SEDAR Interim Financial Statements

Interim Condensed Consolidated Financial Statements (Expressed in Canadian dollars) TERAGO INC. Three and nine months ended September 30, 2025 and 2024 (Unaudited) Notice of no auditor review of interim financial statements Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the interim financial statements; they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor. The accompanying unaudited interim condensed consolidated financial statements of TERAGO Inc. have been prepared by and are the responsibility of management. TERAGO Inc.’s independent auditor has not performed a review of these unaudited interim condensed consolidated financial statements in accordance with standards established by the Chartered Professional Accountants of Canada for a review of interim financial statements by an entity’s auditor. 1 TERAGO INC. Interim Condensed Consolidated Statements of Financial Position (Expressed in thousands of Canadian dollars) (Unaudited) September 30 December 31 2025 2024 Assets Current assets: Cash and cash equivalents (note 11) $ 1,297 $ 4,186 Short-term investments (note 11) - 234 Accounts receivable, net (note 11) 1,642 1,905 Prepaid expenses and other assets 896 695 Current portion of contract costs (note 3) 142 160 Total current assets 3,977 7,180 Non-current assets: Network assets, property and equipment (note 4) 34,049 34,485 Intangible assets (note 5) 10,990 11,020 Goodwill 861 861 Contract costs (note 3) 412 441 Total non-current assets 46,312 46,807 Total assets $ 50,289 $ 53,987 Liabilities and Shareholders' Equity (Deficiency) Current liabilities: Accounts payable and accrued liabilities (note 11) $ 4,601 $ 4,161 Current portion of contract liabilities (note 3) 227 196 Current portion of long-term debt (note 6) 28,408 24,847 Current portion of lease liabilities (notes 7 and 11) 5,356 5,577 Current portion of other long-term liabilities (note 8) 1,072 806 Total current liabilities 39,664 35,587 Non-current liabilities: Decommissioning and restoration obligations 260 226 Contract liabilities (note 3) 150 150 Lease liabilities (notes 7 and 11) 14,543 13,104 Total non-current liabilities 14,953 13,480 Total liabilities $ 54,617 $ 49,067 Shareholders' equity (deficiency): Share capital $ 118,665 $ 118,596 Warrant reserve 844 570 Contributed surplus 29,070 28,501 Deficit (152,907) (142,747) Total shareholders' equity (deficiency) (4,328) 4,920 Total liabilities and shareholders' equity (deficiency) $ 50,289 $ 53,987 Subsequent events (note 13) See accompanying notes to interim condensed consolidated financial statements. 2 TERAGO INC. Interim Condensed Consolidated Statements of Comprehensive Loss (Expressed in thousands of Canadian dollars, except per share amounts) (Unaudited) Three months ended Nine months ended September 30, September 30, 2025 2024 2025 2024 Revenue from operations (note 3) $ 6,398 $ 6,544 $ 19,156 $ 19,593 Expenses: Cost of services 1,670 1,751 5,005 5,278 Salaries and related costs 2,653 2,865 8,437 8,950 Other operating expenses 1,263 1,197 3,778 3,813 Amortization of intangible assets (note 5) 20 13 60 29 Depreciation of network assets, property and equipment (note 4) 2,273 2,390 6,880 7,213 7,879 8,216 24,160 25,283 Loss from operations (1,481) (1,672) (5,004) (5,690) Gain from sale of assets (note 4) 1,351 - 1,351 - Foreign exchange (loss) gain (32) 39 (3) 35 Finance costs (2,214) (1,743) --- (6,550) (4,564) Finance income 8 38 46 122 (2,368) (3,338) (10,160) (10,097) Loss before income taxes Income taxes – – – – Loss for the period and comprehensive loss $ (2,368) $ (3,338) $ (10,160) $ (10,097) Loss per share (note 10): Basic and diluted $ (0.12) $ (0.17) $ (0.51) $ (0.51) Weighted average number of common shares outstanding, in thousands (note 10): Basic and diluted 20,054 19,939 20,031 19,895 See accompanying notes to interim condensed consolidated financial statements. 3 TERAGO INC. Interim Condensed Consolidated Statements of Changes in Equity (Deficiency) (Expressed in thousands of Canadian dollars and thousands of common shares) (Unaudited) Nine months ended Share capital Contributed Warrant September 30, 2025 Number Amount surplus reserve Deficit Total (in 000's) Balance, January 1, 2025 20,002 $ 118,596 $ 28,501 $ 570 $ (142,747) $ 4,920 Loss and comprehensive loss – – – – (10,160) (10,160) Issuance of shares for directors' fees 70 69 – – – 69 Stock-based compensation – – 569 – – 569 Issuance of warrants – – – 274 – 274 Balance, September 30, 2025 20,072 $ 118,665 $ 29,070 $ 844 $ (152,907) $ (4,328) Nine months ended Share capital Contributed Warrant September 30, 2024 Number Amount surplus reserve Deficit Total (in 000's) Balance, January 1, 2024 19,853 $ 118,335 $ 27,655 $ 819 $ (129,476) $ 17,333 Loss and comprehensive loss – – – – (10,097) (10,097) Issuance of shares from vesting for RSUs/PSUs 25 30 (30) – – – Shares deducted for payment of withholding tax (4) – (8) – – (8) Issuance of shares for directors' fees 97 192 192 Stock-based compensation – – 424 – – 424 Issuance of warrants – – – 13 – 13 Expiration of warrants – – 262 (262) – – Balance, September 30, 2024 19,971 $ 118,557 $ 28,303 $ 570 $ (139,573) $ 7,857 See accompanying notes to interim condensed consolidated financial statements. 4 TERAGO INC. Interim Condensed Consolidated Statements of Cash Flows (Expressed in thousands of Canadian dollars) (Unaudited) Three months ended Nine months ended September 30, September 30, 2025 2024 2025 2024 Cash flows from (used in) operating activities: Loss for the period $ (2,368) $ (3,338) $ (10,160) $ (10,097) Adjustments for: Restructuring and other costs - - 332 636 Depreciation of network assets, property and equipment (note 4) 2,273 2,390 6,880 7,213 Amortization of intangible assets (note 5) 20 13 60 29 Gain from sale of assets (1,351) - (1,351) - Stock-based compensation expense (note 9) 159 213 638 627 Finance costs 2,214 1,743 6,550 4,564 Finance income (8) (38) (46) (122) Restructuring and other costs paid - (246) (332) (790) Foreign exchange (gain) loss 32 (24) 3 (33) Change in non-cash operating working capital: Accounts receivable 87 8 243 222 Prepaid expenses and other assets 226 (3) (201) - Accounts payable and accrued liabilities (97) 448 573 1,128 Contract liabilities (46) 9 31 39 Contract costs (1) (53) 47 (1) Net cash flows from operating activities 1,140 1,122 3,267 3,415 Cash flows from (used in) financing activities: Proceeds from debt borrowings (note 6) - 3,972 2,760 7,003 Long-term debt and interest paid (note 6) (1,003) (851) (3,047) (2,277) Financing costs incurred (note 6) - - (138) - Payment of lease liabilities (note 7) (1,372) (1,415) (4,303) (4,364) Net cash flows (used in) from (2,375) 1,706 (4,728) 362 financing activities Cash flows from (used in) investing activities: Purchase of network assets, property, and equipment (note 4) (1,006) (817) (2,990) (2,628) Purchase of intang --- ible assets (note 5) (9) (11) (30) (191) Gain on sale of assets 1,351 - 1,351 - Sale of short-term investment 234 - 234 - Change in non-cash working capital related to network assets, property and equipment and intangible assets 295 115 10 117 Net cash flows from (used in) investing activities 865 (713) (1,425) (2,702) Net change in cash and cash equivalents (370) 2,115 (2,886) 1,075 Cash and cash equivalents, beginning of period 1,699 3,350 4,186 4,381 Change in cash due to foreign exchange (32) 24 (3) 33 Cash and cash equivalents, end of period $ 1,297 $ 5,489 $ 1,297 $ 5,489 See accompanying notes to interim condensed consolidated financial statements. TERAGO INC. Notes to Interim Condensed Consolidated Financial Statements (Expressed In thousands of Canadian dollars, except share and per share amounts) Three and nine months ended September 30, 2025 and 2024 (Unaudited) 5 1. Corporate information: TERAGO Inc. (the "Company") is incorporated under the Canada Business Corporations Act with its corporate head office located at Suite 800 - 55 Commerce Valley Drive West, Thornhill, Ontario. The Company’s common shares are listed on the Toronto Stock Exchange (TSX) under the symbol TGO. The Company owns and operates a carrier-grade, fixed wireless, IP communications network and provides managed network and security services to businesses across Canada ensuring highly secure, reliable and redundant connectivity services. As Canada’s biggest mmWave spectrum holders, the Company possesses exclusive spectrum licenses in the 24GHz and 38 GHz spectrum bands, which it utilizes to provide secure, dedicated SLA guaranteed enterprise grade performance that is technology diverse from buried cables ensuring high availability connectivity services. 2. Basis of preparation: a) Statement of compliance: These unaudited interim condensed consolidated financial statements ("interim financial statements") were prepared using the same accounting policies and methods as those used in the Company’s consolidated financial statements for the year ended December 31, 2024 (the "2024 Consolidated Financial Statements"). These interim financial statements are in compliance International Accounting Standard 34, Interim Financial Reporting ("IAS 34"), as issued by the International Accounting Standards Board ("IASB"). Accordingly, certain information and footnote disclosure normally included in annual financial statements prepared in accordance with IFRS Accounting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”), have been omitted or condensed. The notes presented in these interim financial statements include only significant changes and transactions that have occurred since the last fiscal year. Accordingly, these interim financial statements should be read in conjunction with the Company’s 2024 Consolidated Financial Statements. The policies applied in these interim financial statements are based on IFRS issued and outstanding as at September 30, 2025. The Board of Directors authorized the interim financial statements for issue on November 10, 2025. These interim financial statements include the accounts of TERAGO Inc. and its wholly owned subsidiaries. TERAGO INC. Notes to Interim Condensed Consolidated Financial Statements (Expressed In thousands of Canadian dollars, except share and per share amounts) Three and nine months ended September 30, 2025 and 2024 (Unaudited) 6 2. Basis of preparation (continued): b) Recently adopted --- accounting pronouncement: Effective January 1, 2025, the Company adopted the following new amendments to IFRS: Amendments to IAS 21, The Effects of Changes in Foreign Exchange Rates In August 2023, the IASB amended IAS 21 to clarify when a currency is exchangeable into another currency; and how a company estimates a spot rate when a currency lacks exchangeability. The adoption of these amendments did not have any impact on the interim financial statements for the three and nine months ended September 30, 2025. c) Recent accounting pronouncements: A number of new standards and amendments to standards and interpretations are noted below that are not yet effective for the three and nine months ended September 30, 2025, that have not been applied in preparing these unaudited interim condensed consolidated financial statements: (i) Amendments to IFRS 9 and IFRS 7, Classification and Measurement of Financial Instruments: The IASB has amended IFRS 9 following its post implementation review of the classification and measurement requirements. The amendments include guidance on the classification of financial assets, including those with contingent features. The IASB has also amended IFRS 7, wherein companies will now be required to provide additional disclosures on financial assets and financial liabilities that have certain contingent features. The amendments are effective for annual periods beginning on or after January 1, 2026. (ii) Annual improvements to IFRS Accounting Standards: The annual improvements to IFRS Accounting Standards were issued on July 18, 2024. The IASB made minor amendments to IFRS 9 and to a further four accounting standards. The amendments to IFRS 9 address a conflict between IFRS 9 and IFRS 15 over the initial measurement of trade receivables; and how a lessee accounts for the derecognition of a lease liability. The amendments are effective for annual periods beginning on or after January 1, 2026. TERAGO INC. Notes to Interim Condensed Consolidated Financial Statements (Expressed In thousands of Canadian dollars, except share and per share amounts) Three and nine months ended September 30, 2025 and 2024 (Unaudited) 7 2. Basis of preparation (continued): (iii) Presentation and disclosure in financial statements ("IFRS 18"): IFRS 18 was issued on April 9, 2024 and will replace IAS 1, Presentation of Financial Statements. IFRS 18 aims to provide greater consistency in presentation of the income and cash flow statements, and more disaggregated information in the financial statements. The standard is effective for annual periods beginning on or after January 1, 2027. The Company intends to adopt each of the above standards, as applicable to the Company, in the year in which they are effective. The Company is reviewing these new standards and amendments to determine the potential impact on the Company's consolidated financial statements once they are adopted. 3. Revenue: a) Disaggregation of revenue The Company’s operations, main sources of revenue, and methods for recognition are those described in Note 4 of the 2024 Consolidated Financial Statements. The Company’s revenue consists of connectivity revenue derived from contracts with customers. (b) Contract costs: The following table summarizes the changes in contract costs for the three and nine months ended September 30: Three months ended Nine months ended September 30, September 30, 2025 2024 2025 2024 Balance, beginning of period $ 553 $ 551 $ 601 $ 603 Incremental cost --- s capitalized 47 124 106 226 Amortization (46) (71) (153) (224) Balance, end of period 554 604 554 604 Less current portion (142) (177) (142) (177) $ 412 $ 427 $ 412 $ 427 TERAGO INC. Notes to Interim Condensed Consolidated Financial Statements (Expressed In thousands of Canadian dollars, except share and per share amounts) Three and nine months ended September 30, 2025 and 2024 (Unaudited) 8 3. Revenue (continued): (c) Contract liabilities: The following table summarizes the changes in contract liabilities for the three and nine months ended September 30: Three months ended Nine months ended September 30, September 30, 2025 2024 2025 2024 Balance, beginning of period $ 423 $ 332 $ 346 $ 302 Additions from provisioning 109 93 326 281 Revenue recognized for services provided (156) (85) (296) (243) Balance, end of period 376 340 376 340 Less current portion (227) (194) (227) (194) $ 150 $ 146 $ 150 $ 146 (d) Unsatisfied performance obligations: The aggregate amount of future revenue allocated to performance obligations that are unsatisfied as of September 30, 2025 was $24,679 (December 31, 2024 - $25,030). This represents contractual service obligations that the Company has yet to fulfill under its contracts with customers and yet to invoice its customers. The Company expects to recognize this revenue over the next three years, which represents the average remaining contractual terms prior to renewals. This amount excludes obligations owing for month-to- month contracts as the unsatisfied term is calculated monthly. TERAGO INC. Notes to Interim Condensed Consolidated Financial Statements (Expressed In thousands of Canadian dollars, except share and per share amounts) Three and nine months ended September 30, 2025 and 2024 (Unaudited) 9 4. Network assets, property and equipment: Network Datacentre Computer Right-of-use September 30, 2025 assets infrastructure equipment Other1 assets Total Cost Balance, January 1, 2025 $ 137,608 $ 801 $ 5,289 $ 4,037 $ 42,258 $ 189,993 Additions 2,817 48 2 – 123 2,990 Disposals – – – – (3) (3) Sale of assets (174) – – – – (174) Reclassifications/adjustments (8) 8 – – 3,456 3,456 Balance, September 30, 2025 $ 140,243 $ 857 $ 5,291 $ 4,037 $ 45,834 $ 196,262 Accumulated depreciation Balance, January 1, 2025 $ 120,199 $ 747 $ 5,250 $ 4,022 $ 25,290 $ 155,508 Depreciation for the period 3,918 34 19 4 2,905 6,880 Sale of assets (174) – – – – (174) Reclassifications/adjustments (3) 2 – – – (1) Balance, September 30, 2025 $ 123,940 $ 783 $ 5,269 $ 4,026 $ 28,195 $ 162,213 Net book value September 30, 2025 $ 16,303 $ 74 $ 22 $ 11 $ 17,639 $ 34,049 December 31, 2024 $ 17,409 $ 54 $ 39 $ 15 $ 16,968 $ 34,485 1Other includes office furniture, equipment and leasehold improvements. Disposal of network assets, property and equipment: For the three months ended September 30, 2025, the Company wrote off assets with a net book value of $11 (cost of $291 less accumulated depreciation of $280) which primarily represents replaced assets and obsolete assets disposed of for negligible value. For the nine months ended September 30, 2024, the Company wrote off assets with a net book value of $27 (cost of $339 less accumulated depreciation of $312). The Company also periodically reviews network assets, property, and equipment when events or circumstances may indicate the carrying value is no longer realizable. For the nine months ended September 30, 2025, the Company recorded a charge of $210 (2024 - $182) on network assets, proper --- ty, equipment and intangible assets. The corresponding loss on disposal is included in depreciation of network assets, property, and equipment. For the three months ended September 30, 2025, the Company sold seven telecommunications towers with a net book value of $0 (cost of $174 less accumulated depreciation of $174) for gross proceeds of $1,351 which was recorded as gain on sale of assets in the interim condensed consolidated statements of comprehensive loss. TERAGO INC. Notes to Interim Condensed Consolidated Financial Statements (Expressed In thousands of Canadian dollars, except share and per share amounts) Three and nine months ended September 30, 2025 and 2024 (Unaudited) 10 4. Network assets, property and equipment: As part of the transaction, the Company entered into a tower space license agreement with a ten-year term, allowing continued access to the tower sites for the operation of its telecommunications equipment. In accordance with IFRS 16, the tower space license agreement has been assessed and the appropriate accounting treatment has been applied using IFRS 16 lease accounting which has resulted in the recognition of a right-of-use asset and a corresponding lease liability in the current reporting period (note 7). 5. Intangible assets: Radio Total spectrum Customer intangible September 30, 2025 licenses software assets Cost Balance, January 1, 2025 $ 12,649 $ 10,667 $ 23,316 Additions – 30 30 Balance, September 30, 2025 $ 12,649 $ 10,697 $ 23,346 Accumulated amortization Balance, January 1, 2025 $ 2,371 $ 9,925 $ 12,296 Amortization for the year – 60 60 Balance, September 30, 2025 $ 2,371 $ 9,985 $ 12,356 Net book value September 30, 2025 $ 10,278 $ 712 $ 10,990 December 31, 2024 $ 10,278 $ 742 $ 11,020 6. Long-term debt: September 30, December 31, 2025 2024 Current portion of long-term debt $ 28,408 $ 25,702 Less financing fees - 855 $ 28,408 $ 24,847 TERAGO INC. Notes to Interim Condensed Consolidated Financial Statements (Expressed In thousands of Canadian dollars, except share and per share amounts) Three and nine months ended September 30, 2025 and 2024 (Unaudited) 11 6. Long-term debt (continued): Term debt facility: On September 29, 2022, the Company entered into a three-year credit and guaranty agreement (the "Credit Agreement") with CrowdOut Capital LLC ("CrowdOut") in the amount of U.S. $20,000. The Credit Agreement is a draw down facility and terms include the following: variable interest rate of SOFR plus 9.00%, serviced with monthly interest payments only for a term of 36 months. At the end of the term, there is an exit fee payable to CrowdOut of up to a maximum of $1,000 calculated on a pro-rata basis determined by the amount of the facility that has been drawn down under the Credit Agreement at the time of exit. The Credit Agreement also included a 1% annual rate standby fee for any amounts undrawn on the facility. The standby fee and interest amounts are payable monthly. The Company incurred financing fees in the amount of $395 to facilitate the execution of the Credit Agreement. At September 30, 2025, total exit fee under the initial Credit Agreement was $806 (2024 - $806). In accordance with the Credit Agreement, the Company also issued to CrowdOut 216,463 warrants for the purchase of common shares. Each warrant will be exercisable for the purchase of one common share for a period of up to five years from the date of the Credit Agreement. The warrants vest pro-rata as the facility is drawn down. The st --- rike price for all warrants was $4.43 (based upon a 20% premium to the 30-day volume weighted average price at the time of closing). Since the inception of the Credit Agreement through to May 29, 2024, the Company had drawn in aggregate $18,792 (U.S. $14,000), resulting in the vesting of 151,496 of the issued warrants to CrowdOut. On May 29, 2024, the Company and CrowdOut entered into a First Amendment to Credit Agreement (the "First Amending Agreement") which amended certain terms of the previously executed Credit Agreement dated September 29, 2022. The First Amending Agreement served to add Cymbria Corporation ("Cymbria") to the syndicate of lenders under the Credit Agreement and amended certain conditions and covenants of the Credit Agreement. The Company incurred financing fees in the amount of $274 to facilitate the execution of the First Amending Agreement. The First Amending Agreement gave effect to the following: • the committed debt facility decreased from a U.S. $20,000 facility to a U.S. $19,000 facility under the First Amending Agreement. The remaining U.S. $5,000 facility was to be funded by Cymbria through the Credit Agreement with CrowdOut in two tranches, with the first tranche in the amount of U.S. $2,000 available as of the effective date of the First Amending Agreement and the second tranche in the amount of U.S. $3,000 available at any time after July 1, 2024; • the First Amending Agreement removed the 1% annual rate standby fee on amounts undrawn on the facility and removed any further accrual of exit fee to CrowdOut; • the interest rates applicable under the First Amending Agreement remain the same as in the Credit Agreement except the Adjusted Term SOFR floor increased from 1.5% to 5%; TERAGO INC. Notes to Interim Condensed Consolidated Financial Statements (Expressed In thousands of Canadian dollars, except share and per share amounts) Three and nine months ended September 30, 2025 and 2024 (Unaudited) 12 6. Long-term debt (continued): • the last twelve months ("LTM") installed monthly recurring revenue ratio was updated to reflect that repayments of lease liabilities are included in the definition of installed monthly recurring revenues under this financial covenant, with the maximum ratio for this financial covenant updated to reflect these changes; and • the minimum fixed charge ratio was updated to reflect that repayments of lease liabilities are now included in the definition of fixed charges under this financial covenant. The Company issued 54,100 warrants to Cymbria, on similar terms to the common share purchase warrants previously issued to CrowdOut under the terms of the Credit Agreement. Each warrant entitles Cymbria to subscribe for and purchase, one fully paid common share in the capital of the Company at a price per common share of $4.43. The warrants vest pro-rata as the U.S. $5,000 funded by Cymbria is drawn down. As a result of the First Amending Agreement, the equivalent amount of previously issued common share purchase warrants to CrowdOut shall remain unvested. On May 30, 2024, the Company received its first draw down under the First Amending Agreement in the amount of $2,736 (U.S. $2,000), resulting in the vesting of 21,640 of the issued warrants to Cymbria. On August 27, 2024, the Company received the second tranche in the amount of $4,038 (U.S. $3,000), resulting in the vesting of the remaining 32,460 of the issued warrants to Cymbria. In accordance with the First Amending Agreement, the Com --- pany is subject to the following financial covenants: (i) total debt (including payables more than 120 days past due) not to exceed 160% of the Company's LTM installed monthly recurring revenue from May 31, 2024 to May 31, 2025 and 155% of the Company's LTM installed monthly recurring revenue from June 30, 2025 and thereafter; (ii) the Company's cash and cash equivalents and short-term investments (excluding payables more than 60 days past due) to be above $1,500 at every month end; and (iii) if the Company's cash and cash equivalents balance and short-term investments is below $2,500, the Fixed-Charge Coverage Ratio must be 1/1x or greater. This facility including the First Amending Agreement has been accounted for as a compound financial instrument with a liability component for the debt and an equity component for the warrants issued, as the warrants are exchangeable for a fixed number of the Company's common shares, they meet the fixed-for-fixed criteria. Upon draw down date, the liability is measured at its fair value using the forward SOFR curve rate at the time of the draw down (the most recent drawdown on August 27, 2024 was at 14.35%) and the warrants were measured at the residual amount of the compound financial instrument. On March 31, 2025, the Company and CrowdOut executed a Second Amendment to the Credit Agreement (the “Second Amending Agreement”), which amended certain terms of the Credit Agreement entered into between the Company and CrowdOut as of September 29, 2022, as amended by the First Amending Agreement dated as of May 29, 2024. The Company incurred financing fees in the amount of $137 to facilitate the execution of the Second Amending Agreement. TERAGO INC. Notes to Interim Condensed Consolidated Financial Statements (Expressed In thousands of Canadian dollars, except share and per share amounts) Three and nine months ended September 30, 2025 and 2024 (Unaudited) 13 6. Long-term debt (continued): The Second Amending Agreement gave effect to the following: • The Second Amending Agreement serves to increase the amount of the secured debt facility from U.S. $19,000 to U.S. $21,000, while maintaining consistency with the initial framework of the Credit Agreement, with the U.S. $2,000 increase in the secured debt facility funded by Cymbria which was received by the Company on April 3, 2025; • At the end of the term, additional exit fee payable to CrowdOut of up to a maximum of U.S. $210 upon the earlier of (a) the maturity date and (b) the date of repayment in full of the debt obligation of under the Credit Agreement; and • Amending the financial covenant wherein if the cash and cash equivalents balance and short-term investments is below $1,500, the Fixed-Charge Coverage Ratio must be 1/1x or greater. The Company issued an aggregate of 800,000 new warrants to Cymbria in the second quarter of 2025, in connection with the Second Amending Agreement, in four tranches of 200,000 warrants each, with exercise prices of $2.50, $2.00, $1.50 and $1.06, respectively. Each warrant is exercisable for the purchase of one common share for a period of up to three years from the date of the Second Amending Agreement. The Second Amending Agreement was accounted for in the second quarter of 2025 as a compound financial instrument with a liability component for the debt and an equity component for the warrants issued, as the warrants are exchangeable for a fixed number of the Company's common shares, they meet the fixed-for-fixed criter --- ia. The valuation of the warrants was determined using the Black-Scholes pricing model, incorporating a risk-free interest rate of 2.47%, an expected life of three years; and a volatility of 79.97%. The resulting net fair value of the warrants at the date of issuance of $274 was recorded as a warrant reserve in the interim condensed consolidated statements of shareholders equity (deficiency) for the three and six months ended June 30, 2025, effectively reducing the carrying amount of the debt on the interim condensed consolidated statement of financial position as at June 30, 2025. The Company incurred financing fees in the amount of $138 to facilitate the execution of the Second Amending Agreement. The Company incurred additional exit fee of $295 under the Second Amending Agreement. At September 30, 2025, total exit fee due to the lender, in aggregate, for the initial Credit Agreement through to the Second Amending Agreement is $1,072 (2024 - $806). All financing fees are deferred and are recorded as a reduction in the carrying amount of debt. The amortization of the fees and interest expense for the nine months ended September 30, 2025, were $1,457 and $3,047 which are included in finance costs (2024 - $982 and $3,234), respectively. TERAGO INC. Notes to Interim Condensed Consolidated Financial Statements (Expressed In thousands of Canadian dollars, except share and per share amounts) Three and nine months ended September 30, 2025 and 2024 (Unaudited) 14 6. Long-term debt (continued): On September 10, 2025, the Company and CrowdOut executed a Third Amendment to the Existing Credit Agreement. Pursuant to this amendment, the definition of “Maturity Date in the Existing Credit Agreement was amended such that the Maturity Date was extended to October 31, 2025. All other material terms and conditions of the Existing Credit Agreement including interest rates, security arrangements and financial covenants remained substantially unchanged. As at September 30, 2025, the financial covenant of maintaining a minimum cash and cash equivalents balance and short-term investments of $1,500 was not met. CrowdOut granted a waiver in respect of this covenant, and the facility continued to remain in good standing. These amendments to the Credit Agreement through the First Amending Agreement, the Second Amending Agreement and the Third Amendment to the Existing Credit Agreement were considered non-substantive changes under IFRS 9, and as such, did not require the extinguishment of the existing liability and recognition of a new liability. The extension and subsequent waiver were executed in connection with the Company’s recapitalization plan which was completed on October 16, 2025. The recapitalization included a new debt facility and an equity financing as further described in note 13 – Subsequent events. The Company fully repaid CrowdOut under the Existing Credit Agreement on October 15, 2025. 7. Leases: The Company has many leases of which it is a lessee. The major categories of leases are building leases for the Company's fixed wireless services, network equipment, corporate offices and warehouses. Lease terms vary by category and range from 1 to 20 years. (a) Right-of-use asset: Changes in the right-of-use asset are summarized in note 4 of these interim financial statements. TERAGO INC. Notes to Interim Condensed Consolidated Financial Statements (Expressed In thousands of Canadian dollars, except share and per share amounts) Three and nine months en --- ded September 30, 2025 and 2024 (Unaudited) 15 7. Leases (continued): (b) Lease liabilities: The following table is a summary of the changes in the lease liability during the period: Three months ended Nine months ended September 30, September 30, 2025 2024 2025 2024 Lease liabilities, beginning of period $ 17,652 $ 18,952 $ 18,681 $ 15,063 Additions 123 – 123 104 Terminations – (2) (3) (96) Interest on lease liabilities 669 614 1,945 1,615 Modifications 2,826 550 3,456 6,377 Lease payments (1,371) (1,415) (4,303) (4,364) Lease liabilities, end of period 19,899 18,699 19,899 18,699 Less current portion (5,356) (5,529) (5,356) (5,529) $ 14,543 $ 13,170 $ 14,543 $ 13,170 8. Other current liabilities: September 30, December 31, 2025 2024 Debt financing - exit fee (not 6) $ 1,072 $ 806 $ 1,072 $ 806 9. Stock-based compensation: (a) Stock options: For the three and nine months ended September 30, 2025, the Company granted nil and 447 stock options (2024 - 20 and 745 stock options), respectively. For the three and nine months ended September 30, 2025, the Company recorded stock- based compensation related to stock options expense of $142 and $569 (2024 - $135 and $425), respectively. TERAGO INC. Notes to Interim Condensed Consolidated Financial Statements (Expressed In thousands of Canadian dollars, except share and per share amounts) Three and nine months ended September 30, 2025 and 2024 (Unaudited) 16 9. Stock-based compensation (continued): A summary of the change in the Company’s stock option plan as at September 30, 2025 is presented below: 2025 2024 Weighted Weighted average average Number of exercise Number of exercise options price options price (in 000's) (in 000's) Outstanding, January 1 1,587 $ 2.22 937 $ 2.54 Granted 447 $ 1.00 745 $ 2.11 Forfeited/expired – – (90) $ 4.46 Outstanding, September 30 2,034 1.95 1,592 $ 2.23 Exercisable 829 $ 2.36 313 $ 2.67 As at September 30, 2025, the range of exercise prices, the weighted average exercise price and the weighted average remaining contractual life are as follows: Options outstanding Options exercisable Weighted average Weighted Weighted remaining average average Range of exercise Number contractual exercise Number exercise prices outstanding life (period) price exercisable price (in 000's) (in 000's) $1.00 - $2.11 1,849 8.52 $ 1.86 674 $1.95 $2.12 - $5.44 185 6.67 $ 4.18 154 $4.14 2,034 7.33 $ 1.95 829 $2.36 TERAGO INC. Notes to Interim Condensed Consolidated Financial Statements (Expressed In thousands of Canadian dollars, except share and per share amounts) Three and nine months ended September 30, 2025 and 2024 (Unaudited) 17 9. Stock-based compensation (continued): (b) Restricted Share Units (RSUs): For the three and nine months ended September 30, 2025, the Company granted nil RSUs (2024 - nil and nil), respectively. For the three and nine months ended September 30, 2025, the Company recorded compensation expense of $0 and $0 (2024 - $1 and $10), respectively. In 2024, all RSUs were fully vested and settled in a combination of cash and equity with the Company paying $10 in cash and issuing 6,904 common shares and 3,696 common shares deducted for payment of withholding tax in connection with the settlement. (c) Performance Based Share Units (PSUs): For the three and nine months ended September 30, 2025 and September 30, 2024, the Company granted nil PSUs. For the three and nine months ended September 30, 2025 and September 30, 2024, the Company recorded nil compensation expense --- for both periods. In the third quarter of 2024, all of the issued PSUs aggregating to 16,956 were settled in common chares. (d) Stock-based compensation summary: The following table is a summary of the stock-based compensation expense: Three months ended Nine months ended September 30, September 30, 2025 2024 2025 2024 (in 000's) RSUs $ – $ 1 $ – $ 10 Stock options 142 135 569 425 Directors' fees paid in shares 17 77 69 192 $ 159 $ 213 $ 638 $ 627 TERAGO INC. Notes to Interim Condensed Consolidated Financial Statements (Expressed In thousands of Canadian dollars, except share and per share amounts) Three and nine months ended September 30, 2025 and 2024 (Unaudited) 18 10. Loss per share: The following table sets forth the calculation of basic and diluted loss per share. Three months ended Nine months ended September 30, September 30, 2025 2024 2025 2024 Numerator: Loss for the period $ (2,368) $ (3,338) $ (10,160) $ (10,097) Denominator: Weighted average number of common shares (in thousands): Basic and diluted 20,054 19,939 20,031 19,895 Loss per share: Basic and diluted $ (0.12) $ (0.17) $ (0.51) $ (0.51) Due to the loss for the three and nine months ended September 30, 2025, there were nil (2024 – nil) weighted average outstanding stock options, RSUs and PSUs excluded from the computation of diluted loss per share as their effect would have been anti-dilutive. 11. Financial instruments: (a) Classification and fair values of financial instruments: The fair values of cash and cash equivalents and short-term investments are based on quoted market values. The fair values of short-term financial assets and liabilities, including accounts receivable and accounts payable and accrued liabilities, as presented in the interim condensed consolidated statements of financial position, approximate their carrying amounts due to their short-term maturities. The fair value of long-term debt approximates its carrying value because management believes the interest rates approximate the market interest rate for similar debt with similar security. TERAGO INC. Notes to Interim Condensed Consolidated Financial Statements (Expressed In thousands of Canadian dollars, except share and per share amounts) Three and nine months ended September 30, 2025 and 2024 (Unaudited) 19 11. Financial instruments (continued): The following table outlines the carrying amounts and fair value of its financial assets and financial liabilities including their level in the fair value hierarchy: Carrying amount Fair value (Level 2) September 30, December 31, September 30, December 31, 2025 2024 2025 2024 Financial assets Cash and cash equivalents $ 1,297 $ 4,186 $ 1,297 $ 4,186 Short-term investments - 234 - 234 Accounts receivable 1,642 1,905 1,642 1,905 Financial liabilities Accounts payable and accrued liabilities $ 4,601 $ 4,161 $ 4,601 $ 4,161 Current portion of long-term debt (note 6) 28,408 24,847 28,408 24,847 Lease liabilities 19,899 18,681 19,899 18,681 (b) Credit risk: The Company’s credit risk exposure and management strategies are discussed in the notes to the 2024 Consolidated Financial Statements. During the nine months ended September 30, 2025, the movement in the credit loss allowance in respect of trade receivables was as follows: Balance, beginning of period $ 202 Amounts written off (20) Remeasurement of loss allowance 110 Balance, end of period $ 292 TERAGO INC. Notes to Interim Condensed Consolidated Financial Statements (Expressed In thousands of Canadian d --- ollars, except share and per share amounts) Three and nine months ended September 30, 2025 and 2024 (Unaudited) 20 11. Financial instruments (continued): (c) Liquidity risk: The Company’s liquidity risk exposure and management strategies are discussed in the notes to the 2024 Consolidated Financial Statements. As of September 30, 2025, the Company had cash and cash equivalents of $1,297. The Company has a history of operating losses and can be expected to generate continued operating losses and negative cash flows in the foreseeable future while it carries out its current business plan. Less than 1 year Current portion of long-term debt $ 28,408 Current portion of other long-term liabilities (exit fee) 1,072 Accounts payable and accrued liabilities 4,601 $ 34,081 (d) Interest rate risk: As a result of the Company’s term debt facility (see Note 6), the Company is exposed to changes in interest rates on its cash and cash equivalents and its credit facility with CrowdOut (note 10). As at September 30, 2025, the credit facility with CrowdOut bore interest at a rate equal to adjusted SOFR plus 9.0%, subject to a minimum SOFR floor of 5%. A 1% increase in the interest rate would have increased annual interest by $220, while a 1% decrease in interest rate would have the equal but opposite effect. This analysis assumes that all other variables remain constant. (e) Currency risk: The Company transacts business in multiple currencies, the most significant of which is the U.S. Dollar. Currently, the Company does not enter into foreign exchange contracts to manage this exposure but may do so in the future. The Company has foreign currency exposure with respect to cash and cash equivalents, accounts receivable, accounts payable and the credit facility with CrowdOut. It is also exposed to foreign currency risk on revenue and expenses where it invoices or procures in U.S. dollars. TERAGO INC. Notes to Interim Condensed Consolidated Financial Statements (Expressed In thousands of Canadian dollars, except share and per share amounts) Three and nine months ended September 30, 2025 and 2024 (Unaudited) 21 11. Financial instruments (continued): Balances denominated in foreign currencies that are considered financial instruments are as follows: September 30, September 30, 2025 2024 Cash and cash equivalents U.S. dollar $ 79 $ 2,954 Accounts payable and accrued liabilities U.S. dollar 652 471 Term debt facility U.S. dollar 21,000 19,000 12. Segment reporting: The Company has determined that it operates as a single reportable operating segment providing redundant connectivity services including fixed wireless access and fiber and cable wireline network connectivity for purposes of making operating decisions. The Company’s Chief Executive Officer, the chief operating decision maker, evaluates performance, makes operating decisions and allocates resources based on financial data consistent with the segmented reporting in these interim financial statements. 13. Subsequent events: On October 16, 2025, the Company completed a series of recapitalization transactions that were initially announced on September 11, 2025. The transactions were interdependent and closed concurrently, providing new financing to refinance existing indebtedness and strengthen the Company’s capital structure. The recapitalization comprised the following components: (a) Rights offering: The Company completed a rights offering to eligible holders of its common shares, issuing 12,675,208 commo --- n shares at a subscription price of $0.84 per share, for total gross proceeds of approximately $10,647. The rights offering was partially supported by standby purchasers, including a significant shareholder and insider of the Company. TERAGO INC. Notes to Interim Condensed Consolidated Financial Statements (Expressed In thousands of Canadian dollars, except share and per share amounts) Three and nine months ended September 30, 2025 and 2024 (Unaudited) 22 13. Subsequent events (continued): (b) Private Placement: The Company completed a concurrent non-brokered private placement issuing 6,249,756 common shares at a subscription price of $0.84 per share, for total gross proceeds of approximately $5,250. (c) New Term Debt Facility: The Company entered into a new 36-month senior secured term loan facility with Cymbria Corporation as lender and EdgePoint Investment Group Inc. as administrative and collateral agent. The facility provided gross proceeds of approximately $30,571 and bears interest at 15% per annum, of which 10% is payable in cash in quarterly installments and 5% is payable- in-kind, accruing to the loan balance and payable at maturity. The loan is secured by a first ranking charge over substantially all of the Company’s assets. On October 21, 2025, the facility was syndicated by the administrative agent to additional lenders, and a total of 2,053,411 common share purchase warrants were issued on a pro rata basis to the participating lenders. Each warrant is exercisable into one common share of the Company for a 60-month period following issuance. The syndication did not result in any change to the total principal, interest rate, or other terms of the facility. The proceeds from the new debt facility were used to repay all amounts outstanding under the Company’s previous Existing Credit Agreement on October 15, 2025. The equity financing completed concurrently increased the Company’s available cash resources. In total the Company incurred approximately $1,600 in transaction costs related to the recapitalization. In aggregate, the equity financings resulted in the issuance of a total of 18,924,964 common shares, raising combined gross proceeds of approximately $15,897, resulting in 38,997,457 common shares issued and outstanding upon completion of the recapitalization transactions. These transactions occurred subsequent to September 30, 2025, and will be accounted for in the Company’s annual consolidated financial statements for the year ended December 31, 2025.