SEDAR Interim Financial Statements

HEMPALTA CORP. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED DECEMBER 31, 2025 AND 2024 (Expressed in Canadian dollars) NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL RESULTS Pursuant to National Instrument 51‐102, Part 4, subsection 4.3(3)(a) issued by the Canadian Securities Administrators, if an auditor has not performed a review of the interim condensed consolidated financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor. The accompanying interim condensed consolidated financial statements of the Company have been prepared in accordance with IFRS and are the responsibility of the Company’s management. The interim condensed consolidated financial statements and related financial reporting matters have been reviewed and approved by the Audit Committee. The Company’s independent auditor has not performed a review of these interim condensed consolidated financial statements in accordance with the standards established by the Canadian Institute of Chartered Professional Accountants for a review of interim condensed consolidated financial statements by an entity’s auditor. HEMPALTA CORP. DECEMBER 31, 2025 Q1 FINANCIAL STATEMENTS CONTENTS CONSOLIDATED STATEMENTS OF FINANCIAL POSITION ......................................................................... 1 CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS ................................................ 2 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY) ................ 3 CONSOLIDATED STATEMENTS OF CASH FLOWS ...................................................................................... 4 NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS...................................... 5 1. NATURE OF OPERATIONS AND GOING CONCERN ..................................................................... 5 2. BASIS OF PRESENTATION .............................................................................................................. 6 3. MATERIAL ACCOUNTING POLICIES .............................................................................................. 7 4. SIGNIFICANT JUDGMENTS, ESTIMATES AND ASSUMPTIONS .................................................. 7 5. TERM LOAN AND PAYABLE TO SHAREHOLDER .......................................................................... 7 6. LONG-TERM DEBT ........................................................................................................................... 8 7. SHARE CAPITAL ............................................................................................................................... 8 8. PRODUCT SALES ........................................................................................................................... 11 9. GENERAL AND ADMINISTRATIVE COSTS ................................................................................... 11 10. RELATED PARTY TRANSACTIONS .............................................................................................. 11 11. SEGMENTED INFORMATION AND DISCONTINUED OPERATIONS .......................................... 12 12. CAPITAL MANAGEMENT ............................................................................................................... 14 13. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT .............................................................. 15 14. SUBSEQUENT EVENTS ......... --- ........................................................................................................ 16 HEMPALTA CORP. DECEMBER 31, 2025 Q1 FINANCIAL STATEMENTS 1 HEMPALTA CORP. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited) The accompanying notes are an integral part of these interim condensed consolidated financial statements. (Expressed in Canadian dollars) Notes December 31, 2025 September 30, 2025 ASSETS Current Cash and cash equivalents 46,962 $ 14,978 $ Accounts receivable 15,639 9,953 Assets classified as held for sale 11 1,808 3,884 TOTAL ASSETS 64,409 28,815 $ LIABILITIES Current Accounts payable and accrued liabilities 391,693 $ 458,754 $ Term Loan 5 150,000 325,000 Payable to shareholder 5 128,600 117,600 Contractual obligation - current 8,227 - Liabilities classified as held for sale 11 655,402 654,985 1,333,922 1,556,339 Non-Current Contractual obligation 4,004 4,004 TOTAL LIABILITIES 1,337,926 1,560,343 SHAREHOLDERS' EQUITY (DEFICIENCY) Share capital 7 12,420,610 12,089,456 Contributed surplus 7 1,108,692 1,067,974 Deficit (14,802,819) (14,688,958) TOTAL SHAREHOLDERS' DEFICIENCY (1,273,517) (1,531,528) TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIENCY 64,409 $ 28,815 $ Subsequent events (Note 14) Nature of Operations and Going Concern (Note 1) HEMPALTA CORP. DECEMBER 31, 2025 Q1 FINANCIAL STATEMENTS 2 HEMPALTA CORP. CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS (Unaudited) The accompanying notes are an integral part of these interim condensed consolidated financial statements. (Expressed in Canadian dollars) Notes December 31, 2025 December 31, 2024 Continuing Operations PRODUCT SALES 8 4,063 $ 133 $ COST OF SALES 172 - GROSS PROFIT 3,891 133 EXPENSES Financing costs 18,262 167 General and administrative costs 9 68,322 260,789 Share based compensation 7 31,175 34,465 117,759 295,421 OTHER INCOME (EXPENSES) Other income - 3,028 Gain on debt settlement - 230,589 Loss from continuing operations (113,868) $ (61,671) $ Discontinued operations Income (loss) from discontinued operations 11 7 $ (370,610) $ NET LOSS AND COMPREHENSIVE LOSS (113,861) $ (432,281) $ Net loss per share from continuing and discontinued operations Basic and diluted ($0.00) ($0.00) Net loss per share from continuing operations Basic and diluted ($0.00) ($0.00) Weighted average number of common shares Basic and diluted 96,425,467 91,396,524 THREE MONTHS ENDED HEMPALTA CORP. DECEMBER 31, 2025 Q1 FINANCIAL STATEMENTS 3 HEMPALTA CORP. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY) (Unaudited) The accompanying notes are an integral part of these interim condensed consolidated financial statements. Non-controlling Contributed Accumulated Interest (Expressed in Canadian dollars) Notes Number Amount Surplus Deficit ("NCI") Total Balance at September 30, 2024 94,944,176 12,089,456 $ 980,575 $ (9,826,607) $ (54,591) $ 3,188,833 $ Acquisition of non-controlling interest - - - (55,525) 54,591 (934) Share based compensation 7 - - 34,465 - - 34,465 Loss and comprehensive loss from - continuing operations - - - (61,671) (61,671) Loss and comprehensive loss from - discontinued operations 11 - - - (370,610) - (370,610) Balance at December 31, 2024 94,944,176 12,089,456 $ 1,015,040 $ (10,314,413) $ - $ 2,790,083 $ Balance at September 30, 2025 94,944,176 12,089,456 $ 1,067,974 $ (14,688,958) $ - $ (1,531,528) $ Private placement 7 5,000,000 90,457 9,543 - - 100,000 Shares issued on debt conversion 12,034,843 240,697 - - - 240,6 --- 97 Share based compensation 7 - - 31,175 - - 31,175 Loss and comprehensive loss from continuing operations - - - (113,868) - (113,868) Loss and comprehensive loss from discontinued operations 11 - - - 7 - 7 Balance at December 31, 2025 111,979,019 12,420,610 $ 1,108,692 $ (14,802,819) $ - $ (1,273,517) $ Common Shares HEMPALTA CORP. DECEMBER 31, 2025 Q1 FINANCIAL STATEMENTS 4 HEMPALTA CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) The accompanying notes are an integral part of these interim condensed consolidated financial statements. (Expressed in Canadian dollars) Notes December 31, 2025 December 31, 2024 OPERATING ACTIVITIES Net loss and comprehensive loss (113,861) $ (432,281) $ Items not affecting cash and cash equivalents: Share based compensation 7 31,175 34,465 Amortization - 101,814 Gain on debt settlement - (230,589) Changes in non-cash working capital balances Accounts receivable (5,686) 68,388 Inventory - (3,569) Prepaid expenses - (8) Accounts payable and accrued liabilities (67,061) 70,313 Change in assets and liabilities held for sale 11 715 - Cash flows used in operating activities (154,718) (391,467) FINANCING ACTIVITIES Proceeds from shareholder advances 5 11,000 - Term loan 5 (175,000) - Contractual obligation on deferred revenue 8,227 - Proceeds from the issuance of shares, net of costs 7 100,000 - Shares for debt 7 240,697 - Repayment of long-term debt - (48,522) Lease liabilities settled - (36,932) Payable to non-controlling interest - 38,919 Cash flows from financing activities 184,924 (46,535) INVESTING ACTIVITIES Additions to property, plant and equipment - (15,744) Additions to intangible assets - (90,000) Cash flows from investing activities - (105,744) Increase (decrease) in cash and cash equivalents 30,206 (543,746) Cash and cash equivalents, beginning 14,978 726,514 Cash - discontinued operations 11 1,778 - Cash and cash equivalents, ending - Continuing operations 46,962 $ 182,768 $ THREE MONTHS ENDED HEMPALTA CORP. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED DECEMBER 31 2025 AND 2024 (Unaudited) (Expressed in Canadian dollars) HEMPALTA CORP. DECEMBER 31, 2025 Q1 FINANCIAL STATEMENTS 5 NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. NATURE OF OPERATIONS AND GOING CONCERN Hempalta Corp. (the “Company”) is a public company trading on the TSX Venture Exchange under the symbol (TSX.V: HEMP). The Company was originally incorporated under the name Trail Blazing Ventures Ltd. (“TBV”) under the Business Corporations Act (Alberta) on August 30, 2021, and was a Capital Pool Company as defined in Policy 2.4 (the “Policy”) of the TSX Venture Exchange (the “Exchange”). The Company operates two wholly owned subsidiaries, namely Hempalta Processing Inc. (“HPI”) and Hemp Carbon Standard Inc. (“HCS”). During the year ended September 30, 2025 the Company ceased its hemp processing operations through HPI, vacated and terminated its facility lease, and transitioned its strategic focus to its nature-based carbon credit platform through HCS. GOING CONCERN These consolidated financial statements have been prepared on a going concern basis, which assumes the Company will be able to continue its operations for the foreseeable future and realize its assets and discharge its liabilities in the normal course of business. Details of the working capital and deficit of the Company are as follows: For the three months ended December 31, 2025, the Company incurred a net l --- oss of $113,861, and as at December 31, 2025, had an accumulated deficit of $14,802,819 a working capital deficit of $1,269,513, and cash of $46,962. These conditions indicate the existence of a material uncertainty that may cast significant doubt upon the Company’s ability to continue as a going concern. During the year ended September 30, 2025, HPI, a wholly owned subsidiary of the Company, received a Notice of Default from Farm Credit Canada (“FCC”) in connection with its credit facility. FCC subsequently enforced its security over substantially all of HPI’s processing equipment, and the liquidation of the seized equipment remained in progress as at year-end. The final proceeds recoverable by FCC could not be determined at December 31,2025. In response to these events, the Company is pursuing several initiatives to improve liquidity, including: • The pursuit of equity financing through a private placement; • The ongoing monetization of carbon credits under the HCS; • The evaluation of strategic partnerships and project-based funding opportunities; and • The reduction of fixed operating costs following the shutdown of processing operations. The Company’s ability to continue as a going concern is dependent upon securing additional financing, successfully executing its carbon credit strategy, and resolving its outstanding obligations with FCC. While management is actively pursuing these initiatives, there can be no assurance that such measures will be successful. These interim consolidated financial statements do not reflect adjustments to the carrying values of assets and liabilities, the classification of balances, or the reported amounts of expenses and losses that would be necessary if the going concern assumption were not appropriate. Such adjustments could be material. December 31, 2025 September 30, 2025 Working capital (deficiency) (1,269,513) $ (1,527,524) $ Deficit (14,802,819) $ (14,688,958) $ HEMPALTA CORP. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED DECEMBER 31 2025 AND 2024 (Unaudited) (Expressed in Canadian dollars) HEMPALTA CORP. DECEMBER 31, 2025 Q1 FINANCIAL STATEMENTS 6 2. BASIS OF PRESENTATION STATEMENT OF COMPLIANCE These interim condensed consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and International Accounting Standards 34, “Interim Financial Reporting” (“IAS34”) as issued by the International Accounting Standards Board (“IASB”), and interpretations of the IFRS Interpretations Committee (“IFRIC”). These financial statements are prepared in accordance with the same accounting policies, critical estimates and methods described the Company’s audited annual consolidated financial statements. Given that certain information and note disclosures, which are included in the audited financial statements, have been condensed or excluded in accordance with IAS 34, these interim financial statements should be read in conjunction with the audited annual consolidated financial statements of the Company for the years ended September 30, 2025 and 2024 and the notes thereto (the “Annual Financial Statements”). The interim financial statements have been prepared on a basis consistent with the accounting, estimation and valuation policies described in the Annual Financial Statements. These financial statements were authorized for issue by the Board of Directors, on February 25, 2026. BASIS OF MEASUREMENT These c --- onsolidated financial statements are prepared on a historic cost basis; except for certain financial instruments which are measured at fair value. These consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information. The preparation of financial statements in accordance with IFRS requires management to make certain critical accounting estimates and to exercise judgment in applying accounting policies. BASIS OF CONSOLIDATION The acquisition of HPI by TBV on March 19, 2024 constituted a reverse takeover under IFRS 3. As a result, the consolidated financial statements represent a continuation of the financial statements of HPI, with TBV treated as the acquired entity for accounting purposes. Accordingly, the results of operations, cash flows, and financial position for periods prior to March 19, 2024 reflect those of HPI. These interim condensed consolidated financial statements include the accounts of: • 100% of HPI, since its incorporation in 2021; • 100% TBV / Hempalta Corp., from March 19, 2024; and • 100% of HCS, from April 30, 2024 (controlling interest acquired) and fully from the date the remaining shares were acquired. All intercompany transactions, balances, income and expenses are eliminated on consolidation. The financial statements of all subsidiaries are prepared for the same financial information presentation period as the Company, using consistent accounting policies. FUNCTIONAL AND PRESENTATION CURRENCY The functional currency of the Company and its subsidiaries and the presentation currency of these consolidated financial statements, is the Canadian Dollar. HEMPALTA CORP. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED DECEMBER 31 2025 AND 2024 (Unaudited) (Expressed in Canadian dollars) HEMPALTA CORP. DECEMBER 31, 2025 Q1 FINANCIAL STATEMENTS 7 3. MATERIAL ACCOUNTING POLICIES The Company’s material accounting policies under IFRS are presented in Note 3 to the Annual Financial Statements of the Company. Certain information and disclosures normally required to be included in the notes to the Annual Financial Statements prepared in accordance with IFRS have been condensed or omitted in the interim financial statements. 4. SIGNIFICANT JUDGMENTS, ESTIMATES AND ASSUMPTIONS The significant judgments, estimates and assumptions considered by management in preparing these interim financial statements are presented in Note 4 to the Annual Financial Statements of the Company. Certain information and disclosures normally required to be included in the notes to the Annual Financial Statements prepared in accordance with IFRS have been condensed or omitted in the interim financial statements. 5. TERM LOAN AND PAYABLE TO SHAREHOLDER During the year ended September 30, 2025, major shareholders Darren Bondar and Prairie Merchant Corporation (collectively, the “Lenders”) advanced a one-year term loan of $325,000 to the Company at an annual interest rate of 12% (the “Loan”). In connection with the Loan, the Company issued an aggregate of 5,416,667 common share purchase warrants (the “Warrants”) as a loan bonus. The Warrants are exercisable for a period of one year at an exercise price of $0.06 per share and are subject to a four-month statutory hold period under applicable Canadian securities laws. The fair value of the Warrants was determined using the residual value method. Since the discount rate is same as the coupon rate, a residual va --- lue of $nil was allocated to the Warrants. The Loan is subsequently measured at amortized cost using the effective interest method. During the year ended September 30, 2025, Darren Bondar advanced an additional $117,600 to the Company, and was recorded as payable to shareholder on the statement of financial position. During the year ended September 30, 2025, an additional $138,000 representing unpaid severance owing to Mr. Bondar, was recorded in accounts payable. During the three months ended December 31, 2025, Darren Bondar advanced an additional $11,000 to the Company, and was recorded as payable to shareholder on the statement of financial position. All amounts bear interest at 12% per annum and are secured. Interest expense of $16,934 was accrued during the period on the outstanding loan balance. All interest has been paid at quarter ended December 31, 2025. During the three months ended December 31, 2025, $175,000 of the loan was converted to shares. As of December 31, 2025, the full amount of the term loan and payable to shareholder was classified as a current liability, as the loan matures within one year of issuance. HEMPALTA CORP. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED DECEMBER 31 2025 AND 2024 (Unaudited) (Expressed in Canadian dollars) HEMPALTA CORP. DECEMBER 31, 2025 Q1 FINANCIAL STATEMENTS 8 6. LONG-TERM DEBT CREDIT FACILITY WITH FARM CREDIT CANADA The Company, through its wholly owned subsidiary HPI, previously maintained a credit facility with FCC in the amount of $1,000,000 (the “FCC Facility”). The FCC Facility had a five-year term maturing December 1, 2026 and initially required interest-only payments until January 1, 2023, followed by blended monthly payments of $18,669 thereafter. Borrowings under the FCC Facility bore interest at 4.554% per annum. The FCC Facility was secured by: • substantially all machinery and processing equipment of the Company (net book value at September 30, 2024: $1,697,232) • a $500,000 personal guarantee from the Company’s Chief Executive Officer The proceeds of the FCC Facility were used to finance the acquisition and installation of processing equipment at the Company’s former Calgary facility. During the quarter ended December 31, 2024, FCC adjusted the required payments to interest-only for the period of January 2024 through June 2025, deferring principal repayment during that period. NOTICE OF DEFAULT AND SEIZURE OF ASSETS During the year ended September 30, 2025, following the Company’s decision to wind down hemp processing operations and close the Calgary facility, HPI received a Notice of Default from FCC. The default arose from: • cessation of processing operations • material adverse change provisions • breach of operating covenants No monetary payment default had occurred at the time of the notice. As a result of the default: • the full outstanding loan balance became current, and • FCC assumed possession of substantially all processing equipment securing the loan. FCC initiated liquidation proceedings to apply net proceeds against the loan balance. As at September 30, 2025, the liquidation process remained in progress, and the final amount recoverable was not yet determinable. The total outstanding as at December 31, 2025 was $626,307 (December 31, 2024 - $629,545) and is classified as liabilities held for sale. 7. SHARE CAPITAL AUTHORIZED The Company is authorized to issue an unlimited number of voting common shares, without par --- value. The Company is authorized to issue an unlimited number of Preferred Shares (issuable in series). ISSUED AND OUTSTANDING COMMON SHARES A reconciliation of the number and dollar amount of common shares outstanding is shown below. Common Shares Number Amount Balance at September 30, 2025 and 2024 94,944,176 12,089,456 $ Private placement 5,000,000 90,457 Shares issued for debt conversion 12,034,843 240,697 Balance at December 31, 2025 111,979,019 12,420,610 $ HEMPALTA CORP. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED DECEMBER 31 2025 AND 2024 (Unaudited) (Expressed in Canadian dollars) HEMPALTA CORP. DECEMBER 31, 2025 Q1 FINANCIAL STATEMENTS 9 On December 23, 2025, the Company completed the first tranche of its non-brokered private placement, raising $100,000 in gross proceeds (“Private Placement”). The Private Placement consists of units priced at $0.02 per unit, with each unit comprised of one (1) common share of the Company and one-half (½) of one common share purchase warrant. Each whole warrant entitles the holder to acquire one additional common share at an exercise price of $0.05 for a period of 24 months from the date of issuance, provided that if the closing price of the Company's common shares equals or exceeds $0.20 for five (5) consecutive trading days, the Company may, at its option, accelerate the expiry of the warrants by providing notice to holders, in which case the warrants will expire 30 days from the date of such notice. On December 23, 2025, the Company settled $240,697 of debt through a shares-for-debt settlement transaction. Pursuant to the settlement, the Company issued 12,034,843 common shares at a fair value of $0.02 per share in full and final settlement of such indebtedness. SHARE PURCHASE WARRANTS During the year ended September 30, 2025, major shareholders Darren Bondar and Prairie Merchant Corporation advanced a one-year term loan totaling $325,000 at an interest rate of 12% (Note 5). As consideration for advancing the Loan, the Company issued 5,416,667 common share purchase warrants (the “Loan Bonus Warrants”). The Loan Bonus Warrants are exercisable at $0.06 per share, expire one year from the date of issuance. The fair value of the warrants granted was determined using the residual value method. Since the discount rate is same as the coupon rate, a residual value of $nil was allocated to the warrants. Pursuant to the Private Placement on December 23, 2025, the Company issued 2,500,000 common share purchase warrants. Each warrant entitles the holder to acquire one common share at an exercise price of $0.05 for a period of 24 months from the date of issuance, provided that if the closing price of the Company's common shares equals or exceeds $0.20 for five (5) consecutive trading days, the Company may, at its option, accelerate the expiry of the warrants by providing notice to holders, in which case the warrants will expire 30 days from the date of such notice. The fair value of the warrants granted was determined using the Black Scholes method. The volatility was 100%, risk free interest rate of 2.58%, and the term of 2 years. During the quarter ended December 31, 2025, the Company announced it has approved the issuance of an aggregate of 1,000,000 common share purchase warrants as compensation for strategic advisory services. Each warrant entitles the holder to acquire one common share of the Company at an exercise price of $0.02 per share for a period of --- 24 months from the date of issuance. All warrants issued are subject to applicable statutory hold periods and final acceptance of the TSX Venture Exchange. A continuity of the share purchase warrants is summarized as follows: Number of Weighted average Number of Weighted average Warrants exercise price Warrants exercise price Warrants outstanding, beginning balance 6,928,490 $0.07 2,784,823 $0.14 Expired February 7, 2025 (468,000) ($0.10) Expired July 31, 2025 (625,000) ($0.20) Expired August 8, 2028 (80,000) ($0.15) Expired September 30, 2025 (100,000) ($0.16) Issued March 10, 2025 5,416,667 $0.06 Issued December 23, 2025 1,000,000 $0.02 Issued December 23, 2025 2,500,000 $0.05 Warrants outstanding, ending balance 10,428,490 $0.06 6,928,490 $0.07 December 31, 2025 September 30, 2025 HEMPALTA CORP. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED DECEMBER 31 2025 AND 2024 (Unaudited) (Expressed in Canadian dollars) HEMPALTA CORP. DECEMBER 31, 2025 Q1 FINANCIAL STATEMENTS 10 As at December 31, 2025, the Company’s outstanding warrants consist of: STOCK OPTIONS The Company has adopted an incentive stock option plan (the “Option Plan”) under which the Board of Directors may grant stock options to directors, officers, employees, and consultants of the Company. The maximum number of common shares reserved for issuance under the Option Plan must not exceed 10% of the Company’s issued and outstanding common shares at the time of grant. Options granted under the Option Plan are non-transferable Option Grants. During the quarter ended December 31, 2025, the Company has granted an aggregate of 6,000,000 stock options, of which 5,000,000 were issued to directors and officers. All stock options are exercisable at $0.02 per common share and expire 5 years from the date of grant. A summary of the Company’s stock option transactions is presented below: The share options outstanding as at December 31, 2025, are as follows: Expiry date Exercise price Remaining life (years) Number of warrants outstanding Number of warrants exercisable January 19, 2026 $0.17 0.05 154,859 154,859 January 25, 2026 $0.15 0.07 150,000 150,000 March 10, 2026 $0.06 0.19 5,416,667 5,416,667 June 27, 2027 $0.10 1.49 1,000,000 1,000,000 November 9, 2027 $0.15 1.86 206,964 206,964 December 22, 2027 $0.02 1.98 1,000,000 1,000,000 December 23, 2027 $0.05 1.98 2,500,000 2,500,000 $0.06 0.94 10,428,490 10,428,490 Number Weighted average Number Weighted average of options exercise price of options exercise price Options outstanding, beginning balance 6,392,647 $0.13 7,927,941 $0.14 Granted 6,000,000 $0.02 - $0.00 Cancelled/Expired (3,476,470) $0.13 (1,535,294) $0.15 Options outstanding, ending balance 8,916,177 $0.06 6,392,647 $0.13 Number of options exercisable 4,778,677 $0.08 5,455,147 $0.13 December 31, 2025 September 30, 2025 Number of options Exercise Number of options Remaining life Grant date outstanding price Expiry date exercisable (years) October 1, 2021 470,589 $0.085 October 1, 2031 470,589 5.75 January 21, 2022 470,588 $0.170 January 21, 2032 470,588 6.06 February 7, 2022 800,000 $0.100 February 7, 2027 800,000 1.10 January 25, 2023 800,000 $0.150 January 25, 2028 600,000 2.07 June 24, 2024 375,000 $0.170 June 24, 2029 187,500 3.48 December 22, 2025 6,000,000 $0.020 December 22, 2030 2,250,000 4.98 8,916,177 $0.06 4,778,677 4.40 HEMPALTA CORP. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED DECEMB --- ER 31 2025 AND 2024 (Unaudited) (Expressed in Canadian dollars) HEMPALTA CORP. DECEMBER 31, 2025 Q1 FINANCIAL STATEMENTS 11 CONTRIBUTED SURPLUS The Contributed Surplus account records items recognized as stock-based compensation expense and other share-based payments until such time that the stock options or warrants are exercised, at which time the corresponding amount will be reclassified to share capital. For the three months ended December 31, 2025, the Company recognized share-based compensation on options and warrants of $31,175 (December 31, 2024 - $34,465). 8. PRODUCT SALES Product sales is composed of the sale of carbon credits and other miscellaneous service fees from HCS operations. 9. GENERAL AND ADMINISTRATIVE COSTS The following table provides a breakdown of general and administrative expenses for the three months ended December 31, 2025 and 2024: 10. RELATED PARTY TRANSACTIONS KEY MANAGEMENT PERSONNEL COMPENSATION Key management personnel include directors and officers of the Company who have authority and responsibility for planning, directing, and controlling the activities of the Company, directly or indirectly. Compensation to key management personnel for the three months ended December 31, 2025 and 2024 is summarized as follows: Three months ended December 31, 2025 December 31, 2024 Carbon Credit Revenue 2,826 $ 38 $ Brokerage Service Fee 1,237 37 Miscellaneous Revenue - 58 Product sales 4,063 $ 133 $ Three months ended December 31, 2025 December 31, 2024 Accounting and legal 10,000 $ 132,204 $ Advertising and marketing 1,638 42,567 Bank service charges 1,112 140 Office and sundry 28,733 44,985 Salaries and benefits 26,839 40,485 Travel and business development - 408 Gross general and administrative costs 68,322 $ 260,789 $ Three months ended December 31, 2025 December 31, 2024 Salaries and consulting fees 22,240 $ 63,000 $ Share-based compensation 13,457 34,106 35,697 $ 97,106 $ HEMPALTA CORP. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED DECEMBER 31 2025 AND 2024 (Unaudited) (Expressed in Canadian dollars) HEMPALTA CORP. DECEMBER 31, 2025 Q1 FINANCIAL STATEMENTS 12 Included in accounts payable and accrued liabilities is $12,097 (September 30, 2024 – $Nil) owing to the executive officers and former directors of the Company for reimbursable expenses. Also included in accounts payable and accrued liabilities is $138,000 (September 30, 2024 – $138,000) of severance owing to the Chief Executive Officer of Hemp Carbon Standard Inc. (“HCS”), relating to his termination of employment during the year. LOANS FROM KEY MANAGEMENT PERSONNEL During the quarter ended March 31, 2025, major shareholders Darren Bondar and Prairie Merchant Corporation (together, the “Lenders”) advanced a one-year term loan of $325,000 at 12% interest to provide additional working capital to the Company (Note 5). In connection with this loan, the Company issued 5,416,667 common share purchase warrants as a loan bonus. The warrants are exercisable at $0.06 per share for one year and are subject to a statutory hold period. The loan and warrants are subject to TSX Venture Exchange approval. The fair value of the warrants granted was determined using the residual value method. Since the discount rate is same as the coupon rate, a residual value of $nil was allocated to the warrants. During the three months ended December 31, 2025, Darren Bondar advanced an additional $11,000 to the Company, and was recorded as pay --- able to shareholder on the statement of financial position. During the three months ended December 31, 2025, $175,000 of the loan was converted to shares. An additional $138,000 representing unpaid severance owing to Mr. Bondar, is recorded in accounts payable. All amounts bear interest at 12% per annum and are secured. Interest expense of $16,934 (December 31, 2024 – $nil) was accrued during the year on the outstanding loan balance. All interest has been paid at quarter ended December 31, 2025. As of December 31, 2025, the full amount of the term loan and payable to shareholder was classified as a current liability, as the loan matures within one year of issuance. 11. SEGMENTED INFORMATION AND DISCONTINUED OPERATIONS In accordance with IFRS 8 – Operating Segments, an operating segment is defined as a component of the Company that: • Engages in business activities from which it may earn revenues and incur expenses; • has operating results that are regularly reviewed by the Company’s CEO for purposes of allocating resources and assessing performance; and for which separate financial information is available. For the year ended September 30, 2025, the Company has determined that it has one reportable operating segment, being HPI, which encompassed all revenue-generating activities during the period. Although the Company began expanding its carbon credit operations through HCS during the year, HCS did not meet the quantitative thresholds or operational criteria required for separate reportable segment disclosure under IFRS 8. The “Quantitative Thresholds or Operational Criteria” includes: • corporate-level general and administrative costs, • non-operating assets and liabilities, and the early-stage activities of HCS, which had not yet become a separately reportable segment during the fiscal year. Revenue presented below represents revenue earned from external customers. The accounting policies for segment reporting are consistent with those applied in the consolidated financial statements. HEMPALTA CORP. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED DECEMBER 31 2025 AND 2024 (Unaudited) (Expressed in Canadian dollars) HEMPALTA CORP. DECEMBER 31, 2025 Q1 FINANCIAL STATEMENTS 13 During the year ended September 30, 2025, the Company decided to wind down hemp processing operations and close the Calgary facility. HPI then received a Notice of Default from FCC, and FCC assumed possession of substantially all processing equipment securing the loan (Note 6). As a result, HPI was identified as discontinued operations. The statements of loss and comprehensive loss have been prepared with HPI as a discontinued operation for 2025 and the 2024 statement has been restated. Three months ended December 31, 2025 HPI Others Total PRODUCT SALES 75 $ 4,063 $ 4,138 $ COST OF SALES - 172 172 GROSS PROFIT (LOSS) 75 3,891 3,966 EXPENSES Amortization - - - Financing costs - 18,262 18,262 General and administrative costs 68 68,322 68,390 Share based compensation - 31,175 31,175 68 117,759 117,827 Net loss and comprehensive loss 7 $ (113,868) $ (113,861) $ Three months ended December 31, 2024 HPI Others Total PRODUCT SALES 70,364 $ 133 $ 70,497 $ COST OF SALES 84,162 - 84,162 GROSS PROFIT (LOSS) (13,798) 133 (13,665) EXPENSES Amortization 101,814 - 101,814 Financing costs 18,312 167 18,479 General and administrative costs 236,686 260,789 497,475 Share based compensation - 34,465 34,465 356,812 295,421 652,233 OTHER INCOME (E --- XPENSES) Other income - 3,028 3,028 Gain on debt settlement - 230,589 230,589 Net loss and comprehensive loss (370,610) $ (61,671) $ (432,281) $ HEMPALTA CORP. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED DECEMBER 31 2025 AND 2024 (Unaudited) (Expressed in Canadian dollars) HEMPALTA CORP. DECEMBER 31, 2025 Q1 FINANCIAL STATEMENTS 14 Assets and liabilities held for sale As at December 31, 2025, the assets and liabilities held for sale of HPI was stated at carrying value and are comprised of the following assets and liabilities: A summary of the Company’s cash flows from discontinued operations for the three months ended December 31, 2025 and 2024 is as follows: 12. CAPITAL MANAGEMENT The Company’s objectives when managing capital are to maintain a capital structure that will allow it to continue as a going concern, support the development and scaling of its operations, and maximize shareholder value. The Company defines capital as shareholders’ equity, long-term debt, lease obligations, and other interest-bearing liabilities. The Company’s capital management strategy is focused on preserving liquidity, maintaining financial flexibility, and securing the resources required to advance its carbon credit business following the wind-down of its legacy processing operations. The Company is dependent on external financing to fund its activities and continues to evaluate various sources of capital, including equity issuances, strategic partnerships, and project-based funding. During the year ended September 30, 2025, the Company took several steps to manage its capital structure, including: • the shutdown of its processing facility and termination of its facility lease to significantly reduce fixed operating costs; • receipt of a notice of default from Farm Credit Canada (“FCC”) on its long-term debt, resulting in the reclassification of the FCC loan to current liabilities ; • the seizure and ongoing liquidation of processing equipment by FCC, the proceeds of which will reduce the outstanding loan balance; and • the advancement of funds from major shareholders under a 12% term loan to support working capital needs. Looking forward, the Company intends to manage its capital through: • pursuing equity financing via private placement; • generating revenue from carbon credit sales under the Hemp Carbon Standard; and • assessing additional strategic funding opportunities to advance its nature-based carbon platform. The Board of Directors reviews the Company’s capital structure on a regular basis and considers it appropriate given the Company’s size, current stage of development, and ongoing transition in business focus. There were no externally imposed capital requirements as at December 31, 2025. December 31, 2025 September 30, 2025 Assets Cash and cash equivalents 1,778 $ 2,591 $ Accounts receivable 30 1,293 Assets held for sale 1,808 $ 3,884 $ Liabilities Accounts payable 29,094 $ 28,678 $ Current portion of long-term debt 626,307 626,307 Liabilities held for sale 655,401 $ 654,985 $ December 31, 2025 December 31, 2024 Cash provided by (used in) the following activities: Cash provided by (used in) operating activities (812) $ (261,491) $ Cash provided by (used in) investing activities - $ 15,744 $ Cash used in financing activities - $ (104,005) $ HEMPALTA CORP. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED DECEMBER 31 2025 AND 2024 (Unaudited) (Expressed in Canadi --- an dollars) HEMPALTA CORP. DECEMBER 31, 2025 Q1 FINANCIAL STATEMENTS 15 13. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT Financial instruments are measured at amortized cost or fair value. Fair value represents the estimated amounts at which financial instruments could be exchanged between knowledgeable and willing parties in an arm’s length transaction. Determining fair value requires management judgement. FAIR VALUE MEASUREMENT IFRS 13. Fair value measurement establishes a fair value hierarch that reflects the sign cane of the inputs in making the fair value measurements. The fair value hierarchy has thee following levels: Level 1 – quoted prices (unadjusted) in active markets for identical assets or labilities Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly (i.e. as prices ) or indirectly (i.e. derive from prices) and Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs The Company’s financial instruments include cash, accounts receivable, and accounts payable and accrued liabilities. The carrying value of cash, accounts receivable and accounts payment and accrued liabilities approximates its fair value due to the relatively short period of maturity of the instrument. The Company does not have any financial instruments measured using Level 3 inputs as at December 31, 2025. RISK MANAGEMENT The Company is exposed to credit risk, liquidity risk, market risk, and interest rate risk through its financial instruments. The Company’s Board of Directors oversees risk management policies, which are designed to identify and evaluate financial risks, set risk tolerance levels, and monitor risk exposures. CREDIT RISK Credit risk is the risk of financial loss to the Company if a customer or counterparty fails to meet its contractual obligations. The Company’s accounts receivable primarily relate to carbon credit customers and legacy hemp product customers. Credit risk is mitigated through the Company’s collection practices and the short-term nature of receivables. The Company assesses expected credit losses using historical and forward-looking information. As of December 31, 2025, credit risk is considered low. LIQUIDITY RISK Liquidity risk is the risk that the Company will encounter difficulty meeting its financial obligations as they fall due. Liquidity risk is elevated due to: • the FCC notice of default and seizure of processing equipment, • the classification of the full FCC loan balance as current, • ongoing operating losses, and • the need for external financing to support carbon credit operations. To manage liquidity, the Company has: • reduced fixed costs by shutting down its processing operations, • terminated its facility lease, • obtained related-party loans to support working capital, and • initiated a private placement financing to raise additional capital. The Company’s ability to continue as a going concern is dependent on securing sufficient financing (Note 1). HEMPALTA CORP. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED DECEMBER 31 2025 AND 2024 (Unaudited) (Expressed in Canadian dollars) HEMPALTA CORP. DECEMBER 31, 2025 Q1 FINANCIAL STATEMENTS 16 MARKET RISK Market risk includes exposure to foreign currency risk and interest rate risk. FOREIGN CURRENCY RISK The Company conducts substantially all of its transactions in Canadian dollars. Exposure to foreign cur --- rency risk is minimal. INTEREST RATE RISK Interest rate risk arises from changes in interest rates that may affect the fair value or future cash flows of financial instruments. • The FCC Facility bears interest at a fixed rate of 4.554%, reducing exposure to variable-rate risk. • Related-party loans bear a fixed rate of 12%. Accordingly, the Company’s interest rate risk is considered low. OTHER PRICE RISK The Company has no financial instruments linked to equity or commodity prices. Exposure to other price risk is nil. The table below summarizes the Company’s contractual obligations as at December 31, 2025: 14. SUBSEQUENT EVENTS Subsequent to the period ended December 31, 2025, there were no subsequent events. Recognized in Less than 2-3 4-5 More than December 31, 2025 Financial Statements Total 1 year years years 5 years Accounts payable and accrued liabilities (1) Yes-Liability 391,693 $ 391,693 $ - $ - $ - $ Current portion of debt Yes-Liability 626,307 $ 626,307 $ - $ - $ 626,307 $ Term loan Yes-Liability 150,000 $ 150,000 $ - $ - $ - $ Payable to shareholder Yes-Liability 128,600 $ 128,600 $ - $ - $ - $ Contractual obligations - current Yes-Liability 8,227 $ 8,227 $ - $ - $ - $ Contractual obligations Yes-Liability 4,004 $ - $ - $ - $ 4,004 $ September 30, 2025 Accounts payable and accrued liabilities (1) Yes-Liability 458,754 $ 458,754 $ - $ - $ - $ Current portion of debt Yes-Liability 626,307 $ 626,307 $ - $ - $ - $ Term loan Yes-Liability 325,000 $ 325,000 $ - $ - $ - $ Payable to shareholder Yes-Liability 117,600 $ 117,600 $ - $ - $ - $ Contractual obligations Yes-Liability 4,004 $ - $ - $ - $ 4,004 $ Interest payable on term loan (2) Yes-Liability 11,795 $ 11,795 $ - $ - $ - $ 2) Excludes interest payable on lease liabilities, included w ithin accounts payable and accrued liabilities 1) Excludes interest payable on debt CONTACT Phone: 1-877-622-3354 Email: [email protected] CONNECT Website: www.hempalta.com | www.hempcarbonstandard.org Hempalta | Hempcarbonstandard