AVAX ONE TECHNOLOGY LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three months ended March 31, 2025 and 2024 (unaudited)

(Expressed in US Dollars, except where noted)

1. NATURE OF OPERATIONS AND BASIS OF PREPARATION

Business Overview

AgriFORCE Growing Systems Ltd. (“AgriFORCE™” or the “Company”) was incorporated as a private company by Articles of Incorporation issued pursuant to the provisions of theBusiness Corporations Act (British Columbia) on December 22, 2017. The Company’s registered and records office address is at 800 – 525 West 8 th Avenue, Vancouver, British Columbia, Canada, V5Z 1C6.

The Company is an innovative sustainable technology focused company that strives to innovate and deliver sustainable technology solutions across a wide array of vertical utilization of our proprietary intellectual property to businesses and enterprises through our AgriFORCE™ Solutions division (“Solutions”) and deliver innovative flour products through our AgriFORCE™ Brands division (“Brands”). In 2024, the Company bought the assets of the Radical Clean Solutions (“RCS”) business for which it had bought an exclusive license to the agricultural industry in 2023. During 2023, the Company commenced efforts to launch its UN(THINK) Awakened Flour™, which is a nutritious flour that we believe provides health advantages over traditional flour.

While Solutions’ legacy focus was to operate in the plant based pharmaceutical, nutraceutical, and other high value crop markets using its unique proprietary facility design and hydroponics based automated growing system that enable cultivators to effectively grow crops in a controlled environment (“FORCEGH+™”). The Company has designed FORCEGH+™ facilities to produce in virtually any environmental condition and to optimize crop yields to as near their full genetic potential possible whilst substantially eliminating the need for the use of pesticides and/or irradiation. The Company has changed its focus to broaden the use of its proprietary intellectual property across multiple industries. For instance, the Company through its RCS purchase, is now able to utilize that technology to deliver solutions across multiple industries, including not only agriculture, but other industries including hospitality, commercial applications, education institutions, residential real estate and transportation.

Brands is focused on the development and commercialization of plant-based ingredients and products that deliver healthier and more nutritious solutions. We strive to market and commercialize both branded consumer product offerings and ingredient supply.

During 2024, the Company entered into the sustainable Bitcoin mining industry and has completed two acquisitions since late November 2024 pursuant to which the Company now owns and operates three Bitcoin mining facilities, one in Alberta, Canada and two in Ohio, for a total of 1120 BITMAIN Antminer S19j units. The facility is powered by sustainable energy, advancing AgriFORCE’s mission to integrate innovative technologies that promote environmental stewardship while generating significant financial returns. The Company is proud to announce the launch of sustainable agricultural operations at its newly acquired Bitcoin mining facility in Sturgeon County, Alberta, Canada. By harnessing the excess heat and carbon emissions from Bitcoin mining, AgriFORCE is pioneering a novel approach to promote agricultural productivity while reducing environmental impact.

Basis of Presentation

The accompanying Unaudited Condensed Consolidated Interim Financial Statements and related financial information of AgriFORCE Growing Systems Ltd. should be read in conjunction with the audited financial statements and the related notes thereto for the years ended December 31, 2024 and 2023 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on April 7, 2025. These unaudited interim financial statements have been prepared in accordance with the rules and regulations of the United States Securities and SEC for interim financial information. Accordingly, they do not include all of the information and footnotes required by the accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements.

In the opinion of management, the accompanying interim financial statements contain all adjustments which are necessary to state fairly the Company’s financial position as of March 31, 2025 and December 31, 2024, and the results of its operations and cash flows during the three months ended March 31, 2025 and 2024. Such adjustments are of a normal and recurring nature. The results for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2025, or for any future period.

Liquidity and Management’s Plan

The Company has incurred substantial operating losses since its inception and expects to continue to incur significant operating losses for the foreseeable future. As reflected in the interim financial statements for the three months ended March 31, 2025, the Company had a net loss of $0.1 million, $2.2 million of net cash used in operating activities, and the Company had a working capital deficiency of $5.6 million.

On June 24, 2024, the Company received a Staff Listing Determination Letter from Nasdaq pursuant to which the Staff has determined that as of June 21, 2024, the Company’s common shares had a per share closing bid price of $0.10 or less for ten consecutive trading days (the Company’s bid price has closed at or below $0.10 per share from June 6, 2024, through June 21, 2024). Nasdaq has granted the Company an exception to comply with the bid price rule as follows:

To meet these requirements, the Company held its previously postponed Annual Meeting of Shareholders on November 25, 2024, and effected a 1:100 reverse split on December 5, 2024. The Company regained compliance as of December 19, 2024 but remains subject to panel monitor for one year from that date and if it is not in compliance with the Bid Price Rule during that period, it would not be eligible for an automatic period to regain compliance and instead would need to submit to a Nasdaq Hearings Panel.

The accompanying interim financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The interim financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. The Company is at the development stage of its business plan. As such it is likely that additional financing will be needed by the Company to fund its operations and to develop and commercialize its technology. These factors raise substantial doubt about the Company’s ability to continue as a going concern. For the next twelve months from issuance of these interim financial statements, the Company plans to seek to obtain additional capital through the sale of debt or equity financings or other arrangements to fund operations; however, there can be no assurance that the Company will be able to raise needed capital under acceptable terms, if at all. The sale of additional equity may dilute existing shareholders and newly issued shares may contain senior rights and preferences compared to our currently outstanding common shares. If the Company is unable to obtain such additional financing, future operations would need to be scaled back or discontinued. Due to the uncertainty in the Company’s ability to raise capital, management believes that there is substantial doubt in the Company’s ability to continue as a going concern for twelve months from the issuance of these interim financial statements.

Reverse Stock Split

On December 5, 2024, the Company executed a one-for-one hundred reverse stock split of the Company’s common shares (the “Reverse Split”). As a result of the Reverse Split, every 100 shares of the Company’s old common shares were converted into one share of the Company’s new common shares. Fractional shares resulting from the Reverse Split were sold at the then prevailing price on the open market, with the proceeds being distributed on a pro-rata basis to the impacted stock holders. The Reverse Split automatically and proportionately adjusted all issued and outstanding shares of the Company’s common shares, as well as convertible debentures, convertible features, prefunded warrants, stock options and warrants outstanding at the time of the date of the Reverse Split. The exercise price on outstanding equity based-grants was proportionately increased, while the number of shares available under the Company’s equity-based plans was proportionately reduced. Share and per share data (except par value) for the periods presented reflect the effects of the Reverse Split. References to numbers of common shares and per share data in the accompanying financial statements and notes thereto for periods ended prior to December 5, 2024 have been adjusted to reflect the Reverse Split on a retroactive basis.

2. SIGNIFICANT ACCOUNTING POLICIES

Recent Accounting Pronouncements

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, as modified by the Jumpstart Our Business Start-ups Act of 2012, (the “JOBS Act”). Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 13(a) of the Securities Exchange Act of 1934, as amended, for complying with new or revised accounting standards applicable to public companies. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” ASU 2023-09 requires companies to provide enhanced rate reconciliation disclosures, including disclosure of specific categories and additional information for reconciling items. The standard also requires companies to disaggregate income taxes paid by federal, state and foreign taxes. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 on a retrospective or prospective basis. The Company is currently assessing the impact of adopting this standard

In November 2024, the FASB issued ASU No. 2024-03,Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures(Subtopic 220-40): Disaggregation of Income Statement Expenses. The requires additional disclosures of certain expenses in the notes of the financial statements, to provide enhanced transparency into the expense captions presented on the Consolidated Statements of Operations. Additionally, in January 2025, the FASB issued ASU 2025-01,Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), to clarify the effective date of ASU 2024-03. The new standard is effective for the Company for its annual periods beginning January 1, 2027 and for interim periods beginning January 1, 2028, with early adoption permitted. The Company is currently evaluating the impact of adopting the standard.

Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.

Digital assets

Bitcoin awarded to the Company through its mining activities are accounted for in connection with the Company’s revenue recognition policy.

Digital assets are classified on the Company’s condensed consolidated interim balance sheet as a current asset due to the Company’s ability to sell it in a highly liquid marketplace and its intent to liquidate a portion of its Bitcoin to support operations as needed. The Company measures digital assets at fair value with changes recognized in operating expenses in the condensed consolidated interim statement of operations. The Company tracks its cost basis of digital assets in accordance with the first-in-first-out (“FIFO”) method of accounting.

Sales of Bitcoin by the Company and Bitcoin awarded to the Company are typically included within the investing activities on the condensed consolidated interim statement of cash flows since such Bitcoin is typically not sold nearly immediately after being produced. The Company will monitor its cash needs and sell Bitcoin in the future to fund its cash expenditures as needed. The cost basis of the Company’s Bitcoin as of March 31, 2025 and December 31, 2024 was $298,642 and $26,282 respectively. The Company held 3.3 and 0.3 Bitcoin as of March 31, 2025 and December 31, 2024 respectively.

Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. In order to determine if assets have been impaired, assets are grouped and tested at the lowest level for which identifiable independent cash flows are available (“asset group”). An impairment loss is recognized when the sum of projected undiscounted cash flows is less than the carrying value of the asset group. The measurement of the impairment loss to be recognized is based on the difference between the fair value and the carrying value of the asset group. Fair value can be determined using a market approach, income approach or cost approach. The reversal of impairment losses is prohibited.

Inventories

Inventories consist of work-in-progress hydroxyl devices and finished goods of milled flour and related packaging material recorded at the lower of cost or net realizable value with the cost measured using the average cost method. Inventories includes all costs that relate to bringing the inventory to its present condition and location under normal operating conditions.

Property and Equipment

Property and equipment are initially recognized at acquisition cost or manufacturing cost, including any costs directly attributable to bringing the assets to the location and condition necessary for them to be capable of operating in the manner intended by the Company’s management. Property, plant and equipment are subsequently measured at cost less accumulated depreciation and impairment losses.

Depreciation is recognized on a straight-line basis to write down the cost less estimated residual value of computer equipment and furniture and fixtures.

Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognized in profit or loss within other income or other expenses.

Revenue Recognition

Product revenue in 2024 was limited to sales from hydroxyl generators. We recognize product revenue when we satisfy performance obligations by transferring control of the promised products or services to customers. Product revenue is recognized at a point in time when control of the promised good or service is transferred to the customer, which is at the point of shipment or delivery of the goods.

The Company earns revenue from the production of digital assets through mining activities. The Company provides transaction verification services to the transaction requestor, in addition to the Bitcoin network. Transaction verification services are an output of the Company’s ordinary activities; therefore, the Company views the transaction requestor as a customer and recognizes the transaction fees as revenue from contracts with customers under ASC 606. The Bitcoin network is not an entity such that it may not meet the definition of a customer; however, the Company has concluded that it is appropriate to apply ASC 606 by analogy to block rewards earned from the Bitcoin network. The Company is also entitled to the transaction fees paid by the transaction requester payable in bitcoin for each successful validation of a block. The Company assessed the following factors in the determination of the inception and duration of each individual contract to validate a block and satisfaction of its performance obligation as follows:

● For each individual contract, the parties’ rights, the transaction price, and the payment terms are fixed and known as of the inception of each individual contract.

● The transaction requestor and the Bitcoin network each have a unilateral enforceable right to terminate their respective contracts at any time without penalty.

● For each of these respective contracts, contract inception and completion occur simultaneously upon block validation; that is, the contract begins upon, and the duration of the contract does not extend beyond, the validation of an individual blockchain transaction; and each respective contract contains a single performance obligation to perform a transaction validation service and this performance obligation is satisfied at the point-in-time when a block is successfully validated.

The Company measures the estimated fair value of the non-cash consideration (block reward and transaction fees) at contract inception, which is at the time the performance obligation to the requester and the network is fulfilled by successfully validating a block. The Company measures the non-cash consideration which is fixed as of the inception of each individual contract using the quoted spot rate for bitcoin determined using the Company’s primary trading platform for bitcoin at the time the Company successfully validates a block.

Expenses associated with providing bitcoin transaction verification services, such as hosting fees, electricity costs, and related fees are recorded as cost of revenues. Digital assets received are recorded as digital assets. Cash flows from selling digital assets are typically included within the investing activities on the condensed consolidated interim Statement of Cash Flows.

The Company evaluates and accounts for its digital assets in accordance with ASU 2023-08,Accounting for and Disclosure of Crypto Assets, the Company measures digital assets at fair value with changes recognized in operating expenses. The Company applies the first-in-first-out method of accounting to its digital assets and tracks the cost basis of the crypto asset by wallet.

Convertible Instruments

The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with ASC 815, Derivatives and Hedging (“ASC 815”), which provides that if three criteria are met, the Company is required to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments. These three criteria include circumstances in which;

(a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract;

(b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur; and

(c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

ASC 815 also provides an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as “The Meaning of Conventional Convertible Debt Instrument”. Accordingly, the Company records, when necessary, discounts to convertible notes for the fair value of conversion options embedded in debt instruments. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. ASC 815 provides that, among other things, generally, if an event is not within the entity’s control or could require net cash settlement, then the contract shall be classified as an asset or a liability.

Foreign Currency Transactions

The financial statements of the Company and its subsidiaries whose functional currencies are the local currencies are translated into USD for consolidation as follows: assets and liabilities at the exchange rate as of the balance sheet date, shareholders’ equity at the historical rates of exchange, and income and expense amounts at the average exchange rate for the period. Translation adjustments resulting from the translation of the subsidiaries’ accounts are included in “Accumulated other comprehensive income (loss)” as equity in the consolidated balance sheets. Transactions denominated in currencies other than the applicable functional currency are converted to the functional currency at the exchange rate on the transaction date. At period end, monetary assets and liabilities are remeasured to the reporting currency using exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are remeasured at historical exchange rates. Gains and losses resulting from foreign currency transactions are included within non-operating expenses.

Definite Lived Intangible Assets

Definite lived intangible assets consist of a granted patent and intangible assets acquired from an acquisition. Amortization is computed using the straight-line method over the estimated useful life of the asset (Note 7).

Loss per Common Share

The Company presents basic and diluted loss per share data for its common shares. Basic loss per common share is calculated by dividing the profit or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the year. The number of common shares used in the loss per shares calculation includes all outstanding common shares plus all common shares issuable for which there are no conditions to issue other than time. Diluted loss per common share is calculated by adjusting the weighted average number of common shares outstanding to assume conversion of all potentially dilutive share equivalents, such as stock options and warrants and assumes the receipt of proceeds upon exercise of the dilutive securities to determine the number of shares assumed to be purchased at the average market price during the year. For the three months ended March 31, 2025,234,643 convertible shares were excluded in the diluted loss per common share (March 31, 2024 –150,040 common shares associated with convertible debt that were excluded from diluted earnings per share calculation since adding the common shares would be anti-dilutive.

Loss per common share calculations for all periods have been adjusted to reflect the reverse stock split effected on December 5, 2024.

Fair Value Accounting

The fair value of the Company’s accounts receivable, accounts payable and other current liabilities approximate their carrying amounts due to the relatively short maturities of these items.

As part of the issuance of debentures on June 30, 2022, January 17, 2023, October 18, 2023, November 30, 2023, February 21, 2024, April 11, 2024, May 22, 2024, January 16, 2025, and March 21, 2025 as well as the private placements on June 20, 2023 and October 15, 2024, the Company issued warrants having strike prices denominated in USD. This creates an obligation to issue shares for a price that is not denominated in the Company’s functional currency and renders the warrants not indexed to the Company’s stock, and therefore, must be classified as a derivative liability and measured at fair value at the end of each reporting period. On the same basis, the Series A Warrants and the representative warrants issued as part of the IPO are also classified as a derivative liability and measured at fair value.

The fair value of the Company’s warrants is determined in accordance with FASB ASC 820, “Fair Value Measurement,” which establishes a fair value hierarchy that prioritizes the assumptions (inputs) to valuation techniques used to price assets or liabilities that are measured at fair value. The hierarchy, as defined below, gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The guidance for fair value measurements requires that assets and liabilities measured at fair value be classified and disclosed in one of the following categories:

3. ACQUISITIONS

On August 16, 2024, the Company completed the acquisition of assets of Radical Clean Solutions, Inc. (“RCS”), effectively increasing its interest from 14% to 100%, and providing the Company control over RCS. The RCS technology is a product line consisting of patent-pending “smart hydroxyl generation systems” focused on numerous industry verticals that is proven to eliminate 99.99+% of all major pathogens, virus, mold, volatile organic compounds (“VOCs”) and allergy triggers. As the Company’s investment in RCS does not have a readily determinable fair value, the Company previously elected to account for its 14% interest in RCS at cost, less impairment. The Company recognized a loss on the investment of $97,488 during the year ended December 31, 2024.

The following table summarizes the consideration transferred to acquire RCS and the amounts of identified assets acquired and liabilities assumed at the acquisition date.

The acquisition of RCS includes a contingent consideration arrangement that requires additional consideration to be paid by AgriFORCE to a previous owner of RCS who now serves as a Consultant to AgriFORCE (the “Consultant”). The Consultant is entitled to receive commissions on sales and production of RCS Units, which are payable in cash upon receipt of revenue or completed inventory by the Company. The consultant is also entitled to other manufacturing, sales and product development milestones, which are outlined below.

(a) Completion of wall mount design

(b) Completion of patent prosecution for any of the patent applications heretofore provided to Company or any new U.S. patent applications

(c) Execute distribution agreements for other countries or verticals

(d)Production of 250 RCS units

(e)Production of 500 RCS units

(f)Production of 1,000 RCS units

The Consultant is entitled to be awarded 250 restricted common shares of the Company for meeting each milestone.

The Consultant is also entitled to restricted stock units (“RSUs”) provided certain conditions are met.

As of March 31, 2025, there were no changes in the recognized amounts or range of outcomes for the contingent consideration recognized as a result of the acquisition of RCS.

The goodwill is attributable to the acquisition of the RCS technologies, synergies, access to their key vendors, and other non-quantifiable assets which are expected to create growth and diversification opportunities for the Company.

Prior to the acquisition, the Company had a preexisting relationship with RCS. The Company was a 14% investor of RCS and held a receivable of $200,000 for a secured loan note issued to RCS. As part of the acquisition terms, the receivable amount of $200,000 funded the purchase price consideration and was deemed settled.

On November 28, 2024, the Company completed its acquisition of the Redwater Bitcoin Mining Facility, located in Alberta, Canada. (“Redwater”) for a total purchase price of approximately $1.5 million. Redwater is a Bitcoin mining facility, powered by 1.2 MW of natural gas energy, currently supports over 130 bitcoin mining units and has the scalability to accommodate up to 250 units. The acquisition was accounted for as an asset acquisition as, at the time of acquisition, no outputs were produced from the property, and skilled employees or contractors required for the operation of the facility were not included in the transaction. The purchase price consisted primarily of cash proceeds paid to the seller, and legal transaction costs. The acquired assets will be amortized from their acquisition date over their remaining estimated useful lives.

The purchase price was allocated based on the relative fair value of the assets acquired as follows:

The Power Purchase Agreement between the Company and Rivogenix Energy Corp (“Rivogenix”), allows the Company to obtain natural gas for its Natural Gas Power Plant. The Power Purchase Agreement was determined to be a favourable contract asset, and as such was recorded at the present value of the contractual benefit. As per the agreement, Rivogenix procures the natural gas required to generate power using the Natural Gas Power Plant and allows the Company to purchase the power generated at a rate of C$0.05 per kilowatt hour (KWH). The expected power cost per kilowatt hour in Alberta was determined to be C$0.0883, providing a discount of C$0.0383. The power usage required to operate each of the acquired Bitcoin Miners is 75.9KWH per day per Bitcoin Miner. The discount rate used in the present value calculation is 11.25%, and the period of the contract has been determined to be 3 years.

On January 17, 2025, the Company completed the acquisition of assets of Bald Eagle Mining (“Bald Eagle”), located in Columbiana Country, Ohio, for a total purchase price of $4,840,000. Bald Eagle is a Bitcoin mining facility, powered by 5MW of natural gas energy, and currently supports over 900 bitcoin mining units, and has the capability to scale up to 1,200 units.

The following pro forma summary presents consolidated information of the Company as if the business combination had occurred on January 1, 2024.

The Company did not have any material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and net loss position.

These pro forma amounts have been calculated after applying the Company’s accounting policies and adjusting the results of Bald Eagle to reflect the additional amortization that would have been charged assuming the fair value adjustments to the intangible assets had been applied from January 1, 2025, with the consequential tax effects.

The following table summarizes the consideration transferred to acquire Bald Eagle and the amounts of identified assets acquired and liabilities assumed at the acquisition date.

The goodwill is attributable to the acquisition of the Bald Eagle surface access rights to the Pin Oak gas pad, which allows for further expansion of the Bald Eagle mining operation up to 1,200 bitcoin mining units. In addition, the potential exists to purchase additional natural gas from Geopetro and Pin Oak, which would allow the Company to generate additional power to increase its mining capacity. Further, the potential exists to utilize the heat generated by the bitcoin mining operations to support the cultivation of premium crops and aquaculture at the Bald Eagle site. These crops will generate additional revenue for the Company, while also supporting food security and economic development in the region.

4. PREPAID EXPENSES AND OTHER CURRENT ASSETS

5. INVENTORIES

As at March 31, 2025, the Company had $42,481 in work-in-progress inventory (December 31, 2024 – $42,443 in finished goods).

6. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

Depreciation expense on property and equipment for the three months ended March 31, 2025 was $121,079 (March 31, 2024 - $2,703). During the three months ended March 31, 2025, the Company disposed of property and equipment which resulted in a loss of $Nil (March 31, 2024 - $4,252).

7. INTANGIBLE ASSETS

Intangible assets include $7,076,879 (December 31, 2024 - $7,209,118) for intellectual property (“Manna IP”) acquired under an asset purchase agreement with Manna Nutritional Group, LLC (“Manna”) dated September 10, 2021. The Manna IP encompasses patented technologies to naturally process and convert grains, pulses, and root vegetables, into low-starch, low-sugar, high-protein, fiber-rich baking flour products, as well as a wide range of breakfast cereals, juices, natural sweeteners, and baking enhancers. The Company paid $1,475,000 in cash and issued 1,476 prefunded warrants valued at $12,106,677 (the “Purchase Price”). Subject to a 9.99% blocker and SEC Rule 144 restrictions, the prefunded warrants vested in tranches up until March 10, 2024, at which time all tranches were fully vested. When vested the tranches of prefunded warrants became convertible into an equal number of common shares.

The asset was available for use on January 3, 2023. The asset has a useful life of 20 years. The Company recorded $138,762 in amortization expense related to the Manna IP for the three months ended March 31, 2025 (March 31, 2024 - $164,295).

As at September 30, 2024, the Company determined that there was an indicator of impairment for the intangible assets due to the significant decline in the Company’s stock price as at September 30, 2024. As a result, the Company performed an interim intangible impairment test and determined that the fair value of the intangible asset was $7,832,200 based on an income approach using the Company’s estimated discounted royalty payments. For valuing the Manna IP, the Company made estimates regarding future revenues of a market participant, royalty rate, tax rate, and discount rate. The resulting fair value estimate was considered a level 3 fair value estimate given the significant uncertainty involved in estimating future revenues and other inputs. For purposes of estimatingthe fair value of the patent, the Company assumed that a market participant would capture between 0.008% and 0.115% of the estimated $52.9 billion flour market between the valuation date and the expiration of the patent in 2038, with an average of 0.073%. The Company recorded an asset impairment loss of $4,137,271 in operating expenses. There were no indicators for impairment as of March 31, 2025.

The Company acquired intangible assets from RCS as part of the business combination (Note 3). The following intangible assets were acquired from RCS:

The Company recorded $15,274 (March 31, 2024 - $Nil ) in amortization expense, and a foreign exchange loss of $477 (March 31, 2024 - $Nil) related to the RCS assets for the three months ended March 31, 2025.

The Company acquired an intangible asset from the acquisition of Redwater, as part of the asset acquisition (note 3). The Power Purchase Agreement between the Company and Rivogenix, allows the Company to obtain natural gas for its Natural Gas Power Plant. The Power Purchase Agreement was determined to be a favourable contract asset, and as such was recorded as an intangible asset at the present value of the contractual benefit. The period of the contract has been determined to be 3 years. As at March 31, 2025,2.75 years remain on the contract. The fair value of the Power Purchase Agreement Contract as of March 31, 2025 is $625,736 (December 31, 2024 - $625,736). The Company recognized $61,612 in amortization expense (reflected in cost of sales) during the three months ended March 31, 2025 (March 31, 2024 - $Nil) in relation to the Power Purchase Agreement.

The estimated annual amortization expense for the next five years are as follows:

8. INVESTMENT

On June 18, 2023, the Company signed a memorandum of understanding (“MOU”) with Radical Clean Solutions Ltd. (“RCS”) to purchase common shares issued by RCS. The Company paid RCS $225,000 for 14% of the issued and outstanding common shares of the Company. Under the terms of the MOU, the use of proceeds is exclusively for the advance purchase of hydroxyls generating devices for commercial sales into controlled environment agriculture, food manufacturing, warehousing and transportation verticals. The Company was to receive one of five board of director seats of RCS and had a right of first refusal to maintain an ownership percentage in RCS of not less than 10% of the total issued and outstanding common shares. On October 1, 2023 the Company and RCS signed a definitive agreement to convert the advance into a 14% ownership investment in RCS.

On August 16, 2024, the Company acquired the assets of RCS as part of a business combination. The investment in RCS was accounted for as part of the step-acquisition accounting (Note 3).

9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

10. DEBENTURES

On June 30, 2022, the Company executed the definitive agreements (the “Purchase Agreements”) with arm’s length accredited institutional investors (the “Investors”) for $14,025,000 in debentures with a 10% original issue discount for gross proceeds of $12,750,000 (“First Tranche Debentures”). The First Tranche Debentures were convertible into common shares at $11,100.00 per share. In addition, the Investors received 822 warrants at a strike price of $12,210.00, which expire on December 31, 2025 (the “First Tranche Warrants”). The First Tranche Warrants and First Tranche Debentures each have down round provisions whereby the conversion and strike prices will be adjusted downward if the Company issues equity instruments at lower prices. The First Tranche Warrants strike price, and the First Tranche Debenture conversion price will be adjusted down to the effective conversion price of the issued equity instruments. The transaction costs incurred in relation to first tranche were $1,634,894. The Debentures are senior to all other indebtedness or claims in right of payment, other than indebtedness secured by purchase money security interested.

The Investors had the right to purchase additional tranches of $5,000,000 each, up to a total additional principal amount of $33,000,000.

On January 17, 2023, the Investors purchased additional debentures totaling $5,076,923 with a 10% original issue discount for gross proceeds of $4,615,385 (the “Second Tranche Debenture”). The Second Tranche Debentures were convertible into common shares at $6,200.00 per share and the Investors received an additional 532 warrants at a strike price of $6,200.00, which expire on December 31, 2025 (the “Second Tranche Warrants”). The issuance of the additional tranche triggered the down round provision, adjusting the exercise prices of the First Tranche Debentures and the First Tranche Warrants to $6,200.00. The transaction costs incurred in relation to second tranche were $325,962.

On June 26, 2023, the Company entered into waiver and amendment agreements (“Debenture Modification Agreements”) with the Investors to modify terms of the Purchase Agreements. The Debenture Modification Agreements provide as follows:

On August 9, 2023, the Company entered into another waiver and amendment agreement (“Agreement”) with the Investors with respect to a certain Senior Convertible Debenture (the “Debentures”) due July 17, 2025 issued by the Company to that Investor. The Agreement provides as follows:

On October 18, 2023, the Investors purchased additional debentures totaling $2,750,000 with a 10% original issue discount for gross proceeds of $2,500,000 (the “Third Tranche Debenture”). The Third Tranche Debentures were convertible into common shares at $262.00 per share and the Investors received an additional 6,202 warrants at a strike price of $262.00, which expire on April 18, 2027 (the “Third Tranche Warrants”). The issuance of the additional tranche triggered the down round provision, adjusting the exercise prices of the First and Second Tranche Debentures and the First and Second Tranche Warrants to $262.00. The transaction costs incurred in relation to third tranche were $31,915.

On November 30, 2023, the Investors purchased additional debentures totaling $2,750,000 with a 10% original issue discount for gross proceeds of $2,500,000 (the “Fourth Tranche Debenture”). The Fourth Tranche Debentures were convertible into common shares at $90.00 per share and the Investors received an additional 19,861 warrants at a strike price of $90.00, which expire on May 30, 2027 (the “Fourth Tranche Warrants”). The issuance of the additional tranche triggered the down round provision, adjusting the exercise prices of the First, Second and Third Tranche Debentures and the First, Second and Third Tranche Warrants to $90.00. The transaction costs incurred in relation to fourth tranche were $30,040.

On February 21, 2024, the Investors purchased additional debentures totaling $1,100,000 with a 10% original issue discount for gross proceeds of $1,000,000 (the “Fifth Tranche Debenture”). The Fifth Tranche Debentures were convertible into common shares at $21.40 per share and the Investors received an additional 33,411 warrants at a strike price of $23.54, which expire on August 21, 2027 (the “Fifth Tranche Warrants”). The issuance of the additional tranche triggered the down round provision, adjusting the exercise prices of the First, Second, Third and Fourth Tranche Debentures and the First, Second, Third and Fourth Tranche Warrants to $21.40. The transaction costs incurred in relation to fifth tranche were $50,000.

On April 11, 2024, the Investors purchased additional debentures totaling $550,000 with a 10% original issue discount for gross proceeds of $500,000 (the “Sixth Tranche Debenture”). The Sixth Tranche Debentures were convertible into common shares at $16.30 per share and the Investors received an additional 21,933 warrants at a strike price of $18.00, which expire on October 11, 2027 (the “Sixth Tranche Warrants”). The issuance of the additional tranche triggered the down round provision, adjusting the exercise prices of the First, Second, Third, Fourth and Fifth Tranche Debentures and Warrants to $16.30. The transaction costs incurred in relation to sixth tranche were $31,309.

On May 22, 2024, the Investors purchased additional debentures totaling $833,000 with a 10% original issue discount for gross proceeds of $750,000 (the “Seventh Tranche Debenture”). The Seventh Tranche Debentures were convertible into common shares at $10.00 per share and the Investors received an additional 54,145 warrants at a strike price of $11.00, which expire on November 22, 2027 (the “Seventh Tranche Warrants”). The issuance of the additional tranche triggered the down round provision, adjusting the exercise prices of the First, Second, Third, Fourth, Fifth and Sixth Tranche Debentures and the First, Second, Third, Fourth, Fifth and Sixth Tranche Warrants to $10.00. The transaction costs incurred in relation to seventh tranche were $3,154.

On January 16, 2025, institutional investors purchased additional debentures totaling $7,700,000 with a 10% original issue discount for gross proceeds of $7,000,000 (the “January 2025 Debenture”). The January 2025 Tranche Debentures were convertible into common shares at $2.62 per share and the Investors received an additional 1,910,306 warrants at a strike price of $2.882 (the “January 2025 Warrants”). The issuance of the additional tranche triggered the round down provision, adjusting the exercise price of the First, Second, Third, Fourth, Fifth, Sixth, and Seventh Tranche Debentures and First, Second, Third, Fourth, Fifth, Sixth, and Seventh Tranche Warrants to $2.62. The transaction costs incurred in relation to January 2025 tranche were $290,000 ($145,000 paid as of March 31, 2025).

On March 21, 2025, Investors purchased an additional tranche of $1,320,000 with a 10% original issue discount for gross proceeds of $1,188,000 (the “March 2025 Tranche Debenture”). The March 2025 Tranche Debentures were convertible into common shares at $1.99 per share and the Investors received an additional 431,159 warrants at a strike price of $1.99 (the “March 2025 Warrants”). The issuance of the additional tranche triggered the round down provision, adjusting the exercise price of the First, Second, Third, Fourth, Fifth, Sixth, Seventh, and Eighth Tranche Debentures and First, Second, Third, Fourth, Fifth, Sixth, Seventh, and January 2025 Tranche Warrants to $1.99.

During the year ended December 31, 2024, the Investors converted the full principal balance of the Third, Fifth, Sixth and Seventh Tranche Debenture which resulted in extinguishments of the existing debts (see below).

The First, Second, Third, Fourth, Fifth, Sixth and Seventh Tranche Debentures (the “Debentures”) have an interest rate of 5% for the first 12 months, 6% for the subsequent 12 months, and 8% per annum thereafter. Principal repayments will be made in 25 equal installments which began on September 1, 2022 for the First Tranche Debentures, July 1, 2023 for the Second Tranche Debentures, January 1, 2024 for the Third Tranche Debentures, May 1, 2024 for the Fourth Tranche Debentures, August 1, 2024 for the Fifth Tranche Debentures, October 1, 2024 for the Sixth Tranche Debentures and November 1, 2024 for the Seventh Tranche Debentures. The Debentures may be extended by nine months at the election of the Company by paying a sum equal to nine months’ interest on the principal amount outstanding at the end of the 18 th month, at the rate of 8% per annum.

The January 2025 and March 2025 Tranche Debentures (the “2025 Debentures”) have an interest rate of 5% for the first 12 months, and 8% per annum thereafter. Principle repayments will be made in 25 equal installments which begin on April 1, 2025 for the January 2025 tranche and July 1, 2025 for the March 2025 Tranche Debenture. The maturity dates are January 17, 2026 and March 21, 2026 for the January 2025 tranche and March 2025 tranche respectively, at which time the outstanding debt balance is due. The 2025 Debentures may be extended by six months to July 16, 2026 for the January 2025 Tranche Debentures, and September 21, 2026 for the March 2025 Tranche Debentures at the election of the Company by paying a sum equal to six months interest at the principal amount outstanding at the end of the 12 th month, at the rate of 8% per annum.

The following table summarizes our outstanding debentures as of the dates indicated:

During the three months ended March 31, 2025, the Investors converted $380,000 of principal (March 31, 2024 – $1,760,290) and $21,860 of interest (March 31, 2024 - $92,880) into shares of the Company resulting in a $86,563 (March 31, 2024 - $272,732 loss) gain on the conversion of convertible debentures. During the three months ended March 31, 2025, the Company incurred $971,343 (March 31, 2024 - $1,364,205) in accretion interest and made $135,260 of cash repayments (March 31, 2024 - $668,568).

During the three months ended March 31, 2024, the Investors converted $2,200,657 of the First and Second Tranche Debentures into 87,584 shares of the Company. The conversions were determined to be an extinguishment of the existing debt and issuance of new debt. As a result, the Company recorded a loss on debt extinguishment in the amount of $410,433.

11. CONTRACT BALANCES

As at March 31, 2025*,*contract balances consisted of $Niladvance payments for product sales not yet delivered, which are recognized as a contract liability (December 31, 2024 - $Nil).

12. LONG TERM LOAN

During the year ended December 31, 2020, the Company entered into a loan agreement with Alterna Bank for a principal amount of $27,824 (CAD$40,000) (December 31, 2024 - $27,799 (CAD$40,000)) under the Canada Emergency Business Account Program (the “Program”).

The Program, as set out by the Government of Canada, requires that the funds from this loan shall only be used by the Company to pay non-deferrable operating expenses including, without limitation, payroll, rent, utilities, insurance, property tax and regularly scheduled debt service, and may not be used to fund any payments or expenses such as prepayment/refinancing of existing indebtedness, payments of dividends, distributions and increases in management compensation.

In April 2021, the Company applied for an additional loan with Alterna Bank under the Program and received $13,912 (CAD$20,000) (December 31, 2024 - $13,900 (CAD$20,000)). The expansion loan is subject to the original terms and conditions of the Program.

The loan was interest free for an initial term that ended on January 18, 2024. Any outstanding loan after initial term carries an interest rate of 5% per annum, payable monthly during the extended term i.e. January 19, 2024 to December 31, 2025. The loan is due December 31, 2026.

The balance as at March 31, 2025 was $41,736 (CAD $60,000) (December 31, 2024 was $41,699 (CAD $60,000)).

13. DERIVATIVE LIABILITIES

Warrant Liabilities

As at March 31, 2025, the Warrant Liabilities represent aggregate fair value of 200 warrants issued in a private placement (“Private Placement Warrants”),822 First Tranche Warrants,532 Second Tranche Warrants,6,202 Third Tranche Warrants,19,861 Fourth Tranche Warrants,33,411 Fifth Tranche Warrants,21,933 Sixth Tranche Warrants,54,145 Seventh Tranche Warrants,1,910,306 January 2025 Tranche Warrants, and 431,159 March 2025 Tranche Warrants (“Debenture Warrants”).

As of March 31, 2025, the fair value of the IPO Warrants and Rep Warrants amounted to $22 (December 31, 2024 - $21). The Rep Warrants were exercisable one year from the effective date of the IPO registration statement, expiring three years after the effective date. As of July 16, 2024,645 Company warrants issued as part of its IPO expired which consisted of publicly traded 618 Series A warrants (“IPO Warrants”) and 27 representative’s warrants (“Rep Warrants”). The expiry resulted in a gain on extinguishment of warrant liability of $14,769.

As of March 31, 2025, the fair value of the Private Placement Warrants amounted to $23 (December 31, 2024 - $23). As at March 31, 2025 the Company utilized the Black-Scholes option-pricing model for the Private Placement Warrants and used the following assumptions: stock price $1.10 (December 31, 2024 - $0.47), dividend yield –nil (December 31, 2024 –nil), expected volatility 100% (December 31, 2024 –105%), risk free rate of return 3.82% (December 31, 2024 –3.88%), and expected term of 1 year (December 31, 2024 – expected term of 1.50 years).

As at March 31, 2025 the First Tranche Warrants had a fair value that amounted to $761 (December 31, 2024 - $24,000). As at March 31, 2025 the Company utilized the Monte Carlo option-pricing model to value the First Tranche Warrants using the following assumptions: stock price $1.10 (December 31, 2024 - $2.37), dividend yield –nil (December 31, 2024 –nil), expected volatility 105.0% (December 31, 2024 –90.0%), risk free rate of return 3.90% (December 31, 2024 –4.16%), and expected term of 0.75 years (December 31, 2024 – expected term of 1 year).

As at March 31, 2025 the Second Tranche Warrants had a fair value that amounted to $591 (December 31, 2024 - $15,000). As at March 31, 2025 the Company utilized the Monte Carlo option-pricing model to value the Second Tranche Warrants using the following assumptions: stock price $1.10 (December 31, 2024 - $2.37), dividend yield –nil (December 31, 2024 –nil), expected volatility 105.0% (December 31, 2024 –95.0%), risk free rate of return 3.72% (December 31, 2024 –4.21%), and expected term of 1.80 years (December 31, 2024 – expected term of 1.55 years).

As at March 31, 2025 the Third Tranche Warrants had a fair value that amounted to $4,230 (December 31, 2024 - $192,000). As at March 31, 2025 the Company utilized the Monte Carlo option-pricing model to value the Third Tranche Warrants using the following assumptions: stock price $1.10 (December 31, 2024 - $2.37), dividend yield –nil (December 31, 2024 –nil), expected volatility 105.0% (December 31, 2024 –95.0%), risk free rate of return 3.89% (December 31, 2024 –4.26%), and expected term 2.05 years (December 31, 2024 – expected term of 2.30 years).

As at March 31, 2025 the Fourth Tranche Warrants had a fair value that amounted to $12,380 (December 31, 2024 - $724,000). As at March 31, 2025 the Company utilized the Monte Carlo option-pricing model to value the Fourth Tranche Warrants using the following assumptions: stock price $1.10 (December 31, 2024 - $2.37), dividend yield –nil (December 31, 2024 –nil), expected volatility 100.0% (December 31, 2024 –90.0%), risk free rate of return 3.89% (December 31, 2024 –4.20%), and expected term of 2.17 years (December 31, 2024 – expected term of 2.42 years).

As at March 31, 2025 the Fifth Tranche Warrants had a fair value that amounted to $22,560 (December 31, 2024 - $111,000). As at March 31, 2025 the Company utilized the Monte Carlo option-pricing model to value the Fifth Tranche Warrants using the following assumptions: stock price $1.10 (December 31, 2024 - $2.37), dividend yield –nil (December 31, 2024 –nil), expected volatility 105.0% (December 31, 2024 –95.0%), risk free rate of return 3.89% (December 31, 2024 –4.26%), and expected term of 2.39 years (December 31, 2024 – expected term of 2.64 years).

As at March 31, 2025 the Sixth Tranche Warrants had a fair value that amounted to $15,670 (December 31, 2024 - $73,000). As at March 31, 2025 the Company utilized the Monte Carlo option-pricing model to value the Sixth Tranche Warrants using the following assumptions: stock price $1.10 (December 31, 2024 – $2.37), dividend yield –nil (December 31, 2024 –nil), expected volatility 105.0% (December 31, 2024 –95.0%), risk free rate of return 3.89% (December 31, 2024 –4.27%), and expected term of 2.53 years (December 31, 2024 – expected term of 2.78 years).

As at March 31, 2025 the Seventh Tranche Warrants had a fair value that amounted to $36,620 (December 31, 2024 - $170,000). As at March 31, 2025 the Company utilized the Monte Carlo option-pricing model to value the Seventh Tranche Warrants using the following assumptions: stock price $1.10 (December 31, 2024 – $2.37), dividend yield –nil (December 31, 2024 –nil), expected volatility 105.0% (December 31, 2024 –95.0%), risk free rate of return 3.89% (December 31, 2024 –4.27%), and expected term of 2.64 years (December 31, 2024 – expected term of 2.89 years).

As at March 31, 2025 the January 2025 Tranche Warrants had a fair value that amounted to $1,364,830 (January 16, 2025 - $3,722,310). As at March 31, 2025 the Company utilized the Monte Carlo option-pricing model to value the Eighth Tranche Warrants using the following assumptions: stock price $1.10 (January 16, 2025 – $2.63), dividend yield –nil (January 16, 2025 –nil), expected volatility 100.0% (January 16, 2025 –100.0%), risk free rate of return 3.90% (January 16, 2025 –4.32%), and expected term of 3.30 years (January 16, 2025 – expected term of 3.50 years).

As at March 31, 2025 the March 2025 Tranche Warrants had a fair value that amounted to $329,850 (March 21, 2025 - $428,350). As at March 31, 2025 the Company utilized the Monte Carlo option-pricing model to value the Ninth Tranche Warrants using the following assumptions: stock price $1.10 (March 21, 2025 – $1.42), dividend yield –nil (March 21, 2025 –nil), expected volatility 100.0% (March 21, 2025 –100.0%), risk free rate of return 3.91% (March 21, 2025 –3.94%), and expected term of 3.47 years (March 21, 2025 – expected term of 3.49 years).

Debenture Convertible Feature

As at March 31, 2025 the fair value of the First Tranche Debentures’ convertible feature amounted to $2,057 (December 31, 2024 – $164,000). The Company utilized the Monte Carlo option-pricing model for valuing the convertible feature using the following assumptions: stock price $1.10 (December 31, 2024 - $0.47), dividend yield –nil (December 31, 2024 –nil), expected volatility 100.0% (December 31, 2024 –100.0%), risk free rate of return 3.82% (December 31, 2024 –5.03%), discount rate 12.25% (December 31, 2024 –17.50%), and expected term of 0.15 year (December 31, 2024 –1 year).

As at March 31, 2025 the fair value of the Second Tranche Debentures’ convertible feature amounted to $1,714 (December 31, 2024 – $429,000). The Company utilized the Monte Carlo option-pricing model for valuing the convertible feature using the following assumptions: stock price $1.10 (December 31, 2024 – $0.47), dividend yield –nil (December 31, 2024 –nil), expected volatility 100.0% (December 31, 2024 –105.0%), risk free rate of return 3.82% (December 31, 2024 –4.51%), discount rate 12.25% (December 31, 2024 –17.50%), and expected term of 0.15 years (December 31, 2024 –1.55 years).

As at March 31, 2025 the fair value of the Fourth Tranche Debentures’ convertible feature amounted to $91,000 (December 31, 2024 – $317,000). The Company utilized the Monte Carlo option-pricing model for valuing the convertible feature using the following assumptions: stock price $1.10 (December 31, 2024 - $2.37), dividend yield –nil (December 31, 2024 –nil), expected volatility 100.0% (December 31, 2024 –90%), risk free rate of return 4.01% (December 31, 2024 –4.20%), discount rate 11.25% (December 31, 2024 –11.25%), and expected term of 1.17 years (December 31, 2024 –1.42 years).

As at March 31, 2025 the fair value of the Eighth Tranche Debentures’ convertible feature amounted to $728,000 (January 16, 2025 - $1,012,000). The Company utilized the Monte Carlo option-pricing model for valuing the convertible feature using the following assumptions: stock price $1.10 (January 16, 2025 – $2.63), dividend yield –nil (January 16, 2025 –nil), expected volatility 100.0% (January 16, 2025 –100.0%), risk free rate of return 4.11% (January 16, 2025 –4.18%), discount rate 11.25% (January 16, 2025 –10.75%), and expected term of 0.79 years (January 16, 2025 –1.00 years).

As at March 31, 2025 the fair value of the Ninth Tranche Debentures’ convertible feature amounted to $165,000 (March 21, 2025 - $171,000). The Company utilized the Monte Carlo option-pricing model for valuing the convertible feature using the following assumptions: stock price $1.10 (March 21, 2025 – $1.42), dividend yield –nil (March 21, 2025 –nil), expected volatility 100.0% (March 21, 2025 –100.0%), risk free rate of return 4.04% (March 21, 2025 –4.04%), discount rate 11.25% (March 21, 2025 –11.00%), and expected term of 0.98 years (March 21, 2025 –1.00 years).

During the year ended December 31, 2024, the Investors converted the full principal balance of the Third, Sixth and Seventh Tranche Debenture which resulted in an extinguishment of the existing debt and convertible feature. On March 31, 2024, the fair value of the Third Tranche Debentures’ convertible feature amounted to $618,000. The Company utilized the Monte Carlo option-pricing model for valuing the convertible feature using the following assumptions: stock price $0.18, dividend yield – nil, expected volatility 95.0%, risk free rate of return 4.59%, discount rate 18.00%, and expected term of 2.05 years. On April 11, 2024, the fair value of the Sixth Tranche Debentures’ convertible feature amounted to $197,000. The Company utilized the Monte Carlo option-pricing model for valuing the convertible feature using the following assumptions: stock price $16.00, dividend yield –nil, expected volatility 95.0%, risk free rate of return 4.85%, discount rate 19.00%, and expected term of 2.50 years. On May 22, 2024, the fair value of the Seventh Tranche Debentures’ convertible feature amounted to $295,000. The Company utilized the Monte Carlo option-pricing model for valuing the convertible feature using the following assumptions: stock price $10.00, dividend yield –nil, expected volatility 95.0%, risk free rate of return 4.75%, discount rate 19.00%, and expected term of 2.50 years.

During the three months ended March 31, 2025, a debt extinguishment of $115,384 occurred for the increase in principal of tranche 4 of 15%.

The IPO Warrants, Rep Warrants, and Private Placement Warrants (the “Equity Warrants”) are classified as Level 1 financial instruments, while the Debenture Warrants and Debenture Convertible Feature are classified as Level 3 financial instruments.

Changes in the fair value of the Company’s financial instruments for the three months ended March 31, 2025 and 2024 were as follows:

Due to the expiry date of the warrants and conversion feature being greater than one year, the liabilities have been classified as non-current.

14. SHARE CAPITAL

On June 17, 2024 the Company’s Board of Directors authorized a share repurchase program (the “Repurchase Program”) under which the Company may repurchase up to $1 million of its outstanding common shares, for a period of six months, subject to contractual requirements. No shares were repurchased under the Repurchase Program.

As at March 31, 2025, the Company owed $44,214 worth of stock-based compensation to a former officer of the Company. The balance issuable was classified as anObligation to issue shares.

Basic and diluted net loss per share represents the loss attributable to shareholders divided by the weighted average number of shares and prefunded warrants outstanding during the period on an as converted basis.

15. REVENUE

For the three months ended March 31, 2025, the Company sold hydroxyl generating devices and participated in bitcoin mining activities. The Company’s revenue is as follows:

16. LEASES

The components of lease expenses were as follows:

On March 31, 2024, the Company terminated its short-term office lease.

17. COMMITMENTS AND CONTINGENCIES

Debenture principal repayments

The following table summarizes the future principal payments related to our outstanding debt as of March 31, 2025:

Contingencies

Litigation

On August 11, 2023, AgriFORCE’s former CEO, Ingo Wilhelm Mueller filed a Notice of Civil Claim in which he alleges that AgriFORCE wrongfully terminated his employment without notice, in breach of the parties’ underlying employment agreement. Mr. Mueller alleges to have suffered damages including, among other things, a loss of base salary of $473,367 CAD per annum and damages from not receiving common stock of AgriFORCE equivalent in value to $468,313 CAD. AgriFORCE’s position is that Mr. Mueller was terminated for ‘just cause’ because he breached his fiduciary duty to act in AgriFORCE’s best interest by, among other things, submitting a sizeable bid for the acquisition of a company without first obtaining Board approval. In doing so, Mr. Mueller misrepresented AgriFORCE’s financial standing and forged, or instructed others to forge, a document by affixing the electronic signature of AgriFORCE’s CFO.

As at December 31, 2023, the parties were in the discovery stage of litigation. AgriFORCE has produced relevant documents to Mr. Mueller, and is awaiting Mr. Mueller’s production of relevant documents. The parties are also in the process of scheduling examinations for discovery. Management is instructing counsel to advance the matter given the relative strength of AgriFORCE’s case.

The likelihood of an unfavorable outcome is not probable given the facts supporting AgriFORCE’s ‘for cause’ termination of Mr. Mueller as well as the significant expense that Mr. Mueller would have to incur to advance this matter to trial.

On September 31, 2023, Stronghold filed a Complaint with the Superior Court of California for Breach of Contract; Breach of the Covenant of Good Faith and Fair Dealing; and Common Count: Goods and Services Rendered in relation to the purchase and sale agreement for the Coachella property. Stronghold alleges that AgriFORCE breached the PSA by failing to deposit certain stocks certificates into Escrow, failing to pay amounts owed for its costs incurred in connection with the Sellers Work, and for terminating the PSA despite Stronghold’s performance of the Sellers Work. Stronghold is claiming $451,684.00 plus interest in damages based on invoices it provided. AgriFORCE will dispute, among other things, the amount and invoices, estimating approximately $230,000 as Stronghold’s true expenses that may be claimed. The Company filed their answer on February 26, 2024. On January 17, 2025, the Company settled the complaint with Stronghold and agreed to pay Stronghold $20,833 monthly for 12 months beginning February 1, 2025.

On March 27, 2024, BV Peeters Advocaten-Avocats (“Peeters”) summoned the Company to appear on May 31, 2024 at the First Chamber of the Dutch-Speaking Division of the Business Court in Brussels. Peeters is seeking payment for €467,249 of unpaid bills for legal services plus penalties and interest. The Company believes that Peeters performed actions that were not in the Company’s best interest. The Company does not intend to pay the outstanding legal bills and intends to vigorously defend its position in court. The parties have agreed to go into mediation.

On July 11, 2024, AgriFORCE’s former General Counsel filed a Notice of Civil Claim with the Supreme Court of British Columbia, in which he alleges that AgriFORCE wrongfully terminated his employment without notice, in breach of the parties’ underlying employment agreement. Former General Counsel alleges to have suffered damages including, among other things, a loss of base salary of $250,000 CAD per annum, damages from not receiving common stock of AgriFORCE equivalent in value to $62,500 CAD, and damages from not receiving entitlement to the Company’s short-term incentive bonus of $90,563 CAD, and participation in the Company’s long-term incentive stock option program, and participation in the Company’s Group Benefits plan. The Company filed a response to the claim on August 2, 2024. AgriFORCE’s position is that General Counsel was terminated for ‘just cause’. On January 6, 2025, the Company settled the Civil Claim with the Company’s former General Counsel and agreed to pay a settlement amount of $160,000 CAD to the Company’s former General Counsel.

18. SEGMENTED INFORMATION

The Company has chosen to organize its operating segments based on products or services offered. Each operating segment is also a reportable segment (i.e. operating segments have not been aggregated). The Company’s operating and reportable segments at March 31, 2025, include Unthink Food, which produces high protein baking flour; Radical Clean Solutions, which sells its patented hydroxyl devices; and Bitcoin Mining. All other activities, including financing, are carried out through the corporate entity. At March 31, 2025, Bitcoin Mining operations were conducted at the Redwater Property in Alberta, Canada, and the Bald Eagle Property in Ohio, USA, which reflects the manner in which the Company’s Chief Operating Decision Maker (“CODM”), its Chief Executive Officer, reviews and assesses the performance of the business and allocates resources.

The information used by the CODM to assess performance and allocate resources includes various measures of segment profit, however, for the purposes of the disclosures required by ASC 280, Segment Reporting and ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, the Company has determined that the measure most consistent with the measurement principles used in measuring the corresponding amounts in the condensed consolidated unaudited financial statements is net income. Segment financial information is used to monitor forecast versus actual results in order to make key operating decisions for each segment. The CODM evaluates the performance or allocate resources for each segment based on the Company’s assets or liabilities.

The following discloses key financial information including the significant segment expenses, in the context of deriving net income, that are regularly provided to and reviewed by the CODM reconciled to the segment’s net income:

Other segment items consists of loss on disposition of property, plant and equipment, change in fair value of derivatives, impairment loss, interest income, and foreign exchange (loss) gain, as reported on the condensed consolidated unaudited income statements. following table summarizes the additions to property and equipment, total property and equipment, and total assets by segment, used by the CODM to assess segment performance.

The following tables summarize revenue, assets, and property, plant, and equipment by geographic area based on the location of the underlying action activity or rendering of services and location of the underlying assets:

The revenues for the Radical Clean Solutions segment were generated from one customer for the periods ended March 31, 2025 and 2024.

The revenues for the Bitcoin mining segment were generated from Bitcoin network.

19. SUBSEQUENT EVENTS

From April 1, 2025 through May 15, 2025, the Company issued 817,087 common shares upon conversion of convertible debt (principal and interest of $1,214,047).

On April 22, 2025, an Investor purchased a promissory note of $290,000. The promissory note has an original issue discount of $40,000 and a one-time interest charge of 12% ($34,800).

On May 1, 2025, the Company issued 117,206 common shares to the Executive Chair of the Company for completion of certain milestones.

On May 1, 2025, the Company issued 141,289 common shares to an executive of the Company as part of compensation to Company officers.

On May 9, 2025, the Company issued 50,000 common shares upon exercise of warrants.