Financial statements
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INEO Tech Corp. Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian Dollars)
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Baker Tilly WM LLP 900 – 400 Burrard Street Vancouver, British Columbia Canada V6C 3B7 T: +1 604.684.6212 F: +1 604.688.3497 vancouver@bakertilly.ca www.bakertilly.ca Baker Tilly WM LLP is a member of Baker Tilly Canada Cooperative, which is a member of the global network of Baker Tilly Inte rnational Limited. All members of Baker Tilly Canada Cooperative and Baker Tilly International Limited are separate and independent legal entities. INDEPENDENT AUDITOR’S REPORT To the Shareholders of INEO Tech Corp.: Opinion We have audited the consolidated financial statements of INEO Tech Corp. and its subsidiaries (together the “Company”), which comprise the consolidated statements of financial position as at June 30, 2025 and 2024, and the consolidated statements of loss and comprehensive loss, consolidated statements of shareholders’ equity (deficiency) and consolidated statements of cash flows for the years then ended, and notes to the consolidated financial statements, including material accounting policy information. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at June 30, 2025 and 2024, and its consolidated financial performance and its consolidated cash flows for the year s then ended in accordance with IFRS Accounting Standards. Basis for Opinion We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Material Uncertainty Related to Going Concern We draw attention to Note 1 in the consolidated financial statements, which describes the conditions indicating that a material uncertainty exists that may cast significant doubt on the C ompany’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended June 30, 202 5. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Except for the matter described in the Material Uncertainty Related to Going Concern section of our auditor’s report, we have determined that there are no other key audit matters to communicate in our report.
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Other Information Management is responsible for the other information. The other information comprises the information included in the Management’s Discussion and Analysis filed with the relevant Canadian securities commissions. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit and remain alert for indications that the other information appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are re quired to report that fact in this auditor’s report. We have nothing to report in this regard. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting un less management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company’s financial reporting process. Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assu rance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to p rovide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
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• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s a bility to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Company as a basis for forming an opinion on the group financial statements. We are responsible for the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our i ndependence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The engagement partner on the audit resulting in this independent auditor's report is Doris Yingying Cen. CHARTERED PROFESSIONAL ACCOUNTANTS Vancouver, B.C. October 27, 2025
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INEO Tech Corp. Consolidated Statements of Financial Position (Expressed in Canadian dollars) 1 Notes June 30, 2025 June 30, 2024 Assets Current assets Cash 110,909 - Accounts and other receivables 5 205,559 108,956 Due from related party 18 206,625 - Prepaid expenses 7 7,523 7,534 Inventory 6 267,012 216,323 797,628 332,813 Non-current assets Notes receivable 8 - 28,910 Equipment 9 1,820,376 1,527,191 Right-of-use asset 21 26,300 20,701 Intangibles 4 - 1,085 1,846,676 1,577,887 Total assets 2,644,304 1,910,700 Liabilities and Shareholders' Equity (Deficiency) Current liabilities Bank indebtedness - 17,561 Payables and accrued liabilities 10 1,800,012 1,702,323 Loans payable to related parties 11 206,216 249,365 Interest payable 12,13,15 272,165 173,816 Note payable 12 892,752 - Current portion of bank loan payable 14 61,988 58,400 Due to related parties 18 12,036 33,698 Current portion of lease liability 22 30,399 27,266 3,275,568 2,262,429 Non-current liabilities Note payable 12 - 908,566 Convertible debentures 13 87,718 436,968 Non-current portion of bank loan payable 14 246,880 291,600 Government grant 15 120,000 120,000 454,598 1,757,134 Total liabilities 3,730,166 4,019,563 Shareholders' equity (deficiency) Share capital 16 19,403,380 14,968,979 Reserves 16 1,339,258 1,164,072 Equity conversion feature on convertible debentures 13 92,140 92,140 Deficit (21,920,640) (18,334,054) (1,085,862) (2,108,863) Total liabilities and shareholders' equity 2,644,304 1,910,700 Nature and continuance of operations (Note 1). Approved on behalf of the Board on October 27, 2025: Steve Matyas - Director Cameron Lawrence – Director The accompanying notes are an integral part of these consolidated financial statements.
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INEO Tech Corp. Consolidated Statements of Loss and Comprehensive Loss (Expressed in Canadian dollars) 2 For the years ended June 30 Notes 2025 2024 Sales 18, 24,25 1,410,270 1,357,642 Cost of Sales 24 (801,090) (916,192) Gross Profit 609,180 441,450 Expenses General and administrative 17 2,097,806 1,759,887 Selling 17 894,557 693,714 Research and development 17 792,123 757,819 3,784,486 3,211,420 Net loss before other income (expenses) (3,175,306) (2,769,970) Other Income (Expenses) Interest expense, net 8,11,12,13,14,15,22,23,24 (356,495) (284,628) Loss on loan forgiveness 8 (32,660) - Gain on loan modification 12 80,673 - Foreign exchange loss 24 (53,122) (28,465) Miscellaneous income (expenses), net 24 (49,676) (5,664) (411,280) (318,757) Loss and comprehensive loss (3,586,586) (3,088,727) Weighted average number of common shares outstanding - basic and diluted 125,036,725 76,143,709 Basic and diluted loss per share (0.03) (0.04) The accompanying notes are an integral part of these consolidated financial statements.
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INEO Tech Corp. Consolidated Statements of Shareholders’ Equity (Deficiency) (Expressed in Canadian dollars) 3 Notes Number of shares Amount Equity portion of convertible debentures Warrant reserves Share-based payment reserves Deficit Total shareholders' equity (deficiency) Balance, June 30, 2023 76,143,709 $14,968,979 - $255,295 $689,887 $(15,245,327) $668,834 Share-based payment 16 - - - - 202,231 202,231 Warrants issued for debt 13, 16 - - - 16,659 - - 16,659 Issuance of convertible debentures 13, 23 - - 92,140 - - - 92,140 Net loss and comprehensive loss - - - - - (3,088,727) (3,088,727) Balance, June 30, 2024 76,143,709 14,968,979 92,140 271,954 892,118 (18,334,054) (2,108,863) Share issuance during the year: Private placement 16 80,000,000 4,000,000 - - - - 4,000,000 Settlement of convertible debentures 13, 16, 23 6,201,975 434,401 - 434,401 Share-based payment 16, 17 - - - - 175,186 175,186 Net loss and comprehensive loss - - - - (3,586,586) (3,586,586) Balance, June 30, 2025 162,345,684 $19,403,380 $92,140 $271,954 $1,067,304 $(21,920,640) $(1,085,862) The accompanying notes are integral part of these consolidated financial statements .
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INEO Tech Corp. Consolidated Statements of Cash Flows (Expressed in Canadian dollars) 4 For the years ended June 30 2025 2024 Cash flows (used in) operating activities: Net loss for the year $(3,586,586) $(3,088,727) Items not involving cash: Amortization on equipment, and intangibles 479,293 388,202 Share-based payment 175,186 202,231 Interest expense 333,239 245,381 Accretion on convertible debentures 31,104 4,887 Amortization of right-of-use asset 47,001 31,052 Interest income on notes receivable (3,750) (3,517) Bad debt expense 8,304 17,958 Loss on loan forgiveness 32,660 - Gain on loan modification (80,673) - Change in non-cash operating working capital: Accounts and other receivables (104,907) 140,100 Due from related party (206,625) - Prepaid expenses 11 88,846 Inventory (50,689) 47,639 Payables and accrued liabilities 61,278 1,066,670 (2,865,154) (859,278) Cash flows (used in) investing activities: Purchase of equipment (771,392) (403,836) (771,392) (403,836) Cash flows (used in) financing activities: Loan received 20,000 54,500 Repayment of loan (74,500) - Proceeds from convertible debentures issuances - 570,000 Proceeds from bank loan 19,517 350,000 Repayment of bank loan (60,649) - Interest paid (66,625) (43,805) Payments for lease obligations (51,065) (42,280) Advances from related parties 190,833 33,698 Repayment to related parties (212,495) (9,950) Debt issuance cost - (29,120) Proceeds from issuance of shares 4,000,000 - 3,765,016 883,043 Change in cash 128,470 (380,071) (Bank indebtedness) Cash, beginning of year (17,561) 362,510 (Bank indebtedness) Cash, end of year $110,909 $(17,561) Supplemental cash flow information (Note 23). The accompanying notes are an integral part of these consolidated financial statements .
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 5 1. NATURE AND CONTINUANCE OF OPERATIONS INEO Tech Corp. (the “Company” or “INEO”) is a Canadian company incorporated under the laws of the Province of British Columbia on March 4, 2008. The Company’s shares trade on the TSX Venture Exchange (“TSX-V”) under the symbol ‘INEO.’ The Company’s registered head office is located at 105 – 19130 24 Avenue, Surrey, BC, V3Z 3S9. INEO is the inventor and operator of the INEO Media Network for retailers, which provides retail analytics and targeted advertising through its cloud -based IoT (Internet of Things) and AI (Artificial Intelligence) technology. The Company operates the INEO Media Network using a SaaS-based model for retail stores. These consolidated f inancial statements, including comparatives ( the ’ Financial Statements ’), have been prepared in accordance with IFRS Accounting Standards (“IFRS”) and interpretations of the IFRS Interpretations Committee (“IFRIC”) with the going concern assumption, which assumes that the Company will continue operations for the foreseeable future and, accordingly, will be able to realize its assets and discharge its liabilities in the normal course of operations. The Company’s ability to realize its assets and discharge its liabilities depends upon the Company obtaining the necessary financing and , ultimately, upon its ability to achieve profitable operations. For significant expenditures, the Company will depend on external capital. Such external capital will include the issuance of additional equity shares. There can be no assurance that capital will be available, as necessary, to meet the Company’s operating commitments and development plans. The issuance of additional equity securities by the Company may result in the dilution of current shareholders’ equity interests. The Company’s future capital requirements will depend on many factors, including the cash flows from its operating activities, costs of research and developing its products, operating costs, the current capital market environment, and global market conditions. The continued operations of the Company are dependent on its ability to generate re venues, develop a sufficient financing plan, receive continued financial support from related parties, complete sufficient public equity financing, and ultimately generate profitable operations in the future. The Company has no assurance that it will be successful in its efforts. If the Company cannot obtain financing in the amounts and on terms deemed acceptable, the business's future success could be adversely affected. These conditions result in material uncertainties , which may cast significant doubt on whether the Company will continue as a going concern.
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 6 2. BASIS OF CONSOLIDATION AND PREPARATION These Financial Statements have been prepared on a historical cost basis except for certain financial instruments, measured at fair value. In addition, the se Financial Statements have been prepared using the accrual basis of accounting, except for the cash flow information. These Financial Statements , except as otherwise stated, are presented in Canadian dollars and include the accounts of the Company and its wholly owned subsidiaries, each having a Canadian functional currency. Entity Parent Country of Incorporation Effective Interest INEO Solutions Inc. INEO Tech Corp. Canada 100% FG Manufacturing Inc. (“FG”) INEO Solutions Inc. Canada 100% These Financial Statements include the accounts of the Company and its subsidiaries of which it has control. IFRS 10 states that an investor has control over an investee if and only if the investor has the power over the investee and is able to use it to influence the amount of the investor’s returns. And that the investor has exposure or rights, to variable returns from its involvement with the investee. All intercompany balances, transactions, and any unrealized gains and losses arising from intercompany transactions have been eliminated. Use of estimates and judgments The preparation of these Financial Statements requires management to make judgments, estimates , and assumptions that affect the application of policies and reported amounts of assets, liabilities, revenues, and expenses. Estimates and associated assumptions applied in determining asset or liability values are based on historical experience and various other factors , including other sources that are believed to be reasonable under the circumstances but are not necessarily readily apparent or recognizable when such estimate or assumption is made. Actual results may differ from these estimates. The information about significant areas of estimation uncertainty considered by management in preparing the Financial Statements is as follows: Inventories Inventories are valued at the lower of cost and net realizable value. Cost of inventory includes cost of purchase (purchase price, import duties, transport, handling, and other costs directly attributable to the acquisition of inventories) and other costs incurred in bringing the inventories to their present location and condition. Net realizable value for inventories is the estimated selling price in the ordinary course of business, less the estimated completion costs and costs necessary to make the sale.
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 7 2. BASIS OF CONSOLIDATION AND PREPARATION (CONTINUED) Use of estimates and judgments (continued) Share-based payment Management assesses the fair value of stock options granted in accordance with the accounting policy stated in Note 3. The fair value of stock options granted is measured using the Black -Scholes Option Pricing Model, which was created to estimate the fair value of freely tradable, fully transferable options. The Company’s stock options have characteristics significantly different from those of traded options, and changes in the highly subjective input assumptions can materially affect the calculated values. Income taxes Tax provisions are based on enacted or substantively enacted laws. Changes in those laws could affect amounts recognized in profit or loss both in the period of change, which would include any impact on cumulative provisions, and in future periods. Deferred tax assets (if any) are recognized only to the extent it is considered probable that those assets will be recoverable. This involves assessing when those deferred tax assets are likely to reverse and a judgment as to whether or not there will be sufficient taxable profits available to offset the tax assets when they do reverse. This requires assumptions regarding future profitability and is therefore inherently uncertain. To the extent assumptions regarding future profitability change, there can be an increa se or decrease in the amounts recognized in respect of deferred tax assets and the amounts recognized in profit or loss in the year in which the change occurs. The information about significant areas of judgment considered by management in preparing the se Financial Statements is as follows: Convertible Debentures The component parts of convertible debentures are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. The classification of the conversion option as equity requires significant judgement in assessing whether the settlement would result in a fixed amount of cash for a fixed number of equity instruments.
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 8 3. MATERIAL ACCOUNTING POLICY INFORMATION Cash and cash equivalents Cash and cash equivalents include cash on hand and in banks and deposits, which are readily convertible to cash with original maturities of 3 months or less. Cash and cash equivalents are held with Canadian financial institutions. As at June 30, 2025, and 2024, there were no cash equivalents. Inventory The Company values inventories at the lower of cost and net realizable value. Cost includes the costs of purchases, net of vendor allowances, plus other costs, such as transportation, that are directly incurred to bring the inventories to their present location and condition. The Company uses the first in, first out (“FIFO”) method to determine the cost of inventories. The Company estimates net realizable value as the amount that inventories are expected to be sold while taking into consideration the estimated selling costs. Inventories are written down to net realizable value when the cost of inventories is estimated to be unrecoverable due to obsolescence, damage, or declining market prices. When the circumstances that previously caused inventories to be written down below cost no longer exist or when there is apparent evidence of an increase in selling price, the amount of the write-down previously recorded is reversed. Storage costs, indirect administrative overhead, and certain inventory sales costs are expensed in the period incurred. Financial instruments Classification The Company classifies its financial instruments in the following categories: at fair value through profit or loss (“FVTPL”), at fair value through other comprehensive income (loss) (“FVTOCI”) , or at amortized cost. The Company determines the classification of financial assets at initial recognition. The classification of debt instruments is driven by the Company’s business model for managing the financial assets and their contractual cash flow characteristics. Equity instruments that are held for trading a re classified as FVTPL. For other equity instruments, on the day of acquisition , the Company can make an irrevocable election (on an instrument -by- instrument basis) to designate them as at FVTOCI. Financial liabilities are measured at amortized cost unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives) or if the Company has opted to measure them at FVTPL. The following table shows the classification of financial instruments: Cash and bank indebtedness FVTPL Accounts and other receivables Amortized cost Note receivable Amortized cost Payables and accrued liabilities Amortized cost Convertible debentures Amortized cost Government grant Amortized cost Loans payable Amortized cost Note payable Amortized cost Interest payable Amortized cost Due to/from related parties Amortized cost Measurement Financial assets at FVTOCI Elected investments in equity instruments at FVTOCI are initially recognized at fair value plus transaction costs. Subsequently, they are measured at fair value, with gains and losses recognized in other comprehensive income (loss).
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 9 3. MATERIAL ACCOUNTING POLICIY INFORMATION (CONTINUED) Financial instruments (continued) Financial assets and liabilities at amortized cost Financial assets and liabilities at amortized cost are initially recognized at fair value plus or minus transaction costs, respectively, and subsequently carried at amortized cost less any impairment . Financial assets and liabilities at FVTPL Financial assets and liabilities carried at FVTPL are initially recorded at fair value , and transaction costs are expensed in the statements of loss and comprehensive loss. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in the statements of loss and comprehensive loss in the period in which they arise. Where management has opted to recognize a financial liability at FVTPL, any changes associated with the Comp any’s own credit risk will be recognized in the statements of loss and comprehensive loss. Impairment of financial assets at amortized cost The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost. At each reporting date, the Company measures the loss allowance for the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. Loss allowances are recognized on rece ivables for which the credit risk has not increased significantly since the initial recognition based on the twelve-month ECL. When there is a significant increase in the credit risk of receivables subsequent to the initial recognition, the Company shall recognize in the statements of loss and comprehensive loss, as an impairment gain or loss . Derecognition Financial assets The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire or when it transfers the financial assets and substantially all associated risks and rewards of ownership to another entity. Gains and losses on derecognition are generally recognized in the statements of loss and comprehensive loss. However, gains and losses on the derecognition of financial assets classified as FVTOCI remain within accumulated other comprehensive income (loss). Financial liabilities The Company derecognizes financial liabilities only when its obligations under the financial liabilities are discharged, canceled, or expired. Generally, the difference between the carrying amount of the financial liability derecognized and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognized in the statements of loss and comprehensive loss.
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 10 3. MATERIAL ACCOUNTING POLICY INFORMATION (Continued) Convertible Debentures The Company has unsecured convertible debenture s used for raising capital. The component parts of convertible debenture s issued by the Company are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. A conversion option that will be se ttled by the exchange of a fixed amount of cash or another financial asset for a fixed number of equity instruments issued by the Company is an equity instrument. The Company has determined that the conversion option meets the definition of equity. The Company initially recognized the host liability at amortized cost by calculating the present value using the effective interest rate at the time of transaction. The conversion feature is recognized as an equity component and is then measured at the residual amount, by deducting the amount calculated for the liability component from the fair value of the instrument as a whole . The transaction costs, including the warrants and finder’s fees, were allocated to the liability and the equity components in proportion to the proceeds. The Company subsequently measures the financial liability at amortized cost. Interest expense is recognized in general and administrative expenses. Leases The Company as a lessee The Company recognizes a right -of-use asset and corresponding lease liability at the commencement date , when the lessor makes the asset available for use. Lease payments are recognized in general and administrative expenses. Lease liability reflects the present value of the lease payments that are expected to be payable by the lessee over the lease term. The lease term reflects the period over which the lease payments are reasonably certain. The company subsequently measures the lease liability at amortized cost. Lease payments are discounted using the interest rate implicit in the lease, or if that rate cannot be determined, the lessee’s incremental borrowing rate at the lease inception date. Interest expense is recognized in general and administrative expenses. Right-of-use asset is measured at the initial amount of the lease liabilities and subsequently measured using the cost model. Right-of-use asset is measured at cost less accumulated amortization, accumulated impairment losses and any remeasurements of lease liabilities. The asset is depreciated on a straight -line basis over the shorter of the asset’s useful life and lease term. Amortization starts at the lease commencement date. The Company has elected to apply the practical expedient, under IFRS 16, not to recognize right -of-use assets and lease liabilities for short -term leases having a lease term of 12 months or less and leases of low -value assets. The lease payments associated with these leases are recognized as an expense on a straight -line basis over the term of the lease. Intangibles Intangibles arise from the purchase of a new business, existing franchises and software. Intangible assets acquired include domain names, websites, social media accounts, and customer listings. These are accounted for using the cost model where capitalized costs are amortized on a straight -line basis over their estimated useful life of three years.
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 11 3. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) Foreign currency translation These Financial Statements are presented in Canadian dollars, the Company’s and its subsidiaries’ functional and presentation currency. Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the transaction date. Foreign currency monetary items are re-translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the transaction date. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined. Exchange gains and losses arising from translation are recognized in profit or loss. Equipment On initial recognition, equipment is measured at cost, being the purchase price and directly attributable cost of acquisition or construction required to bring the asset to the location and condition necessary to be capable of operating in the manner intended by the Company, including appropriate bor rowing costs and the estimated present value of any future unavoidable costs of dismantling and removing items. The corresponding liability is recognized within provisions. Equipment is subsequently measured at cost less accumulated amortization, less any accumulated impairment losses. When parts of an item of equipment have different useful lives, they are accounted for as separate items (major components) of equipment. Gains and losses on disposal of an item of equipment are determined by comparing the proceeds from disposal with the carrying amount and are recognized net within other income in profit or loss. The amortization rates applicable to each category of equipment are as follows: Furniture and equipment - 20-50% declining balance Computer hardware - 55% declining balance Motor vehicle - 20% declining balance Installed units - 5-year straight line Share capital The Company records proceeds from the issuance of its common shares as equity. The Company has adopted a residual value method with respect to the measurement of shares and warrants issued as private placement units. The residual value method first allocates value to the most easily measurable component based on fair value and then the residual value, if any, to the less easily measurable component. The fair value of the common shares issued in the private placement was determined to be the most easily measurable component and were valued at their fair value, as determined by the closing quoted price on the issuance date. The remaining proceeds, if any, are allocated to the attached warrants. Any fair value attributed to the warrants is recorded as warrant reserve. Management does not expect to record a value for the warrant in most equity issuances as unit private placements are commonly priced at the market or at a permitted discount to market. However, when warrants are issued as transaction costs, the fair value of the warrants is measured using the Black -Scholes Option Pricing Model and is accounted for as a deduction from equity and from the financial liability at amortized cost, if compound financial instrument.
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 12 3. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) Share capital (continued) The amounts recorded in reserves with respect to the warrants are reclassified to share capital if the warrants are exercised. If the warrants expire or are cancelled/forfeited and unexercised, the related amount remains in warrant reserve. Incremental costs directly attributable to the issue of new common shares are shown in equity as a deduction, net of tax, from the proceeds. Common shares issued for consideration other than cash are valued based on their market value at the date that shares are issued. Share-based payments Share-based payments to employees are measured at the fair value of the instruments issued and amortized over the vesting periods. Share-based payments to non -employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued if it is determined that the fair value of the goods or services cannot be reliably measured and are recorded at the date the goods or services are received. The corresponding amount is recorded in the share-based payment reserve. The fair value of options is determined using the Black-Scholes Option Pricing Model. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognized for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest. The Company accounts for forfeitures as per the stock option agreement. Any previously recognized expense related to the unvested forfeited awards will be reversed during the period of forfeiture. Net loss per share Basic loss per share is calculated using the weighted average number of common shares outstanding during the period. Diluted loss per share is calculated using the treasury stock method. This method assumes that common shares are issued for the exercise of options, warrants , and convertible securities and that the assumed proceeds from the exercise of options, warrants , and convertible securities are used to purchase common shares at the average market price during the period. The difference between the num ber of shares assumed issued and the number of shares assumed purchased is then added to the basic weighted average number of shares outstanding to determine the fully diluted number of common shares outstanding. No exercise or conversion is assumed during the periods in which a net loss is incurred as the effect is anti-dilutive. Related party transactions Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered related if they are subject to common control, and related parties may be individuals or corporate entities. A transaction is a related party transaction when there is a transfer of resources or obligations between related parties.
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 13 3. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) Revenue recognition The Company recognizes revenue in accordance with IFRS 15 – Revenue from Contracts with Customers. Revenue represents the fair value of consideration received or receivable from customers for the transfer of control of goods or services by the Company. For each contract with a customer, the Company applies the following five step model: 1. Identify the contract with a customer; 2. Identify the performance obligation in the contract; 3. Determine the transaction price which takes into account estimates of variable consideration and the time value of money; 4. Allocate the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and 5. Recognize revenue when the performance obligation is satisfied and in a manner that depicts the transfer of the goods or services promised to the customer. The Company derives revenues from the sales of consumable loss prevention products and EAS system, installation services, advertising and licensing fees. Revenue from the sales of consumable loss prevention products and the EAS system is recognized when control of the products has been transferred to the customers which is at a point of time. Revenue from installation services is recognized when installation service is performed at a point of time. Advertising revenue is recognized over time throughout the contract based on agreed milestones for campaigns run on the INEO Welcoming Networks. Revenue from licensing fees with no further obligations to the Company is recognized upon granting the right to use intellectual property in accordance with the provisions of the licensing agreement. Warranties The warranty costs include the cost of labor, material, and related overhead necessary to repair a product during the warranty period. The warranty period is usually one to two years. There were $8,988 warranty expenditures during the year ended June 30, 2025 (June 30, 2024 - $34,475) which is included in the cost of sales.
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 14 3. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) Income taxes Income tax is recognized in profit or loss except to the extent that it relates to equity items, in which case it is recognized in equity. Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at year-end, adjusted for amendments to tax payable with regard to previous years. Deferred tax is recorded using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences do not result in deferred tax assets or liabilities: goodwill not deductible for tax purposes; the initial recognition of assets or liabilities that affect neither accounting profit (loss) nor taxable profit (loss); and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the financial position date. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis. Government assistance Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be met. When the grant relates to an expense item, it is recognized as a deduction against the related expense over the necessary period to match the grant systematically to the costs it intends to compensate. Where the grant relates to an asset, it reduces its carrying amount . Government assistance relating to future expenses is deferred and deducted against the related expenditures once incurred.
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 15 3. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) New accounting standards adopted during the year: The Company has adopted the following new or amended IFRS standards that are effective for the annual periods beginning on or after January 1, 2024. (a) Amendments to IAS 1 – Classification of Liabilities as Current or Non-current These amendments clarify that the classification of liabilities as current or non -current is based on rights that exist at the end of the reporting period. Specifically, a liability is classified as non -current if the entity has a substantive right to defe r settlement for at least twelve months after the reporting date. The adoption of this amendment did not have an impact on the Company’s consolidated financial statements. Standards, amendments and interpretations issued but not yet adopted (a) IFRS 18 Presentation and disclosure in financial statements (“IFRS 18”) In April 2024, the IASB issued IFRS 18 which replaces IAS 1. IFRS 18 introduces new requirements to improve the reporting of financial performance and give investors a better basis for analyzing and comparing companies. Specifically, it introduces: • three defined categories for income and expenses (operating, investing and financing) and requiring companies to provide new defined subtotals, including operating profit; • enhanced transparency of management -defined performance measures requiring companies to disclose explanations of those company-specific measures related to the statement of earnings; and • enhanced guidance on how companies aggregate and disaggregate information which apply to the financial statements and the notes. IFRS 18 is effective for annual reporting periods beginning on or after January 1, 2027, with early adoption permitted. The Company is assessing the potential impact of this new standard. In May 2024, the IASB issued amendments to IFRS 9, Financial Instruments, and IFRS 7, Financial Instruments: Disclosures to address the classification and measurement of financial instruments. The amendments clarify the date of derecognition of financial l iability settled via electronic cash transfers. An accounting policy option is also introduced to allow a company an earlier settlement date and derecognition of financial liability if specified criteria are met. The amendments are effective for annual rep orting periods beginning on or after 1 January 2026, with early adoption permitted. Management is currently evaluating the potential effects of the amendments, including those related to financial liabilities settled through electronic payment systems.
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 16 4. INTANGIBLES During the year ended June 30, 2025, the Company recognized $1,085 (June 30, 2024 - $2,169) in amortization related to the intangible assets. Intangible assets acquired include domain names, websites, social media accounts, and customer listings. The reconciliation of opening and closing balances of intangible follows: Cost Accumulated Amortization Carrying Amount Balance, June 30, 2023 $6,508 3,254 3,254 Additions - 2,169 - Balance, June 30, 2024 $6,508 $5,423 $1,085 Additions - 1,085 - Balance, June 30, 2025 $6,508 $6,508 - 5. ACCOUNTS AND OTHER RECEIVABLES June 30, 2025 June 30, 2024 Gross trade accounts receivable $187,311 $112,556 Less: estimated credit losses (8,591) (8,591) Net trade accounts receivable $178,720 $103,965 GST receivable 26,839 4,991 Total $205,559 $108,956 Reconciliation of expected credit loss is as follows: June 30, 2025 June 30, 2024 Beginning balance $8,591 $10,448 Written off receivables (8,304) (19,815) Bad debts expense 8,304 17,958 Ending balance $8,591 $8,591 6. INVENTORY Inventory of finished goods held by the Company as at June 30, 2025, was $267,012 (June 30, 2024 - $216,323). Finished goods inventory consists of Electronic Article Surveillance (“EAS”) products held for resale. During the year ended June 30, 2025 , the Company recognized $ 380,356 of inventory in cost of sales ( June 30, 2024 - $529,120).
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 17 7. PREPAID EXPENSES The components of prepaid expenses are as follows: June 30, 2025 June 30, 2024 Prepaid insurance $2,186 $3,498 Security deposit 1,363 615 Other prepaids 3,974 3,421 Total $7,523 $7,534 Other prepaid consist of advances to contractors and suppliers for goods and services delivered subsequent to the year ending June 30, 2025. 8. NOTE RECEIVABLE On May 3, 2023, a third party issued a promissory note in favour of the Company amounting to $25,000, with an initial maturity date on June 1, 2024. Subsequently, on May 8, 2024 , the Company entered into an extension agreement with the third party with a new maturity date of December 1, 2025. The unsecured promissory note bears an annual interest rate of 12% in the first year of the commitment period and 15% after that. During the year ended June 30, 2025, the interest income accrued from the note receivable amounted to $ 3,750 (June 30, 2024 - $3,517). On August 7, 2025, the Company settled the promissory note by forgiving all outstanding principal and accrued interest of $32,660. The reconciliation of opening and closing balances of note receivable follows: Amount Balance, June 30, 2023 $25,393 Interest accrued 3,517 Balance, June 30, 2024 28,910 Interest accrued 3,750 Loss on loan forgiveness (32,660) Balance, June 30, 2025 -
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 18 9. EQUIPMENT The movements in the balance of equipment is as follows: Furniture and Equipment R&D Equipment Computer Hardware Motor Vehicle Welcoming Pedestals - Installed Units WIP Installed Units Total Costs: Balance, June 30, 2023 $151,930 - $80,327 $13,800 $1,525,334 $283,872 $2,055,263 Additions - - - - 231,138 172,698 403,836 Transfer of WIP to Installed units - - - - 219,242 (219,242) - Balance, June 30, 2024 151,930 - 80,327 13,800 1,975,714 237,328 2,459,099 Additions 8,560 3,452 - - 474,387 284,994 771,393 Transfer of WIP to Installed units - - - - 260,432 (260,432) - Balance, June 30, 2025 160,490 3,452 80,327 13,800 2,710,533 261,890 3,230,492 Accumulated Depreciation: Balance, June 30, 2023 100,517 - 63,815 5,978 375,565 - 545,875 Amortization 18,676 - 3,264 1,430 362,663 - 386,033 Balance, June 30, 2024 119,193 - 67,079 7,408 738,228 - 931,908 Amortization 15,544 321 2,590 1,167 458,586 - 478,208 Balance, June 30, 2025 134,737 321 69,669 8,575 1,196,814 - 1,410,116 Net Book Value: June 30, 2024 $32,737 - $13,248 $6,392 $1,237,486 $237,328 $1,527,191 June 30, 2025 $25,753 $3,131 $10,658 $5,225 $1,513,719 $261,890 $1,820,376
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 19 10. PAYABLES AND ACCRUED LIABILITIES The components of accounts payable and accrued liabilities are as follows: June 30, 2025 June 30, 2024 Accounts payable $921,123 $1,008,173 Other payables due within one year - 25,000 Accrued liabilities 878,889 669,150 Total $1,800,012 $1,702,323 Accounts payable are generally non -interest bearing and are settled on 30 to 60 -day payment terms. Accrued liabilities include accruals for remuneration and benefits, other expenses billed, and collections received from customers for sales delivered after the reporting date. Accrued liabilities are generally settled within 12 months from year-end. On May 29, 2024, the Company received $25,000 short-term loan from an employee, bearing an annual interest rate of 12%. The loan was repaid in full on August 9, 2025. During the year ended June 30, 2025, the Company incurred $329 in interest expense (June 30, 2024 - $263). June 30, 2025 June 30, 2024 Interest payable on short term loan $592 $263 Interest paid on short term loan (592) - Total - $263 thx 11. LOANS PAYABLE TO RELATED PARTIES The Company entered into related party transactions with two officers. On December 16, 2016, INEO received $100,000 as a loan, bearing an annual interest rate of 12.5% from an officer of the Company . During the year ended June 30, 2024, INEO received an additional $ 54,500 as a loan, bearing an annual interest rate of 12.5% from the related parties. On July 24, 2024, the Company received $20,000 from a director, bearing an annual interest rate of 15%. The related party loans are due on demand and unsecured and proceeds were used for the Company’s operating expenses. The loans balance as at June 30, 2025, amounted to $206,216 (June 30, 2024 - $249,365). During the year ended June 30, 2025, the Company incurred $15,862 in interest expense (June 30, 2024 – $13,615). The reconciliation of opening and closing balances of loan s payable are as follows: Amount Balance, June 30, 2023 $181,250 Additional loan 54,500 Interest accrued 13,615 Balance, June 30, 2024 249,365 Interest accrued 15,862 Additional loan 20,000 Loan repayment (74,500) Interest paid (4,511) Balance, June 30, 2025 $206,216
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 20 12. NOTE PAYABLE On November 17, 2022, INEO received a $1,000,000 unsecured promissory note bearing an annual interest rate of 12.0% from a third party. Repayment of this note is due November 17, 2025. In connection with the note, the Company issued 1,428,571 common shares with a fair value of $171,428. The shares issued were considered debt issuance costs resulting in a discount and amortized using the effective interest method over the credit term of three (3) years with an effective annual interest rate of 19.60%. Pursuant to the agreement dated June 18, 2025, the Company amended its unsecured promissory note , extending the maturity date to May 17, 2026, and reducing the interest rate to 10%. In addition, the Company secured the $1,000,000 principal amount of the note under a general security agreement dated June 18, 2025. The recalculated effective interest is 23.62% over the remaining term of the note. The Company concluded that this was a non -substantive loan modification, and it recorded a modification gain of $80,673 during the year ended June 30, 2025. During the year ended June 30, 2025 , the Company incurred $ 184,037 in interest expense ( June 30, 2024 – $172,647). The details of the outstanding note as at June 30, 2025, are as follows: Balance as at June 30, 2025 Maturity date Interest rate Accrued interest Current portion Total Note - $1,000,000 17-May-26 10.00% - $1,000,000 $1,000,000 Interest payable 253,344 - 253,344 Discount on note - (26,575) (26,575) Loan modification (80,673) (80,673) Total $253,344 $892,752 $1,146,096 Balance as at June 30, 2024 Maturity date Interest rate Accrued interest Current portion Total Note - $1,000,000 17-Nov-25 12.00% - $1,000,000 $1,000,000 Interest payable 134,166 - 134,166 Discount on note - (91,434) (91,434) Total $134,166 $908,566 $1,042,732 The reconciliation of opening and closing balances of note payable follows: Note Payable Accrued Interest Total Balance, June 30, 2023 $856,112 $13,973 $870,085 Interest expense 52,454 120,193 172,647 Interest paid - - - Balance, June 30, 2024 $908,566 $134,166 $1,042,732 Interest expense 64,859 119,178 184,037 Interest paid - - - Gain on loan modification (80,673) - (80,673) Balance, June 30, 2025 $892,752 $253,344 $1,146,096
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 21 13. CONVERTIBLE DEBENTURES On January 11, 2024, the Company announced an offering of a non -brokered private placement of unsecured convertible debentures in the aggregate principal amount of up to $700,000. Each debenture will be convertible into common shares in the capital of the Company (each, a “Share”) at a conversion price of $0.085 per Share for the first year from the date of issuance and thereafter at an adjusted conversion price of $0.10 per Share until the date which is three (3) years from the date of issuance (the “Matur ity Date”) and bears interest at the rate of 12.0% per annum for a period expiring on the Maturity Date. Upon a change of control, the Company may also redeem the principal amount and any unpaid interest of the debentures in cash, without penalty, at any time before the Maturity Date by providing a ten (10) day notice period to the debenture holder by way of a written notice. In connection with the Offering, the Company paid finders’ fees to certain eligible finders, as permitted by the policies of the TSX Venture Exchange (the “Exchange”). The Shares issuable upon the conversion of the debentures will be subject to a statutory hold period of four (4) months plus a day from the date of issuance in accordance with applicable securities legislation. On January 31, 2024, the Company issued $510,000 convertible debentures with net proceeds of $485,680. The Company incurred $24,320 on finder’s fee and issued 286,116 share warrants. The warrants were valued $13,713 using the Black-Scholes Option Pricing Model with the following assumptions: volatility rate of 106.0%, risk-free rate of 3.77%, weighted average life of 3 years. Each warrant entitles the holder to purchase one common share at a price of $0.085 per share for a period of three years. On February 16, 2024, the Company issued $ 60,000 convertible debentures with net proceeds of $ 55,200. The Company incurred $ 4,800 on finder’s fee and issued 56,470 share warrants. The warrants were valued $2,946 using the Black-Scholes Option Pricing Model with the following assumptions: volatility rate of 106.0%, risk-free rate of 4.05%, weighted average life of 3 years. Each warrant entitles the holder to purchase one common share at a price of $0. 085 per share for a period of three years. The Company allocated $92,140 to the equity component of the debentures. The finder’s fee and share warrants issued were considered part of the debt issuance cost resulting to a discount and amortized using the effective interest method over the credit term of three (3) years with an effective annual interest rate of 17%. During the year ended June 30, 2025 , the Company incurred $ 69,346 in interest expense (June 30, 2024 – $39,003). During the year ended June 30, 2025, 6,201,975 shares were issued as redemption of $462,000 convertible debt and $ 54,047 interest by conversion. As of the year ended June 30 , 2025, the convertible debentures had a remaining principal balance of $108,000 (June 30, 2024 - $570,000).
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 22 13. CONVERTIBLE DEBENTURES (CONTINUED) Convertible Debentures Accrued Interest Discount on Debentures Balance, June 30, 2023 - - - Issuance of convertible debentures 570,000 - - Debt Issuance Cost - - - Finder's Fee (29,120) - (29,120) Warrants issued (16,659) - (16,659) Equity component on convertible debentures issued (92,140) - (92,140) Interest on convertible debentures - 34,116 - Accretion on convertible debentures 4,887 - 4,887 Balance, June 30, 2024 436,968 34,116 (133,032) Interest on convertible debentures - 38,242 - Accretion on convertible debentures 31,104 - 31,104 Settlement of convertible debentures (380,354) (54,047) 81,646 Balance, June 30, 2025 $87,718 $18,311 $(20,282) Convertible debentures, equity component, June 30, 2025 and June 30, 2024 $92,140 14. BANK LOAN PAYABLE On September 14, 2023, the Company received a secured bank loan amounting to $350,000 from the Business Development Bank of Canada (BDC). The loan is payable in 72 equal monthly installments starting July 31, 2024, to June 30, 2030 . The interest on the loan is equivalent to BDC’s Floating Base Rate plus a variance of 7.50% per year. During the year ended June 30, 2025 , the BDC’s Floating Base rate is at 7.05% and the Company incurred $49,742 in interest expense (June 30, 2024 - $46,420). Under the terms of existing debt agreements, the following are the three material covenants: (i) Guarantee of the CEO for 5.5% of the Loan amount outstanding on the date BDC demands payment under this guarantee ; (ii) Guarantee of the founder and CFO for 16.8% of the Loan amount outstanding on the date BDC demands payment under this guarantee and; (iii) General Security Agreement from the Company, providing a first security interest in all present and after -acquired personal property, except consumer goods, subject only to priority on inventory and receivables to lender extending line of credit. On October 23, 2024, the Company’s Business Line of Credit with Toronto -Dominion (TD) bank was converted to a business loan amounting to $19,517. The loan is payable in 60 equal monthly installments starting November 23, 2024 to October 23, 2029. The inter est on the loan is equivalent to TD’s Prime Rate plus 3.00% per annum. During the year ended June 30, 2025, the TD’s prime rate is at 5% and the Company incurred $1,027 in interest expense (June 30, 2024 - $Nil). Balance as at June 30, 2025 Maturity date Interest rate Current portion Long-term portion Total Bank loan payable - BDC 30-Jun-30 14.55% $58,320 $233,280 $291,600 Bank loan payable - TD 23-Oct-29 8.00% 3,668 13,600 17,268 Interest payable 39,515 72,014 111,529 Total $101,503 $318,894 $420,397
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 23 14. BANK LOAN PAYABLE (CONTINUED) Balance as at June 30, 2024 Maturity date Interest rate Current portion Long-term portion Total Bank loan payable - BDC 30-Jun-30 16.55% $58,400 $291,600 $350,000 Interest payable 52,738 119,510 172,248 Total $111,138 $411,110 $522,248 The reconciliation of the opening and closing balances of the bank loan follows: Principal Interest Total Balance, June 30, 2023 - - - Proceeds 350,000 - 350,000 Interest Expense - 46,420 46,420 Payment - (41,657) (41,657) Balance, June 30, 2024 $350,000 4,763 $354,763 Additional loan 19,517 - 19,517 Interest expense - 50,769 50,769 Payment (60,649) (55,532) (116,181) Balance, June 30, 2025 $308,868 - $308,868 15. GOVERNMENT GRANT Principal Interest Total Balance, June 30, 2023 111,380 - 111,380 Interest amortization 8,620 - 8,620 Interest expense - 2,656 2,656 Interest paid - (2,148) (2,148) Balance, June 30, 2024 $120,000 $508 $120,508 Interest expense - 5,992 5,992 Interest paid - (5,990) (5,990) Balance, June 30, 2025 $120,000 $510 $120,510 During the year ended June 30, 2021, FG Manufacturing and INEO Solutions applied and received $60,000 each under the Canada Emergency Business Account (CEBA) program which has no repayment terms and non - interest bearing during the initial term until Januar y 18, 2024. The Company has estimated the initial carrying value of each initial CEBA loan at $26,880 and additional loans at $15,408, using a discount rate of 15%, which was the estimated rate for a similar loan without the interest-free component. The difference will be accreted to each CEBA loan liability over the term of the CEBA Loan and offset to other income on the statements of loss and comprehensive loss.
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 24 15. GOVERNMENT GRANT (CONTINUED) On January 18, 2024, the remaining outstanding loan balance was converted into a term loan at a fixed interest rate of 5% per annum, due on December 26, 2026. Additionally, repaying the balance of the loan on or before said date will result in loan forgiveness of up to 33% or up to $20,000. Furthermore, CEBA loan holders who submit a refinancing loan application to their financial institution provider by January 18, 2024, requiring a grace period can still qualify for partial loan forgiveness if the outstan ding principal of their CEBA loan, plus any applicable interest is repaid by March 28, 2024 . The loan was not paid by the Company and did not qualify for the $20,000 loan forgiveness. During the year ended June 30, 2025, the total interest expense recognized for the CEBA grants amounted to $5,992 (June 30, 2024 - $2,656). 16. SHARE CAPITAL AND RESERVES Authorized share capital The Company's authorized share capital consists of an unlimited number of common shares without par value. Shares held in escrow On January 24, 2023, all common shares held in escrow were released to shareholders. As of June 30, 2025, nil shares were held in escrow (June 30, 2024 – nil shares held in escrow). Issued share capital The Company issued 80,000,000 common shares at $0.05 per share, with total consideration of $4,000,000. In addition, 6,201,975 shares were issued as redemption of $462,000 convertible debt and $54,047 interest by conversion during the year ended June 30, 2025. The Company had no capital stock transactions during the year ended June 30, 2024. Stock options The Company has adopted a stock option plan that allows the Company to issue options to certain directors, officers, employees, and consultants to acquire up to 10% of the issued and outstanding common stock. The exercise price of each option cannot be less than the market price of the Company's stock as calculated on the date of grant. The options can be granted for a maximum ter m of 10 years. Stock options granted under the plan vest immediately subject to vesting terms, which may be imposed at the directors' discretion. The summary of changes in stock options during the year ended June 30, 2025, and the year ended June 30, 2024, are as follows: June 30, 2025 June 30, 2024 Number of options Weighted average exercise price Number of options Weighted average exercise price Options outstanding, beginning 7,375,863 $0.19 6,930,863 $0.20 Options granted 9,730,000 0.06 815,000 0.05 Options forfeited (1,416,250) 0.08 (370,000) 0.19 Options outstanding, ending 15,689,613 $0.10 7,375,863 $0.19 Options exercisable, ending 4,959,613 $0.18 4,232,113 $0.24
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 25 16. SHARE CAPITAL AND RESERVES (CONTINUED) Details of options outstanding as at June 30, 2025, are as follows: Expiry date Number of options Weighted average exercise price Weighted average contractual life Number of options exercisable January 8, 2028 175,863 0.09 2.53 175,863 April 15, 2030 2,250,000 0.22 4.79 2,250,000 April 15, 2030 500,000 0.35 4.79 500,000 October 18, 2030 100,000 0.10 5.30 100,000 June 18, 2031 375,000 0.13 5.97 375,000 July 26, 2031 187,500 0.05 6.07 187,500 February 28, 2033 2,272,500 0.11 7.67 1,215,000 September 18, 2033 553,750 0.05 8.22 156,250 August 28, 2034 1,125,000 0.05 9.17 - February 3, 2035 7,550,000 0.07 9.60 - May 27, 2035 300,000 0.05 9.91 - June 19, 2035 300,000 0.05 9.98 - 15,689,613 $0.10 8.18 4,959,613 During the year ended June 30, 2025, the Company recognized share-based payment related to stock options of $175,186 (June 30, 2024 - $202,231). The fair value of stock options granted was determined using the Black- Scholes Option Pricing Model using the following assumptions: June 30, 2025 June 30, 2024 Expected life of options 10 years 10 years Annualized volatility 114% 106% Risk-free interest rate 2.99% 3.75% Dividend rate 0% 0% Exercise price 0.06 0.05 Stock price 0.07 0.05 Warrants The summary of changes in warrants during the year ended June 30, 2025, and the year ended June 30, 2024, are as follows: June 30, 2025 June 30, 2024 Number of warrants Weighted average exercise price Number of warrants Weighted average exercise price Warrants outstanding, beginning 8,528,807 $0.18 8,186,221 $0.18 Warrants issued - - 342,586 0.09 Warrants outstanding, ending 8,528,807 0.18 8,528,807 0.18 Warrants exercisable, ending 8,528,807 $0.18 8,528,807 $0.18
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 26 16. SHARE CAPITAL AND RESERVES (CONTINUED) Warrants (continued) Details of warrants outstanding as at June 30, 2025, are as follows: Expiry date Number of warrants Exercise price Number of warrants exercisable 17-Nov-25 7,262,500 $0.19 7,262,500 17-Nov-25 923,721 0.12 923,721 31-Jan-27 286,116 0.09 286,116 16-Feb-27 56,470 0.09 56,470 8,528,807 $0.18 8,528,807 17. BREAKDOWN OF EXPENSES General and administrative expenses are composed of the following: For the year ended June 30 2025 2024 Remuneration and benefits (Note 18) $884,455 $645,499 Amortization (Note 4, 9, 21) 526,294 419,251 Office expenses 228,711 263,316 Share-based payment (Note 16, 18) 148,232 148,777 Accounting and legal 191,707 162,786 Rent (Note 22) 67,286 55,513 Insurance 41,220 40,859 Bad debt (Note 5) 8,304 17,958 Interest on lease liability (Note 22) 1,597 5,928 Total $2,097,806 $1,759,887 Selling and marketing expenses are composed of the following: For the year ended June 30 2025 2024 Investor relations and corporate development $322,821 $110,730 Marketing and research 17,993 42,738 Remuneration and benefits 428,600 479,879 Share-based payment (Note 16) 12,605 27,197 Travel 112,538 33,170 Total $894,557 $693,714
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 27 17. BREAKDOWN OF EXPENSES (CONTINUED) Research and development expenses are composed of the following: For the year ended June 30 2025 2024 Consulting fees $126,656 $111,273 Remuneration and benefits 651,118 620,289 Share-based payment (Note 16) 14,349 26,257 Total $792,123 $757,819 18. RELATED PARTY TRANSACTIONS Key management personnel: Key management personnel include those persons having authority and responsibility for planning, directing , and controlling the activities of the Company as a whole. The Company has determined that key management personnel consist of executive and non-executive members of the Company’s Board of Directors and corporate officers. Amounts due to or from related parties are non-interest-bearing and unsecured unless specified. During the year ended June 30, 2025, the Company’s total advances received from the related parties were $190,833. Repayments made to the related parties were a total of $212,495 during the year. As at June 30, 2025, the Company has $12,036 due to the two officers of the Company (June 30, 2024 - $33,698). The Company recognized licensing revenue of $206,625 (June 30, 2024 – $Nil) from a related party by virtue of common director and significant influence. As at June 30, 2025, trade receivables from the related party were $206,625 (June 30, 2024 - $Nil). During the year ended June 30, 2025 , and 202 4, the Company incurred t he following key management compensation: For the year ended June 30 2025 2024 Remuneration and benefits $625,000 $505,654 Share-based payment 134,393 145,649 Total $759,393 $651,303
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 28 19. CAPITAL MANAGEMENT The Company considers the items in shareholders’ equity (deficiency) as capital, which was $1,085,862 deficit at June 30, 2025 (June 30, 2024 - $2,108,863 deficit). The Company’s objectives when managing capital are to support the further advancement of the Company’s business objectives and existing product lines, as well as to ensure that the Company can meet its financial obligations as they become due. The Company manages its capital structure to maximize its financial flexibility , adjusting it in response to changes in economic conditions and the risk characteristics of the underlying assets and business opportunities. The Company relies on the expertise of the Company’s management to sustain the future development of the business. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the Company's relative size , is reasonable. The approach to capit al management has not changed since the prior year, and the Company is not subjected to externally imposed capital requirements. 20. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT Fair value of financial instruments The Company’s financial instruments consist of cash , bank indebtedness , accounts and other receivable, note receivable, payables and accrued liabilities, due to/from related parties, loans payable, note payable, interest payable, convertible debentures, and government grants. Financial instruments recorded at fair value on the consolidated statements of financial position are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy are as follows: • Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities; • Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly (i.e., as prices) or indirectly (i.e., derived from prices); and • Level 3: Inputs that are not based on observable market data Cash under the fair value hierarchy is based on Level 1 quoted prices in active markets for identical assets or liabilities. Accounts and other receivables, note receivable, payables and accrued liabilities, due to/from related parties and loans payable approximate their fair value due to their short -term maturities. The fair value of convertible debenture s, note payable, bank loans payable, and government grants also approximates the carrying value since they are discounted using market rates.
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 29 20. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED) Financial and capital risk management The Company examines the various financial instruments and risks to which it is exposed and assesses the impact and likelihood of those risks. These risks include market risk, credit risk, and liquidity risk. These risks are reviewed and monitored by the Board of Directors. The Board of Directors has overall responsibility for the determination of the Company’s risk management objectives and policies. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Company’s competitiveness and flexibility. Discussions of risks associated with financial assets and liabilities are detailed below a) Market risk Market risk is the risk that a financial instrument's fair value or future cash flows will fluctuate because of changes in market prices or prevailing conditions. Market risk comprises three types of risk: currency risk, interest rate risk, and price risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. (i) Currency risk Currency risk is the risk of change in profit or loss that arises from fluctuations in foreign exchange rates and the degree of volatility of these rates. The Company’s exposure to the risk of changes in foreign exchange rates relates to its operational ac tivities. The Company does not use derivative instruments to reduce its exposure to foreign currency risk. The Company’s international sales and purchases of goods and services from foreign companies are denominated in US Dollars and are exposed to foreign exchange fluctuations. Due to these fluctuations, operating results may differ materially from expectations, resulting in significant gains and losses on the remeasurements associated with these transactions . The Company’s approach to management of foreign currency risk has not changed materially from that of the year ended June 30, 2024. As at June 30, 2025, and June 30, 2024, a summary of the quantitative information of the exposure due to foreign currencies is provided as follows: June 30, 2025 June 30, 2024 in US Dollar in US Dollar Cash $7,116 $181 Accounts receivable 239,865 15,959 Prepaid expenses 2,600 2,500 Accounts payable and accrued liabilities (281,463) (284,208) Net assets denominated in foreign currency $(31,882) $(265,568)
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 30 20. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED) Financial and capital risk management (continued) a) Market risk (continued) (i) Currency risk (continued) The most significant closing exchange rates and the approximate average exchange rates of Canadian Dollar per US dollar used in these Financial Statements were as follows: June 30, 2025 June 30, 2024 Currency Closing Average Closing Average U.S. Dollar 1.36 1.40 1.37 1.36 The Company estimates that a 10% increase (decrease) in applicable U.S. dollar exchange rates would impact loss and comprehensive loss by $4,350 (June 30, 2024 - $26,557). (ii) Interest rate risk Interest rate risk is the risk that future cash flows will fluctuate due to changes in market interest rates. As at June 30, 2025 , t he Company is expose d to interest rate risks primarily on the floating interest rate corresponding to $291,600 long-term bank loan with BDC (June 30, 2024 - $350,000) and on the prime rate corresponding to $19,517 long-term loan with TD bank (see Note 14). A 10% change in interest rates would not result in a material change in profit or loss. The Company’s approach to management of interest risk has not changed materially from that of the year ended June 30, 2024. (iii) Price risk Equity price risk is defined as the potential adverse impact on the Company’s earnings due to movements in individual equity prices or general movements in the level of the stock market. The Company does not hold any securities or investments which could expose it to stock prices volatility. The Company’s approach to management of price risk has not changed materially from that of the year ended June 30, 2024. b) Credit risk Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. All the Company’s cash is held through Canadian chartered banks ; accordingly, the Company’s exposure to credit risk is limited. The Company’s GST recoverable are refunds due from the Government of Canada, and the exposure to credit risk on these amounts is considered limited. The Company’s accounts receivable consists of amounts due from various customers. The maximum exposure to credit risk is equal to the carrying value of accounts receivable. The business models of the Company’s respective segments require credit risk analysis specific to each business line. The Company’s historic rate of bad debts is low. The Company’s approach to management of credit risk has not changed materially from that of the year ended June 30, 2024.
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 31 20. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED) Financial and capital risk management (continued) b) Credit risk (continued) The due date of these amounts can vary by agreement but in general, balances over 30 days are considered past due. The aging of the receivables is as follows: June 30, 2025 June 30, 2024 0 - 30 days $90,557 $46,456 31 - 90 days 7,948 30,340 Over 90 days 88,806 28,060 Total receivables before allowance for credit losses $187,311 $104,856 Less allowance for credit losses (8,591) (8,591) Receivables $178,720 $96,265 The Company applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits using the lifetime expected loss provision for all accounts receivable. To measure the expected credit losses, accounts receivable are assessed primarily on days past due combined with the Company’s knowledge of past bad debts. During the year ended June 30, 2025, expected credit losses for the Company were $8,591 (June 30, 2024- $8,591). c) Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. As at June 30, 2025, the Company has a cash balance of $110,909 (June 30, 2024 – -$17,561) and current liabilities balance of $3,275,568 (June 30, 2024 – $2,262,429). The Company manages its liquidity risk by attempting to maintain sufficient cash balances to enable settlement of transactions on the due date. As the Company has limited sources of revenue , additional financing is necessary to accomplish its long-term strategic objectives. The Company’s approach to management of liquidity risk has not changed materially from that of the year ended June 30, 2024. The following table summarizes the amount and the contractual maturities of the principal portion of significant financial liabilities on an undiscounted basis as at June 30, 2025: 2026 2027 2028 2029 2030 Total Convertible debentures - $108,000 - - - $108,000 Accounts payables and accrued liabilities 1,800,012 - - - - 1,800,012 Note payable 1,000,000 - - - - 1,000,000 Bank loan 61,988 62,291 62,619 62,976 58,994 308,868 Government grant - 120,000 - - - 120,000 Total $2,862,000 $290,291 $62,619 $62,976 $58,994 $3,336,880
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 32 21. RIGHT-OF-USE ASSET On March 6, 2020, the Company entered into a 5 -year lease agreement for leased premises in Surrey, British Columbia, commencing April 1, 2020, and ending on March 9, 2025. The minimum monthly base rent for years 1 to 5 of the 5-year lease is $3,290 for year 1, $3,360 for year 2, $3,430 for year 3, $3,500 for year 4, and $3,570 for year 5, respectively. In accordance with IFRS 16, the Company recognized a right-of-use asset of $155,260 as at March 6, 2020, equal to the present value of all remaining lease payments discounted at an incremental borrowing rate of 12.5%. On February 6, 2025, the Company entered into a modification of lease agreement with the landlord to extend the original lease for a period of six months . The minimum monthly base rent is $7,643 for the six months ending on October 31, 2025. The Company recognized a right -of-use asset and recalculated the lease liability over the remaining term. The Company depreciates the right-of-use assets on a straight-line basis over the lease term. Cost Amount Balance, June 30, 2023, 2024 $155,260 Additions 52,600 Balance, June 30, 2025 $207,860 Accumulated amortization Balance, June 30, 2023 $(103,507) Amortization (31,052) Balance, June 30, 2024 (134,559) Amortization (47,001) Balance, June 30, 2025 $(181,560) Net carrying amount Balance, June 30, 2024 $20,701 Balance, June 30, 2025 $26,300 22. LEASE LIABILITY The lease liability is initially measured at the present value of the lease payments to be made over the lease term, using the effective interest method for the present value determination. As the rate implicit in the lease cannot be readily determined, the Co mpany applied an average incremental borrowing rate. The Company used a discount rate of 12.5% to calculate the present value of its lease payments. Total interest expense on lease liabilities for the year ended June 30, 2025, was $1,598 (June 30, 2024 - $5,928). The Company applied a 2.75% incremental borrowing rate at the modification date, based on the 6 -month government treasury bill interest rate. The following table represents the lease obligation for the Company: June 30, 2025 June 30, 2024 Current $30,399 $27,266 Non-current - - Total lease obligation $30,399 $27,266
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 33 22. LEASE LIABILITY (CONTINUED) The following table shows the roll forward of lease obligations for the year ended June 30, 2025, and for the year ended June 30, 2024: June 30, 2025 June 30, 2024 Beginning balance $27,266 $63,618 Additions 52,600 - Interest expense 1,598 5,928 Lease payments (51,065) (42,280) Ending balance $30,399 $27,266 The following table presents the contractual undiscounted cash flows for lease obligation for the year ended June 30, 2025 and for the year ended June 30, 2024: June 30, 2025 June 30, 2024 Less than one year $30,573 $28,560 One to five years - - Total undiscounted lease obligation $30,573 $28,560 During the year ended June 30, 2025, the Company expensed $67,286 in short-term and low-value leases (June 30, 2024 – $55,513). 23. SUPPLEMENTAL CASH FLOW INFORMATION June 30, 2025 June 30, 2024 Disclosure of non-cash financing activities: Settlement of convertible debentures by conversion $434,401 - Fair value of warrants - 16,659 Equity portion of the convertible debentures - $92,140 Disclosure of non-cash investing activities: Settlement of convertible debentures by conversion 434,401 - Disclosure of cash flow information: Cash paid for income taxes - - Cash paid for interest $66,625 $43,805 24. SEGMENTED INFORMATION The Company has the following reporting segments: corporate and administration, loss prevention , retail media, and fabrication. Reportable segments are defined as components of an enterprise for which separate financial information is available. They are evaluated regularly by the chief operating decision maker when deciding how to allocate resources and assess performance.
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 34 24. SEGMENTED INFORMATION (CONTINUED) The reportable segments were determined based on the nature of the services provided and goods sold. Loss Prevention refers to sales of security technology, EAS systems, and supplies. Fabrication specializes in precision CNC cutting, routing, and drilling for various industries and sectors. Retail media refers to advertising revenue welcoming systems and licensing arrangements. Corporate and administrative refers to the Company’s common costs that are shared across the company and are not associated with any reportable segment. For the year ended June 30, 2025 Loss prevention Fabrication Retail media Corporate and administration Total Sales $716,493 $131,807 $561,970 - $1,410,270 Cost of goods sold (627,225) (62,568) (111,297) - (801,090) Gross profit 89,268 69,239 450,673 - 609,180 Operating expenses* (248,189) (18,729) (423,554) (2,567,720) (3,258,192) Amortization, equipment (5,579) (15,128) (458,586) - (479,293) Amortization, right-of-use asset (11,750) - (11,750) (23,501) (47,001) Foreign exchange loss - - - (53,122) (53,122) Other expense - - - (1,663) (1,663) Operating income (loss) (176,250) 35,382 (443,217) (2,646,006) (3,230,091) Finance costs: Interest expense (2,996) (2,996) - (354,253) (360,245) Interest income - - - 3,750 3,750 Net income (loss) and comprehensive income (loss) $(179,246) $32,386 $(443,217) $(2,996,509) (3,586,586) *Operating expenses include Administration, Selling, Marketing, and Research and Development costs. For the year ended June 30, 2024 Loss prevention Fabrication Retail media Corporate and administration Total Sales $1,139,185 $98,021 $120,436 - $1,357,642 Cost of sales (786,738) (61,775) (67,679) - (916,192) Gross profit 352,447 36,246 52,757 - 441,450 Operating expenses (238,082) (20,131) (367,094) (2,166,860) (2,792,167) Amortization, equipment (7,382) (18,157) (362,663) - (388,202) Amortization, right-of-use asset (7,763) - (7,763) (15,526) (31,052) Foreign exchange loss - - - (28,465) (28,465) Other income (expense) - 714 - (6,378) (5,664) Operating income (loss) 99,220 (1,328) (684,763) (2,217,229) (2,804,100) Finance costs: Interest expense (6,517) (6,351) - (275,276) (288,144) Interest income - - - 3,517 3,517 Net loss and comprehensive loss $92,703 $(7,679) $(684,763) $(2,488,988) (3,088,727)
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 35 24. SEGMENTED INFORMATION (CONTINUED) Loss Prevention did not have any customer which accounted for more than 10% of revenue in June 30, 2025 (June 30, 2024 - one customer accounting for 13%). Fabrication Operations has two customers, accounting for 85% of revenue (June 30, 2024 – two customers accounting for 76%). Retail Media has two customers accounting for 75% of revenue during the year (June 30, 2024 – three customers accounting for 86%). The Company’s chief operation decision makers are the CEO, President, Corporate Secretary, and CFO. They review the operations and performance of the Company. June 30, 2025 June 30, 2024 Total assets by segment Fabrication $30,802 $39,198 Loss prevention and other operations 2,613,502 1,871,502 Total $2,644,304 $1,910,700 Sales by geographical locations are as follows: June 30, 2025 June 30, 2024 Location Canada $787,959 $648,998 USA 547,986 530,315 Colombia - 152,623 United Kingdom 52,316 - Mexico 22,009 25,706 Total $1,410,270 $1,357,642 25. REVENUE June 30, 2025 June 30, 2024 Revenue Loss prevention and fabrication $848,300 $1,237,206 Retail media 561,970 120,436 Total $1,410,270 $1,357,642 The Company recorded revenue from the transfer of goods and services at a point-in-time and over time in the following lines of business: June 30, 2025 June 30, 2024 Point-in-time Loss prevention and fabrication $848,300 $1,237,206 Retail media 421,395 - Total $1,269,695 $1,237,206 June 30, 2025 June 30, 2024 Over time Retail media $140,575 $120,436 Total $140,575 $120,436
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 36 26. INCOME TAXES A reconciliation of income taxes at statutory rates with the reported taxes is as follows: For the years ended June 30 2025 2024 Net loss before income tax $(3,586,586) $(3,088,727) Expected income tax (recovery) $(968,000) (834,000) Non-deductible expenses 30,000 43,000 Share issue costs - (8,000) Adjustments to prior years’ provisions versus statutory tax returns and other 10,000 54,000 Change in unrecognized deductible temporary differences 928,000 745,000 Total income tax expense (recovery) - - The significant components of the Company’s deferred tax assets that have not been included in the consolidated statement of financial position are as follows: As at June 30 2025 2024 Deferred tax assets Equipment 169,000 48,000 Intangible asset 2,000 1,000 Share issue costs 68,000 144,000 Debt with accretion (30,000) (52,000) SR&ED pool 22,000 22,000 Non-capital losses available for future period 3,996,000 3,136,000 4,227,000 3,299,000 Unrecognized deferred tax assets (4,227,000) (3,299,000) Net deferred tax assets - - The significant components of the Company’s temporary differences, unused tax credits, and unused tax losses that have not been included in the consolidated statement of financial position are as follows: 2025 Expiry Date Range 2024 Expiry Date Range Deferred tax assets Equipment 628,000 No expiry date 178,000 No expiry date Intangible asset 7,000 No expiry date 5,000 No expiry date Share issue costs 251,000 2026 to 2028 534,000 2044 to 2047 Debt with accretion (109,000) No expiry date (190,000) No expiry date SRED pool 81,000 No expiry date 81,000 No expiry date Non-capital losses available for future period 14,800,000 2035 to 2045 11,616,000 2035 to 2044 Tax attributes are subject to review and potential adjustment by tax autho rities.
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INEO Tech Corp. Notes to the Consolidated Financial Statements As at and for the years ended June 30, 2025 and 2024 (Expressed in Canadian dollars) 37 27. SUBSEQUENT EVENTS On August 7, 2025, the Company entered into a settlement agreement with a contractor resulting to a liability amounting to $12,500 . The settlement terms, including the negotiated payment amount and timing, were agreed upon based on conditions that arose subsequent to the balance sheet date.