SEDAR Interim Financial Statements

Page 1 of 19 Legend Power Systems Inc. CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three months ended December 31 , 2025 and 2024 (Expressed in Canadian Dollars) Page 2 of 19 Legend Power Systems Inc. CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS Three months ended December 31, 2025 and 2024 (Unaudited - Expressed in Canadian Dollars) Page Notice of no Auditor Review 3 Condensed Interim Consolidated Statements of Financial Position 4 Condensed Interim Consolidated Statements of Loss and Comprehensive Loss 5 Condensed Interim Consolidated Statements of Changes in Equity (Deficit) 6 Condensed Interim Consolidated Statements of Cash Flows 7 Notes to the Condensed Interim Consolidated Financial Statements 8 - 20 Page 3 of 19 NOTICE OF NO AUDITOR REVIEW OF CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS The accompanying unaudited condensed interim consolidated financial statements of Legend Power Systems Inc. for the three months ended December 31, 2025, and 2024 have been prepared by and are the responsibility of the Company’s management. The auditor of Legend Power Systems Inc. has not performed a review of the unaudited condensed interim consolidated statements of loss and comprehensive loss for the three month period ended December 31, 2025 and 2024. Page 4 of 19 Legend Power Systems Inc. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited - Expressed in Canadian Dollars) December 31, 2025 September 30, 2025 (Audited) Notes $ $ ASSETS Current assets Cash and cash equivalents 46,634 52,749 Trade and other receivables 5(i) 35,768 222,451 Due from customers on contract 5(ii) 10,211 45,769 Prepaid expenses and deposits 145,274 141,707 Inventory 6 1,263,767 1,238,751 Total current assets 1,501,654 1,701,427 Non-current assets Property and equipment 7 46,288 50,481 Right of use assets 8 208,627 250,352 Intangible assets 9 5,812 6,941 Total non-current assets 260,727 307,774 Total assets 1,762,381 2,009,201 LIABILITIES AND SHAREHOLDERS' DEFICIT Current liabilities Account payable 1,121,457 904,756 Accrued liabilities 649,939 487,051 Deferred revenue 425,810 531,897 Lease liability 8 131,514 143,173 Warranty provision 10 28,768 26,077 Total current liabilities 2,357,488 2,092,954 Non-current liabilities Warranty provision 10 22,572 10,337 Lease liability 8 34,830 68,948 Total liabilities 2,414,890 2,172,239 Shareholders' deficit Share capital 11(i) 63,916,933 63,916,933 Contributed surplus 12,033,091 12,004,494 Accumulated other comprehensive loss (20,834) (24,790) Deficit (76,581,699) (76,059,675) Total shareholders' deficit (652,509) (163,038) Total liabilities and shareholders' deficit 1,762,381 2,009,201 Going concern (Note 1) Segments (Note 4) Commitments and contingencies (Note 12) Subsequent event (Note 17) APPROVED BY THE BOARD OF DIRECTORS AND AUTHORIZED FOR ISSUE ON FEBRUARY 26, 2026 “Cos LaPorta” , Director “Randy Buchamer” , Director The accompanying notes are an integral part of these condensed interim consolidated financial statements. Page 5 of 19 Legend Power Systems Inc. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS (Unaudited - Expressed in Canadian Dollars) For the three months ended December 31, 2025 2024 Notes $ $ Revenue 252,870 81,835 Cost of sales 6 141,554 69,889 Gross margin 111,316 11,946 Expenses Salaries and consulting 360,349 630,153 General and administrative 124,671 127,856 Selling costs 7,652 20,034 Share-based compensation 11(ii) 28,597 --- 174,316 Professional fees 47,820 43,731 Warranty (recovery) expense 10 14,953 (3,473) Product development 18,468 29,226 Foreign exchange (gain) loss (4,784) 15,955 Amortization and depreciation 7,8,9 33,279 31,516 Bad debt recovery 5(i) - (28,028) Total expenses 631,005 1,041,286 Operating loss (519,689) (1,029,340) Interest expense on leases 8 (2,505) (4,107) Other income 170 566 Net loss for the period (522,024) (1,032,881) Other comprehensive loss: Exchange difference arising on translation of foreign operations 3,956 (11,511) Comprehensive loss for the period (518,068) (1,044,392) Basic and diluted loss per share (.00) (.01) Weighted average number of common shares outstanding, basic and diluted 141,911,587 132,693,150 The accompanying notes are an integral part of these condensed interim consolidated financial statements. Page 6 of 19 Legend Power Systems Inc. CONSENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT) (Unaudited – Expressed in Canadian Dollars) Number of shares issued Share capital Contributed surplus Deficit Accumulated other comprehensive loss Total shareholders' equity (deficit) Notes # $ $ $ $ $ Balance at September 30, 2024 131,744,417 62,006,475 11,728,605 (72,767,875) (6,679) 960,526 Private placement, net 11(i) 4,233,167 757,369 - - - 757,369 Warrants exercised 11(i) 1,205,560 313,445 (12,055) - - 301,390 Share-based compensation 11(ii) - - 174,316 - - 174,316 Net loss and comprehensive loss for the period - - (1,032,881) (11,511) (1,044,392) Balance at December 31, 2024 137,183,144 63,077,289 11,890,866 (73,800,756) (18,190) 1,149,209 Balance at September 30, 2025 141,911,587 63,916,933 12,004,494 (76,059,675) (24,790) (163,038) Share-based compensation 11(ii) - - 28,597 - - 28,597 Net loss and comprehensive loss for the period - - - (522,024) 3,956 (518,068) Balance at December 31, 2025 141,911,587 63,916,933 12,033,091 (76,581,699) (20,834) (652,509) The accompanying notes are an integral part of these condensed interim consolidated financial statements. Page 7 of 19 Legend Power Systems Inc. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited – Expressed in Canadian Dollars) For the three months ended December 31, 2025 2024 Notes $ $ Cash flows provided by (used in) operating activities Net loss for the period (522,024) (1,032,881) Items not affecting cash: Amortization and depreciation 7,8,9 47,047 43,126 Share-based payment 11(ii) 28,597 174,316 Warranty (recovery) expense 10 14,953 (3,473) Interest on lease liability 8 3,739 6,130 Provision for slow moving inventory 6 840 - Bad debt recovery 5(i) - (28,028) Changes in non-cash working capital items: Receivables, prepaids and deposits 182,840 196,831 Due from customers on contract 35,558 18,743 Inventory (25,856) (57,319) Accounts payable and accrued liabilities 384,082 50,898 Deferred revenue (106,086) 48,059 43,690 (583,598) Cash flows used in investing activities Purchase of property and equipment 7 - (2,294) - (2,294) Cash flows provided by (used in) financing activities Proceeds from private placement, net 11(i) - 757,369 Proceeds from warrants exercised 11(i) - 301,390 Repayment of lease obligation 8 (49,516) (46,743) (49,516) 1,012,016 Effects of foreign exchange translation in cash (289) (2,122) Net change in cash and cash equivalents for the period (5,826) 426,124 Cash and cash equivalents, beginning of the period 52,749 236,723 Cash and cash equivalents, end of the period 46,634 660,725 The accompanying notes are --- an integral part of these condensed interim consolidated financial statements. Legend Power Systems Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended December 31, 2025 and 2024 (Unaudited - Expressed in Canadian Dollars) Page 8 of 19 1. NATURE OF BUSINESS Legend Power Systems Inc. (hereafter referred to as the “Company” or “Legend”) is incorporated under the laws of the Province of British Columbia and was established as a legal entity on June 4, 1987. The Company’s principal business activities are the assembly, marketing and sale of a patented device, the “SmartGATE™”, which enables dynamic power management of an entire commercial or industrial building. The Company’s common shares are listed on the TSX Venture Exchange. The Company’s principal office is located at 1480 Frances Street, Vancouver, BC, V5L 1Y9, Canada. As described in Note 2 of these condensed interim consolidated financial statements, management makes estimates and assumptions in preparing the consolidated financial statements. Actual results could differ materially from these estimates, in which case the impact would be recognized in the condensed interim consolidated financial statements in future periods. Going concern uncertainty These condensed interim consolidated financial statements of the Company for the three months ended December 31, 2025, and 2024 (“financial statements”) have been prepared on a going concern basis that presumes the realization of assets and discharge of liabilities in the normal course of business. The financial statements do not include any adjustments to the amounts and classification of assets and liabilities that would be necessary should the Company be unable to continue as a going concern. Such adjustments could be material. As at December 31, 2025, the Company has an accumulated deficit of $76,581,699 (September 30, 2025 - $76,059,675), and for the three months ended December 31, 2025, recorded a net loss of $522,024 (December 31, 2024 – $1,032,881) and cash flows provided by operations of $43,690 (December 31, 2024 – negative cash flow of $583,598). Whether, and when, the Company can attain profitability and positive cash flows from operations is subject to material uncertainty. The application of the going concern assumption is dependent upon the Company’s ability to generate future profitable operations and obtain necessary financing to do so. The Company may need to raise additional capital in order to fund its planned operations and meet its obligations. While the Company has been successful in obtaining financing to date and believes it will be able to obtain sufficient funds in the future and ultimately achieve profitability and positive cash flows from operations, there can be no assurance that the Company will achieve profitability and be able to do so on terms favorable for the Company. The above events and conditions indicate there is a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern. 2. BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE Basis of consolidation The condensed interim consolidated financial statements include the accounts of the Company and all of its subsidiaries. The subsidiaries of the Company are as follows: Legend Power Systems Corp. – (USA) active 100% 0809882 B.C. Ltd. – (Canada) inactive 100% LPSI (Barbados) Limited – (Barbados) inactive 100% Assets, liabilities, revenue and expenses of the s --- ubsidiaries are recognized in accordance with the Company’s accounting policies. Inter-company transactions and balances are eliminated upon consolidation. Legend Power Systems Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended December 31, 2025 and 2024 (Unaudited - Expressed in Canadian Dollars) Page 9 of 19 These condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting (“IAS 34”) using accounting policies consistent with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”). These should be read in conjunction with the Company’s last annual consolidated financial statements as at and for the year ended September 30, 2025 (“last annual financial statements”). The accounting policies applied by the Company in these condensed interim consolidated financial statements are the same as those applied in the last annual financial statements. These condensed interim consolidated financial statements do not include all of the information required for full annual financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of changes in the Company’s financial position and performance since the last annual financial statements. The functional currency of the Company, and its Canadian and Barbados subsidiaries is the Canadian dollar. The functional currency of the Company’s U.S. subsidiary is the United States dollar. The condensed interim consolidated financial statements are presented in Canadian dollars. Critical judgments and sources of estimation uncertainty The preparation of these condensed interim consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed interim consolidated financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. These condensed interim consolidated financial statements include estimates which, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the condensed interim consolidated financial statements and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in future periods if the revision affects both current and future periods. These estimates are based on historical experience, current and future economic conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Critical judgments The following are critical judgments that management has made in the process of applying accounting policies and that have the most significant effect on the amounts recognized in the condensed interim consolidated financial statements: i) The Company’s assessment of its ability to continue as a going concern requires judgments about the Company’s ability to execute its strategy by funding future working capital requirements. The Company’s objectives are to ensure that there are adequate capital resources to safeguard the Company’s ability to continue as a going concern and maintain adequate levels of funding to support its ongoing op --- erations and development such that it can continue to provide returns to shareholders and benefits for other stakeholders. ii) The determination of an entity’s functional currency is a matter of judgment based on an assessment of the specific facts and circumstances relevant to determining the primary economic environment of each individual entity within the group. The Company reconsiders the functional currencies used when there is a change in events or conditions considered in determining the primary economic environment of each entity. Legend Power Systems Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended December 31, 2025 and 2024 (Unaudited - Expressed in Canadian Dollars) Page 10 of 19 Estimation uncertainty The following are key assumptions concerning the future and other key sources of estimation uncertainty that have a significant risk of resulting in a material adjustment to the carrying amount of assets and liabilities within the next financial year: i) Provision for future warranty expense was forecasted by management based on recent historical experience and expectations of future warranty claim activity. ii) Provisions for impairment of inventory were made using the best estimate of net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs to complete the sale for finished goods and replacement cost for raw materials. iii) Expected credit losses are estimates based on observations of historical collection history. Given the nature, balances and the collection history of the Company’s receivables, Management has applied a nominal loss allowance. iv) For those contracts that include both a system and its installation, the Company utilizes Management’s best estimate of the relative fair value of revenue generated from the products delivered and the installation services provided. Installation revenue fair value is based on actual third-party contractor pricing by product size multiplied by either: i) the average gross margin achieved by the Company over the preceding two fiscal years or; ii) the implied gross margin specific to a multi system order. The relative fair value of the product is the difference between total sale price to customer and fair value estimate of installation revenue. v) The fair value of share-based compensation is estimated using the Black-Scholes option pricing model and rely on a number of estimates, such as the expected term, expected dividend yield, the volatility of the underlying share price, the risk-free rate of return, and the estimated rate of forfeiture. Such estimates and assumptions are inherently uncertain. Changes in these assumptions affect the fair value estimates of share-based compensation. vi) In assessing the probability of realizing income tax assets, management makes estimates related to expectations of future taxable income, applicable tax planning opportunities, expected timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. In making its assessments, management gives additional weight to positive and negative evidence that can be objectively verified. Estimates of future taxable income are based on forecasted cash flows from operations and the application of existing tax laws in each jurisdiction. The Company considers whether relevant tax planning opp --- ortunities are within the Company's control, are feasible, and are within management's ability to implement. Examination by applicable tax authorities is supported based on individual facts and circumstances of the relevant tax position examined in light of all available evidence. Where applicable tax laws and regulations are either unclear or subject to ongoing varying interpretations, it is reasonably possible that changes in these estimates can occur that materially affect the amounts of income tax assets recognized. Also, future changes in tax laws could limit the Company from realizing the tax benefits from the deferred tax assets. The Company reassesses unrecognized income tax assets at each reporting period. 3. SUMMARY OF MATERIAL ACCOUNTING POLICIES The accounting policies adopted in the preparation of the condensed interim consolidated financial statements are consistent with those followed in the preparation of the Company’s annual consolidated financial statements for the year ended September 30, 2025. Legend Power Systems Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended December 31, 2025 and 2024 (Unaudited - Expressed in Canadian Dollars) Page 11 of 19 4. SEGMENTS The Company operates in Canada and United States, and has one operating segment, which derives its revenue from the sale and installation of the SmartGATE™ products. Information About Geographic Areas Non-current assets of the Company are located in Canada, as follows: December 31, 2025 September 30, 2025 $ $ Property and equipment 46,288 50,481 Right of use asset 208,627 250,352 Intangible asset 5,812 6,941 Revenue based on geographical segments as follows: Three months ended December 31, 2025 2024 $ $ Revenue Canada 252,870 81,835 252,870 81,835 5. RECEIVABLES i) Trade and other receivables Aging of trade receivables as follows: Trade receivables Total due 0-30 days 31-90 days 90+ days $ $ $ $ December 31, 2025 35,768 13,853 1,276 20,639 September 30, 2025 222,451 215,661 - 6,790 During the three months ended December 31, 2024, the Company recovered trade receivables previously provided for in the amount of $28,028. Expected credit loss as at December 31, 2025 was nominal (September 30, 2025 - nominal). ii) Due from customers on contract At December 31, 2025, due from customers on contract amounted to $10,211 and at September 30, 2025, was $45,769. These amounts relate to equipment delivered and/or installation services performed for sales where revenue has been recognized and customers had not yet been invoiced. Legend Power Systems Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended December 31, 2025 and 2024 (Unaudited - Expressed in Canadian Dollars) Page 12 of 19 6. INVENTORY Inventories consist of the following, as at December 31, 2025 and September 30, 2025: December 31, 2025 September 30, 2025 $ $ Finished products ("SmartGATE") 113,725 115,267 Work in progress and finished sub-components 196,854 155,746 Transformers and components 953,188 913,399 Inventory in transit - 54,339 1,263,767 1,238,751 During the three months ended December 31, 2025, inventories were recognized as cost of sales in the amount of $112,179 (December 31, 2024 - $nil). Further, the Company recorded a provision for slow- moving and obsolescence of $840 (December 31, 2024 - $nil). Total provision recognized against inventory as at December 31, 2025, was $310,493 (September 30, 2025 - $309,653 --- ). 7. PROPERTY AND EQUIPMENT Computer equipment Equipment and furniture Leasehold improvements Total $ $ $ $ Cost Balance, September 30, 2024 142,796 747,702 44,245 934,743 Additions - 2,294 - 2,294 Balance, September 30, 2025 142,796 749,996 44,245 937,037 Balance, December 31, 2025 142,796 749,996 44,245 937,037 Accumulated depreciation Balance, September 30, 2024 140,163 679,331 42,996 862,490 Additions 1,377 21,610 1,079 24,066 Balance, September 30, 2025 141,540 700,941 44,075 886,556 Additions 243 3,780 170 4,193 Balance, December 31, 2025 141,783 704,721 44,245 890,749 Net book value At September 30, 2025 1,256 49,055 170 50,481 At December 31, 2025 1,013 45,275 - 46,288 8. RIGHT OF USE ASSETS AND LEASE LIABILITIES Office lease The Company's estimated incremental borrowing rate of the lease was 8.29%, which has been used to determine the present value of the minimum lease payments. On January 1 ,2025, certain costs related to property tax and insurance premiums associated to the leased asset became known and unavoidable for the upcoming year. As a result, those payments became fixed in-substance at that time giving rise to a lease modification. An adjustment was made in the amount of $58,868 to the right-of-use asset and lease liability. Legend Power Systems Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended December 31, 2025 and 2024 (Unaudited - Expressed in Canadian Dollars) Page 13 of 19 During the three months ended December 31, 2025, depreciation of $13,768 (December 31, 2024 - $11,610) and interest of $1,234 (December 31, 2024 - $2,023) was allocated to inventory and cost of sales. Right of use Assets Office lease $ Cost Balance, September 30, 2024 1,033,601 Effect of lease modification 58,868 Balance, September 30, 2025 1,092,469 Balance, December 31, 2025 1,092,469 Accumulated depreciation Balance, September 30, 2024 681,758 Additions 160,359 Balance, September 30, 2025 842,117 Additions 41,725 Balance, December 31, 2025 883,842 Net book value At September 30, 2025 250,352 At December 31, 2025 208,627 Lease Obligations Office lease $ Balance, September 30, 2024 324,827 Effect of lease modification 58,868 Lease payments (194,455) Interest portion of payments 22,881 Balance, September 30, 2025 212,121 Lease payments (49,516) Interest portion of payments 3,739 Balance, December 31, 2025 166,344 Lease payable, current 131,514 Lease payable, non-current 34,830 Total lease payable 166,344 The future undiscounted minimum lease commitments for the Company’s leases are as follows: Office lease $ Less than 1 year 139,445 Between 2 and 3 years 35,070 Total 174,515 Legend Power Systems Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended December 31, 2025 and 2024 (Unaudited - Expressed in Canadian Dollars) Page 14 of 19 9. INTANGIBLE ASSETS Patents Computer software Total $ $ $ Cost Balance, September 30, 2024 1,660,675 184,084 1,844,759 Balance, September 30, 2025 1,660,675 184,084 1,844,759 Balance, December 31, 2025 1,660,675 184,084 1,844,759 Accumulated depreciation Balance, September 30, 2024 1,649,219 184,084 1,833,303 Additions 4,515 - 4,515 Balance, September 30, 2025 1,653,734 184,084 1,837,818 Additions 1,129 - 1,129 Balance, December 31, 2025 1,654,863 184,084 1,838,947 Carrying amount At September 30, 2025 6,941 - 6,941 At December 31, 2025 5,812 - 5,812 10. WARRANTY PROVISION Total $ Balance, September 30, 2024 53,408 Decrease in --- provision (17,020) Adjustment 26 Balance, September 30, 2025 36,414 Increase in provision 14,953 Adjustment (27) Balance, December 31, 2025 51,340 Warranty provision, current 28,768 Warranty provision, non-current 22,572 Total 51,340 The Company provides a variable length warranty on its equipment of between 1 and 10 years. The warranty provision will be used to fulfill warranty claims, should they arise, over the warranty period provided to customers. As at December 31, 2025, the average remaining years of equipment under warranty was 2.40 years (September 30, 2025 – 2.55 years). 11. SHARE CAPITAL AND CONTRIBUTED SURPLUS i) Share Capital The Company’s authorized share capital is an unlimited number of common shares without par value. At December 31, 2025, the Company had 141,911,587 (September 30, 2025 – 141,911,587) shares issued and outstanding. All issued common shares are fully paid. Contributed surplus consists of the Legend Power Systems Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended December 31, 2025 and 2024 (Unaudited - Expressed in Canadian Dollars) Page 15 of 19 accumulated fair value of common share options recognized as share-based compensation, fair value of warrants and fair value of broker warrants. During the year ended September 30, 2025, the Company closed a non-brokered private placement by issuing a total of 8,961,610 units, for gross proceeds of $1,613,090. Each unit consists of one common share of the Company and one common share purchase warrant. Each warrant entitles the holder thereof to purchase one common share at an exercise price of $0.30 at any time up to 24 months following the closing date of the offering. The Company incurred share issuance cost of $16,077. During the year ended September 30, 2025, a total of 1,205,560 shares were issued upon the exercise of stock warrants for gross proceeds of $301,390. ii) Stock Options The Company has an incentive share option plan (the “Plan”). Under the Plan a total of 10% of the Company’s outstanding common shares are reserved for the issuance of share options to directors, officers, employees and consultants. The terms of each option award are fixed by the directors at the time of grant. Share options awarded have a maximum term of five years. Share options vest over various time periods from the grant date to five years at the discretion of the board of directors. During the year ended September 30, 2025, the following stock options were granted: • November 5, 2024 – 2,400,000 with an exercise price of $0.22 and a 5-year term1; • November 5, 2024 – 2,800,000 with an exercise price of $0.22 and a 5-year term2;and • July 21, 2025 – 225,000 with an exercise price of $0.12 and a 5-year term1 The options granted during the year ended September 30, 2025: 1 1/6 vest on the 6-month anniversary of grant and each 6-month anniversary thereafter 2 Vest on performance milestone being met A summary of the Company’s share options outstanding at December 31, 2025, including the changes during the period, is as follows: Share options Weighted average exercise price $ Balance, September 30, 2024 7,670,566 0.32 Granted 5,425,000 0.22 Expired (970,565) 0.31 Forfeited (1,476,665) 0.22 Balance, September 30, 2025 10,648,336 0.27 Expired (1,535,000) 0.47 Forfeited (400,000) 0.22 Balance, December 31, 2025 8,713,336 0.24 The weighted average remaining contractual life of stock options outstanding as of December 31, 2025, is 2.69 years --- (September 30, 2025 – 2.59 years). During the three months ended December 31, 2025, the Company recorded share-based compensation of $28,597 (December 31, 2024 - $174,316). The fair value of share options awarded to employees, directors and consultants was estimated on the dates of award using the Black-Scholes option-pricing model with the following assumptions during the year ended September 30, 2025: Legend Power Systems Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended December 31, 2025 and 2024 (Unaudited - Expressed in Canadian Dollars) Page 16 of 19 September 30, 2025 Risk-free interest rate (average) 3.07% Estimated volatility (average) 83% Expected life (average) 3.87 Forfeiture rate (average) 20.72% Dividend rate (average) 0.00% The Black-Scholes option pricing model was developed for use in estimating the fair value of share options that have no vesting provisions and are fully transferable. Also, option-pricing models require the use of estimates and assumptions including the expected volatility. The Company uses expected volatility rates which are based upon historical volatility rates. Changes in the underlying assumptions can materially affect the fair value estimates. The following table summarizes share options outstanding and exercisable at December 31, 2025: Options outstanding Options exercisable Exercise price Calendar year of expiry $ 520,000 520,000 0.39 - 0.75 2026 2,330,834 2,330,834 0.19 - 0.33 2027 2,212,502 1,495,845 0.18 - 0.33 2028 3,450,000 800,000 0.22 2029 200,000 - 0.12 2030 8,713,336 5,146,679 The following table summarizes share options outstanding and exercisable at September 30, 2025: Options outstanding Options exercisable Exercise price Calendar year of expiry $ 1,535,001 1,535,001 0.47 2025 520,000 520,000 0.39 - 0.75 2026 2,343,334 2,329,171 0.19 - 0.33 2027 2,250,001 1,479,177 0.18 - 0.33 2028 3,800,000 400,000 0.22 2029 200,000 - 0.12 2030 10,648,336 6,263,349 iii) Warrants The continuity of share purchase warrants is as follows: Warrants Weighted average exercise price $ Balance, September 30, 2024 14,067,113 0.25 Granted 8,961,610 0.30 Exercised (1,205,560) 0.25 Balance, September 30, 2025 21,823,163 0.27 Balance, December 31, 2025 21,823,163 0.27 Legend Power Systems Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended December 31, 2025 and 2024 (Unaudited - Expressed in Canadian Dollars) Page 17 of 19 The weighted average remaining contractual life of warrants outstanding as of December 31, 2025, is 0.77 years (September 30, 2025 – 1.02 years). During the year ended September 30, 2025, the Company: a) Issued 8,961,610 unit warrants in connection with the non-brokered private placement which based on the residual method were fair valued at $nil and recorded in contributed surplus b) Amended the expiry date of 12,861,553 warrants issued on July 31, 2025 and August 22, 2025, to July 31, 2026 and August 22, 2026, respectively. 12. COMMITMENTS AND CONTINGENCIES The Company has employment agreements with each of the CEO and COO of the Company that contains severance provisions whereby termination without cause could result in additional costs to the Company unless re-negotiated or settled otherwise. 13. RELATED PARTY DISCLOSURES The Company considers a person or entity a related party if they are a member of key management personnel, including their close relatives, an associate or joint venture, those ha --- ving significant influence over the Company, as well as entities that are controlled by related parties. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. The Company entered into the following related party transactions during the three months ended December 31, 2025 and 2024: (i) Transactions with Key Management Personnel: The following amounts were incurred with respect to Key Management Personnel; being the Company’s CEO, COO and the CFO: December 31, 2025 December 31, 2024 $ $ Salaries and consulting fees to key management personnel 89,063 127,208 Share-based compensation 18,527 14,037 Car allowance 1,800 2,400 109,390 143,645 (ii) Transactions with Directors: The following amounts were incurred with respect to non-executive directors of the Company: December 31, 2025 December 31, 2024 $ $ Share-based compensation 7,075 41,274 7,075 41,274 At December 31, 2025, a total of $173,794 (September 30, 2025 - $50,733) was due to related parties for salaries, and consulting fees. Legend Power Systems Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended December 31, 2025 and 2024 (Unaudited - Expressed in Canadian Dollars) Page 18 of 19 14. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT Financial instruments The Company’s financial instruments consist of cash and cash equivalents, trade and other receivables, due from customers on contract, accounts payable, accrued liabilities and lease liability. The carrying values of these financial instruments are not based on fair value but approximate their fair values because of their short-term nature. Risk management The risks associated with these financial instruments and the policies regarding their management are discussed below. Management monitors these risk exposures to ensure appropriate measures are implemented in a timely and effective manner. Foreign currency risk The Company is exposed to the U.S. dollar versus Canadian dollar exchange rate fluctuation risks through operations of its U.S. subsidiary and expenses incurred in U.S. dollars. As at December 31, 2025, all of the Company’s liquid assets and liabilities were held in Canadian dollars and U.S. dollars. A significant change in the USD exchange rate relative to the Canadian dollar could affect the Company’s results of operations. A change in the value of U.S. dollar by 10% relative to the value of the Canadian dollar would have affected the Company’s results of operations for the nine months ended December 31, 2025, by approximately $11,700 (December 31, 2024 - $27,800). Interest rate risk Interest rate risk refers to the risk that the value of a financial instrument or cash flows associated with the instrument will fluctuate due to changes in market interest rates. The Company is exposed to interest rate risk due to its potential impact on cash and cash equivalents. The Company earns interest on deposits based on current market interest rates, which three months ended December 31, 2025, averaged 2.40% (December 31, 2024 – 3.93%). A 1% nominal change in interest rates would have affected the Company’s results of operations for the three months ended December 31, 2025, by approximately a nominal amount (December 31, 2024 - nominal). The Company does not have any interest-bearing liabilities. Credit risk Credit risk is the risk of an unexpected loss if the counterparty to a financial instrument fails to me --- et its contractual obligations. The credit risk associated with cash is believed to be minimal as cash is on deposit with Canadian and foreign banks that are deemed to be creditworthy. Receivables are comprised primarily of amounts due from various customers. The Company is exposed to credit risk through accounts receivable from customers. At December 31, 2025, trade receivables from two customers accounted for 95% of the Company’s trade receivable balance. At September 30, 2025, trade receivables from one customer accounted for 90% of the Company’s trade receivable balance. Given the nature, balances and the collection history of the Company’s receivables, Management has applied a nominal loss allowance as at December 31, 2025 (September 30, 2025 – nominal). Concentration risk During the three months ended December 31, 2025, two customers accounted for 98% (2024 – two customers accounted for 98%) of the Company’s revenue. Liquidity risk Liquidity risk is managed by ensuring sufficient financial resources are available to meet obligations associated with financial liabilities. The Company has in place a planning and budgeting process which helps determine the funds required to ensure the Company has the appropriate liquidity to meet its operating and growth objectives. As at December 31, 2025, the Company had cash and cash equivalents Legend Power Systems Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended December 31, 2025 and 2024 (Unaudited - Expressed in Canadian Dollars) Page 19 of 19 of $46,634 (September 30, 2025 – $52,749) to settle its current liabilities of $2,357,488 (September 30, 2025 – $2,092,954). 15. LOSS PER SHARE Three months ended December 31, 2025 2024 $ $ Basic (.00) (.01) Diluted (.00) (.01) Common share equivalents that could potentially dilute net income per basic share in the future, were not included in the computation of diluted earnings per share because the impact would have been anti- dilutive, and which included all issued stock options (note 11(ii)). 16. CAPITAL MANAGEMENT The Company’s objectives when managing capital are to ensure that there are adequate capital resources to safeguard the Company’s ability to continue as a going concern and maintain adequate levels of funding to support its ongoing operations and development such that it can continue to provide returns to shareholders and benefits for other stakeholders. The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the Company’s underlying assets. The Company plans to use funds from the future sale of products to fund operations and expansion activities. 17. SUBSEQUENT EVENT In January 2026, the Company closed a non-brokered private placement by issuing a total of 13,748,167 units, for gross proceeds of $1,649,780. Each unit consists of one common share of the Company and one common share purchase warrant. Each warrant entitles the holder thereof to purchase one common share at an exercise price of $0.12 at any time up to 24 months following the closing date of the offering.