorporated by reference herein may be obtained on request without charge from the Company at 16-113 555 Burrard Street, Vancouver, British Columbia, Canada, V7X 1M8 and are also available electronically at <u>www.sedarplus.ca.</u> The filings of the Company through SEDAR+ are not incorporated by reference in this Prospectus except as specifically set out herein.

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The information incorporated by reference is considered part of this Prospectus, and information filed with the securities commission or similar authorities in each of the provinces and territories of Canada subsequent to this Prospectus and prior to the termination of a particular offering of Securities referred to in any Prospectus Supplement will be deemed to update and, if applicable, supersede this information. Except as may be set forth in a Prospectus Supplement, the following documents, filed by the Company with the securities commissions or similar authorities in each of the provinces and territories of Canada, are specifically incorporated by reference into, and form an integral part of, this Prospectus:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the annual information form of the Company dated March 31, 2025, for the year ended December 31, 2024 (the "**AIF**");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the audited financial statements of the Company and the notes thereto for the financial periods ended December 31, 2024 and 2023, together with the independent auditor's report of MNP LLP thereon with respect to the year ended December 31, 2024 thereon (the "**Annual Financial Statements**");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the management's discussion and analysis of financial condition and results of operations of the Company for the year ended December 31, 2024 (the "**2024 MD&A**");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the audited consolidated financial statements of the Company and the notes thereto for the financial years ended December 31, 2023 and 2022, together with the independent auditor's report of BDO Canada LLP thereon with respect to the year ended December 31, 2023 (the "**2023 Financial Statements**"); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) the management information circular of the Company dated August 15, 2024 for the annual general meeting of the shareholders of the Company held on September 18, 2024.

Any document of the type referred to in section 11.1 of Form 44-101F1 of National Instrument 44-101 - *Prospectus Distributions* (excluding confidential material change reports), if filed by the Company with a securities commission or similar regulatory authority in Canada after the date of this Prospectus and all Prospectus Supplements (only in respect of the offering of Securities to which that particular Prospectus Supplement relates) disclosing additional or updated information including the documents incorporated by reference therein, filed pursuant to the requirements of applicable securities legislation in Canada and during the period that this Prospectus is effective, shall be deemed to be incorporated by reference in this Prospectus. The documents incorporated or deemed to be incorporated herein by reference contain meaningful and material information relating to the Company and the readers should review all information contained in this Prospectus, the applicable Prospectus Supplement and the documents incorporated or deemed to be incorporated by reference herein and therein.

Upon a new annual information form and annual consolidated financial statements (and accompanying management's discussion and analysis of financial condition and results of operations) being filed by the Company with the applicable Canadian securities commissions or similar regulatory authorities in Canada during the period that this Prospectus is effective, the previous annual information form, the previous annual consolidated financial statements and all interim consolidated financial statements and in each case the accompanying management's discussion and analysis of financial condition and results of operations, and material change reports, filed prior to the commencement of the financial year of the Company in which the new annual information form is filed shall be deemed to no longer be incorporated into this Prospectus for purpose of future offers and sales of Securities under this Prospectus. Upon the condensed interim consolidated financial statements and the accompanying management's discussion and analysis of financial condition and results of operations being filed by the Company with the applicable Canadian securities commissions or similar regulatory authorities during the period that this Prospectus is effective, all interim consolidated financial statements and the accompanying management's discussion and analysis of financial condition and results of operations filed prior to such new interim consolidated financial statements and management's discussion and analysis of financial condition and results of operations shall be deemed to no longer be incorporated into this Prospectus for purposes of future offers and sales of Securities under this Prospectus. In addition, upon a new management information circular for an annual meeting of shareholders being filed by the Company with the applicable Canadian securities commissions or similar regulatory authorities during the period that this Prospectus is effective, the previous management information circular filed in respect of the prior annual meeting of shareholders shall no longer be deemed to be incorporated into this Prospectus for purposes of future offers and sales of Securities under this Prospectus.

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A Prospectus Supplement containing the specific terms of an offering of Securities and other information relating to the Securities will be delivered to prospective purchasers of such Securities, together with this Prospectus, and will be deemed to be incorporated into this Prospectus as of the date of such Prospectus Supplement but only for the purpose of the offering of the Securities covered by that Prospectus Supplement.

**Any statement contained in this Prospectus or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded, for purposes of this Prospectus, to the extent that a statement contained herein or in any other subsequently filed document that also is, or is deemed to be, incorporated by reference herein modifies, replaces or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document or statement that it modifies or supersedes.**

**The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made.**

**BTQ TECHNOLOGIES CORP.**

BTQ Technologies Corp. was incorporated on November 23, 1983, under the *Business Corporations Act* (British Columbia) as "Southern Star Resources Ltd.". On February 17, 2023, the Company acquired 100% of the issued and outstanding securities of BTQ AG, a Liechtenstein entity, pursuant to a "reverse takeover transaction" whereby BTQ AG became a wholly owned subsidiary of the Company (the "**Transaction**") and the Company changed its name from "Sonora Gold & Silver Corp." to "BTQ Technologies Corp.".

BTQ is listed on Cboe Canada under the symbol "BTQ", the OTCQX under the symbol "BTQQF", and the Frankfurt Stock Exchange under the symbol "NG3".

The head office and principal address of the Company is located at 16-113 555 Burrard Street, Vancouver, British Columbia, Canada, V7X 1M8 and its registered and records office is located at 2500 - 700 West Georgia Street, Vancouver, British Columbia, V7Y 1B3.

The following diagram sets out the intercorporate relationships among the Company's material subsidiaries, including the percentage ownership of voting securities and the jurisdiction of formation or existence of each subsidiary.

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| |
|:---|
| **BTQ TECHNOLOGIES CORP.**<br>(a British Columbia company) |
| 100% |
| **BTQ AG** <br>(a Liechtenstein entity) |

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***General Development of the Business***

*Overview*

BTQ operates in the post-quantum computing market and is currently developing its proprietary hardware and software. BTQ currently holds several patent applications for generating quantum algorithms and is building a portfolio of intellectual property with blockchain, defense, financial services, insurance, and IoT device applications. BTQ intends to commercialize its intellectual property by way of software and hardware products, licensing agreements, as well as service contracts to assist with the transitioning from current cryptography standards to post-quantum encryption. Currently, BTQ has no commercial productions and is in the early stages of developing its proprietary hardware and software.

In the near term, BTQ is planning to continue to develop its mixed-signal computing technology hardware, continue research and develop a proprietary zero-knowledge proof programming language and compiler and BTQ's signature post-quantum Blockchain compression algorithm. In the long term, BTQ is planning to research and develop a formal verification programming language for use in application development.

Further information regarding the business of the Company, its operations can be found in the Company's AIF and the materials incorporated by reference into this Prospectus. See "*Documents Incorporated by Reference*".

*Recent Developments*

Except as set out below and as disclosed herein and in the documents incorporated by reference in this prospectus, there have been no material developments in the business of the Company since December 31, 2024, being the end of the financial year in respect of which the Company filed the AIF, which have not been disclosed in this Prospectus or the documents incorporated by reference herein.

On January 3, 2025, the Company entered into an agreement to acquire intellectual property from Cimtech Technology Co., Ltd., an innovator in memory technology and computing-in memory solutions. This strategic acquisition enhances the Company's capabilities in post-quantum cryptography and quantum-secure communication technologies.

More detailed information regarding the above recent developments, together with all of the Company's other material information, can be obtained by reviewing copies of the applicable news releases and other materials filed on SEDAR+ under the Issuer's profile at <u>www.sedarplus.ca</u>.

***Intellectual Property***

The Company protects its intellectual property through various strategies, including non-disclosure agreements and applying for patents, when appropriate. Currently, the Company has the following patents and patent applications.

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| | | | |
|:---|:---|:---|:---|
| **Current Patents** | **Current Patents** | **Current Patents** | **Current Patents** |
| **Name** | **Jurisdiction/s** | **Application No.** <br>**(Patent No., if different than<br>Application No.)** | **Status** |
| A SYSTEM AND METHOD FOR QUANTUM-SAFE AUTHENTICATION, ENCRYPTION AND DECRYPTION OF INFORMATION | Canada | CA 3078558 | Expiring on October 8, 2038\* |
| A SYSTEM AND METHOD FOR QUANTUM-SAFE AUTHENTICATION, ENCRYPTION AND DECRYPTION OF INFORMATION | Europe | EP 18800260.4 (EP 3692681) | Expiring on October 8, 2038\* |
| A SYSTEM AND METHOD FOR QUANTUM-SAFE AUTHENTICATION, ENCRYPTION AND DECRYPTION OF INFORMATION | Great Britain | EP 3692681 | Expiring on October 8, 2038\* |
| A SYSTEM AND METHOD FOR QUANTUM-SAFE AUTHENTICATION, ENCRYPTION AND DECRYPTION OF INFORMATION | Unitary Patent | EP 3692681 | Expiring on October 8, 2038\* |
| A SYSTEM AND METHOD FOR QUANTUM-SAFE AUTHENTICATION, ENCRYPTION AND DECRYPTION OF INFORMATION | United States | US 16/754,055 (US 11477017) | Expiring on October 8, 2038\* |
| A SYSTEM AND METHOD FOR QUANTUM-SAFE AUTHENTICATION, ENCRYPTION AND DECRYPTION OF INFORMATION | United States | US 17/930,681 (US 11991275) | Expiring on December 17, 2038\* |

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| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp;**Pending Patents** | &nbsp;&nbsp;**Pending Patents** | &nbsp;&nbsp;**Pending Patents** | &nbsp;&nbsp;**Pending Patents** |
| IMPROVED BLOCKCHAIN SYSTEM (POST-QUANTUM AGGREGATE SIGNATURES) AND METHOD | United States | US 19/103296 | Pending |
| IMPROVED BLOCKCHAIN SYSTEM (POST-QUANTUM AGGREGATE SIGNATURES) AND METHOD | Canada | To be confirmed | Pending |
| IMPROVED BLOCKCHAIN SYSTEM (POST-QUANTUM AGGREGATE SIGNATURES) AND METHOD | Europe | EP 23754332.7 | Pending |
| IMPROVED BLOCKCHAIN SYSTEM (POST-QUANTUM AGGREGATE SIGNATURES) AND METHOD | Australia | To be confirmed | Pending |
| IMPROVED BLOCKCHAIN SYSTEM (POST-QUANTUM AGGREGATE SIGNATURES) AND METHOD | China | To be confirmed | Filed April 11, 2025 |
| IMPROVED BLOCKCHAIN SYSTEM (POST-QUANTUM AGGREGATE SIGNATURES) AND METHOD | Japan | To be confirmed | Pending |
| IMPROVED BLOCKCHAIN SYSTEM AND METHOD (DELAYED PROOF OF VALIDITY) | International/PCT | PCT/EP2023/086754 | Pending (application will expire on June 19, 2025 when national applications will be filed) |
| IMPROVED BLOCKCHAIN SYSTEM AND METHOD (QUANTUM ANALOGUES OF PROOF OF WORK SCHEMES) | International/PCT (National Office below) | PCT/EP2024/064555 | Pending (application will expire on November 27, 2025 when national applications will be filed) |
| IMPROVED BLOCKCHAIN SYSTEM AND METHOD (QUANTUM ANALOGUES OF PROOF OF WORK SCHEMES) | Europe | EP 23175874.9 | Pending |
| QUANTUM RANDOM NUMBER GENERATOR (QRNG) | Europe | EP 24199620.6 | Pending |
| NON-VOLATILE STORAGE OF SECURE DATA IN 6T SRAM CELLS USING HOT CARRIER INJECTION | United States | US 18/302,667 | Pending |
| HIGH-RELIABILITY PROCESSING-IN-MEMORY WITH TRANSPOSE SUPPORT USING SPLIT-6T SRAM | United States | US 18/302,674 | Pending |
| IN-MEMORY HIGH PARALLELISM BIT-SERIAL POLYNOMIAL MULTIPLICATION | United States | US 18/302,679 | Pending |
| IN-MEMORY REDUNDANT BINARY ARITHMETIC ON WIDE BITWIDTH INTEGERS | United States | 18/302,684 | Pending |

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Note: \* All expiry dates are subject to payment of periodic patent annuity fees.

**CONSOLIDATED CAPITALIZATION**

There has been no material change in the consolidated capitalization of the Company since December 31, 2024, the date of the Company's Annual Financial Statements, other than as disclosed below.

Since December 31, 2024, the date of the Company's Annual Financial Statements, the Company has issued 172,500 Common Shares pursuant to the conversion of RSUs, 395,000 Common Shares pursuant to the exercise of stock options, and 40,437 Common Shares pursuant to the exercise of Warrants.

The applicable Prospectus Supplement will describe any material change, and the effect of such material change, on the share and loan capitalization of the Company that will result from the issuance of Securities pursuant to such Prospectus Supplement.

**PLAN OF DISTRIBUTION**

During the 25-month period that this Prospectus remains valid, the Company may offer for sale and issue Securities directly to one or more purchasers, through agents, or through underwriters or dealers designated by the Company from time to time. The Company may distribute the Securities from time to time in one or more transactions at a fixed price or prices (which may be changed from time to time), at market prices prevailing at the times of sale, at prices related to prevailing market prices or at negotiated prices, including sales in transactions that are deemed to be "at-the-market distributions" as defined in National Instrument 44-102 - *Shelf Distributions* ("**NI 44-102**") of the Canadian Securities Administrators, including sales made directly on Cboe Canada or other existing trading markets for the Securities. A description of such pricing will be disclosed in the applicable Prospectus Supplement. The Company may offer Securities in the same offering, or it may offer Securities in separate offerings.

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In addition, Securities may be offered and issued in consideration for the acquisition of other businesses, assets or securities by the Company or one of its subsidiaries. The consideration for any such acquisition may consist of any of the Securities separately, a combination of Securities or any combination of, among other things, Securities, cash and assumption of liabilities.

A Prospectus Supplement will describe the terms of each specific offering of Securities, including (i) the terms of the Securities to which the Prospectus Supplement relates, including the type of Security being offered; (ii) the name or names of any agents, underwriters or dealers involved in such offering of Securities; (iii) the purchase price of the Securities offered thereby and the Company's net proceeds; (iv) any agents' commission, underwriting discounts and other items constituting compensation payable to agents, underwriters or dealers; and (v) any discounts or concessions allowed or re-allowed or paid to agents, underwriters or dealers.

If underwriters are used in an offering, the Securities offered thereby will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions at a fixed public offering price or at varying prices determined at the time of sale. Securities may be either offered to the public through underwriting syndicates represented by managing underwriters or by underwriters without a syndicate. Only underwriters named in the Prospectus Supplement are deemed to be underwriters in connection with the Securities offered thereby. The obligations of the underwriters to purchase Securities will be subject to the conditions precedent agreed upon by the parties and outlined in the applicable Prospectus Supplement and the underwriters will be obligated to purchase all Securities under that offering if any are purchased. Any public offering price and any discounts or concessions allowed or re-allowed or paid to agents, underwriters or dealers may be changed from time to time. If, in connection with the offering of the Securities at a fixed price or prices, the underwriters have made a *bona fide* effort to sell all of the Securities at the initial offering price fixed in the applicable Prospectus Supplement, the public offering price may be decreased and thereafter further changed, from time to time, to an amount not greater than the initial offering price fixed in such Prospectus Supplement, in which case the compensation realized by the underwriters will be decreased by the amount that the aggregate price paid by purchasers for the Securities is less than the gross proceeds paid by the underwriters to the Company.

The Securities may also be sold: (i) directly by the Company at such prices and upon such terms as agreed to by the Company and the purchaser of such Securities; or (ii) through agents designated by the Company from time to time. Any agent involved in the offering and sale of the Securities in respect of which this Prospectus is delivered will be named, and any commissions payable by the Company to such agent will be set forth, in the Prospectus Supplement. Unless otherwise indicated in the Prospectus Supplement, any agent is acting on a "best efforts" basis for the period of its appointment.

The Company may agree to pay the underwriters a commission for various services relating to the issue and sale of any Securities offered under any Prospectus Supplement. Agents, underwriters or dealers who participate in the distribution of the Securities may be entitled under agreements to be entered into with the Company to indemnification by the Company against certain liabilities, including liabilities under securities legislation, or to contribution with respect to payments which such underwriters, dealers or agents may be required to make in respect thereof.

Agents, underwriters or dealers may make sales of Securities in privately negotiated transactions and/or any other method permitted by law, including sales deemed to be an "at-the-market" offering as defined in and subject to limitations imposed by and the terms of any regulatory approvals required and obtained under, applicable Canadian securities laws, which includes sales made directly on an existing trading market for the Common Shares, or sales made to or through a market maker other than on an exchange.

In connection with any offering of Securities, except with respect to "at-the-market" offerings, underwriters may over-allot or effect transactions which stabilize or maintain the market price of the offered Securities at a level above that which might otherwise prevail in the open market. Such transactions may be commenced, interrupted or discontinued at any time. No underwriter of the "at-the-market" distribution, and no person or company acting jointly or in concert with an underwriter, may, in connection with the distribution, enter into any transaction that is intended to stabilize or maintain the market price of the securities or securities of the same class as the securities distributed under the Prospectus and applicable Prospectus Supplement, including selling an aggregate number or principal amount of securities that would result in the underwriter creating an over-allocation position in the securities.

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The Company may authorize agents or underwriters to solicit offers by eligible institutions to purchase Securities from the Company at the public offering price set forth in the applicable Prospectus Supplement under delayed delivery contracts providing for payment and delivery on a specified date in the future. The conditions to these contracts and the commissions payable for solicitation of these contracts will be set forth in the applicable Prospectus Supplement.

Each class or series of Securities, other than the Common Shares, will be a new issue of Securities with no established trading market. Subject to applicable laws, any underwriter may make a market in such Securities, but will not be obligated to do so and may discontinue any market making at any time without notice. There may be limited liquidity in the trading market for any such Securities. Unless otherwise specified in the applicable Prospectus Supplement, the Company does not intend to list any of the Securities other than the Common Shares on any securities exchange. Consequently, unless otherwise specified in the applicable Prospectus Supplement, there is no trading market through which Warrants, Subscription Receipts, Units, Share Purchase Contracts, or Debt Securities may be sold and purchasers may not be able to resell any such Securities purchased under this Prospectus. This may affect the pricing of such Securities in the secondary market, the transparency and availability of trading prices, the liquidity of such Securities and the extent of issuer regulation. No assurances can be given that a market for trading in Securities of any series or issue will develop or as to the liquidity of any such market, whether or not the Securities are listed on a securities exchange.

Underwriters, dealers and agents who participate in the distribution of the Securities may be entitled under agreements to be entered into with the Company to indemnification by the Company against certain liabilities, including liabilities under Canadian securities legislation, or to contribution with respect to payments which such underwriters, dealers or agents may be required to make in respect thereof. Those underwriters, dealers and agents may be customers of, engage in transactions with, or perform services for, the Company in the ordinary course of business.

**USE OF PROCEEDS**

The net proceeds to the Company from any offering of Securities, the proposed use of those proceeds and the specific business objectives which the Company expects to accomplish with such proceeds will be set forth in the applicable Prospectus Supplement relating to that offering of Securities.

Below is a table which sets out (a) the use of proceeds the net proceeds from the commercially reasonable efforts private placement made pursuant to the listed issuer financing exemption under Part 5A of National Instrument 45-106 - *Prospectus Exemptions*, in the provinces of British Columbia, Alberta and Ontario (the "**LIFE Offering**"), as disclosed in the Offering Document of the Company dated December 18, 2024 and (b) the actual use of such proceeds as of February 28, 2025:

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| | | |
|:---|:---|:---|
| **Item** | Use of Available Funds<br>Disclosed in LIFE Offering<br>$| Actual Use of Available<br>Proceeds as at February 28, 2025<br>$|
| Quantum Computation in Memory Product | 3810000 | 116233 |
| General and administrative | 1400000 | 1145723 |
| Ongoing operations - other R&D | 1500000 | 582527 |
| Working capital | 1499164 |  |
| **Total** | **8209164** | **1844483** |

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There may be circumstances where, on the basis of results obtained or for other sound business reasons, a re-allocation of funds may be necessary or prudent. Accordingly, management of the Company will have broad discretion in the application of the proceeds of an offering of Securities. The actual amount that the Company spends in connection with each intended use of proceeds may vary significantly from the amounts specified in the applicable Prospectus Supplement and will depend on a number of factors, including those referred to under "*Risk Factors*" and any other factors set forth in the applicable Prospectus Supplement.

The Company has incurred negative cash flow from operating activities for its financial year ended December 31, 2024. Accordingly, the majority or all of the net proceeds of any offering of securities under a Prospectus Supplement will be used as set out in the applicable Prospectus Supplement as well as other general working capital and administrative expenses which may cause the Company to continue to experience negative cash flow from its operating activities. See also "*Risk Factors - Use of Proceeds*".

**DESCRIPTION OF COMMON SHARES**

BTQ is authorized to issue an unlimited number of Common Shares and 132,441,625 Common Shares were issued and outstanding as of the date of this Prospectus. There are no limitations contained in the articles or notice of articles of BTQ on the ability of a person who is not a Canadian resident to hold Common Shares or exercise the voting rights associated with Common Shares. In addition, as of the date of this prospectus, there were 3,865,000 Common Shares issuable upon the exercise of outstanding stock options at a weighted average exercise price of $0.43 per Common Share, 2,072,500 Common Shares issuable upon the settlement of restricted share units, and 167,785 Common Shares issuable upon the exercise of outstanding warrants at a weighted average exercise price of $4.09 per Common Share.

The Company may issue Common Shares, separately or together, Warrants, Subscription Receipts, Units, Share Purchase Contracts, Debt Securities or any combination thereof, as the case may be.

A summary of the rights of the Common Shares is set forth below.

*Dividends*

Holders of Common Shares are entitled to receive equally, share for share, dividends when, as and if declared by the board of directors of the Company out of funds legally available therefor.

*Liquidation*

In the event of the dissolution, liquidation, or winding up of the Company, holders of Common Shares are entitled to share rateably in any assets remaining after the satisfaction in full of the prior rights of creditors, including holders of the Company's indebtedness.

*Voting*

Holders of Common Shares are entitled to receive notice of and to attend all meetings of shareholders of the Company and are entitled to one vote for each share on all matters voted on by shareholders, including the election of directors.

**DESCRIPTION OF WARRANTS**

As of the date of this Prospectus, the Company has 167,785 Warrants exercisable at a weighted average exercise price of $4.09 per Common Share. The Company may issue Warrants to purchase, separately or together, Common Shares, Subscription Receipts, Units, Share Purchase Contracts, Debt Securities or any combination thereof, as the case may be.

The Warrants will be issued under a separate warrant agreement or indenture. A copy of the warrant agreement or indenture relating to an offering of Warrants will be filed by the Company with securities regulatory authorities in Canada after it has been entered into by the Company. The following describes the general terms that will apply to any Warrants that may be offered by the Company pursuant to this Prospectus. The terms and provisions of any Warrants offered under a Prospectus Supplement may differ from the terms described below and may not be subject to or contain any or all of the terms described below.

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The specific terms and provisions of the Warrants, and the extent to which the general terms of the Warrants described in this Prospectus apply to those Warrants, will be set forth in the applicable Prospectus Supplement. This description will include, where applicable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the number of Warrants offered;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the price or prices, if any, at which the Warrants will be issued;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the currency in which the Warrants will be offered and in which the exercise price under the Warrants may be payable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the date on which the right to exercise such Warrants shall commence and the date on which such right shall expire;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● if applicable, the identity of the Warrant agent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● whether the Warrants will be listed on any securities exchange;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● whether the Warrants will be issued with any other securities and, if so, the amount and terms of these securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● any minimum or maximum subscription amount;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● whether the Warrants are to be issued in registered form, "book-entry only" form, non-certificated inventory system form, bearer form or in the form of temporary or permanent global securities and the basis of exchange, transfer and ownership thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● any material risk factors relating to such Warrants and the securities to be issued upon exercise of the Warrants;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● material Canadian federal income tax consequences and United States federal income tax consequences of owning the Warrants and the securities issued upon exercise of the Warrants;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● any other rights, privileges, restrictions and conditions attaching to the Warrants and the securities to be issued upon exercise of the Warrants; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● any other material terms or conditions of the Warrants and the securities to be issued upon exercise of the Warrants; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● upon exercise of the Warrant, the events or conditions under which the amount of securities may be subject to adjustment.

Prior to the exercise of any Warrants, holders of such Warrants will not have any of the rights of holders of the securities purchasable upon such exercise, including the right to receive payments of dividends or the right to vote such underlying securities.

**DESCRIPTION OF SUBSCRIPTION RECEIPTS**

As of the date of this Prospectus, the Company has no Subscription Receipts outstanding. The Company may issue Subscription Receipts that will entitle holders to receive, upon satisfaction of certain release conditions and for no additional consideration, separately or together, Common Shares, Warrants, Units, Share Purchase Contracts, Debt Securities or any combination thereof, as the case may be.

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The Subscription Receipts will be issued under one or more agreements or indentures, each to be entered into between the Company and an escrow agent to be named in the applicable Prospectus Supplement. A copy of the Subscription Receipts agreement or indenture relating to an offering of Subscription Receipts will be filed by the Company with securities regulatory authorities in Canada after it has been entered into by the Company. The following describes the general terms that will apply to any Subscription Receipts that may be offered by the Company pursuant to this Prospectus. The terms and provisions of any Subscription Receipts offered under a Prospectus Supplement may differ from the terms described below, and may not be subject to or contain any or all of the terms described below.

The specific terms and provisions of the Subscription Receipts, and the extent to which the general terms of the Subscription Receipts described in this Prospectus apply to those Subscription Receipts, will be set forth in the applicable Prospectus Supplement. This description will include, where applicable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the number of Subscription Receipts offered;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the price or prices, if any, at which the Subscription Receipts will be issued;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the manner of determining the offering price(s);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the currency in which the Subscription Receipts will be offered and whether the price is payable in installments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the securities into which the Subscription Receipts may be exchanged;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● conditions to the exchange of Subscription Receipts into securities and the consequences of such conditions not being satisfied;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the number of securities that may be issued upon the exchange of each Subscription Receipt and the price per security or the aggregate principal amount, denominations and terms of the series of debt securities that may be issued upon exchange of the Subscription Receipts, and the events or conditions under which the amount of securities may be subject to adjustment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the dates or periods during which the Subscription Receipts may be exchanged;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the circumstances, if any, which will cause the Subscription Receipts to be deemed to be automatically exchanged;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● provisions applicable to any escrow of the gross or net proceeds from the sale of the Subscription Receipts plus any interest or income earned thereon, and for the release of such proceeds from such escrow;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● if applicable, the identity of the Subscription Receipt agent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● whether the Subscription Receipts will be listed on any securities exchange;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● whether the Subscription Receipts will be issued with any other securities and, if so, the amount and terms of these securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● any minimum or maximum subscription amount;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● whether the Subscription Receipts are to be issued in registered form, "book-entry only" form, non- certificated inventory system form, bearer form or in the form of temporary or permanent global securities and the basis of exchange, transfer and ownership thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● any material risk factors relating to such Subscription Receipts and the securities to be issued upon exchange of the Subscription Receipts;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● material Canadian federal income tax consequences and United States federal income tax consequences of owning the Subscription Receipts and the securities to be issued upon exchange of the Subscription Receipts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● any other rights, privileges, restrictions and conditions attaching to the Subscription Receipts and the securities to be issued upon exchange of the Subscription Receipts; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● any other material terms or conditions of the Subscription Receipts and the securities to be issued upon exchange of the Subscription Receipts.

Prior to the exchange of any Subscription Receipts, holders of such Subscription Receipts will not have any of the rights of holders of the securities for which the Subscription Receipts may be exchanged, including the right to receive payments of dividends or the right to vote such underlying securities.

**DESCRIPTION OF UNITS**

As of the date of this Prospectus, the Company has no Units outstanding. The Company may issue Units consisting of one or more, separately or together, Common Shares, Warrants, Subscription Receipts, Share Purchase Contracts, Debt Securities or any combination thereof, as the case may be.

Each Unit will be issued so that the holder of the Unit is also the holder of each Security comprising the Unit. Thus, the holder of a Unit will have the rights and obligations of a holder of each Security. The following describes the general terms that will apply to any Units that may be offered by the Company pursuant to this Prospectus. The terms and provisions of any Units offered under a Prospectus Supplement may differ from the terms described below and may not be subject to or contain any or all of the terms described below.

The specific terms and provisions of the Units, and the extent to which the general terms of the Units described in this Prospectus apply to those Units, will be set forth in the applicable Prospectus Supplement. This description will include, where applicable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the number of Units offered;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the price or prices, if any, at which the Units will be issued;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the manner of determining the offering price(s);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the currency in which the Units will be offered;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the securities comprising the Units;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● whether the Units will be issued with any other securities and, if so, the amount and terms of these securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● any minimum or maximum subscription amount;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● whether the Units and the Securities comprising the Units are to be issued in registered form, "book-entry only" form, non-certificated inventory system form, bearer form or in the form of temporary or permanent global securities and the basis of exchange, transfer and ownership thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● any material risk factors relating to such Units or the Securities comprising the Units;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● material Canadian federal income tax consequences and United States federal income tax consequences of owning the Securities comprising the Units;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● any other rights, privileges, restrictions and conditions attaching to the Units or the Securities comprising the Units; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● any other material terms or conditions of the Units or the Securities comprising the Units, including whether and under what circumstances the Securities comprising the Units may be held or transferred separately.

**DESCRIPTION OF SHARE PURCHASE CONTRACTS**

As of the date of this Prospectus, the Company has no Share Purchase Contracts outstanding. The Company may issue Share Purchase Contracts separately or as part of Units consisting of a Share Purchase Contract and Common Shares, Warrants, Subscription Receipts, Debt Securities or debt obligations of third parties, including U.S. Treasury securities, securing a holder's obligations to purchase the Common Shares, or any combination thereof, as the case may be. The Company may issue Share Purchase Contracts, including contracts obligating holders to purchase from the Company, and the Company to sell to the holders, a specified number of Common Shares, at a future date or dates, or similar contracts which may be issued on a prepaid basis. The price per Common Share and the number of Common Shares may be fixed at the time the Share Purchase Contracts are issued or may be determined by reference to a specific formula set forth in the Share Purchase Contracts. The Share Purchase Contracts will require either the share purchase price be paid at the time the Share Purchase Contracts are issued or that payment be made at a specified future date. The Share Purchase Contracts may require holders to secure their obligations thereunder in a specified manner. The Share Purchase Contracts also may require the Company to make periodic payments to the holders of the Share Purchase Contracts or vice versa, and such payments may be unsecured or refunded on some basis.

The specific terms and provisions of the Share Purchase Contracts, and the extent to which the general terms of the Share Purchase Contracts described in this Prospectus apply to those Share Purchase Contracts, will be set forth in the applicable Prospectus Supplement. This description will include, where applicable, the number of Common Shares to be purchased under the Share Purchase Contract, any procedures that will result in the adjustment of these numbers, the purchase price and purchase date or dates, any provisions relating to the settlement of the Share Purchase Contract and material Canadian federal income tax consequences and United States federal income tax consequences of owning the Share Purchase Contracts. The description in the Prospectus Supplement will not necessarily be complete, and reference will be made to the Share Purchase Contracts, and, if applicable, collateral, depositary or custodial arrangements, relating to the Share Purchase Contracts. In certain circumstances, Share Purchase Contracts may be considered novel specified derivatives pursuant to Part IV of NI 44-102.

**DESCRIPTION OF DEBT SECURITIES**

The Company may issue Debt Securities, separately or together with Common Shares, Warrants, Subscription Receipts, Share Purchase Contracts, Units or any combination thereof, as the case may be.

The Debt Securities will be issued under a separate agreement or indenture. A copy of the agreement or indenture relating to an offering of Debt Securities will be filed by the Company with applicable securities regulatory authorities in Canada after it has been entered into by the Company. The following describes the general terms that will apply to any Debt Securities that may be offered by the Company pursuant to this Prospectus. The terms and provisions of any Debt Securities offered under a Prospectus Supplement may differ from the terms described below and may not be subject to or contain any or all of the terms described below.

The specific terms and provisions of the Debt Securities, and the extent to which the general terms of the Debt Securities described in this Prospectus apply to those Debt Securities, will be set forth in the applicable Prospectus Supplement. This description will include, where applicable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the designation, aggregate principal amount and authorized denominations of such Debt Securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any limit upon the aggregate principal amount of such Debt Securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the currency or currency units for which such Debt Securities may be purchased and the currency or currency units in which the principal and any interest is payable (in either case, if other than Canadian dollars);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the issue price (at par, at a discount or at a premium) of such Debt Securities;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the date or dates on which such Debt Securities will be issued and delivered;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the date or dates on which such Debt Securities will mature, including any provision for the extension of a maturity date, or the method of determination of such date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the rate or rates per annum (either fixed or floating) at which such Debt Securities will bear interest (if any) and, if floating, the method of determination of such rate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the date or dates from which any such interest will accrue and on which such interest will be payable and the record date or dates for the payment of such interest, or the method of determination of such date(s);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• if applicable, the provisions for subordination of such Debt Securities to other indebtedness of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• if applicable, whether the obligations under the Debt Securities are secured or unsecured obligations of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the trustee under any applicable trust indenture pursuant to which such Debt Securities are to be issued;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any redemption term or terms under which such Debt Securities may be terminated whether at or prior to maturity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any repayment or sinking fund provisions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any events of default applicable to such Debt Securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• whether such Debt Securities are to be issued in registered form or in the form of temporary or permanent global securities and the basis of exchange, transfer and ownership thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any exchange or conversion terms, including terms relating to the conversion of the Debt Securities into Common Shares or other securities of the Company, and any provisions for the adjustment thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• if applicable, the ability of the Company to satisfy all or a portion of any redemption of such Debt Securities, any payment of any interest on such Debt Securities or any repayment of the principal owing upon the maturity of such Debt Securities through the issuance of securities of the Company or of any other entity, and any restrictions on the persons to whom such securities may be issued;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the provisions applicable to the modification of the terms of the indenture; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any other material terms or covenants applicable to such Debt Securities.

Prior to the exercise of any Debt Securities, holders of such Debt Securities will not have any of the rights of holders of the any securities that they would receive up upon a due exercise or conversion of the Debt Securities, including any right to receive payments of dividends or any right to vote such underlying securities.

**EARNINGS COVERAGE RATIOS**

The applicable Prospectus Supplement will provide, as required, the earnings coverage ratios with respect to the issuance of Securities pursuant to such Prospectus Supplement.

**PRIOR SALES**

Information in respect of the Common Shares that the Company issued within the previous 12-month period, including Shares that the Company issued either upon the exercise of options or other equity compensation awards, or which were granted under the Company's Stock Option Plan, or any other equity compensation plan, will be provided as required in a Prospectus Supplement with respect to the issuance of securities pursuant to such Prospectus Supplement.

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**TRADING PRICE AND VOLUME**

The Common Shares are currently listed on Cboe Canada under the symbol "BTQ", the OTCQX under the symbol "BTQQF", and the Frankfurt Stock Exchange under the symbol "NG3". Trading price and volume of the Company's securities will be provided for the Common Shares in each Prospectus Supplement to this Prospectus.

**CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS**

The applicable Prospectus Supplement may describe certain Canadian federal income tax consequences to an investor acquiring any Securities offered thereunder. Investors should read the tax discussion in any Prospectus Supplement with respect to a particular offering and consult their own tax advisors with respect to their own particular circumstances.

**CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS**

The applicable Prospectus Supplement may describe certain United States federal income tax consequences to an investor acquiring any Securities offered thereunder. Investors should read the tax discussion in any Prospectus Supplement with respect to a particular offering and consult their own tax advisors with respect to their own particular circumstances.

**RISK FACTORS**

The operations of the Company are speculative due to the high-risk nature of its business and the present stage of its development. Before making an investment decision in Securities of the Company, prospective purchasers should carefully consider the information described in this Prospectus and the documents incorporated by reference herein, including the applicable Prospectus Supplement. There are certain risks inherent in an investment in the Securities, including any risk factors described herein or in a document incorporated by reference herein, which investors should carefully consider before investing. Additional risk factors relating to a specific offering of Securities will be described in the applicable Prospectus Supplement. Some of the factors described herein, in the documents incorporated by reference herein, and/or the applicable Prospectus Supplement are interrelated and, consequently, investors should treat such risk factors as a whole. If any of the risk factors described herein, in the AIF, the 2024 MD&A, and in another document incorporated by reference herein or in the applicable Prospectus Supplement occur, it could have a material adverse effect on the business, financial condition and results of operations of the Company. Additional risks and uncertainties of which the Company currently is unaware or that are unknown or that it currently deems to be immaterial could have a material adverse effect on the Company's business, financial condition and results of operation. The Company cannot assure you that it will successfully address any or all of these risks. There is no assurance that any risk management steps taken will avoid future loss due to the occurrence of the risks described herein, in the AIF, the 2024 MD&A, and in the other documents incorporated by reference herein or in the applicable Prospectus Supplement or other unforeseen risks.

***Use of Proceeds***

While detailed information regarding the use of proceeds from the sale of the Company's securities will be described in the applicable Prospectus Supplement, the Company will have broad discretion over the use of the net proceeds from an offering of its securities. Because of the number and variability of factors that will determine our use of such proceeds, the Company's ultimate use of such proceeds might vary substantially from its planned use. An investor may not agree with how the Company allocates or spends the proceeds from an offering of its securities. The results and effectiveness of the application of the proceeds are uncertain. Any failure by management to apply the proceeds effectively could have a material adverse effect on the Company's business and financial condition.

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***Future Sales or Issuances of Securities***

The Company may require funding through debt or equity offering for its ongoing and future activities. There can be no assurance that BTQ will be able to obtain adequate financing in the future or that the terms of such financing will be favorable. Failure to obtain additional financing could cause BTQ to reduce or terminate its operations.

If additional funds are raised through further issuances of equity or securities convertible into equity, existing shareholders could suffer significant dilution, and any new equity securities issued could have rights, preferences, and privileges superior to those of other BTQ securityholders. Any debt financing secured in the future could involve restrictive covenants relating to capital raising activities and other financial and operational matters, which may make it more difficult for BTQ to obtain additional capital and to pursue business opportunities.

***Market for Securities***

There is currently no market through which the Company's securities, other than its Common Shares, may be sold and, unless otherwise specified in the applicable Prospectus Supplement, the Company's Warrants, Subscription Receipts, Units, Share Purchase Contracts, and Debt Securities will not be listed on any securities or stock exchange or any automated dealer quotation system. As a consequence, investors may not be able to resell Warrants, Subscription Receipts, Units, Share Purchase Contracts, or Debt Securities purchased under this Prospectus and the applicable Prospectus Supplement. This may affect the pricing of the Company's securities, other than its Common Shares, in the secondary market, the transparency and availability of trading prices, the liquidity of these securities and the extent of trading regulation. There can be no assurance that an active trading market will develop for the aforementioned securities, or, if developed, that such a market will be sustained at the price level at which it was offered.

***Foreign Currency Risks***

Securities denominated or payable in foreign currencies may entail significant risks, and the extent and nature of such risks change continuously. These risks include, without limitation, the possibility of significant fluctuations in the foreign currency market, the imposition or modification of foreign exchange controls and potential illiquidity in the secondary market. These risks will vary depending on the currency or currencies involved. Prospective purchasers should consult their own financial and legal advisors as to the risks entailed in an investment in Securities denominated in currencies other than the currency primarily used by such purchaser. Such Securities are not an appropriate investment for investors who are unsophisticated with respect to foreign currency transactions.

These are not the only risks and uncertainties that the Company faces. Additional risks and uncertainties not presently known to the Company or that the Company currently considers immaterial may also impair its business operations. These risk factors could materially affect the Company's future operating results and could cause actual events to differ materially from those described in forward-looking statements relating to the Company.

***Limited Operating History***

BTQ has a limited history of operations and is in the early stage of development. As such, BTQ will be subject to many risks common to early-stage enterprises, including undercapitalization, cash shortages, limitations with respect to personnel, financial and other resources, and lack of revenue. There is no assurance that BTQ will achieve its operating goals. There is no assurance that BTQ will be successful in achieving a return on securityholders' investment and the likelihood of success must be considered in light of its early stage of operations. There can be no assurance that BTQ will be able to earn material revenue or that any of its activities will generate positive cash flow.

***History of Negative Cash Flow***

The Company had negative operating cash flow for the fiscal year ended December 31, 2024. There can be no assurance that BTQ will generate net profits in future periods. Further, there can be no assurance that BTQ will be cash flow positive in future periods. In the event that BTQ fails to achieve profitability in future periods, the value of the Common Shares, Warrants, Subscription Receipts, Units, Share Purchase Contracts, and Debt Securities may decline. To the extent the Company has negative cash flows in future periods, the Company may use a portion of its general working capital or seek additional financing to fund such negative cash flows. There is no assurance that additional capital or other types of financing will be available if needed or that these financings will be on terms at least as favourable to the Company as those previously obtained, or at all.

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***Enforceability of Foreign Judgments***

Investors should be aware that some of the directors, officers, assets and subsidiaries of BTQ are located outside of Canada and, as a result, it may be difficult to enforce a Canadian court judgment based upon the civil liability provisions of Canadian securities laws against BTQ or any of these persons in a Canadian or foreign court, or to affect service of process upon these persons in Canada. All or a substantial portion of the assets of these persons are likely to be located outside of Canada. It may not be possible for investors to collect from such persons or enforce judgments obtained in Canada predicated on the civil liability provisions of Canadian securities legislation against such experts named in this Prospectus or in the applicable Prospectus Supplement. It may not be possible for investors or any other person or entity to assert claims under Canadian securities laws or otherwise in original actions instituted in a foreign jurisdiction. Consequently, investors may be effectively prevented from pursuing remedies against such persons under Canadian securities laws or otherwise.

These are not the only risks and uncertainties that the Company faces. Additional risks and uncertainties not presently known to the Company or that the Company currently considers immaterial may also impair its business operations. These risk factors could materially affect the Company's future operating results and could cause actual events to differ materially from those described in forward-looking statements relating to the Company.

**TRANSFER AGENT AND REGISTRAR**

The transfer agent and registrar for the Common Shares is Computershare Trust Company of Canada at its offices in Vancouver, British Columbia.

**AUDITORS**

The Annual Financial Statements, incorporated by reference in this Prospectus, have been audited by MNP LLP as set forth in their report incorporated by reference in this Prospectus. MNP LLP are the current auditors of the Company and have an address at 1 Adelaide Street East, Suite 1900, Toronto, ON, M5C 2V9.

The 2023 Financial Statements, incorporated by reference in this Prospectus, have been audited by BDO Canada LLP as set forth in their report incorporated by reference in this Prospectus.

**EXPERTS**

MNP LLP, the current auditor of the Company, has informed the Company that it is independent with respect to the Company within the meaning of the Code of Professional Conduct of the Chartered Professional Accountants of Ontario.

BDO Canada LLP, the former auditor of the Company, has informed the Company that it is independent within the meaning of the Code of Professional Conduct of the Chartered Professional Accountants of British Columbia.

Unless otherwise specified in the Prospectus Supplement relating to the Securities, the issue and sale of the Securities will be passed upon for the Company as to matters of Canadian law by Farris LLP. As at the date of this Prospectus, the partners and associates of Farris LLP, as a group, beneficially own, directly or indirectly, less than 1% of any class of securities of the Company.

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**PART II**

**INFORMATION NOT REQUIRED TO BE DELIVERED TO** <br>**OFFEREES OR PURCHASERS**

**Indemnification of Directors and Officers**

Under the *Business Corporations Act* (British Columbia) (the "BCBCA") the Registrant may indemnify a director or officer, a former director or officer, or an individual who acts or acted as a director or officer of an affiliate of the Registrant, or at the Registrant's request as a director or officer (or in a similar capacity) of another corporation or other legal entity, against all judgments, penalties or fines awarded or imposed in, or amounts paid in settlement of, any legal proceeding or investigative action, whether current, threatened, pending or completed, in which such individual or any of his or her heirs and personal or other legal representatives is or may be joined as a party, or is or may be liable for in respect of a judgment, penalty or fine in, or expenses related to such legal proceeding or investigative action because of serving in such capacity, on condition that (i) the individual acted honestly and in good faith with a view to the best interests of the Registrant or such other corporation or legal entity, and (ii) in the case of such a proceeding or investigative action other than a civil proceeding, the individual had reasonable grounds for believing that his or her conduct was lawful. The Registrant may also indemnify a person described above in respect of all costs, charges and expenses, including legal and other fees, actually and reasonably incurred by such person in respect of such a legal proceeding or investigative action, providing such person complies with (i) and (ii) above. The Registrant may provide indemnification in respect of such costs, charges and expenses after the final disposition of such legal proceeding or investigative action, and may pay such costs, charges and expenses as they are incurred in advance of such final disposition, provided it obtains a written undertaking that such person will repay the amounts advanced if it is ultimately determined that the individual did not comply with (i) and (ii) above. Under the BCBCA, an individual described above is entitled to indemnification from the Registrant in respect of such costs, charges and expenses after the final disposition of such legal proceeding or investigative action as a matter of right if the individual has not been reimbursed for such costs, charges and expenses and is wholly successful in the outcome of such legal proceeding or investigative action, or is substantially successful on the merits thereof, providing such individual complies with (i) and (ii) above. On application of the Registrant or an individual described above, the Supreme Court of British Columbia may order the Registrant to indemnify a person described above in respect of any liability incurred by such person in respect of such a legal proceeding or investigative action, and to pay some or all of the expenses incurred by such individual in respect of such legal proceeding or investigative action.

In accordance with the BCBCA, the Articles of the Registrant provide the Registrant must indemnify a director, former director or alternate director of the Company and his or her heirs and legal personal representatives to the greatest extent permitted by the BCBCA, and the Registrant must pay such costs, charges and expenses, including legal and other fees, but does not include judgments, penalties, fines or amounts paid in settlement of a proceeding, actually and reasonably incurred by such person in respect of that proceeding to the greatest extent permitted by the BCBCA. The Articles of the Registrant provide that, subject to any restrictions in the BCBCA, the Company may indemnify any other person.

A policy of directors' and officers' liability insurance is maintained by the Registrant which insures directors and officers for losses as a result of claims against the directors and officers of the Registrant in their capacity as directors and officers and also reimburses the Registrant for payments made pursuant to the indemnity provisions under the Articles of the Registrant and the BCBCA.

\* \* \*

**Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the Registrant pursuant to the foregoing provisions, the Registrant has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act, and is therefore unenforceable.**

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**EXHIBIT INDEX**

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| | |
|:---|:---|
| **Exhibit**<br>**Number** | **Description** |
| [4.1](exhibit4-1.htm) | [<u>The annual information form of the Registrant dated March 31, 2025, for the year ended December 31, 2024.</u>](exhibit4-1.htm) |
| [4.2](exhibit4-2.htm) | [<u>The audited financial statements of the Registrant and the notes thereto for the financial periods ended December 31, 2024 and 2023, together with the independent auditor's report of MNP LLP thereon with respect to the year ended December 31, 2024 thereon</u>.](exhibit4-2.htm) |
| [4.3](exhibit4-3.htm) | [<u>The management's discussion and analysis of financial condition and results of operations of the Registrant for the year ended December 31, 2024</u>.](exhibit4-3.htm) |
| [4.4](exhibit4-4.htm) | [<u>The audited consolidated financial statements of the Registrant and the notes thereto for the financial years ended December 31, 2023 and 2022, together with the independent auditor's report of BDO Canada LLP thereon with respect to the year ended December 31, 2023.</u>](exhibit4-4.htm) |
| [4.5](exhibit4-5.htm) | [<u>The management information circular of the Registrant dated August 15, 2024 for the annual general meeting of the shareholders of the Registrant held on September 18, 2024.</u>](exhibit4-5.htm) |
| [4.6](exhibit4-6.htm) | [The unaudited condensed interim consolidated financial statements of the Registrant for the three and six months ended June 30, 2025 and 2024.](exhibit4-6.htm) |
| [4.7](exhibit4-7.htm) | [The management's discussion and analysis of the Registrant for the quarter ended June 30, 2025.](exhibit4-7.htm) |
| [4.8](exhibit4-8.htm) | [The material change report dated July 14, 2025, with respect to, *inter alia,* the closing of a public offering of 5,555,555 common shares of the Registrant at a price of CAD$7.20 per common share, for aggregate gross proceeds to the Registrant of CAD$40,000,000.](exhibit4-8.htm) |
| [5.1](exhibit5-1.htm) | [Consent of MNP LLP.](exhibit5-1.htm) |
| [5.2](exhibit5-2.htm) | [Consent of BDO Canada LLP.](exhibit5-2.htm) |
| [6.1](#page_32) | [Powers of Attorney (contained on the signature page hereto).](#page_32) |
| [7.1](exhibit7-1.htm) | [Form of Debt Indenture.](exhibit7-1.htm) |
| [107](exhibitfilingfees.htm) | [Filing Fee Table.](exhibitfilingfees.htm) |

---

------

**PART III** 

**UNDERTAKING AND CONSENT TO SERVICE OF PROCESS**

**Item 1. Undertaking** 

The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to the securities registered pursuant to Form F-10 or to transactions in said securities.

**Item 2. Consent to Service of Process** 

A written Appointment of Agent for Service of Process and Undertaking on Form F-X for the Registrant and its agent for service of process is being filed concurrently herewith.

Any change to the name or address of the agent for service of process of the Registrant shall be communicated promptly to the Commission by amendment to Form F-X referencing the file number of this Registration Statement on Form F-10.

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**SIGNATURES** 

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-10 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Vancouver, Country of Canada on September 25, 2025.

---

| | | |
|:---|:---|:---|
| **BTQ TECHNOLOGIES CORP.** | **BTQ TECHNOLOGIES CORP.** | **BTQ TECHNOLOGIES CORP.** |
| By: |  |  |
|  | /s/ Olivier Roussy Newton | /s/ Olivier Roussy Newton |
|  | Name: | Olivier Roussy Newton |
|  | Title: | Chief Executive Officer & Director |

---

------

**POWER OF ATTORNEY** 

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Olivier Roussy Newton and Lonny Wong or any of them, his or her true and lawful attorneys-in-fact and agents, each of whom may act alone, with full powers of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments to this Registration Statement, including post-effective amendments, registration statements filed pursuant to Rule 429 under the Securities Acts of 1933, as amended, and any and all additional registration statements (including amendments and post-effective amendments thereto) in connection with any increase in the amount of securities registered with the Securities and Exchange Commission, and to file the same, with all exhibits thereto, and other documents and in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, and hereby ratifies and confirms all his or her said attorneys-in-fact and agents or any of them or his or her substitute or substitutes may lawfully do or cause to be done by virtue hereof.

This Power of Attorney may be executed in multiple counterparts, each of which shall be deemed an original, but which taken together shall constitute one instrument.

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities indicated and on the dates indicated.

---

| | | |
|:---|:---|:---|
| **Signature** | **Capacity** | **Date** |
| /s/ Olivier Roussy Newton | Chief Executive Officer and Director | September 25, 2025 |
| Olivier Roussy Newton |  |  |
| /s/ Lonny Wong | Chief Financial Officer | September 25, 2025 |
| Lonny Wong |  |  |
| /s/ Christopher Tam | Director | September 25, 2025 |
| Christopher Tam |  |  |
| /s/ Philippe Lucet | Director | September 25, 2025 |
| Philippe Lucet |  |  |
| /s/ Mansour Al Suwaidi | Director | September 25, 2025 |
| Mansour Al Suwaidi |  |  |
| /s/ Manfred Knof | Director | September 25, 2025 |
| Manfred Knof |  |  |

---

------

**AUTHORIZED REPRESENTATIVE**

Pursuant to the requirements of Section 6(a) of the Securities Act of 1933, as amended, the undersigned has signed this Registration Statement, in the capacity of the duly authorized representative of the Registrant in the United States, on September 25, 2025.

---

| |
|:---|
| **PUGLISI & ASSOCIATES** |
| (Authorized Representative in the United States) |
| /s/ Donald J. Puglisi |
| Name: Donald J. Puglisi |
| Title: Managing Director |

---

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## Exhibit 4.1

------

![](exhibit4-1xu001.jpg)

**BTQ TECHNOLOGIES CORP.** 

**ANNUAL INFORMATION FORM**

**FOR THE YEAR ENDED DECEMBER 31, 2024**

------

**TABLE OF CONTENTS**

---

| | |
|:---|:---|
| &nbsp;&nbsp;[**GLOSSARY OF DEFINED TERMS**](#page_3) | [**3**](#page_3) |
| &nbsp;&nbsp;[**GENERAL**](#page_5) | [**5**](#page_5) |
| &nbsp;&nbsp;[**CURRENCY AND EXCHANGE RATE INFORMATION**](#page_5) | [**5**](#page_5) |
| &nbsp;&nbsp;[**STATEMENT REGARDING FORWARD LOOKING INFORMATION**](#page_5) | [**5**](#page_5) |
| &nbsp;&nbsp;[**CORPORATE STRUCTURE**](#page_6) | [**6**](#page_6) |
| &nbsp;&nbsp;[**GENERAL DEVELOPMENT OF THE BUSINESS**](#page_7) | [**7**](#page_7) |
| &nbsp;&nbsp;[**DESCRIPTION OF BUSINESS**](#page_8) | [**8**](#page_8) |
| &nbsp;&nbsp;[**RISK FACTORS**](#page_17) | [**17**](#page_17) |
| &nbsp;&nbsp;[**DIVIDENDS**](#page_23) | [**23**](#page_23) |
| &nbsp;&nbsp;[**DESCRIPTION OF CAPITAL STRUCTURE**](#page_23) | [**23**](#page_23) |
| &nbsp;&nbsp;[**MARKET FOR SECURITIES**](#page_24) | [**24**](#page_24) |
| &nbsp;&nbsp;[**ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTIONS ON TRANSFER**](#page_25) | [**25**](#page_25) |
| &nbsp;&nbsp;[**DIRECTORS AND OFFICERS**](#page_26) | [**26**](#page_26) |
| &nbsp;&nbsp;[**AUDIT COMMITTEE DISCLOSURE**](#page_29) | [**29**](#page_29) |
| &nbsp;&nbsp;[**PROMOTERS**](#page_30) | [**30**](#page_30) |
| &nbsp;&nbsp;[**INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS**](#page_30) | [**30**](#page_30) |
| &nbsp;&nbsp;[**LEGAL PROCEEDINGS AND REGULATORY ACTIONS**](#page_30) | [**30**](#page_30) |
| &nbsp;&nbsp;[**AUDITORS, TRANSFER AGENT AND REGISTRAR**](#page_31) | [**31**](#page_31) |
| &nbsp;&nbsp;[**MATERIAL CONTRACTS**](#page_31) | [**31**](#page_31) |
| &nbsp;&nbsp;[**INTEREST OF EXPERTS**](#page_31) | [**31**](#page_31) |
| &nbsp;&nbsp;[**ADDITIONAL INFORMATION**](#page_31) | [**31**](#page_31) |
| &nbsp;&nbsp;[**APPENDIX "A"**](#page_32) | [**32**](#page_32) |

---

------

**GLOSSARY OF DEFINED TERMS**

In this Annual Information Form, the following capitalized words and terms shall have the following meanings:

---

| | |
|:---|:---|
| **$** | Unless otherwise indicated, Canadian dollars. |
| **AIF** | This Annual Information Form of the Company for the year ended December 31, 2024. |
| **BTQ** | BTQ Technologies Corp. |
| **BCBCA** | *Business Corporations Act* (British Columbia) including the regulations thereunder, as amended. |
| **BCSC** | British Columbia Securities Commission. |
| **Board** | The board of directors of the Company. |
| **Cboe** | Cboe Canada (formerly known as the NEO Exchange Inc.) |
| **CEO** | Chief Executive Officer. |
| **CFO** | Chief Financial Officer. |
| **Common Shares** | Common shares without par value in the capital of the Company. |
| **Company** | BTQ Technologies Corp. |
| **Computershare** | Computershare Trust Company of Canada. |
| **Governmental Authority** | Any (i) international, multinational, national, federal, provincial, state, municipal, local or other governmental or public department, central bank, court, arbitral body, commission, board, bureau, agency or instrumentality, domestic or foreign, (ii) subdivision or authority of any of the above, (iii) quasi- governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing, or (iv) stock exchange or securities authorities. |
| **Insider** | Means, in relation to the Company:<br> (a) a director or senior officer of the Company;<br> (b) a director or senior officer of the corporation that is an Insider or subsidiary of the Company;<br> (c) a person that beneficially owns or controls, directly or indirectly, voting shares carrying more than 10% of the voting rights attached to all outstanding voting shares of the Company; or |

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------

---

| | |
|:---|:---|
|  | (d) the Company itself if it holds any of its own securities. |
| **Listing Statement** | Listing Statement of the Corporation dated February 17, 2023. |
| **NI 51-102** | National Instrument 51-102 - *Continuous Disclosure Obligations.* |
| **person** | Any individual, firm, partnership, joint venture, venture capital fund, association, trust, trustee, executor, administrator, legal personal representative, estate group, body corporate, corporation, unincorporated association or organization, Governmental Authority, syndicate or other entity, whether or not having legal status. |
| **Promoter** | &nbsp;&nbsp;&nbsp;&nbsp; A person who:<br> (a) acting alone or in concert with one or more other persons, directly or indirectly, takes the initiative in founding, organizing or substantially reorganizing the business of the Company; or<br> (b) in connection with the founding, organization or substantial reorganization of the business of the Company, directly or indirectly receives, in consideration of services or property or both, 10% or more of a class of the Company's own securities or 10% or more of the proceeds from the sale of a class of the Company's own securities of a particular issue,<br> but does not include a person who:<br> (c) receives securities or proceeds referred to in paragraph (b) solely<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i) as underwriting commissions, or<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii) in consideration for property, and<br> (d) does not otherwise take part in founding, organizing or substantially reorganizing the business. |
| **Equity Incentive Plan** | The omnibus equity incentive plan of the Company dated February 17, 2023. |

---

------

**GENERAL**

Unless otherwise noted herein, information in this AIF is presented as at December 31, 2024.

In this annual information form, a reference to the "Company", "BTQ", "we", "us", "our" and similar words refer to BTQ Technologies Corp., its subsidiaries and affiliates, or any one of them, as the context requires.

**CURRENCY AND EXCHANGE RATE** **INFORMATION**

In this AIF, otherwise specified or the context otherwise requires, all dollar amounts are expressed in Canadian dollars. All references to "dollars", "$" or "C$" are to Canadian dollars, all references to "US$" are to United States dollars.

On December 31, 2024, the daily exchange rate as quoted by the Bank of Canada was US$1.00 = C$1.4389

**STATEMENT REGARDING FORWARD LOOKING** **INFORMATION**

This AIF contains forward-looking information within the meaning of applicable Canadian securities legislation with respect to the Company and its subsidiaries. Forward looking information may include, but is not limited to: information with respect to amounts and use of available funds; anticipated developments in operations in future periods; planned asset acquisitions; future business operations; the adequacy of financial resources; the costs and timing of development of the Company's business; the costs, timing and receipt of approvals, consents and permits under applicable legislation; executive compensation approaches and practices; the growth of the quantum technology and security market; the future applications of Company products; the timeline for a quantum computer hitting the market; the use of Company office space; the development of and applicability of quantum technologies; the commercialization of the Company's intellectual property; the general adoption of quantum technologies; the Company's research and development plan; the results from Company research and development; future intellectual property registrations of the Company; the future availability of Company products; and the composition of directors and committees.

Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words and phrases such as "will", "may", "is expected to", "anticipates", "estimates", "intends", "plans", "projection", "could", "vision", goals", "objective" and "outlook") are not historical facts and may be forward-looking and may involve estimates, assumptions and uncertainties which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. In making these forward-looking statements, the Company has made certain assumptions, as contemplated below.

Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause actual events or results to differ from those expressed or implied by the forward-looking information, including, without limitation:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the performance of the Company's business and operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the intention to grow the Company's business and operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the introduction and continued offering of services and product features;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the market for the Company's products and services and competitive conditions;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the Company's pricing and revenue models;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the future liquidity and financial capacity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the treatment of the Company and its subsidiaries under government regulatory and taxation regimes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the Company's intellectual property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the Company's ability to operate in certain markets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the Company's ability to meet current and future obligations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the Company's ability to obtain services in a timely manner or at all;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the Company's ability to obtain financing on acceptable terms or at all;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the Company's targeted business milestones and related timelines and costs; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● expectations of the blockchain, quantum computing and cryptocurrency markets and associated regulations;

The above list is not exhaustive of factors that may affect any of the forward-looking information contained in this AIF. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Forward-looking information involves statements about the future and is inherently uncertain, and the actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking information due to a variety of risks, uncertainties and other factors, including, without limitation, those referred to in this AIF under the heading "Risk Factors" and elsewhere in this AIF. Forward-looking information contained in this AIF is based on the beliefs, expectations and opinions of management of the Company on the date the statements are made, and the Company does not assume any obligation to update forward-looking information, whether as a result of new information, future events or otherwise, other than as required by applicable law. In making the forward-looking statements in this AIF, the Company has applied several material assumptions which may prove to be inaccurate, including, but not limited to, the assumptions that any financing needed to fund the operations of the Company will be available on reasonable terms. Other assumptions are discussed throughout this AIF and, in particular in the "Risk Factors" section of this AIF. For the reasons set forth above, prospective investors should not place undue reliance on forward-looking information.

**CORPORATE** **STRUCTURE**

**Name, Address and Incorporation**

BTQ Technologies Corp. (previously known as Sonora Gold & Silver Corp.) was incorporated on November 23, 1983 under the *Business Corporations Act* (British Columbia) as "Southern Star Resources Ltd." On February 17, 2023, the Company acquired 100% of the issued and outstanding securities of BTQ AG, a Liechtenstein entity, pursuant to a "reverse takeover transaction" whereby BTQ AG became a wholly owned subsidiary of the Company (the "**Transaction**") and the Company changed its name from "Sonora Gold & Silver Corp." to "BTQ Technologies Corp.".

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The Company's corporate headquarters is located at 16-113 555 Burrard Street, Vancouver, British Columbia, Canada, V7X 1M8 and its registered office is located at 25th Floor, 700 West Georgia Street, Vancouver, British Columbia, Canada, V7Y 1B3.

**Intercorporate Relationships**

The following diagram sets out the intercorporate relationships among the Company's material subsidiaries as of the date of this AIF, including the percentage ownership of voting securities and the jurisdiction of formation or existence of each subsidiary.

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| |
|:---|
| <br> **BTQ TECHNOLOGIES CORP.**<br> (a British Columbia company) |
| &nbsp;&nbsp; 100% |
| <br> **BTQ AG**<br> (a Liechtenstein entity) |

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**GENERAL DEVELOPMENT OF THE** **BUSINESS**

**Three-Year History**

<u>Prior to the Transaction</u>

BTQ AG was incorporated in the Principality of Liechtenstein on March 26, 2021 by a group of businesspeople and experienced post-quantum cryptographers.

On December 31, 2021, the Company and BTQ entered into a share exchange agreement, which was subsequently amended on April 29, 2022, July 30, 2022, and November 29, 2022.

On September 2, 2022, the Company issued an aggregate of 12,712,500 subscription receipts at a price of $0.40 per subscription receipt for aggregate gross proceeds of $5,085,000. On November 10, 2022, the Company the issued an additional 3,163,750 subscription receipts at a price of $0.40 per subscription receipt for aggregate gross proceeds of $1,265,500. On December 5, 2022, the Company issued an additional 2,225,000 subscription receipts at a price of $0.40 per subscription receipt for aggregate gross proceeds of $890,000. Each subscription receipt automatically converted, with no additional consideration, into one Common Share (as defined below) concurrent with the closing of the Transaction.

On February 17, 2023, the Company closed the Transaction, which included (a) consolidating its common shares on the basis of ten pre-consolidation shares to one post-consolidation share (each post-consolidation share, a "**Common Share**"); (b) issuing 92,000,000 Common Shares to the former BTQ AG shareholders; and (c) changing its name from "Sonora Gold & Silver Corp." to "BTQ Technologies Corp.".

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In connection with the closing of the Transaction, on February 21, 2023, the Company voluntarily delisted its Common Shares from the TSX Venture Exchange and listed its Common Shares on Cboe Canada (formerly known as the NEO Exchange) under the symbol "BTQ".

<u>From Transaction date to current date</u>

On May 3, 2024, the Company entered into a Software License Agreement with ZKP Corp., a Delaware corporation controlled by the COO of the Company, for which the Company received $1,000,000 for the use of its proprietary software and the provision of related services.

On September 9, 2024, the Company issued convertible debt for proceeds of $1,000,000. The convertible debt is non-interest bearing and due on September 9, 2026. At the election of the lender, the principal amount of the debt is convertible into common shares at $0.40 per share.

On July 23, 2024, the Company entered into an agreement for the acquisition of Radical Semiconductor's Processing-in-Memory Technology Portfolio, advancing its Post-Quantum Cryptography capabilities. The integration of Radical's cutting-edge technology is set to enhance BTQ's quantum-secure communications infrastructure and provide substantial growth opportunities in emerging markets such as IoT, financial services, blockchain, and government sectors.

On November 8, 2024, the Company issued convertible debt for proceeds of $500,000. The convertible debt is non-interest bearing and due on November 14, 2026. At the election of the lender, the principal amount of the debt is convertible into common shares at $0.40 per share.

On December 19, 2024, the Company issued 3,355,704 common shares at $2.98 per share for gross proceeds of $10,000,000 pursuant to a brokered listed issuer financing exemption ("LIFE") offering. In connection with the financing, the Company incurred share issuance costs of $860,833 and issued 167,785 agent's warrants exercisable at $4.09 per common share expiring on December 19, 2029.

On December 24, 2024, the Company issued 3,750,000 common shares pursuant to the conversion of $1,500,000 in convertible debt.

On January 3, 2025, the Company entered into an agreement to acquire intellectual property from Cimtech Technology Co., Ltd., an innovator in memory technology and computing-in memory ("CIM") solutions. This strategic acquisition enhances the Company's capabilities in post-quantum cryptography and quantum-secure communication technologies.

**Significant Acquisitions**

The Company has not completed any significant acquisitions during its most recently completed financial year and for which disclosure is required under Part 8 of NI 51-102.

**DESCRIPTION OF** **BUSINESS**

**General**

BTQ is a British Columbia corporation founded by a group of businesspeople and experienced post- quantum cryptographers with an interest in addressing the urgent security threat that a large-scale universal quantum computer poses to the blockchain network, where several potential quantum attack vectors may compromise the network. This paradigm shift requires a new direction in cryptography and blockchain design. BTQ is building a portfolio of intellectual property to safeguard the crypto asset class with energy efficient quantum processes and currently holds several patent applications for generating quantum algorithms. In addition to blockchain applications, the derived intellectual property the Company is building covers a wide range of mission-critical applications, including defense, financial services, insurance, and IoT devices.

------

Quantum computers can take a very large integer and find out its prime factor extremely rapidly by using Shor's algorithm. Theoretically, a universal large-scale quantum computer could be used to disrupt cryptocurrencies, break into digital wallets, and access and decrypt confidential communications. Ethereum and Algor, two of the most technologically advanced cryptocurrencies, announced plans to transition to post-quantum standards.

BTQ has strategically established a branch office in Taipei, Taiwan, home to the most advanced hardware and post-quantum ecosystems. The Taipei engineering office will focus on research and development related to post-quantum cryptography, eco-friendly proof of work proving, and formal verification within smart contracts platforms.

BTQ is listed on the Cboe Canada Exchange (previously known as the NEO Exchange) (the "**Cboe**") under the symbol "BTQ", the OTCQX under the symbol "BTQQF" and the Frankfurt Stock Exchange under the symbol "NG3".

As a research-based company, BTQ Technologies Corp. is building a patent portfolio based on the research undertaken in its Canada, Australia, and elsewhere.

The Company intends to commercialize this intellectual property by way of software and hardware products, licensing agreements, as well as service contracts with large entities in the finance and technology sectors who will hire the Company as a third-party service provider when transitioning from current cryptography standards to post-quantum encryption.

**Principal Products or Services**

BTQ has one reportable operating segment, research and development, which has two principal areas of focus: hardware and software. Currently, BTQ has no commercial productions and is in the early stages of developing its proprietary hardware and software. In the near term for its hardware program, BTQ is planning to continue to develop its mixed-signal computing technology hardware. In the near term for its software program, BTQ is planning to research and develop a proprietary zero-knowledge proof programming language and compiler and BTQ's signature post-quantum Blockchain compression algorithm. In the long term, BTQ is planning to research and develop a formal verification programming language for use in application development.

<u>Research and Development related to Hardware Products and Services</u>

BTQ was engaged in the first phase of research of a proof of concept integrated circuit chip application (the "**Computer Chip**") with respect to a Compute-in-Memory ("**CIM**") implementation of a quantum-resistant hash function. Such research was in collaboration with ITRI with a tapeout submitted to Taiwan Semiconductor Manufacturing Company Limited ("**TSMC**") for production with initial results expected in the near-term. Since entering into the ITRI Mixed-Signal Crypto Accelerator Agreement on March 1, 2022, ITRI and BTQ have been working with TSMC semiconductor fabrication plants in order to bring the Computer Chip into commercialization.

------

BTQ is also developing a security chip named QCIM, which involves both CIM technology and two post- quantum cryptographic algorithms, namely Kyber and Dilithium. BTQ's goal is to implement fast and efficient post-quantum cryptography (PQC) in hardware for blockchain and non-blockchain applications. BTQ is using a combination of in-house and subcontracted research in the development of QCIM, with the relevant outside party being CimTech (see material contracts summary below). QCIM is currently in a preliminary research and development phase, and is expected to be ready for commercialization by the end of 2025 or early 2026.

*Cryptographically Agile Secure Hardware ("CASH")*

CASH is a Post-Quantum Cryptography Accelerator product that is compact, energy-efficient, and powerful enough to fit into low-power devices like smart cards. The technology can handle both new PQC methods and traditional encryption methods (like AES and RSA). This means fewer chips are needed, which saves space, reduces power consumption, and cuts costs. CASH Technology is being developed by building on the patents that were acquired from Radical Semiconductor ("Radical"). Key members of the Radical team are working on the technology within BTQ with the first proof of concept expected in the first half of 2026.

<u>Research and Development related to Software Products and Services Software</u>

*Post-quantum Digital Signature Compression Algorithm*

BTQ's proprietary post-quantum digital signature compression algorithm (the "**Post-quantum Digital Signature Compression Algorithm**"), which builds upon the foundation of BTQ's patents, aims to provide post-quantum scaling and supplemental services to existing blockchains by increasing transaction speeds and efficiency, lowering transaction costs and providing greater security. Scaling solutions relate to software deployed on existing blockchains to improve the transactional speed and lower transaction costs associated with user transactions. For example, several of Ethereum's scaling solutions improve its transactional efficiency by collecting transactions from multiple users and publishing a set of transactions to the Ethereum blockchain as a single transaction. This improves the speed and cost at which users transact over the network by increasing the number of transactions that get published in a block and distributing the cost of a single transaction across a group of users. Post-quantum signatures are digital signatures that are specifically designed to withstand attacks from quantum computers. The Post-quantum Digital Signature Compression Algorithm aims to protect users from attacks by both classical and quantum computers, thus offering two distinct advantages of scalability and security. Currently, the Post-quantum Digital Signature Compression Algorithm is in its development phase.

On August 14, 2022, BTQ filed a patent application in Europe for the application entitled "Improved Blockchain System and Method", which protects a method of aggregating two or more digital signatures together into a blockchain block, wherein the signature scheme is the Falcon signature scheme. This additional patent application, once registered, will complement BTQ's existing patents by protecting the underlying intellectual property which increases the range of services that BTQ anticipates providing. These services now include methods for authenticating, encrypting, and decrypting information in a quantum-safe manner and reducing the space required to transmit and store quantum-resistant digital signatures. All research and development related to the Post-quantum Digital Signature Compression Algorithm is being done in-house.

*Quantum Proof-of-Work Mining*

The other branch of BTQ's software arm is currently conducting research as to the general viability of applications of quantum computing to blockchain environments. On March 9, 2022, BTQ entered into the Macquarie Research Agreement with Macquarie University to research whether quantum computers could be used to perform proof-of-work proving for blockchain-based technologies and how such proof-of-work proving would be completed in a commercialized setting. BTQ has determined that one such direction is developing a quantum-proving algorithm to replace existing proving algorithms such as SHA-256, which is the cryptographic hash function which blockchain miners must solve in order to produce a new block on the blockchain. A quantum-proving algorithm can be used in the transition from classical-computing to quantum computing, allowing both types of computers to simultaneously partake in the proving process.

------

The research into creating a quantum proof-of-work proving infrastructure is in its preliminary phases and therefore the principal steps required for BTQ to commercialize such research have not yet been ascertained with certainty. However, if BTQ determines through its research and research partners that quantum- computing applications can be applicable to blockchain environments, BTQ anticipates it will need to develop proof-of-work proving-specific code and undertake significant platform research and development before the product would be commercially available.

<u>Other Software Developments</u>

*Zero-Knowledge Programming Language and Compiler (Keelung)*

On March 2, 2023, the Company announced the alpha release of Keelung, a domain-specific language designed for fast, private, and secure application development. Based on research in the field of post- quantum zero-knowledge cryptography, Keelung will empower developers to create secure and reliable post-quantum zero-knowledge proofs without the need for specialized cryptography skills. Both Keelung and its compiler have been implemented in Haskell, enabling developers to produce high-level zero- knowledge proofs protected by Haskell's type system while leveraging Haskell's extensive ecosystem and tooling. Keelung will be 100% open-source, allowing for transparency, collaboration, and community- driven development.

The Company is currently maintaining the open-source version of the product which was released to the public during Q4 2023. The Company is expanding backend integrations, which is expected in the last half of 2025, and working on providing support for targeting multiple proving systems (e.g. PLONK-based and STARK based).

**Production and Services**

Currently, BTQ has no commercial production and is in the research and development stages of advancing its proprietary hardware and software. Upon the successful conclusion of BTQ's research and development activities, BTQ will be relying on a hybrid model of producing, with respect to its software division, post- quantum blockchain infrastructure, zero-knowledge software tools and verifiable scripting products internally, while at the same time engaging certain preferred subcontractors to execute BTQ's proving hardware manufacturing contracts and research related to quantum proof-of-work with respect to in its hardware division.

**Specialized Skills and Knowledge**

BTQ relies on the specialized skill and knowledge of its employees and certain subcontractors for its research and development activities. In particular, team members must have expertise in quantum computing, blockchain systems, computer component manufacturing, regulatory systems, and software development.

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**Competitive Conditions**

BTQ protects its brand and the intellectual property related to its hardware and software programs through a collection of trademark applications and patent applications in Canada, the United States and Europe and other registered intellectual property protections. As BTQ generates new data and further develops its proprietary intellectual property, it will expand its registrations throughout the development program and continue to take all the necessary steps to protect their intellectual property.

*Quantum Computing*

Large publicly-traded quantum companies exist in the quantum computing space, including: D-Wave Systems (NYSE: QBTS), IONQ (NYSE: IONQ) and Arqit Quantum (NASDAQ: ARQQ). However, these companies are not direct competitors of BTQ as their main goal is to build a commercial quantum computer with real-world useability. These companies are capital intensive and therefore well funded by both institutional investors and governments alike. The valuations of these companies range from US$50 million to over US$1 billion.

With this surge in funding and general investor interest and excitement in the industry, several companies are emerging in the post-quantum security space. There are various companies that try to tackle the same global problem as BTQ: getting today's infrastructure secured for the quantum revolution, however, the approaches vary widely based on cryptographic techniques, as well as end uses served and therefore is not a winner takes all market. In fact, other companies operating directly in the space may offer potential collaboration opportunities.

PQ Shield, for example, describes itself as "a post-quantum cryptography (PQC) company contributing to the global standards and core technologies to power the future security layer of the world's leading organizations. Its quantum-secure cryptographic solutions work with companies' legacy systems to protect sensitive data now and for years to come". PQ Shield mainly serves the defense and infrastructure, IoT and OEM markets.

Additionally, ISARA Corporation provides security solutions specializing in cryptographic risk management and in creating crypto-agile and quantum-safe security solutions for today's information technology ecosystems. ISARA Corporation broadly targets enterprises and governments. ISARA Corporation raised over $10 million in 2018 to fund its R&D efforts.

To date, BTQ has engaged in key strategic partnerships, notably through the Next Generation Emerging Technologies Graduates Program (NGETGP) in collaboration with CSIRO and top Australian universities. Additionally, BTQ is involved in developing open-source quantum computing software in partnership with the Australian Quantum Software Network (AQSN), enhancing its capabilities in quantum software development to further enhance collaboration opportunities. BTQ's publication of the "Proof-of-Work Consensus by Quantum Sampling" paper also enhances its competitive position by demonstrating real- world use cases for quantum computers much sooner than previously anticipated by the quantum industry.

*Blockchain*

In the blockchain space, large technology companies are building their own secured blockchains. For example, IBM offers blockchain services that help secure multiple aspects of critical industries like supply chains, banking, healthcare, and government. The goal of these blockchains is usually to streamline and scale processes in a secure manner. For example, SandboxAQ, an enterprise SaaS company, provides solutions at the nexus of AI and Quantum technology (AQ) to address some of the world's most challenging problems.

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There are additional "public blockchain" protocols implementing post-quantum cryptography in blockchain environments. Algorand, a Proof-of-Stake cryptocurrency protocol, is focusing on integrating post- quantum cryptography to fortify their cross-chain applications in an effort to withstand attacks by sufficiently large quantum computers that try to alter the state of the blockchain. Starkware is another competitor who is preparing to defend against the growing threat of quantum computers. In 2018 Starkware raised $30M to build technology to improve blockchain scalability and security. zkSync is another competitor who is trying to improve blockchain scalability but is not aligned with BTQ's post-quantum security mission.

BTQ differentiates itself from its competitors with its work at the intersection of NIST standardised post- quantum cryptographic algorithms and blockchain. The Company works on developing next-generation cryptographic primitives like zero-knowledge cryptography to achieve advanced security and efficiency, which is novel in the space.

*Post Quantum Cryptography*

The global quantum cryptography market size was valued at over US$200 million in 2022 and is expected to grow at a CAGR of 22.6%, reaching over US$2,300 million by 2033. Primary competitors and market participants in the security hardware industry are those who develop and manufacture security chips. United Kingdom-based PQShield is a company focusing on post-quantum security intellectual property. BTQ's unique products, such as PQScale, Keelung, Kenting, and QCIM address different aspects of the quantum problem. By building tightly integrated solutions from hardware to software, the company sets itself apart from competitors by offering a full-stack service for post-quantum cryptography.

BTQ has engaged in several strategic collaborations to improve its competitive position. Notably, its partnership with Hon Hai Research Institute (part of Foxconn) aims to promote the standardization of PQC, thereby leading advancements in quantum-safe cryptography. The collaboration with ITRI and the development of quantum computation in memory technology for the Kyber algorithm are also significant, as they enhance BTQ's capabilities in providing secure and efficient PQC solutions.

**Products**

*Cryptographically Agile Secure Hardware ("CASH")*

CASH is a Post-Quantum Cryptography Accelerator product that is compact, energy-efficient, and powerful enough to fit into low-power devices like smart cards. The technology can handle both new PQC methods and traditional encryption methods (like AES and RSA). This means fewer chips are needed, which saves space, reduces power consumption, and cuts costs. CASH Technology is being developed by building on the patents that were acquired from Radical Semiconductor ("Radical"). Key members of the Radical team are working on the technology within BTQ with the first proof of concept expected in the first half of 2026.

<u>Keelung</u>

As described previously in this AIF, on March 2, 2023, the Company announced the alpha release of Keelung, a domain-specific language designed for fast, private, and secure application development. Both the Keelung language and compiler are open source under the Apache 2.0 License. Further developments have been made to the language, primarily for increasing support for efficient operations over post-quantum cryptographic primitives.

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<u>PQScale</u>

We have made significant progress on PQScale, our quantum-resistant blockchain scaling solution that leverages zero-knowledge proofs to accelerate transactions and reduce costs. PQScale continues to evolve and deliver new services. We have been working on PQScale under several grants to integrate the technology into several platforms.

<u>Kenting</u>

Kenting remains at the forefront of specialized hardware development for post-quantum zero-knowledge proving. Our team has continued to innovate and refine our hardware solution, resulting in faster and more seamless service. The latest generation of Kenting hardware offers increased computational power, improved scalability, and enhanced reliability. We are currently looking to make the latest generation of Kenting hardware available on AWS EC2 F1 instances.

<u>QByte</u>

QByte continues to serve as a valuable resource for industry professionals, researchers, and enthusiasts, offering comprehensive coverage and analysis of the rapidly evolving quantum computing landscape. It is available to use online free of charge, and at this time no further development or commercialization of the products is being planned.

<u>Preon</u>

Preon is a post-quantum signature scheme developed by BTQ Technologies Corp. that has been selected as a candidate in the NIST Post-Quantum Cryptography Standardization Process. It is characterized by its small key size, rapid key generation, minimal assumptions, and flexible functionality, making it resistant to potential threats from both classical and quantum computers. Preon has been selected by NIST in the first round (additional signatures) for its post-quantum cryptography standardization process. BTQ anticipates further optimization of Preon in the coming months, as the current reference implementation's performance data is meant for expository purposes and not indicative of the scheme's potential in practice.

QPoW

Boson Sampling is a non-universal NISQ-era architecture for optical quantum computing with comparatively straightforward engineering requirements - a passive optical interferometer with photon sources and photo-detectors. Since it is a highly restricted problem, its utility has been questioned for several years. Recently, boson samplers were demonstrated to have outperformed an equivalent classical simulation by orders of magnitude. BTQ researchers have demonstrated the applicability of boson sampling to the problem of proof-of-work (PoW), a distributed algorithm used in blockchain protocols such as Bitcoin. Classical algorithms are known for their computationally intensive inverse-hashing problems that consume vast amounts of power, bringing blockchain technology under major criticism. In BTQ's QPoW protocol, this energy-intensive inverse hashing problem is substituted with one based on boson sampling. Each classical node is replaced by a quantum counterpart, where light sources are passed through an interferometer, and the output configuration is detected. Since the output configuration is inherently random, several samples are collected and the data is manipulated to reach consensus using different binning strategies. This protocol has demonstrated that a blockchain network comprising quantum nodes performing QPoW can achieve the same outcome (distributed consensus) using orders of magnitude less energy than a corresponding network of classical simulators. QPoW has an initial prototype, BTQ is looking for commercialization partners and licensing partners.

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QRiNG

QRiNG operates through Quantum Consensus Networks (QCNs) that achieve full peer-to-peer connectivity via Quantum Key Distribution (QKD). Consensus is achieved through the majority consistency of pairwise QKD bit-strings, where nodes verify each other, and an honest majority determines network connectivity. Quantum Consensus Networks (QCNs) utilize quantum-enabled nodes to achieve consensus on generating certifiable quantum randomness, a vital resource for cryptography and many other applications. QRiNG harnesses the randomness from QCNs, which act as quantum random oracles, injecting entropy into global keys using entropy addition. This process enables classical Distributed Consensus Networks (DCNs) to reach quantum-grade random consensus. QRiNG is in the early research and development stage.

**Components**

BTQ's hardware and software programs are still in their preliminary stages of research and development. As such, it is not yet possible to determine exactly what components or raw materials will be required, or what their pricing, availability and sources will be.

**Intellectual Property**

The Company protects its intellectual property through various strategies, including non-disclosure agreements and applying for patents, when appropriate. Currently, the Company has the following patents and patent applications.

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| | | | |
|:---|:---|:---|:---|
| **Current Patents** | **Current Patents** | **Current Patents** | **Current Patents** |
| **Name** | **Jurisdiction/s** | **Application No. <br>(Patent No., if different than**<br>**Application No.)** | **Status** |
| &nbsp;&nbsp;A SYSTEM AND METHOD FOR QUANTUM-SAFE AUTHENTICATION, ENCRYPTION AND DECRYPTION OF INFORMATION | &nbsp;&nbsp;Canada | &nbsp;&nbsp;CA 3078558 | &nbsp;&nbsp;Expiring 8 October 2038\* |
| &nbsp;&nbsp;A SYSTEM AND METHOD FOR QUANTUM-SAFE AUTHENTICATION, ENCRYPTION AND DECRYPTION OF INFORMATION | &nbsp;&nbsp;Europe | &nbsp;&nbsp;EP 18800260.4 (EP 3692681) | &nbsp;&nbsp;Expiring 8 October 2038\* |
| &nbsp;&nbsp;A SYSTEM AND METHOD FOR QUANTUM-SAFE AUTHENTICATION, ENCRYPTION AND DECRYPTION OF INFORMATION | &nbsp;&nbsp;Great Britain | &nbsp;&nbsp;EP 3692681 | &nbsp;&nbsp;Expiring 8 October 2038\* |
| &nbsp;&nbsp;A SYSTEM AND METHOD FOR QUANTUM-SAFE AUTHENTICATION, ENCRYPTION AND DECRYPTION OF INFORMATION | &nbsp;&nbsp;Unitary Patent | &nbsp;&nbsp;EP 3692681 | &nbsp;&nbsp;Expiring 8 October 2038\* |
| &nbsp;&nbsp;A SYSTEM AND METHOD FOR QUANTUM-SAFE AUTHENTICATION, ENCRYPTION AND DECRYPTION OF INFORMATION | &nbsp;&nbsp;United States | &nbsp;&nbsp;US 16/754,055 (US 11477017) | &nbsp;&nbsp;Expiring 8 October 2038\* |
| &nbsp;&nbsp;A SYSTEM AND METHOD FOR QUANTUM-SAFE AUTHENTICATION, ENCRYPTION AND DECRYPTION OF INFORMATION | &nbsp;&nbsp;United States | &nbsp;&nbsp;US 17/930,681 (US 11991275) | &nbsp;&nbsp;Expiring 17 December 2038\* |
| **Pending Patents** | **Pending Patents** | **Pending Patents** | **Pending Patents** |
| &nbsp;&nbsp;IMPROVED BLOCKCHAIN SYSTEM (POST-QUANTUM AGGREGATE SIGNATURES) AND METHOD | &nbsp;&nbsp;United States | &nbsp;&nbsp;US 19/103296 | &nbsp;&nbsp;Pending |
| &nbsp;&nbsp;IMPROVED BLOCKCHAIN SYSTEM (POST-QUANTUM AGGREGATE SIGNATURES) AND METHOD | &nbsp;&nbsp;Canada | &nbsp;&nbsp;To be confirmed | &nbsp;&nbsp;Pending |
| &nbsp;&nbsp;IMPROVED BLOCKCHAIN SYSTEM (POST-QUANTUM AGGREGATE SIGNATURES) AND METHOD | &nbsp;&nbsp;Europe | &nbsp;&nbsp;EP 23754332.7 | &nbsp;&nbsp;Pending |
| &nbsp;&nbsp;IMPROVED BLOCKCHAIN SYSTEM (POST-QUANTUM AGGREGATE SIGNATURES) AND METHOD | &nbsp;&nbsp;Australia | &nbsp;&nbsp;To be confirmed | &nbsp;&nbsp;Pending |
| &nbsp;&nbsp;IMPROVED BLOCKCHAIN SYSTEM (POST-QUANTUM AGGREGATE SIGNATURES) AND METHOD | &nbsp;&nbsp;China | &nbsp;&nbsp;To be confirmed | &nbsp;&nbsp;Being filed on April 14, 2025 |
| &nbsp;&nbsp;IMPROVED BLOCKCHAIN SYSTEM (POST-QUANTUM AGGREGATE SIGNATURES) AND METHOD | &nbsp;&nbsp;Japan | &nbsp;&nbsp;To be confirmed | &nbsp;&nbsp;Pending |
| &nbsp;&nbsp;&nbsp;&nbsp;IMPROVED BLOCKCHAIN SYSTEM AND METHOD<br>(DELAYED PROOF OF VALIDITY) | &nbsp;&nbsp;International/PCT | &nbsp;&nbsp;PCT/EP2023/086754 | &nbsp;&nbsp;Pending (application will expire 19 June 2025, when national applications will be filed) |

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| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp; IMPROVED BLOCKCHAIN SYSTEM AND METHOD (QUANTUM ANALOGUES OF PROOF OF WORK SCHEMES) | &nbsp;&nbsp; International/PCT (National Office below) | &nbsp;&nbsp; PCT/EP2024/064555 | &nbsp;&nbsp; Pending (application will expire by 27 November 2025, when national applications will be<br> filed) |
| &nbsp;&nbsp; IMPROVED BLOCKCHAIN SYSTEM AND METHOD (QUANTUM ANALOGUES OF PROOF OF WORK SCHEMES) | &nbsp;&nbsp; Europe | &nbsp;&nbsp; EP 23175874.9 | &nbsp;&nbsp; Pending |
| &nbsp;&nbsp; QUANTUM RANDOM NUMBER GENERATOR (QRNG) | &nbsp;&nbsp; Europe | &nbsp;&nbsp; EP 24199620.6 | &nbsp;&nbsp; Pending |
| &nbsp;&nbsp; NON-VOLATILE STORAGE OF SECURE DATA IN 6T SRAM CELLS USING HOT<br> CARRIER INJECTION | &nbsp;&nbsp; United States | &nbsp;&nbsp; US 18/302,667 | &nbsp;&nbsp; Pending |
| &nbsp;&nbsp; HIGH-RELIABILITY PROCESSING-IN-MEMORY<br> WITH TRANSPOSE SUPPORT USING SPLIT-6T SRAM | &nbsp;&nbsp; United States | &nbsp;&nbsp; US 18/302,674 | &nbsp;&nbsp; Pending |
| &nbsp;&nbsp; IN-MEMORY HIGH PARALLELISM BIT-SERIAL POLYNOMIAL<br> MULTIPLICATION | &nbsp;&nbsp; United States | &nbsp;&nbsp; US 18/302,679 | &nbsp;&nbsp; Pending |
| &nbsp;&nbsp; IN-MEMORY REDUNDANT<br> BINARY ARITHMETIC ON WIDE BITWIDTH INTEGERS | &nbsp;&nbsp; United States | &nbsp;&nbsp; 18/302,684 | &nbsp;&nbsp; Pending |

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Note: \* All expiry dates are subject to payment of periodic patent annuity fees.

**Cycles**

BTQ does not expect the development of its proprietary hardware and software to be subject to cyclical or seasonal forces.

**Economic Dependence**

As of the current reporting period, BTQ does not possess any contracts upon which its business is substantially dependent. This absence is attributed to the Company being in the research and development stage, where the Company's primary focus lies in the exploration and advancement of innovative solutions. Consequently, there are no prevailing contracts in place for the sale of a significant portion of Company's products or services, nor for the acquisition of substantial requirements of goods, services, or raw materials. Furthermore, The Company does not currently hold any franchise, license, or other agreements pertaining to the use of patents, formulas, trade secrets, processes, or trade names that are indispensable to its operations. Given Company's developmental status, the Company's business remains centred on refining and enhancing its offerings, thereby precluding the existence of contractual dependencies at this juncture.

**Changes to Contracts**

It is not expected that the business of the Company will be affected by the renegotiation or termination of contracts or sub-contracts in the current financial.

**Environmental Protection**

In the current financial year and for future years, the Company anticipates no significant financial or operational effects stemming from environmental protection requirements. As BTQ primarily engages in research and development, with a strong focus on the development of hardware and software solutions, the its operations are not subject to substantial environmental compliance obligations. Thus, the Company does not foresee any substantial impact on its capital expenditures, profit or loss, or competitive position as a result of environmental protection requirements. The Company's ongoing efforts center on the advancement of innovative technologies and solutions, and while it remains committed to environmental sustainability, its current business activities and strategic priorities do not expose us to substantial environmental compliance costs or obligations.

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**Employees**

As of BTQs most recent financial year end, it has a total of 27 employees or equivalent.

**Foreign Operations**

BTQ had strategically established a branch office in Taipei, Taiwan. The Taipei engineering office was focused on research and development related to post-quantum cryptography, eco-friendly proof of work proving, and formal verification within smart contracts platforms until its closure in October 2024. During the 2024, the Company transitioned its research and development activities from Taiwan to Canada and Australia.

BTQ also has a number of consultants working for the Company in Canada, Korea, Hong Kong, United States, Israel, and Australia. The Company also maintains an office space in Sydney, Australia for use by its team of research consultants located there.

**Lending and Grants**

The Company does not have any dedicated investment policies or investment restrictions.

**Bankruptcy and Similar Proceedings**

There have been no bankruptcy, receivership, or similar proceedings initiated against the Company or any of its subsidiaries within the three most recently completed financial years, nor during or proposed for the current financial year.

**Reorganizations**

The Company completed the Transaction in February 2023. See "General Development of Business".

**Social and Environmental Risks**

The Company does not have any social or environmental policies.

**RISK** **FACTORS**

Readers should carefully consider all such risks, which include but are not limited to the following:

**General Risks**

*Limited Operating History*

BTQ has a limited history of operations and is in the early stage of development. As such, BTQ will be subject to many risks common to early stage enterprises, including undercapitalization, cash shortages, limitations with respect to personnel, financial and other resources, and lack of revenue. There is no assurance that BTQ will achieve its operating goals. There is no assurance that BTQ will be successful in achieving a return on shareholders' investment and the likelihood of success must be considered in light of its early stage of operations. There can be no assurance that BTQ will be able to earn material revenue or that any of its activities will generate positive cash flow.

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*Future Capital Requirements and Uncertainty of Additional Funding*

The Company may require funding through debt or equity offering for its ongoing and future activities. There can be no assurance that BTQ will be able to obtain adequate financing in the future or that the terms of such financing will be favorable. Failure to obtain additional financing could cause BTQ to reduce or terminate its operations.

If additional funds are raised through further issuances of equity or securities convertible into equity, existing shareholders could suffer significant dilution, and any new equity securities issued could have rights, preferences, and privileges superior to those of other BTQ securityholders. Any debt financing secured in the future could involve restrictive covenants relating to capital raising activities and other financial and operational matters, which may make it more difficult for BTQ to obtain additional capital and to pursue business opportunities.

*Operational Reliance on Third-Party Providers*

The Company relies upon independent third-party services providers. The Company's operations could be interrupted or impaired if these third-party service providers experience operational or other systems difficulties or failures, terminate their services, or fail to comply with regulations. Replacing vendors or addressing other issues with the Company's third-party service providers could entail significant delay, expense, and disruption of service. As a result, if the third-party service providers experience difficulties, are subject to cybersecurity breaches, or terminate their services and the Company is unable to replace them with other service providers in a timely manner, the Company's operations could be interrupted. If an interruption were to continue for a significant period, the Company's business, financial condition, and results of operations could be adversely affected.

*Competition*

The Company will compete with other post-quantum cryptography and technology businesses, including other businesses focused on applying post-quantum cryptography to blockchain. Because its industry is evolving and characterized by technological change, it is difficult for the Company to predict whether, when and by whom new competing technologies may be introduced or when new competitors may enter the market. The Company faces increased competition from companies with strong positions in certain markets the Company intends to serve and in new markets and regions it may enter. Many of the Company's competitors have significantly greater financial and other resources than the Company currently possesses and may spend significant amounts of resources to gain market share. The Company cannot assure investors that it will be able to compete effectively against current and future competitors. In addition, increased competition or other competitive pressures may result in price reductions, reduced margins or loss of market share, any of which could have a material adverse effect on the Company's business, financial condition or results of operations. Competitors may be able to respond to new or emerging technologies and changes in customer requirements more effectively than the Company can, or devote greater resources to the development, promotion and sale of products than the Company can. Current and potential competitors may establish cooperative relationships among themselves or with third parties, including through mergers or acquisitions, to increase the ability of their products to address the needs of the Company's prospective customers. If these competitors were to acquire significantly increased market share, it could have a material adverse effect on the Company's business, financial condition or results of operations. The Company's competitors may also establish or strengthen co-operative relationships with systems integrators, third-party consulting firms or other parties with whom the Company has relationships, thereby limiting its ability to promote its products.

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If the Company is not able to differentiate our business from those of our competitors, drive value for customers or effectively align its financial and operations resources with its goals and objectives, it may not be able to compete effectively against its competitors. If the Company fails to compete effectively against its competitors, its business and profitability may be adversely affected.

*Compliance and Risk Management Programs*

The Company's ability to comply with applicable laws and rules will be largely dependent on the establishment and maintenance of compliance, review, and reporting systems, as well as the ability to attract and retain qualified compliance and other risk-management personnel, as needed. The Company cannot provide any assurance that its compliance policies and procedures will be effective or that it will be successful in monitoring or evaluating its risks. If there is any alleged non-compliance with applicable laws or regulations, The Company could be subject to investigations and judicial or administrative proceedings that may result in substantial penalties or civil lawsuits for damages, restitution or other remedies, which could be significant. Any of these outcomes, individually or together, may materially and adversely affect BTQ's reputation, financial condition and valuation, and the value of its Common Shares.

*Unexpected Market Disruptions*

The Company may incur major losses in the event of disrupted markets and other extraordinary events in which market behavior diverges significantly from historically recognized patterns. The risk of loss in such events may be compounded by the fact that, in disrupted markets, many positions may become illiquid, making it difficult or impossible to close out positions against which markets are moving. Market disruptions caused by unexpected political, military and terrorist events, or other factors, may from time to time cause dramatic losses for BTQ.

*Dependence on Key Personnel*

The success of BTQ will, in part, be dependent upon the skill, judgment, industry relationships and expertise of the Board and management. The loss of a director or key management personnel may materially and adversely affect the business of BTQ. There can be no assurance that these individuals will continue to be employed by, or remain involved with, BTQ for a particular period of time.

*Market Risk for Securities*

There can be no assurance that an active trading market for BTQ's shares will be sustained. The market price for the Company's Common Shares may be subject to wide fluctuations. Factors such as government regulation, price fluctuations, share price movements of peer companies and competitors, as well as overall market movements, may have a significant impact on the market price of BTQ's securities. The stock market has from time to time experienced extreme price and volume fluctuations, which have often been unrelated to the operating performance of particular companies. Market forces may render it difficult or impossible for BTQ to secure purchasers to purchase its securities at a price which will not lead to severe dilution to existing shareholders, or at all. In addition, shareholders may realize less than the original amount invested on dispositions of their Common Shares during periods of such market price decline.

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*Foreign Exchange Risk*

The Company is a Canadian company, and most of its expenses and fundraising is done in Canadian dollars, however, its operations are predominantly denominated in U.S. dollars. As a result, the Company is subject to foreign exchange risks relating to the relative value of the U.S. dollar as compared to the Canadian dollar. A decline in the U.S. dollar could result in a decrease in the real value of the Company's revenues and adversely impact financial performance.

*Tax*

No assurance can be given that new taxation rules will not be enacted or existing rules will not be applied in a manner which could result in BTQ being subject to additional taxation or which could otherwise have a material adverse effect on BTQ's results from operations and financial condition.

*Litigation*

BTQ may be subject to litigation arising out of, or related to, its operations. Damages claimed under such litigation may be material, and the outcome of such litigation may materially impact BTQ's operations and the value of its Common Shares. While BTQ expects to assess the merits of any lawsuits and defend such lawsuits accordingly, it may be required to incur significant expense or devote significant financial resources to such defenses. In addition, the adverse publicity surrounding such claims may have a material adverse effect on BTQ's operations and its Common Shares.

*Investment Risk*

There is no assurance that BTQ will achieve its investment objective. An investment may not earn any positive return and may result in the loss of some or all of the capital invested.

*Ability to Generate Profits*

There can be no assurance that BTQ will generate net profits in future periods. Further, there can be no assurance that BTQ will be cash flow positive in future periods. In the event that BTQ fails to achieve profitability in future periods, the value of the Common Shares may decline. In addition, if BTQ is unable to achieve or maintain positive cash flows, BTQ would be required to seek additional funding, which may not be available on favourable terms, if at all. This risk is a factor which indicates a material uncertainty that may cast significant doubt on the Company's ability to continue as a going concern.

*Management of Growth*

The Company has recently experienced, and may continue to experience, growth in the scope of its operations. This growth has resulted in increased responsibilities for BTQ's existing personnel, the hiring of additional personnel and, in general, higher levels of operating expenses. In order to manage its current operations and any future growth effectively, BTQ will need to continue to implement and improve its operational, financial and management information systems, as well as hire, manage and retain its employees and maintain its corporate culture including technical and customer service standards. There can be no assurance that BTQ will be able to manage such growth effectively or that its management, personnel or systems will be adequate to support BTQ's operations.

*Reliance on Key Personnel*

BTQ's future growth and its ability to develop depend, to a significant extent, on its ability to attract and retain highly qualified personnel. The Company will rely on a limited number of key employees, consultants and members of senior management and there is no assurance that BTQ will be able to retain such key employees, consultants and senior management. The loss of one or more of such key employees, consultants or members of senior management, if not replaced, could have a material adverse effect on BTQ's business, financial condition and prospects.

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*Dividends*

BTQ does not currently have plans to pay regular dividends on its Common Shares. Any declaration and payment of future dividends to holders of Common Shares will be at the sole discretion of BTQ Board and will depend on many factors, including the financial condition, earnings, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends and other considerations of BTQ that BTQ Board deems relevant. Shareholders of BTQ may not receive funds without selling their Common Shares.

**Business and Industry Risks**

*Regulatory Risks.*

Due to their global nature, blockchain-related technologies and encryption-related technologies are subject to regulatory fragmentation due to different treatment depending on jurisdiction. Certain governments have categorized certain blockchain technologies as illegal, while others have embraced their utility and have approved them for trade. Ongoing and/or future regulatory actions may have a substantial impact on BTQ's business operations.

The activities of the Company may be subject to regulation by governmental authorities. Achievement of the Company's business objectives are contingent, in part, upon compliance with regulatory requirements enacted by these governmental authorities and obtaining all regulatory approvals, where necessary, for the sale of its products. The Company cannot predict the time required to secure all appropriate regulatory approvals for its products, or the extent of testing and documentation that may be required by governmental authorities. Any delays in obtaining, or failure to obtain regulatory approvals would significantly delay the development of markets and products and could have a material adverse effect on the business, results of operations and financial condition of the Company. The effect of future regulatory change could materially and adversely affect the Company.

*Reliance on Internally & Externally Built Software, Data and Intellectual Property*

BTQ's business is dependent on internally and externally developed software, data, and intellectual property. Its operations may be severely and adversely affected by the malfunction of such technology.

Failure to protect the Company's intellectual property could harm its ability to compete effectively. The Company is highly dependent on its ability to protect its proprietary technology. The Company intends to rely on a combination of copyright, trademark and trade secret laws, as well as non-disclosure agreements and other contractual provisions to establish and maintain its proprietary rights. The Company intends to protect its rights vigorously. However, there can be no assurance that these measures will, in all cases, be successful. Enforcement of the Company's intellectual property rights may be difficult, particularly in some nations outside of North America in which the Company may seek to market its products. While U.S. and Canadian copyright laws, international conventions and international treaties may provide meaningful protection against unauthorized duplication of software, the laws of some foreign jurisdictions may not protect proprietary rights to the same extent as the laws of Canada or of the United States. The absence of internationally harmonized intellectual property laws makes it more difficult to ensure consistent protection of the Company's proprietary rights. Software piracy has been, and is expected to be, a persistent problem for the software industry, and piracy of the Company's products represents a loss of revenue to the Company. Despite the precautions the Company may take, unauthorized third parties, including its competitors, may be able to: (i) copy certain portions of its products; or (ii) reverse engineer or obtain and use information that the Company regards as proprietary. Also, the Company's competitors could independently develop technologies that are perceived to be substantially equivalent or superior to the Company's technologies. The Company's competitive position may be materially adversely affected by its possible inability to effectively protect its intellectual property.

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*Banks Accounts and Services*

A number of companies that provide blockchain-related services have been unable to find banks that are willing to provide them with bank accounts and banking services. Similarly, a number of such companies have had their existing bank accounts closed by their banks. Banks may refuse to provide bank accounts and other banking services to blockchain-related companies, or companies that accept digital assets, for a number of reasons, such as perceived compliance risks or costs.

*Insurance*

BTQ intends to insure its operations in accordance with technology industry practice. However, given the novelty of digital assets and associated businesses, such insurance may not be available, may be uneconomical for BTQ, or the nature or level may be insufficient to provide adequate insurance cover. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on BTQ.

*Cybersecurity Risks*

Cyber incidents can result from deliberate attacks or unintentional events, and may arise from internal sources (e.g., employees, contractors, service providers, suppliers and operational risks) or external sources (e.g., nation states, terrorists, hacktivists, competitors and acts of nature). Cyber incidents include unauthorized access to information systems and data (e.g., through hacking or malicious software) for purposes of misappropriating or corrupting data or causing operational disruption. Cyber incidents also may be caused in a manner that does not require unauthorized access, such as causing denial-of-service attacks on websites (e.g., efforts to make network services unavailable to intended users). A cyber incident that affects BTQ might cause disruptions and adversely affect its business operations, and might also result in violations of applicable law (e.g., personal information protection laws), each of which might result in potentially significant financial losses and liabilities, regulatory fines and penalties, reputational harm, and reimbursement and other compensation costs. In addition, substantial costs might be incurred to investigate, remediate and prevent cyber incidents.

*Enforcement of Judgments Against Foreign Persons*

BTQ was incorporated under the Personen- and Gesellschaftsrecht in the Principality of Liechtenstein, and most of its operations are currently located in Liechtenstein and Taipei. Investors should be aware that some of the directors and officers of BTQ will be located outside of Canada and, as a result, it may be difficult to enforce a Canadian court judgment based upon the civil liability provisions of Canadian securities laws against BTQ or any of these persons in a Canadian or Liechtenstein court, or to affect service of process upon these persons in Canada. All or a substantial portion of the assets of these persons are likely to be located outside of Canada and, as a result, it may not be possible to satisfy a judgment against such persons in Canada or to enforce a judgment obtained in Canadian courts against such persons outside of Canada. Also, if Canadian law is found to be applicable to a claim which the Liechtenstein or Taipei court can and is prepared to hear, the content of applicable Canadian law must be proved as a fact by expert witnesses, which can be a time-consuming and costly process. If proceedings were to be brought in Liechtenstein or Taipei, all procedural matters may be required to be governed by Liechtenstein or Taipei law. Additionally, it may be difficult for an investor, or any other person or entity, to assert Canadian securities law claims in original actions instituted in Liechtenstein or Taipei.

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**DIVIDENDS**

The Company has not declared or paid any cash dividends on its securities since the completion of the Transaction. The Company currently intends to retain any future earnings to fund the development and growth of its business and/or to pay down debt and do not currently anticipate paying dividends on the subordinate voting shares. Any determination to pay dividends in the future will be at the discretion of the Board and will depend on many factors, including, among others, the Company's financial condition, current and anticipated cash requirements, contractual restrictions and financing agreement covenants, solvency tests imposed by applicable corporate law and other factors that the Board may deem relevant.

**DESCRIPTION OF CAPITAL** **STRUCTURE**

**Common Shares**

The Company is authorized to issue an unlimited number of Common Shares, of which there are 131,833,688 issued and outstanding as of the date of this AIF. Each Common Share entitles the holder thereof to one vote per Common Share at meetings of the shareholders of the Company, to receive dividends if, as and when declared by the board of directors of the Company and to receive *pro rata* the remaining property and assets of the Company upon its dissolution or winding-up. Shareholders have no pre-emptive rights, subscription or conversion rights.

All Common Shares are of the same class with equal rights and privileges. Shares are not subject to future calls or assessments. The Corporation may issue additional Shares and options therefore from time to time on terms and conditions acceptable to the directors.

**Warrants**

As at the date of this AIF, the Company has 167,785 Common Share purchase warrants outstanding, exercisable to purchase Common Shares for $4.09 per Common Share until December 19, 2029.

**Options**

The Company has a "rolling" long-term omnibus equity incentive plan ("**Omnibus Plan**"), which was recently reapproved by shareholders at the Company's 2023 annual general meeting held on August 30, 2023. The Omnibus Plan provides flexibility to the Company to grant equity-based incentive awards in the form of the Company's options ("**Options**"), restricted share units ("**RSUs**"), preferred shared units and deferred share units.

The Omnibus Plan provides that the aggregate maximum number of the outstanding common shares of the Company that may be issued upon the exercise or settlement of awards granted under the Omnibus Plan shall not exceed 10% of the issued and outstanding common shares from time to time. The aggregate number of common shares (a) issuable to insiders at any time (under all of the Company's security-based compensation arrangements) cannot exceed 10% of the issued and outstanding common shares and (b) issued to insiders within any one-year period (under all of the Company's security-based compensation arrangements) cannot exceed 10% of the issued and outstanding common shares. All directors, employees and consultants are eligible to participate in the Omnibus Plan. The extent to which any such individual is entitled to receive a grant of an award pursuant to the Omnibus Plan will be determined in the sole and absolute discretion of the Plan Administrator. Additional information can be found in the Company's Omnibus which is available on SEDAR+.

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As of the date of this AIF, the Company has 4,675,000 Options outstanding under the Omnibus Plan and 8,508,369 Options remain available for grant.

An Option entitles a holder thereof to purchase a prescribed number of Common Shares at an exercise price set at the time of the grant. The Plan Administrator will have the authority to determine the vesting terms applicable to grants of Options. Once an Option becomes vested, it shall remain vested and shall be exercisable until expiration or termination of the Option, unless otherwise specified by the Plan Administrator, or as otherwise set forth in any written employment agreement, award agreement or other written agreement between the Company or a subsidiary of the Company and the participant.

The options are more fully described in the Company's Omnibus which is available on SEDAR+.

**Restricted Share Units**

As of the date of this AIF, the Company has 1,945,000 restricted share units outstanding under the Omnibus Plan. An RSU is a unit equivalent in value to a common share credited by means of a bookkeeping entry in the books of the which entitles the holder to receive one common share (or the value thereof) for each RSU after a specified vesting period. Upon settlement, holders will redeem each vested RSU for the following at the election of such holder but subject to the approval of the Plan Administrator: (a) one fully paid and non-assessable common share in respect of each vested RSU, (b) a cash payment or (c) a combination of common shares and cash. The RSUs are more fully described in the Company's Omnibus Plan which is available on SEDAR+.

**MARKET FOR** **SECURITIES**

**Trading Price and Volume**

The Common Shares are listed and posted for trading on (i) the Cboe Canada exchange under the symbol "BTQ"; (ii) the OTCQB Market under the symbol "BTQQF"; and (iii) the Frankfurt Stock Exchange under the symbol "NG3".

The following table sets forth the reported closing high and low prices and the aggregate volume of trading of Common Shares on Cboe Canada during the financial year ended December 31, 2024:

*Share Price in C$*

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| | | | |
|:---|:---|:---|:---|
| **Date** | **High** | **Low** | **Average Daily<br>Volume** |
| January 2024 | 0.86 | 0.55 | 59809 |
| February 2024 | 0.61 | 0.46 | 72653 |
| March 2024 | 0.58 | 0.40 | 59507 |

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| | | | |
|:---|:---|:---|:---|
| April 2024 | 0.45 | 0.34 | 21090 |
| May 2024 | 0.45 | 0.3 | 31693 |
| June 2024 | 0.65 | 0.35 | 88016 |
| July 2024 | 0.57 | 0.38 | 98730 |
| August 2024 | 0.45 | 0.29 | 20913 |
| September 2024 | 0.37 | 0.25 | 60163 |
| October 2024 | 0.42 | 0.27 | 51831 |
| November 2024 | 0.375 | 0.245 | 85067 |
| December 2024 | 0.26 | 5.58 | 1848947 |

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**Prior Sales**

The following table sets for the details regarding all issuances of the Company's securities that are outstanding but not listed or quoted on a marketplace, including issuances of all securities convertible or exchangeable into shares of the Company, during the most recently completed financial year:

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| | | | |
|:---|:---|:---|:---|
| **Date of Issuance** | **Security** | **Number of <br>Securities Issued** | **Exercise Price Per <br>Security ($)** |
| March 1, 2024 | Stock Options | 200000 | 0.485 |
| March 5, 2024 | Stock Options | 100000 | 0.50 |
| March 6, 2024 | Stock Options | 100000 | 0.485 |
| June 13, 2024 | Stock Options | 400000 | 0.44 |
| September 9, 2024 | Convertible Loan | 2500000 | 0.40 |
| October 1, 2024 | Stock Options | 125000 | 0.35 |
| October 22, 2024 | Stock Options | 50000 | 0.42 |
| November 8, 2024 | Convertible Loan | 1250000 | 0.40 |
| December 2, 2024 | Stock Options | 300000 | 0.27 |
| December 9, 2024 | Restricted Share Units | 800000 | N/A |
| December 10, 2024 | Stock Options | 50000 | 1.51 |
| December 19, 2024 | Agent's Warrants | 167785 | 4.09 |

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**ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL** **** <br> **RESTRICTIONS ON TRANSFER**

The Common Shares that are subject to escrow or contractual restrictions and the percentage of our outstanding Common Shares represented by such Common Shares, are set out below.

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| | |
|:---|:---|
| &nbsp;&nbsp; **Designation of Class** | &nbsp;&nbsp; **Percentage of Class** |
| &nbsp;&nbsp; Common Shares<br>&nbsp;&nbsp; 20362500<sup>(1)</sup> | &nbsp;&nbsp; 15.45% |

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(1) These Common Shares may not be sold, transferred, hypothecated or otherwise traded until February 21, 2026.

**DIRECTORS AND** **OFFICERS**

**Name, Occupation and Security Holdings**

The following table sets out, as of the date of this AIF, the names of the directors and officers of the Company, the province or state, and country of residence of each such director and officer, their respective positions and offices held with the Company and their principal occupations during the last five years. The term of office of each of the directors expires at the next annual general meeting of shareholders or until their successor is elected or appointed.

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| | | |
|:---|:---|:---|
| **Name, Province <br>and Country of <br>Residence and**<br>**Position Held** | <br>**Date Elected or <br>Appointed** | <br>**Principal Occupations During Last Five Years** |
| **Olivier Roussy Newton**<br>*Zug, Switzerland* Chief Executive Officer and<br>Director | February 17, 2023 | Entrepreneur; President of EV Technology Group; Founder of Latent Capital; Co-Founder of DEFI Technologies; former director of Hive Blockchain Technologies Ltd. |
| **Lonny Wong** *Vancouver, British Columbia* Chief Financial<br>Officer | May 18, 2023 | Partner at Saturna Group Chartered Professional Accountants LLP, a public accounting firm located in Vancouver, BC |
| **Nicolas Roussy Newton**<br>*Hong Kong Island, Hong Kong*<br>Chief Operating Officer and<br>Director | February 17, 2023 | Entrepreneur; Investor |
| **Michael Resendes** *Toronto, Ontario*<br>Director | February 17, 2023 | Regional Controller at the Dilwari Group of Companies; director of Sonora Gold & Silver Corp. |

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| | | |
|:---|:---|:---|
| **Name, Province <br>and Country of <br>Residence and**<br>**Position Held** | <br>**Date Elected or <br>Appointed** | <br>**Principal Occupations During Last Five Years** |
| **Johan Wattenstrom** *Zug, Switzerland*<br>Director | February 17, 2023 | Chief Executive Officer of Nortide Capital AG |
| **Kevin Mulhern**<br>*Toronto, Ontario*<br>Director | February 17, 2023 | Vice President of Business Operations of Broadridge; formerly CEO and Founder of AdvisorStream Ltd. |

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As of the date of this AIF, all directors and executive officers of BTQ, as a group, beneficially own, directly or indirectly, or exercise control or direction over, 43,063,675 Common Shares, representing 32.54% of all outstanding Common Shares.

**Biographies**

*Olivier Roussy Newton - Chief Executive Officer; Director.* Mr. Roussy Newton founded and led HIVE Blockchain Technologies, the first crypto mining company to list publicly in 2017. He is a partner at Latent Capital, an investment fund focused on quantum computing, financial technology and bioinformatics. He is also a co-founder and President of EV Technology Group Ltd. (EVT). Mr. Roussy Newton co-founded DeFi Technologies Inc, which bridges the gap between centralized and decentralized finance. Defi Technologies is listed in Canada under the ticker NEO: DEFI. He is also a founder and director of Valour Inc.

*Lonny Wong - Chief Financial Officer.* Mr. Wong is a partner of Saturna Group Chartered Professional Accountants LLP. Saturna Group is a boutique firm located in Vancouver, BC, which specializes in providing auditing, assurance, financial reporting, and consulting services to public companies and companies looking to go public. He has over 30 years of public practice experience. Prior to co-founding Saturna Group in 2008, he worked at an independent mid-sized firm in Vancouver, BC. He holds a Bachelor of Arts from the University of British Columbia and is a Chartered Professional Accountant.

*Nicolas Roussy Newton - Chief Operating Officer and Director.* Mr. Roussy Newton is a serial entrepreneur, and is a director of Novus Paradigm, which incubates new companies working on quantum- related technologies.

*Michael Resendes - Director.* Mr. Resendes holds a designation as a Chartered Professional Accountant with CPABC and a bachelor of accounting from the British Columbia Institute of Technology. Mr. Resendes has over 20 years of experience in accounting, primarily in the automotive finance industry as a controller and assistant manager. Since September, 2017, Mr. Resendes has been the Regional Controller at the Dilwari Group of Companies.

*Johan Wattenstrom - Director.* Mr. Wattenstrom has over 25 years of experience in the financial service industry. He has founded and exited two companies within the digital asset space and also founded and built several businesses within the proprietary trading, market making, financial products and brokerage spaces. He is the current CEO and co-founder of Nortide Capital AG, an investment and proprietary trading firm that is active across all asset classes, and is the COO and co-founder of Valour Inc., a technology company focused on expanding investor access to decentralised technologies. Within the traditional equity space, he has built three proprietary trading businesses, which included trading systems and development of risk systems, as well as establishing prime brokerage setup and best practice accounting and legislative frameworks. Mr. Wattenstrom has a bachelor's degree of business administration and economics with an emphasis on corporate financing and derivatives from Stockholm University.

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*Kevin Mulhern.* Mr. Mulhern is an entrepreneur who brings a deep background in the financial service industry. He has worked for both large and boutique wealth management firms, and in new media, big data, and web-based services. After witnessing a growing need for marketing automation, Mr. Mulhern brought together a team of like-minded technology and experienced industry experts in 2013 to launch the award- winning AdvisorStream digital marketing platform, which automates millions of personalised communications each week for Advisors across the US, Canada, and the UK. Mr. Mulhern has a Bachelor's degree from the University of Western Ontario.

**Cease Trade Orders, Bankruptcies, Penalties or Sanctions**

*Cease Trade Orders*

Other than the Company's management cease trade order in 2024 or as otherwise disclosed herein, to the best of the Company's knowledge, no director, executive officer or Promoter of the Company is, or during the ten years preceding the date of this AIF has been, a director, chief executive officer or chief financial officer of any company that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) was the subject of a cease trade or similar order that denied the relevant company access to any exemptions under applicable securities legislation that was in effect for a period of more than 30 consecutive days; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold the assets of that person.

*Penalties or Sanctions*

None of the directors, officers, Insiders or Promoters of the Company or a shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company has been subject to any penalties or sanctions imposed by a court relating to securities legislation or by any securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or has been subject to any other penalties or sanctions imposed by a court or regulatory body or self-regulatory authority that would be likely to be considered important to a reasonable investor making an investment decision.

*Personal Bankruptcies*

None of the directors, officers, Insiders or Promoters of the Company or a shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company is, or within the 10 years before the date of this AIF, has been declared bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or has been subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold their assets.

**Conflicts of Interest**

There may from time to time be potential conflicts of interest to which some of the directors, officers, Insiders and Promoters of the Company will be subject in connection with the operations of the Company. Some of the individuals who are directors or officers of the Company are also directors and/or officers of other reporting and non-reporting issuers. Conflicts, if any, will be subject to the procedures and remedies provided under applicable laws. In particular, in the event that such a conflict of interest arises at a meeting of the Company's directors, a director who has such a conflict will abstain from voting for or against the approval of such participation or such terms, unless otherwise permitted by applicable laws. In accordance with applicable laws, the directors of the Company are required to act honestly, in good faith and in the best interests of the Company.

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To the best of the Company's knowledge, there are no known existing or potential conflicts of interest among the Company, its Promoters, directors and officers or other members of management of the Company or of any proposed Promoter, director, officer or other member of management as a result of their outside business interests except that certain of the directors and officers serve as directors and officers of other companies, and therefore it is possible that a conflict may arise between their duties to the Company and their duties as a director or officer of such other companies.

**AUDIT COMMITTEE** **DISCLOSURE**

**Audit Committee**

The Audit Committee consists of individuals who are "independent" and "financially literate" within the meaning of National Instrument 52-110 - *Audit Committees*. The Company's Audit Committee is comprised of Michael Resendes, Kevin Mulhern, and Johan Wattenstrom. Each member of the Audit Committee has an understanding of the accounting principles used to prepare financial statements and varied experience as to the general application of such accounting principles, as well as an understanding of the internal controls and procedures necessary for financial reporting. For additional details regarding the relevant education and experience of each member of the Audit Committee, see the relevant biographical experiences for each member under the heading "Directors and Officers - Name, Occupation and Security Holdings" in this AIF.

The Board has adopted a written charter for the Audit Committee which sets out the Audit Committee's role of providing oversight of the Company's financial management and of the design and implementation of an effective system of internal financial controls as well as to review and report to the Board on the integrity of the financial statements of the Company, its subsidiaries and associated companies. This includes helping directors meet their responsibilities, facilitating better communication between directors and the external auditor, enhancing the independence of the external auditor, increasing the credibility and objectivity of financial reports and strengthening the role of the directors by facilitating in-depth discussions among directors, management and the external auditor.

The mandate of the Audit Committee is set out in the written charter of the Audit Committee. A copy of the Audit Committee charter is included as Appendix "A" hereto.

**Audit Committee Oversight**

At no time since the commencement of the Company's most recently completed financial year was a recommendation of the Audit Committee to nominate or compensate an external auditor not adopted by the Board.

**Pre-Approval Policies and Procedures**

The Audit Committee has adopted specific policies and procedures for the engagement of non-audit services as set out in the Audit Committee charter of the Company. The full text of the Company's Audit Committee charter is disclosed in Appendix "A" to this AIF.

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**External Auditor Service Fees**

*Audit Fees*

MNP LLP is expected to bill the Company $139,100 for the year ended December 31, 2024 for audit fees. BDO Canada LLP billed the Company $386,950 for the year ended December 31, 2023 for audit fees.

*Audit-Related Fees*

MNP LLP billed the Company $37,450 for the year ended December 31, 2024 for assurance and related services related to the performance of the audit or review of the Company's financial statements, which are not included in audit fees.

BDO Canada LLP billed the Company $nil for the year ended December 31, 2023 for assurance and related services related to the performance of the audit or review of the Company's financial statements, which are not included in audit fees.

*Tax Fees*

No tax fees were charged by the external auditors for the years ended December 31, 2024 and 2023.

*All Other Fees*

No other fees were charged by the external auditors for the years ended December 31, 2024 and 2023.

**PROMOTERS**

No person is or has been within the two financial years immediately preceding the date hereof, or during the current financial year, a Promoter of the Company.

**INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL** **TRANSACTIONS**

Other than as disclosed elsewhere in this AIF, no director, executive officer or principal shareholder of the Company, or any associate or affiliate of the foregoing, has had any material interest, direct or indirect, in any transaction within the three most recently completed financial years or during the current financial year prior to the date of this AIF that has materially affected or will materially affect the Company.

Nicolas Roussy Newton, director and executive officer of the Company, is the majority shareholder of ZKP Corp., a party to the Software License Agreement. For more information on the Software License Agreement, see *"General Development of the Business - Three Year History of the Company - From Transaction date to current date"*.

**LEGAL PROCEEDINGS AND REGULATORY** **ACTIONS**

There are no actual or pending legal proceedings material to the Company that the Company is or was a party to, or that any of its property is or was the subject of, since the beginning of the Company's most recently completed financial year. In addition, the Company is not currently aware of any such legal proceedings being contemplated.

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**AUDITORS, TRANSFER AGENT AND REGISTRAR**

The auditor of the Company is MNP LLP.

The Company's register and transfer agent is Computershare Investor Services Inc. at its office located at 3rd Floor, 510 Burrard Street, Vancouver, British Columbia, V6C 3B9.

**MATERIAL** **CONTRACTS**

Except as described herein, the Company has not entered into any material contracts in the past fiscal year, other than contracts entered into in the ordinary course of business, and the agency agreement dated December 19, 2024 entered into with A.G.P. Canada Investments ULC with respect to the LIFE offering.

**INTEREST OF** **EXPERTS**

The Company's external auditor for the year ended December 31, 2024 was MNP LLP. MNP LLP has advised the Company that it is independent of the Company in accordance with the Code of Professional Conduct of the Chartered Professional Accountants of Ontario.

**ADDITIONAL** **INFORMATION**

Additional information relating to the Company may be found under the Company's profile on SEDAR+ at <u>www.sedarplus.ca</u> l

Additional information, including directors' and officers' remuneration and indebtedness, principal holders of securities of the Company and securities authorized for issuance under equity compensation plans, may be found in the Company's Management Information Circular,, which is also available on the Company's profile on SEDAR+ at <u>www.sedarplus.ca</u>.

Additional financial information is provided in the Company's audited annual consolidated financial statements and the management's discussion and analysis for its most recently completed financial year.

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**APPENDIX "A"**

**BTQ TECHNOLOGIES CORP.** (the "**Company**")

**AUDIT COMMITTEE CHARTER**

**I. ROLE AND OBJECTIVES**

The Audit Committee is a committee of the Board of Directors (the "**Board**") of BTQ Technologies Corp (the "**Corporation**") to which the Board has delegated certain oversight responsibilities relating to the Corporation's financial statements, external auditors, risk management, compliance with legal and regulatory requirements and management information technology. In this Charter, the Corporation and all entities controlled by the Corporation are collectively referred to as "**BTQ**".

The objectives of the Audit Committee are to maintain oversight of:

(a) the Corporation's accounting and financial reporting processes;

(b) the audits of the Corporation's financial statements;

(c) the integrity of the Corporation's financial statements, the reporting process and itsinternal control over financial reporting;

(d) the reports, qualifications, independence and performance of the Corporation's externalauditor;

(e) the Corporation's risk identification, assessment and management program;

(f) the Corporation's compliance with applicable legal and regulatory requirements;

(g) the Corporation's management of information technology related to financial reporting and financial controls; and

(h) the maintenance of open channels of communication among management of the Corporation, the external auditors and the Board.

**II. MEMBERSHIP AND POLICIES**

The Board, based on recommendation from the Nomination and Governance Committee, will appoint or reappoint members of the Audit Committee. Each member shall serve until his or her successor is appointed unless the member resigns, is removed or ceases to be a director. The Board of Directors may fill a vacancy that occurs in the Committee at any time.

The Audit Committee must be composed of not less than three (3) members of the Board, each of whom must be independent pursuant to the rules and regulations of all applicable stock exchanges and United States and Canadian securities laws and regulations.

No member of the Audit Committee may have participated in the preparation of the financial statements of the Corporation or any of its then-current subsidiaries at any time during the immediately prior three years.

Each member of the Audit Committee must be financially literate, as determined by the Board, and be able to read and understand fundamental financial statements, including the Corporation's balance sheet, income statement, and cash flow statement. Additionally, at least one member of the Audit Committee must have accounting or related financial management expertise, as determined by the Board. A person who is an "audit committee financial expert" as defined in Item 407(d)(5)(ii) of Regulation S-K may be presumed to have accounting or related financial management expertise.

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The Board, in consultation with the Nomination and Governance Committee, will appoint or reappoint the Chair of the Audit Committee from amongst its members.

The Audit Committee may at any time retain outside financial, legal or other advisors as it determines necessary to carry out its duties, at the expense of the Corporation. The Corporationshall provide for appropriate funding, as determined by the Audit Committee in its capacity as a committee of the Board, for payment of: (i) compensation to the external auditor for the purpose of preparing or issuing an audit report or performing other audit, review or attestation services for the Corporation, (ii) compensation to any advisors employed by the Audit Committee, and (iii) ordinary administrative expenses of the Audit Committee that are necessary or appropriatein carrying out its duties.

In discharging its duties under this Charter, the Audit Committee may investigate any matter brought to its attention and will have access to all books, records, facilities and personnel, may conduct meetings or interview any officer or employee, the Corporation's legal counsel, externalauditors and consultants, and may invite any such persons to attend any part of any meeting of the Audit Committee.

The Audit Committee has neither the duty nor the responsibility to conduct audit, accounting or legal reviews, or to ensure that the Corporation's financial statements are complete, accurate and in accordance with International Financial Reporting Standards ("**IFRS**") as issued by the International Accounting Standards Board ("**IASB**"); rather, management is responsible for the financial reporting process, internal review process, and the preparation of the Corporation's financial statements in accordance with IFRS, and the Corporation's external auditor is responsible for auditing those financial statements.

**III. FUNCTIONS**

**A. Financial Statements, the Reporting Process and Internal Controls over Financial Reporting**

The Audit Committee will meet, as applicable, with management and the external auditor to review and discussannual and quarterly financial statements, management's discussion and analyses ("**MD&A**"), any earnings press releases, other financial disclosures and earnings guidance provided to analysts and rating agencies, and determine whether to recommend the approval of such documents to the Board.

&nbsp;&nbsp;&nbsp;&nbsp;(a) In connection with these procedures, the Audit Committee will, as applicable and without limitation establish:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. a procedure for complaints relating to the receipt, retention, and treatment of complaints received by the Corporation regarding accounting, internal accounting controls, or auditing matters; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. the confidential, anonymous submission by the Corporation's employees of concerns regarding questionable or auditing matters.

&nbsp;&nbsp;&nbsp;&nbsp;(b) In connection with these procedures, the Audit Committee will, as applicable and without limitation review and discuss with management and the external auditor:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. the information to be included in the Corporation's financial statements and other financial disclosures which require approval by the Board including the Corporation's annual and quarterly financial statements, notes thereto, MD&A and any earnings press releases or earnings guidance provided to analysis and rating agencies, paying particular attention to any use of "pro forma", "adjusted" and "non-GAAP" information, and ensuring that adequate procedures are in place for the review of the Corporation's public disclosure of financial information extracted or derived from the financial statements;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. any significant financial reporting issues, including major issues regarding accounting principles and financial statement presentations, identified during the reporting period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii. any change in accounting policies, or selection or application of accounting principles, and their impact on the Corporation's financial results and disclosure;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv. all significant estimates and judgments, significant risks and uncertainties madein connection with the preparation of the Corporation's financial statements that may have a material impact to the financial statements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;v. any significant deficiencies or material weaknesses identified by management or the external auditor, compensating or mitigating controls and the final assessment and impact of such deficiencies or material weaknesses on disclosure;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;vi. any major issues as to the adequacy of the internal controls and any special audit steps adopted in light of material internal control deficiencies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;vii. significant adjustments identified by management or the external auditor and the assessment of associated internal control deficiencies, as applicable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;viii. any unresolved issues between management and the external auditor that could materially impact the financial statements and other financial disclosures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ix. any material correspondence with regulators, government agencies, anyemployee or whistleblower complaints and other reports of non-compliance which raise issues regarding the Corporation's financial statements or accountingpolicies and significant changes in regulations which may have a material impact on the Corporation's financial statements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;x. the effect of regulatory and accounting initiatives, as well as any off-balance sheet structures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;xi. significant matters of concern respecting audits and financial reporting processes, including any illegal acts, that have been identified in the course of the preparation or audit of the Corporation's financial statements; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;xii. any analyses prepared by management and/or the external auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of financial statements including analyses of the effects of IFRS on the financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;(c) In connection with the annual audit of the Corporation's financial statements, the Audit Committee will review with the external auditor:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. prior to commencement of the annual audit, plans, scope, staffing, engagement terms and proposed fees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. reports or opinions to be rendered in connection with the audit including the external auditor's review or audit findings report including alternative treatment ofsignificant financial information within IFRS that have been discussed with management and the associated impact on disclosure; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii. the adequacy of internal controls, any audit problems or difficulties, including:

&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;a) any restrictions on the scope of the external auditor's activities or on access to requested information;

&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;b) any significant disagreements with management, and management's response (including discussion among management, the external auditor and, as necessary, internal and external legal counsel);

&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;c) any litigation, claim or contingency, including tax assessments and claims, that could have a material impact on the financial position of the Corporation; and

&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;d) the impact on current or potential future disclosures.

In connection with its review of the annual audited financial statements and quarterly financial statements, the Audit Committee will also review any significant concerns raised during the Chief Executive Officer ("**CEO**") and Chief Financial Officer ("**CFO**") certifications with respect to the financial statements and BTQ's disclosure controls and internal controls. In particular, the Audit Committee will review with the CEO, CFO and external auditor: (i) all significant deficiencies, material weaknesses or significant changes in the design or operation of BTQ'sinternal control over financial reporting that could adversely affect the Corporation's ability to record, process, summarize and report financial information required to be disclosed by the Corporation in the reports that it files or submits under applicable securities laws, within the required time periods; and (ii) any fraud, whether or not material, that involves management of BTQ or other employees who have a significant role in BTQ's internal control over financial reporting. In addition, the Audit Committee will review with the CEO and CFO, BTQ's disclosure controls and procedures and periodically will review management's conclusions about the efficacy of disclosure controls and procedures, including any significant deficiencies, material weaknesses or material non-compliance with disclosure controls and procedures.

**B. The External Auditor**

The Audit Committee, in its capacity as a committee of the Board, is directly responsible for overseeing the relationship, reports, qualifications, independence and performance of the external auditor and audit services by other registered public accounting firms engaged by the Corporation. The Audit Committee has responsibility to take, or recommend that the Board take, appropriate action to oversee the independence of the external auditor. The AuditCommittee shall have the authority and responsibility to recommend the appointment and the revocation of the appointment of the external auditors engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services, and to fix their remuneration.

The external auditor will report directly to the Audit Committee. The Audit Committee's appointment of the external auditor is subject to annual approval by the shareholders.

With respect to the external auditor, the Audit Committee is responsible for:

(a) the appointment, termination, compensation, retention and oversight of the work of the external auditor engaged by the Corporation for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Corporation, including the review and approval of the terms of the external auditor's engagement letter and the proposed fees;

(b) resolution of disagreements or disputes between management and the external auditor regarding financial reporting for audit, review or attestation services;

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(c) pre-approval of all audit services and legally permissible non-audit services to be provided by the external auditors considering the potential impact of such services on the independence of external auditors and, subject to any *de minimis* exemption available under applicable laws. Such approval of non-audit services can be given either specifically or pursuant to pre-approval policies and procedures adopted by the committee including the delegation of this ability to oneor more members of the Audit Committee to the extent permitted by applicable law, provided that any pre-approvals granted pursuant to any such delegation may not delegate Audit Committee responsibilities to management of the Corporation, and must be reported to the full Audit Committee at the first scheduled meeting of the Audit Committee following such pre- approval;

(d) obtaining and reviewing, at least annually, a written report by the external auditor describing the external auditor's internal quality-control procedures, any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues and all relationships between the external auditors and the Corporation;

(e) obtaining a formal written statement delineating all relationships between the auditor andthe Corporation, consistent with The Public Company Accounting Oversight Board Rule 3526, and discussing any disclosed relationships or services with the auditor and how they may impact the objectivity and independence of the auditor;

(f) review of the external auditor which assesses three key factors of audit quality for the Audit Committee to consider and assess including: independence, objectivity and professional skepticism; quality of the engagement team; and quality of communications and interactions with the external auditor. A written comprehensive review of the externalauditor to be considered if required each year and completed at least every five (5) yearswhich will include an:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. assessment of quality of services and sufficiency of resources provided by theexternal auditor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. assessment of auditor independence, objectivity and professional skepticism, including the review and evaluation of the lead partner of the external auditor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii. assessment of value of services provided by the external auditor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv. assessment of written input from external auditor summarizing:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) background of firm, size, resources, geographical coverage, relevantindustry experience, including reputational challenges, systemic audit quality issues identified by Canadian Public Accountability Board ("**CPAB**") and Public Company Accounting Oversight Board ("**PCAOB**") in public reports;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) industry experience of the audit team and plans for training and development of the team;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) how the external auditor demonstrated objectivity and professional skepticism during the audit;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d) how the firm and team met all criteria for independence including identification of all relationships that the external auditor has with the Corporation and its affiliates and steps taken to address possible institutional threats;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e) involvement of engagement quality reviewer ("**EQR**") partner and significant concerns raised by the EQR partner;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f) matters raised to national office or specialists during the review;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g) significant disagreements between management and the external auditors and steps taken to resolve such disagreements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h) satisfaction with communication and cooperation with management and the Audit Committee; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i) findings and firm responses to reviews of the Corporation by CPAB and PCAOB;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;v. communication of the results of the comprehensive review of the external auditor to the Board and recommending that the Board take appropriate action, in response to the review, as required. It is understood that the Audit Committee may recommend tendering the external auditor engagement at their discretion. Inaddition to rotation of the EQR partner as required by law, the Audit Committee,together with the Board, will also consider whether it is necessary to periodically rotate the external audit firm itself. It will be at the discretion of the Audit Committee if the incumbent external auditor is invited to participate in the tendering process; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;vi. setting clear hiring policies for the Corporation regarding partners and employeesand former partners and employees of the present and former external auditor of the Corporation. Before any such partner or employee is offered employment by the Corporation, prior approval from the Chair of the Audit Committee must be received and a one year grace period must pass from the date any work was last completed on an audit engagement before an external auditor employee can be considered for contract or employment by the Corporation.

**C. Risk Management**

The Audit Committee, in its capacity as a committee of the Board, is directly responsible for overseeing the risk identification, assessment and management program of the Corporation by discussing guidelines and policies to govern the process by which risk is identified, assessed and managed. Periodically, in conjunction with senior management, internal counsel and, as necessary, external counsel the Corporation's external auditors and other advisers, as it deems necessary, the Audit Committee willreview the following:

(a) the Corporation's method of reviewing significant risks inherent in BTQ's business, assets, facilities, and strategic directions, including the Corporation's risk management and evaluation process;

(b) discuss guidelines and policies with respect to risk assessment and risk management, including the Corporation's major financial risk exposures and the steps management has taken to monitor and control such exposures. The Audit Committee is not required to be the sole body responsible for risk assessment and management, but, as stated above, the committee must discuss guidelines and policies to govern the process by which risk assessment and management is undertaken.

(c) the major financial risk exposures and steps management has taken to monitor and manage such exposures;

------

(d) the Corporation's annual insurance report including its risk retention philosophy and resulting uninsured exposure, if any, including corporate liability protection programs for directors and officers;

(e) the Corporation's loss prevention policies, risk management programs, disaster response and recovery programs in the context of operational considerations; and

(f) other risk management matters from time to time as the Audit Committee may consider appropriate or the Board may specifically direct.

**D. Additional Duties and Responsibilities**

The Audit Committee will also:

(a) meet separately, and periodically, with management, the external auditor and, as is appropriate, internal and external legal counsel and independent advisors in respect of issues not elsewhere listed concerning any other audit, finance or risk matter;

(b) review the appointment of the CFO and any other key financial executives who are involved in the financial reporting process;

(c) review the Corporation's information technology practices as they relate to financial reporting;

(d) periodically review Directors' and Officers' Liability Insurance Coverage;

(e) from time to time, discuss staffing levels and competencies of the finance team with the external auditor;

(f) review incidents, alleged or otherwise, as reported by whistleblowers, management, the external auditor, internal or external counsel or otherwise, of fraud, illegal acts or conflicts of interest and establish procedures for receipt, treatment and retention of records of incident investigations;

(g) facilitate information sharing with other committees of the Board as required to address matters of mutual interest or concern in respect of the Corporation's financial reporting;

(h) assist Board oversight in respect of issues not elsewhere listed concerning the integrity of the Corporation's financial statements, the Corporation's compliance with legal and regulatory requirements, the independent auditor's qualifications and independence, and the performance of the external auditors;

(i) have the authority and responsibility to recommend the appointment and the revocation of the appointment of registered public accounting firms (in addition to the external auditors) engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services, and to fix their remuneration.

In addition, the Audit Committee will perform such other functions as are assigned by law and on the instructions of the Board.

**IV. MEETINGS**

Notice of each meeting of the Audit Committee will be given to each member and, if applicable, to the external auditors. The notice will:

(a) be in writing (which may be communicated by fax or email);

(b) be accompanied by an agenda that states the nature of the business to be transacted at the meeting in reasonable detail;

------

(c) include copies of documentation to be considered at the meeting and reasonably sufficient time to review documentation; and

(d) be given at least 48 hours preceding the time stipulated for the meeting, unless notice is waived by the Audit Committee members.

A quorum for a meeting of the Audit Committee is a majority of the members present in person, by video conference, webcast or telephone.

If the Chair is not present at a meeting of the Audit Committee, a Chair will be selected from among the members present. The Chair will not have a second or deciding vote in the event of an equality of votes.

At each meeting, the Audit Committee will meet "in-camera", without management or external auditors present, and will periodically, and at least annually, meet in separate sessions with the lead partner of the external auditor at least annually.

The Audit Committee may invite others to attend any part of any meeting of the Audit Committee as it deems appropriate. This includes other directors, members of management, any employee, the Corporation's internal or external legal counsel, external auditors, advisors and consultants.

Minutes will be kept of all meetings of the Audit Committee. The minutes will include copies of all resolutions passed at each meeting, will be maintained with the Corporation's records, and will be available for review by members of the Audit Committee, the Board, and the external auditor.

**V. OTHER MATTERS**

**A. Review of Charter**

The Audit Committee shall review and reassess the adequacy of this Charter annually, and propose recommended changes to the Nomination and Governance Committee.

**B. Reporting**

The Audit Committee shall report to the Board activities and recommendations of each Audit Committee meeting and review with the Board any issues that arise with respect to the quality or integrity of the Corporation's financial statements, the Corporation's compliance with legal or regulatory requirements, the performance and independence of the Corporation's external auditors, management information technology with respect to financial reporting matters, risk management and communication between the parties identified above.

**C. Evaluation**

The Audit Committee's performance shall be evaluated periodically by the Nomination and Governance Committee and the Board as part of the Board assessment process established by the Nomination and Governance Committee and the Board.

This Charter was last approved by the Board of Directors on January 24, 2025.

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## Exhibit 4.2

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![](exhibit4-2xu001.jpg)

**BTQ TECHNOLOGIES CORP.**

Consolidated Financial Statements

For the Years Ended December 31, 2024 and 2023

(Expressed in Canadian dollars)

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---

| | |
|:---|:---|
| **Independent Auditor's Report** | ![](exhibit4-2xu002.jpg) |

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To the Shareholders of BTQ Technologies Corp.:<br>

**Opinion**

We have audited the consolidated financial statements of BTQ Technologies Corp. and its subsidiaries (the "Company"), which comprise the consolidated statement of financial position as at December 31, 2024 and the consolidated statements of operations and comprehensive loss, changes in shareholders' equity and cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of material accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2024 and the results of its consolidated operations and its consolidated cash flows for the year then ended in accordance with IFRS® Accounting Standards as issued by the International Accounting Standard Board.

**Basis for Opinion**

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

**Key Audit Matters**

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

We have determined that there were no key audit matters to communicate in our report.

**Other Matter**

The consolidated financial statements for the year ended December 31, 2023 were audited by another auditor who expressed an unmodified opinion on those statements on June 3, 2024.

**Other Information**

Management is responsible for the other information. The other information comprises Management's Discussion and Analysis.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. We obtained Management's Discussion and Analysis prior to the date of this auditor's report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

MNP LLP <br> 1 Adelaide Street East, Suite 1900, Toronto ON, M5C 2V9 1.877.251.2922 T: 416.596.1711 F: 416.596.7894

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**Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements**

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards as issued by the International Accounting Standard Board, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

**Auditor's Responsibilities for the Audit of the Consolidated Financial Statements**

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

* Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

* Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.

* Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

* Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.

* Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

* Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Company as a basis for forming an opinion on the consolidated financial statements. We are responsible for the direction, supervision and review of the audit work performed for the purposes of the group audit. We remain solely responsible for our audit opinion.

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| | |
|:---|:---|
| *1 Adelaide Street East, Suite 1900, Toronto ON, M5C 2V9* | ![](exhibit4-2xu004.jpg) |
| *1.877.251.2922 T: 416.596.1711 F: 416.596.7894* | ![](exhibit4-2xu004.jpg) |

---

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We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

The engagement partner on the audit resulting in this independent auditor's report is Eduard Shvekher.

---

| | |
|:---|:---|
|  | ![](exhibit4-2xu003.jpg) |
| Toronto, Ontario | Chartered Professional Accountants |
| March 24, 2025 | Licensed Public Accountants |

---

---

| | |
|:---|:---|
| *1 Adelaide Street East, Suite 1900, Toronto ON, M5C 2V9* | ![](exhibit4-2xu004.jpg) |
| *1.877.251.2922 T: 416.596.1711 F: 416.596.7894* | ![](exhibit4-2xu004.jpg) |

---

------

**BTQ TECHNOLOGIES CORP.**<br>Consolidated Statements of Financial Position <br>(Expressed in Canadian dollars)

---

| | | |
|:---|:---|:---|
|  | December 31,<br>2024<br>$| December 31,<br>2023<br>$|
| Assets |  |  |
| Current assets |  |  |
| &nbsp;&nbsp;&nbsp;Cash | 9336892 | 2862023 |
| &nbsp;&nbsp;&nbsp;Short-term investments (Note 9) |  | 577875 |
| &nbsp;&nbsp;&nbsp;Other receivables (Note 17) | 223109 | 120569 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and deposits | 64643 | 229696 |
| Total current assets | 9624644 | 3790163 |
| Non-current assets |  |  |
| &nbsp;&nbsp;&nbsp;Property and equipment (Note 5) |  | 102820 |
| &nbsp;&nbsp;&nbsp;Right-of-use asset (Note 6) |  | 29905 |
| &nbsp;&nbsp;&nbsp;Investments (Note 8) | 77229 | 77229 |
| &nbsp;&nbsp;&nbsp;Deposits | 29605 | 35872 |
| Total non-current assets | 106834 | 245826 |
| Total assets | 9731478 | 4035989 |
| Liabilities and shareholders' equity |  |  |
| Current liabilities |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities (Note 17) | 1357502 | 859709 |
| &nbsp;&nbsp;&nbsp;Corporate taxes payable | 92750 | 65000 |
| &nbsp;&nbsp;&nbsp;Lease obligation (Note 11) |  | 33554 |
| &nbsp;&nbsp;&nbsp;Deferred revenue (Note 22) | 315497 |  |
| &nbsp;&nbsp;&nbsp;Due to related parties (Note 17) | 27172 | 24976 |
| Total liabilities | 1792921 | 983239 |
| Shareholders' equity |  |  |
| &nbsp;&nbsp;&nbsp;Share capital (Notes 4 and 13) | 45553931 | 34317779 |
| &nbsp;&nbsp;&nbsp;Options reserve (Notes 4 and 14) | 1890026 | 2018686 |
| &nbsp;&nbsp;&nbsp;Warrants reserve (Note 13) | 498876 | 67386 |
| &nbsp;&nbsp;&nbsp;RSUs reserve (Note 16) | 640813 | 1217252 |
| &nbsp;&nbsp;&nbsp;Deficit | (40645089) | (34568353) |
| Total shareholders' equity | 7938557 | 3052750 |
| Total liabilities and shareholders' equity | 9731478 | 4035989 |

---

Subsequent events (Note 26)

Approved and authorized for issuance on behalf of the Board on March 24, 2025:

<u>*"*Olivier Roussy Newton*"*</u><u> </u> Director <u>*"Michael Resendes"*</u><u> </u> Director

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

------

**BTQ TECHNOLOGIES CORP.**<br>Consolidated Statements of Operations and Comprehensive Loss <br>(Expressed in Canadian dollars)

---

| | | |
|:---|:---|:---|
|  | Year ended <br>December 31,<br>2024<br>$| Year ended <br>December 31,<br>2023<br>$|
| Revenue (Note 22) | 666667 |  |
| Expenses |  |  |
| &nbsp;&nbsp;&nbsp;Business development, marketing, and promotion (Note 17) | 779967 | 1341812 |
| &nbsp;&nbsp;&nbsp;Consulting fees (Note 17) | 216352 | 120497 |
| &nbsp;&nbsp;&nbsp;Depreciation (Notes 5 and 6) | 86880 | 113164 |
| &nbsp;&nbsp;&nbsp;General and administrative (Note 24) | 756017 | 912690 |
| &nbsp;&nbsp;&nbsp;Professional fees (Note 17) | 1089994 | 636285 |
| &nbsp;&nbsp;&nbsp;Research and development (Notes 17) | 2732496 | 2553365 |
| &nbsp;&nbsp;&nbsp;Share-based compensation (Notes 14, 16, and 17) | 1063 | 3920656 |
| &nbsp;&nbsp;&nbsp;Transfer agent and filing fees | 139377 | 120355 |
| &nbsp;&nbsp;&nbsp;Wages and benefits (Note 17) | 575532 | 761463 |
| Total expenses | 6377678 | 10480287 |
| Loss before other income (expense) | (5711011) | (10480287) |
| Other income (expense) |  |  |
| &nbsp;&nbsp;&nbsp;Collaboration and other income (Note 23) | 108913 | 283816 |
| &nbsp;&nbsp;&nbsp;Foreign exchange loss | (62650) | (87185) |
| &nbsp;&nbsp;&nbsp;Impairment of intangible asset (Note 10) | (275782) |  |
| &nbsp;&nbsp;&nbsp;Impairment of property and equipment (Note 5) | (52002) |  |
| &nbsp;&nbsp;&nbsp;Interest income | 17876 | 16209 |
| &nbsp;&nbsp;&nbsp;Interest expense (Note 11 and 12) | (54663) | (11179) |
| &nbsp;&nbsp;&nbsp;Listing costs (Note 4) |  | (4006915) |
| &nbsp;&nbsp;&nbsp;Loss on sale of property and equipment | (25099) |  |
| &nbsp;&nbsp;&nbsp;Transaction costs (Note 4) |  | (1052754) |
| Total other expense | (343407) | (4858008) |
| Loss before income taxes | (6054418) | (15338295) |
| Income tax provision (Note 25) | (22318) | (65000) |
| Net loss and comprehensive loss for the year | (6076736) | (15403295) |
| Loss per share, basic and diluted | (0.05) | (0.13) |
| Weighted average number of common shares outstanding | 124241167 | 118302780 |

---

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

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**BTQ TECHNOLOGIES CORP.**<br>Consolidated Statements of Changes in Shareholders' Equity <br>(Expressed in Canadian dollars)

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Share capital | Share capital | Equity portion<br>of convertible<br>debt<br>reserve<br>$ | Options<br>reserve<br>$ | Warrants<br>reserve<br>$ | RSUs<br>reserve<br>$ | Deficit<br>$ | Total<br>shareholders'<br>equity<br>$ |
|  | Number of<br>shares | Amount<br>$| Equity portion<br>of convertible<br>debt<br>reserve<br>$ | Options<br>reserve<br>$ | Warrants<br>reserve<br>$ | RSUs<br>reserve<br>$ | Deficit<br>$ | Total<br>shareholders'<br>equity<br>$ |
| Balance, December 31, 2023 | 123193879 | 34317779 |  | 2018686 | 67386 | 1217252 | (34568353) | 3052750 |
| Shares issued for cash | 3355704 | 10000000 |  |  |  |  |  | 10000000 |
| Share issuance costs |  | (1331119) |  |  | 470286 |  |  | (860833) |
| Equity portion of convertible debt |  |  | 427483 |  |  |  |  | 427483 |
| Shares issued for options exercised | 560000 | 433662 |  | (209662) |  |  |  | 224000 |
| Shares issued for warrants exercised | 134105 | 92437 |  |  | (38796) |  |  | 53641 |
| Shares issued for vested RSU's | 840000 | 496500 |  |  |  | (496500) |  |  |
| Shares issued for the conversion of convertible debt | 3750000 | 1544672 | (427483) |  |  |  |  | 1117189 |
| Share-based compensation |  |  |  | 81002 |  | (79939) |  | 1063 |
| Net loss for the year |  |  |  |  |  |  | (6076736) | (6076736) |
| Balance, December 31, 2024 | 131833688 | 45553931 | - | 1890026 | 498876 | 640813 | (40645089) | 7938557 |

---

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

------

**BTQ TECHNOLOGIES CORP.**<br>Consolidated Statements of Changes in Shareholders' Equity <br>(Expressed in Canadian dollars)

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Share capital | Share capital | Options<br>reserve<br>$ | <br>Warrants<br>reserve<br>$ | <br>RSUs<br>reserve<br>$ | <br>Deficit<br>$ | Total<br>shareholders'<br>equity<br>$ |
|  | Number of<br>shares | Amount<br>$| Options<br>reserve<br>$ | <br>Warrants<br>reserve<br>$ | <br>RSUs<br>reserve<br>$ | <br>Deficit<br>$ | Total<br>shareholders'<br>equity<br>$ |
| Balance, December 31, 2022 | 92000000 | 21943784 |  |  |  | (19165058) | 2778726 |
| Shares of the Company pursuant to reverse takeover | 8747629 | 3499051 |  |  |  |  | 3499051 |
| Revaluation of stock options pursuant to reverse takeover |  |  | 97532 |  |  |  | 97532 |
| Shares issued for cash | 18001250 | 7200500 |  |  |  |  | 7200500 |
| Shares issued to finder for the Transaction | 2500000 | 1000000 |  |  |  |  | 1000000 |
| Share issuance costs |  | (107806) |  | 14632 |  |  | (93174) |
| Fair value of finders' warrants allocated to transaction costs |  |  |  | 52754 |  |  | 52754 |
| Share-based compensation |  |  | 1921154 |  | 1999502 |  | 3920656 |
| Shares issued for vested RSU's | 1945000 | 782250 |  |  | (782250) |  |  |
| Net loss for the year |  |  |  |  |  | (15403295) | (15403295) |
| Balance, December 31, 2023 | 123193879 | 34317779 | 2018686 | 67386 | 1217252 | (34568353) | 3052750 |

---

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

------

**BTQ TECHNOLOGIES CORP.**<br>Consolidated Statements of Cash Flows <br>(Expressed in Canadian dollars)

---

| | | |
|:---|:---|:---|
|  | Year ended <br>December 31,<br>2024<br>$| Year ended <br>December 31,<br>2023<br>$|
| Operating activities |  |  |
| Net loss for the year | (6076736) | (15403295) |
| Items not involving cash: |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation | 86880 | 113164 |
| &nbsp;&nbsp;&nbsp;Foreign exchange translation loss | 5787 | 17486 |
| &nbsp;&nbsp;&nbsp;Gain from termination of lease | (2783) |  |
| &nbsp;&nbsp;&nbsp;Impairment of intangible assets | 275782 |  |
| &nbsp;&nbsp;&nbsp;Impairment of property and equipment | 52002 |  |
| &nbsp;&nbsp;&nbsp;Interest expense | 54663 | 11179 |
| &nbsp;&nbsp;&nbsp;Listing costs |  | 4006915 |
| &nbsp;&nbsp;&nbsp;Loss on disposal of property and equipment | 25099 |  |
| &nbsp;&nbsp;&nbsp;Share-based compensation | 1063 | 3920656 |
| &nbsp;&nbsp;&nbsp;Transaction costs |  | 1052754 |
| Changes in non-cash operating working capital: |  |  |
| &nbsp;&nbsp;&nbsp;Other receivables | (102540) | 12281 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and deposits | 144174 | (210383) |
| &nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities | 497793 | (528857) |
| &nbsp;&nbsp;&nbsp;Corporate taxes payable | 27750 | 65000 |
| &nbsp;&nbsp;&nbsp;Deferred revenue | 315497 |  |
| &nbsp;&nbsp;&nbsp;Due to related parties |  | (2361) |
| Net cash used in operating activities | (4695569) | (6945461) |
| Investing activities |  |  |
| &nbsp;&nbsp;&nbsp;Cash acquired in reverse takeover |  | 16562 |
| &nbsp;&nbsp;&nbsp;Purchase of short-term investments |  | (575000) |
| &nbsp;&nbsp;&nbsp;Redemption of short-term investments | 577875 |  |
| &nbsp;&nbsp;&nbsp;Purchase of intangible asset | (275782) |  |
| &nbsp;&nbsp;&nbsp;Purchase of property and equipment |  | (17788) |
| &nbsp;&nbsp;&nbsp;Proceeds from sale of property and equipment | 10946 |  |
| &nbsp;&nbsp;&nbsp;Purchase of investments |  | (13314) |
| &nbsp;&nbsp;&nbsp;Proceeds from deposits | 17037 |  |
| &nbsp;&nbsp;&nbsp;Proceeds from loan receivable |  | 1335500 |
| Net cash provided by investing activities | 330076 | 745960 |
| Financing activities |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from convertible debt | 1500000 |  |
| &nbsp;&nbsp;&nbsp;Repayment of lease obligation | (76446) | (104016) |
| &nbsp;&nbsp;&nbsp;Proceeds from issuance of shares | 10277641 | 7200500 |
| &nbsp;&nbsp;&nbsp;Share issuance costs | (860833) | (93174) |
| Net cash provided by financing activities | 10840362 | 7003310 |
| Increase in cash | 6474869 | 803809 |
| Cash, beginning of year | 2862023 | 2058214 |
| Cash, end of year | 9336892 | 2862023 |

---

Supplemental cash flow information (Note 18)

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

------

**BTQ TECHNOLOGIES CORP.**<br>Notes to the Consolidated Financial Statements <br>Years Ended December 31, 2024 and 2023 <br>(Expressed in Canadian dollars)

**1. CORPORATE INFORMATION**

BTQ Technologies Corp. (formerly Sonora Gold & Silver Corp.) ("the Company") was incorporated on November 23, 1983 under the Business Corporations Act (British Columbia). The principal activity of the Company is the development of computer-based technology related to post-quantum cryptography, particularly as it applies to blockchain and related technologies, and their protection from the emerging security risk of quantum computing. The Company's head office is located at 16-104 555 Burrard Street, Vancouver, BC, Canada. The Company's common shares trade on Cboe Canada under the ticker symbol "BTQ".

On February 17, 2023, the Company acquired all of the issued and outstanding shares of BTQ AG in exchange for 92,000,000 common shares. This transaction constituted a reverse takeover of the Company by BTQ AG with BTQ AG being identified as the accounting acquirer. As a result, these consolidated financial statements are a continuation of BTQ AG. The Company's results of operations are included from February 17, 2023 onwards, except for share capital which has been retroactively adjusted to reflect the capital of the Company. Refer to Note 4.

**2. BASIS OF PRESENTATION**

**Statement of Compliance**

The accompanying consolidated financial statements have been prepared in accordance with IFRS® Accounting Standards as issued by the International Accounting Standards Board ("IFRS") on a going concern basis.

**Basis of Preparation**

These consolidated financial statements have been prepared on a historical cost basis except for certain financial assets and liabilities, which are measured at fair value, as specified by IFRS for each type of asset, liability, income, and expense as set out in the accounting policies below.

**Basis of Consolidation**

These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, BTQ AG, a company incorporated in the Principality of Liechtenstein, and BTQ Technologies Australia Pty Ltd., a company incorporated in Australia.

These consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances are eliminated on consolidation. Control exists where the parent entity has power over the investee and is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Subsidiaries are included in the financial statements from the date control commences until the date control ceases.

**Functional Currency and Presentation Currency**

The functional currency of the Company and its subsidiaries is the Canadian dollar, which is also the presentation currency of these consolidated financial statements.

As a result of the reverse takeover of the Company by BTQ AG on February 17, 2023 (refer to Note 4), BTQ AG changed both its functional currency and the presentation currency of its financial statements from the U.S. dollar to the Canadian dollar.

BTQ AG is in the research and development stage and relies on the Company for its funding and decision making. In consideration of the indicators in IAS 21, *The Effects of changes in Foreign Exchange Rates,* the Company determined that BTQ AG is an extension of the Company. As a result, BTQ AG has the same functional currency as the Company, which is the Canadian dollar.

Under IAS 21, a change in an entity's functional currency is applied prospectively from the date of change.

------

**BTQ TECHNOLOGIES CORP.**<br>Notes to the Consolidated Financial Statements <br>Years Ended December 31, 2024 and 2023 <br>(Expressed in Canadian dollars)

**2. BASIS OF PRESENTATION** (continued)

**Functional Currency and Presentation Currency** (continued)

Effective February 17, 2023, the accounting acquirer, BTQ AG, changed its presentation currency from U.S. dollars to Canadian dollars. In making this change in presentation currency, the Company followed the guidance in IAS 21 and has applied this change retrospectively, as if the Canadian dollar has always been its presentation currency, as follows:

* Assets and liabilities have been translated into Canadian dollar at the rate of exchange prevailing at the respective reporting dates;

* The consolidated statements of loss and comprehensive loss were translated at the average exchange rates for the respective reporting periods, or at the exchange rates prevailing at the applicable transaction date;

* Equity transactions have been translated at the exchange rate prevailing at the date of the transactions; and

* Exchange differences arising on translation were recorded in the consolidated statement of operations and comprehensive loss.

**Use of Estimates and Judgments**

The preparation of these consolidated financial statements in conformity with IFRS requires the Company's management to make judgments, estimates, and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, revenues, and expenses. Estimates and underlying assumptions are reviewed on an ongoing basis, including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected.

Significant estimates and judgments exercised by management in applying the Company's accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements are as follows:

<u>*Reverse Takeover*</u>

The reverse takeover transaction was measured at the fair value of the common shares and stock options that BTQ would have had to issue to the shareholders of the Company. The fair value of common shares and stock options issued were estimated based on the Company's financing event which took place concurrently with the reverse takeover transaction. The fair values of identifiable assets acquired and liabilities assumed approximated their carrying values.

<u>*Research and development costs*</u>

Research costs are recognized as an expense when incurred but development costs may be capitalized as intangible assets if certain conditions are met as described in IAS 38 *Intangible Assets*. Management has determined that development costs do not meet the conditions for capitalization under IAS 38 and all research and development costs have been expensed.

<u>*Fair values of stock options*</u>

Fair values of stock options are determined using the Black-Scholes option pricing model. Estimating fair value requires determining the most appropriate valuation model for a grant of equity instruments, which is dependent on the terms and conditions of the grant. Option-pricing models require the use of highly subjective estimates and assumptions including the expected stock price volatility. Changes in the underlying assumptions can materially affect the fair value estimates and, therefore, existing models do not necessarily provide reliable measurement of the fair value of the Company's stock options and performance warrants.

------

**BTQ TECHNOLOGIES CORP.**<br>Notes to the Consolidated Financial Statements <br>Years Ended December 31, 2024 and 2023 <br>(Expressed in Canadian dollars)

**2. BASIS OF PRESENTATION** (continued)

**Use of Estimates and Judgments** (continued)

<u>*Deferred income taxes*</u>

The determination of income tax expense and the composition of deferred income tax assets and liabilities involves judgment and estimates as to the future taxable earnings, expected timing of reversals of deferred income tax assets and liabilities, and interpretations of tax laws. The Company is subject to assessments by tax authorities who may interpret the tax law differently. Changes in these interpretations, judgments, and estimates may materially affect the final amount of current and deferred income tax provisions, deferred income tax assets and liabilities, and results of operations.

<u>*Going concern presentation*</u>

These consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The assessment of the Company's ability to source future operations and continue as a going concern involves judgement. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. If the going concern assumption is not appropriate for the financial statements, then adjustments would be necessary in the carrying value of the assets and liabilities, the reported revenue and the expenses and the statement of financial position classifications used.

<u>*Impairment of non-current assets*</u>

The Company evaluates the recoverability of non-current assets, including property and equipment, right of use assets, and definite life intangible assets, whether events or changes in circumstances indicate that the carrying value of the asset, or asset group, may not be recoverable. When the Company determines that the carrying value of the long-lived asset may not be recoverable based upon the existence of one or more of the indicators, the assets are assessed for impairment based on the estimate of future discounted. If the carrying value of an asset exceeds its estimated recoverable amount, an impairment loss is recorded for the excess of the asset's carrying value over its recoverable amount. Management judgement is required in the determination of indicators of impairment.

<u>*Convertible debentures*</u>

Convertible debentures are financial instruments which contain a separate financial liability and equity instrument. The identification of such components embedded within a convertible debenture requires significant judgement given that it is based on the interpretation of the substance of the contractual arrangement. The individual fair values attributed to the different components of a financing transaction, and/or derivative financial instruments, are determined using valuation techniques. The Company uses judgement to select the methods used to make certain assumptions and in performing the fair value calculations in order to determine the values attributed to each component of a transaction at the time of their issuance. These valuation estimates could be significantly different because of the use of judgement and the inherent uncertainty in estimating the fair value of these instruments that are not quoted in an active market.

**3. MATERIAL ACCOUNTING POLICY INFORMATION**

**Cash and Cash Equivalents**

The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance, are readily convertible to known amounts of cash, and which are subject to insignificant risk of changes in value to be cash equivalents.

------

**BTQ TECHNOLOGIES CORP.**<br>Notes to the Consolidated Financial Statements <br>Years Ended December 31, 2024 and 2023 <br>(Expressed in Canadian dollars)

**3. MATERIAL ACCOUNTING POLICY INFORMATION** (continued)

**Short-term Investments**

Short-term investments consist of highly liquid short-term interest bearing securities with maturities at the date of purchase of greater than three months, but less than one year, and of other marketable securities.

**Property and Equipment**

The Company depreciates the cost of property and equipment over their estimated useful lives using the declining balance basis at the following rates:

---

| | |
|:---|:---|
| IT equipment | 25% |
| Furniture and equipment | 10% |

---

Residual values and useful economic lives are reviewed at least annually, and adjusted if appropriate, at each reporting date. Subsequent expenditure relating to an item of property and equipment is capitalized when it is probable that future economic benefits from the use of the assets will be increased. All other subsequent expenditures are recognized as repairs and maintenance expenses during the period in which they are incurred. Gains and losses on disposal of equipment are determined by comparing the proceeds from disposal with the carrying amount of the asset and are recognized net within other income in the consolidated statement of operations and comprehensive loss.

**Leases**

Under IFRS 16 - Leases, the Company recognizes a right-of-use asset and a lease liability at the lease commencement date for leases greater than 12 months. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. Right-of-use assets are subsequently depreciated over the remaining term of the lease and are carried at cost less accumulated depreciation and impairment. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's incremental borrowing rate. Lease liabilities are subsequently reduced by lease payments net of interest expense calculated using the effective interest method.

The Company has elected not to recognize right-of-use assets and lease liabilities for leases of low-value assets and short-term leases. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease.

The termination of the lease is accounted for as a decrease in the scope of the lease with remaining lease liability and right of use assets derecognized and any gain or loss relating to the termination is recognized in the consolidated statements of operations and comprehensive loss.

**Impairment of Non-Current Assets**

At each reporting date, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there are any indications of impairment. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any.

Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash generating unit ("CGU") to which the asset belongs. The recoverable amount is determined as the higher of fair value less direct costs to sell and the asset's value in use. In assessing value in use, the estimated future cash flows are discounted to their present value. Estimated future cash flows are calculated using estimated recoverable reserves, estimated future commodity prices, and the expected future operating and capital costs. The pre-tax discount rate applied to the estimated future cash flows reflects current market assessments of the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted.

------

**BTQ TECHNOLOGIES CORP.**<br>Notes to the Consolidated Financial Statements <br>Years Ended December 31, 2024 and 2023 <br>(Expressed in Canadian dollars)

**3. MATERIAL ACCOUNTING POLICY INFORMATION** (continued)

**Impairment of Non-Current Assets** (continued)

If the carrying amount of an asset or CGU exceeds its recoverable amount, the carrying amount of the asset or CGU is reduced to its recoverable amount through an impairment charge to the consolidated statement of operations and comprehensive loss.

Assets that have been impaired are tested for possible reversal of the impairment whenever events or changes in circumstance indicate that the impairment may have reversed. When an impairment subsequently reverses, the carrying amount of the asset or CGU is increased to the revised estimate of its recoverable amount, but only so that the increased carrying amount does not exceed the carrying amount that would have been determined (net of depreciation, depletion and amortization) had no impairment loss been recognized for the asset or CGU in prior periods. A reversal of impairment is recognized as a gain in the consolidated statement of operations and comprehensive loss.

**Foreign Currency Translation**

The functional currency of the Company and its subsidiaries is the currency of the primary economic environment in which the entity operates. The Company's and its subsidiaries' functional currency is the Canadian dollar.

Transactions denominated in currencies other than the functional currency are translated using the exchange rate in effect on the transaction date or at the annual average rate. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange in effect at the consolidated statements of financial position date. Non-monetary items are translated using the historical rate on the date of the transaction. Foreign exchange gains and losses are included in the consolidated statement of operations and comprehensive loss.

**Financial Instruments**

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the respective instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are included in the initial carrying value of the related instrument and are amortized using the effective interest method. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in the consolidated statement of operations and comprehensive loss.

Fair value estimates are made at the statement of financial position date based on relevant market information and information about the financial instrument. All financial instruments are classified into either: fair value through profit or loss ("FVTPL") or amortized cost.

The Company has made the following classifications:

---

| | |
|:---|:---|
| Cash | Amortized cost |
| Short-term investments | Amortized cost |
| Other receivables (excluding GST) | Amortized cost |
| Deposits | FVTPL |
| Investments | FVTPL |
| Accounts payable and accrued liabilities | Amortized cost |
| Lease obligation | Amortized cost |
| Due to related parties | Amortized cost |

---

------

**BTQ TECHNOLOGIES CORP.**<br>Notes to the Consolidated Financial Statements <br>Years Ended December 31, 2024 and 2023 <br>(Expressed in Canadian dollars)

**3. MATERIAL ACCOUNTING POLICY INFORMATION** (continued)

<u>*Financial assets*</u>

IFRS 9 - Financial Instruments ("IFRS 9") establishes three primary measurement categories for financial assets: amortized cost, fair value through other comprehensive income ("FVOCI") and fair value through profit or loss ("FVTPL"). The Company determines the classification of the financial assets at initial recognition. The basis of classification depends on the Company's business model for managing its financial instruments and the contractual cash flow characteristics of the instrument.

A financial asset (unless it is a trade receivable without a significant financing component that is initially measured at the transaction price) is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition. Subsequent to initial recognition, financial assets are measured at amortized cost using the effective interest method, less any impairment.

*Financial assets at amortized cost*

Financial assets are measured at amortized cost if they are not designated at FVTPL, and the following conditions are met:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• are non-derivative financial assets which are held within a business model whose objective is to hold assets to collect contractual cash flows and selling financial assets; and,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

*Financial assets at FVTOCI*

Financial assets are measured at fair value through other comprehensive income only if they not designated at FVTPL, and the following conditions are met:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• it has been held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Interest income is calculated using the effective interest method and gains or losses arising from impairment and foreign exchange are recognized in the consolidated statement of operations and comprehensive loss. All other changes in the carrying amount of financial assets are recognized in other comprehensive income. Upon derecognition, the cumulative gain or loss previously recognized in other comprehensive income is reclassified to the consolidated statement of operations and comprehensive loss. The Company does not hold any financial assets measured at fair value through other comprehensive income.

*Financial assets at FVTPL*

Assets that do not meet the criteria to be measured at amortized cost, or fair value through other comprehensive income, are measured at fair value through profit or loss. All interest income and changes in the financial assets' carrying amount are recognized in the consolidated statement of operations and comprehensive loss.

*Impairment of financial assets*

Financial assets, other than those classified as FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been decreased.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account.

------

**BTQ TECHNOLOGIES CORP.**<br>Notes to the Consolidated Financial Statements <br>Years Ended December 31, 2024 and 2023 <br>(Expressed in Canadian dollars)

**3. MATERIAL ACCOUNTING POLICY INFORMATION** (continued)

**Financial Instruments** (continued)

When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are offset against the allowance account. Changes in the carrying amount of the allowance account are recognized in the consolidated statement of operations and comprehensive loss. Loss allowances are based on the lifetime expected credit losses that result from all possible default events over the expected life of the trade receivable, using the simplified approach.

For financial assets measured at amortized cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through the consolidated statement of operations and comprehensive loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

<u>*Financial liabilities and equity instruments*</u> 

*Classification as debt or equity*

Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

*Equity instruments*

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognized as the proceeds received, net of direct issue costs.

*Other financial liabilities*

Other financial liabilities (including loans and borrowings and trade payables and other liabilities) are initially measured at fair value, net of transaction costs. Subsequently, other financial liabilities are measured at amortized cost using the effective interest method.

The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

**Research and Development Costs**

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognized in the consolidated statement of operations and comprehensive loss as incurred.

Development activities involve a plan or design for the production of new or substantially improved products or processes. Development expenditure is capitalized only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset. The expenditure capitalized includes the cost of materials, direct labour, overhead costs that are directly attributable to preparing the asset for its intended use, and borrowing costs on qualifying assets. Other development expenditures are recognized in the consolidated statements of operations and comprehensive loss as incurred.

------

**BTQ TECHNOLOGIES CORP.**<br>Notes to the Consolidated Financial Statements <br>Years Ended December 31, 2024 and 2023 <br>(Expressed in Canadian dollars)

**3. MATERIAL ACCOUNTING POLICY INFORMATION** (continued)

**Revenue Recognition**

The Company's accounting policy for revenue recognition under IFRS 15, Revenue from Contracts with Customers, follows a five-step model to determine the amount and timing of revenue to be recognized:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Identifying the contract with a customer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Identifying the performance obligations within the contract;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Determining the transaction price;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Allocating the transaction price to the performance obligations; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. Recognizing revenue when/as performance obligation(s) are satisfied.

Revenue is recognized when or as the associated performance obligations are delivered and based on the expected consideration to be received. The Company generates revenues from licensing the right to use the Company's intellectual property. The fees that are outlined in an agreement are recognized when the Company's obligations have been performed. For licenses with multiple performance obligations, the Company will identify specific distinct goods and services and will recognize revenue when the performance obligations for each distinct good or service has been performed.

The Company also analyzes its collaboration arrangements to determine whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities. This assessment is performed throughout the life of the arrangement based on changes in the responsibilities of all parties in the arrangement. The Company assesses whether there are any elements of the collaboration that are more reflective of a vendor-customer relationship and is therefore within the scope of IFRS 15. For these elements of the arrangement that are accounted for pursuant to IFRS 15, the Company applies the five-step model above. The collaboration arrangements entered into during the years ended December 31, 2023 and 2024 did not meet the scope of IFRS 15. Refer to Note 23.

IFRS 11 characterizes a joint arrangement as parties that are bound by a contractual arrangement, and that the contractual arrangement gives two or more of those parties joint control over the arrangement. The Company assessed all of the collaboration agreements entered into during the years ended December 31, 2023 and 2024, and determined that none of the collaboration agreements met the characteristics of a joint arrangement due to the absence of joint control.

**Share-based Compensation**

The grant date fair value of equity-based payment awards granted to employees is generally recognized as share-based compensation expense, with a corresponding increase in equity, over the vesting period of the awards. The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.

The fair value of stock options is measured at the grant date using the Black-Scholes option pricing model. The fair value is recognized as an expense over the vesting period, which is the period over which all of the specified vesting conditions are satisfied with a corresponding increase in equity. For awards with graded vesting, the fair value of each tranche is recognized over its respective vesting period. Non-market vesting conditions are considered in making assumptions about the number of awards that are expected to vest. When the options are exercised, any proceeds received are credited to share capital along with the amount reflected in share-based payment reserve.

------

**BTQ TECHNOLOGIES CORP.**<br>Notes to the Consolidated Financial Statements <br>Years Ended December 31, 2024 and 2023 <br>(Expressed in Canadian dollars)

**3. MATERIAL ACCOUNTING POLICY INFORMATION** (continued)

**Related Party Transactions**

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

**Income Taxes**

Tax expense recognized in the consolidated statements of operations and comprehensive loss comprises the sum of current and deferred income taxes not recognized in other comprehensive income or directly in equity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*i) Current income tax*

Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date, in the countries where the Company operates and generates taxable income.

*ii) Deferred income tax*

Deferred income tax is recognized using the liability method on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. However, the deferred income tax is not recognized if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable income or loss and that at the time of the transaction, does not give rise to equal taxable and deductible temporary differences. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the reporting date and are expected to apply when the related deferred income tax asset is realized, or the deferred income tax liability is settled. A deferred income tax asset is recognized to the extent that it is probable that future taxable income will be available against which the temporary difference can be utilized. Deferred income tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized. Changes in deferred income tax assets or liabilities are recognized as a component of tax income or expense in the consolidated statement of operations and comprehensive loss except where they related to items that are recognized in other comprehensive income or directly in equity, in which case, related deferred tax is also recognized in other comprehensive income or equity, respectively.

Deferred income tax assets and liabilities have been offset where they relate to income taxes levied by the same taxation authority and the Company has the legal right and intent to offset.

**Convertible Debentures**

Convertible debentures are financial instruments which in accordance to IAS 32 contain a separate financial liability and equity instrument or derivative liability. These financial instruments are accounted for separately dependent on the nature of their components. The identification of such components embedded within a convertible debenture requires significant judgment given that it is based on the interpretation of the substance of the contractual arrangement. The convertible debentures issued by the Company were considered to contain an equity conversion feature, refer to Note 12. The debt component is measured at fair value on the initial recognition using a market interest rate and the residual value assigned to the equity conversion feature. Subsequent to initial recognition, the equity conversion feature is not re-measured while the debt components are accreted to the face value of the convertible debenture using the effective interest rate through periodic charges to finance expense over the term of the convertible debenture. When the convertible debenture converted to shares under original terms of the convertible debenture, the carrying amount of the debt component is derecognized and recorded as share capital in the consolidates statements of changes in shareholders' equity.

------

**BTQ TECHNOLOGIES CORP.**<br>Notes to the Consolidated Financial Statements <br>Years Ended December 31, 2024 and 2023 <br>(Expressed in Canadian dollars)

**3. MATERIAL ACCOUNTING POLICY INFORMATION** (continued)

**Loss Per Share**

Basic loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. The computation of diluted loss per share assumes the conversion, exercise or contingent issuance of securities only when such conversion, exercise or issuance would have a dilutive effect on the income per share. The dilutive effect of convertible securities is reflected in the diluted loss per share by application of the "if converted" method. When a loss is incurred during the period, basic and diluted loss per share are the same as the exercise of stock options, share purchase warrants, and restricted share units is considered to be anti-dilutive. As at December 31, 2024, the Company has 6,886,616 (2023 - 9,987,936) potentially dilutive shares outstanding.

**Accounting Standards Effective January 1, 2024 and Issued But Not Yet Effective**

A number of new standards, and amendments to standards and interpretations, are not yet effective for the year ended December 31, 2024, and have not been early adopted in preparing these consolidated financial statements.

*IFRS 18 Presentation and Disclosure in Financial Statements*

In April 2024, the IASB issued IFRS 18 - Presentation and Disclosure in Financial Statements which will replace IAS 1, Presentation of Financial Statements. The key new concepts introduced in IFRS 18 relate to the structure of the statement of earnings (loss), required disclosures in the financial statements for certain earnings or loss performance measures that are reported outside an entity's financial statements and enhanced principles on aggregation and disaggregation which apply to the primary financial statements and notes in general. IFRS 18 will apply for reporting periods beginning on or after January 1, 2027, and also applies to comparative information. The Company is still in the process of assessing the impact of this standard on its consolidated financial statements.

*Classification of liabilities as current or non-current (amendments to IAS 1, presentation of financial statements)*

On January 23, 2020, an amendment was issued to IAS 1 to address inconsistencies with how entities apply the standards over classification of current and non-current liabilities. The amendment serves to address whether, in the statement of financial position, debt and other liabilities with an uncertain settlement should be classified as current or non-current. This amendment is effective on January 1, 2024. The Company adopted the amendment on the effective date and the adoption did not have a material impact on the Company's consolidated financial statements.

*Non-current liabilities with covenants (amendments to IAS 1)*

The amendments to IAS 1 specify that only covenants with which an entity is required to comply on or before the reporting date affect the classification of a liability as current or non-current. In addition, an entity has to disclose information in the notes that enables users of financial statements to understand the risk that non- current liabilities with covenants could become repayable within twelve months. The amendments are effective for annual reporting periods beginning on or after January 1, 2024, and are to be applied retrospectively. The Company adopted the amendment on the effective date and the adoption did not have a material impact on the Company's consolidated financial statements.

------

**BTQ TECHNOLOGIES CORP.**<br>Notes to the Consolidated Financial Statements <br>Years Ended December 31, 2024 and 2023 <br>(Expressed in Canadian dollars)

**4. REVERSE TAKEOVER**

On December 31, 2021 (as amended on April 29, 2022, July 30, 2022, and November 29, 2022), the Company, BTQ AG, and shareholders of BTQ AG entered into an agreement pursuant to which the Company agreed to acquire all of the issued and outstanding shares of BTQ AG (the "Transaction").

The closing of the Transaction occurred on February 17, 2023, at which time the Company issued 92,000,000 common shares in exchange for the issued and outstanding common shares of BTQ AG. The Company consolidated its common shares on a 10:1 basis immediately prior to the closing of the transaction.

As a result of the completion of the Transaction, the former shareholders of BTQ AG acquired 75.88% of the outstanding common shares of the Company, and, for accounting purposes, are considered to have acquired control of the Company. Accordingly, the Transaction constitutes a reverse acquisition of the Company by BTQ AG and has been accounted for as a reverse acquisition transaction in accordance with the guidance provided in IFRS 2, *Share-based Payment* and IFRS 3, *Business Combinations*. As the Company did not qualify as a business prior to the closing of the transaction according to the definition in IFRS 3, this reverse acquisition did not constitute a business combination; rather it was treated as an issuance of shares by BTQ AG for the net assets of the Company. Accordingly, no goodwill was recorded with respect to the Transaction. The Transaction was measured at the fair value of the common shares that BTQ AG would have had to issue to the shareholders of the Company, being 8,747,629 common shares with a fair value of $3,499,051, and the fair value of 350,000 stock options of the Company with a fair value of $97,532, to give the shareholders of the Company the same percentage of equity interest in the combined entity that results from the reverse acquisition had it taken the legal form of BTQ AG acquiring the Company. The Company issued 2,500,000 common shares with a fair value of $1,000,000 as a finder's fee for the Transaction, which is included in the $1,052,754 transaction costs incurred for the Transaction. The fair value of common shares and stock options issued were estimated based on the Company's financing event which took place concurrently to the reverse takeover transaction at the price of $0.40 per common share. Refer to Note 13. As BTQ AG was deemed to be the acquirer for accounting purposes, its assets, liabilities, and operations since its incorporation on March 26, 2021 are included in these consolidated financial statements at their historical carrying values. The assets, liabilities, and results of operations of the Company are included in these consolidated financial statements from the date acquisition on February 17, 2023.

As BTQ AG was deemed to be the acquirer for accounting purposes, its assets, liabilities, and operations since its incorporation on March 26, 2021 are included in these consolidated financial statements at their historical carrying values. The assets, liabilities, and results of operations of the Company are included in these consolidated financial statements from the date of acquisition on February 17, 2023.

The purchase price is allocated as follows:

---

| |
|:---|
| &nbsp;&nbsp;Fair value of the Company's shares (8,747,629 common shares) |
| &nbsp;&nbsp;Fair value of 350,000 stock options of the Company outstanding |
| &nbsp;&nbsp;Total consideration |
| &nbsp;&nbsp;Less: fair value of identifiable assets acquired and liabilities assumed: |
| &nbsp;&nbsp;Cash |
| &nbsp;&nbsp;Cash held in escrow |
| &nbsp;&nbsp;Receivables |
| &nbsp;&nbsp;Short-term investment |
| &nbsp;&nbsp;Accounts payable and accrued liabilities) |
| &nbsp;&nbsp;Subscription receipts liabilities) |
| &nbsp;&nbsp;Net liabilities assumed) |
| &nbsp;&nbsp;Listing costs |

---

The fair value of stock options of the Company was calculated using the Black-Scholes option pricing model with the following assumptions: volatility of 150%, expected life of 2.1 years, no dividends, no forfeitures, and a risk-free rate of 4.15%.

------

**BTQ TECHNOLOGIES CORP.**<br>Notes to the Consolidated Financial Statements <br>Years Ended December 31, 2024 and 2023 <br>(Expressed in Canadian dollars)

**5. PROPERTY AND EQUIPMENT**

---

| | | | |
|:---|:---|:---|:---|
|  | IT equipment<br>$| Furniture and<br>equipment<br>$| Total<br>$|
| &nbsp;&nbsp;Cost: |  |  |  |
| &nbsp;&nbsp;Balance, December 31, 2022 | 101603 | 43921 | 145524 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additions | 13179 | 4609 | 17788 |
| &nbsp;&nbsp;Balance, December 31, 2023 | 114782 | 48530 | 163312 |
| &nbsp;&nbsp;&nbsp;&nbsp;Disposal | (15976) | (41930) | (57906) |
| &nbsp;&nbsp;&nbsp;&nbsp;Impairment | (98806) | (6600) | (105406) |
| &nbsp;&nbsp;Balance, December 31, 2024 | - | - | - |
| &nbsp;&nbsp;Accumulated depreciation: |  |  |  |
| &nbsp;&nbsp;Balance, December 31, 2022 | 31463 | 4393 | 35856 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additions | 20466 | 4170 | 24636 |
| &nbsp;&nbsp;Balance, December 31, 2023 | 51929 | 8563 | 60492 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additions | 12369 | 2404 | 14773 |
| &nbsp;&nbsp;&nbsp;&nbsp;Disposal | (11815) | (10046) | (21861) |
| &nbsp;&nbsp;&nbsp;&nbsp;Impairment | (52483) | (921) | (53404) |
| &nbsp;&nbsp;Balance, December 31, 2024 | - | - | - |
| &nbsp;&nbsp;Carrying amounts: |  |  |  |
| &nbsp;&nbsp;As at December 31, 2023 | 62853 | 39967 | 102820 |
| &nbsp;&nbsp;As at December 31, 2024 | - | - | - |

---

The Company determined the recoverable amount of the property and equipment using a value in use approach and determined that the property and equipment will no longer be in use for future operations and research and development activities of the Company. Therefore, the recoverable amount of the remaining unsold property and equipment was determined to be $nil.

**6. RIGHT-OF-USE ASSET**

On May 15, 2022, the Company entered into a lease agreement which gives the Company the right to use an underlying asset for its Taiwan office which expires on May 15, 2024. On May 15, 2024, renewed the lease agreement which expires on May 15, 2026. On October 14, 2024, the lease agreement was terminated and the aiwan office was closed .

---

| |
|:---|
| &nbsp;&nbsp;Cost: |
| &nbsp;&nbsp;Balance, December 31, 2022 and 2023 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additions |
| &nbsp;&nbsp;&nbsp;&nbsp;Lease termination) |
| &nbsp;&nbsp;Balance, December 31, 2024 |

---

------

**BTQ TECHNOLOGIES CORP.**<br>Notes to the Consolidated Financial Statements <br>Years Ended December 31, 2024 and 2023 <br>(Expressed in Canadian dollars)

**6. RIGHT-OF-USE ASSET** (continued)

---

| | |
|:---|:---|
| &nbsp;&nbsp;Accumulated depreciation: |  |
| &nbsp;&nbsp;Balance, December 31, 2022 | 64736 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additions | 88528 |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange translation difference | 1257 |
| &nbsp;&nbsp;Balance, December 31, 2023 | 154521 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additions | 72107 |
| &nbsp;&nbsp;&nbsp;&nbsp;Lease termination | (226628) |
| &nbsp;&nbsp;Balance, December 31, 2024 | - |
| &nbsp;&nbsp;Carrying amounts: |  |
| &nbsp;&nbsp;As at December 31, 2023 | 29905 |
| &nbsp;&nbsp;As at December 31, 2024 | - |

---

**7. LOAN RECEIVABLE**

On December 1, 2022, BTQ AG entered into an agreement with MEV Trading Inc. ("MEV"), under which the BTQ AG granted a loan of $1,354,400 (US$1,000,000) which is non-interest bearing, and due on June 30, 2023. In consideration for the loan, MEV issued a warrant to BTQ AG entitling BTQ AG to purchase shares of MEV non-voting stock equal to 10% of the loan amount based on the fully-diluted pre-money valuation of the borrower as determined by the most recent qualified equity financing round before the maturity date or within one year of issuance, whichever occurs earlier (expired on June 30, 2023). The fair value of the warrants issued was determined to be nominal. On August 7, 2023, the Company received repayment of the $1,343,300 (US$1,000,000) loan receivable.

**8. INVESTMENTS**

---

| | |
|:---|:---|
|  | $|
| &nbsp;&nbsp;Balance, December 31, 2022 | 63915 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additions | 13314 |
| &nbsp;&nbsp;Balance, December 31, 2023 and 2024 | 77229 |

---

During the year ended December 31, 2022, the BTQ AG invested $63,915 (US$50,000) in the form of a Simple Agreement for Future Equity ("SAFE") in the Holonym Foundation ("Holonym"), which is a public benefit corporation. The investment is not traded in an active market.

On January 11, 2023, BTQ AG invested $13,314 (US$10,000) in the form of a SAFE into Cysic Inc. The investment is not traded in an active market.

The Company estimated the fair value of these investments and concluded that the carrying value approximates the fair value of the investments as at December 31, 2024 and 2023.

**9. SHORT-TERM INVESTMENT**

The Company pledged a guaranteed investment certificate ("GIC") as collateral for the Company's credit cards. The GIC earned interest at Prime Rate less 2.7% per annum and had a maturity date of June 6, 2026. The GIC was redeemed during the year ended December 31, 2024.

------

**BTQ TECHNOLOGIES CORP.**<br>Notes to the Consolidated Financial Statements <br>Years Ended December 31, 2024 and 2023 <br>(Expressed in Canadian dollars)

**10. INTANGIBLE ASSETS**

On July 23, 2024, the Company entered into an agreement to purchase the intellectual property relating to four US patent applications for $275,782. As at December 31, 2024, the Company recognized an impairment of $275,782 due to the uncertainty of future cash flows.

**11. LEASE OBLIGATION**

On May 15, 2022, the Company entered into a premises lease agreement which gives the Company the right to use an underlying asset which expires on May 14, 2024. The Company's obligation to make lease payments arising from the lease is calculated by discounting the fixed lease payments over the lease term at the Company's incremental borrowing rate. The incremental borrowing rate used in the calculation was 13%.

On May 15, 2024, the Company entered into a premises lease agreement which gives the Company the right to use an underlying asset which expires on May 14, 2026. The Company's obligation to make lease payments arising from the lease is calculated by discounting the fixed lease payments over the lease term at the Company's incremental borrowing rate. The incremental borrowing rate used in the calculation was 13%. On October 14, 2024, the lease agreement was terminated and the Taiwan office was closed.

---

| | | |
|:---|:---|:---|
|  | 2024<br>$| 2023<br>$|
| &nbsp;&nbsp;Balance, beginning of year | 33554 | 129062 |
| &nbsp;&nbsp;Additions | 179170 |  |
| &nbsp;&nbsp;Payments | (76446) | (104016) |
| &nbsp;&nbsp;Applied deposit | (8685) |  |
| &nbsp;&nbsp;Interest | 9990 | 11179 |
| &nbsp;&nbsp;Foreign exchange translation difference | 2168 | (2671) |
| &nbsp;&nbsp;Lease termination | (139751) |  |
| &nbsp;&nbsp;Balance, end of year |  | 33554 |
| &nbsp;&nbsp;Less: current portion |  | 33554 |
| &nbsp;&nbsp;Non-current portion | - | - |

---

**12. CONVERTIBLE DEBT**

On September 9, 2024, the Company issued convertible debt for proceeds of $1,000,000. The convertible debt is non-interest bearing and due on September 9, 2026. At the election of the lender, the principal amount of the debt is convertible into common shares at $0.40 per share. The present value of the liability component of the convertible debt at issuance was $694,445, using a discount rate of 20%, which is the estimated interest rate the Company would pay on a similar debt instrument without a conversion option. The residual value of $305,555 was allocated to the equity component. The discount on the convertible debt totaling $305,555 is amortized over the term of the convertible loans using the effective interest rate method. During the year ended December 31, 2024, the Company recorded accretion of $37,905 which is included in interest expense. On December 24, 2024, the debt was converted into common shares, refer to Note 13.

On November 8, 2024, the Company entered into a convertible debt agreement for proceeds of $500,000. The convertible debt is non-interest bearing and due on November 14, 2026. At the election of the lender, the principal amount of the debt is convertible into common shares at $0.40 per share. The present value of the liability component of the convertible debt at issuance was $378,072, using a discount rate of 15%, which is the estimated interest rate the Company would pay on a similar debt instrument without a conversion option. The residual value of $121,928 was allocated to the equity component. The discount on the convertible debt totaling $121,928 is amortized over the term of the convertible loans using the effective interest rate method. During the year ended December 31, 2024, the Company recorded accretion of $6,768 which is included in interest expense. On December 24, 2024, the debt was converted into common shares, refer to Note 13.

------

**BTQ TECHNOLOGIES CORP.**<br>Notes to the Consolidated Financial Statements <br>Years Ended December 31, 2024 and 2023 <br>(Expressed in Canadian dollars)

**13. SHARE CAPITAL**

Authorized: Unlimited number of common shares without par value Share transactions during the year ended December 31, 2024:

* During the year ended December 31, 2024, the Company issued 560,000 common shares for proceeds of $224,000 pursuant to the exercise of stock options. The fair value of stock options exercised of $209,662 was transferred from options reserve to share capital.

* During the year end December 31, 2024, the Company issued 134,105 common shares for proceeds of $53,641 pursuant to the exercise of warrants. The fair value of warrants exercised of $38,796 was transferred from warrants reserve to share capital.

* During the year ended December 31, 2024, the Company issued 840,000 common shares pursuant to the conversion of vested RSUs. Upon conversion, the fair value of $496,500 for the vested RSUs was transferred from RSUs reserve to share capital.

* On December 19, 2024, the Company issued 3,355,704 common shares at $2.98 per share for gross proceeds of $10,000,000. In connection with the financing, the Company incurred share issuance costs of $860,833 and issued 167,785 finders' warrants exercisable at $4.09 per common share expiring on December 19, 2029. The fair value of the finders' warrants was determined to be $470,286 which was calculated using the Black-Scholes option pricing model with the following assumptions: volatility of 206%, expected life of 5 years, no dividends, and a risk-free rate of 3.11%.

* On December 24, 2024, the Company issued 3,750,000 common shares pursuant to the conversion of the convertible debt (see Note 12). The carrying value of the convertible debt at the date of conversion was $1,117,189. The equity component of the convertible debt of $427,483 was transferred to share capital upon conversion.

Share transactions during the year ended December 31, 2023:

* On February 17, 2023, the Transaction closed, resulting in a reverse takeover (refer to Note 4). The Transaction was measured at the fair value of the shares that BTQ AG would have had to issued to the shareholders of the Company, being 8,747,629 common shares with a fair value of $3,499,051.

* On February 17, 2023, the Company issued 2,500,000 common shares with a fair value of $1,000,000 as a finder's fee for the Transaction.

* On February 17, 2023, the Company completed a subscription receipt financing of 18,001,250 common shares at $0.40 per share for gross proceeds of $7,200,500. In connection with the financing, the Company incurred share issuance costs of $93,174 and issued 232,936 finders' warrants exercisable at $0.40 per common share expiring on February 17, 2025. The fair value of finders' warrants was determined to be $67,386 which was calculated using the Black-Scholes option pricing model with the following assumptions: volatility of 150%, expected life of 2 years, no dividends, and a risk-free rate of 4.15%.

* On July 7, 2023, the Company issued 1,822,500 common shares pursuant to the conversion of vested RSUs.

* On November 6, 2023, the Company issued 22,500 common shares pursuant to the conversion of vested RSUs.

* On November 13, 2023, the Company issued 100,000 common shares pursuant to the conversion of vested RSUs.

------

**BTQ TECHNOLOGIES CORP.**<br>Notes to the Consolidated Financial Statements <br>Years Ended December 31, 2024 and 2023 <br>(Expressed in Canadian dollars)

**13. SHARE CAPITAL** (continued)

<u>Escrowed shares</u>

On completion of the Transaction, certain principals of the Company entered into a NP 46-201 Escrow Agreement with the NEO Exchange and Computershare Trust Company of Canada, as escrow agent, in respect of 45,250,000 common shares. Under the terms of the Escrow Agreement, 25% of such escrowed securities were released upon closing (February 17, 2023) with subsequent 25% releases occurring 6, 12, and 18 months from closing. These escrow shares will be released as follows:

---

| | |
|:---|:---|
| Date of automatic timed release | &nbsp;&nbsp;&nbsp;Amount of escrow shares released |
| On the date that the Company's common shares were listed on the NEO, February 17, 2023 | &nbsp;&nbsp;&nbsp;&nbsp;1/4 of the escrowed shares |
| 6 months after the listing date (August 17, 2023) | &nbsp;&nbsp;&nbsp;1/4 of the escrowed shares |
| 12 months after the listing date (February 17, 2024) | &nbsp;&nbsp;&nbsp;1/4 of the escrowed shares |
| 18 months after the listing date (August 17, 2024) | &nbsp;&nbsp;&nbsp;The remainder of the escrowed shares |

---

As at December 31, 2024, the Company has 20,362,500 common shares held in escrow.

**14. STOCK OPTIONS**

The Company has a stock option plan (the "Plan") for directors, officers, employees, and consultants of the Company. Stock options are exercisable for periods of up to five years, as determined by the Board of Directors of the Company, to purchase common shares of the Company at a price not less than the discounted market price on the date of the grant. The maximum number of shares which may be issuable under the Plan cannot exceed 10% of the total number of issued and outstanding common shares on a non- diluted basis.

The following table summarizes the continuity of the Company's stock options:

---

| | | |
|:---|:---|:---|
|  | <br>Number of <br>stock options | Weighted<br>average<br>exercise<br>price<br>$|
| Balance, December 31, 2022 |  |  |
| &nbsp;&nbsp;&nbsp;Outstanding stock options of the Company prior to reverse takeover | 350000 | 0.50 |
| &nbsp;&nbsp;&nbsp;Granted | 8310000 | 0.41 |
| &nbsp;&nbsp;&nbsp;Expired | (890000) | 0.44 |
| Outstanding, December 31, 2023 | 7770000 | 0.41 |
| &nbsp;&nbsp;&nbsp;Granted | 1325000 | 0.42 |
| &nbsp;&nbsp;&nbsp;Exercised | (560000) | 0.40 |
| &nbsp;&nbsp;&nbsp;Expired | (740000) | 0.40 |
| &nbsp;&nbsp;&nbsp;Forfeited | (3120000) | 0.42 |
| Outstanding, December 31, 2024 | 4675000 | 0.42 |
| Exercisable, December 31, 2024 | 1808750 | 0.41 |

---

------

**BTQ TECHNOLOGIES CORP.**<br>Notes to the Consolidated Financial Statements <br>Years Ended December 31, 2024 and 2023 <br>(Expressed in Canadian dollars)

**14. STOCK OPTIONS** (continued)

Additional information regarding stock options outstanding as at December 31, 2024, is as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | Outstanding |  | Exercisable | Exercisable |
| <br>Range of <br>exercise prices<br>$| <br>Number of <br>stock options | Weighted<br>average<br>remaining<br>contractual<br>life (years) | Weighted <br>average <br>exercise price<br>$| <br>Number of <br>stock options | Weighted <br>average <br>exercise price<br>$|
| 0.27 | 300000 | 2.9 | 0.27 |  |  |
| 0.35 | 125000 | 2.8 | 0.35 |  |  |
| 0.40 to 0.45 | 3620000 | 2.5 | 0.41 | 1698750 | 0.41 |
| 0.485 to 0.50 | 420000 | 3.3 | 0.49 | 70000 | 0.49 |
| 0.57 | 100000 | 5.7 | 0.57 |  |  |
| 0.64 to 0.65 | 160000 | 3.0 | 0.64 | 40000 | 0.64 |
| 1.51 | 50000 | 4.0 | 1.51 |  |  |
|  | 4675000 | 2.6 | 0.42 | 1808750 | 0.41 |

---

The fair value for stock options granted have been estimated using the Black-Scholes option pricing model assuming no expected dividends or forfeitures and the following weighted average assumptions:

---

| | | |
|:---|:---|:---|
|  | 2024 | 2023 |
| Risk-free interest rate | 3.17% | 3.59% |
| Expected life (in years) | 4.5 | 4.0 |
| Expected volatility | 203% | 199% |

---

During the year ended December 31, 2024, the Company recognized share-based compensation expense of $81,002 (2023 - $1,921,154). The weighted average fair value of the stock options granted during the year ended December 31, 2024 was $0.42 (2023 - $0.37) per option. The weighted average fair value of shares at the time of the stock option exercises during the year ended December 31, 2024 was $1.84 (2023 - $nil) per common share.

**15. SHARE PURCHASE WARRANTS**

The following table summarizes the continuity of share purchase warrants:

---

| | | |
|:---|:---|:---|
|  | &nbsp;&nbsp;&nbsp;&nbsp;<br>Number of <br>warrants | Weighted<br>average<br>exercise<br>price<br>$|
| &nbsp;&nbsp;Balance, December 31, 2022 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Issued | 232936 | 0.40 |
| &nbsp;&nbsp;Balance, December 31, 2023 | 232936 | 0.40 |
| &nbsp;&nbsp;&nbsp;&nbsp;Issued | 167785 | 4.09 |
| &nbsp;&nbsp;&nbsp;&nbsp;Exercised | (134105) | 0.40 |
| &nbsp;&nbsp;Balance, December 31, 2024 | 266616 | 2.72 |

---

------

**BTQ TECHNOLOGIES CORP.**<br>Notes to the Consolidated Financial Statements <br>Years Ended December 31, 2024 and 2023 <br>(Expressed in Canadian dollars)

**15. SHARE PURCHASE WARRANTS** (continued)

As at December 31, 2024, the following share purchase warrants were outstanding and exercisable:

---

| | | |
|:---|:---|:---|
| Number of <br>warrants<br> outstanding | Exercise<br>price<br>$| Expiry date |
| 98831 | 0.40 | February 17, 2025 |
| 167785 | 4.09 | December 19, 2029 |
| 266616 |  |  |

---

**16. RESTRICTED SHARE UNITS**

A summary of the changes in RSUs is presented below:

---

| | |
|:---|:---|
|  | Number of<br>RSUs |
| Balance, December 31, 2022 |  |
| &nbsp;&nbsp;&nbsp;Issued | 3930000 |
| &nbsp;&nbsp;&nbsp;Converted | (1945000) |
| Balance, December 31, 2023 | 1985000 |
| &nbsp;&nbsp;Issued | 800000 |
| &nbsp;&nbsp;Converted | (840000) |
| Balance, December 31, 2024 | 1945000 |
| Unvested | 845000 |
| Vested, December 31, 2024 | 1100000 |

---

During the year ended December 31, 2024, 800,000 restricted share units ("RSUs") (2023 - 3,930,000) were granted. The weighted average grant date fair value for RSUs granted during the year end December 31, 2024 was $0.75 per RSU (2023 - $0.44). During the year ended December 31, 2024, the Company recognized share-based compensation expense (recovery) of $(79,939) (2023 - $1,999,502) with a corresponding decrease (2023 - increase) to RSU reserve and $496,500 (2023 - $782,250) was transferred to share capital upon the vesting of 840,000 (2023 - 1,945,000) RSUs.

------

**BTQ TECHNOLOGIES CORP.**<br>Notes to the Consolidated Financial Statements <br>Years Ended December 31, 2024 and 2023 <br>(Expressed in Canadian dollars)

**17. RELATED PARTY TRANSACTIONS**

Key management personnel are persons responsible for planning, directing, and controlling the activities of an entity, and include all officers and directors of the Company. Related party transaction during the years ended December 31, 2024 and 2023 was comprised of the following:

---

| | | |
|:---|:---|:---|
|  | 2024<br>$| 2023<br>$|
| &nbsp;&nbsp;Business development, marketing, and promotion | 98626 | 97163 |
| &nbsp;&nbsp;Consulting fees | 24278 | 97163 |
| &nbsp;&nbsp;Professional fees | 84000 | 59661 |
| &nbsp;&nbsp;Research and development | 249842 | 413158 |
| &nbsp;&nbsp;Share-based compensation | 28905 | 765827 |
| &nbsp;&nbsp;Wages and benefits | 282623 | 290543 |
|  | 768274 | 1723515 |

---

As at December 31, 2024, the Company owed $124,247 (2023 - $114,223) to the CEO of the Company, of which $97,075 (2023 - $89,247) is included in accounts payable and accrued liabilities. The amounts owed are non-interest bearing, unsecured, and due on demand.

As at December 31, 2024, the Company was owed $137,369 (2023 - $49,888) from the Chief Operating Officer ("COO") of the Company, which is included in other receivables.

As at December 31, 2024, the Company owed $7,350 (2023 - $7,350) to a firm where the Chief Financial Officer of the Company is a partner, which is included in accounts payable and accrued liabilities.

As at December 31, 2024, the Company owed $nil (2023 - $132,260) to the former Chief Cryptographer of the Company, which is included in accounts payable and accrued liabilities.

As at December 31, 2024, the Company owed $15,020 (2023 - $7,936) to the Head of Corporate Development of the Company, which is included in accounts payable and accrued liabilities.

**18. SUPPLEMENTAL CASH FLOW INFORMATION**

---

| | | |
|:---|:---|:---|
|  | 2024<br>$| 2023<br>$|
| Non-cash investing and financing activities: |  |  |
| &nbsp;&nbsp;&nbsp;Receivables acquired in reverse takeover |  | 25308 |
| &nbsp;&nbsp;&nbsp;Short-term investment acquired in reverse takeover |  | 2875 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities assumed in reverse takeover |  | 455077 |
| &nbsp;&nbsp;&nbsp;Right-of-use asset and corresponding lease obligation | 179170 |  |
| &nbsp;&nbsp;&nbsp;Carrying value of convertible debt recorded in share capital upon conversion | 1544672 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equity portion of convertible debt transferred from reserve to share capital upon conversion | 427483 |  |
| &nbsp;&nbsp;&nbsp;Shares issued for vested RSUs | 496500 | 782250 |
| &nbsp;&nbsp;&nbsp;Fair value of stock options exercised transferred from options reserve to share capital | 209662 |  |
| &nbsp;&nbsp;&nbsp;Fair value of warrants exercised transferred from warrants reserve to share capital | 38796 |  |
| &nbsp;&nbsp;&nbsp;Finders' warrants issued pursuant to private placement | 470286 | 14632 |

---

------

**BTQ TECHNOLOGIES CORP.**<br>Notes to the Consolidated Financial Statements <br>Years Ended December 31, 2024 and 2023 <br>(Expressed in Canadian dollars)

**19. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Fair Values

<u>Fair value hierarchy</u>

The following provides a description of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:

* Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

* Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

* Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Assets and liabilities measured at fair value on a recurring basis were presented on the Company's statement of financial position as at December 31, 2024 and 2023 as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Fair value measurements using | Fair value measurements using | Fair value measurements using |  |
|  | Quoted prices in<br>active markets<br>for identical<br>instruments<br>(Level 1)<br>$| Significant<br>other<br>observable<br>inputs<br>(Level 2)<br>$| Significant<br>unobservable<br>inputs<br>(Level 3)<br>$| <br>Balance,<br>December 31,<br>2023 and 2024<br>$|
| Investments | - | - | 77229 | 77229 |

---

The fair values of the Company's other financial instruments, which include cash, short-term investments, other receivables (except GST), accounts payable and accrued liabilities, lease obligation, and due to related parties, approximate their carrying values due to the relatively short-term maturity of these instruments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents. The Company limits its exposure to credit loss by placing its cash and cash equivalents with high credit quality financial institutions. The carrying amount of financial assets represents the maximum credit exposure.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Foreign Exchange Rate Risk

Foreign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. The Company is exposed to foreign currency risk to the extent that monetary assets and liabilities are denominated in a foreign currency.

The following tables indicate the impact of foreign currency exchange risk on net working capital as at December 31, 2024 and 2023. The tables below also provides a sensitivity analysis of a 10% strengthening of the foreign currency against functional currencies identified which would have increased (decreased) the Company's net loss by the amounts shown in the tables below. A 10% weakening of the foreign currency against the functional currencies would have had the equal but opposite effect as at December 31, 2024 and 2023.

------

**BTQ TECHNOLOGIES CORP.**<br>Notes to the Consolidated Financial Statements <br>Years Ended December 31, 2024 and 2023 <br>(Expressed in Canadian dollars)

**19. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Foreign Exchange Rate Risk (continued)

---

| | | |
|:---|:---|:---|
| 2024 | TWD | US$ |
| Cash | 82993 | (1249) |
| Other receivables (except GST) |  | 106489 |
| Accounts payable and accrued liabilities | (6337488) | (237069) |
| Total foreign currency financial assets and liabilities | (6254495) | (131829) |
| Impact of a 10% strengthening or weakening of foreign exchange rate | (625450) | (13183) |

---

---

| | | |
|:---|:---|:---|
| 2023 | TWD | US$ |
| Cash | 9201660 | 296479 |
| Accounts payable and accrued liabilities |  | (190659) |
| Lease obligation | (778794) |  |
| Total foreign currency financial assets and liabilities | 8422866 | 105820 |
| Impact of a 10% strengthening or weakening of foreign exchange rate | 842287 | 10582 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Interest Rate Risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not exposed to significant interest rate risk as it does not have any liabilities with variable rates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) 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's objective to managing liquidity risk is to ensure that it has sufficient liquidity available to meet its liabilities when due. The Company relies on raising debt or equity financing in a timely manner.

The following amounts are the contractual maturities of financial liabilities as at December 31, 2024, and 2023:

---

| | | | |
|:---|:---|:---|:---|
| 2024 | Total<br>$| Within<br>1 year<br>$| Within<br>2-5 years<br>$|
| Accounts payable and accrued liabilities | 1357502 | 1357502 |  |
| Due to related parties | 27172 | 27172 |  |
| Total | 1384674 | 1384674 | - |
| 2023 | Total | Within<br>1 year | Within<br>2-5 years |
|  | $| $| $|
| Accounts payable and accrued liabilities | 859709 | 859709 |  |
| Lease obligation | 33554 | 33554 |  |
| Due to related parties | 24976 | 24976 |  |
| Total | 918239 | 918239 | - |

---

------

**BTQ TECHNOLOGIES CORP.**<br>Notes to the Consolidated Financial Statements <br>Years Ended December 31, 2024 and 2023 <br>(Expressed in Canadian dollars)

**20. CAPITAL MANAGEMENT**

The Company manages its capital to maintain its ability to continue as a going concern and to provide returns to shareholders and benefits to other stakeholders. The capital structure of the Company consists of cash and equity comprised of issued share capital, options reserve, warrant reserve, and RSUs reserve.

The Company manages its capital structure and makes adjustments to it in light of economic conditions. The Company, upon approval from its Board of Directors, will balance its overall capital structure through new share issuances or by undertaking other activities as deemed appropriate under the specific circumstances.

The Company is not subject to externally imposed capital requirements and the Company's overall strategy with respect to capital risk management remains unchanged from the year ended December 31, 2023.

**21. SEGMENTED INFORMATION**

The Company has one operating segment, the research and development of computer-based technology related to post-quantum cryptography. The Company's head office is in Canada and operations are in Canada, Taiwan, and Australia. Geographic information for non-current assets other than financial instruments is as follows:

---

| | | | |
|:---|:---|:---|:---|
| 2024 | Canada<br>$| Australia<br>$| Total<br>$|
| Non-current assets |  |  |  |
| &nbsp;&nbsp;&nbsp;Deposits | 18902 | 10703 | 29605 |
| Revenue | 666667 | - | 666667 |

---

---

| | | | |
|:---|:---|:---|:---|
| 2023 | Canada<br>$| Taiwan<br>$| Total<br>$|
| Non-current assets |  |  |  |
| &nbsp;&nbsp;&nbsp;Property and equipment |  | 102820 | 102820 |
| &nbsp;&nbsp;&nbsp;Right-of-use asset |  | 29905 | 29905 |
| &nbsp;&nbsp;&nbsp;Deposits |  | 35872 | 35872 |
|  | - | 168597 | 168597 |

---

**22. REVENUE**

During the year ended December 31, 2024, the Company earned license revenue of $666,667 (2023 - $nil) from a company controlled by the COO. As at December 31, 2024, the Company has deferred revenue of $315,497 (2023 - $nil), which represents the remaining period of the licensing agreement. A breakdown of the revenue is presented below:

---

| | | |
|:---|:---|:---|
|  | 2024<br>$| 2023<br>$|
| &nbsp;&nbsp;<u>Major goods/service lines</u> |  |  |
| &nbsp;&nbsp;Software license and related consulting services | 666667 | - |
| &nbsp;&nbsp;<u>Timing of revenue recognition</u> |  |  |
| &nbsp;&nbsp;Software license and services transferred over time | 666667 | - |

---

------

**BTQ TECHNOLOGIES CORP.**<br>Notes to the Consolidated Financial Statements <br>Years Ended December 31, 2024 and 2023 <br>(Expressed in Canadian dollars)

**23. COLLABORATION INCOME**

On May 1, 2023 and November 1, 2023, the Company entered into research and collaboration agreements with a third party. The Company agreed to conduct a research program and was responsible for the engagement of the researchers and contractors while the other party provided funding. The two parties jointly own the rights of the intellectual property resulting from the research program. During the year ended December 31, 2024, the Company recorded collaboration income of $108,913 (2023 - $257,359).

**24. GENERAL AND ADMINISTRATIVE EXPENSES**

The following is a breakdown of general and administrative expenses for the years ended December 31, 2024 and 2023:

---

| | | |
|:---|:---|:---|
|  | 2024<br>$| 2023<br>$|
| Foreign office representation |  | 125886 |
| Insurance | 62970 | 63700 |
| IT and communications | 119795 | 63317 |
| Office and miscellaneous | 118392 | 187420 |
| Rent | 161293 | 127705 |
| Travel | 232193 | 166662 |
| VAT | 61374 | 178000 |
|  | 756017 | 912690 |

---

**25. INCOME TAXES**

The following table reconciles the expected income tax expense (recovery) at the statutory income tax rates to the amounts recognized in the consolidated statements of operations and comprehensive loss for the years ended December 31, 2024 and 2023:

---

| | | |
|:---|:---|:---|
|  | 2024<br>$| 2023<br>$|
| &nbsp;&nbsp;Net loss before income taxes | (6054418) | (15403295) |
| &nbsp;&nbsp;Statutory tax rate | 27% | 27% |
| &nbsp;&nbsp;Expected income tax recovery | (1634693) | (4158890) |
| &nbsp;&nbsp;Tax effect of: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Permanent differences and other | 29503 | 1949822 |
| &nbsp;&nbsp;&nbsp;&nbsp;Difference due to tax rate of foreign jurisdiction | 504207 | 649105 |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange rate impact on temporary differences | (53385) | 24354 |
| &nbsp;&nbsp;&nbsp;&nbsp;Financing fees | (232425) | (25157) |
| &nbsp;&nbsp;&nbsp;&nbsp;Change in unrecognized deferred income tax assets | 1409111 | 1625766 |
| &nbsp;&nbsp;Income tax provision | 22318 | 65000 |

---

------

**BTQ TECHNOLOGIES CORP.**<br>Notes to the Consolidated Financial Statements <br>Years Ended December 31, 2024 and 2023 <br>(Expressed in Canadian dollars)

**25. INCOME TAXES** (continued)

The significant components of deferred income tax assets and liabilities are as follows:

---

| | | |
|:---|:---|:---|
|  | 2024<br>$| 2023<br>$|
| &nbsp;&nbsp;Deferred income tax assets |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-capital losses carried forward | 3057355 | 1903613 |
| &nbsp;&nbsp;&nbsp;&nbsp;Intangible asset | 74461 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Share issuance costs | 201034 | 20126 |
| &nbsp;&nbsp;Total gross deferred income tax assets | 3332850 | 1923739 |
| &nbsp;&nbsp;Total unrecognized deductible deferred income tax assets | (3332850) | (1923739) |
| &nbsp;&nbsp;Net deferred income tax asset | - | - |

---

Deferred income tax assets are only recognized to the extent that the realization of tax benefits is determined to be probable. As at December 31, 2024 and 2023, the Company has not recognized the benefit of the following deductible temporary differences:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Expiry | 2024<br> $ | Expiry | 2023<br> $ |
| Non-capital losses - Canadian | 2043 to 2044 | 6425696 | 2043 | 3964523 |
| Non-capital losses - foreign | No expiry | 10574273 | No expiry | 6665540 |
| Share issuance costs | 2025 to 2028 | 744570 | 2024 to 2027 | 74539 |
|  |  | 17744539 |  | 10704602 |

---

The group's current tax provision of $22,318 (2023 - $65,000) relates to management's assessment of the amount of tax payable on open tax positions where the liabilities remain to be agreed upon with foreign tax authorities. Uncertain tax items for which a provision of $22,318 (2023 - $65,000) is made, relate principally to the interpretation of tax legislation regarding arrangements entered into by the group.

**26. SUBSEQUENT EVENTS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) On January 3, 2025, the Company entered into an agreement to acquire intellectual property for US$50,000.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) On January 30, 2025, the Company issued 100,000 RSUs to a consultant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Subsequent to December 31, 2024, the Company issued 395,000 common shares for proceeds of $160,000 pursuant to the exercise of stock options.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Subsequent to December 31, 2024, the Company issued 40,437 common shares for proceeds of $16,175 pursuant to the exercise of share purchase warrants.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Subsequent to December 31, 2024, the Company issued 72,500 common shares pursuant to the conversion of RSUs.

------

## Exhibit 4.3

------

---

| |
|:---|
| ![](exhibit4-3xu001.jpg) |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE YEAR ENDED DECEMBER 31, 2024** |

---

This Management's Discussion and Analysis ("MD&A") of BTQ Technologies Corp. ("BTQ", or the "Company") is for the year ended December 31, 2024 and is dated March 24, 2025. The MD&A should be read in conjunction with the Company's audited consolidated financial statements and related notes for the year ended December 31, 2024. The consolidated financial statements are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS") and all monetary amounts are expressed in Canadian dollars. The following comments may contain management estimates of anticipated future trends, activities, or results. These are not a guarantee of future performance since actual results could change based on other factors and variables beyond management control.

The management of the Company is responsible for the preparation and integrity of the consolidated financial statements, including the maintenance of appropriate information systems, procedures, and internal controls and to ensure that information used internally or disclosed externally, including the consolidated financial statements and MD&A, is complete and reliable. The Company's board of directors (the "Board") follows recommended corporate governance guidelines for public companies to ensure transparency and accountability to shareholders. The Board's audit committee meets with management quarterly to review the financial statements including the MD&A and to discuss other financial, operating, and internal control matters.

Additional information relating to the Company is available under the Company's profile on SEDAR+ at www.sedarplus.ca.

**DESCRIPTION OF BUSINESS AND OVERVIEW**

The current business of BTQ was founded by a group of experienced post-quantum cryptographers with an interest in addressing the urgent security threat that a large-scale universal quantum computer poses to the Bitcoin network. Bitcoin's store of value thesis - one that supports a crypto ecosystem of over $1 trillion in market capitalization - has several potential quantum attack vectors that could compromise the network. This paradigm shift requires a new direction in cryptography and blockchain design. BTQ is building a portfolio of intellectual property to safeguard the crypto asset class with energy efficient quantum processes and currently holds several patent applications for generating quantum algorithms.

Quantum computers can take a very large integer and find out its prime factor extremely rapidly by using Shor's algorithm. Theoretically, a universal large scale quantum computer could be used to disrupt cryptocurrencies, break into digital wallets, and access and decrypt confidential communications. Ethereum and Algor, two of the most technologically advanced cryptocurrencies, announced plans to transition to post-quantum standards.

BTQ is listed on Cboe Canada under the symbol "BTQ", the OTCQB under the symbol "BTQQF" and the Frankfurt Stock Exchange under the symbol "NG3".

<u>Acquisition</u>

On December 31, 2021 (as amended on April 29, 2022, July 30, 2022, and November 29, 2022), the Company entered into a share exchange agreement with BTQ AG (the "Acquisition"). BTQ AG was incorporated in the Principality of Liechtenstein on March 26, 2021 by a group of experienced post-quantum cryptographers with an interest in addressing the urgent security threat that a large-scale universal quantum computer poses to the Bitcoin network.

In connection with the Acquisition, the Company completed a private placement (the "Offering") of 18,001,250 subscription receipts at a price of $0.40 per subscription receipt, for gross proceeds of $7,200,500, with each subscription receipt automatically converting with no additional consideration into one post-Consolidation Share (each as defined below) concurrent with the closing of the Acquisition.

------

---

| |
|:---|
| ![](exhibit4-3xu001.jpg) |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE YEAR ENDED DECEMBER 31, 2024** |

---

On February 17, 2023, the Company closed the Acquisition resulting in the issuance of 92,000,000 post- Consolidation Shares to the BTQ AG shareholders. Concurrent with the closing, the Company changed its name from Sonora Gold & Silver Corp. to BTQ Technologies Corp. and completed a consolidation (the "Consolidation") of its common shares on the basis of ten pre-Consolidation shares to one post- Consolidation share (each, a "Share"). Immediately following the Consolidation, and excluding those Shares issued pursuant to the Acquisition or the Offering, the former securityholders of Sonora Gold and Silver Corp. ("SOC") held an aggregate of 8,747,629 Shares and 350,000 stock options in the Company. All Share amounts have been retroactively restated to reflect the Consolidation for all periods presented.

On closing of the Acquisition, the gross proceeds of $7,200,500 from the Offering were released from escrow and each subscription receipt was converted into one Share. In connection with the Acquisition, the Company issued 2,500,000 Shares with a fair value of $1,000,000 to a finder as a success fee. In connection with the Offering, the Company also paid $93,174 in finders' fees and issued 232,936 finders' warrants exercisable at an exercise price of $0.40 per Share for a period of two years.

As a condition of the Acquisition, the Company voluntarily delisted its Shares from the TSX-V and the Shares commenced trading on Cboe Canada (formerly NEO Exchange) on February 21, 2023 under the symbol "BTQ".

**DISCUSSION OF OPERATIONS**

The following are operational highlights for the years ended December 31, 2023 and 2024 and events subsequent up until the date of this MD&A.

<u>Product Updates</u>

On March 2, 2023, the Company announced the alpha release of Keelung, a domain-specific language designed for fast, private, and secure application development. Based on research in the field of post- quantum zero-knowledge cryptography, Keelung will empower developers to create secure and reliable post-quantum zero-knowledge proofs without the need for specialized cryptography skills. Both Keelung and its compiler have been implemented in Haskell, enabling developers to produce high-level zero- knowledge proofs protected by Haskell's type system while leveraging Haskell's extensive ecosystem and tooling. Keelung will be 100% open-source, allowing for transparency, collaboration, and community-driven development.

Keelung is now live and open-sourced. The release information can be found here:

https://github.com/btq-ag/keelung/releases. The steps to complete over the coming year are as follows:

&nbsp;&nbsp;&nbsp;&nbsp;1. Language Extensions (v0.19.0 - v0.20.0): Added support for user-defined datatypes, unsigned integer comparisons, and optimizations to the constraint system and compiler.

&nbsp;&nbsp;&nbsp;&nbsp;2. Optimization and Stability (v0.21.0): Introduced a more precise method for reference counting on unsigned integers, renaming of primitive datatype conversions, and numerous bug fixes and stability improvements for the compiler.

&nbsp;&nbsp;&nbsp;&nbsp;3. Upcoming Optimizations (v0.22.0+): Planned optimizations include operators for slicing and joining unsigned integers, improved polynomial representation, faster polynomial insertion, standard library optimizations (e.g., AES, Blake2), and constraint reduction for faster proof generation.

&nbsp;&nbsp;&nbsp;&nbsp;4. Developer Experience (Ongoing): Refinements to the DSL syntax, performance improvements for common data types, benchmarking in the CI/CD pipeline, and expanded documentation and tutorials to improve the developer experience.

------

---

| |
|:---|
| ![](exhibit4-3xu001.jpg) |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE YEAR ENDED DECEMBER 31, 2024** |

---

&nbsp;&nbsp;&nbsp;&nbsp;5. Ecosystem Integration (Future): Planned integration with popular ZK toolchains like Snarkjs/Circom, support for PLONK-based proving systems, and quantitative information flow analysis for privacy leakage detection.

On June 5, 2023, the Company published a research paper on proof-of-work consensus by quantum sampling. The paper presents a novel approach that has the potential to revolutionize blockchain consensus algorithms.

On June 26, 2023, the Company announced that it had received approval from the USPTO for its patent application, "A system and method for quantum-safe authentication, encryption, and decryption of information". The patent relates to methods for generating a private cryptographic key for use in a secure cryptogram for transmission between entities, enabling quantum-safe encryption.

On July 27, 2023, the Company announced that its Quantum-Secure Signature Technology "Preon" had been selected by the National Institute of Standards and Technology (NIST) for consideration in their Post- Quantum Cryptography (PQC) standardization process. Preon is a robust and efficient post-quantum signature scheme, showcasing distinctive features including small key size, rapid key generation, minimal assumptions, and flexible functionality. These attributes make it resistant to potential threats from both classical and quantum computers. The co-authors of this submission include Hon Hai Research Institute, the research arm of global leader Hon Hai Precision Industry Co., Ltd. (Foxconn).

On October 4, 2023, BTQ announced the advancement of its collaboration with ITRI to develop a security chip that utilizes QCIM (Quantum Computation in Memory) technology. This chip will be used for the computation of Kyber, a standardized algorithm by the National Institute of Standards and Technology (NIST). In 2022, BTQ entered a multi-year collaboration agreement with ITRI to develop energy-efficient post-quantum hardware solutions for applications in blockchain, telecom, and other industries with a need for long-term data security. In the first phase of collaboration, BTQ and ITRI successfully validated the proof of concept of applying computation-in-memory in an ASIC chip. To further the collaboration, BTQ is entering into this new phase of the project with ITRI.

<u>Corporate Activities</u>

On November 29, 2023, BTQ and Hon Hai Research Institute announced a Research and Collaboration Agreement aiming to support the academic community by promoting the standardization of post-quantum cryptography. BTQ and Hon Hai first in their submission of Preon, a post-quantum signature scheme submitted as part of the NIST "Call for Additional Digital Signature Schemes for the Post-Quantum Cryptography Standardization Process".

On May 3, 2024, the Company entered into a software license agreement with ZKP Corp. ("ZKP"), a Delaware corporation controlled by Nicolas Roussy Newton, the Chief Operating Officer of the Company, for which the Company received $1,000,000 for the use of its proprietary software for a period of one year.

On September 9, 2024, the Company issued convertible debt for proceeds of $1,000,000. The convertible debt is non-interest bearing and due on September 9, 2026. At the election of the lender, the principal amount of the debt is convertible into common shares at $0.40 per share.

On July 23, 2024, BTQ entered into an agreement for the acquisition of Radical Semiconductor's Processing-in-Memory Technology Portfolio, advancing its Post-Quantum Cryptography capabilities. The integration of Radical's cutting-edge technology is set to enhance BTQ's quantum-secure communications infrastructure and provide substantial growth opportunities in emerging markets such as IoT, financial services, blockchain, and government sectors.

------

---

| |
|:---|
| ![](exhibit4-3xu001.jpg) |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE YEAR ENDED DECEMBER 31, 2024** |

---

On November 5, 2024, the Company and Macquarie University announced a strategic research collaboration to advance quantum computing and secure communications. The partnership is focused in the areas of quantum information theory and post-quantum secure communications, with the aim of integrating quantum processing into a range of communication protocols to enhance speed, security, and energy efficiency.

On November 8, 2024, the Company issued convertible debt for proceeds of $500,000. The convertible debt is non-interest bearing and due on November 14, 2026. At the election of the lender, the principal amount of the debt is convertible into common shares at $0.40 per share.

On December 19, 2024, the Company issued 3,355,704 common shares at $2.98 per share for gross proceeds of $10,000,000 pursuant to a brokered listed issuer financing exemption ("LIFE") offering. In connection with the financing, the Company incurred share issuance costs of $860,833 and issued 167,785 finder's warrants exercisable at $4.09 per common share expiring on December 19, 2029.

On December 24, 2024, the Company issued 3,750,000 common shares pursuant to the conversion of

$1,500,000 in convertible debt.

On January 3, 2025, the Company entered into an agreement to for the acquisition of intellectual property from Cimtech Technology Co., Ltd., an innovator in memory technology and computing-in memory ("CIM") solutions. This strategic acquisition enhances the Company's capabilities in post-quantum cryptography and quantum-secure communication technologies.

**Trends**

<u>Quantum Computing</u>

According to McKinsey & Company, the quantum technology market will be valued at over $106 billion by 20401, with the bulk of the value projected to come from quantum computing as opposed to quantum sensing and quantum communications. The quantum security industry sits within quantum computing and is a rapidly growing field that focuses on developing secure cryptographic solutions for the age of quantum computing. As quantum computers become more powerful, they will become increasingly capable of breaking traditional cryptographic systems, creating a need for even more robust and advanced quantum- resistant solutions. Traditional cryptographic methods are at risk of being broken, which will have serious implications for national security, financial institutions, and other industries that rely on secure communication and data storage. Estimates of when a commercial quantum computer will hit the market vary, however, last year, IBM unveiled the Osprey (433 qubits) and updated its road map to develop a 4,000+ qubit processor in 20252, indicating that these super computers will be available in the near future. In addition to private sector funding, Government bodies around the world are also investing large sums of capital into quantum technologies. At $15.3 billion, China leads the way in publicly announced quantum funding initiatives, followed by the EU at $8.4 billion, USA at $3.7 billion, Japan at $1.8 billion, UK at $1.3 billion, Canada at $1.1 billion, and several others between $0.1 billion and $1.0 billion3.

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1 <u>https:</u><u>//www.mckinsey.com/featured-insights/the-rise-of-quantum-computing</u>

2 <u>https://newsroom.ibm.com/2022-11-09-IBM-Unveils-400-Qubit-Plus-Quantum-Processor-and-Next-Generation-IBM-</u> <u>Quantum-System-Two</u>

3 <u>htt</u><u>ps://www.mckinsey.com/~/media/mckinsey/business%20functions/mckinsey%20digital/our%20insights/quantum%</u>

<u>20technology%20sees%20record%20investments%20progress%20on%20talent%20gap/quantum-technology-</u> <u>monitor-april-2023.pdf</u>

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|:---|
| ![](exhibit4-3xu001.jpg) |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE YEAR ENDED DECEMBER 31, 2024** |

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Overall, the quantum security industry is a rapidly evolving field that will continue to see significant growth and development in the coming years. As businesses and organizations seek to protect their data from the threat of quantum computing, the need for effective and innovative quantum-resistant security solutions will only continue to increase. Investors are recognizing this with about two-thirds, or 68 percent, of all Quantum Technology startup investments since 2001 having occurred in 2021 and 20224.

<u>Post-Quantum Cryptography</u>

One of the main trends in the quantum security industry is the development of post-quantum cryptography ("PQC") algorithms. PQC algorithms are designed to be resistant to attacks from quantum computers, making them a crucial component of quantum-resistant security systems. Many organizations, including government agencies and financial institutions, are already investing in PQC research and development to ensure the security of their sensitive data.

A key driver in the development of the PQC industry is The National Institute of Standards and Technology ("NIST"), a U.S. Department of Commerce agency which sets the standards for businesses and other organizations to secure sensitive data and protect critical infrastructure5. NIST compliance standards must be met by anyone who processes, stores, or transmits sensitive information for the Department of Defense, General Services Administration, NASA, and other government agencies, and is largely seen as the de facto standard body to make cryptographic standards for the entire world.

In 2016, NIST initiated a process to solicit, evaluate, and standardize one or more quantum-resistant public- key cryptographic algorithms. These new cryptography standards will specify additional digital signature and public-key encryption algorithm(s) which are capable of protecting sensitive information well into the foreseeable future, including after the advent of quantum computers. In 2022, NIST officially announced the standardized algorithms from Round 3 of this PQC competition. This was a landmark milestone as government agencies and businesses had been waiting nearly six years for a clear direction as to which algorithms are trustworthy. PQC algorithms are much larger than their classical counterparts. For example, even the smallest NIST-approved digital signature algorithm is over 10x larger than the current Elliptic Curve Digital Signature Algorithm6. This is particularly problematic for distributed ledgers where each full node keeps an entire record of all activities on the ledger. If a blockchain like Bitcoin and Ethereum were to adopt the newly standardized PQC algorithms today, the size of both chains would have to be increased to an unmanageable extent.

<u>Competition and Market Participants</u>

Generally, BTQ differentiates itself from its competitors with its work at the intersection of post-quantum cryptography and blockchain. The Company works on developing next-generation cryptographic primitives like zero-knowledge cryptography to achieve advanced security and efficiency, which is novel in the industry.

Large publicly traded quantum companies exist in the space, including: D-Wave Systems (NYSE: QBTS), IONQ (NYSE: IONQ), Arqit Quantum (NASDAQ: ARQQ). However, these companies are not direct competitors as their main goal is to build a commercial quantum computer with real-world useability. These companies are capital intensive and well-funded by both institutional investors and governments and their valuations range from approximately US$50 million to over US$1 billion.

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4 <u>https:</u><u>//www.mckinsey.com/capabilities/mckinsey-digital/our-insights/quantum-technology-sees-record-investments-</u> <u>progress-on-talent-gap</u>

5 <u>https:</u><u>//www.btq.com/en/blog/blockchain-security</u>

6 <u>https://falcon-sign.info/</u>

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| ![](exhibit4-3xu001.jpg) |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE YEAR ENDED DECEMBER 31, 2024** |

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With a surge in funding and general investor interest and excitement in the industry, several companies are emerging in the post-quantum security space. There are various companies that try to tackle the same global problem as BTQ: getting today's infrastructure secured for the quantum revolution, however, the approaches vary widely based on cryptographic techniques, as well as end uses served and therefore is not a winner takes all market. In fact, other companies operating directly in the space may offer potential collaboration opportunities. Below is a non-exhaustive list of indirect competitors to BTQ:

PQ Shield, for example, describes itself as a PQC company contributing to the global standards and core technologies to power the future security layer of the world's leading organizations. Its quantum-secure cryptographic solutions work with companies' legacy systems to protect sensitive data now and for years to come. The company mainly serves the defense & infrastructure, IoT and OEM markets. PQ Shield raised

$20 million as part of their Series A round in January 20227.

Additionally, Isara provides security solutions specializing in cryptographic risk management and in creating crypto-agile and quantum-safe security solutions for today's information technology ecosystems. The company broadly targets enterprises and governments. Isara raised over $10 million in 2018 to fund its R&D efforts8.

In the blockchain space, large technology companies are building their own secured blockchains. For example, IBM offers blockchain services that help secure multiple aspects of critical industries like supply chains, banking, healthcare, and government. The goal of these blockchains is usually to streamline and scale processes in a secure manner9.

SandboxAQ, an enterprise SaaS company stemming from Alphabet (previously Google), is another key player in the space. Sandbox provides solutions at the nexus of AI and Quantum technology to address some of the world's most challenging problems. The company's core team and inspiration formed at Alphabet Inc., emerging as an independent, growth-capital-backed company in 2022. The company aims to protect the public sector, life sciences & healthcare, financial services, cybersecurity, material science & manufacturing, and global navigation10.

<u>Reverse Takeover</u>

In accordance with IFRS 3, business combinations, the substance of the Acquisition is a reverse takeover as the shareholders of BTQ AG held 75.88% of the resulting issuer shares and SOC's shareholders held 24.12% of the resulting issuer shares. Accordingly, for accounting purposes, BTQ AG was treated as the accounting parent company (legal subsidiary) and the Company has been treated as the accounting subsidiary (legal parent) in these consolidated financial statements. As BTQ AG was deemed to be the acquirer for accounting purposes, its assets, liabilities and operations since incorporation are included in these consolidated financial statements at their historical carrying values. The Company's results of operations have been included from February 17, 2023.

As the Acquisition did not constitute a business combination, the reverse takeover transaction was accounted for in accordance with IFRS 2, share-based payments, whereby equity instruments issued were recognized at fair value and allocated to the net assets acquired (liabilities assumed). Any difference is the value of the listing which was expensed on completion of the Acquisition.

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7 <u>https:</u><u>//www.prnewswire.com/news-releases/pqshield-collaborates-with-nccoe-and-industry-to-ease-the-real-world-</u><u>implementation-of-quantum-resistant-cryptography-301794688.html</u>

8 <u>https:</u><u>//www.isara.com/company/newsroom/shasta-ventures-investment.htm</u>l

9 <u>https:</u><u>//www.ibm.com/blockchain</u>

10 <u>https:</u><u>//www.sandboxaq.com/solutions/security-suite</u>

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| ![](exhibit4-3xu001.jpg) |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE YEAR ENDED DECEMBER 31, 2024** |

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The Transaction was measured at the fair value of the common shares that BTQ AG would have had to issue to the shareholders of the Company, being 8,747,629 common shares with a fair value of $3,499,051, and the fair value of 350,000 stock options of the Company with a fair value of $97,532, to give the shareholders of the Company the same percentage of equity interest in the combined entity that results from the reverse acquisition had it taken the legal form of BTQ AG acquiring the Company. The fair value of the 8,747,629 common shares was determined based on the pricing of the Offering with a value of $0.40 being allocated to each Share. The purchase price was allocated to the net assets acquired as follows:

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| |
|:---|
| Fair value of the Company's shares (8,747,629 common shares) |
| Fair value of 350,000 stock options of the Company outstanding |
| Total consideration |
| Less: fair value of identifiable assets acquired and liabilities assumed: |
| Cash |
| Cash held in escrow |
| Prepaid expenses |
| Restricted cash |
| Accounts payable and accrued liabilities) |
| Subscription receipts liabilities) |
| Net liabilities assumed) |
| Listing costs |

---

The Company issued 2,500,000 common shares with a fair value of $1,000,000 as a finder's fee for the Transaction.

**SELECTED ANNUAL INFORMATION**

The following table presents selected audited financial information for the three most recent fiscal year ends.

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| | | | |
|:---|:---|:---|:---|
|  | 2024<br>$| 2023<br>$| 2022<br>$|
| &nbsp;&nbsp;Revenues | 666667 |  |  |
| &nbsp;&nbsp;Net loss | (6076736) | (15403295) | (18752548) |
| &nbsp;&nbsp;Net loss per share, basic and diluted | (0.05) | (0.13) | (0.37) |
| &nbsp;&nbsp;Total assets | 9731478 | 4035989 | 3868614 |
| &nbsp;&nbsp;Total non-current financial liabilities | - | - | 47088 |

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|:---|
| ![](exhibit4-3xu001.jpg) |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE YEAR ENDED DECEMBER 31, 2024** |

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**RESULTS OF OPERATIONS**

**For the year ended December 31, 2024**

The net loss for the year ended December 31, 2024 was $6,076,736 (2023: $15,403,295). The main categories are listed below:

<u>Revenue of $666,667 (2023: $nil)</u><br> The Company entered into a licensing agreement with ZKP during the year.

<u>Business development, marketing, and promotion of $779,967 (2023: $1,341,812)</u><br> The decrease is due to terminated marketing agreements during the year. In addition, the Company spent more marketing and promotion in the prior year to increase awareness as the Company became a publicly listed entity.

<u>General and administrative of $756,017 (2023: $912,690)</u><br> The decrease is mainly due to the closure of the Company's Taiwan office in October 2024 after several months of downsizing staff.

<u>Professional fees of $1,089,994 (2023: $636,285)</u>

The increase is mainly due to the increase in audit fees incurred during the year. In addition, the Company incurred higher legal fees as a result of the Taiwan office closure and termination of most of its employees.

<u>Research and development of $2,732,496 (2023: $2,553,365)</u><br> The increase was mainly due to research and development fees incurred to Macquarie University.

<u>Share-based compensation of $1,063 (2023: $3,920,656)</u>

The decrease in share-based compensation was mainly due to the forfeiture of 3,120,000 stock options of the Company as a result of employee terminations during the year. During the year-ended December 31, 2024, the Company granted 1,325,000 (2023: 8,310,000) stock options and 800,000 (2023: 3,930,000) restricted stock units.

<u>Wages and benefits of $575,532 (2023: $761,463)</u><br> The decrease is mainly due to the termination of employees and closure of Taiwan office.

<u>Listing and transaction costs of $nil (2023: $5,059,669)</u><br> Listing and transaction costs relate to the RTO transaction in the prior year. See Reverse Takeover section above.

**FOURTH QUARTER**

**For the three months ended December 31, 2024**

The net loss for the three months ended December 31, 2024 was $1,517,826 (2023: $3,500,699). The decrease in net loss compared to the three months ended December 31, 2023 is mainly due to the recognized revenue during the year and the decrease in expenditures following the closure of the Taiwan office. The main categories are listed below:

<u>Revenue of $250,000 (2023: $nil)</u>

The Company recognized revenue of $250,000 for the licensing agreement with ZKP entered into during the year.

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| ![](exhibit4-3xu001.jpg) |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE YEAR ENDED DECEMBER 31, 2024** |

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<u>Business development, marketing, and promotion of $206,689 (2023: $443,437)</u>

The Company spent more marketing and promotion in the previous year to increase awareness as the Company became a publicly listed entity.

<u>General and administrative of $156,938 (2023: $362,949)</u><br> The decrease is mainly due to the closure of the Company's Taiwan branch office during the year.

<u>Professional fees of $235,888 (2023: $197,571)</u><br> Slight increase in professional fees due to an increase in legal fees.

<u>Research and development of $696,214 (2023: $905,802)</u><br> The decrease is mainly due to the termination of research and development employees located in Taiwan prior to the fourth quarter of the current year.

<u>Share-based compensation of $191,994 (2023: $1,259,207)</u><br> The decrease in share-based compensation was mainly due to stock options forfeitures as a result of employee terminations during the year. The Company also granted lesser options which are graded vesting every period. The Company granted 1,325,000 (2023: 8,310,000) stock options and 800,000 (2023: 3,930,000) restricted stock units during the year.

<u>Wages and benefits of $73,587 (2023: $247,442)</u><br> The decrease is mainly due to the termination of employees located in Taiwan prior to the fourth quarter of the current year.

**USE OF AVAILABLE FUNDS**

In connection with the Acquisition and the listing of the Shares on the NEO, the Company filed a listing statement dated February 17, 2023 under its SEDAR+ profile at www.sedarplus.ca. Below is a reconciliation of the expected use of available funds against the actual use of such funds as at December 31, 2024:

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| | | |
|:---|:---|:---|
| **Item** | Use of Available Funds<br>$| Actual Use of Available <br>Proceeds as at <br>December 31, 2024<br>$|
| Transaction costs related to the Acquisition | 700000 | 705078 |
| Research contracts | 750000 |  |
| Software and hardware development | 4215770 | 3988993 |
| Sales and business development | 1500000 | 1804167 |
| General and administrative costs<br>estimated for 12-months | 1830759 | 2698291 |
| Unallocated working capital | 200000 |  |
| **Total** | **9196529** | **9196529** |

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In connection with the brokered LIFE offering which closed on December 19, 2024, below is a reconciliation of the expected use of available funds against the actual use of such funds as at December 31, 2024:

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|:---|
| ![](exhibit4-3xu001.jpg) |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE YEAR ENDED DECEMBER 31, 2024** |

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| | | |
|:---|:---|:---|
| **Item** | Use of Available Funds<br>$| Actual Use of Available <br>Proceeds as at <br>December 31, 2024<br>$|
| Quantum Computation in Memory Product | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3810000 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- |
| General and administrative | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1400000 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- |
| Ongoing operations | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1500000 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- |
| Working capital | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2429167 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1307444 |
| **Total** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9139167** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1307444** |

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**SUMMARY OF QUARTERLY RESULTS**

The following table sets out financial information for the past eight quarters:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | Three Months Ended ($) | Three Months Ended ($) | Three Months Ended ($) | Three Months Ended ($) |
|  | December 31,<br>2024 | September 30,<br>2024 | June 30,<br>2024 | March 31,<br>2024 |
| Total revenues | 250000 | 326094 | 90573 |  |
| Net loss | (1517826) | (1029346) | (1695192) | (1834372) |
| Net loss per share, basic and diluted | (0.01) | (0.01) | (0.01) | (0.02) |

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| | | | | |
|:---|:---|:---|:---|:---|
|  | Three Months Ended ($) | Three Months Ended ($) | Three Months Ended ($) | Three Months Ended ($) |
|  | December 31,<br>2023 | September 30,<br>2023 | June 30,<br>2023 | March 31,<br>2023 |
| Total revenues |  |  |  |  |
| Net loss | (3500699) | (2418203) | (2822927) | (6661466) |
| Net loss per share, basic and diluted | (0.02) | (0.02) | (0.02) | (0.07) |

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The net loss for the quarter ended December 31, 2023 includes share-based compensation of $1,259,207 related to the issuance of stock options and restricted stock units.

The net loss for the quarter ended September 30, 2023 includes share-based compensation of $755,391 related to the issuance of stock options and restricted stock units.

The net loss for the quarter ended June 30, 2023 includes share-based compensation of $1,623,513 related to the issuance of stock options and restricted stock units.

The net loss for the quarter ended March 31, 2023 includes costs of $5,059,669 relating to the Reverse Take Over transaction, share-based compensation of $282,545 related to the issuance of stock options and increased level of activity as BTQ became public as a subsidiary of the Company with a concurrent financing effective February 17, 2023.

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|:---|
| ![](exhibit4-3xu001.jpg) |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE YEAR ENDED DECEMBER 31, 2024** |

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**LIQUIDITY AND CAPITAL RESOURCES**

As at December 31, 2024, the Company had cash of $9,336,892 and working capital of $7,831,723 compared to cash of $2,862,023 and working capital of $2,806,924 as at December 31, 2023.

The Company's operations used cash of $4,695,569 (2023: $6,945,461) during the year ended December 31, 2024. The Company's investing activities provided cash of $330,076 (2023: 745,960). The cash requirements during the year ended December 31, 2024 were funded from the net proceeds from share issuances of $9,416,808 (2023: $7,107,326) and $1,500,000 (2023: $nil) from the convertible debt. The Company's aggregate operating, investing, and financing activities during the year ended December 31, 2024 resulted in an increase in its cash balance of $6,474,869.

**OFF BALANCE SHEET ARRANGEMENTS**

There are no off-balance sheet arrangements to which the Company is committed.

**RELATED PARTY TRANSACTIONS**

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

Key management personnel are persons responsible for planning, directing, and controlling the activities of an entity, and include all officers and directors of the Company. Related party transactions during the years ended December 31, 2024 and 2023 was comprised of the following:

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| | | |
|:---|:---|:---|
|  | 2024<br>$| 2023<br>$|
| Consulting fees incurred to Ming-Yang Chih, former Chief Strategic Officer | 24278 | 97163 |
| Marketing and promotion incurred to Mathieu Gauthier, Head of Corporate Development | 98626 | 97163 |
| Professional fees incurred to Saturna Group Chartered Professional Accountants LLP, a firm where the CFO, Lonny Wong, is a partner | 84000 | 59661 |
| Research and development incurred to Po-Chun Ko (former Chief | 249842 | 413158 |
| Technology Officer), Chen-Mou Cheng (former Chief Cryptographer), and Chelpis Quantum Tech Co. (company owned by Ming-Yang Chih) |  |  |
| Wages and benefits incurred to Nicolas Roussy Newton (COO) and Peter Lavelle (former Chief Legal Officer) | 282623 | 290543 |
| Total short-term benefits | 739369 | 957688 |
| Share-based payments | 28905 | 765827 |
|  | 768274 | 1723515 |

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As at December 31, 2024, the Company owed $124,247 (2023 - $114,223) for expenses paid on behalf of the Company to the CEO of the Company, of which $97,075 (2023 - $89,247) is included in accounts payable and accrued liabilities. The amounts owed are non-interest bearing, unsecured, and due on demand.

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|:---|
| ![](exhibit4-3xu001.jpg) |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE YEAR ENDED DECEMBER 31, 2024** |

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As at December 31, 2024, the Company was owed $137,369 (2023 - $49,888) from the Chief Operating Officer ("COO") of the Company, which is included in other receivables.

As at December 31, 2024, the Company owed $7,350 (2023 - $7,350) to a firm for professional fees rendered where the Chief Financial Officer of the Company is a partner, which is included in accounts payable and accrued liabilities.

As at December 31, 2024, the Company owed $nil (2023 - $132,260) for a bonus pursuant to a consulting agreement to the former Chief Cryptographer of the Company, which is included in accounts payable and accrued liabilities.

As at December 31, 2024, the Company owed $15,020 (2023 - $7,936) in consulting fees to the Head of Corporate Development of the Company, which is included in accounts payable and accrued liabilities.

During the year ended December 31, 2024, the Company earned license revenue of $666,667 (2023 - $nil) from a ZKP, a company controlled by the COO. As at December 31, 2024, the Company has deferred revenue of $315,497 (2023 - $nil) for this company. The license agreement relates to certain non-core technology of the Company that is not of a near-term focus for development, and the licensing of such technology to ZKP provided the Company with near-term revenue stream and enabled ZKP to access certain U.S. focused funding sources for the development of a related product.

**Accounting Standards Effective January 1, 2024 and Issued But Not Yet Effective**

A number of new standards, and amendments to standards and interpretations, are not yet effective for the year ended December 31, 2024, and have not been early adopted in preparing these consolidated financial statements.

*IFRS 18 Presentation and Disclosure in Financial Statements*

In April 2024, the IASB issued IFRS 18 - Presentation and Disclosure in Financial Statements which will replace IAS 1, Presentation of Financial Statements. The key new concepts introduced in IFRS 18 relate to the structure of the statement of earnings (loss), required disclosures in the financial statements for certain earnings or loss performance measures that are reported outside an entity's financial statements and enhanced principles on aggregation and disaggregation which apply to the primary financial statements and notes in general. IFRS 18 will apply for reporting periods beginning on or after January 1, 2027, and also applies to comparative information. The Company is still in the process of assessing the impact of this standard on its consolidated financial statements.

*Classification of liabilities as current or non-current (amendments to IAS 1, presentation of financial statements)*

On January 23, 2020, an amendment was issued to IAS 1 to address inconsistencies with how entities apply the standards over classification of current and non-current liabilities. The amendment serves to address whether, in the statement of financial position, debt and other liabilities with an uncertain settlement should be classified as current or non-current. This amendment is effective on January 1, 2024. The Company adopted the amendment on the effective date and the adoption did not have a material impact on the Company's consolidated financial statements.

*Non-current liabilities with covenants (amendments to IAS 1)*

The amendments to IAS 1 specify that only covenants with which an entity is required to comply on or before the reporting date affect the classification of a liability as current or non-current. In addition, an entity has to disclose information in the notes that enables users of financial statements to understand the risk that non-current liabilities with covenants could become repayable within twelve months. The amendments are effective for annual reporting periods beginning on or after January 1, 2024, and are to be applied retrospectively. The Company adopted the amendment on the effective date and the adoption did not have a material impact on the Company's consolidated financial statements.

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|:---|
| ![](exhibit4-3xu001.jpg) |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE YEAR ENDED DECEMBER 31, 2024** |

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**CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS**

<u>Use of estimates</u>

The preparation of consolidated financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from our company's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

*Reverse Takeover*

The reverse takeover transaction was measured at the fair value of the common shares and stock options that BTQ would have had to issue to the shareholders of the Company. The fair value of common shares and stock options issued were estimated based on the Company's financing event which took place concurrently with the reverse takeover transaction. The fair values of identifiable assets acquired and liabilities assumed approximated their carrying values.

<u>Research and development costs</u>

Research costs are recognized as an expense when incurred but development costs may be capitalized as intangible assets if certain conditions are met as described in IAS 38 *Intangible Assets*. Management has determined that development costs do not meet the conditions for capitalization under IAS 38 and all research and development costs have been expensed.

<u>Fair values of stock options</u>

Fair values of stock options are determined using the Black-Scholes option pricing model. Estimating fair value requires determining the most appropriate valuation model for a grant of equity instruments, which is dependent on the terms and conditions of the grant. Option-pricing models require the use of highly subjective estimates and assumptions including the expected stock price volatility. Changes in the underlying assumptions can materially affect the fair value estimates and, therefore, existing models do not necessarily provide reliable measurement of the fair value of the Company's stock options and performance warrants.

<u>*Deferred income taxes*</u>

The determination of income tax expense and the composition of deferred income tax assets and liabilities involves judgment and estimates as to the future taxable earnings, expected timing of reversals of deferred income tax assets and liabilities, and interpretations of tax laws. The Company is subject to assessments by tax authorities who may interpret the tax law differently. Changes in these interpretations, judgments, and estimates may materially affect the final amount of current and deferred income tax provisions, deferred income tax assets and liabilities, and results of operations.

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|:---|
| ![](exhibit4-3xu001.jpg) |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE YEAR ENDED DECEMBER 31, 2024** |

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<u>*Going concern presentation*</u>

The consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The assessment of the Company's ability to source future operations and continue as a going concern involves judgement. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. If the going concern assumption is not appropriate for the financial statements, then adjustments would be necessary in the carrying value of the assets and liabilities, the reported revenue and the expenses and the statement of financial position classifications used.

<u>*Impairment of non-current assets*</u>

The Company evaluates the recoverability of non-current assets, including property and equipment, right of use assets, and definite life intangible assets, whether events or changes in circumstances indicate that the carrying value of the asset, or asset group, may not be recoverable. When the Company determines that the carrying value of the long-lived asset may not be recoverable based upon the existence of one or more of the indicators, the assets are assessed for impairment based on the estimate of future discounted cash flow. If the carrying value of an asset exceeds its estimated recoverable amount, an impairment loss is recorded for the excess of the asset's carrying value over its recoverable amount. Management judgement is required in the determination of indicators of impairment.

<u>*Convertible debentures*</u>

Convertible debentures are financial instruments which contain a separate financial liability and equity instrument. The identification of such components embedded within a convertible debenture requires significant judgement given that it is based on the interpretation of the substance of the contractual arrangement. The individual fair values attributed to the different components of a financing transaction, and/or derivative financial instruments, are determined using valuation techniques. The Company uses judgement to select the methods used to make certain assumptions and in performing the fair value calculations in order to determine the values attributed to each component of a transaction at the time of their issuance. These valuation estimates could be significantly different because of the use of judgment and the inherent uncertainty in estimating the fair value of these instruments that are not quoted in an active market.

**FINANCIAL INSTRUMENTS AND RISK MANAGEMENT**

**Fair Values**

The following provides a description of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

------

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| |
|:---|
| ![](exhibit4-3xu001.jpg) |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE YEAR ENDED DECEMBER 31, 2024** |

---

Assets and liabilities measured at fair value on a recurring basis were presented on the Company's statement of financial position as at December 31, 2024 and 2023 as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Fair value measurements using | Fair value measurements using | Fair value measurements using |  |
|  | Quoted prices in |  |  |  |
|  | active markets | Significant other | Significant |  |
|  | for identical | observable | unobservable | Balance, |
|  | instruments | inputs | inputs | December 31, |
|  | (Level 1) | (Level 2) | (Level 3) | 2023 and 2024 |
|  | $| $| $| $|
| Investments | - | - | 77229 | 77229 |

---

The fair values of the Company's other financial instruments, which include cash, short-term investment, other receivables, loan receivable, and accounts payable and accrued liabilities, lease obligation, and due to related parties, approximate their carrying values due to the relatively short-term maturity of these instruments.

**Credit Risk**

Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents. The Company limits its exposure to credit loss by placing its cash and cash equivalents with high credit quality financial institutions. The carrying amount of financial assets represents the maximum credit exposure.

**Foreign Exchange Rate Risk**

Foreign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. The Company is exposed to foreign currency risk to the extent that monetary assets and liabilities are denominated in a foreign currency.

The following table indicates the impact of foreign currency exchange risk on net working capital as at December 31, 2024 and 2023. The table below also provides a sensitivity analysis of a 10% strengthening of the foreign currency against functional currencies identified which would have increased (decreased) the Company's net loss by the amounts shown in the table below. A 10% weakening of the foreign currency against the functional currencies would have had the equal but opposite effect as at December 31, 2024 and 2023.

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| | | |
|:---|:---|:---|
| 2024 | TWD | US$ |
| Cash | 82993 | (1249) |
| Other receivables (except GST) |  | 106489 |
| Accounts payable and accrued liabilities | (6337488) | (237069) |
| Total foreign currency financial assets and liabilities | (6254495) | (131830) |
| Impact of a 10% strengthening or weakening of foreign exchange rate | (625450) | (13183) |

---

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---

| |
|:---|
| ![](exhibit4-3xu001.jpg) |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE YEAR ENDED DECEMBER 31, 2024** |

---

---

| | | |
|:---|:---|:---|
| 2023 | TWD | US$ |
| Cash | 9201660 | 296479 |
| Accounts payable and accrued liabilities |  | (190659) |
| Lease obligation | (778794) |  |
| Total foreign currency financial assets and liabilities | 8422866 | 105820 |
| Impact of a 10% strengthening or weakening of foreign exchange rate | 842287 | 10582 |

---

**Interest Rate Risk**

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not exposed to significant interest rate risk as it does not have any liabilities with variable rates.

**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's objective to managing liquidity risk is to ensure that it has sufficient liquidity available to meet its liabilities when due. The Company relies on raising debt or equity financing in a timely manner. Refer to going concern disclosure under Liquidity and Capital Resources.

The following amounts are the contractual maturities of financial liabilities as at December 31, 2024 and 2023:

---

| | | | |
|:---|:---|:---|:---|
| 2024 | Total<br>$| Within <br>1 year<br>$| Within <br>2-5 years<br>$|
| Accounts payable and accrued liabilities | 1357502 | 1357502 |  |
| Due to related parties | 27172 | 27172 |  |
| Total | 1384674 | 1384674 | - |

---

---

| | | | |
|:---|:---|:---|:---|
| 2023 | Total<br>$| Within <br>1 year<br>$| Within <br>2-5 years<br>$|
| Accounts payable and accrued liabilities | 859709 | 859709 |  |
| Lease obligation | 33554 | 33554 |  |
| Due to related parties | 24976 | 24976 |  |
| Total | 918239 | 918239 | - |

---

**DISCLOSURE OF OUTSTANDING SHARE DATA**

The authorized capital of the Company consists of an unlimited number of common shares without par value.

As of the date of this report, the Company had 132,341,625 common shares, 167,785 share purchase warrants outstanding, 3,485,000 stock options outstanding and 1,972,500 RSUs outstanding.

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| |
|:---|
| ![](exhibit4-3xu001.jpg) |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE YEAR ENDED DECEMBER 31, 2024** |

---

**DISCLOSURE CONTROLS AND PROCEDURES**

The CEO and the CFO have designed, or caused to be designed under their supervision, the Company's disclosure controls and procedures ("DCP") to provide reasonable assurance that material information relating to the Company and its consolidated subsidiaries has been recorded, processed, summarized and disclosed in a timely manner in accordance with regulatory requirements and good business practices and that the Company's DCP will enable the Company to meet its ongoing disclosure requirements.

The CEO and CFO have evaluated the effectiveness of the Company's disclosure controls and procedures and have concluded that based on this evaluation, our disclosure controls and procedures are not effective at a reasonable assurance level due to the material weakness described below in Internal Control over Financial Reporting.

**INTERNAL CONTROL OVER FINANCIAL REPORTING**

The CEO and the CFO have designed, or caused to be designed under their supervision, the Company's internal controls over financial reporting ("ICFR") in order to provide reasonable assurance regarding the reliability of the Company's financial reporting and the preparation of financial statements for external purposes in accordance with IFRS.

A material weakness is a control deficiency, or combination of control deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement in the annual or interim financial statements will not be prevented or detected on a timely basis.

The CEO and CFO conducted an evaluation the effectiveness of the Company's ICFR as at December 31, 2024 based on *Internal Control-Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") for the Company as a whole. Based on this evaluation, management concluded that no material weaknesses existed as at December 31, 2024.

**LIMITATION OF CONTROLS AND PROCEDURES**

The Company's management, including its CEO and CFO, believe that any DCP and ICFR, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override to the control. The design of any control system also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any control system will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost effective, control system, misstatements due to error or fraud may occur and not be detected.

**CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING**

There have been no changes to our internal control over financial reporting for the fiscal year ended December 31, 2024, that could have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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| |
|:---|
| ![](exhibit4-3xu001.jpg) |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE YEAR ENDED DECEMBER 31, 2024** |

---

**RISK FACTORS**

The following is a summary of certain risk factors relating to the business. The risks presented below should not be considered exhaustive and may not be all of that the Company may face.

***General Risks***

*The Company has a limited operating history*

The Company has a limited history of operations and is in the early stage of development. As such, the Company will be subject to many risks common to early-stage enterprises, including undercapitalization, cash shortages, limitations with respect to personnel, financial and other resources, and limited revenue. There is no assurance that the Company will achieve its operating goals. There is no assurance that the Company will be successful in achieving a return on shareholders' investment and the likelihood of success must be considered in light of its early stage of operations. There can be no assurance that the Company will be able to earn material revenue or that any of its activities will generate positive cash flow.

*The Company is subject to competition from other post-quantum encryption companies*

The Company will compete with other post-quantum cryptography and technology businesses, including other businesses focused on applying post-quantum cryptography to blockchain.

*The Company's compliance and risk management programs may not be effective*

The Company's ability to comply with applicable laws and rules will be largely dependent on the establishment and maintenance of compliance, review, and reporting systems, as well as the ability to attract and retain qualified compliance and other risk-management personnel, as needed. The Company cannot provide any assurance that its compliance policies and procedures will be effective or that it will be successful in monitoring or evaluating its risks. If there is any alleged non-compliance with applicable laws or regulations, The Company could be subject to investigations and judicial or administrative proceedings that may result in substantial penalties or civil lawsuits for damages, restitution or other remedies, which could be significant. Any of these outcomes, individually or together, may materially and adversely affect the Company's reputation, financial condition and valuation, and the value of its shares.

*Unexpected market disruptions may cause major losses for the Company*

The Company may incur major losses in the event of disrupted markets and other extraordinary events in which market behavior diverges significantly from historically recognized patterns. The risk of loss in such events may be compounded by the fact that, in disrupted markets, many positions may become illiquid, making it difficult or impossible to close out positions against which markets are moving. Market disruptions caused by unexpected political, military and terrorist events, or other factors, may from time to time cause dramatic losses for the Company.

*The Company will be reliant on attracting and retaining skilled management and directors*

The success of the Company will, in part, be dependent upon the skill, judgment, industry relationships and expertise of the Board and management. The loss of a director or key management personnel may materially and adversely affect the business of the Company. There can be no assurance that these individuals will continue to be employed by, or remain involved with, the Company for a particular period of time.

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| |
|:---|
| ![](exhibit4-3xu001.jpg) |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE YEAR ENDED DECEMBER 31, 2024** |

---

*Market risk for securities*

There can be no assurance that an active trading market for the Company's shares will be sustained. The market price for the Company's Shares may be subject to wide fluctuations. Factors such as government regulation, price fluctuations, share price movements of peer companies and competitors, as well as overall market movements, may have a significant impact on the market price of the Company's securities. The stock market has from time to time experienced extreme price and volume fluctuations, which have often been unrelated to the operating performance of particular companies. Market forces may render it difficult or impossible for the Company to secure purchasers to purchase its securities at a price which will not lead to severe dilution to existing shareholders, or at all. In addition, shareholders may realize less than the original amount invested on dispositions of their shares during periods of such market price decline.

*Foreign exchange risk*

The Company is a Canadian company, and most of its expenses and fundraising is done in Canadian dollars, however, its operations are predominantly denominated in U.S. dollars and Taiwan dollars. As a result, the Company is subject to foreign exchange risks relating to the relative value of the U.S. dollar and Taiwan dollar as compared to the Canadian dollar. A decline in the U.S. dollar or Taiwan dollar could result in a decrease in the real value of the Company's revenues and adversely impact financial performance.

*Tax*

No assurance can be given that new taxation rules will not be enacted or existing rules will not be applied in a manner which could result in the Company being subject to additional taxation or which could otherwise have a material adverse effect on the Company's results from operations and financial condition.

*The Company may be subject to litigation*

The Company may be subject to litigation arising out of, or related to, its operations. Damages claimed under such litigation may be material, and the outcome of such litigation may materially impact the Company's operations and the value of its shares. While the Company expects to assess the merits of any lawsuits and defend such lawsuits accordingly, it may be required to incur significant expense or devote significant financial resources to such defenses. In addition, the adverse publicity surrounding such claims may have a material adverse effect on the Company's operations.

*Investment Risk*

There is no assurance that the Company will achieve its investment objective. An investment may not earn any positive return and may result in the loss of some or all of the capital invested.

*Ability to generate profits*

There can be no assurance that the Company will generate net profits in future periods. Further, there can be no assurance that the Company will be cash flow positive in future periods. In the event that the Company fails to achieve profitability in future periods, the value of the Company's shares may decline. In addition, if the Company is unable to achieve or maintain positive cash flows, the Company would be required to seek additional funding, which may not be available on favorable terms, if at all.

*Management of growth*

The Company has recently experienced, and may continue to experience, growth in the scope of its operations. This growth has resulted in increased responsibilities for the Company's existing personnel, the hiring of additional personnel and, in general, higher levels of operating expenses. In order to manage its current operations and any future growth effectively, the Company will need to continue to implement and improve its operational, financial and management information systems, as well as hire, manage and retain its employees and maintain its corporate culture including technical and customer service standards. There can be no assurance that the Resulting Issuer will be able to manage such growth effectively or that its management, personnel or systems will be adequate to support the Company's operations.

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| |
|:---|
| ![](exhibit4-3xu001.jpg) |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE YEAR ENDED DECEMBER 31, 2024** |

---

*Reliance on key personnel*

The Company's future growth and its ability to develop depend, to a significant extent, on its ability to attract and retain highly qualified personnel. The Company will rely on a limited number of key employees, consultants and members of senior management and there is no assurance that the Company will be able to retain such key employees, consultants and senior management. The loss of one or more of such key employees, consultants or members of senior management, if not replaced, could have a material adverse effect on the Company's business, financial condition and prospects.

*The Company has no immediate plans to pay regular dividends on the Company, so shareholders of the Company may not receive funds without selling their Company Shares.*

The Company does not currently have plans to pay regular dividends on Company Shares. Any declaration and payment of future dividends to holders of Company Shares will be at the sole discretion of the Board and will depend on many factors, including the financial condition, earnings, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends and other considerations of the Company that the Company's Board deems relevant.

***Business and Industry Risks***

*Regulatory changes or actions may alter the nature of an investment in the Company or restrict the use of digital assets in a manner that adversely affects the Company's operations*

Due to their global nature, blockchain-related technologies and encryption-related technologies are subject to regulatory fragmentation due to different treatment depending on jurisdiction. Certain governments have categorized certain blockchain technologies as illegal, while others have embraced their utility and have approved them for trade. Ongoing and/or future regulatory actions may have a substantial impact on the Company's business operations.

*The Company relies upon the use of internally/externally built proprietary software, data and intellectual property that may be subject to substantial risk*

The Company's liquidity contribution strategy is dependent on internally and externally developed software, data and intellectual property. Its operations may be severely and adversely affected by the malfunction of technology.

*Banks may not provide banking services, or may cut-off banking services, to businesses that provide services related to blockchain-based technologies*

A number of companies that provide blockchain-related services have been unable to find banks that are willing to provide them with bank accounts and banking services. Similarly, a number of such companies have had their existing bank accounts closed by their banks. Banks may refuse to provide bank accounts and other banking services to blockchain-related companies, or companies that accept digital assets, for a number of reasons, such as perceived compliance risks or costs.

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| |
|:---|
| ![](exhibit4-3xu001.jpg) |
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE YEAR ENDED DECEMBER 31, 2024** |

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*The Company may be unable to obtain adequate insurance to insure its operations*

The Company intends to insure its operations in accordance with technology industry practice. However, given the novelty of digital assets and associated businesses, such insurance may not be available, may be uneconomical for the Company, or the nature or level may be insufficient to provide adequate insurance cover. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the Company.

*The business of the Company will be exposed to cybersecurity risks*

Cyber incidents can result from deliberate attacks or unintentional events, and may arise from internal sources (e.g., employees, contractors, service providers, suppliers and operational risks) or external sources (e.g., nation states, terrorists, hacktivists, competitors and acts of nature). Cyber incidents include unauthorized access to information systems and data (e.g., through hacking or malicious software) for purposes of misappropriating or corrupting data or causing operational disruption. Cyber incidents also may be caused in a manner that does not require unauthorized access, such as causing denial-of-service attacks on websites (e.g., efforts to make network services unavailable to intended users). A cyber incident that affects the Company might cause disruptions and adversely affect its business operations, and might also result in violations of applicable law (e.g., personal information protection laws), each of which might result in potentially significant financial losses and liabilities, regulatory fines and penalties, reputational harm, and reimbursement and other compensation costs. In addition, substantial costs might be incurred to investigate, remediate and prevent cyber incidents.

FORWARD-LOOKING STATEMENTS

*This MD&A includes certain statements that may be deemed "forward-looking statements" concerning the future performance of the Company's business, its operations, its financial performance and condition, as well as management's objectives, strategies, beliefs and intentions. Forward-looking statements are frequently identified by such words as "may", "will", "plan", "expect", "anticipate", "estimate", "intend" and similar words referring to future events and results. Forward-looking statements are based on the current opinions and expectations of management. All statements in this report that do not directly and exclusively relate to historical facts, constitute forward- looking statements. These statements represent the Company's intentions, plans, expectations and beliefs, and are subject to risks, uncertainties and other factors of which many are beyond the control of the Company. These factors could cause actual results to differ materially from such forward-looking statements. The Company disclaims any intention or obligation to update or revise such forward-looking statements, as a result of new information, future events or otherwise. Factors that may cause actual results to vary from forward looking statements include, but are not limited to, the Company's ability to access capital, competitive risks and reliance on key personnel, as described in more detail in this document under "Risk Factors". Investors are cautioned that any such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements.*

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## Exhibit 4.4

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![](exhibit4-4xu001.jpg)

**BTQ TECHNOLOGIES CORP.**

Consolidated Financial Statements

For the Years Ended December 31, 2023 and 2022

(Expressed in Canadian dollars)

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| | | |
|:---|:---|:---|
| ![](exhibit4-4xu002.jpg) | Tel: (604) 688-5421 | BDO Canada LLP |
| ![](exhibit4-4xu002.jpg) | Fax: (604) 688-5132 | Royal Centre, 1055 West Georgia Street, |
| ![](exhibit4-4xu002.jpg) | www.bdo.ca | Unit 1100, P.O. Box 11101 |
| ![](exhibit4-4xu002.jpg) |  | Vancouver, British Columbia |
| ![](exhibit4-4xu002.jpg) |  | V6E 3P3 |
| **Independent Auditor's Report** | **Independent Auditor's Report** | **Independent Auditor's Report** |

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To the Shareholders of BTQ Technologies Corp.

**Opinion**

We have audited the consolidated financial statements of BTQ Technologies Corp. and its subsidiaries (the Group), which comprise the consolidated statement of financial position as at December 31, 2023, and the consolidated statements of operations and comprehensive loss, changes in shareholders' equity/(deficit) and cash flows for the year then ended, and notes to the consolidated financial statements, including material accounting policy information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2023, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS").

**Basis for Opinion**

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the *Auditor's Responsibilities for the Audit of the Consolidated Financial Statements* section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

**Material Uncertainty Related to Going Concern**

We draw attention to Note 1 in the consolidated financial statements, which indicates that during the year ended December 31, 2023, the Company has not generated any revenues from operations and has negative cash flow from operations. As at December 31, 2023, the Company has an accumulated deficit of $34,568,353. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

**Key Audit Matters**

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the *Material Uncertainty Related to Going Concern* section, we have determined the matters described below to be the key audit matters to be communicated in our report.

***1) Reverse takeover transaction***

*Description of the key audit matter*

The Group completed a reverse takeover transaction during the year ended December 31, 2023. The accounting for these transactions carry significant complexity related to technical accounting and valuation, requiring management to apply significant judgment and estimation in their evaluation of these transactions. We have therefore considered this transaction to be a key audit matter due to the judgment and estimation involved in determining accounting and disclosures.

BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms

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![](exhibit4-4xu002.jpg)

Please refer to Note 2 to the consolidated financial statements for the Group's accounting policy on share-based payments and Notes 2, and 3 which detail the critical judgments and estimates applied in determining the accounting and presentation for the reverse take over.

*How the key audit matter was addressed in the audit*

Our approach in addressing this matter included the following procedures, among others:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Evaluated management's analysis of the transactions, related contracts and application of the guidance from IFRS 2, *Share-based Payment*, and IFRS 3, *Business Combinations*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Evaluated management's determination of the accounting acquirer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Considered appropriate evidence to evaluate estimates and judgements applied in management's purchase price allocations that have a material impact on the valuation of the consideration provided, recognized assets and assumed liabilities.

Considered the adequacy of the disclosures included in Note 3.

***2) Estimation uncertainty in stock options***

*Description of the key audit matter*

We identified the accounting for stock options as a key audit matter due to the inherent complexity and high level of estimation uncertainty involved. The fair value of these instruments is not directly observable and requires the use of complex valuation models and assumptions that are subject to significant judgment by management such as stock price volatility in the black scholes calculation.

Please refer to Note 2 to the consolidated financial statements for the Group's accounting policy on stock options and Notes 2 and 11 which detail the critical judgments and estimates applied in determining the accounting and presentation for the stock options.

*How the key audit matter was addressed in the audit*

Our approach in addressing this matter included the following procedures, among others:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Obtained and reviewed methodologies and models used by management to estimate the fair value of stock options to evaluate whether they comply with IFRS 2, *Share-based Payment*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Evaluated the reasonableness of the key assumptions used in the valuation models, specifically stock price volatility given the high estimation uncertainty involved.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Involved internal valuation specialists to evaluate the applied methodology and to help assess the volatility assumptions used by management.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Evaluated the fair value calculation and agreed assumptions and data to corroborative evidence

Considered the adequacy of the disclosures included in Note 11.

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![](exhibit4-4xu002.jpg)

**Emphasis of Matter - Restated Comparative Information**

We draw attention to Note 22 to the consolidated financial statements, which explains that certain comparative information presented:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• As at December 31, 2022 and for the year December 31, 2022 has been restated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• As at January 1, 2022 has been derived from the statement of financial position as at December 31, 2021 (not presented herein).

Our opinion is not modified in respect of this matter.

The financial statements for the years ended December 31, 2022 and 2021 (not presented herein but from which the comparative information as at January 1, 2022 has been derived), excluding the adjustments that were applied to restate certain comparative information were audited in accordance with International Standards on Auditing by another auditor who expressed unmodified opinions on those financial statements on March 30, 2023 and October 19, 2022.

As part of our audit of the consolidated financial statements for the year ended December 31, 2023, we also audited the adjustments applied to restate certain comparative information:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• As at and for the year ended December 31, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• As at January 1, 2022.

In our opinion, such adjustments are appropriate and have been properly applied.

Other than with respect to the adjustments that were applied to restate certain comparative information, we were not engaged to audit, review, or apply any procedures to the financial statements:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• As at December 31, 2022 and for the year ended December 31, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• For the year ended December 31, 2021 (not presented herein).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• As at January 1, 2022.

Accordingly, we do not express an opinion or any other form of assurance on those financial statements taken as a whole.

**Other Information**

Management is responsible for the other information. The other information comprises the information included in Management's Discussion and Analysis for the year ended December 31, 2023.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

We obtained the Management's Discussion and Analysis prior to the date of this auditor's report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor's report. We have nothing to report in this regard.

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![](exhibit4-4xu002.jpg)

**Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements**

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRSs, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group's financial reporting process.

**Auditor's Responsibilities for the Audit of the Consolidated Financial Statements**

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

------

![](exhibit4-4xu002.jpg)

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor's report is Fraser McGlenen.

![](exhibit4-4xu003.jpg)

Chartered Professional Accountants

*Vancouver, British Columbia*

*June 3, 2024*

------

**BTQ TECHNOLOGIES CORP.**

Consolidated Statements of Financial Position<br>(Expressed in Canadian dollars)

---

| |
|:---|
| Assets |
| Current assets |
| &nbsp;&nbsp;Cash |
| &nbsp;&nbsp;Short-term investment (Note 8) |
| &nbsp;&nbsp;Other receivables (Note 14) |
| &nbsp;&nbsp;Prepaid expenses and deposits |
| &nbsp;&nbsp;Loan receivable (Note 6) |
| Total current assets |
| Non-current assets |
| &nbsp;&nbsp;&nbsp;Property and equipment (Note 4) |
| &nbsp;&nbsp;&nbsp;Right-of-use asset (Note 5) |
| &nbsp;&nbsp;&nbsp;Investments (Note 7) |
| &nbsp;&nbsp;&nbsp;Deposits |
| Total non-current assets |
| Total assets |
| Liabilities and shareholders' equity (deficit) |
| Current liabilities |
| &nbsp;&nbsp;Accounts payable and accrued liabilities (Note 14) |
| &nbsp;&nbsp;Corporate taxes payable |
| &nbsp;&nbsp;Loan payable |
| &nbsp;&nbsp;Current portion of lease obligation (Note 9) |
| &nbsp;&nbsp;Due to related parties (Note 14) |
| Total current liabilities |
| Non-current liabilities |
| &nbsp;&nbsp;Lease obligation (Note 9) |
| &nbsp;&nbsp;Lease obligation (Note 9) |
| Total liabilities |
| Shareholders' equity (deficit) |
| &nbsp;&nbsp;Share capital (Notes 3 and 10) |
| &nbsp;&nbsp;Options reserve (Notes 3 and 11) |
| &nbsp;&nbsp;Warrants reserve (Note 10) |
| &nbsp;&nbsp;RSUs reserve (Note 13) |
| &nbsp;&nbsp;Deficit) |
| Total shareholders' equity (deficit) |
| Total liabilities and shareholders' equity (deficit) |

---

Nature of operations and going concern (Note 1)

Commitment (Note 18)

Subsequent events (Note 24)

Approved and authorized for issuance on behalf of the Board on June 3, 2024:

<u>"Olivier Roussy Newton"</u> Director <u>*"Michael Resendes"*</u> Director

The accompanying notes are an integral part of these consolidated financial statements.

------

**BTQ TECHNOLOGIES CORP.**

Consolidated Statements of Financial Position<br>(Expressed in Canadian dollars)

---

| |
|:---|
| Expenses |
| &nbsp;&nbsp;Consulting fees (Note 14) |
| &nbsp;&nbsp;Depreciation (Notes 4 and 5) |
| &nbsp;&nbsp;General and administrative (Note 23) |
| &nbsp;&nbsp;Marketing and promotion (Note 14) |
| &nbsp;&nbsp;Professional fees (Note 14) |
| &nbsp;&nbsp;Research and development (Notes 10 and 14) |
| &nbsp;&nbsp;Share-based compensation (Notes 10, 11, 13, and 14) |
| &nbsp;&nbsp;Transfer agent and regulatory fees |
| &nbsp;&nbsp;Wages and benefits (Note 14) |
| Total expenses |
| Loss before other income (expense) |
| Other income (expense) |
| &nbsp;&nbsp;Collaboration and other income (Note 20) |
| &nbsp;&nbsp;Foreign exchange income (loss) |
| &nbsp;&nbsp;Interest income |
| &nbsp;&nbsp;Interest expense (Note 9) |
| &nbsp;&nbsp;Listing costs (Note 3) |
| &nbsp;&nbsp;Transaction costs (Note 3) |
| Total other income (expense) |
| Loss before income taxes) |
| Income tax provision (Note 21) |
| Net loss and comprehensive loss for the year) |
| Loss per share, basic and diluted) |
| Weighted average number of common shares outstanding |

---

The accompanying notes are an integral part of these consolidated financial statements.

------

 **BTQ TECHNOLOGIES CORP.**<br>Consolidated Statements of Changes in Shareholders' Equity (Deficit)<br>(Expressed in Canadian dollars)

---

| | | | |
|:---|:---|:---|:---|
|  | Share capital | Options | Warrants |
|  | Number of | reserve | reserve |
|  | shares | $| $|
| Balance, December 31, 2021 | 1000000 |  | -) |
| Shares issued for cash | 46000000 |  |  |
| Share-based compensation |  |  |  |
| Fair value of shares issued for research | 45000000 |  |  |
| Net loss for the year |  |  | -) |
| Balance, December 31, 2022 | 92000000 |  | -) |
| Shares of the Company pursuant to reverse takeover | 8747629 |  |  |
| Revaluation of stock options pursuant to reverse takeover |  | 97532 |  |
| Shares issued for cash | 18001250 |  |  |
| Shares issued to finder for the Transaction | 2500000 |  |  |
| Share issuance costs | -) |  | 14632) |
| Fair value of finders' warrants allocated to |  |  |  |
| Transaction costs |  |  | 52754 |
| Share-based compensation |  | 1921154 |  |
| Shares issued for vested RSU's | 1945000 |  | -) |
| Net loss for the year |  |  | -) |
| Balance, December 31, 2023 | 123193879 | 2018686 | 67386) |

---

The accompanying notes are an integral part of these consolidated financial statements.

------

**BTQ TECHNOLOGIES CORP.**

Consolidated Statements of Cash Flows<br>(Expressed in Canadian dollars)

---

| |
|:---|
| Operating activities |
| Net loss for the year) |
| Items not involving cash: |
| &nbsp;&nbsp;Depreciation |
| &nbsp;&nbsp;Foreign exchange translation loss (gain) |
| &nbsp;&nbsp;Listing costs |
| &nbsp;&nbsp;Interest expense |
| &nbsp;&nbsp;Share-based compensation |
| &nbsp;&nbsp;Shares issued for research |
| &nbsp;&nbsp;Transaction costs |
| Changes in non-cash operating working capital: |
| &nbsp;&nbsp;&nbsp;Other receivables) |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and deposits) |
| &nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities) |
| &nbsp;&nbsp;&nbsp;Corporate taxes payable |
| &nbsp;&nbsp;&nbsp;Due to related parties) |
| Net cash used in operating activities) |
| Investing activities |
| &nbsp;&nbsp;&nbsp;Purchase of short-term investment) |
| &nbsp;&nbsp;&nbsp;Purchase of property and equipment) |
| &nbsp;&nbsp;&nbsp;Purchase of investments) |
| &nbsp;&nbsp;&nbsp;Loan receivable advance) |
| &nbsp;&nbsp;&nbsp;Proceeds from loan receivable |
| &nbsp;&nbsp;&nbsp;Cash acquired in reverse takeover |
| Net cash provided by (used in) investing activities |
| Financing activities |
| &nbsp;&nbsp;Repayment of lease obligation) |
| &nbsp;&nbsp;Repayment of loan payable) |
| &nbsp;&nbsp;Repayment of related party loans) |
| &nbsp;&nbsp;Proceeds from issuance of shares |
| &nbsp;&nbsp;Share issuance costs) |
| Net cash provided by financing activities |
| Increase in cash |
| Cash, beginning of year |
| Cash, end of year |

---

Supplemental cash flow information (Note 15)

The accompanying notes are an integral part of these consolidated financial statements.

------

**BTQ TECHNOLOGIES CORP.**

Notes to the Consolidated Financial Statements<br>Years Ended December 31, 2023 and 2022<br>(Expressed in Canadian dollars)

**1. NATURE OF OPERATIONS AND GOING CONCERN**

BTQ Technologies Corp. (formerly Sonora Gold & Silver Corp.) ("the Company") was incorporated on November 23, 1983 under the Business Corporations Act (British Columbia). The principal activity of the Company is the development of computer-based technology related to post-quantum cryptography, particularly as it applies to blockchain and related technologies, and their protection from the emerging security risk of quantum computing. The Company's head office is located at 16-104 555 Burrard Street, Vancouver, BC, Canada. The Company's common shares trade on Cboe Canada under the ticker symbol "BTQ".

On February 17, 2023, the Company acquired all of the issued and outstanding shares of BTQ AG in exchange for 92,000,000 common shares. This transaction constituted a reverse takeover of the Company by BTQ AG with BTQ AG being identified as the accounting acquirer. As a result, these consolidated financial statements are a continuation of BTQ AG. The Company's results of operations are included from February 17, 2023 onwards, except for share capital which has been retroactively adjusted to reflect the capital of the Company. Refer to Note 3.

These consolidated financial statements have been prepared on the going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. During the year ended December 31, 2023, the Company has not generated any revenues from operations and has negative cash flow from operations. As at December 31, 2023, the Company has an accumulated deficit of $34,568,353. The Company's ability to continue its operations and to realize its assets at their carrying values is dependent upon obtaining additional financing and generating revenues sufficient to cover its operating costs. Management is of the opinion that sufficient working capital will be obtained from external financing to meet the Company's liabilities and commitments as they become due, although there is a risk that additional financing will not be available on a timely basis or on terms acceptable to the Company. These factors indicate a material uncertainty that may cast significant doubt on the ability of the Company to continue as a going concern. These consolidated financial statements do not reflect any adjustments that may be necessary if the Company is unable to continue as a going concern. Such adjustments could be material.

**2. BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICIES**

**Statement of Compliance**

The accompanying consolidated financial statements have been prepared in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board ("IFRS") on a going concern basis.

**Basis of Presentation**

These consolidated financial statements have been prepared on a historical cost basis except for certain financial assets and liabilities, which are measured at fair value, as specified by IFRS for each type of asset, liability, income, and expense as set out in the accounting polices below.

**Basis of consolidation**

These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, BTQ AG, a company incorporated in the Principality of Liechtenstein.

These consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances are eliminated on consolidation. Control exists where the parent entity has power over the investee and is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Subsidiaries are included in the financial statements from the date control commences until the date control ceases.

------

**BTQ TECHNOLOGIES CORP.**

Notes to the Consolidated Financial Statements<br>Years Ended December 31, 2023 and 2022<br>(Expressed in Canadian dollars)

**2. BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICIES** (continued)

**Functional Currency and Presentation Currency**

As a result of the reverse takeover of the Company by BTQ AG on February 17, 2023, BTQ AG changed both its functional currency and the presentation currency of its financial statements from the U.S. dollar to the Canadian dollar.

BTQ AG is in the research and development stage and relies on the Company for its funding and decision making. In consideration of the indicators in IAS 21, *The Effects of changes in Foreign Exchange Rates,* the Company determined that BTQ AG is an extension of the Company. As a result, BTQ AG has the same functional currency as the Company, which is the Canadian dollar.

Under IAS 21, a change in an entity's functional currency is applied prospectively from the date of change.

Effective February 17, 2023, the accounting acquirer, BTQ AG, changed its presentation currency from U.S. dollars to Canadian dollars. In making this change in presentation currency, the Company followed the guidance in IAS 21 and has applied this change retrospectively, as if the Canadian dollar has always been its presentation currency, as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Assets and liabilities have been translated into Canadian dollar at the rate of exchange prevailing at the respective reporting dates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The consolidated statements of loss and comprehensive loss were translated at the average exchange rates for the respective reporting periods, or at the exchange rates prevailing at the applicable transaction date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Equity transactions have been translated at the exchange rate prevailing at the date of the transactions; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Exchange differences arising on translation were recorded in the consolidated statement of operations and comprehensive loss.

Refer to Note 22 for the impact of the change in presentation currency.

**Use of Estimates and Judgments**

The preparation of these consolidated financial statements in conformity with IFRS requires the Company's management to make judgments, estimates, and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, revenues, and expenses. Estimates and underlying assumptions are reviewed on an ongoing basis, including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected.

Significant estimates and judgments exercised by management in applying the Company's accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements are as follows:

<u>Reverse Takeover</u>

The reverse takeover transaction was measured at the fair value of the common shares and stock options that BTQ would have had to issue to the shareholders of the Company. The fair value of common shares and stock options issued were estimated based on the Company's financing event which took place concurrently with the reverse takeover transaction. The fair values of identifiable assets acquired and liabilities assumed approximated their carrying values.

<u>Research and development costs</u>

Research costs are recognized as an expense when incurred but development costs may be capitalized as intangible assets if certain conditions are met as described in IAS 38 *Intangible Assets*. Management has determined that development costs do not meet the conditions for capitalization under IAS 38 and all research and development costs have been expensed.

------

**BTQ TECHNOLOGIES CORP.**

Notes to the Consolidated Financial Statements<br>Years Ended December 31, 2023 and 2022<br>(Expressed in Canadian dollars)

**2. BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICIES** (continued)

**Use of Estimates and Judgments** (continued)

<u>*Fair values of stock options*</u>

Fair values of stock options are determined using the Black-Scholes option pricing model. Estimating fair value requires determining the most appropriate valuation model for a grant of equity instruments, which is dependent on the terms and conditions of the grant. Option-pricing models require the use of highly subjective estimates and assumptions including the expected stock price volatility. Changes in the underlying assumptions can materially affect the fair value estimates and, therefore, existing models do not necessarily provide reliable measurement of the fair value of the Company's stock options and performance warrants.

<u>*Deferred income taxes*</u>

The determination of income tax expense and the composition of deferred income tax assets and liabilities involves judgment and estimates as to the future taxable earnings, expected timing of reversals of deferred income tax assets and liabilities, and interpretations of tax laws. The Company is subject to assessments by tax authorities who may interpret the tax law differently. Changes in these interpretations, judgments, and estimates may materially affect the final amount of current and deferred income tax provisions, deferred income tax assets and liabilities, and results of operations.

<u>*Going concern presentation*</u>

These consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The assessment of the Company's ability to source future operations and continue as a going concern involves judgement. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. If the going concern assumption is not appropriate for the financial statements, then adjustments would be necessary in the carrying value of the assets and liabilities, the reported revenue and the expenses and the statement of financial position classifications used.

**Cash and Cash Equivalents**

The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance, are readily convertible to known amounts of cash, and which are subject to insignificant risk of changes in value to be cash equivalents.

**Property and Equipment**

The Company depreciates the cost of property and equipment over their estimated useful lives using the declining balance basis at the following rates:

---

| | |
|:---|:---|
| Computer equipment | 25% |
| Furniture and equipment | 10% |

---

Residual values and useful economic lives are reviewed at least annually, and adjusted if appropriate, at each reporting date. Subsequent expenditure relating to an item of property and equipment is capitalized when it is probable that future economic benefits from the use of the assets will be increased. All other subsequent expenditures are recognized as repairs and maintenance expenses during the period in which they are incurred. Gains and losses on disposal of equipment are determined by comparing the proceeds from disposal with the carrying amount of the asset and are recognized net within other income in the consolidated statement of operations and comprehensive loss.

------

**BTQ TECHNOLOGIES CORP.**

Notes to the Consolidated Financial Statements<br>Years Ended December 31, 2023 and 2022<br>(Expressed in Canadian dollars)

**2. BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICIES** (continued)

**Leases**

Under IFRS 16 - Leases, the Company recognizes a right-of-use asset and a lease liability at the lease commencement date for leases greater than 12 months. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. Right-of-use assets are subsequently depreciated over the remaining term of the lease and are carried at cost less accumulated depreciation and impairment. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's incremental borrowing rate. Lease liabilities are subsequently reduced by lease payments net of interest expense calculated using the effective interest method.

The Company has elected not to recognize right-of-use assets and lease liabilities for leases of low-value assets and short-term leases. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease.

**Impairment of Non-Current Assets**

At each reporting date, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there are any indications of impairment. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any.

Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash generating unit ("CGU") to which the asset belongs. The recoverable amount is determined as the higher of fair value less direct costs to sell and the asset's value in use. In assessing value in use, the estimated future cash flows are discounted to their present value. Estimated future cash flows are calculated using estimated recoverable reserves, estimated future commodity prices, and the expected future operating and capital costs. The pre-tax discount rate applied to the estimated future cash flows reflects current market assessments of the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted.

If the carrying amount of an asset or CGU exceeds its recoverable amount, the carrying amount of the asset or CGU is reduced to its recoverable amount through an impairment charge to the consolidated statement of operations and comprehensive loss.

Assets that have been impaired are tested for possible reversal of the impairment whenever events or changes in circumstance indicate that the impairment may have reversed. When an impairment subsequently reverses, the carrying amount of the asset or CGU is increased to the revised estimate of its recoverable amount, but only so that the increased carrying amount does not exceed the carrying amount that would have been determined (net of depreciation, depletion and amortization) had no impairment loss been recognized for the asset or CGU in prior periods. A reversal of impairment is recognized as a gain in the consolidated statement of operations and comprehensive loss.

**Foreign Currency Translation**

The functional currency of the Company and its subsidiary is the currency of the primary economic environment in which the entity operates. The Company's and its subsidiary's functional currency is the Canadian dollar.

Transactions denominated in currencies other than the functional currency are translated using the exchange rate in effect on the transaction date or at the annual average rate. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange in effect at the consolidated statements of financial position date. Non-monetary items are translated using the historical rate on the date of the transaction. Foreign exchange gains and losses are included in the consolidated statement of operations and comprehensive loss.

------

**BTQ TECHNOLOGIES CORP.**

Notes to the Consolidated Financial Statements Years Ended December 31, 2023 and 2022 (Expressed in Canadian dollars)

**2. BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICIES** (continued)

**Financial Instruments**

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the respective instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are included in the initial carrying value of the related instrument and are amortized using the effective interest method. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in the consolidated statement of operations and comprehensive loss.

Fair value estimates are made at the statement of financial position date based on relevant market information and information about the financial instrument. All financial instruments are classified into either: fair value through profit or loss ("FVTPL") or amortized cost.

The Company has made the following classifications:

---

| | |
|:---|:---|
| Cash | Amortized cost |
| Short-term investment | Amortized cost |
| Other receivables (excluding GST/VAT) | Amortized cost |
| Loan receivable | Amortized cost |
| Investments | FVTPL |
| Accounts payable and accrued liabilities | Amortized cost |
| Due to related parties | Amortized cost |

---

<u>*Financial assets*</u>

The classification of financial assets depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

*Financial assets at FVTPL*

Financial assets are classified as FVTPL when the financial asset is either held for trading or it is designated as FVTPL. A financial asset is classified as held for trading if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• it has been acquired principally for the purpose of selling it in the near term; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• on initial recognition, it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• it is a derivative that is not designated and effective as a hedging instrument.

*Financial assets at amortized cost*

Financial assets at amortized cost are non-derivative financial assets which are held within a business model whose objective is to hold assets to collect contractual cash flows and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. A financial asset (unless it is a trade receivable without a significant financing component that is initially measured at the transaction price) is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition. Subsequent to initial recognition, financial assets are measured at amortized cost using the effective interest method, less any impairment.

*Impairment of financial assets*

Financial assets, other than those classified as FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been decreased.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account.

------

**BTQ TECHNOLOGIES CORP.**

Notes to the Consolidated Financial Statements<br>Years Ended December 31, 2023 and 2022<br>(Expressed in Canadian dollars)

**2. BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICIES** (continued)

**Financial Instruments** (continued)

When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are offset against the allowance account. Changes in the carrying amount of the allowance account are recognized in the consolidated statement of operations and comprehensive loss. Loss allowances are based on the lifetime ECL's that result from all possible default events over the expected life of the trade receivable, using the simplified approach.

For financial assets measured at amortized cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through the consolidated statement of operations and comprehensive loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

<u>*Financial liabilities and equity instruments*</u>

*Classification as debt or equity*

Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

*Equity instruments*

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognized as the proceeds received, net of direct issue costs.

*Other financial liabilities*

Other financial liabilities (including loans and borrowings and trade payables and other liabilities) are initially measured at fair value, net of transaction costs. Subsequently, other financial liabilities are measured at amortized cost using the effective interest method.

The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

**Research and Development Costs**

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognized in the consolidated statement of operations and comprehensive loss as incurred.

Development activities involve a plan or design for the production of new or substantially improved products or processes. Development expenditure is capitalized only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset. The expenditure capitalized includes the cost of materials, direct labour, overhead costs that are directly attributable to preparing the asset for its intended use, and borrowing costs on qualifying assets. Other development expenditures are recognized in the consolidated statements of operations and comprehensive loss as incurred.

------

**BTQ TECHNOLOGIES CORP.**

Notes to the Consolidated Financial Statements<br>Years Ended December 31, 2023 and 2022<br>(Expressed in Canadian dollars)

**2. BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICIES (continued)**

**Revenue Recognition**

The Company's accounting policy for revenue recognition under IFRS 15, Revenue from Contracts with Customers, follows a five-step model to determine the amount and timing of revenue to be recognized:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Identifying the contract with a customer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Identifying the performance obligations within the contract;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Determining the transaction price;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Allocating the transaction price to the performance obligations; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. Recognizing revenue when/as performance obligation(s) are satisfied.

The Company analyzes its collaboration arrangements to determine whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities. This assessment is performed throughout the life of the arrangement based on changes in the responsibilities of all parties in the arrangement. The Company assesses whether there are any elements of the collaboration that are more reflective of a vendor-customer relationship and is therefore within the scope of IFRS 15. For these elements of the arrangement that are accounted for pursuant to IFRS 15, the Company applies the five-step model above. The collaboration arrangement entered into during the year ended December 31, 2023 did not meet the scope of IFRS 15. Refer to Note 20.

**Related Party Transactions**

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

**Share-based Compensation**

The grant date fair value of equity-based payment awards granted to employees is generally recognized as share-based compensation expense, with a corresponding increase in equity, over the vesting period of the awards. The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

Where equity instruments are granted to parties other than employees, they are recorded by reference to the fair value of the services received. If the fair value of the services received cannot be reliably estimated, the Company measures the services received by reference to the fair value of the equity instruments granted, measured at the date the counterparty renders service.

Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.

The fair value of stock options is measured at the grant date using the Black-Scholes option pricing model. The fair value is recognized as an expense over the vesting period, which is the period over which all of the specified vesting conditions are satisfied with a corresponding increase in equity. For awards with graded vesting, the fair value of each tranche is recognized over its respective vesting period. Non-market vesting conditions are considered in making assumptions about the number of awards that are expected to vest. When the options are exercised, any proceeds received are credited to share capital along with the amount reflected in share-based payment reserve.

------

**BTQ TECHNOLOGIES CORP.**

Notes to the Consolidated Financial Statements<br>Years Ended December 31, 2023 and 2022<br>(Expressed in Canadian dollars)

**2. BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICIES** (continued)

**Loss Per Share**

Basic loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. The computation of diluted loss per share assumes the conversion, exercise or contingent issuance of securities only when such conversion, exercise or issuance would have a dilutive effect on the income per share. The dilutive effect of convertible securities is reflected in the diluted loss per share by application of the "if converted" method. When a loss is incurred during the period, basic and diluted loss per share are the same as the exercise of stock options, share purchase warrants, and restricted share units is considered to be anti-dilutive.

**Short-term Investments**

Short-term investments consist of highly liquid short-term interest bearing securities with maturities at the date of purchase of greater than three months, but less than one year, and of other marketable securities.

**Accounting standards issued but not yet effective**

A number of new standards, and amendments to standards and interpretations, are not yet effective for the year ended December 31, 2023, and have not been early adopted in preparing these consolidated financial statements. These new standards, and amendments to standards and interpretations are either not applicable or are not expected to have a significant impact on the Company's consolidated financial statements.

**3. REVERSE TAKEOVER**

On December 31, 2021 (as amended on April 29, 2022, July 30, 2022, and November 29, 2022), the Company, BTQ AG, and shareholders of BTQ AG entered into an agreement pursuant to which the Company agreed to acquire all of the issued and outstanding shares of BTQ AG (the "Transaction").

The closing of the Transaction occurred on February 17, 2023, at which time the Company issued 92,000,000 common shares in exchange for the issued and outstanding common shares of BTQ AG. The Company consolidated its common shares on a 10:1 basis immediately prior to the closing of the transaction.

As a result of the completion of the Transaction, the former shareholders of BTQ AG acquired 75.88% of the outstanding common shares of the Company, and, for accounting purposes, are considered to have acquired control of the Company. Accordingly, the Transaction constitutes a reverse acquisition of the Company by BTQ AG and has been accounted for as a reverse acquisition transaction in accordance with the guidance provided in IFRS 2, *Share-based Payment* and IFRS 3, *Business Combinations*. As the Company did not qualify as a business prior to the closing of the transaction according to the definition in IFRS 3, this reverse acquisition did not constitute a business combination; rather it was treated as an issuance of shares by BTQ AG for the net assets of the Company. Accordingly, no goodwill was recorded with respect to the Transaction. The Transaction was measured at the fair value of the common shares that BTQ AG would have had to issue to the shareholders of the Company, being 8,747,629 common shares with a fair value of $3,499,051, and the fair value of 350,000 stock options of the Company with a fair value of $97,532, to give the shareholders of the Company the same percentage of equity interest in the combined entity that results from the reverse acquisition had it taken the legal form of BTQ AG acquiring the Company. The Company issued 2,500,000 common shares with a fair value of $1,000,000 as a finder's fee for the Transaction. The fair value of common shares and stock options issued were estimated based on the Company's financing event which took place concurrently to the reverse takeover transaction at the price of $0.40 per common share. Refer to Note 10. As BTQ AG was deemed to be the acquirer for accounting purposes, its assets, liabilities, and operations since its incorporation on March 26, 2021 are included in these consolidated financial statements at their historical carrying values. The assets, liabilities, and results of operations of the Company are included in these consolidated financial statements from the date acquisition on February 17, 2023.

------

**BTQ TECHNOLOGIES CORP.**

Notes to the Consolidated Financial Statements<br>Years Ended December 31, 2023 and 2022<br>(Expressed in Canadian dollars)

**3. REVERSE TAKEOVER** (continued)

The purchase price is allocated as follows:

---

| |
|:---|
| &nbsp;&nbsp;Fair value of the Company's shares (8,747,629 common shares) |
| &nbsp;&nbsp;Fair value of 350,000 stock options of the Company outstanding |
| &nbsp;&nbsp;Total consideration |
| &nbsp;&nbsp;Less: fair value of identifiable assets acquired and liabilities assumed: |
| &nbsp;&nbsp;Cash |
| &nbsp;&nbsp;Cash held in escrow |
| &nbsp;&nbsp;Receivables |
| &nbsp;&nbsp;Restricted cash |
| &nbsp;&nbsp;Accounts payable and accrued liabilities) |
| &nbsp;&nbsp;Subscription receipts liabilities) |
| &nbsp;&nbsp;Net liabilities assumed) |
| &nbsp;&nbsp;Listing costs |

---

The fair value of stock options of the Company was calculated using the Black-Scholes option pricing model with the following assumptions: volatility of 150%, expected life of 2.1 years, no dividends, no forfeitures, and a risk-free rate of 4.15%.

**4. PROPERTY AND EQUIPMENT**

---

| | | | |
|:---|:---|:---|:---|
|  |  | Furniture and |  |
|  | IT equipment | equipment | Total |
|  | $| $| $|
| &nbsp;&nbsp;Cost: |  |  |  |
| &nbsp;&nbsp;Balance, December 31, 2021 | 23092 |  | 23092 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additions | 78511 | 43921 | 122432 |
| &nbsp;&nbsp;Balance, December 31, 2022 | 101603 | 43921 | 145524 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additions | 13179 | 4609 | 17788 |
| &nbsp;&nbsp;Balance, December 31, 2023 | 114782 | 48530 | 163312 |
| &nbsp;&nbsp;Accumulated depreciation: |  |  |  |
| &nbsp;&nbsp;Balance, December 31, 2021 | 5773 |  | 5773 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additions | 25690 | 4393 | 30083 |
| &nbsp;&nbsp;Balance, December 31, 2022 | 31463 | 4393 | 35856 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additions | 20466 | 4170 | 24636 |
| &nbsp;&nbsp;Balance, December 31, 2023 | 51929 | 8563 | 60492 |
| &nbsp;&nbsp;Carrying amounts: |  |  |  |
| &nbsp;&nbsp;As at December 31, 2022 | 70140 | 39528 | 109668 |
| &nbsp;&nbsp;As at December 31, 2023 | 62853 | 39967 | 102820 |

---

------

**BTQ TECHNOLOGIES CORP.**

Notes to the Consolidated Financial Statements<br>Years Ended December 31, 2023 and 2022<br>(Expressed in Canadian dollars)

**5. RIGHT-OF-USE ASSET**

---

| |
|:---|
| &nbsp;&nbsp;Cost: |
| &nbsp;&nbsp;Balance, December 31, 2021 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additions |
| &nbsp;&nbsp;Balance, December 31, 2022 and 2023 |
| &nbsp;&nbsp;Accumulated depreciation: |
| &nbsp;&nbsp;Balance, December 31, 2021 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additions |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange translation difference |
| &nbsp;&nbsp;Balance, December 31, 2022 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additions |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange translation difference) |
| &nbsp;&nbsp;Balance, December 31, 2023 |
| &nbsp;&nbsp;Carrying amounts: |
| &nbsp;&nbsp;As at December 31, 2022 |
| &nbsp;&nbsp;As at December 31, 2023 |

---

**6. LOAN RECEIVABLE**

On December 1, 2022, BTQ AG entered into an agreement with MEV Trading Inc. ("MEV"), under which the BTQ AG granted a loan of $1,354,400 (US$1,000,000) which is non-interest bearing, and due on June 30, 2023. In consideration for the loan, MEV issued a warrant to BTQ AG entitling BTQ AG to purchase shares of MEV non-voting stock equal to 10% of the loan amount based on the fully-diluted pre-money valuation of the borrower as determined by the most recent qualified equity financing round before the maturity date or within one year of issuance, whichever occurs earlier (expired on June 30, 2023). The fair value of the warrants issued was determined to be nominal. On August 7, 2023, the Company received repayment of the $1,343,300 (US$1,000,000) loan receivable.

**7. INVESTMENTS**

---

| | |
|:---|:---|
|  | $|
| &nbsp;&nbsp;Balance, December 31, 2021 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Additions | 63915 |
| &nbsp;&nbsp;Balance, December 31, 2022 | 63915 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additions | 13314 |
| &nbsp;&nbsp;Balance, December 31, 2023 | 77229 |

---

During the year ended December 31, 2022, the BTQ AG invested $63,915 (US$50,000) in the form of a Simple Agreement for Future Equity ("SAFE") in the Holonym Foundation ("Holonym"), which is a public benefit corporation. The investment is not traded in an active market.

On January 11, 2023, BTQ AG invested $13,314 (US$10,000) in the form of a SAFE into Cysic Inc. The investment is not traded in an active market.

------

**BTQ TECHNOLOGIES CORP.**

Notes to the Consolidated Financial Statements<br>Years Ended December 31, 2023 and 2022<br>(Expressed in Canadian dollars)

**8. SHORT-TERM INVESTMENT**

The Company has pledged a guaranteed investment certificate ("GIC") as collateral for the Company's credit cards. The GIC earns interest at Prime Rate less 2.7% per annum and has a maturity date of June 6, 2024.

**9. LEASE OBLIGATION**

On May 15, 2022, the Company entered into a premises lease agreement which gives the Company the right to use an underlying asset which expires on May 14, 2024. The Company's obligation to make lease payments arising from the lease is calculated by discounting the fixed lease payments over the lease term at the Company's incremental borrowing rate. The incremental borrowing rate used in the calculation was 13%.

---

| |
|:---|
| &nbsp;&nbsp;Balance, beginning of year |
| &nbsp;&nbsp;Additions |
| &nbsp;&nbsp;Payments) |
| &nbsp;&nbsp;Interest |
| &nbsp;&nbsp;Foreign exchange translation difference) |
| &nbsp;&nbsp;Balance, end of year |
| &nbsp;&nbsp;Less: current portion |
| &nbsp;&nbsp;Non-current portion |

---

**10. SHARE CAPITAL**

Authorized: Unlimited number of common shares without par value Share transactions during the year ended December 31, 2023:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• On February 17, 2023, the Transaction closed, resulting in a reverse takeover (refer to Note 3). The Transaction was measured at the fair value of the shares that BTQ AG would have had to issued to the shareholders of the Company, being 8,747,629 common shares with a fair value of $3,499,051.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• On February 17, 2023, the Company issued 2,500,000 common shares with a fair value of $1,000,000 as a finder's fee for the Transaction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• On February 17, 2023, the Company completed a subscription receipt financing of 18,001,250 common shares at $0.40 per share for gross proceeds of $7,200,500. In connection with the financing, the Company incurred share issuance costs of $93,174 and issued 232,936 finders' warrants exercisable at $0.40 per common share expiring on February 17, 2025. The fair value of finders' warrants was determined to be $67,386 which was calculated using the Black-Scholes option pricing model with the following assumptions: volatility of 150%, expected life of 2 years, no dividends, and a risk-free rate of 4.15%.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• On July 7, 2023, the Company issued 1,822,500 common shares pursuant to the conversion of vested RSUs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• On November 6, 2023, the Company issued 22,500 common shares pursuant to the conversion of vested RSUs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• On November 13, 2023, the Company issued 100,000 common shares pursuant to the conversion of vested RSUs.

------

**BTQ TECHNOLOGIES CORP.**

Notes to the Consolidated Financial Statements<br>Years Ended December 31, 2023 and 2022<br>(Expressed in Canadian dollars)

**10. SHARE CAPITAL** (continued)

Share transactions during the year ended December 31, 2022:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**•** On June 9, 2022, the BTQ AG issued 45,000,000 Class A shares with a fair value $14,224,500 to acquire in-process research from the Chief Executive Officer ("CEO") of BTQ AG.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**•** On June 9, 2022, the BTQ AG issued 2,500,000 Class A shares with a fair value of $790,250 for which the Company received proceeds of $158,050 (US$125,000) and recognized share-based compensation of $632,200 for services rendered.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**•** On June 9, 2022, the BTQ AG issued 23,500,000 Class B shares at $0.013 (US$0.01) per share for proceeds of $297,134 (US$235,000) to the CEO of BTQ AG.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**•** On July 14, 2022, the BTQ AG issued 20,000,000 Class A shares at $0.328 (US$0.25) per share for proceeds of $6,569,000 (US$5,000,000).

<u>Escrowed shares</u>

On completion of the Transaction, certain principals of the Company entered into a NP 46-201 Escrow Agreement with the NEO Exchange and Computershare Trust Company of Canada, as escrow agent, in respect of 45,250,000 common shares. Under the terms of the Escrow Agreement, 25% of such escrowed securities were released upon closing (February 17, 2023) with subsequent 25% releases occurring 6, 12, and 18 months from closing. These escrow shares will be released as follows:

---

| | |
|:---|:---|
| Date of automatic timed release | Amount of escrow shares released |
| On the date that the Company's common shares were listed on the NEO, February 17, 2023 | 1/4 of the escrowed shares |
| 6 months after the listing date (August 17, 2023) | 1/4 of the escrowed shares |
| 12 months after the listing date (February 17, 2024) | 1/4 of the escrowed shares |
| 18 months after the listing date (August 17, 2024) | The remainder of the escrowed shares |

---

As at December 31, 2023, 22,625,000 common shares remained in escrow.

**11. STOCK OPTIONS**

The Company has a stock option plan (the "Plan") for directors, officers, employees, and consultants of the Company. Stock options are exercisable for periods of up to five years, as determined by the Board of Directors of the Company, to purchase common shares of the Company at a price not less than the discounted market price on the date of the grant. The maximum number of shares which may be issuable under the Plan cannot exceed 10% of the total number of issued and outstanding common shares on a non- diluted basis.

The following table summarizes the continuity of the Company's stock options:

---

| | | |
|:---|:---|:---|
|  |  | Weighted |
|  |  | average |
|  |  | exercise |
|  | Number of | price |
|  | stock options | $|
| Outstanding, December 31, 2021 and 2022 |  |  |
| &nbsp;&nbsp;Outstanding stock options of the Company prior to reverse takeover | 350000 | 0.50 |
| &nbsp;&nbsp;Granted | 8310000 | 0.41 |
| &nbsp;&nbsp;Expired | (890000) | 0.44 |
| Outstanding, December 31, 2023 | 7770000 | 0.41 |
| Exercisable, December 31, 2023 | 2230000 | 0.41 |

---

------

**BTQ TECHNOLOGIES CORP.**

Notes to the Consolidated Financial Statements<br>Years Ended December 31, 2023 and 2022<br>(Expressed in Canadian dollars)

**11. STOCK OPTIONS** (continued)

Additional information regarding stock options outstanding as at December 31, 2023, is as follows:

---

| | | | |
|:---|:---|:---|:---|
| Outstanding | Outstanding | Exercisable | Exercisable |
|  | Weighted |  |  |
|  | average |  | Weighted |
|  | remaining |  | average |
| Number of | contractual | Number of | exercise price |
| $stock options | life (years) | $stock options | $|
| 7230000 | 3.0 | 2050000 | 0.40 |
| 180000 | 1.2 | 180000 | 0.50 |
| 100000 | 5.7 |  |  |
| 210000 | 4.0 |  |  |
| 50000 | 4.6 |  |  |
| 7770000 | 3.0 | 2230000 | 0.41 |

---

The fair value for stock options granted have been estimated using the Black-Scholes option pricing model assuming no expected dividends or forfeitures and the following weighted average assumptions:

---

| | |
|:---|:---|
|  | 2023 |
| Risk-free interest rate | 3.59% |
| Expected life (in years) | 4.0 |
| Expected volatility | 199% |

---

During the year ended December 31, 2023, the Company recognized share-based compensation expense of $1,921,154 (2022 - $nil), with a corresponding increase to options reserve (2022 - $nil). The weighted average fair value of the stock options granted during the year ended December 31, 2023 was $0.37 (2022 - $nil) per option.

**12. SHARE PURCHASE WARRANTS**

The following table summarizes the continuity of share purchase warrants:

---

| | | |
|:---|:---|:---|
|  |  | Weighted |
|  |  | average |
|  |  | exercise |
|  | Number of | price |
|  | warrants | $|
| Balance, December 31, 2021 and 2022 |  |  |
| &nbsp;&nbsp;Issued | 232936 | 0.40 |
| Balance, December 31, 2023 | 232936 | 0.40 |

---

As at December 31, 2023, the following share purchase warrants were outstanding and exercisable:

---

| | |
|:---|:---|
| Number of |  |
| warrants |  |
| outstanding | $Expiry date |
| 232936 | February 17, 2025 |

---

------

**BTQ TECHNOLOGIES CORP.**

Notes to the Consolidated Financial Statements Years Ended December 31, 2023 and 2022 (Expressed in Canadian dollars)

**13. RESTRICTED SHARE UNITS**

A summary of the changes in RSUs is presented below:

---

| | |
|:---|:---|
|  | Number of |
|  | RSUs |
| Balance, December 31, 2021 and 2022 |  |
| &nbsp;&nbsp;Issued | 3930000 |
| &nbsp;&nbsp;Converted | (1945000) |
| Balance, December 31, 2023 | 1985000 |
| Unvested | 1135000 |
| Vested, December 31, 2023 | 850000 |

---

During the year ended December 31, 2023, 3,930,000 restricted share units ("RSUs") (2022 - nil) were granted. The weighted average grant date fair value for RSUs granted during the year end December 31, 2023 was $0.44 per RSU. During the year ended December 31, 2023, the Company recognized share- based compensation expense of $1,999,502 with a corresponding increase to RSU reserve and $782,250 was transferred to share capital upon the vesting of 1,945,000 RSUs.

**14. RELATED PARTY TRANSACTIONS**

Key management personnel are persons responsible for planning, directing, and controlling the activities of an entity, and include all officers and directors of the Company. Key management personnel compensation during the years ended December 31, 2023 and 2022 was comprised of the following:

---

| | | |
|:---|:---|:---|
|  | 2023 | 2022 |
|  | $| $|
| Consulting fees | 97163 | 93694 |
| Marketing and promotion | 97163 | 63302 |
| Professional fees | 59661 |  |
| Research and development | 413158 | 495547 |
| Wages and benefits | 290543 | 196977 |
| Total short-term benefits | 957688 | 849520 |
| Share-based payments | 765827 |  |
|  | 1723515 | 849520 |

---

As at December 31, 2023, the Company owed $114,223 (2022 - $27,264) (2021 - $314,095) to the CEO of the Company, of which $89,247 (2022 - $nil) (2021 - $nil) is included in accounts payable and accrued liabilities. The amounts owed are non-interest bearing, unsecured, and due on demand.

As at December 31, 2023, the Company was owed $49,888 (2022 - $7,110) (2021 - $nil) from the Chief Operating Officer ("COO") of the Company, which is included in other receivables.

As at December 31, 2023, the Company owed $3,027 (2022 - $3,100) (2021 - $2,902) to a company controlled by the CEO and COO of the Company, which is non-interest bearing, unsecured, and due on demand.

As at December 31, 2023, the Company owed $7,350 (2022 - $nil) (2021 - $nil) to a firm where the Chief Financial Officer of the Company is a partner, which is included in accounts payable and accrued liabilities.

------

**BTQ TECHNOLOGIES CORP.**

Notes to the Consolidated Financial Statements<br>Years Ended December 31, 2023 and 2022<br>(Expressed in Canadian dollars)

**14. RELATED PARTY TRANSACTIONS** (continued)

As at December 31, 2023, the Company owed $132,260 (2022 - $135,440) (2021 - $nil) to the Chief Cryptographer of the Company, which is included in accounts payable and accrued liabilities.

As at December 31, 2023, the Company owed $7,936 (2022 - $nil) (2021 - $nil) to the Head of Corporate Development of the Company, which is included in accounts payable and accrued liabilities.

**15. SUPPLEMENTAL CASH FLOW INFORMATION**

---

| | | |
|:---|:---|:---|
|  | 2023 | 2022 |
|  | $| $|
| Non-cash investing and financing activities: |  |  |
| &nbsp;&nbsp;Receivables acquired in reverse takeover | 25308 |  |
| &nbsp;&nbsp;Restricted cash acquired in reverse takeover | 2875 |  |
| &nbsp;&nbsp;Accounts payable and accrued liabilities assumed in reverse takeover | 455077 |  |
| &nbsp;&nbsp;Shares issued for vested RSUs | 782250 |  |
| &nbsp;&nbsp;Finders' warrants issued pursuant to private placement | 14632 | - |

---

**16. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Fair Values

<u>Fair value hierarchy</u>

The following provides a description of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 1 fair value measurements are those derived from quoted prices (unadjusted) 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 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Assets and liabilities measured at fair value on a recurring basis were presented on the Company's statement of financial position as at December 31, 2023 and 2022 as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Fair value measurements using | Fair value measurements using | Fair value measurements using |  |
|  | Quoted prices in | Significant |  |  |
|  | active markets | other | Significant |  |
|  | for identical | observable | unobservable | Balance, |
|  | instruments | inputs | inputs | December 31, |
|  | (Level 1) | (Level 2) | (Level 3) | 2023 |
|  | $| $| $| $|
| Investments | - | - | 77229 | 77229 |

---

------

**BTQ TECHNOLOGIES CORP.**

Notes to the Consolidated Financial Statements<br>Years Ended December 31, 2023 and 2022<br>(Expressed in Canadian dollars)

**16. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Fair Values (continued)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Fair value measurements using | Fair value measurements using | Fair value measurements using |  |
|  | Quoted prices in | Significant |  |  |
|  | active markets | other | Significant |  |
|  | for identical | observable | unobservable | Balance, |
|  | instruments | inputs | inputs | December 31, |
|  | (Level 1) | (Level 2) | (Level 3) | 2022 |
|  | $| $| $| $|
| Investments | - | - | 63915 | 63915 |

---

The fair values of the Company's other financial instruments, which include cash, short-term investment, other receivables, loan receivable, accounts payable and accrued liabilities, lease obligation, and due to related parties, approximate their carrying values due to the relatively short-term maturity of these instruments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents. The Company limits its exposure to credit loss by placing its cash and cash equivalents with high credit quality financial institutions. The carrying amount of financial assets represents the maximum credit exposure.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Foreign Exchange Rate Risk

Foreign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. The Company is exposed to foreign currency risk to the extent that monetary assets and liabilities are denominated in a foreign currency.

The following tables indicate the impact of foreign currency exchange risk on net working capital as at December 31, 2023 and 2022. The tables below also provides a sensitivity analysis of a 10% strengthening of the foreign currency against functional currencies identified which would have increased (decreased) the Company's net loss by the amounts shown in the tables below. A 10% weakening of the foreign currency against the functional currencies would have had the equal but opposite effect as at December 31, 2023 and 2022.

---

| | | |
|:---|:---|:---|
| 2023 | TWD | US$ |
| Cash | 9201660 | 296479 |
| Accounts payable and accrued liabilities |  | (190659) |
| Lease obligation | (778794) |  |
| Total foreign currency financial assets and liabilities | 8422866 | 105820 |
| Impact of a 10% strengthening or weakening of foreign exchange rate | 842287 | 10582 |
| 2022 | TWD | US$ |
| Cash | 1230771 | 1479624 |
| Accounts payable and accrued liabilities |  | (309447) |
| Lease obligation | (2923542) |  |
| Total foreign currency financial assets and liabilities | (1692771) | 1170177 |
| Impact of a 10% strengthening or weakening of foreign exchange rate | 169277 | 117018 |

---

------

**BTQ TECHNOLOGIES CORP.**

Notes to the Consolidated Financial Statements<br>Years Ended December 31, 2023 and 2022<br>(Expressed in Canadian dollars)

**16. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Interest Rate Risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not exposed to significant interest rate risk as it does not have any liabilities with variable rates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) 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's objective to managing liquidity risk is to ensure that it has sufficient liquidity available to meet its liabilities when due. The Company relies on raising debt or equity financing in a timely manner. Refer to going concern disclosure in Note 1.

The following amounts are the contractual maturities of financial liabilities as at December 31, 2023, 2022, and 2021:

---

| | | | |
|:---|:---|:---|:---|
| 2023 |  | Within | Within |
|  | Total | 1 year | 2-5 years |
|  | $| $| $|
| Accounts payable and accrued liabilities | 856682 | 856682 |  |
| Lease obligation | 33554 | 33554 |  |
| Due to related parties | 28003 | 28003 |  |
| Total | 918239 | 918239 | - |
| 2022 |  | Within | Within |
|  | Total | 1 year | 2-5 years |
|  | $| $| $|
| Accounts payable and accrued liabilities | 930462 | 930462 |  |
| Lease obligation | 129062 | 81974 | 47088 |
| Due to related parties | 30364 | 30364 |  |
| Total | 1089888 | 1042800 | 47088 |
| 2021 |  | Within | Within |
|  | Total | 1 year | 2-5 years |
|  | $| $| $|
| Accounts payable and accrued liabilities | 64256 | 64256 |  |
| Loan payable | 17231 | 17231 |  |
| Due to related parties | 316997 | 316997 |  |
| Total | 398484 | 398484 | - |

---

------

**BTQ TECHNOLOGIES CORP.**

Notes to the Consolidated Financial Statements<br>Years Ended December 31, 2023 and 2022<br>(Expressed in Canadian dollars)

**17. CAPITAL MANAGEMENT**

The Company manages its capital to maintain its ability to continue as a going concern and to provide returns to shareholders and benefits to other stakeholders. The capital structure of the Company consists of cash and equity comprised of issued share capital, share-based payment reserve, and warrant reserve.

The Company manages its capital structure and makes adjustments to it in light of economic conditions. The Company, upon approval from its Board of Directors, will balance its overall capital structure through new share issuances or by undertaking other activities as deemed appropriate under the specific circumstances.

The Company is not subject to externally imposed capital requirements and the Company's overall strategy with respect to capital risk management remains unchanged from the year ended December 31, 2022.

**18. COMMITMENT**

On September 22, 2023, the Company entered into a premises lease agreement. Effective October 1, 2023, the Company is obligated to make a monthly lease payment of $9,280 for a period of one year.

**19. SEGMENTED INFORMATION**

The Company has one operating segment, the research and development of computer-based technology related to post-quantum cryptography. The Company's head office is in Canada and operations are in Canada and Taiwan. Geographic information for non-current assets other than financial instruments is as follows:

---

| | | |
|:---|:---|:---|
| 2023 | Taiwan | Total |
|  | $| $|
| Property and equipment | 102820 | 102820 |
| Right-of-use asset | 29905 | 29905 |
| Deposits | 35872 | 35872 |
|  | 168597 | 168597 |
| 2022 | Taiwan | Total |
|  | $| $|
| Property and equipment | 109668 | 109668 |
| Right-of-use asset | 119690 | 119690 |
| Deposits | 26451 | 26451 |
|  | 255809 | 255809 |

---

**20. COLLABORATION INCOME**

On May 1, 2023, the Company entered into a research and collaboration agreement with a third party. The Company agreed to conduct a research program and was responsible for the engagement of the researchers and contractors while the other party provided funding of $257,359 which was recorded as collaboration income. The two parties jointly own the rights of the intellectual property resulting from the research program.

------

**BTQ TECHNOLOGIES CORP.**

Notes to the Consolidated Financial Statements<br>Years Ended December 31, 2023 and 2022<br>(Expressed in Canadian dollars)

**21. INCOME TAXES**

The following table reconciles the expected income tax expense (recovery) at the statutory income tax rates to the amounts recognized in the consolidated statements of operations and comprehensive loss for the years ended December 31, 2022 and 2023:

---

| |
|:---|
| Net loss before income taxes) |
| Statutory tax rate |
| Expected income tax recovery) |
| Tax effect of: |
| &nbsp;&nbsp;Permanent differences and other |
| &nbsp;&nbsp;Difference due to tax rate of foreign jurisdiction |
| &nbsp;&nbsp;Foreign exchange rate impact on temporary differences) |
| &nbsp;&nbsp;Change in unrecognized deferred income tax assets |
| Income tax provision |

---

The significant components of deferred income tax assets and liabilities are as follows:

---

| |
|:---|
| Deferred income tax assets |
| &nbsp;&nbsp;Non-capital losses carried forward |
| &nbsp;&nbsp;Share issuance costs |
| Total gross deferred income tax assets |
| Total unrecognized deductible temporary differences) |
| Net deferred income tax asset |

---

Deferred income tax assets are only recognized to the extent that the realization of tax benefits is determined to be probable. As at December 31, 2023 and 2022, the Company has not recognized the benefit of the following deductible temporary differences:

---

| | | | |
|:---|:---|:---|:---|
|  |  |  | 2022 |
|  | Expiry | $Expiry | $|
| Non-capital losses - Canadian | 2043 |  |  |
| Non-capital losses - foreign | No expiry | No expiry | 2383783 |
| Share issuance costs | 2024 to 2027 |  |  |
|  |  |  | 2383783 |

---

The group's current tax provision of $65,000 relates to management's assessment of the amount of tax payable on open tax positions where the liabilities remain to be agreed upon with foreign tax authorities. Uncertain tax items for which a provision of $65,000 is made, relate principally to the interpretation of tax legislation regarding arrangements entered into by the group.

**22. RESTATEMENTS AND CHANGE IN PRESENTATION CURRENCY**

BTQ AG has restated its financial statements as at December 31, 2022 and for the year then ended to correct the fair value of shares issued to a related party for research and was determined to not meet the capitalization criteria, expense cut-off errors, accounting for the premises lease under IFRS 16, classification of a loan receivable, and improperly capitalized research and website costs. The statement of cash flows has been restated to reflect the adjustments and removes non-cash transactions which were incorrectly included in investing and financing activities.

------

**BTQ TECHNOLOGIES CORP.**

Notes to the Consolidated Financial Statements<br>Years Ended December 31, 2023 and 2022<br>(Expressed in Canadian dollars)

**22. RESTATEMENTS AND CHANGE IN PRESENTATION CURRENCY** (continued)

In addition, certain of the prior year's figures were reclassified to conform to the current year's presentation.

BTQ AG also restated its financial statements for the year ended December 31, 2021 to correct improperly capitalized research costs.

Effective February 17, 2023, BTQ AG's functional currency and presentation currency was changed from the U.S. dollar to the Canadian dollar. The change in presentation currency was accounted for as a change in accounting policy and applied retrospectively, as if the new presentation currency had always been the presentation currency of the financial statements.

The impact of the restatements and change in presentation currency as at December 31, 2022 and for the year then ended is summarized below:

<u>Statement of Financial Position</u>

---

| | | | |
|:---|:---|:---|:---|
|  | As reported | Adjustments | Restated |
|  | US$ | US$ | US$ |
| Assets |  |  |  |
| Current assets |  |  |  |
| &nbsp;&nbsp;Cash | 1519650 |  | 1519650 |
| &nbsp;&nbsp;Receivables | 79402 |  | 79402 |
| &nbsp;&nbsp;Prepaid expenses and deposits | 21215 |  | 21215 |
| &nbsp;&nbsp;Loan receivable |  | 1000000 | 1000000 |
| Total current assets | 1620267 | 1000000 | 2620267 |
| Non-current assets |  |  |  |
| &nbsp;&nbsp;&nbsp;Property and equipment | 85366 |  | 85366 |
| &nbsp;&nbsp;&nbsp;Intangible asset | 3743470 | (3743470) |  |
| &nbsp;&nbsp;&nbsp;Right-of-use asset |  | 92403 | 92403 |
| &nbsp;&nbsp;&nbsp;Investments | 1050000 | (1000000) | 50000 |
| &nbsp;&nbsp;&nbsp;Deposits | 19530 |  | 19530 |
| Total non-current assets | 4898366 | (4651067) | 247299 |
| Total assets | 6518633 | (3651067) | 2867566 |
| Liabilities and shareholders' equity |  |  |  |
| Current liabilities |  |  |  |
| &nbsp;&nbsp;Accounts payable and accrued liabilities | 546918 | 140074 | 686992 |
| &nbsp;&nbsp;Current portion of lease obligation |  | 60524 | 60524 |
| &nbsp;&nbsp;Due to related parties | 2289 | 20130 | 22419 |
| Total current liabilities | 549207 | 220798 | 769935 |
| Non-current liabilities |  |  |  |
| &nbsp;&nbsp;Lease obligation |  | 34767 | 34767 |
| &nbsp;&nbsp;Due to related parties | 20130 | (20130) |  |
| Total liabilities | 569337 | 235365 | 804702 |
| Shareholders' equity |  |  |  |
| &nbsp;&nbsp;Share capital | 7675000 | 9485000 | 17160000 |
| &nbsp;&nbsp;Deficit | (1725704) | (13371432) | (15097136) |
| Total shareholders' equity | 5949296 | (3886432) | 2062864 |
| Total liabilities and shareholders' equity | 6518633 | (3651067) | 2867566 |

---

------

**BTQ TECHNOLOGIES CORP.**

Notes to the Consolidated Financial Statements<br>Years Ended December 31, 2023 and 2022<br>(Expressed in Canadian dollars)

**22. RESTATEMENTS AND CHANGE IN PRESENTATION CURRENCY** (continued)

<u>Statement of Operations and Comprehensive Loss</u>

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Year ended December 31, 2022 | Year ended December 31, 2022 | Year ended December 31, 2022 | Year ended December 31, 2022 |
|  | As reported | Adjustments | Reclassifications | Restated |
|  | US$ | US$ | US$ | US$ |
| Expenses |  |  |  |  |
| &nbsp;&nbsp;Consulting fees |  |  | 116623 | 116623 |
| &nbsp;&nbsp;Depreciation | 419478 | (349940) |  | 69538 |
| &nbsp;&nbsp;Expenses paid for purchased services | 829759 |  | (829759) |  |
| &nbsp;&nbsp;General and administrative |  | (48579) | 340359 | 291780 |
| &nbsp;&nbsp;Marketing and promotion |  | 105450 | 90044 | 195494 |
| &nbsp;&nbsp;Other expenses | 526231 |  | (526231) |  |
| &nbsp;&nbsp;Professional fees |  | 33524 | 240236 | 273760 |
| &nbsp;&nbsp;Research and development |  | 12913450 | 57951 | 12971401 |
| &nbsp;&nbsp;Share-based compensation |  | 500000 |  | 500000 |
| &nbsp;&nbsp;Transfer agent and regulatory fees |  | 89730 |  | 89730 |
| &nbsp;&nbsp;Wages and benefits | 1447456 |  | (1137659) | 309797 |
| &nbsp;&nbsp;Other capitalized costs and services | (1650526) |  | 1650526 |  |
| Total expenses | 1572398 | 13243635 | 2090 | 14818123 |
| Loss before other income (expense) | (1572398) | (13243635) | (2090) | (14818123) |
| Other income (expense) |  |  |  |  |
| &nbsp;&nbsp;Foreign exchange income | 55424 |  |  | 55424 |
| &nbsp;&nbsp;Income tax expense | (2090) |  | 2090 |  |
| &nbsp;&nbsp;Interest expense |  | (8875) |  | (8875) |
| Total other income (expense) | 53334 | (8875) | 2090 | 46549 |
| Net loss and comprehensive loss | (1519064) | (13252510) | - | (14771574) |
| Loss per share, basic and diluted | (0.03) | (0.26) | - | (0.29) |

---

<u>Statement of Changes in Shareholders' Equity</u>

---

| | | | |
|:---|:---|:---|:---|
|  | As at December 31, 2022 | As at December 31, 2022 | As at December 31, 2022 |
|  | As reported | Adjustments | Restated |
|  | US$ | US$ | US$ |
| Shareholders' equity |  |  |  |
| &nbsp;&nbsp;Share capital | 7675000 | 9485000 | 17160000 |
| &nbsp;&nbsp;Deficit | (1725704) | (13371432) | (15097136) |
| Total shareholders' equity | 5949296 | (3886432) | 2062864 |

---

------

**BTQ TECHNOLOGIES CORP.**

Notes to the Consolidated Financial Statements<br>Years Ended December 31, 2023 and 2022<br>(Expressed in Canadian dollars)

**22. RESTATEMENTS AND CHANGE IN PRESENTATION CURRENCY** (continued)

<u>Statement of Cash Flows</u>

---

| | | | |
|:---|:---|:---|:---|
|  | Year ended December 31, 2022 | Year ended December 31, 2022 | Year ended December 31, 2022 |
|  | As reported | Adjustments | Restated |
|  | US$ | US$ | US$ |
| Operating activities |  |  |  |
| &nbsp;&nbsp;Net loss | (1516974) | (13254600) | (14771574) |
| Items not involving cash: |  |  |  |
| &nbsp;&nbsp;Amortization of intangible asset | 396428 | (396428) |  |
| &nbsp;&nbsp;Depreciation | 23050 | 46489 | 69539 |
| &nbsp;&nbsp;Foreign exchange translation loss (gain) | 11168 | (11243) | (75) |
| &nbsp;&nbsp;Income taxes | (2090) | 2090 |  |
| &nbsp;&nbsp;Interest expense |  | 8775 | 8775 |
| &nbsp;&nbsp;Share-based compensation |  | 500000 | 500000 |
| &nbsp;&nbsp;Shares issued for research |  | 11250000 | 11250000 |
| Changes in non-cash operating working capital: |  |  |  |
| &nbsp;&nbsp;Receivables | (79402) |  | (79402) |
| &nbsp;&nbsp;Prepaid expenses and deposits | 3300 | (19155) | (15855) |
| &nbsp;&nbsp;Accounts payable and accrued liabilities | 495124 | 141184 | 636308 |
| Net cash used in operating activities | (669396) | (1732888) | (2402284) |
| Investing activities |  |  |  |
| &nbsp;&nbsp;Purchase of property and equipment | (94557) |  | (94557) |
| &nbsp;&nbsp;Purchase of investments | (1050000) | 1000000 | (50000) |
| &nbsp;&nbsp;Intangible assets | (4020976) | 4020976 |  |
| &nbsp;&nbsp;Deposit | (19611) | 19611 |  |
| &nbsp;&nbsp;Loan receivable advance |  | (1000000) | (1000000) |
| Net cash used in investing activities | (5185144) | 4040587 | (1144557) |
| Financing activities |  |  |  |
| &nbsp;&nbsp;Repayment of lease obligation |  | (52300) | (52300) |
| &nbsp;&nbsp;Repayment of loan payable |  | (13591) | (13591) |
| &nbsp;&nbsp;Repayment of related party loans | (228863) | 1245 | (227618) |
| &nbsp;&nbsp;Proceeds from issuance of shares | 7625000 | (2265000) | 5360000 |
| Net cash provided by financing activities | 7396137 | (2329646) | 5066491 |
| Effect of exchange rate changes on cash | (8356) | 8356 |  |
| Increase in cash | 1533241 | (13591) | 1519650 |
| Cash, beginning of year | (13591) | 13591 |  |
| Cash, end of year | 1519650 | - | 1519650 |

---

------

**BTQ TECHNOLOGIES CORP.**

Notes to the Consolidated Financial Statements<br>Years Ended December 31, 2023 and 2022<br>(Expressed in Canadian dollars)

**22. RESTATEMENTS AND CHANGE IN PRESENTATION CURRENCY** (continued)

The impact of the restatement and change in presentation currency as at December 31, 2021 is summarized below:

<u>Statement of Financial Position</u>

---

| | | | |
|:---|:---|:---|:---|
|  | As reported | Adjustments | Restated |
|  | US$ | US$ | US$ |
| Assets |  |  |  |
| Current assets |  |  |  |
| &nbsp;&nbsp;Prepaid expenses and deposits | 24515 |  | 24515 |
| Total current assets | 24515 |  | 24515 |
| Non-current assets |  |  |  |
| &nbsp;&nbsp;&nbsp;Property and equipment | 13860 |  | 13860 |
| &nbsp;&nbsp;&nbsp;Intangible asset | 118922 | (118922) |  |
| &nbsp;&nbsp;&nbsp;Deposits | 375 |  | 375 |
| Total non-current assets | 133157 | (118922) | 14235 |
| Total assets | 157672 | (118922) | 38750 |
| Liabilities and shareholders' deficit |  |  |  |
| Current liabilities |  |  |  |
| &nbsp;&nbsp;Accounts payable and accrued liabilities | 50684 |  | 50684 |
| &nbsp;&nbsp;Loan payable | 13591 |  | 13591 |
| &nbsp;&nbsp;Due to related parties | 2289 | 247748 | 250037 |
| Total current liabilities | 66564 | 247748 | 314312 |
| Non-current liabilities |  |  |  |
| &nbsp;&nbsp;Due to related parties | 247748 | (247748) |  |
| Total liabilities | 314312 |  | 314312 |
| Shareholders' deficit |  |  |  |
| &nbsp;&nbsp;Share capital | 50000 |  | 50000 |
| &nbsp;&nbsp;Deficit | (206640) | (118922) | (325562) |
| Total shareholders' equity | (156640) | (118922) | (275562) |
| Total liabilities and shareholders' deficit | 157672 | (118922) | 38750 |

---

**23. GENERAL AND ADMINISTRATIVE EXPENSES**

The following is a breakdown of general and administrative expenses for the years ended December 31, 2023 and 2022:

---

| | | |
|:---|:---|:---|
|  | 2023 | 2022 |
|  | $| $|
| Foreign office representation | 125886 | 64690 |
| Insurance | 63700 |  |
| IT and communications | 63317 | 5494 |
| Office and miscellaneous | 187420 | 141906 |
| Personnel and recruitment costs |  | 66331 |
| Rent | 127705 | 94746 |
| Travel | 166662 | 6526 |
| VAT | 178000 |  |
|  | 912690 | 379693 |

---

------

**BTQ TECHNOLOGIES CORP.**

Notes to the Consolidated Financial Statements<br>Years Ended December 31, 2023 and 2022<br>(Expressed in Canadian dollars)

**24. SUBSEQUENT EVENTS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) On March 5, 2024, the Company issued 750,000 common shares pursuant to the conversion of vested RSUs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) On March 5, 2024, the Company granted 100,000 stock options exercisable at $0.50 per common share expiring on March 5, 2029 to a consultant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) On March 6, 2024, the Company granted 200,000 stock options exercisable at $0.485 per common share expiring on March 1, 2029 to consultants.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) On March 6, 2024, the Company granted 100,000 stock options exercisable at $0.485 per common share expiring on March 6, 2026 to a consultant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Subsequent to December 31, 2023, the Company issued 260,000 common shares for proceeds of $104,000 pursuant to the exercise of stock options.

------

## Exhibit 4.5

------

![](exhibit4-5xu001.jpg)

**MANAGEMENT INFORMATION CIRCULAR**

(Containing information as at August 15, 2024 unless indicated otherwise)

This Management Information Circular (the "**Circular**") is furnished in connection with the solicitation of proxies by the management of BTQ Technologies Corp. (the "**Company**") for use at the annual general meeting (the "**Meeting**") of its shareholders to be held at the offices of Farris LLP, 25th floor, 700 West Georgia Street, British Columbia, V7Y 1B3 on September 18, 2024 at the time and place and for the purposes set forth in the accompanying notice of the Meeting.

In this Circular, references to "the Company", "we" and "our" refer to BTQ Technologies Corp., "common shares" means common shares without par value in the capital of the Company. "Beneficial Shareholders" means shareholders who do not hold common shares in their own name and "intermediaries" refers to brokers, investment firms, clearing houses and similar entities that own securities on behalf of Beneficial Shareholders.

**GENERAL PROXY INFORMATION**

**Solicitation of Proxies**

The solicitation of proxies will be primarily by mail, but proxies may be solicited personally or by telephone by directors, officers and regular employees of the Company. The Company will bear all costs of this solicitation. We have arranged for intermediaries to forward the meeting materials to beneficial owners of common shares held as of record by those intermediaries and we may reimburse the intermediaries for their reasonable fees and disbursements in that regard.

**Appointment of Proxyholders**

The individuals named in the accompanying form of proxy (the "**Proxy**") are officers and directors of the Company. **If you are a shareholder entitled to vote at the Meeting, you have the right to appoint a person or company other than either of the persons designated in the Proxy, who need not be a shareholder, to attend and act for you on your behalf at the Meeting. You may do so either by inserting the name of that other person in the blank space provided in the Proxy or by completing and delivering another suitable form of proxy.**

The only methods by which you may appoint a person as proxy are submitting a Proxy by mail, hand delivery or fax.

**Voting by Proxyholder**

The persons named in the Proxy will vote or withhold from voting the common shares represented thereby in accordance with your instructions on any ballot that may be called for. If you specify a choice with respect to any matter to be acted upon, your common shares will be voted accordingly. The Proxy confers discretionary authority on persons named therein with respect to:

(a) each matter or group of matters identified therein for which a choice is not specified, other than the appointment of an auditor and the election of directors,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) any amendment to or variation of any matter identified therein, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) any other matter that properly comes before the Meeting.

**In respect of a matter for which a choice is not specified in the Proxy, or where both choices have been specified, in favour or all matters described herein, the persons named in the Proxy will vote the common shares represented by the Proxy for the approval of such matter.**

**Notice and Access**

The Company is not sending this Circular to registered or beneficial shareholders using "notice-and-access" as defined under National Instrument 54-101 ("**NI 54-101**").

------

**Registered Shareholders**

If you are a Registered Shareholder and wish to have your common shares voted at the Meeting, you will be required to submit your vote by proxy. Registered Shareholders electing to submit a proxy may do so by completing, dating and signing the Proxy and returning it to the Company's transfer agent, Computershare Trust Company of Canada ("**Computershare**"), in accordance with the instructions on the Proxy. Alternatively, Registered Shareholders may vote their common shares via the internet or by telephone as per the instructions provided on the Proxy.

**In all cases you should ensure that the Proxy is received at least 48 hours (excluding Saturdays, Sundays and holidays) before the Meeting or the adjournment thereof at which the Proxy is to be used.**

Registered Shareholders electing to submit a Proxy may do so by:

(a) **Internet.** Vote online at <u>www.investorvote.com</u> using the Proxy control number found in the enclosed Proxy.

(b) **Telephone.** Using a touch-tone phone to transmit voting choices to the toll-free number given in the Proxy. Registered Shareholders who choose this option must follow the instructions of the voice response system and refer to the enclosed Proxy for the toll-free number, the holder's account number and the Proxy Control Number.

(c) **Mail**. Completing, dating and signing the enclosed Proxy and returning it to Computershare, by fax within North America at 1-866-249-7775, or by mail or hand delivery at 8th Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1, Canada.

In all cases ensuring that the Proxy is received at least 48 hours (excluding Saturdays, Sundays and holidays) before the Meeting or the adjournment thereof at which the Proxy is to be used.

Should you wish to contact Computershare, please refer to the following:

**General Shareholder Inquiries:**

---

| | |
|:---|:---|
| By phone: | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1-800-564-6253 |
| By fax: | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1-888-453-0330 |
| By email: | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>service@computershare.com</u> |
| By regular mail: | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Computershare Trust Company of Canada |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;100 University Avenue, 8<sup>th</sup> Floor |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Toronto, Ontario, M5J 2Y1 |

---

**Beneficial Shareholders**

The following information is of significant importance to shareholders who do not hold common shares in their own name. Beneficial Shareholders should note that the only proxies that can be recognized and acted upon at the Meeting are those deposited by Registered Shareholders (those whose names appear on the records of the Company as the registered holders of common shares).

These securityholder materials are being sent to both registered and non-registered owners of the securities of the Company. If you are a non-registered owner, and the Company or its agent has sent these materials directly to you, your name and address and information about your holdings of securities, have been obtained in accordance with applicable securities regulatory requirements from the intermediary holding on your behalf. By choosing to send these materials to you directly, the Company (and not the intermediary holding on your behalf) has assumed responsibility for (i) delivering these materials to you, and (ii) executing your proper voting instructions. Please return your voting instructions as specified in your request for voting instructions.

If common shares are listed in an account statement provided to a shareholder by a broker, then in almost all cases those common shares will not be registered in the shareholder's name on the records of the Company. Such common shares will more likely be registered under the names of the shareholder's broker or an agent of that broker. In the United States, the vast majority of such common shares are registered under the name of Cede & Co. as nominee for The Depository Trust Company (which acts as depositary for many U.S. brokerage firms and custodian banks), and in Canada, under the name of CDS & Co. (the registration name for The Canadian Depository for Securities Limited, which acts as nominee for many Canadian brokerage firms).

There are two kinds of beneficial owners - those who object to their name being made known to the issuers of securities which they own (called "**OBOs**" for "**Objecting Beneficial Owners**") and those who do not object to the issuers of the securities they own knowing who they are (called "**NOBOs**" for "**Non-Objecting Beneficial Owners**").

------

Pursuant to National Instrument 54-101 of the Canadian Securities Administrators, the Company is sending proxy- related materials directly to NOBOs, which materials will include a scannable Voting Instruction Form (a "VIF"). These VIFs are to be completed and returned to Computershare in the envelope provided or by facsimile. In addition, Computershare provides both telephone voting and Internet voting as described on the VIF itself which contain complete instructions. Computershare will tabulate the results of the VIFs received from NOBOs and will provide appropriate instructions at the Meeting with respect to the common shares represented by the VIFs they receive.

Management of the Company does not intend to pay for intermediaries to forward to OBOs under National Instrument 54-101 the proxy-related materials and Form 54-101F7 Request for Voting Instructions Made by Intermediary, and, in the case of an OBO, the OBO will not receive the materials unless the OBO's intermediary assumes the cost of delivery.

Every intermediary that mails proxy-related materials to Beneficial Shareholders has its own mailing procedures and provides its own return instructions to clients. Beneficial Shareholders should follow the instructions of their intermediary carefully to ensure that their common shares are voted at the Meeting.

Most brokers now delegate responsibility for obtaining instructions from clients to Broadridge Financial Solutions, Inc. ("**Broadridge**") in the United States and in Canada. Broadridge mails a voting instruction form (the "**Broadridge VIF**") which will be similar to the Proxy provided to Registered Shareholders by the Company. However, its purpose is limited to instructing the intermediary on how to vote on your behalf. The Broadridge VIF will appoint the same persons as the Company's Proxy to represent you at the Meeting. You have the right to appoint a person (who need not be a shareholder of the Company), other than the persons designated in the Broadridge VIF, to represent you at the Meeting. To exercise this right, you should insert the name of the desired representative in the blank space provided in the Broadridge VIF. The completed Broadridge VIF must then be returned to Broadridge by mail or facsimile or given to Broadridge by phone or over the internet, in accordance with Broadridge's instructions. Broadridge then tabulates the results of all instructions received and provides appropriate instructions respecting the voting of common shares to be represented at the Meeting. **If you receive a Broadridge VIF, you cannot use it to vote common shares directly at the Meeting - the Broadridge VIF must be completed and returned to Broadridge, in accordance with its instructions, well in advance of the Meeting in order to have the common shares voted.**

Although as a Beneficial Shareholder you may not be recognized directly at the Meeting for the purposes of voting common shares registered in the name of your broker, you, or a person designated by you, may attend at the Meeting as proxyholder for your broker and vote your common shares in that capacity. **If you wish to attend the Meeting and indirectly vote your common shares as proxyholder for your broker, or have a person designated by you do so, you should enter your own name, or the name of the person you wish to designate, in the blank space on the voting instruction form provided to you and return the same to your broker in accordance with the instructions provided by such broker, well in advance of the Meeting.**

Alternatively, you can request in writing that your broker send you a legal Proxy which would enable you, or a person designated by you, to attend at the Meeting and vote your common shares.

**Revocation of Proxies**

In addition to revocation in any other manner permitted by law, a Registered Shareholder who has given a Proxy may revoke it by:

(a) executing a Proxy bearing a later date or by executing a valid notice of revocation, either of the foregoing to be executed by the Registered Shareholder or the Registered Shareholder's authorized attorney in writing, or, if the shareholder is a corporation, under its corporate seal by an officer or attorney duly authorized, and by delivering the Proxy bearing a later date to Computershare at any time up to 10:00 a.m. (Vancouver time) on September 16, 2024 or, if the Meeting is adjourned, 10:00 a.m. (Vancouver time) on the second business day that precedes any reconvening thereof, or to the chairman of the Meeting on the day of the Meeting or any reconvening thereof, or in any other manner provided by law; or

(b) personally attending the Meeting and voting the Registered Shareholder's common shares.

A revocation of a Proxy will not affect a matter on which a vote is taken before the revocation.

**INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON**

No director or executive officer of the Company, nor any person who has held such a position since the beginning of the last completed financial year end of the Company, nor any proposed nominee for election as a director of the Company, nor any associate or affiliate of the foregoing persons, has any substantial or material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted on at the Meeting other than the election of directors, the appointment of the auditor and as set out herein.

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**VOTING SECURITIES AND PRINCIPAL HOLDERS OF VOTING SECURITIES**

The board of directors (the "**Board**") of the Company has fixed August 13, 2024 as the record date (the "**Record Date**") for determination of persons entitled to receive notice of the Meeting. Only shareholders of record at the close of business on the Record Date who either attend the Meeting personally or complete, sign and deliver a form of Proxy in the manner and subject to the provisions described above will be entitled to vote or to have their common shares voted at the Meeting.

As at the Record Date, there were 124,203,879 common shares issued and outstanding, each carrying the right to one vote.

On a show of hands, every individual who is present and is entitled to vote as a shareholder or as a representative of one or more corporate shareholders will have one vote, and on a poll every shareholder present in person or represented by a Proxy and every person who is a representative of one or more corporate shareholders, will have one vote for each common share registered in that shareholder's name on the list of shareholders as at the Record Date, which is available for inspection during normal business hours at Computershare and will be available at the Meeting.

To the knowledge of the directors and executive officers of the Company, the only person that beneficially owns, directly or indirectly, or exercised control or direction over, common shares carrying 10% or more of the voting rights attached to all outstanding common shares of the Company as at the Record Date as follows:

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| | | |
|:---|:---|:---|
| **Name of Shareholder** | **Number of Shares Held** | **Percentage** |
| Olivier Roussy Newton | 41,843,000 Shares | 33.69% |

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**VOTES NECESSARY TO PASS RESOLUTIONS**

A simple majority of affirmative votes cast at the Meeting is required to pass the resolutions described herein. If there are more nominees for election as directors or appointment of the Company's auditor than there are vacancies to fill, those nominees receiving the greatest number of votes will be elected or appointed, as the case may be, until all such vacancies have been filled. If the number of nominees for election or appointment is equal to the number of vacancies to be filled, all such nominees will be declared elected or appointed by acclamation.

**SETTING NUMBER OF DIRECTORS**

The persons named in the enclosed Proxy intend to vote in favour of fixing the number of directors at five (5). The Board proposes that the number of directors be fixed at five (5). Shareholders will therefore be asked to approve an ordinary resolution that the number of directors elected be fixed at five (5).

**ELECTION OF DIRECTORS**

The term of office of each of the current directors expires at the conclusion of the Meeting. Unless the director's office is earlier vacated in accordance with the provisions of the Business Corporations Act (British Columbia), each director elected will hold office until the conclusion of the next annual general meeting of the Company, or if no director is then elected, until a successor is elected.

The following table sets out the names of management's nominees for election as a director (a "proposed director"), the province and country in which he is ordinarily resident, all major offices and positions with the Company and any of its significant affiliates each now holds, each nominee's principal occupation, business or employment for the five preceding years for new director nominees, the period of time during which each has been a director of the Company and the number of common shares of the Company beneficially owned by each, directly or indirectly, or over which each exercised control or direction, as at the Record Date.

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5 <br>

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| | | | |
|:---|:---|:---|:---|
| **Name of Nominee, Province and**<br>**Country of Ordinary Residence**<br>**and Positions Held with the**<br>**Company** | **Occupation, Business or**<br>**Employment<sup>(1)</sup>** | **Director of the**<br>**Company Since** | **Common Shares**<br>**Beneficially Owned**<br>**or Controlled, or**<br>**Directed, Directly or**<br>**Indirectly<sup>(1)</sup>** |
| **Olivier Roussy Newton**<br> Zug, Switzerland<br> *Director and CEO* | Entrepreneur; President of EV Technology Group; Founder of Latent Capital; Co- Founder of DEFI Technologies; former director of Hive Blockchain Technologies Ltd. | February 17, 2023 | 41,843,000 Shares |
| **Nicolas Roussy Newton**<br> Taipei City, Taiwan<br> *Director and COO* | Entrepreneur; Investor. | February 17, 2023 | Nil |
| **Michael Resendes<sup>(2) (3)</sup>**<br> British Columbia, Canada<br> *Director* | Accountant. | September 13, 2005 | 225000 |
| **Johan Wattenstrom<sup>(2) (3)</sup>**<br> Zug, Switzerland<br> *Director* | Chief Executive Officer of Nortide Capital AG | February 17, 2023 | 400000 |
| **Kevin Mulhern<sup>(2) (3)</sup>**Ontario, Canada<br>*Director* | Vice President of Business Operations of Broadridge; formerly CEO and Founder of AdvisorStream Ltd. | February 17, 2023 | 400000 |

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Notes:

(1) The information as to principal occupation, business or employment and common shares beneficially owned or controlled is not within the knowledge of the management of the Company and has been furnished by the respective nominees. Each nominee has held the same or a similar principal occupation with the organization indicated or a predecessor thereof for the last five years.

(2) Denotes a member of the audit committee of the Company.

None of the proposed directors of the Company is to be elected under any arrangement or understanding between the proposed director and any other person or company, except the directors and officers of the Company acting solely in such capacity.

**CORPORATE CEASE TRADE ORDERS OR BANKRUPTCIES**

The Company applied for a management cease trade order (an "MCTO") under National Policy 12-203 Management Cease Trade Orders ("NP 12-203") on March 18, 2024, due to the delayed filing of its consolidated financial statements for the year ended December 31, 2023. The MCTO was lifted after the filing of the Company's annual consolidated financial statements on June 4, 2024.

With the exception of the MCTO, as at the date of this Circular, and within the last 10 years before the date of this Circular, no proposed director (or any of their personal holding companies) of the Company was a director, CEO or CFO of any company (including the Company) that:

(a) was subject to a cease trade or similar order or an order denying the relevant company access to any exemptions under securities legislation, for more than 30 consecutive days while that person was acting in the capacity as director, CEO or CFO; or

(b) was the subject of a cease trade or similar order or an order that denied the issuer access to any exemption under securities legislation in each case for a period of 30 consecutive days, that was issued after the person ceased to be a director, CEO or CFO in the company and which resulted from an event that occurred while that person was acting in the capacity as director, CEO or CFO; or

(c) is as at the date of this Circular or has been within 10 years before the date of this Circular, a director or executive officer of any company, including the Company, that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or

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(d) has within the 10 years before the date of this Circular, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangements or compromise with creditors, or had a receiver, receiver manager as trustee appointed to hold the assets of that individual.

None of the proposed directors (or any of their personal holding companies) has been subject to:

(1) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or

(2) any other penalties or sanctions imposed by a court or a regulatory body that would likely be considered important to a reasonable securityholder in deciding whether to vote for a proposed director

**AUDIT COMMITTEE AND RELATIONSHIP WITH AUDITOR**

The Audit Committee of the Board is responsible for monitoring the Company's systems and procedures for financial reporting and internal control, reviewing certain public disclosure documents and monitoring the performance and independence of the Company's external auditors. The committee is also responsible for reviewing the Company's annual audited financial statements, unaudited quarterly financial statements and management's discussion and analysis of financial results of operations for both annual and interim financial statements and review of related operations prior to their approval by the full Board.

The Company has filed an Annual Information Form (the "AIF") for the fiscal year ended December 31, 2023, on SEDAR+ at www.sedarplus.ca, which contains, among other things, all of the financial disclosure and also the Charter of the Company's Audit Committee as required under NI 52-110. In particular, the information that is required to be disclosed in Form 52-110F1 of NI 52-110 may be found under the heading "Audit Committee Disclosure" in the AIF.

The members of the Audit Committee are Michael Resendes, Kevin Mulhern, and Johan Wattenstrom. All members are not executive officers of the Company and, therefore, are independent members of the Audit Committee. All members are considered to be financially literate. A member of the audit committee is independent if the member has no direct or indirect material relationship with the Company. A material relationship means a relationship which could, in the view of the Company's Board, reasonably interfere with the exercise of a member's independent judgment. A member of the audit committee is considered financially literate if he or she has the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company.

**CORPORATE GOVERNANCE**

**General**

Corporate governance refers to the policies and structure of the Board of a company whose members are elected by and are accountable to the shareholders of the company. Corporate governance encourages establishing a reasonable degree of independence of the Board from executive management and the adoption of policies to ensure the Board recognizes the principles of good management. The Board is committed to sound corporate governance practices as such practices are both in the interests of shareholders and help to contribute to effective and efficient decision-making.

Effective June 30, 2005, National Instrument 58-101 Disclosure of Corporate Governance Practices ("NI 58-101") and National Policy 58-201 Corporate Governance Guidelines ("NP 58-201") were adopted in each of the provinces and territories of Canada. NI 58-101 requires issuers to disclose the corporate governance practices that they have adopted. NP 58-201 provides guidance on corporate governance practices. This section sets out the Company's approach to corporate governance and addresses the Company's compliance with NI 58-101.

**Board of Directors**

Directors are considered to be independent if they have no direct or indirect material relationship with the Company. A "material relationship" is a relationship which could, in the view of the Company's Board, be reasonably expected to interfere with the exercise of a director's independent judgment.

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The Company's Board facilitates its exercise of independent judgement in carrying out its responsibilities by carefully examining issues and consulting with outside counsel and other advisors in appropriate circumstances. The Company's Board requires management to provide complete and accurate information with respect to the Company's activities and to provide relevant information concerning the industry in which the Company operates in order to identify and manage risks. The Company's Board is responsible for monitoring the Company's officers, who in turn are responsible for the maintenance of internal controls and management information systems.

The current independent members of the Board are Michael Resendes, Johan Wattenstrom, and Kevin Mulhern. The non-independent members of the Board are Olivier Roussy Newton, CEO of the Company, and Nicolas Roussy Newton, COO of the Company.

**Mandate**

The Board of Directors is responsible for the stewardship and the general supervision of the management of the business of the Company and is to act in the best interests of the Company and its stakeholders. The Board will discharge its responsibilities directly and through its committees. In addition, the Board may from time to time, appoint such additional committees as it deems necessary and appropriate in order to discharge its duties.

**Position Description**

The Chairman of the Board is responsible for presiding at meetings of the Board and for annually proposing the leadership and membership of the Company's committees.

The Chairman of the Audit Committee is responsible for presiding at meetings of the Audit Committee and for investigating any complaints made against the Company through the whistleblower policy. Any responsibility which is not delegated to senior management or a Board committee remains with the full Board.

The CEO is responsible for the management of the resources and operations of a Company, making major corporate decisions, and acting as the main point of contact between the Board, employees, and the public. The CEO is also responsible for leading and developing key management personnel. There is no explicit written position description for the CEO at the point of this filings.

The COO oversees operations in the company's various offices in Canada, Taiwan, and Australia. The COO is also responsible for establishing general research direction and sourcing partnerships with potential customers and other research companies.

**Directorships**

In addition to his role at BTQ, Olivier Roussy Newton is serving as the executive chairman of Defi Technologies (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company that converges traditional capital markets with the world of decentralized finance.

**Orientation and Continuing Education**

When new directors are appointed, they receive an orientation, commensurate with their previous experience, on the Company's properties, business, technology and industry and on the responsibilities of directors.

Board meetings may also include presentations by the Company's management and employees to give the directors additional insight into the Company's business.

**Ethical Business Conduct**

The Board has found that the fiduciary duties placed on individual directors by the Company's governing corporate legislation and the common law and the restrictions placed by applicable corporate legislation on an individual directors' participation in decisions of the Board in which the director has an interest have been sufficient to ensure that the Board operates independently of management and in the best interests of the Company. Further, the Company's auditor has full and unrestricted access to the Audit Committee at all times to discuss the audit of the Company's financial statements and any related findings as to the integrity of the financial reporting process.

**Nomination of Directors**

The Board considers its size each year when it considers the number of directors to recommend to the shareholders for election at the annual meeting of shareholders, taking into account the number required to carry out the Board's duties effectively and to maintain a diversity of views and experience.

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The Board does not have a nominating committee, and these functions are currently performed by the Board as a whole. However, if there is a change in the number of directors required by the Company, this policy will be reviewed.

**Compensation**

The Board as a whole determines compensation for the directors and the CEO.

**Other Board Committees**

The Board has no other committees other than the Audit Committee.

**Majority Voting Policy**

The Company has adopted a majority voting policy in director elections, which applies to any meeting of shareholders where an uncontested election of directors is held. Pursuant to this policy, any nominee who receives a greater number of votes "withheld" from his or her election than votes "for" such election will immediately tender his or her resignation to the Board. The independent directors of the Company (the "Committee") shall evaluate the best interests of the Company and its shareholders and shall recommend to the Board the action to be taken with respect to such tendered resignation, following which the Board shall consider the Committee's recommendation and make a determination. The Board shall accept the resignation absent exceptional circumstances. The above procedures shall be completed within ninety (90) days following the shareholder meeting.

In reaching its recommendation, the Committee shall consider all factors it deems relevant, including, without limitation, the effect of the exercise of cumulative voting in the election, if applicable, any stated reasons why shareholders "withheld" votes for the election from such director, the length of service and qualifications of the director whose resignation has been tendered, the director's contributions to the Company, the Company's corporate governance guidelines and whether any special interest groups conducted a campaign involving the election of directors to further the interests of such group, as opposed to the best interests of all shareholders.

In considering the Committee's recommendation, the Board will consider all of the factors considered by the Committee and such additional factors as it deems relevant.

**Assessments**

The Board monitors the adequacy of information given to directors, communication between the Board and management and the strategic direction and processes of the Board and committees.

**STATEMENT OF EXECUTIVE COMPENSATION**

**Compensation Discussion and Analysis**

*Compensation, Philosophy and Objectives*

The Company does not have a formal compensation program. The Board meets to discuss and determine management compensation, without reference to formal objectives, criteria or analysis. The general objectives of the Company's compensation strategy are to (a) compensate management in a manner that encourages and rewards a high level of performance and outstanding results with a view to increasing long-term shareholder value; (b) align management's interests with the long-term interests of shareholders; (c) provide a compensation package that is commensurate with other junior mineral exploration companies to enable the Company to attract and retain talent; and (d) ensure that the total compensation package is designed in a manner that takes into account the constraints that the Company is under by virtue of the fact that it is a junior mineral exploration company without a history of earnings.

The Board, as a whole, ensures that total compensation paid to all NEOs, as hereinafter defined, is fair and reasonable. The Board relies on the experience of its members as officers and directors with other junior mining companies in assessing compensation levels.

The Board has not conducted a formal evaluation of the implications of the risks associated with the Company's compensation policies. Risk management is a consideration of the Board when implementing its compensation policies and the Board do not believe that the Company's compensation policies result in unnecessary or inappropriate risk taking including risks that are likely to have a material adverse effect on the Company.

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*Analysis of Elements*

Base salary is used to provide the NEOs a set amount of money during the year with the expectation that each NEO will perform his responsibilities to the best of his ability and in the best interests of the Company.

The Company considers the granting of incentive stock options to be a significant component of executive compensation as it allows the Company to reward each NEO's efforts to increase value for shareholders without requiring the Company to use cash from its treasury. Stock options are generally awarded to executive officers at the commencement of employment and periodically thereafter. The terms and conditions of the Company's stock option grants, including vesting provisions and exercise prices, are governed by the terms of the Company's stock option plan (the "**Stock Option Plan**").

*Long Term Compensation and Option-Based Awards*

The Company has no long-term incentive plans other than its Stock Option Plan. The Company's directors and officers and certain consultants are entitled to participate in the Stock Option Plan. The Stock Option Plan is designed to encourage share ownership and entrepreneurship on the part of the senior management and other employees. The Board believes that the Stock Option Plan aligns the interests of the NEO and the Board with shareholders by linking a component of executive compensation to the longer term performance of the Company's common shares.

Options are granted by the Board. In monitoring or adjusting the option allotments, the Board takes into account its own observations on individual performance (where possible) and its assessment of individual contribution to shareholder value, previous option grants and the objectives set for the NEOs and the Board. The scale of options is generally commensurate to the appropriate level of base compensation for each level of responsibility.

In addition to determining the number of options to be granted pursuant to the methodology outlined above, the Board also makes the following determinations:

(a) parties who are entitled to participate in the Stock Option Plan;

(b) the exercise price for each stock option granted, subject to the provision that the exercise price cannot be lower than the prescribed discount permitted by the TSX Venture Exchange from the market price on the date of grant;

(c) the date on which each option is granted;

(d) the vesting period, if any, for each stock option;

(e) the other material terms and conditions of each stock option grant; and

(f) any re-pricing or amendment to a stock option grant.

The Board makes these determinations subject to and in accordance with the provisions of the Stock Option Plan. The Board reviews and approves grants of options on an annual basis and periodically during a financial year.

*Use of Financial Instruments*

The Company does not have a policy that would prohibit a NEO or director from purchasing financial instruments, including prepaid variable forward contracts, equity swaps, collars or units of exchange funds, that are designed to hedge or offset a decrease in market value of equity securities granted as compensation or held, directly or indirectly, by the NEO or director. However, management is not aware of any NEO or director purchasing such an instrument.

**Performance Graph**

This chart represents the illustrative value of a $100 investment in BTQ Technologies Corp. at the time of the company completing its RTO transaction vs. an investment in the S&P/TSX Venture Composite Index ("SPTSXVEN") for the same time period. The return on investment benchmark SPTSXVEN was chosen due to companies in said index having similar characteristics as BTQ (market capitalization, trading history, growth potential, etc.) but does not constitute a perfect comparable.

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![](exhibit4-5xu002.jpg)

**Summary Compensation Table**

In this section, a "Named Executive Officer" ("NEO") includes (i) the CEO, (ii) the CFO, (iii) each of the three most highly compensated executive officers, other than the CEO and CFO, who were serving as executive officers as at the end of the most recently completed financial year of December 31, 2023, and whose total compensation was more than $150,000; and (iv) any additional individuals for whom disclosure would have been required except that the individual was not serving as an officer of the Company at the end of the most recently completed financial year.

The following table sets forth compensation paid to the Company's NEOs for the Company's three most recently completed financial years is as set out below:

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11 <br>

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| | | | | |
|:---|:---|:---|:---|:---|
| **Name and**<br>**principal position** | **Year<sup>(1)</sup>** | **Salary**<br>**($)**<br>**(a)** | **Option-**<br>**based**<br>**awards**<br>**($)<sup>(2)</sup>**<br>**(c)** | **Total**<br>**compensation**<br>**($)<sup>(2)</sup>** |
| **Name and**<br>**principal position** | **Year<sup>(1)</sup>** | **Salary**<br>**($)**<br>**(a)** | **Option-**<br>**based**<br>**awards**<br>**($)<sup>(2)</sup>**<br>**(c)** | **Total**<br>**compensation**<br>**($)<sup>(2)</sup>** |
| **Olivier Roussy**<br>**Newton**<br>CEO | 2023<br>2022<br>2021 | Nil<br>Nil<br>Nil | Nil<br>Nil<br>Nil | Nil<br>Nil<br>Nil |
| **Lonny Wong**<br>CFO | 2023<br>2022<br>2021 | 59,661<sup>(4)</sup><br>Nil<br>Nil 81,000<sup>(4)</sup><br>Nil<br>Nil | 110,575<sup>(4)</sup><br>Nil<br>Nil Nil<br>Nil<br>Nil | 251,236<sup>(4)</sup><br>Nil<br>Nil |
| **Nicolas Roussy**<br>**Newton**<br>COO | 2023<br>2022<br>2021 | 162,183<br>Nil<br>Nil Nil<br>Nil<br>Nil | 196,843<br>Nil<br>Nil Nil<br>Nil<br>Nil | 359,026<br>Nil<br>Nil |
| **Peter Lavelle**<br>Chief Legal<br>Officer | 2023<br>2022<br>2021 | 128,360<br>Nil<br>Nil Nil<br>Nil<br>Nil | 157,474<br>Nil<br>Nil Nil<br>Nil<br>Nil | 285,834<br>Nil<br>Nil |
| **Po-Chun Kuo**<br>Chief Technology<br>Officer | 2023<br>2022<br>2021 | 128,360<br>Nil<br>Nil Nil<br>Nil<br>Nil | 157,474<br>Nil<br>Nil Nil<br>Nil<br>Nil | 285,834<br>Nil<br>Nil |
| **Ming-Yang Chih**<br>Chief Strategic<br>Officer | 2023<br>2022<br>2021 | 97,163<br>Nil<br>Nil Nil<br>Nil<br>Nil | 157,474<br>Nil<br>Nil Nil<br>Nil<br>Nil 86,275<sup>(5)</sup><br>Nil<br>Nil | 340,912<br>Nil<br>Nil |

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Notes:

(1) 2023 and 2022 financial years ended January 31.

(2) Share-based awards comprise RSUs. Value represents the fair value of the entire award on the grant date which differs from the value reported in the Company's financial statements. For financial statement purposes, the accounting fair value amount is amortized over the service period to obtain the accounting compensation expense.

(3) The value ascribed to option grants represents non-cash consideration and has been estimated using the Black-Scholes option pricing model as at the date of grant as follows: February 17, 2023 - expected volatility - 216%, expected option life - 4.9 years, risk free-rate - 3.33%, dividend rate - 0%, May 18, 2023 - expected volatility - 219%, expected option life - 4.6 years, risk-free rate - 3.28%, dividen rate - 0%. The Company chose the Black-Scholes option pricing model given its prevalence of use in North America. The value represents the fair value of the entire award on the grant date which differs from the value reported in the Company's financial statements. For financial statement purposes, the accounting fair value amount is amortized over the service period to obtain the accounting compensation expense.

(4) Amount paid/awarded to Saturna Group Chartered Professional Accountants LLP where Lonny Wong is a partner.

(5) Amount paid to Chelpis Quantum Tech Co., a company owed by Ming-Yang Chih.

**INCENTIVE PLAN AWARDS**

**Outstanding Share and Option-based Awards**

The Company has a formal Stock Option Plan, previously approved by the shareholders of the Company. As of the December 31, 2023, the following share-based and option-based awards were outstanding for each of the NEOs:

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12 <br>

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Option-based Awards | Option-based Awards | Option-based Awards | Option-based Awards | Share-based Awards | Share-based Awards | Share-based Awards |
| **Name** | **Number of**<br>**securities**<br>**underlying**<br>**unexercised**<br>**options<br>(#)** | **Option**<br>**exercise price<br>($)** | **Option**<br>**expiration<br>date<br>(c)** | **Value of**<br>**unexercised**<br>**in-the-money**<br>**options**<br>**($)**<br>**(1)(2)** | **Number of**<br>**shares or units**<br>**of shares that**<br>**have not**<br>**vested**<br>**(#)** | **Market or**<br>**payout value**<br>**of share-based**<br>**awards that**<br>**have not**<br>**vested**<br>**($)**<br>**(3)** | **Market or**<br>**payout value**<br>**of vested**<br>**share-based**<br>**awards not**<br>**paid out or**<br>**distributed**<br>**($)** |
| **Olivier Roussy**<br>**Newton**<br>CEO | Nil | Nil | Nil | Nil | Nil | Nil | Nil |
| **Lonny Wong**<br>CFO | 250000 | 0.45 | January 1, 2028 | 92500 | 135000 | 60750 | Nil |
| **Nicolas Roussy**<br>**Newton**<br>COO | 500000 | 0.40 | January 1, 2028 | 210000 | Nil | Nil | Nil |
| **Peter Lavelle**<br>Chief Legal<br>Officer | 400000 | 0.40 | January 1, 2028 | 168000 | Nil | Nil | Nil |
| **Po-Chun Kuo**<br>Chief<br>Technology<br>Officer | 400000 | 0.40 | January 1, 2028 | 168000 | Nil | Nil | Nil |
| **Ming-Yang**<br>**Chih**<br> Chief Strategic<br>Officer | 400000 | 0.40 | January 1, 2028 | 168000 | Nil | Nil | Nil |

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Notes:

(1) Based on the closing market price of $0.82 on December 29, 2023 and subtracting the exercise price of the options.

(2) These options have not been, and may never be, exercised, and actual gains, if any, on exercise will depend on the value of the common shares on the date of exercise.

(3) Share-based awards comprise of RSUs. Value is based on the fair value of the award on the grant date.

**Incentive Plan Awards - Value Vested or Earned during the Most Recently Completed Financial Year**

The following table sets forth details of the value of incentive plan awards that vested or were earned during the most recently completed financial year ended December 31, 2023:

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| | |
|:---|:---|
| **Name** | **Share-based awards -**<br>**Value vested during**<br>**the year**<br>**($)**<br>**(b)** |
| **Olivier Roussy Newton**<br>CEO Nil | Nil |
| **Lonny Wong**<br>CFO Nil | 20250 Nil |
| **Nicolas Roussy Newton**<br>COO Nil | Nil |
| **Peter Lavelle**<br>Chief Legal Officer Nil | Nil |
| **Po-Chun Kuo**<br>Chief Technology Officer Nil | Nil |
| **Ming-Yang Chih**<br>Chief Strategic Officer Nil | Nil |

---

**Pension Plans**

The Company does not provide retirement benefits for directors or executive officers.

**Termination of Employment, Changes in Responsibility and Employment Contracts**

There are no employment contracts between the Company and the NEOs, except as referred to under the heading "Management Contracts" below.

------

The Company has no plans or arrangements in respect to compensation to its executive officers which would result from the resignation, retirement or any other termination of the executive officers' employment with the Company or from a change of control of the Company or a change in the executive officers' responsibilities following a change in control, where in respect of an executive officer the value of such compensation exceeds $100,000.

**Compensation of Directors**

The Company does not pay cash fees to any of its directors. The Company compensates its directors through option grants. NEOs do not receive additional compensation for serving as directors.

**Director Compensation Table**

The following table provides information regarding compensation paid to the non-NEO directors of the Company for the most recently completed financial year.

---

| | | |
|:---|:---|:---|
| **Name** | **Option based**<br>**awards**<br>**($)**<br>**(1)** | **Total**<br>**($)** |
| Kevin Mulhern Nil | 90589 Nil | 90.589 |
| Johan<br>Wattenstrom Nil | 90589 Nil | 90.589 |
| Michael<br>Resendes Nil | Nil | **Nil** |

---

(1) The value ascribed to option grants represents non-cash consideration and has been estimated using the Black-Scholes option pricing model as at the date of grant as follows: February 17, 2023 - expected volatility - 166%, expected option life - 1.9 years, risk free-rate - 4.15%, dividend rate - 0%, The Company chose the Black-Scholes option pricing model given its prevalence of use in North America. The value represents the fair value of the entire award on the grant date which differs from the value reported in the Company's financial statements. For financial statement purposes, the accounting fair value amount is amortized over the service period to obtain the accounting compensation expense.

**INCENTIVE PLAN AWARDS**

**Outstanding Share and Option-based Awards**

The Company has a formal Stock Option Plan, previously approved by the shareholders of the Company. As of the December 31, 2023, the following share-based and option-based awards were outstanding stock options for each of the non-NEO directors of the Company:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Option-based Awards | Option-based Awards | Option-based Awards | Option-based Awards | Share-based Awards | Share-based Awards | Share-based Awards |
| **Name** | **Number of**<br>**securities**<br>**underlying**<br>**unexercised**<br>**options**<br>**(#)** | **Option**<br>**exercise price**<br>**($)** | **Option**<br>**expiration**<br>**date**<br>**(c)** | **Value of**<br>**unexercised**<br>**in-the-money**<br>**options**<br>**($)**<br>**(1)(2)** | **Number of**<br>**shares or units**<br>**of shares that**<br>**have not**<br>**vested**<br>**(#)** | **Market or**<br>**payout value**<br>**of share-based**<br>**awards that**<br>**have not**<br>**vested**<br>**($)** | **Market or**<br>**payout value**<br>**of vested**<br>**share-based**<br>**awards not**<br>**paid out or**<br>**distributed**<br>**($)** |
| Kevin Mulhern | 300000 | 0.40 | January 1, 2025 | 126000 | Nil | Nil | Nil |
| Johan<br>Wattenstrom | 300000 | 0.40 | January 1, 2025 | 126000 | Nil | Nil | Nil |
| Michael<br>Resendes | 20000 | 0.50 | March 5, 2025 | 6400 | Nil | Nil | Nil |

---

Notes:

(1) Based on the closing market price of $0.82 on December 29, 2023 and subtracting the exercise price of the options.

------

**(**2) These options have not been, and may never be, exercised, and actual gains, if any, on exercise will depend on the value of the common shares on the date of exercise.

**Incentive Plan Awards Options - Value Vested or Earned during the Most Recently Completed Financial Year**

The following table sets forth details of the value of incentive plan awards that vested or were earned during the most recently completed financial year ended December 31, 2023 for each of the non-NEO directors of the Company::

---

| | | | |
|:---|:---|:---|:---|
| **Name** | **Option-based awards-**<br>**Value vested during**<br>**the year**<br>**($)**<br>**(a)** | **Share-based awards -**<br>**Value vested during**<br>**the year**<br>**($)**<br>**(b)** | **Non-equity incentive**<br>**plan compensation -**<br>**Value earned during**<br>**the year**<br>**($)** |
| Kevin Mulhern | Nil | Nil | Nil |
| Johan Wattenstrom | Nil | Nil | Nil |
| Michael Resendes | Nil | Nil | Nil |

---

**SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS**

For the financial year ended December 31, 2023, the only equity compensation plan which the Company had in place was the Stock Option Plan which was previously approved by the Board and the shareholders of the Company. The Stock Option Plan was established to provide incentive to qualified parties to increase their proprietary interest in the Company and thereby encourage their continuing association with the Company. The Stock Option Plan is administered by the Board. The Stock Option Plan provides that options will be issued to directors, officers, employees or consultants of the Company or a subsidiary of the Company. The Stock Option Plan provides that the number of common shares issuable under the Stock Option Plan, together with all of the Company's other previously established or proposed share compensation arrangements, may not exceed 10% of the total number of issued and outstanding common shares. All options expire on a date not later than five years after the date of grant of such option.

The following table sets out equity compensation plan information as at the end of the year ended.

---

| | | | |
|:---|:---|:---|:---|
| **Plan Category** | **Number of securities to**<br>**be issued upon exercise**<br>**of outstanding options,**<br>**warrants and rights** | **Weighted-average**<br>**exercise price of**<br>**outstanding options,**<br>**warrants and rights** | **Number of securities remaining**<br>**available for future issuance under**<br>**equity compensation plans (excluding**<br>**securities reflected in column (a))** |
| Equity compensation plans<br>approved by securityholders - | 7770000 | $0.41 | 4650388 |
| Equity compensation plans not<br>approved by securityholders | Nil | Nil | Nil |
| TOTAL: | 7770000 | $0.41 | 4650388 |

---

**INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS**

At no time during the Company's last completed financial year or as of the Record Date, was any director, executive officer, employee, proposed management nominee for election as a director of the Company nor any associate of any such director, executive officer, or proposed management nominee of the Company or any former director, executive officer or employee of the Company or any of its subsidiaries indebted to the Company or any of its subsidiaries or indebted to another entity where such indebtedness was the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by the Company or any of its subsidiaries.

**INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS**

To the knowledge of management of the Company, no informed person (a director, officer or holder of 10% or more of the common shares) or nominee for election as a director of the Company or any associate or affiliate of any informed person or proposed director had any interest in any transaction which has materially affected or would materially affect the Company or any of its subsidiaries since January 1, 2025 (being the commencement of the Company's last completed financial year), or has any interest in any material transaction in the current year other than as set out herein.

------

**MANAGEMENT CONTRACTS**

There are no management functions of the Company, which are to any substantial degree performed by a person or company other than the directors or executive officers of the Company.

**APPOINTMENT OF AUDITOR**

The Board proposes to appoint BDO Canada LLP, Chartered Professional Accountants, of Vancouver, British Columbia as the auditor of the Company. Unless otherwise instructed, the proxies given pursuant to this solicitation will be voted for the appointment of BDO Canada LLP, Chartered Professional Accountants, as the auditor of the Company to hold office until the close of the next annual general meeting of the Company. BDO Canada LLP, Chartered Professional Accountants has been the auditor of the Company since May 17, 2023. It is proposed that the remuneration to be paid to the auditor of the Company be fixed by the Board.

**Management recommends and, unless otherwise directed, the persons named in the enclosed Proxy intend to vote FOR such resolution:**

**"UPON MOTION DULY MADE, IT WAS RESOLVED AS AN ORDINARY RESOLUTION THAT:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. BDO Canada LLP, Chartered Professional Accountants, is hereby appointed as the auditor of the Company until the next annual general meeting of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Any one or more of the directors and officers of the Company be authorized to perform all such acts, deeds and things and execute, under seal of the Company or otherwise, all such documents as may be required to give effect to these resolutions."

**ADDITIONAL INFORMATION**

The audited consolidated financial statements of the Company for the year ended December 31, 2023, and the related management's discussion and analysis (the "Financial Materials") are available on SEDAR+ at www.sedarplus.ca and will be placed before the Meeting.

Shareholders may request copies of the Financial Materials without charge from the Company by telephone: (778) 373-5499.

**OTHER MATTERS**

The Board is not aware of any other matters which it anticipates will come before the Meeting as of the date of this Circular.

------

## Exhibit 4.6

------

![](exhibit4-6xu001.jpg)

**BTQ TECHNOLOGIES CORP.**

Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2025 and 2024

(Expressed in Canadian dollars)

(unaudited)

------

**BTQ TECHNOLOGIES CORP.**

Condensed Interim Consolidated Statements of Financial Position <br>(Expressed in Canadian dollars)

(unaudited)

---

| |
|:---|
| Assets |
| Current assets |
| &nbsp;&nbsp;Cash |
| &nbsp;&nbsp;Other receivables (Note 8) |
| &nbsp;&nbsp;Prepaid expenses and deposits |
| Total current assets |
| Non-current assets |
| &nbsp;&nbsp;&nbsp;Property and equipment |
| &nbsp;&nbsp;&nbsp;Investments (Note 3) |
| &nbsp;&nbsp;&nbsp;Deposits |
| Total non-current assets |
| Total assets |
| Liabilities and shareholders' equity |
| Current liabilities |
| &nbsp;&nbsp;Accounts payable and accrued liabilities (Note 8) |
| &nbsp;&nbsp;Corporate taxes payable |
| &nbsp;&nbsp;Deferred revenue (Note 9) |
| &nbsp;&nbsp;Due to related parties (Note 8) |
| Total liabilities |
| Shareholders' equity |
| &nbsp;&nbsp;Share capital (Note 4) |
| &nbsp;&nbsp;Options reserve (Notes 4 and 5) |
| &nbsp;&nbsp;Warrants reserve (Note 4) |
| &nbsp;&nbsp;RSUs reserve (Note 7) |
| &nbsp;&nbsp;Shares to be issued (Note 4) |
| &nbsp;&nbsp;Deficit) |
| Total shareholders' equity |
| Total liabilities and shareholders' equity |
| Nature of operations (Note 1) |
| Subsequent events (Note 15) |

---

Approved and authorized for issuance on behalf of the Board on August 14, 2025:

<u>*"*Olivier Roussy Newton*"*</u> Director <u>*"Michael Resendes"*</u> Director

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

------

**BTQ TECHNOLOGIES CORP.**

Condensed Interim Consolidated Statements of Loss and Comprehensive Loss <br>(Expressed in Canadian dollars)

(unaudited)

---

| |
|:---|
| Revenue (Note 9) |
| Expenses |
| &nbsp;&nbsp;Business development, marketing, and |
| &nbsp;&nbsp;&nbsp;&nbsp;promotion (Note 8) |
| &nbsp;&nbsp;Consulting fees (Note 8) |
| &nbsp;&nbsp;Depreciation |
| &nbsp;&nbsp;General and administrative (Note 14) |
| &nbsp;&nbsp;Professional fees (Note 8) |
| &nbsp;&nbsp;Research and development (Note 8) |
| &nbsp;&nbsp;Share-based compensation (Notes 5, 7, and 8) |
| &nbsp;&nbsp;Transfer agent and regulatory fees |
| &nbsp;&nbsp;Wages and benefits (Note 8) |
| Total expenses |
| Loss before other income (expense) |
| Other income (expense) |
| &nbsp;&nbsp;Foreign exchange gain (loss) |
| &nbsp;&nbsp;Interest income |
| &nbsp;&nbsp;Interest expense) |
| Total other income (expense) |
| Net loss and comprehensive loss for the period) |
| Loss per share, basic and diluted) |
| Weighted average number of common shares |
| outstanding, basic and diluted |

---

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

------

**BTQ TECHNOLOGIES CORP.**

Condensed Interim Consolidated Statements of Changes in Shareholders' Equity <br>(Expressed in Canadian dollars)

(unaudited)

---

| | | |
|:---|:---|:---|
|  | Share capital | Share capital |
|  | Number of | Amount |
|  | shares | $|
| Balance, December 31, 2024 | 131833688 | 45553931 |
| Shares issued for options exercised | 485000 | 394908 |
| Shares issued for warrants exercised | 40437 | 28969 |
| Shares issued for vested RSU's | 195000 | 289250 |
| Proceeds received for options |  |  |
| exercised |  |  |
| Share-based compensation |  |  |
| Net loss for the period |  |  |
| Balance, June 30, 2025 | 132554125 | 46267058 |
|  |  | Share capital |
|  |  | Number of |
|  |  | shares |
| Balance, December 31, 2023 |  | 123193879 |
| Shares issued for options exercised |  | 260000 |
| Share-based compensation |  |  |
| Shares issued for vested RSU's |  | 750000 |
| Net loss for the period |  |  |
| Balance, June 30, 2024 |  | 124203879 |

---

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

------

**BTQ TECHNOLOGIES CORP.**

Condensed Interim Consolidated Statements of Cash Flows <br>(Expressed in Canadian dollars)

(unaudited)

---

| |
|:---|
| Operating activities |
| Net loss for the period) |
| Items not involving cash: |
| &nbsp;&nbsp;Depreciation |
| &nbsp;&nbsp;Foreign exchange translation gain) |
| &nbsp;&nbsp;Interest expense |
| &nbsp;&nbsp;Share-based compensation |
| Changes in non-cash operating working capital: |
| &nbsp;&nbsp;&nbsp;Other receivables) |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and deposits) |
| &nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities) |
| &nbsp;&nbsp;&nbsp;Other payable |
| &nbsp;&nbsp;&nbsp;Deferred revenue) |
| Net cash used in operating activities) |
| Investing activities |
| &nbsp;&nbsp;&nbsp;Redemption of short-term investment |
| &nbsp;&nbsp;&nbsp;Proceeds from deposit |
| &nbsp;&nbsp;&nbsp;Purchase of property and equipment) |
| Net cash provided by (used in) investing activities |
| Financing activities |
| &nbsp;&nbsp;Repayment of lease obligation) |
| &nbsp;&nbsp;Proceeds from stock options exercised |
| &nbsp;&nbsp;Proceeds from warrants exercised |
| Net cash provided by financing activities |
| Change in cash) |
| Cash, beginning of period |
| Cash, end of period |

---

Supplemental cash flow information (Note 10)

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

------

**BTQ TECHNOLOGIES CORP.**<br> Notes to the Condensed Interim Consolidated Financial Statements <br>Six Months Ended June 30, 2025 and 2024<br> (Expressed in Canadian dollars) <br>(unaudited)<br>

**1. NATURE OF OPERATIONS**

BTQ Technologies Corp. (formerly Sonora Gold & Silver Corp.) ("the Company") was incorporated on November 23, 1983 under the Business Corporations Act (British Columbia). The principal activity of the Company is the development of computer-based technology related to post-quantum cryptography, particularly as it applies to blockchain and related technologies, and their protection from the emerging security risk of quantum computing. The Company's head office is located at 25<sup>th</sup> Floor, 700 West Georgia Street, Vancouver, BC, Canada. The Company's common shares trade on Cboe Canada under the ticker symbol "BTQ".

On February 17, 2023, the Company acquired all of the issued and outstanding shares of BTQ AG in exchange for 92,000,000 common shares. This transaction constituted a reverse takeover of the Company by BTQ AG with BTQ AG being identified as the accounting acquirer. As a result, these consolidated financial statements are a continuation of BTQ AG. The Company's results of operations are included from February 17, 2023 onwards, except for share capital which was retroactively adjusted to reflect the capital of the Company.

**2. BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICY INFORMATION** 

**Statement of Compliance**

These condensed interim consolidated financial statements have been prepared in accordance with IFRS Accounting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") applicable to interim financial information, as outlined in International Accounting Standard ("IAS") 34, "Interim Financial Reporting" and using the accounting policies consistent with those in the audited financial statements as at and for the year ended December 31, 2024 except as detailed below.

The condensed interim consolidated financial statements of the Company have been prepared on an accrual basis and are based on historical cost, except for certain financial assets and liabilities that are measured at fair value.

**Basis of Presentation**

These consolidated financial statements have been prepared on a historical cost basis except for certain financial assets and liabilities, which are measured at fair value, as specified by IFRS for each type of asset, liability, income, and expense as set out in the accounting policies below.

These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, BTQ AG, a company incorporated in the Principality of Liechtenstein, and BTQ Technologies Australia Pty Ltd., a company incorporated in Australia.

These consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances are eliminated on consolidation. Control exists where the parent entity has power over the investee and is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Subsidiaries are included in the financial statements from the date control commences until the date control ceases.

------

**BTQ TECHNOLOGIES CORP.**<br> Notes to the Condensed Interim Consolidated Financial Statements <br>Six Months Ended June 30, 2025 and 2024<br> (Expressed in Canadian dollars) <br>(unaudited)<br>

 **2. BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICY INFORMATION** (continued)

**Accounting Standards Issued But Not Yet Effective**

A number of new standards, and amendments to standards and interpretations, are not yet effective for the period ended June 30, 2025, and have not been early adopted in preparing these consolidated financial statements.

*IFRS 18 Presentation and Disclosure in Financial Statements*

In April 2024, the IASB issued IFRS 18 - Presentation and Disclosure in Financial Statements which will replace IAS 1, Presentation of Financial Statements. The key new concepts introduced in IFRS 18 relate to the structure of the statement of earnings (loss), required disclosures in the financial statements for certain earnings or loss performance measures that are reported outside an entity's financial statements and enhanced principles on aggregation and disaggregation which apply to the primary financial statements and notes in general. IFRS 18 will apply for reporting periods beginning on or after January 1, 2027, and also applies to comparative information. The Company is still in the process of assessing the impact of this standard on its consolidated financial statements.

Other accounting standards or amendments to existing accounting standards that have been issued but have future effective dates and are not expected to have a significant impact on the Company's consolidated financial statements.

**3. INVESTMENTS**

---

| | |
|:---|:---|
|  | $|
| Balance, December 31, 2024 and June 30, 2025 | 77229 |

---

During the year ended December 31, 2022, the BTQ AG invested $63,915 (US$50,000) in the form of a Simple Agreement for Future Equity ("SAFE") in the Holonym Foundation ("Holonym"), which is a public benefit corporation. The investment is not traded in an active market.

On January 11, 2023, BTQ AG invested $13,314 (US$10,000) in the form of a SAFE into Cysic Inc. The investment is not traded in an active market.

The Company estimated the fair value of these investments and concluded that the carrying value approximates the fair value of the investments as at December 31, 2024 and June 30, 2025.

**4. SHARE CAPITAL**

Authorized: Unlimited number of common shares without par value Share transactions during the six months ended June 30, 2025:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• During the six months ended June 30, 2025, the Company issued 485,000 common shares for proceeds of $201,125 pursuant to the exercise of stock options. The fair value of stock options exercised of $193,783 was transferred from options reserve to share capital.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• During the six months ended June 30, 2025, the Company issued 40,437 common shares for proceeds of $16,175 pursuant to the exercise of share purchase warrants. The fair value of share purchase warrants exercised of $12,794 was transferred from warrants reserve to share capital.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• During the six months ended June 30, 2025, the Company issued 195,000 common shares pursuant to the conversion of vested RSUs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• As at June 30, 2025, the Company has received proceeds of $40,000 pursuant to the exercise of stock options.

------

**BTQ TECHNOLOGIES CORP.**<br> Notes to the Condensed Interim Consolidated Financial Statements <br>Six Months Ended June 30, 2025 and 2024<br> (Expressed in Canadian dollars) <br>(unaudited)<br>

**4. SHARE CAPITAL** (continued)

Share transactions during the six months ended June 30, 2024:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• During the six months ended June 30, 2024, the Company issued 260,000 common shares for proceeds of $104,000 pursuant to the exercise of stock options. The fair value of stock options exercised of $67,808 was transferred from options reserve to share capital.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• On March 5, 2024, the Company issued 750,000 common shares pursuant to the conversion of vested RSUs.

Escrowed shares

On completion of the Transaction, certain principals of the Company entered into a NP 46-201 Escrow Agreement with the NEO Exchange and Computershare Trust Company of Canada, as escrow agent, in respect of 45,250,000 common shares. Under the terms of the Escrow Agreement, 25% of such escrowed securities were released upon closing (February 17, 2023) with subsequent 25% releases occurring 6, 12, and 18 months from closing. These escrow shares will be released as follows:

---

| | |
|:---|:---|
| Date of automatic timed release | Amount of escrow shares released |
| On the date that the Company's common shares were listed<br>on the NEO, February 17, 2023 | 1/4 of the escrowed shares |
| 6 months after the listing date (August 17, 2023) | 1/4 of the escrowed shares |
| 12 months after the listing date (February 17, 2024) | 1/4 of the escrowed shares |
| 18 months after the listing date (August 17, 2024) | The remainder of the escrowed shares |

---

As at December 31, 2024, 20,362,500 (June 30, 2025 - nil) common shares remained in escrow.

**5. STOCK OPTIONS**

The Company has a stock option plan (the "Plan") for directors, officers, employees, and consultants of the Company. Stock options are exercisable for periods of up to five years, as determined by the Board of Directors of the Company, to purchase common shares of the Company at a price not less than the discounted market price on the date of the grant. The maximum number of shares which may be issuable under the Plan cannot exceed 10% of the total number of issued and outstanding common shares on a non- diluted basis.

The following table summarizes the continuity of the Company's stock options:

---

| | | |
|:---|:---|:---|
|  |  | Weighted |
|  |  | average |
|  |  | exercise |
|  | Number of | price |
|  | stock options | $|
| Outstanding, December 31, 2024 | 4675000 | 0.41 |
| &nbsp;&nbsp;Granted | 50000 | 4.48 |
| &nbsp;&nbsp;Exercised | (485000) | 0.41 |
| &nbsp;&nbsp;Expired | (400000) | 0.40 |
| &nbsp;&nbsp;Cancelled | (15000) | 0.40 |
| Outstanding, June 30, 2025 | 3825000 | 0.48 |
| Exercisable, June 30, 2025 | 1705000 | 0.42 |

---

------

**BTQ TECHNOLOGIES CORP.**<br> Notes to the Condensed Interim Consolidated Financial Statements <br>Six Months Ended June 30, 2025 and 2024<br> (Expressed in Canadian dollars) <br>(unaudited)<br>

**5. STOCK OPTIONS** (continued)

Additional information regarding stock options outstanding as at June 30, 2025, is as follows:

---

| | | | |
|:---|:---|:---|:---|
| Outstanding | Outstanding | Exercisable | Exercisable |
|  | Weighted |  |  |
|  | average |  | Weighted |
|  | remaining |  | average |
| Number of | contractual | Number of | exercise price |
| $stock options | life (years) | $stock options | $|
| 300000 | 2.4 |  |  |
| 125000 | 2.3 | 25000 | 0.35 |
| 2790000 | 2.3 | 1475000 | 0.41 |
| 350000 | 2.8 | 125000 | 0.49 |
| 160000 | 2.5 | 80000 | 0.64 |
| 50000 | 4.5 |  |  |
| 50000 | 4.6 |  |  |
| 3825000 | 2.4 | 1705000 | 0.42 |

---

The fair value for stock options granted have been estimated using the Black-Scholes option pricing model assuming no expected dividends or forfeitures and the following weighted average assumptions:

---

| | | |
|:---|:---|:---|
|  | Six months | Six months |
|  | ended | ended |
|  | June 30, | June 30, |
|  | 2025 | 2024 |
| Risk-free interest rate | 2.76% | 3.38% |
| Expected life (in years) | 5 | 4.6 |
| Expected volatility | 220% | 215% |

---

During the six months ended June 30, 2025, the Company recognized share-based compensation expense of $235,080 (2024 - $271,422), with a corresponding increase to options reserve. The weighted average fair value of the stock options granted during the six months ended June 30, 2025 was $4.48 (2024 - $0.45) per option. The weighted average fair value of shares at the time of the stock option exercises during the six months ended June 30, 2025 was $3.33 (2024 - $0.56) per common share.

**6. SHARE PURCHASE WARRANTS**

The following table summarizes the continuity of share purchase warrants:

---

| | | |
|:---|:---|:---|
|  |  | Weighted |
|  |  | average |
|  |  | exercise |
|  | Number of | price |
|  | warrants | $|
| Outstanding, December 31, 2024 | 266616 | 2.72 |
| &nbsp;&nbsp;Exercised | (40437) | 0.40 |
| &nbsp;&nbsp;Expired | (58394) | 0.40 |
| Outstanding, June 30, 2025 | 167785 | 4.09 |

---

------

**BTQ TECHNOLOGIES CORP.**<br> Notes to the Condensed Interim Consolidated Financial Statements <br>Six Months Ended June 30, 2025 and 2024<br> (Expressed in Canadian dollars) <br>(unaudited)<br>

**6. SHARE PURCHASE WARRANTS** (continued)

As at June 30, 2025, the following share purchase warrants were outstanding and exercisable:

---

| | |
|:---|:---|
| Number of |  |
| warrants |  |
| outstanding | $Expiry date |
| 167785 | December 19, 2029 |

---

**7. RESTRICTED SHARE UNITS**

A summary of the changes in RSUs is presented below:

---

| | |
|:---|:---|
|  | Number of |
|  | RSUs |
| Balance, December 31, 2024 | 1945000 |
| &nbsp;&nbsp;Granted | 300000 |
| &nbsp;&nbsp;Converted to shares | (195000) |
| Balance, June 30, 2025 | 2050000 |
| Unvested | 825000 |
| Vested, June 30, 2025 | 1225000 |

---

During the six months ended June 30, 2025, the Company recognized share-based compensation expense of $910,160 (2024 - recovery of $137,872) with a corresponding increase (2024 - decrease) to RSU reserve and $289,250 (2024 - $456,000) was transferred to share capital upon the vesting of 195,000 (2024 - 750,000) RSUs.

**8. RELATED PARTY TRANSACTIONS**

Key management personnel are persons responsible for planning, directing, and controlling the activities of an entity, and include all officers and directors of the Company. Key management personnel compensation during the six months ended June 30, 2025 and 2024 was comprised of the following:

---

| | | |
|:---|:---|:---|
|  | Six months | Six months |
|  | ended | ended |
|  | June 30, | June 30, |
|  | 2025 | 2024 |
|  | $| $|
| Consulting fees |  | 40758 |
| Business development, marketing and promotion | 50738 | 48910 |
| Professional fees | 42000 | 42000 |
| Research and development |  | 140257 |
| Wages and benefits | 87975 | 146901 |
| Total short-term benefits | 180713 | 418826 |
| Share-based payments | 35610 | 155101 |
|  | 216323 | 573927 |

---

As at June 30, 2025, the Company owed $117,611 (December 31, 2024 - $124,247) to the CEO of the Company, of which $91,848 (December 31, 2024 - $97,075) is included in accounts payable and accrued liabilities. The amounts owed are non-interest bearing, unsecured, and due on demand.

------

**BTQ TECHNOLOGIES CORP.**<br> Notes to the Condensed Interim Consolidated Financial Statements <br>Six Months Ended June 30, 2025 and 2024<br> (Expressed in Canadian dollars) <br>(unaudited)<br>

**8. RELATED PARTY TRANSACTIONS** (continued)

As at June 30, 2025, the Company was owed $120,881 (December 31, 2024 - $137,369) from the Chief Operating Officer ("COO") of the Company, which is included in other receivables.

As at June 30, 2025, the Company owed $nil (December 31, 2024 - $7,350) to a firm where the Chief Financial Officer of the Company is a partner, which is included in accounts payable and accrued liabilities, which is non-interest bearing, unsecured, and due on demand.

As at June 30, 2025, the Company owed $nil (December 31, 2024 - $15,020) to the Head of Corporate Development of the Company, which is included in accounts payable and accrued liabilities, which is non- interest bearing, unsecured, and due on demand.

**9. REVENUE**

During the six months ended June 30, 2025, the Company earned license revenue of $315,497 (2024 - $90,573) from a company controlled by the COO. As at June 30, 2025, the Company has deferred revenue of $nil (December 31, 2024 - $315,497) for this company. All revenue recognized during the six months ended June 30, 2025 was recorded as deferred revenue as at December 31, 2024.

A breakdown of the revenue is presented below:

---

| | | |
|:---|:---|:---|
|  | Six months | Six months |
|  | ended | ended |
|  | June 30, | June 30, |
|  | 2025 | 2024 |
|  | $| $|
| <u>Major goods/service lines</u> |  |  |
| Software license and related consulting services | 315497 | 90573 |
| <u>Timing of revenue recognition</u> |  |  |
| Software license and services transferred over time | 315497 | 90573 |

---

**10. SUPPLEMENTAL CASH FLOW INFORMATION**

---

| | | |
|:---|:---|:---|
|  | Six months | Six months |
|  | ended | ended |
|  | June 30, | June 30, |
|  | 2025 | 2024 |
|  | $| $|
| Non-cash investing and financing activities: |  |  |
| Fair value of stock options exercised transferred from options reserve to share capital | 193783 | 67808 |
| Fair value of warrants exercised transferred from warrants reserve to share capital | 12794 |  |
| Shares issued for vested RSUs | 289250 | 456000 |

---

------

**BTQ TECHNOLOGIES CORP.**<br> Notes to the Condensed Interim Consolidated Financial Statements <br>Six Months Ended June 30, 2025 and 2024<br> (Expressed in Canadian dollars) <br>(unaudited)<br>

**11. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Fair Values

Fair value hierarchy

The following provides a description of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 1 fair value measurements are those derived from quoted prices (unadjusted) 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 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Assets and liabilities measured at fair value on a recurring basis were presented on the Company's statement of financial position as at June 30, 2025 and December 31, 2024 as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Fair value measurements using | Fair value measurements using | Fair value measurements using |  |
|  | Quoted prices in | Significant |  |  |
|  | active markets | other | Significant |  |
|  | for identical | observable | unobservable | Balance, |
|  | instruments | inputs | inputs | June 30, |
|  | (Level 1) | (Level 2) | (Level 3) | 2025 |
|  | $| $| $| $|
| Investments | - | - | 77229 | 77229 |
|  | Fair value measurements using | Fair value measurements using | Fair value measurements using |  |
|  | Quoted prices in | Significant |  |  |
|  | active markets | other | Significant |  |
|  | for identical | observable | unobservable | Balance, |
|  | instruments | inputs | inputs | December 31, |
|  | (Level 1) | (Level 2) | (Level 3) | 2024 |
|  | $| $| $| $|
| Investments | - | - | 77229 | 77229 |

---

The fair values of the Company's other financial instruments, which include cash, other receivables, accounts payable and accrued liabilities, and due to related parties, approximate their carrying values due to the relatively short-term maturity of these instruments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash. The Company limits its exposure to credit loss by placing its cash with high credit quality financial institutions. The carrying amount of financial assets represents the maximum credit exposure.

------

**BTQ TECHNOLOGIES CORP.**<br> Notes to the Condensed Interim Consolidated Financial Statements <br>Six Months Ended June 30, 2025 and 2024<br> (Expressed in Canadian dollars) <br>(unaudited)<br>

**11. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Foreign Exchange Rate Risk

Foreign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. The Company is exposed to foreign currency risk to the extent that monetary assets and liabilities are denominated in a foreign currency.

The following tables indicate the impact of foreign currency exchange risk on net working capital as at June 30, 2025 and December 31, 2024. The tables below also provides a sensitivity analysis of a 10% strengthening of the foreign currency against functional currencies identified which would have increased (decreased) the Company's net loss by the amounts shown in the tables below. A 10% weakening of the foreign currency against the functional currencies would have had the equal but opposite effect as at June 30, 2025 and December 31, 2024.

---

| | | |
|:---|:---|:---|
| As at June 30, 2025 | TWD | US$ |
| Cash | 822829 | 20647 |
| Other receivables (except GST) |  | 117390 |
| Accounts payable and accrued liabilities | (238997) | (81011) |
| Total foreign currency financial assets and liabilities | 583832 | 57026 |
| Impact of a 10% strengthening or weakening of foreign exchange rate | 58383 | 5703 |
| As at December 31, 2024 | TWD | US$ |
| Cash | 82993 | (1249) |
| Other receivables (except GST) |  | 106489 |
| Accounts payable and accrued liabilities | (6337488) | (237069) |
| Total foreign currency financial assets and liabilities | (6254495) | (131829) |
| Impact of a 10% strengthening or weakening of foreign exchange rate | (625450) | (13183) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Interest Rate Risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not exposed to significant interest rate risk as it does not have any liabilities with variable rates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) 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's objective to managing liquidity risk is to ensure that it has sufficient liquidity available to meet its liabilities when due. The Company relies on raising debt or equity financing in a timely manner.

The following amounts are the contractual maturities of financial liabilities as at June 30, 2025 and December 31, 2024:

---

| | | | |
|:---|:---|:---|:---|
| As at June 30, 2025 |  | Within | Within |
|  | Total | 1 year | 2-5 years |
|  | $| $| $|
| Accounts payable and accrued liabilities | 833184 | 833184 |  |
| Due to related parties | 25763 | 25763 |  |
|  | 858947 | 858947 | - |

---

------

**BTQ TECHNOLOGIES CORP.**<br> Notes to the Condensed Interim Consolidated Financial Statements <br>Six Months Ended June 30, 2025 and 2024<br> (Expressed in Canadian dollars) <br>(unaudited)<br>

**11. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Liquidity Risk (continued) <br>

---

| | | | |
|:---|:---|:---|:---|
| As at December 31, 2024 |  | Within | Within |
|  | Total | 1 year | 2-5 years |
|  | $| $| $|
| Accounts payable and accrued liabilities | 1357502 | 1357502 |  |
| Due to related parties | 27172 | 27172 |  |
|  | 1384674 | 1384674 | - |

---

**12. CAPITAL MANAGEMENT**

The Company manages its capital to maintain its ability to continue as a going concern and to provide returns to shareholders and benefits to other stakeholders. The capital structure of the Company consists of cash and equity comprised of issued share capital, share-based payment reserve, and warrant reserve.

The Company manages its capital structure and makes adjustments to it in light of economic conditions. The Company, upon approval from its Board of Directors, will balance its overall capital structure through new share issuances or by undertaking other activities as deemed appropriate under the specific circumstances.

The Company is not subject to externally imposed capital requirements and the Company's overall strategy with respect to capital risk management remains unchanged from the year ended December 31, 2024.

**13. SEGMENTED INFORMATION**

The Company has one operating segment, the research and development of computer-based technology related to post-quantum cryptography. The Company's head office is in Canada and operations are in Canada, United States, Australia, and Taiwan. Geographic information for non-current assets other than financial instruments is as follows:

---

| | | | |
|:---|:---|:---|:---|
| June 30, 2025 | Canada | Australia | Total |
|  | $| $| $|
| Non-current assets |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Property and equipment | - | 11632 | 11632 |
| Revenue | 315497 | - | 315497 |
| December 31, 2024 | Canada | Australia | Total |
|  | $| $| $|
| Non-current assets |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Deposits | 18902 | 10703 | 29605 |
| Revenue | 666667 | - | 666667 |

---

------

**BTQ TECHNOLOGIES CORP.**<br> Notes to the Condensed Interim Consolidated Financial Statements <br>Six Months Ended June 30, 2025 and 2024<br> (Expressed in Canadian dollars) <br>(unaudited)<br>

**14. GENERAL AND ADMINISTRATIVE EXPENSES**

The following is a breakdown of general and administrative expenses for the six months ended June 30, 2025 and 2024:

---

| | | |
|:---|:---|:---|
|  | Six months | Six months |
|  | ended | ended |
|  | June 30, | June 30, |
|  | 2025 | 2024 |
|  | $| $|
| Insuran**ce** | 38493 | 32029 |
| IT and communications | 4425 | 103427 |
| Office and miscellaneous | 75650 | 63957 |
| Ren**t** | 136888 | 92655 |
| Travel | 31755 | 168366 |
|  | 287211 | 460434 |

---

**15. SUBSEQUENT EVENTS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) On July 11, 2025, the Company issued 5,555,555 common shares at $7.20 per share for gross proceeds of $39,999,996. In connection with this offering, the Company incurred a finder's fee of $2,800,000 and share issuance costs of $109,589. The Company also issued 138,888 finder's warrants exercisable at $12.60 per common share expiring on July 11, 2030.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Subsequent to June 30, 2025, the Company issued 165,000 common shares for proceeds of $70,250 pursuant to the exercise of stock options.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Subsequent to June 30, 2025, the Company issued 125,000 common shares pursuant to the conversion of RSUs.

------

## Exhibit 4.7

------

---

| |
|:---|
| ![](exhibit4-7xu001.jpg)<br>|
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE QUARTER ENDED JUNE 30, 2025** |

---

This Management's Discussion and Analysis ("MD&A") of BTQ Technologies Corp. ("BTQ" or the "Company") is for the quarter ended June 30, 2025 and is dated August 14, 2025. The MD&A should be read in conjunction with the Company's unaudited condensed interim consolidated financial statements and related notes for the quarter ended June 30, 2025. The unaudited condensed interim consolidated financial statements are prepared in accordance with IFRS Accounting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and all monetary amounts are expressed in Canadian dollars. The following comments may contain management estimates of anticipated future trends, activities, or results. These are not a guarantee of future performance since actual results could change based on other factors and variables beyond management control.

The management of the Company is responsible for the preparation and integrity of the consolidated financial statements, including the maintenance of appropriate information systems, procedures, and internal controls and to ensure that information used internally or disclosed externally, including the consolidated financial statements and MD&A, is complete and reliable. The Company's board of directors (the "Board") follows recommended corporate governance guidelines for public companies to ensure transparency and accountability to shareholders. The Board's audit committee meets with management quarterly to review the financial statements including the MD&A and to discuss other financial, operating, and internal control matters.

Additional information relating to the Company is available under the Company's profile on SEDAR+ at www.sedarplus.ca.

**DESCRIPTION OF BUSINESS AND OVERVIEW**

The current business of BTQ was founded by a group of experienced post-quantum cryptographers with an interest in addressing the urgent security threat that a large-scale universal quantum computer poses to the Bitcoin network. Bitcoin's store of value thesis - one that supports a crypto ecosystem of over $1 trillion in market capitalization - has several potential quantum attack vectors that could compromise the network. This paradigm shift requires a new direction in cryptography and blockchain design. BTQ is building a portfolio of intellectual property to safeguard the crypto asset class with energy efficient quantum processes and currently holds several patent applications for generating quantum algorithms.

Quantum computers can take a very large integer and find out its prime factor extremely rapidly by using Shor's algorithm. Theoretically, a universal large scale quantum computer could be used to disrupt cryptocurrencies, break into digital wallets, and access and decrypt confidential communications. Ethereum and Algor, two of the most technologically advanced cryptocurrencies, announced plans to transition to post-quantum standards.

BTQ is listed on Cboe Canada under the symbol "BTQ", the OTCQB under the symbol "BTQQF", and the Frankfurt Stock Exchange under the symbol "NG3".

<u>Acquisition</u>

On December 31, 2021 (as amended on April 29, 2022, July 30, 2022, and November 29, 2022), the Company entered into a share exchange agreement with BTQ AG (the "Acquisition"). BTQ AG was incorporated in the Principality of Liechtenstein on March 26, 2021 by a group of experienced post-quantum cryptographers with an interest in addressing the urgent security threat that a large-scale universal quantum computer poses to the Bitcoin network.

In connection with the Acquisition, the Company completed a private placement (the "Offering") of 18,001,250 subscription receipts at a price of $0.40 per subscription receipt, for gross proceeds of $7,200,500, with each subscription receipt automatically converting with no additional consideration into one post-Consolidation Share (each as defined below) concurrent with the closing of the Acquisition.

------

---

| |
|:---|
| ![](exhibit4-7xu001.jpg)<br>|
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE QUARTER ENDED JUNE 30, 2025** |

---

On February 17, 2023, the Company closed the Acquisition resulting in the issuance of 92,000,000 post- Consolidation Shares to the BTQ AG shareholders. Concurrent with the closing, the Company changed its name from Sonora Gold & Silver Corp. to BTQ Technologies Corp. and completed a consolidation (the "Consolidation") of its common shares on the basis of ten pre-Consolidation shares to one post- Consolidation share (each, a "Share"). Immediately following the Consolidation, and excluding those Shares issued pursuant to the Acquisition or the Offering, the former securityholders of Sonora Gold and Silver Corp. ("SOC") held an aggregate of 8,747,629 Shares and 350,000 stock options in the Company. All Share amounts have been retroactively restated to reflect the Consolidation for all periods presented.

On closing of the Acquisition, the gross proceeds of $7,200,500 from the Offering were released from escrow and each subscription receipt was converted into one Share. In connection with the Acquisition, the Company issued 2,500,000 Shares with a fair value of $1,000,000 to a finder as a success fee. In connection with the Offering, the Company also paid $93,175 in finders' fees and issued 232,936 finders' warrants exercisable at an exercise price of $0.40 per Share for a period of two years.

As a condition of the Acquisition, the Company voluntarily delisted its Shares from the TSX-V and the Shares commenced trading on Cboe Canada (formerly NEO Exchange) on February 21, 2023 under the symbol "BTQ".

**DISCUSSION OF OPERATIONS**

The following are operational highlights for the year ended December 31, 2024 and events subsequent up until the date of this MD&A.

Product Updates

On March 2, 2023, the Company announced the alpha release of Keelung, a domain-specific language designed for fast, private, and secure application development. Based on research in the field of post- quantum zero-knowledge cryptography, Keelung will empower developers to create secure and reliable post-quantum zero-knowledge proofs without the need for specialized cryptography skills. Both Keelung and its compiler have been implemented in Haskell, enabling developers to produce high-level zero- knowledge proofs protected by Haskell's type system while leveraging Haskell's extensive ecosystem and tooling. Keelung will be 100% open-source, allowing for transparency, collaboration, and community-driven development.

Keelung is now live and open-sourced. The release information can be found here: https://github.com/btq- ag/keelung/releases. The steps to complete over the coming year are as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Language Extensions (v0.19.0 - v0.20.0): Added support for user-defined datatypes, unsigned integer comparisons, and optimizations to the constraint system and compiler.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Optimization and Stability (v0.21.0): Introduced a more precise method for reference counting on unsigned integers, renaming of primitive datatype conversions, and numerous bug fixes and stability improvements for the compiler.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Upcoming Optimizations (v0.22.0+): Planned optimizations include operators for slicing and joining unsigned integers, improved polynomial representation, faster polynomial insertion, standard library optimizations (e.g., AES, Blake2), and constraint reduction for faster proof generation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Developer Experience (Ongoing): Refinements to the DSL syntax, performance improvements for common data types, benchmarking in the CI/CD pipeline, and expanded documentation and tutorials to improve the developer experience.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. Ecosystem Integration (Future): Planned integration with popular ZK toolchains like Snarkjs/Circom, support for PLONK-based proving systems, and quantitative information flow analysis for privacy leakage detection.

------

---

| |
|:---|
| ![](exhibit4-7xu001.jpg)<br>|
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE QUARTER ENDED JUNE 30, 2025** |

---

On June 5, 2023, the Company published a research paper on proof-of-work consensus by quantum sampling. The paper presents a novel approach that has the potential to revolutionize blockchain consensus algorithms.

On June 26, 2023, the Company announced that it had received approval from the USPTO for its patent application, "A system and method for quantum-safe authentication, encryption, and decryption of information". The patent relates to methods for generating a private cryptographic key for use in a secure cryptogram for transmission between entities, enabling quantum-safe encryption.

On July 27, 2023, the Company announced that its Quantum-Secure Signature Technology "Preon" had been selected by the National Institute of Standards and Technology (NIST) for consideration in their Post- Quantum Cryptography (PQC) standardization process. Preon is a robust and efficient post-quantum signature scheme, showcasing distinctive features including small key size, rapid key generation, minimal assumptions, and flexible functionality. These attributes make it resistant to potential threats from both classical and quantum computers. The co-authors of this submission include Hon Hai Research Institute, the research arm of global leader Hon Hai Precision Industry Co., Ltd. (Foxconn).

On October 4, 2023, BTQ announced the advancement of its collaboration with ITRI to develop a security chip that utilizes QCIM (Quantum Computation in Memory) technology. This chip will be used for the computation of Kyber, a standardized algorithm by the National Institute of Standards and Technology (NIST). In 2022, BTQ entered a multi-year collaboration agreement with ITRI to develop energy-efficient post-quantum hardware solutions for applications in blockchain, telecom, and other industries with a need for long-term data security. In the first phase of collaboration, BTQ and ITRI successfully validated the proof of concept of applying computation-in-memory in an ASIC chip. To further the collaboration, BTQ is entering into this new phase of the project with ITRI.

On June 2, 2025, the Company announced new performance benchmarks for its proprietary CASH (Cryptographically Agile Secure Hardware) architecture-demonstrating world-class speed, energy efficiency, and readiness for mass-market adoption in the era of quantum-secure technology.

On July 8, 2025, BTQ unveiled its "Quantum Proof-of-Work Simulator", the first publicly accessible platform that showcases a fully quantum-native mining algorithm that remains verifiable on classical hardware. The release marks a milestone in securing digital assets, offering a quantum analogue to Bitcoin's SHA-256 proof-of-work and creating a path to future-proof digital assets against emerging quantum threats.

On July 23, 2025, BTQ announced the launch of "Léonne", a novel blockchain consensus framework designed to overcome the core limitations of existing distributed ledger technologies. Built on advanced mathematical structures and quantum enhanced security, Léonne addresses the longstanding trade-offs between scalability, security, and decentralization - often referred to as the "blockchain trilemma."

*Cryptographically Agile Secure Hardware ("CASH")*

CASH is a Post-Quantum Cryptography Accelerator product that is compact, energy-efficient, and powerful enough to fit into low-power devices like smart cards. The technology can handle both new PQC methods and traditional encryption methods (like AES and RSA). This means fewer chips are needed, which saves space, reduces power consumption, and cuts costs. CASH Technology is being developed by building on the patents that were acquired from Radical Semiconductor ("Radical"). Key members of the Radical team are working on the technology within BTQ with the first proof of concept expected in the first half of 2026.

------

---

| |
|:---|
| ![](exhibit4-7xu001.jpg)<br>|
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE QUARTER ENDED JUNE 30, 2025** |

---

<u>Corporate Activities</u>

On November 29, 2023, BTQ and Hon Hai Research Institute announced a Research and Collaboration Agreement aiming to support the academic community by promoting the standardization of post-quantum cryptography. BTQ and Hon Hai first in their submission of Preon, a post-quantum signature scheme submitted as part of the NIST "Call for Additional Digital Signature Schemes for the Post-Quantum Cryptography Standardization Process".

On May 3, 2024, the Company entered into a software license agreement with ZKP Corp. ("ZKP"), a Delaware corporation controlled by Nicolas Roussy Newton, the Chief Operating Officer of the Company, for which the Company received $1,000,000 for the use of its proprietary software for a period of one year.

On September 9, 2024, the Company issued convertible debt for proceeds of $1,000,000. The convertible debt is non-interest bearing and due on September 9, 2026. At the election of the lender, the principal amount of the debt is convertible into common shares at $0.40 per share.

On July 23, 2024, BTQ entered into an agreement for the acquisition of Radical Semiconductor's Processing-in-Memory Technology Portfolio, advancing its Post-Quantum Cryptography capabilities. The integration of Radical's cutting-edge technology is set to enhance BTQ's quantum-secure communications infrastructure and provide substantial growth opportunities in emerging markets such as IoT, financial services, blockchain, and government sectors.

On November 8, 2024, the Company issued convertible debt for proceeds of $500,000. The convertible debt is non-interest bearing and due on November 14, 2026. At the election of the lender, the principal amount of the debt is convertible into common shares at $0.40 per share.

On December 19, 2024, the Company issued 3,355,704 common shares at $2.98 per share for gross proceeds of $10,000,000 pursuant to a brokered listed issuer financing exemption ("LIFE") offering. In connection with the financing, the Company incurred share issuance costs of $860,833 and issued 167,785 finder's warrants exercisable at $4.09 per common share expiring on December 19, 2029.

On December 24, 2024, the Company issued 3,750,000 common shares pursuant to the conversion of $1,500,000 in convertible debt.

On January 3, 2025, the Company entered into an agreement to for the acquisition of intellectual property from Cimtech Technology Co., Ltd., an innovator in memory technology and computing-in memory ("CIM") solutions. This strategic acquisition enhances the Company's capabilities in post-quantum cryptography and quantum-secure communication technologies.

On June 27, 2025, the Company has been appointed as Chair of the newly formed Quantum Communications Working Group under QuINSA (Quantum Information Science and Technology Standardization Alliance).

On July 11, 2025, the Company issued 5,555,555 common shares at $7.20 per share for gross proceeds of $39,999,996. In connection with this offering, the Company incurred a finder's fee of $2,800,000 and share issuance costs of $109,589. The Company also issued 138,888 finder's warrants exercisable at $12.60 per common share expiring on July 11, 2030.

------

---

| |
|:---|
| ![](exhibit4-7xu001.jpg)<br>|
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE QUARTER ENDED JUNE 30, 2025** |

---

**Trends**

<u>Quantum Computing</u>

According to McKinsey & Company, the quantum technology market will be valued at over $106 billion by 2040<sup>1</sup>, with the bulk of the value projected to come from quantum computing as opposed to quantum sensing and quantum communications. The quantum security industry sits within quantum computing and is a rapidly growing field that focuses on developing secure cryptographic solutions for the age of quantum computing. As quantum computers become more powerful, they will become increasingly capable of breaking traditional cryptographic systems, creating a need for even more robust and advanced quantum- resistant solutions. Traditional cryptographic methods are at risk of being broken, which will have serious implications for national security, financial institutions, and other industries that rely on secure communication and data storage. Estimates of when a commercial quantum computer will hit the market vary, however, last year, IBM unveiled the Osprey (433 qubits) and updated its road map to develop a 4,000+ qubit processor in 2025<sup>2</sup>, indicating that these super computers will be available in the near future. In addition to private sector funding, Government bodies around the world are also investing large sums of capital into quantum technologies. At $15.3 billion, China leads the way in publicly announced quantum funding initiatives, followed by the EU at $8.4 billion, USA at $3.7 billion, Japan at $1.8 billion, UK at $1.3 billion, Canada at $1.1 billion, and several others between $0.1 billion and $1.0 billion<sup>3</sup>.

Overall, the quantum security industry is a rapidly evolving field that will continue to see significant growth and development in the coming years. As businesses and organizations seek to protect their data from the threat of quantum computing, the need for effective and innovative quantum-resistant security solutions will only continue to increase. Investors are recognizing this with about two-thirds, or 68 percent, of all Quantum Technology startup investments since 2001 having occurred in 2021 and 2022<sup>4</sup>.

<u>Post-Quantum Cryptography</u>

One of the main trends in the quantum security industry is the development of post-quantum cryptography ("PQC") algorithms. PQC algorithms are designed to be resistant to attacks from quantum computers, making them a crucial component of quantum-resistant security systems. Many organizations, including government agencies and financial institutions, are already investing in PQC research and development to ensure the security of their sensitive data.

A key driver in the development of the PQC industry is The National Institute of Standards and Technology ("NIST"), a U.S. Department of Commerce agency which sets the standards for businesses and other organizations to secure sensitive data and protect critical infrastructure<sup>5</sup>. NIST compliance standards must be met by anyone who processes, stores, or transmits sensitive information for the Department of Defense, General Services Administration, NASA, and other government agencies, and is largely seen as the de facto standard body to make cryptographic standards for the entire world.

_____________________________<br>1 https://www.mckinsey.com/featured-insights/the-rise-of-quantum-computing

2 https://newsroom.ibm.com/2022-11-09-IBM-Unveils-400-Qubit-Plus-Quantum-Processor-and-Next-Generation-IBM- Quantum-System-Two

<sup>3</sup> https://www.mckinsey.com/~/media/mckinsey/business%20functions/mckinsey%20digital/our%20insights/quantum% 20technology%20sees%20record%20investments%20progress%20on%20talent%20gap/quantum-technology- monitor-april-2023.pdf

4 https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/quantum-technology-sees-record-investments- progress-on-talent-gap

5 https://www.btq.com/en/blog/blockchain-security

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| |
|:---|
| ![](exhibit4-7xu001.jpg)<br>|
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE QUARTER ENDED JUNE 30, 2025** |

---

In 2016, NIST initiated a process to solicit, evaluate, and standardize one or more quantum-resistant public- key cryptographic algorithms. These new cryptography standards will specify additional digital signature and public-key encryption algorithm(s) which are capable of protecting sensitive information well into the foreseeable future, including after the advent of quantum computers. In 2022, NIST officially announced the standardized algorithms from Round 3 of this PQC competition. This was a landmark milestone as government agencies and businesses had been waiting nearly six years for a clear direction as to which algorithms are trustworthy. PQC algorithms are much larger than their classical counterparts. For example, even the smallest NIST-approved digital signature algorithm is over 10x larger than the current Elliptic Curve Digital Signature Algorithm<sup>6</sup>. This is particularly problematic for distributed ledgers where each full node keeps an entire record of all activities on the ledger. If a blockchain like Bitcoin and Ethereum were to adopt the newly standardized PQC algorithms today, the size of both chains would have to be increased to an unmanageable extent.

<u>Competition and Market Participants</u>

Generally, BTQ differentiates itself from its competitors with its work at the intersection of post-quantum cryptography and blockchain. The Company works on developing next-generation cryptographic primitives like zero-knowledge cryptography to achieve advanced security and efficiency, which is novel in the industry.

Large publicly traded quantum companies exist in the space, including: D-Wave Systems (NYSE: QBTS), IONQ (NYSE: IONQ), Arqit Quantum (NASDAQ: ARQQ). However, these companies are not direct competitors as their main goal is to build a commercial quantum computer with real-world useability. These companies are capital intensive and well-funded by both institutional investors and governments and their valuations range from approximately US$200 million to over US$8 billion.

With a surge in funding and general investor interest and excitement in the industry, several companies are emerging in the post-quantum security space. There are various companies that try to tackle the same global problem as BTQ: getting today's infrastructure secured for the quantum revolution, however, the approaches vary widely based on cryptographic techniques, as well as end uses served and therefore is not a winner takes all market. In fact, other companies operating directly in the space may offer potential collaboration opportunities. Below is a non-exhaustive list of indirect competitors to BTQ:

PQ Shield, for example, describes itself as a PQC company contributing to the global standards and core technologies to power the future security layer of the world's leading organizations. Its quantum-secure cryptographic solutions work with companies' legacy systems to protect sensitive data now and for years to come. The company mainly serves the defense & infrastructure, IoT and OEM markets. PQ Shield raised $20 million as part of their Series A round in January 2022<sup>7</sup>.

Additionally, Isara provides security solutions specializing in cryptographic risk management and in creating crypto-agile and quantum-safe security solutions for today's information technology ecosystems. The company broadly targets enterprises and governments. Isara raised over $10 million in 2018 to fund its R&D efforts<sup>8</sup>.

In the blockchain space, large technology companies are building their own secured blockchains. For example, IBM offers blockchain services that help secure multiple aspects of critical industries like supply chains, banking, healthcare, and government. The goal of these blockchains is usually to streamline and scale processes in a secure manner<sup>9</sup>.

_____________________________<br>6 https://falcon-sign.info/

7 https://www.prnewswire.com/news-releases/pqshield-collaborates-with-nccoe-and-industry-to-ease-the-real-world-implementation-of-quantum-resistant-cryptography-301794688.html

8 https://www.isara.com/company/newsroom/shasta-ventures-investment.html

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| |
|:---|
| ![](exhibit4-7xu001.jpg)<br>|
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE QUARTER ENDED JUNE 30, 2025** |

---

SandboxAQ, an enterprise SaaS company stemming from Alphabet (previously Google), is another key player in the space. Sandbox provides solutions at the nexus of AI and Quantum technology to address some of the world's most challenging problems. The company's core team and inspiration formed at Alphabet Inc., emerging as an independent, growth-capital-backed company in 2022. The company aims to protect the public sector, life sciences & healthcare, financial services, cybersecurity, material science & manufacturing, and global navigation<sup>10</sup>.

**RESULTS OF OPERATIONS**

For the six months ended June 30, 2025

The net loss for the six months ended June 30, 2025 was $3,758,598 (2024: $3,529,564). The main categories are listed below:

<u>Revenue of $315,497 (2024: $90,573)</u>

The Company entered into a one year revenue licensing agreement in May 2024.

<u>Business development, marketing, and promotion of $349,678 (2024: $462,355)</u>

The decrease is due to terminated marketing agreements during the third quarter of 2024.

<u>General and administrative of $287,211 (2024: $460,434)</u>

The decrease is mainly due to the closure of the Company's Taiwan branch office in October 2024.

<u>Professional fees of $1,187,606 (2024: $615,259)</u>

The increase is mainly due to higher legal fees incurred relating to the base shelf prospectus and Nasdaq listing application/Form 40-F preparation. The Company also incurred fees for internal control advisory services in the current period.

<u>Research and development of $713,526 (2024: $1,435,628)</u>

The decrease is mainly due to the termination of research and development employees located in Taiwan prior to the fourth quarter of 2024.

<u>Share-based compensation of $1,145,240 (2024: $133,550)</u>

The increase in share-based compensation was due to stock options and RSUs issued during the period. In addition, there were no forfeited options and RSUs during the period as in the comparative period.

<u>Transfer agent and regulatory fees of $139,566 (2024: $46,112)</u>

The increase is mainly due to the base shelf prospectus filing.

<u>Wages and benefits of $138,880 (2024: $325,023)</u>

The decrease is mainly due to the termination of employees and closure of the Taiwan branch office in 2024.

<br>_____________________________<br>9 https://www.ibm.com/blockchain

10 https://www.sandboxaq.com/solutions/security-suite

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| |
|:---|
| ![](exhibit4-7xu001.jpg)<br>|
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE QUARTER ENDED JUNE 30, 2025** |

---

**USE OF AVAILABLE FUNDS**

In connection with the brokered LIFE offering which closed on December 19, 2024, below is a reconciliation of the expected use of available funds against the actual use of such funds as at June 30, 2025:

---

| | | |
|:---|:---|:---|
|  |  | Actual Use of Available |
|  |  | Proceeds as at |
| **Item** | Use of Available Funds | June 30, 2025 |
|  | $| $|
|  | 3810000 | 268649 |
| Quantum Computation in Memory Product | 3810000 | 268649 |
| General and administrative | 1400000 | 2342786 |
| Ongoing operations - other R&D | 1500000 | 829280 |
| Working capital | 1499164 |  |
| **Total** | **8209164** | **3440715** |

---

**SUMMARY OF QUARTERLY RESULTS**

The following table sets out financial information for the past eight quarters:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three Months Ended ($) | Three Months Ended ($) | Three Months Ended ($) | Three Months Ended ($) |
|  | June 30, | March 31, | December 31, | September 30, |
|  | 2025 | 2025 | 2024 | 2024 |
| Total revenues | 65497 | 250000 | 250000 | 326094 |
| Net loss | (1946618) | (1811980) | (1517826) | (1029346) |
| Net loss per share, basic and diluted | (0.01) | (0.01) | (0.01) | (0.01) |
|  | Three Months Ended ($) | Three Months Ended ($) | Three Months Ended ($) | Three Months Ended ($) |
|  | June 30, | March 31, | December 31, | September 30, |
|  | 2024 | 2024 | 2023 | 2023 |
| Total revenues | 90573 |  |  |  |
| Net loss | (1695192) | (1834372) | (3500699) | (2418203) |
| Net loss per share, basic and diluted | (0.01) | (0.01) | (0.02) | (0.02) |

---

The net loss for the quarter ended June 30, 2025 includes share-based compensation of $538,232 related to the issuance of stock options and restricted share units.

The net loss for the quarter ended March 31, 2025 includes share-based compensation of $607,008 related to the issuance of stock options and restricted share units.

The net loss for the quarter ended December 31, 2023 includes share-based compensation of $1,259,207 related to the issuance of stock options and restricted share units.

The net loss for the quarter ended September 30, 2023 includes share-based compensation of $755,390 related to the issuance of stock options and restricted share units.

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| |
|:---|
| ![](exhibit4-7xu001.jpg)<br>|
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE QUARTER ENDED JUNE 30, 2025** |

---

**LIQUIDITY AND CAPITAL RESOURCES**

As at June 30, 2025, the Company had cash of $5,980,893 and working capital of $5,493,638 compared to cash of $9,336,892 and working capital of $7,831,723 as at December 31, 2024.

The Company's operations used cash of $3,607,017 (2024: $2,319,813) during the six months ended June 30, 2025. The Company's investing activities used cash of $6,282 (2024: provided cash of $2,875). The cash requirements during the six months ended June 30, 2025 were funded from the net proceeds from share issuances of $257,300 (2024: $52,894) and working capital.

The Company's aggregate operating, investing, and financing activities during the six months ended June 30, 2025 resulted in a decrease in its cash balance of $3,355,999 (2024: $2,264,044).

On July 11, 2025, the Company issued 5,555,555 common shares at $7.20 per share for gross proceeds of $39,999,996. In connection with this offering, the Company incurred a finder's fee of $2,800,000 and share issuance costs of $109,589. The Company also issued 138,888 finder's warrants exercisable at $12.60 per common share expiring on July 11, 2030.

**OFF BALANCE SHEET ARRANGEMENTS**

There are no off-balance sheet arrangements to which the Company is committed.

**RELATED PARTY TRANSACTIONS**

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

Key management personnel are persons responsible for planning, directing, and controlling the activities of an entity, and include all officers and directors of the Company. Key management personnel compensation during the six months ended June 30, 2025 and 2024 was comprised of the following:

---

| | | |
|:---|:---|:---|
|  | Six month**s** | Six months |
|  | ended | ended |
|  | June 30, | June 30, |
|  | 2025 | 2024 |
|  | $| $|
| Consulting fees incurred to Ming-Yang Chih, former Chief Strategic Officer |  | 40758 |
| Business development, marketing and promotion incurred to Mathiew Gauthier, Head of Corporate Development | 50738 | 48910 |
| Professional fees incurred to Saturna Group Chartered Professional Accountants LLP, a firm where the CFO, Lonny Wong, is a partner | 42000 | 42000 |
| Research and development incurred to Po-Chun Ko (former Chief Technology Officer and Chen-Mou Cheng (former Chief Cryptographer) |  | 140257 |
| Wages and benefits incurred to Nicolas Roussy Newton (Chief Operating Officer ("COO:) and Peter Lavelle (former Chief Legal Officer) | 87975 | 146901 |
| Total short-term benefits | 180713 | 418826 |
| Share-based payments | 35610 | 155101 |
|  | 216323 | 573927 |

---

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| |
|:---|
| ![](exhibit4-7xu001.jpg)<br>|
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE QUARTER ENDED JUNE 30, 2025** |

---

As at June 30, 2025, the Company owed $117,611 (December 31, 2024 - $124,247) to the CEO of the Company, of which $91,848 (December 31, 2024 - $97,075) is included in accounts payable and accrued liabilities. The amounts owed are non-interest bearing, unsecured, and due on demand.

As at June 30, 2025, the Company was owed $120,881 (December 31, 2024 - $137,369) from the COO of the Company, which is included in other receivables.

As at June 30, 2025, the Company owed $nil (December 31, 2024 - $7,350) to a firm where the Chief Financial Officer of the Company is a partner, which is included in accounts payable and accrued liabilities, which is non-interest bearing, unsecured, and due on demand.

As at June 30, 2025, the Company owed $nil (December 31, 2024 - $15,020) to the Head of Corporate Development of the Company, which is included in accounts payable and accrued liabilities, which is non- interest bearing, unsecured, and due on demand.

During the six months ended June 30, 2025, the Company earned license revenue of $315,497 (2024 - $90,573) from a ZKP Corp. ("ZKP"), a company controlled by the COO. As at June 30, 2025, the Company has deferred revenue of $nil (December 31, 2024 - $315,497) for this company. The license agreement relates to certain non-core technology of the Company that is not of a near-term focus for development, and the licensing of such technology to ZKP provided the Company with near-term revenue stream and enabled ZKP to access certain U.S. focused funding sources for the development of a related product.

**ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE**

A number of new standards, and amendments to standards and interpretations, are not yet effective for the period ended June 30, 2025, and have not been early adopted in preparing the consolidated financial statements.

In April 2024, the IASB issued IFRS 18 - Presentation and Disclosure in Financial Statements which will replace IAS 1, Presentation of Financial Statements. The key new concepts introduced in IFRS 18 relate to the structure of the statement of earnings (loss), required disclosures in the financial statements for certain earnings or loss performance measures that are reported outside an entity's financial statements and enhanced principles on aggregation and disaggregation which apply to the primary financial statements and notes in general. IFRS 18 will apply for reporting periods beginning on or after January 1, 2027, and also applies to comparative information. The Company is in the process of assessing the impact of this standard on its consolidated financial statements.

Other accounting standards or amendments to existing accounting standards that have been issued but have future effective dates and are not expected to have a significant impact on the Company's consolidated financial statements.

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| |
|:---|
| ![](exhibit4-7xu001.jpg)<br>|
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE QUARTER ENDED JUNE 30, 2025** |

---

**CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS**

<u>Use of estimates</u>

The preparation of consolidated financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from our company's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

<u>Research and development costs</u>

Research costs are recognized as an expense when incurred but development costs may be capitalized as intangible assets if certain conditions are met as described in IAS 38 *Intangible Assets*. Management has determined that development costs do not meet the conditions for capitalization under IAS 38 and all research and development costs have been expensed.

<u>Fair values of stock options</u>

Fair values of stock options are determined using the Black-Scholes option pricing model. Estimating fair value requires determining the most appropriate valuation model for a grant of equity instruments, which is dependent on the terms and conditions of the grant. Option-pricing models require the use of highly subjective estimates and assumptions including the expected stock price volatility. Changes in the underlying assumptions can materially affect the fair value estimates and, therefore, existing models do not necessarily provide reliable measurement of the fair value of the Company's stock options and performance warrants.

<u>*Deferred income taxes*</u>

The determination of income tax expense and the composition of deferred income tax assets and liabilities involves judgment and estimates as to the future taxable earnings, expected timing of reversals of deferred income tax assets and liabilities, and interpretations of tax laws. The Company is subject to assessments by tax authorities who may interpret the tax law differently. Changes in these interpretations, judgments, and estimates may materially affect the final amount of current and deferred income tax provisions, deferred income tax assets and liabilities, and results of operations.

<u>*Going concern presentation*</u>

The consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The assessment of the Company's ability to source future operations and continue as a going concern involves judgement. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. If the going concern assumption is not appropriate for the financial statements, then adjustments would be necessary in the carrying value of the assets and liabilities, the reported revenue and the expenses and the statement of financial position classifications used.

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| |
|:---|
| ![](exhibit4-7xu001.jpg)<br>|
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE QUARTER ENDED JUNE 30, 2025** |

---

**FINANCIAL INSTRUMENTS AND RISK MANAGEMENT**

**Fair Values**

The following provides a description of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Assets and liabilities measured at fair value on a recurring basis were presented on the Company's statement of financial position as at June 30, 2025 and December 31, 2024 as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Fair value measurements using | Fair value measurements using | Fair value measurements using |  |
|  | Quoted prices in |  |  |  |
|  | active markets | Significant other | Significant | Balance, |
|  | for identical | observable | unobservable | June 30, 2025 |
|  | instruments | inputs | inputs | and December |
|  | (Level 1) | (Level 2) | (Level 3) | 31, 2024 |
|  | $| $| $| $|
| Investments | - | - | 77229 | 77229 |

---

The fair values of the Company's other financial instruments, which include cash, other receivables, accounts payable and accrued liabilities, and due to related parties, approximate their carrying values due to the relatively short-term maturity of these instruments.

**Credit Risk**

Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents. The Company limits its exposure to credit loss by placing its cash and cash equivalents with high credit quality financial institutions. The carrying amount of financial assets represents the maximum credit exposure.

**Foreign Exchange Rate Risk**

Foreign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. The Company is exposed to foreign currency risk to the extent that monetary assets and liabilities are denominated in a foreign currency.

The following tables indicate the impact of foreign currency exchange risk on net working capital as at June 30, 2025 and December 31, 2024. The tables below also provides a sensitivity analysis of a 10% strengthening of the foreign currency against functional currencies identified which would have increased (decreased) the Company's net loss by the amounts shown in the tables below. A 10% weakening of the foreign currency against the functional currencies would have had the equal but opposite effect as at June 30, 2025 and December 31, 2024.

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| |
|:---|
| ![](exhibit4-7xu001.jpg)<br>|
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE QUARTER ENDED JUNE 30, 2025** |

---

---

| | | |
|:---|:---|:---|
| As at June 30, 2025 | TWD | US$ |
| Cash | 822829 | 20647 |
| Other receivables (except GST) |  | 117390 |
| Accounts payable and accrued liabilities | (238997) | (81011) |
| Total foreign currency financial assets and liabilities | 583832 | 57026 |
| Impact of a 10% strengthening or weakening of foreign exchange rate | 58383 | 5703 |
| As at December 31, 2024 | TWD | US$ |
| Cash | 82993 | (1249) |
| Other receivables (except GST) |  | 106489 |
| Accounts payable and accrued liabilities | (6337488) | (237069) |
| Total foreign currency financial assets and liabilities | (6254495) | (131829) |
| Impact of a 10% strengthening or weakening of foreign exchange rate | (625450) | (13183) |

---

**Interest Rate Risk**

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not exposed to significant interest rate risk as it does not have any liabilities with variable rates.

**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's objective to managing liquidity risk is to ensure that it has sufficient liquidity available to meet its liabilities when due. The Company relies on raising debt or equity financing in a timely manner. Refer to going concern disclosure under Liquidity and Capital Resources.

The following amounts are the contractual maturities of financial liabilities as at June 30, 2025 and December 31, 2024:

---

| | | | |
|:---|:---|:---|:---|
| As at June 30, 2025 |  | Within | Within |
|  | Total | 1 year | 2-5 years |
|  | $| $| $|
| Accounts payable and accrued liabilities | 833184 | 833184 |  |
| Due to related parties | 25763 | 25763 |  |
|  | 858947 | 858947 | - |
| As at December 31, 2024 |  | Within | Within |
|  | Total | 1 year | 2-5 years |
|  | $| $| $|
| Accounts payable and accrued liabilities | 1357502 | 1357502 |  |
| Due to related parties | 27172 | 27172 |  |
|  | 1384674 | 1384674 | - |

---

**DISCLOSURE OF OUTSTANDING SHARE DATA**

The authorized capital of the Company consists of an unlimited number of common shares without par value.

As of the date of this report, the Company had 138,399,680 common shares, 306,673 share purchase warrants outstanding, 3,660,000 stock options outstanding and 1,925,000 RSUs outstanding.

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| |
|:---|
| ![](exhibit4-7xu001.jpg)<br>|
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE QUARTER ENDED JUNE 30, 2025** |

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**DISCLOSURE CONTROLS AND PROCEDURES**

The CEO and the CFO have designed, or caused to be designed under their supervision, the Company's disclosure controls and procedures ("DCP") to provide reasonable assurance that material information relating to the Company and its consolidated subsidiaries has been recorded, processed, summarized and disclosed in a timely manner in accordance with regulatory requirements and good business practices and that the Company's DCP will enable the Company to meet its ongoing disclosure requirements.

The CEO and CFO have evaluated the effectiveness of the Company's disclosure controls and procedures and have concluded that based on this evaluation, our disclosure controls and procedures are effective.

**INTERNAL CONTROL OVER FINANCIAL REPORTING**

The CEO and the CFO have designed, or caused to be designed under their supervision, the Company's internal controls over financial reporting ("ICFR") in order to provide reasonable assurance regarding the reliability of the Company's financial reporting and the preparation of consolidated financial statements for external purposes in accordance with IFRS.

A material weakness is a control deficiency, or combination of control deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement in the annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

The CEO and CFO conducted an evaluation the effectiveness of the Company's ICFR as at June 30, 2025 based on *Internal Control-Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") for the Company as a whole. Based on this evaluation, management concluded that no material weaknesses existed as at June 30, 2025.

**LIMITATION OF CONTROLS AND PROCEDURES**

The Company's management, including its CEO and CFO, believe that any DCP and ICFR, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override to the control. The design of any control system also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any control system will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost effective, control system, misstatements due to error or fraud may occur and not be detected.

**CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING**

There have been no changes to our internal control over financial reporting for the six months ended June 30, 2025, that could have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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| |
|:---|
| ![](exhibit4-7xu001.jpg)<br>|
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE QUARTER ENDED JUNE 30, 2025** |

---

**RISK FACTORS**

The following is a summary of certain risk factors relating to the business. The risks presented below should not be considered exhaustive and may not be all of that the Company may face.

*General Risks*

*The Company has a limited operating history*

The Company has a limited history of operations and is in the early stage of development. As such, the Company will be subject to many risks common to early-stage enterprises, including undercapitalization, cash shortages, limitations with respect to personnel, financial and other resources, and limited revenue. There is no assurance that the Company will achieve its operating goals. There is no assurance that the Company will be successful in achieving a return on shareholders' investment and the likelihood of success must be considered in light of its early stage of operations. There can be no assurance that the Company will be able to earn material revenue or that any of its activities will generate positive cash flow.

*The Company is subject to competition from other post-quantum encryption companies*

The Company will compete with other post-quantum cryptography and technology businesses, including other businesses focused on applying post-quantum cryptography to blockchain.

*The Company's compliance and risk management programs may not be effective*

The Company's ability to comply with applicable laws and rules will be largely dependent on the establishment and maintenance of compliance, review, and reporting systems, as well as the ability to attract and retain qualified compliance and other risk-management personnel, as needed. The Company cannot provide any assurance that its compliance policies and procedures will be effective or that it will be successful in monitoring or evaluating its risks. If there is any alleged non-compliance with applicable laws or regulations, The Company could be subject to investigations and judicial or administrative proceedings that may result in substantial penalties or civil lawsuits for damages, restitution or other remedies, which could be significant. Any of these outcomes, individually or together, may materially and adversely affect the Company's reputation, financial condition and valuation, and the value of its shares.

*Unexpected market disruptions may cause major losses for the Company*

The Company may incur major losses in the event of disrupted markets and other extraordinary events in which market behavior diverges significantly from historically recognized patterns. The risk of loss in such events may be compounded by the fact that, in disrupted markets, many positions may become illiquid, making it difficult or impossible to close out positions against which markets are moving. Market disruptions caused by unexpected political, military and terrorist events, or other factors, may from time to time cause dramatic losses for the Company.

------

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| |
|:---|
| ![](exhibit4-7xu001.jpg)<br>|
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE QUARTER ENDED JUNE 30, 2025** |

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*The Company will be reliant on attracting and retaining skilled management and directors*

The success of the Company will, in part, be dependent upon the skill, judgment, industry relationships and expertise of the Board and management. The loss of a director or key management personnel may materially and adversely affect the business of the Company. There can be no assurance that these individuals will continue to be employed by, or remain involved with, the Company for a particular period of time.

*Market risk for securities*

There can be no assurance that an active trading market for the Company's shares will be sustained. The market price for the Company's Shares may be subject to wide fluctuations. Factors such as government regulation, price fluctuations, share price movements of peer companies and competitors, as well as overall market movements, may have a significant impact on the market price of the Company's securities. The stock market has from time to time experienced extreme price and volume fluctuations, which have often been unrelated to the operating performance of particular companies. Market forces may render it difficult or impossible for the Company to secure purchasers to purchase its securities at a price which will not lead to severe dilution to existing shareholders, or at all. In addition, shareholders may realize less than the original amount invested on dispositions of their shares during periods of such market price decline.

*Foreign exchange risk*

The Company is a Canadian company, and most of its expenses and fundraising is done in Canadian dollars, however, its operations are predominantly denominated in U.S. dollars and Taiwan dollars. As a result, the Company is subject to foreign exchange risks relating to the relative value of the U.S. dollar and Taiwan dollar as compared to the Canadian dollar. A decline in the U.S. dollar or Taiwan dollar could result in a decrease in the real value of the Company's revenues and adversely impact financial performance.

*Tax*

No assurance can be given that new taxation rules will not be enacted or existing rules will not be applied in a manner which could result in the Company being subject to additional taxation or which could otherwise have a material adverse effect on the Company's results from operations and financial condition.

*The Company may be subject to litigation*

The Company may be subject to litigation arising out of, or related to, its operations. Damages claimed under such litigation may be material, and the outcome of such litigation may materially impact the Company's operations and the value of its shares. While the Company expects to assess the merits of any lawsuits and defend such lawsuits accordingly, it may be required to incur significant expense or devote significant financial resources to such defenses. In addition, the adverse publicity surrounding such claims may have a material adverse effect on the Company's operations.

*Investment Risk*

There is no assurance that the Company will achieve its investment objective. An investment may not earn any positive return and may result in the loss of some or all of the capital invested.

*Ability to generate profits*

There can be no assurance that the Company will generate net profits in future periods. Further, there can be no assurance that the Company will be cash flow positive in future periods. In the event that the Company fails to achieve profitability in future periods, the value of the Company's shares may decline. In addition, if the Company is unable to achieve or maintain positive cash flows, the Company would be required to seek additional funding, which may not be available on favorable terms, if at all.

------

---

| |
|:---|
| ![](exhibit4-7xu001.jpg)<br>|
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE QUARTER ENDED JUNE 30, 2025** |

---

*Management of growth*

The Company has recently experienced, and may continue to experience, growth in the scope of its operations. This growth has resulted in increased responsibilities for the Company's existing personnel, the hiring of additional personnel and, in general, higher levels of operating expenses. In order to manage its current operations and any future growth effectively, the Company will need to continue to implement and improve its operational, financial and management information systems, as well as hire, manage and retain its employees and maintain its corporate culture including technical and customer service standards. There can be no assurance that the Resulting Issuer will be able to manage such growth effectively or that its management, personnel or systems will be adequate to support the Company's operations.

*Reliance on key personnel*

The Company's future growth and its ability to develop depend, to a significant extent, on its ability to attract and retain highly qualified personnel. The Company will rely on a limited number of key employees, consultants and members of senior management and there is no assurance that the Company will be able to retain such key employees, consultants and senior management. The loss of one or more of such key employees, consultants or members of senior management, if not replaced, could have a material adverse effect on the Company's business, financial condition and prospects.

*The Company has no immediate plans to pay regular dividends on the Company, so shareholders of the Company may not receive funds without selling their Company Shares.*

The Company does not currently have plans to pay regular dividends on Company Shares. Any declaration and payment of future dividends to holders of Company Shares will be at the sole discretion of the Board and will depend on many factors, including the financial condition, earnings, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends and other considerations of the Company that the Company's Board deems relevant.

***Business and Industry Risks***

*Regulatory changes or actions may alter the nature of an investment in the Company or restrict the use of digital assets in a manner that adversely affects the Company's operations*

Due to their global nature, blockchain-related technologies and encryption-related technologies are subject to regulatory fragmentation due to different treatment depending on jurisdiction. Certain governments have categorized certain blockchain technologies as illegal, while others have embraced their utility and have approved them for trade. Ongoing and/or future regulatory actions may have a substantial impact on the Company's business operations.

*The Company relies upon the use of internally/externally built proprietary software, data and intellectual property that may be subject to substantial risk*

The Company's liquidity contribution strategy is dependent on internally and externally developed software, data and intellectual property. Its operations may be severely and adversely affected by the malfunction of technology.

------

---

| |
|:---|
| ![](exhibit4-7xu001.jpg)<br>|
| **MANAGEMENT'S DISCUSSION AND ANALYSIS**<br>**FOR THE QUARTER ENDED JUNE 30, 2025** |

---

*Banks may not provide banking services, or may cut-off banking services, to businesses that provide services related to blockchain-based technologies*

A number of companies that provide blockchain-related services have been unable to find banks that are willing to provide them with bank accounts and banking services. Similarly, a number of such companies have had their existing bank accounts closed by their banks. Banks may refuse to provide bank accounts and other banking services to blockchain-related companies, or companies that accept digital assets, for a number of reasons, such as perceived compliance risks or costs.

*The Company may be unable to obtain adequate insurance to insure its operations*

The Company intends to insure its operations in accordance with technology industry practice. However, given the novelty of digital assets and associated businesses, such insurance may not be available, may be uneconomical for the Company, or the nature or level may be insufficient to provide adequate insurance cover. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the Company.

*The business of the Company will be exposed to cybersecurity risks*

Cyber incidents can result from deliberate attacks or unintentional events, and may arise from internal sources (e.g., employees, contractors, service providers, suppliers and operational risks) or external sources (e.g., nation states, terrorists, hacktivists, competitors and acts of nature). Cyber incidents include unauthorized access to information systems and data (e.g., through hacking or malicious software) for purposes of misappropriating or corrupting data or causing operational disruption. Cyber incidents also may be caused in a manner that does not require unauthorized access, such as causing denial-of-service attacks on websites (e.g., efforts to make network services unavailable to intended users). A cyber incident that affects the Company might cause disruptions and adversely affect its business operations, and might also result in violations of applicable law (e.g., personal information protection laws), each of which might result in potentially significant financial losses and liabilities, regulatory fines and penalties, reputational harm, and reimbursement and other compensation costs. In addition, substantial costs might be incurred to investigate, remediate and prevent cyber incidents.

**FORWARD-LOOKING STATEMENTS**

*This MD&A includes certain statements that may be deemed "forward-looking statements" concerning the future performance of the Company's business, its operations, its financial performance and condition, as well as management's objectives, strategies, beliefs and intentions. Forward-looking statements are frequently identified by such words as "may", "will", "plan", "expect", "anticipate", "estimate", "intend" and similar words referring to future events and results. Forward-looking statements are based on the current opinions and expectations of management. All statements in this report that do not directly and exclusively relate to historical facts, constitute forward- looking statements. These statements represent the Company's intentions, plans, expectations and beliefs, and are subject to risks, uncertainties and other factors of which many are beyond the control of the Company. These factors could cause actual results to differ materially from such forward-looking statements. The Company disclaims any intention or obligation to update or revise such forward-looking statements, as a result of new information, future events or otherwise. Factors that may cause actual results to vary from forward looking statements include, but are not limited to, the Company's ability to access capital, competitive risks and reliance on key personnel, as described in more detail in this document under "Risk Factors". Investors are cautioned that any such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements.*

------

## Exhibit 4.8

------

![](exhibit4-8xu001.jpg)

**Form 51-102F3**

**MATERIAL CHANGE REPORT**

**Item 1 Name and Address of Company**

BTQ Technologies Corp. (the "**Company**")

16-113 555 Burrard Street, Vancouver,

British Columbia, Canada, V7X 1M8

**Item 2 Date of Material Change**

July 11, 2025

**Item 3 News Release**

On July 11, 2025, the Company issued a news release reporting the material change through CNW (Canada NewsWire).

**Item 4 Summary of Material Change**

On July 11, 2025, the Company closed its public offering (the "**Offering**") pursuant to a prospectus supplement dated July 9, 2025 ("**Prospectus Supplement**") to the Company's short form base shelf prospectus dated April 29, 2025 ("**Base Shelf**"). The Offering was completed on a best-efforts agency basis pursuant to an agency agreement (the "**Agency Agreement**") between the Company and A.G.P. Canada Investments ULC (the "**Agent**") dated July 9, 2025. Pursuant to the Offering, the Company has issued 5,555,555 common shares of the Company ("**Common Shares**") at a price of C$7.20 per Common Share, for aggregate gross proceeds of approximately C$40,000,000.

**Item 5 Full Description of Material Change**

**5.1 Full Description of Material Change**

On July 11, 2025, the Company closed the Offering pursuant to a Prospectus Supplement dated July 9, 2025, to the Company's Base Shelf. The Offering was completed on a best-efforts agency basis pursuant to the Agency Agreement between the Company and the Agent dated July 9, 2025. Pursuant to the Offering, the Company has issued 5,555,555 Common Shares at a price of C$7.20 per Common Share, for aggregate gross proceeds of approximately C$40,000,000.

------

The Agent acted as the sole bookrunner and agent for the Offering and A.G.P./Alliance Global Partners acted as sole U.S. placement agent for the Offering.

Pursuant to the terms of the Agency Agreement, the Company paid the Agent a cash fee equal to 7% of the gross proceeds from the Offering and issued to the Agent non-transferable broker warrants (the "**Broker Warrants**") equal to 2.5% of the total number of Common Shares sold pursuant to the Offering. Each Broker Warrant will be exercisable for one Common Share at a price of C$12.60 per Broker Warrant and is exercisable for a period of 60 months following the completion of the Offering.

The securities to be offered pursuant to the Offering were not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "**U.S. Securities Act**") or under any U.S. state securities laws, and may not be offered or sold in the United States or to, or for the account or benefit of, a "U.S. person" (as defined in Regulation S under the U.S. Securities Act) absent registration or any applicable exemption from the registration requirements under the U.S. Securities Act and applicable U.S. state securities laws. This news release shall not constitute an offer to sell or the solicitation of an offer to buy securities in the United States, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

**Item 6 Reliance on subsection 7.1(2) of National Instrument 51-102**

Not applicable.

**Item 7 Omitted Information**

No significant facts otherwise required to be disclosed in this report have been omitted.

------

**Item 8 Executive Officer**

The following executive officer of the Company is knowledgeable about the material change and may be contacted respecting the change:

Olivier Roussy Newton

Chief Executive Officer

Email: desk@btq.com

**Item 9 Date of Report**

July 14, 2025

------

## Exhibit 5.1

------

![](exhibit5-1xu002.jpg)

**CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

We consent to the incorporation by reference in the Registration Statement on Form F-10 (the "Form F-10") of our auditor's report dated March 24, 2025 relating to the consolidated financial statements of BTQ Technologies Corp. consisting of the consolidated statement of financial position as at December 31, 2024 and the related consolidated statement of operations and comprehensive loss, changes in shareholders' equity and cash flows for the year then ended.

We also consent to reference to us under the heading "Expert" in the Form F-10 and "Interests of Experts" in the Annual Information Form for the year ended December 31, 2024, which is filed as Exhibit 4.1 to this Form F-10.

/s/ MNP LLP

Chartered Professional Accountants

Licensed Public Accountants

September 25, 2025

Toronto, Canada

![](exhibit5-1xu004.jpg)

------

## Exhibit 5.2

------

---

| | | |
|:---|:---|:---|
| ![](exhibit5-2xu002.jpg) | Tel: (604) 688-5421<br>Fax: (604) 688-5132<br>**www.bdo.ca** | BDO Canada LLP<br>1100 Royal Centre<br>1055 West Georgia Street, P.O. Box 11101<br>Vancouver, British Columbia<br>V6E 3P3 |

---

<u>Consent of Independent Registered Public Accounting Firm</u>

We hereby consent to the incorporation by reference in this Registration Statement on Form F-10 (the "F-10") of our report dated June 3, 2024, relating to the consolidated financial statements of BTQ Technologies Corp. (the Company) as at December 31, 2023 and for the year then ended, and the related notes to the consolidated financial statements. Our report contains an explanatory paragraph regarding the Company's ability to continue as a going concern.

We also consent to reference to us under the heading "Expert" in the F-10.

/s/ BDO Canada LLP

Chartered Professional Accountants

Vancouver, Canada

September 25, 2025

------

## Exhibit 7.1

------

**BTQ Technologies Corp.**<br>**as Issuer**<br>**and**<br>**[ ]** <br>**as U.S. Trustee**

<br>**and**<br>**[ ]** <br>**as Canadian Trustee**

**Indenture**<br>**Dated as of [ ]**

------

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
| [**ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION**](#page_7) | [**ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION**](#page_7) | [1](#page_7) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 1.01](#page_7) | [Definitions](#page_7) | [1](#page_7) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 1.02](#page_15) | [Rules of Construction](#page_15) | [9](#page_15) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 1.03](#page_16) | [Compliance Certificates and Opinions](#page_16) | [10](#page_16) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 1.04](#page_16) | [Form of Documents Delivered to Trustees](#page_16) | [10](#page_16) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 1.05](#page_17) | [Acts of Holders](#page_17) | [11](#page_17) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 1.06](#page_18) | [Notices](#page_18) | [12](#page_18) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 1.07](#page_18) | [Notice to Holders; Waiver](#page_18) | [12](#page_18) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 1.08](#page_19) | [Effect of Headings and **Table of Contents**](#page_19) | [13](#page_19) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 1.09](#page_19) | [Successors and Assigns](#page_19) | [13](#page_19) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 1.10](#page_19) | [Severability Clause](#page_19) | [13](#page_19) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 1.11](#page_19) | [Benefits of Indenture](#page_19) | [13](#page_19) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 1.12](#page_19) | [Governing Law](#page_19) | [13](#page_19) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 1.13](#page_19) | [Legal Holidays](#page_19) | [13](#page_19) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 1.14](#page_20) | [Agent for Service; Submission to Jurisdiction; Waiver of Immunities](#page_20) | [14](#page_20) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 1.15](#page_20) | [Conversion of Judgment Currency](#page_20) | [14](#page_20) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 1.16](#page_21) | [Currency Equivalent](#page_21) | [15](#page_21) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 1.17](#page_21) | [Conflict with Trust Indenture Legislation](#page_21) | [15](#page_21) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 1.18](#page_22) | [Incorporators, Shareholders, Officers and Directors of the Company Exempt from Individual Liability](#page_22) | [16](#page_22) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 1.19](#page_22) | [Waiver of Jury Trial](#page_22) | [16](#page_22) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 1.20](#page_22) | [Counterparts](#page_22) | [16](#page_22) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 1.21](#page_22) | [Force Majeure](#page_22) | [16](#page_22) |
| [**ARTICLE TWO SECURITIES FORMS**](#page_22) | [**ARTICLE TWO SECURITIES FORMS**](#page_22) | [16](#page_22) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 2.01](#page_22) | [Forms Generally](#page_22) | [16](#page_22) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 2.02](#page_23) | [Form of Trustee's Certificate of Authentication](#page_23) | [17](#page_23) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 2.03](#page_23) | [Securities Issuable in Global Form](#page_23) | [17](#page_23) |
| [**ARTICLE THREE THE SECURITIES**](#page_24) | [**ARTICLE THREE THE SECURITIES**](#page_24) | [18](#page_24) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 3.01](#page_24) | [Issuable in Series](#page_24) | [18](#page_24) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 3.02](#page_27) | [Denominations](#page_27) | [21](#page_27) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 3.03](#page_27) | [Execution, Authentication, Delivery and Dating](#page_27) | [21](#page_27) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 3.04](#page_29) | [Temporary Securities](#page_29) | [23](#page_29) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 3.05](#page_30) | [Registration, Registration of Transfer and Exchange](#page_30) | [24](#page_30) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 3.06](#page_33) | [Mutilated, Destroyed, Lost and Stolen Securities](#page_33) | [27](#page_33) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 3.07](#page_33) | [Payment of Principal, Premium and Interest; Interest Rights Preserved; Optional Interest Reset](#page_33) | [27](#page_33) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 3.08](#page_36) | [Optional Extension of Stated Maturity](#page_36) | [30](#page_36) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 3.09](#page_36) | [Persons Deemed Owners](#page_36) | [30](#page_36) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 3.10](#page_37) | [Cancellation](#page_37) | [31](#page_37) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 3.11](#page_37) | [Computation of Interest](#page_37) | [31](#page_37) |

---

i

------

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 3.12](#page_37) | [Currency and Manner of Payments in Respect of Securities](#page_37) | [31](#page_37) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 3.13](#page_40) | [Appointment and Resignation of Successor Exchange Rate Agent](#page_40) | [34](#page_40) |
| [**ARTICLE FOUR SATISFACTION AND DISCHARGE**](#page_40) | [**ARTICLE FOUR SATISFACTION AND DISCHARGE**](#page_40) | [34](#page_40) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 4.01](#page_40) | [Satisfaction and Discharge of Indenture](#page_40) | [34](#page_40) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 4.02](#page_41) | [Application of Trust Money](#page_41) | [35](#page_41) |
| [**ARTICLE FIVE REMEDIES**](#page_42) | [**ARTICLE FIVE REMEDIES**](#page_42) | [36](#page_42) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 5.01](#page_42) | [Events of Default](#page_42) | [36](#page_42) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 5.02](#page_43) | [Acceleration of Maturity; Rescission and Annulment](#page_43) | [37](#page_43) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 5.03](#page_44) | [Collection of Debt and Suits for Enforcement by Trustees](#page_44) | [38](#page_44) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 5.04](#page_44) | [Trustees May File Proofs of Claim](#page_44) | [38](#page_44) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 5.05](#page_45) | [Trustees May Enforce Claims Without Possession of Securities](#page_45) | [39](#page_45) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 5.06](#page_45) | [Application of Money Collected](#page_45) | [39](#page_45) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 5.07](#page_46) | [Limitation on Suits](#page_46) | [40](#page_46) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 5.08](#page_46) | [Unconditional Right of Holders to Receive Principal, Premium and Interest](#page_46) | [40](#page_46) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 5.09](#page_47) | [Restoration of Rights and Remedies](#page_47) | [41](#page_47) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 5.10](#page_47) | [Rights and Remedies Cumulative](#page_47) | [41](#page_47) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 5.11](#page_47) | [Delay or Omission Not Waiver](#page_47) | [41](#page_47) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 5.12](#page_47) | [Control by Holders](#page_47) | [41](#page_47) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 5.13](#page_47) | [Waiver of Past Defaults](#page_47) | [41](#page_47) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 5.14](#page_48) | [Waiver of Stay or Extension Laws](#page_48) | [42](#page_48) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 5.15](#page_48) | [Undertaking for Costs](#page_48) | [42](#page_48) |
| [**ARTICLE SIX THE TRUSTEES**](#page_48) | [**ARTICLE SIX THE TRUSTEES**](#page_48) | [42](#page_48) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 6.01](#page_48) | [Notice of Defaults](#page_48) | [42](#page_48) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 6.02](#page_49) | [Certain Duties and Responsibilities of Trustees](#page_49) | [43](#page_49) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 6.03](#page_50) | [Certain Rights of Trustees](#page_50) | [44](#page_50) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 6.04](#page_51) | [Trustees Not Responsible for Recitals or Issuance of Securities](#page_51) | [45](#page_51) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 6.05](#page_51) | [May Hold Securities](#page_51) | [45](#page_51) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 6.06](#page_51) | [Money Held in Trust](#page_51) | [45](#page_51) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 6.07](#page_51) | [Compensation and Reimbursement](#page_51) | [45](#page_51) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 6.08](#page_52) | [Corporate Trustees Required; Eligibility](#page_52) | [46](#page_52) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 6.09](#page_53) | [Resignation and Removal; Appointment of Successor](#page_53) | [47](#page_53) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 6.10](#page_54) | [Acceptance of Appointment by Successor](#page_54) | [48](#page_54) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 6.11](#page_55) | [Merger, Conversion, Consolidation or Succession to Business](#page_55) | [49](#page_55) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 6.12](#page_56) | [Appointment of Authenticating Agent](#page_56) | [50](#page_56) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 6.13](#page_57) | [Joint Trustees](#page_57) | [51](#page_57) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 6.14](#page_58) | [Other Rights of Trustees](#page_58) | [52](#page_58) |
| [**ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY**](#page_59) | [**ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY**](#page_59) | [53](#page_59) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 7.01](#page_59) | [Company to Furnish Trustees Names and Addresses of Holders](#page_59) | [53](#page_59) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 7.02](#page_59) | [Preservation of List of Names and Addresses of Holders](#page_59) | [53](#page_59) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 7.03](#page_59) | [Disclosure of Names and Addresses of Holders](#page_59) | [53](#page_59) |

---

ii

------

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 7.04](#page_60) | [Reports by Trustees](#page_60) | [54](#page_60) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 7.05](#page_60) | [Reports by the Company](#page_60) | [54](#page_60) |
| [**ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE**](#page_61) | [**ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE**](#page_61) | [55](#page_61) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 8.01](#page_61) | [Company May Consolidate, Etc., Only on Certain Terms](#page_61) | [55](#page_61) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 8.02](#page_61) | [Successor Person Substituted](#page_61) | [55](#page_61) |
| [**ARTICLE NINE SUPPLEMENTAL INDENTURES**](#page_62) | [**ARTICLE NINE SUPPLEMENTAL INDENTURES**](#page_62) | [56](#page_62) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 9.01](#page_62) | [Supplemental Indentures Without Consent of Holders](#page_62) | [56](#page_62) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 9.02](#page_63) | [Supplemental Indentures with Consent of Holders](#page_63) | [57](#page_63) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 9.03](#page_64) | [Execution of Supplemental Indentures](#page_64) | [58](#page_64) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 9.04](#page_64) | [Effect of Supplemental Indentures](#page_64) | [58](#page_64) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 9.05](#page_64) | [Conformity with Trust Indenture Legislation](#page_64) | [58](#page_64) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 9.06](#page_64) | [Reference in Securities to Supplemental Indentures](#page_64) | [58](#page_64) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 9.07](#page_65) | [Notice of Supplemental Indentures](#page_65) | [59](#page_65) |
| [**ARTICLE TEN COVENANTS**](#page_65) | [**ARTICLE TEN COVENANTS**](#page_65) | [59](#page_65) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 10.01](#page_65) | [Payment of Principal, Premium and Interest](#page_65) | [59](#page_65) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 10.02](#page_65) | [Maintenance of Office or Agency](#page_65) | [59](#page_65) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 10.03](#page_66) | [Money for Securities Payments to Be Held in Trust](#page_66) | [60](#page_66) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 10.04](#page_67) | [Statement as to Compliance](#page_67) | [61](#page_67) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 10.05](#page_67) | [Waiver of Certain Covenants](#page_67) | [61](#page_67) |
| [**ARTICLE ELEVEN REDEMPTION OF SECURITIES**](#page_67) | [**ARTICLE ELEVEN REDEMPTION OF SECURITIES**](#page_67) | [61](#page_67) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 11.01](#page_67) | [Applicability of Article](#page_67) | [61](#page_67) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 11.02](#page_67) | [Election to Redeem; Notice to Trustees](#page_67) | [61](#page_67) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 11.03](#page_68) | [Selection by Trustees of Securities to Be Redeemed](#page_68) | [62](#page_68) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 11.04](#page_68) | [Notice of Redemption](#page_68) | [62](#page_68) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 11.05](#page_69) | [Deposit of Redemption Price](#page_69) | [63](#page_69) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 11.06](#page_69) | [Securities Payable on Redemption Date](#page_69) | [63](#page_69) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 11.07](#page_69) | [Securities Redeemed in Part](#page_69) | [63](#page_69) |
| [**ARTICLE TWELVE SINKING FUNDS**](#page_70) | [**ARTICLE TWELVE SINKING FUNDS**](#page_70) | [64](#page_70) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 12.01](#page_70) | [Applicability of Article](#page_70) | [64](#page_70) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 12.02](#page_70) | [Satisfaction of Sinking Fund Payments with Securities](#page_70) | [64](#page_70) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 12.03](#page_70) | [Redemption of Securities for Sinking Fund](#page_70) | [64](#page_70) |
| [**ARTICLE THIRTEEN REPAYMENT AT OPTION OF HOLDERS**](#page_71) | [**ARTICLE THIRTEEN REPAYMENT AT OPTION OF HOLDERS**](#page_71) | [65](#page_71) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 13.01](#page_71) | [Applicability of Article](#page_71) | [65](#page_71) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 13.02](#page_71) | [Repayment of Securities](#page_71) | [65](#page_71) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 13.03](#page_72) | [Exercise of Option](#page_72) | [66](#page_72) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 13.04](#page_72) | [When Securities Presented for Repayment Become Due and Payable](#page_72) | [66](#page_72) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 13.05](#page_72) | [Securities Repaid in Part](#page_72) | [66](#page_72) |

---

iii

------

---

| | | |
|:---|:---|:---|
| [**ARTICLE FOURTEEN DEFEASANCE AND COVENANT DEFEASANCE**](#page_73) | [**ARTICLE FOURTEEN DEFEASANCE AND COVENANT DEFEASANCE**](#page_73) | [67](#page_73) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 14.01](#page_73) | [Company's Option to Effect Defeasance or Covenant Defeasance](#page_73) | [67](#page_73) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 14.02](#page_73) | [Defeasance and Discharge](#page_73) | [67](#page_73) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 14.03](#page_73) | [Covenant Defeasance](#page_73) | [67](#page_73) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 14.04](#page_74) | [Conditions to Defeasance or Covenant Defeasance](#page_74) | [68](#page_74) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 14.05](#page_75) | [Deposited Money and Government Obligations to Be Held in Trust; Other Miscellaneous Provisions](#page_75) | [69](#page_75) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[SECTION 14.06](#page_76) | [Reinstatement](#page_76) | [70](#page_76) |

---

iv

------

CROSS-REFERENCE TABLE

---

| | | |
|:---|:---|:---|
| TIA | TIA | Indenture |
| <u>Section</u> | <u>Section</u> | <u>Section</u> |
| 310 | &nbsp;&nbsp;(a) | 6.08(1) |
|  | &nbsp;&nbsp;(b) | 6.09 |
|  | &nbsp;&nbsp;(c) | Not Applicable |
| 311 | &nbsp;&nbsp;(a) | 6.05 |
|  | &nbsp;&nbsp;(b) | 6.05 |
|  | &nbsp;&nbsp;(c) | Not Applicable |
| 312 | &nbsp;&nbsp;(a) | 7.05 |
|  | &nbsp;&nbsp;(b) | 7.03 |
|  | &nbsp;&nbsp;(c) | 7.03 |
| 313 | &nbsp;&nbsp;(a) | 7.04 |
|  | &nbsp;&nbsp;(b) | 7.04 |
|  | &nbsp;&nbsp;(c) | 7.04 |
|  | &nbsp;&nbsp;(d) | 7.05 |
| 314 | &nbsp;&nbsp;(a) | 7.05 |
|  | &nbsp;&nbsp;(a)(4) | 10.04 |
|  | &nbsp;&nbsp;(b) | Not Applicable |
|  | &nbsp;&nbsp;(c)(1) | 1.03 |
|  | &nbsp;&nbsp;(c)(2) | 1.03 |
|  | &nbsp;&nbsp;(d) | Not Applicable |
|  | &nbsp;&nbsp;(e) | 1.03 |
|  | &nbsp;&nbsp;(f) | Not Applicable |
| 315 | &nbsp;&nbsp;(a) | 6.02 |
|  | &nbsp;&nbsp;(b) | 6.01 |
|  | &nbsp;&nbsp;(c) | 6.02 |
|  | &nbsp;&nbsp;(d) | 6.02 |
|  | &nbsp;&nbsp;(e) | 5.15 |
| 316 | &nbsp;&nbsp;(a)(last sentence) | 1.01 ("Outstanding") |
|  | &nbsp;&nbsp;(a)(1)(A) | 5.12 |
|  | &nbsp;&nbsp;(a)(1)(B) | 5.02, 5.13 |
|  | &nbsp;&nbsp;(a)(2) | Not Applicable |
|  | &nbsp;&nbsp;(b) | 5.08 |
|  | &nbsp;&nbsp;(c) | 1.04(e) |
| 317 | &nbsp;&nbsp;(a)(1) | 5.03 |
|  | &nbsp;&nbsp;(a)(2) | 5.04 |
|  | &nbsp;&nbsp;(b) | 10.03 |
| 318 | &nbsp;&nbsp;(a) | 1.16 |

---

Note: This Cross-Reference Table shall not, for any purpose, be deemed to be part of this Indenture.

------

This INDENTURE, dated as of ____________________, is entered into by and among BTQ Technologies Corp., a corporation duly incorporated under the laws of the Province of British Columbia, Canada (herein called the "**Company**"), having its principal office at 700 West Georgia Street, Suite 2500, Vancouver, British Columbia, V7Y 1B3, and ______________________, a ______________________, organized under the laws of ______________________, as U.S. trustee (herein called the "**U.S. Trustee**"), and______________________, a ______________________, organized under the laws of ______________________, as Canadian trustee (the "**Canadian Trustee**" and, together with the U.S. Trustee, the "**Trustees**").

**RECITALS**

The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its debentures, notes, bonds or other evidences of indebtedness (herein called the "**Securities**"), which may be convertible into or exchangeable for any securities of any Person (including the Company), to be issued in one or more series as in this Indenture provided.

This Indenture is subject to the provisions of Trust Indenture Legislation that are required to be part of this Indenture and shall, to the extent applicable, be governed by such provisions.

All things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities or of series thereof, as follows:

**ARTICLE ONE**<br>**DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION**

**SECTION 1.01 Definitions**.

"**Act**," when used with respect to any Holder, has the meaning specified in Section 1.04.

"**Affiliate**" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.

"**Authenticating Agent**" means any Person authorized by the applicable Trustee pursuant to Section 6.12 to act on behalf of such Trustee to authenticate Securities.

"**Base Currency**" has the meaning specified in Section 1.14.

"**Board of Directors**" means the board of directors of the Company or any duly authorized committee thereof.

------

"**Board Resolution**" means a copy of a resolution certified by the Corporate Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustees.

"**Business Day**," when used with respect to any Place of Payment or any other particular location referred to in this Indenture or in the Securities, means, unless otherwise specified with respect to any Securities pursuant to Section 3.01, any day other than Saturday, Sunday or any other day on which commercial banking institutions in that Place of Payment or other location are permitted or required by any applicable law, regulation or executive order to close.

"**calculation period**" has the meaning specified in Section 3.11.

"**Canadian Trustee**" means the Person named as the "Canadian Trustee" in the first paragraph of this Indenture until a successor Canadian Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Canadian Trustee" shall mean or include each Person who is then a Canadian Trustee hereunder; *provided, however*, that if at any time there is more than one such Person, "Canadian Trustee" as used with respect to the Securities of any series shall mean only the Canadian Trustee with respect to Securities of that series.

"**Commission**" means the U.S. Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time.

"**Company**" means the Person named as the "Company" in the first paragraph of this Indenture until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person.

"**Company Request**" or "**Company Order**" means a written request or order signed in the name of the Company by an Officer and delivered to the Trustees.

"**Component Currency**" has the meaning specified in Section 3.12(h).

"**Conversion Date**" has the meaning specified in Section 3.12(d).

"**Conversion Event**" means the cessation of use of (i) a Foreign Currency (other than the Euro or other Currency unit) both by the government of the country which issued such Currency and by a central bank or other public institution of or within the international banking community for the settlement of transactions, (ii) the Euro or (iii) any Currency unit (or composite currency) other than the Euro for the purposes for which it was established.

"**Corporate Trust Office**" means the principal corporate trust office of the U.S. Trustee or the Canadian Trustee, as applicable, at which at any particular time its corporate trust business may be administered, such an office on the date of execution of this Indenture of the U.S. Trustee is located at _________________________, Attention: _______________________, and of the Canadian Trustee is located at ______________________, Attention: ____________________________, except that with respect to presentation of Securities for payment or for registration of transfer or exchange, such term shall mean the office or agency of the U.S. Trustee or the Canadian Trustee, as applicable, designated in writing to the Company at which, at any particular time, its corporate agency business shall be conducted.

"**covenant defeasance**" has the meaning specified in Section 14.03.

------

"**Currency**" means any currency or currencies, composite currency or currency unit or currency units, including, without limitation, the Euro, issued by the government of one or more countries or by any recognized confederation or association of such governments.

"**Default**" means any event which is, or after notice or passage of time or both would be, an Event of Default.

"**Defaulted Interest**" has the meaning specified in Section 3.07.

"**defeasance**" has the meaning specified in Section 14.02.

"**Depositary**" means, with respect to the Securities of any series issuable or issued in global form, the Person designated as Depositary by the Company pursuant to Section 3.05 until a successor Depositary shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Depositary" shall mean or include each Person who is then a Depositary hereunder, and, if at any time there is more than one such Person, "Depositary" as used with respect to the Securities of any such series shall mean the Depositary with respect to the Securities of that series.

"**Dollar**" or "**$**" means a dollar or other equivalent unit in such coin or currency of the United States of America as at the time shall be legal tender for the payment of public and private debts.

"**Dollar Equivalent of the Currency Unit**" has the meaning specified in Section 3.12(g).

"**Dollar Equivalent of the Foreign Currency**" has the meaning specified in Section 3.12(f).

"**Election Date**" has the meaning specified in Section 3.12(h).

"**Euro**" means the single currency of the participating member states from time to time of the European Union described in legislation of the European Counsel for the operation of a single unified European currency (whether known as the Euro or otherwise).

"**Event of Default**" has the meaning specified in Section 5.01.

"**Exchange Act**" means the United States Securities Exchange Act of 1934, as amended.

"**Exchange Date**" has the meaning specified in Section 3.04.

"**Exchange Rate Agent**" means, with respect to Securities of or within any series, unless otherwise specified with respect to any Securities pursuant to Section 3.01, a New York clearing house bank, designated pursuant to Section 3.01 or Section 3.13.

"**Exchange Rate Officer's Certificate**" means a tested telex or a certificate setting forth (i) the applicable Market Exchange Rate and (ii) the Dollar or Foreign Currency amounts of principal, premium (if any) and interest (if any) (on an aggregate basis and on the basis of a Security having the lowest denomination principal amount determined in accordance with Section 3.02 in the relevant Currency), payable with respect to a Security of any series on the basis of such Market Exchange Rate, sent (in the case of a telex) or signed (in the case of a certificate) by the Chief Executive Officer, President or Chief Financial Officer of the Company.

"**Extension Notice**" has the meaning specified in Section 3.08.

"**Extension Period**" has the meaning specified in Section 3.08.

------

"**Final Maturity**" has the meaning specified in Section 3.08.

"**First Currency**" has the meaning specified in Section 1.15.

"**Foreign Currency**" means any Currency other than Currency of the United States.

"**Government Obligations**" means, unless otherwise specified with respect to any series of Securities pursuant to Section 3.01, securities which are (i) direct obligations of the government which issued the Currency in which the Securities of a particular series are payable or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the government which issued the Currency in which the Securities of such series are payable, the payment of which is unconditionally guaranteed by such government, which, in either case, are full faith and credit obligations of such government payable in such Currency and are not callable or redeemable at the option of the issuer thereof and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such Government Obligation or a specific payment of interest on or principal of any such Government Obligation held by such custodian for the account of the holder of a depository receipt; *provided* that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the Government Obligation or the specific payment of interest or principal of the Government Obligation evidenced by such depository receipt.

"**Holder**" means the Person in whose name a Security is registered in the Security Register.

"**Indenture**" means this instrument as originally executed and as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, and shall include the terms of particular series of Securities established as contemplated by Section 3.01; *provided, however,* that, if at any time more than one Person is acting as Trustee under this instrument, "Indenture" shall mean, with respect to any one or more series of Securities for which such Person is Trustee, this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and shall include the terms of the particular series of Securities for which such Person is Trustee established as contemplated by Section 3.01, exclusive, however, of any provisions or terms which relate solely to other series of Securities for which such Person is not Trustee, regardless of when such terms or provisions were adopted, and exclusive of any provisions or terms adopted by means of one or more indentures supplemental hereto executed and delivered after such Person had become such Trustee but to which such Person, as such Trustee, was not a party.

"**Indexed Security**" means a Security the terms of which provide that the principal amount thereof payable at Stated Maturity may be more or less than the principal face amount thereof at original issuance.

"**interest**," when used with respect to an Original Issue Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity at the rate prescribed in such Original Issue Discount Security.

"**Interest Payment Date**," when used with respect to any Security, means the Stated Maturity of an installment of interest on such Security.

"**Judgment Currency**" has the meaning specified in Section 1.14.

"**Lien**" means any mortgage, pledge, hypothecation, charge, assignment, deposit arrangement, encumbrance, security interest, lien (statutory or other), or preference, priority or other security or similar agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any agreement to give or grant a Lien or any lease, conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing).

------

"**mandatory sinking fund payment**" has the meaning specified in Section 12.01.

"**Market Exchange Rate**" means, unless otherwise specified with respect to any Securities pursuant to Section 3.01, (i) for any conversion involving a Currency unit on the one hand and Dollars or any Foreign Currency on the other, the exchange rate between the relevant Currency unit and Dollars or such Foreign Currency calculated by the method specified pursuant to Section 3.01 for the Securities of the relevant series, (ii) for any conversion of Dollars into any Foreign Currency, the noon (New York City time) buying rate for such Foreign Currency for cable transfers quoted in New York City as certified for customs purposes by the Federal Reserve Bank of New York and (iii) for any conversion of one Foreign Currency into Dollars or another Foreign Currency, the spot rate at noon local time in the relevant market at which, in accordance with normal banking procedures, the Dollars or Foreign Currency into which conversion is being made could be purchased with the Foreign Currency from which conversion is being made from major banks located in New York City, Vancouver, London or any other principal market for Dollars or such purchased Foreign Currency, in each case determined by the Exchange Rate Agent. Unless otherwise specified with respect to any Securities pursuant to Section 3.01, in the event of the unavailability of any of the exchange rates provided for in the foregoing clauses (i), (ii) and (iii), the Exchange Rate Agent shall use, in its sole discretion and without liability on its part, such quotation of the Federal Reserve Bank of New York as of the most recent available date, or quotations from one or more major banks in New York City, Vancouver, London or another principal market for the Currency in question, or such other quotations as the Exchange Rate Agent shall deem appropriate. Unless otherwise specified by the Exchange Rate Agent, if there is more than one market for dealing in any Currency by reason of foreign exchange regulations or otherwise, the market to be used in respect of such Currency shall be that upon which a non-resident issuer of securities designated in such Currency would purchase such Currency in order to make payments in respect of such securities.

"**Maturity**," when used with respect to any Security, means the date on which the principal of such Security or an installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, notice of redemption, notice of option to elect repayment or otherwise.

"**Notice of Default**" has the meaning specified in Section 5.01.

"**Officer**" means the Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer or any Executive Vice President, or, in the event that the Company is a partnership or a limited liability company that has no such officers, a person duly authorized under applicable law by the general partner, managers, members or a similar body to act on behalf of the Company.

"**Officer's Certificate**" means a certificate, which shall comply with this Indenture, signed by an Officer and delivered to the Trustees.

"**Opinion of Counsel**" means a written opinion of counsel, who may be counsel for the Company, including an employee of the Company, which opinion may contain customary exceptions and qualifications as to the matters set forth therein.

"**Optional Reset Date**" has the meaning specified in Section 3.07.

"**optional sinking fund payment**" has the meaning specified in Section 12.01.

------

"**Original Issue Discount Security**" means any Security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.02.

"**Original Stated Maturity**" has the meaning specified in Section 3.08.

"**Outstanding**," when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Securities theretofore cancelled by either Trustee or delivered to either Trustee for cancellation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Securities, or portions thereof, for whose payment or redemption or repayment at the option of the Holder, money in the necessary amount has been theretofore deposited with either Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; *provided* that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustees has been made;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Securities, except to the extent provided in Section 14.02 and Section 14.03, with respect to which the Company has effected defeasance and/or covenant defeasance as provided in Article Fourteen; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Securities which have been paid pursuant to Section 3.06 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustees proof satisfactory to them that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company;

*provided, however*, that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, and for the purpose of making the calculations required by TIA Section 313, (i) the principal amount of an Original Issue Discount Security that may be counted in making such determination or calculation and that shall be deemed to be Outstanding for such purpose shall be equal to the amount of principal thereof that would be (or shall have been declared to be) due and payable, at the time of such determination, upon a declaration of acceleration of the maturity thereof pursuant to Section 5.02, (ii) the principal amount of any Security denominated in a Foreign Currency that may be counted in making such determination or calculation and that shall be deemed Outstanding for such purpose shall be equal to the Dollar equivalent, determined as of the date such Security is originally issued by the Company as set forth in an Exchange Rate Officer's Certificate delivered to the Trustees, of the principal amount (or, in the case of an Original Issue Discount Security, the Dollar equivalent as of such date of original issuance of the amount determined as provided in clause (i) above) of such Security, (iii) the principal amount of any Indexed Security that may be counted in making such determination or calculation and that shall be deemed outstanding for such purpose shall be equal to the principal face amount of such Indexed Security at original issuance, unless otherwise provided with respect to such Security pursuant to Section 3.01, and (iv) Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustees shall be protected in making such calculation or in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Trustees know to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustees the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor.

------

"**Paying Agent**" means any Person (including the Company acting as Paying Agent) authorized by the Company to pay the principal of, premium (if any) or interest (if any) on any Securities on behalf of the Company. Such Person must be capable of making payment in the Currency of the issued Security.

"**Person**" means any individual, corporation, body corporate, partnership, limited partnership, limited liability partnership, joint venture, limited liability company, unlimited liability company, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

"**Place of Payment**" means, when used with respect to the Securities of or within any series, each place where the principal of, premium (if any) and interest (if any) on such Securities are payable as specified as contemplated by Sections 3.01 and 10.02.

"**Predecessor Security**" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 3.06 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.

"**Privacy Laws**" has the meaning specified in Section 6.14.

"**rate(s) of exchange**" has the meaning specified in Section 1.14.

"**Redemption Date**," when used with respect to any Security to be redeemed, in whole or in part, means the date fixed for such redemption by or pursuant to this Indenture.

"**Redemption Price**," when used with respect to any Security to be redeemed, in whole or in part, means the price at which it is to be redeemed pursuant to this Indenture, plus accrued and unpaid interest thereon to the Redemption Date.

"**Regular Record Date**" for the interest payable on any Interest Payment Date on the Securities of or within any series means the date specified for that purpose as contemplated by Section 3.01.

"**Repayment Date**" means, when used with respect to any Security to be repaid at the option of the Holder, the date fixed for such repayment pursuant to this Indenture.

"**Reset Notice**" has the meaning specified in Section 3.07.

"**Responsible Officer**," when used with respect to a Trustee, means any vice president, secretary, any assistant secretary, treasurer, any assistant treasurer, any senior trust officer, any trust officer, the controller within the corporate trust administration division of a Trustee or any other officer of a Trustee customarily performing functions similar to those performed by any of the above-designated officers, and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject.

"**Securities**" has the meaning stated in the first recital of this Indenture and more particularly means any Securities authenticated and delivered under this Indenture; *provided, however,* that if at any time there is more than one Person acting as Trustee under this Indenture, "Securities" with respect to the Indenture as to which such Person is Trustee shall have the meaning stated in the first recital of this Indenture and shall more particularly mean Securities authenticated and delivered under this Indenture, exclusive, however, of Securities of any series as to which such Person is not Trustee.

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"**Security Register**" and "**Security Registrar**" have the respective meanings specified in Section 3.05.

"**Special Record Date**" for the payment of any Defaulted Interest on the Securities of or within any series means a date fixed by the Trustees pursuant to Section 3.07.

"**Specified Amount**" has the meaning specified in Section 3.12(h).

"**Stated Maturity**," when used with respect to any Security or any installment of principal thereof or interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such installment of principal or interest is due and payable, as such date may be extended pursuant to the provisions of Section 3.08 (if applicable).

"**Subsequent Interest Period**" has the meaning specified in Section 3.07.

"**Trust Indenture Act**" or "**TIA**" means the United States Trust Indenture Act of 1939, as amended, as in force at the date as of which this Indenture was executed, except as provided in Section 9.05.

"**Trust Indenture Legislation**" means, at any time, the provisions of (i) any applicable statute of Canada or any province or territory thereof and the regulations thereunder as amended or re-enacted from time to time, but only to the extent applicable, or (ii) the Trust Indenture Act and regulations thereunder, but only to the extent applicable, in each case relating to trust indentures and to the rights, duties and obligations of trustees under trust indentures and of corporations issuing debt obligations under trust indentures, to the extent that such provisions are at such time in force and applicable to this Indenture or the Company or the Trustees.

"**Trustee**" or "**Trustees**" means the U.S. Trustee and the Canadian Trustee. If a Canadian Trustee is not appointed under this Indenture, or resigns or is removed and, pursuant to Section 6.09, the Company is not required to appoint a successor Trustee to the Canadian Trustee, "Trustee," "Trustees" and any reference to "either Trustee," "both of the Trustees" or such similar references shall mean the Person named as the U.S. Trustee or any successor thereto appointed pursuant to the applicable provisions of this Indenture. Except to the extent otherwise indicated, "Trustees" shall refer to the Canadian Trustee (if appointed and still serving) and the U.S. Trustee, both jointly and individually.

"**U.S. Federal Bankruptcy Code**" means the Bankruptcy Act of Title 11 of the United States Code, as amended from time to time.

"**U.S. Trustee**" means the Person named as the "U.S. Trustee" in the first paragraph of this Indenture until a successor U.S. Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "U.S. Trustee" shall mean or include each Person who is then a U.S. Trustee hereunder; *provided, however,* that if at any time there is more than one such Person, "U.S. Trustee" as used with respect to the Securities of any series shall mean only the U.S. Trustee with respect to Securities of that series.

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"**United States**" means, unless otherwise specified with respect to any Securities pursuant to Section 3.01, the United States of America (including the states and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction.

"**United States person**" means, unless otherwise specified with respect to any Securities pursuant to Section 3.01, an individual who is a citizen or resident of the United States, a corporation, partnership (including any entity treated as a corporation or as a partnership for United States federal income tax purposes) or other entity created or organized in or under the laws of the United States, any state thereof or the District of Columbia, an estate the income of which is subject to United States federal income taxation regardless of its source, or a trust if (A) it is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of the trust or (B) it has a valid election in effect under applicable United States Treasury Regulations to be treated as a United States person.

"**Valuation Date**" has the meaning specified in Section 3.12(c).

"**Writing**" has the meaning specified in Section 6.13.

"**Yield to Maturity**" means the yield to maturity, computed at the time of issuance of a Security (or, if applicable, at the most recent redetermination of interest on such Security) and as set forth in such Security in accordance with generally accepted United States bond yield computation principles.

**SECTION 1.02 Rules of Construction**.

For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the terms defined in this Indenture have the meanings assigned to them herein and include the plural as well as the singular;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) all terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein, and the terms "cash transaction" and "self-liquidating paper," as used in TIA Section 319, shall have the meanings assigned to them in the rules of the Commission adopted under the Trust Indenture Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) "or" is not exclusive;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) words implying any gender shall apply to all genders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) the words Subsection, Section and Article refer to the Subsections, Sections and Articles, respectively, of this Indenture unless otherwise noted; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) "include," "includes" or "including" means include, includes or including, in each case, without limitation.

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**SECTION 1.03 Compliance Certificates and Opinions**.

Upon any application or request by the Company to the Trustees to take any action under any provision of this Indenture, the Company shall furnish to the Trustees an Officer's Certificate stating that all conditions precedent, if any, provided for in this Indenture (including any covenant compliance with which constitutes a condition precedent) relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished.

Every certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture (other than pursuant to Section 10.04) shall include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) a statement as to whether, in the opinion of each such individual, such covenant or condition has been complied with.

**SECTION 1.04 Form of Documents Delivered to Trustees**.

In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons may certify or give an opinion with respect to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon an Opinion of Counsel, a certificate of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.

Any certificate or opinion of an officer of the Company or counsel may be based, insofar as it relates to accounting matters, upon a certificate or opinion of, or representations by, an accountant or firm of accountants in the employ of the Company, unless such officer or counsel, as the case may be, knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the accounting matters upon which such certificate or opinion may be based are erroneous. Any certificate or opinion of any independent firm of public accountants filed with the Trustees shall contain a statement that such firm is independent.

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Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

**SECTION 1.05 Acts of Holders**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders of the Outstanding Securities of all series or one or more series, as the case may be, may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agents duly appointed in writing. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments or record or both are delivered to the Trustees and, where it is hereby expressly required, to the Company. Such instrument or instruments and any such record (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "**Act**" of the Holders signing such instrument or instruments or so voting at any such meeting. Proof of execution of any such instrument or of a writing appointing any such agent, or of the holding by any Person of a Security, shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustees and the Company, if made in the manner provided in this Section 1.05. The Trustees may make reasonable rules for action by or at a meeting of Holders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustees deem sufficient.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The ownership of the Securities, including the principal amount and the date of holding the same, shall be proved by the Security Register.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) If the Company shall solicit from the Holders of Securities any request, demand, authorization, direction, notice, consent, waiver or other Act, the Company may, at its option, by or pursuant to a Board Resolution, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but the Company shall have no obligation to do so. Notwithstanding Trust Indenture Legislation, including TIA Section 316(c), such record date shall be the record date specified in or pursuant to such Board Resolution, which shall be a date not earlier than the date 30 days prior to the first solicitation of Holders generally in connection therewith and not later than the date such solicitation is completed. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of record at the close of business on such record date shall be deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of Outstanding Securities have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the Outstanding Securities shall be computed as of such record date; *provided* that no such authorization, agreement or consent by the Holders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than eleven months after the record date.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustees or the Company in reliance thereon, whether or not notation of such action is made upon such Security.

**SECTION 1.06 Notices**.

Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other documents provided or permitted by this Indenture to be made upon, given or furnished to, or filed with:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the U.S. Trustee, by the Canadian Trustee, any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the U.S. Trustee at its Corporate Trust Office, Attention: ________________, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the Canadian Trustee, by the U.S. Trustee, any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Canadian Trustee at its Corporate Trust Office, Attention: ________________, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) the Company by either Trustee or any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, or sent by overnight courier, to the Company at 700 West Georgia Street, Suite 2500, Vancouver, British Columbia, V7Y 1B3, Attention: Chief Financial Officer or such other address and/or officer as the Company may designate on written notice to the Trustees.

**SECTION 1.07 Notice to Holders; Waiver**.

Where this Indenture provides for notice of any event to Holders of Securities by the Company or the Trustees, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each such Holder affected by such event, at his address as it appears in the Security Register. In any case where notice to Holders of Securities is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders of Securities. Any notice mailed to a Holder in the manner herein prescribed shall be conclusively deemed to have been received by such Holder, whether or not such Holder actually receives such notice.

In case, by reason of the suspension of or irregularities in regular mail service or by reason of any other cause, it shall be impractical to mail notice of any event to Holders of Securities when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustees shall be deemed to be sufficient giving of such notice for every purpose hereunder.

Any request, demand, authorization, direction, notice, consent or waiver required or permitted under this Indenture shall be in the English language, except that any published notice may be in an official language of the country of publication.

Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustees, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.

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**SECTION 1.08 Effect of Headings and Table of Contents**.

The Article and Section headings herein and the **Table of Contents** are for convenience only and shall not affect the construction hereof.

**SECTION 1.09 Successors and Assigns**.

All covenants and agreements in this Indenture by the Company and the Trustees shall bind their successors and assigns, whether so expressed or not.

**SECTION 1.10 Severability Clause**.

In case any provision in this Indenture or in any Security shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

**SECTION 1.11 Benefits of Indenture**.

Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto, any Authenticating Agent, any Paying Agent, any Securities Registrar and their successors hereunder and the Holders of Securities, any benefit or any legal or equitable right, remedy or claim under this Indenture. Subject to Section 1.16, at all times in relation to this Indenture and any action to be taken hereunder, the Company and the Trustees each shall observe and comply with Trust Indenture Legislation and the Company, the Trustees and each Holder of a Security shall be entitled to the benefits of Trust Indenture Legislation.

**SECTION 1.12 Governing Law**.

This Indenture and the Securities shall be governed by and construed in accordance with the law of the State of New York, but without giving effect to applicable principles of conflicts of law to the extent that the application of the law of another jurisdiction would be required thereby. Notwithstanding the preceding sentence, the exercise, performance or discharge by the Canadian Trustee of any of its rights, powers, duties or responsibilities hereunder shall be construed in accordance with the laws of the Province of British Columbia and the federal laws of Canada applicable thereto. This Indenture is subject to the provisions of Trust Indenture Legislation that are required to be part of this Indenture and shall, to the extent applicable, be governed by such provisions. Each Trustee and the Company agrees to comply with all provisions of Trust Indenture Legislation applicable to or binding upon it in connection with this Indenture and any action to be taken hereunder.

**SECTION 1.13 Legal Holidays**.

In any case where any Interest Payment Date, Redemption Date, sinking fund payment date or Stated Maturity or Maturity of any Security shall not be a Business Day at any Place of Payment or other location contemplated hereunder, then (notwithstanding any other provision of this Indenture or of any Security other than a provision in the Securities of any series which specifically states that such provision shall apply in lieu of this Section 1.13), payment of principal, premium (if any) or interest (if any), need not be made at such Place of Payment or other location contemplated hereunder on such date, but may be made on the next succeeding Business Day at such Place of Payment or other location contemplated hereunder with the same force and effect as if made on the Interest Payment Date or Redemption Date or sinking fund payment date, or at the Stated Maturity or Maturity; *provided* that no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date, sinking fund payment date, Stated Maturity or Maturity, as the case may be.

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**SECTION 1.14 Agent for Service; Submission to Jurisdiction; Waiver of Immunities**.

By the execution and delivery of this Indenture, the Company (i) acknowledges that it has irrevocably designated and appointed _____________________ as its authorized agent upon which process may be served in any suit, action or proceeding arising out of or relating to the Securities or this Indenture that may be instituted in any United States federal or New York state court located in The Borough of Manhattan, The City of New York, or brought by the Trustees (whether in their individual capacity or in their capacity as Trustees hereunder), (ii) irrevocably submits to the non-exclusive jurisdiction of any such court in any such suit or proceeding, and (iii) agrees that service of process upon _____________________ and written notice of said service to the Company (mailed or delivered to the Company at 700 West Georgia Street, Suite 2500, Vancouver, British Columbia, V7Y 1B3, Attention: Chief Financial Officer or such other address and/or officer as the Company may designate on written notice to the Trustees), shall be deemed in every respect effective service of process upon the Company in any such suit or proceeding. The Company further agrees to take any and all action, including the execution and filing of any and all such documents and instruments, as may be necessary to continue such designation and appointment of _____________________ in full force and effect so long as this Indenture shall be in full force and effect.

To the extent that the Company has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, the Company hereby irrevocably waives such immunity in respect of its obligations under this Indenture and the Securities, to the extent permitted by law.

The Company irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of venue of any such action, suit or proceeding in any such court or any appellate court with respect thereto. The Company irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of any such action, suit or proceeding in any such court.

**SECTION 1.15 Conversion of Judgment Currency**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company covenants and agrees that the following provisions shall apply to conversion of Currency in the case of the Securities and this Indenture, to the fullest extent permitted by applicable law:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) If for the purposes of obtaining judgment in, or enforcing the judgment of, any court in any country, it becomes necessary to convert into a Currency (the "**Judgment Currency**") an amount due or contingently due in any other Currency under the Securities of any series and this Indenture (the "**Base Currency**"), then the conversion shall be made at the rate of exchange prevailing on the Business Day before the day on which the final judgment is given or the order of enforcement is made, as the case may be (unless a court shall otherwise determine).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) If there is a change in the rate of exchange prevailing between the Business Day before the day on which the judgment referred to in (i) above is given or an order of enforcement is made, as the case may be (or such other date as a court shall determine), and the date of receipt of the amount due, the Company shall pay such additional (or, as the case may be, such lesser) amount, if any, as may be necessary so that the amount paid in the Judgment Currency when converted at the rate of exchange prevailing on the date of receipt will produce the amount in the Base Currency originally due.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In the event of the winding-up of the Company at any time while any amount or damages owing under the Securities and this Indenture, or any judgment or order rendered in respect thereof, shall remain outstanding, the Company shall indemnify and hold the Holders and the Trustees harmless against any deficiency arising or resulting from any variation in rates of exchange between (1) the date as of which the equivalent of the amount in the Base Currency due or contingently due under the Securities and this Indenture (other than under this Subsection (b)) is calculated for the purposes of such winding-up and (2) the final date for the filing of proofs of claim in such winding-up. For the purpose of this Subsection (b) the final date for the filing of proofs of claim in the winding-up of the Company shall be the date fixed by the liquidator or otherwise in accordance with the relevant provisions of applicable law as being the latest practicable date as at which liabilities of the Company may be ascertained for such winding-up prior to payment by the liquidator or otherwise in respect thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The obligations contained in Subsections (a)(ii) and (b) of this Section 1.15 shall constitute separate and independent obligations of the Company from its other obligations under the Securities and this Indenture, shall give rise to separate and independent causes of action against the Company, shall apply irrespective of any waiver or extension granted by any Holder or the Trustees from time to time and shall continue in full force and effect notwithstanding any judgment or order or the filing of any proof of claim in the winding up of the Company for a liquidated sum in respect of amounts due hereunder (other than under Subsection (b) above) or under any such judgment or order. Any such deficiency as aforesaid shall be deemed to constitute a loss suffered by the Holders or the Trustees, as the case may be, and no proof or evidence of any actual loss shall be required by the Company or its liquidator. In the case of Subsection (b) above, the amount of such deficiency shall not be deemed to be increased or reduced by any variation in rates of exchange occurring between the said final date and the date of any liquidating distribution.

The term "**rate(s) of exchange**" shall mean the rate of exchange quoted by a Canadian chartered bank as may be designated in writing by the Company to the Trustees from time to time, at its central foreign exchange desk in its main office in Vancouver at 12:00 noon (Vancouver time) on the relevant date for purchases of the Base Currency with the Judgment Currency and includes any premiums and costs of exchange payable. The Trustees shall have no duty or liability with respect to monitoring or enforcing this Section 1.15.

**SECTION 1.16 Currency Equivalent**.

Except as otherwise provided in this Indenture, for purposes of the construction of the terms of this Indenture or of the Securities, in the event that any amount is stated herein in the Currency of one nation (the "**First Currency**"), as of any date such amount shall also be deemed to represent the amount in the Currency of any other relevant nation which is required to purchase such amount in the First Currency at the Bank of Canada daily average exchange rate as reported by Telerate on screen 3194 (or such other means of reporting the Bank of Canada daily average exchange rate as may be agreed upon by each of the parties to this Indenture) on the date of determination.

**SECTION 1.17 Conflict with Trust Indenture Legislation**.

If and to the extent that any provision of this Indenture limits, qualifies or conflicts with any mandatory requirement of Trust Indenture Legislation, such mandatory requirement shall control. If and to the extent that any provision hereof modifies or excludes any provision of Trust Indenture Legislation that may be so modified or excluded, the latter provision shall be deemed to apply hereof as so modified or to be excluded, as the case may be.

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**SECTION 1.18 Incorporators, Shareholders, Officers and Directors of the Company Exempt from Individual Liability**.

No recourse under or upon any obligation, covenant or agreement contained in this Indenture, or in any Security, or because of any indebtedness evidenced thereby, shall be had against any incorporator, as such, or against any past, present or future shareholder, officer or director, as such, of the Company or of any successor, either directly or through the Company or any successor, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance of the Securities by the Holders and as part of the consideration for the issue of the Securities.

**SECTION 1.19 Waiver of Jury Trial**.

Each of the Company and the Trustees hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Indenture, the Securities or the transactions contemplated hereby.

**SECTION 1.20 Counterparts**.

This Indenture may be executed in any number of counterparts (either by facsimile or by original manual signature), each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Indenture.

**SECTION 1.21 Force Majeure**.

Except for the payment obligations of the Company contained herein, neither the Company nor the Trustees shall be liable to each other, or held in breach of this Indenture, if prevented, hindered, or delayed in the performance or observance of any provision contained herein by reason of act of God, riots, terrorism, acts of war, epidemics, governmental action or judicial order, earthquakes, or any other similar causes (including, but not limited to, mechanical, electronic or communication interruptions, disruptions or failures). Performance times under this Indenture shall be extended for a period of time equivalent to the time lost because of any delay that is excusable under this Section 1.21.

**ARTICLE TWO**<br>**SECURITIES FORMS**

**SECTION 2.01 Forms Generally**.

The Securities of each series shall be in substantially the forms as shall be established by or pursuant to a Board Resolution or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the Officer executing such Securities, as evidenced by the execution of such Securities by such Officer. If the forms of Securities of any series are established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Corporate Secretary or an Assistant Secretary of the Company and delivered to the Trustees at or prior to the delivery of the Company Order contemplated by Section 3.03 for the authentication and delivery of such Securities. Any portion of the text of any Security may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Security.

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Either Trustee's certificate of authentication shall be in substantially the form set forth in this Article Two.

**SECTION 2.02 Form of Trustee's Certificate of Authentication**.

Subject to Section 6.12, either Trustee's certificate of authentication shall be in substantially the following form:

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

(Certificate of Authentication may be executed by either Trustee)

Dated: ____________

_______________________, as U.S. Trustee, certifies that this is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

_____________________________,<br>as U.S. Trustee

By: ________________________________<br> Authorized Officer

OR

Dated: ____________

____________________, as Canadian Trustee, certifies that this is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

______________________,<br>as Canadian Trustee

By: ________________________________<br> Authorized Officer

**SECTION 2.03 Securities Issuable in Global Form**.

If Securities of or within a series are issuable in global form, as specified and contemplated by Section 3.01, then any such Security shall represent such of the Outstanding Securities of such series as shall be specified therein and may provide that it shall represent the aggregate amount of Outstanding Securities of such series from time to time endorsed thereon and that the aggregate amount of Outstanding Securities of such series represented thereby may from time to time be increased or decreased to reflect exchanges. Any endorsement of a Security in global form to reflect the amount, or any increase or decrease in the amount, of Outstanding Securities represented thereby shall be made by the Trustees in such manner and upon instructions given by the Holder or its nominee as shall be specified therein or in the Company Order to be delivered to the Trustees pursuant to Section 3.03 or Section 3.04. Subject to the provisions of Section 3.03 and Section 3.04 (if applicable), the Trustees shall deliver and redeliver any Security in global form in the manner and upon instructions given by the Holder or its nominee as shall be specified therein or in the applicable Company Order. If a Company Order pursuant to Section 3.03 or Section 3.04 has been, or simultaneously is, delivered, any instructions by the Company with respect to endorsement or delivery or redelivery of a Security in global form shall be in writing but need not comply with Section 1.03 and need not be accompanied by an Opinion of Counsel.

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Notwithstanding the provisions of Section 3.07, unless otherwise specified as contemplated by Section 3.01, payment of principal of, premium (if any) and interest (if any) on any Security in permanent global form shall be made to the Holder or its nominee specified therein.

Notwithstanding Section 3.09 and except as provided in the preceding paragraph, the Company, the Trustees and any agent of the Company and the Trustees shall treat as the Holder of such principal amount of Outstanding Securities represented by a permanent global Security, the Holder of such permanent global Security.

**ARTICLE THREE**<br>**THE SECURITIES**

**SECTION 3.01 Issuable in Series**.

The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited.

The Securities may be issued in one or more series and may be denominated and payable in Dollars or any Foreign Currency. The principal amount of any series of Securities may be increased and issued under this Indenture. There shall be established in one or more Board Resolutions or pursuant to authority granted by one or more Board Resolutions and set forth in, or determined in the manner provided in, an Officer's Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series, any or all of the following, as applicable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the title of the Securities of the series (which shall distinguish the Securities of such series from the Securities of all other series);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the aggregate principal amount of the Securities of the series and any limit upon the aggregate principal amount of the Securities of the series that may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer (including any restriction or condition on the transferability of the Securities of such series) of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 3.04, 3.05, 3.06, 9.06, 11.07 or 13.05) and, in the event that no limit upon the aggregate principal amount of the Securities of that series is specified, the Company shall have the right, subject to any terms, conditions or other provisions specified pursuant to this Section 3.01 with respect to the Securities of such series, to re-open such series for the issuance of additional Securities of such series from time to time;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) the extent and manner, if any, to which payment on or in respect of the Securities of the series will be senior or will be subordinated to the prior payment of other liabilities and obligations of the Company, and whether the payment of principal, premium (if any) and interest (if any) will be guaranteed by any other Person;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) the percentage or percentages of principal amount at which the Securities of the series will be issued;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) the date or dates, or the method by which such date or dates will be determined or extended, on which the Securities of the series may be issued and the date or dates, or the method by which such date or dates will be determined or extended, on which the principal of and premium (if any) on the Securities of the series is payable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) the rate or rates at which the Securities of the series shall bear interest, whether fixed or variable (if any), or the method by which such rate or rates shall be determined, whether such interest shall be payable in cash or additional Securities of the same series or shall accrue and increase the aggregate principal amount outstanding of such series, the date or dates from which such interest shall accrue, or the method by which such date or dates shall be determined, the Interest Payment Dates on which such interest shall be payable and the Regular Record Date, if any, for the interest payable on any Security on any Interest Payment Date, or the method by which such date or dates shall be determined, and the basis upon which interest shall be calculated;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) the place or places, if any, other than or in addition to the Borough of Manhattan, The City of New York, where the principal of, premium (if any) and interest (if any) on Securities of the series shall be payable, where any Securities of the series may be surrendered for registration of transfer, where Securities of the series may be surrendered for transfer or exchange, where Securities of the series that are convertible or exchangeable may be surrendered for conversion or exchange, as applicable and, if different than the location specified in Section 1.06, the place or places where notices or demands to or upon the Company in respect of the Securities of the series and this Indenture may be served;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) the period or periods within which, the date or dates on which, the price or prices at which, the Currency in which, and other terms and conditions upon which Securities of the series may be redeemed, in whole or in part, at the option of the Company, if the Company is to have that option;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) the obligation, if any, of the Company to redeem, repay or purchase Securities of the series pursuant to any sinking fund, amortization or analogous provisions or at the option of a Holder thereof, and the period or periods within which, the price or prices at which, the Currency in which, and other terms and conditions upon which Securities of the series shall be redeemed, repaid or purchased, in whole or in part, pursuant to such obligation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) the denomination or denominations in which any Securities of the series shall be issuable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(11) the identity of each Security Registrar and/or Paying Agent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(12) if other than the principal amount thereof, the portion of the principal amount of Securities of the series that shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 5.02 or the method by which such portion shall be determined;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(13) the Currency in which payment of the principal of, premium (if any) or interest (if any) on the Securities of the series shall be payable or in which the Securities of the series shall be denominated and the particular provisions applicable thereto in accordance with, in addition to or in lieu of any of the provisions of Section 3.12;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(14) whether the amount of payments of principal of, premium (if any) or interest (if any) on the Securities of the series may be determined with reference to an index, formula or other method (which index, formula or method may be based, without limitation, on one or more Currencies, commodities, equity indices or other indices), and the manner in which such amounts shall be determined;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(15) whether the principal of, premium (if any) or interest (if any) on the Securities of the series are to be payable, at the election of the Company or a Holder thereof, in a Currency other than that in which such Securities are denominated or stated to be payable, the period or periods within which (including the Election Date), and the terms and conditions upon which, such election may be made, and the time and manner of determining the exchange rate between the Currency in which such Securities are denominated or stated to be payable and the Currency in which such Securities are to be so payable, in each case in accordance with, in addition to or in lieu of any of the provisions of Section 3.12;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(16) the designation of the initial Exchange Rate Agent, if any;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(17) the applicability, if any, of Sections 14.02 and/or 14.03 to the Securities of the series and any provisions in modification of, in addition to or in lieu of any of the provisions of Article Fourteen that shall be applicable to the Securities of the series;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(18) provisions, if any, granting special rights to the Holders of Securities of the series upon the occurrence of such events as may be specified;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(19) any deletions from, modifications of or additions to the Events of Default or covenants (including any deletions from, modifications of or additions to Section 10.09) of the Company with respect to Securities of the series, whether or not such Events of Default or covenants are consistent with the Events of Default or covenants set forth herein;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(20) any restrictions applicable to the offer, sale or delivery of Securities of the series, whether any Securities of the series are to be issuable initially in temporary global form and whether any Securities of the series are to be issuable in permanent global form and, if so, whether beneficial owners of interests in any such permanent global Security may exchange such interests for Securities of such series and of like tenor of any authorized form and denomination and the circumstances under which any such exchanges may occur, if other than in the manner provided in Section 3.05, and the circumstances under which and the place or places where any such exchanges may be made and, if Securities of the series are to be issuable in global form, the designation of any Depositary therefor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(21) the date as of which any temporary global Security of the series shall be dated if other than the date of original issuance of the first Security of the series to be issued;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(22) the Person to whom any interest on any Security of the series shall be payable, if other than the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, and the extent to which, or the manner in which, any interest payable on a temporary global Security on an Interest Payment Date will be paid if other than in the manner provided in Section 3.04;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(23) if Securities of the series are to be issuable in definitive form (whether upon original issue or upon exchange of a temporary Security of such series) only upon receipt of certain certificates or other documents or satisfaction of other conditions, the form and/or terms of such certificates, documents or conditions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(24) if the Securities of the series are to be issued upon the exercise of warrants or subscription receipts, the time, manner and place for such Securities to be authenticated and delivered;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(25) if the Securities of the series are to be convertible into or exchangeable for any securities or property of any Person (including the Company), the terms and conditions upon which such Securities will be so convertible or exchangeable, and any additions or changes to permit or facilitate such conversion or exchange;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(26) provisions as to modification, amendment or variation of any rights or terms attaching to the Securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(27) whether the Securities will be secured or unsecured and the nature and priority of any security; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(28) any other terms, conditions, rights and preferences (or limitations on such rights and preferences) relating to the series (which terms shall not be inconsistent with the requirements of Trust Indenture Legislation or the provisions of this Indenture).

All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to such Board Resolution (subject to Section 3.03) and set forth in such Officer's Certificate or in any such indenture supplemental hereto. Not all Securities of any one series need be issued at the same time, and, unless otherwise provided, a series may be reopened for issuances of additional Securities of such series.

If any of the terms of the series are established by action taken pursuant to one or more Board Resolutions, such Board Resolutions shall be delivered to the Trustees at or prior to the delivery of the Officer's Certificate setting forth the terms of the series.

**SECTION 3.02 Denominations**.

The Securities of each series shall be issuable in such denominations as shall be specified as contemplated by Section 3.01. With respect to Securities of any series denominated in Dollars, in the absence of any such provisions, the Securities of such series, other than Securities issued in global form (which may be of any denomination), shall be issuable in denominations of $1,000 and any integral multiple thereof.

**SECTION 3.03 Execution, Authentication, Delivery and Dating**.

The Securities shall be executed on behalf of the Company by an Officer. The signature of an Officer on the Securities may be the manual or facsimile signatures of the present or any future such authorized officer and may be imprinted or otherwise reproduced on the Securities.

Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.

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At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series, executed by the Company to the applicable Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the applicable Trustee in accordance with such Company Order shall authenticate and deliver such Securities. If not all the Securities of any series are to be issued at one time and if the Board Resolution or supplemental indenture establishing such series shall so permit, such Company Order may set forth procedures acceptable to the Trustees for the issuance of such Securities and determining terms of particular Securities of such series such as interest rate, Stated Maturity, date of issuance and date from which interest shall accrue.

In authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustees shall be entitled to receive, and (subject to Trust Indenture Legislation, including TIA Sections 315(a) through 315(d)) shall be fully protected in relying upon, an Opinion of Counsel stating:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) that the form or forms of such Securities have been established in conformity with the provisions of this Indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) that the terms of such Securities have been established in conformity with the provisions of this Indenture;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) that such Securities, when completed by appropriate insertions and executed and delivered by the Company to the applicable Trustee for authentication in accordance with this Indenture, authenticated and delivered by the applicable Trustee in accordance with this Indenture and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute the legal, valid and binding obligations of the Company, enforceable in accordance with their terms;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the execution and delivery by the Company of such Securities and any supplemental indenture will not contravene the articles of incorporation or continuance, or such other constating documents then in effect, if any, or the by-laws of the Company, or violate applicable laws; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) that the Company has the corporate power to issue such Securities, and has duly taken all necessary corporate action with respect to such issuance.

Notwithstanding the provisions of Section 3.01 and of the preceding two paragraphs, if not all the Securities of any series are to be issued at one time, it shall not be necessary to deliver the Officer's Certificate otherwise required pursuant to Section 3.01 or the Company Order and Opinion of Counsel otherwise required pursuant to the preceding two paragraphs prior to or at the time of issuance of each Security, if such documents are delivered prior to or at the time of issuance of the first Security of such series and with respect to all Securities of such series.

The Trustees shall not be required to authenticate and deliver any such Securities if the issue of such Securities pursuant to this Indenture will affect the Trustees' own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustees.

Each Security shall be dated the date of its authentication.

No Security shall entitle a Holder to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein duly executed by the applicable Trustee by manual signature of an authorized officer thereof, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustees for cancellation as provided in Section 3.10 together with a written statement (which need not comply with Section 1.03 and need not be accompanied by an Opinion of Counsel) stating that such Security has never been issued and sold by the Company, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never entitle a Holder to the benefits of this Indenture.

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**SECTION 3.04 Temporary Securities**.

Pending the preparation of definitive Securities of any series, the Company may execute, and upon Company Order the applicable Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued, in registered form, and with such appropriate insertions, omissions, substitutions and other variations as the Officer executing such Securities may determine, as conclusively evidenced by their execution of such Securities. Such temporary Securities may be in global form.

Except in the case of temporary Securities in global form (which shall be exchanged in accordance with the provisions of the following paragraphs), if temporary Securities of any series are issued, the Company will cause definitive Securities of that series to be prepared without unreasonable delay. After the preparation of definitive Securities of such series, the temporary Securities of such series shall be exchangeable for definitive Securities of such series upon surrender of the temporary Securities of such series at the office or agency of the Company in a Place of Payment for that series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities of any series, the Company shall execute and the applicable Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Securities of the same series of authorized denominations and of like tenor and evidencing the same indebtedness. Until so exchanged the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series.

If temporary Securities of any series are issued in global form, any such temporary global Security shall, unless otherwise provided therein, be delivered to the office of the Depositary for credit to the respective accounts of the beneficial owners of such Securities (or to such other accounts as they may direct).

Without unnecessary delay, but in any event not later than the date specified in, or determined pursuant to the terms of, any such temporary global Security (the "**Exchange Date**"), the Company shall deliver to the Trustees definitive Securities, in aggregate principal amount equal to the principal amount of such temporary global Security and of like tenor and evidencing the same indebtedness, executed by the Company. On or after the Exchange Date, such temporary global Security shall be surrendered by the Depositary to the Trustees, as the Company's agent for such purpose, to be exchanged, in whole or from time to time in part, for definitive Securities without charge and the applicable Trustee shall authenticate and deliver, in exchange for each portion of such temporary global Security, an equal aggregate principal amount of definitive Securities of the same series of authorized denominations and of like tenor and evidencing the same indebtedness as the portion of such temporary global Security to be exchanged. The definitive Securities to be delivered in exchange for any such temporary global Security shall be in registered form or permanent global registered form, or any combination thereof, as specified as contemplated by Section 3.01, and, if any combination thereof is so specified, as requested by the beneficial owner thereof; *provided, however*, that, unless otherwise specified in such temporary global Security, upon such presentation by the Depositary, such temporary global Security is accompanied by a certificate dated the Exchange Date or a subsequent date and signed by the Depositary as to the portion of such temporary global Security held for its account then to be exchanged and a certificate dated the Exchange Date or a subsequent date, each in the form set forth in Exhibit A-2 to this Indenture (or in such other form as may be established pursuant to Section 3.01).

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Unless otherwise specified in such temporary global Security, the interest of a beneficial owner of Securities of a series in a temporary global Security shall be exchanged for definitive Securities of the same series and of like tenor and evidencing the same indebtedness following the Exchange Date when the account holder instructs the Depositary to request such exchange on his behalf and delivers to the Depositary a certificate in the form set forth in Exhibit A-1 to this Indenture (or in such other form as may be established pursuant to Section 3.01), dated no earlier than 15 days prior to the Exchange Date, copies of which certificate shall be available from the offices of the Depositary, the Trustees, any Authenticating Agent appointed for such series of Securities and each Paying Agent. Unless otherwise specified in such temporary global Security, any such exchange shall be made free of charge to the beneficial owners of such temporary global Security, except that a Person receiving definitive Securities must bear the cost of insurance, postage, transportation and the like in the event that such Person does not take delivery of such definitive Securities in person at the offices of the Depositary.

Until exchanged in full as hereinabove provided, the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of the same series and of like tenor and evidencing the same indebtedness authenticated and delivered hereunder, except that, unless otherwise specified as contemplated by Section 3.01, interest payable on a temporary global Security on an Interest Payment Date for Securities of such series occurring prior to the applicable Exchange Date shall be payable to the Depositary on such Interest Payment Date upon delivery by the Depositary to the Trustees of a certificate or certificates in the form set forth in Exhibit A-2 to this Indenture (or in such other form as may be established pursuant to Section 3.01), for credit without further interest thereon on or after such Interest Payment Date to the respective accounts of the Persons who are the beneficial owners of such temporary global Security on such Interest Payment Date and who have each delivered to the Depositary a certificate dated no earlier than 15 days prior to the Interest Payment Date occurring prior to such Exchange Date in the form set forth in Exhibit A-1 to this Indenture (or in such other form as may be established pursuant to Section 3.01). Notwithstanding anything to the contrary herein contained, the certifications made pursuant to this paragraph shall satisfy the certification requirements of the preceding two paragraphs of this Section 3.04 and of the third paragraph of Section 3.03 and the interests of the Persons who are the beneficial owners of the temporary global Security with respect to which such certification was made will be exchanged for definitive Securities of the same series and of like tenor and evidencing the same indebtedness on the Exchange Date or the date of certification if such date occurs after the Exchange Date, without further act or deed by such beneficial owners. Except as otherwise provided in this paragraph, no payments of principal of, premium (if any) or interest (if any) owing with respect to a beneficial interest in a temporary global Security will be made unless and until such interest in such temporary global Security shall have been exchanged for an interest in a definitive Security. Any interest so received by the Depositary and not paid as herein provided shall be returned to the Trustees immediately prior to the expiration of two years after such Interest Payment Date in order to be repaid to the Company in accordance with Section 10.03.

**SECTION 3.05 Registration, Registration of Transfer and Exchange**.

So long as required by Trust Indenture Legislation, the Company shall cause to be kept at the Corporate Trust Offices of the applicable Trustee a register for each series of Securities (the registers maintained in the Corporate Trust Offices of the Trustees and in any other office or agency of the Company in a Place of Payment being herein sometimes collectively referred to as the "**Security Register**") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of the Holders of Securities and of transfers of Securities. The Security Register shall be in written form or any other form capable of being converted into written form within a reasonable time. At all reasonable times, the Security Register shall be open to inspection by the Trustees. The Trustees are hereby initially appointed as security registrar (the "Security Registrar") for the purpose of registering Securities and transfers of Securities as herein provided. The Company shall have the right to remove and replace from time to time the Security Registrar for any series of Securities; provided, however, that, no such removal or replacement shall be effective until a successor Security Registrar with respect to such series of Securities shall have been appointed by the Company and shall have accepted such appointment by the Company. In the event that the Trustees shall not be or shall cease to be the Securities Registrar with respect to a series of Securities, they shall have the right to examine the Security Register for such series at all reasonable times. There shall be only one Securities Register for such series of Securities.

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Upon surrender for registration of transfer of any Security of any series at the office or agency in a Place of Payment for that series, the Company shall execute, and the applicable Trustee shall authenticate and deliver, in the name of the designated transferee, one or more new Securities of the same series, of any authorized denominations and of a like aggregate principal amount and tenor and evidencing the same indebtedness.

For Canadian Securities, the Security must be duly endorsed for transfer or in a duly endorsed transferable form as applicable and must comply with the current industry practice in accordance with the Securities Transfer Association of Canada.

At the option of the Holder, Securities of any series may be exchanged for other Securities of the same series, of any authorized denomination and of a like aggregate principal amount and tenor and evidencing the same indebtedness, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the applicable Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive.

Whenever any Securities are so surrendered for exchange, the Company shall execute, and the applicable Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive.

Notwithstanding the foregoing, except as otherwise specified as contemplated by Section 3.01, any permanent global Security shall be exchangeable only as provided in this Section. If any beneficial owner of an interest in a permanent global Security is entitled to exchange such interest for Securities of such series and of like tenor and principal amount of another authorized form and denomination, as contemplated by Section 3.01 and provided that any applicable notice provided in the permanent global Security shall have been given to the Company, the Trustees and the Depositary, then without unnecessary delay but in any event not later than the earliest date on which such interest may be so exchanged, the Company shall deliver to the applicable Trustee definitive Securities in aggregate principal amount equal to the principal amount of such beneficial owner's interest in such permanent global Security, executed by the Company. On or after the earliest date on which such interests may be so exchanged, such permanent global Security shall be surrendered by the Depositary or such other depositary as shall be specified in the Company Order with respect thereto to the applicable Trustee, as the Company's agent for such purpose, to be exchanged in whole or from time to time in part, for definitive Securities without charge, and the applicable Trustee shall authenticate and deliver, in exchange for each portion of such permanent global Security, an equal aggregate principal amount of definitive Securities of the same series of authorized denominations and of like tenor as the portion of such permanent global Security to be exchanged. If a Security is issued in exchange for any portion of a permanent global Security after the close of business at the office or agency where such exchange occurs on (i) any Regular Record Date and before the opening of business at such office or agency on the relevant Interest Payment Date, or (ii) any Special Record Date and before the opening of business at such office or agency on the related proposed date for payment of Defaulted Interest, interest or Defaulted Interest, as the case may be, will not be payable on such Interest Payment Date or proposed date for payment, as the case may be, in respect of such Security, but will be payable on such Interest Payment Date or proposed date for payment, as the case may be, only to the Person to whom interest in respect of such portion of such permanent global Security is payable in accordance with the provisions of this Indenture.

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Transfers of global Securities shall be limited to transfers in whole, but not in part, to the Depositary, its successors or their respective nominees. If at any time the Depositary for Securities of a series notifies the Company that it is unwilling, unable or no longer qualifies to continue as Depositary for Securities of such series or if at any time the Depositary for such series shall no longer be registered or in good standing under the Exchange Act, or other applicable statute or regulation, the Company shall appoint a successor Depositary for the Securities of such series. If a successor to the Depositary for Securities of such series is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such condition, as the case may be, the Company's election pursuant to Section 3.01 shall no longer be effective with respect to the Securities for such series and the Company will execute, and the applicable Trustee, upon receipt of a Company Order for the authentication and delivery of definitive Securities of such series, will authenticate and deliver Securities of such series in definitive form, in authorized denominations, and in an aggregate principal amount equal to the principal amount of the global Security or Securities representing such series and evidencing the same indebtedness in exchange for such global Security or Securities.

The Company may at any time and in its sole discretion determine that the Securities of any series issued in the form of one or more global Securities shall no longer be represented by such global Security or Securities. In such event the Company will execute, and the applicable Trustee, upon receipt of a Company Order for the authentication and delivery of definitive Securities of such series, will authenticate and deliver Securities of such series in definitive form, in authorized denominations, and in an aggregate principal amount equal to the principal amount of the global Security or Securities representing such series and evidencing the same indebtedness in exchange for such global Security or Securities.

Upon the exchange of a global Security for Securities in definitive form, such global Security shall be cancelled by the applicable Trustee. Securities issued in exchange for a global Security pursuant to this Section 3.05 shall be registered in such names and in such authorized denominations as the Depositary for such global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the applicable Trustee in writing. The applicable Trustee shall deliver such Securities to the Persons in whose names such Securities are so registered.

All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange.

Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Security Registrar or applicable securities transfer industry practices) be duly endorsed, or be accompanied by a written instrument of transfer, in form satisfactory to the Company and the Security Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing.

Any registration of transfer or exchange of Securities may be subject to service charges by the Securities Registrar and the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 3.04, 9.06, 11.07 or 13.05 not involving any transfer.

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The Company shall not be required (i) to issue, register the transfer of or exchange Securities of any series in definitive form during a period beginning at the opening of business 15 days before the day of the selection for redemption of Securities of that series under Section 11.03 or 12.03 and ending at the close of business on the day of the mailing of the relevant notice of redemption or (ii) to register the transfer of or exchange any Security in definitive form so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part, or (iii) to issue, register the transfer of or exchange any Security in definitive form which has been surrendered for repayment at the option of the Holder, except the portion, if any, of such Security not to be so repaid.

**SECTION 3.06 Mutilated, Destroyed, Lost and Stolen Securities**.

If any mutilated Security is surrendered to the applicable Trustee, the Company shall execute and the applicable Trustee shall authenticate and deliver in exchange therefor a new Security of the same series and of like tenor and principal amount and evidencing the same indebtedness and bearing a number not contemporaneously outstanding, or, in case any such mutilated Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. If there shall be delivered to the Company and to the Trustees (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security (or surety in the case of the Canadian Trustee) or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustees that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon Company Order the applicable Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of the same series and of like tenor and principal amount and evidencing the same indebtedness and bearing a number not contemporaneously outstanding.

Notwithstanding the provisions of the previous two paragraphs, in case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security appertaining to such mutilated, destroyed, lost or stolen Security, pay such Security.

Upon the issuance of any new Security under this Section 3.06, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustees) connected therewith.

Every new Security of any series issued pursuant to this Section 3.06 in lieu of any mutilated, destroyed, lost or stolen Security, shall constitute an original additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by anyone, and the Holders of such Security shall be entitled to all the benefits of this Indenture equally and proportionately with the Holders of any and all other Securities of that series duly issued hereunder.

The provisions of this Section 3.06 as amended or supplemented pursuant to this Indenture with respect to a particular series of Securities or generally are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.

**SECTION 3.07 Payment of Principal, Premium and Interest; Interest Rights Preserved; Optional Interest Reset**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Unless otherwise provided as contemplated by Section 3.01 with respect to any series of Securities, interest (if any) on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid by the Paying Agent to the Person in whose name such Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest at the office or agency of the Company maintained for such purpose pursuant to Section 10.02; *provided, however*, that each installment of interest (if any) on any Security may at the Company's option be paid by (i) mailing a check for such interest, payable to or upon the written order of the Person entitled thereto pursuant to Section 3.09, to the address of such Person as it appears on the Security Register, (ii) wire transfer to an account located in the United States maintained by the Person entitled to such payment as specified in the Security Register, or (iii) as otherwise specified pursuant to Section 3.01 for the Securities of such series. Unless otherwise provided as contemplated by Section 3.01 with respect to any series of Securities, principal and premium (if any) paid in relation to any Security shall be paid to the Holder of such Security only upon presentation and surrender of such Security at the office or agency of the Company maintained for such purpose pursuant to Section 10.02.

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Unless otherwise provided as contemplated by Section 3.01, every permanent global Security will provide that interest (if any) payable on any Interest Payment Date will be paid to the Depositary with respect to that portion of such permanent global Security held for its account by the Depositary, for the purpose of permitting the Depositary to credit the interest (if any) received by it in respect of such permanent global Security to the accounts of the beneficial owners thereof.

Any interest on any Security of any series which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such defaulted interest and, if applicable, interest on such defaulted interest (to the extent lawful) at the rate specified in the Securities of such series (such defaulted interest and, if applicable, interest thereon herein collectively called "**Defaulted Interest**") must be paid by the Company as provided for in either clause (1) or (2), at the Company's election:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustees in writing of the amount of Defaulted Interest proposed to be paid on each Security of such series and the date of the proposed payment, and at the same time the Company shall deposit with the applicable Trustee an amount of money in the Currency in which the Securities of such series are payable (except as otherwise specified pursuant to Section 3.01 for the Securities of such series and except, if applicable, as provided in Sections 3.12(b), 3.12(d) and 3.12(e)) equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustees for such deposit on or prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustees shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustees of the notice of the proposed payment. The Trustees shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be given in the manner provided in Section 1.07, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so given, such Defaulted Interest shall be paid to the Persons in whose name the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (2).

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The Company may make payment of any Defaulted Interest on the Securities of any series in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and, upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustees of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The provisions of this Section 307(b) may be made applicable to any series of Securities pursuant to Section 3.01 (with such modifications, additions or substitutions as may be specified pursuant to such Section 3.01). The interest rate (or the spread or spread multiplier used to calculate such interest rate, if applicable) on any Security of such series may be reset by the Company on the date or dates specified on the face of such Security (each an "**Optional Reset Date**"). The Company may exercise such option with respect to such Security by notifying the Trustees of such exercise at least 50 but not more than 60 days prior to an Optional Reset Date for such Security. Not later than 40 days prior to each Optional Reset Date, the Trustees shall transmit, in the manner provided for in Section 1.07, to the Holder of any such Security a notice (the "**Reset Notice**") indicating whether the Company has elected to reset the interest rate (or the spread or spread multiplier used to calculate such interest rate, if applicable), and if so (i) such new interest rate (or such new spread or spread multiplier, if applicable) and (ii) the provisions, if any, for redemption during the period from such Optional Reset Date to the next Optional Reset Date or if there is no such next Optional Reset Date, to the Stated Maturity of such Security (each such period a "**Subsequent Interest Period**"), including the date or dates on which or the period or periods during which and the price or prices at which such redemption may occur during the Subsequent Interest Period.

Notwithstanding the foregoing, not later than 20 days prior to the Optional Reset Date, the Company may, at its option, revoke the interest rate (or the spread or spread multiplier used to calculate such interest rate, if applicable) provided for in the Reset Notice and establish an interest rate (or the spread or spread multiplier, if applicable) that is higher than the interest rate (or the spread or spread multiplier, if applicable) provided for in the Reset Notice, for the Subsequent Interest Period by causing the Trustees to transmit, in the manner provided for in Section 1.07, notice of such higher interest rate (or such higher spread or spread multiplier, if applicable) to the Holder of such Security. Such notice shall be irrevocable. All Securities with respect to which the interest rate (or the spread or spread multiplier used to calculate such interest rate, if applicable) is reset on an Optional Reset Date, and with respect to which the Holders of such Securities have not tendered such Securities for repayment (or have validly revoked any such tender) pursuant to the next succeeding paragraph, will bear such higher interest rate (or such higher spread or spread multiplier, if applicable).

The Holder of any such Security will have the option to elect repayment by the Company of the principal of such Security on each Optional Reset Date at a price equal to the principal amount thereof plus interest accrued to such Optional Reset Date. In order to obtain repayment on an Optional Reset Date, the Holder must follow the procedures set forth in Article Thirteen for repayment at the option of Holders except that the period for delivery or notification to the Trustees shall be at least 25 but not more than 35 days prior to such Optional Reset Date and except that, if the Holder has tendered any Security for repayment pursuant to the Reset Notice, the Holder may, by written notice to the Trustees, revoke such tender or repayment until the close of business on the tenth day before such Optional Reset Date.

Subject to the foregoing provisions of this Section 3.07 and Section 3.05, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security.

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**SECTION 3.08 Optional Extension of Stated Maturity**.

The provisions of this Section 3.08 may be made applicable to any series of Securities pursuant to Section 3.01 (with such modifications, additions or substitutions as may be specified pursuant to such Section 3.01). The Stated Maturity of any Security of such series may be extended at the option of the Company for the period or periods specified on the face of such Security (each an "**Extension Period**") up to but not beyond the date (the "**Final Maturity**") set forth on the face of such Security. The Company may exercise such option with respect to any Security by notifying the Trustees of such exercise at least 50 but not more than 60 days prior to the Stated Maturity of such Security in effect prior to the exercise of such option (the "**Original Stated Maturity**"). If the Company exercises such option, the Trustees shall transmit, in the manner provided for in Section 1.07, to the Holder of such Security not later than 40 days prior to the Original Stated Maturity a notice (the "**Extension Notice**") indicating (i) the election of the Company to extend the Stated Maturity, (ii) the new Stated Maturity, (iii) the interest rate (if any) applicable to the Extension Period and (iv) the provisions, if any, for redemption during such Extension Period. Upon the Trustees' transmittal of the Extension Notice, the Stated Maturity of such Security shall be extended automatically and, except as modified by the Extension Notice and as described in the next paragraph, such Security will have the same terms as prior to the transmittal of such Extension Notice.

Notwithstanding the foregoing, not later than 20 days before the Original Stated Maturity of such Security, the Company may, at its option, revoke the interest rate provided for in the Extension Notice and establish a higher interest rate for the Extension Period by causing the Trustees to transmit, in the manner provided for in Section 1.07, notice of such higher interest rate to the Holder of such Security. Such notice shall be irrevocable. All Securities with respect to which the Stated Maturity is extended will bear such higher interest rate.

If the Company extends the Maturity of any Security, the Holder will have the option to elect repayment of such Security by the Company on the Original Stated Maturity at a price equal to the principal amount thereof, plus interest accrued to such date. In order to obtain repayment on the Original Stated Maturity once the Company has extended the Maturity thereof, the Holder must follow the procedures set forth in Article Thirteen for repayment at the option of Holders, except that the period for delivery or notification to the Trustees shall be at least 25 but not more than 35 days prior to the Original Stated Maturity and except that, if the Holder has tendered any Security for repayment pursuant to an Extension Notice, the Holder may by written notice to the Trustees revoke such tender for repayment until the close of business on the tenth day before the Original Stated Maturity.

**SECTION 3.09 Persons Deemed Owners**.

Prior to due presentment of a Security for registration of transfer, the Company, the Trustees and any agent of the Company or the Trustees may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of, premium (if any) and (subject to Sections 3.05 and 3.07) interest (if any) on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and none of the Company, the Trustees or any agent of the Company or the Trustees shall be affected by notice to the contrary.

The Depositary for Securities may be treated by the Company, the Trustees, and any agent of the Company or the Trustees as the owner of such global Security for all purposes whatsoever. None of the Company, the Trustees, any Paying Agent or the Security Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Security in global form or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.

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Notwithstanding the foregoing, with respect to any global Security, nothing herein shall prevent the Company, the Trustees, or any agent of the Company or the Trustees, from giving effect to any written certification, proxy or other authorization furnished by any Depositary, as a Holder, with respect to such global Security or impair, as between such Depositary and owners of beneficial interests in such global Security, the operation of customary practices governing the exercise of the rights of such Depositary (or its nominee) as Holder of such global Security.

**SECTION 3.10 Cancellation**.

All Securities surrendered for payment, redemption, repayment at the option of the Holder, registration of transfer or exchange or for credit against any current or future sinking fund payment shall, if surrendered to any Person other than a Trustee, be delivered to either Trustee. All Securities so delivered to either Trustee shall be promptly cancelled by such Trustee. The Company may at any time deliver to a Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and may deliver to either Trustee (or to any other Person for delivery to such Trustee) for cancellation any Securities previously authenticated hereunder which the Company has not issued and sold, and all Securities so delivered shall be promptly cancelled by such Trustee. If the Company shall so acquire any of the Securities, however, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities unless and until the same are surrendered to either Trustee for cancellation. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section 3.10, except as expressly permitted by this Indenture. All cancelled Securities held by either Trustee shall be disposed of by such Trustee in accordance with its customary procedures and certification of their disposal delivered to the Company unless by Company Order the Company shall direct that cancelled Securities be returned to it.

**SECTION 3.11 Computation of Interest**.

Except as otherwise specified as contemplated by Section 3.01 with respect to any Securities, interest (if any) on the Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months. For the purposes of disclosure under the Interest Act (Canada), the yearly rate of interest to which interest calculated under a Security for any period in any calendar year (the "**calculation period**") is equivalent, is the rate payable under a Security in respect of the calculation period multiplied by a fraction the numerator of which is the actual number of days in such calendar year and the denominator of which is the actual number of days in the calculation period.

**SECTION 3.12 Currency and Manner of Payments in Respect of Securities**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) With respect to Securities of any series not permitting the election provided for in paragraph (b) below or the Holders of which have not made the election provided for in paragraph (b) below, payment of the principal of, premium (if any) and interest (if any) on such Security of such series will be made in the Currency in which such Security is payable. The provisions of this Section 3.12 may be modified or superseded with respect to any Securities pursuant to Section 3.01.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) It may be provided pursuant to Section 3.01 with respect to Securities of any series that Holders shall have the option, subject to paragraphs (d) and (e) below, to receive payments of principal of, premium (if any) or interest (if any) on such Securities in any of the Currencies which may be designated for such election by delivering to the Trustees a written election with signature guarantees and in the applicable form established pursuant to Section 3.01, not later than the close of business on the Election Date immediately preceding the applicable payment date. If a Holder so elects to receive such payments in any such Currency, such election will remain in effect for such Holder or any transferee of such Holder until changed by such Holder or such transferee by written notice to the Trustees (but any such change must be made not later than the close of business on the Election Date immediately preceding the next payment date to be effective for the payment to be made on such payment date and no such change of election may be made with respect to payments to be made on any Security of such series with respect to which an Event of Default has occurred or with respect to which the Company has deposited funds pursuant to Article Four or Fourteen or with respect to which a notice of redemption has been given by the Company or a notice of option to elect repayment has been sent by such Holder or such transferee). Any Holder of any such Security who shall not have delivered any such election to the Trustees not later than the close of business on the applicable Election Date will be paid the amount due on the applicable payment date in the relevant Currency as provided in Section 3.12(a). The Trustees shall notify the Exchange Rate Agent as soon as practicable after the Election Date of the aggregate principal amount of Securities for which Holders have made such written election.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Unless otherwise specified pursuant to Section 3.01, if the election referred to in paragraph (b) above has been provided for pursuant to Section 3.01, then, unless otherwise specified pursuant to Section 3.01, not later than the fourth Business Day after the Election Date for each payment date for Securities of any series, the Exchange Rate Agent will deliver to the Company a written notice specifying, in the Currency in which Securities of such series are payable, the respective aggregate amounts of principal of, premium (if any) and interest (if any) on the Securities to be paid on such payment date, specifying the amounts in such Currency so payable in respect of the Securities as to which the Holders of Securities of such series shall have elected to be paid in another Currency as provided in paragraph (b) above. If the election referred to in paragraph (b) above has been provided for pursuant to Section 3.01 and if at least one Holder has made such election, then, unless otherwise specified pursuant to Section 3.01, on the second Business Day preceding such payment date the Company will deliver to the Trustees for such series of Securities an Exchange Rate Officer's Certificate in respect of the Dollar or Foreign Currency payments to be made on such payment date. Unless otherwise specified pursuant to Section 3.01, the Dollar or Foreign Currency amount receivable by Holders of Securities who have elected payment in a Currency as provided in paragraph (b) above shall be determined by the Company on the basis of the applicable Market Exchange Rate in effect on the third Business Day (the "**Valuation Date**") immediately preceding each payment date, and such determination shall be conclusive and binding for all purposes, absent manifest error.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) If a Conversion Event occurs with respect to a Foreign Currency in which any of the Securities are denominated or payable other than pursuant to an election provided for pursuant to paragraph (b) above, then, with respect to each date for the payment of principal of, premium (if any) and interest (if any) on the applicable Securities denominated or payable in such Foreign Currency occurring after the last date on which such Foreign Currency was used (the "**Conversion Date**"), the Dollar shall be the Currency of payment for use on each such payment date. Unless otherwise specified pursuant to Section 3.01, the Dollar amount to be paid by the Company to the Trustees and by the Trustees or any Paying Agent to the Holders of such Securities with respect to such payment date shall be, in the case of a Foreign Currency other than a Currency unit, the Dollar Equivalent of the Foreign Currency or, in the case of a Currency unit, the Dollar Equivalent of the Currency Unit, in each case as determined by the Exchange Rate Agent in the manner provided in paragraph (f) or (g) below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Unless otherwise specified pursuant to Section 3.01, if the Holder of a Security denominated in any Currency shall have elected to be paid in another Currency as provided in paragraph (b) above, and a Conversion Event occurs with respect to such elected Currency, such Holder shall receive payment in the Currency in which payment would have been made in the absence of such election; and if a Conversion Event occurs with respect to the Currency in which payment would have been made in the absence of such election, such Holder shall receive payment in Dollars as provided in paragraph (d) above.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The "**Dollar Equivalent of the Foreign Currency**" shall be determined by the Exchange Rate Agent and shall be obtained for each subsequent payment date by converting the specified Foreign Currency into Dollars at the Market Exchange Rate on the Conversion Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) The "**Dollar Equivalent of the Currency Unit**" shall be determined by the Exchange Rate Agent and subject to the provisions of paragraph (h) below shall be the sum of each amount obtained by converting the Specified Amount of each Component Currency into Dollars at the Market Exchange Rate for such Component Currency on the Valuation Date with respect to each payment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) For purposes of this Section 3.12 the following terms shall have the following meanings:

A "**Component Currency**" shall mean any Currency which, on the Conversion Date, was a component currency of the relevant Currency unit, including, but not limited to, the Euro.

A "**Specified Amount**" of a Component Currency shall mean the number of units of such Component Currency or fractions thereof which were represented in the relevant Currency unit, including, but not limited to, the Euro, on the Conversion Date. If after the Conversion Date the official unit of any Component Currency is altered by way of combination or subdivision, the Specified Amount of such Component Currency shall be divided or multiplied in the same proportion. If after the Conversion Date two or more Component Currencies are consolidated into a single currency, the respective Specified Amounts of such Component Currencies shall be replaced by an amount in such single Currency equal to the sum of the respective Specified Amounts of such consolidated Component Currencies expressed in such single Currency, and such amount shall thereafter be a Specified Amount and such single Currency shall thereafter be a Component Currency. If after the Conversion Date any Component Currency shall be divided into two or more currencies, the Specified Amount of such Component Currency shall be replaced by amounts of such two or more currencies, having an aggregate Dollar Equivalent value at the Market Exchange Rate on the date of such replacement equal to the Dollar Equivalent value of the Specified Amount of such former Component Currency at the Market Exchange Rate immediately before such division and such amounts shall thereafter be Specified Amounts and such currencies shall thereafter be Component Currencies. If, after the Conversion Date of the relevant Currency unit, including, but not limited to, the Euro, a Conversion Event (other than any event referred to above in this definition of "**Specified Amount**") occurs with respect to any Component Currency of such Currency unit and is continuing on the applicable Valuation Date, the Specified Amount of such Component Currency shall, for purposes of calculating the Dollar Equivalent of the Currency Unit, be converted into Dollars at the Market Exchange Rate in effect on the Conversion Date of such Component Currency.

"**Election Date**" shall mean the date for any series of Securities as specified pursuant to clause (15) of Section 3.01 by which the written election referred to in paragraph (b) above may be made.

All decisions and determinations of the Exchange Rate Agent regarding the Dollar Equivalent of the Foreign Currency, the Dollar Equivalent of the Currency Unit, the Market Exchange Rate and changes in the Specified Amounts as specified above shall be in its sole discretion and shall, in the absence of manifest error, be conclusive for all purposes and irrevocably binding upon the Company, the Trustees and all Holders of such Securities denominated or payable in the relevant Currency. The Exchange Rate Agent shall promptly give written notice to the Company and the Trustees of any such decision or determination.

In the event that the Company determines in good faith that a Conversion Event has occurred with respect to a Foreign Currency, the Company will immediately give written notice thereof to the Trustees and to the Exchange Rate Agent (and the Trustees will promptly thereafter give notice in the manner provided for in Section 1.07 to the affected Holders) specifying the Conversion Date. In the event the Company so determines that a Conversion Event has occurred with respect to the Euro or any other Currency unit in which Securities are denominated or payable, the Company will immediately give written notice thereof to the Trustees and to the Exchange Rate Agent (and the Trustees will promptly thereafter give notice in the manner provided for in Section 1.07 to the affected Holders) specifying the Conversion Date and the Specified Amount of each Component Currency on the Conversion Date. In the event the Company determines in good faith that any subsequent change in any Component Currency as set forth in the definition of Specified Amount above has occurred, the Company will similarly give written notice to the Trustees and the Exchange Rate Agent.

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The Trustees shall be fully justified and protected in relying and acting upon information received by it from the Company and the Exchange Rate Agent and shall not otherwise have any duty or obligation to determine the accuracy or validity of such information independent of the Company or the Exchange Rate Agent.

**SECTION 3.13 Appointment and Resignation of Successor Exchange Rate Agent**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Unless otherwise specified pursuant to Section 3.01, if and so long as the Securities of any series (i) are denominated in a Currency other than Dollars or (ii) may be payable in a Currency other than Dollars, or so long as it is required under any other provision of this Indenture, then the Company will maintain with respect to each such series of Securities, or as so required, at least one Exchange Rate Agent. The Company will cause the Exchange Rate Agent to make the necessary foreign exchange determinations at the time and in the manner specified pursuant to Section 3.01 for the purpose of determining the applicable rate of exchange and, if applicable, for the purpose of converting the issued Currency into the applicable payment Currency for the payment of principal, premium (if any) and interest (if any) pursuant to Section 3.12.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company shall have the right to remove and replace from time to time the Exchange Rate Agent for any series of Securities. No resignation of the Exchange Rate Agent and no appointment of a successor Exchange Rate Agent pursuant to this Section 3.13 shall become effective until the acceptance of appointment by the successor Exchange Rate Agent as evidenced by a written instrument delivered to the Company and the Trustees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If the Exchange Rate Agent shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of the Exchange Rate Agent for any cause with respect to the Securities of one or more series, the Company, by or pursuant to a Board Resolution, shall promptly appoint a successor Exchange Rate Agent or Exchange Rate Agents with respect to the Securities of that or those series (it being understood that any such successor Exchange Rate Agent may be appointed with respect to the Securities of one or more or all of such series and that, unless otherwise specified pursuant to Section 3.01, at any time there shall only be one Exchange Rate Agent with respect to the Securities of any particular series that are originally issued by the Company on the same date and that are initially denominated and/or payable in the same Currency).

**ARTICLE FOUR**<br>**SATISFACTION AND DISCHARGE**

**SECTION 4.01 Satisfaction and Discharge of Indenture**.

This Indenture shall upon Company Request cease to be of further effect with respect to any series of Securities specified in such Company Request (except as to any surviving rights of registration of transfer or exchange of Securities of such series expressly provided for herein or pursuant hereto and the rights of Holders of such series of Securities to receive, solely from the trust fund described in subclause (b) of clause (1) of this Section 4.01, payments in respect of the principal of, premium (if any) and interest (if any) on such Securities when such payments are due and except as provided in the last paragraph of this Section 4.01) and the Trustees, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture as to such series when

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) either

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) all Securities of such series theretofore authenticated and delivered (other than Securities of such series for whose payment money has theretofore been deposited in trust with either Trustee or any Paying Agent or segregated and held in trust by the Company and thereafter repaid to the Company, as provided in Section 10.03) have been delivered to either Trustee for cancellation; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) all Securities of such series not theretofore delivered to either Trustee for cancellation

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) have become due and payable, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) will become due and payable at their Stated Maturity within one year, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) if redeemable at the option of the Company, are to be called for redemption within one year under arrangements satisfactory to the Trustees for the giving of notice of redemption by the Trustees in the name, and at the expense, of the Company,

and the Company, in the case of (i), (ii) or (iii) above, has irrevocably deposited or caused to be deposited with either Trustee as trust funds in trust for such purpose an amount in the Currency in which the Securities of such series are payable, sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to such Trustee for cancellation, for principal, premium (if any) and interest (if any) to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) the Company has delivered to the Trustees an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture as to such series have been complied with.

Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustees under Section 6.07, the obligations of the Trustees to any Authenticating Agent under Section 6.12 and, if money shall have been deposited with the Trustees pursuant to subclause (b) of clause (1) of this Section 4.01, the obligations of the Trustees under Section 4.02, Section 6.07(3) and the last paragraph of Section 10.03 shall survive.

**SECTION 4.02 Application of Trust Money**.

Subject to the provisions of the last paragraph of Section 10.03, all money deposited with the Trustees pursuant to Section 4.01 shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustees may determine, to the Persons entitled thereto, of the principal, premium (if any) and interest (if any) for whose payment such money has been deposited with the Trustees; but such money need not be segregated from other funds except to the extent required by law.

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**ARTICLE FIVE**<br>**REMEDIES**

**SECTION 5.01 Events of Default**.

"**Event of Default**," wherever used herein with respect to Securities of any series, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body), unless such event is specifically deleted or modified in or pursuant to a supplemental indenture, Board Resolution or Officer's Certificate establishing the terms of such series pursuant to Section 3.01 of this Indenture:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) default in the payment of any interest due on any Security of that series, when such interest becomes due and payable, and continuance of such default for a period of 30 days; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) default in the payment of the principal or premium (if any) in respect of any Security of that series at its Maturity; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) default in the deposit of any sinking fund, amortization or analogous payment when due by the terms of any Security of that series and Article Twelve; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) default in the performance, or breach, of any covenant or agreement of the Company in this Indenture which affects or is applicable to the Securities of that series (other than a covenant or agreement, a default in whose performance or whose breach is elsewhere in this Section 5.01 specifically dealt with), and continuance of such default or breach for a period of 60 days after there has been given (and 120 days with respect to a default or breach under Section 7.05), by registered or certified mail, to the Company by the Trustees or to the Company and the Trustees by the Holders of at least 25% in principal amount of all Outstanding Securities of that series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) the entry of a decree or order by a court having jurisdiction in the premises adjudging the Company bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under or subject to the Bankruptcy and Insolvency Act (Canada), the Companies' Creditors Arrangement Act (Canada), the U.S. Federal Bankruptcy Code or any other federal, provincial, state or foreign bankruptcy, insolvency or analogous laws, or the issuance of a sequestration order or the (appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or in receipt of any substantial part of the property of the Company, and any such decree, order or appointment continues unstayed and in effect for a period of 90 consecutive days; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) the institution by the Company of proceedings to be adjudicated bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under or subject to the Bankruptcy and Insolvency Act (Canada), the Companies' Creditors Arrangement Act (Canada), the U.S. Federal Bankruptcy Code or any other federal, provincial, state or foreign bankruptcy, insolvency or analogous laws or the consent by it to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or of any substantial part of its property, or the making by it of a general assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due or the taking by it of corporate action in furtherance of any of the aforesaid purposes; or

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) any other Event of Default provided with respect to Securities of that series.

**SECTION 5.02 Acceleration of Maturity; Rescission and Annulment**.

If an Event of Default described in clause (1), (2), (3), (4) or (7) of Section 5.01 with respect to Securities of any series at the time Outstanding occurs and is continuing, then in every such case, either Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of that series, may declare the principal amount (or, if the Securities of that series are Original Issue Discount Securities or Indexed Securities, such portion of the principal amount as may be specified in the terms of that series) of all of the Securities of that series and all interest thereon to be due and payable immediately, by a notice in writing to the Company (and to the Trustees if given by Holders), and upon any such declaration such principal amount (or specified portion thereof) shall become immediately due and payable. If an Event of Default specified in clause (5) or (6) of Section 5.01 occurs and is continuing, then the principal amount of all the Securities shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustees or any Holder.

At any time after such a declaration of acceleration with respect to Securities of any series (or of all series, as the case may be) has been made and before a judgment or decree for payment of the money due has been obtained by either Trustee as hereinafter provided in this Article Five, the Holders of a majority in principal amount of the Outstanding Securities of that series (or of all series, as the case may be), by written notice to the Company and the Trustees, may rescind and annul such declaration and its consequences if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the Company has paid or deposited with either Trustee a sum sufficient to pay in the Currency in which the Securities of such series are payable (except as otherwise specified pursuant to Section 3.01 for the Securities of such series and except, if applicable, as provided in Sections 3.12(b), 3.12(d) and 3.12(e)),

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) all overdue interest (if any) on all Outstanding Securities of that series (or of all series, as the case may be),

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) all unpaid principal of and premium (if any) on any Outstanding Securities of that series (or of all series, as the case may be) which has become due otherwise than by such declaration of acceleration, and interest on such unpaid principal and premium (if any) at the rate or rates prescribed therefor in such Securities,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) to the extent that payment of such interest is legally enforceable, interest on overdue interest at the rate or rates prescribed therefor in such Securities, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) all sums paid or advanced by the Trustees hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustees, their agents and counsel; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) all Events of Default with respect to Securities of that series (or of all series, as the case may be), other than the non-payment of amounts of principal of, premium (if any) or interest (if any) on Securities of that series (or of all series, as the case may be) which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 5.13.

No such rescission shall affect any subsequent default or impair any right consequent thereon.

**SECTION 5.03 Collection of Debt and Suits for Enforcement by Trustees**.

The Company covenants that if

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) default is made in the payment of any installment of interest on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) default is made in the payment of the principal of or premium (if any) any Security at the Maturity thereof,

then the Company will, upon demand of the Trustees, pay to the applicable Trustee for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal of, premium (if any) and interest (if any) and interest on any overdue principal, overdue premium (if any) and, to the extent lawful, overdue interest (if any), at the rate or rates prescribed therefor in such Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustees, their agents and counsel.

If the Company fails to pay such amounts forthwith upon such demand, the Trustees, in their own names as trustees of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Securities, wherever situated.

If an Event of Default with respect to Securities of any series (or of all series, as the case may be) occurs and is continuing, either Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series (or of all series, as the case may be) by such appropriate judicial proceedings as such Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.

**SECTION 5.04 Trustees May File Proofs of Claim**.

In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, each Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether either Trustee shall have made any demand on the Company for the payment of overdue principal, premium (if any) or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise,

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) to file and prove a claim for the whole amount of principal and premium (if any), or such portion of the principal amount of any series of Original Issue Discount Securities or Indexed Securities as may be specified in the terms of such series, and interest (if any) owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of such Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of such Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to such Trustee and, in the event that such Trustee shall consent to the making of such payments directly to the Holders, to pay to such Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of each Trustee, its agents and counsel, and any other amounts due to such Trustee under Section 6.07.

Nothing herein contained shall be deemed to authorize the Trustees to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustees to vote in respect of the claim of any Holder in any such proceeding.

**SECTION 5.05 Trustees May Enforce Claims Without Possession of Securities**.

All rights of action and claims under this Indenture, the Securities may be prosecuted and enforced by the Trustees without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by either Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of such Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.

**SECTION 5.06 Application of Money Collected**.

Any money collected by either Trustee pursuant to this Article Five shall be applied in the following order, at the date or dates fixed by the Trustees and, in case of the distribution of such money on account of principal of, premium (if any) or interest (if any) upon presentation of the Securities, and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:

First: to the payment of all amounts due the Trustees under Section 6.07;

Second: to the payment of the amounts then due and unpaid for principal of, premium (if any) and interest (if any), on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal, premium (if any) and interest (if any), respectively; and

Third: the balance, if any, to the Person or Persons entitled thereto.

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**SECTION 5.07 Limitation on Suits**.

No Holder of any Security of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture or the Securities, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) such Holder has previously given written notice to the Trustees of a continuing Event of Default with respect to the Securities of that series;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the Holders of not less than 25% in principal amount of the Outstanding Securities of that series in the case of any Event of Default described in clause (1), (2), (3), (4) or (7) of Section 5.01, or, in the case of any Event of Default described in clause (5) or (6) of Section 5.01, the Holders of not less than 25% in principal amount of all Outstanding Securities, shall have made written request to the Trustees to institute proceedings in respect of such Event of Default in their own names as Trustees hereunder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) such Holder or Holders have offered to the Trustees reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) the Trustees for 60 days after their receipt of such notice, request and offer of indemnity have failed to institute any such proceeding; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) no direction inconsistent with such written request has been given to the Trustees during such 60-day period by the Holders of a majority or more in principal amount of the Outstanding Securities of that series in the case of any Event of Default described in clause (1), (2), (3), (4) or (7) of Section 5.01, or in the case of any Event of Default described in clause (5) or (6) of Section 5.01, by the Holders of a majority or more in principal amount of all Outstanding Securities;

it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Securities of the same series, in the case of any Event of Default described in clause (1), (2), (3), (4) or (7) of Section 5.01, or of Holders of all Securities in the case of any Event of Default described in clause (5) or (6) of Section 5.01, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all Holders of Securities of the same series, in the case of any Event of Default described in clause (1), (2), (3), (4) or (7) of Section 5.01, or of Holders of all Securities in the case of any Event of Default described in clause (5) or (6) of Section 5.01.

**SECTION 5.08 Unconditional Right of Holders to Receive Principal, Premium and Interest**.

Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment, as provided herein (including, if applicable, Article Fourteen) and in such Security, of the principal of and premium (if any) and (subject to Section 3.07) interest (if any) on, such Security on the respective Stated Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date or, in the case of repayment at the option of the Holder as contemplated by Article Twelve, on the Repayment Date) and subject to the limitations on a Holder's ability to institute suit contained Section 5.07, to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder.

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**SECTION 5.09 Restoration of Rights and Remedies**.

If either Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to such Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustees and the Holders of Securities shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustees and the Holders shall continue as though no such proceeding had been instituted.

**SECTION 5.10 Rights and Remedies Cumulative**.

Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 3.06, no right or remedy herein conferred upon or reserved to the Trustees or to the Holders of Securities is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not, to the extent permitted by law, prevent the concurrent assertion or employment of any other appropriate right or remedy.

**SECTION 5.11 Delay or Omission Not Waiver**.

No delay or omission of the Trustees or of any Holder of any Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article Five or by law to the Trustees or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustees or by the Holders, as the case may be.

**SECTION 5.12 Control by Holders**.

With respect to the Securities of any series, the Holders of not less than a majority in principal amount of the Outstanding Securities of such series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustees, or exercising any trust or power conferred on the Trustees, relating to or arising under clause (1), (2), (3), (4) or (7) of Section 5.01, and, with respect to all Securities, the Holders of not less than a majority in principal amount of all Outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustees, or exercising any trust or power conferred on the Trustees, not relating to or arising under clause (1), (2), (3), (4) or (7) of Section 5.01, *provided* that in each case

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) such direction shall not be in conflict with any rule of law or with this Indenture,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the Trustees may take any other action deemed proper by the Trustees which is not inconsistent with such direction, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) the Trustees need not take any action which might involve them in personal liability or be unjustly prejudicial to the Holders of Securities of such series not consenting.

**SECTION 5.13 Waiver of Past Defaults**.

Subject to Section 5.02, the Holders of not less than a majority in principal amount of the Outstanding Securities of any series may on behalf of the Holders of all the Securities of such series waive any past Default described in clause (1), (2), (3), (4) or (7) of Section 5.01 (or, in the case of a Default described in clause (5) or (6) of Section 5.01, the Holders of not less than a majority in principal amount of all Outstanding Securities may waive any such past Default), and its consequences, except a default

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) in respect of the payment of the principal of, premium (if any) or interest (if any) on any Security, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) in respect of a covenant or provision herein which under Article Nine cannot be modified or amended without the consent of the Holder of each outstanding Security of such series affected.

Upon any such waiver, any such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon.

**SECTION 5.14 Waiver of Stay or Extension Laws**.

The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustees, but will suffer and permit the execution of every such power as though no such law had been enacted.

**SECTION 5.15 Undertaking for Costs**.

In any suit for the enforcement of any right or remedy under this Indenture, or in any suit against either Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in Trust Indenture Legislation; *provided, however*, that neither this Section 5.15 nor the provisions of TIA Section 315(e) shall apply to any suit instituted by either Trustee or by any Holder or group of Holders holding more than 10% in principal amount of all Outstanding Securities or by any Holder of any Security on any suit for the enforcement of the right to receive the principal of and interest on any such Securities.

**ARTICLE SIX**<br>**THE TRUSTEES**

**SECTION 6.01 Notice of Defaults**.

Each Trustee shall promptly give the other Trustee notice of any Default or Event of Default known to it. Within a reasonable time, but no more than 30 days after either Trustee has knowledge of any Default hereunder with respect to the Securities of any series, one or both of the Trustees shall transmit in the manner and to the extent provided in Trust Indenture Legislation, including TIA Section 313(c), notice to the Holders of such Default hereunder known to either Trustee, unless such Default shall have been cured or waived (and, in the case where such Default shall have been cured, the Trustees shall notify the Holders in writing of such cure in writing within a reasonable time, but not exceeding 30 days, after the Trustees have become aware that the Default has been cured); *provided, however*, that, except in the case of a Default in the payment of the principal of, premium (if any) or interest (if any) on any Security of such series or in the payment of any sinking fund installment with respect to Securities of such series, the Trustees shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of each Trustee in good faith determine that the withholding of such notice is in the interest of the Holders of Securities of such series; *provided further* that in the case of any Default of the character specified in clause (4) of Section 5.01 with respect to Securities of such series, no such notice to Holders shall be given until at least 30 days after the occurrence thereof.

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**SECTION 6.02 Certain Duties and Responsibilities of Trustees**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Trustees, prior to the occurrence of an Event of Default and after the curing of all Events of Default that may have occurred, shall undertake to perform with respect to the Securities of any series such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants shall be read into this Indenture against the Trustees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In all instances, in the exercise of the powers, rights, duties and discharge of obligations prescribed or conferred by the terms of this Indenture, each Trustee shall act honestly and in good faith with a view to the best interests of the Holders and exercise that degree of care, diligence and skill that a reasonably prudent trustee in respect of indentures for the purpose of issuing corporate debt obligations would exercise in comparable circumstances.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) No provision of this Indenture shall be construed to relieve each Trustee from liability for its own actions or failure to act in accordance with Subsection 6.02(b), except that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) prior to the occurrence of an Event of Default and after the curing or waiving of all such Events of Default that may have occurred:

&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;(A) the duties and obligations of each Trustee with respect to the Securities of any series shall be determined solely by the express provisions of this Indenture, and the Trustees shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustees; and

&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;(B) in the absence of bad faith on the part of either Trustee, such Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustees and conforming to the requirements of this Indenture and Trust Indenture Legislation; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustees, the Trustees shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture; *provided, however*, the Canadian Trustee shall not be required to determine whether the certificates or opinions presented to it conform to the Trust Indenture Act and the U.S. Trustee shall not be required to determine whether the certificates or opinions presented to it conform to Canadian Trust Indenture Legislation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the Trustees shall not be liable with respect to any action taken or omitted to be taken by them in good faith in accordance with the direction of the Holders of not less than a majority in principal amount of the Securities of any series at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustees, or exercising any trust or power conferred upon the Trustees under this Indenture;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) none of the provisions contained in this Indenture shall require either Trustee to expend or risk their own funds or otherwise incur personal or any financial liability in the performance of any of their duties or in the exercise of any of their rights or powers; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) whether or not therein expressly so provided, except to the extent expressly provided herein to the contrary, every provision of this Indenture relating to the conduct or effecting the liability or affording protection to the Trustees shall be subject to the provisions of this Section 6.02.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Notwithstanding the provisions of this Section 6.02 or any provision in this Indenture or in the Securities, the Trustees will not be charged with knowledge of the existence of any Event of Default or any other fact that would prohibit the making of any payment of monies to or by the Trustees, or the taking of any other action by the Trustees, unless and until the Trustees have received written notice thereof from the Company or any Holder.

**SECTION 6.03 Certain Rights of Trustees**.

Subject to the provisions of TIA Sections 315(a) through 315(d):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the Trustees may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by them to be genuine and to have been signed or presented by the proper party or parties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) whenever in the administration of this Indenture the Trustees shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, each Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officer's Certificate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) the Trustees may consult with counsel and the written advice of such counsel or any opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by them hereunder in good faith and in reliance thereon;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) the Trustees shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders of Securities of any series pursuant to this Indenture, unless such Holders shall have offered to the Trustees reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by them in compliance with such request or direction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) the Trustees shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustees, in their discretion, may make such further inquiry or investigation into such facts or matters as they may see fit, and, if the Trustees shall determine to make such further inquiry or investigation, they shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) in an Event of Default, the Trustees' powers shall not be infringed upon so long as they act in accordance with Section 6.02(b);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) the Trustees may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustees shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by them hereunder; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) the Trustees shall not be liable for any action taken, suffered or omitted by them in good faith and believed by them to be authorized or within the discretion or rights or powers conferred upon them by this Indenture, so long as they act in accordance with this Section 6.02(b).

**SECTION 6.04 Trustees Not Responsible for Recitals or Issuance of Securities**.

The recitals contained herein and in the Securities, except for a Trustee's certificate of authentication, shall be taken as the statements of the Company, and neither Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustees make no representations as to the validity or sufficiency of this Indenture or of the Securities, except that the Trustees represent that they are duly authorized to execute and deliver this Indenture, authenticate the Securities and perform their obligations hereunder and that the statements made by the U.S. Trustee in a Statement of Eligibility on Form T-1 supplied to the Company are true and accurate, subject to the qualifications set forth therein. Neither Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of Securities or the proceeds thereof. Nothing herein contained will impose on either Trustee any obligation to see to, or to require evidence of, the registration or filing (or renewal thereof) of this Indenture or any supplemental indenture. The Trustees shall not be bound to give notice to any person of the execution hereof.

**SECTION 6.05 May Hold Securities**.

The Trustees, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Company or of the Trustees, in their individual or any other capacity, may become the owner or pledgee of Securities and, subject to TIA Sections 310(b) and 311, may otherwise deal with the Company, including, without limitation, as a creditor of the Company, with the same rights they would have if they were not Trustees, Authenticating Agent, Paying Agent, Security Registrar or such other agent. A Trustee that has resigned or is removed shall remain subject to TIA Section 311(a) to the extent provided therein.

**SECTION 6.06 Money Held in Trust**.

Money held by the Trustees in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustees shall be under no liability for interest on any money received by them hereunder except as otherwise agreed with the Company.

**SECTION 6.07 Compensation and Reimbursement**.

The Company agrees:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) to pay to the Trustees from time to time reasonable compensation for all services rendered by them hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) except as otherwise expressly provided herein, to reimburse the Trustees upon their request for all reasonable expenses, disbursements and advances incurred or made by the Trustees in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of their agents and counsel), except any such expense, disbursement or advance as may be attributable to the U.S. Trustee's gross negligence or bad faith or the Canadian Trustee's gross negligence or willful misconduct, respectively; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) to indemnify the Trustees for, and to hold them and their directors, officers, agents, representatives, successors, assigns and employees harmless against, any loss, liability or expense incurred without gross negligence or bad faith on the part of the U.S. Trustee, or gross negligence or willful misconduct on the part of the Canadian Trustee, respectively, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including reasonable attorneys' fees and other reasonable costs and expenses of defending themselves against any claim or liability in connection with the exercise or performance of any of their powers or duties hereunder.

The obligations of the Company under this Section 6.07 to compensate the Trustees, to pay or reimburse the Trustees for expenses, disbursements and advances and to indemnify and hold harmless the Trustees shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture and the resignation or removal of the Trustee. As security for the performance of such obligations of the Company, the Trustees shall have a claim prior to the Securities upon all property and funds held or collected by the Trustees as such, except funds held in trust for the payment of principal of, premium (if any) or interest (if any) on particular Securities.

When the Trustees incur expenses or render services in connection with an Event of Default specified in clause (5) or (6) of Section 5.01, the expenses (including reasonable charges and expense of its counsel) of and the compensation for such services are intended to constitute expenses of administration under any applicable United States or Canadian federal, state or provincial bankruptcy, insolvency or other similar law.

The provisions of this Section 6.07 shall survive the termination of this Indenture.

**SECTION 6.08 Corporate Trustees Required; Eligibility**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) There shall be at all times a U.S. Trustee hereunder which shall be eligible to act as Trustee under TIA Section 310(a)(1) and, together with its immediate parent, shall have a combined capital and surplus of at least $50,000,000. If the U.S. Trustee publishes reports of condition at least annually, pursuant to law or to the requirements of United States federal, state, territorial or District of Columbia supervising or examining authority, then for the purposes of this Section 6.08, the combined capital and surplus of U.S. Trustee shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the U.S. Trustee shall cease to be eligible in accordance with the provisions of this Section 6.08, it shall resign immediately in the manner and with the effect hereinafter specified in this Article Six.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) For so long as required by Trust Indenture Legislation, there shall be a Canadian Trustee under this Indenture. The Canadian Trustee shall at all times be a resident or authorized to do business in the Province of British Columbia and any other province in Canada where Holders may be resident from time to time. The Canadian Trustee represents and warrants that no material conflict of interest exists in the Canadian Trustee's role as a fiduciary hereunder and agrees that in the event of a material conflict of interest arising hereafter it will, within 30 days after ascertaining that it has such material conflict of interest, either eliminate the same or resign its trust hereunder. If any such material conflict of interests exists or hereafter shall exist, the validity and enforceability of this Indenture shall not be affected in any manner whatsoever by reason thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) The Trustees will not be required to give any bond or security in respect of the execution of the trusts and powers set out in this Indenture or otherwise in respect of the premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Neither Trustee nor any Affiliate of either Trustee shall be appointed a receiver or receiver and manager or liquidator of all or any part of the assets or undertaking of the Company.

**SECTION 6.09 Resignation and Removal; Appointment of Successor**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) No resignation or removal of either Trustee and no appointment of a successor Trustee pursuant to this Article Six shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 6.10.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Either Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by Section 6.10 shall not have been delivered to such Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Either Trustee may be removed following 30 days notice at any time with respect to the Securities of any series by Act of the Holders of not less than a majority in principal amount of the Outstanding Securities of such series, delivered to such Trustee and to the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) If at any time:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) either Trustee shall acquire any conflicting interest as defined in TIA Section 310(b) and fail to comply with the provisions of TIA Section 310(b)(i), or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) either Trustee shall fail to comply with the provisions of TIA Section 310(b) after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) either Trustee shall cease to be eligible under Section 6.08 and shall fail to resign after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) either Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of such Trustee or of its property shall be appointed or any public officer shall take charge or control of such Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,

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then, in any such case, (i) the Company, by a Board Resolution, may remove such Trustee with respect to all Securities, or (ii) subject to TIA Section 315(e), any Holder who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of such Trustee with respect to all Securities of such series and the appointment of a successor Trustee or Trustees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) If either Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of the U.S. Trustee or the Canadian Trustee for any cause, with respect to the Securities of one or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees with respect to the Securities of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series) *provided, however*, that the Company shall not be required to appoint a successor Trustee to the Canadian Trustee if the Canadian Trustee resigns or is removed and a Canadian Trustee under this Indenture is no longer required under Trust Indenture Legislation. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee with respect to the Securities of such series and to that extent supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Securities of any series shall have been so appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) The Company shall give notice of each resignation and each removal of a Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series to the Holders of Securities of such series in the manner provided for in Section 1.07. Each notice shall include the name of the successor Trustee with respect to the Securities of such series and the address of its Corporate Trust Office.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) If a Canadian Trustee under this Indenture is no longer required by Trust Indenture Legislation, then the Company by a Board Resolution may remove the Canadian Trustee.

**SECTION 6.10 Acceptance of Appointment by Successor**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) In case of the appointment hereunder of a successor Trustee with respect to all Securities, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates. Whenever there is a successor Trustee with respect to one or more (but less than all) series of Securities issued pursuant to this Indenture, the terms "Indenture" and "Securities" shall have the meanings specified in the provisos to the respective definitions of those terms in Section 1.01 which contemplate such situation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Upon reasonable request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all rights, powers and trusts referred to in paragraph (1) or (2) of this Section 6.10, as the case may be.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article Six.

**SECTION 6.11 Merger, Conversion, Consolidation or Succession to Business**.

Any corporation into which either Trustee or its corporate trust business may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which either Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of either Trustee, shall be the successor of such Trustee hereunder, *provided* such corporation shall be otherwise qualified and eligible under this Article Six, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by a Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities. In case any of the Securities shall not have been authenticated by such predecessor Trustee, any successor Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor Trustee. In all such cases such certificates shall have the full force and effect which this Indenture provides for the certificate of authentication of such Trustee; *provided, however*, that the right to adopt the certificate of authentication of any predecessor Trustee or to authenticate Securities in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation.

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**SECTION 6.12 Appointment of Authenticating Agent**.

At any time when any of the Securities remain outstanding, the Trustees may appoint an Authenticating Agent or Agents, with respect to one or more series of Securities which shall be authorized to act on behalf of the Trustees to authenticate Securities of such series and the Trustees shall give written notice of such appointment to all Holders of Securities of the series with respect to which such Authenticating Agent will serve, in the manner provided for in Section 1.07. Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the applicable Trustee hereunder. Any such appointment shall be evidenced by an instrument in writing signed by a Responsible Officer of the Trustees, and a copy of such instrument shall be promptly furnished to the Company. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustees or either Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustees by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustees by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, any state thereof or the District of Columbia or the laws of Canada or any province thereof, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by United States federal or state or Canadian federal or provincial authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section 6.12, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 6.12, it shall resign immediately in the manner and with the effect specified in this Section 6.12.

Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, *provided* such corporation shall be otherwise eligible under this Section 6.12, without the execution or filing of any paper or any further act on the part of the Trustees or the Authenticating Agent.

An Authenticating Agent may resign at any time by giving written notice thereof to the Trustees and to the Company. The Trustees may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 6.12, the Trustees may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall give written notice of such appointment to all Holders of Securities of the series with respect to which such Authenticating Agent will serve, in the manner provided for in Section 1.07. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section 6.12.

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The Trustees agree to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section 6.12, and the Trustees shall be entitled to be reimbursed for such payments, subject to the provisions of Section 6.07.

If an appointment with respect to one or more series is made pursuant to this Section 6.12, the Securities of such series may have endorsed thereon, in addition to either Trustee's certificate of authentication, an alternate certificate of authentication in the following form:

(Certificate of Authentication may be executed by either Trustee)

_____________________, as U.S. Trustee, certifies that this is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

Dated: ____________

_____________________________,<br>as U.S. Trustee

By: ________________________________<br> As Authenticating Agent

By: ________________________________<br> Authorized Officer

_____________________, as Canadian Trustee, certifies that this is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

Dated: ____________

_____________________________,<br>as Canadian Trustee

By: ________________________________<br> As Authenticating Agent

By: ________________________________<br> Authorized Officer

**SECTION 6.13 Joint Trustees**.

The rights, powers, duties and obligations conferred and imposed upon the Trustees are conferred and imposed upon and shall be exercised and performed by the U.S. Trustee and the Canadian Trustee individually, except to the extent the Trustees are required under Trust Indenture Legislation to perform such acts jointly, and neither Trustee shall be liable or responsible for the acts or omissions of the other Trustee. If the U.S. Trustee and Canadian Trustee are unable to agree jointly to act or refrain from acting, the applicable Trustee shall make the decision in accordance with its applicable legislation. Unless the context implies or requires otherwise, any written notice, request, direction, certificate, instruction, opinion or other document (each such document, a "**Writing**") delivered pursuant to any provision of this Indenture to any of the U.S. Trustee or the Canadian Trustee shall be deemed for all purposes of this Indenture as delivery of such Writing to the Trustee. Each such Trustee in receipt of such Writing shall notify such other Trustee of its receipt of such Writing within two Business Days of such receipt *provided, however*, that any failure of such trustee in receipt of such Writing to so notify such other Trustee shall not be deemed as a deficiency in the delivery of such Writing to the Trustee.

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**SECTION 6.14 Other Rights of Trustees**.

Each Trustee shall retain the right not to act and shall not be liable for refusing to act if, due to a lack of information or for any other reason whatsoever, either Trustee, in its sole judgment, determines that such act might cause it to be in non-compliance with any applicable anti-money laundering or anti-terrorist legislation, regulation or guideline. Further, should either Trustee, in its sole judgment, determine at any time that its acting under this Indenture has resulted in its being in non-compliance with any applicable anti-money laundering or anti-terrorist legislation, regulation or guideline, then it shall have the right to resign on 10 days written notice to all parties provided (i) that such Trustee's written notice shall describe the circumstances of such non-compliance; and (ii) that if such circumstances are rectified to such Trustee's satisfaction within such 10 day period, then such resignation shall not be effective.

The parties hereto acknowledge that Canadian federal and provincial legislation addressing the protection of individuals' personal information (collectively, "**Privacy Laws**") applies to obligations and activities under this Indenture. Despite any other provision of this Indenture, neither party shall take or direct any action that would contravene, or cause the other to contravene, applicable Privacy Laws. The Company, prior to transferring, or causing to be transferred, personal information to the Canadian Trustee, shall obtain and retain required consents of the relevant individuals to the collection, use and disclosure of their personal information, or shall have determined that such consents either have been previously given and can be relied on or are not required under Privacy Laws. The Canadian Trustee shall use commercially reasonable efforts to ensure that its services hereunder comply with Privacy Laws. Specifically, the Trustee agrees to (i) have designated a chief privacy officer; (ii) maintain policies and procedures to protect personal information and to receive and respond to any privacy complaint or inquiry; (iii) use personal information solely for the purposes of providing its services under or ancillary to this Indenture and not to use it for any other purpose except with the consent and direction of the Company; (iv) not sell or otherwise improperly disclose personal information to any third party; and (v) use employee administrative, physical and technological safeguards to reasonably secure and protect personal information against loss, theft or unauthorized access, use or modification.

It is expressly acknowledged and agreed that the Canadian Trustee may, in the course of providing services hereunder, collect or receive, use and disclose financial and other personal information about such parties and/or their representatives, as individuals, or about other individuals related to the subject matter hereof, and use such information for the following purposes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) to provide the services required under this Indenture and other services that may be requested from time to time;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) to help the Canadian Trustee manage its servicing relationships with such individuals;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) to meet the Canadian Trustee's legal and regulatory requirements; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) if social insurance numbers are collected by the Canadian Trustee, to perform tax reporting and to assist in verification of an individual's identity for security purposes.

Further, each party agrees that it shall not provide or cause to be provided to the Canadian Trustee any personal information relating to an individual who is not a party to this Indenture unless that party has assured itself that such individual understands and has consented to the aforementioned uses and disclosures. Notwithstanding anything to the contrary herein, the Company and the Trustees may, without liability, disclose information about the Holders and beneficial owners or potential Holders or potential beneficial owners of the Securities pursuant to subpoena or other order issued by a court of competent jurisdiction or when otherwise required by applicable law.

Each Trustee hereby accepts the trusts in this Indenture declared and provided for and agrees to perform the same upon the terms and conditions herein set forth and to hold all rights, privileges and benefits conferred hereby and by law in trust for the various persons who shall from time to time be holders, subject to all the terms and conditions herein set forth.

**ARTICLE SEVEN**<br>**HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY**

**SECTION 7.01 Company to Furnish Trustees Names and Addresses of Holders**.

The Company will furnish or cause to be furnished to the Trustees (1) not more than 15 days after each Regular Record Date, or such lesser time as required by the Trustees, a list, in such form as the Trustees may reasonably require, of the names and addresses of Holders as of such Regular Record Date; *provided, however*, that the Company shall not be obligated to furnish or cause to be furnished such list at any time that the list shall not differ in any respect from the most recent list furnished to the Trustees by the Company or at such times as either Trustee is acting as Security Registrar for the applicable series of Securities and (2) at such other times as the Trustees may request in writing within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished.

**SECTION 7.02 Preservation of List of Names and Addresses of Holders**.

The Trustees shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the Holders contained in the most recent list furnished to them as provided in Section 7.01 and as to the names and addresses of Holders received by either Trustee in its capacity as Security Registrar for the applicable series of Securities (if acting in such capacity).

The Trustees may destroy any list furnished as provided in Section 7.01 upon receipt of a new list so furnished.

Holders may communicate as provided in TIA Section 312(b) with other Holders with respect to their rights under this Indenture or under the Securities.

**SECTION 7.03 Disclosure of Names and Addresses of Holders**.

Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustees that none of the Company or the Trustees or any agent of either of them shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with TIA Section 312, regardless of the source from which such information was derived, and that the Trustees shall not be held accountable by reason of mailing any material pursuant to a request made under TIA Section 312(b).

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**SECTION 7.04 Reports by Trustees**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Within 60 days after May 15 of each year commencing with the first year after the first issuance of Securities pursuant to this Indenture, the U.S. Trustee shall transmit to the Holders of Securities, in the manner and to the extent provided in TIA Section 313(c), a brief report dated as of such reporting date, if required by TIA Section 313(a).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The U.S. Trustee shall comply with TIA Sections 313(b) and 313(c).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) A copy of such report shall, at the time of such transmission to the Holders, be filed by the U.S. Trustee with the Company, with each securities exchange upon which any of the Securities are listed (if so listed) and also with the Commission. The Company agrees to notify the Trustees when the Securities become listed on any securities exchange.

**SECTION 7.05 Reports by the Company**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Company will file with the Trustees, within 20 days after filing with or furnishing to the Commission, copies of its annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may by rules and regulations prescribe) which the Company is required to file or furnish with the Commission pursuant to Section 13 or 15(d) of the Exchange Act or, if the Company is not required to file information, documents or reports pursuant to either of such sections, then to file with the Trustees and the Commission, in accordance with rules and regulations prescribed by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Exchange Act in respect of a security listed and registered on a national securities exchange as may be prescribed in such rules and regulations; *provided* that any such reports, information or documents filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval (EDGAR) system shall be deemed filed with the Trustees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The Company will transmit to all Holders, in the manner and to the extent provided in TIA Section 313(c), within 30 days after the filing thereof with the Trustees, such summaries of any information, documents and reports required to be filed by the Company pursuant to paragraph (1) of this Section 7.05 as may be required by rules and regulations prescribed from time to time by the Commission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) If at any time the Securities are guaranteed by a direct or indirect parent of the Company, and such parent has furnished the reports required by this Section 7.05 with respect to parent as required by this Section 7.05 as if parent were the Company (including any financial information required hereby), the Company shall be deemed to be in compliance with this Section 7.05.

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**ARTICLE EIGHT**<br>**CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE**

**SECTION 8.01 Company May Consolidate, Etc., Only on Certain Terms**.

The Company shall not amalgamate or consolidate with or merge into or enter into any statutory arrangement with any other Person, or, directly or indirectly, convey, transfer or lease all or substantially all of its properties and assets to any Person, unless:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the Person formed by or continuing from such amalgamation or consolidation or into which the Company is merged or with which it enters into such statutory arrangement or the Person which acquires by operation of law or by conveyance or transfer, or which leases, all or substantially all of the properties and assets of the Company shall be a corporation, partnership or trust organized and validly existing under the laws of Canada or any province or territory thereof, the United States of America or any state thereof or the District of Columbia or, if such amalgamation, consolidation, merger, statutory arrangement or other transaction would not impair the rights of Holders, any other country, and, unless the Company is the continuing corporation, shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustees, in form satisfactory to the Trustees, the Company's obligation for the due and punctual payment of the principal of, premium (if any) and interest (if any) on all the Securities and the performance and observance of every covenant of this Indenture on the part of the Company to be performed or observed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) immediately after giving effect to such transaction, no Default or Event of Default shall have happened and be continuing; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) the Company or such Person shall have delivered to the Trustees an Officer's Certificate and an Opinion of Counsel, each stating that such amalgamation, consolidation, merger, statutory arrangement or other transaction and such supplemental indenture comply with this Article Eight and that all conditions precedent herein provided for relating to such transaction have been complied with.

Notwithstanding the above, the Company may consolidate with, amalgamate with, undergo an arrangement with, merge with or into an Affiliate of the Company solely for the purpose of reincorporating the Company in a state of the United States or the District of Columbia or in another province or territory of Canada.

This Section 8.01 shall only apply to a merger, consolidation or amalgamation in which the Company is not the surviving Person and to conveyances, leases and transfers by the Company as transferor or lessor.

**SECTION 8.02 Successor Person Substituted**.

Upon any amalgamation or consolidation by the Company with or merger by the Company into any other corporation or a statutory arrangement or any conveyance, transfer or lease of all or substantially all of the properties and assets of the Company to any Person in accordance with Section 8.01, the successor Person formed by such amalgamation or consolidation or into which the Company is merged or statutory arrangement, or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and in the event of any such conveyance or transfer, the Company (which term shall for this purpose mean the Person named as the "Company" in the first paragraph of this Indenture or any successor Person which shall theretofore become such in the manner described in Section 8.01), except in the case of a lease, shall be discharged of all obligations and covenants under this Indenture and the Securities and may be dissolved and liquidated.

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**ARTICLE NINE**<br>**SUPPLEMENTAL INDENTURES**

**SECTION 9.01 Supplemental Indentures Without Consent of Holders**.

Notwithstanding Section 9.02, without the consent of any Holders, the Company, when authorized by or pursuant to a Board Resolution, and the Trustees, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustees, for any of the following purposes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company contained herein and in the Securities; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) to add to the covenants of the Company for the benefit of the Holders of all or any series of Securities (and if such covenants are to be for the benefit of less than all series of Securities, stating that such covenants are being included solely for the benefit of such series) or to surrender any right or power herein conferred upon the Company; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) to add any additional Events of Default (and if such Events of Default are to be for the benefit of less than all series of Securities, stating that such Events of Default are being included solely for the benefit of such series); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) to delete or modify any Events of Default with respect to a series of the Securities, the form and terms of which are being established pursuant to such supplemental indenture as permitted in Section 3.01 (and if such Events of Default are to be for the benefit of less than all series of Securities, stating that such Events of Default are being included solely for the benefit of such series, and to specify the rights and remedies of the Trustees and the Holders of such Securities in connection therewith); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) to change or eliminate any of the provisions of this Indenture; *provided* that any such change or elimination shall become effective only when there is no Security Outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) to establish the form or terms of Securities of any series as permitted by Sections 2.01 and 3.01; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 6.10; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) to close this Indenture with respect to the authentication and delivery of additional series of Securities; or

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) to cure any ambiguity or to correct or supplement any provision contained herein or in any indenture supplemental hereto which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture or to conform the terms hereof, as amended and supplemented, that are applicable to the Securities of any series to the description of the terms of such Securities in the offering memorandum, prospectus supplement or other offering document applicable to such Securities at the time of initial sale thereof; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) to make any change in any series of Securities that does not adversely affect in any material respect the rights of the Holders of such Securities; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(11) to add to or change or eliminate any provision of this Indenture as shall be necessary or desirable in accordance with any amendments to the Trust Indenture Act; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(12) to supplement any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the defeasance and discharge of any series of Securities pursuant to Sections 4.01, 14.02 and 14.03; *provided* that any such action shall not adversely affect the interests of the Holders of Securities of such series or any other series of Securities in any material respect; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(13) to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualifications of this Indenture under any applicable law of the United States and Canada or of any province or territory thereof to the extent they do not conflict with the applicable law of the United States heretofore or hereafter enacted.

**SECTION 9.02 Supplemental Indentures with Consent of Holders**.

Except as provided in Section 9.01 and this Section 9.02, with the consent of the Holders of not less than a majority in principal amount of all Outstanding Securities affected by such supplemental indenture, by Act of said Holders delivered to the Company and the Trustees, the Company, when authorized by or pursuant to a Board Resolution, and the Trustees may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture which affect such series of Securities or of modifying in any manner the rights of the Holders of Securities of such series under this Indenture; *provided, however*, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security of such series,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) change the Stated Maturity of the principal of, premium (if any) or any installment of interest (if any) on any Security of such series, or reduce the principal amount thereof, premium (if any) or the rate of interest (if any) thereon, or reduce the amount of the principal of an Original Issue Discount Security of such series that would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.02 or the amount thereof provable in bankruptcy pursuant to Section 5.04, or adversely affect any right of repayment at the option of any Holder of any Security of such series, or change any Place of Payment where, or the Currency in which, any Security of such series or any premium or interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption or repayment at the option of the Holder, on or after the Redemption Date or Repayment Date, as the case may be), or adversely affect any right to convert or exchange any Security as may be provided pursuant to Section 3.01 herein, or

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) reduce the percentage in principal amount of the Outstanding Securities of such series required for any such supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with certain provisions of this Indenture which affect such series or certain defaults applicable to such series hereunder and their consequences provided for in this Indenture, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) modify any of the provisions of this 9.02 Section, Section 5.13 or Section 10.09, except to increase any such percentage or to provide that certain other provisions of this Indenture which affect such series cannot be modified or waived without the consent of the Holder of each Outstanding Security of such series.

A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series. Any such supplemental indenture adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture, or modifying in any manner the rights of the Holders of Securities of such series, shall not affect the rights under this Indenture of the Holders of Securities of any other series.

It shall not be necessary for any Act of Holders under this 9.02 Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.

**SECTION 9.03 Execution of Supplemental Indentures**.

**SECTION 9.04 Effect of Supplemental Indentures**.

Upon the execution of any supplemental indenture under this Article Nine, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.

**SECTION 9.05 Conformity with Trust Indenture Legislation**.

Every supplemental indenture executed pursuant to this Article Nine shall conform to the requirements of Trust Indenture Legislation as then in effect.

**SECTION 9.06 Reference in Securities to Supplemental Indentures**.

Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article Nine may, and shall if required by the Trustees, bear a notation in form approved by the Trustees as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustees and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustees in exchange for outstanding Securities of such series.

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**SECTION 9.07 Notice of Supplemental Indentures**.

Promptly after the execution by the Company and the Trustees of any supplemental indenture pursuant to the provisions of Section 9.02, the Company shall give notice thereof to the Holders of each outstanding Security affected, in the manner provided for in Section 1.07, setting forth in general terms the substance of such supplemental indenture.

**ARTICLE TEN**<br>**COVENANTS**

**SECTION 10.01 Payment of Principal, Premium and Interest**.

The Company covenants and agrees for the benefit of the Holders of each series of Securities that it will duly and punctually pay the principal of, premium (if any) and interest (if any), on the Securities of that series in accordance with the terms of the Securities and this Indenture.

**SECTION 10.02 Maintenance of Office or Agency**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Company will maintain in each Place of Payment for any series of Securities an office or agency where Securities of that series may be presented or surrendered for payment, where Securities of that series may be surrendered for registration of transfer or exchange, where Securities of that series that are convertible or exchangeable may be surrendered for conversion or exchange, as applicable, and where notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be served .

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The Company will give prompt written notice to the Trustees of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustees with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Offices of the Trustees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) The Company may also from time to time designate one or more other offices or agencies where the Securities of one or more series may be presented or surrendered for any or all such purposes and may from time to time rescind any such designation; *provided, however*, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in accordance with the requirements set forth above for Securities of any series for such purposes. The Company will give prompt written notice to the Trustees of any such designation or rescission and of any change in the location of any such other office or agency. Unless otherwise specified with respect to any Securities as contemplated by Section 3.01 with respect to a series of Securities, the Company hereby initially appoints the U.S. Trustee at its Corporate Trust Office as Paying Agent in such city and as its agent to receive all such presentations, surrenders, notices and demands.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Unless otherwise specified with respect to any Securities pursuant to Section 3.01, if and so long as the Securities of any series (i) are denominated in a Currency other than Dollars or (ii) may be payable in a Currency other than Dollars, or so long as it is required under any other provision of the Indenture, then the Company will maintain with respect to each such series of Securities, or as so required, at least one Exchange Rate Agent.

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**SECTION 10.03 Money for Securities Payments to Be Held in Trust**.

If the Company shall at any time act as its own Paying Agent with respect to any series of Securities, it will, on or before each due date of the principal of, premium (if any) or interest (if any) on any of the Securities of that series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum in the Currency in which the Securities of such series are payable (except as otherwise specified pursuant to Section 3.01 for the Securities of such series and except, if applicable, as provided in Sections 3.12(b), 3.12(d) and 3.12(e)) sufficient to pay the principal of, premium (if any) or interest (if any) on Securities of such series so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustees of its action or failure so to act.

Whenever the Company shall have one or more Paying Agents for any series of Securities, it will, prior to or on each due date of the principal of, premium (if any) or interest (if any) on any Securities of that series, deposit with a Paying Agent a sum (in the Currency described in the preceding paragraph) sufficient to pay the principal, premium (if any) or interest (if any) so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such Paying Agent is a Trustee) the Company will promptly notify the Trustees of its action or failure so to act.

The Company will cause each Paying Agent (other than the Trustees) for any series of Securities to execute and deliver to the Trustees an instrument in which such Paying Agent shall agree with the Trustees, subject to the provisions of this 10.03 Section, that such Paying Agent will:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) hold all sums held by it for the payment of the principal of, premium (if any) and interest (if any) on Securities of such series in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) give the Trustees notice of any default by the Company (or any other obligor upon the Securities of such series) in the making of any payment of principal of, premium (if any) or interest (if any) on the Securities of such series; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) at any time during the continuance of any such default, upon the written request of the Trustees, forthwith pay to the Trustees all sums so held in trust by such Paying Agent.

The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustees all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustees upon the same trusts as those upon which sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustees, such Paying Agent shall be released from all further liability with respect to such sums.

Except as provided in the Securities of any series, any money deposited with the Trustees or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium (if any) or interest (if any) on any Security of any series, and remaining unclaimed for two years after such principal, premium or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustees or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease.

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**SECTION 10.04 Statement as to Compliance**.

The Company shall deliver to the Trustees, on or before 120 days after the end of the Company's fiscal year, an Officer's Certificate stating that a review of the activities of the Company during such fiscal year has been made under the supervision of the signing Officer with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to such Officer, that the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions hereof (or, if a Default or Event of Default shall have occurred and is continuing, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company is taking or propose to take with respect thereto). The Company shall deliver to the Trustees upon demand evidence in such form as the Trustees may require as to compliance by the Company with any condition or covenant of the Company set out herein relating to any action required or permitted to be taken by the Company under this Indenture or as a result of any obligation imposed by this Indenture. For purposes of this Section 10.04, such compliance shall be determined without regard to any period of grace or requirement of notice under this Indenture.

**SECTION 10.05 Waiver of Certain Covenants**.

The Company may, with respect to any series of Securities, omit in any particular instance to comply with any term, provision or condition in any covenants of the Company added to this Article Ten pursuant to Section 3.01(19) in connection with Securities of such series, if before the time for such compliance the Holders of at least a majority in principal amount of all Outstanding Securities of any series, by Act of such Holders, waive such compliance in such instance with such term, provision or condition, but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustees to Holders of Securities of such series in respect of any such term, provision or condition shall remain in full force and effect.

**ARTICLE ELEVEN**<br>**REDEMPTION OF SECURITIES**

**SECTION 11.01 Applicability of Article**.

Securities of any series which are redeemable before their Stated Maturity shall be redeemable in accordance with the terms of such Securities and (except as otherwise specified as contemplated by Section 3.01 for Securities of any series) in accordance with this Article Eleven.

**SECTION 11.02 Election to Redeem; Notice to Trustees**.

The election of the Company to redeem any Securities shall be evidenced by or pursuant to a Board Resolution. In case of any redemption at the election of the Company, the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustees), notify the Trustees of such Redemption Date and of the principal amount of Securities of such series to be redeemed and, in the case of certificated Securities, shall deliver to the Trustees such documentation and records as shall enable the Trustees to select the Securities to be redeemed pursuant to Section 11.03. In the case of any redemption of Securities prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture, the Company shall furnish to the Trustees an Officer's Certificate evidencing compliance with such restriction.

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**SECTION 11.03 Selection by Trustees of Securities to Be Redeemed**.

If less than all the Securities of any series are to be redeemed, the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustees, from the Outstanding Securities of such series not previously called for redemption, in the case of certificated Securities, by such method as the Trustees shall deem fair and appropriate and which may provide for the selection for redemption of portions of the principal of Securities of such series, or in the case of Securities in global form in accordance with the policies and procedures of the applicable Depositary; *provided, however*, that no such partial redemption shall reduce the portion of the principal amount of a Security not redeemed to less than the minimum authorized denomination for Securities of such series established pursuant to Section 3.01.

The Trustees shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed.

For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security which has been or is to be redeemed.

**SECTION 11.04 Notice of Redemption**.

Except as otherwise specified as contemplated by Section 3.01, notice of redemption shall be given in the manner provided for in Section 1.07 not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed. Failure to give notice in the manner provided in Section 1.07 to the Holder of any Securities designated for redemption as a whole or in part, or any defect in the notice to any such Holder, shall not affect the validity of the proceedings for the redemption of any other Securities or portion thereof.

All notices of redemption shall state:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the Redemption Date,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the Redemption Price and the amount of accrued interest to the Redemption Date payable as provided in Section 11.06, if any,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) if less than all the Outstanding Securities of any series are to be redeemed, the identification (and, in the case of partial redemption, the principal amounts) of the particular Securities to be redeemed,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) in case any Security is to be redeemed in part only, the notice which relates to such Security shall state that on and after the Redemption Date, upon surrender of such Security, the Holder will receive, without charge, a new Security or Securities of authorized denominations for the principal amount thereof remaining unredeemed,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) that on the Redemption Date, the Redemption Price and accrued interest (if any) to the Redemption Date payable as provided in Section 11.06 will become due and payable upon each such Security, or the portion thereof, to be redeemed and, if applicable, that interest thereon will cease to accrue on and after said date,

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) the Place or Places of Payment where such Securities are to be surrendered for payment of the Redemption Price and accrued interest (if any),

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) that the redemption is for a sinking fund, if such is the case, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) if applicable, any condition to such redemption.

Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustees in the name and at the expense of the Company.

**SECTION 11.05 Deposit of Redemption Price**.

Prior to any Redemption Date, the Company shall deposit with a Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 10.03) an amount of money in the Currency in which the Securities of such series are payable (except as otherwise specified pursuant to Section 3.01 for the Securities of such series and except, if applicable, as provided in Sections 3.12(b), 3.12(d) and 3.12(e)) sufficient to pay the Redemption Price of, and accrued interest (if any) on, all the Securities which are to be redeemed on that date.

**SECTION 11.06 Securities Payable on Redemption Date**.

Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified in the Currency in which the Securities of such series are payable (except as otherwise specified pursuant to Section 3.01 for the Securities of such series and except, if applicable, as provided in Sections 3.12(b), 3.12(d) and 3.12(e)) (together with accrued interest (if any) to the Redemption Date), and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest (if any)) such Securities shall, if the same were interest-bearing, cease to bear interest. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued interest (if any), to the Redemption Date; *provided, however*, that installments of interest on Securities whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant record dates according to their terms and the provisions of Section 3.07.

If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal and premium (if any) shall, until paid, bear interest from the Redemption Date at the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) set forth in such Security.

**SECTION 11.07 Securities Redeemed in Part**.

Any Security which is to be redeemed only in part (pursuant to the provisions of this Article Eleven or of Article Twelve) shall be surrendered at a Place of Payment therefor (with, if the Company or the Trustees so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustees duly executed by, the Holder thereof or such Holder's attorney duly authorized in writing), and the Company shall execute, and the applicable Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities of the same series, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered.

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**ARTICLE TWELVE**<br>**SINKING FUNDS**

**SECTION 12.01 Applicability of Article**.

Retirements of Securities of any series pursuant to any sinking fund shall be made in accordance with the terms of such Securities and (except as otherwise specified as contemplated by Section 3.01 for Securities of any series) in accordance with this Article Twelve.

The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a "**mandatory sinking fund payment**," and any payment in excess of such minimum amount provided for by the terms of Securities of any series is herein referred to as an "**optional sinking fund payment**". If provided for by the terms of Securities of any series, the cash amount of any mandatory sinking fund payment may be subject to reduction as provided in Section 12.02. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of Securities of such series.

**SECTION 12.02 Satisfaction of Sinking Fund Payments with Securities**.

Subject to Section 12.03, in lieu of making all or any part of any mandatory sinking fund payment with respect to any Securities of a series in cash, the Company may at its option (1) deliver to the Trustees Outstanding Securities of a such series (other than any previously called for redemption) theretofore purchased or otherwise acquired by the Company, and/or (2) receive credit for the principal amount of Securities of such series which have been previously delivered to the Trustees by the Company or redeemed either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, in each case in satisfaction of all or any part of any mandatory sinking fund payment with respect to the Securities of the same series required to be made pursuant to the terms of such Securities as provided for by the terms of such series; *provided, however*, that such Securities have not been previously so credited. Such Securities shall be received and credited for such purpose by the Trustees at the Redemption Price specified in such Securities for redemption through operation of the sinking fund and the amount of such mandatory sinking fund payment shall be reduced accordingly.

**SECTION 12.03 Redemption of Securities for Sinking Fund**.

Not less than 60 days prior to each sinking fund payment date for any series of Securities, the Company will deliver to the Trustees an Officer's Certificate specifying the amount of the next ensuing sinking fund payment for that series pursuant to the terms of that series, the portion thereof, if any, which is to be satisfied by payment of cash in the Currency in which the Securities of such series are payable (except as otherwise specified pursuant to Section 3.01 for the Securities of such series and except, if applicable, as provided in Sections 3.12(b), 3.12(d) and 3.12(e)) and the portion thereof, if any, which is to be satisfied by delivering or crediting Securities of that series pursuant to Section 12.02 (which Securities will, if not previously delivered, accompany such certificate) and whether the Company intends to exercise its right to make a permitted optional sinking fund payment with respect to such series.

Such certificate shall be irrevocable and upon its delivery the Company shall be obligated to make the cash payment or payments therein referred to, if any, on or before the next succeeding sinking fund payment date. In the case of the failure of the Company to deliver such certificate, the sinking fund payment due on the next succeeding sinking fund payment date for that series shall be paid entirely in cash and shall be sufficient to redeem the principal amount of such Securities subject to a mandatory sinking fund payment without the option to deliver or credit Securities as provided in Section 12.02 and without the right to make any optional sinking fund payment, if any, with respect to such series.

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Not more than 60 days before each such sinking fund payment date the Trustees shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 11.03 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 11.04. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 11.06 and 11.07.

Prior to any sinking fund payment date, the Company shall pay to the Trustees or a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 10.03) in cash a sum equal to any interest that will accrue to the date fixed for redemption of Securities or portions thereof to be redeemed on such sinking fund payment date pursuant to this 12.03 Section.

Notwithstanding the foregoing, with respect to a sinking fund for any series of Securities, if at any time the amount of cash to be paid into such sinking fund on the next succeeding sinking fund payment date, together with any unused balance of any preceding sinking fund payment or payments for such series, does not exceed in the aggregate $100,000, the Trustees, unless requested by the Company, shall not give the next succeeding notice of the redemption of Securities of such series through the operation of the sinking fund. Any such unused balance of moneys deposited in such sinking fund shall be added to the sinking fund payment for such series to be made in cash on the next succeeding sinking fund payment date or, at the request of the Company, shall be applied at any time or from time to time to the purchase of Securities of such series, by public or private purchase, in the open market or otherwise, at a purchase price for such Securities (excluding accrued interest and brokerage commissions, for which the Trustees or any Paying Agent will be reimbursed by the Company) not in excess of the principal amount thereof.

**ARTICLE THIRTEEN**<br>**REPAYMENT AT OPTION OF HOLDERS**

**SECTION 13.01 Applicability of Article**.

Repayment of Securities of any series before their Stated Maturity at the option of Holders thereof shall be made in accordance with the terms of such Securities and (except as otherwise specified as contemplated by Section 3.01 for Securities of any series) in accordance with this Article Thirteen.

**SECTION 13.02 Repayment of Securities**.

Securities of any series subject to repayment in whole or in part at the option of the Holders thereof will, unless otherwise provided in the terms of such Securities, be repaid at a price equal to the principal amount thereof, together with interest (if any) thereon accrued to the Repayment Date specified in or pursuant to the terms of such Securities. The Company covenants that, with respect to such Securities, on or before the Repayment Date it will deposit with a Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 10.03) an amount of money in the Currency in which the Securities of such series are payable (except as otherwise specified pursuant to Section 3.01 for the Securities of such series and except, if applicable, as provided in Sections 3.12(b), 3.12(d) and 3.12(e)) sufficient to pay the principal (or, if so provided by the terms of the Securities of any series, a percentage of the principal) of and (except if the Repayment Date shall be an Interest Payment Date) accrued interest (if any) on, all the Securities or portions thereof, as the case may be, to be repaid on such date.

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**SECTION 13.03 Exercise of Option**.

Securities of any series subject to repayment at the option of the Holders thereof will contain an "Option to Elect Repayment" form on the reverse of such Securities. To be repaid at the option of the Holder, any Security so providing for such repayment, with the "Option to Elect Repayment" form on the reverse of such Security duly completed by the Holder (or by the Holder's attorney duly authorized in writing), must be received by the Company at the Place of Payment therefor specified in the terms of such Security (or at such other place or places which the Company shall from time to time notify the Holders of such Securities) not earlier than 45 days nor later than 30 days prior to the Repayment Date. If less than the entire principal amount of such Security is to be repaid in accordance with the terms of such Security, the principal amount of such Security to be repaid, in increments of the minimum denomination for Securities of such series, and the denomination or denominations of the Security or Securities to be issued to the Holder for the portion of the principal amount of such Security surrendered that is not to be repaid, must be specified. The principal amount of any Security providing for repayment at the option of the Holder thereof may not be repaid in part if, following such repayment, the unpaid principal amount of such Security would be less than the minimum authorized denomination of Securities of the series of which such Security to be repaid is a part. Except as otherwise may be provided by the terms of any Security providing for repayment at the option of the Holder thereof, exercise of the repayment option by the Holder shall be irrevocable unless waived by the Company.

**SECTION 13.04 When Securities Presented for Repayment Become Due and Payable**.

If Securities of any series providing for repayment at the option of the Holders thereof shall have been surrendered as provided in this Article Thirteen and as provided by or pursuant to the terms of such Securities, such Securities or the portions thereof, as the case may be, to be repaid shall become due and payable and shall be paid by the Company on the Repayment Date therein specified, and on and after such Repayment Date (unless the Company shall default in the payment of such Securities on such Repayment Date) such Securities shall, if the same were interest- bearing, cease to bear interest. Upon surrender of any such Security for repayment in accordance with such provisions, the principal amount of such Security so to be repaid shall be paid by the Company, together with accrued interest (if any) to the Repayment Date; *provided, however*, that, in the case of Securities, installments of interest (if any) whose Stated Maturity is on or prior to the Repayment Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 3.07.

If any Security surrendered for repayment shall not be so repaid upon surrender thereof for repayment, the principal amount and premium (if any) shall, until paid, bear interest from the Repayment Date at the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) set forth in such Security.

**SECTION 13.05 Securities Repaid in Part**.

Upon surrender of any Security which is to be repaid in part only, the Company shall execute and the applicable Trustee shall authenticate and deliver to the Holder of such Security, without service charge and at the expense of the Company, a new Security or Securities of the same series, of any authorized denomination specified by the Holder, in an aggregate principal amount equal to and in exchange for the portion of the principal of such Security so surrendered which is not to be repaid.

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**ARTICLE FOURTEEN**<br>**DEFEASANCE AND COVENANT DEFEASANCE**

**SECTION 14.01 Company's Option to Effect Defeasance or Covenant Defeasance**.

Except as otherwise specified as contemplated by Section 3.01 for Securities of any series, the provisions of this Article Fourteen shall apply to each series of Securities, and the Company may, at its option, effect defeasance of the Securities of or within a series under Section 14.02, or covenant defeasance of or within a series under Section 14.03 in accordance with the terms of such Securities and in accordance with this Article Fourteen.

**SECTION 14.02 Defeasance and Discharge**.

Upon the Company's exercise of the above option applicable to this Section 14.02 with respect to any Securities of or within a series, the Company shall be deemed to have been discharged from its obligations with respect to such Securities on the date the conditions set forth in Section 14.04 are satisfied (hereinafter, "**defeasance**"). For this purpose, such defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness represented by such Securities, which shall thereafter be deemed to be "Outstanding" only for the purposes of Section 14.05 and the other Sections of this Indenture referred to in (A) and (B) below, and to have satisfied all of its other obligations under such Securities and this Indenture insofar as such Securities are concerned (and the Trustees, at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following which shall survive until otherwise terminated or discharged hereunder: (A) the rights of Holders of such Securities to receive, solely from the trust fund described in Section 14.04 and as more fully set forth in such Section, payments in respect of the principal of, premium (if any) and interest (if any) on such Securities when such payments are due, (B) the Company's obligations with respect to such Securities under Sections 3.05, 3.06, 10.02 and 10.03, (C) the rights, powers, trusts, duties and immunities of the Trustees hereunder and (D) this Article Fourteen. Subject to compliance with this Article Fourteen, the Company may exercise its option under this Section 14.02 notwithstanding the prior exercise of its option under Section 14.03 with respect to such Securities.

**SECTION 14.03 Covenant Defeasance**.

Upon the Company's exercise of the above option applicable to this Section 14.03 with respect to any Securities of or within a series, the Company shall be released from, if specified pursuant to Section 3.01, its obligations under any covenant with respect to such Securities on and after the date the conditions set forth in Section 14.04 are satisfied (hereinafter, "**covenant defeasance**"), and such Securities shall thereafter be deemed not to be "Outstanding" for the purposes of any direction, waiver, consent or declaration or Act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "Outstanding" for all other purposes hereunder. For this purpose, such covenant defeasance means that, with respect to such Securities, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under clauses (4) or (7) of Section 5.01 or otherwise but, except as specified above, the remainder of this Indenture and such Securities shall be unaffected thereby.

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**SECTION 14.04 Conditions to Defeasance or Covenant Defeasance**.

The following shall be the conditions to application of either Section 14.02 or Section 14.03 to any Securities of or within a series:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Company shall irrevocably have deposited or caused to be deposited with either Trustee (or another trustee satisfying the requirements of Section 6.08 who shall agree to comply with the provisions of this Article Fourteen applicable to it) as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such Securities, (A) an amount (in such Currency in which such Securities are then specified as payable at Stated Maturity), or (B) Government Obligations applicable to such Securities (determined on the basis of the Currency in which such Securities are then specified as payable at Stated Maturity) which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment of principal of and premium (if any) and interest (if any) under such Securities, money in an amount, or (C) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustees, to pay and discharge, and which shall be applied by the Trustees (or another trustee satisfying the requirements of Section 6.08 who shall agree to comply with the provisions of this Article Fourteen) to pay and discharge, (i) the principal of, premium (if any) and interest (if any) on such Securities on the Stated Maturity (or Redemption Date, if applicable) of such principal of, premium (if any) or installment of interest (if any), (ii) any mandatory sinking fund payments or analogous payments applicable to such Securities on the day on which such payments are due and payable in accordance with the terms of this Indenture and of such Securities, and (iii) all amounts due the Trustees under Section 6.07; *provided* that the Trustees shall have been irrevocably instructed to apply such money or the proceeds of such Government Obligations to said payments with respect to such Securities. Before such a deposit, the Company may give to the Trustees, in accordance with Section 11.02, a notice of its election to redeem all or any portion of such Securities at a future date in accordance with the terms of such Securities and Article Eleven hereof, which notice shall be irrevocable. Such irrevocable redemption notice, if given, shall be given effect in applying the foregoing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) No Default or Event of Default with respect to such Securities shall have occurred and be continuing on the date of such deposit or, insofar as clauses (5) and (6) of Section 5.01 are concerned, at any time during the period ending on the 91st day after the date of such deposit (it being understood that this condition shall not be deemed satisfied until the expiration of such period).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Such defeasance or covenant defeasance shall not result in a breach or violation of, or constitute a Default or an Event of Default under, this Indenture or any default under any material agreement or instrument to which the Company is a party or by which it is bound.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) In the case of an election under Section 14.02, the Company shall have delivered to the Trustees an Opinion of Counsel in the United States stating that (x) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (y) since the date of execution of this Indenture, there has been a change in the applicable United States federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of such Securities will not recognize income, gain or loss for United States federal income tax purposes as a result of such defeasance and will be subject to United States federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) In the case of an election under Section 14.03, the Company shall have delivered to the Trustees an Opinion of Counsel in the United States to the effect that the Holders of such Securities will not recognize income, gain or loss for United States federal income tax purposes as a result of such covenant defeasance and will be subject to United States federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) The Company shall have delivered to the Trustees an Opinion of Counsel in Canada or a ruling from the Canada Revenue Agency to the effect that the Holders of such Securities will not recognize income, gain or loss for Canadian federal, provincial or territorial income tax or other tax purposes as a result of such defeasance or covenant defeasance, as applicable, and will be subject to Canadian federal, provincial or territorial income tax and other tax on the same amounts, in the same manner and at the same times as would have been the case had such defeasance or covenant defeasance, as applicable, not occurred (and for the purposes of such opinion, such Canadian counsel shall assume that Holders of such Securities include Holders who are not resident in Canada).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) The Company is not an "insolvent person" within the meaning of the Bankruptcy and Insolvency Act (Canada) on the date of such deposit or at any time during the period ending on the 91st day after the date of such deposit (it being understood that this condition shall not be deemed satisfied until the expiration of such period).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) Notwithstanding any other provisions of this Section 14.04, such defeasance or covenant defeasance shall be effected in compliance with any additional or substitute terms, conditions or limitations in connection therewith pursuant to Section 3.01.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) The Company shall have delivered to the Trustees an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for, relating to either the defeasance under Section 14.02 or the covenant defeasance under Section 14.03 (as the case may be), have been complied with.

**SECTION 14.05 Deposited Money and Government Obligations to Be Held in Trust; Other Miscellaneous Provisions**.

Subject to the provisions of the last paragraph of Section 10.03, all money and Government Obligations (or other property as may be provided pursuant to Section 3.01) (including the proceeds thereof) deposited with a Trustee (or another trustee satisfying the requirements of Section 6.08 who shall agree to comply with the provisions of this Article Fourteen) pursuant to Section 14.04 in respect of such Securities shall be held in trust and applied by such Trustee, in accordance with the provisions of such Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent), to the Holders of such Securities of all sums due and to become due thereon in respect of principal, premium (if any) and interest (if any) on such Securities but such money need not be segregated from other funds except to the extent required by law.

Unless otherwise specified with respect to any Security pursuant to Section 3.01, if, after a deposit referred to in Section 14.04(1) has been made, (a) the Holder of a Security in respect of which such deposit was made is entitled to, and does, elect pursuant to Section 3.12(b) or the terms of such Security to receive payment in a Currency other than that in which the deposit pursuant to Section 14.04(1) has been made in respect of such Security, or (b) a Conversion Event occurs as contemplated in Section 3.12(d) or 3.12(e) or by the terms of any Security in respect of which the deposit pursuant to Section 14.04(1) has been made, the indebtedness represented by such Security shall be deemed to have been, and will be, fully discharged and satisfied through the payment of the principal of, premium (if any) and interest (if any) on such Security as they become due out of the proceeds yielded by converting (from time to time as specified below in the case of any such election) the amount or other property deposited in respect of such Security into the Currency in which such Security becomes payable as a result of such election or Conversion Event based on the applicable Market Exchange Rate for such Currency in effect on the third Business Day prior to each payment date, except, with respect to a Conversion Event, for such Currency in effect (as nearly as feasible) at the time of the Conversion Event.

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The Company shall pay and indemnify such Trustee against any tax, fee or other charge imposed on or assessed against the Government Obligations deposited pursuant to Section 14.04 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of such Securities.

Anything in this Article Fourteen to the contrary notwithstanding, such Trustee shall deliver or pay to the Company from time to time upon Company Request any money or Government Obligations (or other property and any proceeds therefrom) held by it as provided in Section 14.04 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to such Trustee, are in excess of the amount thereof which would then be required to be deposited to effect an equivalent defeasance or covenant defeasance, as applicable, in accordance with this Article Fourteen.

**SECTION 14.06 Reinstatement**.

If a Trustee or any Paying Agent is unable to apply any money in accordance with Section 14.05 by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Indenture and such Securities shall be revived and reinstated as though no deposit had occurred pursuant to Section 14.02 or 14.03, as the case may be, until such time as such Trustee or Paying Agent is permitted to apply all such money in accordance with Section 14.05; *provided, however*, that if the Company makes any payment of principal of, premium (if any) or interest (if any) on any such Security following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money held by such Trustee or Paying Agent.

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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the day and year first above written.

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| | |
|:---|:---|
| BTQ TECHNOLOGIES CORP. | BTQ TECHNOLOGIES CORP. |
| By: |  |
| Name: |  |
| Title: |  |
| ______________________,<br>as U.S. Trustee | ______________________,<br>as U.S. Trustee |
| By: |  |
| Name: |  |
| Title: |  |
| By: |  |
| Name: |  |
| Title: |  |
| ______________________,<br>as Canadian Trustee | ______________________,<br>as Canadian Trustee |
| By: |  |
| Name: |  |
| Title: | Authorized Signing Officer |
| By: |  |
| Name: |  |
| Title: | Authorized Signing Officer |

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**EXHIBIT A-1**

FORM OF CERTIFICATE TO BE GIVEN BY<br>PERSON ENTITLED TO OBTAIN INTEREST PAYABLE PRIOR<br>TO THE EXCHANGE DATE

CERTIFICATE

BTQ TECHNOLOGIES CORP.<br>_____% Notes due _________________

This is to certify that as of the date hereof, and except as set forth below, the above-captioned Securities held by you for our account (i) are owned by any person(s) that is not a citizen or resident of the United States; a corporation or partnership (including any entity treated as a corporation or partnership for United States federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia unless, in the case of a partnership, United States Treasury Regulations provide otherwise; any estate whose income is subject to United States federal income tax regardless of its source; or a trust if (A) a United States court can exercise primary supervision over the trust's administration and one or more United States persons are authorized to control all substantial decisions of the trust or (B) it was in existence on August 20, 1996 and has a valid election in effect under applicable United States Treasury Regulations to be treated as a United States person ("United States persons(s)"), (ii) are owned by United States person(s) that are (a) foreign branches of United States financial institutions (financial institutions, as defined in United States. United States Treasury Regulation Section 1.165-12(c)(1)(iv) are herein referred to as "financial institutions") purchasing for their own account or for resale, or (b) United States person(s) who acquired the Securities through foreign branches of United States financial institutions and who hold the Securities through such United States financial institutions on the date hereof (and in either case (a) or (b), each such United States financial institution hereby agrees, on its own behalf or through its agent, that you may advise BTQ Technologies Corp. or its agent that such financial institution will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the United States Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (iii) are owned by United States or foreign financial institution(s) for purposes of resale during the restricted period (as defined in United States Treasury Regulation Section 1.163-5(c)(2)(i)(D)(7)), and, in addition, if the owner is a United States or foreign financial institution described in clause (iii) above (whether or not also described in clause (i) or (ii)), this is to further certify that such financial institution has not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions.

As used herein, "United States" means the United States of America (including the states and the District of Columbia); and its "possessions" include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands.

We undertake to advise you promptly in writing on or prior to the date on which you intend to submit your certification relating to the above-captioned Securities held by you for our account in accordance with your operating procedures if any applicable statement herein is not correct on such date, and in the absence of any such notification it may be assumed that this certification applies as of such date.

This certificate excepts and does not relate to U.S. $__________ of such interest in the above-captioned Securities in respect of which we are not able to certify and as to which we understand an exchange for an interest in a permanent global security or an exchange for and delivery of definitive Securities (or, if relevant, collection of any interest) cannot be made until we do so certify.

A-1-1

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We understand that this certificate may be required in connection with certain tax legislation in the United States. If administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorize you to produce this certificate or a copy thereof to any interested party in such proceedings.

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| | |
|:---|:---|
| Dated:__________________<br>[To be dated no earlier than the 15th day prior to (i) the Exchange Date or (ii) the relevant Interest Payment Date occurring prior to the Exchange Date, as applicable] |  |
|  | [Name of Person Certification] |
|  | By: |
|  | Name: |
|  | Title: |

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A-1-2

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**EXHIBIT A-2**

FORM OF CERTIFICATE TO BE GIVEN BY THE DEPOSITARY<br>IN CONNECTION WITH THE EXCHANGE OF A PORTION OF A<br>TEMPORARY GLOBAL SECURITY OR TO OBTAIN INTEREST<br>PAYABLE PRIOR TO THE EXCHANGE DATE

CERTIFICATE

BTQ TECHNOLOGIES CORP.<br>_____% Notes due _________________

This is to certify that based solely on written certifications that we have received in writing or by electronic transmission from each of the persons appearing in our records as persons entitled to a portion of the principal amount set forth below (our "Member Organizations") substantially in the form attached hereto, as of the date hereof, U.S. $__________ principal amount of the above-captioned Securities (i) is owned by any person(s) that is not a citizen or resident of the United States; a corporation or partnership (including any entity treated as a corporation or partnership for United States federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia unless, in the case of a partnership, United States Treasury Regulations provide otherwise; any estate whose income is subject to United States federal income tax regardless of its source; or a trust if (A) a United States court can exercise primary supervision over the trust's administration and one or more United States persons are authorized to control all substantial decisions of the trust or (B) it was in existence on August 20, 1996 and has a valid election in effect under applicable United States Treasury Regulations to be treated as a United States person ("United States person(s)"), (ii) is owned by United States person(s) that are (a) foreign branches of United States financial institutions (financial institutions, as defined in United States Treasury Regulation Section 1.165-12(c)(1)(iv) are herein referred to as "financial institutions") purchasing for their own account or for resale, or (b) United States person(s) who acquired the Securities through foreign branches of United States financial institutions and who hold the Securities through such United States financial institutions on the date hereof (and in either case (a) or (b), each such financial institution has agreed, on its own behalf or through its agent, that we may advise BTQ Technologies Corp. or its agent that such financial institution will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (iii) is owned by United States or foreign financial institution(s) for purposes of resale during the restricted period (as defined in United States Treasury Regulation Section 1.163-5(c)(2)(i)(D)(7)) and, to the further effect, that financial institutions described in clause (iii) above (whether or not also described in clause (i) or (ii)) have certified that they have not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions.

As used herein, "United States" means the United States of America (including the states and the District of Columbia); and its "possessions" include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands.

We further certify that (i) we are not making available herewith for exchange (or, if relevant, collection of any interest) any portion of the temporary global Security representing the above-captioned Securities excepted in the above-referenced certificates of Member Organizations and (ii) as of the date hereof we have not received any notification from any of our Member Organizations to the effect that the statements made by such Member Organizations with respect to any portion of the part submitted herewith for exchange (or, if relevant, collection of any interest) are no longer true and cannot be relied upon as of the date hereof.

A-2-1

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We understand that this certification is required in connection with certain tax legislation in the United States. If administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorize you to produce this certificate or a copy thereof to any interested party in such proceedings.

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| | |
|:---|:---|
| Dated:_____________<br>[To be dated as of (i) the Exchange Date or (ii) the relevant Interest Payment Date occurring prior to the Exchange Date, as applicable] |  |
|  | [INSERT NAME OF DEPOSITARY] |
|  | By: |
|  | Name: |
|  | Title: |

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A-2-2

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## Ex-Filing

?xml version='1.0' encoding='ASCII'? EX-FILING FEES

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|:---|
| &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; **Calculation of Filing Fee Tables**  |
| &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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **F-10**  |
| &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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **BTQ Technologies Corp.**  |

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | | &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; **Security Type**  | &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; **Security Class Title**  | &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; **Fee Calculation Rule or Instruction**  | &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; **Maximum Aggregate Offering Price**  | &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; **Fee Rate**  | &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; **Amount of Registration Fee**  |
|  |  | Other | Common Shares, Warrants, Subscription Receipts, Share Purchase Contracts, Debt Securities, Units | 457(o) |  |  |  |
| Fees to be Paid | 1 | Unallocated (Universal) Shelf |  | 457(o) | $173310226.00 | 0.0001531 | $26533.80 |
| Fees Previously Paid |  |  |  |  |  |  |  |
|  |  |  | Total Offering Amounts: | Total Offering Amounts: | $173310226.00  |  | $26533.80  |
|  |  |  | Total Fees Previously Paid:  | Total Fees Previously Paid:  |  |  | $0.00  |
|  |  |  | Total Fee Offsets:  | Total Fee Offsets:  |  |  | $0.00  |
|  |  |  | Net Fee Due:  | Net Fee Due:  |  |  | $26533.80  |

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&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; **Offering Note** <br>

&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; <sup>1</sup> There are being registered under this registration statement such indeterminate number of common shares, warrants to purchase other securities, subscription receipts, share purchase contracts, debt securities and units (comprised of one or more of the preceding identified securities) of the Registrant, and a combination of such securities, separately or as units, as may be sold by the Registrant from time to time, which collectively shall have an aggregate initial offering price of not to exceed USD$173,310,226 (converted from CAD$240,000,000 at an exchange rate of USD$1.00=CAD$1.3848, which was the daily average exchange rate reported by the Bank of Canada on September 12, 2025). The securities registered hereunder also include such indeterminate number of each class of identified securities as may be issued upon conversion, exercise or exchange of any other securities that provide for such conversion into, exercise for or exchange into such securities. Separate consideration may or may not be received for securities that are issuable on exercise, conversion or exchange of other securities. In addition, pursuant to Rule 416 under the Securities Act of 1933, as amended, the common shares being registered hereunder include such indeterminate number of common shares as may be issuable with respect to the shares being registered hereunder as a result of stock splits, stock dividends, or similar transactions. The proposed maximum initial offering price per security will be determined, from time to time, by the Registrant in connection with the sale of the securities under this registration statement. Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) of the Securities Act.

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| | |
|:---|:---|
| | |
| **Rules 457(b) and 0-11(a)(2)** | **Rules 457(b) and 0-11(a)(2)** |
| Fee Offset Claims | N/A |
| Fee Offset Sources | N/A |
| **Rule 457(p)** | **Rule 457(p)** |
| Fee Offset Claims | N/A |
| Fee Offset Sources | N/A |

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | &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; **Security Type**  | &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; **Security Class Title**  | &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; **Amount of Securities Previously Registered**  | &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; **Maximum Aggregate Offering Price of Securities Previously Registered**  | &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; **Form Type**  | &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; **File Number**  | &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; **Initial Effective Date**  |
| N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A |

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