SEDAR Interim Financial Statements

NEXE INNOVATIONS INC. Condensed Consolidated Interim Financial Statements For the three and six months ended November 30, 2025 and 2024 (Unaudited - Expressed in Canadian dollars) NOTICE TO READER The accompanying unaudited condensed consolidated interim financial statements of NEXE INNOVATIONS INC. (the “Company”) have been prepared by and are the responsibility of management. The unaudited condensed consolidated interim financial statements have not been reviewed by the Company’s auditors. NEXE INNOVATIONS INC. Condensed Consolidated Interim Statements of Financial Position As at November 30, 2025 and May 31, 2025 (Unaudited - Expressed in Canadian dollars, unless otherwise noted) 3 Consolidated Statements of Financial Position As at: Notes November 30, 2025 May 31, 2025 ASSETS Current assets Cash and cash equivalents $ 1,927,732 $ 9,282,299 Term deposits - 30,000 Investment in GICs 3 8,673,468 3,000,000 Trade and other receivables 4 446,304 363,894 Inventory 5 614,268 658,783 Prepaid expenses and deposits 6 256,613 99,520 Total current assets $ 11,918,385 $ 13,434,496 Non-current assets Prepaid expenses and deposits 6 1,467,467 1,467,467 Property, plant and equipment 8 18,576,957 19,358,733 Intangible assets 78,980 78,980 Total assets $ 32,041,789 $ 34,339,676 LIABILITIES Current liabilities Trade and other payables 2,020,659 2,210,850 Income tax payable 449,873 449,873 Deferred revenue 46,436 9,838 Government loan payable 9 332,581 396,741 Total current liabilities $ 2,849,549 $ 3,067,302 Total liabilities $ 2,849,549 $ 3,067,302 EQUITY Share capital 11 66,189,968 66,189,968 Reserves 12 3,684,733 3,297,041 Contributed surplus 12 8,706,752 8,706,752 Deficit (49,389,213) (46,921,387) Total shareholders' equity $ 29,192,240 $ 31,272,374 Total liabilities and shareholders' equity $ 32,041,789 $ 34,339,676 Nature of operations (Note 1) Segment reporting (Note 17) Events after reporting period (Note 20) Approved by the Board of Directors and authorized for issue on January 26, 2026: ______“Darren Footz”_____ Director ________“Killian Ruby” ____Director The accompanying notes are an integral part of these condensed consolidated interim financial statements NEXE INNOVATIONS INC. Condensed Consolidated Interim Statements of Income (Loss) and Comprehensive Income (Loss) For the three and six months ended November 30, 2025 and 2024 (Unaudited - Expressed in Canadian dollars, unless otherwise noted) 4 Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) For the three months ended: For the six months ended: Notes November 30, 2025 November 30, 2024 November 30, 2025 November 30, 2024 Revenue $ 198,644 $ 70,754 $ 319,128 $ 73,901 Cost of goods sold 14 (247,928) (226,050) (351,960) (237,475) Gross income (loss) $ (49,284) $ (155,296) $ (32,832) $ (163,574) Operating expenses Selling, general and administrative 13 520,145 906,001 1,255,632 1,663,755 Depreciation 8 362,340 486,781 811,467 1,006,481 Interest and accretion 9 6,786 29,194 19,791 63,309 Research and development 15,732 105,871 119,193 222,582 Share-based compensation 10,12 168,712 24,582 387,692 160,106 Total operating expenses $ (1,073,715) $ (1,552,429) $ (2,593,775) $ (3,116,233) Operating loss before other items $ (1,122,999) $ (1,707,725) $ (2,626,607) $ (3,279,807) Other items Interest income 3 82,699 118,083 184,263 275,083 Foreign exchange gain (loss) 280 (29,392) (25,482) (19,873) Inventory write-down – (26,621) – (28,879) Net gain on disposal of assets 7 – – --- – 3,700,554 Total other items $ 82,979 $ 62,070 $ 158,781 $ 3,926,885 Income (loss) from continuing operations before tax $ (1,040,020) $ (1,645,655) $ (2,467,826) $ 647,078 Income tax expense – – – – Net income (loss) and comprehensive income (loss) $ (1,040,020) $ (1,645,655) $ (2,467,826) $ 647,078 Basic and diluted earnings (loss) per common share $ (0.01) $ (0.02) $ (0.03) $ 0.01 Basic and diluted weighted average number of shares outstanding 97,293,297 97,293,297 97,293,297 97,293,297 The accompanying notes are an integral part of these condensed consolidated interim financial statements NEXE INNOVATIONS INC. Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity For the six months ended November 30, 2025 and 2024 (Unaudited - Expressed in Canadian dollars, unless otherwise noted) 5 Consolidated Statements of Changes in Shareholders’ Equity Number of common shares Share capital Reserves Contributed surplus Deficit Total shareholders' equity Balance - May 31, 2024 97,293,297 $ 66,189,968 $ 2,774,501 $ 8,706,752 $ (44,076,154) $ 33,595,067 Share-based compensation - - 160,106 - - 160,106 Net income - - - - 647,078 647,078 Balance - November 30, 2024 97,293,297 $ 66,189,968 $ 2,934,607 $ 8,706,752 $ (43,429,076) $ 34,402,251 Balance - May 31, 2025 97,293,297 $ 66,189,968 $ 3,297,041 $ 8,706,752 $ (46,921,387) $ 31,272,374 Share-based compensation - - 387,692 - - 387,692 Net loss - - - - (2,467,826) (2,467,826) Balance - November 30, 2025 97,293,297 $ 66,189,968 $ 3,684,733 $ 8,706,752 $ (49,389,213) $ 29,192,240 Share Capital (Note 11) Reserves and Contributed Surplus (Note 12) The accompanying notes are an integral part of these condensed consolidated interim financial statements NEXE INNOVATIONS INC. Condensed Consolidated Interim Statements of Cash Flows For the six months ended November 30, 2025 and 2024 (Unaudited - Expressed in Canadian dollars, unless otherwise noted) 6 Consolidated Statements of Cash Flows For the six months ended: November 30, 2025 November 30, 2024 OPERATING ACTIVITIES Net income (loss) $ (2,467,826) $ 2,292,733 Items not affecting cash: Depreciation 893,357 521,830 Inventory write-down - 2,258 Interest and accretion 19,791 34,114 Gain on disposal of assets - (3,848,348) Share-based compensation 387,692 135,524 (1,173,772) (861,889) Changes in non-cash working capital items: Trade and other receivables (82,413) (104,647) Inventory 44,515 19,664 Prepaid expenses and deposits (157,093) - Trade and other payables (190,809) (116,168) Deferred revenue 36,598 18,000 Net cash used in operating activities $ (1,516,188) $ (1,045,040) INVESTING ACTIVITIES Purchase of property, plant and equipment (111,578) (69,051) Increase in prepaid expenses - 59,958 Proceeds from sale of assets, net of cost to sell - 5,700,000 Redemption of term deposit 30,000 - Investment in GIC (5,673,469) - Net cash generated by (used in) investing activities $ (5,755,047) $ 5,690,907 FINANCING ACTIVITIES Repayment of government loan $ (83,334) $ (125,001) Net cash used in financing activities $ (83,334) $ (125,001) Increase (decrease) in cash and cash equivalents $ (7,354,569) $ 4,520,866 Cash and cash equivalents, beginning of period $ 9,282,301 $ 8,048,712 Cash and cash equivalents, end of period $ 1,927,732 $ 12,569,578 The accompanying notes are an integral part of these condensed consolidated interim financial statements NEXE INNOVATIONS INC. Notes to Condensed Consolidated Interim Financial Statements For the three --- and six months ended November 30, 2025 and 2024 (Unaudited - Expressed in Canadian dollars, unless otherwise noted) 7 1. Nature of Operations NEXE Innovations Inc. (“NEXE” or the “Company”) is a leader in plant-based compostable technology and advanced materials manufacturing based in British Columbia, Canada. The Company has developed patented, fully compostable, plant-based, single-serve coffee pods for use in leading single-serve coffee machines. NEXE Innovations Inc., formerly Whatcom Capital Corp. (“Whatcom”), was incorporated pursuant to the Business Corporations Act (British Columbia) on September 19, 2019. Whatcom subsequently completed an initial public offering as a Capital Pool Company and listed its common shares on the TSX Venture Exchange (the “Exchange”) on June 4, 2020. On December 15, 2020, Whatcom completed its qualifying transaction (the “Transaction”) with Nexe Innovations Inc. (“Privco”). The Company’s registered and records office and head office is located at #1200 – 750 West Pender Street, Vancouver, British Columbia V6C 2T8. 2. Material Accounting Policy Information Basis of Preparation Statement of Compliance These condensed consolidated interim financial statements (“Financial Statements”) have been prepared in accordance with IAS 34, “Interim Financial Reporting of the International Financial Reporting Standards” (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), following the same accounting policies, including estimates and judgments and methods of application as those disclosed in the annual audited consolidated financial statements for the year ended May 31, 2025, except as described in the notes to the Financial Statements. The Financial Statements should be read in conjunction with the annual consolidated financial statements of the Company for the year ended May 31, 2025, which have been prepared in accordance with IFRS. The Financial Statements of the Company are presented in Canadian dollars unless otherwise indicated. Basis of Consolidation Subsidiaries The Financial Statements include the accounts of the Company and its subsidiaries, which are controlled by the Company. Control is achieved when the parent company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Company controls an investee if, and only if, the Company has all of the following: (i) power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee); (ii) exposure, or rights, to variable returns from its involvement with the investee; and (iii) the ability to use its power over the investee to affect its returns. The financial statements of the subsidiaries are included in these financial statements from the date that control commences until the date that control ceases. All significant inter-company balances and transactions are eliminated on consolidation. The entities contained in the Financial Statements are as follows: Entity Name Place of Business and Operations Functional Currency Equity Percentage NEXE Innovations Inc. (the “Company”) – parent Canada CAD n/a Xoma Operations Inc. (“XOI”) Canada CAD 100% owned by parent NEXE Coffee Ltd. (“NCL”) Canada CAD 100% owned by parent NEXE Polymers Inc. (“NPI”) Canada CAD 100% owned by parent NEXE Operations Inc. (“NOI”) Canada CAD 100% owned by parent NEXE Technolo --- gy Corp. (“NTC”) Canada CAD 100% owned by NOI G-Pak Holdings Ltd. (“GHL”) Canada CAD 100% owned by NOI NEXE INNOVATIONS INC. Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended November 30, 2025 and 2024 (Unaudited - Expressed in Canadian dollars, unless otherwise noted) 8 Foreign Currency Transactions Transactions undertaken in foreign currencies are translated into Canadian dollars at daily exchange rates prevailing when the transactions occur. Monetary assets and liabilities denominated in foreign currencies are translated at period-end exchange rates and non-monetary items are translated at historical exchange rates. Realized and unrealized exchange gains and losses are recognized in the consolidated statements of loss and comprehensive loss. Amendments to IAS 21 – Lack of Exchangeability The amendments to IAS 21 provide additional guidance on when a currency is exchangeable and on how to determine the exchange rate when it is not. The amendments also require the disclosure of additional information when a currency is not considered exchangeable. The amendments are applied prospectively for annual periods beginning on or after 1 January 2025, with early application permitted. There is no significant impact to the Company’s condensed consolidated interim financial statements based on assessment performed. Recent Pronouncements Not Yet Effective and That Have Not Been Adopted Early Certain new standards, interpretations, amendments, and improvements to existing standards were issued by the IASB or IFRIC that are not yet effective. The standards and amendments issued that are applicable to the Company are as follows: IFRS 18 – Presentation and Disclosure of Financial Statements The introduction of IFRS 18 will provide all entities applying IFRS with more guidance on the presentation and disclosure of information in general purpose financial statements. The new standard will clarify guidance on how to present and disclose information that faithfully represents an entity’s assets, liabilities, equity, revenue and expenses. The new standards are applied retrospectively for annual periods beginning on or after 1 January 2027, with early adoption permitted provided that this fact is disclosed. The Company is currently assessing the expected impact of this standard. IAS 7– Statement of Cash flows and IFRS 7 – Financial Instruments The IASB has ongoing projects to amend these standards as part of its broader disclosure and transparency initiatives. The proposed amendments to IAS 7 are intended to improve the presentation and granularity of cash flow information, including enhanced disclosure of changes in liabilities arising from financing activities and more detailed breakdowns of operating, investing, and financing cash flows. Similarly, proposed changes to IFRS 7 aim to strengthen disclosures related to financial instrument risks, particularly around liquidity risk, concentration of exposures, and the maturity analysis of financial liabilities. These enhancements are expected to provide users of financial statements with improved insights into an entity’s funding and risk management practices, especially under stressed conditions. In May 2024, the IASB issued Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and IFRS 7). The key changes included clarification on the recognition and derecognition date of certain financial assets and liabilities, and am --- ended the requirements related to financial liabilities settled through electronic payment system, including an option to utilize an accounting policy for early derecognition. It also clarified how to assess the contractual cash flow characteristics of financial assets in determining whether they meet the solely payments of principal and interest criterion, including financial assets that have environmental, social and corporate governance (ESG)-linked features and other similar contingent features. The IASB also added disclosure requirements to provide additional transparency regarding equity investments designated at fair value through other comprehensive income and financial instruments with contingent features, such as those related to ESG. NEXE INNOVATIONS INC. Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended November 30, 2025 and 2024 (Unaudited - Expressed in Canadian dollars, unless otherwise noted) 9 Material Accounting Policies Material accounting policies applied to these Financial Statements are the same as those applied to the Company’s audited consolidated financial statements for the year ended May 31, 2025. Use of Estimates, Assumptions, and Judgements Material accounting estimates, assumption, and judgements applied to these Financial Statements are the same as those applied to the Company’s audited consolidated financial statements for the year ended May 31, 2025. 3. Investment in GICs The Company has invested in short-term redeemable guaranteed investment certificates (GICs) with Canadian financial institutions, totaling $8,673,468 as of November 30, 2025, compared to $3,000,000 on May 31, 2025. These GICs earn interest ranging from 3.02% to 3.20% per year and have maturity dates between January 1, 2026 and February 2, 2026. The GIC recorded at May 31, 2025 was redeemed in July 2025 and the proceeds were re-invested in another short-term GIC. 4. Trade and Other Receivables Trade and other receivables comprise the following: November 30, 2025 May 31, 2025 Trade receivables $ 38,810 $ 81,524 Sales tax input tax credits 314,371 242,396 Accrued interest 93,123 39,974 Total trade and other receivables $ 446,304 $ 363,894 Aging of trade and other receivables is as follows: Aging of trade and other receivables November 30, 2025 May 31, 2025 Current $ 125,745 $ 45,944 Over 60 days 6,188 75,554 Total trade and other receivables $ 131,933 $ 121,498 5. Inventory November 30, 2025 May 31, 2025 Raw materials $ 544,901 $ 553,635 Finished goods 69,367 105,148 Total inventory $ 614,268 $ 658,783 Cost of inventories recognized as an expense during the three and six months ended November 30, 2025 were $144,606 and $179,935 respectively (2024 - $1,112 and $85,365). During the six months ended November 31, 2025 and 2024 the inventory was not written down for obsolescence. NEXE INNOVATIONS INC. Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended November 30, 2025 and 2024 (Unaudited - Expressed in Canadian dollars, unless otherwise noted) 10 6. Prepaid Expenses and Deposits November 30, 2025 May 31, 2025 Prepayments on purchase of property, plant and equipment $ 1,672,129 $ 1,493,558 Prepaid operating expenses 51,951 73,429 Total prepaid expenses and deposits $ 1,724,080 $ 1,566,987 Less: non-current portion of prepaid expenses and deposits 1,467,467 1,467,467 Current portion of prepaid expenses and deposits 256,613 99,520 7. Assets held for sale Th --- e Company’s former manufacturing facility based in Surrey, British Columbia, was listed for sale and sold on July 30, 2024 for gross proceeds of $5,700,000. The Company incurred total selling costs of $147,794, resulting in a net gain on disposal of $3,700,554 during the six months ended November 30, 2024. Cost Accumulated depreciation Net carrying value Property $ 2,025,185 $ 555,679 $ 1,469,506 Building improvements 67,499 26,623 40,876 Land 341,270 – 341,270 Balance at May 31, 2024 $ 2,433,954 $ 582,302 $ 1,851,652 Sale of assets held for sale (2,433,954) (582,302) (1,851,652) Balance at May 31, 2025 and August 31, 2025 $ – $ – $ – NEXE INNOVATIONS INC. Notes to Condensed Consolidated Interim Financial Statements For the three months ended August 31, 2025 and 2024 (Unaudited - Expressed in Canadian dollars, unless otherwise noted) 11 8. Property, Plant and Equipment Computer equipment Furniture and equipment Machinery Building improvements Manufacturing facility Vehicles Land Government loan benefit Total $ $ $ $ $ $ $ $ $ Cost Balance, May 31, 2024 46,553 928,263 17,376,824 4,123,131 3,192,102 96,623 1,241,373 (1,409,113) 25,595,756 Additions 1,626 – 100,387 82,409 – – – – 184,422 Balance, May 31, 2025 48,179 928,263 17,477,211 4,205,540 3,192,102 96,623 1,241,373 (1,409,113) 25,780,178 Additions – – 89,499 22,084 – – – – 111,583 Balance, November 30, 2025 48,179 928,263 17,566,710 4,227,624 3,192,102 96,623 1,241,373 (1,409,113) 25,891,761 Accumulated depreciation and impairment Balance, May 31, 2024 42,652 704,840 3,700,064 353,049 671,926 1,139 – (828,954) 4,644,716 Depreciation in the period 2,858 56,699 1,447,741 227,745 159,605 28,827 – (146,746) 1,776,729 Balance, May 31, 2025 45,510 761,539 5,147,805 580,794 831,531 29,966 – (975,700) 6,421,445 Depreciation in the period 986 22,742 738,400 114,504 80,021 10,079 – (73,373) 893,359 Balance, November 30, 2025 46,496 784,281 5,886,205 695,298 911,552 40,045 – (1,049,073) 7,314,804 Carrying amount Balance, May 31, 2024 3,901 223,423 13,676,760 3,770,082 2,520,176 95,484 1,241,373 (580,159) 20,951,040 Balance, May 31, 2025 2,669 166,724 12,329,406 3,624,746 2,360,571 66,657 1,241,373 (433,413) 19,358,733 Balance, November 30, 2025 1,683 143,982 11,680,505 3,532,326 2,280,550 56,578 1,241,373 (360,040) 18,576,957 (1) The benefit of the loans from government at a below-market interest rate is measured and recognized as the difference between the initial carrying value of the loans determined using the effective interest method and the proceeds received. The benefit amount is amortized in the profit and loss over the same period as the useful life of the machinery. (2) $2,377,142 (May 31, 2025 - $2,377,142) included in the carrying amount of machinery is not available for use, no depreciation is calculated on these assets. As at November 30, 2025, the Company performed its impairment tests for property, plant and equipment. The recoverable amount was determined based on fair value less costs of disposal as the Company is still under initial commercialization production stage and Management is not in a position to estimate the cash flows that will be generated once it starts its operation in full capacity. Management determined the carrying amount did not exceed its recoverable amount as at November 30, 2025 and, accordingly, did not record any impairment charge (2024: no impairment charge). A total accumulated impairment of $1,288,117 as at November 30, 2025 remained unchanged from M --- ay 31, 2025. NEXE INNOVATIONS INC. Notes to Condensed Consolidated Interim Financial Statements For the three months ended August 31, 2025 and 2024 (Unaudited - Expressed in Canadian dollars, unless otherwise noted) 12 9. Government Loan The Company received $2,500,000 of loans from Western Economic Diversification Canada (“WEDC”) and is required to make monthly repayments of $41,667, that were to commence August 1, 2020; however, an extension for repayment was granted to January 1, 2021, and maturity was extended to December 1, 2025. The loan was considered as an interest free loan and the difference between the fair value of the loan and the principal was credited against property, plant and equipment. The continuity schedule as at November 30, 2025 and May 31, 2025 is as follows: November 30, 2025 May 31, 2025 Opening balance $ 396,741 $ 665,953 Accretion 19,174 105,791 Repayment (83,334) (375,003) Closing balance $ 332,581 $ 396,741 After a short interruption, the Company began making quarterly payments again in October 2025. 10. Related Party Transactions and Balances Key management compensation Key management personnel include those persons having authority and responsibility for planning, directing, and controlling the activities of the Company as a whole. The Company has determined that key management personnel consisted of members of the Company’s Board of Directors and corporate officers. The remuneration of key management personnel and directors of the Company during the three and six months ended November 30, 2025 and 2024 is as follows: Three months ended: Six months ended: November 30, 2025 November 30, 2024 November 30, 2025 November 30, 2024 Salary, benefits and consulting fees $ 148,060 $ 154,060 $ 291,620 $ 296,120 Share-based compensation 94,130 48,452 217,362 97,315 Total related party compensation $ 242,190 $ 202,512 $ 508,982 $ 393,435 11. Share Capital Authorized: Common Shares: unlimited without par value. Issued and outstanding: As at November 30, 2025, the Company had 97,293,297 (May 31, 2025: 97,293,297) issued and outstanding common shares. During the six months ended November 30, 2025 and 2024, the Company did not issue any common shares. NEXE INNOVATIONS INC. Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended November 30, 2025 and 2024 (Unaudited - Expressed in Canadian dollars, unless otherwise noted) 13 12. Reserves and Contributed Surplus a. Share purchase warrants (warrants) The summary of changes in warrants for the six months ended November 30, 2025 and the year ended May 31, 2025 is as follows: Number of warrants Weighted average exercise price Balance, May 31, 2024 and May 31, 2025 100,000 0.35 Expired (100,000) 0.35 Balance, November 30, 2025 - – On June 1, 2025, 100,000 share purchase warrants with an exercise price of $0.35 expired unexercised. b. Stock options The summary of changes in stock options for the six months ended November 30, 2025 and the year ended May 31, 2025 is as follows: Number of stock options Weighted average exercise price Balance, May 31, 2024 7,415,859 $0.53 Granted 1,995,000 0.44 Expired (1,850,000) (0.60) Balance, May 31, 2025 7,560,859 $0.49 Expired (905,859) (0.50) Balance, November 30, 2025 6,655,000 $0.40 The Company did not grant stock options during the six months ended November 30, 2025 and 2024. During the six months ended November 30, 2025, 550,000 stock options with an exercise price of $0.65 and 355,859 stock options --- with an exercise price of $0.28 expired unexercised. The Company recognized share-based compensation of $62,837 and $175,942 in connection with vesting of stock options in the condensed consolidated interim statement of income (loss) and comprehensive income (loss) during the three and six months ended November 30, 2025 (2024: $24,582 and $160,106). The stock options outstanding and exercisable as of November 30, 2025 and May 31, 2025 are as follows: November 30, 2025 May 31, 2025 Exercise price ($) Expiry date Number of stock options outstanding Number of stock options vested and exercisable Number of stock options outstanding Number of stock options vested and exercisable 0.65 June 1, 2025 - - 500,000 500,000 0.65 October 2, 2025 - - 50,000 50,000 0.28 October 2, 2025 - - 355,859 355,859 0.80 December 15, 2025 600,000 600,000 600,000 600,000 0.50 March 17, 2027 2,455,000 2,455,000 2,455,000 2,455,000 0.40 June 2, 2028 1,605,000 1,605,000 1,605,000 1,605,000 0.44 January 27, 2030 1,995,000 665,000 1,995,000 - 6,655,000 5,325,000 7,560,859 5,565,859 NEXE INNOVATIONS INC. Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended November 30, 2025 and 2024 (Unaudited - Expressed in Canadian dollars, unless otherwise noted) 14 c. Restricted share units (RSUs) The summary of changes in RSUs for the six months ended November 30, 2025 and the year ended May 31, 2025 is as follows: Balance, May 31, 2024 - Granted 1,210,000 Balance, May 31, 2025 and November 30, 2025 1,210,000 On January 27, 2025, the Company granted 1,210,000 RSUs to employees, vesting on the first anniversary of the grant date. Each RSU was valued at $0.35. The Company recognized share-based compensation of $105,875 and $211,750 in connection with vesting of RSUs in the condensed consolidated interim statement of income (loss) and comprehensive income (loss) during the three and six months ended November 30, 2025 (2024: $nil and $nil). 13. Selling, General and Administrative Expenses The breakdown of selling, general and administrative expenses is as follows: For the three months ended: For the six months ended: November 30, 2025 November 30, 2024 November 30, 2025 November 30, 2024 Administrative expenses $ 99,336 $ 117,102 $ 351,364 $ 315,336 Advertising, marketing and other promotional expenses 7,897 16,038 30,135 32,623 Consulting fees 9,524 291,720 41,587 308,815 Legal and professional fees 76,845 166,682 127,396 290,115 Management fees 112,552 66,250 225,927 132,500 Salaries, wages and benefits 213,991 248,209 479,223 584,366 Total selling, general and administrative expenses $ 520,145 $ 906,001 $ 1,255,632 $ 1,663,755 14. Cost of Goods Sold The breakdown of cost of goods sold is as follows: For the three months ended: For the six months ended: November 30, 2025 November 30, 2024 November 30, 2025 November 30, 2024 Direct material, direct labour and direct overhead $ 155,496 $ 139,069 $ 196,978 $ 221,250 Indirect fixed factory overhead 32,140 80,623 52,920 8,667 Depreciation 60,292 6,358 102,062 7,558 Total cost of goods sold $ 247,928 $ 226,050 $ 351,960 $ 237,475 15. Financial Instruments and Risk Management The Company’s ?nancial instruments are exposed to certain ?nancial risks, including currency risk, credit risk, liquidity risk and interest rate risk. Credit Risk Credit risk is the risk of ?nancial loss to the Company if a counterparty to a ?nancial instrument fails to meet its contractual obligations. The Company’s cash and --- cash equivalents, term deposits, investments in GICs, and trade and other receivables are subject to credit risk for a maximum of the amount shown on the consolidated statements of ?nancial position. The Company limits its exposure to credit risk on cash and cash equivalents by depositing only with reputable ?nancial institutions and limits its exposure to credit risk on trade and other receivables and term deposits and investments in GICs by only working with large and well-funded organizations. The carrying amount of ?nancial assets represents the maximum credit exposure. Management believes that the Company is subject to minimal credit risk. NEXE INNOVATIONS INC. Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended November 30, 2025 and 2024 (Unaudited - Expressed in Canadian dollars, unless otherwise noted) 15 Liquidity Risk Liquidity risk is the risk that the Company will not be able to meet its ?nancial obligations as they fall due. The purpose of liquidity risk management is to maintain a sufficient amount of cash and cash equivalents and term deposits and investment in GICs to meet its liquidity requirements at any point in time. The Company uses cash to settle its ?nancial obligations, as they become due, with trade payables coming due on standard commercial terms. The Company’s objective is to have sufficient liquidity to meet its liabilities when due. The Company monitors its cash balances and cash ?ows generated from operations to meet its requirements. It has sufficient cash and cash equivalents to meet the obligations in the following table below: Undiscounted Contractual Cash Flows Total carrying amount Contractual cash flows Less than 1 year 1 – 5 years More than 5 years As at November 30, 2025 $ $ $ $ $ Trade and other payables 2,020,659 2,020,659 2,020,659 - - Government loan payable 332,581 332,581 332,581 - - Total 2,353,240 2,353,240 2,353,240 - - Undiscounted Contractual Cash Flows Total carrying amount Contractual cash flows Less than 1 year 1 – 5 years More than 5 years As at May 31, 2025 $ $ $ $ $ Trade and other payables 2,210,850 2,210,850 2,210,850 - - Government loan payable 396,741 396,741 396,741 - - Total 2,607,591 2,607,591 2,607,591 - - Interest Rate Risk Interest rate risk is the risk that the fair value or the future cash ?ows of a ?nancial instrument will ?uctuate because of changes in market interest rates. The Company is only subject to interest rate risk on its cash and term deposits and investments in GICs in the bank and there is unlikely to be a material impact on net income (loss) as the bank deposits are short term. Foreign Currency Risk Foreign exchange risk is the risk that the Company’s ?nancial instruments will ?uctuate in value as a result of movements in foreign exchange rates. The Company is not exposed to any signi?cant foreign exchange rate risk. Fair Value Hierarchy We apply the following fair value hierarchy for ?nancial instruments that are carried at fair value. The hierarchy prioritizes the inputs used in the valuation methodologies in measuring fair value into three levels. The three levels are de?ned as follows: • Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. • Level 2 – inputs to valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directl --- y or indirectly, for substantially the full term of the financial instrument. • Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement. NEXE INNOVATIONS INC. Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended November 30, 2025 and 2024 (Unaudited - Expressed in Canadian dollars, unless otherwise noted) 16 The fair value of cash and cash equivalents, term deposits, GICs, trade and other receivables, trade and other payables, and the government loan payable approximate their carrying values because of the relatively short periods to maturity of these instruments and the low credit risk. 16. Capital Management The Company’s primary objective when managing capital is to maintain sufficient resources and raise funding to support current and long-term operating needs. The ability to continue as a going concern is essential to the Company’s goal of providing returns to shareholders and other stakeholders. The capital structure of the Company consists of shareholders’ equity. The Company manages its capital structure, and makes adjustments, based on the level of funds available to the Company to manage its operations and in light of economic conditions. The Company balances its overall capital through new share issuances or by undertaking other activities as deemed appropriate in the circumstances. The Company is not subject to externally imposed capital requirements. There have been no signi?cant changes in the Company’s approach to capital management during the year. These objectives and strategies are reviewed on a continuous basis. 17. Segment Reporting The Company operates in one reporting segment. All of the Company’s assets are located in Canada. 18. Commitments The Company has agreed to purchase manufacturing equipment valued at approximately $1,418,203, applying exchange rates of 1.6205 (EUR) and 1.3979 (USD) as applicable. The majority of this equipment, including coffee capsule dosing and sealing machines sourced from a European supplier, is covered by an exclusive agreement, with delivery anticipated within eight to twelve months. 19. Contingent Liabilities Due to the nature of its operations, the Company may from time to time be subject to disputes or claims from various suppliers. The Company believes these claims do not have merit and are being defended by the Company. The ultimate outcome of such claims or disputes are subject to the ?nal resolution of such claims. As at November 30, 2025 the Company is unable to fully determine the outcome of these contingent liabilities and therefore has not accrued any amounts for such contingent liabilities. 20. Events After Reporting Period In December 2025, 600,000 stock options with an exercise price of $0.80 expired unexercised.