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ARCpoint Inc. — Interim / Quarterly Report 2025
Nov 27, 2025
45041_rns_2025-11-27_9563e81c-aad9-4961-b8d0-8cf5ab2abbec.pdf
Interim / Quarterly Report
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arcpoint
ARCpoint Inc.
Interim Condensed Consolidated Financial Statements
For the nine months ended September 30, 2025 and 2024
NOTICE TO READER
Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the interim condensed consolidated financial statements, they must be accompanied by a notice indicating that an auditor has not reviewed the financial statements.
The accompanying interim condensed consolidated financial statements and the notes thereto have been prepared by, and are the responsibility of, the management of ARCpoint Inc. These interim condensed consolidated financial statements have been prepared in accordance with International Financial Reporting Standards using management's best judgments.
The Company's independent auditor has not performed a review of these interim condensed consolidated financial statements in accordance with the standards established by the Canadian Institute of Chartered Professional Accountants.
November 27, 2025
ARCPoint Inc.
Interim Condensed Consolidated Statements of Financial Position
Unaudited (in United States dollars)
| Note | September 30, 2025 | December 31, 2024 | |
|---|---|---|---|
| ASSETS | |||
| Current assets | |||
| Cash | $ 133,239 | $ 77,116 | |
| Accounts receivable, net | 3 | 306,036 | 501,115 |
| Prepaid expenses | 83,990 | 105,002 | |
| Notes receivable | 4 | 40,424 | 60,082 |
| 563,689 | 743,315 | ||
| Non-current assets | |||
| Intangible assets | 5 | 144,684 | 425,420 |
| Property and equipment | 6 | 185,774 | 228,753 |
| Right-of-use assets | 9 | 19,510 | 174,860 |
| Investment in associate | 7 | 2,258,056 | 1,684,045 |
| TOTAL ASSETS | $ 3,171,713 | $ 3,256,393 | |
| LIABILITIES AND DEFICIT | |||
| Current liabilities | |||
| Accounts payable and accrued liabilities | 8 | $ 2,441,865 | $ 2,203,371 |
| Convertible loans | 10 | 2,570,759 | 2,456,510 |
| Current portion of lease liabilities | 9 | 35,406 | 94,132 |
| Notes payable - related party | 11 | 1,624,616 | 1,411,702 |
| Notes payable | 12 | 2,665,755 | 2,396,744 |
| 9,338,401 | 8,562,459 | ||
| Non-current liabilities | |||
| Lease liabilities | 9 | - | 69,174 |
| Notes payable - related party | 11 | 1,370,221 | 1,184,126 |
| TOTAL LIABILITIES | 10,708,622 | 9,815,759 | |
| Shareholders' deficiency | |||
| Share capital | 14 | 11,373,428 | 10,860,567 |
| Accumulated other comprehensive income | 28,970 | (5,710) | |
| Reserves | 14 | 1,793,221 | 1,510,842 |
| Accumulated deficit | (20,684,459) | (18,839,562) | |
| (7,488,840) | (6,473,863) | ||
| Noncontrolling interest | 13 | (48,069) | (85,503) |
| TOTAL SHAREHOLDERS' DEFICIENCY | (7,536,909) | (6,559,366) | |
| TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIENCY | $ 3,171,713 | $ 3,256,393 |
Nature of Operations and Going Concern (Note 1)
Commitments and contingencies (Note 15)
Approved on behalf of the Board:
(Signed) "Felix Mirando"
Director
(Signed) "John Constantine"
Director
ARCpoint Inc.
Interim Condensed Consolidated Statements of Loss and Comprehensive Loss
Unaudited (in United States dollars except per share data)
| Note | Three months ended September 30, | Nine months ended September 30, | |||
|---|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | ||
| Revenue | |||||
| Royalties and other | $ | - | $ 637,273 | - | $ 2,369,295 |
| Brand Fund revenue | - | 59,946 | - | 356,151 | |
| Technology | 110,677 | 145,981 | 428,889 | 514,898 | |
| Support and lab services | 3,025 | 377,071 | 22,844 | 1,241,756 | |
| Total revenues | 113,702 | 1,220,271 | 451,733 | 4,482,100 | |
| Cost of revenue | |||||
| Brand Fund expenses | - | (38,537) | - | (474,001) | |
| Commissions | - | (79,228) | - | (433,293) | |
| Support and lab services | (19,053) | (283,827) | (84,735) | (1,025,928) | |
| Gross income | 94,649 | 818,679 | 366,998 | 2,548,878 | |
| Expenses | |||||
| Amortization and depreciation | 117,968 | 134,076 | 350,381 | 443,639 | |
| Bad debt | - | 114,689 | 2,176 | 151,643 | |
| Foreign exchange loss (gain) | (4,148) | 11,503 | 39,260 | 2,192 | |
| General, rent and administrative | 53,692 | 197,823 | 232,419 | 639,932 | |
| Professional fees | 18 | 355,485 | 401,013 | 1,027,248 | 1,332,246 |
| Salary and wages | 18 | 122,719 | 635,347 | 478,959 | 2,613,966 |
| Sales and marketing | 99,996 | 43,877 | 149,996 | 213,240 | |
| Share based compensation | 14, 18 | 64,601 | 106,564 | 255,711 | 163,883 |
| Software development | 5 | 36,257 | 72,582 | 170,909 | 265,687 |
| Transfer agent and filing fees | 3,994 | 5,595 | 18,991 | 25,700 | |
| Travel | 506 | 26,493 | 16,407 | 149,873 | |
| Total expenses | 851,070 | 1,749,562 | 2,742,457 | 6,002,001 | |
| Operating loss | (756,421) | (930,883) | (2,375,459) | (3,453,123) | |
| Other items | |||||
| Accretion expense | 10, 11 | (39,337) | (65,081) | (112,522) | (194,317) |
| Interest expense | 9-12 | (120,490) | (120,437) | (346,864) | (373,060) |
| Gain on deconsolidation | 7 | - | 6,314,646 | - | 6,314,646 |
| Gain on disposal of ABH Greenville | 13 | - | - | 341,612 | - |
| Share of income of associate | 7 | 253,939 | 14,749 | 574,011 | 14,749 |
| Other income (expenses) | 155,135 | - | 85,074 | 345 | |
| Net income (loss) for the period | $(507,174) | $ 5,212,994 | $(1,834,148) | $ 2,309,240 | |
| Net income (loss) attributable to: | |||||
| Shareholders of the Group | $(507,174) | $ 5,192,615 | $(1,844,897) | $ 2,319,582 | |
| Noncontrolling interests | 13 | - | 20,379 | 10,749 | (10,342) |
| Total net income (loss) for the period | $(507,174) | $ 5,212,994 | $(1,834,148) | $ 2,309,240 | |
| Accumulated other comprehensive income | |||||
| Items that may be reclassified subsequently to net income: | |||||
| Exchange differences on translating foreign operations | 28,670 | 30,645 | 34,680 | 34,207 | |
| Total comprehensive income (loss) for the period | (478,504) | 5,243,639 | (1,799,468) | 2,343,447 | |
| Accumulated other comprehensive income (loss) attributable to: | |||||
| Shareholders of the Group | 28,670 | 30,645 | 34,680 | 34,207 | |
| 28,670 | 30,645 | 34,680 | 34,207 | ||
| Total comprehensive income (loss) attributable to: | |||||
| Shareholders of the Group | $(478,504) | $ 5,223,260 | $(1,810,217) | $ 2,353,789 | |
| Noncontrolling interests | - | 20,379 | 10,749 | (10,342) | |
| $(478,504) | $ 5,243,639 | $(1,799,468) | $ 2,343,447 | ||
| Income (loss) per share | |||||
| Basic and diluted - PVS and SVS | $(0.00) | $ 0.05 | $(0.01) | $ 0.02 | |
| Weighted average number of shares outstanding | |||||
| Basic and diluted - PVS and SVS | 123,923,087 | 101,322,978 | 123,923,087 | 101,322,978 |
ARCpoint Inc.
Interim Condensed Consolidated Statements of Changes in Shareholders' Deficiency
Unaudited (in United States dollars except per share data)
| Share Capital | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Class A Subordinate Voting Shares ("SVS") | Class B Proportionate Voting Shares ("PVS") | Amount | Reserves | Accumulated other comprehensive income (loss) | Accumulated deficit | Shareholders' Equity (Deficit) | Noncontrolling interest | Total | |
| Balance, December 31, 2023 | 29,153,744 | 123,894 | $ 8,994,984 | $ 839,668 | $ 53,275 | $ (20,197,472) | $ (10,309,545) | $ (76,152) | $ (10,385,697) |
| Share-based compensation | - | - | - | 163,883 | - | - | 163,883 | - | 163,883 |
| Shares issued in private placement | 25,059,900 | - | 1,863,664 | - | - | - | 1,863,664 | - | 1,863,664 |
| Shares issued in debt | 1,396,046 | - | 112,686 | - | - | - | 112,686 | - | 112,686 |
| Share issuance costs | - | - | (109,598) | - | - | - | (109,598) | - | (109,598) |
| Currency translation adjustment | - | - | 2,510 | 1,272 | (34,207) | - | (30,425) | - | (30,425) |
| Net income (loss) for the period | - | - | - | - | - | 2,319,582 | 2,319,582 | (10,342) | 2,309,240 |
| Balance, September 30, 2024 | 55,609,690 | 123,894 | $ 10,864,246 | $ 1,004,823 | $ 19,068 | $ (17,877,890) | $ (5,989,753) | $ (86,494) | $ (6,076,247) |
| Share-based compensation | - | - | - | 298,391 | - | - | 298,391 | - | 298,391 |
| Shares issued for debt | - | - | - | - | - | - | - | - | - |
| Shares issued for exercise of Restricted Share Unit | 555,000 | - | 51,142 | (51,142) | - | - | - | - | - |
| Share issuance costs | - | - | (52,311) | 59,879 | - | - | 7,568 | - | 7,568 |
| Reissuance of warrants | - | - | - | 200,163 | - | - | 200,163 | - | 200,163 |
| Currency translation adjustment | - | - | (2,510) | (1,272) | (24,778) | - | (28,560) | - | (28,560) |
| Net income for the period | - | - | - | - | - | (961,672) | (961,672) | 991 | (960,681) |
| Balance, December 31, 2024 | 56,164,690 | 123,894 | $ 10,860,567 | $ 1,510,842 | $ (5,710) | $ (18,839,562) | $ (6,473,863) | $ (85,503) | $ (6,559,366) |
| Share-based compensation | - | - | - | 255,711 | - | - | 255,711 | - | 255,711 |
| Shares issued in private placement | 10,247,150 | - | 570,397 | - | - | - | 570,397 | - | 570,397 |
| Share issuance costs | - | - | (57,536) | 26,668 | - | - | (30,868) | - | (30,868) |
| Currency translation adjustment | - | - | - | - | 34,680 | - | 34,680 | - | 34,680 |
| Derecognition of NCI | - | - | - | - | - | - | - | 26,685 | 26,685 |
| Net income (loss) for the period | - | - | - | - | - | (1,844,897) | (1,844,897) | 10,749 | (1,834,148) |
| Balance, September 30, 2025 | 66,411,840 | 123,894 | $ 11,373,428 | $ 1,793,221 | $ 28,970 | $ (20,684,459) | $ (7,488,840) | $ (48,069) | $ (7,536,909) |
ARCpoint Inc.
Interim Condensed Consolidated Statements of Cash Flows
Unaudited (in United States dollars)
| For the nine months ended September 30, | ||
|---|---|---|
| 2025 | 2024 | |
| Operating Activities | ||
| Net income (loss) for the period | $ (1,834,148) | $ 2,309,240 |
| Adjusted for: | ||
| Amortization of capitalized commissions | - | 473,907 |
| Amortization of deferred revenue | - | (1,417,164) |
| Amortization and depreciation | 350,381 | 443,639 |
| Bad debt | 2,176 | 151,643 |
| Finance costs | 459,386 | 531,400 |
| Impairment of inventory | - | 56,100 |
| Interest paid | (1,127) | (57,654) |
| Loss on settlement of notes receivable | - | 44,322 |
| Share based compensation | 255,711 | 163,883 |
| Gain on disposal of ABH Greenville | (341,612) | - |
| Gain as result of deconsolidation | - | (6,314,646) |
| Share of income of associate | (574,011) | (14,749) |
| Unrealized foreign exchange gains and losses | 40,529 | (20,366) |
| Changes in operating working capital: | ||
| Accounts payable and accrued liabilities | 273,811 | 715,482 |
| Accounts receivable | 212,561 | (340,929) |
| Brand Fund restricted cash | - | 83,263 |
| Capitalized commissions | - | (299,298) |
| Cash received for deferred revenues | - | 890,133 |
| Prepaid expenses | 15,195 | 139,225 |
| Net cash related to operating activities | (1,141,148) | (2,462,569) |
| Investing Activities | ||
| Advances on notes receivable- other | - | (40,741) |
| Loss of cash on deconsolidation | - | (27,730) |
| Net cash received from disposal of ABH Greenville | 359,557 | - |
| Repayment on notes receivable- other | - | 123,907 |
| Net cash related to investing activities | 359,557 | 55,436 |
| Financing Activities | ||
| Lease principal payments made | (21,577) | (85,245) |
| Lease interest payments made | (2,097) | (31,259) |
| Repayment of notes payable | - | (370,230) |
| Proceeds from private placement, net | 539,529 | 1,754,066 |
| Proceeds from notes payable | 287,179 | 439,980 |
| Net cash related to financing activities | 803,034 | 1,707,312 |
| Effect of currency translation reserve | 34,680 | (30,425) |
| Decrease in cash and cash equivalents | 56,123 | (730,246) |
| Cash and cash equivalents, beginning of year | 77,116 | 916,702 |
| Cash and cash equivalents, end of period | $ 133,239 | $ 186,456 |
ARCpoint Inc.
Notes to Interim Condensed Consolidated Financial Statements
Unaudited (in United States dollars except per share data)
For the nine months ended September 30, 2025 and 2024
1. Nature of Operations and Going Concern
ARCpoint Inc. ("ARCpoint" or the "Company"), together with its subsidiaries (the "Group"), is a publicly traded health care technology company listed on the TSX Venture Exchange under the symbol "ARC". The Company operates a technology platform that leverages brick-and-mortar locations to give businesses and individual consumers access to convenient, cost-effective health care information and solutions. The Company also maintains an interest in a U.S.-based franchise system providing drug and alcohol testing, DNA and clinical lab testing, corporate wellness programs, and employment and background screening services.
The Company was formed through a reverse takeover transaction completed in October 2022, in which ARCpoint Group LLC ("ARCGL") and its affiliated operating subsidiaries became wholly owned by the Company. As a result of the transaction, ARCGL was identified as the accounting acquirer, and these consolidated financial statements reflect the continuing operations of ARCGL.
On August 20, 2024, ARCpoint entered into a transaction with Any Lab Test Now ("ALTN") to bring together the franchise operations of both companies into a new joint venture company, CRESSO Brands LLC. ("CRESSO") ARCpoint maintains a 29.5% ownership interest in CRESSO, a U.S.-based franchisor offering direct to consumer diagnostic testing and employer solutions.
The Company is a corporation existing under the Canadian Business Corporations Act. Its head office is located at 101 North Main Street, Suite 301, Greenville, South Carolina, USA and its registered office is located at Suite 635, 333 Bay Street, Toronto, Ontario, Canada.
Entity Reorganization
ARCGL and the ARCpoint Operating Subsidiaries completed the Roll-Up on September 7, 2021. The consolidated financial statements of the Group include the financial position and operations of:
- AFG Services, which is a software and clinical services company that supports franchise systems along with other direct business to business customers. AFG Services provides support in the form of marketing, technology, and training to new and existing AFG franchisees. AFG Services was formed under the laws of the state of South Carolina in September 2020.
- ARCpoint Corporate Labs and its subsidiary, ARCpoint Corporate Labs of Indy LLC ("ACL Indy"), which is a vaccine and augmented health services company. It provides diagnostic and toxicology testing, as well as vaccines, to businesses and individuals. ARCpoint Corporate Labs was formed under the laws of the state of South Carolina in July 2020. On June 30, 2022, the Group closed the business operations of ACL Indy and recorded an impairment loss of $19,299 in 2022 and $99,750 in 2023 in the consolidated statement of comprehensive income (loss).
- ARCpoint Holdings holds the intellectual property of the Group. ARCpoint Holdings was formed under the laws of the state of South Carolina in July 2019.
ARCpoint Inc.
Notes to Interim Condensed Consolidated Financial Statements
Unaudited (in United States dollars except per share data)
For the nine months ended September 30, 2025 and 2024
1. Nature of Operations and Going Concern (continued)
Entity Reorganization (continued)
On September 7, 2021, ARCGL acquired all the outstanding membership interests of the ARCpoint Operating Subsidiaries and completed the Roll-Up. In exchange, certain members of the ARCpoint Operating Subsidiaries were provided with units in ARCGL, and the interests of other members were redeemed for cash and notes payable more fully described in Note 12.
In February 2022, the Group acquired a controlling interest (60%) in Achieve Behavioral Health Greenville, LLC (“ABH Greenville”) in partnership with Achieve Behavioral Health, LLC who owns the remaining 40% interest. As of December 31, 2023, the Group acquired an additional 8% in ABH Greenville for a total controlling interest of 68%.
In August 2022, Total Reporting, LLC, a subsidiary of the Group newly formed under the laws of Delaware, acquired certain business assets.
Disposition of AFG and Investment in Associate (CRESSO Brands LLC)
On August 20, 2024, the Group completed a transaction with ALTN Holdings LLC to merge the franchise operations of both its subsidiary companies, AFG and Any Test Franchising, LLC (“ALTN”), into a new joint venture company, CRESSO Brands LLC. ALTN Holdings LLC owns 70.5% of the new entity, with the Group owning the other 29.5%. Both ALTN and AFG brands will remain and be managed on a separate basis. ALTN is an arm’s-length party and there were no finders’ fees payable in connection with this transaction. As a result, the Group lost control of AFG and acquired a 29.5% equity interest in CRESSO. The Group records this equity interest as an investment in an associate (Note 7).
Disposition of ABH Greenville
On January 3, 2025, the Group completed the sale of its 68% share ownership interest in ABH Greenville. In exchange for its ownership interest in ABH Greenville, the Group received cash consideration of $360,000 (Note 13).
ARCpoint Inc.
Notes to Interim Condensed Consolidated Financial Statements
Unaudited (in United States dollars except per share data)
For the nine months ended September 30, 2025 and 2024
1. Nature of Operations and Going Concern (continued)
Material Uncertainty Relating to Going Concern
These interim condensed consolidated financial statements for the nine months ended September 30, 2025 and 2024 (the "financial statements") are presented on the basis that the Group will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. Realization values may be substantially different from the carrying values shown and these consolidated financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Group be unable to continue as a going concern. As at September 30, 2025, the Group had an accumulated deficit of $20,684,459 (December 31, 2024 - $18,839,562) and the Group's working capital deficit was $8,774,712 (December 31, 2024 - $7,819,144).
The Group has incurred significant operating losses and negative cash flows from operations in recent periods and has a working capital deficiency. Whether and when the Group can attain profitability and positive cashflows is uncertain. These uncertainties cast significant doubt upon the Group's ability to continue as a going concern. The Group will need to reduce expenditure and raise capital in order to fund its operations. This need may be adversely impacted by a lack of available financing and deaccelerating operational activities. To address its financing requirements, the Group will seek financing through debt and equity financing. The outcome of these matters cannot be predicted at this time.
2. Basis of Presentation
(a) Basis of Preparation
These financial statements were approved by the Board of Directors and authorized for issue on November 27, 2025.
These financial statements have been prepared in accordance with IAS 34 - Interim Financial Reporting as issued by the IASB. Accordingly, certain disclosures included in these financial statements prepared in accordance with IFRS as issued by the IASB have been condensed or omitted and these financial statements should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2024 (the "Annual Financial Statements").
In the preparation of these financial statements, the Company used the same accounting policies as in the Annual Financial Statements.
The Company's interim results are not necessarily indicative of its results for a full year.
ARCpoint Inc.
Notes to Interim Condensed Consolidated Financial Statements
Unaudited (in United States dollars except per share data)
For the nine months ended September 30, 2025 and 2024
2. Basis of Presentation (continued)
The preparation of the financial statements in compliance with IFRS requires management to make certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies. The areas involving a higher degree of judgment of complexity, or areas where assumptions and estimates are significant to these financial statements are disclosed in Note 3 of the Annual Financial Statements.
(b) Basis of measurement
The financial statements have been prepared on the historical cost basis except for financial instruments that are measured at fair value through the consolidated statement of income (loss). The methods used to measure fair values are disclosed in Note 17.
The financial statements are presented in United States dollars ("USD"). The functional currency of the Company is the Canadian dollar ("CAD"), while the functional currency of its subsidiaries is the United States dollar. An entity's functional currency is the currency of the primary economic environment in which it operates. Unless otherwise indicated, all dollar amounts ("$") are expressed in USD; references to "C$" or "CAD" refer to Canadian dollars.
(c) Basis of consolidation
These financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances are eliminated on consolidation. Control exists where the parent entity has power over the investee and is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Subsidiaries are included in the financial statements from the date control commences until the date control ceases.
A summary of the Company's subsidiaries is as follows:
| Subsidiaries | Country of Incorporation | Percentage of Ownership | |
|---|---|---|---|
| September 30, 2025 | December 31, 2024 | ||
| AFG Services LLC | USA | 100% | 100% |
| ARCpoint Group LLC | USA | 100% | 100% |
| ARCpoint Corporate Labs LLC | USA | 100% | 100% |
| ARCpoint Corporate Labs of Indy LLC | USA | 90% | 90% |
| ARCpoint Holdings LLC | USA | 100% | 100% |
| Achieve Behavioral Health Greenville, LLC | USA | 0% | 68% |
| ARCpoint Finance Corp. | Canada | 100% | 100% |
ARCpoint Inc.
Notes to Interim Condensed Consolidated Financial Statements
Unaudited (in United States dollars except per share data)
For the nine months ended September 30, 2025 and 2024
3. Accounts Receivable, Net
| September 30, 2025 | December 31, 2024 | |
|---|---|---|
| Accounts receivable | $ 490,410 | $ 685,489 |
| Less: estimated credit losses | (184,374) | (184,374) |
| Net accounts receivable | $ 306,036 | $ 501,115 |
As at September 30, 2025, accounts receivables of $103,441 (December 31, 2024 - $388,363) were not past due. As at September 30, 2025, accounts receivables of $2,305 (December 31, 2024 - $60,996) were past due but not impaired. The movement in the provision for impairment is as follows:
| Balance, December 31, 2023 | $ | 195,108 |
|---|---|---|
| Expected credit loss | 261,749 | |
| Amounts written off | (66,641) | |
| Disposal of AFG (Note 7) | (205,842) | |
| Balance, December 31, 2024 | $ | 184,374 |
| Expected credit loss | 2,176 | |
| Amounts written off | (2,176) | |
| Balance, September 30, 2025 | $ | 184,374 |
The expected credit loss provision is recorded as bad debt on the consolidated statements of loss and comprehensive loss.
4. Notes Receivable
As of September 30, 2025, the notes receivable consisted of an employee loan and initial franchise fees for certain existing franchisees, all of which are on demand and are classified as current.
The movement in the Notes Receivable at September 30, 2025, and December 31, 2024 is summarized below:
| September 30, 2025 | December 31, 2024 | |
|---|---|---|
| Balance, beginning of year | $ 60,082 | $ 254,193 |
| Additions | - | 60,370 |
| Accrued interest | - | 345 |
| Reclass note receivable to accounts receivable | (19,658) | (77,931) |
| Forgiven | - | (52,988) |
| Payments received | - | (123,907) |
| Balance, end of period | $ 40,424 | $ 60,082 |
ARCpoint Inc.
Notes to Interim Condensed Consolidated Financial Statements
Unaudited (in United States dollars except per share data)
For the nine months ended September 30, 2025 and 2024
5. Intangible Assets
In December 2022, AFG Services LLC acquired from LabSender, LLC a forked copy of the source code for the LabSender platform ("the Software Asset"), including all LabSender's ownership right, title, and interest in and to the physical instance of the Software Asset to use for monetization by the Group. The Software Asset provides an integrated portal and database for scheduling, sample processing and patient management. It also provides an interface with highly complex labs, allowing for the scheduling and management of outsourced testing such as testosterone and DNA profiling. In January 2023, the Software Asset portal was commercially implemented with additional direct development costs capitalized as of September 30, 2023.
The software development costs incurred, beginning October 1, 2023, are associated with maintaining the Group's implemented innovation and technology initiatives and, therefore, are expensed as incurred. Software development costs expensed during the period ended September 30, 2025 totaled $170,909 (2024 - $265,687).
A summary of the Group's intangible assets is as follows:
| Total | |
|---|---|
| Cost | |
| Balance, December 31, 2023 and 2024 | $ 1,294,849 |
| Balance, September 30, 2025 | $ 1,294,849 |
| Accumulated amortization | |
| Balance, December 31, 2023 | $ 493,057 |
| Amortization | 376,372 |
| Balance, December 31, 2024 | $ 869,429 |
| Amortization | 280,736 |
| Balance, September 30, 2025 | $ 1,150,165 |
| Carrying amount | |
| Balance, December 31, 2024 | $ 425,420 |
| Balance, September 30, 2025 | $ 144,684 |
ARCpoint Inc.
Notes to Interim Condensed Consolidated Financial Statements
Unaudited (in United States dollars except per share data)
For the nine months ended September 30, 2025 and 2024
6. Property and Equipment
A summary of the Group's property and equipment is as follows:
| Furniture and Office Equipment | Computer Equipment and Software | Leasehold Improvements | Total | |
|---|---|---|---|---|
| Cost | ||||
| Balance, December 31, 2023 | $ 223,746 | $ 161,579 | $ 508,134 | $ 893,459 |
| Disposal of AFG (Note 7) | (131,209) | - | (176,333) | (307,542) |
| Balance, December 31, 2024 | $ 92,537 | $ 161,579 | $ 331,801 | $ 585,917 |
| Disposal of ABH Greenville (Note 13) | (14,871) | (37,239) | - | (52,110) |
| Balance, September 30, 2025 | $ 77,666 | $ 124,340 | $ 331,801 | $ 533,807 |
Accumulated depreciation
| Balance, December 31, 2023 | $ | 130,736 | $ | 151,808 | $ | 89,755 | $ | 372,299 |
|---|---|---|---|---|---|---|---|---|
| Depreciation | 24,852 | 9,771 | 53,032 | 87,655 | ||||
| Disposal of AFG (Note 7) | (77,594) | - | (25,196) | (102,790) | ||||
| Balance, December 31, 2024 | $ | 77,994 | $ | 161,579 | $ | 117,591 | $ | 357,164 |
| Depreciation | 3,407 | - | 36,496 | 39,903 | ||||
| Disposal of ABH Greenville (Note 13) | (11,795) | (37,239) | (49,034) | |||||
| Balance, September 30, 2025 | $ | 69,606 | $ | 124,340 | $ | 154,087 | $ | 348,033 |
Carrying amount
| Balance, December 31, 2024 | $ 14,543 | $ - | $ 214,210 | $ 228,753 |
|---|---|---|---|---|
| Balance, September 30, 2025 | $ 8,060 | $ - | $ 177,714 | $ 185,774 |
7. Investment in Associate
On August 20, 2024, the Group completed a transaction with ALTN Holdings LLC ("ALTN Holdings") whereby AFG was disposed of with the net assets contributed to CRESSO. CRESSO was formed to hold the net assets of AFG and Any Test Franchising, LLC ("ALTN"), a subsidiary of ALTN Holdings. As a result of the disposal and deconsolidation, the Group retained a 29.5% interest in CRESSO. The Group's interest in CRESSO is recorded as an investment in associate accounted using the equity method.
Due to the change in control, AFG Franchise was disposed and deconsolidated which gave rise to a gain on disposition of $5,829,432 during the year ended December 31, 2024.
13
ARCpoint Inc.
Notes to Interim Condensed Consolidated Financial Statements
Unaudited (in United States dollars except per share data)
For the nine months ended September 30, 2025 and 2024
7. Investment in Associate (continued)
Summary of the latest available financial information for the period ended September 30, 2025, for CRESSO is as follows:
| September 30, 2025 | December 31, 2024 | |
|---|---|---|
| Current assets | $ 2,605,754 | $ 1,702,609 |
| Non-current assets | 13,667,121 | 13,950,604 |
| Current liabilities | (609,165) | (711,826) |
| Non-current liabilities | (8,997,669) | (10,221,146) |
| Net assets | $ 6,666,041 | $ 4,720,241 |
| Nine months ended September 30, 2025 | August 21, 2024 to September 30, 2024 | |
| --- | --- | --- |
| Revenue | $ 9,729,560 | $ 1,191,095 |
| Operating expenses | (7,783,760) | (1,141,099) |
| Net income | $ 1,945,800 | $ 49,996 |
| The Group’s share of net income - 29.5% | $ 574,011 | $ 14,749 |
The Group's interest in CRESSO is recorded as an investment using the equity method:
| Balance, December 31, 2023 | $ - |
|---|---|
| Equity interest in Cresso at August 20, 2024 | 1,607,575 |
| Share of income in Cresso for the period August 20 - December 31, 2024 | 76,470 |
| Balance, December 31, 2024 | 1,684,045 |
| Share of income in Cresso for the period | 574,011 |
| Balance, September 30, 2025 | $ 2,258,056 |
ARCpoint Inc.
Notes to Interim Condensed Consolidated Financial Statements
Unaudited (in United States dollars except per share data)
For the nine months ended September 30, 2025 and 2024
8. Accounts Payable and Accrued Liabilities
| September 30, | December 31, | ||
|---|---|---|---|
| 2025 | 2024 | ||
| Trade payables | $ | 2,085,947 | $ 1,847,990 |
| Accrued distributions | 266,238 | 266,238 | |
| Other accrued liabilities | 89,680 | 89,143 | |
| Total | $ | 2,441,865 | $ 2,203,371 |
9. Right-of-Use Assets and Lease Liabilities
The Group entered into lease agreements for long-term office space and medical equipment during 2021 and recognized an initial lease liability of $1,013,790, measured using the present value of the lease payments discounted using a range of incremental borrowing rates of 3.9% to 8.4%. The Group entered into lease agreements for long-term office space during the year ended December 31, 2022, and recognized an initial lease liability of $501,107 under IFRS 16, measured using the present value of the lease payments discounted using the incremental borrowing rates ranging from 6.25% to 10.75%. The Group recorded a right-of-use asset of the same amount which relates to long-term office leases. Amortization of the right-of-use asset is calculated using the straight-line method over the remaining lease term. In the year ended December 31, 2023, the Group terminated its ACL Indy office lease for $80,750, resulting in a gain on retirement of the lease of $157,477 and one ABH Greenville office lease, resulting in a gain on retirement of the lease of $25,833. In the year ended December 31, 2024, the Group terminated one ABH Greenville office lease, resulting in a gain on retirement of the lease of $2,990.
During the period ended September 30, 2025, the Group recognized interest expense on the lease liability of $2,097 (2024- $31,259) and derecognized its ABH Greenville office leases with the disposal of ABH Greenville (Note 13).
15
ARCpoint Inc.
Notes to Interim Condensed Consolidated Financial Statements
Unaudited (in United States dollars except per share data)
For the nine months ended September 30, 2025 and 2024
9. Right-of-Use Assets and Lease Liabilities (continued)
Right-of-use assets:
| Balance, December 31, 2023 | $ 546,185 |
|---|---|
| Additions | 118,274 |
| Amortization | (115,000) |
| Termination of lease | (21,524) |
| Disposal of AFG (Note 7) | (353,075) |
| Balance, December 31, 2024 | $ 174,860 |
| Amortization | (29,742) |
| Disposal of ABH Greenville (Note 13) | (125,608) |
| Balance, September 30, 2025 | $ 19,510 |
Lease liabilities:
| Balance, December 31, 2023 | $ 792,671 |
|---|---|
| Add: Additions | 118,274 |
| Add: Interest | 33,773 |
| Less: Rent payments | (117,451) |
| Less: Equipment lease payments | (42,486) |
| Less: Termination of lease | (24,513) |
| Less: Disposal of AFG (Note 7) | (596,962) |
| Balance, December 31, 2024 | $ 163,306 |
| Add: Interest | 2,097 |
| Less: Equipment lease payments | (23,674) |
| Less: Disposal of ABH Greenville (Note 13) | (106,323) |
| Balance, September 30, 2025 | 35,406 |
| Less: Current portion | (35,406) |
| Non-current portion | $ - |
| September 30, 2025 | |
| --- | --- |
| Maturity Analysis – contractual undiscounted cash flows from minimum lease | |
| Short-term portion - less than one year | $ 37,561 |
| Long-term portion - one to five years | - |
| Total undiscounted lease liabilities | $ 37,561 |
ARCpoint Inc.
Notes to Interim Condensed Consolidated Financial Statements
Unaudited (in United States dollars except per share data)
For the nine months ended September 30, 2025 and 2024
10. Convertible Loans
In the year ended December 31, 2022, the Group reissued warrants as part of the RTO transactions for the GICMB I convertible debt that were converted. As a result, the Group incurred a loss on the reissuance of the warrants. The loss was deferred with an offset to the convertible debt balance and amortized over the remaining term of the loan. As at September 30, 2025, the Group amortized $Nil of the loss incurred (December 31, 2024 - $200,163). These warrants expire October 21, 2025.
The convertible loans bear a 6.5% interest per annum, are convertible at C$0.312 per SVS with a maturity date that has been extended indefinitely until further agreement between parties. As at September 30, 2025, an amount of $2,570,759, net of fair value discount, remains outstanding (December 31, 2024 - $2,456,510). As at September 30, 2025, the face value amount of $2,650,551 remains outstanding (December 31, 2024 - $2,536,302).
A summary of the Group's convertible loans is as follows:
| Balance, December 31, 2023 | $ 2,490,250 |
|---|---|
| Interest paid | (57,654) |
| Interest accrued | 153,168 |
| Accretion | 70,908 |
| Amortization of loss on reissuance of warrants | (200,163) |
| Balance, December 31, 2024 | $ 2,456,510 |
| Interest accrued | 114,249 |
| Balance, September 30, 2025 | $ 2,570,759 |
11. Notes Payable – Related Party
Notes payable - related party consisted of loans with officers and board members of the Group. These loans are unsecured and are payable as cash flow allows, at rates ranging from 1.88% to 12% per annum.
On October 21, 2022, concurrently with the Transaction described in Note 1, the Group provided $150,000 in cash and issued a promissory note that bears a 1.88% interest per annum of $2,350,000 with a maturity date of April 26, 2031, to a board member to acquire 25,000 ARCpoint Class A Common Units.
During the year ended December 31, 2024, the Company entered into non-secured demand loan agreements with officers and board members of the Group for $499,980 that bear a simple interest rate of 10% per annum. The Group completed a debt settlement agreement with a director of the Company and repaid an outstanding debt of $110,884 (C$153,565) by issuing 1,396,046 SVS at a price of C$0.11. The Company recorded a gain on settlement of the debt of $4,889.
During the nine months ended September 30, 2025, the Group entered into non-secured demand loan agreements with an officer and a board member of the Group for $128,000 that bears a simple interest rate of 12% per annum.
ARCpoint Inc.
Notes to Interim Condensed Consolidated Financial Statements
Unaudited (in United States dollars except per share data)
For the nine months ended September 30, 2025 and 2024
11. Notes Payable – Related Party (continued)
For the nine months ended September 30, 2025, interest expense on these notes were $119,085 (2024 - $91,053).
As at September 30, 2025, an amount of $2,994,837, net of fair value discount, remains outstanding (December 31, 2024 - $2,595,828). As at September 30, 2025, the face value amount of $4,017,917 remains outstanding (December 31, 2024 - $3,846,331).
| Related Parties | Maturity Date | September 30, 2025 | December 31, 2024 |
|---|---|---|---|
| P Blakely | December 31, 2025 | $ 1,071,939 | $ 1,021,962 |
| F Mirando | April 26, 2031 | 1,370,221 | 1,184,126 |
| Loans from management | Due on demand | 552,677 | 389,740 |
| Total | $ 2,994,837 | $ 2,595,828 |
12. Notes Payable
On September 7, 2021, in connection to the Roll-Up described in Note 1, the Group issued a two-year, 5% interest per annum promissory note of $2,552,611 to pay out the minority unitholders of AFG. Under the terms of the Redemption Agreement, a portion of the redemption price was paid to the Sellers at the closing of the transactions contemplated by the Redemption Agreement, which occurred on September 7, 2021. The Redemption Agreement provides that the remainder of the redemption price is to be paid on or before September 7, 2023, provided that payment of such remainder will be deferred if and to the extent necessary to comply with South Carolina Code Section 33-44-406. Section 33-44-406 generally restricts distributions by a limited liability company to its members if the limited liability company is not able to pay its debts as they become due in the ordinary course of business or the company's total assets would be less than the sum of its total liabilities. Given the current net losses, the Group has deferred payment until such time the Group is able to make in accordance with Section 33-44-406.
The Group also entered into an agreement during the year ended December 31, 2023, with one of the arm's length unitholders to restructure $1,062,719 of the note plus accrued and unpaid interest ("Indebtedness"). Pursuant to the terms of the agreement, the Group agreed to issue 1,500,000 Class A SVS at a deemed price of C$0.12 per share to settle $136,098 (C$180,000) of indebtedness on December 29, 2023, and to pay $350,000 of Indebtedness to the unit holder in 2024. The Group further agreed that the remaining Indebtedness shall bear a simple interest at a rate of 9.66% per annum for a period of two years and shall cease to accrue after the date that is two years from the date of the Agreement. Taking into effect the cash and shares paid in this agreement, a change in the present value of the outstanding note payable resulted in a gain of $32,899 for the Group for the year ended December 31, 2023.
18
ARCpoint Inc.
Notes to Interim Condensed Consolidated Financial Statements
Unaudited (in United States dollars except per share data)
For the nine months ended September 30, 2025 and 2024
12. Notes Payable (continued)
During the year ended December 31, 2024, the Group entered into an agreement with one of the AFG minority unitholders note payable to restructure the related interest rate from 5% to 10% per annum as of March 1, 2024. Pursuant to the terms of the agreement, the Group agreed to pay an additional amount of $23,776 when the remaining redemption price and accrued interest are paid. During the year ended December 31, 2024, the Group modified an agreement with one of the arm's length unitholders of the AFG minority unitholders note payable to restructure the related interest rate from 5% to 10% per annum as of September 7, 2021.
During the year ended December 31, 2024, the Company entered into an amended agreement to assign the promissory notes from AFG to ARCGL and defer the repayment of the Outstanding Redemption Amount until the later of December 28, 2024 or after certain financial metrics are met. As of September 30, 2025, these amounts remain outstanding.
On June 6, 2025, the Group issued a 12% interest per annum promissory note of $54,200 to CRESSO with a maturity date of March 31, 2026. Any principal and accrued interest that is not timely shall bear interest payable on demand at 18% per annum. This note and the indebtedness are secured by the Group's equity interest in CRESSO in the amount of 1.5% equity interest of CRESSO. During the period ended September 30, 2025, interest expense on this note was $2,067 (2024 - $Nil).
On July 3, 2025, the Group issued a $104,979 note payable to GICMB with an interest rate of 12% per annum and maturity date of January 3, 2026 ("Maturity Date"), with principal and interest both payable at the Maturity Date. During the period ended September 30, 2025, interest expense on this note was $2,439 (2024 - $Nil).
| Balance, December 31, 2023 | $ 2,553,270 |
|---|---|
| Interest accrued | 193,474 |
| Repayments | (350,000) |
| Balance, December 31, 2024 | 2,396,744 |
| Additions | 159,179 |
| Interest Accrued | 109,832 |
| Balance, September 30, 2025 | $ 2,665,755 |
As at September 30, 2025, these notes payable had an outstanding amount of $2,665,755 (December 31, 2024 - $2,396,744).
19
ARCpoint Inc.
Notes to Interim Condensed Consolidated Financial Statements
Unaudited (in United States dollars except per share data)
For the nine months ended September 30, 2025 and 2024
13. Non-controlling Interests and Disposal of ABH Greenville
a. Non-controlling interests
A summary of the Group’s non-controlling interest is as follows:
| Corporate Labs of Indy | ABH Greenville | Total | |||
|---|---|---|---|---|---|
| 90% | 68% | ||||
| Balance as at December 31, 2023 | $ | (47,749) | $ | (28,403) | $ (76,152) |
| Net income attributable to non-controlling | (320) | (9,031) | (9,351) | ||
| Balance as at December 31, 2024 | $ | (48,069) | $ | (37,434) | $ (85,503) |
| Net income attributable to non-controlling interest | - | 10,749 | 10,749 | ||
| Non-controlling interest derecognized | - | 26,685 | 26,685 | ||
| Balance as at September 30, 2025 | $ | (48,069) | $ | - | $ (48,069) |
b. Disposal of ABH Greenville
On January 3, 2025, the Group completed the sale of its 68% share ownership interest in ABH Greenville, as originally announced on December 30, 2024. In exchange for its ownership interest in ABH Greenville, the Group received a cash consideration of $360,000. ABH Greenville’s results of operations, and details of the sale are set out below.
A summary of the results of operations for the nine months ended September 30, 2025 and 2024 is as follows:
| 2025 | 2024 | ||
|---|---|---|---|
| Revenue | $ | - | $ 210,072 |
| (Expenses) recovery(1) | 33,592 | (252,295) | |
| Net income (loss) | $ | 33,592 | $ (42,223) |
| Attributable to Group | 22,843 | (28,712) | |
| Attributable to Non-controlling interest | 10,749 | (13,511) |
(1) The expense recovery for the nine months ended September 30, 2025 relates to the forgiveness of an intercompany payable amount which was recognized as a gain by ABH Greenville prior to disposal.
ARCpoint Inc.
Notes to Interim Condensed Consolidated Financial Statements
Unaudited (in United States dollars except per share data)
For the nine months ended September 30, 2025 and 2024
13. Non-controlling Interests and Disposal of ABH Greenville (continued)
b. Disposal of ABH Greenville
A summary of the disposal of ABH Greenville as at January 3, 2025 is as follows:
| January 3, 2025 | |
|---|---|
| Assets: | |
| Cash | $ 443 |
| Prepaids | 5,817 |
| Property, Plant, Equipment | 3,076 |
| Right of use assets | 125,608 |
| 134,944 | |
| Liabilities: | |
| Accounts payable | 36,918 |
| Lease liabilities | 106,323 |
| 143,241 | |
| Net assets (liabilities) | (8,297) |
| Less: Non-controlling interest | 26,685 |
| Group's share of consolidated carrying amount | 18,388 |
| Cash consideration received | 360,000 |
| Gain on disposal | $ 341,612 |
c. Corporate Labs of Indy
The following is the summarized statements of financial position of ARCpoint Corporate Labs of Indy as of September 30, 2025 and December 31, 2024:
| September 30, 2025 | December 31, 2024 | |
|---|---|---|
| Current: | ||
| Assets | $ 2,433 | $ 2,433 |
| Liabilities | (355,054) | (355,054) |
| Total current net (liabilities) | (352,621) | (352,621) |
| Non-current: | ||
| Assets | - | - |
| Liabilities | - | - |
| Total non-current net (liabilities) | - | - |
| Total net (liabilities) | $ (352,621) | $ (352,621) |
There were no transactions within ARCpoint Corporate Labs of Indy during the nine months ended September 30, 2025 and 2024. Accordingly, no profit or loss was recognized for these periods.
ARCpoint Inc.
Notes to Interim Condensed Consolidated Financial Statements
Unaudited (in United States dollars except per share data)
For the nine months ended September 30, 2025 and 2024
14. Share Capital
a. Authorized share capital
The Company is authorized to issue unlimited SVS and PVS, both with no par value. As of September 30, 2025, 66,411,840 SVS and 123,894 PVS were issued and outstanding.
During the nine months ended September 30, 2025, the Group had the following transactions:
- On March 7, 2025, the Group completed a non-brokered private placement for gross proceeds of $570,397 (C$800,000) through the sale of 10,000,000 units at C$0.08 per unit. Each unit was comprised of one Class A SVS of the Group (each, a "Share") and one warrant to purchase an additional Share at C$0.12 for 24 months from the March 7, 2025. In connection with the closing of the private placement, the Company issued 247,150 finders' shares at C$0.08 per SVS for $13,757 (C$19,772), 536,400 finders' warrants valued using the Black Scholes Model for $26,668 (C$38,328); key inputs are described under Share Warrants; and paid a cash commission of $17,018 (C$24,458) to certain arm's-length finders. Each finder's warrant entitles the holder thereof to purchase one Share at a price of C$0.08 per finder's warrant share until March 7, 2027. Using the residual method, the entire proceeds of the private placement were allocated to share capital, as the market price of the Shares on the closing date exceeded the unit offering price.
During the year ended December 31, 2024, the Group had the following transactions:
-
On January 22, 2024, the Group completed a non-brokered private placement by issuing 11,000,000 SVS at $0.10 per SVS for total gross proceeds of $1,100,000.
-
On July 12, 2024, the Group completed a debt settlement agreement with a director of the Company and repaid an outstanding debt of $110,884 (C$153,565) by issuing 1,396,046 SVS at a price of C$0.11. The Company recorded a gain on settlement of the debt of $4,889.
-
On July 31, 2024, the Group completed a non-brokered private placement for gross proceeds of C$1,004,175, through the sale of 13,389,000 SVS of the Group at a price of C$0.075 per SVS. In connection with the closing of the private placement, the Company issued 670,900 finder's SVS of the Group recorded as share issuance costs for $32,154. The Company also issued 1,013,900 finder's warrants valued using the Black Scholes Model for $59,878 (C$82,684); key inputs are described under Share Warrants; and paid a cash commission of $44,128 (C$60,934) to certain arm's length finders and incurred legal and other fees in connection with the private placement totaled $25,748 (C$35,554). Each finder's warrant entitles the holder thereof to purchase one SVS at a price of C$0.075 per share until July 31, 2026.
22
ARCpoint Inc.
Notes to Interim Condensed Consolidated Financial Statements
Unaudited (in United States dollars except per share data)
For the nine months ended September 30, 2025 and 2024
14. Share Capital (continued)
b. Share options
The Company adopted an omnibus incentive plan (the "Omnibus Plan"), which provides that the Board of Directors of the Company may from time to time, in its discretion, and in accordance with the TSX-V requirements, grant to directors, officers and employees to the Company and its subsidiaries, restricted share units ("RSU"), performance share units ("PSU"), deferred share units ("DSU", together with RSU and PSU, the "Units") and non-transferable SVS purchase options (the "Options", together with the Units, the "Awards"). The maximum number of SVS issuable at any time pursuant to outstanding Awards under the Omnibus Plan will be equal to the following: (i) in respect to grants of the Options under the Omnibus Plan, 10% of the total number of SVS that are issued and outstanding and that may be convertible from the PVS that are then issued and outstanding (the "Issued Shares") as of the date of any Option grant, and (ii) in respect to grants of Units under the Omnibus Plan, 10,210,074 SVS, representing 10% of the Issued Shares as of the date of implementation of the Omnibus Plan.
On October 2, 2023, the Company issued 3,440,000 options to current officers, directors and employees of the Company. Each option is exercisable to acquire one Class A SVS of the Company at a price of C$0.25 per SVS. The options vest in three equal installments on the anniversary of the issue date for each of the three years following the issue date with an expiry date of October 2, 2033. The grant date fair value of the Options was $100,703 (C$138,082), based on the Black-Scholes Option Pricing Model, with the following assumptions: risk free rate 4.26%; volatility of 31%; dividend rate 0%; forfeiture rate 0%; and expected life of 10 years. The share-based compensation expense recognized in the period ended September 30, 2025, for the vesting of these options was $26,256 (C$36,727) (2024- $46,351 (C$63,217)).
On July 18, 2024, the Company issued 2,000,000 options to arm's length consultants of the Company. Each option is exercisable to acquire one Class A SVS of the Company at a price of C$0.12 per SVS. The options vest in eight equal quarterly installments for each of the two years following the issue date with an expiry date of July 18, 2029. The grant date fair value of the Options was $169,262 (C$231,834), based on the Black-Scholes Option Pricing Model, with the following assumptions: risk free rate 3.34%; volatility of 138%; dividend rate 0%; forfeiture rate 0%; and expected life of 5 years. The share-based compensation expense recognized in the period ended September 30, 2025, for the vesting of these options was $60,764 (C$84,997) (2024- $23,730 (C$32,365)).
On September 3, 2024, the Company issued 4,720,000 options to current officers, directors, consultants and employees of the Company. Each option is exercisable to acquire one Class A SVS of the Company at a price of C$0.12 per SVS. Of the 4,720,000 options, 920,000 vest in four equal quarterly installments for the year following the issue date with an expiry date of September 3, 2034. The remaining 3,800,000 options vest in eight equal quarterly installments for each of the two years following the issue date with an expiry date of September 3, 2034. The grant date fair value of the Options was $407,640 (C$552,283), based on the Black-Scholes Option Pricing Model, with the following assumptions: risk free rate 3.06%; volatility of 138%; dividend rate 0%; forfeiture rate 0%; and expected life of 10 years. The share-based compensation expense recognized in the period ended September 30, 2025, for the vesting of these options was $154,980 (C$216,786) (2024- $32,231 (C$43,960)).
23
ARCpoint Inc.
Notes to Interim Condensed Consolidated Financial Statements
Unaudited (in United States dollars except per share data)
For the nine months ended September 30, 2025 and 2024
14. Share Capital (continued)
b. Share options
In relation to the disposition of AFG Franchise, on August 20, 2024, 680,000 unvested options with an exercise price of C$0.25 were cancelled. As a result, the Company recorded an additional charge of $17,001 to accelerate the vesting of these options during the year ended December 31, 2024.
The changes in stock options during the nine months ended September 30, 2025 and year ended December 31, 2024 are as follows:
| September 30, 2025 | December 31, 2024 | |||
|---|---|---|---|---|
| Number of options | Weighted average exercise price | Number of options | Weighted average exercise price | |
| Options outstanding, beginning | 9,740,000 | C$ 0.17 | 4,061,000 | C$ 0.26 |
| Options issued | - | - | 6,720,000 | 0.12 |
| Options expired/cancelled | - | - | (1,041,000) | 0.25 |
| Options outstanding, ending | 9,740,000 | C$ 0.17 | 9,740,000 | C$ 0.17 |
Details of options outstanding and exercisable at September 30, 2025, are as follows:
| Number outstanding | Number exercisable | Price (C$) | Expiry Date | Remaining Life |
|---|---|---|---|---|
| 260,000 | 260,000 | $0.45 | October 21, 2027 | 2.06 years |
| 2,760,000 | 920,000 | $0.25 | October 2, 2033 | 8.01 years |
| 2,000,000 | 1,000,000 | $0.12 | July 18, 2029 | 3.80 years |
| 4,720,000 | 2,820,000 | $0.12 | September 3, 2034 | 8.93 years |
| 9,740,000 | 5,000,000 | $0.17 | 7.43 years |
c. Share warrants
On December 16, 2021, ARCGL issued 10,000 warrants to ARCGL security holders. Following the completion of the Company's reverse takeover transaction on October 21, 2022, the 10,000 ARCGL warrants were exchanged for 5,000,000 of the Company's warrants. Each warrant entitles the holder thereof to acquire an SVS at a price of C$0.16 per SVS. On July 31, 2024, the Company extended the expiry date of these share purchase warrants from December 31, 2024, to December 31, 2026.
In connection with a private placement during the year ended December 31, 2022, ARCpoint Finco issued, in aggregate, 2,416,868 unit warrants to the investors of the private placement. Each unit warrant was exchanged for one replacement unit warrant of the Company upon closing of the RTO on October 21, 2022. Each replacement unit warrant is exercisable to acquire one SVS of the Company at a price of C$0.675 per SVS for a period of three years from the date of issue.
24
ARCpoint Inc.
Notes to Interim Condensed Consolidated Financial Statements
Unaudited (in United States dollars except per share data)
For the nine months ended September 30, 2025 and 2024
14. Share Capital (continued)
c. Share warrants (continued)
In connection with the private placement above, ARCpoint Finco issued 45,351 compensation warrants to certain finders. Each compensation warrant was exchanged for one replacement compensation warrant of the Company upon closing of the RTO on October 21, 2022. Each replacement compensation warrant is exercisable to acquire one SVS of the Company at a price of C$0.45 per SVS for a period of two years from the date of issue. These warrants expired unexercised during the year ended December 31, 2024.
On July 31, 2024, in connection with the closing of a private placement, the Group issued 1,013,900 finders' warrants, which are exercisable to acquire one SVS of the Company at a price of C$0.075 per SVS for a period of two years from the date of issue. The fair value of the warrants issued to finders was $59,878 (C$82,684) based on the Black-Scholes Option Pricing Model, with the following assumptions: risk free rate 3.60%; volatility of 138%; dividend rate 0%; forfeiture rate 0%; and expected life of 2 years.
In connection with the closing of the private placement on March 7, 2025, the Group issued 536,400 finders' warrants, which are exercisable to acquire one SVS of the Company at a price of C$0.08 per SVS for a period of two years from the date of issue. The fair value of the warrants issued to finders was $26,668 (C$38,328) based on the Black-Scholes Option Pricing Model, with the following assumptions: risk free rate 2.59%; volatility of 138%; dividend rate 0%; forfeiture rate 0%; and expected life of 2 years.
The changes in warrants during the nine months ended September 30, 2025 and year ended December 31, 2024 as follows: Details of warrants outstanding and exercisable as at September 30, 2025, are as follows:
| September 30, 2025 | December 31, 2024 | |||
|---|---|---|---|---|
| Number of warrants | Weighted average exercise price | Number of warrants | Weighted average exercise price | |
| Warrants outstanding, beginning | 8,430,768 | C$ 0.304 | 7,462,219 | C$ 0.330 |
| Warrants issued | 10,536,400 | 0.118 | 1,013,900 | 0.075 |
| Warrants expired | - | - | (45,351) | 0.450 |
| Warrants outstanding, ending | 18,967,168 | C$ 0.205 | 8,430,768 | C$ 0.304 |
| Number outstanding | Price (C$) | Expiry Date | Remaining Life | |
| --- | --- | --- | --- | |
| 5,000,000 | $0.16 | December 31, 2026 | 1.24 years | |
| 2,416,868 | $0.675 | October 21, 2025 | 0.05 years | |
| 1,013,900 | $0.075 | July 31, 2026 | 0.83 years | |
| 536,400 | $0.080 | March 7, 2027 | 1.43 years | |
| 10,000,000 | $0.120 | March 7, 2027 | 1.43 years | |
| 18,967,168 | $0.205 | 1.17 years |
ARCpoint Inc.
Notes to Interim Condensed Consolidated Financial Statements
Unaudited (in United States dollars except per share data)
For the nine months ended September 30, 2025 and 2024
14. Share Capital (continued)
d. Restricted Share Units, Performance Share Units and Deferred Share Units
On October 2, 2023, the Group awarded 555,000 RSUs to a director and officer of the Company pursuant to the Omnibus Plan. Each RSU can be settled for one SVS after such RSU vests on October 2, 2024. During the year ended December 31, 2024, these RSUs were fully exercised.
On November 5, 2024, the Group issued 2,000,000 Deferred Share Units ("DSUs") to a director of the Company. Each vested DSU shall entitle the holder to one SVS. The expiry of the DSUs would be the earlier of: (i) the last business day that is one year from the date on which the holder receiving the DSU ceases to be a director, officer, employee or consultant of the Company or any of its subsidiaries, or (ii) the business day preceding December 31 of the calendar year following the calendar year during which the holder ceases to be a director, officer, employee or consultant of the Company or any of its subsidiaries.
On May 13, 2025, the Group awarded 1,000,000 RSUs to a consultant of the Company pursuant to the Omnibus Plan. Each RSU can be settled for one SVS after such RSU vests on May 13, 2025 until December 29, 2028. The fair value of the RSUs recognized during the period ended September 30, 2025, included in share-based compensation expense was $13,711 (C$19,179) (2024 - $Nil).
15. Commitments and Contingencies
As at September 30, 2025 and December 31, 2024, there were no capital or commitments other than the lease commitments disclosed in Note 9.
16. Capital Management
The Group's policy is to maintain a strong capital base so as to maintain investor and creditor confidence and to sustain future development of the business. The capital structure of the Group consists of the aggregate of short-term and long-term debt, deferred revenue, members' capital, reserves, and deficit.
The Group manages its capital structure and adjusts it in light of economic conditions and externally imposed capital requirements. The Group, upon approval from its Board of Directors, will make changes to its capital structure as deemed appropriate under specific circumstances. The current objectives are to safeguard the Group's ability to continue as a going concern, provide financial capacity and flexibility to meet its strategic objectives and provide an adequate return to unitholders commensurate with the level of risk. There were no changes in the Group's approach to capital management during the nine months ended September 30, 2025.
ARCpoint Inc.
Notes to Interim Condensed Consolidated Financial Statements
Unaudited (in United States dollars except per share data)
For the nine months ended September 30, 2025 and 2024
17. Financial Instruments
a. Financial assets and liabilities
Financial instruments are measured at amortized cost or fair value. Fair value represents the estimated amounts at which financial instruments could be exchanged between knowledgeable and willing parties in an arm’s length transaction. Determining fair value requires management judgment.
As of September 30, 2025 and December 31, 2024, the carrying values of cash, accounts receivable, notes receivable, short term portion of lease liabilities, accounts payable and accrued liabilities, and notes payable approximate their fair value due to their ability to be promptly liquidated and their short term to maturity. In addition, the convertible debentures are being amortized to the face value at an effective interest rate which approximates market rates.
Financial instruments are analyzed using the following hierarchy that reflects the significance of the inputs used in making the measurements:
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: inputs other than quoted prices included within 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 for the asset or liability that are not based on observable market data (unobservable inputs).
The Group’s convertible debt are measured based on unobservable inputs and are considered Level 3 instruments. The Group’s all other financial assets and liabilities are carried at amortized cost and are considered Level 2 instruments, because while observable prices and inputs are available, they are not quoted in an active market. There has not been any transfer between fair value hierarchy levels during the nine months ended September 30, 2025 and 2024.
b. Financial risk management
(i) Credit risk
The Group’s financial instruments that are exposed to concentrations of credit risk are primarily cash, accounts receivable and notes receivable. Credit risk pertaining to cash relates primarily to deposits in banks that, at times, exceed the federally insured limit of $250,000. Management does not believe a significant risk of concentration exists with respect to these balances at September 30, 2025.
(ii) Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group constantly monitors its operations and cash flows to ensure that current and future obligations will be met when they are due.
ARCpoint Inc.
Notes to Interim Condensed Consolidated Financial Statements
Unaudited (in United States dollars except per share data)
For the nine months ended September 30, 2025 and 2024
17. Financial Instruments (continued)
b. Financial risk management (continued)
(ii) Liquidity risk
The maturities of the Group’s financial liabilities are as follows:
| As at September 30, 2025 | |
|---|---|
| Less than 90 days: | |
| Accounts payable | $ 2,085,947 |
| Convertible loans | 2,570,759 |
| Notes payable | 2,665,755 |
| Lease liabilities | 11,446 |
(iii) Currency risk
Foreign currency risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because they are denominated in currencies that differ from the respective functional currency.
The Group is exposed to foreign currency risk on fluctuations related to cash and accounts payable and accrued liabilities that are denominated in Canadian dollars (“CAD”). At September 30, 2025, the Group holds cash of C$1,328 (December 31, 2024 - C$24,062) in CAD bank accounts. A 1% change in foreign exchange rates would have an effect of C$18 (December 31, 2024 - C$343) on foreign currency. During the nine months ended September 30, 2025, the Company had a foreign exchange loss of $39,260 (2024 - loss of $2,192).
18. Related Party Transactions
Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and not disclosed in this note. The following table discloses the compensation amount of the Board of Directors and key management personnel in the ordinary course of their employment recognized as an expense during the reporting periods. Key management personnel have authority and responsibility for overseeing, planning, directing, and controlling the activities of the Group and consist of the Group’s executive officers. The Group’s key management consists of its officers and directors.
ARCpoint Inc.
Notes to Interim Condensed Consolidated Financial Statements
Unaudited (in United States dollars except per share data)
For the nine months ended September 30, 2025 and 2024
18. Related Party Transactions (continued)
Key management compensation for the nine months ended September 30, 2025 and 2024 is as follows:
| Nine months ended September 30, | ||
|---|---|---|
| 2025 | 2024 | |
| Professional fees | $ 128,352 | $ 308,345 |
| Salaries and wages | 330,077 | 758,050 |
| Share based compensation | 118,284 | 97,618 |
| $ 576,713 | $ 1,164,013 |
Compensation of the key management personnel includes salaries and non-cash benefits. As of September 30, 2025, accounts payable amounts owing to related parties are $159,448 (December 31, 2024 - $184,713).
19. Segmented Information
For the nine months ended September 30, 2025, the Group's revenue is derived from two operating segments, which each represent a reportable segment. Management has separated reporting segments by the types of products and services it derives its revenue from. These include:
(i) AFG Services - This segment's revenue consists primarily of clinical testing and software services that support the Group's franchise systems. The revenue generated from this segment also includes diagnostic testing kits sold to franchisees as well as other direct business to business customers.
(ii) Other - This segment's revenue consists of corporately held ARCpoint Lab franchises. This segment's expenses include all corporate related expenses and assets and expenses related to ABH Greenville. As a result of the transaction discussed in Note 13, ABH Greenville is no longer an operating segment of the Group at September 30, 2025.
ARCpoint Inc.
Notes to Interim Condensed Consolidated Financial Statements
Unaudited (in United States dollars except per share data)
For the nine months ended September 30, 2025 and 2024
19. Segmented Information (continued)
All the revenues earned by the Company and all assets occur and /or is located within the United States. A breakdown of revenues and expenses for each operating and reporting segment for the nine months ended September 30, 2025 and 2024 is as follows:
| Period ended September 30, 2025 | ARCpoint Franchise | ||||
|---|---|---|---|---|---|
| Group | AFG Services | Other | Total | ||
| Revenues | $ | - | $451,733 | $ - | $451,733 |
| Cost of sales | - | 84,735 | - | 84,735 | |
| Gross income | - | 366,998 | - | 366,998 | |
| Operating expenses | - | 925,947 | 1,770,537 | 2,696,484 | |
| Total operating loss | $ | - | $(558,949) | $(1,770,537) | $(2,329,486) |
| Period ended September 30, 2024 | ARCpoint Franchise | ||||
| --- | --- | --- | --- | --- | --- |
| Group (1) | AFG Services | Other | Total | ||
| Revenues | $ | 2,692,695 | $1,544,415 | $244,990 | $4,482,100 |
| Cost of sales | 953,322 | 964,030 | 15,870 | 1,933,222 | |
| Gross income | 1,739,373 | 580,385 | 229,120 | 2,548,878 | |
| Operating expenses | 2,299,602 | 1,599,142 | 2,103,256 | 6,002,001 | |
| Total operating loss | $ | (560,229) | $(1,018,757) | $(1,874,136) | $(3,453,123) |
(1) The ARCpoint Franchise Group segment represents revenue from the Group's franchise network, primarily consisting of royalties and Brand Fund contributions calculated as a percentage of sales reported by franchise labs. Additional revenue includes franchise fees and initial setup fees (clinical, training, and technology) paid by new franchisees. As a result of the disposition of AFG described in Note 7, ARCpoint Franchise Group is no longer considered an operating segment of the Group as of December 31, 2024, and September 30, 2025.
A breakdown of non-current assets for each operating segment as of September 30, 2025 and December 31, 2024 is as follows:
| As at September 30, 2025 | AFG Services | Other | Total | |||
|---|---|---|---|---|---|---|
| Intangible assets | $ | 144,684 | $ | - | $ | 144,684 |
| Property and equipment | - | 185,774 | 185,774 | |||
| Right-of-use assets | 19,510 | - | 19,510 | |||
| Investment in associate | - | 2,258,056 | 2,258,056 | |||
| Total non-current assets | $ | 164,194 | $ | 2,443,830 | $ | 2,608,024 |
| As at December 31, 2024 | AFG Services | Other | Total | |||
| --- | --- | --- | --- | --- | --- | --- |
| Intangible assets | $ | 425,420 | $ | - | $ | 425,420 |
| Property and equipment | - | 228,753 | 228,753 | |||
| Right-of-use assets | 49,252 | 125,608 | 174,860 | |||
| Investment in associate | - | 1,684,045 | 1,684,045 | |||
| Total non-current assets | $ | 474,672 | $ | 2,038,406 | $ | 2,513,078 |
ARCpoint Inc.
Notes to Interim Condensed Consolidated Financial Statements
Unaudited (in United States dollars except per share data)
For the nine months ended September 30, 2025 and 2024
19. Segmented Information (continued)
A breakdown of total assets and total liabilities for each operating segment as of September 30, 2025 and December 31, 2024 is as follows:
| As at September 30, 2025 | AFG Services | Other | Total | ||
|---|---|---|---|---|---|
| Total Assets | $ | 444,203 | $ | 2,727,510 | $ 3,171,713 |
| Total Liabilities | $ | 388,236 | $ | 10,320,386 | $ 10,708,622 |
| At December 31, 2024 | AFG Services | Other | Total | ||
| --- | --- | --- | --- | --- | --- |
| Total Assets | $ | 835,700 | $ | 2,420,692 | $ 3,256,393 |
| Total Liabilities | $ | 888,560 | $ | 8,927,200 | $ 9,815,759 |
See details in Note 7 for the disposition of AFG and Note 13 for the disposition of ABH Greenville.