SEDAR Interim Financial Statements

California Nanotechnologies Corp. Condensed Consolidated Interim Financial Statements For the nine months ended November 30, 2025 and 2024 (Unaudited, in United States Dollars) Contents Condensed Consolidated Interim Financial Statements Notice to Reader 2 Interim Statements of Financial Position 3 Interim Statements of Income and Comprehensive Income 4 Interim Statements of Changes in Shareholders’ Equity/(Deficit) 5 Interim Statements of Cash Flows 6 Notes to Condensed Consolidated Interim Financial Statements 7 - 17 The accompanying notes are an integral part of these consolidated financial statements 2 UNAUDITED INTERIM FINANCIAL STATEMENTS In accordance with National Instrument 51-102 released by the Canada Securities Administrators, the Company discloses that its auditors have not reviewed the unaudited condensed consolidated financial statements for the nine months ended November 30, 2025 and 2024. NOTICE TO THE READER OF THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS The interim financial statements of California Nanotechnologies Corp. and the accompanying interim condensed consolidated statements of financial position as at November 30, 2025 and the interim condensed consolidated statements of loss, comprehensive loss, changes in equity and cash flows for the nine months ended November 30, 2025 and 2024 are the responsibility of the Company’s management. These condensed consolidated financial statements have not been reviewed on behalf of the shareholders by the independent external auditors of the Company, MNP LLP. The condensed consolidated interim financial statements have been prepared by management and include the selection of appropriate accounting principles, judgments and estimates necessary to prepare these condensed consolidated interim financial statements in accordance with IAS 34, Interim Financial Reporting as issued by the International Accounting Standards Board (“IASB”). “signed” Sebastien Goulet “signed” Roger Dent Director Director The accompanying notes are an integral part of these consolidated financial statements 3 California Nanotechnologies Corp. Condensed Consolidated Interim Statement of Financial Position United States Dollars As at Note November 30, 2025 February 28, 2025 (Unaudited) (Audited) ASSETS Current assets Cash $ 341,417 $ 533,845 Accounts receivable 538,970 1,232,703 Prepaid expenses and deposits 43,186 63,697 Total current assets 923,573 1,830,245 Property and equipment 6 3,152,967 3,626,330 Deposits 41,736 41,736 Intangible assets 7 2,677 3,108 Total assets $ 4,120,953 $ 5,501,419 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable and accrued liabilities $ 497,674 $ 808,341 Income tax payable 93,091 168,091 Interest payable 1,784 - Deferred revenue - 17,500 Share purchase warrants - 568,103 Current lease liability 8 317,584 316,348 Total current liabilities 910,133 1,878,383 Non-current lease liability 8 1,073,841 1,306,706 Total liabilities 1,983,974 3,185,089 Shareholders’ equity Share capital 10 6,623,000 5,176,599 Contributed surplus 12 1,390,583 1,181,375 Deficit (5,876,604) (4,041,644) Total shareholders' equity/(deficit) 2,136,979 2,316,330 Total liabilities and shareholders' equity $ 4,120,953 $ 5,501,419 Going concern 2 On behalf of the Board: “signed” Sebastien Goulet “signed” Roger Dent Director Director The accompanying notes are an integral part of these consolidated financial statements 4 California Nanotechnologies Corp. Condensed Consolidat --- ed Statements of Income United States Dollars Unaudited Note For the nine months ended November 30, 2025 For the nine months ended November 30, 2024 For the three months ended November 30, 2025 For the three months ended November 30, 2024 Revenue $ 1,888,950 $ 5,077,216 $ 392,481 $ 1,806,205 Cost of goods sold 934,784 1,281,252 329,096 413,983 Gross profit 954,166 3,795,964 63,385 1,392,222 Expenses Advertising and promotion 131,107 77,054 53,773 21,930 Depreciation and amortization 6, 7 524,076 388,396 175,255 153,382 Consulting 161,290 157,557 46,382 51,136 Office 224,492 189,383 67,445 94,064 Professional fees 283,539 127,648 114,620 55,317 Repairs and maintenance 2,203 5,045 1,532 4,755 Salaries, wages, and benefits 600,114 669,154 174,674 247,678 Supplies 204,732 187,866 62,644 71,577 Travel and entertainment 49,497 49,235 10,642 22,810 Share-based compensation 12 373,881 156,574 182,749 59,753 Total Expenses 2,554,931 2,007,912 889,716 782,402 Income/(loss) from operations (1,600,765) 1,788,052 (826,331) 609,820 Other income (expense) Other income 1,148 43,913 - 3,522 Other expense (80) (44) - (22) Foreign exchange (loss) (203) (1,902) - - Interest expense, net (91,625) (187,305) (31,336) (61,049) Gain on sales of fixed assets - 14,900 - - Realized loss- warrants 10 (403,333) (974,260) (232,895) (655,782) Unrealized gain/(loss)-warrants 10 263,986 (528,398) - 216,651 Income/(loss) before taxes (1,830,872) 154,956 (1,090,562) 113,140 Income tax expense 4,088 805 4,088 - Net income/(loss) and comprehensive income/(loss) (1,834,960) 154,151 (1,094,650) 113,140 Income/(loss)per share - basic 11 $ (.04) $ nil $ (.02) $ nil - diluted 11 (.04) nil (.02) nil Weighted average shares outstanding-basic 12 47,526,825 44,836,103 47,526,825 44,836,103 - diluted 12 47,526,825 51,470,802 47,526,825 51,470,802 The accompanying notes are an integral part of these consolidated financial statements 5 California Nanotechnologies Corp. Consolidated Statements of Changes in Shareholders’ Equity/(Deficit) United States Dollars Unaudited Note Share capital Contributed surplus Comprehensive income/(loss) Total Balance at February 28, 2024 $ 3,343,837 $ 685,446 $ (3,883,311) $ 145,972 Warrants exercised 12 198,749 318,478 517,227 Share based compensation 96,821 96,821 Net income and comprehensive income 41,011 41,011 Balance at November 30, 2024 $ 3,542,586 $ 1,100,745 $ (3,842,300) $ 801,031 Balance at February 28, 2025 $ 5,176,599 $ 1,181,375 $ (4,041,644) $ 2,316,330 Stock options exercised 12 44,730 44,730 Share-based compensation 12 373,881 373,881 Warrants exercised 12 1,401,671 (164,673) 1,236,998 Net loss and comprehensive loss (1,834,960) (1,834,960) Balance at November 30, 2025 $ 6,623,000 $ 1,390,583 $ (5,876,604) $ 2,136,979 The accompanying notes are an integral part of these consolidated financial statements 6 California Nanotechnologies Corp. Consolidated Statements of Cash Flows United States Dollars For the nine months ended November 30, 2025 and November 30, 2024 Note 2025 2024 Cash flows from operating activities Net income/(loss) for the year $ (1,834,960) $ 154,151 Adjustments for: Depreciation and amortization 6, 7 524,076 388,396 Interest expense, net 99,983 138,540 Realized loss on share purchase warrants 10 403,333 974,260 Unrealized (gain)/loss on share purchase warrants 10 (263.986) 528,398 Share-based compensation 4,12 373,881 156,574 (697,673) 2,340,319 Net change in non-cash working capital items Accounts receivable 693,734 (77 --- 7,440) Prepaid expenses and deposits 20,511 513,643 Accounts payable and accrued liabilities (403,167) 470,350 Net cash from operating activities (386,595) 2,546,872 Cash flows used/from for financing activities Payments to related parties - (978,568) Options exercised 44,731 20,000 Warrants exercised 529,547 330,770 Repayment of lease liability 8 (329,829) (299,077) Net cash used/from financing activities 244,449 (926,875) Investing activities Purchase of equipment & leasehold improvements 6 (50,282) (2,057,516) Net cash used for investing activities (50,282) (2,057,516) Increase/(Decrease) in cash (192,428) (437,519) Cash, beginning of year 533,845 841,352 Cash, end of period $ 341,417 $ 403,833 California Nanotechnologies Corp. Notes to the Condensed Consolidated Financial Statements United States Dollars For the interim nine months ended November 30, 2025 and 2024 7 1. Incorporation and operations Veritek Technologies Inc. (“Veritek”) was incorporated under the laws of the Province of Alberta on May 19, 2002. On February 1, 2007, Veritek changed its name to California Nanotechnologies Corp. (the “Company”) in connection with the reverse takeover with California Nanotechnologies Inc. The consolidated financial statements of the Company for the nine months ended November 30, 2025 include the accounts of the Company and its wholly-owned subsidiaries. Its head office, research and development, and production operations are located at 17220 Edwards Road, Cerritos, California, U.S.A, 90703. A corporate, registered office is located at 110 Yonge Street, Suite 1601, Toronto, Ontario, Canada, M5C 1T4. Since the date of the reverse takeover, the Company has been devoted to the development of nanocrystalline materials through grain size reduction. The advantages of these materials include improved strength and ductility. The Company's target markets are Aerospace, Defense, Automotive, Medical and Sports and Recreation. Since the most significant portion of the Company's operations is located in the United States and its functional currency is denominated in United States (“U.S.”) dollars, these consolidated financial statements are presented in U.S. dollars. The Company is listed for trading on the TSX Venture Exchange under the symbol CNO and in the U.S. on the OTC Markets under the symbol CANOF. These consolidated financial statements were authorized for issue in accordance with a resolution by the Board of Directors on January 28, 2026. 2. Significant accounting policies These condensed consolidated interim financial statements, which are unaudited, have been prepared by management in accordance with IAS 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (“IASB”) and interpretations of the IFRS Interpretations Committee (“IFRIC”). The accounting policies applied in these financial statements are consistent with those disclosed in the Company’s most recent annual audited consolidated financial statements and have been applied consistently to all periods presented, including the comparative interim periods ended November 30, 2025 and November 30, 2024. The preparation of interim financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Actual results may differ from these estimates. In management’s opinion, these financial statements have been prepared using reasonable judgments and are presented within the --- framework of materiality appropriate for interim reporting. (a) Basis of consolidation The Company has consolidated the assets, liabilities, revenues and expenses of the subsidiaries after the elimination of intercompany transactions and balances. These consolidated financial statements include the accounts of the Company, and its wholly owned subsidiaries, California Nanotechnologies Inc. and White Roof Solutions, Inc. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of the subsidiaries are prepared for the same period as the parent company, using consistent accounting policies. The table below provides information relative to the Company’s significant subsidiaries, including the entity's name, its jurisdiction of incorporation/formation, the percentage of securities directly or indirectly owned by the Company, and the market areas served, if applicable. currency of each entity is U.S. dollars. California Nanotechnologies Corp. Notes to the Condensed Consolidated Financial Statements United States Dollars For the interim nine months ended November 30, 2025 and 2024 8 4. Inventory The company expenses any materials used in the production process as cost of goods sold at the time of purchase. The cost of materials for the nine months ended November 30, 2025 was $116,258 (2024 - $287,263). 5. Related party transactions As of November 30, 2025, a related entity holding approximately 13.38% (2024 – 14.43%) of the Company’s common shares was considered a related party under IFRS. There were no financing transactions or outstanding balances with this related party during the nine months ended November 30, 2025. The Company leases its property from the related entity. The lease has been disclosed in Note 8. As part of the October 2024 private placement, the Company entered into a loan agreement with Eric Eyerman, CEO & Director. In exchange for 2,222,200 units that include one common share and ½ of one common share purchase warrant, the Company agreed to advance the purchase price of $250,000 as a loan with 4% interest, compounded monthly. The principal and any unpaid interest are due by October 30, 2028. For accounting purposes, the plan is considered to be an option and the transaction has been accounted as such. Share-based compensation of $29,673 and $164,854 was recognized for the year ended February 29, 2024 on the shares and warrants granted, respectively. As this arrangement has been accounted for as an option, neither the loan nor the shares are considered to be outstanding until the options are exercised by repaying the loan or it expires. During the period ended November 30, 2025, Eric Eyerman, CEO & Director, exercised 361,110 warrants issued pursuant to the private placement. As at November 30,2025, all warrants issued under the October 2024 private placement had been exercised and accordingly, no related warrants were outstanding nor exercisable at that date. Company (Jurisdiction of Incorporation/ Formation Percentage of ownership by California Nanotechnologies Corp. Overview Market Area California Nanotechnologies Inc. (California, USA) 100% Wholly-owned subsidiary of California Nanotechnologies Corp. which was formed and incorporated on February 4, 2005. It is the head office which conducts research and development, and materials processing. USA White Roof Solut --- ions Inc. (California, USA) 100% Wholly-owned subsidiary of California Nanotechnologies Inc. which was formed and incorporated on May 21, 2012. This entity is inactive. USA California Nanotechnologies Corp. Notes to the Condensed Consolidated Financial Statements United States Dollars For the interim nine months ended November 30, 2025 and 2024 9 6. Property, plant, and equipment Nanotechnology equipment Leasehold Improvements Right-of-use assets Totals Cost At February 29, 2024 $ 1,805,087 $ - $ 278,368 $ 2,083,455 Additions 1,875,794 181,723 1,715,754 3,773,271 Disposals (588,022) - - (588,022) At November 30, 2024 $ 3,092,859 $ 181,723 $ 1,994,122 $ 5,268,704 Additions 63,524 5,842 - 69,366 At February 28, 2025 $ 3,156,383 $ 187,565 $ 1,994,122 $ 5,338,070 Additions 42,694 7,589 - 50,283 At November 30, 2025 $ 3,199,077 $ 195,154 $ 1,994,122 $ 5,388,353 Accumulated depreciation At February 28, 2024 $ 1,649,618 $ - $ 71,912 $ 1,721, 530 Depreciation 122,613 6,058 259,296 387,967 Disposals (588,022) - - (588,022) At November 30, 2024 1,184,209 6,058 331,208 1,521,475 Depreciation 72,384 10,748 107,133 190,265 At February 28, 2025 1,256,593 16,806 438,341 1,711,740 Depreciation 216,099 32,724 274,822 523,645 At November 30, 2025 $ 1,472,692 $ 49,530 $ 713,163 $ 2,235,385 Net book value At November 30, 2024 $ 1,908,650 $ 175,665 $ 1,662,914 $ 3,747,229 At November 30, 2025 $ 1,726,385 $ 145,624 $ 1,280,959 $ 3,152,968 California Nanotechnologies Corp. Notes to the Condensed Consolidated Financial Statements United States Dollars For the interim nine months ended November 30, 2025 and 2024 10 7. Intangible assets Cost Patents At February 28, 2024, February 29, 2025, November 30, 2024 and 2025 $ 8,615 Accumulated amortization At February 29, 2024 $ 4,933 Amortization 431 At November 30, 2024 $ 5,364 Amortization 143 At February 28, 2025 $ 5,507 Amortization 431 At November 30, 2025 $ 5,938 Net book value At November 30, 2024 $ 3,251 At November 30, 2025 $ 2,677 8. Lease liability In 2022, the Company entered into an agreement with a related party to sub-lease a portion of the property located at 17220 Edwards Road, Cerritos, California. The Company recorded a right of use asset and lease liability of $278,368, using an incremental borrowing rate of 9%. The Company is responsible for its own maintenance and operating costs, including insurance. For the period ended November 30, 2025, the costs totaled $158,672 (2024 - $119,995) and are recorded in office expenses. Effective March 1, 2024, the lease agreement with the related party was amended to increase the monthly rent from $3,500 to $4,300. The amendment was accounted for as a lease modification under IFRS 16, resulting in a remeasurement of the lease liability and adjustment to the right-of-use asset as of the effective date of the amendment. In 2024, the Company entered into an agreement to lease a warehouse and equipment. The Company recorded a right of use asset of $1,663,554 and lease liability of $1,586,421, using an incremental borrowing rate of 9% and 7.8% for warehouse and equipment, respectively. California Nanotechnologies Corp. Notes to the Condensed Consolidated Financial Statements United States Dollars For the interim nine months ended November 30, 2025 and 2024 11 8. Lease liability-continued The table below summarizes the changes in the Company’s lease liabilities for the period ended November 30, 2025 and 2024, including additions from the new lease agreements, schedule --- d lease payments, and interest expense recognized during the period. At Nov 30, 2025 At Nov 30, 2024 Opening Balance $ 1,623,054 $ 228,375 Additions - 1,708,834 Payments (329,829) (362,372) Interest 98,200 119,264 Lease Liability at end of period $ 1,391,425 $ 1,694,101 Less current portion (317,584) (305,634) Long term portion $ 1,073,841 $ 1,388,467 Maturity analysis-contractual undiscounted cash flow At Nov 30, 2025 At Nov 30, 2024 Less than one year $ 428,782 $ 442,352 One to ten years 1,208,822 2,088,167 Total undiscounted lease obligations 1,637,604 2,530,519 Unrecognized imputed interest (246,180) (540,034) Total Lease obligation $ 1,391,424 $ 1,990,485 9. Compensation of key management personnel The remuneration of key management personnel during the year was as follows: November 30, 2025 November 30, 2024 Remuneration $ 345,851 $ 346,247 Share-based payments 288,654 134,637 $ 634,505 $ 480,884 Key management personnel of the Company include the CEO and Directors. 10. Share capital (a) Authorized: Unlimited number of Class “A” Common shares, without nominal or par value. (b) Issued: Number Amount Total issued and outstanding, February 28, 2025 44,242,087 $ 5,176,599 Options exercised 648,974 44,730 Warrants exercised 2,984,709 1,401,671 Issued and outstanding, November 30, 2025 47,875,770 $ 6,623,000 California Nanotechnologies Corp. Notes to the Condensed Consolidated Financial Statements United States Dollars For the interim nine months ended November 30, 2025 and 2024 12 10. Share capital-continued (i) On October 30, 2024, the company issued 7,777,800 shares through a private placement, at US$0.1088 (CA$0.15) per share unit, for total proceeds of US$846,499 (CA$1,166,667). Each share unit was comprised of one common share plus ½ of one common share purchase warrant. Each warrant is exercisable at CA$0.25 through October 30, 2025. The warrants were valued at US$576,991 (CA$798,160). The warrant values were determined using the Black-Scholes fair value pricing model based on a risk-free rate of 4.65%, expected volatility of 132.65% and an expected life of two years. The total costs to complete the private placement were US$87,848, which included legal fees of US$62,466, finder’s fees of US$16,553, and investor relations expense of US$8,829. Warrants: Number Amount Total issued and outstanding, February 28, 2025 1,873,610 $ 568,103 Warrants exercised (1,873,610) (332,349) Loss on share purchase warrants - (235,754) Issued and outstanding, November, 2025 - $ - Due to the exercise price of the share purchase warrants being denominated in Canadian dollars while the Company's functional currency is the US dollar, the warrants were classified as derivative financial liabilities and measured at fair value through profit and loss. The share purchase warrants were remeasured at fair value at each reporting date until exercised, with changes in fair value recognized in earnings. For the nine months ending November 30, 2025, the change in fair value was (US$235,754). During the period, all outstanding share purchase warrants were exercised, with none outstanding. Upon exercise, the carrying value of the share purchase warrants was reclassified to equity. (c) Options - directors, officers, employees, and consultants During the Annual Stockholder’s Meeting held on August 23, 2024, the stockholders approved an amendment to replace the company’s stock option plan with a Fixed Stock Option Plan. The amendment increased the number of shares aut --- horized for issuance from 10% to 20% of the issued and outstanding shares of common stock. California Nanotechnologies Corp. Notes to the Condensed Consolidated Financial Statements United States Dollars For the interim nine months ended November 30, 2025 and 2024 13 10. Share capital-continued The Company’s stock option plan is for directors, officers, employees, and consultants. Stock options can be issued up to a maximum number of common shares equal to 20% of the issued and outstanding common shares of the Company. The exercise price of options granted is not less than the market price of the common shares traded and along with the vesting period, is determined by the Board of Directors. Options granted have a term of up to 5 years. Number of Options Weighted Average price (CAD) Balance, February 28, 2024 4,200,000 $ 0.13 Granted 1,300,000 0.83 Exercised (395,247) 0.07 Balance, February 28, 2025 5,104.753 $ 0.31 Granted 2,475,000 0.39 Exercised (648,974) 0.83 Expired (140,000) 0.08 Balance, November 30, 2025 6,790,779 $ 0.37 During the nine months ended November 30, 2025, the Company recorded $373,881 in share-based compensation expense (2024 - $156,573). The weighted average fair value of the options granted during the nine months ended November 30, 2025, was estimated using the Black Scholes option-pricing model with the following assumptions: Risk free interest rate (%) 2.63-4.17 Expected term (years) 2-5 Expected volatility (%) 131-147 Dividend per share - Forfeiture rate (%) .74-5.57 The following tables summarize information about stock options outstanding at November 30, 2025: Options Outstanding Options Exercisable Exercise Price Number of options Weighted Average of Remaining Contractual Life (years) Weighted Average Exercise Price (CAD) Number of Options Weighted Average Exercise Price (CAD) $ 0.075 - 0.83 6,790,779 3.5 $ 0.37 4,707,439 $ 0.31 California Nanotechnologies Corp. Notes to the Condensed Consolidated Financial Statements United States Dollars For the interim nine months ended November 30, 2025 and 2024 14 10. Share capital-continued The following tables summarize information about stock options outstanding at November 30, 2024: Options Outstanding Options Exercisable Exercise Price Number of options Weighted Average of Remaining Contractual Life (years) Weighted Average Exercise Price (CAD) Number of Options Weighted Average Exercise Price (CAD) $ 0.05 - 0.83 5,500,000 3.28 $ 0.29 3,489,989 $ 0.12 11. Earnings per share Basic earnings per common share is calculated by dividing net loss and comprehensive loss by the weighted-average number of common shares outstanding during the period. Diluted loss per common share is calculated using net loss and comprehensive loss divided by the same weighted- average number of shares outstanding, as the inclusion of stock options would be anti-dilutive due to the net loss during the period. For the nine months ending November 30, 2025, there were 3,015,779 (2024 – 3,489,989) stock options outstanding. No warrants were outstanding at November 30, 2025 (2024 – 3,144,710). These potential common shares were excluded from the calculation of diluted earnings per share because the company incurred a net loss and their inclusion would have been anti-dilutive. 12. Financial instruments Financial instruments of the Company consist of cash, share purchase warrants, accounts receivable, accounts payable and accrued liabilities, interest payable, and advances from related party. Novembe --- r 30, 2025 November 30, 2024 Carrying Value Fair Value Carrying Value Fair Value At FVTPL Cash $ 341,417 $ 341,417 $ 403,833 $ 403,833 Share purchase warrants - - 1,269,672 1,269,672 At amortized cost Accounts receivable 538,970 538,970 1,210,422 1,210,422 Accounts payable and accrued liabilities 497,674 497,674 716,814 716,814 Interest payable 1,784 1,784 - - California Nanotechnologies Corp. Notes to the Condensed Consolidated Financial Statements United States Dollars For the interim nine months ended November 30, 2025 and 2024 15 13. Financial instruments-continued Fair value represents the price at which a financial instrument could be exchanged in an orderly market, in an arm’s length transaction between knowledgeable and willing parties who are under no compulsion to act. The Company classifies the fair value of the financial instruments according to the following hierarchy based on the amount of observable inputs used to value the instrument. Level 1 Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 Pricing inputs are other than quoted prices in active markets included in level 1. Prices in level 2 are either directly or indirectly observable as of the reporting date. Level 2 valuations are based on inputs, including quoted forward prices for commodities, time value and volatility factors, which can be substantially observed or corroborated in the marketplace. Level 3 Valuations in this level are those with inputs for the assets or liabilities that are not based on observable market date. There have been no transfers during the nine months ended November 30, 2025 between Levels 1, 2 and 3. The carrying values of cash, accounts receivable, accounts payable and accrued liabilities, interest payable and current portion of bank indebtedness approximate their fair value due to their short-term nature. The fair value of the Company’s long-term portion of bank indebtedness approximate its fair values due to the interest rates applied to these instruments, which approximate market interest rates. The fair value of the Company’s advances from related party approximate their fair values due to the amounts being due on demand. The Company holds various forms of financial instruments. The nature of these instruments and the Company's operations expose the Company to various risks. The Company manages its exposure to these risks by operating in a manner that minimizes its exposure to the extent practical. The Company does not make use of off statement of financial position contracts to manage these risks. Liquidity risk The Company defines liquidity risk as the financial risk that it may encounter difficulty meeting its obligations associated with financial liabilities as they become due. The Company’s objective for managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. This risk is mitigated through the active management of cash flows, including the monitoring and collection of receivables and management of payables to vendors and related parties. At November 30, 2025, the Company had working capital of $13,440 (2024 – deficit 482,994). California Nanotechnologies Corp. Notes to the Condensed Consolidated Financial Statements United States Dollars For the interim nine months ended Novembe --- r 30, 2025 and 2024 16 13. Financial instruments-continued The following table provides an analysis of the financial liabilities based on the remaining terms of the liabilities as at: November 30, 2025 = 1 year > 1 year = 3 years > 3 years = 4 years > 5 years Total Accounts payable and accrued liabilities $ 497,674 $ - $ - $ - $ 497,674 Interest payable 1,784 - - - 1,784 Income tax payable 93,091 - - - 93,091 Lease liability 317,584 805,260 235,063 33,518 1,391,425 Total $ 910,133 $ 805,260 $ 235,063 $ 33,518 $ 1,983,974 November 30, 2024 = 1 year > 1 year = 3 years > 3 year = 4 years > 5 years Total Accounts payable and accrued liabilities $ 716,814 $ - $ - $ - $ 716,814 Deferred revenue 17,500 - - - 17,500 Lease Liability 277,832 643,057 838,452 231,145 1,990,486 Total $ 1,012,146 $ 643,057 $ 838,452 $ 231,145 $ 2,724,800 Foreign currency risk A portion of the Company’s operations are located outside of the U.S. and, accordingly, the related financial assets and liabilities are subject to fluctuations in exchange rates. The Company believes its exposure to foreign currency risk to be minimal. As at November 30, 2025, the Company had the following balances denominated in CAD. The balances have been translated into U.S. dollars in accordance with the Company’s foreign exchange accounting policy. U.S. Dollar U.S. Dollar November 30, 2025 November 30, 2024 Accounts receivable $ 3,167 $ 6,866 Accounts payable and accrued liabilities 44,378 29,608 The Company operates with a U.S. dollar functional currency which gives rise to currency exchange rate risk on the Company’s CAD denominated monetary assets and liabilities, such as CAD bank accounts and accounts payable, as follows: Impact on Net Income U.S. Dollar Exchange Rate – 10% increase $ 4,121 U.S. Dollar Exchange Rate – 10% decrease (4,121) California Nanotechnologies Corp. Notes to the Condensed Consolidated Financial Statements United States Dollars For the interim nine months ended November 30, 2025 and 2024 17 13. Financial instruments-continued Revenue concentration and credit risk For the nine months ended November 30, 2025, the Company was engaged in contracts for products with two (2024 - one) customer(s) in excess of 10% of revenue, which accounted for $440,670 (2024 - $3,145,850) or 24% (2024 - 62%) of the Company's total revenue. The loss of these customers, or a significant reduction in purchase volume from these customers, could have a material adverse effect on the Company's financial position, results of operations, and cash flows. The Company manages credit risk by dealing with financially sound customers, based on an evaluation of the customer's financial condition. The maximum exposure to credit risk is the carrying value of accounts receivable and cash. Two (2024 - three) customers had an outstanding balance in excess of 10% of accounts receivable, which accounted for $133,300 (2024 - $911,060) or 29% (2024 - 61%) of the Company's total accounts receivable balance. The table below provides a analysis of the current and past due accounts receivable. The following table below provides an analysis of the current and past due accounts receivable. As at November 30, 2025, the average expected credit loss on the Company's accounts receivable was 0% and as a result the provision for expected credit losses was $nil. Total Current = 30 days > 30 days = 60 days >60 days = 90 days > 90 days November 30, 2025 $ 538,970 $ 229,214 $ 17,025 $ - $ 79,485 $ 213,246 November 30, 2024 $ --- 1,210,422 $ 730,141 $ 397,269 $ 48,125 $ 2,222 $ 32,665 As at November 30, 2025, the average expected credit loss on the Company’s accounts receivable was 0% and as a result the provision for expected credit losses was $nil. 14. Capital disclosures The Company manages its capital to maintain its ability to continue as a going concern and to provide returns to shareholders and benefits to other stakeholders. The capital structure of the Company consists of cash, and equity comprised of issued capital, contributed surplus and deficit. The Company manages its capital structure and makes adjustments to it in light of economic conditions. The Company, upon approval from its Board of Directors, will balance its overall capital structure through new share issues or by undertaking other activities as deemed appropriate under the specific circumstances. The Company is not subject to externally imposed capital requirements and the Company’s overall strategy with respect to capital risk management remains unchanged for the nine months ended November 30, 2025.