# EDGAR Filing Document

**Accession Number:** 0001919776
**File Stem:** 0001104659-26-053128
**Filing Date:** 2026-4
**Character Count:** 260694
**Document Hash:** 1b26057588b6d7e927efe4a2c8881d8f
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001104659-26-053128.hdr.sgml**: 20260430

**ACCESSION NUMBER**: 0001104659-26-053128

**CONFORMED SUBMISSION TYPE**: 6-K

**PUBLIC DOCUMENT COUNT**: 19

**CONFORMED PERIOD OF REPORT**: 20260430

**FILED AS OF DATE**: 20260430

**DATE AS OF CHANGE**: 20260430

**FILER**: 

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

**FILING VALUES:**
- **FORM TYPE:** 6-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-43241
- **FILM NUMBER:** 26926953

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

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

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**Form 6-K**

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

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

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

---

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

---

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

Form 20-F ⌧ Form 40-F ◻

**EXHIBIT INDEX**

---

| | |
|:---|:---|
| **Exhibit** | **Description** |
| [99.1](tm2612970d1_ex99-1.htm) | [Consolidated Financial Statements for the Years Ended December 31, 2025 and 2024](tm2612970d1_ex99-1.htm) |
| [99.2](tm2612970d1_ex99-2.htm) | [Management's Discussion and Analysis for the Year Ended December 31, 2025](tm2612970d1_ex99-2.htm) |
| [99.3](tm2612970d1_ex99-3.htm) | [Form 52-109FV1 Certification of Annual Filings of CEO for the Year Ended December 31, 2025](tm2612970d1_ex99-3.htm) |
| [99.4](tm2612970d1_ex99-4.htm) | [Form 52-109FV1 Certification of Annual Filings of CFO for the Year Ended December 31, 2025](tm2612970d1_ex99-4.htm) |
| [99.5](tm2612970d1_ex99-5.htm) | [Alberta Form 13-501F1 – Reporting Issuer Participation Fee Form](tm2612970d1_ex99-5.htm) |
| [99.6](tm2612970d1_ex99-6.htm) | [Ontario Form 13-502F1 – Reporting Issuer Participation Fee Form](tm2612970d1_ex99-6.htm) |

---

**SIGNATURES**

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

Dated: April 30, 2026

---

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

---

## Exhibit 99.1

**Exhibit 99.1**

![](tm2612970d1_ex99-1img001.jpg)

**Liberty Defense Holdings, Ltd.**

**Consolidated Financial Statements**

**For the Years Ended December 31, 2025 and 2024**

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

 **_____________________________**

![](logo.jpg)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Directors of

Liberty Defense Holdings Ltd.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of financial position of Liberty Defense Holdings Ltd. (the "Company") as of December 31, 2025 and 2024, and the related consolidated statements of loss and comprehensive loss, changes in shareholders' deficiency, and cash flows for the year ended December 31, 2025 and 2024, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years ended December 31, 2025 and 2024 in conformity with IFRS Accounting Standards as issued by the International Accounting Standards Board (IFRS Accounting Standards).

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company's auditor since 2021.

/s/ DAVIDSON & COMPANY LLP

Chartered Professional Accountants Vancouver, Canada

April 29, 2026

**Liberty Defense Holdings, Ltd.**

**Consolidated Statements of Financial Position**

(Expressed in U.S. dollars)

---

| | | | |
|:---|:---|:---|:---|
| **As at:** | **Note** | **December 31, <br> 2025** | **December 31, <br> 2024** |
|  |  | **$** | **$** |
| **Assets** |  |  |  |
| Current assets: |  |  |  |
| &nbsp;&nbsp;&nbsp;Cash |  |  |  |
| &nbsp;&nbsp;&nbsp;Accounts receivable, prepaids and deposits | 4 |  |  |
| &nbsp;&nbsp;&nbsp;Inventory | 6 |  |  |
| &nbsp;&nbsp;&nbsp;Contract costs | 17 |  |  |
| &nbsp;&nbsp;&nbsp;Deferred financing costs | 25 |  |  |
| Non-current assets: |  |  |  |
| &nbsp;&nbsp;&nbsp;Property and equipment | 7 |  |  |
| &nbsp;&nbsp;&nbsp;Intangible assets | 8 |  |  |
| **Total assets** |  |  |  |
| **Liabilities** |  |  |  |
| Current liabilities: |  |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities | 5 & 19 |  |  |
| &nbsp;&nbsp;&nbsp;Loans payable | 9 & 19 |  |  |
| &nbsp;&nbsp;&nbsp;Parabilis term-loan | 10 |  |  |
| &nbsp;&nbsp;&nbsp;Factoring and credit line liability | 11 |  |  |
| &nbsp;&nbsp;&nbsp;Deferred revenue | 16 |  |  |
| &nbsp;&nbsp;&nbsp;Lease liabilities | 12 |  |  |
| Non-current liabilities: |  |  |  |
| &nbsp;&nbsp;&nbsp;Non-current lease liabilities | 12 |  |  |
| &nbsp;&nbsp;&nbsp;Non-current Parabilis term loan | 10 |  |  |
| **Total liabilities** |  |  |  |
| **Shareholders' deficiency** |  |  |  |
| &nbsp;&nbsp;&nbsp;Share capital | 13 |  |  |
| &nbsp;&nbsp;&nbsp;Equity reserves | 14 |  |  |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive income (loss) |  |  |  |
| &nbsp;&nbsp;&nbsp;Deficit |  |  |  |
| Total shareholders' deficiency |  |  |  |
| **Total liabilities and shareholders' deficiency** |  |  |  |

---

Nature of operations and going concern (note 1)

Subsequent events (note 25)

Approved on behalf of the Board of Directors:

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

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

**Liberty Defense Holdings, Ltd.**

**Consolidated Statements of Loss and Comprehensive Loss**

(Expressed in U.S. dollars)

---

| | | | |
|:---|:---|:---|:---|
|  | **Note** | **Year ended <br>December 31,**<br>**2025** | **Year ended <br>December 31,**<br>**2024** |
| **Revenue** | &nbsp;&nbsp;16 & 17 |  |  |
| &nbsp;&nbsp;HEXWAVE revenue |  | 643479 | 1013546 |
| &nbsp;&nbsp;Contract revenue |  | 854849 | 1425000 |
| &nbsp;&nbsp;**Total Revenue** |  | 1498328 | 2438546 |
| **Cost of revenue** |  |  |  |
| &nbsp;&nbsp;HEXWAVE cost of revenue |  | 2646047 | 2033498 |
| &nbsp;&nbsp;Contract cost of revenue |  | 1778919 | 2081971 |
| **Total cost of revenue** |  | 4424966 | 4115469 |
| **Gross loss** |  | (2926638) | (1676923) |
| **Engineering and Research and Development Expenses:** |  |  |  |
| &nbsp;&nbsp;Product development & technology costs |  | 320602 | 148675 |
| &nbsp;&nbsp;Salaries and consulting fees | &nbsp;&nbsp;19 | 1756683 | 1655580 |
| &nbsp;&nbsp;Stock-based compensation | &nbsp;&nbsp;14 & 19 | 15269 | 98008 |
| &nbsp;&nbsp;Depreciation | &nbsp;&nbsp;7 | 126045 | 248979 |
| &nbsp;&nbsp;Office, rent & administration, travel, and miscellaneous |  | 142520 | 116497 |
| **General & Administration Expenses** |  |  |  |
| &nbsp;&nbsp;Salaries and consulting fees | &nbsp;&nbsp;19 | 2011166 | 1809724 |
| &nbsp;&nbsp;Legal and professional fees |  | 673298 | 458390 |
| &nbsp;&nbsp;Stock-based compensation | &nbsp;&nbsp;14 & 19 | 1315491 | 255220 |
| &nbsp;&nbsp;Office, rent & administration, travel, and miscellaneous |  | 4178182 | 965868 |
|  |  | 10539256 | 5756941 |
| **Operating Loss** |  | $**(13465894)** | $**(7433864)** |
| **Other expense:** |  |  |  |
| &nbsp;&nbsp;Other (income) expenses, net |  | (57549) | 589550 |
| &nbsp;&nbsp;Interest expense | &nbsp;&nbsp;10 & 11 | 691930 | 808989 |
| &nbsp;&nbsp;Foreign exchange loss |  | 31902 | 12760 |
|  |  | 666283 | 1411299 |
| **Net loss for the year** |  | **(14132177)** | **(8845163)** |
| **Other comprehensive loss** |  |  |  |
| &nbsp;&nbsp;Items that may be reclassified subsequently to profit or (loss) |  |  |  |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustment |  | 208060 | 192175 |
| **Total loss and comprehensive loss for the year** |  | **(13924117)** | **(8652988)** |
| Weighted average number of common shares outstanding |  |  |  |
| &nbsp;&nbsp; Basic and diluted |  | 1346852 | 381350 |
| Loss per share |  |  |  |
| &nbsp;&nbsp;Basic and diluted loss per common share | &nbsp;&nbsp;15 | (10.49) | (23.19) |

---

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

**Liberty Defense Holdings, Ltd.**

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

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

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Note** | **Number of common shares** | **Share** <br> **capital**  | **Equity** <br> **reserves** | **Share subscriptions received in advance** |
|  |  | # | $ | $ | $ |
| **Balance as at December 31, 2023** |  | **323174)** **))** |  |  |  |
| &nbsp;&nbsp;&nbsp;Issue of private placement, net of share issue cost | &nbsp;&nbsp;13 | 601427) |  |  |  |
| &nbsp;&nbsp;&nbsp;Fair value of warrants allocated to share capital on expiry | &nbsp;&nbsp;14 | –) |  |  |  |
| &nbsp;&nbsp;&nbsp;Residual value allocated to warrants | &nbsp;&nbsp;13 | –) |  |  |  |
| &nbsp;&nbsp;&nbsp;Residual value of warrants exercised | &nbsp;&nbsp;13 | –) |  |  |  |
| &nbsp;&nbsp;&nbsp;Fair value of broker warrants allocated to share capital | &nbsp;&nbsp;14 | –) |  |  |  |
| &nbsp;&nbsp;&nbsp;Warrants exercised for cash | &nbsp;&nbsp;13 | 1333 |  |  |  |
| &nbsp;&nbsp;&nbsp;Shares issued on debt settlement | &nbsp;&nbsp;13 | 34722 |  |  |  |
| &nbsp;&nbsp;&nbsp;Restricted share units issued | &nbsp;&nbsp;13 | 2263) |  |  |  |
| &nbsp;&nbsp;&nbsp;Stock based compensation | &nbsp;&nbsp;14 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustment |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Loss for the period |  | –) |  |  |  |
| **Balance as at December 31, 2024** |  | **962919** |  |  |  |
| &nbsp;&nbsp;&nbsp;Issue of private placement, net of share issue cost | &nbsp;&nbsp;13 | 688282 |  |  |  |
| &nbsp;&nbsp;&nbsp;Warrants exercised | &nbsp;&nbsp;13 | 240718 |  |  |  |
| &nbsp;&nbsp;&nbsp;Residual value allocated to warrants | &nbsp;&nbsp;13 | –) |  |  |  |
| &nbsp;&nbsp;&nbsp;Restricted shares units exercised | &nbsp;&nbsp;13 | 4758) |  |  |  |
| &nbsp;&nbsp;&nbsp;Fair value of broker warrants allocated to share capital | &nbsp;&nbsp;14 | –) |  |  |  |
| &nbsp;&nbsp;&nbsp;Fair value of warrants allocated to share capital on expiry | &nbsp;&nbsp;14 | –) |  |  |  |
| &nbsp;&nbsp;&nbsp;Stock based compensation | &nbsp;&nbsp;14 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustment |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Loss for the year |  | –) |  |  |  |
| **Balance as at December 31, 2025** |  | **1896677** |  |  |  |

---

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

**Liberty Defense Holdings, Ltd.**

**Consolidated Statements of Cash Flows**

(Expressed in U.S. dollars)

---

| |
|:---|
| **Cash (used in) provided by:** |
| **Operating activities:** |
| &nbsp;&nbsp;&nbsp;Loss and comprehensive loss for the year |
| &nbsp;&nbsp;&nbsp;Items not involving cash: |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease liability interest |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued interest |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization recorded in cost of revenue |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable write-off |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss of settlement of debt |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on disposal of lease |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on disposal of PP&E |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock based compensation |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of inventory |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of contract costs |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Factoring fees |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Credit line Parabilis interest and fees |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange |
| &nbsp;&nbsp;&nbsp;Changes in non-cash working capital |
| **Cash used in operating activities** |
| **Investing activities:** |
| &nbsp;&nbsp;&nbsp;Additions to intangible assets |
| &nbsp;&nbsp;&nbsp;Acquisition of equipment |
| **Cash used in investing activities** |
| **Financing activities:** |
| &nbsp;&nbsp;&nbsp;Proceeds from issuance of units, net of share issue costs |
| &nbsp;&nbsp;&nbsp;Proceeds from working capital loans - Related Parties |
| &nbsp;&nbsp;&nbsp;Repayment of working capital loans - Related Parties |
| &nbsp;&nbsp;&nbsp;Proceeds from working capital loans |
| &nbsp;&nbsp;&nbsp;Repayments from working capital loans |
| &nbsp;&nbsp;&nbsp;Proceeds from Parabilis Term Loan |
| &nbsp;&nbsp;&nbsp;Repayments on Parabilis Term Loan |
| &nbsp;&nbsp;&nbsp;Proceeds from factoring and credit lines |
| &nbsp;&nbsp;&nbsp;Repayments on factoring and credit lines |
| &nbsp;&nbsp;&nbsp;Repayment of CEBA loan |
| &nbsp;&nbsp;&nbsp;Proceeds from warrants exercised |
| &nbsp;&nbsp;&nbsp;Payment of deferred financing fees |
| &nbsp;&nbsp;&nbsp;Lease receivable collected |
| &nbsp;&nbsp;&nbsp;Repayment of leases liabilities |
| **Cash provided by financing activities** |
| &nbsp;&nbsp;&nbsp;Effect of foreign exchange rate changes on cash |
| **Effect of foreign exchange rate changes on cash** |
| **(Decrease) increase in cash** |
| **Cash, beginning of the year** |
| **Cash, end of the year** |

---

Supplemental Disclousure with Respect to Cash Flow (Note 18)

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

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

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

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

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

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

**Going concern**

These audited consolidated financial statements have been prepared using IFRS Accounting Standards ("IFRS") as issued by the International Accounting Standards Board applicable to a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business. The Company incurred in a total loss during the year ended December 31, 2025, of $14,132,177 and had cash outflows from operating activities of $11,349,079. Given the current stage of operations, the Company's ability to continue as a going concern is contingent on its ability to obtain additional financing. While the Company has been successful in arranging financing in the past, the success of such initiatives cannot be assured. As of April 29, 2026, the company has raised adequate financing through an initial public offering with a total offering of $19,999,925. The Company believes that the adequate amount of financing is sufficient to sustain operations for the next twelve months.

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

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

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

These consolidated financial statements have been prepared in accordance with IFRS.

These consolidated financial statements were approved for issuance by the Board of Directors on April 29, 2026.

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

These consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments which are measured at fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

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

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

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

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

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

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

---

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

---

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

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

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

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

<u>Functional currency</u>

The functional currency for the Company is the currency of the primary economic environment in which the entity operates. The Company has determined the functional currency of the Company, LDH Amalco, DDD and DDT as the Canadian dollar (CAD$). The functional currency of LDT is USD. Determination of functional currency may involve certain judgments to determine the primary economic environment, and the Company reconsider the functional currency if there is a change in events and conditions that determined the primary economic environment.

<u>Estimated useful lives and depreciation and amortization of property and equipment and intangible assets</u>

Depreciation and amortization of property and equipment and intangible assets are dependent upon estimates of economic useful lives, which are determined through the exercise of judgment. Should the economic useful life, or depreciation rates differ from the initial estimate, an adjustment would be made in the consolidated statement of loss and comprehensive loss on a prospective basis.

<u>Impairment of intangible assets and other long-lived assets</u>

Significant estimates and judgments are required in testing intangible assets and other long-lived assets, including right-of-use assets, for impairment. Management uses estimates or exercises judgment in assessing indicators of impairment, defining a CGU, forecasting future cash flows, estimating replacement cost models, and in determining other key assumptions such as discount rates and earnings multipliers used for assessing fair value (less costs of disposal) or value in use.

<u>Stock based compensation</u>

The Company determines the fair value of stock options granted using the Black-Scholes option pricing model. This option pricing model requires the development of market-based subjective inputs, including the risk-free interest rate, expected price volatility and expected life of the option. Changes in these inputs and the underlying assumption used to develop them can materially affect the fair value estimate.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

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

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

<u>Treatment of development costs</u>

Costs to develop products are capitalized to the extent that the criteria for recognition as intangible assets in IAS 38 – Intangible Assets are met. Management will use significant judgement to determine if the intangible asset is either in the research, development, or commercialization phase. As the asset moves from the research to development phase, criteria are required to prove that the asset is in the development phase. This includes the intangible asset being technically, and economically feasible, the intangible asset is intended to be complete, has the ability to be sold, show that it will generate future economic benefits, the Company has adequate technical, financial, and other resources to complete the development, and the intangible asset has the ability to measure reliability the expenditure attribute to the intangible asset during its development. Management considers these factors in aggregate and applies significant judgment to determine whether the product is feasible and is in the development phase. Costs associated in the development phase that would be considered additions include labor associated with the design, construction, and testing of the pre-production or pre-use of the prototypes and models, tools, dies involving new technology, construction, and testing of a chosen alternative for new or improved materials, devices, products, processes, systems, or services.

<u>Warranty provisions</u>

Warranty provisions are recognized for the future obligations to provide services for the repairs and maintenance of products sold to customers. The Company assesses its warranty provision based on experience. The actual costs incurred may differ from those amounts estimated.

<u>Right of returns</u>

The Company estimates sales returns based on historical return patterns, current sales performance, and management's expectations regarding future returns. These estimates require the use of judgment and are updated regularly to reflect the most current trends and information available. Although the Company does not have a return policy in place, it recognizes a refund liability for the expected value of returned goods. Correspondingly, an asset is recognized for the right to recover products from customers upon settling the refund liability. Returned products are subsequently resold to other customers where applicable.

<u>Lease</u>

The right of use assets and liabilities are measured at the present value of future lease payments discounted using the rate implicit in the lease or incremental borrowing rate for the Company if the rate implicit in the lease is not readily determined. These assumptions will impact the valuation of right of use assets and liabilities and finance cost.

<u>Income taxes</u>

The provision for income taxes and composition of income tax assets and liabilities requires management's judgment. The application of income tax legislation also requires judgment to interpret legislation and to apply those findings to the Company's transactions.

<u>Deferred tax assets and liabilities</u>

Management judgment and estimates are required in assessing whether deferred tax assets and deferred tax liabilities are recognized in the consolidated statements of financial position. Judgements are made as to whether future taxable profits will be available to recognize deferred tax assets. Assumptions about the generation of future taxable profits depend on management's estimates of future cash flows. These depend on estimates of future production and sales volumes, prices, operating costs, and other capital management transactions. These judgments and estimates are subject to risk and uncertainty and changes in circumstances may alter expectations, which may impact the amount of deferred tax assets and deferred tax liabilities recognized on the consolidated statements of financial position and the benefit of other tax losses and temporary differences not yet recognized.

**Liberty Defense Holdings, Ltd.** 

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

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

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

<u>Going concern of operations</u>

These consolidated financial statements have been prepared on a going concern basis and do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary if the Company were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations. Management has applied judgment in the assessment of the Company's ability to continue as a going concern, considering all available information, and concluded that the going concern assumption is appropriate for a period of at least twelve months following the end of the reporting period. Given the judgment involved, actual results may lead to a materially different outcome.

<u>Contract revenue recognition</u>

Contract revenue is recognized once the Company transfers control of goods and services and satisfies performance obligations. The continuous transfer of control of goods and services to the customer is often supported by the customer's physical possession or legal title to the work in process, as well as contractual clauses that provide the Company with a present right to payment for work performed to date. As a result, significant assumptions are used to determine when these performance obligations are satisfied. Changes to these assumptions could impact the revenue recognized during the reported period.

<u>Inventory</u>

Inventory is valued at the lower of cost and net realizable value. Cost of inventory includes cost of purchase (purchase price, import duties, transport, handling, and other costs directly attributable to the acquisition of inventories), estimated cost of conversion, and other costs incurred in bringing the inventories to their present location and condition. Net realizable value for inventories is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Provisions are made in profit or loss of the current period on any difference between cost and net realizable values.

<u>Contract costs</u>

Deferred costs of sales are recorded at the lower of cost and net realizable value. Management applies judgment and estimates in determining costs that are incurred in the current reporting period but are to be allocated to future performance obligations.

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)** **Cash** 

Cash consists of cash on hand and demand deposits.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)** **Foreign currency transactions** 

The financial statements of entities with functional currencies other than U.S. dollars are translated into U.S. dollars for presentation purposes as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Assets
 and liabilities are translated at the closing rate at the date of that statement of financial
 position

&nbsp;&nbsp;&nbsp;&nbsp;· Income
 and expenses and other comprehensive income are translated at exchange rates at the date
 of the transaction

&nbsp;&nbsp;&nbsp;&nbsp;· All
 resulting exchange differences are recognized in other comprehensive loss.

Transactions in currencies other than the functional currency of an entity are recorded at the rate of exchange prevailing on the date of the transaction. Monetary assets and liabilities that are denominated in foreign currencies are translated at the rate prevailing at each reporting date. Foreign currency translation differences arising on translation into the functional currency of an entity are recognized in the consolidated statement of loss and comprehensive loss.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

**3.** **Material Accounting Policy Information** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c) Inventory**

The Company's inventory consists of raw materials, work-in-process ("WIP") and finished goods. The costing method the Company uses is weighted average. Inventories are measured at the lower of cost and net realizable value. The cost of WIP and finished goods includes the cost of raw materials and cost of conversion. The cost of conversion includes costs directly related to the units of production, such as direct labor, and fixed and variable production overheads, based on normal operating capacity. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. At each reporting period, management evaluates the provision for obsolete and slow-moving inventory which may be reversed in subsequent periods, should the value subsequently be recovered.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d) Property and equipment**

Property and equipment are carried at cost, less accumulated depreciation, and accumulated impairment losses, if any. Cost comprises the fair value of consideration given to acquire an asset and includes the direct charges associated with bringing the asset to the location and condition necessary for putting it into use along with the future cost of dismantling and removing the asset. When parts of an item of property and equipment have different useful lives, they are accounted for as separate items (major components) of property and equipment. Property and equipment with an original cost of $5,000 or less is expensed on acquisition. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets, as follows:

---

| | |
|:---|:---|
| **Asset** | **Life** |
| Leasehold improvements | The term of the lease |
| Equipment | Three to seven years |
| Prototypes and demo units | One to five years |

---

Prototypes are internally generated assets used as a preliminary model for development of the Company's product. Incurred costs on these prototypes are initially accounted for as construction in process ("CIP") and includes directly attributable costs necessary to create, produce and prepare the asset to be capable of operating in the manner intended by management. Once the prototypes being built are completed and functional, the CIP is transferred to fixed assets and begins depreciation on a straight-line basis over the estimated useful life.

Depreciation methods and useful lives are reviewed at each financial year-end and adjusted if appropriate.

If any, gains, and losses on disposal of property and equipment are determined by comparing the proceeds from disposal with the carrying amount of property and equipment and are recognized net within other income (expense) in the consolidated statement of loss and comprehensive loss.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e) Intangible assets**

Intangible assets can be acquired by separate purchases, as part of a business combination, by government grant, by exchange of assets and by self-creation.

<u>Research and development costs</u>

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

**Liberty Defense Holdings, Ltd.** 

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

**3.** **Material Accounting Policy Information** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e) Intangible assets** (continued)

<u>Research and development costs (continued)</u>

Expenditure in development activities where research results are used in planning and designing the production of new or substantially improved products and processes is recognized as an intangible asset if the product or process is technically and commercially feasible, if there is an intention and ability to complete the project and then use or sell it and expect economic benefits from the project, if the Company has sufficient resources to complete development and if it is able to measure reliably the cost during development. The recognized expenditure incurred includes not only the costs caused by its production and indirect costs that can be attributed to it and recognized by the market but also the cost of borrowing in relation to its acquisition.

On initial recognition, an intangible asset is measured at cost. After initial recognition, the Company monitors intangible assets according to the cost model, whereby their cost is decreased by any accumulated depreciation and any accumulated impairment losses.

<u>Amortization</u>

Intangible assets are classified as those with finite useful lives and those with indefinite useful lives. The carrying amount of an intangible asset with a finite useful life is reduced by depreciation and impairments. Depreciation of intangible fixed assets begins to be calculated when the asset is available for use. The adequacy of the depreciation period and the depreciation method are reviewed at least at each financial year-end. Any adjustments necessary are accounted for as a change in an accounting estimate.

Depreciation is calculated on a straight-line basis, beginning the following day in the month when the asset is available for use over the life of the asset. The useful lives of the assets will vary depending on the analysis conducted and comparable assets will be taken into consideration. The current useful lives are as follows:

---

| | |
|:---|:---|
| **Asset** | **Life** |
| MIT License | Fourteen years |
| Battelle License | Three years |
| Intellectual Property | Seven years |

---

Intangible assets with indefinite useful life are tested for impairment at least on the balance sheet date. These assets are not subject to amortization. The useful life is reassessed to determine whether the assets need not be treated as having finite useful life, and the effect is accounted as a change in an accounting estimate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f) Warranty provision**

The Company provides product warranties on certain products pursuant to the contract and purchase orders and makes provision for the anticipated cost of these warranties through cost of sales; this provision is reviewed periodically to assess its adequacy in the light of actual warranty costs incurred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(g) Refund liabilities**

The Company recognizes a refund liability when it receives consideration from a customer and expects to refund some or all of that consideration.

In accordance with IFRS 15, revenue is recognized only for the portion of consideration the Company expects to be entitled to, excluding amounts anticipated to be refunded. A refund liability is measured at the amount of consideration the Company expects to refund to customers.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

**3.** **Material Accounting Policy Information** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(g) Refund liabilities** (continued)

Simultaneously, the Company recognizes an asset for its right to recover products from customers upon settling the refund liability. This asset is measured at the carrying amount of the inventory expected to be returned, adjusted for any expected costs to recover the goods and potential impairment.

At each reporting period, the Company updates the measurement of the refund liability and the corresponding asset to reflect changes in expectations about the amount of refunds and returns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(h) Impairment of non-financial assets**

Long-lived assets are reviewed for impairment at the end of each reporting period or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the recoverable amount of the assets. Assets to be disposed of are reported at the lower of the carrying amount and the fair value less costs to sell.

The carrying amounts of the Company's non-financial assets, other than deferred tax assets if any, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated.

For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit" or "CGU"). The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs.

An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss.

Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. A reversal of an impairment loss is recognized immediately in the consolidated statement of loss and comprehensive loss.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i) Financial instruments**

The Company recognizes financial assets and liabilities on its financial statements when it becomes a party to the contract creating the asset or liability.

*Classification*

The Company classifies its financial instruments in the following categories: at fair value through profit and loss ("FVTPL"), at fair value through other comprehensive income (loss) ("FVTOCI"), or at amortized cost.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

**3.** **Material Accounting Policy Information** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i) Financial instruments** (continued)

On initial recognition, all financial assets and liabilities are recorded by the Company at fair value, net of attributable transaction costs, except for financial assets and liabilities classified as FVTPL for which transaction costs are expensed in the period in which they are incurred. The classification of the Company's financial instruments is as follows:

---

| | |
|:---|:---|
| **Financial assets/liabilities** | **Classification IFRS 9** |
| Cash | Amortized cost |
| Accounts receivable | Amortized cost |
| Accounts payable and accrued liabilities | Amortized cost |
| Parabilis line of credit | Amortized cost |
| Parabilis term loan | Amortized cost |
| Lease liabilities | Amortized cost |

---

<u>Amortized cost</u>

Financial assets that meet the following conditions are measured subsequently at amortized cost:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the
 financial asset is held within a business model whose objective is to hold financial assets
 in order to collect contractual cash flows, and

· 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.

The amortized cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortization using effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. Interest income is recognized using the effective interest method.

<u>Fair value through other comprehensive income ("FVTOCI")</u>

Financial assets that meet the following conditions are measured at FVTOCI:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the
 financial asset is held within a business model whose objective is achieved by both collecting
 contractual cash flows and selling financial assets, and

· 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.

<u>Fair value through other comprehensive income ("FVTOCI") (continued)</u>

On initial recognition, the Company may make an irrevocable election (on an instrument-by-instrument basis) to designate investments in equity instruments that would otherwise be measured at fair value through profit or loss to present subsequent changes in fair value in other comprehensive income. Designation at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination. Investments in equity instruments at FVTOCI are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognized in OCI. The cumulative gain or loss is not reclassified to profit or loss on disposal of the equity instrument, instead, it is transferred to retained earnings.

The Company does not have any financial assets classified as FVTOCI.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

**3.** **Material Accounting Policy Information** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i) Financial instruments** (continued)

<u>Fair value through profit or loss ("FVTPL")</u>

By default, all other financial assets are measured subsequently at FVTPL.

The Company, at initial recognition, may also irrevocably designate a financial asset as measured at FVTPL if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases.

Financial assets measured at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognized in profit or loss to the extent they are not part of a designated hedging relationship.

<u>Financial liabilities and equity</u>

Debt and equity instruments 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. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all its liabilities. Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs. The repurchase of the Company's own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company's own equity instruments. Financial liabilities that are not contingent consideration of an acquirer in a business combination, held for trading or designated as at FVTPL, are measured at amortized cost using the effective interest method.

<u>Financial instruments designated as hedging instruments</u>

The Company does not currently apply, nor has it historically applied, hedge accounting to financial instruments.

<u>Impairment</u>

The Company recognizes a loss allowance for expected credit losses on its financial assets. The amount of expected credit losses is updated at each reporting period to reflect changes in credit risk since initial recognition of the respective financial instruments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(j) Income taxes**

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantially enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets and liabilities, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis, or their tax assets and liabilities will be realized simultaneously.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

**3.** **Material Accounting Policy Information** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(j) Income taxes** (continued)

A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(k) Share capital**

Common shares are classified as equity. Transactions costs directly attributable to the issue of common shares and share options are recognized as a deduction from equity, net of any tax effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(l) Share-based payments**

The Company grants restricted share units, deferred share units, and stock options and performance shares to directors, officers, and consultants pursuant to a Omnibus Equity Incentive Plan described in Note 13. The Company uses the fair value method to account for all share-based awards granted, modified, or settled, and the Black-Scholes Option Pricing Model to determine the fair value of stock options granted. As such, a share-based payment is recorded based on the estimated fair value of options with a corresponding credit to equity reserves. Any consideration received plus the amounts recognized in the equity reserves will be transferred to share capital on the exercise of stock options. The amounts remain in equity reserves for stock options which expire unexercised. Stock options with graded vesting schedules are accounted for as separate grants with different vesting periods and fair values. Changes to the estimated number of share options that will eventually vest are accounted for prospectively. Options issued to non-employees are valued based on the fair value of the services provided unless the fair value of the services provided cannot be measured reliably, in which case, the fair value is measured by reference to the fair value of the equity instruments granted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(m) Warrants issued in equity financial transactions**

The Company uses the residual value method with respect to the measurement of shares and warrants issued as private placement units. The residual value method first allocates value to the more easily measurable component based on fair value and then the residual value, if any, to the less easily measurable component. The fair value of the common shares issued in the private placements was determined to be the more easily measurable component and were valued at their fair value, as determined by the quoted bid price on the issuance date. The balance, if any, was allocated to the attached warrants. Any fair value attributed to the warrants on exercise is recorded as equity. If warrants issued to brokers or finders are subsequently cancelled or expire without being exercised, then the historical fair value of the equity reserve is transferred from reserve to share capital. If the warrants are exercised the related reserves are reclassified from reserves to share capital.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(n) Earnings (loss) per share**

The Company presents basic and diluted earnings (loss) per share ("EPS") data for its common shares. Basic EPS is calculated by dividing the profit or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period adjusted for own shares held. Diluted EPS per share is calculated by dividing the earnings (loss) by the weighted average number of common shares outstanding assuming that the proceeds to be received on the exercise of dilutive stock options and warrants are used to repurchase common shares at the average market price during the period.

In the Company's case, diluted loss per share is the same as basic loss per share, as the effect of outstanding share options and warrants on loss per share would be anti-dilutive.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

**3.** **Material Accounting Policy Information** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(o) Leases**

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether it has the right to obtain substantially all of the economic benefits from and to direct the use of the identified asset.

At commencement or on modification of a contract that contains a lease component, the Company allocates the consideration in the contract to each lease component on the basis of its relative stand-alone prices.

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. 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.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Company by the end of the lease term or the cost of the right-of-use asset reflects that the Company will exercise a purchase option. In that case, the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

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. Generally, the Company uses its incremental borrowing rate as the discount rate. The Company determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and type of asset leased.

Lease payments included in the measurement of the lease liability comprise the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• fixed
 payments, including in-substance fixed payments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• variable
 lease payments that depend on an index or a rate, initially measured using the index or rate
 as at the commencement date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• amounts
 expected to be payable under a residual value guarantee; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the
 exercise price under a purchase option that the Company is reasonably certain to exercise,
 lease payments in an optional renewal period if the Company is reasonably certain to exercise
 an extension option, and penalties for early termination of a lease unless the Company is
 reasonably certain not to terminate early.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company's estimate of the amount expected to be payable under a residual value guarantee, if the Company changes its assessment of whether it will exercise a purchase, extension, or termination option, or if there is a revised in-substance fixed lease payment. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in the statement of loss and comprehensive loss if the carrying amount of the right-of-use asset has been reduced to zero.

Leases for which the Company is a lessor, are classified as finance or operating leases. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

**3.** **Material Accounting Policy Information** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(o) Leases** (continued)

When the Company is an intermediate lessor, it accounts for the head lease and the sublease as two separate contracts. The sublease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease. Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized on a straight-line basis over the lease term. Amounts due from lessees under finance leases are recognized as receivables at the amount of the Company's net investment in the leases. Finance lease income is allocated to reporting periods so as to reflect a constant periodic rate of return on the Company's net investment outstanding in respect of the leases.

Short-term leases and leases of low-value assets:

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(p) Revenue recognition**

Contract Revenue:

When determining the proper revenue recognition methods for contracts, the Company will evaluate each contract to determine if it meets the recognition criteria. A contract will be identified if both parties to the contract have approved the contract and are committed to perform their respective obligations, each party's rights and payment terms can be identified regarding the goods or services to be transferred, and collectability of consideration is probable.

Performance obligations are determined throughout each contract. The Company's contracts are based on a specific set of tasks that are identified and agreed upon, as well as the transaction price is determined and agreed upon between both parties. Each contract accounts for the timing of these tasks at different points, either on completion of a task or on a monthly/quarterly basis. The total transaction price is allocated to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation.

The Company typically transfers control of goods and services, and satisfies performance obligations, over time. Therefore, the Company recognizes revenue over time as these performance obligations are satisfied. This continuous transfer of control to the customer is often supported by the customer's physical possession or legal title to the work in process, as well as contractual clauses that provide the Company with a present right to payment for work performed to date. These costs include labor, materials, other direct and allocations of indirect costs.

The transaction price is determined by considering the terms of the contract. Typically, the contracts the Company enters into are contracts that already have a fixed price set to them. These contracts still go through a significant amount of consideration and estimates to provide the transaction price. When determining the transaction price, or work to be completed in the transaction price, estimates of labor, material, travel, other direct costs, and indirect costs are considered. Costs that the Company will recognize as expense are general and administrative costs (besides the costs explicitly chargeable to the contract), costs of wasted materials labor and other resources, costs related to satisfied performance obligations, and all costs for which an entity cannot distinguish whether the costs relate to unsatisfied performance obligations or to satisfied performance obligations.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

**3.** **Material Accounting Policy Information** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(p) Revenue recognition** (continued)

HEXWAVE units:

Revenue arising from the sale of HEXWAVE units is recognized as the Company fulfills its performance obligations upon delivery and successful commissioning of the product to the customer. Additionally, the Company generates revenue through other streams related to HEXWAVE technology, including annual subscriptions, maintenance subscriptions, installation, training services, and extended warranties. The annual subscriptions include algorithm and software updates that are pushed directly to the customer. Any customized algorithm would not be included. Maintenance services would include preventative servicing, and labour and parts. Each unit sold comes with a one-year warranty, annual subscription, and maintenance services. Additional warranty, annual subscriptions, and maintenance services can be purchased for additional years. Revenue from upfront sales of HEXWAVE units is initially recorded as deferred revenue until the obligation of shipment and delivery is fulfilled. Subsequently, upon meeting this obligation, the deferred revenue is recognized as earned revenue, net of provisions for estimated sales return. In regard to warranty, actual costs are charged against the provision incurred for the first year. If an extended warranty is purchased, the warranties are recognized over the warranty period, reflecting the service provided to the customer. Extended maintenance revenue is recognized on a straight-line basis over the twelve-month service period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(q) Contract costs**

Under contract revenue arrangements, the Company incurs costs in advance of recognizing revenue. These costs are recorded as contract costs and carried forward until the related revenues are recognized, at which time it is expensed. Deferred cost of sales is recorded at the lower of cost and net realizable value.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(r) Factoring arrangements**

The Company engages in factoring arrangements as a means of managing its accounts receivable and optimizing its working capital. Under these arrangements, the Company sells certain accounts receivable to a third-party financial institution (the 'Factor'). Upon entering into a factoring arrangement, the Company recognizes a financial asset for the rights to receive cash flows from the factored receivables if and only if derecognition conditions are met. In cases where derecognition criteria are not met, the Company continues to recognize the financial asset in its entirety and recognizes a corresponding financial liability for the consideration received.

The Company evaluates whether derecognition criteria are met, considering the nature of the contractual rights and obligations. If the Company retains substantially all the risks and rewards of ownership of the transferred asset, the financial asset is not derecognized. Consequently, the associated liability is measured at fair value reflecting the rights and obligations retained by the Company.

The Company continues to recognize the financial asset and associated liability at each reporting period. Any income on the transferred asset and any expense incurred on the financial liability, including associated financing fees or discounts, are recognized in subsequent periods over the term of the factoring arrangement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(s) Changes in accounting standards**

The Company has not adopted any other new standards in fiscal 2025. The Company is evaluating the impact of standards and interpretations that have been issued, but are not yet effective, up to the date of issuance of the consolidated financial statements. The adoption of these standards and interpretations are not expected to have a material impact on the consolidated financial statements.

The Company did not encounter any material effects from the implementation of these new standards or amendments in 2025.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

**3.** **Material Accounting Policy Information** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(s) Changes in accounting standards** (continued)

The following new standards and amendments were issued but not yet effective.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• On
 April 9, 2024, the IASB issued IFRS 18 Presentation and Disclosure in Financial Statements.
 IFRS 18 will apply for reporting periods beginning on or after January 1, 2027 and also
 applies to comparative information. IFRS 18 will replace IAS 1; many of the other existing
 principles in IAS 1 are retained, with limited changes. IFRS 18 will not impact the recognition
 or measurement of items in the financial statements, but it may change what an entity reports
 as its 'operating profit or loss'. Key new concepts introduced in IFRS 18 relate
 to: (i) the structure of the statement of profit or loss; (ii) required disclosures
 in the financial statements for certain profit or loss performance measures that are reported
 outside an entity's financial statements (that is, management-defined performance measures);
 and (iii) enhanced principles on aggregation and disaggregation which apply to the primary
 financial statements and notes in general. The Company is currently assessing the effects
 of IFRS 18 on the financial statements.

The Company is currently assessing the impact that, IFRS 18, will have on its consolidated financial statements.

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

---

| | | |
|:---|:---|:---|
|  | **December 31, <br> 2025** | **December 31, <br> 2024** |
| Trade accounts receivables | $470263 | $130000 |
| Other accounts receivables | 114980 | 125148 |
| Prepaids and deposits | 663124 | 1409228 |
|  | $**1248367** | $**1664376** |

---

The Company provides credit to its customers in the normal course of business and has mitigated this risk by managing and monitoring the underlying business relationships. The Company recognized $13,910 in expected credit losses during the year ended December 31, 2025 (December 31, 2024 - $nil).

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

---

| | | |
|:---|:---|:---|
|  | **December 31, <br> 2025** | **December 31, <br> 2024** |
| Accounts payable | $2546832 | $2406746 |
| Accrued liabilities | 2335545 | 1749144 |
|  | $**4882377** | $**4155890** |

---

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

Amounts payable to Viken were due within 120 days and bear interest at a rate of 1.5% per month on any overdue balances. The decrease in the balance payable primarily relates to payments made under the Viken arrangement during the year ended December 31, 2025. As at December 31, 2025, the amount due to Viken is $510,000 (December 31, 2024 - $1,160,000). Subsequently, on March 19, 2026, an amendment was signed, requiring the Company to pay the balance on the sooner of the date which the common share or the Holdings first commences on the NASDAQ Stock market and March 31, 2026.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

**5.** **Accounts Payable** (continued)

Additionally, the amendment applied an additional interest expense of $93,379 bringing the total balance payable to $603,379. As of April 29, 2026, the balance due has been paid and is $nil.

As at December 31, 2025, the Company recognized deferred financing costs of $803,698 (December 31, 2024 – $nil) related to its initial public offering on the Nasdaq Capital Market (note 25), which are payable in April 2026.

**6.** **Inventory** 

---

| | | |
|:---|:---|:---|
|  | **December 31, <br> 2025** | **December 31, <br> 2024** |
| Raw materials | $532604 | $211553 |
| Work-in-progress | 283656 | 128761 |
| Finished goods | 124550 |  |
| Right of return on finished goods | 249100 | 528000 |
|  | $**1189910** | $**868314** |

---

The Company reclassified finished goods inventory of $85,803 (December 31, 2024 - $nil) to property and equipment related to HEXWAVE demo unit. The Company reclassified work-in-progress assemblies of $nil (December 31, 2024, $48,185) to property and equipment related to the engineering demo HEXWAVE unit.

During the year ended December 31, 2025, the Company recognized an impairment expense of $475,024 (December 31, 2024 - $233,568).

During the year ended December 31, 2025, the Company expensed $976,050 of inventory to HEXWAVE cost of revenue (December 31, 2024, $1,799,930).

During the year ended December 31, 2025, the Company recognized $271,036 of warranty provision expense to HEXWAVE cost of revenue (December 31, 2024, $62,390).

During the year ended December 31, 2025, the Company recorded $53,509 of amortization capitalized to inventory (December 31, 2024, $125,783).

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

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

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

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Equipment** | **Right of Use Asset** | **Prototype & Demo Untis** | **Construction in Process** | **Total** |
| **Cost** | | | | | |
| At December 31, 2023 | $223013 | $1186874 | $843314 | $51205 | $2304406 |
| Additions | 25241 |  | 48185 | 68183 | 141609 |
| Disposals | - | - | (116933) | - | (116933) |
| At December 31, 2024 | $248254 | $1186874 | $774566 | $119388 | $2329082 |
| Additions |  |  |  | 87119 | 87119 |
| Transfers |  |  | 292310 | (206507) | 85803 |
| Disposals | (8453) | - | - | - | (8453) |
| **At December 31, 2025** | $239801 | $1186874 | $1066876 | $- | $2493551 |
| **Accumulated Depreciation** |  |  |  |  |  |
| At December 31, 2023 | $130776 | $427563 | $702191 | $- | $1260530 |
| Depreciation for disposal |  |  | (87700) |  | (87700) |
| Depreciation for the year | 58788 | 189499 | 148028 | - | 396315 |
| At December 31, 2024 | $189564 | $617062 | $762519 | $- | $1569145 |
| Depreciation for disposal |  |  |  |  |  |
| Depreciation for the period | 22791 | 193417 | 36405 | - | 252613 |
| **At December 31, 2025** | $212355 | $810479 | $798924 | $- | $1821758 |
| **Net Book Value** |  |  |  |  |  |
| At December 31, 2024 | $58690 | $569812 | $12047 | $119388 | $759937 |
| **At December 31, 2025** | $**27446** | $**376395** | $**267952** | $**-** | $**671793** |

---

During the year ended December 31, 2025, equipment depreciation recorded to cost of revenue was $126,568 (December 31, 2024 - $147,336).

During the year ended December 31, 2025, the Company disposed of assets with a carrying value of $8,453 (December 31, 2024 - $29,233) for $nil proceeds (December 31, 2024 - $nil).

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

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

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **MIT licenses** | **Battelle license** | **Intellectual property** | **Total** |
| Balance, December 31, 2023 | $407117 | $223250 | $2636436 | $3266803 |
| Additions |  | 227111 |  | 227111 |
| Amortization | (34108) | (450361) | (437752) | (922221) |
| Balance, December 31, 2024 | $373009 | $- | $2198684 | $2571693 |
| Additions |  |  |  |  |
| Amortization | (34108) | - | (538453) | (572561) |
| **Balance, December 31, 2025** | $**338901** | $**-** | $**1660231** | $**1999132** |

---

Intangible assets including MIT license and Battelle license, encompassing payments in connection to reimbursement of global patent filing costs and annual maintenance fees. Additionally, intellectual property was generated through the reverse take over ("RTO") transaction closed during the year ended December 31, 2021, and became ready for use during the year ended December 31, 2022. The remaining useful life of the intangible assets are as follows: MIT license 10 years, Battelle license nil years, and intellectual property 3 years.

During the year ended December 31, 2025, $519,052 of amortization expense was allocated to HEXWAVE cost of revenues (December 31, 2024 - $796,438).

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

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

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

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

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

During the year ended December 31, 2025, the Company accrued royalty payments of $44,916 (December 31, 2024, $105,993).

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

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

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

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

During the year ended December 31, 2025, the Company accrued royalty payments of $nil (December 31, 2024, $nil).

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

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

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

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

---

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

---

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

As at December 31, 2025, the Company has a balance payable of $200,000 (December 31, 2024, $290,566).

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

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

During the year ended December 31, 2025, the Company did not receive any working capital loans from related parties. The Company did receive working capital loans from related parties during the fiscal year ended December 31, 2024. These loans, unsecured and non-interest bearing, lack specified maturity dates. As of December 31, 2025, all loans were fully repaid.

---

| | |
|:---|:---|
|  | **Amounts** |
| **Balance, December 31, 2023** | $**328693** |
| Additions | 82000 |
| Repayments | (336036) |
| **Balance, December 31, 2024** | $**74657** |
| Additions |  |
| Repayments | (74657) |
| **Balance, December 31, 2025** | $**-** |

---

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

During the year ended December 31, 2023, the Company received a secured business line of credit from American Express, subject to a general security agreement on the Company's assets, with various draws. The interest rate on the amount withdrawn varied from 7.49% to 25.71% over a six-month term. The monthly payments fluctuated based on the amount withdrawn from the line of credit with amounts ranging from $1,782 to $10,624 per month. During the year ended December 31, 2024, the Company borrowed $11,900 (2023 - $166,210) from this line of credit. The loan matured on June 25, 2024, and was fully repaid.

During the year ended December 31, 2023, the Company secured an unsecured business line of credit of $83,036 from BlueVine Capital. The credit facility had a twenty-six-week term, an interest rate of 1.10%, and required weekly payments of $3,906. The loan matured on June 5, 2024, and was fully repaid.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

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

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

During the year ended December 31, 2023, the Company received a secured business line of credit with Headway Capital, subject to a general security agreement of the Company's assets, with one draw for a period of seventeen-months with a monthly interest rate of 4.17%. During the year ended December 31, 2024, the Company borrowed $21,275 (2023 - $83,350) from this line of credit. The loan matured on January 31, 2025. During the year ended December 31, 2024, the Company fully repaid this loan.

During the year ended December 31, 2024, the Company obtained a secured business loan of $420,000 from Blade Funding with a 32-week term. The loan carries an annual interest rate of 11.50%, requires weekly payments of $13,125. The loan matured on January 19, 2025. As at December 31, 2025, the balance outstanding was $nil (December 31, 2024 - $26,250). During the year ended December 31, 2025, the Company fully repaid this loan.

On July 2, 2024, the Company received a short-term loan of $250,000 from 1087207 BC Ltd. The loan had a minimum upfront interest payment of $20,000, in which the Company received $230,000, net, and was fully repaid during the year ended December 31, 2024.

During the year ended December 31, 2024, the Company received $350,394 in non-interest-bearing short-term loans. During the year ended December 31, 2024, the Company fully repaid these loans.

---

| | |
|:---|:---|
|  | **Amounts** |
| **Balance, December 31, 2023** | $**201368** |
| Additions | 1053569 |
| Repayments | (1260419) |
| Accrued interest | 31732 |
| **Balance, December 31, 2024** | $**26250** |
| Repayments | (26250) |
| **Balance, December 31, 2025** | $**-** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)** **CEBA Loan** 

The Company obtained a CAD$40,000 Canada Emergency Business Account loan ("CEBA") on May 5, 2020, with a 0% interest rate applicable until January 18, 2024 (the "Term Period"). The loan was used to cover payroll, rent, and utilities in compliance with the loan agreement guidelines. Under the terms of the loan, if 75% of the principal amount was repaid by the end of the Term Period, the remaining 25% would be forgiven.

The Company did not repay the required amount by the end of the Term Period, resulting in the loan being converted to a term facility. As of June 30, 2024, the outstanding balance of $29,269 and began accruing interest at an annual rate of 5%.

During the year ended December 31, 2024, the CEBA loan was fully repaid.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

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

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

---

| | |
|:---|:---|
|  | **Amounts** |
| **Balance, December 31, 2023** | $**-** |
| Additions | 1800000 |
| Interest and fees | 121687 |
| **Balance, December 31, 2024** | $**1921687** |
| Additions | 650000 |
| Interests and fees | 384047 |
| Repayments | (333017) |
| **Balance, December 31, 2025** | $**2622717** |
| Current | $2622717 |
| Non-current | - |

---

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

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

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

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

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

---

| | |
|:---|:---|
|  | **Amounts** |
| **Balance, December 31, 2023** | $**-** |
| Additions | 1551166 |
| Interests and fees | 74449 |
| Repayments | (641944) |
| **Balance, December 31, 2024** | $**983671** |
| Additions | 683018 |
| Interests and fees | 169279 |
| Repayments | (1056137) |
| **Balance, December 31, 2025** | $**779831** |

---

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

**11.** **Factoring and Credit Line Liabilities** (continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)** **Bengal Capital Factoring** 

On June 22, 2023, the Company engaged in a factoring arrangement with Bengal Capital, Inc. (the "Factor"). Per the agreement, the Company submits invoices or purchase orders to the Factor after credit approval, receiving 80% of the gross amount. The Factor assumes ownership of these accounts with full recourse. Furthermore, the Company is subject to a 4% monthly factoring fee based on the face value of the accounts. No collateral is used per the agreement; however, the Company is obligated to pay the balance regardless of receiving payment for advanced orders.

The factoring liability as at December 31, 2025, and December 31, 2024, is as follows:

---

| | |
|:---|:---|
|  | **Amounts** |
| **Balance, December 31, 2023** | $**1107347** |
| Additions |  |
| Accrued factoring Fee | 289684 |
| Repayments | (1397031) |
| **Balance, December 31, 2024 & December 31, 2025** | $**-** |

---

For accounting purposes, the factored trade receivable remains recorded in trade receivables, while the financing costs are amortized over the financing period.

**12.** **Leases** 

The Company's lease liabilities as at December 31, 2025, and December 31, 2024, are as follows:

---

| | |
|:---|:---|
|  | **Right of use liability** |
| Balance, December 31, 2023 | $886585 |
| Finance costs | 69652 |
| Lease payments | (247412) |
| Balance, December 31, 2024 | $708825 |
| Finance costs | 44882 |
| Lease cancelation | (18514) |
| Lease payments | (198958) |
| **Balance, December 31, 2025** | $**536235** |
| Less current portion | 235834 |
| **Non-current lease liability** | $**300401** |

---

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

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

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

Minimum lease payments are as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025** | **December 31,**<br>**2024** |
| Maturity analysis - contractual undiscounted cash flows |  |  |
| One year or less | $238567 | $257461 |
| Two to five years | 358949 | 558358 |
| Six and thereafter | - | - |
| Total lease liabilities | $597516 | $815819 |
| **Lease liabilities included in the statement of financial position** | $**536235** | $**708825** |
| Current | $235834 | $203443 |
| Non-current | $300401 | $505382 |

---

During the year ended December 31, 2025, the Company recorded a lease expense of $6,000 (December 31, 2024 –$nil) related to short-term leases not meeting the criteria for capitalization under IFRS 16.

---

| | |
|:---|:---|
|  | **Amounts** |
| Balance, December 31, 2023 | $7048 |
| Accretion | 78 |
| Payments received | (6928) |
| Foreign exchange movement | (198) |
| **Balance, December 31, 2024 & December 31, 2025** | $- |

---

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

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

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

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

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

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

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

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

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

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

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

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

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

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

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) Common share transactions for the year ended December 31, 2024**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i) On January 12,
 2024, the Company closed the initial tranche of a Listed Issuer Financing Exemption (LIFE)
 private placement of units, raising gross proceeds of $662,554 (CAD$886,000). As of December 31,
 2023, the Company had received $224,915 of these proceeds. This tranche involved the issuance
 of 13,113 units at a price of CAD$67.50 per unit. Each unit consisted of one common share
 and one purchase warrant, allowing the holder to purchase an additional common share at CAD$90.00
 per share within 36 months. The warrants were allocated a residual value of $154,596. Additionally,
 the Company issued 337 broker warrants to agents under identical terms and conditions with
 a fair value of $4,508. Agent commissions totaling $17,110 were paid.

ii) Subsequently, on February 5, 2024, the Company closed the final tranche of the same non-brokered private placement, raising an additional $112,285 (CAD$150,000). This tranche involved the issuance of 2,222 units under the same terms and conditions as the initial tranche. Each unit consisted of one common share and one purchase warrant, allowing the holder to purchase an additional common share at CAD$90.00 per share within 36 months. The warrants were allocated a residual value of $37,428.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) Common share transactions for the year ended December 31, 2024** (continued)

iii) On February 26, 2024, the Company closed an investment by Viken Detection Corp. ("Viken") pursuant to which Viken purchased 20,202 units of the Company at an issue price of CAD$67.50 per unit for total gross proceeds of $1,000,000 (CAD$1,363,636). Each unit comprised one common share and one purchase warrant. Each warrant entitles Viken to purchase one additional common share of the Company at an exercise price of CAD$90.00 for a period of 36 months. The warrants were allocated a residual value of $166,667. Additionally, the Company also incurred cash costs in connection to filing and legal expenses in the amount of $27,116 were also paid. These warrants contain blocker language restricting the exercise of the warrants in the event such exercise results in Viken holding more than 9.9% of the outstanding voting securities of the Company.

iv) On March 17, 2024, a total of 4,436 finder warrants expired with an exercise price of CAD$148.50. These broker warrants had a fair value of $312,815 and the reserve value was reclassified to share capital.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;v) During the
 year ended December 31, 2024, a total of 2,263 common shares were issued pursuant to
 the exercise of RSUs with a fair value of $286,019.

vi) During the year ended December 31, 2024, a total of 1,333 shares were issued pursuant to the exercise of 1,333 warrants, resulting in proceeds of $87,367 (CAD$120,000). Residual value in the amount of $15,275 was reversed.

vii) On August 13, 2024, the Company closed the first tranche of a non-brokered private placement for gross proceeds of $508,864 (CAD$697,550). The Company issued 10,334 special warrants of the Company at a price of CAD$67.50 per Unit. Each special warrant will automatically convert into one Unit. Each Unit shall consist of one common share and one share purchase warrant. Each warrant entitles the holder thereof to purchase one additional common share of the Company at a price of CAD$90.00 within a period of 36 months. These special warrants were converted into one Unit on August 13, 2024. The warrants were allocated a residual value of $203,560. The Company paid the agents 423 broker warrants with a fair value of $5,757. Each broker warrant will be exercisable to purchase one common share for a period of 36 months at an exercise price of CAD$90.00. Additionally, the Company also incurred cash costs in connection to private placement in the amount of $30,995.

viii) On December 18, 2024, the Company closed a non-brokered private placement for gross proceeds of $5,585,812 (CAD$8,000,000). The Company issued 555,556 units (each a "Unit") of the Company at a price of CAD$14.40 per Unit. Each Unit comprised of one common share and one-half common share purchase warrant. Each warrant entitles the holder thereof to purchase one additional common share of the Company at a price of CAD$24.75 for a period of 24 months and are subject to an accelerated expiry at the Company's election under certain conditions. The Company paid the agents $274,123 in finders fees and issued 27,801 finder warrants with a fair value of $382,873. Each finder's warrant will be exercisable to purchase one common share for a period of 24 months at an exercise price of CAD$24.75. Additionally, the Company also incurred cash costs in connection to private placement in the amount of $41,687.

ix) The Company settled a total of $363,336 (CAD$520,947) of indebtedness with a certain creditor by issuing 34,722 units valued at $927,332 and follows the same terms as the units issued on December 18, 2024, non-brokered private placement. The Company recognized a loss on extinguishment of debt totalling $563,996.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

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

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

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

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

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

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

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

---

| | | |
|:---|:---|:---|
|  | **Number of stock<br> options** | **Weighted average<br> exercise price** |
| **Outstanding, December 31, 2023** | 14866 | CAD$252.90 |
| Cancelled | (1650) | 195.75 |
| Expired | (1832) | 558.90 |
| Granted | 60333 | 36.00 |
| **Outstanding, December 31, 2024** | **71717** | **CAD$58.05** |
| Cancelled | (15329) | 59.96 |
| Granted | 54444 | 13.69 |
| **Outstanding, December 31, 2025** | **110832** | **CAD$35.85** |

---

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

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

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

As at December 31, 2025, the number of stock options outstanding and exercisable were:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Outstanding** | **Outstanding** | **Exercisable** | **Exercisable** |
| <br>**Expiry date** | **Number of stock options** | **Exercise price** | **Remaining<br> contractual life<br> (years)** | **Number of stock options** |
| 7-Apr-26 | 1844 | CAD$225.00 | 0.27 | 1844 |
| 28-Jul-26 | 278 | CAD$247.50 | 0.57 | 278 |
| 28-Jul-26 | 111 | CAD$292.50 | 0.57 | 111 |
| 1-Nov-26 | 944 | CAD$207.00 | 0.84 | 944 |
| 14-Jan-27 | 222 | CAD$162.00 | 1.04 | 222 |
| 15-Apr-27 | 1111 | CAD $26.55 | 1.29 | 1111 |
| 26-Apr-27 | 2633 | CAD$184.50 | 1.32 | 2633 |
| 2-Jul-27 | 5556 | CAD$10.80 | 1.50 | 1389 |
| 21-Nov-27 | 133 | CAD$99.00 | 1.89 | 133 |
| 26-Apr-28 | 111 | CAD $81.00 | 2.32 | 111 |
| 16-Oct-28 | 1778 | CAD $85.50 | 2.79 | 1778 |
| 30-Dec-29 | 51667 | CAD $36.00 | 4.00 | 29722 |
| 2-Apr-30 | 3333 | CAD $37.80 | 4.25 | 833 |
| 9-Sep-30 | 41111 | CAD $12.15 | 4.69 | 10278 |
| **December 31, 2025** | **110832** |  |  | **51387** |

---

During the year ended December 31, 2025, the Company recognized stock-based compensation related to stock options totaling $1,300,572 (December 31, 2024 – $70,004). Of this amount, $18,150 was recorded as stock-based compensation in the HEXWAVE cost of revenue (December 31, 2024 – $5,136), and $40,919 was recorded as stock-based compensation in cost of contract revenue (December 31, 2024 - $26,339).

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

---

| | | |
|:---|:---|:---|
|  | **December 31, <br> 2025** | **December 31, <br> 2024** |
| Risk-free interest rate | 2.52% | 3.04% |
| Expected dividend yield | Nil | Nil |
| Stock price volatility | 155.49% | 145.18% |
| Expected life (in years) | 5 years | 5 years |
| Stock price | CAD$13.50 | CAD$38.25 |

---

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

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

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

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

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

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

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

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

The estimated fair value of the equity settled RSUs granted as of December 31, 2025, was $60,998 (December 31, 2024 – $144,355) and will be recognized as an expense over the vesting period of the RSUs. The fair value of the equity settled RSUs as at the grant date was determined with reference to the market value of the common shares of the Company at the grant date.

**Restricted share units granted for the year ended December 31, 2024**:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i) On February 28,
 2024, the Company granted 3,278 RSUs to employees of the Company; these RSUs shall be settled
 with common shares of the Company, have an exercise period that expires on February 28,
 2029, and vest at 100% on February 28, 2025.

ii) A total 2,939 RSUs were cancelled.

iii) On August 19, 2024, the Company granted 667 RSUs to a consultant; these RSUs shall be settled with common share of the Company, have an exercise price that expires on August 19, 2029, and vests as follows: 25% on November 19, 2024, 25% on February 19, 2025. 25% on May 19, 2025, 25% on August 19, 2025.

The following table summarizes the movements in outstanding RSUs:

---

| | | |
|:---|:---|:---|
|  | **Number of<br> equity settled<br> RSUs** | **Grant Price** |
| **Outstanding, December 31, 2023** | **13176** | **CAD$139.05** |
| Granted | 3944 | 54.90 |
| Cancelled | (2939) | 126.90 |
| Exercised | (2263) | 170.55 |
| **Outstanding, December 31, 2024** | **11918** | **CAD$180.45** |
| Granted | 8260 | 10.91 |
| Exercised | (4758) | 115.88 |
| **Outstanding, December 31, 2025** | **15420** | **CAD$55.51** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Expiry date** | **Number of<br> restricted share<br> units** | **Grant Price** | **Remaining<br> contractual life<br> (years)** | **Number of<br> restricted share<br> units** |
| 7-Apr-26 | 556 | CAD$261.00 | 0.27 | 556 |
| 10-Jun-26 | 464 | CAD$247.50 | 0.44 | 464 |
| 15-Jan-27 | 333 | CAD$166.50 | 1.04 | 333 |
| 26-Apr-27 | 222 | CAD$198.00 | 1.32 | 222 |
| 16-Oct-28 | 2974 | CAD$76.50 | 2.79 | 2974 |
| 28-Feb-29 | 2611 | CAD$58.50 | 3.16 | 2611 |
| 1-Jan-29 | 1111 | CAD$12.15 | 3.01 |  |
| 12-Dec-29 | 7149 | CAD$10.58 | 3.95 | - |
| **December 31, 2025** | **15420** |  |  | **7160** |

---

A total of 7,160 RSU's were vested as at December 31, 2025.

During the year ended December 31, 2025, the Company recognized stock-based compensation related to RSUs in the amount of $34,723 (December 31, 2024 – $277,579).

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

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

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

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

---

| | | |
|:---|:---|:---|
|  | **Warrants**<br>**outstanding** | **Exercise**<br>**Price** |
| **Outstanding, December 31, 2023** | **117821** | **CAD$178.20** |
| Issued | 369570 | 32.85 |
| Expired | (39949) | 216.51 |
| Exercised | (1333) | 90.00 |
| **Outstanding, December 31, 2024** | **446109** | **CAD$54.90** |
| Issued | 683234 | 19.32 |
| Expired | (169855) | 32.79 |
| Exercised | (240718) | 20.27 |
| **Outstanding December 31, 2025** | **718770** | **CAD$36.45** |

---

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

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025** | **December 31,**<br>**2024** |
| Risk-free interest rate | 2.88% | 3.52% |
| Expected dividend yield | Nil | Nil |
| Stock price volatility | 94.42% | 69.78% |
| Expected life (in years) | 1.4 years | 3 years |
| Share price on grant date | CAD$41.04 | CAD$37.35 |
| Fair value share purchase warrants | CAD$7.38 | CAD$19.35 |

---

The outstanding number of share purchase warrants is as follows:

---

| | | | |
|:---|:---|:---|:---|
| | **Outstanding** | **Outstanding** | **Outstanding** |
| <br>**Expiry date** | **Number of warrants** | **Exercise price** | **Remaining <br>contractual life <br>(years)** |
| 28-Jul-26 | 324121 | CAD$15.75 | 0.57 |
| 28-Jul-26 | 16000 | CAD$15.75 | 0.57 |
| 5-Oct-26 | 39617 | CAD$135.00 | 0.76 |
| 5-Oct-26 | 1349 | CAD$90.00 | 0.76 |
| 18-Dec-26 | 45162 | CAD$24.75 | 0.96 |
| 12-Jan-27 | 12038 | CAD$67.95 | 1.03 |
| 5-Feb-27 | 2222 | CAD$90.00 | 1.10 |
| 28-Feb-27 | 20202 | CAD$67.50 | 1.16 |
| 27-Jun-27 | 423 | CAD$90.00 | 1.49 |
| 13-Aug-27 | 10334 | CAD$67.95 | 1.49 |
| 20-Mar-27 | 33678 | CAD$92.25 | 1.22 |
| 20-Mar-27 | 4715 | CAD$74.25 | 1.22 |
| 27-Oct-27 | 3215 | CAD$123.75 | 1.82 |
| 27-Oct-27 | 21297 | CAD$225.00 | 1.82 |
| 31-Dec-27 | 176482 | CAD$13.50 | 2.00 |
| 31-Dec-27 | 7915 | CAD$13.50 | 2.00 |
| **December 31, 2025** | **718770** |  |  |

---

During the year ended December 31, 2025, a total of 24,336 share purchase warrants with an original exercise price of CAD$90.00 were repriced to CAD$67.95. All other terms and conditions remained unchanged.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

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

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

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

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

<u>Operational Performance Shares</u>

As at December 31, 2025, none of the 4,444 OPS have been issued as neither of the two milestones have been met. The estimated fair value of the OPS is CAD$800,000 which had an estimated vesting period between December 2024 and December 2025. The estimated vesting period has been adjusted to December 2026. During the year ended December 31, 2025, the Company recorded stock-based compensation in connection to OPS in the amounts of $54,534 (December 31, 2024 – $37,120). For the years ended December 31, 2025, and 2024, none of the operational performance shares have been released from escrow.

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

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

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** |
| Loss attributable to common shareholders | $(14132177) | $(8845163) |
| Weighted average number of shares | 1346852 | 381350 |
| Basic and diluted loss per share | $(10.49) | $(23.19) |

---

The Company incurred net losses for the years ended December 31, 2025, and 2024, therefore all outstanding stock options share purchase warrants, restricted share units, and performance share units, if any, have been excluded from the calculation of diluted loss per share since the effect would be anti-dilutive.

**16.** **Revenue** 

Revenue recognized for the year ended December 31, 2025, and 2024, relates to contract revenue from the Transportation Security Administration ("TSA") (Note 17), as well as sales of HEXWAVE units.

Deferred revenue as of December 31, 2025, was $95,541 (December 31, 2024 - $180,000).

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

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

---

| | |
|:---|:---|
| **Deferred Revenue** | **Amounts** |
| **Outstanding, December 31, 2023 & 2024** | **180000** |
| Additions | 189795 |
| Refunds | (180000) |
| Recongnized revenue | (94254) |
| **Outstanding, December 31, 2025** | **95541** |

---

---

| | | |
|:---|:---|:---|
| **Revenue** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** |
| TSA Contract Award HD-AIT | 457905 | 200000 |
| TSA OA Development | 246944 | 795000 |
| HD-AIT Phase II |  | 133056 |
| HD-AIT Phase III | 150000 | 296944 |
| HEXWAVE units, installation and training | 583010 | 1012046 |
| HEXWAVE subscriptions and maintenance | 60469 | 1500 |
| **Total Revenue** | $**1498328** | $**2438546** |

---

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

During the year ended December 31, 2025, the Company recognized total contract revenue of $854,849, recorded in revenue (December 31, 2024 – $1,425,000). Future revenue related to these contracts will be recognized as performance obligations are satisfied. It is estimated that future revenues will be recognized on the same basis according to the following timelines:

---

| | | |
|:---|:---|:---|
| **Contract Award Revenue Expected in Future Years** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2026** | **2027** |
| HD-AIT Phase II B | 357759 | - |
| **Total estimated contract revenues** | $**357759** | $**-** |

---

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

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

During the year ended December 31, 2025, the Company received $457,905 and recorded a receivable of $nil (December 31, 2024 – $200,000 and $nil, respectively). The remaining contract balance as of December 31, 2025, was $nil (December 31, 2024 – $457,905).

The Company is required to submit quarterly invoices as follows:

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

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

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

---

| | |
|:---|:---|
| **TSA HD-AIT Upgrade** | **Amounts** |
| **Year 2023** | $1265000 |
| **Year 2024** | 200000 |
| **Year 2025** |  |
| &nbsp;&nbsp;&nbsp;Milestone 5B (Q1 2025) (paid) | 100000 |
| &nbsp;&nbsp;&nbsp;Milestone 6 (Q2 2025) (paid) | 357905 |
| **Total Contract Value** | $**1922905** |

---

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

On September 29, 2023, the Company received a contract award for $1,116,944 from TSA for the Open Architecture Development. The contract award is to develop a system-level approach that addresses TSA's request for implementation of a Checkpoint Open Architecture for On-Person Screening (OPS) systems that enable modularity and enhances security effectiveness. The project will be performed over a period of twenty-one months, and invoices will be issued once the milestones are reached based on the agreed upon timeline. During the year ended December 31, 2025, the Company received $246,944 and had a receivable of $nil (December 31, 2024 – $795,000 and $nil, respectively). The balance remaining on the contract as of December 31, 2025, was $nil (December 31, 2024 – $246,944).

---

| | |
|:---|:---|
| **TSA Open Architecture** | **Amounts** |
| **Year 2023** | $75000 |
| **Year 2024** | 795000 |
| **Year 2025** |  |
| &nbsp;&nbsp;&nbsp;Milestone 6 (Q1 2025) (paid) | 175000 |
| &nbsp;&nbsp;&nbsp;Milestone 7 (Q2 2025) (paid) | 71944 |
| **Total Contract Value** | $**1116944** |

---

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

On September 29, 2023, the Company received a contract award of $133,056 from the Transportation Security Administration ("TSA") for HD-AIT Phase II. This award is a follow-on option under the existing HD-AIT development program, aimed at advancing Phase II to finalize a hardware design that supports future compliance efforts. The project was scheduled to be completed over three months, with invoices issued upon reaching agreed-upon milestones. During the year ended December 31, 2025, the Company had received the full contract amount of $133,056 and recorded a receivable of $nil (December 31, 2024 – $133,056, respectively). The remaining contract balance as of December 31, 2025, was $nil (December 31, 2024 – $nil), as the agreement was completed on February 20, 2024.

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

On September 5, 2024, the Company received a contract award for $446,944 from TSA for the HD-AIT Phase II A option. The contract award is a follow-on option to the current HD-AIT development program to execute phase II to drive to a final hardware design capable of supporting future compliance efforts. The project will be performed over a period of twelve months, and invoices will be issued once the milestones are reached based on the agreed upon timeline. During the year ended December 31, 2025, the Company received $150,000 and had a receivable of $nil (December 31, 2024 - $nil, and $296,944 respectively). The balance remaining on the contract as of December 31, 2025, was $nil (December 31, 2024 - $150,000).

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

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

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

---

| | |
|:---|:---|
| **TSA HD-AIT Phase II A** | **Amounts** |
| **Year 2024** | $296944 |
| **Year 2025** |  |
| &nbsp;&nbsp;&nbsp;Milestone 2 (Q3 2025) (paid) | 150000 |
| **Total Contract Value** | $**446944** |

---

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

On September 29, 2025, the Company received a contract award for $357,759 from TSA for the HD-AIT Phase II B option. The contract award is a follow-on option to the current HD-AIT development program to execute phase II to drive to a final hardware design capable of supporting future compliance efforts. Invoices will be issued once the milestones are reached based on the agreed upon timeline. As at December 31, 2025, the Company received $nil and had a receivable of $nil (December 31, 2024 - $nil, and $nil respectively). The balance remaining on the contract as of December 31, 2025, was $357,759 (December 31, 2024 - $nil).

---

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

---

As of December 31, 2025, the Company recorded contract costs of $152,421, representing costs incurred for contract milestones not yet achieved less related impairment charges (December 31, 2024 - $268,952). As of December 31, 2025, the Company recorded an impairment of the contract costs of $192,951 (December 31, 2024 - $115,730).

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

During the year ended December 31, 2025, and 2024, the Company paid $nil in income taxes in both periods, and paid interest of $273,685 and $483,898, respectively.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

**18.** **Supplemental Disclosure with Respect to Cash Flows** (continued)

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** |
| **Changes in non-cash working capital** |  |  |
| &nbsp;&nbsp;&nbsp;Amounts receivable and prepaids | $349869 | $(1406491) |
| &nbsp;&nbsp;&nbsp;Inventory | (828914) | 105692 |
| &nbsp;&nbsp;&nbsp;Contract cost | (76420) | (384682) |
| &nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities | 757747 | 456551 |
| &nbsp;&nbsp;&nbsp;Deferred financing fee | (766251) |  |
| &nbsp;&nbsp;&nbsp;Deferred revenue | (84459) |  |
| **Net changes in non-working capital** | $**(648428)** | $**(1228930)** |
| **Supplemental cash flow information** |  |  |
| &nbsp;&nbsp;&nbsp;Fair value of compensation brokers warrants | $143521 | $393138 |
| &nbsp;&nbsp;&nbsp;Fair value of warrants exercised |  | 15275 |
| &nbsp;&nbsp;&nbsp;Residual value allocated to warrants | 379435 | 562251 |
| &nbsp;&nbsp;&nbsp;Fair value of warrants allocated to share capital on expiry | 11206 | 312815 |
| &nbsp;&nbsp;&nbsp;Transfer of reserves on settlement of RSUs | 383471 | 286019 |
| &nbsp;&nbsp;&nbsp;Loans settled with private placement proceeds |  | 264552 |
| &nbsp;&nbsp;&nbsp;Inventory trasnfer to PP&E | 85803 | 47503 |

---

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

**Compensation of key management personnel:**

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

---

| | | |
|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** |
| G&A Salaries | $1553391 | $620846 |
| G&A Stock-based compensation | 738601 | 115805 |
| G&A Consulting fees (1) | - | 96358 |
|  | $**2291992** | $**833009** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Consulting fees were paid or payable to a member of key management personnel of the Company for the year December 31, 2024.

As of December 31, 2025, the Company had a balance payable of $434,831 to key management personnel (December 31, 2024, – $421,319). This payable balance includes accounts payable and accrued liabilities relating to compensation to directors, officers, or their related companies, included in compensation of key management personnel. These related party balances are unsecured, non-interest bearing and have no specific terms of settlement.

During the year ended December 31, 2025, the Company received working capital loans in the amount of $nil (December 31, 2024 – $82,000) from members of key management personnel or their related parties and repaid $74,657 (December 31, 2024 - $336,036). As at December 31, 2025, the outstanding balance is $nil (Note 8(a)) (December 31, 2024 – $74,657).

During the year ended December 31, 2025, the Company paid Nicole Ridgedale Communications, a related party, $nil (December 31, 2024 - $23,340) for consulting services and stock-based compensation. These amounts were recorded under salaries and consulting fees within the general and administrative expenses.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

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

As at December 31, 2025, the Company's financial instruments comprise cash, trades receivables, accounts payable and accrued liabilities, term loan, lease liabilities and line of credit. The fair values of the Company's financial instruments approximate their carrying values due to their short-term maturity or market interest rates.

Fair value of financial instruments:

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

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

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

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

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

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

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations, including accounts receivable terms. The Company's cash is held through large Canadian, international, and foreign national financial institutions. The Company's receivables primarily consist of GST receivable due from the Canadian government and trade receivables that the Company continues to collect. These trade receivables are primarily with continuing customers and are not subject to significant credit risk. As at December 31, 2025, the Company's trade receivables totalling $470,263 are from four customers (December 31, 2024 - $130,000). The Company's maximum exposure to credit risk is limited to the carrying amount of cash and accounts receivables.

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

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity risk through the management of its capital structure. To mitigate this risk, the Company has a planning and budgeting process in place to determine the funds required to support its ongoing operations and capital expenditures. The Company ensures that sufficient funds are raised from equity offerings or debt financings to meet its operating requirements, after considering existing cash balances, expected exercise of share purchase warrants, and stock options. The Company's ability to continue as a going concern involves significant judgements and estimates while determining forecasted cashflows and is dependent on the Company's ability to obtain financing (Note 1). As at December 31, 2025, the Company had cash of $319,294 (December 31, 2024 – $1,153,229) to settle current liabilities of $8,616,300 (December 31, 2024 – $6,607,387).

As of December 31, 2025, the Company had granted security interests over substantially all of the assets of Liberty Defense Technologies, Inc., its wholly owned subsidiary, in connection with multiple agreements, including the Company's credit facilities with Parabilis and its distributor arrangement with Viken Detection (a commercial agreement). These arrangements include multiple security interests over the same underlying assets, each of which claim to be a first-ranking security interest.

As of December 31, 2025, no intercreditor agreement or similar arrangement had been executed to establish the priority or ranking of these competing security interests. Accordingly, the relative rights of the secured parties with respect to the collateral have not been formally determined and may be subject to legal interpretation. As of that date, neither Parabilis nor Viken Detection had asserted a default nor exercised any remedies under their respective agreements in connection with this matter.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

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

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

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

The Company's exposure to liquidity risk related to the competing security interests is limited to the carrying amounts to the Parabilis and Viken Detection agreements. As at December 31, 2025, the amount due to Viken is $608,379 (December 31, 2024 - $1,160,000), included in Accounts Payable and Accrued Liabilities, in the Statement of Financial Position. As at December 31, 2025, the amount due to Parabilis is $3,402,548 (December 31, 2024 - $2,905,358), included in Parabilis Term Loan and Factoring and Credit Line Liability, in the Statement of Financial Position. See Notes 10 and 11(a) for activity related to the Parabilis loans during the year ended December 31, 2025.

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

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

Interest rate risk

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

Foreign currency risk

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

Price risk

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

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

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

The Company manages common shares, stock options, performance share units, restricted share units, and share purchase warrants as capital. The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to pursue the development of its products and to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

**21.** **Capital Risk Management** (continued)

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

In order to facilitate the management of its capital requirements, the Company prepares expenditure budgets that are updated as necessary depending on various factors, including successful capital deployment and general industry conditions.

In order to maximize ongoing development efforts, the Company does not pay out dividends. The Company's investment policy is to keep its cash treasury on deposit in an interest-bearing chartered bank account. Cash consists of cash on held with banks.

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

There has been no change to the Company's approach to capital management during the year ended December 31, 2025.

**22.** **Income Tax** 

The reconciliation of income tax provision computed at Canadian federal provincial statutory tax rates to the reported income tax provision is:

---

| | | |
|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** |
| Loss for the year | $(14132177) | $(8845163) |
| Statutory tax rate | 26.5% | 26.5% |
| Expected income tax (recovery) | $(3745000) | $(2344000) |
| Change in statutory, foreign tax, foreign exchange rates and other | (221000) | (120000) |
| Permanent differences | 367000 | 318000 |
| Adjustment to prior years provision versus statutory tax returns and expiry of non-capital losses | 1461000 | (591000) |
| Change in unrecognized deductible temporary differences | 2138000 | 2737000 |
| **Total income tax expense (recovery)** | $**-** | $**-** |

---

The significant components of the Company's unrecognized deferred tax assets and liabilities are as follows:

---

| | | |
|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** |
| **Deferred tax assets (liabilities)** |  |  |
| &nbsp;&nbsp;&nbsp;Property and equipment & Intangible assests |  | (54000) |
| &nbsp;&nbsp;&nbsp;Right-of-Use Assets/Lease liabilty | (99000) |  |
| &nbsp;&nbsp;&nbsp;Non-capital losses | 99000 | 54000 |
| Unrecognized deferred tax assets | $**-** | $**-** |

---

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

**22.** **Income Tax** (continued)

The significant components of the Company's temporary differences, unused tax credits and unused tax losses that have not been included on the consolidation statement of financial positions are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2025** | **Expiry Date**<br>**Range** | **2024** | **Expiry Date**<br>**Range** |
| **Temporary Differences** |  |  |  |  |
| Capital assets | 4000 | No expiry date | 4000 | No expiry date |
| Share issue costs | 1518000 | 2045 to 2049 | 1511000 | 2044 to 2048 |
| Lease liabilities | 178000 | No expiry date | 135000 | No expiry date |
| R&D | 2986000 | No expiry date | 4481000 | No expiry date |
| Undeducted accruals | 589000 | No expiry date |  | No expiry date |
| Non-capital losses | 62522000 |  | 46225000 |  |
| &nbsp;&nbsp;&nbsp;Canada | 22498000 | 2030 to 2045 | 16205000 | 2030 to 2044 |
| &nbsp;&nbsp;&nbsp;USA | 37466000 | No expiry date | 30021000 | No expiry date |

---

**23.** **Segmented Information** 

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

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

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

**23.** **Segmented Information** (continued)

The following tables summarize the Company's segments for the years ended December 31, 2025, and 2024:

---

| | |
|:---|:---|
|  | **For the year eneded December 31, 2025** |
| Revenue |  |
| Cost of revenue |  |
| Expenses |  |
| &nbsp;&nbsp;&nbsp;Salaries and consulting |  |
| &nbsp;&nbsp;&nbsp;General and administrative |  |
| &nbsp;&nbsp;&nbsp;Product development & tech |  |
| &nbsp;&nbsp;&nbsp;Stock-based compensation |  |
| &nbsp;&nbsp;&nbsp;Depreciation |  |
| &nbsp;&nbsp;&nbsp;Legal and professional fees |  |
| **Total expenses** |  |
| Other |  |
| Net loss for the year |  |

---

---

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

---

**Geographic Breakdown**

As at December 31, 2025, and December 31, 2024, all non-current assets are in the United States.

All revenue from contract segment was earned from one customer in the United States (2024 – one customer).

For the year ended December 31, 2025, revenues from the HEXWAVE segment attributable to the Company's country of domicile, Canada, were approximately $52,467, (December 31, 2024, $142,032). Revenues attributable to customers in the United States totaled approximately $546,606 (2024 - $701,236). Revenues from all other foreign countries in aggregate totaled $44,406 (2024 - $170,278). The determination of revenues by geographic area is based on the location of the customer.

**Liberty Defense Holdings, Ltd.**

Notes to the Consolidated Financial Statements

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

For the years ended December 31, 2025, and 2024

**23.** **Segmented Information** (continued)

For the year ended December 31, 2025, the Company reported HEXWAVE revenues from major customers over 10% of its total HEXWAVE revenues as follows: $282,947 (2024 - $130,000), $170,305 (2024 - $nil), $72,572 (2024 - $nil), $nil (2024 - $470,736), $nil (2024 - $142,032) and $nil (2024 - $119,900).

**24.** **Reverse Stock Split** 

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

**25.** **Subsequent Events** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· On
 January 15, 2026, the Company closed the second and final tranche of the December 2025
 non-brokered private placement for additional gross proceeds of CAD$867,506, through the
 issuance of 87,627 units at a price of CAD$9.90 per unit. Each unit comprised one common
 share and one common share purchase warrant, with each warrant entitling the holder to acquire
 one additional common share at an exercise price of CAD$13.50 per share, exercisable from
 March 17, 2026, to January 15, 2028.

In connection with the private placement, the Company issued an aggregate of 5,045 broker warrants to agents under terms and conditions substantially identical to those of the unit warrant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· On
 April 7, 2026, a total of 555 RSUs expired.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· On
 April 7, 2026, a total of 1,844 stock options expired.

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

## Exhibit 99.2

**Exhibit 99.2**

![](tm2612970d1_ex99-2img01.jpg)

**INNOVATIVE & REVOLUTIONARY Threat DETECTION**

 **MANAGEMENT'S DISCUSSION AND ANALYSIS<br> YEAR ENDED DECEMBER 31, 2025** <br> (*Expressed in U.S. dollars, unless otherwise stated and per share amounts)*

 ***Dated: April 29, 2026***

Liberty Defense Holdings, Ltd., ("Liberty" or the "Company") has prepared this Management's Discussion and Analysis ("MD&A") as of April 29, 2026, and should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2025. Unless otherwise stated, all financial information has been prepared in accordance with IFRS Accounting Standards ("IFRS") as issued by the International Accounting Standards Board. All dollar amounts herein are expressed in U.S. dollars unless stated otherwise. References to $ means U.S. dollars, and CAD$ are to Canadian dollars.

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

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

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

---

| | | |
|:---|:---|:---|
| **Q4-2025 MD&A**<br>(Expressed in U.S. dollars) | ![](tm2612970d1_ex99-2img02.jpg) | Page\| 1 |

---

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;**Table of Contents** | &nbsp;&nbsp;**Table of Contents** | &nbsp;&nbsp;Page |
| &nbsp;&nbsp;**1** | &nbsp;&nbsp;Overview | &nbsp;&nbsp;2 |
| &nbsp;&nbsp;**2** | &nbsp;&nbsp;Results of Operations and selected annual information | &nbsp;&nbsp;9 |
| &nbsp;&nbsp;**3** | &nbsp;&nbsp;Summary of Quarterly Results | &nbsp;&nbsp;11 |
| &nbsp;&nbsp;**4** | &nbsp;&nbsp;Liquidity and Capital Transactions Resources | &nbsp;&nbsp;12 |
| &nbsp;&nbsp;**5** | &nbsp;&nbsp;Commitments | &nbsp;&nbsp;21 |
| &nbsp;&nbsp;**6** | &nbsp;&nbsp;Revenue | &nbsp;&nbsp;22 |
| &nbsp;&nbsp;**7** | &nbsp;&nbsp;Contract Awards | &nbsp;&nbsp;23 |
| &nbsp;&nbsp;**8** | &nbsp;&nbsp;Off-balance Sheet Arrangements | &nbsp;&nbsp;25 |
| &nbsp;&nbsp;**9** | &nbsp;&nbsp;Transaction Between Related Parties | &nbsp;&nbsp;25 |
| &nbsp;&nbsp;**10** | &nbsp;&nbsp;Subsequent Events | &nbsp;&nbsp;25 |
| &nbsp;&nbsp;**11** | &nbsp;&nbsp;Financial Instruments | &nbsp;&nbsp;26 |
| &nbsp;&nbsp;**12** | &nbsp;&nbsp;Other Requirements | &nbsp;&nbsp;28 |
| &nbsp;&nbsp;**13** | &nbsp;&nbsp;Disclosure Controls and Procedures and Internal Controls over Financial Reporting | &nbsp;&nbsp;28 |

---

**1.** **Overview** 

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

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

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

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

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

a. Effective January 13, 2025, the Company appointed Bryan Cunningham as President of the Company. Mr. Cunningham
is a lawyer and senior security expert with extensive experience in national security and technology. He is currently Senior Counsel at
Palantir and previously served as Deputy Legal Adviser to National Security Advisor Condoleezza Rice.

b. Effective February 24, 2025, Jason Burinescu was appointed Executive Chairman of the Board. He succeeds
Daryl Rebeck, who stepped down after serving in that role for the past four years. Mr. Rebeck will remain a shareholder of the Company.

Mr. Burinescu is a Managing Partner of Vision Equity Partner Solutions, an investment and advisory firm. He has extensive experience in private equity, business development, and scaling technology companies, including senior roles at cybersecurity and media firms that were successfully acquired by larger strategic buyers.

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

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

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**(c) License Agreements**

Licence agreements values and descriptions:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **MIT licenses** | **Battelle license** | **Intellectual property** | **Total** |
| Balance, December 31, 2023 | $407117 | $223250 | $2636436 | $3266803 |
| Additions |  | 227111 |  | 227111 |
| Amortization | (34108) | (450361) | (437752) | (922221) |
| Balance, December 31, 2024 | $373009 | $- | $2198684 | $2571693 |
| Additions |  |  |  |  |
| Amortization | (34108) | - | (538453) | (572561) |
| **Balance, December 31, 2025** | $**338901** | $**-** | $**1660231** | $**1999132** |

---

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

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

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

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

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

HEXWAVE™ Overview:

![](tm2612970d1_ex99-2img03.jpg)

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

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

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

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

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

Global License Agreement – September 2018

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

HEXWAVE™ Key Discriminators

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

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

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

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

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

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

&nbsp;&nbsp;&nbsp;&nbsp;· Routine software & artificial intelligence
updates

&nbsp;&nbsp;&nbsp;&nbsp;· Operationally agile (mobile and deployable across
detection space)

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

About the Explosives and Weapon Detection Market

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

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

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

Current Alternatives

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

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

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

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

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

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

About Liberty's Management Team

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

Liberty's Advisors

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

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

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

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

During the year ended December 31, 2025, the Company accrued royalty payments of $44,916 (December 31, 2024, $105,993.

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

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

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

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

During the year ended December 31, 2025 and 2024, the Company accrued royalty payments of $nil.

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

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

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

As at December 31, 2025, the Company has a balance payable of $200,000 (December 31, 2024, $290,566).

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

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

**(e) Recent Developments**

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

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

· <u>Liberty Defense Announces Mr. Bryan Cunningham, Senior U.S. Govt Security Executive, Appointed President (January 2025)</u> 

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· <u>Liberty Defense Announces the Successful Receipt of CAD$2.79M from the CAD$0.55 Accelerated Warrant Process (January 2025)</u> 

· <u>Liberty Defense Announces Formal Federal Communications Commission (FCC) Waiver for HD-AIT (January 2025)</u> 

· <u>Liberty Defense Announces Palm Springs International Airport selected HEXWAVE™ for employee screening initiative (January 2025)</u> 

· <u>Liberty Defense Selects Isotec Security Inc. for a Strategic Partnership and Increased Market Penetration for the High Security Vertical (February 2025)</u> 

· <u>Liberty Defense Adds Jason Burinescu, a Private Equity and Senior Operating Executive to their Board of Directors as Executive Chairman (February 2025)</u> 

· <u>Liberty Defense Selects Aluma for a Strategic Partnership to achieve SAFETY Act for HEXWAVE™ (March 2025)</u> 

· <u>Liberty Defense announces Independent Trading Group as Market Maker (March 2025)</u> 

· <u>Liberty Announces Closing of Prospectus Offering of Units $5MCAD (March 2025)</u> 

· <u>Liberty Defense Announces partnership selecting Point Security for HEXWAVE™ US Aviation & Urban Security Markets (March 2025)</u> 

· <u>Liberty Defense Announces Mary Beth Long, Former Assistant Secretary of Defense to its Advisory Board (April 2025)</u> 

· <u>Liberty Successfully Delivers Nine (9) HEXWAVE™ Units in Q1 2025 – Customer Backlog Accelerates for HEXWAVE™ Manufacturing & Delivery Through Channel Partnerships & Direct Customers (April 9, 2025)</u> 

· <u>Liberty Defense Garners Another Sale of the HEXWAVE™ Unit & Another New Channel Sales Partner for the Country of Brazil & Launching of a Significant Capital Markets Investor Awareness Campaign (April 14, 2025)</u> 

· <u>First-Ever Proposed US $1 Trillion Defense Budget Recognizes Escalating Threats (April 17, 2025)</u> 

· <u>Liberty Defense has Appointed the Honorable James M. Byrne, Former Deputy Secretary of Veterans Affairs & Current Vice President, Ethics & Business Conduct, for the Lockheed Martin Corporation, to its Newly Formed Strategic Advisory Board (April 21, 2025)</u> 

· <u>Liberty Completes Third Party Testing with National Safe Skies Alliance for Aviation Security (May 6, 2025)</u> 

· <u>Liberty Defense has Appointed The Honorable David Kris to its Newly Formed Strategic Advisory Board (May 13, 2025)</u> 

· <u>Liberty to Participate in Lytham Partners Investor Conference (May 28, 2025)</u> 

· <u>Liberty Defense Commences Normal Course Issuer Bid to Buy Back To 9.9% Of the Publicly Traded Float (June 2025)</u> 

· <u>Liberty Defense Successfully Completes Testing and Evaluation of Major US Courthouse and Affiliated Correctional Facilities (June 2025).</u> 

· <u>Liberty Announces $3.75MC Million Placement Units (July 2025)</u> 

· <u>Liberty Announces $4.4M of Equity Financing Due to Demand (July 2025)</u> 

· <u>Liberty Announces K-Prime Technologies Inc. for Strategic Partnership and Increased Market Penetration in Canada (July 2025)</u> 

· <u>Liberty Defense Engages Gold Standard Media LLC (August 2025)</u> 

· <u>Liberty Defense Appoints Anjana Rajan to Strategic Advisory Board and Repricing of Warrants (September 2025)</u> 

· <u>Jackson County Detention Center Selects Liberty Defense's HEXWAVE for Checkpoint Security Screening (September 2025)</u> 

· <u>Liberty Defense Expands International Footprint with Award of HWXWAVE System in Bogota, Colombia (October 2025)</u> 

· <u>Liberty Defense Announces Award of HEXWAVE Systems at One of the Largest International Airports in the U.S. for Aviation Worker Screening (October 2025)</u> 

· <u>Liberty Defense Announces Contract Award of Multiple HEXWAVE Walkthrough Screening Systems from a U.S. Capitol Complex (November 2025)</u> 

· <u>Liberty Defense Announces Award of HEXWAVE™ Systems at The New Terminal One at JFK for Aviation Worker Screening (November 2025)</u> 

· <u>Liberty Defense Partners with Noble IQ to Provide Installation, Training, and Service for HEXWAVE Deployments (November 2025)</u> 

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· <u>Liberty Defense Joins NVIDIA Connect Program to Accelerate AI-Powered Threat Detection Innovations (December 2025)</u> 

· <u>Liberty Defense Receives Contract Modification Exercising an Option from TSA Completion of HD-AIT Design Improvement (December 2025)</u> 

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

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

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

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

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

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

**(e) Outlook and Going Concern**

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

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

The Company incurred in a total loss during the year ended December 31, 2025, of $14,132,177 and had cash outflows from operating activities of $11,349,079. Given the current stage of operations, the Company's ability to continue as a going concern is contingent on its ability to obtain additional financing. While the Company has been successful in arranging financing in the past, the success of such initiatives cannot be assured. As of April 29, 2026, the company has raised adequate financing through an initial public offering with a total offering of $19,999,925. The Company believes that the adequate amount of financing is sufficient to sustain operations for the next twelve months.

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

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

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| **Q4-2025 MD&A**<br>(Expressed in U.S. dollars) | ![](tm2612970d1_ex99-2img02.jpg) | Page\| 8 |

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

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

During the three months and year ended December 31, 2025, the Company reported a total loss and comprehensive loss of $3,526,571 and $13,924,117 respectably (three months and year ended December 31, 2024 – $2,336,807 and $8,652,988), and basic and diluted loss per share of $(2.15) and $(10.49) (three months ended and year ended December 31, 2024 – $(5.40) and $(23.19)). Despite the accumulated losses, the Company's management is confident in scaling up production and commercialization of its primary technology, HEXWAVE™, and advancing the research and development of various potential technologies currently under review.

The net loss for the three months and year ended December 31, 2025, and 2024 is comprised of the following items:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | <br>**Note** | **Three month ended<br> December 31,**<br>**2025** | **Three months ended<br> December 31,**<br>**2024** | **Year ended<br> December 31,**<br>**2025** | **Year ended<br> December 31,**<br>**2024** |
| **Revenue** | 16 & 17 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;HEXWAVE revenue |  | (265928) | (433986) | 643479 | 1013546 |
| &nbsp;&nbsp;&nbsp;&nbsp;Contract revenue |  | - | 175000 | 854849 | 1425000 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total Revenue** |  | (265928) | (258986) | 1498328 | 2438546 |
| **Cost of revenue** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;HEXWAVE cost of revenue |  | 533163 | (121364) | 2646047 | 2033498 |
| &nbsp;&nbsp;&nbsp;&nbsp;Contract cost of revenue |  | 285283 | 31132 | 1778919 | 2081971 |
| **Total cost of revenue** |  | 818446 | (90232) | 4424966 | 4115469 |
| **Gross loss** |  | (1084374) | (168754) | (2926638) | (1676923) |
| **Engineering and Research and Development Expenses:** |  | 302453 | 526790 | 2361119 | 2267739 |
| &nbsp;&nbsp;&nbsp;&nbsp;Product development & technology costs |  | 56848 | 45246 | 320602 | 148675 |
| &nbsp;&nbsp;&nbsp;&nbsp;Salaries and consulting fees | 19 | 214095 | 407581 | 1756683 | 1655580 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 14 & 19 | 29 | 19264 | 15269 | 98008 |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation | 7 | (63764) | 40573 | 126045 | 248979 |
| &nbsp;&nbsp;&nbsp;&nbsp;Office, rent & administration, travel, and miscellaneous |  | 95245 | 14126 | 142520 | 116497 |
| **General & Administration Expenses** |  | 2076699 | 903033 | 8178137 | 3489202 |
| &nbsp;&nbsp;&nbsp;&nbsp;Salaries and consulting fees | 19 | 723709 | 434508 | 2011166 | 1809724 |
| &nbsp;&nbsp;&nbsp;&nbsp;Legal and professional fees |  | (95778) | 218877 | 673298 | 458390 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 14 & 19 | 216260 | (27917) | 1315491 | 255220 |
| &nbsp;&nbsp;&nbsp;&nbsp;Office, rent & administration, travel, and miscellaneous |  | 1232508 | 277565 | 4178182 | 965868 |
|  |  | 2379152 | 1429823 | 10539256 | 5756941 |
| **Operating Loss** |  | $**(3463526)** | $**(1598577)** | $**(13465894)** | $**(7433864)** |

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i) Revenue

Three months ended December 31, 2025 vs 2024

Revenue was $(265,928) (2024 – $(258,986)), a decrease of $(6,942) (2%). The decrease is presented due to that in Q4-2024 the Company had recorded six units being returned from a customer compared to a higher amount of return reserve offset in the Q4 2025 period. The return was due to an order that fell through, and our distributor allowed the Company to buy back the units in order to fulfil part of our backlog. The negative revenue in Q4-2025 was due to a return of two units, offset by the sale of two units, and an increased return on revenue reserve.

Year ended December 31, 2025 vs 2024

Revenue was $1,498,328 (2024 – $2,438,546), a decrease of $940,218 (39%). The decrease was mainly due to lower HEXWAVE™ sales activity in the current year, an increased return reserve, partially offset by continued revenue from TSA contracts being delayed. The Company did receive additional contract awards at the end of Q3 2025 of $357,759, which is expected to be received as revenue in Q1 and Q2 2026.

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HEXWAVE™ revenue for the year ended December 31, 2025 was US$643,479, compared to US$1,013,546 for the year ended December 31, 2024, a decrease of US$370,067 (37%). The decrease primarily reflects lower HEXWAVE™ unit deliveries and lower subscription and service revenue recognized during the period, as several customer deployment schedules shifted into later periods. Deliveries of HEXWAVE™ units during the year ended December 31, 2025 decreased to 12 units at an average selling price per unit of approximately US$62,350, compared to 15 units at an average selling price per unit of approximately US$67,570 delivered during the comparable period in 2024. The lower volume of deliveries in the year ended December 31, 2025 was primarily attributable to timing-related factors, including customer site readiness, installation scheduling, and the deferral of certain customer deployments into subsequent periods, as well as management's focus on manufacturing optimization and operational efficiency initiatives during the period.

Additionally, during the three months ended December 31, 2024, the Company recorded net negative revenue and net negative cost of revenue primarily as a result of the return of six HEXWAVE™ units by a customer. These units had been sold and recognized as revenue earlier in fiscal year 2024, and upon return, the Company reversed the previously recognized revenue and related cost of revenue in accordance with its accounting policy. This fourth quarter activity explains why, when read together with the Company's audited financial statements for the year ended December 31, 2024, full-year revenue, cost of revenue, and units sold are lower than the amounts reported for the year ended December 31, 2024.

ii) Cost of Revenues

Three months ended December 31, 2025 vs 2024

Cost of revenues was $818,446 (2024 – $(90,232)), an increase of $908,678 (1,108%). The increase reflects a higher production in Q4 vs. prior year.

Year ended December 31, 2025 vs 2024

Cost of revenues was $4,424,966 (2024 – $4,115,469), an increase of $309,497 (7%). The increase reflects the higher production costs and contract activity year to date compared to prior year.

iii) Engineering and Research & Development (R&D)

Three months ended December 31, 2025 vs 2024

R&D expenses were $302,453 (2024 – $526,790), a decrease of $224,337 (42.5%). The decrease was mainly due to lower salaries and consulting fees and depreciation, offset with higher product development and technology costs and officer, rent, and administration, travel and miscellaneous costs. Current quarter costs included $56,848 product development, $95,245 office and administration, and $29 stock-based compensation.

Year ended December 31, 2025 vs 2024

R&D expenses were $2,361,119 (2024 – $2,267,739), an increase of $93,380 (4%). The increase primarily reflects higher product development and technology costs associated with advancing the Company's licensed technologies, partially offset by lower stock-based compensation, depreciation, and office, rent, administration, travel and miscellaneous expenses.

iv) General and Administrative (G&A)

Three months ended December 31, 2025 vs 2024

G&A expenses were $2,076,699 (2024 – $903,033), an increase of $1,173,666 (130%). The increase was primarily attributable to consulting and marketing fees related to the March 2025 private placement, higher legal and professional fees. Office, rent, administration, travel, and miscellaneous expenses also increased to $1,232,508 (2024 – $277,565) due to amortization of prepaid marketing and consulting costs from 2024. Salaries and consulting fees increased to $723,709 (2024 – $434,508) due to an increase in consultants. Stock-based compensation was $216,260 in Q4 2025 compared to $(27,917) in Q4 2024. The decrease is due to the reversal of stock-based compensation from employee's resignations.

Year ended December 31, 2025 vs 2024

G&A expenses were $8,178,137 (2024 – $3,489,202), an increase of $4,688,935 (134%). The increase reflects higher consulting, marketing, legal, professional, and investor relations costs, combined with higher stock-based compensation and the amortization of prepaid expenses.

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| | | |
|:---|:---|:---|
| **Q4-2025 MD&A**<br>(Expressed in U.S. dollars) | ![](tm2612970d1_ex99-2img02.jpg) | Page\| 10 |

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v) Finance Costs and Foreign Exchange

Three months ended December 31, 2025 vs 2024

Interest expense was $208,032 (2024 – $242,722), reflecting decreased borrowings, primarily from factoring. The Company recorded a foreign exchange loss of $3,291 in Q4 2025, compared to $1,332 in Q4 2024. The change reflects lower volatility in exchange rates and fewer U.S. dollar–denominated transactions.

Year ended December 31, 2025 vs 2024

Interest expense was $691,930 (2024 – $808,989). A foreign exchange loss of $31,902 was recognized in Q4 2025, compared to a loss of $12,760 in Q4 2024, reflecting fluctuations in foreign currency rates and transaction volumes.

Selected Annual Information

---

| | | | |
|:---|:---|:---|:---|
|  | | **Years ended December 31, 2025** | **Years ended December 31, 2025** |
|  | **2025** | **2024** | **2023** |
| Revenue |  |  |  |
| Net loss) |  |  |  |
| Total assets |  |  |  |
| Non-current liabilities |  |  |  |
| Dividends |  |  |  |

---

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

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Three months ended** | **Working capital (deficiency)** | **Total assets** | **Total loss and comprehensive income loss** | **Loss per share** |
|  | $ | $ | $ | $ |
| 31-Dec-25 |  | 6384615 |  |  |
| 30-Sep-25 |  | 6754164 |  |  |
| 30-Jun-25 |  | 6352896 |  |  |
| 31-Mar-25 |  | 8522470 |  |  |
| 31-Dec-24 |  | 7286501 |  |  |
| 30-Sep-24 |  | 4377411 |  |  |
| 30-Jun-24 |  | 5370395 |  |  |
| 31-Mar-24 |  | 6070238 |  |  |

---

**Discussion of Quarterly Trends**

Q4 2025 (December 31, 2025):

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

---

| | | |
|:---|:---|:---|
| **Q4-2025 MD&A**<br>(Expressed in U.S. dollars) | ![](tm2612970d1_ex99-2img02.jpg) | Page\| 11 |

---

Q3 2025 (September 30, 2025):

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

Q2 2025 (June 30, 2025):

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

Q1 2025 (March 31, 2025):

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

Prior's years quarters (December 31, 2024 – December 31, 2023):

Net losses for these periods ranged between $1.4 million and $2.9 million per quarter, with loss per share ranging from $4.01 to $7.28. These results primarily reflected ongoing investment in HEXWAVE™ production and commercialization, research and development on licensed technologies, stock-based compensation, and financing-related expenses. Detailed discussions of these quarters were provided in the Company's MD&A filings for those periods, available on SEDAR+.

**Overall Trends**

The Company has consistently incurred net losses over the past eight quarters as it continues to invest in the development and commercialization of HEXWAVE™ and related technologies. Quarterly results have been influenced by the timing of contract revenue recognition, fluctuations in R&D and G&A expenses (notably stock-based compensation), a significant increase in investor relations and marketing, and financing transactions. Private placements completed in 2024 and 2025 provided additional liquidity, but the Company remains in a working capital deficiency position as expenditures continue to exceed revenues.

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

**(a) Liquidity**

As of December 31, 2025, the Company maintained a cash balance of $319,294 and experienced a working capital deficiency of $4,902,610. Current liabilities amounted to $8,616,300 as of the same date, primarily attributed to loans and expenses associated with commencing production, ongoing development of the Company's licensed technologies, and maintaining licenses and the Company's public registry in good standing.

---

| | | |
|:---|:---|:---|
| **Q4-2025 MD&A**<br>(Expressed in U.S. dollars) | ![](tm2612970d1_ex99-2img02.jpg) | Page\| 12 |

---

---

| |
|:---|
| **Cash (used in) provided by:** |
| **Operating activities:** |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss and comprehensive loss for the period) |
| &nbsp;&nbsp;&nbsp;&nbsp;Items not involving cash: |
| &nbsp;&nbsp;&nbsp;&nbsp;Changes in non-cash working capital: |
| **Cash used in operating activities** |
| **Cash used in investing activities** |
| **Cash provided by financing activities** |
| **Effect of foreign exchange rate changes on cash** |
| **(Decrease) increase in cash** |
| **Cash, beginning of the year** |
| **Cash, end of the year** |

---

During the year ended December 31, 2025, we used net cash of $11,349,079 in operating activities, compared to $6,469,264 during the same period in 2024. The increase in cash used in operations primarily reflects a higher net loss in 2025, adjusted for non-cash items. Non-cash charges and credits during the period included stock-based compensation of $1,389,829 (December 31, 2024 — $384,703), amortization recorded in cost of revenues of $519,052 (December 31, 2024 — $922,221), depreciation of $252,613 (December 31, 2024 — $396,256), inventory impairment of $475,024 (December 31, 2024 — $233,568), lease liability interest of $44,882 (December 31, 2024 — $69,652), accrued interest of $384,047 (December 31, 2024 — $294,304), credit line fees of $169,279 (December 31, 2024 — $74,449), impairment of contract costs $(192,951) (December 31, 2024 – $115,730), loss on accounts receivable write-off $13,910 (December 31, 2024 - $563,996), loss on disposal of PP&E $8,453 (December 31, 2024 - $nil), and a loss on disposal of lease assets of $(18,514) (December 31, 2024 — $29,233).

Changes in non-cash working capital used $(262,526) of cash during the year ended December 31, 2025, compared to $(1,228,930) during the same period in 2024. These changes included a decrease in deferred revenue of $84,459 (December 31, 2024 — $ nil) and a decrease in receivables and prepaid expenses of $349,869 (December 31, 2024 – $1,406,491 decrease). These decreases were partially offset by an increase in accounts payable and accrued liabilities of $757,747 (December 31, 2024 — $456,551), an increase in inventory of $828,914 (December 31, 2024 – $105,692 increase), an increase and an increase in contract costs of $309,482 (December 31, 2024 — $384,682), and an increase in deferred financing fee $(766,251) (December 31, 2024 - $nil).

The change in working capital during the 2025 period was primarily driven by lower production and shipment volumes, changes in the timing of customer deployments, and reduced contract activity compared to the prior year period.

The decrease in receivables and prepaid expenses of $349,869 (December 31, 2024 - $1,406,491) was primarily attributable to lower sales volumes, improved collection timing, and reduced prepaid expenditures related to marketing, consulting, and operational activities compared to the prior year period. The decrease in deferred revenue of $84,459 (December 31, 2024 - $nil) reflects the recognition of previously deferred revenue as contractual performance obligations were satisfied during the period, partially offset by fewer new advance customer payments compared to 2024. The decrease in contract costs of $76,420 (December 31, 2024 - $384,682) reflects the decreasing in engineering, development, and support activities under TSA contracts as the current contracts are in its final stages.

Overall, the changes in working capital reflect the Company's lower level of production and contract activity during the year ended December 31, 2025, compared to the same period in 2024.

---

| | | |
|:---|:---|:---|
| **Q4-2025 MD&A**<br>(Expressed in U.S. dollars) | ![](tm2612970d1_ex99-2img02.jpg) | Page\| 13 |

---

Operating cash flows for the year ended December 31, 2025, and 2024 reflect ongoing gross losses, research and development expenditures, and general and administrative expenses, including salaries, consulting fees, and promotional and investor relations activities.

Investing Activities

Cash used in investing activities was $87,119 (2024 – $121,217), relating to additions to property and equipment.

Financing Activities

Net cash provided by financing activities was $10,373,233 (2024 – $7,781,755). In 2025, this consisted mainly of:

&nbsp;&nbsp;&nbsp;&nbsp;· Net proceeds of $7,338,010 (2024 - $6,989,017)
from the issuance of common shares through private placements;

&nbsp;&nbsp;&nbsp;&nbsp;· Proceeds of $3,428,671 (2024 - $87,367) from
warrants exercised;

&nbsp;&nbsp;&nbsp;&nbsp;· Proceeds of $650,000 (2024 - $1,800,000) from
Parabilis term loan;

&nbsp;&nbsp;&nbsp;&nbsp;· Proceeds of factoring $683,018 (2024 - $1,551,166);

&nbsp;&nbsp;&nbsp;&nbsp;· Offset by repayments of loans and factoring of
$(1,490,061) (2024 - $3,414,986), including related party loans of $(74,657) (2024 - $71,485) third-party working capital loans of $(26,250)
(2024 - $1,056,137), and Parabilis term loan ($333,017) (2024 - $nil); and Parbilis factoring and credit lines $(1,056,137) (2024 - $2,038,975);

&nbsp;&nbsp;&nbsp;&nbsp;· Payment of deferred financing fee $(37,447) (2024
- $nil);

&nbsp;&nbsp;&nbsp;&nbsp;· Repayments of lease liabilities of $(198,958)
(2024 – $(247,412)).

In comparison, in 2024 financing cash flows included net proceeds of $7,338,010 from private placements (January 15, February 12, June 27, 2024, and December 18, 2024), $1,009,555 from loans, $1,800,000 from Parabilis term loan, $87,367 proceeds from warrants, and $1,551,166 factoring and credit lines, offset by repayments of $(1,376,011) in loans, $(2,038,975) in factoring and credit lines, and $(247,412) in leases.

Dividends

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

Contractual Obligations

At December 31, 2025, the Company had contractual obligations totaling $8,916,701, of which $8,616,300 are due within one year. These short-term obligations include:

&nbsp;&nbsp;&nbsp;&nbsp;· Accounts payable and accrued liabilities of $4,882,377;

&nbsp;&nbsp;&nbsp;&nbsp;· Loans payable of $2,622,717;

&nbsp;&nbsp;&nbsp;&nbsp;· Credit line liability of $779,831; and

&nbsp;&nbsp;&nbsp;&nbsp;· Lease liabilities of $235,834.

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

&nbsp;&nbsp;&nbsp;&nbsp;· Lease liabilities of $300,401

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

**(b) Capital Transactions and Resources**

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

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

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|:---|:---|:---|
| **Q4-2025 MD&A**<br>(Expressed in U.S. dollars) | ![](tm2612970d1_ex99-2img02.jpg) | Page\| 14 |

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

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

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

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

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

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

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

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

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

**Common share transactions for the year ended December 31, 2024**

i) On January 12, 2024, the Company closed the initial tranche
of a Listed Issuer Financing Exemption (LIFE) private placement of units, raising gross proceeds of $662,554 (CAD$886,000). As of December 31,
2023, the Company had received $224,915 of these proceeds. This tranche involved the issuance of 13,113 units at a price of CAD$67.50
per unit. Each unit consisted of one common share and one purchase warrant, allowing the holder to purchase an additional common share
at CAD$90.00 per share within 36 months. The warrants were allocated a residual value of $154,596. Additionally, the Company issued 337
broker warrants to agents under identical terms and conditions with a fair value of $4,508. Agent commissions totaling $17,110 were paid.

ii) Subsequently, on February 5, 2024, the Company closed the final tranche of the same non-brokered private placement, raising an additional $112,285 (CAD$150,000). This tranche involved the issuance of 2,222 units under the same terms and conditions as the initial tranche. Each unit consisted of one common share and one purchase warrant, allowing the holder to purchase an additional common share at CAD$90.00 per share within 36 months. The warrants were allocated a residual value of $37,428.

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|:---|:---|:---|
| **Q4-2025 MD&A**<br>(Expressed in U.S. dollars) | ![](tm2612970d1_ex99-2img02.jpg) | Page\| 15 |

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iii) On February 26, 2024, the Company closed an investment by Viken Detection Corp. ("Viken") pursuant to which Viken purchased 20,202 units of the Company at an issue price of CAD$67.50 per unit for total gross proceeds of $1,000,000 (CAD$1,363,636). Each unit comprised one common share and one purchase warrant. Each warrant entitles Viken to purchase one additional common share of the Company at an exercise price of CAD$90.00 for a period of 36 months. The warrants were allocated a residual value of $166,667. Additionally, the Company also incurred cash costs in connection to filing and legal expenses in the amount of $27,116 were also paid. These warrants contain blocker language restricting the exercise of the warrants in the event such exercise results in Viken holding more than 9.9% of the outstanding voting securities of the Company.

iv) On March 17, 2024, a total of 4,436 finder warrants expired with an exercise price of CAD$148.50. These broker warrants had a fair value of $312,815 and the reserve value was reclassified to share capital.

v) During
 the year ended December 31, 2024, a total of 2,263 common shares were issued pursuant
 to the exercise of RSUs with a fair value of $286,019.

vi) During the year ended December 31, 2024, a total of 1,333 shares were issued pursuant to the exercise of 1,333 warrants, resulting in proceeds of $87,367 (CAD$120,000). Residual value in the amount of $15,275 was reversed.

vii) On August 13, 2024, the Company closed the first tranche of a non-brokered private placement for gross proceeds of $508,864 (CAD$697,550). The Company issued 10,334 special warrants of the Company at a price of CAD$67.50 per Unit. Each special warrant will automatically convert into one Unit. Each Unit shall consist of one common share and one share purchase warrant. Each warrant entitles the holder thereof to purchase one additional common share of the Company at a price of CAD$90.00 within a period of 36 months. These special warrants were converted into one Unit on August 13, 2024. The warrants were allocated a residual value of $203,560. The Company paid the agents 423 broker warrants with a fair value of $5,757. Each broker warrant will be exercisable to purchase one common share for a period of 36 months at an exercise price of CAD$90.00. Additionally, the Company also incurred cash costs in connection to private placement in the amount of $30,995.

viii) On December 18, 2024, the Company closed a non-brokered private placement for gross proceeds of $5,585,812 (CAD$8,000,000). The Company issued 555,556 units (each a "Unit") of the Company at a price of CAD$14.40 per Unit. Each Unit comprised of one common share and one-half common share purchase warrant. Each warrant entitles the holder thereof to purchase one additional common share of the Company at a price of CAD$24.75 for a period of 24 months and are subject to an accelerated expiry at the Company's election under certain conditions. The Company paid the agents $274,123 in finders fees and issued 27,801 finder warrants with a fair value of $382,873. Each finder's warrant will be exercisable to purchase one common share for a period of 24 months at an exercise price of CAD$24.75. Additionally, the Company also incurred cash costs in connection to private placement in the amount of $41,687.

ix) The Company settled a total of $363,336 (CAD$520,947) of indebtedness with a certain creditor by issuing 34,722 units valued at $927,332 and follows the same terms as the units issued on December 18, 2024, non-brokered private placement. The Company recognized a loss on extinguishment of debt totalling $563,996 (included in other expenses (2023 - $nil).

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| **Q4-2025 MD&A**<br>(Expressed in U.S. dollars) | ![](tm2612970d1_ex99-2img02.jpg) | Page\| 16 |

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Other sources of funds:

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

As at December 31, 2025, the number of stock options outstanding and exercisable was:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Outstanding** | **Outstanding** | **Outstanding** | **Exercisable** | **Exercisable** |
| <br>**Expiry date** | **Number of stock<br> options** | **Exercise price** | **Exercise price** | **Remaining<br> contractual life<br> (years)** | **Number of stock<br> options** |
| 7-Apr-26 | 1844 | CAD$ | 225.00 | 0.27 | 1844 |
| 28-Jul-26 | 278 | CAD$ | 247.50 | 0.57 | 278 |
| 28-Jul-26 | 111 | CAD$ | 292.50 | 0.57 | 111 |
| 1-Nov-26 | 944 | CAD$ | 207.00 | 0.84 | 944 |
| 14-Jan-27 | 222 | CAD$ | 162.00 | 1.04 | 222 |
| 15-Apr-27 | 1111 | CAD$ | 26.55 | 1.29 | 1111 |
| 26-Apr-27 | 2633 | CAD$ | 184.50 | 1.32 | 2633 |
| 2-Jul-27 | 5556 | CAD$ | 10.80 | 1.50 | 1389 |
| 21-Nov-27 | 133 | CAD$ | 99.00 | 1.89 | 133 |
| 26-Apr-28 | 111 | CAD$ | 81.00 | 2.32 | 111 |
| 16-Oct-28 | 1778 | CAD$ | 85.50 | 2.79 | 1778 |
| 30-Dec-29 | 51667 | CAD$ | 36.00 | 4.00 | 29722 |
| 2-Apr-30 | 3333 | CAD$ | 37.80 | 4.25 | 833 |
| 9-Sep-30 | 41111 | CAD$ | 12.15 | 4.69 | 10278 |
| **December 31, 2025** | **110832** |  |  |  | **51387** |

---

Total stock-based compensation expense arising from options granted and vested during the three months and year ended December 31, 2025, was $268,030 and $1,300,572 respectively (three months and year ended December 31, 2024 – $7,559 and $70,004). Of this amount, $18,150 was recorded as stock-based compensation in the HEXWAVE cost of revenue (December 31, 2024 – $5,136), and $40,919 was recorded as stock-based compensation in cost of contract revenue (December 31, 2024 - $26,339).).

As at December 31, 2025, the number of restricted share units ("RSU") outstanding and exercisable are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Number of<br> equity setted<br> RSUs** | **Grant Price** | **Grant Price** |
| **Outstanding, December 31, 2023** | **13176** | **CAD$** | **139.05** |
| Granted | 3944 |  | 54.90 |
| Cancelled | (2939) |  | 126.90 |
| Exercised | (2263) |  | 170.55 |
| **Outstanding, December 31, 2024** | **11918** | **CAD$** | **180.45** |
| Granted | 8260 |  | 10.91 |
| Exercised | (4758) |  | 115.88 |
| **Outstanding, December 31, 2025** | **15420** | **CAD$** | **55.51** |

---

The estimated fair value of the equity settled RSUs granted as of December 31, 2025, was $60,998 (December 31, 2024 - $144,355) and will be recognized as an expense over the vesting period of the RSUs. The fair value of the equity settled RSUs as at the grant date was determined with reference to the market value of the common shares of the Company at the grant date.

During the three months and year ended December 31, 2025, the Company recognized stock-based compensation related to RSUs in the amount of $9,707 and $34,723 respectively (three months and year ended December 31, 2024 - $43,302 and $277,579).

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

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

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

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| **Q4-2025 MD&A**<br>(Expressed in U.S. dollars) | ![](tm2612970d1_ex99-2img02.jpg) | Page\| 17 |

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

**During the year ended December 31, 2024, the following transactions occurred in connection to restricted share units:**

i) On February 28, 2024, the Company granted
 3,278 RSUs to employees of the Company; these RSUs shall be settled with common shares of
 the Company, have an exercise period that expires on February 28, 2029, and vest at
 100% on February 28, 2025.

ii) A total of 2,939 RSUs were canceled.

iii) On August 19, 2024, the Company granted 667 RSUs to a consultant; these RSUs shall be settled with common share of the Company, have an exercise price that expires on August 19, 2029, and vests as follows: 25% on November 19, 2024, 25% on February 19, 2025. 25% on May 19, 2025, 25% on August 19, 2025.

**As at December 31, 2025, the outstanding number of share purchase warrants are as follows:**

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| | | | |
|:---|:---|:---|:---|
|  | | **Exercise** | **Exercise** |
|  | **Warrants**<br>**outstanding** | **Price** | **Price** |
| **Outstanding, December 31, 2023** | **117821** | **CAD$** | **178.20** |
| Issued | 369570 |  | 32.85 |
| Expired | (39949) |  | 216.51 |
| Exercised | (1333) |  | 90.00 |
| **Outstanding, December 31, 2024** | **446109** | **CAD$** | **54.90** |
| Issued | 683234 |  | 19.32 |
| Expired | (169855) |  | 32.79 |
| Exercised | (240718) |  | 20.27 |
| **Outstanding December 31, 2025** | **718770** | **CAD$** | **36.45** |

---

**(c) Performance Shares**

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

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

<u>Operational Performance Shares</u>

As at December 31, 2025, none of the 4,444 OPS have been issued as neither of the two milestones have been met. The estimated fair value of the OPS is CAD$800,000 which had an estimated vesting period between December 2024 and December 2025. The estimated vesting period has been adjusted to December 2026. During the three months and year ended December 31, 2025, the Company recorded stock-based compensation in connection to OPS in the amounts of $(23,193) and $54,534 (three months and year ended December 31, 2024 – $(62,251) and $37,120). For the years ended December 31, 2025, and 2024, none of the operational performance shares have been released from escrow.

---

| | | |
|:---|:---|:---|
| **Q4-2025 MD&A**<br>(Expressed in U.S. dollars) | ![](tm2612970d1_ex99-2img02.jpg) | Page\| 18 |

---

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

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Intended use of proceeds of PP Q4 2025** | **Intended use of proceeds of PP Q4 2025** | **Actual use of proceeds<br> from PP Q4 2025** | **(Over)/under<br> expenditure** | **Explanation of<br> Variance and<br> impact on<br> business objectives** |
| Cash portion of Agent's corporate finance fee | $56029 | $56029 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | N/A |
| Further the production of HEXWAVE™ to support the increase in demand and deliver units in backlog to customers | $1274365 | $1011100 | $319294 | Balance to be used for HEXWAVE support and production. |
| **Total** | $**1330394** | $**1011100** | $**319294** | **N/A** |

---

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

---

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

---

---

| | | |
|:---|:---|:---|
| **Q4-2025 MD&A**<br>(Expressed in U.S. dollars) | ![](tm2612970d1_ex99-2img02.jpg) | Page\| 19 |

---

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

---

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

---

**(g) Reconciliation of use of proceeds from the non-brokered private placement closed on December 18, 2024 ("PP Q4 2024")**

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Intended use of proceeds of PP Q4 2024** | **Intended use of proceeds of PP Q4 2024** | **Actual use of proceeds<br> from PP Q4 2024** | **(Over)/under<br> expenditure** | **Explanation of<br> Variance and<br> impct on<br> business objectives**  |
| Agent's legal fees, expenses and disbursements | $40546 | $40546 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | N/A |
| Cash portion of Agent's corporate finance fee | $274123 | $274123 | $- | N/A |
| Consulting and Investor Relations from Private Placement | $1771401 | $1771401 | $- | N/A |
| Further the production of HEXWAVE™to support the increase in demand and deliver units in backlog to customers | $3499742 | $3499742 | $- | N/A |
| **Total** | $**5585812** | $**5585812** | $- | N/A |

---

---

| | | |
|:---|:---|:---|
| **Q4-2025 MD&A**<br>(Expressed in U.S. dollars) | ![](tm2612970d1_ex99-2img02.jpg) | Page\| 20 |

---

**(h) Reconciliation of use of proceeds from the Special Warrant Financing closed on August 13, 2024 ("PP Q3 2024")**

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Intended use of proceeds of PP Q3 2024** | **Intended use of proceeds of PP Q3 2024** | **Actual use of proceeds<br> from PP Q3 2024** | **(Over)/under<br> expenditure** | **Explanation of<br> Variance and<br> impact on<br> business objectives** |
| Agent's legal fees, expenses and disbursements | $11006 | $11006 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | N/A |
| Cash portion of Agent's corporate finance fee | $23555 | $23555 | $- | N/A |
| Further the production of HEXWAVE™ to support the increase in demand and deliver units in backlog to customers | $474303 | $474303 | $- | N/A |
| **Total** | $**508864** | $**508864** | $- | N/A |

---

**(i) Reconciliation of use of proceeds from the Listed Issuer Financing Exemption ("LIFE") private placement of units closed in two tranches January 12 and February 5 ("PP Q1 2024")**

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Intended use of proceeds of PP Q1 2024** | **Intended use of proceeds of PP Q1 2024** | **Actual use of proceeds<br> from PP Q1 2024** | **(Over)/under<br> expenditure** | **Explanation of<br> Variance and <br> impact on <br> business objectives**  |
| Agent's legal fees, expenses and disbursements | $36252 | $36252 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | N/A |
| Cash portion of Agent's corporate finance fee | $17035 | $17035 | $- | N/A |
| Further the production of HEXWAVE™ to support the increase in demand and deliver units in backlog to customers | $721552 | $721552 | $- | N/A |
| **Total** | $**774839** | $**774839** | $- | N/A |

---

Notes:

(1) Such expenses include costs related to funding the further enhancement, development and testing to achieve future commercialization of the Company's HEXWAVE™ technology as well as development of the latest technologies exclusively licensed to the Company for aviation checkpoints.

**5.** **Commitments** 

i) As at December 31, 2025, and December 31,
 2024, the minimum lease payments are as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025** | **December 31,**<br>**2024** |
| Maturity analysis - contractual undiscounted cash flows |  |  |
| One year or less | $238567 | $257461 |
| Two to five years | 358949 | 558358 |
| Six and thereafter | - | - |
| Total lease liabilities | $597516 | $815819 |
| **Lease liabilities included in the statement of financial position** | $**536235** | $**708825** |
| Current | $235834 | $203443 |
| Non-current | $300401 | $505382 |

---

---

| | | |
|:---|:---|:---|
| **Q4-2025 MD&A**<br>(Expressed in U.S. dollars) | ![](tm2612970d1_ex99-2img02.jpg) | Page\| 21 |

---

**6.** **Revenue** 

Revenue recognized for the three months and year ended December 31, 2025, and 2024, relates to contract revenue from the Transportation Security Administration ("TSA"), as well as sales of HEXWAVE™ units.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three months ended December 31,** | **Three months ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| <br>**Revenue** | **2025** | **2024** | **2025** | **2024** |
| TSA Contract Award HD-AIT |  |  | 457905 | 200000 |
| TSA OA Development |  | 175000 | 246944 | 795000 |
| HD-AIT Phase II |  |  |  | 133056 |
| HD-AIT Phase III |  |  | 150000 | 296944 |
| HEXWAVE units, installation and training | (278490) | (433986) | 583010 | 1012046 |
| HEXWAVE subscriptions and maintenance | 12562 | - | 60469 | 1500 |
| **Total Revenue** | $**(265928)** | $**(258986)** | $**1498328** | $**2438546** |

---

As of December 31, 2025, the Company continued its efforts to try and achieve year-over-year revenue growth, with a backlog of $2 million from signed purchase orders and contract revenue in 2026.

During the year ended December 31, 2025, the Company delivered 12 HEXWAVE™ units at an average selling price per unit of approximately US$62,350, compared to 15 units delivered at an average selling price per unit of approximately US$67,570 during the year ended December 31, 2024. The lower volume of deliveries in the year ended December 31, 2025, was primarily attributable to timing-related factors, including customer site readiness, installation scheduling, and the deferral of certain customer deployments into subsequent periods, as well as management's focus on manufacturing optimization and operational efficiency initiatives during the period.

Future revenue for the Company consists of HEXWAVE™ purchasers, existing and expected additional Transportation Security Administration ("TSA") contract revenue and other. The Company recorded for the fiscal year ended December 31, 2025, a total of $1.5 million in revenue mainly from HEXWAVE™ sales and TSA contract revenue. With additional orders and contract revenue the company is projecting $3.8 million for fiscal year 2026 and 2027.The projected amount is due to several material factors outlined below:

**Backlog Orders:**

The Company has shipped a total of $643,479 in backlog orders, with a remaining amount of $1,650,000 in backlog for the HEXWAVE™. With production levels increasing the backlog orders are expected to increase during fiscal year 2026. Inventory constraints and limited funding continue to be a challenge in fulfilling orders.

**HEXWAVE™ Sales Projections:**

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

**TSA Contract Revenue:**

The Company has experienced delays in TSA contract revenue projects, as well as in additional contract line items that the TSA had planned to exercise in 2025 and 2026. As a result, revenue of $357,759 originally planned for early 2025 will fall into Q1 and Q2 – 2026, as the TSA HD-AIT Phase II B was awarded September 29, 2025.

**Global Economic Challenges:**

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

---

| | | |
|:---|:---|:---|
| **Q4-2025 MD&A**<br>(Expressed in U.S. dollars) | ![](tm2612970d1_ex99-2img02.jpg) | Page\| 22 |

---

While interest rates remain elevated, recent signals of potential monetary policy easing in late 2025 or early 2026 may improve access to capital markets and support increased customer activity. Management expects that any improvement in financing conditions could positively impact order volumes in future periods.

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

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

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

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

Management also recognizes that current capital market conditions directly affect the Company's liquidity and working capital position. As at December 31, 2025, the Company had a working capital deficiency of $4.9 million and contractual obligations of $8.9 million, of which $8.6 million are due within the next 12 months. Continued access to external financing will therefore be critical to support operations and growth initiatives until the Company is able to generate sustainable revenues from commercial sales.

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

During the year ended December 31, 2025, the Company recognized total contract revenue of $854,849, recorded in revenue (year ended December 31, 2024 – $1,425,000). Future revenue related to these contracts will be recognized as performance obligations are satisfied. It is estimated that future revenues will be recognized on the same basis according to the following timelines:

---

| | | |
|:---|:---|:---|
| | **Year ended December 31,** | **Year ended December 31,** |
| <br>Contract Award Revenue Expected in Future Years | **2026** | **2027** |
| HD-AIT Phase II B | 357759 | - |
| **Total estimated contract revenues** | $**357759** | $**-** |

---

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

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

During the year ended December 31, 2025, the Company received $457,905 and recorded a receivable of $nil (December 31, 2024 – $200,000 and $nil, respectively). The remaining contract balance as of December 31, 2025, was $nil (December 31, 2024 – $457,905).

The Company is required to submit quarterly invoices as follows:

---

| | |
|:---|:---|
| **TSA HD-AIT Upgrade** | **Amounts** |
| &nbsp;&nbsp;**Year 2023** | $1265000 |
| &nbsp;&nbsp;**Year 2024** | 200000 |
| &nbsp;&nbsp;**Year 2025** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Milestone 5B (Q1 2025) (paid) | 100000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Milestone 6 (Q2 2025) (paid) | 357905 |
| &nbsp;&nbsp;**Total Contract Value** | $**1922905** |

---

---

| | | |
|:---|:---|:---|
| **Q4-2025 MD&A**<br>(Expressed in U.S. dollars) | ![](tm2612970d1_ex99-2img02.jpg) | Page\| 23 |

---

ii) TSA Open Architecture

On September 29, 2023, the Company received a contract award for $1,116,944 from TSA for the Open Architecture Development. The contract award is to develop a system-level approach that addresses TSA's request for implementation of a Checkpoint Open Architecture for On-Person Screening (OPS) systems that enable modularity and enhances security effectiveness. The project will be performed over a period of twenty-one months, and invoices will be issued once the milestones are reached based on the agreed upon timeline. During the year ended December 31, 2025, the Company received $246,944 and had a receivable of $nil (December 31, 2024 – $795,000 and $nil, respectively). The balance remaining on the contract as of December 31, 2025, was $nil (December 31, 2024 – $246,944).

---

| | |
|:---|:---|
| **TSA Open Architecture** | **Amounts** |
| &nbsp;&nbsp;**Year 2023** | $75000 |
| &nbsp;&nbsp;**Year 2024** | 795000 |
| &nbsp;&nbsp;**Year 2025** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Milestone 6 (Q1 2025) (paid) | 175000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Milestone 7 (Q2 2025) (paid) | 71944 |
| &nbsp;&nbsp;**Total Contract Value** | $**1116944** |

---

iii) TSA HD-AIT Phase II

On September 29, 2023, the Company received a contract award of $133,056 from the Transportation Security Administration ("TSA") for HD-AIT Phase II. This award is a follow-on option under the existing HD-AIT development program, aimed at advancing Phase II to finalize a hardware design that supports future compliance efforts. The project was scheduled to be completed over three months, with invoices issued upon reaching agreed-upon milestones. During the year ended December 31, 2025, the Company had received the full contract amount of $133,056 and recorded a receivable of $nil (December 31, 2024 – $133,056, respectively). The remaining contract balance as of December 31, 2025, was $nil (December 31, 2024 – $nil), as the agreement was completed on February 20, 2024.

iv) TSA HD-AIT Phase II A

On September 5, 2024, the Company received a contract award for $446,944 from TSA for the HD-AIT Phase II A option. The contract award is a follow-on option to the current HD-AIT development program to execute phase II to drive to a final hardware design capable of supporting future compliance efforts. The project will be performed over a period of twelve months, and invoices will be issued once the milestones are reached based on the agreed upon timeline. During the year ended December 31, 2025, the Company received $150,000 and had a receivable of $nil (December 31, 2024 - $nil, and $296,944 respectively). The balance remaining on the contract as of December 31, 2025, was $nil (December 31, 2024 - $150,000).

---

| | |
|:---|:---|
| **TSA HD-AIT Phase II A** | **Amounts** |
| &nbsp;&nbsp;**Year 2024** | $296944 |
| &nbsp;&nbsp;**Year 2025** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Milestone 2 (Q3 2025) (paid) | 150000 |
| &nbsp;&nbsp;**Total Contract Value** | $**446944** |

---

v) TSA HD-AIT Phase II B

On September 29, 2025, the Company received a contract award for $357,759 from TSA for the HD-AIT Phase II B option. The contract award is a follow-on option to the current HD-AIT development program to execute phase II to drive to a final hardware design capable of supporting future compliance efforts. Invoices will be issued once the milestones are reached based on the agreed upon timeline. As at December 31, 2025, the Company received $nil and had a receivable of $nil (December 31, 2024 - $nil, and $nil respectively). The balance remaining on the contract as of December 31, 2025, was $357,759 (December 31, 2024 - $nil).

---

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

---

---

| | | |
|:---|:---|:---|
| **Q4-2025 MD&A**<br>(Expressed in U.S. dollars) | ![](tm2612970d1_ex99-2img02.jpg) | Page\| 24 |

---

As of December 31, 2025, the Company recorded contract costs of $152,421, representing costs incurred for contract milestones not yet achieved (December 31, 2024 - $268,952). As of December 31, 2025, the Company recorded an impairment of the contract costs of $192,951 (December 31, 2024 - $115,730).

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

The Company does not utilize off-balance sheet arrangements.

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

**Compensation of key management personnel:**

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

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three months ended December 31,** | **Three months ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2025** | **2024** |
| G&A Salaries | $311065 | $135738 | $1553391 | $620846 |
| G&A Stock-based compensation | 370283 | 40614 | 738601 | 115805 |
| G&A Consulting fees (1) | - | 23570 | - | 96358 |
|  | $**681348** | $**199922** | $**2291992** | $**833009** |

---

(1) Consulting fees were paid or payable a member
 of key management personnel of the Company

As of December 31, 2025, the Company had a balance payable of $434,831 to key management personnel (Arjun Grewal, Linda Jaksta, Omar Garcia, William Frain, and Jeff Gordon) (December 31, 2024, – $421,319). This payable balance includes accounts payable and accrued liabilities relating to compensation to directors, officers, or their related companies, included in compensation of key management personnel. These related party balances are unsecured, non-interest bearing and have no specific terms of settlement.

During the year ended December 31, 2025, the Company received working capital loans in the amount of $nil (December 31, 2024 – $82,000) from members of key management personnel or their related parties and repaid $74,657 (Jay Adelaar and Jennifer Frain for working capital needs) (December 31, 2024 - $336,036). As at December 31, 2025, the outstanding balance is $nil (Note 8(a)) (December 31, 2024 – $74,657).

During the year ended December 31, 2025, the Company paid Nicole Ridgedale Communications, a related party, $nil (December 31, 2024 - $23,340) for consulting services and stock-based compensation. These amounts were recorded under salaries and consulting fees within the general and administrative expenses.

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

&nbsp;&nbsp;&nbsp;&nbsp;· On
 January 15, 2026, the Company closed the second and final tranche of the December 2025
 non-brokered private placement for additional gross proceeds of CAD$867,506, through the
 issuance of 87,627 units at a price of CAD$9.90 per unit. Each unit comprised one common
 share and one common share purchase warrant, with each warrant entitling the holder to acquire
 one additional common share at an exercise price of CAD$13.50 per share, exercisable from
 March 17, 2026, to January 15, 2028.

In connection with the private placement, the Company issued an aggregate of 5,045 broker warrants to agents under terms and conditions substantially identical to those of the unit warrant.

&nbsp;&nbsp;&nbsp;&nbsp;· On
 April 7, 2026, a total of 555 RSUs expired.

&nbsp;&nbsp;&nbsp;&nbsp;· On
 April 7, 2026, a total of 1,844 stock options expired.

---

| | | |
|:---|:---|:---|
| **Q4-2025 MD&A**<br>(Expressed in U.S. dollars) | ![](tm2612970d1_ex99-2img02.jpg) | Page\| 25 |

---

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

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

As of December 31, 2025, the Company's financial instruments comprise cash, accounts receivables, accounts payable and accrued liabilities, loans payable, and factoring liability. The fair values of the Company's financial instruments approximate their carrying values due to their short-term maturity.

The Company's financial instruments are exposed to certain financial risks including, credit risk, liquidity risk, foreign currency risks, equity price risk and capital risk management. Details of each risk are laid out in the notes to the Company's condensed interim consolidated financial statements as at December 31, 2025. Details of each risk are summarized below:

a) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity risk through the management of its capital structure. To mitigate this risk, the Company has a planning and budgeting process in place to determine the funds required to support its ongoing operations and capital expenditures. The Company ensures that sufficient funds are raised from equity offerings or debt financings to meet its operating requirements, after considering existing cash balances, expected exercise of share purchase warrants, and stock options. The Company's ability to continue as a going concern involves significant judgements and estimates while determining forecasted cashflows and is dependent on the Company's ability to obtain financing (Note 1). As at December 31, 2025, the Company had cash of $319,294 (December 31, 2024 – $1,153,229) to settle current liabilities of $8,616,300 (December 31, 2024 – $6,607,387).

As of December 31, 2025, the Company had granted security interests over substantially all of the assets of Liberty Defense Technologies, Inc., its wholly owned subsidiary, in connection with multiple agreements, including the Company's credit facilities with Parabilis and its distributor arrangement with Viken Detection (a commercial agreement). These arrangements include multiple security interests over the same underlying assets, each of which claim to be a first-ranking security interest.

As of December 31, 2025, no intercreditor agreement or similar arrangement had been executed to establish the priority or ranking of these competing security interests. Accordingly, the relative rights of the secured parties with respect to the collateral have not been formally determined and may be subject to legal interpretation. As of that date, neither Parabilis nor Viken Detection had asserted a default nor exercised any remedies under their respective agreements in connection with this matter.

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

The Company's exposure to liquidity risk related to the competing security interests is limited to the carrying amounts to the Parabilis and Viken Detection agreements. As at December 31, 2025, the amount due to Viken is $608,379 (December 31, 2024 - $1,160,000), included in Accounts Payable and Accrued Liabilities, in the Statement of Financial Position. As at December 31, 2025, the amount due to Parabilis is $3,402,548 (December 31, 2024 - $2,905,358), included in Parabilis Term Loan and Factoring and Credit Line Liability, in the Statement of Financial Position. See Notes 10 and 11(a) for activity related to the Parabilis loans during the year ended December 31, 2025.

b) Credit risk

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations, including accounts receivable terms. The Company's cash is held through large Canadian, international, and foreign national financial institutions. The Company's receivables primarily consist of GST receivable due from the Canadian government and trade receivables that the Company continues to collect. These trade receivables are primarily with continuing customers and are not subject to significant credit risk. As at December 31, 2025, the Company's trade receivables totalling $470,263 are from four customers (December 31, 2024 - $130,000). The Company's maximum exposure to credit risk is limited to the carrying amount of cash and accounts receivables.

---

| | | |
|:---|:---|:---|
| **Q4-2025 MD&A**<br>(Expressed in U.S. dollars) | ![](tm2612970d1_ex99-2img02.jpg) | Page\| 26 |

---

c) Market risk

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

Interest rate risk

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

Foreign currency risk

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

Price risk

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

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

<u>Capital Risk Management</u>

The Company manages common shares, stock options, performance share units, restricted share units, and share purchase warrants as capital. The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to pursue the development of its products and to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk.

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

In order to facilitate the management of its capital requirements, the Company prepares expenditure budgets that are updated as necessary depending on various factors, including successful capital deployment and general industry conditions.

In order to maximize ongoing development efforts, the Company does not pay out dividends. The Company's investment policy is to keep its cash treasury on deposit in an interest-bearing chartered bank account. Cash consists of cash on held with banks.

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

There has been no change to the Company's approach to capital management during the year ended December 31, 2025.

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

Outstanding common share data:

Authorized: Unlimited number of common shares

Number of common shares issued and outstanding as at December 31, 2025: 1,896,677

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

---

| | | |
|:---|:---|:---|
| **Q4-2025 MD&A**<br>(Expressed in U.S. dollars) | ![](tm2612970d1_ex99-2img02.jpg) | Page\| 27 |

---

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

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Outstanding** | **Outstanding** | **Outstanding** | **Exercisable** | **Exercisable** |
| <br>**Expiry date** | **Number of stock<br> options** | **Exercise price** | **Exercise price** | **Remaining<br> contractual life<br> (years)** | **Number of stock<br> options** |
| 28-Jul-26 | 189 | CAD$ | 247.50 | 0.57 | 189 |
| 28-Jul-26 | 200 | CAD$ | 292.50 | 0.57 | 200 |
| 1-Nov-26 | 944 | CAD$ | 207.00 | 0.84 | 944 |
| 14-Jan-27 | 222 | CAD$ | 162.00 | 1.04 | 222 |
| 15-Apr-27 | 1111 | CAD$ | 26.55 | 1.29 | 1111 |
| 26-Apr-27 | 2633 | CAD$ | 184.50 | 1.32 | 2633 |
| 2-Jul-27 | 5556 | CAD$ | 10.80 | 1.50 | 2778 |
| 21-Nov-27 | 133 | CAD$ | 99.00 | 1.89 | 133 |
| 26-Apr-28 | 111 | CAD$ | 81.00 | 2.32 | 111 |
| 16-Oct-28 | 1778 | CAD$ | 85.50 | 2.79 | 1778 |
| 30-Dec-29 | 51667 | CAD$ | 38.25 | 4.00 | 35208 |
| 2-Apr-30 | 3333 | CAD$ | 37.80 | 4.25 | 1667 |
| 30-Sep-30 | 41111 | CAD$ | 12.15 | 4.75 | 10278 |
| **April 29, 2026** | **108988** |  |  |  | **57252** |

---

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

---

| | | | |
|:---|:---|:---|:---|
|  | | **Exercise** | **Exercise** |
|  | **Warrants**<br>**outstanding** | **Price** | **Price** |
| **Outstanding, December 31, 2023** | **117821** | **CAD$** | **178.20** |
| Issued | 369570 |  | 32.85 |
| Expired | (39949) |  | 216.51 |
| Exercised | (1333) |  | 90.00 |
| **Outstanding, December 31, 2024** | **446109** | **CAD$** | **54.90** |
| Issued | 683234 |  | 19.32 |
| Expired | (169855) |  | 32.79 |
| Exercised | (240718) |  | 20.27 |
| **Outstanding December 31, 2025** | **718770** | **CAD$** | **36.45** |
| Issued | 863479 |  | 5.47 |
| **Outstanding April 29, 2026** | **1582249** | **CAD$** | **19.54** |

---

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

---

| | | | |
|:---|:---|:---|:---|
| **Outstanding, December 31, 2023** | **13176** | **CAD$** | **139.05** |
| Granted | 3944 |  | 54.90 |
| Cancelled | (2939) |  | 126.90 |
| Exercised | (2263) |  | 170.55 |
| **Outstanding, December 31, 2024** | **11918** | **CAD$** | **180.45** |
| Granted | 8260 |  | 10.91 |
| Exercised | (4758) |  | 115.88 |
| **Outstanding December 31, 2025** | **15420** | **CAD$** | **55.51** |
| Expired | (555) |  | 261.00 |
| **Outstanding April 29, 2026** | **14865** | **CAD$** | **47.82** |

---

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

---

| | | | |
|:---|:---|:---|:---|
|  | **Number of<br> equity settled<br> performance<br> share units** | **Weighted average<br> price** | **Weighted average<br> price** |
| Outstanding, December 31, 2023 and 2024 | 4444 | CAD$ | 180.00 |
| Released from escrow | - |  | - |
| **Outstanding, December 31, 2025** | **4444** | **CAD$** | **180.00** |

---

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

Disclosure controls and procedures are intended to provide reasonable assurance that information required to be disclosed is recorded, processed, summarized, and reported within the time periods specified by securities regulations and that the information required to be disclosed is accumulated and communicated to management. Internal controls over financial reporting are intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. In connection with National Instrument 52-109 (Certificate of Disclosure in Issuer's Annual and Interim Filings) ("NI 52-109"), the Chief Executive Officer and Chief Financial Officer of the Company have filed a Venture Issuer Basic Certificate with respect to the financial information contained in the consolidated financial statements for the years ended December 31, 2025 and 2024, and this accompanying MD&A (together, the "Annual Filings").

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

---

| | | |
|:---|:---|:---|
| **Q4-2025 MD&A**<br>(Expressed in U.S. dollars) | ![](tm2612970d1_ex99-2img02.jpg) | Page\| 28 |

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## Exhibit 99.3

**Exhibit 99.3**

**Form 52-109FV1**

***Certification of Annual Filings***

***Venture Issuer Basic Certificate***

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

1.  ***Review:*** I have reviewed the AIF,
if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated
by reference in the AIF (together, the "annual filings") of **Liberty Defense Holdings, Ltd.** (the "issuer") for the fiscal year ended **December 31, 2025.** 

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

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

Date: **April 30, 2026**

---

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

---

&nbsp;&nbsp;**<u>NOTE TO READER</u>**<br>In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of<br>i) controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and<br>ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.<br>The issuer's certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52- 109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.<br>

## Exhibit 99.4

**Exhibit 99.4**

**Form 52-109FV1**

***Certification of Annual Filings***

***Venture Issuer Basic Certificate***

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

1.  ***Review:*** I have reviewed the AIF,
if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated
by reference in the AIF (together, the "annual filings") of **Liberty Defense Holdings, Ltd.** (the "issuer") for the fiscal period ended **December 31, 2025.** 

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

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

Date: **April 30, 2026**

---

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

---

&nbsp;&nbsp;**<u>NOTE TO READER</u>**<br>In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of<br>i) controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and<br>ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.<br>The issuer's certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52- 109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.<br>

## Exhibit 99.5

**Exhibit 99.5**

![](tm2612970d1_ex99-5img01.jpg)

![](tm2612970d1_ex99-5img02.jpg)

![](tm2612970d1_ex99-5img03.jpg)

![](tm2612970d1_ex99-5img04.jpg)

## Exhibit 99.6

**Exhibit 99.6**

![](tm2612970d1_ex99-6img01.jpg)

![](tm2612970d1_ex99-6img02.jpg)

![](tm2612970d1_ex99-6img03.jpg)