SEDAR Interim Financial Statements

Condensed Consolidated Interim Financial Statements of Zonetail Inc. For the three and nine months ended September 30, 2025 (Expressed in Canadian Dollars) September 30, 2025 P a g e | 2 RESPONSIBILITY FOR FINANCIAL STATEMENTS The accompanying unaudited condensed consolidated interim financial statements (the “Financial Statements”) for Zonetail Inc. (the "Company") have been prepared by management in accordance with International Financial Reporting Standards consistently applied (“IFRS”). These financial statements have been prepared on a historical cost basis with the exception of financial instruments classified as fair value through profit and loss. In addition, these financial statements have been prepared using the accrual basis of accounting except for cash flow information. Accordingly, a precise determination of many assets and liabilities is dependent upon future events. Therefore, estimates and approximations have been made using careful judgment. Recognizing that the Company is responsible for both the integrity and objectivity of the financial statements, management is satisfied that these financial statements have been fairly presented. 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 unaudited condensed consolidated 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 condensed consolidated interim financial statements of the Company have been prepared by and are the responsibility of the Company's management. The Company's independent auditor has not performed a review of these financial statements in accordance with standards established by the Canadian Chartered Professional Accountants for a review of interim financial statements by an entity's auditor. September 30, 2025 P a g e | 3 Zonetail Inc. Condensed Consolidated Interim Statements of Financial Position (In Canadian dollars) As at September 30 December 31 2025 2024 $ $ ASSETS Current Cash 4,298 716 Trade and other receivables (note 5) 23,674 14,834 Prepaid expenses 41,836 8,304 Total assets 69,808 23,854 LIABILITIES Current Trade and other payables (note 6) 649,855 736,842 Convertible debentures (note 7) 310,926 272,559 Promissory notes (note 8) 316,854 259,603 Current portion of bank loan (note 9) 7,901 7,560 Deposits against shares to be issued in equity 61,500 31,000 Due to related parties (note 12) 140,719 112,225 1,487,755 1,419,789 Non-current Long term portion of bank loan (note 9) 20,118 26,318 Total liabilities 1,507,873 1,446,107 SHAREHOLDERS' DEFICIENCY Share capital, warrants, equity portion of convertible debentures, share based compensation (note 11) 13,884,524 13,582,317 Deficit (15,322,589) (15,004,570) (1,438,065) (1,422,253) Total liabilities and shareholder’s deficiency 69,808 23,854 The accompanying notes are an integral part of these condensed consolidated interim financial statements. Nature of operations and going concern (note 1) Subsequent events (note 14) Approved on behalf of the board: (signed) “Mark Holmes” (signed) “Paul Scott” Director Director September 30, 2025 P a g e | 4 Zonetail Inc. Condensed Consolidated Interim Statements of Loss and Comprehensive Loss (In Canadian dollars) For three months ended For nine months ended September 30 2025 September 30 2024 September 30 2025 September 30 --- 2024 $ $ $ $ Revenue 4,100 9,919 20,834 28,479 Operating expenses Salaries and benefits (note 12) 60,782 152,915 182,346 421,188 Interest (3,469) 12,359 44,949 35,093 Software development and maintenance - - 600 - Professional fees 15,885 - 45,885 33,188 General and administrative (3,043) 14,670 10,496 35,104 Interest accretion - 5,687 - 20,377 Public company cost 7,646 12,653 15,001 34,627 Software hosting 6,312 14,366 30,954 30,303 Share-based compensation (notes 11 and 12) - - - 522 Rent 1,629 2,267 5,623 6,739 Investor relations - 26,000 - 26,000 85,742 242,635 338,854 644,859 Operating loss 81,642 232,716 318,020 644,859 Forgiveness of CEBA loan (note 10) - - - (20,000) Net loss and comprehensive loss for the period 81,642 232,716 318,020 596,380 Loss per share basic and diluted 0.00 0.00 0.00 0.00 Weighted average number of shares outstanding basic and diluted 280,520,672 253,840,501 273,577,117 247,217,452 The accompanying notes are an integral part of these condensed consolidated interim financial statements. September 30, 2025 P a g e | 5 Zonetail Inc. Condensed Consolidated Interim Statements of Cash Flows (In Canadian dollars) For nine months ended September 30 2025 September 30 2024 $ $ Operating activities Net loss and comprehensive loss for the period (318,020) (596,380) Adjustment for non-cash items: Share based compensation (notes 11 and 12) - 522 Interest accretion 9,765 20,377 Interest expense 45,853 33,579 Forgiveness of CEBA loan (note 10) - (20,000) Net change in non-cash working capital balances related to operating activities: Trade and other receivables (8,840) 102,266 Prepaid expenses (33,532) 28,863 Trade and other payables (86,987) (41,046) Due to related parties 28,494 28,495 Net cash used in operating activities (363,267) (434,324) Financing activities Proceeds from private placement 309,631 372,324 Deposits against shares to be issued in equity (30,500) - Proceeds from promissory notes 117,500 130,000 Repayment of promissory notes (77,500) - Share issuance costs (7,423) (6,233) Repayment of bank loan (5,859) (4,339) Convertible debenture issuance costs - - Net cash provided from financing activities 366,849 491,752 Net decrease in cash 3,582 48,428 Cash, beginning of the period 716 3,342 Cash, end of the period 4,298 51,770 The accompanying notes are an integral part of these condensed consolidated interim financial statements. Zonetail Inc. Condensed Consolidated Interim Statements of Changes in Shareholders’ Deficiency (In Canadian dollars) Share capital Warrants Equity portion of debentures Share based compensation Sub-total Deficit Total # $ $ $ $ $ $ $ Balance, December 31, 2023 245,895,747 12,913,813 80,663 11,876 236,153 13,242,505 (14,148,576) (906,071) Common shares issued after period end18,643,400 372,324 - - - 372,324 - 372,324 Share issuance costs - (6,481) 248 - - (6,233) - (6,233) Share based compensation (note 11) - - - 522 522 - 522 Expiry of stock options - - - - (6,030) (6,030) 6,030 - Net loss and comprehensive loss for the period - - - - - - (596,380) (596,380) Balance, September 30, 2024 264,539,147 13,279,656 80,911 11,876 230,645 13,604,088 (14,728,926) (1,135,838) Private placements 500,000 10,544 - - - 10,544 - 10,544 Share issuance costs (note 11) (1,840) - - - (1,840) - (1,840) Expiry of warrants - - (158) - - (158) 158 - Expiry of stock options - - - - (29,317) (29,317) 29,317 - Net loss and comprehensive loss for the period - - - - - - (295,119) (295,119) Balance, December 31, --- 2024 265,039,147 13,288,360 80,753 11,876 201,328 13,582,317 (15,004,570) (1,422,253) Private placements 15,481,525 309,631 - - - 309,631 - 309,631 Share issuance costs (note 11) - (7,423) - - - (7,423) - (7,423) Expiry of stock options - - - - (168,848) (168,848) 168,848 - Net loss and comprehensive loss for the period - - - - - - (318,020) (318,020) Balance, September 30, 2025 280,520,672 13,590,568 80,753 11,876 32,480 13,715,677 (15,153,742 (1,438,065) The accompanying notes are an integral part of these condensed consolidated interim financial statements. Zonetail Inc. Notes to the Condensed Consolidated Interim Financial Statements For the three and nine months ended September 30, 2025 (In Canadian dollars) September 30, 2025 P a g e | 7 1. Nature of operations and going concern Zonetail Inc. (“Zonetail” or the “Company”) was incorporated on March 14, 2013 under the Canada Business Corporations Act. The corporate office is located at 70 University Avenue, Suite 1460, Toronto, Ontario, Canada. Zonetail provides mobile platforms to hi-rise residential condominiums and apartments connecting the resident or guest to the amenities and services of their building through their personal mobile device. Included on the platforms is an explore section highlighting the businesses and services in the local area. The Company trades on the TSX Venture Exchange (“TSXV”) under the symbol “ZONE”. The condensed consolidated interim financial statements have been prepared on a going concern basis which presumes the realization of assets and discharge of liabilities in the normal course of business for the foreseeable future. The Company has accumulated a deficit amounting to $15,153,742 as at September 30, 2025 (December 31, 2024 - $15,004,570). The Company's ability to continue as a going concern is dependent upon its ability to attain profitable operations and generate funds therefrom, and to continue to obtain equity investment and borrowings sufficient to meet current and future obligations. The Company had a net loss and comprehensive loss for the nine months ended Setpember 30, 2025, of $318,020 (nine months ended September 30, 2024 - $596,380). As the Company continues to develop its core offerings, it will require additional financing to meet its working capital requirements. These conditions indicate a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern. These financial statements do not reflect the adjustments or reclassification of assets and liabilities which would be necessary if the Company were unable to continue its operations. These adjustments could be material. 2. Material accounting policies The Company applies International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”). These unaudited condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting. Accordingly, they do not include all of the information required for full annual financial statements required by IFRS as issued by IASB and interpretations issued by IFRIC. The policies applied in these unaudited condensed interim consolidated financial statements are based on IFRSs issued and outstanding as of December 1, 2025, the date the Board of Directors approved the --- statements. The same accounting policies and methods of computation are followed in these unaudited condensed interim consolidated financial statements as compared with the most recent annual financial statements as at and for the year ended December 31, 2024, except as noted below. Any subsequent changes to IFRS that are given effect in the Company’s annual financial statements for the year ending December 31, 2025, could result in restatement of these unaudited condensed interim consolidated financial statements. 3. Capital risk management The Company manages its capital with the following objectives: • to ensure sufficient financial flexibility to achieve the ongoing business objectives including funding of future growth opportunities, and pursuit of accretive acquisitions; and • to maximize shareholder return through enhancing the share value. Zonetail Inc. Notes to the Condensed Consolidated Interim Financial Statements For the three and nine months ended September 30, 2025 (In Canadian dollars) September 30, 2025 P a g e | 8 The Company monitors its capital structure and makes adjustments according to market conditions in an effort to meet its objectives given the current outlook of the business and industry in general. The Company may manage its capital structure by issuing new shares, repurchasing outstanding shares, adjusting capital spending, or disposing of assets. The capital structure is reviewed by management and the Board of Directors on an ongoing basis. The Company considers its capital to be equity, which comprises share capital, share issuance costs, warrants, share based compensation, equity portion of convertible debentures and deficit, which at September 30, 2025 , the shareholders’ deficiency totaled $1,438,065 (December 31, 2024 – shareholders’ deficiency of $1,422,253). The Company manages capital through its financial and operational forecasting processes. The Company reviews its working capital and forecasts its future cash flows based on operating expenditures, and other investing and financing activities. Selected information is provided to the Board of Directors of the Company. The Company is not subject to any capital requirements imposed by a lending institution or regulatory body. 4. Financial instruments Financial risk The Company's activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk (including interest rate and foreign currency risk). Risk management is carried out by the Company's management team under policies approved by the Board of Directors. The Board of Directors also provides regular guidance for overall risk management. There were no changes to credit risk, liquidity risk or market risk for the nine months ended September 30, 2025. Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Company’s financial instruments that are exposed to concentrations of credit risk relate primarily to cash, and trade and other accounts receivables. The Company mitigates its risk by maintaining its funds with large reputable financial institutions. Management assesses the credit quality of the borrower for receivables and believes there is not significant credit risk. Liquidity risk Liquidity risk is the risk that the Company encounters difficulty in meeting its obligations associated with financial liabilities. Liquidity risk includes the risk that, as --- a result of operational liquidity requirements, the Company will not have sufficient funds to settle a transaction on the due date; will be forced to sell financial assets at a value, which is less than what they are worth; or may be unable to settle or recover a financial asset. Liquidity risk arises from trade and other payables, promissory note, convertible debentures and commitments. The Company limits its exposure to this risk by closely monitoring the cash flow. All liabilities accept the bank loan are due within 1 year (see going concern note 1). Market risk Market risk is the risk of loss that may arise from changes in market factors such as interest rates and foreign exchange rates. Interest rate risk The Company currently does not have any short-term or long-term debt that is variable interest bearing. Foreign currency risk Foreign exchange risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in the foreign exchange rates. The Company enters into foreign currency purchase transactions and has assets that are denominated in foreign currencies and thus is exposed to the financial Zonetail Inc. Notes to the Condensed Consolidated Interim Financial Statements For the three and nine months ended September 30, 2025 (In Canadian dollars) September 30, 2025 P a g e | 9 risk of earnings fluctuations arising from changes in foreign exchange rates and the degree of volatility of these rates. The Company does not currently use derivative instruments to reduce its exposure to foreign currency risk. As at September 30, 2025, the Company had no material foreign currency balances as at year end that would have a material impact in the net loss and comprehensive loss (December 31, 2024, no material foreign currency balances). 5. Trade and other receivables September 30 2025 December 31 2024 $ $ Sales tax receivable 11,174 6,924 Trade and accrued receivables 12,500 7,910 23,674 14,834 6. Trade and other payables September 30 2025 December 31 2024 $ $ Trade payables 504,494 531,244 Accrued liabilities 145,365 205,598 649,859 736,842 7. Convertible debentures June 30 2025 December 31 2024 $ $ Convertible debentures 203,800 203,800 Unaccreted portion of convertible debentures - (2,187) Accrued interest 107,126 70,946 310,926 272,559 On April 25, 2023, the Company closed a non-brokered private placement of convertible debenture securities generating aggregate gross proceeds of $203,800. The private placement involved the issuance of secured convertible debentures bearing interest at 20% per annum, with a 24-month term from issuance and providing for a conversion price of $0.05 per share. The debentures are convertible by the holder at any time. The debentures are convertible at the option of the Company, if the Company’s shares trade in excess of $0.125 over any period of 10 trading days during the term, whether or not consecutive. 8. Promissory notes On June 30, 2023 and July 11, 2023, the Company issued short-term promissory notes in the amount of $30,000 and $20,000 respectively. The notes pay a commitment fee of 10% of the face value of the note along with 10% interest from the maturity date. The principal amount along with the commitment fee totaling $55,000 is payable 12 months from issuance or five business days after the Company completes a financing in excess of $250,000. The term on the notes has been extended to June 30, 2026 and July 11, 2026. Zonetail Inc. Notes to the Co --- ndensed Consolidated Interim Financial Statements For the three and nine months ended September 30, 2025 (In Canadian dollars) September 30, 2025 P a g e | 10 On December 15, 2023 and December 21, 2023, the Company issued short-term promissory notes in the amount of $15,000 and $5,000 respectively. The notes pay a commitment fee of 10% of the face value of the note along with 10% interest from the maturity date. The principal amount along with the commitment fee totaling $22,000 is payable 12 months from issuance or five business days after the Company completes a financing in excess of $500,000. The term on the notes has been extended to December 15, 2026 and December 21, 2026. On October 15, 2023, the Company issued a short-term promissory note in the amount of $24,800 in lieu of the repayment of the convertible debentures in the amount of $20,000. The note bears interest at 10% interest from the issue date and is due December 31, 2024. The term on the notes has been extended to October 15, 2026. In March, April and May 2024, the Company issued short term promissory notes totaling $71,869. The notes pay a commitment fee of 10% of the face value of the note along with 10% interest from the maturity date. The principal amount along with the commitment fee are payable 12 months from issuance or five business days after the Company completes a financing in excess of $500,000. In June, July and September 2024, the Company issued short term promissory notes totaling $28,000. The notes pay a commitment fee of 10% of the face value of the note along with 10% interest from the maturity date. The principal amount along with the commitment fee are payable 12 months from issuance or five business days after the Company completes a financing in excess of $500,000. In September and October 2024, the Company issued short term promissory notes totaling $16,869. The notes pay a commitment fee of 10% of the face value of the note along with 10% interest from the maturity date. The principal amount along with the commitment fee are payable 12 months from issuance or five business days after the Company completes a financing in excess of $500,000. In March 2025, the Company issued short term promissory notes totaling $5,000. The notes pay a commitment fee of 10% of the face value of the note along with 10% interest from the maturity date. The principal amount along with the commitment fee are payable 12 months from issuance or five business days after the Company completes a financing in excess of $500,000. In April 2025, the Company issued short term promissory notes totaling $82,500. The notes pay a commitment fee of 10% of the face value of the note along with 10% interest from the maturity date. The principal amount along with the commitment fee are payable 12 months from issuance or five business days after the Company completes a financing in excess of $500,000. In June 2025, $77,500 of these notes were repaid along with the commitment fee of $8,250. In the third quarter of 2025, the Company issued short term promissory notes totaling $30,000. The notes pay a commitment fee of 10% of the face value of the note along with 10% interest from the maturity date. The principal amount along with the commitment fee are payable 12 months from issuance or five business days after the Company completes a financing in excess of $500,000. Subsequent to September 30, 2025, $10,000 of the notes were repaid plus the commitment fee. 9. Bank loan On January 18, 2024 --- , the Company received bank term loan in the amount of $40,000 in order to repay the CEBA Loan (refer to note 10). The bank term loan bears interest at prime plus 2.34% payable in blended principal and interest payments of $840 per month. Zonetail Inc. Notes to the Condensed Consolidated Interim Financial Statements For the three and nine months ended September 30, 2025 (In Canadian dollars) September 30, 2025 P a g e | 11 10. Government loan During 2020 and 2021, the Company received a $40,000 loan and a $20,000 loan respectively from a recognized Canadian financial institution from the Canada Emergency Business Account (the “CEBA Loan”). The CEBA Loan bears 0% interest until December 31, 2023. On January 18, 2024, $40,000 of the CEBA loan was reapid and $20,000 loan forgiveness was received. 11. Shareholders’ equity Authorized share capital The Company is authorized to issue an unlimited number of common shares with no par value. Common shares issued # $ Balance, December 31, 2023 245,895,747 12,913,813 Private placements for cash 19,143,400 382,868 Share issuance costs - (8,321) Balance, December 31, 2024 265,039,147 13,288,360 Private placements for cash 15,481,525 309,631 Share issuance costs - (7,423) Balance, September 30, 2025 280,520,672 13,590,568 On June 23, 2025, the Company completed a private placement of shares issued at a price of $0.02 per share. The Company issued an aggregate of 8,750,000 shares, for gross proceeds of $175,000. On March 20, 2025, the Company completed a private placement of shares issued at a price of $0.02 per share. The Company issued an aggregate of 6,731,525 shares, for gross proceeds of $134,631. On September 27, 2024 and October 16, 2025, the Company completed the first and second tranches of a private placement of shares issued at a price of $0.02 per share. The Company issued an aggregate of 8,750,000 shares, for gross proceeds of $175,000. On April 22, 2024, April 29, 2024, and May 3, 2024, the Company completed the first, second, and third tranches of a private placement of shares issued at a price of $0.02 per share. The Company issued an aggregate of 6,327,425, 2,702,375, and 1,363,600 shares, for gross proceeds of $207,868. The Company paid cash compensation as finders fees of $840 and issued 42,000 finders warrants of the Company to such eligible finders (“Finders Warrants”). Each Finder Warrant entitles the holder to purchase one Share of the Company at an exercise price of $0.05, for a period of thirty-six months from the closing date of the Offering. The fair value of the finder warrants was estimated to be $248 using the Black-Scholes option pricing model with the following weighted average assumptions - share price - $0.02, dividend yield - 0%; expected volatility – 100%; risk-free interest rate – 3.77%; and an expected life - 3 years. As at September 30, 2025, cumulative share issuance costs totaled $573,613 (December 31, 2024 - $566,190). Warrants Warrants Amount # $ Balance, December 31, 2023 14,588,335 80,663 Finder warrants 42,000 248 Expired (33,960) (158) Balance, December 31, 2024 and September 30, 2025 14,596,375 80,753 Zonetail Inc. Notes to the Condensed Consolidated Interim Financial Statements For the three and nine months ended September 30, 2025 (In Canadian dollars) September 30, 2025 P a g e | 12 Date of issuance Remaining life Number of warrants Exercise price # $ October 4, 2022 0.01 years 6,652,375 0.05 December 21, 2022 0.22 years 3,445,000 0.05 April 4, 2023 0. --- 51 years 3,876,000 0.05 April 18, 2023 0.55 years 200,000 0.05 May 30, 2023 0.66 years 141,000 0.05 September 29, 2023 1.00 years 150,000 0.05 October 13, 2023 1.04 years 90,000 0.05 April 18, 2024 1.55 years 42,000 0.05 14,596,375 On April 4, 2024, the Company issued 42,000 Finder Warrants with each Warrant exercisable into one common share of the Company, expiring April 18, 2027, at an exercise price of $0.05 per warrant. On April 3, 2024, the Company announced an extension of the Warrants for an additional one year and on March 27, 2025, the Company announced an extension of the debentures and Warrants for an additional one year. On October 4, 2025, 6,552,375 warrants expired unexercised. Share based compensation The Company adopted a fixed stock option plan (the "Plan") whereby the Board of Directors may grant to employees, officers, directors, management consultants and external consultants of the Company or of its subsidiary thereof, options to acquire common shares in such numbers, for such terms and at such exercise prices as may be determined by the Board. The exercise price of each option may not be lower than the market price of the common shares at the time of the grant of the options. The options vest at the date of the grant unless additional restrictions on the vesting of the options are imposed by the Board of Directors except for the consultants working in investor relations, whose options are vested in quarterly installments over a twelve-month period from grant. The option period is a period of time fixed by the Board of Directors but cannot exceed 5 years. Weighted average Options exercise price # $ Balance, December 31, 2023 9,000,000 0.06 Expired (8,250,000) 0.06 Balance, December 31, 2024 and September 30, 2025 750,000 0.05 Exercisable at September 30, 2025 750,000 0.05 A summary of the outstanding stock options as at September 30, 2025 is presented below: Date of grant Remaining life Number of options Exercisable Exercise price # # $ September 16, 2021 0.96 years 500,000 500,000 0.065 June 9, 2022 1.69 years 250,000 250,000 0.05 750,000 750,000 On July 16, 2025, 7,000,000 stock options expired unexercised. Zonetail Inc. Notes to the Condensed Consolidated Interim Financial Statements For the three and nine months ended September 30, 2025 (In Canadian dollars) September 30, 2025 P a g e | 13 12. Key management compensation and related party transactions Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any directors (executive and non- executive) of the Company. Remuneration of directors and key management personnel of the Company was as follows: For the three months ended September 30 For the nine months ended September 30 2025 2024 2025 2024 $ $ $ $ Salaries and benefits 46,216 85,970 138,658 261,410 Due to related parties includes $140,718 (December 31, 2024 - $112,225) accrued for director’s fees which have no terms of repayment and are unsecured. 13. Loss per share For the nine months ended September 30, 2025, basic and diluted loss per share has been calculated based on the loss attributable to common shareholders of $318,020 (nine months ended September 30, 2024 - $596,380) and the weighted average number of common shares outstanding of 273,577,117 (nine months ended September 30, 2024 – 248,562,281). Diluted loss per share did not include the effect of stock options, warrants --- and conversion features as they are anti-dilutive. For the three months ended September 30, 2025, basic and diluted loss per share has been calculated based on the loss attributable to common shareholders of $81,642 (three months ended September 30, 2024 - $232,716) and the weighted average number of common shares outstanding of 280,520,672 (three months ended September 30, 2024 – 256,559,169). Diluted loss per share did not include the effect of stock options, warrants and conversion features as they are anti-dilutive. 14. Subsequent events On October 23, 2025 and November 24, 2025, the Company completed the first and seconds tranches of a private placement, issuing 11,825,000 and 8,050,000 common shares at a price of $0.02 per share for gross proceeds totalling $397,500. On October 4, 2025, 6,552,375 warrants expired unexercised. On October 3, 2025, 6,397,375 warrants and 255,000 broker warrants expired unexercised.