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01 Quantum Inc. Interim / Quarterly Report 2025
44702_rns_2025-06-19_df29b04a-a7d1-49e5-8502-5946f82a27bc.pdf
Interim / Quarterly Report
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01 Communique Laboratory Inc.
Interim Consolidated Financial Statements
for the period ended April 30, 2025
(Unaudited)
TSX-V : ONE; OTC Pink: OONEF
Dated: June 18, 2025
01 COMMUNIQUE LABORATORY INC.
Consolidated Statements of Financial Position
(In Canadian dollars)
Unaudited
As at April 30, 2025 and October 31, 2024
| 30-Apr-25 | 31-Oct-24 | |
|---|---|---|
| Assets | ||
| Current assets | ||
| Cash | $ 133,235 | $ 139,126 |
| Guaranteed investment certificate (note 4) | 690,000 | - |
| Accounts receivable | 91,977 | 62,902 |
| Prepaid expenses and other assets | 46,089 | 6,037 |
| 961,301 | 208,065 | |
| Plant and equipment (note 5) | 136,074 | 32,418 |
| Total assets | $ 1,097,375 | $ 240,483 |
| Liabilities and Shareholders' Deficit | ||
| Current liabilities | ||
| Accounts payable (noes 2(a), 13) | $ 162,040 | $ 104,122 |
| Deferred revenue | 4,655 | 3,869 |
| Lease liability (note 6) | 40,048 | 21,071 |
| 206,743 | 129,062 | |
| Non-current liabilities | ||
| Lease liability (note 6) | 85,375 | - |
| Total liabilities | 292,118 | 129,062 |
| Shareholders' deficit | ||
| Share capital (note 7 (a)) | 44,656,198 | 44,282,090 |
| Contributed surplus (note 7 (b)) | 6,562,144 | 6,460,194 |
| Warrants (note 7 (c)) | 640,000 | - |
| Deficit | (51,053,085) | (50,630,863) |
| 805,257 | 111,421 | |
| Total liabilities and shareholders' deficit | $ 1,097,375 | $ 240,483 |
Contingencies (note 13)
Subsequent Event – Private Placement (note 16)
See accompanying notes to the consolidated financial statements.
ONE - Q2F5 - April2025.docx
01 COMMUNIQUE LABORATORY INC.
Interim Consolidated Statements of Operations and Comprehensive Loss (In Canadian dollars)
Unaudited
For the three month and six month periods ended April 30, 2025 and 2024
| three months ended | six months ended | |||
|---|---|---|---|---|
| 30-Apr-25 | 30-Apr-24 | 30-Apr-25 | 30-Apr-24 | |
| Revenue (note 8) | $ 102,807 | $ 106,220 | $ 189,312 | $ 204,690 |
| Expenses (note 14): | ||||
| Selling, general and administrative | 192,418 | 123,558 | 365,106 | 275,672 |
| Research and development | 190,175 | 44,812 | 231,031 | 96,559 |
| Withholding taxes | 7,142 | 7,623 | 14,967 | 16,133 |
| 389,735 | 175,993 | 611,104 | 388,364 | |
| Loss before other income and expense | (286,928) | (69,773) | (421,792) | (183,674) |
| Interest income | 972 | 1,548 | 972 | 3,660 |
| Interest expense | (827) | (413) | (1,402) | (905) |
| Loss for the period and comprehensive loss | $ (286,783) | $ (68,638) | $ (422,222) | $ (180,919) |
| Loss per common share (note 9): | ||||
| Basic | $ (0.00) | $ (0.00) | $ (0.00) | $ (0.00) |
| Diluted | $ (0.00) | $ (0.00) | $ (0.00) | $ (0.00) |
| Weighted average number of common shares: | ||||
| Basic | 100,614,554 | 96,364,554 | 99,031,221 | 96,364,554 |
| Diluted | 100,614,554 | 96,364,554 | 99,031,221 | 96,364,554 |
See accompanying notes to consolidated financial statements.
ONE - Q2F5 - April2025.docx
01 COMMUNIQUE LABORATORY INC.
Interim Consolidated Statements of Changes in Shareholders' Equity
(In Canadian dollars)
Unaudited
For the six month periods ended April 30, 2025 and 2024
| April 30, 2025 | Number of shares | Share Capital | Contributed Surplus | Warrants | Deficit | Total shareholders' equity |
|---|---|---|---|---|---|---|
| Balance October 31, 2024 | 96,364,554 | $44,282,090 | $6,460,194 | $ Nil | $(50,630,863) | $ 111,421 |
| Loss and comprehensive loss | - | - | - | - | (422,222) | (422,222) |
| Stock-based compensation expense (note 7 (b)) | - | - | 155,000 | - | - | 155,000 |
| Exercise of options (note 7 (a) (ii)) | 250,000 | 111,550 | (53,050) | - | 58,500 | |
| Private placement (note 7 (a) (i)) | 4,000,000 | 262,558 | - | 640,000 | - | 902,558 |
| Balance, April 30, 2025 | 100,614,554 | $44,656,198 | $6,562,144 | $640,000 | $(51,053,085) | $ 805,257 |
| April 30, 2024 | Number of shares | Share Capital | Contributed Surplus | Warrants | Deficit | Total shareholders' equity |
| --- | --- | --- | --- | --- | --- | --- |
| Balance October 31, 2023 | 96,364,554 | $44,282,090 | $6,287,173 | $ 16,875 | $(50,312,073) | $ 274,065 |
| Comprehensive loss for the period | - | - | - | - | (180,919) | (180,919) |
| Stock-based compensation expense (note 7 (b)) | - | - | 91,598 | - | - | 91,598 |
| Balance, April 30, 2024 | 96,364,554 | $44,282,090 | $6,378,771 | $ 16,875 | $(50,492,992) | $ 184,744 |
See accompanying notes to consolidated financial statements.
ONE - Q2F5 - April2025.docx
01 COMMUNIQUE LABORATORY INC.
Consolidated Statements of Cash Flows
(In Canadian dollars)
Unaudited
For the three and month periods ended April 30, 2025 and 2024
| three months ended | six months ended | |||
|---|---|---|---|---|
| 30-Apr-25 | 30-Apr-24 | 30-Apr-25 | 30-Apr-24 | |
| Cash provided by (used in): | ||||
| Operating activities: | ||||
| Loss and comprehensive loss for the period | $ (286,783) | $ (68,638) | $ (422,222) | $ (180,919) |
| Adjustments to reconcile loss for the period to net cash flows from operating activities: | ||||
| Depreciation of property and equipment (note 5) | 1,682 | 2,199 | 3,786 | 4,668 |
| Amortization of right-of-use asset (note 5) | 11,307 | 11,593 | 22,900 | 22,812 |
| Stock-based compensation expense | 79,300 | 37,931 | 155,000 | 91,598 |
| Change in non-cash working capital (note 10) | 25,069 | (14,339) | (10,423) | (50,052) |
| (169,425) | (31,254) | (250,959) | (111,893) | |
| Financing activities: | ||||
| Payment of loan (note 15) | - | - | - | (40,000) |
| Exercise of stock options (note 7 (a) (ii)) | - | - | 58,500 | - |
| Proceeds from private placement (note 7 (a) (i)) | - | - | 920,000 | - |
| Costs on private placement (note 7 (a) (i)) | (5,886) | - | (17,442) | - |
| Lease payments made (note 6) | (44,988) | (12,380) | (24,448) | (24,274) |
| (50,874) | (12,380) | 936,610 | (64,274) | |
| Investing activities: | ||||
| Proceeds from GIC (note 4) | 110,000 | 20,000 | - | 80,000 |
| Purchase of (note 4) | - | - | (690,000) | - |
| Purchase of property and equipment | (632) | - | (1,542) | (543) |
| 109,368 | 20,000 | (691,542) | 79,457 | |
| Increase (decrease) in cash | (110,931) | (23,634) | (5,891) | (96,710) |
| Cash, beginning of period | 244,166 | 199,464 | 139,126 | 272,540 |
| Cash, end of period | $ 133,235 | $ 175,830 | $ 133,235 | $ 175,830 |
See accompanying notes to consolidated financial statements.
ONE - Q2F5 - April2025.docx
ONE - Q2F5 - April2025.docx
01 COMMUNIQUE LABORATORY INC.
Notes to Interim Consolidated Financial Statements
(In Canadian dollars)
Unaudited
For the three and six month periods ended April 30, 2025 and 2024
Notice to reader of the interim consolidated financial statements
These unaudited interim condensed consolidated financial statements ("interim consolidated financial statements") of 01 Communique Laboratory Inc. (the "Company"), which include the accompanying interim consolidated statement of financial position as at April 30, 2025 and the interim consolidated statements of operations and comprehensive income (loss), changes in shareholders' equity and cash flows for the three and six month periods ended April 30, 2025 and 2024, are the responsibility of the Company's management. These interim consolidated financial statements have not been audited or reviewed on behalf of the shareholders by the independent external auditors of the Company, McGovern Hurley LLP. The unaudited interim consolidated financial statements have been prepared by management and include the selection of appropriate accounting principles, judgments and estimates necessary to prepare these financial statements in accordance with accounting principles generally accepted in Canada. These unaudited interim consolidated financial statements are prepared under International Financial Reporting Standards ("IFRS") and reflect management's best estimates and judgment based on information currently available.
01 Communique Laboratory Inc. (the "Company") was incorporated on October 7, 1992 under the laws of Ontario. The Company's cybersecurity business unit focuses on its IronCAP™ patented cryptographic system. The Company's remote access business unit focuses on its I'm InTouch suite of secure remote access services and products.
The Company's head office is located at 789 Don Mills Road, Suite 700, Toronto, Ontario M3C 1T5 and its common shares are traded on the TSX Venture Exchange ("TSX-V") under the symbol ONE and quoted on the OTC Pink market in the United States under the symbol OONEF.
1. Significant Accounting Policies:
The accounting policies set out below have been applied consistently to all years presented in these consolidated financial statements, unless otherwise indicated:
(a) Statement of compliance:
These unaudited consolidated financial statements, including comparatives, are prepared by management in accordance with International Accounting Standards ("IAS") 34 Interim Financial Reporting ("IAS 34") using accounting policies consistent with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and Interpretations of the International Financial Reporting Interpretations Committee ("IFRC") effective for the Company's reporting for the three and six month periods ended April 30, 2025 and 2024. These consolidated financial statements reflect management's best estimates and judgment based on information currently available.
01 COMMUNIQUE LABORATORY INC.
Notes to Interim Consolidated Financial Statements
(In Canadian dollars)
Unaudited
For the three and six month periods ended April 30, 2025 and 2024
These consolidated financial statements were authorized for issue by the Board of Directors on June 18, 2025.
(b) Basis of presentation:
These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, 01 Communique (GP) Inc. and 01 Communique Laboratory Hong Kong Limited. Intercompany transactions and balances are eliminated on consolidation.
Subsidiaries consist of entities over which the Company is exposed to, or has rights to, variable returns as well as the ability to affect those returns through the power to direct the relevant activities of the entity. Generally, the Company has a shareholding of more than one half of the voting rights in its subsidiaries. The effects of potential voting rights that are currently exercisable are considered when assessing whether control exists. Subsidiaries are fully consolidated from the date control is transferred to the Company, and are deconsolidated from the date control ceases. The financial statements include all the assets, liabilities, revenues, expenses and cash flows of the Company and its subsidiaries after eliminating inter-entity balances and transactions.
The consolidated financial statements have been prepared on the historical cost basis, except for certain items which may be accounted for at fair value as further discussed in subsequent notes, using the Significant accounting policies and measurement bases summarized below.
The consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.
The consolidated financial statements are presented in Canadian dollars, which is the Company's functional currency.
Presentation of the consolidated statements of financial position differentiates between current and non-current assets and liabilities. The consolidated statements of operations and comprehensive loss are presented using the functional classification for expenses.
These consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will continue in operation for the foreseeable future and be able to realize its assets and discharge its liabilities in the normal course of business. The Company has sustained substantial losses and negative cash flows from operations in recent years and its ability to continue as a going concern is dependent on the Company's ability to generate future profitable operations and cash flows and/or obtain additional financing.
Should the Company not be able to generate sufficient cash flows to become profitable in the future and generate sufficient working capital to fund operations, it will become necessary to
ONE - Q2F5 - April2025.docx
ONE - Q2F5 - April2025.docx
01 COMMUNIQUE LABORATORY INC.
Notes to Interim Consolidated Financial Statements
(In Canadian dollars)
Unaudited
For the three and six month periods ended April 30, 2025 and 2024
secure additional sources of financing. However, there can be no assurances that any such financing will be available to the Company on acceptable terms or at all. These consolidated financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and, therefore, be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in these consolidated financial statements.
2. Financial Instruments and Financial Risk Management:
(a) Financial instruments:
The Company has classified its financial instruments as follows:
| 30-Apr-25 | 31-Oct-24 | |
|---|---|---|
| Financial assets: | ||
| Financial assets measured at amortized cost: | ||
| Cash | $ 133,235 | $ 139,126 |
| Guaranteed investment certificate | 690,000 | - |
| Accounts receivable | 91,977 | 62,902 |
| Financial liabilities: | ||
| Financial liabilities measured at amortized cost: | ||
| Accounts payable and accrued liabilities | 162,040 | 104,122 |
Accounts receivable comprises the following:
| 30-Apr-25 | 31-Oct-24 | |
|---|---|---|
| Trade receivables | $ 70,727 | $ 50,871 |
| Investment tax credits receivable | 8,000 | 8,000 |
| HST receivable | 13,247 | 4,031 |
| $ 91,977 | $ 62,902 |
(b) Financial risk management:
(i) Overview:
The Company has exposure to credit risk, liquidity risk and market risk. The Company's Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework and reviews the Company's policies on an ongoing basis.
ONE - Q2F5 - April2025.docx
01 COMMUNIQUE LABORATORY INC.
Notes to Interim Consolidated Financial Statements
(In Canadian dollars)
Unaudited
For the three and six month periods ended April 30, 2025 and 2024
(a) Credit risk:
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's cash and accounts receivable. The carrying amount of financial assets represents the maximum credit exposure.
The Company's exposure to credit risk with its customers is influenced mainly by the individual characteristics of each customer. The Company generally does not require collateral for sales on credit. The Company closely monitors extensions of credit and has not experienced significant credit losses in the past. At April 30, 2025 and October 31, 2024, the Company had a nil balance in the allowance for doubtful accounts and had no material past due trade receivables.
The Company invests its cash with the objective of maintaining safety of principal and providing adequate liquidity to meet all current payment obligations. The Company invests its cash with Canadian chartered banks that are of high credit quality. Given these high credit ratings, the Company does not expect these counterparties to fail to meet their obligations.
Concentrations of credit risk:
There was one customer that comprised 97% (in 2025 - 97%) of the Company's total revenue for the three and six months ended April 30, 2025. No other customers exceeded 10% of revenue during the current or prior period. The customer comprising 97% of revenue in 2025 (2024 - 97%) comprised 100% of trade receivables, as at April 30, 2025 (2024 - 100%).
(b) Liquidity risk:
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company's approach to managing liquidity is to ensure that it will have sufficient liquidity to meet its liabilities when due. To the extent that the Company does not believe it has sufficient liquidity to meet these obligations, management will consider securing additional funds through equity or debt transactions.
However, the Company has sustained substantial losses in recent years and its ability to continue as a going concern is dependent on the Company's ability to generate future profitable operations and cash flows and/or obtain additional financing, which would be contingent upon market and other conditions in the future, which are beyond the Company's control.
8
ONE - Q2F5 - April2025.docx
01 COMMUNIQUE LABORATORY INC.
Notes to Interim Consolidated Financial Statements
(In Canadian dollars)
Unaudited
For the three and six month periods ended April 30, 2025 and 2024
At April 30, 2025, the Company had financial assets, consisting of cash, guaranteed investment certificate and accounts receivable of $915,212 (Oct. 31, 2024 - $202,028) and financial liabilities, consisting of accounts payable and accrued liabilities, and the lease liability of $287,463 (Oct. 31, 2024 - $125,093).
The Company manages its liquidity risk by continuously monitoring forecasted and actual cash flows.
(c) Market risk:
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk is comprised of currency risk, interest rate risk and market price risk. The Company is exposed to currency risk and interest rate risk.
Currency risk:
Net monetary assets and liabilities due in U.S. dollars include accounts payable of USD 58,850 (April 30, 2024 - USD 2,812) and cash of USD 76,100 (April 30, 2024 - USD 111,330). Net monetary assets due in Japanese Yen include accounts payable of 737,029 Yen $7,072 CAD equivalent, (April 30, 2024 - 585,000 Yen, $5,093 CAD equivalent), and accounts receivable of 7,370,296 Yen, $70,729 CAD equivalent (April 30, 2024 - 5,884,000 Yen, $50,931 CAD equivalent).
The Company reports its results in Canadian dollars. The Company markets its products in Canada, the United States ("U.S.") and other jurisdictions, including Japan. Sales to Japanese customers are primarily denominated in the Japanese Yen and sales to U.S. and other customers outside Canada in U.S. dollars. Substantially all of the Company's sales are either in U.S. dollars or the Japanese Yen. As a result, the Company is subject to currency risk from sales made and expenses incurred in U.S. dollars and the Japanese Yen. The Company does not hedge the risk related to fluctuations in the exchange rate between the U.S. dollar or the Japanese Yen and the Canadian dollar from either the date of the sales transaction to the collection date due or from the date an expense is incurred to the date the payment is made. As at April 30, 2025, the Company had net monetary assets in U.S. dollars of USD 17,250 (April 30, 2024 - USD $108,518) and net monetary assets in the Japanese Yen of 6,633,267 (April 30, 2024 - 5,269,000 Japanese Yen). An increase or decrease in the U.S. to Canadian dollar exchange rate by 10% as at April 30, 2025 would have resulted in a gain in the amount of $2,400 (2024 - $14,843) or a loss of $2,400 (2024 - $14,843), respectively. An increase or decrease in the Japanese Yen to Canadian dollar exchange rate by 10% as at April 30, 2025 would have resulted in a gain in the amount of $6,350 (2024 - $4,500) or a loss of $6,350 (2024 - $4,500), respectively.
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ONE - Q2F5 - April2025.docx
01 COMMUNIQUE LABORATORY INC.
Notes to Interim Consolidated Financial Statements
(In Canadian dollars)
Unaudited
For the three and six month periods ended April 30, 2025 and 2024
Interest rate risk:
The Company is exposed to interest rate risk on its fixed rate financial instruments. Fixed rate instruments subject the Company to fair value interest rate risk, as the fair value of the financial instrument fluctuates due to changes in market interest rates. Financial instruments subject to interest rate risk include demand deposits and the liability component of the debenture.
(ii) Fair values of financial instruments:
All financial instruments measured at fair value are categorized into one of three hierarchy levels, described below, for disclosure purposes. Each level is based on the transparency of the inputs used to measure the fair values of assets and liabilities:
Level 1 – Values based on unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets of liabilities.
Level 2 – Values based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability.
Level 3 – Values based on prices or valuations techniques that require inputs that are both unobservable and significant to the overall fair value measurement.
As at April 30, 2025 and October 31, 2024, the Company measures its investment at fair value, and it is categorized as level 3.
3. Capital Risk Management:
The Company's primary objective with respect to its capital management is to ensure that it has sufficient cash resources to fund operations and discharge liabilities as they become due. Management performs regular reviews of its forecasted cash flow requirements to ensure cash flow needs are addressed.
The Board does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company's management to sustain future development of the business. The Company considers its capital to consist of shareholders' equity.
Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. There were no significant changes in the Company's approach to capital management during the six month periods ended April 30, 2025 and 2024.
01 COMMUNIQUE LABORATORY INC.
Notes to Interim Consolidated Financial Statements
(In Canadian dollars)
Unaudited
For the three and six month periods ended April 30, 2025 and 2024
The Company and its subsidiaries are not subject to any capital requirements imposed by a lending institution or regulatory body, other than of the TSX Venture Exchange ("TSXV") which requires adequate working capital or financial resources of the greater of (i) $50,000 and (ii) an amount required to maintain operations and cover general and administrative expenses for a period of 6 months. As at April 30, 2025 and October 31, 2024, the Company believes it is compliant with the policies of the TSXV.
4. Guaranteed Investment Certificate:
| 30-Apr-25 | 31-Oct-24 | ||
|---|---|---|---|
| i) | One year prime linked cashable guaranteed investment certificate. At the date of issuance the rate was 3.22% per annum. Maturity date is January 13, 2026. | $ 690,000 | $ - |
| $ 690,000 | $ - |
5. Property and Equipment:
| April 30,2025 | Computer systems | Communications equipment | Furniture and fixtures and leasehold improvements | Right of Use Asset | Total |
|---|---|---|---|---|---|
| Cost | |||||
| Balance at October 31, 2024 | $ 577,145 | $ 3,394 | $ 99,513 | $ 49,291 | $ 729,343 |
| Additions | 1,542 | - | - | 128,800 | $ 130,342 |
| Dispositions | - | - | - | - | - |
| Balance at April 30, 2025 | $ 578,687 | $ 3,394 | $ 99,513 | $ 178,091 | $ 859,685 |
| Depreciation | |||||
| Balance at October 31, 2024 | $ 568,223 | $ 1,895 | $ 99,513 | $ 27,294 | $ 696,925 |
| Additions | $ 3,701 | $ 85 | $ - | $ 22,900 | $ 26,686 |
| Dispositions | - | - | - | - | - |
| Balance at April 30, 2025 | $ 571,924 | $ 1,980 | $ 99,513 | $ 50,194 | $ 723,611 |
| Carry amounts | |||||
| Balance at October 31, 2024 | $ 8,922 | $ 1,499 | $ - | $ 21,997 | $ 32,418 |
| Balance at April 30, 2025 | $ 6,763 | $ 1,414 | $ - | $ 127,897 | $ 136,074 |
ONE - Q2F5 - April2025.docx
01 COMMUNIQUE LABORATORY INC.
Notes to Interim Consolidated Financial Statements
(In Canadian dollars)
Unaudited
For the three and six month periods ended April 30, 2025 and 2024
| April 30,2024 | Computer systems | Communications equipment | Furniture and fixtures and leasehold improvements | Right of Use Asset | Total |
|---|---|---|---|---|---|
| Cost | |||||
| Balance at October 31, 2023 | $ 576,602 | $ 3,394 | $ 99,513 | $ 134,634 | $ 814,143 |
| Additions | 543 | - | - | 49,291 | 49,834 |
| Dispositions | - | - | - | (134,634) | (134,634) |
| Balance at April 30, 2024 | $ 577,145 | $ 3,394 | $ 99,513 | $ 49,291 | $ 729,343 |
| Depreciation | |||||
| Balance at October 31, 2023 | $ 559,770 | $ 1,555 | $ 99,513 | $ 115,930 | $ 776,768 |
| Additions | 4,498 | 170 | - | 22,812 | 27,480 |
| Dispositions | - | - | - | (134,634) | (134,634) |
| Balance at April 30, 2024 | $ 564,268 | $ 1,725 | $ 99,513 | $ 4,108 | $ 669,614 |
| Carry amounts | |||||
| Balance at October 31, 2023 | $ 16,832 | $ 1,839 | $ - | $ 18,704 | $ 37,375 |
| Balance at April 30, 2024 | $ 12,877 | $ 1,669 | $ - | $ 45,183 | $ 59,729 |
6. Lease Commitment:
The Company's head office, located at 789 Don Mills Road, Suite 700, Toronto, Ontario M3C 1T5, is leased and considered to be a right-of-use asset. On March 1, 2024 the lease was amended extending the expiry date to March 31, 2025. Lease payments (including the Company's share of property taxes, operating costs, utilities and extra services) for the three and six months ended April 30, 2025 were $24,448 (2024 - $24,274).
On January 24, 2025 the lease was amended extending the expiry date from March 31, 2025 to March 31, 2028. The lease liability has been measured by discounting future lease payments at the incremental borrowing rate at March 1, 2021 and for the amendments at March 1, 2024 and January 24, 2025. The incremental borrowing rate applied was determined to be 5.0% per annum for the initial term of the lease and 7% for the amendments, which represents the Company's best estimate of the rate of interest that it would expect to pay to borrow, on a collateralized basis, over a similar term, an amount equal to the lease payments in the current economic environment. As a result, the Company recorded an increase in property and equipment, right of use asset, of $134,634 and $49,291 for the March 1, 2024 and $128,800 for the January 24, 2025 amendments and an increase in the corresponding lease liability of $134,634 and $49,291 for the March 1, 2024 and $128,800 for the January 24, 2025 amendments.
The carrying value included as part of property and equipment as at April 30, 2025 is $127,897 (October 31, 2024 - $21,997). The lease liability is split between current and non-current amounts. As at April 30, 2025 the current lease liability is $40,048 (October 31, 2024 - $21,071) and the
ONE - Q2F5 - April2025.docx
ONE - Q2F5 - April2025.docx
01 COMMUNIQUE LABORATORY INC.
Notes to Interim Consolidated Financial Statements
(In Canadian dollars)
Unaudited
For the three and six month periods ended April 30, 2025 and 2024
non-current lease liability is $85,375 (October 31, 2024 – Nil). The following details the changes in the lease liability for the six month period ended April 30, 2025:
| Balance, October 31, 2024 | $ 21,071 |
|---|---|
| Addition for January 24, 2025 amendment | 128,800 |
| Interest expense | 1,119 |
| Undiscounted contractual lease payments made | (25,567) |
| Balance, April 30, 2025 | $ 125,423 |
Future undiscounted contractual lease payments required through to the end of the lease on March 31, 2028 are as follows:
2025 $ 23,858
2026 $ 47,717
2027 $ 47,717
2028 $ 19,882
7. Shareholders' Equity:
(a) Share capital authorized, issued and outstanding:
| 30-Apr-25 | 31-Oct-24 | |
|---|---|---|
| Authorized: | ||
| 50,000 Series A preference shares | ||
| Unlimited preference shares, issuable in series | ||
| Unlimited common shares | ||
| Issued: 100,614,554 common shares (2024 – 96,364,554) | $ 44,656,198 | $ 44,282,090 |
The changes in issued and outstanding shares for the six month period ended April 30, 2025 are as follows:
| Common shares | ||
|---|---|---|
| Number | Amount | |
| Balance, October 31, 2024 | 96,364,554 | $ 44,282,090 |
| Exercise of stock options (note 7 (a)(i)) | 250,000 | 111,550 |
| Private placement (note 7 (a)(ii)) | 4,000,000 | 262,558 |
| Balance, April 30, 2025 | 100,614,554 | $ 44,656,198 |
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01 COMMUNIQUE LABORATORY INC.
Notes to Interim Consolidated Financial Statements
(In Canadian dollars)
Unaudited
For the three and six month periods ended April 30, 2025 and 2024
(i) On January 7, 2025 the Company completed a non-brokered private placement issuing a total of 4,000,000 units at a unit price of $0.23 for total gross proceeds of $920,000 and net proceeds of $908,444 after costs related to issuance of $11,556. Each unit consisted of one common share and one Common Share Purchase Warrant (a "Warrant"). Each Warrant entitles the holder to purchase one Common Share of the Company at an exercise price of $0.75 per Common Share at any time on or before January 7, 2028. The fair value of each Warrant was estimated using the Black-Scholes option pricing model, using the following assumptions: interest rate of 3%, volatility of 154%, expected life of 3 years and 0% expected dividend yield. The fair value of each Warrant was estimated to be $0.16 resulting in $640,000 being allocated to the Warrants and $268,444 to share capital. The securities issued were issued pursuant to a contractual hold (in addition to the regulatory four month hold period) for twelve months which hold will expire on January 7, 2026.
(ii) There were 250,000 stock options exercised pursuant to the Company's employee option plan at an average exercise price of $0.23. Total cash proceeds were $58,500. In addition, $53,050 of stock-based compensation had been previously recorded for the exercised stock options and has been reclassified from contributed surplus to share capital.
(b) Employee option plan:
The Company maintains a share option plan (the "Plan") for the benefit of management, directors, officers, contractors and employees. The Plan is a "rolling" stock option plan, pursuant to which the maximum number of common shares that may be reserved for issuance under outstanding stock options will be 10% of the Company's issued and outstanding common shares, as constituted on the date of any grant of options under the Plan.
Options are granted under the Plan at the discretion of the Board of Directors at exercise prices determined as the trading prices of the Company's common shares on the TSX-V on the day preceding the effective date of the grant. In general, options granted under the Plan vest over the period of up to a maximum of five years from the grant date and expire by no later than the fifth anniversary of the date of grant.
Changes in outstanding options during the six month period ended April 30, 2025 are as follows:
| Number | Weighted average exercise price | |
|---|---|---|
| Options outstanding October 31, 2024 | 6,265,000 | $ 0.15 |
| Granted | 790,000 | $ 0.40 |
| Exercised | (250,000) | $ 0.23 |
| Expired | (100,000) | $ 0.38 |
| Options outstanding April 30, 2025 | 6,705,000 | $ 0.17 |
ONE - Q2F5 - April2025.docx
01 COMMUNIQUE LABORATORY INC.
Notes to Interim Consolidated Financial Statements
(In Canadian dollars)
Unaudited
For the three and six month periods ended April 30, 2025 and 2024
The following table summarizes information about stock options outstanding at April 30, 2025:
| Range of exercise prices | Options outstanding | Options exercisable | |||
|---|---|---|---|---|---|
| Number outstanding | Weighted average remaining contractual life (years) | Weighted average exercise price | Number exercisable | Weighted average exercise price | |
| $0.05 | 1,320,000 | 3.1 | $ 0.05 | 330,000 | $ 0.05 |
| $0.12 to $0.17 | 3,725,000 | 1.8 | $ 0.13 | 3,365,000 | $ 0.13 |
| $0.23 to $0.47 | 1,660,000 | 0.8 | $ 0.36 | 970,000 | $ 0.32 |
| 6,705,000 | 1.8 | $ 0.17 | 4,665,000 | $ 0.16 |
There were 790,000 options granted during the six months ended April 30, 2025 (2024 – Nil). The average grant date fair value of options granted during the six months ended April 30, 2025 was $0.25. The fair value of each option granted has been estimated on the date of grant using the Black-Scholes fair value option-pricing model with the following assumptions used for grants for the six months ended April 30, 2025: expected dividend yield of nil, expected volatility of between 141% and 168%, weighted average risk-free interest rate of 3% and expected lives of between one and four years.
| Grant date | Expiry date | Number granted | Exercise price | Vesting date |
|---|---|---|---|---|
| 16-Dec-24 | 09-Dec-25 | 300,000 | $ 0.32 | 100,000 on each of 16-Jan-25 |
| 16-Feb-25 | ||||
| 16-Mar-25 | ||||
| 09-Jan-25 | 09-Jan-27 | 200,000 | $ 0.45 | 200,000 on 09-Jul-25 |
| 15-Jan-25 | 15-Jan-29 | 250,000 | $ 0.47 | 62,500 on each of 15-Jul-25 |
| 15-Jan-26 | ||||
| 15-Jul-26 | ||||
| 15-Jan-27 | ||||
| 05-Feb-25 | 05-Feb-29 | 40,000 | $ 0.38 | 10,000 on each of 05-Aug-25 |
| 05-Feb-26 | ||||
| 05-Aug-27 | ||||
| 05-Feb-27 | ||||
| Total | 790,000 |
During the six month period ended April 30, 2025, the Company recorded stock option expense for stock options granted in the current and previous periods of $155,000 (2024 - $91,598).
ONE - Q2F5 - April2025.docx
01 COMMUNIQUE LABORATORY INC.
Notes to Interim Consolidated Financial Statements
(In Canadian dollars)
Unaudited
For the three and six month periods ended April 30, 2025 and 2024
Details of the stock options granted for the six months ended April 30, 2025 are as follows:
(c) Warrants:
The following table summarizes information about warrants outstanding at April 30, 2025:
| Exercise price | Number outstanding | Weighted average remaining contractual life (years) | Weighted average exercise price | |
|---|---|---|---|---|
| Warrants issued on private placement on January 7, 2025 expiring January 7, 2028 | $ 0.75 | 4,000,000 | 2.6 | $ 0.75 |
- Revenues:
The significant categories of revenue recognized for the three and six month periods ended April 30, 2025 and 2024 are as follows:
| three months ended | six months ended | |||
|---|---|---|---|---|
| 30-Apr-25 | 30-Apr-24 | 30-Apr-25 | 30-Apr-24 | |
| Royalty, development fees, engineering and maintenance | $ 100,171 | $ 103,224 | $ 183,982 | $ 198,377 |
| Subscription fees | 2,636 | 2,996 | 5,330 | 6,313 |
| $ 102,807 | $ 106,220 | $ 189,312 | $ 204,690 |
- Loss per Common Share:
The computations for basic and diluted loss per share for the three and six month periods ended April 30, 2025 and 2024 are as follows:
| three months ended | six months ended | |||
|---|---|---|---|---|
| 30-Apr-25 | 30-Apr-24 | 30-Apr-25 | 30-Apr-24 | |
| Loss per common share | ||||
| Basic | $ (0.00) | $ (0.00) | $ (0.00) | $ (0.00) |
| Diluted | $ (0.00) | $ (0.00) | $ (0.00) | $ (0.00) |
| Weighted average number of common shares | ||||
| Basic | 100,614,554 | 96,364,554 | 99,031,221 | 96,364,554 |
| Diluted | 100,614,554 | 96,364,554 | 99,031,221 | 96,364,554 |
ONE - Q2F5 - April2025.docx
01 COMMUNIQUE LABORATORY INC.
Notes to Interim Consolidated Financial Statements
(In Canadian dollars)
Unaudited
For the three and six month periods ended April 30, 2025 and 2024
As the Company is in a loss position for the three month and six periods ended April 30, 2025 and 2024, the inclusion of options and warrants in the calculation of diluted earnings per share would be anti-dilutive, and accordingly, were excluded from the diluted loss per share calculation.
10. Change in Non-Cash Operating Working Capital:
For the three and six month periods ended:
| three months ended | six months ended | |||
|---|---|---|---|---|
| 30-Apr-25 | 30-Apr-24 | 30-Apr-25 | 30-Apr-24 | |
| Change in non-cash working capital | ||||
| Accounts receivable | $ (13,733) | $ 33,441 | $ (29,075) | $ 28,363 |
| Prepaid expenses and other assets | (42,216) | (4,841) | (40,052) | (3,205) |
| Accounts payable & accruals | 79,626 | (44,305) | 57,918 | (76,037) |
| Deferred revenue | 1,392 | 1,366 | 786 | 827 |
| $ 25,069 | $ (14,339) | $ (10,423) | $ (50,052) |
11. Segmented Information:
The Company currently operates in one business segment, which is the development and marketing of its remote access software and its cryptographic software. The Company markets its products primarily in the United States, Asia/Pacific and Canada.
Revenue attributable to geographic location based on the location of the customer for the three and six month periods ended April 30, 2025 and 2024 is as follows:
| three months ended | six months ended | |||
|---|---|---|---|---|
| 30-Apr-25 | 30-Apr-24 | 30-Apr-25 | 30-Apr-24 | |
| United States | $ 1,582 | $ 1,798 | $ 3,234 | $ 3,556 |
| Canada | 1,054 | 1,198 | 2,096 | 2,757 |
| Asia/Pacific | 100,171 | 103,224 | 183,982 | 198,377 |
| $ 102,807 | $ 106,220 | $ 189,312 | $ 204,690 |
Substantially all of the Company's identifiable assets as at April 30, 2025 and October 31, 2024 are located in Canada.
ONE - Q2F5 - April2025.docx
ONE - Q2F5 - April2025.docx
01 COMMUNIQUE LABORATORY INC.
Notes to Interim Consolidated Financial Statements
(In Canadian dollars)
Unaudited
For the three and six month periods ended April 30, 2025 and 2024
12. Related Party Transactions:
The remuneration of directors and other key management personnel of the Company during the three and six month periods ended April 30, 2025 and 2024 was as follows:
| three months ended | six months ended | |||
|---|---|---|---|---|
| 30-Apr-25 | 30-Apr-24 | 30-Apr-25 | 30-Apr-24 | |
| Salaries and contractor fees | $ 63,500 | $ 61,000 | $ 117,250 | $ 122,000 |
| Stock-based compensation | 11,450 | 51,614 | 38,338 | 103,228 |
| Total | $ 74,950 | $ 112,614 | $ 155,588 | $ 225,228 |
The Company's President and Chief Executive Officer ("CEO") invoices the Company for his services that pertain to research and development pursuant to a contractor agreement. Fees paid under this agreement during the three and six month periods ended April 30, 2025 were $16,500 (2024 - $16,500) and $23,250 (2024 - $33,000) respectively and have been included in research and development expenses and are included in the salaries and contractor fees amounts in the above table. In addition, the CEO received a salary for the three and six month periods ended April 30, 2025 of $21,000 (2024 - $21,000) and $42,000 (2024 - $42,000) respectively, which has been recorded in selling, general and administrative expenses, and is included in the salaries and contractor fees amounts in the above table.
Salary and contractor fees included in the above table owing to directors and other key management personnel and so included in accounts payable and accrued liabilities at April 30, 2025 is $9,800 (October 31, 2024 - $22,913). They are unsecured, non-interest bearing with no fixed terms of payment and were paid subsequent to the end of the quarter.
13. Contingencies:
The Company is engaged in legal actions from time to time arising in the ordinary course of business. None of these actions, individually or in the aggregate, is expected to have a material adverse effect on the consolidated financial position or results of operations.
18
01 COMMUNIQUE LABORATORY INC.
Notes to Interim Consolidated Financial Statements
(In Canadian dollars)
Unaudited
For the three and six month periods ended April 30, 2025 and 2024
14. Operating Expenses:
The Company presents functional consolidated statements of operations in which expenses are aggregated according to the function to which they relate. The Company has identified the major functions as selling, general and administrative expenses; and research and development expenses. The following tables present the expenses based on their nature:
| for the three months ended
30-Apr-25 | Selling, general
and administrative | Research and
development | Total |
| --- | --- | --- | --- |
| Salaries, contractors, commissions
and benefits | $ 49,564 | $ 79,339 | $ 128,903 |
| Stock-based compensation | 79,300 | - | 79,300 |
| Other operating expenses | 63,554 | 110,836 | 174,390 |
| | $ 192,418 | $ 190,175 | $ 382,593 |
| for the three months ended
30-Apr-24 | Selling, general
and administrative | Research and
development | Total |
| Salaries, contractors, commissions
and benefits | $ 53,557 | $ 28,061 | $ 81,618 |
| Stock-based compensation | 37,931 | - | 37,931 |
| Other operating expenses | 32,070 | 16,751 | 48,821 |
| | $ 123,558 | $ 44,812 | $ 168,370 |
| for the six months ended
30-Apr-25 | Selling, general
and administrative | Research and
development | Total |
| Salaries, contractors, commissions
and benefits | $ 97,100 | $ 104,865 | $ 201,965 |
| Stock-based compensation | 155,000 | - | 155,000 |
| Other operating expenses | 113,006 | 126,166 | 239,172 |
| | $ 365,106 | $ 231,031 | $ 596,137 |
| for the six months ended
30-Apr-24 | Selling, general
and administrative | Research and
development | Total |
| Salaries, contractors, commissions
and benefits | $ 122,701 | $ 62,559 | $ 185,260 |
| Stock-based compensation | 91,598 | - | 91,598 |
| Other operating expenses | 61,373 | 34,000 | 95,373 |
| | $ 275,672 | $ 96,559 | $ 372,231 |
ONE - Q2F5 - April2025.docx
01 COMMUNIQUE LABORATORY INC.
Notes to Interim Consolidated Financial Statements
(In Canadian dollars)
Unaudited
For the three and six month periods ended April 30, 2025 and 2024
15. Government Assistance:
The Canada Emergency Business Account ("CEBA") provides interest-free bank loans, guaranteed by the government of Canada, of up to $60,000 to small businesses that qualify. The Company's loan consisted of a $60,000 CEBA loan that is interest free and was repaid prior to maturity of January 18, 2024 and as such $20,000 of the loan was forgiven. Management had assessed at the time the loan was received that the Company would be able to repay the balance of the loans by January 18, 2024 and accordingly, the total forgivable amount of $20,000 was recorded as government assistance income in 2021.
16. Subsequent Event – Private Placement:
The Company completed a non-brokered private placement on June 6, 2025 for gross proceeds of $511,500. Pursuant to the offering the Company issued a total of 1,705,000 Units. Following the closing of the offering, the Company has 102,319,554 common shares issued and outstanding.
The securities issued in connection with the offering were issued pursuant to applicable exemptions from the prospectus requirements under applicable securities laws.
Each Unit was issued at a price $0.30 and consists of one common share in the capital of the Company (a "Common Share") and one-half of one Common Share purchase warrant (a "Warrant"). Each whole Warrant entitles the holder thereof to purchase one additional Common Share at an exercise price of $0.50 per Common Share at any time on or before June 6, 2027. No finders' fees or commissions were paid by the Company in connection with the completion of the offering. The securities issued under the offering are subject to a four month hold period that expires on October 7, 2025.
ONE - Q2F5 - April2025.docx