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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended: ~~September~~December 3031, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from:

Commission File Number: 000-56692

VERSES AI INC.

(Exact name of registrant as specified in its charter)

British Columbia, Canada		88-2921736
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

2121 Avenue of the Stars, 8th Floor, Los Angeles, CA		90067
(Address of principal executive offices)		(Zip Code)

(310) 988-1944

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of the issuer’s Class A Subordinate Voting Shares, without par value, outstanding at ~~November~~February 13, ~~2025~~2026 was 12,~~611~~680,~~275~~005.

Table of Contents

		Page
PART I - FINANCIAL INFORMATION		4
ITEM 1.	Financial Statements	4
	[Condensed Consolidated] Balance Sheets as of September 30, 2025 (Unaudited) and March 31, 2025	4
	[Condensed Consolidated] Balance Sheets as of December 31, 2025 (Unaudited) and March 31, 2025	5
	[Condensed Consolidated] Statements of Operations and Comprehensive Loss for the Three and Six Months Ended September 30, 2025 and 2024 (Unaudited)	6
	[Condensed Consolidated] Statements of Operations for the Three and Nine Months Ended December 31, 2025 and 2024 (Unaudited)	6
	[Condensed Consolidated Statements of Changes in Stockholders’ Equity] for the Three and Six Months Ended September 30, 2025 and 2024 (Unaudited)	7
	[Condensed Consolidated] Statements of Comprehensive Loss for the Three and Nine Months Ended December 31, 2025 and 2024 (Unaudited)	7
	[Condensed Consolidated Statements of Cash Flows] for the Three and Six Months Ended September 30, 2025 and 2024 (Unaudited)	8
	[Condensed Consolidated Statements of Changes in Shareholders’ Equity] for the Three and Nine Months Ended December 31, 2025 and 2024 (Unaudited)	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
	[Condensed Consolidated Statements of Cash Flows] for the Three and Nine Months Ended December 31, 2025 and 2024 (Unaudited)	9
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
	Notes to Unaudited Condensed Consolidated Financial Statements	10
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	48
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
ITEM 4.	Controls and Procedures	48
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	52
PART II - OTHER INFORMATION
ITEM 4.	Controls and Procedures	52
ITEM 1.	Legal Proceedings	49
PART II - OTHER INFORMATION		53
ITEM 1A.	Risk Factors	50
ITEM 1.	Legal Proceedings	53
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50
ITEM 1A.	Risk Factors	55
ITEM 3.	Defaults Upon Senior Securities	50
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55
ITEM 5.	Other Information	50
ITEM 3.	Defaults Upon Senior Securities	55
ITEM 6.	Exhibits	51
ITEM 5.	Other Information	55
SIGNATURES		52
ITEM 6.	Exhibits	56
SIGNATURES		57

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements in this Quarterly Report on Form 10-Q about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “believe,” “will,” “expect,” “anticipate,” “estimate,” “intend,” “plan” and “would.” For example, statements concerning financial condition, possible or assumed future results of operations, growth opportunities, industry ranking, plans and objectives of management, markets for our Class A Subordinate Voting Shares and future management and organizational structure are all forward-looking statements. Forward-looking statements are not guarantees of performance. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to differ materially from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement.

Any forward-looking statements are qualified in their entirety by reference to the risk factors discussed in this Quarterly Report on Form 10-Q. Some of the risks, uncertainties and assumptions that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include, but are not limited to:

	●	the competitive and business strategies of the Company (as defined below);
	●	the Company’s research roadmap and expectations regarding the Company’s development of artificial intelligence (“AI”);
	●	the Company’s participation in AI benchmark challenges and expectations regarding the public release timeline of Genius (as defined herein);
	●	market prices, values and other economic indicators;
	●	receipt and timing of any required governmental, regulatory and third-party approvals, licenses and permits;
	●	the performance of the Company’s business and operations;
	●	the intention to grow the business, operations and potential activities of the Company;
	●	the Company’s competitive positioning;
	●	the Company’s anticipated partnerships and agreements with third parties and the expected outcomes of such partnerships and agreements;
	●	possible events, conditions or financial performance that is based on assumptions about future economic conditions and courses of action;
	●	timing, costs and potential success of future activities on the Company’s facilities and projects;
	●	future outlook and goals relating to the Company’s strategy;
	●	whether the Company will have sufficient working capital and its ability to raise additional financing required in order to continue development of its business and continue operations;
	●	the Company’s expected reliance on key management personnel, advisors and consultants;
	●	the Company’s intended compensation policy and practices and compensation structure;
	●	the capabilities of Genius and Genius-based applications;
	●	the development and roll-out of Genius and Genius-based applications;
	●	the expected competitive aspects of Genius and Genius-based applications in the market;
	●	the scalability of the Spatial Web (as defined herein) and Genius;
	●	beliefs and intentions regarding the ownership or potential ownership of any material patents, trademarks and domain names used in connection with the Company’s products and services;
	●	analyses and other information based on expectations of future performance and planned products;
	●	planned expenditures and budgets and the execution thereof; and
	●	anticipated results and developments in the Company’s operations in future periods and other matters which may occur in the future.

-1-

Forward-looking information is not a guarantee of future performance and is based upon a number of estimates and assumptions of management in light of management’s experience and perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances, including, without limitation, assumptions about:

	●	possible events, conditions or financial performance that is based on assumptions about future economic conditions and courses of action;
	●	general economic, financial market, regulatory and political conditions in which the Company operates;
	●	general demand and consumer interest in the Company’s products;
	●	the competitive environment in which the Company operate;
	●	the ability of the Company to grow its market share and the Company’s growth outlook;
	●	anticipated and unanticipated costs that the Company may face;
	●	estimated contracted revenue, revenue structures and revenue from operations;
	●	there being no significant delays in the development and commercialization of Genius and other products and services;
	●	the ability of the Company to raise any necessary capital on acceptable terms;
	●	the ability of the Company to anticipate future needs of clients and partners;
	●	the ability of the Company to maintain and effect sufficient research and development capabilities;
	●	the ability of the Company to execute the Company’s growth, sales and customer acquisition strategies;
	●	the ability of the Company to attract and retain skilled personnel;
	●	the ability of the Company to obtain qualified staff and in a timely and cost-efficient manner;
	●	there being no significant barriers to the acceptance of the Company’s products and services;
	●	the continued adoption and acceptance of the Spatial Web;
	●	stability in financial and capital markets;
	●	fluctuations in capital markets and share prices;
	●	the accuracy of budgeted costs and expenditures;
	●	future currency exchange rates and interest rates;
	●	the timely receipt of any required governmental, regulatory and third-party approvals, license and permits on favorable terms and any required renewals of the same;
	●	legislation and regulation favoring the furtherance of AI applications; and
	●	requirements under applicable laws.

While the Company considers these assumptions to be reasonable, the assumptions are inherently subject to significant business, social, economic, political, regulatory, competitive and other risks and uncertainties, contingencies and other factors that could cause actual actions, events, conditions, results, performance or achievements to be materially different from those projected in the forward-looking information. Many assumptions are based on factors and events that are not within the control of the Company and there is no assurance they will prove to be correct.

Furthermore, by their very nature, forward-looking information involves a variety of known and unknown risks, uncertainties and other factors which may cause the actual plans, intentions, events, results, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, without limitation: industry-wide risks; fluctuations in capital markets and share prices; price volatility; risks related to the ability to obtain financing needed to fund the continued development of the Company’s business; changes in the Company’s business plans; risks related to the Company’s limited operating history; the Company requiring additional funding to maintain operations; risks related to the Company’s negative cashflow from operating activities; the Company’s failure to implement its growth strategy; risks related to conflicts of interest involving the Company’s management; risks related to the uncertainty of the Company’s use of available funds; risks related to proprietary AI algorithms; the failure of the Company to manage its growth; risks related to the Company’s reliance on strategic partnerships; risk associated with security breaches; risk associated with software errors or defects; risks associated with insufficient insurance coverage; the Company’s failure to maintain, promote and enhance its brand; the Company’s dependence on customer Internet access and use of Internet for commerce; risks associated with privacy and security of sensitive information; risks associated with changes in technology affecting the Company’s business and products; risks associated with the competitive environment of the Company’s industry; risks associated with the uncertainty of market opportunity estimates and growth forecasts; risks associated with reputational damage; the Company’s inability to protect its intellectual property; the volatility of the global economy; the Company’s dependence on management and key personnel; risks associated with government regulation affecting the Company; the Company being subject to civil or other legal proceedings; risks related to reporting requirements arising from the Company’s reporting issuer status; risks associated with future acquisitions; risks related to the maintenance of effective internal controls by the Company; the potential that no active or liquid market for the Class A Subordinate Voting Shares may develop or be sustained; the speculative nature of an investment in the Class A Subordinate Voting Shares; risk that the market price of the Class A Subordinate Voting Shares may not represent the Company’s performance or intrinsic value; risks associated with the influence of reports published by securities or industry analysts on the trading market of the Class A Subordinate Voting Shares; risks associated with price volatility of publicly traded securities; risks associated with the future dilution of the Company’s securities; risks associated the payment of dividends; and other risks discussed under “Risk Factors” below.

-2-

The foregoing is not an exhaustive list of the risks and factors that may affect the Company’s forward-looking information. Although the Company has attempted to identify important factors that could affect the Company and may cause actual actions, events, conditions, results, performance or achievements to differ materially from those described in the forward-looking information, there may be other factors that cause actions, events, conditions, results, performance or achievements not to be as anticipated, estimated or intended. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

The Company cautions that the foregoing lists of important assumptions and factors are not exhaustive. Other events or circumstances could cause actual results to differ materially from those estimated or projected and expressed in, or implied by, the forward-looking information contained in this Quarterly Report on Form 10-Q. You should read this Quarterly Report on Form 10-Q and the documents that we reference herein and have filed as exhibits to the Quarterly Report on Form 10-Q, completely and with the understanding that our actual future results may be materially different from what we expect. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. You should assume that the information appearing in this Quarterly Report on Form 10-Q is accurate as of the date hereof. Accordingly, readers should not place undue reliance on forward-looking information. Except as required by law, the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

We qualify all of the information presented in this Quarterly Report on Form 10-Q, and particularly our forward-looking statements, by these cautionary statements.

This Quarterly Report on Form 10-Q may include market data and certain industry data and forecasts, which we may obtain from internal surveys, market research, publicly available information and industry publications. Such reports generally state that the information contained therein has been obtained from sources believed to be reliable, but the accuracy or completeness of such information is not guaranteed. Although we believe this information is reliable, we have not independently verified, nor can we guarantee, the accuracy or completeness of that information.

Throughout this Quarterly Report on Form 10-Q, the “Company,” “VERSES,” “we,” “us,” and “our” refers to Verses AI Inc., individually, or as the context requires, collectively with its subsidiaries.

-3-

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

VERSES AI INC.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED DECEMBER 31, 2025 and 2024

(Expressed in United States dollars)

-4-

VERSES AI INC.

Condensed Consolidated Interim Balance Sheet

(Expressed in United States dollars)

			September 30, 2025				March 31, 2025
					December 31, 2025				March 31, 2025
	Notes		~~(Unaudited)~~		(Unaudited)		~~(Audited)~~		(Audited)
ASSETS
CURRENT
Cash and restricted cash	3	3	$	~~1,209,908~~	$	67,954	$	~~4,816,906~~	$	4,816,906
Accounts receivable				~~296,700~~		164,000		-		-
Deferred financing costs				-		-		~~118,546~~		118,546
Work in progress				-		-		~~6,654~~		6,654
Tax receivable				~~728,193~~		761,962		~~604,912~~		604,912
Prepaid expenses	12	12		~~1,215,775~~		1,105,789		~~636,064~~		636,064
Total current assets				~~3,450,576~~		2,099,705		~~6,183,082~~		6,183,082
Due from related parties	8	8		~~69,657~~		70,449		~~68,080~~		68,080
Equipment	~~6, 13~~	6, 13		~~120,008~~		120,290		~~125,413~~		125,413
TOTAL ASSETS			$	~~3,640,241~~	$	2,290,444	$	~~6,376,575~~	$	6,376,575
LIABILITIES
CURRENT
Accounts payable	8	8	$	~~1,508,247~~	$	3,141,081	$	~~2,036,916~~	$	2,036,916
Accrued liabilities				~~132,665~~		79,891		~~41,736~~		41,736
Deferred grant	3	3		-		41,739		~~67,732~~		67,732
Deferred revenue				-		-		~~100,000~~		100,000
Provision for legal claim	~~19, 20~~	22		~~9,402,338~~		9,640,094		~~8,948,085~~		8,948,085
Restricted share unit liability	7			1,776,600				3,911,823
Convertible debentures		15				1,832,770				-
Total current liabilities				12,819,850				15,106,292
Restricted share unit liability		7				611,592				3,911,823
Loans payable	6			139,722				139,039
Total current liabilities						15,347,167				15,106,292
TOTAL LIABILITIES				12,959,572				15,245,331
Loans payable		6				141,036				139,039
SHAREHOLDERS’ DEFICIENCY
TOTAL LIABILITIES						15,488,203				15,245,331
Class A Subordinate Voting Shares, without par value: unlimited authorized; 8,897,200 and 7,825,571 issued and outstanding, respectively	10			121,532,339				105,477,150
SHAREHOLDERS’ DEFICIENCY
Class B Proportionate Voting Shares, without par value: unlimited authorized; 198,517 and Nil issued and outstanding, respectively	10			-				-
Class A Subordinate Voting Shares, without par value: unlimited authorized; 12,618,775 and 7,825,571 issued and outstanding, respectively		10				118,580,460				105,477,150
Voting shares, value	10			-				-
Additional paid-in capital		10, 11				23,368,424				15,891,737
Additional paid-in capital	8, 10, 11			18,808,571				15,891,737
Accumulated other comprehensive loss						(601,456	)			(675,018	)
Accumulated other comprehensive loss				(591,715	)			(675,018	)
Deficit						(154,545,187	)			(129,562,625	)
Deficit				(149,068,526	)			(129,562,625	)
TOTAL SHAREHOLDERS’ DEFICIENCY						(13,197,759	)			(8,868,756	)
TOTAL SHAREHOLDERS’ DEFICIENCY				(9,319,331	)			(8,868,756	)
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIENCY					$	2,290,444			$	6,376,575
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIENCY			$	3,640,241			$	6,376,575

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

-45-

VERSES AI INC.

Unaudited Condensed Consolidated Interim Statements of Operations

For the three and ~~six~~nine months ended ~~September~~December 3031, 2025 and 2024

(Expressed in United States dollars)

	2025			2024			2025			2024
	Three months ended						~~Six~~Nine months ended
	September 30,						September 30,
	December 31,						December 31,
	2025			2024			2025			2024
REVENUE	$	~~100~~417,~~700~~932		$	~~155,000~~-		$	~~400~~818,~~700~~632		$	155,000
COST OF REVENUE		(70,490	)		(145,000	)		(254,551	)		(145,000	)
COST OF REVENUE (excluding depreciation)		(292,552	)		-			(547,103	)		(145,000	)
NET REVENUE		30,210			10,000			146,149			10,000
GROSS PROFIT		125,380			-			271,529			10,000
Operating expenses:
Selling, general and administrative expenses		(95,~~651~~534,~~834~~743	)		(1013,~~265~~259,~~830~~580	)		(1925,~~640~~175,~~713~~456	)		(2033,~~566~~826,~~903~~482	)
OPERATING INCOME (EXPENSE)		(95,~~621~~409,~~624~~363	)		(1013,~~255~~259,~~830~~580	)		(1924,~~494~~903,~~564~~927	)		(2033,~~556~~816,~~903~~482	)
Other income/(expense), net		(~~245~~67,~~434~~298	)		1(3,~~687~~551,~~108~~470	)		(1178,~~337~~635	)		1(457,~~427,476~~994	)
NET LOSS		(95,~~867~~476,~~058~~661	)		(816,~~568~~811,~~722~~050	)		(1924,~~505~~982,~~901~~562	)		(1934,~~129~~274,~~427~~476	)
Loss Per Class A Subordinate Voting Shares - Basic and Diluted	$	(10.0047	)	$	(12.4863	)	$	(2.1250	)	$	(37.9012	)
Loss Per Class B Proportionate Voting Shares - Basic and Diluted	$	(62.2294	)		-		$	(1315.2660	)		-
Class A Subordinate Voting Shares Shares used in computing earnings per share - Basic and Diluted		9,861,001			5,780,312			9,166,869			4,905,748
Class A Subordinate Voting Shares used in computing earnings per share - Basic and Diluted		11,253,519			6,386,293			9,858,896			4,811,546
Class B Proportionate Voting Shares Shares used in computing earnings per share - Basic and Diluted		8,726			-			4,363			-
Class B Proportionate Voting Shares used in computing earnings per share - Basic and Diluted		61,082			-			23,909			-

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

-56-

VERSES AI INC.

Unaudited Condensed Consolidated Interim Statements of Comprehensive Loss

For the three and ~~six~~nine months ended ~~September~~December 3031, 2025 and 2024

(Expressed in United States dollars)

	2025			2024			2025			2024
	Three months ended						~~Six~~Nine months ended
	September 30,						September 30,
	December 31,						December 31,
	2025			2024			2025			2024
Net Loss		(9,867,058	)		(8,568,722	)		(19,505,901	)		(19,129,427	)
NET LOSS		(5,476,661	)		(16,811,050	)		(24,982,562	)		(34,274,476	)
Change in foreign currency translation		(879,~~018~~741	)		~~(134~~562,~~465~~012	)		8373,~~303~~562			~~(221~~340,~~974~~038	)
NET COMPREHENSIVE LOSS	$	(95,~~954~~486,~~076~~402	)	$	(816,~~703~~249,~~187~~038	)	$	(1924,~~422~~909,~~598~~000	)	$	(1933,~~351~~934,~~401~~438	)

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

-67-

VERSES AI INC.

Unaudited Condensed Consolidated Interim Statements of Shareholders’ Deficiency

For the three and ~~six~~nine months ended ~~September~~December 3031, 2025 and 2024

(Expressed in United States dollars)

	Number of Class B Proportionate Voting Shares			Number of Class A Subordinate Voting Shares			Share Capital			Additional paid-in capital			Obligation to Issue Shares			Accumulated Other Comprehensive Loss			Deficit			Total Shareholders’ Deficiency
Balance, March 31, 2024		370,370			3,205,319		$	62,472,187		$	13,342,560		$	-		$	(920,958	)	$	(86,569,901	)	$	(11,676,112	)
Exercise of options and warrants		-			74102,~~143~~383			2,~~056~~713,~~857~~826			(~~884~~987,~~868~~543	)		-			-			-			1,~~171~~726,~~989~~283
Stock options granted		-			-			-			337,045			-			-			-			337,045
RSUs converted
RSUs converted, shares
Stock options granted		-			-			-			1,380,843			-			-			-			1,380,843
Warrants granted convertible debenture
Equity financing with contingent consideration (net)
Equity financing with contingent consideration (net), shares
Conversion of Class B Proportionate Voting shares into Class A Subordinate Voting shares		(370,370	)		2,314,815			-			-			-			-			-			-
Shares issued for services		-			1,852			49,714			-			-			-			-			49,714
Special warrants proceeds received (net)		-			-			-			181,394			6,758,974			-			-			6,940,368
Special warrants proceeds received converted to shares (net)		-			370,370			6,758,974			181,394			-			-			-			6,940,368
Foreign exchange difference		-			-			-			-			-			(87,509	)		-			(87,509	)
Additional interest convertible debenture
Net loss		-			-			-			-			-			-			(10,560,705	)		(10,560,705	)
Additional interest convertible debenture, shares
Additional interest convertible debenture		-			-			3,668			-			-			-			-			3,668
RSUs converted		-			-			1,137,392			-			-			-			-			1,137,392
Conversion of Class A Subordinate Voting shares into Class B Proportionate Voting shares		198,517			-	)		-			-			-			-			-			-
Balance, June 30, 2024		-			5,596,129		$	64,578,758		$	12,976,131		$	6,758,974		$	(1,008,467	)	$	(97,130,606	)	$	(13,825,210	)
Exercise of options and warrants		-			28,240			656,969			(102,675	)		-			-			-			554,294
Stock options granted		-			-			-			1,043,798			-			-			-			1,043,798
Special warrants converted to shares		-			370,370			6,758,974			-			(6,758,974	)		-			-			-
Issuance of units for cash (net)		-			231,481			3,231,158			134,813			-			-			-			3,365,971
Foreign exchange difference		-			-			-			-			-			(134,465	)		-			(134,465	)
RSU settlement
Net loss		-			-			-			-			-			-			(8,568,722	)		(8,568,722	)
RSU settlement, shares
Conversion of Class A Subordinate Voting shares into Class B Proportionate Voting shares
Conversion of Class A Subordinate Voting shares into Class B Proportionate Voting shares, shares
Foreign exchange difference		-			-			-			-			-			(221,974	)		-			(221,974	)
Net loss		-			-			-			-			-			-			(19,129,427	)		(19,129,427	)
Balance, September 30, 2024		-			6,226,220		$	75,225,859		$	14,052,067		$	-		$	(1,142,932	)	$	(105,699,328	)	$	(17,564,334	)
Exercise of options and warrants		-			22,223			291,522			-			-			-			-			291,522
Stock options granted		-			-			-			793,124			-			-			-			793,124
Special warrants proceeds received (net)		-			-			-			58,290			1,139,570			-			-			1,197,860
Issuance of units for cash (net)		-			310,123			2,701,865			107,228			-			-			-			2,809,093
RSU settlement		-			12,346			284,417			-			-			-			-			284,417
Foreign exchange difference		-			-			-			-			-			562,012			-			562,012
Net loss		-			-			-			-			-			-			(16,811,050	)		(16,811,050	)
Balance, December 31, 2024		-			6,570,911		$	78,503,663		$	15,010,709		$	1,139,570		$	(580,920	)	$	(122,510,378	)	$	(28,437,356	)
Balance, March 31, 2025		-			7,825,571		$	105,477,150		$	15,891,737		$	-		$	(675,018	)	$	(129,562,625	)	$	(8,868,756	)
Stock options granted		-			-			-			~~557~~3,~~003~~088,086			-			-			-			~~557~~3,~~003~~088,086
Additional interest convertible debenture		-			4,254			3,668			-			-			-			-			3,668
Issuance of Units for cash (net)		-			~~916~~1,~~666~~924,430			612,~~616~~013,~~192~~902			~~495~~1,~~635~~156,535			-			-			-			713,~~111~~170,~~827~~437
Foreign exchange difference		-			-			-			-			-			170,321			-			170,321
Net loss		-			-			-			-			-			-			(9,638,843	)		(9,638,843	)
Balance, June 30, 2025		-			8,746,491		$	112,097,010		$	16,944,375		$	-		$	(504,697	)	$	(139,201,468	)	$	(10,664,780	)
Balance		-			8,746,491		$	112,097,010		$	16,944,375		$	-		$	(504,697	)	$	(139,201,468	)	$	(10,664,780	)
Exercise of options and warrants		-			250,000			2,900,227			(1,327,787	)		-			-			-			1,572,440
RSUs converted		-			133,686			1,137,392			-			-			-			-			1,137,392
Stock options granted		-			-			-			2,531,083			-			-			-			2,531,083
Issuance of Units for cash (net)		-			1,007,764			5,397,710			660,900			-			-			-			6,058,610
Conversion of Class A Subordinate Voting shares into Class B Proportionate Voting shares		198,517			(1,240,741	)		-			-			-			-			-			-
Foreign exchange difference		-			-			-			-			-			~~(87~~83,~~018~~303	)		-			~~(87~~83,~~018~~303	)
Net loss		-			-			-			-			-			-			(919,~~867~~505,~~058~~901	)		(919,~~867~~505,~~058~~901	)
Balance, September 30, 2025		198,517			8,897,200		$	121,532,339		$	18,808,571		$	-		$	(591,715	)	$	(149,068,526	)	$	(9,319,331	)
Balance		198,517			8,897,200		$	121,532,339		$	18,808,571		$	-		$	(591,715	)	$	(149,068,526	)	$	(9,319,331	)
RSUs converted		-			7,500			20,550			-			-			-			-			20,550
Stock options granted		-			-			-			1,096,220			-			-			-			1,096,220
Warrants granted convertible debenture		-			-			-			45,361			-			-			-			45,361
Equity financing with contingent consideration (net)		-			2,473,334			495,880			-			-			-			-			495,880
Equity financing - issuance costs		-			-			(3,468,309	)		3,418,272			-			-			-			(50,037	)
Conversion of Class B Proportionate Voting shares into Class A Subordinate Voting shares		(198,517	)		1,240,741			-			-			-			-			-			-
Foreign exchange difference		-			-			-			-			-			(9,741	)		-			(9,741	)
Net loss		-			-			-			-			-			-			(5,476,661	)		(5,476,661	)
Balance, December 31, 2025		-			12,618,775		$	118,580,460		$	23,368,424		$	-		$	(601,456	)	$	(154,545,187	)	$	(13,197,759	)
Balance		-			12,618,775		$	118,580,460		$	23,368,424		$	-		$	(601,456	)	$	(154,545,187	)	$	(13,197,759	)

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

-78-

VERSES AI INC.

Unaudited Condensed Consolidated Interim Statements of Cash Flows

For the ~~six~~nine months ended ~~September~~December 3031, 2025 and 2024

(Expressed in United States dollars)

For the period ended	~~September~~December 3031, 2025			~~September~~December 3031, 2024
Cash provided by (used in):
OPERATING ACTIVITIES
Cash provided by (used in): OPERATING ACTIVITIES
Net loss	$	(19,505,901	)	$	(19,129,427	)
OPERATING ACTIVITIES
Net loss	$	(24,982,562	)	$	(34,274,476	)
Adjustments to reconcile net losses to net cash used in operating activities:
Depreciation		45,894			93,907
Accretion expense		3,155			719,195
Interest due from related parties loan		(1,577	)		-
Depreciation		70,408			138,088
Fair value gain on derivative liability		-			(2546,~~464,873~~121	)
Foreign exchange effect on convertible debenture		-			~~216~~204,~~334~~694
Provision for legal claim		454,253			-
Interest due from related parties loan		(2,369	)		(2,369	)
Interest expense		25,291			545,000
Issuance of shares for advisory units		-			49,714
Provision for contract settlement		-			1,252,076
Provision for losses on related party transactions		-			396,524
Provision for legal claim		692,009			-
Accretion expense		-			453,839
Restricted shares units		(3,300,231	)		-
Interest expense		12,254			293,038
Share based payments		5,336,681			8,855,582
Issuance of shares for services		-			49,714
Restricted shares units		(2,135,223	)		581,010
Share based payments		4,225,478			1,380,714
Changes in operating assets and liabilities:
Accounts receivable		(296,700	)		(55,000	)
Accounts payable and accrued liabilities		1,134,893			289,726
Contract assets and unbilled revenue		6,654			-
Accounts receivable		(164,000	)		100,000
Tax receivable		(123,281	)		(173,932	)
Contract assets and unbilled revenue		6,654			(242,959	)
Prepaid expenses		(579,711	)		(255,289	)
Deferred financing costs		118,546			80,993
Accounts payable and accrued liabilities		(443,705	)		1,112,197
Deferred revenue		(100,000	)		100,000
Deferred revenue		(100,000	)		-
Prepaid expenses		(469,725	)		(58,082	)
Net cash used in operating activities		(18,323,019	)		(16,168,175	)
Provision for legal claim		-			(1,791,000	)
Tax receivable		(157,050	)		(182,822	)
Net cash used in operating activities		(21,788,300	)		(24,762,761	)
INVESTING ACTIVITIES
Due from related parties		-			(398,099	)
Investment in equipment		(65,285	)		(30,580	)
Investment in equipment		(40,489	)		(30,579	)
Net cash used in investing activities		(65,285	)		(30,580	)
Net cash used in investing activities		(40,489	)		(428,678	)
FINANCING ACTIVITIES
Deferred grant		(6725,~~732~~993	)		~~176~~122,~~030~~748
Repayments of loans		(1,938	)		(2,003,876	)
Proceeds from issuance of contingent consideration		495,880			-
Proceeds from issuance of special warrants		-			7,306,000
Contingent consideration issuance costs		(50,037	)		-
Special warrant issuance costs		-			(365,632	)
Proceeds from issuance of convertible debentures		1,934,170			10,000,000
Proceeds from issuance of equity instruments		1,572,440			1,726,283
Convertible debentures issuance costs		(69,527	)
Proceeds from issuance of Units		14,930,232			16,~~643~~690,~~693~~340
Private placement issuance costs		(1,759,795	)		(320,029	)
Units issuance costs		(1,759,795	)		(515,276	)
Proceeds from issuance of convertible debentures		-			10,000,000
Proceeds from issuance of special warrants		-			8,511,105
Net cash provided by financing activities		14,673,207			18,162,469
Special warrant issuance costs		-			(372,877	)
Foreign exchange effect on cash		83,303			(221,845	)
Proceeds from issuance of equity instruments		1,572,440			2,017,805
Net change in cash during the period		(3,606,998	)		1,343,771
Repayments of loans		(1,938	)		(2,005,815	)
Net cash provided by financing activities		17,025,432			24,448,030
Foreign exchange effect on cash		79,201			329,535
Net change in cash during the period		(4,748,952	)		(15,776	)
Cash, beginning of the period		4,816,906			892,727
Cash, end of the period	$	167,~~209,908~~954		$	2876,~~236,498~~951

Supplemental cash flow information (Note 1619).

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

-89-

VERSES AI INC. Unaudited Condensed Consolidated Interim Statements of Shareholders’ Deficiency For the three and six months ended September 30, 2025 and 2024 (Expressed in United States dollars)

1.	NATURE OF BUSINESS AND GOING CONCERN

~~VERSES~~Verses is a cognitive computing company ~~specializing~~focused inon developing next generation artificial intelligence software, ~~systems.~~known Weas ~~are~~agentic ~~primarily~~AI, ~~focused~~that ~~on developing~~is andesigned ~~intelligence~~to support and improve decision making and take actions, we intend to license this software-as-a-service ~~smart~~to ~~software~~individuals ~~platform~~and companies. Our ~~business~~software is based on the ~~vision~~fundamental principles of neuroscience and the ~~“Spatial~~way ~~Web”~~that the human brain learns and makes decisions -in ana ~~open,~~process ~~hyper-connected,~~known ~~context-aware~~as Active Inference, ~~governance-based~~which ~~network~~we ofhave ~~humans,~~configured ~~machines~~to ~~and~~create ~~intelligent~~a ~~agents~~proprietary process. WeActive ~~also~~inference ~~intend~~focuses toon ~~build~~making ~~tools~~predictions ~~that~~based ~~enable~~on ~~the~~learning ~~Spatial~~and ~~Web~~dynamic reasoning from new and tochanging ~~become~~information, aunlike ~~leader~~many inexisting ~~the~~AI ~~transition~~processes ~~from~~like ~~the~~Large ~~information~~Language Models ~~age~~(LLMs) tothat ~~the~~rely ~~intelligence~~solely ~~age~~on fixed rules, large amounts of historical data, or static models.

In early 2024, we launched a private beta program of our software ~~platform~~ with a few select users with whom we had existing business relationships~~. During~~, and during the second half of 2024, we launched a public beta program for a broader number of users and developers. In April 2025, we released our flagship product, an innovative agentic software platform called Genius, which uses our proprietary technology based Active Inference to support and improve domain-specific decision making by providing insight when where there is volatility, uncertainty, complexity, or ambiguity in the input data. Genius integrates key customer inputs with internally generated and externally sourced data to develop cause and effect models with explainable probabilistic projections, forecasts, and comparative results. The Company intends to continue to develop Genius to improve the ease of integrating Genius into a client’s existing technology stack, data architecture, governance, and workflows as well as increase its predictive accuracy, transparency, and auditability. To make Genius available to a larger universe of potential users, we offer a range of pricing packages that includes flat fee or profit share options, as well as variable pricing options based on complexity and usage criteria such as number of users, transactions, inferences, transactions, and input parameters.

OnBased ~~April~~on ~~30,~~user ~~2025,~~feedback weand ~~announced~~ the ~~commercial~~results ~~launch~~ of our ~~flagship~~beta ~~software platform~~program, ~~called~~we ~~Genius,~~have ~~which~~implemented isa ~~designed~~highly targeted a go-to-market ~~enable~~strategy ~~agentic~~which we call our ~~intelligence~~“Lighthouse” ~~for~~strategy ~~enterprises.~~that ~~Genius~~will isinitially ~~designed~~focus our efforts to ~~provide~~license ~~the~~an ~~tools~~enterprise ~~necessary~~version of Genius to ~~build~~financial ~~domain-specific~~institutions and ~~models~~asset managers that ~~are~~manage ~~intended~~more ~~to improve~~than ~~decision-making~~$100 ~~(inference~~million asof aassets ~~service)~~under ~~for~~management ~~third-party~~such ~~agents~~as ~~through~~pension ~~our~~funds ~~software~~and ~~development~~other ~~kits/application~~institutional fund managers ~~programming~~including: ~~interfaces~~sovereign ~~and~~funds, ~~model~~insurance ~~editor.~~companies, Weuniversity ~~are~~and ~~implementing~~other aendowments, ~~“Lighthouse”~~hedge gofunds, toand ~~market~~family ~~strategy~~offices, ~~that~~all ~~will~~of ~~focus~~whom onare estimated ~~working~~to ~~with~~collectively amanage ~~small~~hundreds ~~number~~ of ~~high-value,~~trillions ~~high-impact~~of ~~clients~~dollars in ~~sectors~~long-duration ~~where~~capital. ~~success~~Genius ~~will~~is ~~have~~designed ~~broad~~to ~~applicability, such~~help asthese ~~financial~~funds ~~services,~~improve ~~robotics,~~their performance ~~and~~by ~~smart~~integrating ~~cities.~~their ~~Each~~key ~~client~~internal ~~will~~inputs ~~allow~~such usas toasset ~~continue~~performance toassumptions, ~~develop~~portfolio constraints, and ~~validate~~investment ~~our Genius~~strategies, ~~model~~with ~~that~~third-party ~~can~~market, ~~then~~economic, beand ~~applied~~other data to ~~other~~developed ~~clients~~structured inand ~~the~~auditable ~~same~~multi-year ~~sector.~~investment ~~During~~risk ~~the~~and ~~coming~~return ~~quarters~~projections, probabilistic weforecasts, ~~plan~~and tocomparative ~~expand~~results ~~from~~based ~~these~~on ~~initial sectors~~various ~~into~~asset ~~others~~allocation, ~~such~~portfolio asrebalancing, ~~logistics~~ and ~~infrastructure~~liquidity ~~management~~criteria.

Our targeted financial institutions are high-value, high-impact entities that manage large, diversified portfolios of various asset classes, and Genius can assist their investment teams to make class allocation decisions that increase returns and manage risk. Genius helps investment teams compare and optimize various asset allocation mixes by projecting how different mixes and different portfolio strategies may perform across a range of scenarios. Each target client will provide us with real world results that will allow us to continue to develop and improve Genius that can then be applied to other clients in the same sector and other sectors. During the coming quarters, we plan to expand from our initial target sector into others, such as robotics, logistics, and infrastructure management.

On June 28, 2022, the Subordinate Class A shares of the Company were listed and started trading on the NEO Exchange in Canada (“NEO”) (“Listing”) under the symbol “VERS”.

On October 4, 2022, the Company announced that the Company’s Class A shares have commenced trading on the OTCQX® Best Market, an over-the-counter public market in the United States, under the ticker symbol “VRSSF”. VERSES will continue to trade on the NEO Exchange in Canada, as its primary listing.

On July 20, 2023, the Company was downgraded from the OTCQX and started trading on OTCQB® Venture Market under the same ticker symbol “VRSSF”.

The Company’s head office and registered and records office is located at 1111 West Hastings Street, 15th Floor, Vancouver, British Columbia, V6E 2J3, Canada.

~~For the six~~-month period ending September 30, 2025, the Company incurred a net loss of $19,505,901 (September 30, 2025 - $19,129,427), which was primarily funded by the issuance of Units and exercise of equity instruments (Note 10~~). As of September 30, 2025, the Company has an accumulated deficit of $149,068,526 (March 31, 2025~~ - $129,562,625). The Company’s ability to continue its operations and to realize its assets at their carrying values is dependent upon obtaining additional financing and generating revenues sufficient to cover its operating costs and working capital deficit.

~~The~~For ~~ability of~~ the ~~Company~~nine-month toperiod ~~raise~~ending ~~additional~~December ~~capital sufficient to continue operations is dependant~~31, ~~in part~~2025, on the ~~progress~~Company ofincurred ~~its~~a ~~technology development~~net ~~and~~loss ~~continued investor support. The material uncertainty~~ of ~~these~~$24,982,562 ~~items~~(December ~~raise~~31, ~~substantial~~2025 ~~doubt~~- ~~about~~$34,274,476), ~~the Company’s~~which ~~ability~~was toprimarily ~~continue~~funded asby athe ~~going~~issuance ~~concern.~~of ~~These~~Units, ~~consolidated~~exercise ~~financial~~of ~~statements~~equity doinstruments ~~not~~(Note ~~give~~10), ~~effect~~and toconvertible ~~any~~debentures. ~~adjustments,~~As ~~which~~of ~~would~~December be31, ~~necessary~~2025, ~~should~~ the Company behas ~~unable~~an toaccumulated ~~raise~~deficit ~~additional~~of ~~capital~~$154,545,187 to(March ~~continue~~31, as2025 a- ~~going concern~~$129,562,625). InThe ~~such~~Company’s ~~circumstances,~~ability ~~the~~to ~~Company~~continue ~~would~~its beoperations ~~required~~and to realize its assets ~~and~~at ~~discharge~~their ~~its~~carrying ~~liabilities~~values ~~outside~~is ofdependent ~~the~~upon ~~normal~~obtaining ~~course~~additional offinancing ~~business,~~ and ~~the~~generating ~~amounts realized~~revenues ~~could~~sufficient ~~differ~~to ~~materially~~cover ~~from~~its ~~those~~operating ~~reflected~~costs inand ~~these~~working ~~consolidated~~capital ~~financial statements~~deficit.

~~-9-~~The ability of the Company to raise additional capital sufficient to continue operations is dependent, in part, on the progress of its technology development and continued investor support. The material uncertainty of these items raises substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not give effect to any adjustments, which would be necessary should the Company be unable to raise additional capital to continue as a going concern. In such circumstances, the Company would be required to realize its assets and discharge its liabilities outside of the normal course of business, and the amounts realized could differ materially from those reflected in these consolidated financial statements.

VERSES AI INC. Unaudited Condensed Consolidated Interim Statements of Shareholders’ Deficiency For the three and six months ended September 30, 2025 and 2024 (Expressed in United States dollars)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The condensed consolidated interim financial statements include the accounts of VERSES AI Inc. and its wholly owned subsidiaries (“Subsidiaries”) (collectively “VERSES” or the “Company”) have been prepared in accordance with U.S generally accepted accounting principles (“GAAP”) as defined by the Financial Accounting Standards Board (FASB).

Consolidation

These consolidated financial statements include the accounts of the Company and its wholly owned Subsidiaries. The results of the Subsidiaries will continue to be included in the consolidated financial statements of the Company until the date that the Company’s control over the Subsidiaries ceases. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. All intercompany transactions are eliminated on these consolidated financial statements.

Details of the Company’s Subsidiaries at ~~September~~December 3031, 2025 and March 31, 2025 are as follows:

SCHEDULE OF SUBSIDIARIES

Name	Place of Incorporation	~~September~~December 3031, 2025 Interest		~~March 31, 2025 Interest~~	March 31, 2025 Interest
Verses Technologies USA, Inc. (formerly Verses Labs Inc.) (“VTU”)	Wyoming, USA		100%		~~100%~~	100%
Verses Operations Canada Inc. (“VOC”)	British Columbia, CA		100%		~~100%~~	100%
Verses Logistics Inc. (“VLOG”)	Wyoming, USA		100%		~~100%~~	100%
Verses Realities Inc. (“VRI”)	Wyoming, USA		Dissolved		~~100%~~	100%
Verses Inc. (“VINC”)	Wyoming, USA		100%		~~100%~~	100%
Verses Health Inc. (“VHE”)	Wyoming, USA		Dissolved		~~100%~~	100%
Verses Global BV (“VBV”)	Netherlands		100%		~~100%~~	100%
Verses Solutions Inc (“VSI”)	Wyoming, USA		100%		~~100%~~	100%

Significant accounting estimates and judgments

The preparation of these condensed consolidated interim financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. These consolidated financial statements include estimates that, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the consolidated financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are based on historical experience, current and future economic conditions, and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes could differ from these estimates.

The significant judgements made by management in the Company’s accounting policies and key sources of estimation uncertainty were the same as those applied in the annual audited consolidated financial statements for the year ended March 31, 2025.

-1011-

VERSES AI INC. Unaudited Condensed Consolidated Interim Statements of Shareholders’ Deficiency For the three and six months ended September 30, 2025 and 2024 (Expressed in United States dollars)

3.	DEFERRED GRANT

The Company’s subsidiary, VBV, entered into a grant agreement (along with other beneficiaries) with the Horizon Europe, which is a program delegated under the European Commission, to provide technical expertise on artificial intelligence.

Under the grant agreement, VBV received $226,877 (€209,056) on July 24, 2024, ~~upon~~and ~~the~~$169,000 ~~execution~~(€146,339) ofon ~~the~~November ~~agreement~~7, 2025. The funds under this agreement are to reimburse the Company for amounts spent on the project. The Company is required to submit their costs incurred ~~related~~ related to the project and only approved expenses under the project are reimbursed.

Of the expenses incurred in connection with the grant agreement, $2414,~~013~~ 699 (March 31, 2025 - $17,944) are included in accounts payable, with $128,~~613~~ 609 (March 31, 2025 - $67,732) remaining in restricted cash as of ~~September~~December 3031, 2025. Grant income of $81210,~~909~~ 339 (~~September~~December 3031, 2024 - $5698,~~034~~105) was recognized during the ~~six~~nine months ended ~~September~~December 3031, 2025.

SCHEDULE OF DEFERRED GRANT

	September 30, 2025			March 31, 2025
	December 31, 2025			March 31, 2025
Balance, beginning of the year	$	67,732		$	-
Grant received		-169,000			226,877
Expenses on the project		(71199,~~530~~959	)		(156,885	)
Exchange difference		34,~~798~~966			(2,260	)
Balance, end of the period	$	-41,739		$	67,732

4.	REVENUE

The Company recognized revenues from contracts with customers in accordance with the following timing under ASC 606 Revenue from Contracts with Customers.

	2025		2024		2025		2024
	Three months ended September 30,				Six months ended September 30,
	Three months ended December 31,				Nine months ended December 31,
	2025		2024		2025		2024
Recognized at a point in time (1)	$	-385,250	$	~~155,000~~-	$	~~300~~685,~~000~~250	$	155,000
Recognized over the duration of contracts (2)		~~100~~32,~~700~~682		-		~~100~~133,~~700~~382		-
Total	$	~~100~~417,~~700~~932	$	~~155,000~~-	$	~~400~~818,~~700~~632	$	155,000

	(1)	Includes revenues from completed Proof of Concept contracts (“POCs”) and software implementation services.
	(2)	Includes revenue from Software as a Service (“SaaS”).

⁽¹⁾

Includes revenues from completed Proof of Concept contracts (“POCs”) and software implementation services.

⁽²⁾

Includes revenue from Software as a Service (“SaaS”).

On August 14, 2024, the Company announced the existing SaaS contract with its customer was terminated by both parties. As a result, the Company has recorded a provision for the contract settlement for $1,252,076 on June 30, 2024.

5.	COST OF REVENUE

The Company’s cost of revenue is summarized as follows:

SCHEDULE OF COST OF REVENUE

	2025		2024		2025		2024
	Three months ended				~~Six~~Nine months ended
	September 30,				September 30,
	December 31,				December 31,
	2025		2024		2025		2024
Cost of Revenue from POCs and software implementation	$	-269,675	$	~~145,000~~-	$	~~184~~479,~~061~~675	$	145,000
Cost of Revenue from SaaS		7022,~~490~~877		-		7067,~~490~~428		-
Total	$	70292,~~490~~552	$	~~145,000~~-	$	~~254~~547,~~551~~103	$	145,000

-1112-

VERSES AI INC. Unaudited Condensed Consolidated Interim Statements of Shareholders’ Deficiency For the three and six months ended September 30, 2025 and 2024 (Expressed in United States dollars)

6.	LOANS PAYABLE

Loan activity consisted of the following:

SCHEDULE OF LOANS PAYABLE

For the period ended	~~September~~December 3031, 2025			March 31, 2025
Balance, beginning of the year	$	139,039		$	140,904
Repayment		(1,938	)		(7,106	)
Interest expense		23,~~621~~935			5,241
Balance, end of the period	$	~~139~~141,~~722~~036		$	139,039

On June 5, 2020, the Company received a $142,400 loan from the U.S. Small Business Administration. The loan is secured by all tangible and intangible personal property of VTU, and bears interest of 3.75% per annum and requires monthly payments of $646 starting in June 2021 with a maturity of 30 years.

7.	SHARE BASED PAYMENTS

Stock Options

The Company has an Omnibus Equity Incentive Plan (the “Plan”) available to employees, directors, officers, and consultants with grants under the Plan approved from time to time by the Board of Directors. Under the Plan, the Company is authorized to issue options (“Options”) to purchase an aggregate of up to 25% of the Company’s issued and outstanding Subordinate Voting Shares. Each option can be exercised to acquire one Subordinate Voting Share of the Company (“Share”). The exercise price for an option granted under the Plan may not be less than the prevailing market price at the date of grant.

Options to purchase Subordinate Voting Shares have been granted to directors, employees, and consultants as follows:

Expiry date	Average Remaining Contractual Life in Years		Exercise Price (CAD$)		Exercise Price (USD$ equivalent) (1)		Outstanding
June 16, 2027		1.7146		21.60		15.5276		103,703
September 4, 2027		1.9368		7.44		5.3443		125,000
September 16, 2027		1.9671		27.00		19.3970		19,072
April 28, 2028		2.5833		44.55		32.0050		3,703
December 15, 2028		32.2196		32.85		23.6097		345,204
December 23, 2028		32.2398		30.51		2122.9226		136,290
April 15, 2029		3.5429		30.78		22.1146		8,794
July 3, 2029		3.7651		29.01		2021.8417		142,808
May 26, 2030		4.6540		12.57		9.0317		33,334
September 19, 2030		4.9772		6.90		45.9603		261,726
		3.42		22.03		15.82		1,179,634
October 1, 2030		4.75		7.55		5.51		105,000
		2.91		20.23		14.76		1,284,634

⁽¹⁾

Converted at balance sheet rate.

-1213-

~~VERSES~~A summary ~~AI INC. Unaudited Condensed Consolidated Interim Statements~~ of ~~Shareholders’ Deficiency For~~ the ~~three~~Company’s ~~and~~Options ~~six~~as ~~months~~of ~~ended~~December ~~September 30~~31, 2025, and ~~2024~~changes ~~(Expressed~~for inprevious ~~United~~financial ~~States~~year ~~dollars)~~end is as follows:

7. SHARE BASED PAYMENTS (continued)

a) Stock Options (continued)

A summary of the Company’s Options as of June 30, 2025, and changes for previous financial year end is as follows:

SUMMARY OF OPTIONS

	Number of stock options			Weighted Average Exercise Price (CAD$)		Weighted Average Exercise Price (USD$ equivalent) (1)
Outstanding, March 31, 2024		542,334		$	32.09	$	23.0542
Granted		364,099			27.39		19.6798
Exercised		(51,235	)		23.22		16.6894
Cancelled		(84,314	)		35.37		25.4181
Outstanding, March 31, 2025		770,884			30.10		21.6296
Granted		~~670~~775,060			7.9489		5.7076
Exercised		(250,000	)		8.66		6.2232
Expired		(11,310	)		33.89		24.3473
Outstanding, September 30, 2025		1,179,634			22.03		15.82
Outstanding, December 31, 2025		1,284,634			20.23		14.76
Exercisable, September 30, 2025		834,135		$	23.64	$	16.98
Exercisable, December 31, 2025		1,039,271		$	23.64	$	17.25

⁽¹⁾

Converted at balance sheet rate.

During the ~~six~~nine month period ended ~~September~~December 3031, 2025:

	-	11,310 Options at an average exercise price of CAD$33.89 ($24.8473 at balance sheet rate) belonging to inactive employees expired according to the Plan.
	-	250,000 Options, which were granted on July 24, 2025 to Consultant “B”, were exercised at an exercise price of CAD$8.66 for the net proceeds of $1,572,440. The original fair value of these Options of $1,327,787 was reclassified from additional paid-in capital to share capital upon exercise.

On ~~September~~October 191, 2025, the Company ~~granted 261~~105,~~726~~ 000 Options to ~~employees~~the ~~and~~consultants ~~independent~~listed ~~contractors~~below ofat ~~the Company with~~ an exercise price of CAD$67.90 55 ($45.96 51 at balance sheet rate), ~~expiring~~vesting inon ~~5 years, of which 218,247 will vest 25% every quarter subsequent to~~ the ~~vesting~~grant ~~start~~ date, ~~and 43,479 with vest 25% on the date~~ that isexpire ~~one~~5 ~~(1)~~years ~~year~~after ~~from~~ the ~~vesting start~~ date ~~and~~of 6grant.~~25% every subsequent quarter.~~

~~These~~● ~~Options~~Consultant ~~were~~“E” ~~fair~~37,500 ~~valued~~● atConsultant $1“F” 37,~~092,915 using~~500 ~~the~~● ~~Black-Scholes~~Consultant ~~option~~“P” ~~pricing~~20,000 ~~model~~● ~~with~~Consultant ~~the~~“I” ~~following assumptions:~~10,000

These Options were fair valued at $470,072 using the Black-Scholes option pricing model with the following assumptions:

	CAD$			$
Share price at grant date	$	7.55		$	5.51
Risk-free interest rate		2.73	%		2.73	%
Expected life		5 years			5 years
Expected volatility		118.4	%		118.4	%
Expected forfeitures		0	%		0	%
Expected dividends		Nil			Nil
Grant date fair value per option	$	6.24		$	4.48

On October 1, 2025, what remains subject to shareholder approval, the Company repriced 849,263 outstanding Options to acquire Class A Common shares of the Company to an exercise price of CAD$7.55 ($5.51 at balance sheet rate).

Original vesting terms and expiry date of the repriced stock options were maintained according to the original certificate agreement.

On October 1, 2025, the Company cancelled an aggregate of 90,313 Options and 46,296 RSUs in accordance with the rescission agreements as these Options and RSUs were initially granted to entities and not individuals as required by the Plan.

A total of 90,313 Options (the “Replacement Options”) and 46,296 RSUs (the “Replacement RSUs”) were granted on the same date to individuals related to the original entities. Original vesting terms and exercise price of the Replacement Options and Replacement RSUs were maintained according to the original certificate agreement. The Replacement Options have a 5-year expiry. The Company did not incur any additional costs related to the Replacement Options and Replacement RSUs.

-14-

On September 19, 2025, the Company granted 261,726 Options to employees and independent contractors of the Company with an exercise price of CAD$6.90 ($5.03 at balance sheet rate), expiring in 5 years, of which 218,247 will vest 25% every quarter subsequent to the vesting start date, and 43,479 with vest 25% on the date that is one (1) year from the vesting start date and 6.25% every subsequent quarter.

These Options were fair valued at $1,092,915 using the Black-Scholes option pricing model with the following assumptions:

	CAD$			$
Share price at grant date	$	6.90		$	5.00
Risk-free interest rate		2.74	%		2.74	%
Expected life		5 years			5 years
Expected volatility		120.6	%		120.6	%
Expected forfeitures		0	%		0	%
Expected dividends		Nil			Nil
Grant date fair value per option	$	5.76		$	4.18

During the ~~six~~nine month period ended ~~September~~December 3031, 2025, the Company recognized $~~376~~739,~~295~~732 as share-based payment for these Options using the graded vesting method over the vesting period.

On September 4, 2025, the Company granted 125,000 Options to the consultant “B” with an exercise price of CAD$7.44 ($5.43 at balance sheet rate), expiring in 2 years, and vesting on the grant date. These Options were fair valued at $414,244 using the Black-~~13-~~Scholes option pricing model with the following assumptions:

VERSES AI INC. Unaudited Condensed Consolidated Interim Statements of Shareholders’ Deficiency For the three and six months ended September 30, 2025 and 2024 (Expressed in United States dollars)

7. SHARE BASED PAYMENTS (continued)

a) Stock Options (continued)

On September 4, 2025, the Company granted 125,000 Options to the consultant “B” with an exercise price of CAD$7.44 ($5.34 at balance sheet rate), expiring in 2 years, and vesting on the grant date. These Options were fair valued at $414,244 using the Black-Scholes option pricing model with the following assumptions:

	CAD$			$
Share price at grant date	$	7.44		$	5.45
Risk-free interest rate		2.47	%		2.47	%
Expected life		5 years			5 years
Expected volatility		120.6	%		120.6	%
Expected forfeitures		0	%		0	%
Expected dividends		Nil			Nil
Grant date fair value per option	$	4.58		$	3.31

On July 24, 2025, the Company granted 250,000 Options to the consultant “B” with an exercise price of CAD$8.66 ($6.~~22 at~~32 at balance sheet rate), expiring in 5 years, and vesting on the grant date. These Options were fair valued at $1,327,787 using the Black-Scholes option pricing model with the following assumptions:

	CAD$			$
Share price at grant date	$	8.66		$	6.35
Risk-free interest rate		3.10	%		3.10	%
Expected life		5 years			5 years
Expected volatility		120.6	%		120.6	%
Expected forfeitures		0	%		0	%
Expected dividends		Nil			Nil
Grant date fair value per option	$	7.24		$	5.31

On May 26, 2025, the Company granted 16,667 Options to the consultant “E” and 16,667 Options to the consultant “F” with an exercise price of CAD$12.57 ($9.21 at balance sheet rate), expiring in 5 years, and vesting on the grant date. These Options were fair valued at $258,056 using the Black-Scholes option pricing model with the following assumptions:

	CAD$			$
Share price at grant date	$	12.57		$	9.21
Risk-free interest rate		2.92	%		2.92	%
Expected life		5 years			5 years
Expected volatility		123.9	%		123.9	%
Expected forfeitures		0	%		0	%
Expected dividends		Nil			Nil
Grant date fair value per option	$	10.63		$	7.74

-14-

VERSES AI INC. Unaudited Condensed Consolidated Interim Statements of Shareholders’ Deficiency For the three and six months ended September 30, 2025 and 2024 (Expressed in United States dollars)

7. SHARE BASED PAYMENTS (continued)

a) Stock Options (continued)

On December 23, 2024, the Company granted 49,444 Options to employees and independent contractors of the Company with an exercise price of CAD$30.51($21.92 at balance sheet rate), expiring in 5 years, with 25% vesting on the date that is one (1) year from the vesting start date and 6.25% every subsequent quarter.

During the six month period ended September 30, 2025, the Company recognized $134,400 as share-based payment for these Options using the graded vesting method over the vesting period.

On December 23, 2024, the Company granted 86,852 Options to consultants of the Company with an exercise price of CAD$30.51 ($21.92 at balance sheet rate), expiring in 5 years, where 33.33% of these Options vested on the grant date and 33.33% will vest every 6 months after the grant date.

During the six month period ended September 30, 2025, the Company recognized $318,445 as share-based payment for these Options using the graded vesting method over the vesting period.

On July 3, 2024, the Company granted 85,682 Options to employees and independent contractors of the Company with a weighted average exercise price of CAD$29.10 ($20.90 at balance sheet rate), expiring in 5 years, with 25% vesting on the date that is one (1) year from the vesting start date and 6.25% every subsequent quarter.

During the six month period ended September 30, 2025, the Company recognized $158,174 as share-based payment for these Options using the graded vesting method over the vesting period.

On April 15, 2024, the Company granted 4,260 Options to employees and independent contractors of the Company with a weighted average exercise price of CAD$33.86 ($24.32 at balance sheet rate), expiring in 5 years, with 25% vesting on the date that is one (1) year from the vesting start date and 6.25% every subsequent quarter.

During the six month period ended September 30, 2025, the Company recognized $7,111 as share-based payment for these Options using the graded vesting method over the vesting period.

On December 15, 2023, the Company granted 347,952 Options to employees and independent contractors of the Company with an exercise price of CAD$36.45 ($26.18 at balance sheet rate), expiring in 5 years, where 173,186 of these Options vest on the grant date, based on previous commitments, and 6.25% every subsequent quarter.

During the six month period ended September 30, 2025, the Company recognized $93,580 as share-based payment for these Options using the graded vesting method over the vesting period.

-15-

~~VERSES~~On May AI26, ~~INC.~~2025, ~~Unaudited~~the ~~Condensed~~Company ~~Consolidated~~granted ~~Interim~~16,667 ~~Statements~~Options ofto ~~Shareholders’~~the ~~Deficiency~~consultant ~~For~~“E” and 16,667 Options to the ~~three~~consultant ~~and~~“F” with ~~six~~an ~~months~~exercise ~~ended~~price ~~September~~of 30CAD$12.57 ($9.17 at balance sheet rate), ~~2025~~expiring in 5 years, and ~~2024~~vesting ~~(Expressed~~on inthe ~~United~~grant ~~States~~date. ~~dollars)~~These Options were fair valued at $258,056 using the Black-Scholes option pricing model with the following assumptions:

7. SHARE BASED PAYMENTS (continued)

	CAD$			$
Share price at grant date	$	12.57		$	9.21
Risk-free interest rate		2.92	%		2.92	%
Expected life		5 years			5 years
Expected volatility		123.9	%		123.9	%
Expected forfeitures		0	%		0	%
Expected dividends		Nil			Nil
Grant date fair value per option	$	10.63		$	7.74

a)On December ~~Stock~~23, 2024, the Company granted 49,444 Options to employees and independent contractors of the Company with an exercise price of CAD$30.51 (~~continued~~$22.26 at balance sheet rate), expiring in 5 years, with 25% vesting on the date that is one (1) year from the vesting start date and 6.25% every subsequent quarter.

During the nine month period ended December 31, 2025, the Company recognized $201,281 as share-based payment for these Options using the graded vesting method over the vesting period.

On December 23, 2024, the Company granted 86,852 Options to consultants of the Company with an exercise price of CAD$30.51 ($22.26 at balance sheet rate), expiring in 5 years, where 33.33% of these Options vested on the grant date and 33.33% will vest every 6 months after the grant date.

During the nine month period ended December 31, 2025, the Company recognized $406,762 as share-based payment for these Options using the graded vesting method over the vesting period.

On July 3, 2024, the Company granted 85,682 Options to employees and independent contractors of the Company with a weighted average exercise price of CAD$29.10 ($21.23 at balance sheet rate), expiring in 5 years, with 25% vesting on the date that is one (1) year from the vesting start date and 6.25% every subsequent quarter.

During the nine month period ended December 31, 2025, the Company recognized $235,341 as share-based payment for these Options using the graded vesting method over the vesting period.

On April 15, 2024, the Company granted 4,260 Options to employees and independent contractors of the Company with a weighted average exercise price of CAD$33.86 ($24.70 at balance sheet rate), expiring in 5 years, with 25% vesting on the date that is one (1) year from the vesting start date and 6.25% every subsequent quarter.

During the nine month period ended December 31, 2025, the Company recognized $9,720 as share-based payment for these Options using the graded vesting method over the vesting period.

On December 15, 2023, the Company granted 347,952 Options to employees and independent contractors of the Company with an exercise price of CAD$36.45 ($26.59 at balance sheet rate), expiring in 5 years, where 173,186 of these Options vest on the grant date, based on previous commitments, and 6.25% every subsequent quarter.

During the nine month period ended December 31, 2025, the Company recognized $121,317 as share-based payment for these Options using the graded vesting method over the vesting period.

-16-

The table below consolidates the position of the Options granted related to consultants of the Company:

Consultant	Total granted amount		Exercised - Inception to March 31, 2025			Outstanding March 31, 2025		Granted Q2Q3-2026 (ytd)		Exercised Q2Q3-2026 (ytd)			Cancelled Q2Q3-2026 (ytd)			Outstanding ~~September~~December 3031, 2025		% of the total
A		64,815		(55,556	)		9,259		-		-			-			9,259		2.5	%
B		64,814		(9,259	)		55,555		375,000		(250,000	)		-			180,555		47.8	%
C		55,555		(44,444	)		11,111		-		-			-			11,111		2.9	%
D		44,444		-			44,444		-		-			-			44,444		11.8	%
E		23,889		-			23,889		16,667		-			-			40,556		10.7	%
F		3,704		-			3,704		16,667		-			-			20,371		5.4	%
G		14,815		(14,815	)		-		-		-			-			-		0.0	%
H		14,815		-			14,815		-		-			-			14,815		3.9	%
I		12,963		-			12,963		-		-			-			12,963		3.4	%
J		12,963		(10,556	)		2,407		-		-			-			2,407		0.6	%
K		9,259		(9,259	)		-		-		-			-			-		0.0	%
L		7,407		-			7,407		-		-			-			7,407		2.0	%
M		6,481		-			6,481		-		-			-			6,481		1.7	%
N		6,481		-			6,481		-		-			-			6,481		1.7	%
O		4,457		-			4,457		-		-			-			4,457		1.2	%
P		3,704		-			3,704		-		-			-			3,704		1.0	%
Q		3,704		-			3,704		-		-			-			3,704		1.0	%
Others		10,577		(1,235	)		9,342		-		-			(617	)		8,725		2.3	%
Total		364,847		(145,124	)		219,723		408,334		(250,000	)		(617	)		377,440		100.0	%

-16-

VERSES AI INC. Unaudited Condensed Consolidated Interim Statements of Shareholders’ Deficiency For the three and six months ended September 30, 2025 and 2024 (Expressed in United States dollars)

7. SHARE BASED PAYMENTS (continued)

Restricted Shares Units

Pursuant to the Plan, the Company may grant RSUs to employees, directors, officers, and consultants. The RSUs can be settled at the election of the holder for Subordinate Voting Shares (“Shares”), cash, or a combination of Shares and cash. The RSUs are determined to be a liability instrument, and the fair value will be recognized as an expense using the graded vesting method over the vesting period.

On ~~September~~December 1930, 2025, the Company’s ~~granted~~Board ~~30,000~~of ~~RSUs to~~Directors ~~independent~~approved ~~contractors~~the cancellation of ~~the~~all ~~Company,~~outstanding ~~expiring~~RSUs inheld 5by ~~years,~~certain ~~which~~consultants, ~~vest~~including ~~25%~~RSUs ~~every~~that ~~quarter~~had ~~after~~previously ~~the~~vested ~~grant~~and ~~date.~~been ~~These~~settled ~~RSUs~~in ~~were~~shares. ~~fair~~Pursuant ~~valued~~to ~~based~~executed onrescission ~~the~~agreements, ~~prevailing~~all ~~market~~unvested ~~price~~RSUs ~~of one Share on the~~were ~~balance~~canceled ~~sheet~~without ~~date.~~consideration, ~~The~~and ~~Company~~all ~~recognized~~vested ~~$8,616~~shares aspreviously ~~share-based~~issued ~~payment~~upon ~~during~~settlement ~~the~~of ~~six~~RSUs ~~month~~were ~~period~~surrendered ~~ended~~by ~~September~~the ~~30,~~grantees ~~2025~~and canceled.

OnAs ~~July~~a ~~28,~~result ~~2025,~~of the ~~Company converted 40~~rescission,~~742 RSUs,~~ ofthe ~~which~~Company ~~18,519 RSUs~~recorded tothe ~~consultant~~following ~~“E”~~during ~~and 18,519 RSUs to consultant “F” based on~~ the ~~completion~~period ofa ~~the~~reversal ~~milestones~~ of ~~funding~~previously ~~the~~recognized ~~company~~share-based ~~in aggregate greater than~~compensation ~~CAD50 million.~~expense ~~The~~related ~~Company also converted 3,704~~ to ~~other~~unconverted ~~consultants. These~~ RSUs ~~were valued based on the prevailing market price~~ of ~~one Share on the completion date~~$181,887. ~~and~~Details ~~the Company recognized an expense~~ of ~~$230,491 during~~ the ~~six~~canceled ~~month~~RSUs ~~period~~are ~~ended~~as ~~September 30, 2025.~~follows:

	○	Consultant “P” - 20,000 RSUs - USD38,397
	○	Consultant “E” - 37,037 RSUs - USD71,745
	○	Consultant “F” - 37,037 RSUs - USD71,745

On December 1, 2025, the Company converted 7,500 RSUs issued to independent contractors granted on September 19, 2025. These RSUs were valued based on the prevailing market price of one Share on the conversion date, and the Company recognized $20,550 as share capital.

On October 1, 2025, the Company granted 20,000 RSUs to consultant “P” vesting on the grant date. The Company recognized $38,397 as share-based payment during the nine month period ended December 31, 2025.

-17-

On September 19, 2025, the Company granted 30,000 RSUs to independent contractors of the Company, expiring in 5 years, which vest 25% every quarter after the grant date. These RSUs were fair valued based on the prevailing market price of one Share on the balance sheet date. The Company recognized $32,054 as share-based payment during the nine month period ended December 31, 2025.

On July 28, 2025, the Company converted 40,742 RSUs, of which 18,519 RSUs to consultant “E” and 18,519 RSUs to consultant “F” based on the completion of the milestones of funding the company in aggregate greater than CAD$50 million. The Company also converted 3,704 to other consultants. These RSUs were valued based on the prevailing market price of one Share on the completion date, and the Company recognized an expense of $230,491 during the nine month period ended December 31, 2025.

On July 3, 2025, the Company granted converted a total of 92,944 RSUs, of which 42,592 RSUs to consultant “B”, 18,519 RSUs to consultant “E”, 18,519 RSUs to consultant “F”, 351 to other consultants, and 12,963 to directors and officers of the Company. These RSUs were valued based on the prevailing market price of one Share on the conversion date, and the Company recognized $253,541 as share capital.

On May 26, 2025, the Company granted 33,333 RSUs to consultant “B”, expiring in 5 years, and vest on July 1, 2025. These RSUs were fair valued based on the market price of one Share on the balance sheet date. The Company recognized $344,431 as share-based payment during the ~~six~~nine month period ended ~~September~~December 3031, 2025.

The table below consolidates the position of the RSUs granted related to consultants of the Company:

Consultant	Total granted amount		Converted - Inception to March 31, 2025			Outstanding March 31, 2025		Granted Q2Q3-2026 (~~ydt~~ytd)		Converted Q2Q3-2026 (ytd)			~~Outstanding~~Cancelled ~~September~~Q3-2026 ~~30, 2025~~(ytd)			%Outstanding ofDecember ~~the~~31, ~~total~~2025			% of the total
A		7,407		(2,469	)		4,938		-		-			~~4,938~~-			4.1,938	%		3.5	%
B		46,296		(9,259	)		37,037		33,333		(42,592	)		~~27,778~~-			~~22.9~~27,778	%		19.7	%
E		111,111		(37,037	)		74,074		-		(37,~~038~~037	)		(37,~~036~~037	)		~~30.5~~-	%		0.0	%
F		111,111		(37,037	)		74,074		-		(37,~~038~~037	)		(37,~~036~~037	)		~~30.5~~-	%		0.0	%
L		1,852		-			1,852		-		-			~~1,852~~-			1.5,852	%		1.3	%
Others		20,371		(3,704	)		16,667		-20,000		(4,055	)		12(20,~~612~~000	)		~~10.4~~12,612	%		8.9	%
Total		298,148		(89,506	)		208,642		3353,333		(120,~~723~~721	)		~~121~~(94,~~252~~074	)		~~100.0~~141,254	%		100.0	%

On September 30, 2025, the balance of 585,020 RSUs granted in the previous periods, were revalued based on the prevailing market price of one Share on the revaluation date, and the Company derecognized $12,~~581~~611,~~375~~ 348 as share-based payment for RSUs during the ~~six~~nine month period ended ~~September~~December 3031, 2025.

~~-17-~~A summary of the Company’s restricted shares units as at December 31, 2025, and changes for the years then ended is as follows:

VERSES AI INC. Unaudited Condensed Consolidated Interim Statements of Shareholders’ Deficiency For the three and six months ended September 30, 2025 and 2024 (Expressed in United States dollars)

7. SHARE BASED PAYMENTS (continued)

b) Restricted Shares Units

A summary of the Company’s restricted shares units as at September 30, 2025, and changes for the years then ended is as follows:

SCHEDULE OF RESTRICTED SHARES

	Number of RSUs
Balance, March 31, 2024		24,075
Issued, April 15, 2024		1,852
Issued, June 20, 2024		37,037
Issued, July 3, 2024		359,817
Issued, September 13, 2024		74,074
Issued, December 23, 2024		296,296
Cancelled		(5,926	)
Converted		(101,852	)
Balance, March 31, 2025		685,373
Issued, May 26, 2025		33,333
Issued, September 19, 2025		30,000
Issued		30,000
Issued, October 1, 2025		20,000
Converted		(133,686	)
Issued		20,000
Balance, September 30, 2025		615,020
Cancelled		(94,074	)
Exercisable, September 30, 2025		145,853
Converted		(141,186	)
Balance, December 31, 2025		533,446
Exercisable, December 31, 2025		1,481
Exercisable		1,481

-18-

A reconciliation of share based payments is as follows:

Share based payments	Stock Options			RSUs			Total
Previous years graded vesting		~~402~~860,~~225~~673			-			~~402~~860,~~225~~673
Previous years RSUs revaluation		-			(251,392	)		(251,392	)
Revaluation RSUs 2023		-			(62,339	)		(62,339	)
New grants Q1 2025		76196,~~787~~119			2656,~~668~~989			~~103~~253,~~455~~108
New grants Q2 2025		1,~~027~~178,~~452~~861			~~805~~3,~~605~~771,684			14,~~833~~950,~~057~~545
Cancelled options		(125,621	)		-			(125,621	)
New grants Q3 2025		1,334,636			2,927,997			4,262,633
Balance, September 30, 2024	$	1,380,843		$	580,881		$	1,961,724
RSU milestone conversion
Previous years graded vesting		711,710			-			711,710
Cancelled options / RSUs		(1,396,321	)		(12,717	)		(1,409,038	)
Previous years RSUs revaluation		-			(1,581,375	)		(1,581,375	)
Balance, December 31, 2024	$	2,173,968		$	6,681,614		$	8,855,582
Previous years graded vesting		1,337,858			-			1,337,858
Previous years RSUs revaluation		-			(2,611,348	)		(2,611,348	)
New grants Q1 2026		258,056			344,431			602,487
New grants Q2 2026		2,118,326			832,~~616~~054			2,~~126~~150,~~942~~380
New grants Q3 2026		470,072			38,397			508,469
New grants		470,072			38,397			508,469
RSU milestone conversion		-			230,491			230,491
Balance, September 30, 2025	$	3,088,092		$	(997,837	)	$	2,090,255
RSUs cancellation		-			(181,887	)		(181,887	)
Balance, December 31, 2025	$	4,184,312		$	(2,147,862	)	$	2,036,450

As of ~~September~~December 3031, 2025, the fair value of RSUs was $1611,~~776,600~~592 (March 31, 2025 - $3,911,823).

-18-

VERSES AI INC. Unaudited Condensed Consolidated Interim Statements of Shareholders’ Deficiency For the three and six months ended September 30, 2025 and 2024 (Expressed in United States dollars)

8.	RELATED PARTY TRANSACTIONS AND BALANCES

The Company’s related parties consist of the directors, executive officers and key management personnel, who have authority and responsibility for planning, directing, and controlling the Company’s activity and companies controlled by them. Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources, services, or obligations between related parties.

Transactions are measured at the exchange amount, which is the amount agreed to by the parties.

Key management personnel include those with authority and responsibility for planning, directing, and controlling the company’s activities. The Company has determined that key management personnel consist of executive and non-executive members of its Board of Directors and senior officers.

During the three and six month periods ended September 30, 2025 and 2024, related party transactions were as follows:

SCHEDULE OF RELATED PARTY TRANSACTIONS

	2025			2024		2025			2024
	Three months ended					Six months ended
	September 30,					September 30,
	2025			2024		2025			2024
Management fees	$	60,000		$	59,455	$	120,000		$	84,581
Management salaries and benefits included in personnel expenses		463,104			464,884		900,870			770,635
Share-based payments		(159,394	)		34,914		(194,919	)		(67,827	)
Related party transactions	$	363,710		$	559,253	$	825,951		$	787,389

Included in accounts payable as due from related parties at September 30, 2025, were amounts totaling $20,000 due to Michael Blum, the Chairman (March 31, 2025 – $20,000), $nil due to James Hendrickson, the Chief Operating Officer (March 31, 2025 - $83,500), and $nil due to Kevin Wilson, the Chief Accounting Officer (March 31, 2025 - $2,299).

Also included as due from related parties at September 30, 2025, is an unsecured loan made on April 28, 2023 of $69,657 (March 31, 2025 - $68,080) to Michael Wadden, the Chief Commercial Officer of the Company. The loan has an annual interest rate of 5% and requires principal and interest to be paid in full by May 1, 2033. No repayments were made during the six month period ended September 30, 2025.

On December 23, 2024, the Company granted 7,407 Options to James Hendrickson, the Chief Operating Officer, with an exercise price of CAD$30.51 ($21.92 at balance sheet rate), expiring in 5 years, where 25% will vest within one year of the grant date, and 6.25% every subsequent quarter.

During the six month period ended September 30, 2025, the Company recognized $1,587 as share-based payment for stock these Options using the graded vesting method over the vesting period.

On December 23, 2024, the Company granted 7,408 RSUs to two independent directors of the Company, 3,704 to Gordon Scott Paterson and 3,704 to Jonathan de Vos. These RSUs have no exercise price and expire in 5 years. They vest 33.33% within one year of the grant date and 33.33% yearly thereafter. The Company revalued the RSUs based on the prevailing market price of one Share on the revaluation date. The Company derecognized $857 as share-based payment for these RSUs during the six month period ended September 30, 2025.

-19-

~~VERSES AI INC. Unaudited Condensed Consolidated Interim Statements of Shareholders’ Deficiency For~~ During the three and ~~six~~nine ~~months~~month periods ended ~~September~~December 3031, 2025 and 2024, ~~(Expressed~~related inparty ~~United~~transactions ~~States~~were ~~dollars)~~as follows:

8. SCHEDULE OF RELATED PARTY TRANSACTIONS ~~AND BALANCES (continued)~~

On September 13, 2024, the Company granted 74,074 RSUs to Michael Blum, the Chairman, with no exercise price and expire in 10 years. 24,691 RSUs vest 12 months after the grant date and 8.33% every three months afterwards. During the period ended September 30, 2025, the Company revalued these RSUs based on the prevailing market price of one Share on the revaluation date. The Company derecognized $170,708 as share-based payment for RSUs during the six month period ended September 30, 2025.

	2025			2024		2025			2024
	Three months ended					Nine months ended
	December 31, 2025					December 31, 2025
	2025			2024		2025			2024
Management fees	$	75,000		$	49,753	$	195,000		$	134,334
Management salaries and benefits included in personnel expenses		442,626			347,051		1,343,496			1,117,687
Share-based payments		(168,813	)		302,201		(363,732	)		626,013
Related party transactions	$	348,813		$	699,005	$	1,174,764		$	1,878,034

OnIncluded ~~July~~in 3accounts payable as due from related parties at December 31, ~~2024~~2025, ~~the~~were ~~Company~~amounts ~~granted~~totaling 3$60,~~704~~000 ~~Options~~due to ~~James~~Michael ~~Hendrickson~~Blum, the ~~Chief~~Chairman (March ~~Operating~~31, ~~Officer~~2025 ~~and~~– 1$20,~~852~~000), ~~to Kevin Wilson~~$7, ~~its~~500 ~~Chief~~due ~~Financial~~to ~~Officer.~~David ~~The~~Scott, ~~Options~~director ~~have~~(March an31, ~~exercise~~2025 ~~price~~– ~~of CAD~~$~~28.89~~Nil) ($~~20.75~~nil atdue ~~balance~~to ~~sheet~~James ~~rate)~~Hendrickson, President and ~~expire~~Chief inOperating 5Officer ~~years.~~(March ~~25% of~~31, ~~the~~2025 ~~options~~- ~~will~~$83,500), ~~vest~~and 12$nil ~~months~~due ~~after~~to Kevin Wilson, the ~~grant~~Chief ~~date~~Accounting ~~and~~Officer ~~6.25%~~(March ~~every~~31, ~~subsequent~~2025 ~~quarter~~- $2,299).

~~During~~Also ~~the~~included ~~six~~as ~~month~~due ~~period~~from ~~ended~~related ~~September~~parties 30at December 31, 2025, ~~the~~is ~~Company~~an ~~recognized~~unsecured loan made on April 28, 2023 of $1270,~~834 as~~449 ~~share-based~~(March ~~payment~~31, ~~for~~2025 ~~these~~- ~~stock~~$68,080) to ~~options~~Michael ~~using~~Wadden, the ~~graded~~Chief ~~vesting~~Commercial ~~method~~Officer ~~over~~of the ~~vesting~~Company. The loan has an annual interest rate of 5% and requires principal and interest to be paid in full by May 1, 2033. No repayments were made during the nine month period ended December 31, 2025.

On ~~July~~December 323, 2024, the Company granted 17,~~852~~407 ~~RSUs~~ Options to ~~Kevin~~James ~~Wilson~~Hendrickson, ~~its~~President and Chief ~~Financial~~Operating Officer, ~~and~~with ~~16,665~~an toexercise ~~the~~price ~~three~~of ~~independent~~CAD$30.51 ~~directors~~($22.26 ofat ~~the~~balance ~~Company,~~sheet 5rate),~~555~~ ~~to Gordon~~expiring ~~Scott~~in ~~Paterson,~~ 5~~,555~~ ~~to Jonathan de Vos~~years, ~~and~~where ~~5,555~~25% ~~to Jay~~will ~~Samit. The RSUs have no exercise price and expire in 10 years. 33.33%~~ vest ~~every~~within 12one ~~months~~year ~~after~~of the grant date., ~~The~~and ~~Company revalued the RSUs based on the prevailing market price of one Share on the revaluation date~~6. ~~The Company derecognized $31,703 as~~25% ~~share-based~~every ~~payment~~subsequent ~~for during the six month period ended September 30, 2025~~quarter.

OnDuring ~~December 23, 2023,~~ the ~~Company~~nine ~~granted~~month ~~16,278~~period ~~stock~~ended ~~options~~December ~~to Kevin Wilson~~31, ~~its Chief Financial Officer and 1~~2025,~~852~~ ~~stock~~the ~~options to~~Company ~~James~~recognized ~~Hendrickson~~$30,154 ~~its~~as ~~Chief~~share-based ~~Operating~~payment ~~Officer~~for ~~with~~stock anthese ~~exercise~~Options ~~price~~using ~~of CAD$36.45 ($26.18 at balance sheet rate), expiring in 5 years,~~the ~~where~~graded ~~16,278~~vesting ~~vested~~method onover the ~~grant~~vesting ~~date, and 1,852 will vest 25% within one year of the grant date, and 6~~period.~~25% every subsequent quarter.~~

~~During~~On December 23, 2024, the ~~six~~Company ~~month~~granted ~~period~~7,408 ~~ended~~RSUs ~~September~~to 30two independent directors of the Company, ~~2025~~3,704 to Gordon Scott Paterson (former director) and 3,704 to Jonathan de Vos. These RSUs have no exercise price and expire in 5 years. They vest 33.33% within one year of the grant date and 33.33% yearly thereafter. The Company ~~recognized~~revalued the RSUs based on the prevailing market price of one Share on the revaluation date. The Company derecognized $207,~~134~~346 as share-based payment for these ~~Options~~RSUs ~~using~~during the ~~graded~~nine ~~vesting~~month ~~method~~period ~~over~~ended ~~the~~December ~~vesting~~31, ~~period~~2025.

On September 3013, ~~2025~~2024, the ~~remaining~~Company ~~unvested~~granted 674,~~172~~ 074 RSUs ~~granted~~ to ~~Gordon~~Michael ~~Scott~~Blum, ~~Paterson~~the Chairman, awith ~~director~~no ofexercise ~~the~~price ~~Company,~~and expire in 10 years. 24,691 RSUs vest 12 months after the ~~year~~grant date and 8.33% every three months afterwards. During the period ended ~~March~~September 3130, ~~2023~~2025, the ~~were~~Company ~~valued~~revalued these RSUs based on the prevailing market price of one ~~Subordinate Voting~~ Share on the revaluation date,. ofThe ~~which~~Company derecognized $26330,~~206~~191 isas ~~derecognized~~share-based inpayment for RSUs during the ~~six~~nine month period ended ~~September~~December 3031, 2025.

On July 3, 2024, the Company granted 3,704 Options to James Hendrickson, President and Chief Operating Officer and 1,852 to Kevin Wilson, its Chief Accounting Officer. The Options have an exercise price of CAD$28.89 ($21.08 at balance sheet rate) and expire in 5 years. 25% of the options will vest 12 months after the grant date and 6.25% every subsequent quarter.

During the nine month period ended December 31, 2025, the Company recognized $19,210 as share-based payment for these stock options using the graded vesting method over the vesting period.

On July 3, 2024, the Company granted 1,852 RSUs to Kevin Wilson, its Chief Accounting Officer and 16,665 to the three independent directors of the Company, 5,555 to Gordon Scott Paterson (former director) and 5,555 to Jonathan de Vos. The RSUs have no exercise price and expire in 10 years. 33.33% vest every 12 months after the grant date. The Company revalued the RSUs based on the prevailing market price of one Share on the revaluation date. The Company derecognized $51,219 as share-based payment for during the nine month period ended December 31, 2025.

-20-

~~VERSES~~On December AI23, ~~INC.~~2023, ~~Unaudited~~the ~~Condensed~~Company ~~Consolidated~~granted ~~Interim~~16,278 ~~Statements~~stock ofoptions ~~Shareholders’~~to ~~Deficiency~~Kevin ~~For~~Wilson, ~~the~~its ~~three~~Chief Financial Officer and ~~six~~1,852 ~~months~~stock ~~ended~~options to ~~September~~James 30Hendrickson, ~~2025~~its ~~and~~Chief ~~2024~~Operating Officer with an exercise price of CAD$36.45 (~~Expressed~~$26.18 inat ~~United~~balance ~~States~~sheet ~~dollars~~rate), expiring in 5 years, where 16,278 vested on the grant date, and 1,852 will vest 25% within one year of the grant date, and 6.25% every subsequent quarter.

During the nine month period ended December 31, 2025, the Company recognized $1,866 as share-based payment for these Options using the graded vesting method over the vesting period.

On December 31, 2025, the remaining unvested 6,172 RSUs granted to Gordon Scott Paterson (former director) in the year ended March 31, 2023, were valued based on the market price of one Subordinate Voting Share on the revaluation date, of which $26,206 is derecognized in the nine month period ended December 31, 2025.

9.	COMMITMENTS

The Company has an obligation to pay royalties to Cyberlab, LLC (“Cyberlab”) (a company controlled by Dan Mapes, a director and officer). Cyberlab shall be entitled to receive a share of the gross revenue derived from the sales, licensing, and other commercial activities involving Spatial Domain Names, pursuant to the following schedule:

	-	Years 1 through 10 of the Spatial Domain Program: Cyberlab shall be entitled to retain Five Percent (5%) of all gross revenue from the Spatial Domain Program, while VERSES shall retain the remaining Ninety-Five Percent (95%) to allocate between itself and other Spatial Domain Program stakeholders (e.g., registries, registrars, etc.) as it sees fit.
	-	Years 11 through 14 of the Spatial Domain Program: Cyberlab shall be entitled to retain Four Percent (4%) of all gross revenue from the Spatial Domain Program, while VERSES shall retain the remaining Ninety-Six Percent (96%).
	-	Years 15 through 17 of the Spatial Domain Program: Cyberlab shall be entitled to retain Three Percent (3%) of all gross revenue from the Spatial Domain Program, while VERSES shall retain the remaining Ninety-Seven Percent (97%).
	-	Years 18 and 19 of the Spatial Domain Program: Cyberlab shall be entitled to retain Two Percent (2%) of all gross revenue from the Spatial Domain Program, while VERSES shall retain the remaining Ninety-Eight Percent (98%).
	-	Years 20 to 25 of the Spatial Domain Program: Cyberlab shall be entitled to retain One Percent (1%) of all gross revenue from the Spatial Domain Program, while VERSES shall retain the remaining Ninety-Nine Percent (99%).

As of ~~September~~December 3031, 2025, no amounts are payable under the royalty agreement.

The Company may grant stock options (“Options”), deferred share units (“DSU”), or restricted stock units (“RSU”) to qualifying consultants and employees based on their respective contracts, to be determined at the grant date based on the prevailing market price of the Company’s shares. As of ~~September~~December 3031, 2025, the outstanding commitment balance is 77143,510 (March 31, 2025 – nil) to be granted as Options, RSUs or DSUs, of which 37,510 stock options is for the new Board of Directors member, David Scott, ~~and~~33,000 is 30for Hari Thiruvengada (Chief Technology Officer), 33,000 is for James Hendrickson (President and Chief Operating Officer), and 1,481 RSUs to Expansion Project Technologies Holding 9 SPV RSC Ltd in connection with CAD$400,000 in revenues derived by Verses from the commercial agreements it enters into with affiliates of G42.

The Company has entered into severance agreements with Gabriel Rene (Chief Executive Officer and Director), Dan Mapes (President Emeritus and Global Ambassador and Director), James Christodoulou (Chief Financial Officer), Kevin Wilson (Chief Accounting Officer), Donald Moody (General Counsel and Chief Legal Officer), Capm Petersen (Chief Innovation Officer), Steven Swanson (Chief Experience Officer), ~~and~~ Michael Wadden (Chief Commercial Officer), James Hendrickson (President and Chief Operating Office), and Hari Thiruvengada (Chief Technology Officer). In the case of involuntary termination or a change in control, the executives are entitled to a monetary payment of base salary, continuation of medical and dental insurance, and immediate, accelerated vesting of all stock options, equity, and related compensation.

-21-

10.

SHARE CAPITAL

Authorized shares

Effective July 20, 2021, the Company amended its Articles to create an unlimited number of Class A Subordinate Voting Shares and unlimited number of Class B Proportionate Voting Shares. Each Subordinate Voting Share shall entitle the holder thereof to one vote. Each Class B share shall entitle the holder thereof to 6.25 votes and such proportionate dividends and liquidation rights. Each Class B share is convertible, at the holder’s option, into 6.25 Subordinate Voting Shares.

On May 30, 2024, all 370,370 Class B Proportionate Voting Shares were converted to 2,314,815 Class A Subordinate Voting Shares.

On September 26, 2025, 1,240,741 Class A Subordinate Voting Shares were converted to 198,517 Class B Proportionate Voting Shares.

~~-21-~~On October 29, 2025, 198,517 Class B Proportionate Voting Shares were converted back to 1,240,741 Class A Subordinate Voting Shares.

VERSES AI INC. Unaudited Condensed Consolidated Interim Statements of Shareholders’ Deficiency For the three and six months ended September 30, 2025 and 2024 (Expressed in United States dollars)

10. SHARE CAPITAL (continued)

Issued

On ~~July~~December ~~29 and August 13~~1, 2025, 7,500 RSUs were settled into Shares with a ~~total~~value of ~~250~~$20,~~000~~550 ~~options~~based ~~were~~on ~~exercised~~the prevailing share price and exchange rate on the settlement date.

On November 10, 2025, the Company entered into a private placement financing and a related sharing agreement with Sorbie Bornholm LP and Sorbie Investments LLP (collectively, “Sorbie”). The Company issued 2,333,334 units issued pursuant to the private placement and. Each unit was issued at a price of CAD$6.00 ($4.38 at balance sheet rate) per unit, for total gross proceeds of CAD$14,000,000 ($9,917,600). Each unit consisted of one Class A subordinate voting share and one-half of one common share purchase warrant. Each whole warrant is exercisable for one Class A subordinate voting share at an exercise price of CAD$7.00 ($5.11 at balance sheet rate) per share and expires three years from the date of issuance.

At closing, CAD$700,000 (USD495,880) of the gross proceeds was released to the Company in cash. The remaining proceeds were delivered in accordance with the terms of the related Sharing Agreement.

Concurrently with the closing of the private placement, the Company entered into a Sharing Agreement with Sorbie, pursuant to which the Company is entitled to receive variable monthly cash settlements over an 11-month term, based on the performance of the Company’s share price relative to a benchmark price of CAD$7.75 ($5.65 at balance sheet rate). Settlement amounts are determined monthly based on the volume-weighted average trading price of the Company’s shares and are not subject to a contractual maximum. The Company has no obligation to issue additional shares under the Sharing Agreement. An additional 140,000 units were issued in accordance with the terms of the transaction as CAD$840,000 ($595,056) compensation for the Sharing Agreement.

On July 29 and August 13, 2025, a total of 250,000 options granted to consultant “B” were exercised.

On July 28, 2025, 40,742 RSUs were settled into Shares with a value of $253,541 based on the prevailing share price and exchange rate on the settlement date.

-22-

On July 11, 2025, the Company closed an offering by way of prospectus supplement. Pursuant to the Offering, the Company raised gross proceeds of approximately CAD$9,573,758 (US$7,000,331) by issuing 1,007,764 units of the Company (the “Units”) at a price of CAD$9.50 (US$6.946) per Unit.

Each Unit is comprised of one Class A Subordinate Voting Share of the Company (a “Share”) and one-half of one Share purchase warrant (each whole Share purchase warrant, a “Warrant”). Each Warrant entitles the holder to purchase one Share of the Company (a “Warrant Share”) at an exercise price of CAD$11.50 ($8.26 at balance sheet rate) per Warrant Share at any time until the date that is 36-month from the date of issuance, subject to adjustment in certain events.

The Offering was completed pursuant to an agency agreement dated July 9, 2025 between the Company, A.G.P. Canada Investments ULC and A.G.P./Alliance Global Partners. Each of A.G.P. Canada Investments ULC and A.G.P./Alliance Global Partners acted as co-lead agents, on behalf of a syndicate of agents including Imperial Capital, LLC and Haywood Securities Inc.

In connection with the Offering, the Company agreed to pay the agents a cash commission of CAD$400,000 ($292,480), and further agreed to issue to the agents 35,271 of compensation warrants (the “Compensation Warrants”). Each Compensation Warrant is exercisable into a Share at an exercise price of CAD$11.50 (US$8.409) per Share until the date that is 36 months after the date of issuance. In addition, the Company paid a cash fee of US$250,000 and issued 75,000 corporate finance fee warrants to TriView Capital Ltd., a financial advisor of the Company, with such corporate finance fee warrants having identical terms to the Compensation Warrants.

On July 3, 2025, 92,944 RSUs were settled into Shares with a value of $883,851 based on the prevailing share price and exchange rate on the settlement date.

On May 9, 2025, in connection with the conversion of the convertible debentures, the Company issued 4,253 Shares as an interest remainder.

On April 28, 2025, the Company closed an offering by way of prospectus supplement (the “Offering”). Pursuant to the Offering, the Company raised gross proceeds of $7,929,900 (CAD$11,000,000) by issuing 916,666 Units of the Company (the “Units”) at a price of US$8.64 (CAD$12.00) per Unit.

Each Unit is comprised of one Class A Subordinate Voting Share of the Company (a “Share”) and one-half of one Share purchase warrant (each whole Share purchase warrant, a “Warrant”). Each Warrant entitles the holder to purchase one Share of the Company (a “Warrant Share”) at an exercise price of CAD$15.00 ($11.00 at balance sheet rate) per Warrant Share at any time until the date that is 36-month from the date of issuance, subject to adjustment in certain events.

The Offering was completed pursuant to an agency agreement dated April 23, 2025 between the Company, A.G.P. Canada Investments ULC, Clear Street LLC and A.G.P./Alliance Global Partners.

-22-

VERSES AI INC. Unaudited Condensed Consolidated Interim Statements of Shareholders’ Deficiency For the three and six months ended September 30, 2025 and 2024 (Expressed in United States dollars)

10. SHARE CAPITAL (continued)

b) Issued

In connection with the Offering, the Company agreed to pay the agents a cash commission equal to $575,655, incurred in legal fees of $242,418, and agreed to issue 70,334 compensation warrants (the “Compensation Warrants”) valued at $495,635 (Note 11). Each Compensation Warrant is exercisable into a Share at an exercise price of CAD$12.00 ($8.80 at balance sheet rate) per Share until the date that is 36 months after the date of issuance. The cash commission and the number of Compensation Warrants was reduced from 7% to 2.0% in respect to the portion of aggregate gross proceeds of the Offering attributable to subscribers identified by the Company.

The Offering was completed in Canada pursuant to a prospectus supplement dated April 25, 2025 (the “Supplement”) to the Company’s base shelf prospectus receipted on September 26, 2024 (the “Base Shelf Prospectus”).

-23-

11.

WARRANTS

On December 18, 2025, in connection with the Convertible Debentures issuance (Note 15), the Company issued 434,764 warrants. Each whole warrant is exercisable for one Class A subordinate voting share at an exercise price of CAD$7.00 ($5.11 at balance sheet rate) per share and expires three years from the date of issuance. The Company also issued 23,026 Broker Units. Each Broker Unit has an exercise price of CAD$3.04 ($2.22 at balance sheet rate) per unit and consisted of one Class A subordinate voting share and one-half of one common share purchase warrant. Each whole warrant is exercisable for one Class A subordinate voting share at an exercise price of CAD$7.00 ($5.11 at balance sheet rate) per share and expires three years from the date of issuance.

The total fair value of Broker Units was $45,361, estimated using the Black-Scholes option pricing model with the following weighted average assumptions:

	CAD$			$
Share price at grant date	$	3.04		$	2.21
Risk-free interest rate		2.59	%		2.59	%
Expected life		3 years			3 years
Expected volatility		118.4	%		118.4	%
Expected dividends		Nil			Nil
Grant date fair value per warrant	$	1.85		$	1.34

On November 6, 2025, in connection with the Sorbie financing (Note 10), the Company issued 1,236,667 warrants. Each whole warrant is exercisable for one Class A subordinate voting share at an exercise price of CAD$7.00 ($5.11 at balance sheet rate) per share and expires three years from the date of issuance. The Company also issued 186,667 Broker Units. Each Broker Unit has an exercise price of CAD$6.00 ($4.38 at balance sheet rate) per unit and consisted of one Class A subordinate voting share and one-half of one common share purchase warrant. Each whole warrant is exercisable for one Class A subordinate voting share at an exercise price of CAD$7.00 ($5.11 at balance sheet rate) per share and expires three years from the date of issuance.

The total fair value of these Warrants was $2,774,214 and the Broker Units was $644,058, estimated using the Black-Scholes option pricing model with the following weighted average assumptions:

	CAD$			$
Share price at grant date	$	4.88		$	3.46
Risk-free interest rate		2.39	%		2.39	%
Expected life		3 years			3 years
Expected volatility		118.4	%		118.4	%
Expected dividends		Nil			Nil
Grant date fair value per warrant	$	3.29		$	2.33

On July 11, 2025, in connection with the Prospectus Supplement offering closed, the Company issued 503,882 warrants and 110,271 Compensation Warrants (Note 10). Each Warrant entitles the holder to purchase one Share of the Company (a “Warrant Share”) at an exercise price of CAD$11.50 ($8.26 at balance sheet rate) per Warrant Share at any time until the date that is 36-month from the date of issuance, subject to adjustment in certain events.

-24-

The total fair value of these Compensation Warrants was $660,900, estimated using the Black-Scholes option pricing model with the following weighted average assumptions:

SCHEDULE OF WEIGHTED AVERAGE ASSUMPTIONS

	CAD$			$
Share price at grant date	$	11.46		$	8.38
Risk-free interest rate		2.72	%		2.72	%
Expected life		3 years			3 years
Expected volatility		120.6	%		120.6	%
Expected dividends		Nil			Nil
Grant date fair value per warrant	$	8.20		$	5.99

On May 9, 2025, in connection with the Prospectus Supplement offering closed, the Company issued 458,333 warrants and 70,334 Compensation Warrants (Note 10).

The total fair value of these Compensation Warrants was $495,635, estimated using the Black-Scholes option pricing model with the following weighted average assumptions:

	CAD$			$
Share price at grant date	$	13.20		$	9.52
Risk-free interest rate		2.61	%		2.61	%
Expected life		3 years			3 years
Expected volatility		123.9	%		123.9	%
Expected dividends		Nil			Nil
Grant date fair value per warrant	$	9.78		$	7.05

Warrants outstanding as at ~~September~~December 3031, 2025 are summarized below:

SCHEDULE OF WARRANTS OUTSTANDING

	Number of warrants			Weighted Average Exercise Price (CAD$)		Exercise Price (USD$ equivalent) (1)
Balance, March 31, 2024		878,061		$	41.10	$	29.5299
Issued		1,340,158			40.16		2829.8530
Exercised		(122,993	)		24.09		17.3058
Expired		(2	)		21.60		15.5276
Balance, March 31, 2025		2,095,224		$	41.50	$	2930.8128
Issued		13,~~142~~023,~~820~~944			128.9384		96.2945
Expired		(368,303	)		26.54		19.0636
Balance, September 30, 2025		2,869,741		$	32.04	$	23.02
Balance, December 31, 2025		4,750,865		$	21.87	$	15.96

⁽¹⁾

Converted at balance sheet rate.

-2325-

~~VERSES AI INC. Unaudited Condensed Consolidated Interim Statements~~ As of ~~Shareholders’~~December ~~Deficiency~~31, ~~For~~2025, the ~~three~~Company’s ~~and~~outstanding ~~six~~share ~~months~~purchase ~~ended~~warrants ~~September~~expire ~~30,~~as ~~2025 and 2024 (Expressed in United States dollars)~~follows:

11. WARRANTS (continued)

As of September 30, 2025, the Company’s outstanding share purchase warrants expire as follows:

Expiry date	Weighted Average Remaining Contractual Life in Years		Exercise Price (CAD$)		Exercise Price (USD$ equivalent) (1)		Outstanding
April 15, 2026		0.5429		10.80		7.7688		46,296
April 17, 2026		0.5529		27.00		19.3970		3,348
April 29, 2026		0.5833		27.00		19.3970		6,618
May 16, 2026		0.6237		27.00		19.3970		1,702
July 6, 2026		0.7651		55.35		3940.7638		29,227
July 6, 2026		0.7651		68.85		4950.4523		294,694
August 15, 2026		0.8762		27.00		19.3970		45,496
August 17, 2026		0.8863		40.50		29.0955		126,853
August 30, 2026		0.9266		40.50		29.0955		43,062
September 17, 2026		0.9671		40.50		29.0955		12,494
December 22, 2026		10.2398		32.40		23.2764		809
January 8, 2027		1.2702		40.50		29.0955		28
June 20, 2027		1.7247		40.50		29.0955		255,185
September 26, 2027		1.9974		21.60		15.5276		10,562
September 26, 2027		1.9974		32.40		23.2764		114,354
November 8, 2027		21.1185		13.50		9.7085		14,444
November 8, 2027		21.1185		18.90		13.5879		85,699
November 15, 2027		21.1387		13.50		9.7085		2,229
November 15, 2027		21.1387		18.90		13.5879		15,290
December 9, 2027		21.1994		13.50		9.7085		3,707
December 9, 2027		21.1994		18.90		13.5879		28,519
January 9, 2028		2.2802		52.92		38.0161		235,906
January 9, 2028		2.2802		42.39		30.4593		26,420
February 25, 2028		2.4115		52.92		38.0161		257,312
March 9, 2028		2.4419		18.90		13.5879		66,667
April 28, 2028		2.5833		15.00		10.7794		458,333
April 28, 2028		2.5833		12.00		8.6276		70,334
July 11, 2028		2.7853		11.50		8.2639		614,153
		2.07	$	32.04	$	23.02		2,869,741
November 6, 2028		2.85		6.00		4.38		186,667
November 6, 2028		2.85		7.00		5.11		1,236,667
December 18, 2028		2.97		3.04		2.22		23,026
December 18, 2028		2.97		7.00		5.11		434,764
		2.24	$	21.87	$	15.96		4,750,865

Notes:

(1) Converted at balance sheet rate.

	⁽¹⁾	Converted at balance sheet rate.
	⁽²⁾	Warrants expiring July 6, 2026

~~sheet~~Pre-Consolidation Exercise Terms: 1 Warrant + CAD$2.55 ($1.86 at balance sheet rate) = 1 ~~New~~ Class A Subordinate Voting share.

Post-Consolidation Exercise Terms: 27 Warrants + CAD$68.85 (2$50.23 at balance sheet rate) ~~Warrants~~= ~~expiring~~1 ~~July~~New 6,Class ~~2026~~A Subordinate Voting share.

~~Pre-Consolidation~~For ~~Exercise~~presentation ~~Terms:~~purposes, the Company divided the total outstanding warrants by 27 to reflect 1 ~~Warrant~~warrant + CAD$268.5585 ($150.8323 at balance sheet rate) = 1 New Class A Subordinate Voting share.

Post-Consolidation Exercise Terms: 27 Warrants + CAD$68.85 ($49.46 at balance sheet rate) = 1 New Class A Subordinate Voting share.

For presentation purposes, the Company divided the total outstanding warrants by 27 to reflect 1 warrant + CAD$68.85 ($49.46 at balance sheet rate) = 1 New Class A Subordinate Voting share.

-24-

VERSES AI INC. Unaudited Condensed Consolidated Interim Statements of Shareholders’ Deficiency For the three and six months ended September 30, 2025 and 2024 (Expressed in United States dollars)

12.

PREPAID EXPENSES

Prepaid expenses consisted of the following:

SCHEDULE OF PREPAID EXPENSES

	September 30, 2025		March 31, 2025
	December 31, 2025		March 31, 2025
Deposit	$	3450,~~929~~399	$	10,000
Retainer		269,311		251,983
Prepaid insurance		~~540~~482,~~495~~796		106,084
Subscriptions		~~371~~303,~~040~~283		267,997
Balance, end of the period	$	1,~~215~~105,~~775~~789	$	636,064
Prepaid expenses	$	1,~~215~~105,~~775~~789	$	636,064

-26-

13.

EQUIPMENT

SCHEDULE OF EQUIPMENT

Cost	Equipment
Balance, March 31, 2025	$	580,751
Additions		4065,~~489~~285
Balance, September 30, 2025	$	621,240
Balance, December 31, 2025	$	646,036
Accumulated depreciation		Equipment
Balance, March 31, 2025	$	455,338
Additions		45,894
Balance, September 30, 2025	$	501,232
Net book value, March 31, 2025	$	125,413
Net book value, September 30, 2025	$	120,008

14. FINANCIAL INSTRUMENTS

Accumulated depreciation		Equipment
Balance, March 31, 2025	$	455,338
Additions		70,408
Balance, December 31, 2025	$	525,746

Net book value, March 31, 2025	$	125,413
Net book value, December 31, 2025	$	120,290

~~As of~~14. ~~September~~CONTINGENT 30, 2025, the Company’s financial instruments consist of cash and restricted cash, accounts receivable, accounts payable and accrued liabilities, restricted share unit liability, provision for legal claim, convertible debenture, and loans payable.RECEIVABLE

On November 10, 2025, in connection with the financing agreement with Sorbie Bornholm LP, the Company entered into a Sharing Agreement tranches to be paid, Sorbie must have freely trading shares without a restrictive legend. Currently, the securities issued under the Offering are not freely trading and are subject to a statutory hold period of four months plus a day from the date of issuance in accordance with applicable securities legislation in Canada.

The Sharing Agreement calculates each additional tranche, as the Transfer Amount of CAD$1,209,091 ($882,152 at balance sheet rate) minus the difference between the Benchmark Price of CAD$7.75 ($5.65 at balance sheet rate) and the trailing 20-day Value Weighted Average Price times 164,223 (Transfer Amount – ((Benchmark Price – 20-day VWAP)*164,223). The Company is responsible to pay 8% brokerage fee with each tranche.

For tranches under the Sharing Agreement to be payable, Sorbie must hold freely tradable shares without a restrictive legend. As of the date of issuance of these Condensed Consolidated Interim Financial Statements, the shares issued under the Sharing Agreement remain subject to a restrictive legend. Accordingly, the contingent receivable cannot be measured or recognized at this time.

Any subsequent cash proceeds received will be recorded directly in Shareholders’ Equity.

15.

CONVERTIBLE DEBENTURE

On December 19, 2025, the Company announced that it had closed a non-brokered private placement offering (the “Offering”) of secured convertible debenture units (the “Units”) for gross proceeds of CAD$2,651,000 ($1,923,566) of which CAD$2,415,000 ($1,752,324) was in cash. Each Unit consists of CAD$1,000 ($730 at balance sheet rate) principal amount of secured convertible debentures (the “Convertible Debentures”) and 164 detachable share purchase warrants (the “Warrants”). The Convertible Debentures are convertible into Class A Subordinate Voting Shares of the Company (the “Shares”), at the election of the holder, at a conversion price of CAD$3.04 ($2.22 at balance sheet rate) per Share (the “Conversion Price”), subject to customary anti-dilution adjustments. The Warrants are exercisable at a price of CAD$7.00 ($5.11 at balance sheet rate) per Share until December 18, 2028. The Convertible Debentures mature on December 18, 2027 (the “Maturity Date”) and bear interest at a rate of 15% per annum, payable in arrears on the earlier of conversion, prepayment, or the Maturity Date, in either cash or, at the option of the holder, by the issuance of Shares at the Conversion Price, subject to approval of Cboe Canada Inc. (the “Exchange”). The Convertible Debentures are secured by a first-ranking security interest over all present and after-acquired property and assets of the Company.

-27-

A reconciliation of the contingent receivable is as follows:

Convertible debenture
Balance, March 31, 2025	$	-
Proceeds from issuance		1,934,170
Issuance costs cash paid		(69,527	)
Issuance costs warrants granted		(45,361	)
Interest payable		10,261
Accretion expense		3,155
Foreign exchange on convertible debt		72
Balance, December 31, 2025	$	1,832,770

16.

CONTINGENT LIABILITY

On or about November 7, 2025, a subsidiary of the Company (VTU) was served with a copy of a summons and complaint for a Wyoming civil action for, inter alia, breach of contract and unjust enrichment from a Florida resident (Philip Plough) based upon a ~$35,000 loan (paid in cryptocurrency) made to an unrelated third party entity (XYZ Global Technologies, Inc.), and entity which Mr. Mapes and Mr. Rene, Officers and Directors of the Company were associated with. Along with XYZ, VTU and the Company, Mr. Mapes and Mr. Rene were also named in the Complaint as individuals along with a law firm (Gresham International America LLC) that specializes in fintech compliance services. The Complaint seeks $1,856,000 in compensatory damages, as well as punitive / exemplary damages and injunctive relief. On or about January 8, 2026, counsel for Plaintiff served a group of applications for “default judgment” against several defendants — including some that appear to have never been properly served or that have filed challenges to the court’s jurisdiction. The Company was also included, even though it too never accepted service of process or consented to personal jurisdiction.

However, because VTU is a Wyoming corporation, it did not challenge proper service or jurisdiction, and an Answer was filed on its behalf in late December 2025. VTU denied the allegations made against it, highlighting that the loan document in question (i.e. a promissory note) makes no mention of VTU or the Company, and that to the best of its knowledge neither one ever had any involvement with or received any funds from the 2018 loan to XYZ. XYZ has never done any business with VTU or the Company, and neither the Company nor VTU have any stock or other ownership interest in or day-to-day involvement with XYZ. Likewise, XYZ owns no stock in and has no day-to-day involvement with the Company or VTU. The case is otherwise still in its early stages. No hearings have been held and no discovery has been taken by either side.

17.

FINANCIAL INSTRUMENTS

As of December 31, 2025, the Company’s financial instruments consist of cash and restricted cash, accounts receivable, accounts payable and accrued liabilities, restricted share unit liability, provision for legal claim, convertible debenture, and loans payable.

In accordance with ASC 820, Fair Value Measurement, the Company categorizes financial assets and liabilities measured at fair value into a three-level hierarchy based on the inputs used in the valuation techniques. The hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs (Level 3).

The levels of the fair value hierarchy are defined as follows:

● Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date. ● Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities in active or inactive markets. ● Level 3 – Unobservable inputs for the asset or liability, which are used to measure fair value to the extent that observable inputs are not available, and which are significant to the overall fair value measurement.

● Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities in active or inactive markets.-28-

-25-

VERSES AI INC. Unaudited Condensed Consolidated Interim Statements of Shareholders’ Deficiency For the three and six months ended September 30, 2025 and 2024 (Expressed in United States dollars)

14. FINANCIAL INSTRUMENTS (continued)

● Level 3 – Unobservable inputs for the asset or liability, which are used to measure fair value to the extent that observable inputs are not available, and which are significant to the overall fair value measurement.

SCHEDULE OF FAIR VALUE HIERARCHY

As of September 30, 2025	Level 1 ($)		Level 2 ($)		Level 3 ($)		Total ($)
As of December 31, 2025	Level 1 ($)		Level 2 ($)		Level 3 ($)		Total ($)
Assets:
Cash and restricted cash		167,~~209,908~~954		-		-		167,~~209,908~~954
Accounts receivable		~~296~~164,~~700~~000		-		-		~~296~~164,~~700~~000
Due from related parties		6970,~~657~~449		-		-		6970,~~657~~449
Liabilities:
Accounts payable		13,~~508~~141,~~247~~081		-		-		13,~~508~~141,~~247~~081
Accrued liabilities		~~132~~79,~~665~~891		-		-		~~132~~79,~~665~~891
Provision for legal claim		9,~~402~~640,~~338~~094		-		-		9,~~402~~640,~~338~~094
Restricted share unit liability		-		1,776,600		-		1,776,600
Convertible Debenture		1,832,770		-		-		1,832,770
Loans payable		139,722		-		-		139,722
Restricted share unit liability		-		611,592		-		611,592
Loans payable		141,036		-		-		141,036

As of March 31, 2025	Level 1		Level 2		Level 3		Total
Assets:
Cash and restricted cash		4,816,906		-		-		4,816,906
Due from related parties		68,080		-		-		68,080
Liabilities:
Accounts payable		2,036,916		-		-		2,036,916
Accrued liabilities		41,736		-		-		41,736
Provision for legal claim		8,948,085		-		-		8,948,085
Restricted share unit liability		-		3,911,823		-		3,911,823
Loans payable		139,039		-		-		139,039

Credit risk

Credit risk is the risk of loss associated with a counterparty’s inability to fulfill its payment obligations. The financial instrument that potentially subjects the Company to concentrations of credit risk consists principally of cash, accounts receivable, and due from related parties. To minimize the credit risk, the Company places its cash with large financial institutions.

Amounts due from related parties of $6970,~~657~~449 as of ~~September~~December 3031, 2025 (March 31, 2025 - $68,080) represent receivables from an unsecured loan to to a key member of the management team. The loan has an annual interest rate of 5% and requires principal and interest to be paid in ~~full~~ full by May 1, 2033 (Note 8).

As of ~~September~~December 3031, 2025, management assessed that there is no need to provide a credit loss allowance.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company’s operations on an ongoing basis. The Company strives to ensure that there are sufficient funds to meet its short-term business requirements, taking into account its anticipated cash flows from operations, cash holdings, and anticipated future financing transactions.

-26-

VERSES AI INC. Unaudited Condensed Consolidated Interim Statements of Shareholders’ Deficiency For the three and six months ended September 30, 2025 and 2024 (Expressed in United States dollars)

14. FINANCIAL INSTRUMENTS (continued)

Liquidity risk (continued)

~~Contractual cash flow requirements as of September 30, 2025, were as follows:~~-29-

Contractual cash flow requirements as of December 31, 2025, were as follows:

	Less than 1 year	~~Less than 1 year~~	1 to 2 years	~~1 to 2 years~~	2 to 5 years	~~2 to 5 years~~	After 5 years	~~After 5 years~~	Total	~~Total~~
	<1 year $		1-2 years $		2-5 years $		>5 years $		Total $
Accounts payable		13,~~508~~141,~~247~~081		-		-		-		13,~~508~~141,~~247~~081
Accrued liabilities		~~132~~79,~~665~~891		-		-		-		~~132~~79,~~665~~891
Loans payable		7,752		7,752		23,256		100,962		139,722
Convertible Debenture		-		1,832,770		-		-		1,832,770
Total		1,648,664		7,752		23,256		100,962		1,780,634
Loans payable		7,752		7,752		23,256		102,276		141,036
Total		3,228,724		1,840,522		23,256		102,276		5,194,778

As of ~~September~~December 3031, 2025, the Company had a working capital deficit of $913,~~205~~247,~~281~~462 (March 31, 2025 - $8,923,210).

Foreign exchange risk

Foreign exchange risk is the risk that the fair value or future cash flows will fluctuate due to changes in foreign exchange rates. The Company has financial assets denominated in Euros and Canadian dollars and is therefore exposed to exchange rate fluctuations. As of ~~September~~December 3031, 2025, the Company had the equivalent of $962,~~283 (March 31~~321,007 ~~2025 - $223,534)~~ net financial liabilities ~~denominated~~ in Canadian dollars ~~and~~ ~~$14,864~~ (March 31, 2025 - net financial liabilities ~~assets~~of - $~~104~~223,~~416~~534) and $13,761 in net financial ~~liabilities~~assets denominated in Euros (March 31, 2025 - $104,416).

The foreign exchange risk exposure of the Company financial instruments as at ~~September~~December 3031, 2025 is as below:

							+/- 10% fluctuation
	Currency						Increase/(decrease)
Financial Instrument Type	CAD$			$			$ impact
Cash		~~987~~17,~~753~~019			~~709~~12,~~503~~417			701,~~950~~242		(701,~~950~~242	)
Tax receivable		1,~~003~~041,~~283~~333			~~720~~759,~~659~~756			7275,~~066~~976		(7275,~~066~~976	)
Prepaid expenses		1,~~172~~053,~~734~~483			~~842~~768,~~375~~621			8476,~~237~~862		(8476,~~237~~862	)
Accounts payable		(~~774~~751,~~473~~698	)		(~~556~~548,~~304~~439	)		(5554,~~630~~844	)	5554,~~630~~844
Accrued liabilities		(5081,~~000~~569	)		(3559,~~915~~513	)		(35,~~592~~951	)	35,~~592~~951
Restricted share unit liability		(2,473,384	)		(1,776,600	)		(177,660	)	177,660
Convertible debentures		(2,512,020	)		(1,832,770	)		(183,277	)	183,277
Foreign currency future instrument		(134,087	)		(96,283	)		(9,629	)	9,629
Restricted share unit liability		(1,087,554	)		(793,479	)		(79,348	)	79,348
Foreign currency future instrument		(2,321,007	)		(1,693,407	)		(169,340	)	169,340

+/- 10% fluctuation

Currency

Increase/(decrease)

Financial Instrument Type

EURO

$ impact

Restricted cash

124,~~375~~427

128,~~613~~609

~~161~~2,861

(~~161~~2,861

)

Tax receivable

61,~~423~~884

72,~~535~~206

~~753~~221

(~~753~~221

)

Accounts payable

(2012,~~468~~550

)

(2414,~~011~~698

)

(21,~~401~~470

)

21,~~401~~470

Foreign currency future instrument

~~(12~~13,~~670~~761

)

~~(14~~16,~~864~~117

)

(1,~~486~~612

)

(1,~~486~~612

)

-27-

VERSES AI INC. Unaudited Condensed Consolidated Interim Statements of Shareholders’ Deficiency For the three and six months ended September 30, 2025 and 2024 (Expressed in United States dollars)

14. FINANCIAL INSTRUMENTS (continued)

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates. The interest earned on cash balances ~~approximate~~approximates fair value rates, and the Company is not subject to significant risk due to ~~fluctuating~~ fluctuating interest rates. As of ~~September~~December 3031, 2025, the Company does not hold any liabilities that are subject to fluctuations in market ~~interest~~ interest rates.

-30-

Price risk

Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices, other than those arising from interest rate risk or currency risk. The Company is not exposed to other price risk.

1518. MANAGEMENT OF CAPITAL

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue the development of their technology. The Company considers the items in shareholders’ equity as capital. There has been no change to what the Company considers capital from the prior year. The Company does not have any externally imposed capital requirements to which it is subject to.

The Company manages the 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 issue Subordinate Voting Shares, dispose of assets or adjust the amount of cash. There has been no change to how capital is managed from the prior year.

1619. SUPPLEMENTAL CASH FLOW INFORMATION

The supplemental cash paid and received by the Company as of ~~September~~December 3031, 2025 is as below:

	2025		2024		2025		2024
	For three months ended				For ~~Six~~nine months ended
	September 30,				September 30,
	December 31,				December 31,
	2025		2024		2025		2024
Cash paid for interest	$	~~1,313~~-	$	51,~~524~~307	$	~~2,621~~248	$	63,~~843~~940
Cash received for interest	$	3743,~~609~~114	$	3518,~~147~~056	$	8591,~~053~~350	$	4968,~~970~~026

1720. SEGMENT REPORTING

Operating segments comprised of the components of an entity in which separate information is available for evaluation by the Company’s Chief Operating Decision Maker (“CODM”), the Company’s Chief Executive Officer, or group of decision makers, in determining how to allocate resources in evaluating performance.

The CODM has determined that the Company consists of a single reporting segment providing Software as a Service, which includes proof of concept and software implementation services.

The accounting policies of the services segment are as described in the summary of significant accounting policies. The CODM evaluates the performance of the services segment based on the Company’s net income (loss) as reported in the Statements of Operations.

The CODM reviews performance based on gross profit, operating profit, and net earnings. Operating profit is reviewed to monitor the operating and administrative expenses of the Company. The Company does not have any operations or sources of revenue outside of the United States. Accordingly, the CODM considers the revenue, operating expenses, and other income (expenses) of our single operating segment as reported on the statement of operations and considers our current and total assets as recorded on the balance sheet. There are no additional expense or asset information that are supplemental to those disclosed in these consolidated financial statements that are regularly provided to the CODM.

-2831-

~~VERSES AI INC~~21. ~~Unaudited~~OTHER ~~Condensed Consolidated Interim Statements of Shareholders’ Deficiency For the three and six months ended September 30, 2025 and 2024 (Expressed in United States dollars)~~INCOME

18. OTHER INCOME

Other income consisted of the following:

SCHEDULE OF OTHER INCOME

	2025			2024			2025			2024
	For three months ended						For ~~Six~~nine months ended
	September 30,						September 30,
	December 31,						December 31,
	2025			2024			2025			2024
Accretion expense	$	-(3,155	)	$	(~~411~~265,~~813~~356	)	$	-(3,155	)	$	(~~453~~719,~~839~~195	)
Grant Income		17128,~~720~~430			5642,~~034~~071			81210,~~909~~339			5668,~~034~~026
Interest earned		376,~~609~~297			3518,~~147~~056			8591,~~053~~350			4998,~~970~~105
Gain on derivative liability		-			2,464,873			-			2,464,873
Loss on derivative liability		-			(3,010,994	)		-			(546,121	)
Interest expense		(713,~~278~~037	)		(~~221~~251,~~720~~962	)		(1225,~~254~~291	)		(~~293~~545,~~038~~000	)
Legal claim expense		(~~359~~185,~~164~~833	)		-			(~~582~~768,~~253~~086	)		-1,666,000
Provision for losses on related party transactions		-			(~~235~~83,~~413~~285	)		-			(~~396~~479,~~524~~809	)
R&D tax credits		~~65,679~~-			-			416,208			-
Other income	$	(~~245~~67,~~434~~298	)	$	1(3,~~687~~551,~~108~~470	)	$	(1178,~~337~~635	)	$	1(457,~~427,476~~994	)

1922. PROVISION FOR LEGAL CLAIM

On July 13, 2022, David Thomson, a former independent contractor, filed a ~~lawsuit~~claim against ~~VTU~~one of the Company’s U.S. subsidiaries, VTU, Cyberlab LLC, and two directors/officers of the Company in Los Angeles Superior Court. The claim alleged violations of various sections of the California Corporations ~~code~~Code, breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment. Plaintiff claimed as much as $5,000,000 in damages, subject to proof.

On September 1, 2022, ~~the~~VTU ~~Company~~ filed an answer denying any wrongdoing, and also made its own counterclaim against Mr. Thomson. The cross-claims against David Thomson included: (i) misappropriation of trade secrets; (ii) breach of contract; (iii) violation of the California Computer Data Access and Fraud Act (“CDAFA”); and (iv) violation of the Economic Espionage Act along with three additional cross-claims (alleging violation of the Computer Fraud and Abuse Act, conversion, violation of the Stored Communications Act, respectively) that were subsequently dismissed by the Court. VTU, for its part, sought to recover both compensatory and punitive damages from Mr. Thomson, as well as restitution of any ill-gotten gains and an award of reasonable attorneys’ fees.

~~(“CDAFA”);~~The ~~and~~arbitration ~~(iv)~~was ~~violation~~conducted offor ~~the~~a ~~Economic~~total ~~Espionage~~of ~~Act,~~13 ~~along~~days ~~with~~over ~~three~~a ~~additional~~period ~~cross-claims~~from ~~(alleging~~February ~~violation~~5 ofthrough ~~the~~April ~~Computer~~3, ~~Fraud and~~2024, ~~Abuse~~via ~~Act,~~a ~~conversion,~~single ~~violation~~arbitrator ofat the American ~~Stored~~Arbitration ~~Communications~~Association. ~~Act,~~The ~~respectively)~~CDAFA ~~that~~claim ~~were~~was ~~subsequently~~ dismissed by the ~~Court. The Company~~Arbitrator, ~~for~~but ~~its~~the ~~part,~~claims ~~sought~~for totrade ~~recover~~secret ~~both~~misappropriation, breach ~~compensatory~~of contract and ~~punitive~~unjust ~~damages~~enrichment ~~from~~were ~~Mr.~~allowed ~~Thomson,~~to asmove ~~well~~forward. asA ~~restitution~~final ofarbitration ~~any~~award ~~ill-gotten gains~~was ~~and~~issued anon ~~award~~May of17, ~~reasonable attorneys’ fees~~2024.

The ~~arbitration~~final ~~was~~award ~~conducted~~imposed ~~for~~liability aagainst: ~~total~~(i) ofVTU, 13jointly ~~days~~and ~~over~~severally with Cyberlab, LLC, a ~~period~~company ~~from~~owned ~~February~~by 5the ~~through~~Company’s ~~April~~former president 3,and ~~2024~~current President Emeritus, ~~via~~Director of Global Development and a ~~single~~director ~~arbitrator~~of atthe Company, Dan Mapes, in the amount of $6,307,258, ~~American~~inclusive ~~Arbitration~~of ~~Association.~~interest; ~~The~~and ~~CDAFA~~(ii) ~~claim~~Cyberlab, ~~was~~LLC, ~~dismissed~~VTU byand its principals, Gabriel René and Dan Mapes, jointly and severally, for damages in the ~~Arbitrator~~amount of $1,900,000, ~~but~~interest of $709,973 costs of $64,303 and the ~~claims~~fees ~~for~~of ~~trade~~plaintiff’s ~~secret~~counsel ~~misappropriation~~totaling $920,231. ~~breach~~To resolve their part of ~~contract~~joint and ~~unjust~~several ~~enrichment~~liability, ~~were~~Mr. ~~allowed~~René and Mr. Mapes are working toward satisfying the portion of the award that applies to ~~move~~them ~~forward~~as individuals, including $1,666,000 proceeds from insurance. The remaining liability belongs to VTU. Initial good faith payments of $1,791,000 have been made to the claimant.

AOn ~~final~~January ~~arbitration~~24, ~~award was issued on May 17~~2025, ~~2024~~Mr. ItThomson ~~imposed~~filed ~~liability~~a ~~against:~~Petition ~~(i)~~to ~~Verses~~Confirm ~~Technologies USA, Inc. (VTU), a subsidiary of~~ the ~~Company,~~Arbitration ~~jointly~~Award ~~and severally~~ with ~~Cyberlab,~~the ~~LLC~~Los (aAngeles ~~company~~Superior ~~owned~~Court. byA ~~the~~hearing ~~Company’s~~on ~~president, Dan Mapes), in~~ the ~~amount~~ ofPetition ~~$6,307,258,~~was ~~inclusive~~held ~~of interest;~~ and ~~(ii)~~on ~~Cyberlab~~May 8, ~~VTU and its principals~~2025, ~~Gabriel~~the ~~René~~Petition ~~and~~was ~~Daniel~~confirmed ~~Mapes, jointly and severally,~~ for ~~damages~~approximately ~~in the amount of~~ $19,900,000, ~~interest~~together ofwith ~~$709,973,~~interest ~~costs~~accrued thereon. ofThe ~~$64,303~~Company ~~and~~recorded the ~~fees~~total ofamount ~~plaintiff’s counsel totaling $920,231. To resolve their part~~ of ~~joint~~this ~~and~~award ~~several~~as ~~liability,~~an ~~Mr.~~expense ~~René~~incurred ~~and~~during ~~Mr.~~our ~~Mapes~~fiscal ~~are~~year ~~working~~ended ~~toward~~March ~~satisfying~~31, ~~the~~2024, ~~portion~~while in of the ~~award~~ ~~that~~following ~~applies~~fiscal toyear ~~them~~we recorded as ~~individuals,~~income ~~including~~the $1,666,000 ~~proceeds~~insurance ~~from~~payment ~~insurance.~~received ~~The~~by ~~remaining~~Mr. ~~liability~~Mapes ~~belongs~~and toMr. ~~VTU~~René, ~~a subsidiary~~which ofwas ~~the~~partially ~~Company.~~offset ~~Initial~~by ~~good~~an ~~faith~~aggregate ~~payments~~ of $1817,~~791,000~~787 ~~have~~of ~~been~~interest ~~made~~that toaccrued ~~the~~on ~~claimant. However,~~ the ~~likelihood~~total ofaward aduring ~~favourable or unfavourable outcome, or an estimate of~~ the ~~amount~~most orrecently ~~range~~completed ~~of potential loss, which is isolated to VTU and Cyberlab, is not reasonably~~fiscal ~~foreseeable~~year ~~at this time~~ended.

On ~~January~~August 2411, 2025, Mr. ~~Thompson~~Thomson ~~filed~~served acounsel ~~Petition~~for toVTU ~~Confirm~~with ~~the~~a ~~Arbitration~~motion ~~Award~~seeking ~~with~~$500,000 ~~the~~in ~~Los~~additional ~~Angeles~~attorneys’ ~~Superior~~fees ~~Court~~and costs. ~~This~~Mr. Thomson ishas aapplied ~~necessary “first~~for ~~step”~~an ~~that~~order ~~must~~compelling bethe ~~undertaken~~individual ~~before~~defendants an(Mapes ~~arbitration~~and ~~award~~René) ~~can~~to beturn ~~converted~~over ~~into~~ an ~~enforceable~~allotment ~~judgment.~~of Atheir ~~hearing~~individually-owned onVAI ~~the~~shares ~~Petition~~(1,158,333 ~~was~~each, ~~set~~ for ~~April~~a ~~29,~~combined ~~2025.~~total Onof ~~May 8~~2, ~~2025~~316,666) towards the ~~Petition~~aforementioned ~~was~~judgment. ~~confirmed~~A ~~for~~hearing ~~the~~on ~~amounts~~that ~~listed~~application ~~below, including interest~~is ~~from~~currently ~~the~~scheduled ~~date~~for ofJanuary ~~the~~20, ~~Arbitration Award~~2026.

~~On or about August 12, 2025, attorneys for Mr. Thomson served VTU with several collections~~-~~related discovery requests asking, inter alia, the company to identify assets and property that it holds. The company responded to these requests within the allotted time~~32-~~frame.~~

A reconciliation of the legal claim provision is provided in the table below:

	September 30, 2025			March 31, 2025
	December 31, 2025			March 31, 2025
Beginning of the year		8,948,085			9,921,298
Provision for legal claim		8,948,085			9,921,298
Payments in the year		-(1,121	)		(1,791,000	)
Interest		~~454~~693,~~253~~130			817,787
Balance, end of the period		9,~~402~~640,~~338~~094			8,948,085
Provision for legal claim		9,~~402~~640,~~338~~094			8,948,085

~~-29-~~23. SUBSEQUENT EVENTS

~~VERSES~~January 13, AI2026, ~~INC.~~the ~~Unaudited~~Company ~~Condensed~~granted ~~Consolidated~~61,230 ~~Interim~~RSUs ~~Statements~~to oftwo ~~Shareholders’~~independent ~~Deficiency~~contractors ~~For~~of the ~~three and six months ended September 30~~Company, ~~2025~~expiring ~~and 2024 (Expressed~~ in ~~United~~5 ~~States~~years, ~~dollars)~~vesting immediately.

20January 19, 2026, the Company entered into a loan agreement with Susie Zamora for $75,000. ~~SUBSEQUENT~~The ~~EVENTS~~loan bears interest rate of 15% and was repaid in full on Jan 26, 2026.

OnJanuary ~~October 1~~29, ~~2025~~2026, the Company granted 20450,000 ~~RSUs~~Options to ~~consultant “P” vesting on~~ the ~~grant date and 105,000 Option to the~~ consultants listed ~~bellow~~below at an exercise price of CAD$70.5587 ($50.4263 at balance sheet rate), vesting on the grant date, that expire 5 years after the date of grant.

● Consultant “E” 37,500 ● Consultant “F” 37,500 ● Consultant “P” 20,000 ● Consultant “I” 10,000

	●	Consultant “E” 250,000
	●	Consultant “F” 200,000

OnJanuary ~~October 1~~30, ~~2025~~2026, ~~what~~the ~~remains~~Company ~~subject~~entered tointo ~~shareholder~~a ~~approval,~~loan ~~the~~agreement ~~Company~~with ~~repriced~~Susie ~~849,263~~Zamora ~~outstanding~~for ~~Options~~$25,000. toThe ~~acquire~~loan ~~Class~~bears Ainterest ~~Common~~rate ~~shares~~ of ~~the~~15% ~~Company~~and towas annot repaid ~~exercise~~until ~~price~~the issuance of ~~CAD$7.55 ($5.42 at~~this ~~balance~~Condensed ~~sheet~~Consolidated ~~rate)~~Interim Financial Statements date.

~~Original~~February ~~vesting~~8, ~~terms~~2026, Gabriel Rene, the Company’s Chief Executive Officer and ~~expiry~~member ~~date~~of the Company’s board of directors, resigned his positions as Chief Executive Officer and as a director on the ~~repriced~~Company’s ~~stock~~board ~~options~~of ~~were~~directors, ~~maintained~~and ~~according~~the Company’s board of directors appointed David Scott, a current member of the Company’s board of directors, to serve and interim Chief Executive Officer while the ~~original~~Company’s ~~certificate~~board ~~agreement~~of directors conducts a search for a permanent replacement. Dan Mapes, President Emeritus and Global Brand Ambassador and director on the Company’s board of directors, also resigned his positions with the Company. The Company’s board merged the Chief Accounting Officer position with the Chief Financial Officer position, and consequently, Kevin Wilson, the Company’s Chief Accounting Officer and Corporate Secretary, is no longer employed by the Company. The responsibilities of Chief Accounting Officer will be assumed James Christodoulou, the Company’s Chief Financial Officer, and the responsibilities of Corporate Secretary will be assumed by Donald Moody, the Company’s General Counsel.

OnFebruary ~~October 1~~20, 2025, ~~the~~in ~~Company~~connection ~~cancelled~~with ofthe anBoard ~~aggregate~~Resolution ~~90,313 Options~~dated ~~and~~December 4630,~~296 RSUs~~ in2025 ~~accordance~~(Note ~~with~~7), ~~the~~148,150 ~~rescission~~shares ~~agreements~~issued asfrom ~~these~~vested ~~Options~~RSUs ~~and~~held ~~RSUs~~by certain weconsultants ~~initially~~were ~~granted~~canceled. Pursuant to ~~entities~~executed ~~and~~rescission ~~not~~agreements, ~~individuals~~all asvested ~~required~~shares previously issued upon settlement of RSUs were surrendered by the ~~Plan~~grantees and canceled without consideration.

A total of 90,313 Options (the “Replacement Options”) and 46,296 RSUs (the “Replacement RSUs”) were granted on the same date to individuals related to the original entities. Original vesting terms and exercise price Replacement Options and Replacement RSUs where maintained according to the original certificate agreement. The Replacement Options have a 5 year expiry.

	●	Consultant “E” - 74,075 shares
	●	Consultant “F” - 74,075 shares

On October 20, 2025, the Company learned that Philip Plough had filed a claim against XYZ Global Technologies Inc. (“XYZ”) for an alleged breach of a promissory note (“Note”) related to a $35,000 loan made in 2018, which also named VAI, one of its wholly-~~owned U.S. subsidiaries (VTU) and two directors/officers of the Company, as well as a law firm, Gresham International America LLC, as co~~33-defendants with XYZ Global Technologies Inc. The claim alleges, inter alia, breach of contract, fraudulent inducement, conversion, successor liability and unjust enrichment. The Plaintiff is seeking, subject to proof, $1,856,000 in compensatory damages for breach of contract, and any other punitive, exemplary, treble damages and attorneys’ fees, as the Court deems just and proper.

The Company, for its part, disputes any liability for a loan made to a separate company (XYZ) and if the action continues to be pursued, the Company will vigorously contest Mr. Plough’s claims, including seeking to dismiss VAI, VTU and the individual directors / officers.

As litigation is subject to many uncertainties, it is not possible to predict the ultimate outcome of this claim or to estimate the loss, if any, which may result. Accordingly, the outcome of the claim is not yet determinable, and the extent to which an outflow of funds may be required to settle this possible obligation cannot be reliably determined.

On October 31, 2025, the Company initiated a workforce reduction program designed to streamline operations, reduce costs, and strengthen the Company’s liquidity position. The program is a combination of targeted workforce reductions, furloughs, and executive salary deferrals.

On November 10, 2025, the Company closed a financing agreement with Sorbie Bornholm LP with a notional value of CAD$14,000,000 in exchange for the issuance of an aggregate of 2,660,000 Units, including finder’s fees. Each Unit consists of one Class A subordinated voting share (a “Common Share”) of the Company and one half warrant (each whole warrant, a “Warrant”), where each Warrant will entitle the holder to acquire one additional Common Share at an exercise price of CAD$7.00 for a period of 36 months from the closing of the Offering.

Upon closing, the Company received CAD$700,000 representing the first tranche of the Offering, and expects to receive eleven additional tranches expected to be paid monthly subject to the terms of the Sharing Agreement. The Sharing Agreement calculates each additional tranche, as CAD$1,209,091 times the percent increase or decrease between the benchmark price of CAD$7.75 and the trailing 20-day Value Weighted Average Price. The Company anticipates that the additional tranches will begin 30 days after closing and is responsible to pay 8% brokerage fee with each tranche.

The securities issued under the Offering are subject to a statutory hold period of four months plus a day from the date of issuance in accordance with applicable securities legislation in Canada.

-30-

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025 as may be amended, supplemented or superseded from time to time by other reports we file with the SEC. Unless stated otherwise or the context otherwise requires, in this Quarterly Report on Form 10-Q, references to “CAD$” are to Canadian dollars and references to “$” are to United States dollars. On ~~September~~December 3031, 2025, the noon buying rates in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York, referred to as the “Noon Buying Rate”, for the conversion of Canadian dollars into United States dollars was CAD$1.00 equals $0.~~7183~~7296.

Unless the context otherwise requires, references to “we”, “our”, “us”, the “Company” or “VERSES” mean Verses AI Inc. and its subsidiaries.

Overview

~~VERSES~~Verses is a cognitive computing company ~~specializing~~focused inon developing next generation artificial intelligence software, ~~systems.~~known Weas ~~are~~agentic ~~primarily~~AI, ~~focused~~that ~~on developing~~is andesigned ~~intelligence~~to support and improve decision making and take actions, we intend to license this software-as-a-service ~~smart~~to ~~software~~individuals ~~platform~~and companies. Our ~~business~~software is based on the ~~vision~~fundamental principles of neuroscience and the ~~“Spatial~~way ~~Web”~~that -the anhuman ~~open,~~brain learns and makes decisions ~~hyper-connected,~~in ~~context-aware,~~a ~~governance-based~~process ~~network~~known ofas ~~humans~~Active Inference, ~~machines~~which ~~and~~we ~~intelligent~~have ~~agents.~~configured Weto ~~also~~create ~~intend~~a toproprietary ~~build~~process. ~~tools~~Active ~~that~~inference focuses on making ~~enable~~predictions ~~the~~based ~~Spatial~~on ~~Web~~learning and todynamic ~~become~~reasoning afrom ~~leader~~new inand ~~the~~changing ~~transition~~information, ~~from~~unlike ~~the~~many ~~information~~existing ~~age~~AI toprocesses ~~the~~like ~~intelligence~~Large ~~age~~Language Models (LLMs) that rely solely on fixed rules, large amounts of historical data, or static models.

In early 2024, we launched a private beta program of our software ~~platform~~ with a few select users with whom we had existing business relationships., ~~During~~and during the second half of 2024, we launched a public beta program for a broader number of users and developers. In April 2025, we released our flagship product, an innovative agentic software platform called Genius, which uses our proprietary technology based Active Inference to support and improve domain-specific decision making by providing insight when where there is volatility, uncertainty, complexity, or ambiguity in the input data. Genius integrates key customer inputs with internally generated and externally sourced data to develop cause and effect models with explainable probabilistic projections, forecasts, and comparative results. The Company intends to continue to develop Genius to improve the ease of integrating Genius into a client’s existing technology stack, data architecture, governance, and workflows as well as increase its predictive accuracy, transparency, and auditability. To make Genius available to a larger universe of potential users, we offer a range of pricing packages that includes flat fee or profit share options, as well as variable pricing options based on complexity and usage criteria such as number of users, transactions, inferences, transactions, and input parameters.

OnBased ~~April~~on ~~30,~~user ~~2025,~~feedback weand ~~announced~~ the ~~commercial~~results ~~launch~~ of our ~~flagship~~beta ~~software platform~~program, ~~called~~we ~~Genius,~~have ~~which~~implemented isa ~~designed~~highly targeted a go-to-market ~~enable~~strategy ~~agentic intelligence~~which ~~for~~we ~~enterprises.~~call ~~Genius~~our “Lighthouse” isstrategy ~~designed~~that towill ~~provide~~initially ~~the~~focus ~~tools~~our ~~necessary~~efforts to ~~build~~license ~~domain-specific~~an ~~models~~enterprise ~~that~~version ~~are~~of ~~intended~~Genius to financial institutions ~~improve~~and ~~decision-making~~asset ~~(inference~~managers asthat amanage ~~service)~~more ~~for~~than ~~third-party~~$100 ~~agents~~million ~~through~~of ~~our~~assets ~~software~~under ~~development~~management ~~kits/application~~such ~~programming interfaces~~as pension funds and ~~model~~other ~~editor.~~institutional Wefund ~~are~~managers including: ~~implementing~~sovereign afunds, ~~“Lighthouse”~~insurance gocompanies, touniversity ~~market~~and ~~strategy~~other ~~that~~endowments, ~~will~~hedge ~~focus~~funds, onand ~~working~~family ~~with~~offices, aall ~~small~~of whom are estimated ~~number~~to collectively manage hundreds of ~~high-value,~~trillions ~~high-impact~~of ~~clients~~dollars in ~~sectors~~long-duration ~~where~~capital. ~~success~~Genius ~~will~~is ~~have~~designed ~~broad~~to ~~applicability,~~help ~~such~~these asfunds ~~financial~~improve ~~services, robotics,~~their ~~and~~performance ~~smart~~by ~~cities.~~integrating ~~Each~~their ~~client~~key ~~will~~internal ~~allow~~inputs ussuch toas ~~continue~~asset toperformance ~~develop~~assumptions, ~~and~~portfolio ~~validate~~constraints, ~~our~~and ~~Genius~~investment ~~model~~strategies, with ~~that~~third-party ~~can~~market, ~~then~~economic, beand ~~applied~~other data to ~~other~~developed ~~clients in~~structured ~~the~~and ~~same~~auditable ~~sector.~~multi-year ~~During~~investment ~~the~~risk ~~coming~~and ~~quarters~~return projections, probabilistic weforecasts, ~~plan~~and tocomparative ~~expand~~results ~~from~~based ~~these~~on ~~initial~~various ~~sectors~~asset ~~into others~~allocation, ~~such~~portfolio ~~logistics~~rebalancing, and ~~infrastructure management~~liquidity criteria.

Genius includes:

● Intelligent, autonomous software agents ● A visual model editor for building and testing AI models ● APIs to integrate with existing enterprise systems ● A full-featured developer portal for rapid deployment

Recent Developments

On July 11, 2025, the Company closed of a public offering of 1,007,764 units at $6.946 (CAD$9.50) per unit for gross proceeds of approximately $7,000,331 (CAD$9,573,758), before deducting commissions and expenses incurred in connection with the offering. Proceeds to the company after deducting commissions and expenses was $6,058,610. Each unit consists of one Class A Subordinate Voting Share (“Share”) of the Company and one-half of one Class A Subordinate Voting Share purchase warrant. Each whole warrant is exercisable to acquire one Class A Subordinate Voting Share at a price of $8.41 (CAD$11.50) per share for a period of 36 months from the date of issuance.

-31-

SELECTED FINANCIAL INFORMATION

FINANCIAL RESULTS FOR THE QUARTER ENDED SEPTEMBER 30, 2025, COMPARED TO THE QUARTER ENDED SEPTEMBER 30, 2024

	Quarter ended September 30,
	2025			2024			$ Change			% Change
REVENUE	$	100,700		$	155,000		$	(54,300	)		-35	%
COST OF REVENUE		(70,490	)		(145,000	)		74,510			-51	%
NET REVENUE		30,210			10,000			20,210			202	%
OPERATING EXPENSES
Cash expenses
Accounting fees		(229,873	)		(200,526	)		(29,347	)		15	%
Consulting fees		(777,873	)		(630,846	)		(147,027	)		23	%
Investor relations and marketing		(561,458	)		(1,401,530	)		840,072			-60	%
Legal fees		(663,861	)		(426,198	)		(237,663	)		56	%
Board fees		(60,556	)		(59,455	)		(1,101	)		2	%
Office and general		(636,611	)		(508,714	)		(127,897	)		25	%
Personnel expenses		(908,651	)		(908,304	)		(347	)		0	%
Rent		(5,849	)		(24,741	)		18,892			-76	%
Research and development		(4,242,443	)		(4,166,763	)		(75,680	)		2	%
Travel and meals		(122,542	)		(150,672	)		28,130			-19	%
		(8,209,717	)		(8,477,749	)		268,032			-3	%
Non-cash expenses
Depreciation		(22,503	)		(47,857	)		25,354			-53	%
Provision for contract settlement		-			-			-			N/A
Share based payments		(1,419,614	)		(1,740,224	)		320,610			-18	%
		(1,442,117	)		(1,788,081	)		345,964			-19	%
TOTAL EXPENSES		(9,651,834	)		(10,265,830	)		613,996			-6	%
OTHER ITEMS:
Grant income		17,720			56,034			(38,314	)		-68	%
Other income		103,288			35,147			68,141			194	%
Gain on derivative liability		-			2,464,873			(2,464,873	)		-100	%
Accretion expense		-			(411,813	)		411,813			-100	%
Interest expense		(7,278	)		(221,720	)		214,442			-97	%
Legal claim expense		(359,164	)		-			(359,164	)		N/A
Provision for losses on related party transactions		-			(235,413	)		235,413			-100	%
NET LOSS		(9,867,058	)		(8,568,722	)		(1,298,336	)		15	%
Loss Per Class A Subordinate Voting Shares - Basic and Diluted	$	(1.00	)	$	(1.48	)	$	0.49			-33	%
Loss Per Class B Proportionate Voting Shares - Basic and Diluted	$	(6.22	)	$	-		$	(6.22	)		N/A
Class A Subordinate Voting Shares Shares used in computing earnings per share - Basic and Diluted		9,861,001			5,780,312			4,080,689			71	%
Class B Proportionate Voting Shares Shares used in computing earnings per share - Basic and Diluted		8,726			-			8,726			N/A

	September 30, 2025			% of Revenue			September 30, 2024			% of Revenue			$ Change			% Change
REVENUE	$	100,700					$	155,000					$	(54,300	)		-35	%
COST OF REVENUE		(70,490	)		70	%		(145,000	)		94	%		74,510			-51	%
NET REVENUE		30,210			30	%		10,000			6	%		20,210			202	%

-32-

QUARTER ENDED SEPTEMBER 30, 2025, COMPARED TO THE QUARTER ENDED SEPTEMBER 30, 2024

Revenue was $100,700 for the quarter ended September 30, 2025, which consisted of revenue from our first Genius Platform customers. Revenue for the quarter ended September 30, 2024 was $155,000, which is related to the conclusion of a proof-of-concept project.

Cost of revenue consists of personnel and contractors’ costs directly related to the delivery of services to the customers. Cost of Revenue was $70,490 for the quarter ended September 30, 2025, which related to services provided to the customers referenced above. Cost of revenue for the quarter ended September 30, 2024 was $145,000, which is related to the conclusion of a proof-of-concept project. Costs of revenue as a percentage of revenue was 70% for the quarter ending September 30, 2025, compared to 94% for the quarter ending September 30, 2024, which reflects the economics associated with our core Genius Platform.

Net revenue represents the revenue minus the cost of revenue. Net revenue was $30,210 for the quarter ended September 30, 2025, compared to $10,000 reported in the quarter ended September 30, 2024. Net revenue as a percentage of revenue was 30% for the quarter ending September 30, 2025, compared to 6% for the quarter ending September 20, 2024, which reflects the economics associated with our core Genius Platform.

Operating expenses are allocated between cash and non-cash expenses. We allocated expenses on this basis to calculate and understand the Company’s cash flow from operations and liquidity, which we believe are important financial and operating metrics.

Cash expenses consist of the items below. Total Cash Expenses (“TCE”) decreased by $268,032, or 3%, to $8.21 million for the quarter ended September 30, 2025, compared to $8.48 million for the quarter ended September 30, 2024.

	September 30, 2025			% of TCE			September 30, 2024			% of TCE			$ Change			% Change
Cash expenses
Accounting fees		(229,873	)		3	%		(200,526	)		2	%		(29,347	)		15	%
Consulting fees		(777,873	)		9	%		(630,846	)		7	%		(147,027	)		23	%
Investor relations and marketing		(561,458	)		7	%		(1,401,530	)		17	%		840,072			-60	%
Legal fees		(663,861	)		8	%		(426,198	)		5	%		(237,663	)		56	%
Board fees		(60,556	)		1	%		(59,455	)		1	%		(1,101	)		2	%
Office and general		(636,611	)		8	%		(508,714	)		6	%		(127,897	)		25	%
Personnel expenses		(908,651	)		11	%		(908,304	)		11	%		(347	)		0	%
Rent		(5,849	)		0	%		(24,741	)		0	%		18,892			-76	%
Research and development		(4,242,443	)		52	%		(4,166,763	)		49	%		(75,680	)		2	%
Travel and meals		(122,542	)		1	%		(150,672	)		2	%		28,130			-19	%
Total Cash Expenses (TCE)		(8,209,717	)		100	%		(8,477,749	)		100	%		268,032			-3	%

Accounting Fees are related to accounting staff and external audit fees. Accounting fees increased by $29,347, or 15%, to $229,873 for the quarter ended September 30, 2025, compared to $200,529 for the quarter ended September 30, 2024. Accounting Fees were 3% of TCE for the quarter ended September 30, 2025, compared to 2% for the quarter ended September 30, 2024. The increase of $29,347 is primarily due to additional costs associated with translating our financial statements to USGAAP and complying with new SEC reporting requirements.

-33-

Consulting Fees are related to financial advisory and general consulting services. Consulting Fees increased by $147,027, or 23%, to $777,873 for the quarter ended September 30, 2025, compared to $630,846 for the quarter ended September 30, 2024. Consulting Fees were 9% of TCE for the quarter ended September 30, 2025, compared to 7% for the quarter ended September 30, 2024.

	○	Financial advisory services was $559,682 for the quarter ended September 30, 2025, compared to $543,966 for the quarter ended September 30, 2024. The increase of $15,716 is primarily due to less fees paid to financial advisors in connection with funds raised by the Company: The Company raised $6.06 million in net proceeds during the quarter ended September 30, 2025, compared to $3.37 million during the quarter ended September 30, 2024.
	○	General consulting services was $218,191 for the quarter ended September 30, 2025, compared to $86,880 for the quarter ended September 30, 2024. The increase of $131,311 is due to a new consulting agreement for market intelligence services ($53,780), a new administrative agreement to support operations in Europe ($38,012), and other general consulting services ($39,519).

Investor Relations and Marketing are related to messaging, marketing, and advertising of the Company and its products to potential users, to develop general Company and brand awareness as well as investor relations initiatives in media, roadshows, and on social media. Investor Relations and Marketing decreased by $840,072 or 60% to $561,458 for the quarter ended September 30, 2025, compared to $1.40 million for the quarter ended September 30, 2024. Investor Relations and Marketing was approximately 7% of TCE for the quarter ended September 30, 2025, compared to 17% for the quarter ended September 30, 2024.

These expenses are currently combined, as the initiatives to market the product and services of the Company and investment in the Company are intertwined and indistinguishable. As the Company begins to market its core products and services, marketing and investor relations expenses will be separated. The decrease in Investor Relations and Marketing is due to:

	○	Marketing and investor awareness decreased by $726,223 or 60% to $481,846 for the quarter ended September 30, 2025, compared to $1.21 million for the quarter ended September 30, 2024. The decrease is a result of fewer consultants engaged to perform marketing and investor awareness activities during the quarter ended September 30, 2025 compared to the quarter ended September 20, 2024.
	○	Business development decreased by $123,499 or 61% to $79,613 for the quarter ended September 30, 2025, compared to $203,112 for the quarter ended September 30, 2024. The decrease is a result of fewer consultants engaged to perform business development activities during the quarter ended September 30, 2025 compared to the quarter ended September 20, 2024.

Legal Fees are related to fees paid to external counsel in the US and Canada.

-34-

Our targeted ~~Legal~~financial ~~fees~~institutions ~~increased~~are ~~by $237~~high-value,~~663,~~ orhigh-impact ~~56%,~~entities tothat ~~$663~~manage large,~~861~~ ~~for~~diversified ~~the quarter~~portfolios ~~ended~~of ~~September~~various ~~30,~~asset ~~2025~~classes, and ~~compared~~Genius can assist their investment teams to ~~$426,198~~make ~~for~~class ~~the~~allocation ~~quarter~~decisions ~~ended~~that ~~September~~increase ~~30,~~returns ~~2024~~and manage risk. ~~Legal~~Genius ~~fees~~helps ~~represented~~investment teams 8%compare ofand ~~TCE~~optimize ~~for the~~various ~~quarter~~asset ~~ended~~allocation ~~September~~mixes ~~30,~~by ~~2025,~~projecting ~~compared~~how todifferent 5%mixes ~~for~~and ~~the~~different ~~quarter~~portfolio ~~ended~~strategies ~~September~~may ~~30,~~perform across ~~2024~~a range of scenarios. ~~The~~Each ~~increase~~target ofclient ~~$237,663~~will isprovide ~~primarily due~~us with real world results that will allow us to ~~increased~~continue ~~legal~~to ~~costs~~develop ~~associated~~and improve ~~with~~Genius that can then be applied to other clients in the ~~Company~~same ~~becoming~~sector aand Uother sectors.S. ~~SEC~~During ~~reporting~~the oncoming ~~April 1~~quarters, ~~2025~~we plan to expand from our initial target sector into others, ~~which~~such ~~requires~~as ~~additional~~robotics, ~~disclosure~~ logistics, and ~~reporting~~infrastructure management.

~~Board~~Recent Fees are related to costs associated with Board members. Board Fees increased by $1,101, or 2%, to $60,556 during the quarter ended September 30, 2025, compared to $59,455 for the quarter ended September 30, 2024. Board Fees were 1% of TCE for both quarters ended September 30, 2025 and September 30, 2024.The increase of $60,556 is due to increased fees paid to board members for the quarter ended September 30, 2025, compared to the quarter ended September 30, 2024.Developments

~~Office~~February ~~and~~8, ~~General~~2026, ~~Expenses~~Gabriel ~~are~~Rene, ~~related~~the toCompany’s ~~subscriptions,~~Chief ~~insurance,~~Executive ~~transaction~~Officer ~~fees,~~ and ~~general~~member ~~expenses~~ of the Company.’s ~~Office~~board ~~and~~of ~~general~~directors, resigned ~~expenses~~his ~~increased~~positions byas ~~$127,897,~~Chief orExecutive ~~25%,~~Officer toand ~~$636,611~~as ~~for~~a director on the ~~quarter~~Company’s ~~ended~~board ~~September~~of 30directors, ~~2025,~~and ~~compared~~the toCompany’s ~~$508~~board of directors appointed David Scott,~~714~~ ~~for~~a current member of the ~~quarter~~Company’s ~~ended September~~board 30of directors, ~~2024.~~to ~~Office~~serve and ~~General~~interim ~~Expenses~~Chief ~~was~~Executive 8%Officer while the Company’s board of ~~TCE~~directors conducts a search for ~~the~~a ~~quarter~~permanent ~~ended~~replacement. ~~September~~Dan 30Mapes, ~~2025,~~President ~~compared~~Emeritus toand 6%Global Brand ~~for~~Ambassador and director on the ~~quarter ended~~Company’s ~~September~~board 30of directors, ~~2024.~~also ~~The~~resigned ~~increase~~his ofpositions ~~$127~~with the Company,~~898~~ isand ~~primarily~~the ~~due~~Company’s board tomerged ~~higher~~the ~~Directors~~Chief Accounting Officer position with the Chief Financial Officer position, and ~~Officers~~consequently, ~~(“D&O”)~~Kevin ~~insurance~~Wilson, the Company’s ~~premium~~Chief ~~costs~~Accounting ofOfficer ~~$124~~and Corporate Secretary,~~904~~ ~~resulting~~is ~~from~~no ~~increased~~longer ~~coverage~~employed asby the Company. ~~became~~The aresponsibilities ~~U.S.~~of ~~SEC~~Chief ~~reporting~~Accounting onOfficer will ~~April~~be 1assumed James Christodoulou, ~~2025~~the Company’s Chief Financial Officer, ~~which~~and ~~requires~~the responsibilities of Corporate Secretary will ~~additional~~be ~~disclosure~~assumed ~~and~~by ~~reporting~~Donald Moody, the Company’s General Counsel.

~~Personnel~~December ~~expenses~~18, ~~are~~2025, ~~related~~the toCompany ~~general~~issued ~~and~~an ~~administrative~~aggregate ~~payroll~~of ~~costs.~~2,650 ~~Personnel~~secured ~~expenses~~convertible ~~increased~~debenture byunits ~~$347,~~(the “Debenture Units”) to an accredited investor in a private placement offering for an aggregate value of CAD$~~908~~2,~~651~~650,000 ~~for~~before ~~the~~transaction ~~quarter~~fees ~~ended~~and the exchange ~~September~~of ~~30,~~obligations ~~2025,~~of ~~compared~~or commitments by the Company to ~~$908,304~~the ~~for~~investor. Each Debenture Unit consists of one 15% senior secured convertible debenture (a “Debenture”) in the ~~quarter~~principal ~~ended~~amount ~~September~~of 30CAD$1,000 ~~2024~~and 164 detachable share purchase warrants (the “Debenture Warrants”). Each ~~Personnel~~Debenture ~~expenses~~Warrant ~~were~~is ~~11%~~exercisable for a period of ~~TCE~~three years from the date of issuance for ~~both~~one ~~quarters~~Class A Subordinate Voting Share ~~ended~~of ~~September~~the 30Company at an exercise price of CAD$7.00 per share. As a result, ~~2025~~the Company issued Debentures with an aggregate principal amount of CAD$2,650,000 and ~~September~~434,600 30Debenture Warrants in exchange for CAD$2,400,000 ~~2024~~cash after fees.

~~Rent~~The isDebenture ~~related~~will tomature ~~payments~~on ~~for~~December ~~office~~18, ~~and~~2027 ~~other~~(“Debenture ~~spaces~~Maturity ~~utilized~~Date”). byThe ~~the~~Debenture ~~Company.~~bears ~~Rent~~interest ~~decreased~~at bya ~~$18~~rate of 15% per annum,~~892,~~ ~~totaling~~payable $5in arrears on the earlier of conversion,~~849~~ ~~for~~prepayment, or the ~~quarter~~Maturity Date. Interest will be paid in either cash or, at ~~ended~~the ~~September~~option 30of the holder, ~~2025~~by the issuance of Class A Subordinate Voting Shares, ~~compared~~subject to ~~$24~~approval of Cboe Canada Inc.,~~741~~ ~~for~~whereby the interest ~~quarter~~on ~~ended~~the ~~September~~Debenture ~~30,~~will ~~2024~~be converted to Class A Subordinate Voting Share based on a conversion price of CAD$3.04 ~~Rent~~(the ~~expense~~“Debenture Conversion ~~accounted~~Price”). ~~for~~The ~~less~~Debenture ~~than~~will 1%rank senior to all other existing and future indebtedness of ~~TCE~~the Company and are secured ~~for~~by ~~both~~a ~~quarters~~first-ranking ~~ended~~security ~~September~~interest ~~30,~~over ~~2025~~all present and ~~September~~after-acquired ~~30,~~property ~~2024~~and assets of the Company.

~~Research~~At ~~and~~any ~~Development~~time ~~(R&D)~~during isthe ~~related~~term toof ~~payroll and contractor costs associated with developing~~ the ~~Company’s~~Debenture, ~~product.~~a ~~R&D~~holder ~~increased by~~thereof ~~$75,680,~~may orelect ~~2%,~~ to ~~$4.24~~convert ~~million for~~ the ~~quarter~~outstanding ~~ended~~principal ~~September~~and ~~30,~~any ~~2025,~~accrued ~~compared~~and ~~to $4.17 million for the quarter ended September~~unpaid ~~30,~~interest ~~2024.~~thereon ~~R&D~~into ~~was~~Class ~~52%~~A ofSubordinate ~~TCE~~Voting ~~for~~Share ~~the~~at ~~quarter ended September 30, 2025, compared to 49% for~~ the ~~quarter~~Conversion ~~ended September 30, 2024~~Price. The ~~increase~~proceeds of ~~$75,680 is primarily due to~~ the ~~higher~~offering ~~salaries~~of ~~and fees paid to personnel for~~ the ~~quarter~~Debenture ~~ended~~Units ~~September 30, 2025,~~are ~~compared~~expected to ~~the~~be ~~salaries~~used ~~and fees paid to personnel~~ for ~~the~~general ~~quarter~~working ~~ended~~capital ~~September 30, 2024~~purposes.

~~Travel~~November ~~and~~10, ~~Meals~~2025, ~~are~~the ~~related~~Company toclosed ~~expenses~~a ~~related~~financing toagreement ~~meals~~with Sorbie Bornholm LP for a notional value of CAD$14,000,000 ~~airfare~~in exchange for the issuance of an aggregate of 2,333,334 ~~transportation~~units, ~~and~~including ~~other~~finder’s ~~related expenses~~fees. ~~Travel~~Each ~~and~~such ~~Meals~~unit ~~decreased~~(the by“Sorbie Units”) consists ~~$28~~of one Class A subordinated voting share of the Company and one-half warrant (each whole warrant,~~132,~~ ora ~~19%~~“Sorbie Warrant”), where each Sorbie Warrant will entitle the holder to acquire one additional common share of the Company at an exercise price of CAD$~~122,542~~7.00 for a period of 36 months from the ~~quarter~~closing ~~ended~~of ~~September~~this ~~30,~~offering. ~~2025,~~In ~~compared~~addition to ~~$150~~the 2,~~672~~333,334 ~~for~~Sorbie ~~the~~Units ~~quarter~~described ~~ended~~above, ~~September~~at 30closing, ~~2024.~~the Company ~~Travel~~issued ~~and~~an ~~Meals~~additional ~~remained~~140,000 ~~consistent~~Sorbie Units at ~~approximately~~a 1price of CAD$6.~~5-2%~~00 per Unit in satisfaction of ~~cash~~a ~~expenses~~corporate ~~for~~finance ~~both~~fee ~~periods.~~of CAD$840,000

~~NON-CASH~~Upon ~~EXPENSES~~closing, –the ~~Consisted~~Company ofreceived ~~the~~CAD$700,000 ~~items~~representing ~~below.~~the ~~Non-Cash~~first ~~Expenses~~tranche ~~decreased~~of bythis ~~$345~~offering,~~964,~~ orand ~~19%~~expects to receive eleven Sharing Agreement (defined herein) tranches, expected to $1be paid periodically,44 ~~million~~subject ~~for~~to the ~~quarter~~terms of the Sharing Agreement. The Sharing Agreement calculates ~~ended~~each ~~September~~additional 30tranche, ~~2025~~as CAD$1,209,091 ~~compared~~times tothe percent increase or decrease between the benchmark price of CAD$17.7975 ~~million~~and ~~for~~ the ~~quarter~~trailing 20-day ~~ended~~value ~~September~~weighted ~~30,~~average ~~2024~~price. The Company is responsible to pay 8% brokerage fee with each tranche.

	September 30, 2025			% of TNCE			September 30, 2024			% of TNCE			$ Change		% Change
Non-cash expenses
Depreciation		(22,503	)		2	%		(47,857	)		3	%		25,354		-53	%
Share based payments		(1,419,614	)		98	%		(1,740,224	)		97	%		320,610		-18	%
Total Non Cash Expenses (TNCE)		(1,442,117	)		100	%		(1,788,081	)		100	%		345,964		-19	%

-35-

~~Depreciation~~For isSharing ~~related~~Agreement tranches to ~~the~~be ~~decrease~~paid, inSorbie ~~the~~must ~~useful~~have ~~life~~freely oftrading ~~computer~~shares ~~and~~without ~~other~~a ~~equipment.~~restrictive ~~Depreciation~~legend, ~~decreased~~currently bythe ~~$25,354,~~securities issued orunder ~~53%,~~this tooffering ~~$22,503 for~~are ~~the~~not ~~quarter~~freely ~~ended~~trading ~~September~~and ~~30,~~are ~~2025,~~subject ~~compared~~ to ~~$47,857~~a ~~for~~statutory ~~the~~hold ~~quarter~~period ~~ended~~of ~~September~~four ~~30,~~months ~~2024.~~plus ~~The~~a ~~decrease~~day ~~for~~from the ~~quarter~~date ~~ended~~of ~~September~~issuance ~~30,~~in ~~2025~~accordance iswith ~~due~~applicable tosecurities ~~certain~~legislation ~~assets~~in ~~reaching the end of their three-year useful life~~Canada.

~~Share~~SELECTED ~~based~~FINANCIAL payments are related to the Black-Scholes valuation and vesting of stock options (“Options”) and Restricted Share Units (RSUs) granted to the Company’s employees, contractors, and consultants. Share-based payments decreased by $320,610, or 18%, to $1.42 million for the quarter ended September 30, 2025, compared to $1.74 million for the quarter ended September 30, 2024. This decrease is primarily due to the decline in the fair value of RSUs, which are tied to the Class A Subordinate Voting Share price as of the balance sheet date for the quarter ended September 30, 2025, compared to the quarters ended September 30, 2024. The decrease during the quarter ended September 30, 2025 was partially offset by a higher number of Options granted during the quarter ended September 30, 2025. For a detailed breakdown of the changes, please refer to the table below.INFORMATION

Share based payments	Stock Options			RSUs			Total
Previous years graded vesting		139,476			-			139,476
Previous years RSUs revaluation		-			(99,082	)		(99,082	)
New grants Q1 2025		2,491			(10,227	)		(7,736	)
New grants Q2 2025		1,027,452			805,735			1,833,187
Cancelled options		(125,621	)		-			(125,621	)
Balance, September 30, 2024	$	1,043,798		$	696,426		$	1,740,224
Previous years graded vesting		289,706			-			289,706
Previous years RSUs revaluation		-			(1,350,582	)		(1,350,582	)
New grants Q2 2026		2,118,326			8,616			2,126,942
Cancelled options		123,057			-			123,057
RSU milestone conversion		-			230,491			230,491
Balance, September 30, 2025	$	2,531,089		$	(1,111,475	)	$	1,419,614

FINANCIAL RESULTS FOR THE QUARTER ENDED DECEMBER 31, 2025, COMPARED TO THE QUARTER ENDED DECEMBER 31, 2024

Total Operating expenses decreased by $613,995, or 6%, to $9.65 million for the quarter ended September 30, 2025, compared to $10.27 million for the quarter ended September 30, 2024. The decrease during the quarter ended September 30, 2025 is primarily due to $320,610 in non-cash expenses associated with share based payments during the quarter ended September 30, 2025, as well as a decrease in expenses associated with investor relations and marketing, which decreased by $840,072. The decrease during the quarter ended September 30, 2025 was partially offset by increases in legal fees ($237,663), consulting fees ($147,027), and Office and General expenses ($127,898) during the quarter ended September 30, 2025.

	Quarter ended December 31,
	2025			2024			$ Change			% Change
REVENUE	$	417,932		$	-		$	417,932			N/A
COST OF REVENUE (excluding depreciation)		(292,552	)		-			(292,552	)		N/A
GROSS PROFIT		125,380			-			125,380			N/A
OPERATING EXPENSES
Cash expenses
Accounting fees		(61,755	)		(77,957	)		16,202			-21	%
Consulting fees		(382,808	)		(419,854	)		37,046			-9	%
Investor relations and marketing		(174,201	)		(1,250,035	)		1,075,834			-86	%
Legal fees		(236,549	)		(202,403	)		(34,146	)		17	%
Board fees		(81,568	)		(49,753	)		(31,815	)		64	%
Office and general		(506,617	)		(475,807	)		(30,810	)		6	%
Personnel expenses		(738,472	)		(768,718	)		30,246			-4	%
Rent		(5,208	)		(15,408	)		10,200			-66	%
Research and development		(3,318,796	)		(2,984,580	)		(334,216	)		11	%
Travel and meals		(58,060	)		(77,026	)		18,966			-25	%
		(5,564,034	)		(6,321,541	)		757,507			-12	%
Non-cash expenses
Depreciation		(24,514	)		(44,181	)		19,667			-45	%
Provision for contract settlement		-			-			-			N/A
Share based payments		53,805			(6,893,858	)		6,947,663			-101	%
		29,291			(6,938,039	)		6,967,330			-100	%
TOTAL EXPENSES		(5,534,743	)		(13,259,580	)		7,724,837			-58	%
OTHER ITEMS:
Grant income		128,430			42,071			86,359			205	%
Other income		6,297			18,056			(11,759	)		-65	%
Loss on derivative liability		-			(3,010,994	)		3,010,994			-100	%
Accretion expense		(3,155	)		(265,356	)		262,201			-99	%
Interest expense		(13,037	)		(251,962	)		238,925			-95	%
Legal claim expense		(185,833	)		-			(185,833	)		N/A
Provision for losses on related party transactions		-			(83,285	)		83,285			-100	%
NET LOSS		(5,476,661	)		(16,811,050	)		11,334,389			-67	%
Loss Per Class A Subordinate Voting Shares - Basic and Diluted	$	(0.47	)	$	(2.63	)	$	2.16			-82	%
Loss Per Class B Proportionate Voting Shares - Basic and Diluted	$	(2.94	)	$	-		$	(2,94	)		N/A
Class A Subordinate Voting Shares used in computing earnings per share - Basic and Diluted		11,253,519			6,386,293			4,867,226			76	%
Class B Proportionate Voting Shares used in computing earnings per share - Basic and Diluted		61,082			-			61,082			N/A

Other Items consisted of the items below. Other Items resulted in a loss of $245,434 for the quarter ended September 30, 2025, compared to a gain of $1.68 million for the quarter ended September 30, 2024.

	September 30, 2025			% TOI			September 30, 2024			% TOI			$ Change			% Change
OTHER ITEMS:
Grant income		17,720			-7	%		56,034			3	%		(38,314	)		-68	%
Other income		103,288			-42	%		35,147			2	%		68,141			194	%
Gain on derivative liability		-			0	%		2,464,873			146	%		(2,464,873	)		-100	%
Accretion expense		-			0	%		(411,813	)		-24	%		411,813			-100	%
Interest expense		(7,278	)		3	%		(221,720	)		-13	%		214,442			-97	%
Legal claim expense		(359,164	)		146	%		-			0	%		(359,164	)		N/A
Provision for losses on related party transactions		-			0	%		(235,413	)		-14	%		235,413			-100	%
Total Other Items (TOI)		(245,434	)		100	%		1,687,108			100	%		(1,932,542	)		-115	%

Grant Income is related to reimbursing expenses for amounts spent on project activities related to the grant agreement with Horizon Europe, which is a program delegated by the European Commission. Grant income was $17,720 for the quarter ended September 30, 2025, compared to $56,034 for the quarter ended September 30, 2024. This project is expected to end in August 2026.

-36-

~~Other~~QUARTER ~~Income~~ENDED isDECEMBER ~~related to R&D tax credits and interest received from interest-bearing bank accounts. Other income increased $68~~31,~~141~~ ~~to $103,288 for the quarter ended September 30,~~ 2025, ~~compared~~COMPARED toTO ~~$35,147~~THE ~~for~~QUARTER ~~the~~ENDED ~~quarter~~DECEMBER ~~ended September 30~~31, 2024~~. This increase is primarily due to $65,679 of R&D tax credits received during the quarter ended September 30, 2025.~~

Gain on derivative liability is the result of measuring the derivative liability embedded in the convertible debenture using the Monte-Carlo binomial. Changes in the estimates for the quarter ended September 30, 2024, resulted in a gain on the fair value of derivative liability of the convertible debenture of $2,464,873. There was no such expense during the quarter ended September 30, 2025.

	December 31, 2025			% of Revenue			December 31, 2024		% of Revenue			$ Change			% Change
REVENUE	$	417,932					$	-				$	417,932			N/A
COST OF REVENUE (excluding depreciation)		(292,552	)		70	%		-		0	%		(292,552	)		N/A
GROSS PROFIT		125,380			30	%		-		0	%		125,380			N/A

~~Accretion~~Revenue ~~Expense~~was is$417,932 ~~related~~for to the ~~increase~~quarter inended ~~the~~December ~~carrying~~31, ~~value~~2025, ofwhich ~~the~~consisted ~~discounted~~of ~~value~~revenue offrom ~~the~~a ~~convertible~~Genius ~~debenture~~Platform ~~converted~~customer in($385,250) ~~2025.~~and ~~There~~subscriptions ~~was~~to ~~no accretion expense for~~ the ~~quarter~~Genius ~~ended~~platform ~~September 30~~($32,682). ~~2025,~~We ~~compared~~did tonot angenerate ~~expense~~revenue ~~of $411,813~~ for the quarter ended ~~September 30~~December 31, 2024.

~~Interest~~Cost ~~Expense~~of isrevenue ~~related~~consists ~~to interest incurred in the conversion~~ of ~~the~~personnel ~~convertible debenture converted in 2025, interest incurred in the loan payable,~~ and ~~the~~contractors’ ~~interest~~costs directly related to the ~~financing~~delivery of ~~the~~services ~~director’s~~to ~~and~~the ~~officer’s insurance~~customers. ~~Interest~~Cost ~~expense decreased~~of ~~$214,442,~~Revenue orwas ~~97%, to~~ $7292,~~278~~552 for the quarter ended ~~September~~December 3031, 2025, ~~compared~~which relates to anthe ~~expense~~revenue referenced above. We did not incur any Cost of ~~$221,720~~revenue for the quarter ended ~~September 30~~December 31, 2024. ~~This~~as ~~decrease~~we isdid ~~primarily~~not ~~due~~generate toany ~~the~~revenue ~~conversion~~for that period. Cost of ~~the~~revenue ~~convertible~~as ~~debenture~~a ~~during~~percentage of revenue was 70% for the quarter ended ~~September~~December 3031, ~~2024~~2025.

~~Legal~~Gross ~~Claim~~profit ~~Expense~~represents revenue minus the cost of revenue. Gross profit was $~~359~~125,~~164~~380 for the quarter ended ~~September~~December 3031, 2025,. ~~compared~~We todid ~~nil~~not ~~for~~generate any net revenue the quarter ended ~~September~~December 3031, 2024. ~~This~~as ~~amount is~~we ~~interest~~did ~~accrued~~not ingenerate ~~connection~~any ~~with~~revenue ~~the~~or ~~David~~incur ~~Thomson~~any ~~arbitration~~cost ~~award,~~of ~~which~~revenue ~~was~~for ~~confirmed~~that ~~by the Los Angeles Superior Court in~~period. ~~the~~Gross ~~quarter~~profit ~~ended~~as ~~June~~a ~~30,~~percentage ~~2025.~~of ~~There~~revenue was no30% ~~such~~for ~~expense in~~ the quarter ended ~~September~~December 3031, ~~2024~~2025.

~~Provision~~Operating ~~for~~expenses ~~Loss~~are allocated between cash and non-cash expenses. We allocate expenses on ~~Related~~this ~~Party~~basis ~~Transactions~~to ~~was~~calculate ~~$235,413~~and ~~for~~understand the ~~quarter~~Company’s cash ~~ended~~flow ~~September~~from ~~30,~~operations ~~2024.~~and ~~There~~liquidity, ~~was~~which nowe ~~provision~~believe ~~for~~are ~~the~~important ~~quarter ended~~financial ~~September~~and ~~30,~~operating ~~2025~~metrics.

The provision for loss on related party transactions includes amounts due from Cyberlab LLC (“Cyberlab”) and the Spatial Web Foundation (“SWF”), entities controlled or associated with the Company’s founders, Dan Mapes and Gabriel Rene.

	●	The related expenses arose primarily from payments made by the Company on behalf of these related parties to third-party vendors.
	●	Although these amounts are expected to be settled through future service agreements, management performed a credit assessment in accordance with the current expected credit loss (“CECL”) model under ASC 326. Based on this assessment, management determined that there is significant uncertainty regarding the timing and collectability of these receivables. As of September 30, 2025, management concluded that full repayment is not probable within a reasonable timeframe.

Net Loss increased by $1.30 million, or 15%, to $9.87 million for the quarter ended September 30, 2025, compared to a net loss of $8.57 million for the quarter ended September 30, 2024.

-37-

~~FINANCIAL~~Cash ~~RESULTS~~expenses ~~FOR~~consist ~~THE~~of ~~SIX~~the ~~MONTHS~~items ~~ENDED~~below. ~~SEPTEMBER~~Total 30Cash Expenses (“TCE”) decreased by $757,507, or 12%, to $5.56 million for the quarter ended December 31, 2025, ~~COMPARED~~compared TOto ~~THE~~$6.32 ~~SIX~~million ~~MONTHS~~for ~~ENDED~~the ~~SEPTEMBER~~quarter 30ended December 31, 2024.

SELECTED FINANCIAL INFORMATION

	December 31, 2025			% of TCE			December 31, 2024			% of TCE			$ Change			% Change
Cash expenses
Accounting fees		(61,755	)		1	%		(77,957	)		1	%		16,202			-21	%
Consulting fees		(382,808	)		7	%		(419,854	)		7	%		37,046			-9	%
Investor relations and marketing		(174,201	)		3	%		(1,250,035	)		20	%		1,075,834			-86	%
Legal fees		(236,549	)		4	%		(202,403	)		3	%		(34,146	)		17	%
Board fees		(81,568	)		1	%		(49,753	)		1	%		(31,815	)		64	%
Office and general		(506,617	)		9	%		(475,807	)		8	%		(30,810	)		6	%
Personnel expenses		(738,472	)		13	%		(768,718	)		12	%		30,246			-4	%
Rent		(5,208	)		0	%		(15,408	)		0	%		10,200			-66	%
Research and development		(3,318,796	)		60	%		(2,984,580	)		47	%		(334,216	)		11	%
Travel and meals		(58,060	)		1	%		(77,026	)		1	%		18,966			-25	%
Total Cash Expenses (TCE)		(5,564,034	)		100	%		(6,321,541	)		100	%		757,507			-12	%

	Six months ended September 30,
	2025			2024			$ Change			% Change
REVENUE	$	400,700		$	155,000		$	245,700			159	%
COST OF REVENUE		(254,551	)		(145,000	)		(109,551	)		76	%
NET REVENUE		146,149			10,000			136,149			1361	%
OPERATING EXPENSES
Cash expenses
Accounting fees		(392,360	)		(350,407	)		(41,953	)		12	%
Consulting fees		(1,494,960	)		(1,793,016	)		298,056			-17	%
Investor relations and marketing		(2,191,491	)		(2,867,059	)		675,568			-24	%
Legal fees		(1,479,224	)		(864,112	)		(615,112	)		71	%
Board fees		(119,342	)		(84,581	)		(34,761	)		41	%
Office and general		(1,097,098	)		(940,979	)		(156,119	)		17	%
Personnel expenses		(1,877,672	)		(1,762,012	)		(115,660	)		7	%
Rent		(37,374	)		(60,079	)		22,705			-38	%
Research and development		(8,543,836	)		(8,261,915	)		(281,921	)		3	%
Travel and meals		(271,207	)		(275,036	)		3,829			-1	%
		(17,504,564	)		(17,259,196	)		(245,368	)		1	%
Non-cash expenses
Depreciation		(45,894	)		(93,907	)		48,013			-51	%
Provision for contract settlement		-			(1,252,076	)		1,252,076			-100	%
Share based payments		(2,090,255	)		(1,961,724	)		(128,531	)		7	%
		(2,136,149	)		(3,307,707	)		1,171,558			-35	%
TOTAL EXPENSES		(19,640,713	)		(20,566,903	)		926,190			-5	%
OTHER ITEMS:
Grant income		81,909			56,034			25,875			46	%
Other income		501,261			49,970			451,291			903	%
Gain on derivative liability		-			2,464,873			(2,464,873	)		-100	%
Accretion expense		-			(453,839	)		453,839			-100	%
Interest expense		(12,254	)		(293,038	)		280,784			-96	%
Legal claim expense		(582,253	)		-			(582,253	)		N/A
Provision for losses on related party transactions		-			(396,524	)		396,524			-100	%
NET LOSS		(19,505,901	)		(19,129,427	)		(376,474	)		2	%
Loss Per Class A Subordinate Voting Shares - Basic and Diluted	$	(2.12	)	$	(3.90	)	$	1.78			-46	%
Loss Per Class B Proportionate Voting Shares - Basic and Diluted	$	(13.26	)	$	-		$	(13.26	)		N/A
Class A Subordinate Voting Shares Shares used in computing earnings per share - Basic and Diluted		9,166,869			4,905,748			4,261,121			87	%
Class B Proportionate Voting Shares Shares used in computing earnings per share - Basic and Diluted		4,363			-			4,363			N/A

Accounting Fees are related to accounting staff and external audit fees. Accounting fees decreased by $16,202, or 21%, to $61,755 for the quarter ended December 31, 2025, compared to $77,957 for the quarter ended December 31, 2024. Accounting Fees were 1% of TCE for the quarter ended December 31, 2025, compared to 1% for the quarter ended December 31, 2024. The decrease of $16,202 is primarily due lower assurance costs compared to the quarter ended December 31, 2024.

	September 30, 2025			% of Revenue			September 30, 2024			% of Revenue			$ Change			% Change
REVENUE	$	400,700					$	155,000					$	245,700			159	%
COST OF REVENUE		(254,551	)		64	%		(145,000	)		94	%		(109,551	)		76	%
NET REVENUE		146,149			36	%		10,000			6	%		136,149			1361	%

Consulting Fees are related to financial advisory and general consulting services. Consulting Fees decreased by $37,046, or 9%, to $382,808 for the quarter ended December 31, 2025, compared to $419,854 for the quarter ended December 31, 2024. Consulting Fees were 7% of TCE for both periods.

	○	Financial advisory services was $192,488 for the quarter ended December 31, 2025, compared to $237,867 for the quarter ended December 31, 2024. The decrease of $45,379 is primarily due to less fees paid to financial advisors in connection with funds raised by the Company: The Company raised $2.31 million in net proceeds during the quarter ended December 31, 2025, compared to $4.01 million during the quarter ended December 31, 2024.
	○	General consulting services was $190,320 for the quarter ended December 31, 2025, compared to $181,987 for the quarter ended December 31, 2024. The increase of $8,333 is primarily due to a consulting firm hired to provide business and technology insights ($40,432) during the nine months ended December 31, 2025.

Investor Relations and Marketing are related to messaging, marketing, and advertising of the Company and its products to potential users, to develop general Company and brand awareness as well as investor relations initiatives in media, roadshows, and on social media. Investor Relations and Marketing decreased by $1.08 million or 86% to $174,201 for the quarter ended December 31, 2025, compared to $1.25 million for the quarter ended December 31, 2024. Investor Relations and Marketing was approximately 3% of TCE for the quarter ended December 31, 2025, compared to 20% for the quarter ended December 31, 2024.

	○	Marketing and investor awareness decreased by $668,812 or 79% to $173,201 for the quarter ended December 31, 2025, compared to $843,013 for the quarter ended December 31, 2024. The decrease is a result of fewer consultants engaged to perform marketing and investor awareness activities during the quarter ended December 31, 2025 compared to the quarter ended December 31, 2024.
	○	Business development decreased by $407,022 or 100% to $Nil for the quarter ended December 31, 2025, compared to $407,022 for the quarter ended December 31, 2024. The decrease is a result of fewer consultants engaged to perform business development activities during the quarter ended December 31, 2025 compared to the quarter ended December 31, 2024.

-38-

~~SIX~~Legal ~~MONTHS~~Fees ~~ENDED~~are ~~SEPTEMBER~~related ~~30,~~to ~~2025,~~fees ~~COMPARED~~paid TOto ~~THE~~external ~~SIX~~counsel ~~MONTHS~~in ~~ENDED~~the ~~SEPTEMBER~~US ~~30,~~and ~~2024~~Canada.

~~Revenue~~Legal ~~was~~fees increased by $~~400~~34,~~700~~146, or 17%, to $236,549 for the ~~six~~quarter ~~months~~ ended ~~September~~December 3031, 2025, ~~which~~compared ~~consisted~~to of$202,403 ~~revenue~~for ~~from~~the ~~our~~quarter ~~first~~ended ~~Genius~~December 31, ~~Platform customers~~2024. ~~Revenue~~ Legal fees represented 4% of TCE for the ~~six~~quarter ~~months~~ ended ~~September~~December 3031, 2025 compared to 3% for the quarter ended December 31, 2024. ~~was~~The increase of $~~155~~34,~~000,~~146 ~~which~~ is ~~related~~primarily due to increased legal costs associated with the ~~conclusion~~Company ofbecoming a ~~proof-of-concept~~U.S. ~~project~~SEC reporting on April 1, 2025, which requires additional disclosure and reporting.

~~Cost~~Board ofFees ~~revenue~~are ~~consists~~related ofto ~~personnel~~costs ~~and~~associated ~~contractors’~~with ~~costs~~Board ~~directly~~members. ~~related~~Board toFees ~~the~~increased ~~delivery~~by of$31,815, ~~services~~or 64%, to ~~the~~$81,568 ~~customers.~~during ~~Cost~~the ofquarter ended ~~Revenue~~December ~~was~~31, 2025, compared to $~~254~~49,~~551~~753 for the ~~six~~quarter ~~months~~ ended ~~September~~December 3031, ~~2025,~~2024. ~~which~~Board ~~related~~Fees towere ~~services~~1% ~~provided~~of toTCE for the ~~customers~~quarter ~~referenced~~ended ~~above.~~December ~~Cost~~31, of2025 ~~revenue~~and for the ~~six~~quarter ~~months~~ ended ~~September~~December 3031, 2024. ~~was~~The increase of $~~145~~31,~~000,~~815 ~~which~~ is ~~related~~due to ~~the~~increased ~~conclusion~~fees ofpaid ato ~~proof-of-concept~~board ~~project. Costs~~members ~~of revenue as a percentage of revenue was 64%~~ for the quarter ~~ending~~ended ~~September~~December 3031, 2025, compared to ~~94% for~~ the quarter ~~ending September~~ended ~~30,~~December ~~2024~~31, ~~which reflects the economics associated with our core Genius Platform~~2024.

~~Net~~Office ~~revenue~~and ~~represents~~General ~~the~~Expenses ~~revenue~~are ~~minus~~related ~~the~~to ~~cost~~subscriptions, insurance, transaction fees, and general expenses of ~~revenue~~the Company. ~~Net~~Office ~~revenue~~and ~~was~~general expenses increased by $~~146~~30,~~149~~810, or 6%, to $506,617 for the ~~six~~quarter ~~months~~ ended ~~September~~December 3031, 2025, compared to $10475,~~000~~807 ~~reported~~ for the ~~six~~quarter ~~months~~ ended December ~~September 30~~31, 2024. ~~Net~~Office ~~revenue~~and asGeneral aExpenses ~~percentage of revenue~~ was 369% of TCE for the quarter ~~ending September~~ended 30December 31, 2025, compared to 68% for the quarter ended ~~ending~~December ~~September 20~~31, 2024. The increase of $30,810 ~~which~~is ~~reflects~~primarily due to higher Directors and Officers (“D&O”) insurance premium costs of $123,424 resulting from increased coverage as the ~~economics~~Company ~~associated~~became ~~with~~a ~~our~~U.S. ~~core~~SEC ~~Genius~~reporting on April 1, 2025, which requires ~~Platform~~additional disclosure and reporting.

~~Operating~~Personnel expenses are ~~allocated~~related ~~between~~to ~~cash~~general and ~~non-cash~~administrative ~~expenses.~~payroll Wecosts, ~~allocated~~including benefits and payroll taxes. Personnel expenses ondecreased by ~~this~~$30,246, ~~basis~~or 4%, to ~~calculate~~$738,472 ~~and~~for ~~understand~~the quarter ended December 31, 2025, compared to $768,718 for the ~~Company’s~~quarter ended December 31, 2024. ~~cash~~Personnel ~~flow~~expenses ~~from~~were ~~operations~~13% ~~and~~of ~~liquidity~~TCE for the quarter ended December 31, ~~which~~2025, wecompared ~~believe~~to ~~are~~12% ~~important~~for ~~financial~~the ~~and~~quarter ~~operating~~ended ~~metrics~~December 31, 2024. The decrease is primarily due to the workforce reduction that was implemented on October 31, 2025.

~~Cash~~Rent is ~~expenses~~related ~~consist~~to ofpayments ~~the~~for ~~items~~office ~~below. Total~~and ~~Cash~~other ~~Expenses~~spaces ~~(“TCE”)~~utilized ~~increased~~by the Company. Rent decreased by $~~245~~10,~~368~~200, or 166%, to $~~17.50~~5,208 ~~million~~ for the ~~six months~~ quarter ended ~~September~~December 3031, 2025, compared to $1715,408 for the quarter ended December 31, 2024.26 ~~million~~Rent expense accounted for less than 1% of TCE for the ~~six~~quarter ~~months~~ended December 31, 2025 and for the quarter ended ~~September~~December 3031, 2024.

Research and Development (R&D) is related to payroll and contractor costs associated with developing the Company’s product. R&D increased by $334,216, or 11%, to $3.32 million for the quarter ended December 31, 2025, compared to $2.98 million for the quarter ended December 31, 2024. R&D was 59% of TCE for the quarter ended December 31, 2025, compared to 47% for the quarter ended December 31, 2024. The increase of $334,216 is primarily due to the higher salaries and fees paid to personnel for the quarter ended December 31, 2025, compared to the salaries and fees paid to personnel for the quarter ended December 31, 2024.

Travel and Meals are related to expenses related to meals, airfare, transportation, and other related expenses. Travel and Meals decreased by $18,966, or 25%, to $58,060 for the quarter ended December 31, 2025, compared to $77,026 for the quarter ended December 31, 2024. Travel and Meals were approximately 1% of TCE for the quarter ended December 31, 2025 and for the quarter ended December 31, 2024.

-39-

	September 30, 2025			% of TCE			September 30, 2024			% of TCE			$ Change			% Change
Cash expenses
Accounting fees		(392,360	)		2	%		(350,407	)		2	%		(41,953	)		12	%
Consulting fees		(1,494,960	)		9	%		(1,793,016	)		10	%		298,056			-17	%
Investor relations and marketing		(2,191,491	)		13	%		(2,867,059	)		17	%		675,568			-24	%
Legal fees		(1,479,224	)		8	%		(864,112	)		5	%		(615,112	)		71	%
Board fees		(119,342	)		1	%		(84,581	)		0	%		(34,761	)		41	%
Office and general		(1,097,098	)		6	%		(940,979	)		5	%		(156,119	)		17	%
Personnel expenses		(1,877,672	)		11	%		(1,762,012	)		10	%		(115,660	)		7	%
Rent		(37,374	)		0	%		(60,079	)		0	%		22,705			-38	%
Research and development		(8,543,836	)		49	%		(8,261,915	)		48	%		(281,921	)		3	%
Travel and meals		(271,207	)		2	%		(275,036	)		2	%		3,829			-1	%
Total Cash Expenses (TCE)		(17,504,564	)		100	%		(17,259,196	)		100	%		(245,368	)		1	%

NON-CASH EXPENSES – Consisted of the items below. Non-Cash Expenses decreased by $6.97 million, or 100%, to non-cash income of $29,291 for the quarter ended December 31, 2025, compared to non-cash expense of $6.94 million for the quarter ended December 31, 2024. The decrease of non-cash expense of $6,97 million to create non-cash income of $29,291, is primarily due to a reduction in the value of the RSUs, which are tied to the Class A Subordinate Voting Share price as of the balance sheet date for the quarter ended December 31, 2025, compared to the quarters ended December 31, 2024.

Accounting Fees are related to accounting staff and external audit fees. Accounting fees increased by $41,953, or 12%, to $392,360 for the six months ended September 30, 2025, compared to $350,407 for the six months ended September 30, 2024. Accounting Fees were 2% of TCE for both six month periods ended September 30, 2025 and September 30, 2024. The increase of $41,953 is primarily due to additional costs associated with translating our financial statements to USGAAP and complying with new SEC reporting requirements.

	December 31, 2025			% of TNCE			December 31, 2024			% of TNCE			$ Change		% Change
Non-cash expenses
Depreciation		(24,514	)		-84	%		(44,181	)		1	%		19,667		-45	%
Share based payments		53,805			184	%		(6,893,858	)		99	%		6,947,663		-101	%
Total Non Cash Expenses (TNCE)		29,291			100	%		(6,938,039	)		100	%		6,967,330		-100	%

~~Consulting~~Depreciation is ~~Fees are~~ related to ~~financial~~the ~~advisory and~~decrease ~~general~~in ~~consulting~~the ~~services.~~useful ~~Consulting~~life ~~Fees~~of computer and other equipment. Depreciation decreased by $~~298~~19,~~056~~667, or 1745%, to $124,~~49 million~~ 514 for the ~~six~~quarter ~~months~~ ended ~~September~~December 3031, 2025, compared to $~~1.79~~44,181 ~~million~~ for the ~~six~~quarter ~~months~~ ended ~~September~~December 3031, 2024. ~~Consulting~~The ~~Fees~~decrease ~~were 9% of TCE~~ for the ~~six~~quarter ~~months~~ ended ~~September~~ 30December 31, 2025, ~~compared~~is due to ~~10%~~certain ~~for~~assets reaching the ~~six~~end ~~months~~of ~~ended~~their ~~September~~three-year ~~30,~~useful ~~2024~~life.

	○	Financial advisory services was $1.10 million for the six months ended September 30, 2025, compared to $1.49 million for the six months ended September 30, 2024. The decrease of $384,144 is primarily due to less fees paid to financial advisors in connection with funds raised by the Company: The Company raised $13.17 million in net proceeds during the six months ended September 30, 2025, compared to $10.31 million during the six months ended September 30, 2024.
	○	General consulting services was $391,552 for the six months ended September 30, 2025, compared to $305,465 for the six months ended September 30, 2024. The increase of $86,087 is primarily due to a consulting firm hired to provide business and technology insights ($94,449) during the six months ended September 30, 2025.

Share based payments are related to the Black-Scholes valuation and vesting of stock options (“Options”) and Restricted Share Units (RSUs) granted to the Company’s employees, contractors, and consultants. Share-based payments decreased by $6.97 million, or 101%, to a gain of $53,805 for the quarter ended December 31, 2025, compared to a non-cash expense of $6.89 million for the quarter ended December 31, 2024. This decrease is primarily due to the decline in the fair value of RSUs, which are tied to the Class A Subordinate Voting Share price as of the balance sheet date for the quarter ended December 31, 2025, compared to the quarter ended December 31, 2024. The decrease during the quarter ended December 31, 2025 was partially offset by a higher number of Options granted during the quarter ended December 31, 2025. For a detailed breakdown of the changes, please refer to the table below.

Investor Relations and Marketing are related to messaging, marketing, and advertising of the Company and its products to potential users, and to develop general Company and brand awareness as well as investor relations initiatives in media, roadshows, and on social media. Investor Relations and Marketing decreased by $675,568 or 24% to $2.19 million for the six months ended September 30, 2025, compared to $2.87 million for the six months ended September 30, 2024. Investor Relations and Marketing was 13% of TCE for the six months ended September 30, 2025, compared to 17% for the six months ended September 30, 2024. These expenses are currently combined, as the initiatives to market the product and services of the Company and investment in the Company are intertwined and indistinguishable. As the Company begins to market its core products and services, marketing and investor relations expenses will be separated. The decrease in Investor Relations and Marketing is due to:

Share based payments	Stock Options			RSUs			Total
Previous years graded vesting		458,448			-			458,448
Revaluation RSUs 2023		-			189,053			189,053
New grants Q1 2024		119,332			30,321			149,653
New grants Q2 2024		151,409			2,966,079			3,117,488
New grants Q3 2024		1,334,636			2,927,997			4,262,633
Cancelled options / RSUs		(1,270,700	)		(12,717	)		(1,283,417	)
Balance, December 31, 2024	$	793,125		$	6,100,733		$	6,893,858

Previous years graded vesting		626,148			-			626,148
Previous years RSUs revaluation		-			(1,029,973	)		(1,029,973	)
New grants Q2 2026		-			23,438			23,438
New grants Q3 2026		470,072			38,397			508,469
RSUs/Shares cancellation		-			(181,887	)		(181,887	)
Balance, December 31, 2025	$	1,096,220		$	(1,150,025	)	$	(53,805	)

	○	Marketing and investor awareness decreased by $388,265 or 19% to $1.61 million for the six months ended September 30, 2025, compared to $2.00 million for the six months ended September 30, 2024. The decrease is a result of fewer consultants engaged to perform marketing and investor awareness activities during the six months ended September 30, 2025 compared to the six months ended September 20, 2024.
	○	Business development decreased by $287,303 or 33% to $582,298 for the six months ended September 30, 2025, compared to $869,601 for the six months ended September 30, 2024. The decrease is a result of fewer consultants engaged to perform business development activities during the six months ended September 30, 2025 compared to the six months ended September 20, 2024.

-40-

~~Legal~~Total ~~Fees~~Operating ~~are~~expenses ~~related~~decreased ~~to fees paid to external counsel in the US and Canada. Legal fees increased~~ by $~~615~~7.72 million,~~112,~~ or 7158%, to $15.4853 million for the ~~six~~quarter ~~months~~ ended ~~September~~December 3031, 2025, compared to $~~864,112~~13.26 million for the ~~six~~quarter ~~months~~ ended ~~September~~December 3031, 2024. ~~Legal~~The ~~fees~~decrease ~~were~~of 8%$7.72 ofmillion ~~TCE for~~during the ~~six~~quarter ~~months~~ ended ~~September~~December 3031, 2025, ~~compared~~is primarily due to the 5%decrease ~~for~~of ~~the~~$6.95 ~~six~~million ~~months~~in ~~ended~~non-cash ~~September~~expenses ~~30,~~associated ~~2024.~~with ~~The~~share ~~increase~~based ofpayments ~~$615,112~~during ~~for~~ the ~~six~~quarter ~~months~~ ended ~~September~~December 3031, 2025, ~~was~~as well ~~primarily~~as ~~due~~a todecrease ~~increased~~in ~~legal~~expenses ~~costs~~ associated with ~~the~~investor ~~Company~~relations ~~becoming~~and amarketing, Uwhich decreased by $1.S08 million. ~~SEC~~The ~~reporting~~decrease during onthe ~~April~~quarter 1ended December 31, 2025, ~~which~~was ~~requires~~partially ~~additional~~offset ~~disclosure~~by an increase in research and ~~reporting~~development fees of $334,216 during the quarter ended December 31, 2025.

~~Board~~Other ~~Fees~~Items ~~are~~consisted ~~related~~of tothe ~~costs~~items ~~associated with Board members~~below. ~~Board~~Other ~~Fees~~Items ~~increased~~resulted byin ~~$34,761,~~a orloss ~~41%,~~of to $~~119~~67,~~342~~298 for the ~~six~~quarter ~~months~~ ended ~~September~~ 30December 31, 2025, compared to ~~$84,581 for the six months ended September 30, 2024. Board Fees were 1% of TCE for the six months ended~~a ~~September~~loss ~~30, 2025, compared to less than 1% for the six months ended September 30, 2024. The increase~~ of $~~34,761~~3.55 ismillion ~~due~~for ~~to increased fees paid to board members during~~ the ~~six~~quarter ~~months~~ ended ~~September~~December 3031, ~~2025, compared to the six months ended September 30,~~ 2024.

Office and General Expenses are related to subscriptions, insurance, transaction fees, and general expenses of the Company. Office and general expenses increased by $156,119, or 17%, to $1.10 million for the six months ended September 30, 2025, compared to $940,979 for the six months ended September 30, 2024. Office and General Expenses was 6% of TCE for the six months ended September 30, 2025, compared to 5% for the six months ended September 30, 2024. The increase of $156,119 for the six months ended September 30, 2025 is primarily due to higher Directors and Officers (“D&O”) insurance premium cost of $124,904 resulting from increased coverage as the Company became a U.S. SEC reporting on April 1, 2025, which requires additional disclosure and reporting.

	December 31, 2025			% TOI			December 31, 2024			% TOI			$ Change			% Change
OTHER ITEMS:
Grant income		128,430			-191	%		42,071			-1	%		86,359			205	%
Other income		6,297			-9	%		18,056			-1	%		(11,759	)		-65	%
Loss on derivative liability		-			0	%		(3,010,994	)		85	%		3,010,994			-100	%
Accretion expense		(3,155	)		5	%		(265,356	)		7	%		262,201			-99	%
Interest expense		(13,037	)		19	%		(251,962	)		7	%		238,925			-95	%
Legal claim expense		(185,833	)		276	%		-			0	%		(185,833	)		N/A
Provision for losses on related party transactions		-			0	%		(83,285	)		2	%		83,285			-100	%
Total Other Items (TOI)		(67,298	)		100	%		(3,551,470	)		100	%		3,484,172			-98	%

~~Personnel~~Grant ~~expenses~~Income ~~are~~is related to ~~general~~reimbursing ~~and~~expenses ~~administrative~~for ~~payroll~~amounts ~~costs.~~spent ~~Personnel~~on ~~expenses~~project ~~increased~~activities byrelated ~~$115,660, or 7%,~~ to ~~$1.88 million for~~ the ~~six~~grant ~~months~~agreement ~~ended~~with ~~September~~Horizon 30Europe, which ~~2025,~~is ~~compared~~a toprogram ~~$1.76~~delegated ~~million~~by ~~for~~ the ~~six~~European ~~months ended September 30, 2024~~Commission. ~~Personnel~~Grant ~~expenses~~income ~~were 11%~~was of$128,430 ~~TCE~~ for the ~~six~~quarter ~~months~~ ended ~~September~~December 3031, 2025, compared to ~~10%~~$42,071 for the ~~six~~quarter ~~months~~ ended ~~September~~December 3031, 2024. ~~The~~This ~~increase~~project ~~of $115,660 in personnel expenses~~ is ~~primarily~~expected ~~due~~ to ~~the~~end ~~higher~~in ~~salaries~~August ~~paid to personnel during the six months ended September 30, 2025, compared to the salaries and fees paid to personnel during the six months ended September 30, 2024~~2026.

~~Rent~~Other Income is related to ~~payments~~interest ~~for~~received ~~office~~from ~~and~~interest-bearing ~~other~~bank ~~spaces utilized by the Company~~accounts. ~~Rent~~Other income decreased by $2211,~~705~~759, ~~totaling~~or 65%, to $376,~~374~~297 for the ~~six~~quarter ~~months~~ ended ~~September~~December 3031, 2025, compared to $6018,~~079~~056 for the ~~six~~quarter ~~months~~ ended ~~September~~December 3031, 2024. ~~Rent expense accounted for less than 1% of TCE for both six month periods ended September 30, 2025 and September 30, 2024.~~

~~Research~~Loss ~~and~~on ~~Development~~derivative ~~(R&D)~~liability is ~~related~~the toresult ~~payroll~~of ~~and~~measuring ~~contractor costs associated with developing~~ the ~~Company’s~~derivative ~~product.~~liability ~~R&D~~embedded ~~increased by~~in ~~$281,921, or 3%, to $8.54 million for~~ the ~~six~~convertible ~~months~~debenture ~~ended~~using ~~September 30, 2025, compared to $8.26 million for~~ the ~~six months ended~~Monte-Carlo ~~September~~binomial ~~30,~~valuation ~~2024~~model. ~~R&D~~Based ~~was~~on ~~approximately~~estimates ~~48-49% of TCE~~ for ~~both~~the ~~six~~quarter ~~month periods~~ ended ~~September~~December 3031, ~~2025 and September 30,~~ 2024~~. The increase of $281~~,~~921~~ ~~is primarily due to~~ the ~~higher~~fair ~~salaries~~value ~~and~~of ~~fees~~derivative ~~paid~~liability toof ~~personnel during~~ the ~~six months ended September 30,~~convertible ~~2025,~~debenture ~~compared~~of to$3.01 ~~the~~million. ~~salaries~~There ~~and~~was ~~fees~~no ~~paid~~such toexpense ~~personnel~~ during the ~~six~~quarter ~~months~~ ended ~~September~~December 3031, ~~2024~~2025.

Accretion Expense is related to the increase in the carrying value of the discounted value of the convertible debenture converted in 2025. Accretion expense was 3,155 for the quarter ended December 31, 2025, compared to an expense of $265,356 for the quarter ended December 31, 2024.

Interest Expense is related to interest incurred in the conversion of the convertible debenture converted in the nine months ended December 31, 2024, interest incurred in the loan payable, and the interest related to the financing of the director’s and officer’s insurance. Interest expense decreased by $238,925, or 95%, to $13,037 for the quarter ended December 31, 2025, compared to an expense of $251,962 for the quarter ended December 31, 2024. This decrease is primarily due to the conversion of the convertible debenture during the quarter ended December 31, 2024.

Legal Claim Expense was $185,833 for the quarter ended December 31, 2025, there was no such expense for the quarter ended December 31, 2024. This amount is interest accrued in connection with the David Thomson arbitration award, which was confirmed by the Los Angeles Superior Court in the quarter ended June 30, 2025. There was no such expense in the quarter ended December 31, 2024.

-41-

~~Travel~~Provision for ~~and~~Loss ~~Meals~~on ~~are~~Related ~~related~~Party toTransactions ~~expenses related~~was ~~to meals~~$83,285 ~~airfare,~~for ~~transportation,~~the ~~and~~quarter ~~other~~ended ~~related~~December ~~expenses. Travel and Meals decreased by $3~~31,~~829,~~ or2024. ~~1%,~~There towas ~~$271,207~~no provision for the ~~six~~ ~~months~~quarter ~~ending~~ended December ~~September 30~~31, 2025,. ~~compared~~The toprovision ~~$275,036~~ for ~~the~~loss ~~six~~on ~~months~~related ~~ended~~party ~~September~~transactions ~~30,~~includes ~~2024.~~amounts ~~Travel~~due ~~and~~from ~~Meals~~Cyberlab ~~remained~~LLC ~~consistent~~(“Cyberlab”) atand 2%the ofSpatial ~~TCE~~Web ~~for~~Foundation ~~both~~(“SWF”), ~~six~~entities ~~month~~controlled ~~periods~~or ~~ended~~associated ~~September~~with ~~30,~~the ~~2025~~Company’s ~~and~~founders, ~~September~~Dan ~~30,~~Mapes ~~2024~~and Gabriel Rene.

NON-CASH EXPENSES – Consisted of the items below. Non-Cash Expenses decreased by $1.17 million, or 35%, to $2.14 million for the six months ended September 30, 2025, compared to $3.31 million for the six months ended September 30, 2024.

	●	The related expenses arose primarily from payments made by the Company on behalf of these related parties to third-party vendors.
	●	Although these amounts are expected to be settled through future service agreements, management performed a credit assessment in accordance with the current expected credit loss (“CECL”) model under ASC 326. Based on this assessment, management determined that there is significant uncertainty regarding the timing and collectability of these receivables. As of December 31, 2025, management concluded that full repayment is not probable within a reasonable timeframe.

	September 30, 2025			% of TNCE			September 30, 2024			% of TNCE			$ Change			% Change
Non-cash expenses
Depreciation		(45,894	)		2	%		(93,907	)		3	%		48,013			-51	%
Provision for contract settlement		-			0	%		(1,252,076	)		38	%		1,252,076			-100	%
Share based payments		(2,090,255	)		98	%		(1,961,724	)		59	%		(128,531	)		7	%
Total Non Cash Expenses (TNCE)		(2,136,149	)		100	%		(3,307,707	)		100	%		1,171,558			-35	%

Net Loss decreased by $11.33 million, or 67%, to $5.48 million for the quarter ended December 31, 2025, compared to a net loss of $16.81 million for the quarter ended December 31, 2024.

~~Depreciation~~FINANCIAL isRESULTS ~~related~~FOR toTHE ~~the~~NINE ~~decrease~~MONTHS inENDED ~~the~~DECEMBER ~~useful life of computer and other equipment. Depreciation decreased by $48~~31,~~013,~~ ~~or 51%, to $45,894 for the six months ended September 30,~~ 2025, ~~compared~~COMPARED toTO ~~$93,907~~THE ~~for~~NINE ~~the~~MONTHS ~~six~~ENDED ~~months~~DECEMBER ~~ended September 30~~31, 2024~~. The decrease for the six months ended September 30, 2025 is due to certain assets reaching the end of their three-year useful life.~~

~~Provision~~SELECTED ~~for~~FINANCIAL contract settlement is related to the unbilled balance of the SaaS project terminated in August 2024. Provision for contract settlement was $1.25 million for the six months ended September 30, 2024. There was no comparable expense for the six months ended September 30, 2025.INFORMATION

Share based payments are related to the Black-Scholes valuation and vesting of stock options and Restricted Share Units (RSUs) granted to the Company’s employees, contractors, and consultants. Share-based payments increased by $128,531, or 7%, to $2.09 million for the six months ended September 30, 2025, compared to $1.96 million for the six months ended September 30, 2024. This increase is primarily due to a higher amount of equity grants issued for the six months ended September 30, 2025, compared to the six months ended September 30, 2024. The increase during the six months ended September 30, 2025 was partially offset by a decline in the fair value of RSUs, which are tied to the Class A Subordinate Voting Share price as of the balance sheet date. For a detailed breakdown of the changes, please refer to the table below.

	Nine months ended December 31,
	2025			2024			$ Change			% Change
REVENUE	$	818,632		$	155,000		$	663,632			428	%
COST OF REVENUE (excluding depreciation)		(547,103	)		(145,000	)		(402,103	)		277	%
GROSS PROFIT		271,529			10,000			261,529			2615	%
OPERATING EXPENSES
Cash expenses
Accounting fees		(454,115	)		(428,364	)		(25,751	)		6	%
Consulting fees		(1,877,768	)		(2,240,308	)		362,540			-16	%
Investor relations and marketing		(2,365,692	)		(4,089,656	)		1,723,964			-42	%
Legal fees		(1,715,773	)		(1,066,515	)		(649,258	)		61	%
Board fees		(200,910	)		(134,334	)		(66,576	)		50	%
Office and general		(1,603,715	)		(1,416,785	)		(186,930	)		13	%
Personnel expenses		(2,616,144	)		(2,530,730	)		(85,414	)		3	%
Rent		(42,582	)		(75,487	)		32,905			-44	%
Research and development		(11,862,632	)		(11,246,495	)		(616,137	)		5	%
Travel and meals		(329,267	)		(352,062	)		22,795			-6	%
		(23,068,598	)		(23,580,736	)		512,138			-2	%
Non-cash expenses
Depreciation		(70,408	)		(138,088	)		67,680			-49	%
Provision for contract settlement		-			(1,252,076	)		1,252,076			-100	%
Share based payments		(2,036,450	)		(8,855,582	)		6,819,132			-77	%
		(2,106,858	)		(10,245,746	)		8,138,888			-79	%
TOTAL EXPENSES		(25,175,456	)		(33,826,482	)		8,651,026			-26	%
OTHER ITEMS:
Grant income		210,339			98,105			112,234			114	%
Other income		507,558			68,026			439,532			646	%
Loss on derivative liability		-			(546,121	)		546,121			-100	%
Accretion expense		(3,155	)		(719,195	)		716,040			-100	%
Interest expense		(25,291	)		(545,000	)		519,709			-95	%
Legal claim expense		(768,086	)		1,666,000			(2,434,086	)		-146	%
Provision for losses on related party transactions		-			(479,809	)		479,809			-100	%
NET LOSS		(24,982,562	)		(34,274,476	)		9,291,914			-27	%
Loss Per Class A Subordinate Voting Shares - Basic and Diluted	$	(2.50	)	$	(7.12	)	$	4.63			-65	%
Loss Per Class B Proportionate Voting Shares - Basic and Diluted	$	(15.60	)	$	-		$	(15.60	)		N/A
Class A Subordinate Voting Shares used in computing earnings per share - Basic and Diluted		9,858,896			4,811,546			5,047,351			105	%
Class B Proportionate Voting Shares used in computing earnings per share - Basic and Diluted		23,909			-			23,909			N/A

Share based payments	Stock Options			RSUs			Total
Previous years graded vesting		402,225			-			402,225
Previous years RSUs revaluation		-			(251,392	)		(251,392	)
New grants Q1 2025		76,787			26,668			103,455
New grants Q2 2025		1,027,452			805,605			1,833,057
Cancelled options		(125,621	)		-			(125,621	)
Balance, September 30, 2024	$	1,380,843		$	580,881		$	1,961,724
Previous years graded vesting		711,710			-			711,710
Previous years RSUs revaluation		-			(1,581,375	)		(1,581,375	)
New grants Q1 2026		258,056			344,431			602,487
New grants Q2 2026		2,118,326			8,616			2,126,942
RSU milestone conversion		-			230,491			230,491
Balance, September 30, 2025	$	3,088,092		$	(997,837	)	$	2,090,255

-42-

~~Total Operating expenses decreased by~~NINE ~~$926,190,~~MONTHS orENDED ~~5%,~~DECEMBER ~~to $19.64 million for the six months ended September 30~~31, 2025, ~~compared~~COMPARED toTO ~~$19.13~~THE ~~million~~NINE ~~for~~MONTHS ~~the~~ENDED ~~six~~DECEMBER ~~months ended September 30~~31, 2024. The decrease for the six months ended September 30, 2025 is primarily due to $1.25 million in non-cash expenses associated with the provision for contract settlement during the six months ended September 30, 2024 that was not present during the six months ended September 30, 2025, as well as a decrease in expenses associated with investor relations and marketing, which decreased by $675,568. The decrease during the six months ended September 30, 2025 was partially offset by increases in legal fees ($615,112) during the six months ended September 30, 2025.

Other Items consisted of the items below. Other Items resulted in a loss of $11,337 for the six months ended September 30, 2025, compared to a gain of $1.43 million for the six months ended September 30, 2024.

	December 31, 2025			% of Revenue			December 31, 2024			% of Revenue			$ Change			% Change
REVENUE	$	818,632					$	155,000					$	663,632			428	%
COST OF REVENUE (excluding depreciation)		(547,103	)		67	%		(145,000	)		94	%		(402,103	)		277	%
GROSS PROFIT		271,529			33	%		10,000			6	%		261,529			2615	%

	September 30, 2025			% TOI			September 30, 2024			% TOI			$ Change			% Change
OTHER ITEMS:
Grant income		81,909			-722	%		56,034			4	%		25,875			46	%
Other income		501,261			-4421	%		49,970			4	%		451,291			903	%
Gain on derivative liability		-			0	%		2,464,873			173	%		(2,464,873	)		-100	%
Accretion expense		-			0	%		(453,839	)		-32	%		453,839			-100	%
Interest expense		(12,254	)		108	%		(293,038	)		-21	%		280,784			-96	%
Legal claim expense		(582,253	)		5136	%		-			0	%		(582,253	)		N/A
Provision for losses on related party transactions		-			0	%		(396,524	)		-28	%		396,524			-100	%
Total Other Items (TOI)		(11,337	)		100	%		1,427,476			100	%		(1,438,813	)		-101	%

Revenue was $818,632 for the nine months ended December 31, 2025, which consisted of revenue from Genius Platform customers ($685,250) and subscriptions to the Genius platform ($133,382). Revenue for the nine months ended December 31, 2024 was $155,000, which is related to the conclusion of a proof-of-concept project.

~~Grant~~Cost of ~~Income~~revenue isconsists of personnel and contractors’ costs directly related to the ~~reimbursement~~ delivery of ~~expenses~~services to the customers. Cost of Revenue was $254,551 for ~~amounts~~the ~~spent~~nine onmonths ~~project~~ended ~~activities~~December 31, 2025, which related to the ~~grant~~revenue ~~agreement~~referenced ~~with~~above. ~~Horizon~~Cost ~~Europe~~of revenue for the nine months ended December 31, 2024 was $145,000, which is related to the conclusion of a ~~program~~proof-of-concept ~~delegated~~project. byCost of revenue ~~the~~as ~~European~~a ~~Commission.~~percentage ~~Grant~~of ~~income~~revenue was ~~$81,909~~64% for the ~~six~~quarter ~~months~~ending ~~ended~~December ~~September 30~~31, 2025, compared to ~~$56,034~~94% for the ~~six~~quarter ~~months ended~~ending ~~September~~December 3031, 2024., which ~~This~~reflects ~~project~~the iseconomics ~~expected~~associated towith ~~end~~our incore ~~August~~Genius ~~2026~~Platform.

~~Other~~Gross profit ~~Income~~represents isthe ~~related~~revenue tominus ~~R&D~~the ~~tax~~cost ~~credits and~~of ~~interest received from interest-bearing bank accounts~~revenue. ~~Other~~Gross ~~income~~profit ~~increased~~was $~~451~~271,~~291~~529 ~~to $501,261~~ for the ~~six~~nine months ended ~~September 30~~December 31, 2025, compared to $4910,~~970~~000 reported for the ~~six~~nine months ended ~~September~~December 3031, 2024. ~~This~~Gross ~~increase~~profit isas ~~primarily~~a ~~due~~percentage toof ~~$416,208~~revenue ofwas ~~R&D~~33% ~~tax~~for ~~credits~~the quarter ending ~~received~~December ~~during~~31, 2025, compared to 6% for the ~~six~~quarter ~~months~~ending ~~ended~~December ~~September~~31, 302024, ~~2025~~which reflects the economics associated with our core Genius Platform.

Cash expenses consist of the items below. Total Cash Expenses (“TCE”) decreased by $512,138, or 2%, to $23.01 million for the nine months ended December 31, 2025, compared to $23.58 million for the nine months ended December 31, 2024.

	December 31, 2025			% of TCE			December 31, 2024			% of TCE			$ Change			% Change
Cash expenses
Accounting fees		(454,115	)		2	%		(428,364	)		2	%		(25,751	)		6	%
Consulting fees		(1,877,768	)		8	%		(2,240,308	)		10	%		362,540			-16	%
Investor relations and marketing		(2,365,692	)		10	%		(4,089,656	)		17	%		1,723,964			-42	%
Legal fees		(1,715,773	)		7	%		(1,066,515	)		5	%		(649,258	)		61	%
Board fees		(200,910	)		1	%		(134,334	)		1	%		(66,576	)		50	%
Office and general		(1,603,715	)		7	%		(1,416,785	)		6	%		(186,930	)		13	%
Personnel expenses		(2,616,144	)		11	%		(2,530,730	)		11	%		(85,414	)		3	%
Rent		(42,582	)		0	%		(75,487	)		0	%		32,905			-44	%
Research and development		(11,862,632	)		51	%		(11,246,495	)		48	%		(616,137	)		5	%
Travel and meals		(329,267	)		1	%		(352,062	)		1	%		22,795			-6	%
Total Cash Expenses (TCE)		(23,068,598	)		100	%		(23,580,736	)		100	%		512,138			-2	%

-43-

~~Gain~~Accounting onFees ~~derivative~~are ~~liability~~related isto ~~the~~accounting ~~result~~staff ofand ~~measuring~~external ~~the~~audit ~~derivative~~fees. ~~liability~~Accounting ~~embedded~~fees inincreased ~~the~~by ~~convertible~~$25,751, ~~debenture~~or ~~using~~6%, to $454,115 for the ~~Monte-Carlo~~nine months ~~binomial.~~ended ~~Changes~~December in31, ~~the~~2025, ~~estimates~~compared ~~during~~to $428,364 for the ~~six~~nine months ended ~~September~~December 3031, 2024,. ~~resulted~~Accounting inFees awere ~~gain~~2% onof TCE for the ~~fair~~nine months ~~value~~ended ofDecember ~~derivative liability~~31, of2025 and for the ~~convertible~~nine ~~debenture~~months ended December 31, 2024. The increase of $225,~~464,873.~~751 ~~There~~is ~~was~~primarily nodue ~~such~~to ~~expense~~additional costs ~~during~~associated ~~the~~with ~~six~~translating ~~months~~our ~~ended~~financial ~~September~~statements ~~30,~~to ~~2025~~USGAAP and complying with new SEC reporting requirements.

~~Accretion~~Consulting ~~Expense~~Fees isare related to ~~the~~financial ~~increase~~advisory inand ~~the~~general ~~carrying~~consulting ~~value~~services. ofConsulting ~~the~~Fees ~~discounted~~decreased ~~value~~by of$362,540, or 16%, to $1.88 million for the ~~convertible~~nine ~~debenture~~months ~~converted~~ended inDecember 31, 2025, compared to $2.24 ~~There was~~million nofor ~~accretion~~the ~~expense~~nine ~~during~~months ended December 31, 2024. Consulting Fees were 8% of TCE for the ~~six~~nine months ended ~~September~~December 3031, 2025, compared to an10% ~~expense~~for ~~of $453,839 during~~ the ~~six~~nine months ended ~~September~~ 30December 31, 2024.

Interest Expense is related to interest incurred in the conversion of the convertible debenture converted in 2025, interest incurred in the loan payable, and the interest related to the financing of the director’s and officer’s insurance. Interest expense decreased $280,784, or 96%, to $12,254 for the six months ended September 30, 2025, compared to an expense of $293,038 for the six months ended September 30, 2024. This decrease is primarily due to the conversion of the convertible debenture during the six months ended September 30, 2024.

	○	Financial advisory services was $1.30 million for the nine months ended December 31, 2025, compared to $1.73 million for the nine months ended December 31, 2024. The decrease of $429,522 is primarily due to less fees paid to financial advisors in connection with funds raised by the Company: The Company raised $17.03 million in net proceeds during the nine months ended December 31, 2025, compared to $24.45 million during the nine months ended December 31, 2024.
	○	General consulting services was $581,872 for the nine months ended December 31, 2025, compared to $514,890 for the nine months ended December 31, 2024. The increase of $66,982 is primarily due to a consulting firm hired to provide business and technology insights ($94,449) during the nine months ended December 31, 2025.

~~Legal~~Investor ~~Claim~~Relations ~~Expense~~and ~~was~~Marketing are related to messaging, marketing, and advertising of the Company and its products to potential users, and to develop general Company and brand awareness as well as investor relations initiatives in media, roadshows, and on social media. Investor Relations and Marketing decreased by $~~582~~1.72 million,~~253~~ or 42%, to $2.37 million for the ~~six~~nine months ended ~~September~~December 3031, 2025, compared to $4.09 ~~nil~~million for the ~~six~~nine months ended ~~September~~December 3031, 2024. ~~This~~ ~~amount~~Investor isRelations ~~interest~~and ~~accrued~~Marketing inwas ~~connection~~10% ~~with~~of TCE for the ~~David~~nine ~~Thomson~~months ~~arbitration~~ended December ~~award~~31, ~~which~~2025, ~~was~~compared ~~confirmed~~to by17% for the ~~Los~~nine ~~Angeles~~months ~~Superior~~ended December 31, 2024. These expenses are currently combined, as the initiatives ~~Court~~to ~~during~~market the ~~six~~product ~~months~~and ~~ended~~services ~~September~~of ~~30,~~the ~~2025.~~Company ~~There~~and ~~was~~investment ~~not~~in ~~such~~the ~~expense~~Company ~~during~~are intertwined and indistinguishable. As the ~~six~~Company begins ~~months~~to ~~ended~~market ~~September~~its 30core products and services, ~~2024~~marketing and investor relations expenses will be separated. The decrease in Investor Relations and Marketing is due to:

Provision for Loss on Related Party Transactions was $396,524 for the six months ended September 30, 2024. There was no provision for the six months ended September 30, 2025.

	○	Marketing and investor awareness decreased by $1.06 million or 37% to $1.78 million for the nine months ended December 31, 2025, compared to $2.84 million for the nine months ended December 31, 2024. The decrease is a result of fewer consultants engaged to perform marketing and investor awareness activities during the nine months ended December 31, 2025 compared to the nine months ended September 20, 2024.
	○	Business development decreased by $666,151 or 53% to $583,098 for the nine months ended December 31, 2025, compared to $1.25 million for the nine months ended December 31, 2024. The decrease is a result of fewer consultants engaged to perform business development activities during the nine months ended December 31, 2025 compared to the nine months ended September 20, 2024.

	●	The related expenses arose primarily from payments made by the Company on behalf of these related parties to third-party vendors.
	●	Although these amounts are expected to be settled through future service agreements, management performed a credit assessment in accordance with the current expected credit loss (“CECL”) model under ASC 326. Based on this assessment, management determined that there is significant uncertainty regarding the timing and collectability of these receivables. As of September 30, 2025, management concluded that full repayment is not probable within a reasonable timeframe.

Net Loss increased $376,474, or 2%, to $19.51 million for the six months ended September 30, 2025, compared to a net loss of $19.13 million for the six months ended September 30, 2024.

-44-

Legal Fees are related to fees paid to external counsel in the US and Canada. Legal fees increased by $649,258, or 61%, to $1.71 million for the nine months ended December 31, 2025, compared to $1.07 million for the nine months ended December 31, 2024. Legal fees were 7% of TCE for the nine months ended December 31, 2025, compared to 5% for the nine months ended December 31, 2024. The increase of $649,258 for the nine months ended December 31, 2025 was primarily due to increased legal costs associated with the Company becoming a U.S. SEC reporting on April 1, 2025, which requires additional disclosure and reporting.

Board Fees are related to costs associated with Board members. Board Fees increased by $66,576, or 50%, to $200,910 for the nine months ended December 31, 2025, compared to $134,334 for the nine months ended December 31, 2024. Board Fees were 1% of TCE for the nine months ended December 31, 2025 and for the nine months ended December 31, 2024. The increase of $66,576 is due to increased fees paid to board members during the nine months ended December 31, 2025, compared to the nine months ended December 31, 2024.

Office and General Expenses are related to subscriptions, insurance, transaction fees, and general expenses of the Company. Office and general expenses increased by $186,930, or 13%, to $1.60 million for the nine months ended December 31, 2025, compared to $1.42 million for the nine months ended December 31, 2024. Office and General Expenses was 7% of TCE for the nine months ended December 31, 2025, compared to 6% for the nine months ended December 31, 2024. The increase of $186,930 for the nine months ended December 31, 2025 is primarily due to higher Directors and Officers (“D&O”) insurance premium cost of $249,884 resulting from increased coverage as the Company became a U.S. SEC reporting on April 1, 2025, which requires additional disclosure and reporting.

Personnel expenses are related to general and administrative payroll costs, including benefits and payroll taxes. Personnel expenses increased by $85,414, or 3%, to $2.61 million for the nine months ended December 31, 2025, compared to $2.53 million for the nine months ended December 31, 2024. Personnel expenses were 11% of TCE for the nine months ended December 31, 2025 and for the nine months ended December 31, 2024. The increase of $85,414 in personnel expenses is primarily due to the higher salaries paid to personnel during the nine months ended December 31, 2025, compared to the salaries and fees paid to personnel during the nine months ended December 31, 2024.

Rent is related to payments for office and other spaces utilized by the Company. Rent decreased by $32,905, or 44%, to $42,582 for the nine months ended December 31, 2025, compared to $75,487 for the nine months ended December 31, 2024. Rent expense accounted for less than 1% of TCE for the nine months ended December 31, 2025 and for the nine months ended December 31, 2024.

Research and Development (R&D) is related to payroll and contractor costs associated with developing the Company’s product. R&D increased by $616,137, or 5%, to $11.86 million for the nine months ended December 31, 2025, compared to $11.25 million for the nine months ended December 31, 2024. R&D was 51% of TCE for the nine months ended December 31, 2025, as compared to 48% for the nine months ended December 31, 2024. The increase of $616,137 is primarily due to the higher salaries and fees paid to personnel during the nine months ended December 31, 2025, compared to the salaries and fees paid to personnel during the nine months ended December 31, 2024.

Travel and Meals are related to expenses related to meals, airfare, transportation, and other related expenses. Travel and Meals decreased by $22,795, or 6%, to $329,267 for the nine months ending December 31, 2025, compared to $352,062 for the nine months ended December 31, 2024. Travel and Meals were 1% of TCE for the nine months ended December 31, 2025 and for the nine months ended December 31, 2024.

-45-

NON-CASH EXPENSES – Consisted of the items below. Non-Cash Expenses decreased by $8.14 million, or 79%, to $2.10 million for the nine months ended December 31, 2025, compared to $10.25 million for the nine months ended December 31, 2024.

	December 31, 2025			% of TNCE			December 31, 2024			% of TNCE			$ Change		% Change
Non-cash expenses
Depreciation		(70,408	)		3	%		(138,088	)		1	%		67,680		-49	%
Provision for contract settlement		-			0	%		(1,252,076	)		12	%		1,252,076		-100	%
Share based payments		(2,036,450	)		97	%		(8,855,582	)		86	%		6,819,132		-77	%
Total Non Cash Expenses (TNCE)		(2,106,858	)		100	%		(10,245,746	)		100	%		8,138,888		-79	%

Depreciation is related to the decrease in the useful life of computer and other equipment. Depreciation decreased by $67,680, or 49%, to $70,408 for the nine months ended December 31, 2025, compared to $138,088 for the nine months ended December 31, 2024. The decrease of $67,680 for the nine months ended December 31, 2025 is due to certain assets reaching the end of their three-year useful life.

Provision for contract settlement is related to the unbilled balance of the SaaS project terminated in August 2024. Provision for contract settlement was $1.25 million for the nine months ended December 31, 2024. There was no comparable expense for the nine months ended December 31, 2025.

Share based payments are related to the Black-Scholes valuation and vesting of stock options and Restricted Share Units (RSUs) granted to the Company’s employees, contractors, and consultants. Share-based payments decreased by $6.82 million, or 77%, to $2.03 million for the nine months ended December 31, 2025, compared to $8.86 million for the nine months ended December 31, 2024. This decrease is primarily due to the decline in the fair value of RSUs, which are tied to the Class A Subordinate Voting Share price as of the balance sheet date for the nine months ended December 31, 2025, compared to nine months ended December 31, 2024. The decrease for the nine months ended December 31, 2025 was partially offset by a higher number of Options granted during the nine months ended December 31, 2025. For a detailed breakdown of the changes, please refer to the table below.

Share based payments	Stock Options			RSUs			Total
Previous years graded vesting		860,673			-			860,673
Revaluation RSUs 2023		-			(62,339	)		(62,339	)
New grants Q1 2024		196,119			56,989			253,108
New grants Q2 2024		1,178,861			3,771,684			4,950,545
New grants Q3 2024		1,334,636			2,927,997			4,262,633
Cancelled options / RSUs		(1,396,321	)		(12,717	)		(1,409,038	)
Balance, December 31, 2024	$	2,173,968		$	6,681,614		$	8,855,582

Previous years graded vesting		1,337,858			-			1,337,858
Previous years RSUs revaluation		-			(2,611,348	)		(2,611,348	)
New grants Q1 2026		258,056			344,431			602,487
New grants Q2 2026		2,118,326			32,054			2,150,380
New grants Q3 2026		470,072			38,397			508,469
RSU milestone conversion		-			230,491			230,491
RSUs/Shares cancellation		-			(181,887	)		(181,887	)
Balance, December 31, 2025	$	4,184,312		$	(2,147,862	)	$	2,036,450

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Total Operating expenses decreased by $8.65 million, or 26%, to $25.18 million for the nine months ended December 31, 2025, compared to $33.83 million for the nine months ended December 31, 2024. The decrease of $8.65 million for the nine months ended December 31, 2025 is primarily due to $6.82 million in non-cash expense associated with share based payments, $1.25 million in non-cash expenses associated with the provision for contract settlement during the nine months ended December 31, 2024 that was not present during the nine months ended December 31, 2025, as well as a decrease in expenses associated with investors relation and marketing, which decreased by $1.72 million. The decrease during the nine months ended December 31, 2025 was partially offset by increases in legal fees of $649,258 and R&D of $616,137 during the nine months ended December 31, 2025.

Other Items consisted of the items below. Other Items resulted in a loss of $78,635 for the nine months ended December 31, 2025, compared to a loss of $457,994 for the nine months ended December 31, 2024.

	December 31, 2025			% TOI			December 31, 2024			% TOI			$ Change			% Change
OTHER ITEMS:
Grant income		210,339			-267	%		98,105			-21	%		112,234			114	%
Other income		507,558			-645	%		68,026			-15	%		439,532			646	%
Loss on derivative liability		-			0	%		(546,121	)		119	%		546,121			-100	%
Accretion expense		(3,155	)		4	%		(719,195	)		157	%		716,040			-100	%
Interest expense		(25,291	)		32	%		(545,000	)		119	%		519,709			-95	%
Legal claim expense		(768,086	)		977	%		1,666,000			-364	%		(2,434,086	)		-146	%
Provision for losses on related party transactions		-			0	%		(479,809	)		105	%		479,809			-100	%
Total Other Items (TOI)		(78,635	)		100	%		(457,994	)		100	%		379,359			-83	%

Grant Income is related to the reimbursement of expenses for amounts spent on project activities related to the grant agreement with Horizon Europe, which is a program delegated by the European Commission. Grant income was $210,339 for the nine months ended December 31, 2025, compared to $98,105 for the nine months ended December 31, 2024. This project is expected to end in August 2026.

Other Income is related to R&D tax credits and interest received from interest-bearing bank accounts. Other income increased by $439,532, or 646%, to $507,558 for the nine months ended December 31, 2025, compared to $68,026 for the nine months ended December 31, 2024. This increase is primarily due to $416,208 of R&D tax credits received during the nine months ended December 31, 2025.

Loss on derivative liability is the result of measuring the derivative liability embedded in the convertible debenture using the Monte-Carlo binomial. Based on estimates during the nine months ended December 31, 2024, the fair value of derivative liability of the convertible debenture was $546,121. There was no such expense during the nine months ended December 31, 2025.

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Accretion Expense is related to the increase in the carrying value of the discounted value of the convertible debenture converted in 2025. Accretion expense was $3,155 for the nine months ended December 31, 2025, compared to an expense of $719,195 during the nine months ended December 31, 2024.

Interest Expense is related to interest incurred in the conversion of the convertible debenture converted in the nine months ended December 31, 2024, interest incurred in the loan payable, and the interest related to the financing of the director’s and officer’s insurance. Interest expense decreased $519,709, or 95%, to $25,291 for the nine months ended December 31, 2025, compared $545,000 for the nine months ended December 31, 2024. This decrease is primarily due to the conversion of the convertible debenture during the nine months ended December 31, 2024.

Legal Claim Expense was $768,086 for the nine months ended December 31, 2025, compared to a gain of $1.67 million for the nine months ended December 31, 2024. This amount is interest accrued in connection with the David Thomson arbitration award, which was confirmed by the Los Angeles Superior Court during the nine months ended December 31, 2025. The gain reported in the nine months ended December 31, 2024 was related to insurance proceeds received by the Company.

Provision for Loss on Related Party Transactions was $479,809 for the nine months ended December 31, 2024. There was no provision for the nine months ended December 31, 2025. The provision for loss on related party transactions includes amounts due from Cyberlab LLC (“Cyberlab”) and the Spatial Web Foundation (“SWF”), entities controlled or associated with the Company’s founders, Dan Mapes and Gabriel Rene.

	●	The related expenses arose primarily from payments made by the Company on behalf of these related parties to third-party vendors.
	●	Although these amounts are expected to be settled through future service agreements, management performed a credit assessment in accordance with the current expected credit loss (“CECL”) model under ASC 326. Based on this assessment, management determined that there is significant uncertainty regarding the timing and collectability of these receivables. As of December 31, 2025, management concluded that full repayment is not probable within a reasonable timeframe.

Net Loss decreased by $9.29 million, or 27%, to $24.98 million for the nine months ended December 31, 2025, compared to a net loss of $34.27 million for the nine months ended December 31, 2024.

LIQUIDITY AND CAPITAL RESOURCES

Verses is a development-stage technology cognitive computing company specializing in researching, developing, and selling next generation intelligence software systems. We are primarily focused on developing an intelligence-as-a-service smart software platform called Genius. As described above, for the ~~six~~nine month period ended ~~September~~December 3031, 2025, we reported Total Cash Expense (“TCE”) of $17.50 million, and for the ~~six~~nine month period ended ~~September~~December 3031, 2024, we reported TCE of $17.26 million. Our largest cash expense is associated with research and development, comprising $8.54 million or 49% of TCE for the ~~six~~nine months ended ~~September~~December 3031, 2025; $8.26 million or 48% of TCE for the ~~six~~nine month period ended ~~September~~December 3031, 2024. We anticipate that research and development will continue to be our largest expense, and that we will continue to have negative operating cash flow for the foreseeable future as we continue to invest in research and product development, as well as commercialization, marketing and sales of our systems and cannot accurately project when we will generate positive operating cash flow. Our average monthly cash used by operating activities, as described below, was $2.69 million per month for the past 24 months and $2.73 million for the past 3 months, which reflects an increase in research and development. We anticipate that our average monthly cash used in operations activity will increase as we commercialize, market, and sell our systems and that over time, the revenue generated from product sales will offset the increased costs of commercialization, marketing, and sales and will position the company to to generate positive operating cash flow. Our approach to managing liquidity is to ensure, to the extent possible, that we always have ~~sufficient~~ sufficient liquidity to meet our obligations as they become due, and we do so by monitoring cash flow and performing budget-to-actual analysis on a regular basis.

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The Company has historically raised capital to fund operations, primarily through debt and equity investors, although there is no assurance that it will be able to raise funds in the future. The Company will continue to rely on such financings to generate sufficient amounts of cash and cash equivalents to cover its operating costs, satisfy short and long term capital requirements, and meet growth objectives. The ability of the Company to arrange additional financing in the future will also depend, in part, on prevailing capital market conditions. Any quoted market for the Company’s shares may be subject to market trends generally, notwithstanding any potential success of the Company in creating new revenues, cash flows or earnings.

The Company’s ability to continue its operations and to realize its assets at their carrying values is dependent upon obtaining additional financing and generating revenues sufficient to cover its operating costs. The ability of the Company to raise sufficient capital to fund operations are conditional primarily through the continuation of its agreements and investor support. The material uncertainty associated with these events and conditions may cast substantial doubt about the Company’s ability to continue as a going concern. The Company’s financial statements do not give effect to any adjustments, which would be necessary should the Company be unable to continue as a going concern. In such circumstances, the Company would be required to realize its assets and discharge its liabilities outside of the normal course of business, and the amounts realized could differ materially from those reflected in the accompanying condensed consolidated interim financial statements.

The Company’s consolidated financial statements have been prepared as a going concern, which assumes that the Company will continue to operate for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. The Company has incurred losses since inception and has not yet achieved profitable operations. The Company has been relying on debt and equity financing to fund its operations in the past. While the Company has been successful in securing financing to date, there can be no assurances that it will be able to do so in the future. As noted in the report of our independent public accountants for our financial statements for the year ended March 31, 2025, the aforementioned factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that such audited annual financial statements were issued.

Historically, the Company has used net proceeds from issuances of debt and equity to provide sufficient funds to meet its near-term operating expenses and other contractual obligations when due. Management plans to fund operations of the Company with its current working capital and through additional equity and/or debt financings.

In view of these matters, continuing as a going concern is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to, meets its financial requirements, raise additional capital, and the success of its future operations.

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The Company’s long-term capital requirements may vary materially from those currently planned and will depend on many factors, including net sales, the timing and extent of spending on research and development efforts and other initiatives, sales and marketing activities, the timing of new products, and overall economic conditions. Any quoted market for the Subordinate Voting Shares may be subject to market trends generally, notwithstanding any potential success of the Company in creating new revenues, cash flows or earnings. The sale of additional equity would result in additional dilution to the Company’s shareholders. The incurrence of debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that may restrict our operations. There can be no assurances that we will be able to raise additional capital on terms that are attractive to us or at all. The inability to raise capital would adversely affect our ability to achieve our business objectives.

	September 30, 2025			March 31, 2025
	December 31, 2025			March 31, 2025
Cash		167,~~209,908~~954			4,816,906
Current assets, including cash		32,~~450~~099,~~576~~705			6,183,082
Total Assets	$	32,~~640~~290,~~241~~444		$	6,376,575
Current liabilities		1215,~~819~~347,~~850~~167			15,106,292
Other liabilities		~~139~~141,~~722~~036			139,039
Shareholder’s deficiency		(913,~~319~~197,~~331~~759	)		(8,868,756	)
Total liabilities and shareholder’s deficiency	$	32,~~640~~290,~~241~~444		$	6,376,575

Cash decreased to $1.21 million as of September 30, 2025, compared to $4.82 million as of March 31, 2025. Working capital is current assets minus current liabilities, including the current portion of long-~~term debt. The Company had a working capital deficit of $9.37 million as of September 30, 2025, compared to a working capital deficit of $8.92 million as of the year ended March 31, 2025.~~49-

For the six months ended	September 30, 2025			September 30, 2024			Change
Cash provided by (used) in operating activities	$	(18,323,019	)	$	(16,168,175	)	$	(2,154,844	)
Cash provided by (used) in investing activities		(40,489	)		(428,678	)		388,189
Cash provided by (used) in financing activities		14,673,207			18,162,469			(3,489,262	)
Foreign exchange effect on cash		83,303			(221,845	)		305,148
Net change in cash during the period	$	(3,606,998	)	$	1,343,771		$	(4,950,769	)

Cash decreased to $67,954 as of December 31, 2025, compared to $4.82 million as of March 31, 2025. Working capital is current assets minus current liabilities, including the current portion of long-term debt. The Company had a working capital deficit of $8.04 million as of December 31, 2025, compared to a working capital deficit of $8.92 million as of the fiscal year ended March 31, 2025.

Cash used in operating activities is comprised of net loss, add-back of non-cash expenses, and net change in non-cash working capital items. Cash used in operating activities increased by $2.15 million to $18.32 million during the six months ended September 30, 2025, compared to $16.17 million during the six months ended September 30, 2024. The increase is primarily due to a higher variation of cash used to settle accounts payable ($1.56 million), prepaids ($324,422), and the cash allocated to accounts receivable ($241,700).

For the nine months ended	December 31, 2025			December 31, 2024			Change
Cash provided by (used) in operating activities	$	(21,788,300	)	$	(24,762,761	)	$	2,974,461
Cash provided by (used) in investing activities		(65,285	)		(30,580	)		(34,705	)
Cash provided by (used) in financing activities		17,025,432			24,448,030			(7,422,598	)
Foreign exchange effect on cash		79,201			329,535			(250,334	)
Net change in cash during the period	$	(4,748,952	)	$	(15,776	)	$	(4,733,176	)

Cash used in ~~investing~~operating activities ~~primarily~~is ~~reflects~~comprised ~~payments~~of ~~related~~net toloss, ~~Spatial~~add-back ~~Web~~of ~~Foundation~~non-cash ~~(“SWF”)~~expenses, and ~~Cyberlab~~net ~~LLC~~change ~~(“Cyberlab”), entities~~in ~~controlled~~non-cash orworking ~~associated~~capital ~~with~~items. Cash ~~the~~used ~~Company’s~~in ~~founders,~~operating ~~Dan~~activities ~~Mapes~~decreased ~~and~~by ~~Gabriel~~$2.98 ~~Rene,~~million asto ~~well~~$21.79 asmillion ~~purchases~~during ~~of computer equipment. During~~ the ~~six~~nine months ended ~~September~~December 3031, 2025, ~~the Company did not report payments related to SWF and Cyberlab,~~ compared to ~~payments of~~ $~~398,099~~24.76 million during the ~~six~~nine months ended ~~September~~December 3031, 2024. ~~Capital~~The ~~expenditures~~increase ~~associated~~is ~~with~~primarily ~~computers~~due ~~and~~to ~~other~~a ~~equipment~~higher ~~increased by~~provision ~~$9,910~~for tolegal claim ($~~40,489~~2.48 ~~during~~million) ~~the~~and ~~six~~higher ~~months~~accounts ~~ended~~payable ~~September 30, 2025, compared to~~ ($30899,~~579 during the six months ended September 30, 2024~~887).

~~-46-~~Cash used in investing activities primarily reflects purchases of computer equipment. During the nine months ended December 31, 2025, the Company capital expenditures associated with computers and other equipment increased by $34,704 to $65,285, compared to $30,580 during the nine months ended December 31, 2024.

Cash provided by financing activities relates to the instruments used by the Company to fund its working capital needs. Cash provided by financing activities was $1417.6702 million during the ~~six~~nine months ended ~~September~~December 3031, 2025 compared to $1824.1648 million during the ~~six~~nine months ended ~~September~~ 30December 31, 2024.

○ During the ~~six~~nine months ended ~~September~~December 3031, 2025 the Company received (used)

- Received $13.17 million net proceeds from the issuance of Units. - Received $1.57 million net proceeds from the issuance of equity instruments. Received $495,880 net proceeds from the issuance of contingent receivable. Received $1.86 million net proceeds from the issuance of convertible debentures. - Used $(6725,~~732~~993) as expenses related to the European Grant (Horizon Europe, which is a program delegated under the European Commission). - Used $(1.94938) ~~million~~ on the repayment of loans.

○ During the ~~six~~nine months ended ~~September~~December 3031, 2024 the Company received (used)

- Received $10.00 million for the issuance of convertible debentures. - Received $68.9414million ~~million~~ net proceeds from the issuance of special warrants. - Received $16.3217 million net proceeds from the issuance of Units. - Received $12.7302 million from the issuance of equity instruments. Received $122,748 from the European Grant (Horizon Europe, which is a program delegated under the European Commission). - Used $(2.00) million on the repayment of promissory notes.

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CRITICAL ACCOUNTING ESTIMATES

Equipment

The Company reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected remaining useful life of the assets. Uncertainties in these estimates relate to technical obsolescence that may change the utilization of equipment.

Recoverability of accounts receivable, contracts assets, and unbilled revenues, and allowance for credit loss

The Company provides an allowance for expected credit losses based on an assessment of the recoverability of accounts receivable. Allowances are applied to accounts receivable at initial recognition based on the probability of default. Management analyzes its debts, customer concentrations, customer creditworthiness, current economic trends, and changes in customer payment terms when making a judgment to evaluate the adequacy of the allowance for expected credit losses. Where the expectation is different from the original estimate, such difference will impact the carrying value of accounts receivable.

Functional currency

The determination of the functional currency of each entity within the Company requires management judgment in determining the currency that mainly influences the sale price of services and costs of providing services.

Revenue recognition

When the Company enters into an agreement for software development which is longer in nature (longer than 1 year), the Company records a contract asset which is representative of receivables from the agreements not yet billed to the customer. Significant judgment is made to determine the performance obligations and whether each performance obligation is satisfied at a point in time or over the term of the contracts.

Contingent asset

The contingent receivable represents the Company’s right to receive 11 variable monthly cash installments. times the percent increase or decrease between the benchmark price of CAD$7.75 ($5.65 at balance sheet rate) and the trailing 20-day Value Weighted Average Price. The Company is responsible to pay 8% brokerage fee with each tranche. The amounts ultimately received may be greater or less than the scheduled installments depending on future share price performance, and there is no guaranteed minimum amount.

Changes in key assumptions, particularly expected share price volatility or future share price performance relative to the benchmark price, could result in material changes to the estimated fair value of the contingent receivable and impact the Company’s results of operations. Management believes the assumptions used are reasonable; however, actual outcomes may differ materially from those estimates.

Going concern

The assessment of the Company’s ability to continue as a going concern. The determination that the Company will be able to continue as a going concern is subject to critical judgments of management with respect to assumptions surrounding the short and long-term operating budget and financing activities. Should these judgments prove to be inaccurate, management’s continued use of the going concern assumption may be inappropriate.

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JOBS Act

On April 5, 2012, the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

We have chosen to take advantage of the extended transition periods available to emerging growth companies under the JOBS Act for complying with new or revised accounting standards until those standards would otherwise apply to private companies provided under the JOBS Act. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates for complying with new or revised accounting standards.

Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we intend to rely on certain of these exemptions, including, without limitation, (i) providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended, and (ii) complying with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We will remain an “emerging growth company” until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of our initial public offering; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of ~~September~~December 3031, 2025, the end of the period covered by this Quarterly Report on Form 10-Q. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures. Based on such evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective to ensure that the information required to be disclosed by us in the reports that we ~~file~~ file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC’s rules and forms and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.

Identified Material Weakness

In connection with the audit of our financial statements as of March 31, 2025, we identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

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The material weaknesses that we have identified relate to:

1. Insufficient written policies and procedures to ensure the correct application of accounting and financial reporting with respect to the current requirements of GAAP and SEC disclosure requirements.

2. Due to the Company’s size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible.

3. Although the Company does have a written procedure for the approval, identification and reporting of related-party transactions may be limited.

Remediation Plan

We are taking actions to remediate the material weakness described above by reviewing and updating our internal policies and human resources allocations.

Changes in Internal Control Over Financial Reporting

Other than as described above, there have been no changes in our internal control over financial reporting that occurred during our last fiscal quarter ended ~~September~~December 3031, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. Other than as set forth below, we are currently not aware of any such legal proceedings or claims that will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.

On July 13, 2022, David Thomson, a former independent contractor, filed a claim against one of the Company’s U.S. subsidiaries, Verses Technologies USA Inc. (“VTU”), Cyberlab LLC (“Cyberlab”), and two directors/officers of the Company in Los Angeles Superior Court. The claim alleged violations of various sections of the California Corporations Code, breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment. Plaintiff claimed as much as $5,000,000 in damages, subject to proof. On September 1, 2022, VTU filed an answer denying any wrongdoing, and also made its own counterclaim against Mr. Thomson. The cross-claims against David Thomson included: (i) misappropriation of trade secrets; (ii) breach of contract; (iii) violation of the California Computer Data Access and Fraud Act (“CDAFA”); and (iv) violation of the Economic Espionage Act along with three additional cross-claims (alleging violation of the Computer Fraud and Abuse Act, conversion, violation of the Stored Communications Act, respectively) that were subsequently dismissed by the Court. VTU, for its part, sought to recover both compensatory and punitive damages from Mr. Thomson, as well as restitution of any ill-gotten gains and an award of reasonable attorneys’ fees. The arbitration was conducted for a total of 13 days over a period from February 5 through April 3, 2024, via a single arbitrator at the American Arbitration Association. The CDAFA claim was dismissed by the Arbitrator, but the claims for trade secret misappropriation, breach of contract and unjust enrichment were allowed to move forward. A final arbitration award was issued on May 17, 2024. The final award imposed liability against: (i) VTU, jointly and severally with Cyberlab, LLC, a company owned by the Company’s former president and current President Emeritus, Director of Global Development and a director of the Company, Dan Mapes, in the amount of $6,307,258, inclusive of interest; and (ii) Cyberlab, LLC, VTU and its principals, Gabriel René and Dan Mapes, jointly and severally, for damages in the amount of $1,900,000, interest of $709,973 costs of $64,303 and the fees of plaintiff’s counsel totaling $920,231. To resolve their part of joint and several liability, Mr. René and Mr. Mapes are working toward satisfying the portion of the award that applies to them as individuals, including $1,666,000 proceeds from insurance. The remaining liability belongs to VTU. Initial good faith payments of $1,791,000 have been made to the claimant. On January 24, 2025, Mr. Thomson filed a Petition to Confirm the Arbitration Award with the Los Angeles Superior Court. A hearing on the Petition was held and on May 8, 2025, the Petition was confirmed for approximately $9,900,000 ~~million~~ together with interest accrued thereon. We recorded the total amount of this award as an expense incurred during our fiscal year ended March 31, 2024, while in the following fiscal year we recorded as income the $1,666,000 insurance payment received by Mr. Mapes and Mr. Rene, which was partially offset by an aggregate of $817,787 of interest that accrued on the total award during the most recently completed fiscal year ended.

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On August 10, 2024, the Company learned that a complaint (the “Complaint”) had been filed in the Los Angeles Superior Court on June 21, 2024 by a former employee (the “Complainant”) against one of the Company’s US subsidiaries (VERSES, Inc. or “VINC”) and one of its employees in their individual capacity. The Complainant worked for VINC but had been terminated several weeks prior by VINC for poor work performance. The Complaint alleges, inter alia, gender harassment; gender discrimination; race discrimination; race harassment; retaliation; and wrongful termination, while seeking to recover as much as US$3,500,000 in general and special compensatory damages, subject to proof. The Company (and VINC) for its part, disputes the allegations, and considers the Complainant’s termination to have been completely proper and justified under applicable law. VINC was properly served with a copy of the Complaint (and associated summons) and it filed an Answer to the allegations raised therein on September 24, 2024. The employment contract with the Complainant contained an arbitration clause, and VINC’s counsel timely moved to compel arbitration (the “VINC Motion”) and a hearing was held on April 1, 2025. The tentative ruling from the Los Angeles Superior Court (the “Court”) denied the VINC Motion, finding that the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (“EFAA”) was applicable to the Complainant’s “gender harassment” claim and that the Complainant had the option to bring her claims to the Court instead of arbitration. The Court allowed for limited oral advocacy during which VINC’s counsel argued that the arbitration clause should be enforced. The Court took the matter under submission but, after due deliberation, reaffirmed its original conclusions. The Complainant served VINC with discovery requests, and responses were sent on May 8, 2025. The Court assigned a trial date of July 10, 2026, and also asked the parties to engage in informal mediation via a court sponsored alternative dispute resolution program. A post-mediation status conference is scheduled for Sept. 15, 2025 where the parties have been instructed to summarize the outcome of the mediation process.

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On August 11, 2025, David Thomson (“Complainant”) made a motion with the Court seeking from VTU, Cyberlab and two directors/officers of the Company, an aggregate of $495,543 for attorney’s fees and related costs incurred by the Complainant after the May 17, 2024, final arbitration award. This motion is based on the Court’s judgment on May 28, 2025, which gave the Court discretion to award the Complainant attorney’s fees and expenses incurred by the Complainant after May 17, 2024. A hearing date has been set for April 21, 2026. We are currently evaluating this motion and intend to respond to it in due course.

Other than the above, we are not currently involved in any material legal proceedings. We may be involved from time to time in various claims and legal actions arising in the ordinary course of business, including proceedings involving employee claims, contract disputes, and other general liability claims, as well as trademark, copyright, and related claims and legal actions. In the opinion of our management, the ultimate disposition of these matters will not have a material adverse effect on our consolidated financial position, results of operations or liquidity.

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