SEDAR Interim Financial Statements

PHARMALA BIOTECH HOLDINGS INC. CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED NOVEMBER 30, 2025 AND 2024 (EXPRESSED IN CANADIAN DOLLARS) (UNAUDITED) PharmAla Biotech Holdings Inc. Condensed Interim Consolidated Statements of Financial Position (Expressed in Canadian Dollars) (Unaudited) November 30 August 31, As at, 2025 2025 ASSETS Current Cash $ 83,523 $ 40,187 Short-term investments (Note 3) 773,529 920,473 Accounts receivables (Note 4) 153,582 37,791 HST receivable 20,644 20,748 Prepaid expenses, deposits and other assets (Note 5) 256,072 257,956 Inventory (Note 6) 357,666 369,709 Total current assets 1,645,016 1,646,864 Equipment 2,603 2,918 Intangible assets (Note 7) 1,751,552 1,770,100 Total assets $ 3,399,171 $ 3,419,882 LIABILITIES Current Accounts payables and accrued liabilities (Note 16) $ 467,439 $ 558,910 Customer deposits and deferred revenue (Note 12) 433,232 276,035 Deferred joint venture downstream sales (Note 13) 126,787 126,787 Total liabilities 1,027,458 961,732 SHAREHOLDERS' EQUITY Share capital (Note 8) 7,743,458 7,452,478 Contributed surplus (Note 9 & 10) 941,234 908,955 Warrants (Note 11) 1,227,906 1,227,906 Deficit (7,540,884) (7,131,189) Total shareholders' equity 2,371,714 2,458,150 Total liabilities and shareholders' equity $ 3,399,172 $ 3,419,882 Nature of operations and going concern (Note 1) Commitment and Contingencies (Note 15) Subsequent event (Note 17) Approved by the Board: "Nicholas Kadysh" "Kevin Roy" Director Director The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements. - 1 - PharmAla Biotech Holdings Inc. Condensed Interim Consolidated Statements of Loss and Comprehensive Loss (Expressed in Canadian Dollars) (Unaudited) Three Months Ended November 30, 2025 2024 Revenue (Note 12 & 14) $ 206,440 $ 57,297 Cost of goods sold (Note 6) 34,837 - Gross profit 171,603 57,297 Expenses Consulting (Note 16) 30,749 70,582 Depreciation and amortization (Note 7) 29,757 29,567 Investor relations 16,841 20,008 Office and general 52,286 5,762 Research costs 41,098 33,250 Payroll expenses (Note 16) 102,009 43,162 Professional fees (Note 16) 119,414 50,614 Stock based compensation (Note 9, 10 & 16) 106,592 226,295 Loss on debt settlement (Note 8) 66,047 35,632 Travel 16,505 21,534 Total expenses 581,298 536,406 Net loss and comprehensive loss for the period $ (409,695) $ (479,109) Net loss and comprehensive loss per share - basic and diluted (Note 11) $ (0.01) $ (0.01) Weighted average number of common shares outstanding - basic and diluted (Note 11) 108,009,123 92,080,163 The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements. - 2 - PharmAla Biotech Holdings Inc. Condensed Interim Consolidated Statements of Cash Flows (Expressed in Canadian Dollars) (Unaudited) Three Months Ended November 30, 2025 2024 Operating activities Loss for the period $ (409,695) $(479,109) Items not affecting cash: Depreciation and amortization (Note 7) 29,757 29,567 Stock based compensation (Note 9 & 10) 106,592 226,295 Loss on debt settlement (Note 8) 66,047 35,632 Accrued interest income (Note 3) (23,529) - Changes in non-cash working capital items: Accounts receivables (115,791) 16,190 HST receivable 104 1,116 Prepaid expenses, deposits and other assets 1,884 26,521 Inventory 12,043 - Accounts payables and accrued liabilities 59,170 (169,513) Customer deposits and deferred revenue 157,197 --- 74,412 Net cash used in operating activities (116,221) (238,889) Investing activities Intangible assets (Note 7) (10,916) (24,441) Redemption of investments (Note 3) 170,473 - Net cash provided by (used in) investing activities 159,557 (24,441) Financing activities Proceeds from exercise of stock options (Note 8) - 42,500 Net cash provided by financing activities - 42,500 (Decrease) increase in cash 43,336 (220,830) Cash, beginning of period 40,187 419,379 Cash, end of period $ 83,523 $ 198,549 The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements. PharmAla Biotech Holdings Inc. Condensed Interim Consolidated Statements of Changes in Equity (Expressed in Canadian Dollars) (Unaudited) Number of Shares Share Capital Warrants Contributed Surplus Deficit Total Balance, August 31, 2024 91,724,217 $ 5,694,754 $ 380,579 $ 861,972 $ (4,955,945) $1,981,360 Share issuance (net of costs) (Note 8) 459,770 132,584 - - - 132,584 Vesting of RSUs (Note 8 & 9) 1,256,250 206,250 - (206,250) - - Exercise of stock options (Note 8) 850,000 74,069 - (31,569) - 42,500 Stock based compensation (Note 9 & 10) - - - 226,295 - 226,295 Net loss for the period - - - - (479,109) (479,109) Balance, November 30, 2024 94,290,237 $ 6,107,657 $ 380,579 $ 850,448 $ (5,435,054) $1,903,630 Balance, August 31, 2025 106,604,753 $ 7,452,478 $1,227,906 $ 908,955 $ (7,131,189) $2,458,150 Shares issued for debt settlement, net of issue costs (Note 8) 1,666,667 216,667 - - - 216,667 Vesting of RSUs (Note 8 & 9) 347,045 74,313 - (74,313) - - Stock based compensation (Note 9 & 10) - - - 106,592 - 106,592 Net loss for the period - - - - (409,695) (409,695) Balance, November 30, 2025 108,618,465 $ 7,743,458 $1,227,906 $ 941,234 $ (7,540,884) $2,371,714 The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements. PharmAla Biotech Holdings Inc. Notes to Condensed Interim Consolidated Financial Statements For the Three Month Periods Ended November 30, 2025 and 2024 (Expressed in Canadian Dollars) (Unaudited) 1. NATURE OF OPERATIONS AND GOING CONCERN PharmAla Biotech Inc. ("PharmAla") was incorporated under the Business Corporations Act (British Columbia) on December 23, 2020. PharmAla Biotech Holdings Inc. (previously Greenridez 3.0 Acquisitions Corp.) ("Holdings Inc.") was incorporated under the Business Corporations Act (British Columbia) on January 12, 2021. On December 17, 2024, Holdings Inc. filed articles of continuance (the “Continuance”) to redomicile from British Columbia to Ontario. As a result of the Continuance, the registered head office of Holdings Inc. is 1 Adelaide Street East, Unit 801, Toronto, Ontario, M5C 2V9, Canada. PharmAla is a Canadian Biotechnology company dedicated to the development, manufacture and sales of MDMA and MDXX class molecules in service to the burgeoning clinical research community and growing commercial use cases in select jurisdictions. On May 1, 2023, the Company along with Australian-based Vitura Health Limited (ASX: VIT) ("Vitura") each own 50% equity interest in Cortexa Pty Ltd. (“Cortexa” or “Joint Venture”). Cortexa has exclusive rights to manufacture and distribute MDMA and Psilocybin in Australia under GMP conditions using PharmAla’s manufacturing technology and intellectual property. On August 11, 2025, the Company incorporated a wholly-owned subsidiary, PharmAla Biotech Australia Pty Ltd (“PharmAla Australia”). As of August --- 31, 2025, PharmAla Australia has no operations, assets or liabilities. The Company incorporated PharmAla Australia in order to facilitate a planned clinical trial for ALA-002. The Company is a publicly listed company incorporated in Canada with limited liability under the legislation of the Province of British Columbia. On January 11, 2022, the Company’s shares were listed on the Canadian Securities Exchange ("CSE") under the symbol "MDMA". These unaudited condensed interim consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business as they come due. For the three month period ended November 30, 2025 the Company reported a net loss and negative cash flows from operations, and an accumulated deficit as at November 30, 2025 and August 31, 2025. The Company's ability to continue as a going concern is dependent upon its ability to develop and maintain profitable operations and/or to obtain additional financing. Management is of the opinion that the Company will achieve profitable operations, or that sufficient working capital will be obtained from either increased sales through access to new markets or new clients, or external financing to sustain its operations for the foreseeable future and that the going concern assumption is appropriate. However, there is no assurance that the outcome of these matters will be successful and, as a result, there are material uncertainties that might cause significant doubt regarding the going concern assumption. These unaudited condensed interim consolidated financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and therefore be 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 unaudited condensed interim consolidated financial statements. Such adjustments could be material. PharmAla Biotech Holdings Inc. Notes to Condensed Interim Consolidated Financial Statements For the Three Month Periods Ended November 30, 2025 and 2024 (Expressed in Canadian Dollars) (Unaudited) 2. BASIS OF PREPARATION Statement of compliance The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the IFRS Interpretations Committee ("IFRIC"). These unaudited condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting. Accordingly, they do not include all of the information required for full annual financial statements required by IFRS as issued by IASB and interpretations issued by IFRIC. The preparation of financial statements in accordance with International Accounting Standards (IAS) 34 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity or areas where assumptions and estimates are significant to these unaudited condensed interim consolidated financial statements were the same as those that applied to the Company’s annual consolidated financial statements as at and for the year ended August --- 31, 2025, except as noted below. The same accounting policies and methods of computation are followed in these unaudited condensed interim consolidated financial statements as compared with the most recent annual financial statements as at and for the year ended August 31, 2025, other than those noted below. Any subsequent changes to IFRS that are given effect in the Company’s annual financial statements for the year ending August 31, 2026 could result in restatement of these unaudited condensed interim consolidated financial statements. The policies applied in these unaudited condensed interim consolidated financial statements are based on IFRS, which have been applied consistently to all periods presented. These unaudited condensed interim consolidated financial statements were issued and effective as of December 23, 2025, the date the Board of Directors approved the statements. Basis of measurement These unaudited condensed interim consolidated financial statements have been prepared on a historical cost basis except for financial instruments classified as financial instruments at fair value through profit or loss, which are stated at their fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information. Functional currency and presentation currency These unaudited condensed interim consolidated financial statements are presented in Canadian (“CDN”) dollars, except as otherwise noted, which is the functional currency of the Company and its subsidiaries. Basis of consolidation These unaudited condensed interim consolidated financial statements incorporate the financial statements of the Company and its subsidiaries. The subsidiary is consolidated from the date of acquisition, being the date on which the Company obtains control, and continues to be consolidated until the date that such control ceases. Control is achieved when an investor has power over an investee to direct its activities, exposure to variable returns from an investee, and the ability to use the power to affect the investor's returns. The results of subsidiaries acquired or disposed of during the period presented are included in the consolidated statements of comprehensive loss from the effective date of control and up to the effective date of disposal or loss PharmAla Biotech Holdings Inc. Notes to Condensed Interim Consolidated Financial Statements For the Three Month Periods Ended November 30, 2025 and 2024 (Expressed in Canadian Dollars) (Unaudited) of control, as appropriate. All intercompany transactions, balances, income and expenses are eliminated upon consolidation. 3. MATERIAL ACCOUNTING POLICIES The Company’s accounting policies and its standards of financial disclosure set out below are in accordance with IFRS and have been applied consistently throughout the period presented in these financial statements, unless otherwise stated. Short-term investments Short-term investments consist of investments in term deposits and GICs with terms to maturity of greater than 90 days. These short-term investments are measured at amortized cost as they consist solely of payments of principal and interest and the intention is to hold these financial assets and collect the related cash flows. As at November 30, 2025, the short-term investments consist of: Principal Rate Maturity Issue date Term (days) Accrued interest GIC (CAD) $ 750,000 3.45% 02-Jan-26 03-Jan-25 364 $ 23,529 The GIC --- is denominated in CAD and is cashable at any time. As the Company intends to hold these balances to maturity both have been classified as short-term investments as opposed to cash equivalents. During the period the Company redeemed $170,473 of the GIC (including accrued interest thereon). Accounting standards issued but not yet applied IFRS 18, Presentation and Disclosure in Financial Statements The IASB has issued IFRS 18, the new standard on presentation and disclosure in financial statements, with a focus on updates to the statement of profit or loss. The key new concepts introduced in IFRS 18 relate to: the structure of the statement of profit or loss; required disclosures in the financial statements for certain profit or loss performance measures that are reported outside an entity’s financial statements (that is, management-defined performance measures); and enhanced principles on aggregation and disaggregation which apply to the primary financial statements and notes in general. IFRS 18 will replace IAS 1; many of the other existing principles in IAS 1 are retained, with limited changes. IFRS 18 will not impact the recognition or measurement of items in the financial statements, but it might change what an entity reports as its “operating profit or loss”. IFRS 18 will apply for reporting periods beginning on or after January 1, 2027 and also applies to comparative information. Management is currently assessing the impact of this standard. In May 2024, the International Accounting Standards Board (IASB) issued narrow scope amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures. The amendments are effective for annual reporting periods beginning on or after January 1, 2026. Management is currently assessing the impact of this standard. There are no other standards, interpretations or amendments to existing standards that are not yet effective that are expected to have a material impact on the consolidated financial statements of the Company. PharmAla Biotech Holdings Inc. Notes to Condensed Interim Consolidated Financial Statements For the Three Month Periods Ended November 30, 2025 and 2024 (Expressed in Canadian Dollars) (Unaudited) 4. ACCOUNTS RECEIVABLES Accounts receivables consist of: November 30, August 31, 2025 2025 Trade receivables $ 193,812 $ 78,133 Other receivables 19,060 18,949 Expected credit loss (59,290) (59,290) Total $ 153,582 $ 37,791 Trade receivables are non-interest bearing and are generally on terms of 30 to 90 days. The aging of the gross trade receivables at each reporting date was as follows: Past due Past due Past due Past due Current 1-30 31-60 61-90 >90 Total November 30, 2025 $ 18,872 $ 95,973 $ - $ - $ 78,967 $ 193,812 August 31, 2025 $ - $ 18,028 $ - $ - $ 60,105 $ 78,133 Expected credit loss: Balance, August 31, 2024 $ 39,463 Additions 14,830 Foreign exchange 4,997 Balance, August 31, 2025 $ 59,290 Additions - Foreign exchange - Balance, November 30, 2025 $ 59,290 5. PREPAID EXPENSES, DEPOSITS AND OTHER ASSETS Prepaid expenses, deposits and other assets consist of: November 30, August 31, 2025 2025 Prepaid expenses $ 10,212 $ 24,525 Contract asset 201,528 201,528 Deposits and other assets 44,332 31,903 Total $ 256,072 $ 257,956 The contract asset represents the right to receive a perpetual license of the clinical trial data from a customer as a result of a contract under which the Company provided the MDMA product for their clinical trial, which was valued at $201 --- ,528 based on the stand-alone selling price of the related MDMA product. As the Company has not yet received any access to data, as a result of the early stage of the related clinical trial, the amount is reflected as a contract asset, when the related clinical trial data is made available the Company will reassess the nature and classification of the asset at that point. PharmAla Biotech Holdings Inc. Notes to Condensed Interim Consolidated Financial Statements For the Three Month Periods Ended November 30, 2025 and 2024 (Expressed in Canadian Dollars) (Unaudited) 6. INVENTORY Inventory consists of: November 30, August 31, 2025 2025 Work in process $ 84,161 $ 84,161 Finished goods 273,505 285,548 Total $ 357,666 $ 369,709 Cost of inventory recognized as an expense in cost of sales for the period ended November 30, 2025 was $12,043 (2024 – $nil). The remainder of cost of sales pertains to shipping costs. 7. INTANGIBLE ASSETS Intangible assets consist of deferred development costs for internally generated intangible assets such as: • Patents of novel MDXX class compounds, as well as novel synthesis routes to manufacture these molecules; • Development of manufacturing pathways allowing for the manufacture and testing of clinical-grade MDMA at scale; and • The development of novel delivery mechanisms for non-scheduled, and MDMA and MDXX class compounds. Cost MDXX Process Development Drug Delivery Total Balance, August 31, 2024 $ 1,035,389 $ 921,665 $ 27,500 $ 1,984,554 Additions 32,328 - - 32,328 Balance, August 31, 2025 $ 1,067,717 $ 921,665 $ 27,500 $ 2,016,882 Additions 10,916 - - 10,916 Balance, November 30, 2025 $ 1,078,633 $ 921,665 $ 27,500 $ 2,027,798 Amortization MDXX Process Development Drug Delivery Total Balance, August 31, 2024 $ 4,314 $ 123,093 $ 2,750 $ 130,157 Amortization 52,429 61,444 2,752 116,625 Balance, August 31, 2025 $ 56,743 $ 184,537 $ 5,502 $ 246,782 Amortization 13,415 15,361 688 29,464 Balance, November 30, 2025 $ 70,158 $ 199,898 $ 6,190 $ 276,246 Net Book value MDXX Process Development Drug Delivery Total Balance, August 31, 2025 $ 1,010,974 $ 737,128 $ 21,998 $ 1,770,100 Balance, November 30, 2025 $ 1,008,475 $ 721,767 $ 21,310 $ 1,751,552 8. SHARE CAPITAL Authorized share capital The Company is authorized to issue an unlimited number of common shares without par value. PharmAla Biotech Holdings Inc. Notes to Condensed Interim Consolidated Financial Statements For the Three Month Periods Ended November 30, 2025 and 2024 (Expressed in Canadian Dollars) (Unaudited) Common shares issued Number of Shares Share Capital Balance, August 31, 2024 91,724,217 $ 5,694,754 Share issuance (net of costs) 459,770 132,584 Vesting of RSUs 1,256,250 206,250 Exercise of stock options 850,000 74,069 Balance, November 30, 2024 94,290,237 $ 6,107,657 Balance, August 31, 2025 106,604,753 $ 7,452,478 Shares issued for debt settlement, net of issue costs 1,666,667 216,667 Vesting of RSUs 347,045 74,313 Balance, November 30, 2025 108,618,465 $ 7,743,458 On November 14, 2024, the Company issued 459,770 common shares in exchange for settlement of accounts payable in the amount of $100,000, the extinguishment of the liability at the market price of the common shares resulted in a loss on debt settlement of $35,632. On October 1, 2025, the Company issued 1,666,667 common shares in exchange for settlement of accounts payable in the amount of $150,000, the extinguishment of the liability at the market price of the common shares resulted in --- a loss on debt settlement of $66,047. Option exercises During the period ended November 30, 2024, the Company received funds for the exercise of 850,000 options for gross proceeds of $42,500, with a black scholes value of $31,569. RSU Vesting During the period ended November 30, 2025, as a result of the vesting of RSUs (note 9) the Company issued 347,045 common shares and reclassified the grant date fair value of the vested awards from contributed surplus to share capital, amounting to $74,313 (2024 – 1,256,250 common shares and grant date fair value of $206,250). 9. RESTRICTED SHARE UNITS AND PERFORMANCE SHARE UNITS Restricted Share Units Under the Company's Restricted Stock Unit (“RSU”) plan (“RSU Plan”), the Company may issue RSUs to directors, officers, employees, and consultants, and may be granted for a maximum term of ten years from the date of the grant. The Board of Directors are responsible for determining if the RSU vest immediately or have vesting conditions. PharmAla Biotech Holdings Inc. Notes to Condensed Interim Consolidated Financial Statements For the Three Month Periods Ended November 30, 2025 and 2024 (Expressed in Canadian Dollars) (Unaudited) The Company had the following RSUs activity during the periods noted: Number of RSUs Balance, August 31, 2024 6,375,000 Granted - Vested and issued (1,256,250) Balance, November 30, 2024 5,118,750 Balance, August 31, 2025 3,221,875 Granted 225,000 Cancelled (281,250) Vested and issued (315,625) Balance, November 30, 2025 2,850,000 Number of Number of Number of Grant Date RSUs RSUs Vested RSUs Fair Value Grant Date Granted & Issued Outstanding Per RSU November 3, 2023 2,300,000 - 2,300,000 0.12 March 8, 2024 2,075,000 1,981,250 93,750 0.20 July 30, 2024 2,000,000 2,000,000 - 0.11 December 13, 2024 1,500,000 1,250,000 250,000 0.25 January 27, 2025 200,000 162,840 - 0.23 October 1, 2025 225,000 18,750 206,250 0.23 Balance, November 30, 2025 8,300,000 5,412,840 2,850,000 On November 3, 2023, the Company issued 2,300,000 RSUs to Clariti Strategic Advisors Inc, which vest based upon liquidity event and have an expiry date of 10 years. During the year ended August 31, 2025, the Company revised the estimated timeline for meeting the liquidity event vesting condition, formerly assumed to be a 2 year period the timeline was revised to 3 years, which resulted in a recovery of $37,904 of stock-based compensation recognized during the year ended August 31, 2024. On March 8, 2024, the Company issued 2,075,000 RSUs to certain directors, officers, employees and consultants, 950,000 RSUs granted vest quarterly over a one-year period with the remaining 1,125,000 RSUs vesting quarterly over a two year period. During the period ended November 30, 2025, 281,250 of these RSU’s were cancelled resulting in the reversal of $56,250 of previously vested stock based compensation. On July 30, 2024, the Company issued 2,000,000 RSUs to the CEO, vesting quarterly over a one year period. On December 13, 2024, the Company issued 1,000,000 RSUs to the CFO, vesting quarterly over a one year period. Further, on December 13, 2024, the Company issued 500,000 RSUs, vesting immediately, to a consultant as bonus compensation for their contributions during the period. On January 27, 2025, the Company issued 200,000 RSUs to an employee, vesting 50% immediately, 25% in three months from the grant date and the remainder in six months from the grant date. The awards fully vested; however, only 162,840 common shares were --- issued as the awards were settled net of withholding taxes on the awards and the corresponding number of common shares were withheld by the Company with a value of $8,548. On October 1, 2025, the Company issued 225,000 RSUs to a consultant serving as a director of a subsidiary, vesting quarterly over a three year period. PharmAla Biotech Holdings Inc. Notes to Condensed Interim Consolidated Financial Statements For the Three Month Periods Ended November 30, 2025 and 2024 (Expressed in Canadian Dollars) (Unaudited) For the period ended November 30, 2025 the Company recorded share-based compensation recovery of $(52) due to the reversal of stock based compensation from the cancelled RSUs offsetting $56,302 of expense (2024 - $182,921) related to the vesting of the restricted share units. Performance Share Units Under the Company’s omnibus equity incentive plan (the “Equity Incentive Plan”) the Company may grant Performance Share Units (“PSU”) to directors, officers, employees, and consultants, and may be granted for a maximum term of ten years from the date of the grant. The Board of Directors are responsible for determining if the PSUs vest immediately or have vesting conditions. During year ended August 31, 2025, the Company granted 500,000 PSUs, 250,000 of which vest on achieving a target of $2.5M of combined sales or equity proceeds and 250,000 which vest upon achieving a target of $3M combined sales or equity proceeds for the year ended August 31, 2025. The grant date fair value per PSU was $0.25, as of November 30, 2025, none of these PSUs have vested and no share-based compensation has been recognized in respect of these awards. Additionally, on February 6, 2025, the Company granted 1,000,000 PSUs to an advisor, which vest based on various performance metrics. 1/3 vests based on established market outreach metrics; 1/3 vests on the occurrence of financing of more than $500,000 USD sourced by the advisor and, the final 1/3 vests based on certain sales metrics. If all objectives are met, but the advisor falls short of the established metrics, they will be compensated 150,000 common shares or $45,000 of value in common shares at the then market price, whichever is lower. The grant date fair value per PSU was $0.25, as of November 30, 2025, the Company has recognized share-based compensation of $9,349 (2024 - $nil) in respect of these awards. 10. STOCK OPTIONS The Company has adopted an incentive stock option plan in accordance with the policies of the Exchange (the “Stock Option Plan”). Options may be granted for a maximum term of ten years from the date of the grant. They are not transferable. Unless the Board determines otherwise, options shall be exercisable in whole or in part at any time during this period. Options expire within 90 days of termination of employment or holding office as director or officer of the Company and, in the case of death, expire within a maximum period of one year after such death, subject to the expiry date of the option. The Company had the following stock options activity during the periods ended November 30, 2025 and 2024: Number of Stock options Weighted Average Exercise Price Balance, August 31, 2024 7,465,000 $0.12 Exercised (850,000) $0.05 Balance, November 30, 2024 6,615,000 $0.12 Balance, August 31, 2025 8,115,000 $0.12 Issued 1,000,000 $0.12 Cancelled (1,100,000) $0.05 Balance, November 30, 2025 8,015,000 $0.12 For the period ended November 30, 2025 the Company recorded share-based compensation --- of $97,066 (2024 - $21,489) related to options granted. PharmAla Biotech Holdings Inc. Notes to Condensed Interim Consolidated Financial Statements For the Three Month Periods Ended November 30, 2025 and 2024 (Expressed in Canadian Dollars) (Unaudited) (i) On August 12, 2021, the Company granted stock options to an employee to purchase 250,000 common shares of the Company at an exercise price of $0.10 for a period of 5 years following the date of grant, vesting 5,000 options per month until fully vested. The options were valued at $18,560 using a Black-Scholes valuation model with the following assumptions: share price of $0.10 per common shares, expected dividend yield of 0%, expected volatility of 100%, risk-free rate of 0.89%, and expected life of 5 years. (ii) On January 5, 2022, the Company granted stock options to an employee to purchase 750,000 common shares of the Company at an exercise price of $0.10 for a period of 5 years (expiring January 5, 2027) following the date of grant, which 41,667, vest immediately, and the remainder vest equally over 36 months ended November 30, 2024. The options were valued at $55,324 using a Black-Scholes valuation model with the following assumptions: share price of $0.10 per common shares, expected dividend yield of 0%, expected volatility of 100%, risk-free rate of 0.89%, and expected life of 5 years. (iii) January 5, 2022, the Company granted stock options to directors, and officers to purchase 1,750,000 common shares of the Company at an exercise price of $0.10 for a period of 5 years following the date of grant. Included in the 1,750,000 options are 1,500,000 options vest over 12 months, the remaining options vest 25% every three months. The options were valued at $130,525 using a Black-Scholes valuation model with the following assumptions: share price of $0.10 per common shares, expected dividend yield of 0%, expected volatility of 100%, risk-free rate of 1.42%, and expected life of 5 years. (iv) On July 13, 2022, the Company granted stock options to a director to purchase 300,000 common shares of the Company at an exercise price of $0.10 for a period of 5 years following the date of grant, which vest over 12 months. The options were valued at $5,235 using a Black-Scholes valuation model with the following assumptions: share price of $0.10 per common shares, expected dividend yield of 0%, expected volatility of 100%, risk-free rate of 3.13%, and expected life of 5 years. (v) On November 6, 2023, the Company granted stock options to advisors to purchase 2,300,000 common shares of the Company at an exercise price of $0.175 for a period of 10 years following the date of grant, which vest upon the occurrence of a liquidity event. The options were valued at $250,100 using a Black-Scholes valuation model with the following assumptions: share price of $0.14 per common shares, expected dividend yield of 0%, expected volatility of 177.69%, risk-free rate of 4.45%, and expected life of 2 years. During the year ended August 31, 2025, the expected life was reassessed and adjusted to 3 years, the change resulted in a net reduction of previously recognized share-based compensation expense of $31,857. (vi) On May 29, 2025, the Company granted stock options to directors and officers to purchase 1,500,000 common shares of the Company at an exercise price of $0.105 for a period of 5 years following the date of grant, which vest quarterly over 12 months. The options were valued at $152,292 using a Black-Sch --- oles valuation model with the following assumptions: share price of $0.105 per common shares, expected dividend yield of 0%, expected volatility of 154%, risk-free rate of 3.02%, and expected life of 5 years. (vii) On October 3, 2025, the Company granted stock options to the COO to purchase 1,000,000 common shares of the Company at an exercise price of $0.12 for a period of 5 years following the date of grant, which vest quarterly over 12 months. The options were valued at $110,536 using a Black-Scholes valuation model with the following assumptions: share price of $0.12 per common shares, expected dividend yield of 0%, expected volatility of 154%, risk-free rate of 2.72%, and expected life of 5 years. PharmAla Biotech Holdings Inc. Notes to Condensed Interim Consolidated Financial Statements For the Three Month Periods Ended November 30, 2025 and 2024 (Expressed in Canadian Dollars) (Unaudited) The following table reflects the stock options issued and outstanding as of November 30, 2025: Weighted Average Remaining Number of Number of Exercise Contractual Life Options Options Vested Expiry Date Price ($) (years) Outstanding (Exercisable) March 23, 2026 0.05 0.31 160,000 160,000 June 18, 2026 0.1 0.55 525,000 1,025,000 August 12, 2026 0.1 0.70 80,000 330,000 January 5, 2027 0.1 1.10 750,000 750,000 January 5, 2027 0.1 1.10 1,500,000 1,750,000 July 13, 2027 0.1 1.62 300,000 300,000 November 6, 2033 0.18 7.94 2,300,000 - May 29, 2030 0.105 4.50 1,400,000 750,000 October 3, 2030 0.12 4.84 1,000,000 - Total 0.12 4.09 8,015,000 5,065,000 10. WARRANTS The Company had the following activity regarding warrants during the periods ended November 30, 2025 and 2024: Number of Weighted Average Warrants Exercise Price Balance, August 31, 2024 2,083,331 - Issued (note 6) - 0.270 Balance, November 30, 2024 2,083,331 $ 0.270 Balance, August 31, 2025 and November 30, 2025 6,311,442 $ 0.270 Weighted Average Remaining Number of Exercise Contractual Life Warrants Expiry Date Price ($) (years) Outstanding April 19, 2027 $ 0.270 1.38 1,973,331 December 20, 2027 $ 0.270 2.05 4,338,111 1.84 6,311,442 As at August 31, 2023 the Company had no warrants outstanding. During fiscal 2024, in the private placement on April 19, 2024, the Company issued 2,083,331 warrants, and in the private placement on December 20, 2024, the Company issued another 4,338,111 warrants, as further discussed in Note 6. PharmAla Biotech Holdings Inc. Notes to Condensed Interim Consolidated Financial Statements For the Three Month Periods Ended November 30, 2025 and 2024 (Expressed in Canadian Dollars) (Unaudited) 11. LOSS PER SHARE For the periods ended November 30, 2025 and 2024, basic and diluted loss per share has been calculated based on the loss attributable to common shareholders and the weighted average number of common shares outstanding. The potential dilutive effect of the shares issuable under the terms of options, warrants and RSUs has not been included as their impact would be anti-dilutive. 12. CUSTOMER DEPOSITS AND DEFERRED REVENUE Customer deposits and deferred revenue relates to advance consideration received from customers for services yet to be performed, generally, these consist of refundable deposits that become non-refundable upon the initiation of manufacturing. Customer deposits and deferred revenue will be recognised as revenue as the Company satisfies its performance obligation, ordinarily delivery to and acceptance by the customer. Below is a summary of deferred re --- venue from contracts with customers and the significant changes in those balances during the noted periods: November 30, August 31, 2025 2025 Opening balance, beginning of period $ 276,035 $ 208,574 Additions during the period 225,299 150,463 Deferred revenue recognized as revenue during the period (68,102) (83,002) Closing balance, end of period $ 433,232 $ 276,035 13. JOINT VENTURE On May 1, 2023, the Company along with Australian-based Vitura Health Limited (ASX: VIT) each acquired a 50% equity interest in Cortexa. Cortexa has exclusive rights to manufacture and distribute MDMA and Psilocybin in Australia under GMP conditions using PharmAla’s manufacturing technology and intellectual property. Cortexa is controlled by a board consisting of equal representatives of both the Company and Vitura. Cortexa is considered a joint venture for accounting purposes and accordingly is accounted for using the equity method. A joint venture is a contractual arrangement whereby the Company and other parties undertake an economic activity that is subject to joint control (i.e. when the strategic, financial and operating policy decisions relating to the activities of the joint venture require the unanimous consent of the parties sharing control). PharmAla may make available from time to time products to Cortexa for import into Australia for supply to medical practitioners under the Therapeutic Goods Administration (TGA) Authorised Prescriber 2 scheme. Cortexa has a licence based on PharmAla’s manufacturing technology and intellectual property, allowing for the manufacturing of MDMA and Psilocybin in Australia under GMP conditions. As at November 30, 2025, the Company accrued license revenue receivable of $19,060 (AUS 20,833; August 31, 2025 - $18,433 (AUS 20,833)) and has $69,425 (AUS 75,000) in accounts receivable related to license fee revenue (2024 - $nil). PharmAla Biotech Holdings Inc. Notes to Condensed Interim Consolidated Financial Statements For the Three Month Periods Ended November 30, 2025 and 2024 (Expressed in Canadian Dollars) (Unaudited) The following table summarizes, in aggregate, the financial information of Cortexa. The amounts included in the IFRS financial statements of the associate are presented in Australian dollars, and adjusted to reflect adjustments made by the Company when using the equity method. As of November 30, 2025 (AUS) As of November 30, 2024 (AUS) Cash 41,429 66,896 Total current assets 586,699 522,129 Total non-current assets - - Total assets 586,699 522,129 Total current liabilities 182,766 90,317 Total non-current liabilities 1,645,877 1,155,693 Net assets (1,241,944) (723,881) Period Ended November 30, 2025 (AUS) Period Ended November 30, 2024 (AUS) Revenue 6,730 600 Loss from continuing operations and total comprehensive loss 134,677 105,484 Under the equity method, the Company's share of losses in Cortexa equals or exceeds its interest in Cortexa, the Company discontinues recognising its share of further losses. After the Company’s interest is reduced to zero, additional losses are provided for, and a liability is recognised, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of Cortexa. If Cortexa subsequently reports profits, the entity resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised. The Company’s share of current loss is 50%, or $67,338 (2024 - $52,742). During the year --- ended August 31, 2025, the Company contributed $17,030 ($19,000 AUS) to Cortexa, which resulted in a pick up of losses in the corresponding amount. Cumulative losses of Cortexa attributed to the Company amount to $611,368. As part of its operations the Company from time to time may sell either raw GMP or encapsulated product to Cortexa to facilitate sales (downstream transaction), under the equity method transactions involving downstream sales must be recognised only to the extent of unrelated investors’ interests. During the year ended August 31, 2024, the Company made sales of $476,723 to Cortexa, and deferred the gain on sales of $157,430 as at August 31, 2024. There were no additional product sales to Cortexa during the period ended November 30, 2025. 14. REVENUE The following is a disaggregation of the Company’s revenues: November 30, 2025 November 30, 2024 Product sales 149,314 - License revenue 57,126 57,297 $ 206,440 $ 57,297 Product Sales - by Geography November 30, 2025 November 30, 2024 Canada 3,600 - United States 145,714 - $ 149,314 $ - PharmAla Biotech Holdings Inc. Notes to Condensed Interim Consolidated Financial Statements For the Three Month Periods Ended November 30, 2025 and 2024 (Expressed in Canadian Dollars) (Unaudited) Product Sales - by Type November 30, 2025 November 30, 2024 SAP Sales 3,600 - Clinical Trial and Other Sales 145,714 - $ 149,314 $ - 15. COMMITMENTS AND CONTINGENCIES Sales contracts Pursuant to the sales contracts with customers, the Company receives deposits for sales contracts. Certain upfront costs are non-refundable, however due to the nature of the industry of which the Company operates in, completing performance obligation for the contract often requires regulatory approval from a number of agencies. The Company is committed to completing its performance obligations. Contingencies From time to time, the Company may become involved in various claims and litigation as part of its normal course of business. The Company is not currently aware of any material claims and litigation that it is party to at this time. 16. RELATED PARTY TRANSACTIONS Related parties include the Board of Directors, officers, close family members and enterprises that are controlled by these individuals as well as certain persons performing similar functions. During the period ended November 30, 2025, the Company incurred consulting and payroll fees of $42,500 (2024 - $42,500) to the Chief Executive Officer ("CEO") stock-based compensation of $12,656 (2024 - $95,049). During the period ended November 30, 2025, the Company incurred consulting fees of $23,500 to the newly hired Chief Operating Officer ("COO") (2024 – $24,000 to a company controlled by the former COO) and stock based compensation of $8,479 (2024 – to the former COO $23,857. As at November 30, 2025, the Company has accrued $16,000 for consulting fees due to the former COO (2024 - $27,654). During the period ended November 30, 2025, the Company incurred $22,500 in consulting fees (2024 - $20,500) to a company owned by the CFO and stock-based compensation of $18,113 (2024 - $nil). The Chief Commercial Officer (“CCO”) was appointed in March 2025, during the period ended November 30, 2025, the Company incurred $28,659 (2024 - $nil) to companies owned by the CCO for services as the CCO and for legal services and stock-based compensation of $2,531 (2024 - $nil). See notes 8, 9 and 10. During the period ended November 30, 2025, the Company incurred stock-based compe --- nsation expense to directors and officers of $90,017 (2024 - $148,533). 17. SUBSEQUENT EVENTS Subsequent to year end the 250,000 RSUs vested and were issued to the CFO and a further 18,750 RSUs vested to the director of PharmAla Australia.