RYSE Inc.
RYSE Inc.
10/01/2026 | Press release | Distributed by Public on 10/01/2026 13:34
Special Semiannual Financial Report under Regulation A (Form 1-SA)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 1-SA
x SEMIANNUAL REPORT PURSUANT TO REGULATION A
or
¨ SPECIAL FINANCIAL REPORT PURSUANT TO REGULATION A
For the fiscal semiannual period ended: June 30, 2026
RYSE INC.
(Exact name of issuer as specified in its charter)
Commission File No. 024-11397
| Ontario, Canada | N/A | |
| State or other jurisdiction of incorporation or organization | (I.R.S. Employer Identification No.) |
20 Camden Street, Suite 200, Toronto, Ontario, Canada, M5V 1V1
(Full mailing address of principal executive offices)
929-226-0994
(Issuer's telephone number, including area code)
With a copy to:
Arden Anderson, Esq.
Solon Law, PC
550 W. B Street, 4th Floor, #1913
San Diego, CA 92101
THIS SEMI-ANNUAL REPORT MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY'S MANAGEMENT. WHEN USED IN THIS REPORT, THE WORDS "ESTIMATE," "PROJECT," "BELIEVE," "ANTICIPATE," "INTEND," "EXPECT" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT'S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE.
| ITEM 1. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The following discussion of the financial condition and results of operations of RYSE Inc. ("we", "Ryse", or "the Company") should be read in conjunction with our financial statements and the related notes included in this semi-annual report, our annual report filed on Form 1-K on April 30, 2026, and our post-qualification amendment to our Offering Statement filed on September 21, 2026. The following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.
The unaudited financial information set forth below with respect to the six-month period ended June 30, 2026, is preliminary and subject to potential adjustments. Adjustments to these financial statements may be identified when review of historic financial statements has been completed in conjunction with our year-end audit, which could result in significant differences from this preliminary unaudited condensed restated financial information, although in the opinion of management all adjustments necessary to make restated interim results of operations not misleading have been included here. Unless otherwise indicated, latest results discussed below are as of June 30, 2026.
In these reports, all figures are in Canadian Dollars and $ refers to Canadian dollars throughout.
Operating Results
| All figures in Canadian dollars | Six-months ended June 30, | |||||||
| 2026 | 2025 | |||||||
| Revenues | $ | 2,287,969 | $ | 1,552,655 | ||||
| Cost of Sales | 922,512 | 863,803 | ||||||
| Gross Margin | $ | 1,365,457 | $ | 688,852 | ||||
Revenues
Revenues for the six months period ended June 30, 2026, increased to $2,287,969 from revenues of $1,552,655 for the six months period ended June 30, 2025. The increase in 2026 revenue is attributable to a larger investment into advertising and promotional activities to generate sales, as well as a consistent availability of inventory.
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Operating Expenses
| All figures in Canadian dollars | Six-month ended June 30 | |||||||
| 2026 | 2025 | |||||||
| Operating Expenses | $ | 4,961,622 | $ | 4,701,397 | ||||
Total operating expenses increased to $4,961,622 for the six-month period ended June 30, 2026, from $4,701,397 for the six-month period ended June 30, 2025, an increase of 6%. Total operating expenses includes advertising and promotion and research and development.
We increased advertising and promotion expenses to $1,912,992 for the six-month period ended June 30, 2026, from $1,548,831 for the six-month period ended June 30, 2025. This increase came from additional online advertising of our product in H1-2026 compared to H1-2025.
Research and development expenses decreased to $355,418 for the six-month period ended June 30, 2026, from $408,132 for the six-month period ended June 30, 2025, a decrease of 13%. The decrease is related to lower spending on new product development during the period.
Other Income and Expenses
| Six months ended June 30, | ||||||||
| All figures in Canadian dollars | 2026 | 2025 | ||||||
| Finance expense | $ | (1,474,668 | ) | $ | (1,949,352 | ) | ||
| Government grant income | 47,839 | 454,699 | ||||||
| Foreign exchange gain (loss) | (21,200 | ) | 50,534 | |||||
| Government loan forgiveness | - | - | ||||||
Finance expense
Net finance expense decreased to $1,474,668 during the six-months period ended June 30, 2026, as compared to $1,949,352 in the prior period. The decrease is mainly a result of lower interest on term loans and notes payable of $926,023 compared to $1,366,166 in 2025.
Government grant income
The grant income decreased to $47,839 during the period ending June 30, 2026, which represents the amortization of deferred grant revenue on the FedDev and HASCAP government loans. The prior period included $367,545 of SDTC grant income and $39,315 of Eco Canada grant income.
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Foreign exchange gain (loss)
A significant portion of our financial liabilities, mainly the promissory notes issued by RYSE USA Inc., is denominated in U.S. dollars, so our results are exposed to changes in the U.S. dollar to Canadian dollar exchange rate. We recorded a foreign exchange loss of $21,200 for the six-month period ended June 30, 2026, compared to a gain of $50,534 for the six-month period ended June 30, 2025. While we have sales of products in multiple countries, the time lag between sales and collection is relatively short, reducing our exposure to currency gains and losses.
Net Losses
As a result of the foregoing, the Company decreased its net loss for the six-month period ended June 30, 2026, to $5,044,194, compared to $5,430,001 for the six-month period ended June 30, 2025.
Liquidity and Capital Resources
As of June 30, 2026, the Company's cash on hand was $323,086 compared with $323,974 as of December 31, 2025.
The Company is generating limited revenues from operations and requires the continued infusion of new capital to continue business operations. Our total Stockholders' Deficit as of June 30, 2026, was $15,103,446 compared with $15,681,116 on December 31, 2025.
Cash Flow
The following table summarizes, for the periods indicated, selected items in our Statements of Cash Flows:
| For the Six-Month Period Ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| Net cash (used in) provided by: | ||||||||
| Operating activities | $ | (4,521,478 | ) | $ | (5,037,641 | ) | ||
| Investing activities | $ | (25,483 | ) | $ | (15,328 | ) | ||
| Financing activities | $ | 4,546,073 | $ | 4,906,580 | ||||
Operating Activities
Net cash used in operating activities decreased to $4,521,478 from $5,037,641 for the six-month periods ended June 30, 2026 and 2025, respectively. The decrease in net cash used in operating activities was primarily due to the reduction in inventory during the period, partially offset by the payment of accounts payable.
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Financing Activities
Cash provided by financing activities decreased to $4,546,073 from $4,906,580 for the six-month periods ended June 30, 2026, and 2025, respectively. Cash provided by financing activities was primarily from the issuance of Class B common shares of $5,254,523 (net of share issuance costs), partially offset by the net repayment of notes payable of $634,005, the repayment of lease liabilities of $150,125 and the conversion of convertible notes of $209,195.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements, including arrangements that would affect the liquidity, capital resources, market risk support, and credit risk support or other benefits.
Issuance of Equity Securities
On December 28, 2020, the Company filed an Offering Statement and a Preliminary Offering Circular ("OC") under Regulation A with the Securities and Exchange Commission ("SEC"). On February 22, 2021, the SEC qualified the Offering Statement. The Company may offer a maximum of 2,104,718 Class B Common Shares at $7.13USD per share ($0.713USD per share after share split on May 8, 2022). During 2021, the Company sold 67,231 Class B Common shares for proceeds of $644,733, and incurred share issuance costs of $80,160.
On February 22, 2022, the Company issued 119,050 Class A and 186,432 Class B shares on convertible notes with fair value amounting to $1,123,777 and $1,760,915, respectively. During the year ended December 31, 2022, the Company issued 185,637 Class A Common shares for proceeds of $214,360. In addition, the Company issued 722,807 Class B Common shares, for total proceeds of $1,911,505 during the same period. Share issuance costs directly attributable to the issuance of Class B Common shares totaled $17,378.
On May 8, 2022, the Company amended its Articles of Incorporation to subdivide and split the shares in the capital of the Company on the basis of ten (10) shares for every one (1) share held. The share split resulted in an increase in Class A and B Common Shares by 31,887,504 shares and 2,951,991 shares, respectively.
On May 11, 2022, the Company filed an Offering Statement under Regulation A with the SEC. The Offering Statement was qualified on July 27, 2022. The Company is offering a maximum of 25,000,000 Class B Common Shares at $1.00USD per share (the "2022 Regulation A Offering"). As of December 31, 2022, the Company issued 339,451 Class B Common shares for proceeds of $339,451 in the 2022 Regulation A Offering. In addition, the Company issued 141,770 Class B Common shares for proceeds of $141,770 during the same period in a concurrent private placement in Canada.
During the year ended December 31, 2022, the Company issued 280,270 Class B Common shares at $0.713 per share, for proceeds of $134,260USD and $100,000 under Regulation D and a private placement in Canada.
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During the year ended December 31, 2023, the Company issued 1,053,768 Class B Common Shares at $1.00USD per share, for proceeds of $1,053,768USD in the 2022 Regulation A Offering. In addition, the Company sold 229,850 shares at $1.00USD per share, for proceeds of $229,850USD during the same period in a concurrent private placement in Canada.
On August 23, 2023, the Company filed an amendment to the Offering Statement under Regulation A with the SEC, which was qualified on August 31, 2023 (the "2023 Offering Statement"). The Company is offering a maximum of 20,000,000 Class B Common Shares at $1.25USD per share.
During the year ended December 31, 2023, the Company issued 1,190,391 Class B Common Shares (including bonus shares) at $1.25USD per share, for proceeds of $1,394,302USD under the 2023 Offering Statement. In addition, the Company sold 196,093 shares (including bonus shares) at $1.25USD per share, for proceeds of $240,778USD during the same period in a concurrent private placement in Canada. A total of 77,621 bonus shares were issued during the year 2023.
During the year ended December 31, 2023, the Company issued 2,347,253 Class B Common shares at $0.713USD per share, for proceeds of $578,000USD and $1,500,000USD under Regulation D and a private placement in Canada.
During the year ended December 31, 2024, the Company issued 121,400 Class B Common Shares to pay of the remaining balance of certain notes payables amounting to $153,603.
During the year ended December 31, 2024, the Company issued 6,000 Class B Common Shares at a price of $1.00USD per share, generating proceeds of $6,000USD.
In addition, the Company issued 52,600 Class B Common Shares, including bonus shares, at a price of $1.25USD per share, generating proceeds of $25,000USD.
Additionally, the Company issued 2,181,494 Class B Common Shares, including bonus shares, at a price of $1.50USD per share for total proceeds of $3,055,700USD.
Furthermore, the Company issued 1,032,628 Class B Common Shares, at a price of $1.75USD per share including bonus shares, in exchange for consideration totaling $1,671,415USD.
The total share issuance cost for the year ended December 31, 2024, is $2,138,588.
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During the year ended December 31, 2025, the Company:
| - | Cancelled 73,225 Class A Common Shares and 42,080 Class B Common Shares amounting to $91,933 |
| - | Issued 225,632 Class B Common Shares to pay off certain notes payable amounting to $329,814 |
| - | Issued 359,222 Class B Common Shares at $1.00 per share for proceeds of $359,222 USD |
| - | Issued 2,400 Class B Common Shares, including bonus shares, at $1.25 per share for proceeds of $3,000 USD |
| - | Issued 35,893 Class B Common Shares, including bonus shares, at $1.75 per share for proceeds of $54,812 USD |
| - | Issued 783,324 Class B Common Shares, including bonus shares, at $1.90 per share for proceeds of $1,382,921 USD |
| - | Issued 622,514 Class B Common Shares, including bonus shares, at $2.00 per share for proceeds of $1,123,978 USD |
| - | Issued 301,907 Class B Common Shares, including bonus shares, at $2.25 per share for proceeds of $586,010 USD |
| - | The total share issuance cost for the year ended December 31, 2025, is $1,685,673. |
During the period ended June 30, 2026, the Company:
| - | Issued 1,934,698 Class B Common Shares, including bonus shares, for gross proceeds of $5,254,523, less share issuance costs of $773,453 |
| - | Issued 77,025 Class B Common Shares, including bonus shares, through convertible of notes in the amount of $209,185. |
Indebtedness
During the years from 2017 to 2019, the company issued a series of convertible securities for total principal amount of CDN$1,049,575. The notes accrue 7% simple interest and have maturity dates between 24-48 months after issuance. The notes are automatically convertible into shares of the company's stock issued during the company's next qualified financing, as defined in the notes. During 2022, the convertible notes were converted into Class A or Class B common shares. During 2023, the company issued a series of convertible securities for total principal amount of CDN $400,000. The notes accrue 18% per annum and are payable 12 months from the date of issuance.
On May 2, 2018, the company issued a series of promissory notes managed via an inter-creditor agreement by EP Capital in total principal amounts of CDN$1,119,750 and $400,000. Interest is paid monthly, based on 17% annual interest, and the notes have a 36- month maturity. Principal is repaid quarterly and consists of 6.5% of gross revenues for May 2018 through December 2018, 4% of gross revenues beginning in April 2019, and 3% of gross revenues beginning in April 2020. The loan is secured via a General Security Agreement (GSA) over the assets of the Company and personal security from the company's CEO, Trung Pham, for 30% of the principal amount. The balance on these notes amounted to CDN$2,757 and CDN$193,388 as of June 30, 2026, and December 31, 2025, respectively. During the period ended June 30, 2026, principal of $190,631 was repaid.
The company received a series of loans from OKR Financial for CDN$350,000 on November 6, 2019, CDN$200,000 on December 6, 2019, CDN$525,000 on January 28, 2020, CDN$200,000 on March 10, 2020, and CDN$82,500 on April 14, 2020. The loans accrue a compound interest of 2.35% per month. The loan is secured by the SDTC grant and Scientific Research & Experimental Development tax credits under a Canadian federal tax program, in which 65% of future tranches of funding from our SDTC grant is used to pay down the principal and accrued interest. Of these principal amounts, CDN$82,500 was repaid on July 10, 2020. The principal balance of these loans totaled CDN$488,536 as of December 31, 2022, and was fully repaid during 2023.
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The company received a series of loans from private investors, with a principal balance of CDN$935,000 as of June 30, 2026, and CDN$935,000 as of December 31, 2025. These loans are unsecured, and carry a 10%-30% simple interest, paid monthly, with a 12 month maturity and an option to renew for an additional 12 months at maturity upon consent by both borrower and lender; the option to renew has been exercised by both parties through 2026.
The company received a series of loans from the CEO's father, totaling CDN $270,000 as of December 31, 2025, and June 30, 2026. These loans are unsecured, and carry a 10% simple interest, paid semi-annually, with a 12-month maturity and option to renew. The option to renew has been exercised by both parties through 2026.
The company's CEO holds a Shareholders' Loan balance to the company for CDN$3,872,262 as of June 30, 2026, and CDN$3,775,884 as of December 31, 2025.
On November 30, 2021, the company's wholly-owned subsidiary, RYSE USA Inc., commenced an offering of $1,070,000 in revenue sharing promissory notes under Regulation Crowdfunding. The proceeds of the offering are intended to fund inventory at the subsidiary and will not be available for the company's operations. The subsidiary is obligated to pay 10% of quarterly net revenues, as defined in the notes, to repay the principal amount of the notes until such date that all such that investors receive 2x times their investment in the notes for the first $400,000 in notes, and 1.75x times their investment for all subsequent funds. The notes are secured by all personal property of the subsidiary and are subordinated to any senior indebtedness of the subsidiary.
On June 19, 2023, the Company issued new convertible promissory notes for a total value of $400,000 with a stated interest rate of 18%. The new convertible notes will automatically convert upon a qualified equity financing greater than $2,500,000 at a 20% discount from the transaction price; or convert at a rate based on a specific US$ valuation of the Company or be repaid at maturity.
During 2023, the company's wholly-owned subsidiary, RYSE USA Inc. issued a series of promissory notes from various investors. The promissory notes hold interest rates ranging from 16% to 18%. As of June 30, 2026, the subsidiary has US$9,133,493 in principal amount of notes outstanding (December 31, 2025 - US$9,645,860).
The company's total liabilities decreased by CDN$1,431,985, from CDN$23,329,185 as of December 31, 2025, to CDN$21,897,200 as of June 30, 2026.
On February 16, 2024, the Company issued an additional convertible debenture amounting to $27,000 with stated interest rates of 15% per annum. The new convertible notes will automatically convert upon a qualified equity financing greater than $2,500,000 at a 20% discount from the transaction price; or convert at a rate based on a specific US$ valuation of the Company or be repaid at maturity. These notes were exercised during 2025.
On December 6, 2024, the Company entered into a $270,118 USD financing agreement with the consignor. This consignment agreement allows the Company to expand its sales partner with expanded consignment opportunity. The loan is secured by a lien on consignment inventory. The agreement permits the lender to expand the collateral to include all Company assets, if payment defaults exceed $50,000 cumulatively or any payment remains overdue by 30+ days. The balance was fully repaid during the period ended June 30, 2026.
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On June 12, 2026, RYSE USA Inc. entered into a Revenue-Based Finance Advance Purchase Agreement with Flexbase Technologies, Inc. ("Flex") and received an advance of $300,000 USD. Under the agreement, the Company sold a portion of its future receivables to Flex for a total of $326,400 USD. That amount is the advance plus a capital fee of $26,400 USD (8.8%, or 1.1% per month). The Company repays the advance through weekly payments equal to 25% of its sales, and each weekly payment is capped at $9,600 USD. The agreement gives Flex a first-priority security interest in the Company's future receivables. Although the agreement is legally structured as a sale of future receivables, the Company accounts for it as a financial liability measured at amortized cost, because the Company keeps the obligation to pay the full amount out of its own sales. During the period ended June 30, 2026, the Company repaid $8,824 USD and the balance outstanding as at June 30, 2026, was $291,176 USD.
During the year ended December 31, 2025, the Company received a total of $437,221 and repaid $912,084. During the period ended June 30, 2026, the Company received $413,422 and repaid $457,038.
During 2024, RYSE USA Inc. issued additional promissory notes to obtain additional financing. The promissory notes hold interest rates of 15-18% per annum. During the period ended June 30, 2026, the Company received $2,719,040 and repaid $2,012,961, and this indebtedness decreased by $634,005.
For the year ended December 31, 2025, the Company issued additional convertible debentures amounting to $284,992 with stated interest rates of 16% per annum. However, these debentures are short-term in nature and are due and payable 12 months from the date of issuance of the note. The notes include a conversion feature. During the period ended June 30, 2026, convertible notes of $209,185 were converted into Class B Common shares, and the balance as of June 30, 2026, was $475,807.
Trend Information
We expect the residential market to continue to adopt smart home and home improvement technologies that can be attributed to the large adoption of voice speakers and DIY smart home platforms such as Google Home, Amazon Alexa, and Apple HomeKit. This trend is further strengthened by the push towards a unified radio communication protocol, known as "Matter", being promoted by Google, Amazon, and Apple, in order to reduce interoperability issues among devices and platforms.
| ITEM 2. | OTHER INFORMATION |
None.
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| ITEM 3. | financial STATEMENTS |
Ryse Inc. (formerly Axis Labs Inc.)
Condensed Consolidated Interim Financial Statements
Unaudited
For the six-months ended June 30, 2026 and 2025
Contents
| Condensed Consolidated Interim Financial Statements | |
| Condensed Consolidated Interim Statements of Financial Position | 11 |
| Condensed Consolidated Interim Statements of Comprehensive Loss | 12 |
| Condensed Consolidated Interim Statements of Changes in Shareholders' Deficit | 13 |
| Condensed Consolidated Interim Statements of Cash Flows | 14 |
| Notes to Condensed Consolidated Interim Financial Statements | 15-39 |
| 10 |
Ryse Inc.
Consolidated Statements of Financial Position
All figures in Canadian dollars
| June 30, 2026 | December 31, 2025 | |||||||
| Assets | ||||||||
| Current | ||||||||
| Cash and cash equivalents | $ | 323,086 | $ | 323,974 | ||||
| Accounts receivable (Note 3) | 355,614 | 181,384 | ||||||
| Inventory (Note 5) | 638,376 | 1,221,084 | ||||||
| Prepaid inventory | 83,542 | 387,344 | ||||||
| Investment tax credit receivable (Note 6) | 791,637 | 791,637 | ||||||
| Total current assets | 2,192,255 | 2,905,423 | ||||||
| Non-current | ||||||||
| Property and equipment, net (Note 7) | 803,967 | 931,596 | ||||||
| Security deposits (Note 23) | 70,993 | 70,993 | ||||||
| Due from related parties (Note 20) | 3,450,099 | 3,457,277 | ||||||
| Intangible assets, net (Note 8) | 276,440 | 282,780 | ||||||
| Total non-current assets | 4,601,499 | 4,742,646 | ||||||
| Total assets | $ | 6,793,754 | $ | 7,648,069 | ||||
| Liabilities and Shareholders' Deficit | ||||||||
| Current | ||||||||
| Bank indebtedness | $ | 26,932 | $ | 7,614 | ||||
| Accounts payable and accrued liabilities (Note 9) | 1,288,182 | 1,795,765 | ||||||
| Advances (Note 10) | 366,794 | 331,585 | ||||||
| Deferred government assistance income (Notes 4,15) | 188,985 | 236,825 | ||||||
| Term loans - current portion (Note 11) | 464,266 | 507,882 | ||||||
| Notes payable (Note 12) | 12,586,610 | 13,220,615 | ||||||
| Short-term fair-value of convertible notes (Note 12) | 475,807 | 684,992 | ||||||
| Current portion of lease liabilities (Note 23) | 240,864 | 280,227 | ||||||
| Warrant liability (Note 13) | 119,806 | 119,806 | ||||||
| Government loans - current portion (Note 15) | 170,615 | 195,184 | ||||||
| Total current liabilities | 15,928,861 | 17,380,495 | ||||||
| Non-current | ||||||||
| Due to shareholders (Note 14) | 3,872,262 | 3,775,884 | ||||||
| Lease liabilities (Note 23) | 509,794 | 620,555 | ||||||
| Government loans (Note 15) | 304,783 | 270,751 | ||||||
| Term loans (Note 11) | 1,281,500 | 1,281,500 | ||||||
| Total non-current liabilities | 5,968,339 | 5,948,690 | ||||||
| 21,897,200 | 23,329,185 | |||||||
| Shareholders' deficit | ||||||||
| Share capital (Note 16) | 27,705,578 | 22,241,870 | ||||||
| Contributed surplus (Note 17) | 3,097,068 | 3,030,096 | ||||||
| Warrants (Note 13) | 338,123 | 338,123 | ||||||
| Cumulative translation adjustment | 170,294 | 79,110 | ||||||
| Accumulated deficit | (46,414,509 | ) | (41,370,315 | ) | ||||
| Total shareholders' deficit | (15,103,446 | ) | (15,681,116 | ) | ||||
| Total liabilities and shareholders' deficit | $ | 6,793,754 | $ | 7,648,069 | ||||
(See accompanying notes to consolidated financial statements)
| 11 |
Ryse Inc.
Consolidated Statements of Comprehensive Loss
All figures in Canadian dollars
| For the six-month ended | June 30, 2026 | June 30, 2025 | ||||||
| Sales | $ | 2,287,969 | $ | 1,552,655 | ||||
| Product costs (Note 21) | 922,512 | 863,803 | ||||||
| Gross margin | 1,365,457 | 688,852 | ||||||
| Government assistance income (Note 4) | 47,839 | 454,699 | ||||||
| Expenses | ||||||||
| Operating expenses (Note 21) | 4,961,622 | 4,701,397 | ||||||
| Loss from operations | (3,548,326 | ) | (3,557,846 | ) | ||||
| Other income (expense) | ||||||||
| Finance expense (Note 22) | (1,474,668 | ) | (1,949,352 | ) | ||||
| Interest income | - | 1,400 | ||||||
| Gain on warrants fair value adjustment (Note 13) | - | 25,263 | ||||||
| Foreign exchange gain (loss) | (21,200 | ) | 50,534 | |||||
| Total other income (expense) | (1,495,868 | ) | (1,872,155 | ) | ||||
| Loss before income tax expense | (5,044,194 | ) | (5,430,001 | ) | ||||
| Income tax expense | - | - | ||||||
| Net loss for the period | (5,044,194 | ) | (5,430,001 | ) | ||||
| Translation adjustment | 91,184 | 565,105 | ||||||
| Comprehensive loss for the period | $ | (4,953,010 | ) | $ | (4,864,896 | ) | ||
| 12 |
Ryse Inc.
Condensed Consolidated Interim Statements of Change in Shareholders' Deficit
Unaudited
All figures in Canadian dollars
| Class A common shares | Class B common shares | Contributed | Translation | Total shareholders | ||||||||||||||||||||||||||||||||
| Number | Amount | Number | Amount | Warrants | surplus | Adjustment | Deficit | Deficiency | ||||||||||||||||||||||||||||
| December 31, 2024 | 35,572,451 | $ | 4,965,656 | 12,336,138 | $ | 14,036,796 | $ | 270,201 | $ | 2,734,797 | (531,200 | ) | (37,794,493 | ) | $ | (16,318,243 | ) | |||||||||||||||||||
| Net loss and comprehensive loss | - | - | - | - | - | - | - | (5,430,001 | ) | (5,430,001 | ) | |||||||||||||||||||||||||
| Translation adjustment | - | - | - | - | - | - | 565,105 | - | 565,105 | |||||||||||||||||||||||||||
| Stock based compensation (Note 17) | - | - | - | - | - | 182,214 | - | - | 182,214 | |||||||||||||||||||||||||||
| Issued Capital shares through warrants | - | - | 11,000 | 11,000 | (1,356 | ) | - | - | - | 9,644 | ||||||||||||||||||||||||||
| Reversal of expired warrants (Note 13) | - | - | - | - | (806 | ) | - | - | - | (806 | ) | |||||||||||||||||||||||||
| Issuance of Shares on Convertible Notes (Note 12) | - | - | 196,689 | 269,133 | - | - | - | - | 269,133 | |||||||||||||||||||||||||||
| Shares issued (Note 16) | - | - | 1,084,242 | 2,442,940 | - | - | - | - | 2,442,940 | |||||||||||||||||||||||||||
| Bonus Shares | - | - | 59,411 | - | - | - | - | - | - | |||||||||||||||||||||||||||
| June 30, 2025 | 35,572,451 | $ | 4,965,656 | 13,687,480 | $ | 16,759,869 | $ | 268,039 | $ | 2,917,011 | $ | 33,905 | $ | (43,224,494 | ) | $ | (18,280,014 | ) | ||||||||||||||||||
| December 31, 2025 | 35,499,226 | $ | 4,915,656 | 14,624,950 | $ | 17,326,214 | $ | 338,123 | $ | 3,030,096 | 79,110 | (41,370,315 | ) | $ | (15,681,116 | ) | ||||||||||||||||||||
| Net loss and comprehensive loss | - | - | - | - | - | - | - | (5,044,194 | ) | (5,044,194 | ) | |||||||||||||||||||||||||
| Translation adjustment | - | - | - | - | - | - | 91,184 | - | 91,184 | |||||||||||||||||||||||||||
| Stock based compensation (Note 17) | - | - | - | - | - | 66,972 | - | - | 66,972 | |||||||||||||||||||||||||||
| Shares converted | - | - | 77,025 | 209,195 | - | - | - | - | 209,195 | |||||||||||||||||||||||||||
| Shares issued (Note 16) | - | - | 1,934,698 | 5,254,523 | - | - | - | - | 5,254,523 | |||||||||||||||||||||||||||
| June 30, 2026 | 35,499,226 | $ | 4,915,656 | 16,636,673 | $ | 22,789,922 | $ | 338,123 | $ | 3,097,068 | $ | 170,294 | $ | (46,414,509 | ) | $ | (15,103,446 | ) | ||||||||||||||||||
(See accompanying notes to condensed consolidated interim financial statements)
| 13 |
Ryse Inc.
Condensed Consolidated Interim Statements of Cash Flows
Unaudited
All figures in Canadian dollars
| For the six-months ended | June 30, 2026 | June 30, 2025 | ||||||
| Cash flows from operating activities | ||||||||
| Net loss for the period | $ | (5,044,194 | ) | $ | (5,430,001 | ) | ||
| Adjustments for non-cash items | ||||||||
| Stock-based compensation | 66,972 | 182,214 | ||||||
| Translation adjustment | 91,184 | 565,105 | ||||||
| Recognition of deferred grant revenue | (47,839 | ) | (47,839 | ) | ||||
| Accretion of interest in government loans | 28,932 | 46,464 | ||||||
| Depreciation of property and equipment (Note 7) | 152,380 | 154,868 | ||||||
| Gain on warrants fair value adjustment (Note 13) | - | (25,263 | ) | |||||
| Unrealized foreign exchange loss | - | (23,066 | ) | |||||
| Amortization of intangible assets (Note 8) | 7,072 | 7,047 | ||||||
| Changes in non-cash working capital balances | ||||||||
| Accounts receivable | (174,230 | ) | (68,179 | ) | ||||
| Inventory | 886,510 | 586,623 | ||||||
| Bank indebtedness | 19,318 | (66,424 | ) | |||||
| Accounts payable and accrued liabilities | (507,583 | ) | (919,190 | ) | ||||
| Net cash used in operating activities | (4,521,478 | ) | (5,037,641 | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchase of property and equipment | (24,751 | ) | (6,610 | ) | ||||
| Purchase of intangible assets | (732 | ) | (8,718 | ) | ||||
| Net cash used in investing activities | (25,483 | ) | (15,328 | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from/(repayment of) advances | 35,209 | 121,680 | ||||||
| Repayment of lease liabilities (Note 23) | (150,125 | ) | (110,413 | ) | ||||
| Proceeds from term loans | 401,262 | 42,787 | ||||||
| Repayment of term loans | (444,878 | ) | (631,982 | ) | ||||
| Forgiveness of government loans | - | - | ||||||
| Proceeds from converting of convertible notes | - | 554,125 | ||||||
| Proceeds from government grant | - | - | ||||||
| (Repayment of)/proceeds from shareholders | 96,378 | (229,516 | ) | |||||
| Repayment of government loans (Note 15) | (19,469 | ) | (169,616 | ) | ||||
| Net proceeds from/(repayment of) notes payable | (634,005 | ) | 2,876,932 | |||||
| Issuance of Class B shares (Net of share issuance cost) | 5,254,523 | 2,452,583 | ||||||
| Repayment from/(loan to) related parties (Note 20) | 7,178 | - | ||||||
| Net cash generated from financing activities | 4,546,073 | 4,906,580 | ||||||
| Increase(Decrease) in cash and cash equivalents during the period | (888 | ) | (146,389 | ) | ||||
| Cash and cash equivalents, beginning of period | 323,974 | 397,638 | ||||||
| Cash and cash equivalents, end of period | $ | 323,086 | $ | 251,249 | ||||
Supplemental cash flow information (Note 24)
(See accompanying notes to consolidated financial statements)
| 14 |
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Unaudited
All figures in Canadian dollars
| 1. | Nature of Business |
Ryse Inc. (formerly Axis Labs Inc.) (the "Company") was incorporated on May 6, 2009, under the laws of the Business Corporations Act (Ontario). The Company and its subsidiaries develop products called AXIS Gear and RYSE SmartShade, a smart device to help automate shades in homes. Consumers can control their shades with a tab on the AXIS Gear item itself or with their smartphone. The registered office of the Company is 20 Camden Street, Suite 200, Toronto, Ontario, Canada, M5V 1V1. The Company owns 100% of its two subsidiary companies, AXIS Labs USA Inc. and AXIS Intelligent Products (China WFOE).
Ryse USA Inc. (formerly AXIS Labs USA Inc.) was incorporated on July 6, 2017 under the laws of the Delaware General Corporation Law Act. The registered office of the subsidiary is in the state of Delaware at 2035 Sunset Lake Road, Suite B-2, Newark, New Castle.
A subsidiary, RYSE GBP Ltd., was incorporated on October 9, 2024, under the Companies Act 2006. The registered office of the subsidiary was at 27 Old Gloucester St., Holborn, London, United Kingdom. This entity was dissolved on March 17, 2026.
| 2. | Basis of Presentation and going concern uncertainties |
Going concern uncertainties
The Company reported a consolidated net loss of $5,044,194 for the six-month period ended June 30, 2026 (June 30, 2025 - $5,430,001). As at June 30, 2026, the Company had a working capital deficiency of $13,736,606 (December 31, 2025 - $14,475,072) and a deficit of $46,414,509 (December 31, 2025 - $41,370,315).
The Company has experienced recurring losses and is dependent on its ability to raise additional funds to continue operations. These circumstances create material uncertainties that cast significant doubt as to the ability of the Company to continue as a going concern. The Company is actively pursuing additional financing to further develop certain of the Company's scientific initiatives, but there is no assurance these initiatives will be successful, timely, or sufficient. Consequently, the Company's ability to continue as a going concern is dependent on its ability to secure additional financing.
These condensed consolidated interim financial statements have been prepared on a going concern basis, which assumes that the future operations will allow for the realization of assets and the discharge of liabilities in the normal course of business. These consolidated financial statements do not include any adjustments to the carrying value and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern, and such adjustments could be material.
The Company continues to be affected by tariff-related risk and cost pressure, particularly because production remains mainly concentrated in China. Management has taken active steps to reduce future exposure to import tariffs and trade uncertainty, including evaluating and expanding manufacturing capacity in other Southeast Asian countries, including the Philippines, for selected production outside China, as well as developing a lower-cost product line for the U.S. market. The Company will continue to monitor tariff developments and adjust its supply chain and product strategy as needed.
| 15 |
Statement of Compliance
These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard ("IAS") 34, Interim Financial Reporting, as issued by the International Accounting Standards Board under the historical cost convention, other than certain financial instruments measured at fair value. These condensed consolidated interim financial statements comply with, and have been prepared in accordance with, International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. These condensed consolidated interim financial statements do not include all of the disclosures required by IFRS for annual financial statements and should be read in conjunction with the Company's annual consolidated financial statements for the year ended December 31, 2025.
The consolidated interim financial statements were authorized for issue by representatives of the Company on September 28, 2026.
The consolidated interim financial statements are presented in Canadian dollars, which is the Company's functional currency.
| 3. | Accounts receivables |
| June 30, 2026 | December 31, 2025 | |||||||
| Accounts and accrued receivable | $ | 370,730 | $ | 196,500 | ||||
| Less: Provision for expected credit losses | (15,116 | ) | (15,116 | ) | ||||
| $ | 355,614 | $ | 181,384 | |||||
The provision for expected credit losses was determined based on historical loss rates and payment behavior from customers by major aging category, updated for estimates of forward-looking factors that may differ from past experience such as credit quality and industry factors. These updated loss rates were applied to aging categories to determine the expected credit losses on accounts receivable using the simplified approach.
During the six-month ended June 30, 2026, the Company has no write off from its receivable.
| Provision for expected credit losses | ||||
| Cost: | ||||
| December 31, 2024 | $ | 25,161 | ||
| Less: receivable write-off | (10,045 | ) | ||
| December 31, 2025 | $ | 15,116 | ||
| Additions | - | |||
| June 30, 2026 | 15,116 | |||
| 16 |
| 4. | Government grants |
During the six-month ended June 30, 2026, the Company received $Nil (2025 - $39,315) EcoCanada grant which offers wage subsidies to support environmental employers, for roles in sustainability, climate change, and natural resources.
During the six-month ended June 30, 2026, the Company received $Nil (2025 - $367,545) SDTC grant which supports small and medium-sized technology developers developing sustainable development technology towards commercialization.
Deferred government assistance income (cumulative to date)
| June 30, 2026 | December 31, 2025 | |||||||
| Deferred grant revenue from government loans | 188,985 | 236,825 | ||||||
| $ | 188,985 | $ | 236,825 | |||||
Government grant revenue
| Six-months ended June 30, 2026 | Six-months ended June 30, 2025 | |||||||
| HASCAP | 6,795 | 6,795 | ||||||
| SDTC | - | - | ||||||
| Eco Canada | - | - | ||||||
| Federal Economic Development Agency (Note 15) | 41,044 | 41,044 | ||||||
| $ | 47,839 | $ | 454,699 | |||||
| 5. | Inventory |
| June 30, 2026 | December 31, 2025 | |||||||
| Finished goods | $ | 638,376 | $ | 1,221,084 | ||||
During the six-months ended June 30, 2026, the Company has no write-off from its inventories.
The Company also pays in advance for future inventories deliveries. Total prepaid inventories as of June 30, 2026 is $83,542 (December 31, 2025 - $387,344).
| 6. | Investment tax credit receivable |
The Company claims Scientific Research and Development (SR&ED) and related investment tax credits for income tax purposes based on management's interpretation of the applicable legislation in the Income Tax Act of Canada. These claims are subject to audit by the Canada Revenue Agency ("CRA"). Included in investment tax credit receivable are amounts for SR&ED credits which are currently under review or are expected to come under review by the taxation authorities:
| June 30, 2026 | December 31, 2025 | |||||||
| Balance, opening | $ | 791,637 | $ | 403,005 | ||||
| Additions | - | 791,637 | ||||||
| Recovered | - | (403,005 | ) | |||||
| Balance, ending | $ | 791,637 | $ | 791,637 | ||||
During the year ended December 31, 2025, the Company recovered its investment tax credit receivable of $403,005.
| 17 |
| 7. | Property and equipment |
| Tooling | Office Equipment | Computer Equipment | Leasehold Improvement | ROU Assets | Total | |||||||||||||||||||
| Cost: | ||||||||||||||||||||||||
| 31-Dec-25 | $ | 302,300 | $ | 56,138 | $ | 98,476 | $ | 13,380 | $ | 1,290,183 | $ | 1,760,477 | ||||||||||||
| Additions | 8,925 | 2,055 | - | 13,771 | - | 24,751 | ||||||||||||||||||
| 30-Jun-26 | $ | 311,225 | $ | 58,193 | $ | 98,476 | $ | 27,151 | $ | 1,290,183 | $ | 1,785,228 | ||||||||||||
| Accumulated depreciation: | ||||||||||||||||||||||||
| 31-Dec-25 | $ | 175,120 | $ | 33,474 | $ | 84,543 | $ | 2,956 | $ | 532,788 | $ | 828,881 | ||||||||||||
| Depreciation | 13,164 | 2,340 | 3,911 | 2,247 | 130,718 | 152,380 | ||||||||||||||||||
| 30-Jun-26 | $ | 188,284 | $ | 35,814 | $ | 88,454 | $ | 5,203 | $ | 663,506 | $ | 981,261 | ||||||||||||
| Net carrying amounts: | ||||||||||||||||||||||||
| 31-Dec-25 | $ | 127,180 | $ | 22,664 | $ | 13,933 | $ | 10,424 | $ | 757,395 | $ | 931,596 | ||||||||||||
| 30-Jun-26 | $ | 122,941 | $ | 22,379 | $ | 10,022 | $ | 21,948 | $ | 626,677 | $ | 803,967 | ||||||||||||
| 8. | Intangible assets |
| Trademarks and patents | ||||
| Cost: | ||||
| 31-Dec-25 | $ | 425,621 | ||
| Additions | 732 | |||
| 30-Jun-26 | $ | 426,353 | ||
| Accumulated amortization: | ||||
| 31-Dec-25 | $ | 142,841 | ||
| Amortization | 7,072 | |||
| 30-Jun-26 | $ | 149,913 | ||
| Net carrying amounts: | ||||
| 31-Dec-25 | $ | 282,780 | ||
| 30-Jun-26 | $ | 276,440 | ||
The Company has capitalized the costs related to the design, development, filing and registration of the patents. These patents have a useful life of 10 years and have been amortized on a straight-line basis.
| 18 |
| 9. | Accounts payable and accrued liabilities |
| June 30, 2026 | December 31, 2025 | |||||||
| Credit cards payable | $ | 438,982 | $ | 290,668 | ||||
| Trade accounts payable | 738,668 | 1,354,635 | ||||||
| Government remittances payable | 110,532 | 150,462 | ||||||
| $ | 1,288,182 | $ | 1,795,765 | |||||
| 10. | Advances |
| June 30, 2026 | December 31, 2025 | |||||||
| Advance [a] | $ | 266,715 | $ | 185,557 | ||||
| Advance [b] | 11,930 | 40,554 | ||||||
| Advance [c] | 69,499 | 27,460 | ||||||
| Advance [d] | 18,650 | 78,014 | ||||||
| $ | 366,794 | $ | 331,585 | |||||
[a] Advance
On October 5, 2020, the Company entered into an agreement from an entity affiliated with a channel partner. Repayment of was made by transferring 17% of payments from the channel partner to the affiliated entity. During the period ended June 30, 2026, the Company received $771,669 (2025 - $281,887) and repaid $691,526 (2025 - $279,757). The other movements in this advance pertains to foreign exchange revaluation.
[b] Advance
On January 7, 2021, the Company entered into an agreement from an entity affiliated with a channel partner. Repayment of the amount advanced was made by transferring 30% of payments from the channel partner to the affiliated entity. During the period ended June 30, 2026, the Company received $50,030 (2025 - $28,893) and repaid $22,563 (2025 - $9,061). The other movements in this advance pertains to foreign exchange revaluation.
[c] Advance
On May 7, 2024, the Company entered into a new agreement and received $55,000 from a financing company. Repayment of the amount advanced is to be repaid made through weekly payments of $2,369. The advance carries an effective interest rate of 10% per annum. During the period ended June 30, 2026, the Company received $162,000 (2025 - $65,000) and repaid $119,961 (2025 - $65,281).
[d] Advance
On March 17, 2025, the Company entered into an agreement from an entity affiliated with a channel partner. Repayment of the amount advanced is 15% of gross sales generated through the channel partner. The advance carries an effective interest rate of 14.95% per annum. During the period ended June 30, 2026, the Company received $Nil (2025 - $133,896) and repaid $59,790 (2025 - $33,898). The other movements in this advance pertains to foreign exchange revaluation.
All interest and fees associated with the above advances have been recorded through other interest and charges.
| 19 |
| 11. | Term debt |
| June 30, 2026 | December 31, 2025 | |||||||
| Term loans | $ | 1,743,009 | $ | 1,595,994 | ||||
| Term loans issued with warrants | 2,757 | 193,388 | ||||||
| 1,745,766 | 1,789,382 | |||||||
| Less: Current portion | 464,266 | 507,882 | ||||||
| $ | 1,281,500 | $ | 1,281,500 | |||||
Term loans
The Company received a series of loans from third parties, totaling $300,000 from 2019 and 2022. These loans were unsecured and had no interest. The balance was fully repaid during 2025.
During 2022, the Company borrowed $1,150,000 from third parties, with a 12-month maturity and the option to renew. These loans are unsecured and carry 16-18% simple interest. The option to renew has been exercised by the lenders.
During 2021, the Company borrowed USD $192,815 under a promissory note. The repayment amount is two times the amount of the loan and repayments begin quarterly beginning December 22, 2022. The amount of each quarterly repayment will be 10% of the revenue earned by the Company in the quarter immediately preceding the repayment, and quarterly repayments will continue until the loan is repaid in full. During 2022, the Company borrowed additional $145,669 under a promissory note with the same terms and condition as the original note.
The Company received a series of loans from the CEO's father, totaling $270,000 in 2021 (Note 20). These loans are unsecured and carry a 10% simple interest, paid semi-annually, with a 12 month maturity and option to renew. The option to renew has been exercised by both parties through 2026 .
On December 6, 2024, the Company entered into a $270,118 USD financing agreement with the consignor. This consignment agreement allows the Company to expand its sales partner with expanded consignment opportunity. The loan is secured by a lien on consignment inventory. The agreement permits the lender to expand the collateral to include all Company assets, if payment defaults exceed $50,000 cumulatively or any payment remains overdue by 30+ days. The balance was fully repaid during the period ended June 30, 2026.
| 20 |
On June 12, 2026, the Company entered into a Revenue-Based Finance Advance Purchase Agreement with Flexbase Technologies, Inc. ("Flex") and received an advance of $300,000 USD. Under the agreement, the Company sold a portion of its future receivables to Flex for a total of $326,400 USD. That amount is the advance plus a capital fee of $26,400 USD (8.8%, or 1.1% per month). The Company repays the advance through weekly payments equal to 25% of its sales, and each weekly payment is capped at $9,600 USD. The agreement gives Flex a first-priority security interest in the Company's future receivables. Although the agreement is legally structured as a sale of future receivables, the Company accounts for it as a financial liability measured at amortized cost, because the Company keeps the obligation to pay the full amount out of its own sales. During the period ended June 30, 2026, the Company repaid $8,824 USD and the balance outstanding as at June 30, 2026 was $291,176 USD.
During the year ended December 31, 2025, the Company received a total of $437,221 and repaid $912,084.
During the period ended June 30, 2026, the Company received a total of $401,262 and repaid $444,878.
Term loans issued with warrants
On May 2, 2018, the Company borrowed $1,119,750 and $400,000 USD repayable on April 30, 2021 from various lenders. Interest is calculated and payable monthly at a rate of 1.41667% per month. As part of the issuance of the term loans, the lenders received warrants (Note 13).
Under IAS 32 Financial Instruments: Presentation the proceeds of the term loans were allocated between the term loan principle, and the warrants, based on the relative fair values of the two instruments. This resulted in $1,349,131 being allocated to term loans and $282,965 being allocated to warrants. The warrants are classified as a liability in accordance with IAS 32 since the amount of shares to be received upon exercise is not a fixed amount. These warrants are subsequently remeasured at their fair value each reporting period.
The loans are secured by a general security agreement over the assets of the Company and personal security from a shareholder for 30% of the principal amount.
During 2022, term loan issued with warrants has extended the maturity date to June 30, 2024. During the year ended December 31, 2024, portion of the term loans issued with warrants were further extended to April 30, 2026. During the period ended June 30, 2026, the remaining principal of $190,631 was repaid.
| 21 |
| 12. | Notes payable and convertible notes payable |
Notes payable
During the six-month period ended June 30, 2026, the Company repaid $2,719,040 and received $2,012,961 proceeds from promissory notes without conversion features issued by RYSE USA, Inc. which shall be due and payable in twelve (12) months after the effective date of the note. The interest rate is equal to fifteen to eighteen percent (15-18%) per annum which shall be payable on a monthly basis. The other movements in this account pertains to foreign exchange revaluation.
Total notes payable without conversion feature as at June 30, 2026 is $12,586,610 (December 31, 2025 - $13,220,615). During the year ended December 31, 2025, notes payable amounting to $329,814 was repaid in exchange for 225,632 Class B Common shares.
Convertible notes payable
On February 22, 2022, the Company issued 119,050 Class A and 186,432 Class B shares on convertible notes with fair value amounting to $1,123,777 and $1,760,915, respectively. All convertible notes issued prior to December 31, 2022 were converted.
For the year ended December 31, 2023, the Company issued additional convertible debentures amounting to $400,000 with stated interest rates of 15-18% per annum. However, these debentures are short-term in nature and are due and payable 12 months from the date of issuance of the Note. During the years ended 2025 and 2024, the lenders opted to extend the debt for another 12 months. The convertible notes include a conversion feature that allows for conversion under one of the following two conditions:
| (a) | the convertible debentures convert automatically upon a qualified equity financing greater than $2,500,000 at a discount of 20% from the transaction price: |
| (b) | at maturity, the holder of the convertible debenture has the option to convert at a price equal to the price per common share of $1 USD or be repaid. |
For the year ended December 31, 2024, the Company issued additional convertible debentures amounting to $27,000 with stated interest rates of 15% per annum. However, these debentures are short-term in nature and are due and payable 12 months from the date of issuance of the Note. The notes include a conversion feature and were exercised during 2025.
For the year ended December 31, 2025, the Company issued additional convertible debentures amounting to $284,992 with stated interest rates of 16% per annum. However, these debentures are short-term in nature and are due and payable 12 months from the date of issuance of the note. The notes include a conversion feature. During the period ended June 30, 2026, convertible notes of $209,185 were converted into Class B Common shares. Total notes payable with conversion feature as at June 30, 2026 is $475,807 (December 31, 2025 - $684,992).
Due to the short-term nature of these newly issued convertible debentures, the fair value was deemed to approximate its face value.
| 22 |
| 13. | Warrants |
Warrant liabilities
[a] May 2, 2018
On May 2, 2018, the Company issued warrants as part of the term debt described in Note 11 - term loans issued with warrants, which are classified as a liability. The warrants have an exercise price of the lesser of $3.69 before share split ($0.369 after share split) and the most recent cash issue price paid in a qualifying financing to obtain one Class A common share. The warrants vest immediately and are exercisable for 5 years from issuance.
On December 26, 2022, the Company extended expiry date of some warrants to April 30, 2026. Subsequent to December 31, 2025, the Company extended the expiry date of the warrants to September 30, 2027. Currently issued warrants were canceled and new warrants were issued to reflect the extended maturity date and adjusted number of Class A Common Shares of the Company that may be purchased by the holder of the warrants as a result of a 1:10 split of the Class A Common Shares.
During 2023, 50,000 of the total warrants expired and were not included in the extension until April 30, 2026.
In line with IFRS 9 and per the Company's policy, warrant liabilities are presented at their fair value with the results of this remeasurement reflected in the consolidated statements of comprehensive loss. During the year ended December 31, 2025, the Company recognized a gain of $1,556,077. No fair value adjustment was recognized during the period ended June 30, 2026.
Warrants in equity
[b] April 1, 2019
On April 1, 2019, the Company issued warrants for services to a non-employee. The transaction was valued at the fair value of the instruments in accordance with IFRS 2 - Share-based payment (IFRS 2) as the value of the services could not be estimated reliably. The warrants have an exercise price of $4.91 to obtain one Class A common share. The warrants vest immediately and are exercisable for 10 years from issuance and have been valued using the Black-Scholes Model. During 2025, 100,000 warrants expired.
[c] December 7, 2019
On December 7, 2019, the Company issued warrants to settle interest due on a term loan. The transaction was valued at the fair value of the instruments in accordance with IFRS 9. The warrants have an exercise price of $5.33 to obtain one Class A common share. The warrants vest immediately and are exercisable for 10 years from issuance and have been valued using the Black-Scholes Model.
| 23 |
[d] December 7, 2019
On December 7, 2019, the Company issued warrants to settle interest due on a term loan. The transaction was valued at the fair value of the instruments in accordance with IFRS 9. The warrants have an exercise price of $3.18 to obtain one Class A common share. The warrants vest immediately and are exercisable for 5 years from issuance and have been valued using the Black-Scholes Model.
[e] December 7, 2019
On December 7, 2019, the Company issued warrants for services to a non-employee. The transaction was valued at the fair value of the instruments in accordance with IFRS 2 as the value of the services could not be estimated reliably. The warrants have an exercise price of $5.65 to obtain one Class A common share. The warrants vest immediately and are exercisable for 10 years from issuance and have been valued using the Black-Scholes Model.
[f] December 7, 2019
On December 7, 2019, the Company issued warrants to settle interest due on a term loan. The warrants have an exercise price of $3.64 to obtain one Class A common share. The warrants vest immediately and are exercisable for 10 years from issuance and have been valued using the Black-Scholes Model.
[g] April 30, 2021
On April 30, 2021, the Company issued warrants for services to a corporation. The transaction was valued at the fair value of the instruments in accordance with IFRS 2 as the value of the services could not be estimated reliably. The warrants have an exercise price of $9.48 to obtain one Class B common share. The warrants vest immediately and are exercisable for 10 years from issuance and have been valued using the Black-Scholes Model.
[h] August 17, 2021
On August 17, 2021, the Company issued warrants for services to a corporation. The transaction was valued at the fair value of the instruments in accordance with IFRS 2 as the value of the services could not be estimated reliably. The warrants have an exercise price of $9.48 to obtain one Class B common share. The warrants vest immediately and are exercisable for 10 years from issuance and have been valued using the Black-Scholes Model.
[i] October 29, 2021
On October 29, 2021, the Company issued warrants for services to a corporation. The transaction was valued at the fair value of the instruments in accordance with IFRS 2 as the value of the services could not be estimated reliably. The warrants have an exercise price of $9.48 to obtain one Class B common share. The warrants vest immediately and are exercisable for 10 years from issuance and have been valued using the Black-Scholes Model.
[j] December 21, 2021
On December 21, 2021, the Company issued warrants for services to a corporation. The transaction was valued at the fair value of the instruments in accordance with IFRS 2 as the value of the services could not be estimated reliably. The warrants have an exercise price of $9.48 to obtain one Class B common share. The warrants vest immediately and are exercisable for 10 years from issuance and have been valued using the Black-Scholes Model.
| 24 |
[j] December 21, 2021
On December 21, 2021, the Company issued warrants for services to a corporation. The transaction was valued at the fair value of the instruments in accordance with IFRS 2 as the value of the services could not be estimated reliably. The warrants have an exercise price of $9.48 to obtain one Class B common share. The warrants vest immediately and are exercisable for 10 years from issuance and have been valued using the Black-Scholes Model.
[k] February 28, 2022
On February 28, 2022, the Company issued warrants for services to a corporation. The transaction was valued at the fair value of the instruments in accordance with IFRS 2 as the value of the services could not be estimated reliably. The warrants have an exercise price of $9.48 to obtain one Class B common share. The warrants vest immediately and are exercisable for 10 years from issuance and have been valued using the Black-Scholes Model.
[l] May 4, 2022
On May 4, 2022, the Company issued warrants for services to a corporation. The transaction was valued at the fair value of the instruments in accordance with IFRS 2 as the value of the services could not be estimated reliably. The warrants have an exercise price of USD$7.13 to obtain one Class B common share. The warrants vest immediately and are exercisable for 10 years from issuance and have been valued using the Black-Scholes Model. All warrants is cancelled during 2025.
Share split
On May 8, 2022, the Company amended its Articles of Incorporation to subdivide and split the shares in the capital of the Company on the basis of ten (10) shares for every one (1) share held. The share split resulted to an increase in warrants by 2,292,129 shares and 445,644 shares for warrants in liabilities and equity, respectively. Exercise price are one tenth (1/10) of the initial value at the date of grant.
Warrants after share split
[m] June 7, 2022
On June 7, 2022, the Company issued warrants as part of the investment to the Company. The transaction was valued at the fair value of the instruments in accordance with IFRS 2 as the value of the services could not be estimated reliably. The warrants have an exercise price of US$0.713 to obtain one Class B common share. The warrants vest immediately and are exercisable for 2 years from issuance and have been valued using the Black-Scholes Model. The warrant is expired in 2025.
[n] July 25, 2022
On July 25, 2022, the Company issued some warrants as an equity kicker. The warrants are exercisable for 20 years from issuance with exercise price of $0.01 USD and have been valued using the Black-Scholes Model.
[o] October 24, 2022
On October 24, 2022, the Company issued some warrants as an equity kicker. The warrants are exercisable for 20 years from issuance with exercise price of $0.713 USD and have been valued using the Black-Scholes Model. This was exercised in 2023.
| 25 |
[p] November 9, 2022
On November 9, 2022, the Company issued some warrants as an equity kicker. The warrants are exercisable for 20 years from issuance with exercise price of $1.00 USD and have been valued using the Black-Scholes Model.
[q] November 9, 2022
On November 9, 2022, the Company issued some warrants as an equity kicker. The warrants are exercisable for 20 years from issuance with exercise price of $0.01 USD and have been valued using the Black-Scholes Model.
[r] November 15, 2022
On November 15, 2022, the Company issued some warrants as an equity kicker. The warrants are exercisable for 2 years from issuance with exercise price of $1.00 USD and have been valued using the Black-Scholes Model.
[s] November 24, 2022
On November 24, 2022, the Company issued some warrants as an equity kicker. The warrants are exercisable for 20 years from issuance with exercise price of $1.00 USD and have been valued using the Black-Scholes Model.
[t] April 28, 2023
On April 28, 2023, the Company issued warrants for services to a corporation. The transaction was valued at the fair value of the instruments in accordance with IFRS 2 as the value of the services could not be estimated reliably. The warrants have an exercise price of $1.00 per Warrant Share to obtain one Class B common share. The warrants vest immediately and are exercisable for 5 years from issuance and have been valued using the Black-Scholes Model.
[u] July 26, 2023
On July 26, 2023, the Company issued warrants for services to a corporation. The transaction was valued at the fair value of the instruments in accordance with IFRS 2 as the value of the services could not be estimated reliably. The warrants have an exercise price of $1.00 per Warrant Share to obtain one Class B common share. The warrants vest immediately and are exercisable for 5 years from issuance and have been valued using the Black-Scholes Model.
[v] December 9, 2024
On December 9, 2024, the Company issued warrants in exchange for consulting services from a contractor. The transaction was valued at the fair value of the instruments in accordance with IFRS 2 as the value of the services could not be estimated reliably. The warrants have an exercise price of $0.01 per Warrant Share to obtain one Class B common share. The warrants vest immediately and are exercisable for 20 years from issuance and have been valued using the Black-Scholes Model.
| 26 |
[w] July 2, 2025
On July 2, 2025, the Company issued warrants in exchange for consulting services from a contractor. The transaction was valued at the fair value of the instruments in accordance with IFRS 2 as the value of the services could not be estimated reliably. The warrants have an exercise price of $1.90 per Warrant Share to obtain one Class B common share. The warrants vest immediately and are exercisable for 5 years from issuance and have been valued using the Black-Scholes Model.
[x] July 18, 2025
On July 18, 2025, the Company issued warrants in exchange for consulting services from a contractor. The transaction was valued at the fair value of the instruments in accordance with IFRS 2 as the value of the services could not be estimated reliably. The warrants have an exercise price of $0.01 per Warrant Share to obtain one Class B common share. The warrants vest immediately and are exercisable for 20 years from issuance and have been valued using the Black-Scholes Model.
[y] August 20, 2025
On August 20, 2025, the Company issued warrants in exchange for consulting services from a contractor. The transaction was valued at the fair value of the instruments in accordance with IFRS 2 as the value of the services could not be estimated reliably. The warrants have an exercise price of $0.01 per Warrant Share to obtain one Class B common share. The warrants vest immediately and are exercisable for 10 years from issuance and have been valued using the Black-Scholes Model.
|
Number of warrants |
Warrant liability amount |
Warrant equity amount |
||||||||||
| December 31, 2024 | 3,042,175 | $ | 1,675,883 | $ | 270,201 | |||||||
| Warrants issued | 31,027 | - | 94,542 | |||||||||
| Warrants exercised | (7,000 | ) | - | (1,356 | ) | |||||||
| Expiration and revaluation of warrants | (103,500 | ) | (1,556,077 | ) | (25,264 | ) | ||||||
| December 31, 2025 | 2,962,702 | $ | 119,806 | $ | 338,123 | |||||||
| Warrants issued | - | - | - | |||||||||
| Expiration and revaluation of warrants | - | - | - | |||||||||
| June 30, 2026 | 2,962,702 | $ | 119,806 | $ | 338,123 | |||||||
| 27 |
Warrants before share split
|
Number of warrants |
Number of common shares exercisable into |
Exercise price |
Expiry date |
|||||||||||
| May 2, 2018 [a] | 254,681 | 254,681 | $ | 3.69 | May 2, 2023 | |||||||||
| April 1, 2019 [b] | 10,000 | 10,000 | $ | 4.91 | April 1, 2029 | |||||||||
| December 7, 2019 [c] | 4,690 | 4,690 | $ | 5.33 | December 7, 2029 | |||||||||
| December 7, 2019 [d] | 15,730 | 15,730 | $ | 3.18 | December 7, 2024 | |||||||||
| December 7, 2019 [e] | 11,502 | 11,502 | $ | 5.65 | December 7, 2029 | |||||||||
| December 7, 2019 [f] | 5,494 | 5,494 | $ | 3.64 | December 7, 2029 | |||||||||
| April 30, 2021 [g] | 408 | 408 | $ | 9.48 | April 30, 2031 | |||||||||
| August 17, 2021 [h] | 138 | 138 | $ | 9.48 | August 17, 2031 | |||||||||
| October 29, 2021 [i] | 153 | 153 | $ | 9.48 | October 29, 2031 | |||||||||
| December 21, 2021 [j] | 160 | 160 | $ | 9.48 | December 21, 2031 | |||||||||
| February 28, 2022 [k] | 891 | 891 | $ | 9.48 | February 28, 2032 | |||||||||
| May 4, 2022 [l] | 350 | 350 | $ | 7.13USD | May 4, 2032 | |||||||||
| 304,197 | 304,197 | |||||||||||||
Warrants after share split
|
Number of warrants |
Number of common shares exercisable into |
Exercise price |
Expiry date |
|||||||||||
| May 2, 2018 [a] | 2,546,810 | 2,546,810 | $ | 0.369 | September 30, 2027 | |||||||||
| April 1, 2019 [b] | 100,000 | 100,000 | $ | 0.491 | April 1, 2029 | |||||||||
| December 7, 2019 [c] | 46,900 | 46,900 | $ | 0.533 | December 7, 2029 | |||||||||
| December 7, 2019 [d] | 157,300 | 157,300 | $ | 0.318 | December 7, 2024 | |||||||||
| December 7, 2019 [e] | 115,020 | 115,020 | $ | 0.565 | December 7, 2029 | |||||||||
| December 7, 2019 [f] | 54,940 | 54,940 | $ | 0.364 | December 7, 2029 | |||||||||
| April 30, 2021 [g] | 4,080 | 4,080 | $ | 0.948 | April 30, 2031 | |||||||||
| August 17, 2021 [h] | 1,380 | 1,380 | $ | 0.948 | August 17, 2031 | |||||||||
| October 29, 2021 [i] | 1,530 | 1,530 | $ | 0.948 | October 29, 2031 | |||||||||
| December 21, 2021 [j] | 1,600 | 1,600 | $ | 0.948 | December 21, 2031 | |||||||||
| February 28, 2022 [k] | 8,910 | 8,910 | $ | 0.948 | February 28, 2032 | |||||||||
| May 4, 2022 [l] | 3,500 | 3,500 | $ | 0.713USD | May 4, 2032 | |||||||||
| June 7, 2022 [m] | 56,101 | 56,101 | $ | 0.713USD | June 7, 2024 | |||||||||
| July 25, 2022 [n] | 56,500 | 56,500 | $ | 0.01USD | July 25, 2042 | |||||||||
| October 24, 2022 [o] | 1,024,000 | 1,024,000 | $ | 0.713USD | October 24, 2042 | |||||||||
| November 9, 2022 [p] | 66,500 | 66,500 | $ | 1.00 USD | November 9, 2042 | |||||||||
| November 9, 2022 [q] | 37,000 | 37,000 | $ | 0.01USD | November 9, 2042 | |||||||||
| November 15, 2022 [r] | 7,000 | 7,000 | $ | 1.00USD | November 15, 2024 | |||||||||
| November 24, 2022 [s] | 29,500 | 29,500 | $ | 1.00USD | November 24, 2042 | |||||||||
| April 28, 2023 [t] | 350 | 350 | $ | 1.00USD | April 28, 2028 | |||||||||
| July 26, 2023 [u] | 655 | 655 | $ | 1.00USD | July 26, 2028 | |||||||||
| December 9, 2024 [v] | 10,000 | 10,000 | $ | 0.01USD | December 9, 2044 | |||||||||
| July 2, 2025 [w] | 1,027 | 1,027 | $ | 1.90USD | July 2, 2030 | |||||||||
| July 18, 2025 [x] | 12,000 | 12,000 | $ | 0.01USD | July 18, 2045 | |||||||||
| August 20, 2025 [y] | 18,000 | 18,000 | $ | 0.01USD | August 20, 2035 | |||||||||
| 4,360,603 | 4,360,603 | |||||||||||||
| Less: | ||||||||||||||
| Warrants exercised (o,r) | (1,031,000) | (1,031,000) | ||||||||||||
| Expiration of warrants (a,b,d,m,l) | (366,901) | (366,901) | ||||||||||||
| 2,962,702 | 2,962,702 | |||||||||||||
| 28 |
The following assumptions were used to calculate the fair values at:
| June 30, 2026 | December 31, 2025 | |||||||
| Time to expiry in years | 10-20 | 10-20 | ||||||
| Expected volatility | 46% | 46% | ||||||
| Risk-free rate | 2.91-3.88% | 2.91-3.88% | ||||||
| Exercise price after share split | $ | 0.01-1.90 | $ | 0.01-1.90 | ||||
The weighted average exercise price for the total outstanding warrants at June 30, 2026 was $0.39 (December 31, 2025 - $0.39).
| 14. | Due to shareholders |
The balances due to shareholders are unsecured, non-interest bearing, with no specific terms of repayment.
| 15. | Government loans |
Canada Emergency Business Account ("CEBA")
The Company borrowed $40,000 on April 23, 2020 and an additional $20,000 on December 16, 2020 under the CEBA program. The CEBA was offered in the context of the COVID-19 pandemic, and is an interest-free revolving line until December 31, 2022. Any outstanding balance on January 1, 2023 becomes a term loan carrying an interest rate of 5% per annum. No principal repayment is required before December 31, 2022, and only interest payments are required thereafter until the full principal is repaid no later than December 31, 2025. Repaying the outstanding balance of the loan (other than the amount available to be forgiven) on or before December 31, 2022 will result in a single tranche of loan forgiveness up to $20,000 based on a blended rate:
| · | 25 percent on the first $40,000; plus | |
| · | 50 percent on amounts above $40,000 and up to $60,000 |
The fair value of the debt of $22,383 was calculated using an effective rate of 24%, which corresponds to a rate that the Company would have obtained for a similar loan.
In 2024, CEBA loan of $43,949 was forgiven and fully paid off. As of June 30, 2026 the balance is $Nil.
| 29 |
Federal Economic Development Agency ("FedDev") Loan
In December 2020, the company borrowed $139,875 from FedDev as part of its Regional Economic Growth Through Innovation program. The loan is interest-free, and the principal is to be repaid in equal monthly instalments from January 1, 2023 to December 1, 2027. The fair value of the debt of $55,671 was calculated using an effective rate of 24%, which corresponds to a rate that the Company would have obtained for a similar loan
On April 1, 2021, the company borrowed an additional $810,125 from FedDev under the same terms. The fair value of the debt of $395,441 was calculated using an effective rate of 24%, which corresponds to a rate that the Company would have obtained for a similar loan.
The book value at June 30, 2026 was $377,148 ($359,243 at December 31, 2025).
During the six-month period ended June 30, 2026, $41,044 was recorded as government grant revenue on the consolidated statement of comprehensive loss. Deferred grant revenue is recognized over the interest free period of the loan.
Highly Affected Sectors Credit Availability Program ("HASCAP") Loan
On July 20, 2021, the Company borrowed $250,000 from a financial institution. The debt is guaranteed by the Business Development Bank of Canada as part of its Highly Affected Sectors Credit Availability Program. The loan carries an interest rate of 4% per annum. Monthly interest-only payments are required for the first twelve months, and principal is to be repaid in equal monthly instalments from August 20, 2022 to July 20, 2031.
The fair value of the debt of $114,102 was calculated using an effective rate of 24%, which corresponds to a rate that the Company would have obtained for a similar loan. The book value at June 30, 2026 was $98,250 (December 31, 2025 was $106,692). During the six-month period ended June 30, 2026, $6,795 was recorded as government grant revenue on the consolidated statement of comprehensive loss. Deferred grant revenue is recognized over the interest free period of the loan.
| Government loans, December 31, 2025 | $ | 465,935 | ||
| Accretion | 28,932 | |||
| Payment | (19,469 | ) | ||
| Government loans, June 30, 2026 | $ | 475,398 | ||
| Short-term portion | $ | 170,615 | ||
| Long-term portion | $ | 304,783 | ||
| 30 |
| 16. | Share capital |
| Authorized | ||
| Unlimited | Class A Common shares | |
| Unlimited | Class B Common Shares, non-voting, non-participating |
| Issued after share split | June 30, 2026 | December 31, 2025 | ||||||||||
| 35,499,226 | Class A Common shares | $ | 4,915,656 | $ | 4,915,656 | |||||||
| 16,636,673 | Class B Common shares | $ | 22,789,922 | $ | 17,326,214 | |||||||
On December 28, 2020, the Company filed and an Offering Statement and a Preliminary Offering Circular ("OC") under Regulation A with the Securities and Exchange Commission ("SEC"). On February 22, 2021, the SEC qualified the Offering Statement. The Company may offer a maximum of 2,104,718 Class B Common Shares at $7.13USD per share ($0.713USD per share after share split on May 8, 2022). During 2021, the Company sold 67,231 Class B Common shares for proceeds of $644,733, and incurred share issuance costs of $80,160.
On February 22, 2022, the Company issued 119,050 Class A and 186,432 Class B shares on convertible notes with fair value amounting to $1,123,777 and $1,760,915, respectively. During the year ended December 31, 2022, the Company issued 185,637 Class A Common shares for proceeds of $214,360. In addition, the Company issued 722,807 Class B Common shares, for total proceeds of $1,911,505 during the same period. Share issuance costs directly attributable to the issuance of Class B Common shares totaled $17,378.
On May 8, 2022, the Company amended its Articles of Incorporation to subdivide and split the shares in the capital of the Company on the basis of ten (10) shares for every one (1) share held. The share split resulted in an increase in Class A and B Common Shares by 31,887,504 shares and 2,951,991 shares, respectively.
On May 11, 2022, the Company filed an Offering Statement under Regulation A with the SEC. The Offering Statement was qualified on July 27, 2022. The Company is offering a maximum of 25,000,000 Class B Common Shares at $1.00USD per share (the "2022 Regulation A Offering"). As of December 31, 2022, the Company issued 339,451 Class B Common shares for proceeds of $339,451 in the 2022 Regulation A Offering. In addition, the Company issued 141,770 Class B Common shares for proceeds of $141,770 during the same period in a concurrent private placement in Canada.
During the year ended December 31, 2022, the Company issued 280,270 Class B Common shares at $0.713 per share, for proceeds of $134,260USD and $100,000 under Regulation D and a private placement in Canada.
During the year ended December 31, 2023, the Company issued 1,053,768 Class B Common Shares at $1.00USD per share, for proceeds of $1,053,768USD in the 2022 Regulation A Offering. In addition, the Company sold 229,850 shares at $1.00USD per share, for proceeds of $229,850USD during the same period in a concurrent private placement in Canada.
| 31 |
On August 23, 2023, the Company filed an amendment to the Offering Statement under Regulation A with the SEC, which was qualified on August 31, 2023 (the "2023 Offering Statement"). The Company is offering a maximum of 20,000,000 Class B Common Shares at $1.25USD per share.
During the year ended December 31, 2023, the Company issued 1,190,391 Class B Common Shares (including bonus shares) at $1.25USD per share, for proceeds of $1,394,302USD under the 2023 Offering Statement. In addition, the Company sold 196,093 shares (including bonus shares) at $1.25USD per share, for proceeds of $240,778USD during the same period in a concurrent private placement in Canada. A total of 77,621 bonus shares were issued during the year 2023.
During the year ended December 31, 2023, the Company issued 2,347,253 Class B Common shares at $0.713USD per share, for proceeds of $578,000USD and $1,500,000USD under Regulation D and a private placement in Canada.
During the year ended December 31, 2024, the Company issued 121,400 Class B Common Shares to pay of the remaining balance of certain notes payables amounting to $153,603.
During the year ended December 31, 2024, the Company issued 6,000 Class B Common Shares at a price of $1.00USD per share, generating proceeds of $6,000USD.
In addition, the Company issued 52,600 Class B Common Shares, including bonus shares, at a price of $1.25USD per share, generating proceeds of $25,000USD.
Additionally, the Company issued 2,181,494 Class B Common Shares, including bonus shares, at a price of $1.50USD per share for total proceeds of $3,055,700USD.
Furthermore, the Company issued 1,032,628 Class B Common Shares, at a price of $1.75USD per share. including bonus shares, in exchange for consideration totaling $1,671,415USD.
The total share issuance cost for the year ended December 31, 2024 is $2,138,588.
During the year ended December 31, 2025, the Company:
| - | Cancelled 73,225 Class A Common Shares and 42,080 Class B Common Shares amounting to $91,933 | |
| - | Issued 225,632 Class B Common Shares to pay off certain notes payable amounting to $329,814 | |
| - | Issued 359,222 Class B Common Shares at $1.00 per share for proceeds of $359,222 USD | |
| - | Issued 2,400 Class B Common Shares, including bonus shares, at $1.25 per share for proceeds of $3,000 USD | |
| - | Issued 35,893 Class B Common Shares, including bonus shares, at $1.75 per share for proceeds of $54,812 USD | |
| - | Issued 783,324 Class B Common Shares, including bonus shares, at $1.90 per share for proceeds of $1,382,921 USD | |
| - | Issued 622,514 Class B Common Shares, including bonus shares, at $2.00 per share for proceeds of $1,123,978 USD | |
| - | Issued 301,907 Class B Common Shares, including bonus shares, at $2.25 per share for proceeds of $586,010 USD | |
| - | The total share issuance cost for the year ended December 31, 2025 is $1,685,673. |
During the period ended June 30, 2026, the Company:
| - | Issued 1,934,698 Class B Common Shares, including bonus shares, for gross proceeds of $5,254,523 less share issuance costs of $773,453 | |
| - | Issued 77,025 Class B Common Shares, including bonus shares, through convertible of notes in the amount of $209,195. |
| 32 |
| 17. | Stock-based compensation |
The Company may grant stock options to the Board, certain employees and consultants, that allow each participant to purchase Class B common shares of the Company. The exercise price of each stock option is equal to the fair value of the underlying Class B common share when the stock option was granted. Stock options vest quarterly over terms ranging from 2 to 4 years. Stock options have a 10-year term. Employees and consultants also have the benefit of cashless exercise wherein employees and consultants are not required to pay in cash to exercise the option, rather, the option plan allows the use of equity built up in the option to pay the exercise price.
On May 8, 2022, the Company amended its Articles of Incorporation to subdivide and split the shares in the capital of the Corporation on the basis of ten (10) shares for every one (1) share held. The share split resulted to an increase by 3,970,584 stock options. In addition, the Company granted additional 3,598,459 stock options in 2022 with the same exercise price and expiration date.
A summary of stock option activity under the plan is as follows:
| Number of stock options | Weighted average exercise price | |||||||
| December 31, 2018 | 413,605 | $ | 1.00 | |||||
| Granted | 27,571 | 1.00 | ||||||
| December 31, 2019 | 441,176 | $ | 1.00 | |||||
| Granted | - | 1.00 | ||||||
| December 31, 2020 | 441,176 | $ | 1.00 | |||||
| Granted | - | 1.00 | ||||||
| December 31, 2021 | 441,176 | $ | 1.00 | |||||
| Share split | 3,970,584 | /10 | ||||||
| Granted after share split | 2,458,699 | 0.10 | ||||||
| December 31, 2022 | 6,870,459 | 0.10 | ||||||
| Cancelled/expired | (199,311 | ) | 0.10 | |||||
| Granted | 231,968 | 0.10 | ||||||
| December 31, 2023 | 6,903,116 | $ | 0.10 | |||||
| Granted | 548,824 | 0.09 | ||||||
| December 31, 2024 | 7,451,940 | $ | 0.10 | |||||
| Granted | 20,000 | 0.10 | ||||||
| December 31, 2025 | 7,471,940 | 0.10 | ||||||
| Granted/expired | - | 0.10 | ||||||
| June 30, 2026 | 7,471,940 | 0.10 | ||||||
| Options exercisable - June 30, 2026 | 7,384,860 | $ | 0.10 | |||||
| 33 |
The Company uses the fair value method for recording compensation expense related to stock-based instruments awarded to employees, consultants, officers and the Board in accordance with IFRS 2 Share-based Payment ("IFRS 2"). For the purpose of expensing stock options each tranche in an award is considered a separate award with its own vesting period and grant date fair value. Compensation expense is recognized over the tranche's vesting period by increasing contributed surplus based on the number of awards expected to vest.
For options granted in 2026 and 2025, the fair value of each stock option on the date of the grant was estimated using the Black-
Scholes option pricing model as set out below.
| 2026 | 2025 | |||||||
| Risk-free interest rate | - | 3.22% | ||||||
| Estimated volatility | - | 39.8% | ||||||
| Dividend yield | - | - | ||||||
| Expected life (in years) | - | 10.00-20.00 | ||||||
| Weighted average share price at grant date | - | $ | 0.37 | |||||
| Weighted average fair value after share split | - | $ | 0.414 | |||||
Expected volatility has been based on an evaluation of the historical volatility of companies under the same industry of the Company, particularly over the historical period commensurate with the expected term.
As at June 30, 2026, the weighted average remaining contractual life of stock options was 7.03 years (December 31, 2025 - 7.53 years)
| 18. | Capital management |
The Company's objectives when managing capital are to safeguard its ability to continue as a going concern while providing a return to its stakeholders. The capital structure of the Company is composed of long-term debt, convertible notes, warrant liability, government loans and equity attributable to the Company's shareholders. The Company's primary uses of capital are to finance the development of its technology. The Company's objectives in managing capital are: (i) to maintain sufficient working capital to meet current financial obligations and continue as a going concern; (ii) to maintain investor and creditor confidence; and (iii) to sustain future development of the business. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. As at June 30, 2026, total managed capital was $49,941,020 (December 31, 2025 - $45,200,769).
| 34 |
| 19. | Financial instruments |
Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair value. The three levels of the fair value hierarchy are:
| · | Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities: |
| · | Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and |
| · | Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable. |
The carrying value of cash, accounts receivable, accounts payable and accrued liabilities, advances, and due from related party approximate their fair values due to the relatively short-term maturities of these financial instruments.
| Fair value hierarchy level | June 30, 2026 | December 31, 2025 | ||||||||
| Cash | Level 1 | $ | 323,086 | $ | 323,974 | |||||
| Accounts receivable | Level 2 | 355,614 | 181,384 | |||||||
| Due from related parties | Level 2 | 3,450,099 | 3,457,277 | |||||||
| $ | 4,128,799 | $ | 3,962,635 | |||||||
| Bank indebtedness | Level 1 | $ | 26,932 | $ | 7,614 | |||||
| Accounts payable and accrued liabilities | Level 2 | 1,288,182 | 1,795,765 | |||||||
| Advances | Level 2 | 366,794 | 331,585 | |||||||
| Notes payable | Level 2 | 12,586,610 | 13,220,615 | |||||||
| Fair-value of convertible notes | Level 3 | 475,807 | 684,992 | |||||||
| Term loans | Level 3 | 1,745,766 | 1,789,382 | |||||||
| Warrant liability | Level 3 | 119,806 | 119,806 | |||||||
| Lease Liabilities | Level 3 | 750,658 | 900,782 | |||||||
| Due to shareholders | Level 2 | 3,872,262 | 3,775,884 | |||||||
| Government loans | Level 3 | 475,398 | 465,935 | |||||||
| $ | 21,708,215 | $ | 23,092,360 | |||||||
| 35 |
The Company is exposed to the following risks by virtue of its activities: Credit Risk - Cash is primarily invested with one major bank in Canada and a bank in the United States. Management believes that the financial institutions that hold the Company's cash are financially sound and, accordingly, minimal credit risk exists with respect to this asset. The accounts receivable balance is mainly due from one large retailer which has been assessed for expected credit losses and no significant allowance has been determined. The maximum credit risk is the sum of its cash and accounts receivable. None of the Company's financial assets are secured by collateral or other credit enhancements. No receivables were written-off during the period ended June 30, 2026. Apart from the receivables, the Company determined that there were no financial assets that were impaired.
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rate. The Company enters into foreign currency purchase and sale transactions and has assets and liabilities denominated in foreign currencies resulting in expose to the financial risk of earnings fluctuations arising from changes in foreign exchange rates and the degree of volatility of these rates. The Company does not use derivative instruments to reduce its exposure to foreign currency risk.
The Company's financial instruments denominated in foreign currencies expressed in Canadian dollars and the exchange rate (Canadian dollars per unit of foreign currency) used at the balance sheet date are as follows:
| Currency | June 30, 2026 | December 31, 2025 | ||||||||
| Cash | U.S. dollar | $ | 290,857 | $ | 249,234 | |||||
| Accounts payable and accrued liabilities | U.S. dollar | $ | 1,286,615 | $ | 1,795,765 | |||||
| Advances | U.S. dollar | $ | 297,295 | $ | 304,125 | |||||
| Notes payable | U.S. dollar | $ | 12,586,610 | $ | 13,220,615 | |||||
Liquidity Risk - Liquidity risk arises from the Company will encounter difficulties in meeting its obligations associated with its financial liabilities. The Company is exposed to this risk mainly with respect to its accounts payable and accrued liabilities, long-term debt and due to related party balances. The Company manages its liquidity risk by monitoring its operating requirements (Note 2). Convertible notes at fair value in Note 12, the majority of the value relates to the conversion feature.
| Carrying amount | Contractual cash flow | 1 Year | 2-7 years | |||||||||||||
| June 30, 2026 | ||||||||||||||||
| Bank indebtedness | $ | 26,932 | $ | 26,932 | $ | 26,932 | $ | - | ||||||||
| Accounts payable and accrued liabilities | 1,288,182 | 1,288,182 | 1,288,182 | - | ||||||||||||
| Advances | 366,794 | 366,794 | 366,794 | - | ||||||||||||
| Fair-value of convertible notes | 475,807 | 475,807 | 475,807 | - | ||||||||||||
| Due to shareholders | 3,872,262 | 3,872,262 | - | 3,872,262 | ||||||||||||
| Notes payable | 12,586,610 | 12,586,610 | 12,586,610 | - | ||||||||||||
| Term loans | 1,745,766 | 1,745,766 | 464,266 | 1,281,500 | ||||||||||||
| Government loans | 475,398 | 475,398 | 170,615 | 304,783 | ||||||||||||
| $ | 20,837,751 | $ | 20,837,751 | $ | 15,379,206 | $ | 5,458,545 | |||||||||
| December 31, 2025 | ||||||||||||||||
| Bank indebtedness | $ | 7,614 | $ | 7,614 | $ | 7,614 | $ | - | ||||||||
| Accounts payable and accrued liabilities | 1,795,765 | 1,795,765 | 1,795,765 | - | ||||||||||||
| Advances | 331,585 | 331,585 | 331,585 | - | ||||||||||||
| Notes payable | 13,220,615 | 13,220,615 | 13,220,615 | - | ||||||||||||
| Due to shareholders | 3,775,884 | 3,775,884 | - | 3,775,884 | ||||||||||||
| Lease liabilities | 900,782 | 1,046,561 | 358,716 | 687,845 | ||||||||||||
| Term loans | 1,789,382 | 1,789,382 | 507,882 | 1,281,500 | ||||||||||||
| Convertible notes | 684,992 | 684,992 | 684,992 | - | ||||||||||||
| Government loans | 465,935 | 612,456 | 270,632 | 341,824 | ||||||||||||
| $ | 22,972,554 | $ | 23,264,854 | $ | 17,177,801 | $ | 6,087,053 | |||||||||
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| 20. | Compensation of key management and related party transactions |
Key management includes the Company's Board and key officers. Compensation awarded to key management included:
| Six-months ending June 30, 2026 | Six-months ending June 30, 2025 | |||||||
| Salaries and benefits | $ | 62,500 | $ | 95,833 | ||||
| Stock-based compensation | - | - | ||||||
| $ | 62,500 | $ | 95,833 | |||||
Transactions with related parties
At June 30, 2026, $270,000 (December 31, 2025 - $270,000) of term loans were owed to a relative of the CEO (Note 11).
In 2025, the Company entered into intellectual property license, distribution, service, and financing agreements with a related entity under common control. As of June 30, 2026, the due from related party balance is $3,450,099 (December 31, 2025 - $3,457,277).
| 21. | Expenses by nature |
| June 30, 2026 | June 30, 2025 | |||||||||||||||
| Product costs | Operating expenses | Product costs | Operating expenses | |||||||||||||
| Advertising and promotion | $ | - | $ | 1,912,992 | $ | - | $ | 1,548,831 | ||||||||
| Depreciation and amortization (Notes 7, 8) | - | 159,452 | - | 184,841 | ||||||||||||
| Freight and shipping | - | 305,527 | - | 212,387 | ||||||||||||
| Inventory (Note 5) | 922,512 | - | 863,803 | - | ||||||||||||
| Office and general | - | 739,384 | - | 884,550 | ||||||||||||
| Short term rentals | - | 11,391 | - | 6,702 | ||||||||||||
| Research and development | - | 355,418 | - | 408,132 | ||||||||||||
| Salaries and benefits | - | 1,208,020 | - | 1,102,255 | ||||||||||||
| Stock-based compensation (Note 17) | - | 269,438 | - | 353,699 | ||||||||||||
| $ | 922,512 | $ | 4,961,622 | $ | 863,803 | $ | 4,701,397 | |||||||||
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| 22. | Finance expense |
| June 30, 2026 | June 30, 2025 | |||||||
| Interest on term loans (Note 11) | $ | 957,628 | $ | 1,366,166 | ||||
| Term loan with warrants interest (Note 11) | 269,876 | 269,876 | ||||||
| Interest in leases (Note 23) | 32,122 | 55,602 | ||||||
| Accretion on government loans (Note 15) | 28,932 | 50,176 | ||||||
| Other interest and finance charges | 186,110 | 207,532 | ||||||
| $ | 1,474,668 | $ | 1,949,352 | |||||
| 23. | Leases |
The Company has entered a lease for office space in Toronto and a lease for a vehicle. The leases are included in the consolidated statements of financial position as a right-of-use asset and lease liability. The vehicle lease began on May 31, 2023, and has a 4-year term. The Company has an option to purchase the vehicle at the end of the lease. The office lease started on January 1, 2024, it has a 5-year term, and there is no purchase option at the end of the lease term. The Company has provided a security deposit totaling $70,993 as of June 30, 2026, and December 31, 2025. The security deposit is classified as a non-current asset on the consolidated statement of financial position, as it is expected to be returned at the end of the lease term, subject to the terms of the lease agreement. During the period ended June 30, 2026, interest expense incurred on lease liabilities is $32,122 (2025 - $55,602) (Note 22).
Other short-term rentals included in the operating expenses amounted to $11,391 for the period ended June 30, 2026 (2025 - $6,702).
Lease Liabilities
| Vehicle | Office | Total | ||||||||||
| 31-Dec-25 | $ | 27,845 | $ | 872,937 | $ | 900,782 | ||||||
| Lease Payments | (10,423 | ) | (139,701 | ) | (150,124 | ) | ||||||
| 30-Jun-26 | $ | 17,422 | $ | 733,236 | $ | 750,658 | ||||||
| Less: Current portion | (17,422 | ) | (223,442 | ) | (240,864 | ) | ||||||
| Non-current portion | $ | - | $ | 509,794 | $ | 509,794 | ||||||
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The following table presents the future cash flow from the two lease agreements as of December 31, 2025 for the next 5 years.
| 2026 | 2027 | 2028 | 2029 | Thereafter | Total | |||||||||||||||||||
| Lease Payments | $ | 280,227 | $ | 299,632 | $ | 320,982 | $ | - | $ | - | $ | 900,841 | ||||||||||||
| Finance Charges | 78,489 | 49,222 | 18,009 | - | - | 145,720 | ||||||||||||||||||
| Future undiscounted payments | $ | 358,716 | $ | 348,854 | $ | 338,991 | $ | - | $ | - | $ | 1,046,561 |
Additions to ROU assets and carrying amounts at the end of the reporting periods as well as depreciation charges are presented in Note 7.
| 24. | Supplemental cash flow information |
| June 30, 2026 | June 30, 2025 | |||||||
| Non-cash value of share issuance through exercise of warrants | $ | - | $ | 1,356 | ||||
| Non-cash value of convertible notes converted to Common B Shares | 209,195 | 260,687 | ||||||
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| ITEM 4. | EXHIBITS |
The documents listed in the Exhibit Index of this report are incorporated by reference from the Company's Regulation A Offering Statement on Form 1-A (Commission File No. 024-11397) or are filed with this report, in each case as indicated below.
| 2.1 | Certificate and Articles of Incorporation as Amended* |
| 2.2 | Bylaws as Amended* |
| 2.3 | Certificate of Share Split Amendment* |
| 4.1 | Form of Subscription Agreement* |
| 6.1 | Voting Trust Agreement as Amended* |
| 6.2 | Shareholders Agreement as Amended* |
| 6.3 | Employment Agreement Marc Bishara* |
| 6.4 | Lease (portions of this exhibit have been omitted)* |
| 6.5 | Agreement with Dealmaker* |
* Previously filed.
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SIGNATURES
Pursuant to the requirements of Regulation A, the issuer has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
RYSE Inc.
| /s/ Trung Pham | |
|
Chief Executive Officer Date: October 1, 2026 |
Pursuant to the requirements of Regulation A, this report has been signed below by the following persons on behalf of the issuer and in the capacities and on the dates indicated.
| /s/ Trung Pham, | |
| Chief Executive Officer, Principal Financial Officer, Principal Accounting Officer, Director | |
| Date: October 1, 2026 | |
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