SEDAR Interim Financial Statements

Defence Therapeutics Inc. Condensed Consolidated Interim Financial Statements Six Months Ended December 31, 2025 (Unaudited – Expressed in Canadian Dollars) Defence Therapeutics Inc. Six Months Ended December 31, 2025 and 2024 INDEX Page Condensed Consolidated Interim Financial Statements Notice of No Auditor Review 1 Condensed Interim Statements of Financial Position 2 Condensed Interim Statements of Comprehensive Loss 3 Condensed Interim Statements of Changes in Equity (Deficiency) 4 Condensed Interim Statements of Cash Flows 5 Notes to the Condensed Interim Financial Statements 6-18 1 NOTICE OF NO AUDITOR REVIEW OF CONDENSED INTERIM FINANCIAL STATEMENTS Under National Instrument 51-102, Part 4, subsection 4.3(3) (a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor. The accompanying unaudited condensed interim financial statements of the Company have been prepared by and are the responsibility of the Company’s management. The Company’s independent auditor has not performed a review of these condensed interim financial statements in accordance with standards established by the Chartered Professional Accountants of Canada for a review of condensed interim financial statements by an entity’s auditor. February 20, 2026 2 Defence Therapeutics Inc. Condensed Consolidated Interim Statements of Financial Position (Expressed in Canadian Dollars) December 31 June 30 2025 2025 (unaudited) Assets Current Cash $ 947,354 $ 1,232,427 Receivables (note 10) 222,684 198,052 Prepaids 21,769 33,377 1,191,807 1,463,856 Non-current Equipment (note 7) 177,198 180,997 Right-of-use asset (note 7) - 6,662 177,198 187,659 $ 1,369,005 $ 1,651,515 Liabilities Current Accounts payable and accrued liabilities (note 9) $ 1,105,403 $ 1,403,088 Convertible debentures (note 8) - 1,489,194 Lease obligation – current portion - 15,069 1,105,403 2,907,351 Non-current Convertible debentures (note 8) – non-current portion 1,487,720 - 2,593,123 2,907,351 Shareholders’ Deficiency Share Capital (note 10) $ 25,812,447 $ 24,191,231 Share-based Payments Reserve (note 10) 4,029,688 3,753,396 Equity Component of Convertible Debentures (note 8) 281,558 104,340 Accumulated other comprehensive income (2,768) 1,303 Deficit (31,345,044) (29,306,106) (1,224,119) (1,255,836) $ 1,369,005 $ 1,651,515 Going Concern (note 2) Commitments (note 13) Approved on behalf of the Board of Directors: “Sébastien Plouffe” " Philippe Lefrançois” ……………………………… Director ……………………………… Director Sébastien Plouffe Philippe Lefrançois The accompanying notes are an integral part of these condensed interim financial statements. 3 Defence Therapeutics Inc. Condensed Consolidated Interim Statements of Comprehensive Loss For the Six Months Ended December 31, (Unaudited – Expressed in Canadian Dollars) Three Months ended Six Months ended December 31, December 31, December 31, December 31, 2025 2024 2025 2024 Expenses Share-based compensation (notes 10 and 11) $ 83,531 $ 160,229 $ 197,436 $ 230,444 Research and lab fees (notes 10 and 12) 316,511 220,153 432,111 346,491 Investor relations and shareholder communication 616,877 12,536 764,174 71,298 Management fees (note 9) 60,000 85,500 140,000 211,000 Interest accretion (notes 8) 111,064 109,434 191,575 217,463 Consulting fees (note 9) 44,840 34,956 100,913 84,023 Accounting and legal (note 9) 126,970 31,406 176,827 47,488 Office --- and general 115,775 28,148 136,261 47,595 Transfer agent and filing fees 36,169 36,860 43,292 62,412 Depreciation of equipment and right-of-use asset (note 7) 9,275 17,709 25,515 35,418 Foreign exchange loss (gain) -8,446 67,906 14,258 58,129 1,512,566 804,837 2,222,362 1,704,617 Other Items Interest income 631 1 631 63 Cumulative translation adjustment (9,568) - (2,768) - Net Loss and Comprehensive Loss for the Period $ 1,521,503 $ 804,837 $ 2,224,499 $ 1,411,698 Basic and Diluted Loss Per Share $ (0.03) $ (0.02) $ (0.04) $ (0.03) Weighted Average Number of Common Shares Outstanding – Basic and Diluted 55,351,943 46,196,711 55,351,943 46,196,711 The accompanying notes are an integral part of these condensed interim financial statements. 4 Defence Therapeutics Inc. Condensed Consolidated Interim Statements of Changes in Equity (Deficiency) (Unaudited – Expressed in Canadian Dollars) Share Capital Number of Common Shares Share Capital Share-based Payments Reserve Equity Component of Convertible Debentures Deficit Accumulated Other Comprehensive Income Total Balance, June 30, 2024 45,536,673 $ 19,242,375 $ 6,877,146 104,340 $ (29,808,089) - $ (3,584,228) Shares issued for private placements 1,600,000 596,208 203,792 - - - 800,000 Share issuance costs - (28,631) 7,215 - - - (21,416) Fair value transferred on expiry of stock options - - (3,147,891) - 3,147,891 - - Share-based compensation - - 230,444 - - - 230,444 Conversion of convertible debentures 440,697 370,607 - (104,340) - - 266,267 Issuance of convertible debentures - - - 202,834 - - 202,834 Finders fees on issuance of convertible debentures 123,000 63,960 - - - - 63,960 Net loss and comprehensive loss for the period - - - - (1,411,698) (1,411,698) Balance, December 31, 2024 47,700,370 20,244,519 4,170,706 202,834 (28,071,896) - (3,453,837) Balance, June 30, 2025 54,725,370 $ 24,191,232 $ 3,753,396 104,340 $ (29,306,107) $ 1,303 $ (1,255,836) Share issuance costs - (615) - - - (615) Shares issued on exercise of warrants 37,000 27,750 (9,032) 9,032 27,750 Fair value transferred on expiry of warrants - - (173,762) - 173,762 - Share-based compensation - - 197,436 - - 197,436 Conversion of convertible debentures 2,607,600 1,594,080 - - - 1,594,080 Issuance of convertible debentures - - 261,650 177,218 - 438,869 Foreign Currency Translation (4,071) (4,071) Net loss and comprehensive loss for the period - - - - (2,221,731) (2,221,731) Balance, December 31, 2025 57,369,970 25,812,447 4,029,688 281,558 (31,345,044) (2,768) (1,342,198) The accompanying notes are an integral part of these condensed interim financial statements. 5 Defence Therapeutics Inc. Condensed Consolidated Interim Statements of Cash Flows For the Six Months Ended December 31, (Unaudited – Expressed in Canadian Dollars) Six Months Ended December 31, December 31, 2025 2024 Operating Activities Net loss for the period $ (2,224,499) $ (1,411,698) Items not involving cash Deferred tax recovery Depreciation of equipment and right-of-use asset 6,662 35,418 Depreciation of intangible assets 18,853 Interest accretion 191,575 212,839 Share-based compensation 197,436 230,444 Gain on extinguishment of debentures - - Changes in non-cash working capital Receivables (24,632) 50,636 Prepaids 11,608 44,041 Accounts payable and accrued liabilities (297,685) 257,352 Cash Provided by (Used in) Operating Activities (2,120,682) (580,968) Investing Activity Sale (Purchase) of equipment (Net) (15,054) 18,597 Cash Used in Investing Activity (15 --- ,054) 18,597 Financing Activities Proceeds from share issuance - 800,000 Proceeds from exercise of warrants 27,750 - Share issue costs (615) (21,416) Proceeds from loan payable - 15,000 Proceeds from issuance of convertible debentures 2,000,000 - Repayments of convertible debentures - (94,000) Transcation costs (160,100) - Repayments of loan payable - (50,000) Repayment of lease obligation (15,069) (13,239) Cash Used in Financing Activities 1,851,966 636,345 Impact of currency translation on cash (1,303) - Inflow (Outflow) of Cash (285,073) 73,974 Cash, Beginning of Period 1,232,427 56,547 Cash, End of Period $ 947,354 $ 130,521 The accompanying notes are an integral part of these condensed interim financial statements. Defence Therapeutics Inc. Notes to the Condensed Interim Financial Statements For the Six Months Ended December 31, 2025 (Unaudited – Expressed in Canadian Dollars) 6 1. NATURE OF OPERATIONS Defence Therapeutics Inc. (the “Company”) was incorporated as Accum Therapeutics Inc. on July 18, 2017, under the laws of the province of Québec. The Company changed its name to Defence Therapeutics Inc. on March 26, 2020 and was continued into British Columbia on July 10, 2020. Its principal business activity is the development of a biological drug enhancer platform that improves the efficacy and safety of a multitude of biological-/biosimilar-based pharmaceuticals used in the treatment of cancer and infectious diseases. Company’s head office address and registered and records office is 7171 Rue Frederick-Banting, Montreal (Quebec), H4S1Z9 Canada. On April 30, 2021, the Company became a reporting issuer, and on May 7, 2021, the Company’s Common Shares were listed on the Canadian Securities Exchange and began trading under the symbol “DTC”. 2. GOING CONCERN These condensed interim financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations. The Company’s ability to continue its operations and to realize assets at their carrying value is dependent upon its ability to generate positive cash flows and/or obtain additional financing sufficient to fund its development and operating costs. The Company may be able to generate working capital to fund its operations by raising additional capital through equity markets. However, there is no assurance it will be able to raise funds in the future. Based on its current plans, budgeted expenditures and cash requirements, the Company does not have sufficient cash to finance its current plans for at least twelve months from the date the condensed interim financial statements are issued. These material uncertainties may cast significant doubt upon the Company’s ability to continue as a going concern. These condensed interim financial statements do not give effect to any adjustments required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying condensed interim financial statements. If the going concern assumption were not appropriate for these condensed interim financial statements, then adjustments may be necessary in the carrying values of assets and liabilities, the reported expenses and the statement of financial position classifications used. Such adjustm --- ents could be material. The Company’s business may be affected by changes in political and market conditions, such as interest rates, availability of credit, inflation rates, changes in laws, and national and international circumstances. Recent geopolitical events and potential economic global challenges, such as the risk of higher inflation and the energy crises, may create further uncertainty and risk with respect to the prospects of the Company’s business. 3. BASIS OF PREPARATION a) Statement of compliance The condensed interim financial statements of the Company have been prepared in accordance with International Accounting Standard (“IAS”) 34 Interim Financial Reporting. The condensed interim financial statements of the Company should be read in conjunction with the Company’s June 30, 2025 audited financial statements, which have been prepared in accordance with IFRS Accounting Standards, as issued by the International Accounting Standards Board. These condensed interim financial statements were reviewed by the Audit Committee and approved and authorized for issue by the Board of Directors on February 20, 2026 Defence Therapeutics Inc. Notes to the Condensed Interim Financial Statements For the Six Months Ended December 31, 2025 (Unaudited – Expressed in Canadian Dollars) 7 . 3. BASIS OF PREPARATION (Continued) b) Basis of consolidation These consolidated financial statements include the accounts of the Company and its subsidiary. A subsidiary is an entity in which the Company has control, directly or indirectly. Control is defined as the investor being exposed, or having rights, to variable returns from its involvement with the investee and having the ability to affect those returns through its power over the investee. All material intercompany transactions and balances have been eliminated on consolidation. Details of the Company’s subsidiary as at December 31, 2025 and 2024 are as follows: Name Place of Incorporation Ownership % December 31, 2025 Ownership % June 30, 2024 Defence Therapeutics US LLC USA 100% 0% c) Basis of measurement These condensed interim financial statements have been prepared under the historical cost basis, except for certain financial instruments that are measured at fair value, as explained in the material accounting policies (note 4). These condensed interim financial statements have been prepared under the accrual basis of accounting, except for cash flow information. 4. MATERIAL ACCOUNTING POLICIES These condensed interim financial statements have been prepared, for all periods presented, following the same accounting policies and methods of computation as described in note 4 to the audited financial statements as at June 30, 2025 and for the year then ended, except for the following: Classification of liabilities as current or non-current (amendments to IAS 1) IAS 1 has been amended to promote consistency in applying the requirements by helping companies determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current. These amendments were adopted for the reporting period beginning January 1, 2024. There was no impact for the Company. IFRS 18 Presentation and Disclosure in Financial Statements In April 2024, the IASB issued IFRS 18 Presentation and Disclosure in Financial Statements. This standard aims to improve the consistency and clarity of f --- inancial statement presentation and disclosures by providing updated guidance on the structure and content of financial statements. Key changes include enhanced requirements for the presentation of financial performance, financial position, and cash flows, as well as additional disclosures to improve transparency and comparability. IFRS 18 is effective for annual reporting periods beginning on or after January 1, 2027. The Company is currently assessing Defence Therapeutics Inc. Notes to the Condensed Interim Financial Statements For the Six Months Ended December 31, 2025 (Unaudited – Expressed in Canadian Dollars) 8 5. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS The Company makes estimates and assumptions about the future that affect the reported amounts of assets and liabilities. Estimates and judgments are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The effect of a change in an accounting estimate is recognized prospectively by including it in comprehensive income/loss in the year of the change if the change affects that year only, or in the year of the change and future years if the change affects both. Critical judgments in applying accounting policies Information about critical judgments in applying accounting policies that have the most significant risk of causing material adjustment to the carrying amounts of assets and liabilities recognized in the condensed interim financial statements within the next fiscal year are discussed below. Going concern risk assessment The assessment of the Company’s ability to continue as a going concern requires significant judgment. The condensed interim financial statements have been prepared on the basis of accounting principles applicable to a going concern, as disclosed in note 2. Key sources of estimation uncertainty Convertible debentures and lease obligation The debt component of the convertible debenture and lease obligation are calculated using a discounted cash flow method, which requires management to make an estimate of an appropriate discount rate. Changes in the discount rate can materially affect the calculation of the debt component of the convertible debentures and the lease obligation. 6. FINANCIAL INSTRUMENTS Financial instruments are agreements between two parties that result in promises to pay or receive cash or equity instruments. The carrying values of accounts payable and accrued liabilities, lease obligation, loan payable and convertible debentures approximate their fair values due to their short term to maturity. The following table sets forth the Company’s financial asset measured at fair value by level within the fair value hierarchy: December 30, 2025 Level 1 Level 2 Level 3 Total Cash $ 947,354 $ - $ - $ 947,354 June 30, 2025 Level 1 Level 2 Level 3 Total Cash $ 1,232,427 $ - $ - $ 1,232,427 Defence Therapeutics Inc. Notes to the Condensed Interim Financial Statements For the Six Months Ended December 31, 2025 (Unaudited – Expressed in Canadian Dollars) 9 6. FINANCIAL INSTRUMENTS (Continued) The Company has exposure to the following risks from its use of financial instruments: • Credit risk; • Liquidity risk; and • Market risk. a) Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by fail --- ing to discharge an obligation. The Company manages credit risk, in respect of cash, by placing it at major Canadian financial institutions. The Company has minimal credit risk. Of the $222,684 (June 30, 2025 - $198,052) receivables balance, $116,074 (June 30, 2025 - $198,052) is owing from the Canada Revenue Agency and Revenue Québec. b) Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquid funds to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. The contractual financial liabilities of the Company as of December 31, 2025 equal $2,593,123 (June 30, 2025 - $2,907,351). The face value of the convertible debenture is $2,000,000 which matures on September 16, 2027. All of the liabilities presented as accounts payable are due within 30 days of the reporting date. c) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return on capital. i) Currency risk – The Company has minimal funds held in a foreign currency and holds a material amount of accounts payable and accrued liabilities in United States dollars. A fluctuation in the exchange rate between the Canadian and United States dollars of 10% would result in a $74,346 change in the Company’s accounts payable and accrued liabilities. The Company does not use any techniques to mitigate currency risk. ii) Interest rate risk – Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. Interest earned on cash is at nominal interest rates. The Company currently has no debt subject to variable interest rates. Accordingly, the Company does not consider interest rate risk to be significant. iii) Other price risk – Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices, other than those arising from interest rate risk. The Company is not exposed to significant other price risk. d) Capital management The Company considers its capital to be comprised of shareholders’ equity (deficiency). Defence Therapeutics Inc. Notes to the Condensed Interim Financial Statements For the Six Months Ended December 31, 2025 (Unaudited – Expressed in Canadian Dollars) 10 6. FINANCIAL INSTRUMENTS (Continued) The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares. Although the Company has been successful at raising funds in the past through the issuance of share capital, it is uncertain whether it will continue this method of financing due to the current difficult market conditions. In order to facilitate the management of its capital requirements, the Company prepares expenditure budgets that are updated as necessary depending on various factors, including successful capital deployment and g --- eneral industry conditions. Management reviews the capital structure on a regular basis to ensure that the above objectives are met. There have been no changes to the Company’s approach to capital management during the six months ended December 31, 2025. The Company is not subject to externally imposed capital requirements. 7. EQUIPMENT AND RIGHT-OF-USE-ASSET Equipment Right-of-use Asset Cost Balance at June 30, 2024 269,042 53,282 Additions 15,000 - Disposals -18,598 - Balance at June 30, 2025 $ 265,444 $ 53,282 Addition 15,054 Balance at December 31, 2025 $ 280,498 $ 53,282 Accumulated Depreciation Balance at June 30, 2024 38,749 19,980 Depreciation 45,699 26,640 Balance at June 30, 2025 $ 84,448 $ 46,620 Depreciation 18,853 6,662 Balance at December 30, 2025 $ 103,301 $ 53,282 Net Book Value, June 30, 2025 $ 180,996 $ 33,302 Net Book Value, December 31, 2025 $ 177,197 $ 0 8. CONVERTIBLE DEBENTURES During the year ended June 30, 2024, debentures with a principal amount of $549,499 were converted by the holder into 349,999 Common Shares, with the debt having a value of $441,349 at the date of conversion. The Company repaid interest of $36,140 in relation to the conversions. On November 16, 2024, a) Debentures amounting to $ 94,000 were repaid. b) Interest on debentures amounting to $251,200 were converted by the holders to 440,697 Common Shares. c) The Company completed a refinancing transaction involving the extinguishment of its previously issued Defence Therapeutics Inc. Notes to the Condensed Interim Financial Statements For the Six Months Ended December 31, 2025 (Unaudited – Expressed in Canadian Dollars) 11 8. CONVERTIBLE DEBENTURES (Continued) convertible debentures. At the time of the transaction, the carrying amount of the liability component of the original debentures was $1,476,000. d) In exchange, the Company issued new convertible debentures with a principal amount of $1,476,000. The fair value of the liability component of the new debentures at initial recognition was determined to be $1,333,198, based on prevailing market interest rates and contractual cash flows. As the present value of the revised cash flows differed by more than 10% from the present value of the remaining cash flows under the original terms, discounted at the original effective interest rate, the transaction was accounted for as an extinguishment of the original financial liability in accordance with IFRS 9 – Financial Instruments. As a result, the Company derecognized the carrying amount of the original debenture liability and recognized the new debenture liability at fair value. A gain on extinguishment of $142,802 was recognized in profit or loss. e) In connection with the above, 123,000 Common Shares were issued to an arm’s length finder as finders fees. This transaction costs of $63,960 were recognized in profit and loss netted with the gain on extinguishment. f) The equity component of the original debentures $104,340 remains with no gain or loss recognized in profit or loss. In November 2025, the Company converted al of the principal amount and the accrued interests thereof into an aggregate number of 2,607,600 common shares of the Company. In accordance with the terms of the Debentures, the principal amount of $1,476,000 was converted into 2,460,000 Shares at the conversion price of $0.60 per Share and an aggregate amount of $118,080 of accrued interests was converted into 147,600 Shares at $0.80 per Share totaling 2,607,600 Shares for an aggr --- egate amount of $1,594,080. On September 16, 2025, The Company completed a non brokered private placement of up to 2,000 debenture units of the Company (the “Debenture Units”) at a price of $1,000 per Debenture Unit. Each Debenture Unit will consist of (i) one $1,000 principal amount of unsecured convertible debentures (the “Debenture”) and (ii) 1,666 transferable common share purchase warrant (the “Warrants”). Each Warrant will entitle the holder to purchase one common share of the Company at an exercise price of $0.75 per Warrant Share for a period of 24 months from the date of issuance The Debentures will bear interest from the date of issue at a rate of 8.0% per annum, calculated and paid on the Conversion Date or the Maturity Date and which may at the election of the Company be payable in cash or alternately in common shares at a price of $0.60 per common share. The Debentures will mature twenty-four (24) months from the date of issuance. The Debentures are convertible into common shares of the issuer (each a “Common Share”) at the option of the holder thereof at a conversion price of $0.60 per Common Share. In connection with the issuance of the above Debentures, the Company paid a finder’s fees of $160,000 and issued 266,667 warrants. The finders’ warrants had a fair value of $101,002 estimated using the Black-Scholes option pricing model with a volatility of 98.46%, risk-free interest rate of 2.49%, dividend rate of 0% and expected life of 2 years. The debentures are compound instruments, and the proceeds are required to be bifurcated to record the fair value of the separate debt and equity components. The fair value of the debt was determined using a discounted cash flow model using an estimated market interest rate for equivalent debt of 18%. The initial fair value of Defence Therapeutics Inc. Notes to the Condensed Interim Financial Statements For the Six Months Ended December 31, 2025 (Unaudited – Expressed in Canadian Dollars) 12 8. CONVERTIBLE DEBENTURES (Continued) the debt was calculated to be $1,611,402 with the residual portion of $388,598 allocated to both the equity component ($203,828) and the warrants ($184,770). Transaction costs totaled $261,102, of which $210,370 were allocated to the liability component and offset the carrying value and are amortized using the effective interest method as finance costs over the expected life of the debentures. Transactions costs of $26,610 were charged to the equity component and $24,122 were charged to the warrant component. Convertible debenture transactions are summarized as follows: Six months Year Ended Ended December 31, June 30, 2025 2025 Opening balance 1,489,194 1,660,270 Interest accretion - 160,930 Interest converted to shares (118,080) (251,200) Repayments - (94,000) Conversion to shares (1,476,000) - Re-issue of new debentures - (1,476,000) Add issue of new debentures 2,000,000 1,476,000 Less Transferred to Equity (177,218) - Less: Transferred to Share based Payment Reserve (261,650) - Less proportionate transaction costs (160,100) - Gain on extinguishment of debentures - (142,802) Interest accretion 191575 155,996 1,487,720 1,489,194 Current portion - 1,489,194 Non-current portion 1,487,720 - Defence Therapeutics Inc. Notes to the Condensed Interim Financial Statements For the Six Months Ended December 31, 2025 (Unaudited – Expressed in Canadian Dollars) 13 9. RELATED PARTY TRANSACTIONS These amounts of key management compensation are included in the amounts shown --- on the condensed interim statements of comprehensive loss: Six Months Ended December 31, 2025 Six Months Ended December 31, 2024 Consulting fees $ 76,957 $ 58,400 Accounting and Legal 93,500 - Management fees 140,000 226,000 Research and lab fees - 125,000 Wages and Salaries 115,000 - Share-based compensation 197,436 159,514 $ 622,893 $ 569,014 During the six months ended December 31, 2025, the Company paid research and lab fees of $nil (2024 - $125,000) to companies in which management and directors are principals. As at December 31, 2025, the Company had accounts payable of $12,886 (June 30, 2025 - $71,195) with companies controlled by current and former officers and directors. The balances owing are unsecured, non- interest-bearing and have no specific terms of repayment. At December 31, 2025, the Company had accounts receivable of $nil (June 30, 2025 - $Nil) from a company with a common officer for expense reimbursement. 10. SHARE CAPITAL a) Authorized Unlimited Class A Common Shares, voting, participating, without par value (“Common Shares”) b) Issued and outstanding During the year ended June 30, 2025 In November 2024, the Company closed a private placement of 1,600,000 units at a price of $0.50 per unit for aggregate gross proceeds of $800,000. Each unit consists of one common share and one-half of one common share purchase warrant. Each warrant is exercisable to acquire one additional share at an exercise price of $1.00 per share for a period of 24 months from the date of the closing. The Company paid cash finder’s fees of $14,000 and issued 28,000 finder’s warrants with a fair value of $4,946 with the same terms as the warrants issued in the units. The Company completed a refinancing of its convertible debentures, including the repayment of $94,000, conversion of $251,200 in interest into 440,697 shares, and issuance of new debentures totalling $1,476,000. As part of the deal, 123,000 common shares were issued to a finder with a fair value $63,960. (see note 8) Defence Therapeutics Inc. Notes to the Condensed Interim Financial Statements For the Six Months Ended December 31, 2025 (Unaudited – Expressed in Canadian Dollars) 14 10. SHARE CAPITAL (Continued) In January 2025, the Company closed a private placement of 7,025,000 units at a price of $0.60 per unit for aggregate gross proceeds of $4,215,000. Each unit consists of one common share and one common share purchase warrant. Each warrant is exercisable to acquire one additional share at an exercise price of $0.75 per share for a period of 24 months from the date of the closing. The Company paid cash finder’s fees of $247,200 and issued 412,000 finder’s warrants with a fair value of $100,632 with the same terms as the warrants issued in the units. c) Warrants Warrant transactions and the number of warrants outstanding are summarized as follows: Year Ended Year Ended December 31,2025 June 30, 2025 Number of Warrants Weighted Average Exercise Price Number of Warrants Weighted Average Exercise Price Outstanding, beginning of period 10,807,140 $0.87 2,974,260 $2.02 Issued 3,598,667 $0.75 8,265,000 $0.78 Exercised -37,000 - - - Expired -1,497,780 - -432,120 7.14 Outstanding, end of period 12,871,027 $0.94 10,807,140 $0.87 The following warrants were outstanding and exercisable at December 31, 2025: Expiry Date Weighted Average Remaining Contractual Life in Years Exercise Price Outstanding 30-Jan-26 0.08 $2.00 612,360 22-Mar-26 0.22 $2.00 432,000 30-Oct-26 0.83 $1.00 803,000 29-Nov --- -26 0.91 $1.00 25,000 31-Jan-27 1.08 $0.75 7,400,000 15-Sep-27 1.71 $0.75 3,598,667 1.17 12,871,027 Defence Therapeutics Inc. Notes to the Condensed Interim Financial Statements For the Six Months Ended December 31, 2025 (Unaudited – Expressed in Canadian Dollars) 15 10. SHARE CAPITAL (Continued) c) Warrants (continued) The fair value of each finder’s warrant issued was calculated using the following weighted average assumptions: Six Months Ended December 30, 2025 Year Ended June 30, 2025 Expected life (years) N/A 2.00 Risk-free interest rate N/A 2.71% Annualized volatility N/A 86% Dividend yield N/A 0% Stock price at grant date N/A $ 0.59 Exercise price N/A $ 0.78 Weighted average grant date fair value N/A $ 0.53 Option pricing models require the input of highly subjective assumptions regarding volatility. The Company has estimated the volatility of the share price based on comparable start-up companies’ volatilities. During the six months ended December 31, 2025, the Company transferred $182,794 (2024 - $ 81,895) from the share-based payments reserve to deficit, as Nil (2024 - 44,475) warrants expired unexercised. d) Stock options The Company has a stock option plan to grant incentive stock options to directors, officers, employees and consultants. Under the plan, the aggregate number of Common Shares that may be subject to option at any one time may not exceed 10% of the issued Common Shares of the Company as of that date, including options granted prior to the adoption of the plan. Options granted may not exceed a term of 10 years. All options vest when granted unless they are otherwise specified by the Board of Directors. Stock option transactions and the number of stock options outstanding are summarized as follows: Six Months Ended Year Ended December 31, 2025 June 30, 2025 Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price Outstanding, beginning of period 2,525,000 $1.55 2,500,000 $2.48 Issued 200,000 $0.75 1,425,000 $0.83 Expired -1,400,000 $2.47 Outstanding, end of period 2,725,000 $1.52 2,525,000 $1.55 Defence Therapeutics Inc. Notes to the Condensed Interim Financial Statements For the Six Months Ended December 31, 2025 (Unaudited – Expressed in Canadian Dollars) 16 10. SHARE CAPITAL (Continued) d) Options (continued) The following stock options were outstanding and exercisable at December 31, 2025: Expiry Date Weighted Average Remaining Contractual Life in Years Exercise Price Outstanding Exercisable 08-Jul-26 0.52 1.00 25,000 25,000 10-Oct-26 0.78 0.60 200,000 200,000 27-Sep-27 1.74 0.60 200,000 200,000 13-Nov-27 1.87 0.60 100,000 100,000 15-Nov-27 1.87 0.60 100,000 100,000 19-Dec-27 1.97 0.60 100,000 100,000 31-Jan-28 2.08 1.02 100,000 100,000 16-Sep-28 2.71 0.75 100,000 100,000 02-Oct-28 2.76 0.80 100,000 100,000 06-Oct-33 7.77 2.50 1,100,000 1,100,000 31-Jan-35 9.09 1.02 250,000 250,000 3.81 1.50 2,725,000 2,537,500 The Company applies the fair value method using the Black-Scholes option pricing model in accounting for its stock options granted. Accordingly, share-based payments of $794,727 (2024 - $5,836,658) were recognized during the year ended June 30, 2025. The fair value of each stock option granted was calculated using the following weighted average assumptions: Six Months Ended December 31, 2025 Year Ended June 30, 2025 Expected life (years) 3 5.79 Risk-free interest rate 2.48% 3.07% Annualized volatility 98% 124% Dividend yield 0% 0% Stock price at grant date $0. --- 73 $ 0.81 Exercise price $0.78 $ 0.83 Weighted average grant date fair value $0.44 $ 0.65 Option pricing models require the input of highly subjective assumptions regarding volatility. The Company has estimated the volatility of the share price based on comparable start-up companies’ volatilities. During the year ended June 30, 2025, the Company transferred $Nil (2024 - $96,412) from the share-based payments reserve to share capital, as Nil (2024 - 339,000) stock options were exercised. The weighted- average share price for stock options exercised during the year ended June 30, 2025 was $Nil (2024 - $2.42). During the year ended June 30, 2025, the Company transferred $3,309,090 (2024 - $292,134) from the share-based payments reserve to deficit, as 1,400,000 (2024 - 1,161,000) stock options expired unexercised. Defence Therapeutics Inc. Notes to the Condensed Interim Financial Statements For the Six Months Ended December 31, 2025 (Unaudited – Expressed in Canadian Dollars) 17 11. RESEARCH AND LAB FEES An investment tax credit refund under the government of Québec Scientific Research & Experimental Development program of $Nil for the six months ended December 31, 2025 (2024 - $nil) has been recorded as a reduction of research and lab fees. 12. SEGMENTED DISCLOSURE The Company has one operating segment, being research and development. All of the Company’s assets are located in Canada. 13. COMMITMENTS The consulting agreements signed with certain consultants have indefinite terms and monthly fees totalling $30,000. In the event the agreements are terminated by the Company or the consultants as a result of a change in control, the Company would be required to pay a total of $180,000 to the consultants. The consulting agreement with the chief executive officer contains bonus payments upon reaching certain milestones related to clinical trials and license agreements. During the year ended June 30, 2025, bonuses of $65,000 (2024 - $75,000) were paid or accrued to the chief executive officer. 14. SUPPLEMENTAL DISCLOSURES WITH RESPECT TO CASH FLOWS December 2025 June 2025 Interest paid $ - $ 3,381 Non-cash investing and financing activities Conversion of convertible debenture to shares $ 1,476,000 $ 251,200 Fair value transferred on exercise of stock options $ - $ 96,412 Fair value transferred on exercise of warrants $ 9,032 $ - Fair value transferred on expiry of warrants $ 1,476,000 $ 714,965 Fair value transferred on expiry of stock options $ - $ 3,309,090 Fair value of finders’ warrants issued $ - $ 105,578 Fair value of finders’ shares issued $ - $ 63,960 Reconciliation of liabilities arising from financing activities for the six months ended December 31, 2025 and year ended June 30, 2025: Non-cash Items June 30, 2025 Cash Flow Accretion Bifurcation t o Equity Bifurcation t o Warrant Reserve Gain on extinguishment of debentures Conversion December 31, 2025 $ $ $ $ $ $ $ $ Convertible debentures 1,489,194 1,839,900 191,575 -177,218 -261,650 - (1,594,080) 1,487,720 Non-cash Items June 30, 2024 Cash Flow Accretion Bifurcation t o Equity Bifurcation t o Warrant Reserve Gain on extinguishment of debentures Conversion June 30, 2025 $ $ $ $ $ $ $ $ Convertible debentures 1,660,270 (94,000) 316,926 - - (142,802) (251,200) 1,489,194