basecarbon

BASE CARBON INC.

AUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 2025 AND 2024
(EXPRESSED IN UNITED STATES DOLLARS)

BDO

Tel: 403 266 5608
Fax: 403 233 7833
www.bdo.ca

BDO Canada LLP
903 – 8th Avenue SW, Suite 620
Calgary AB T2P 0P7
Canada

Independent Auditor’s Report

To the Shareholders of Base Carbon Inc.

Opinion

We have audited the consolidated financial statements of Base Carbon Inc. and its subsidiaries (the Group), which comprise the consolidated statement of financial position as at December 31, 2025, and the consolidated statements of (loss) income and comprehensive (loss) income, changes in equity and cash flows for the year then ended, and notes to the consolidated financial statements, including material accounting policy information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2025, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IASB).

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Matter

The consolidated financial statements for the year ended December 31, 2024, were audited by another auditor who expressed an unmodified opinion on those financial statements on March 31, 2025.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Evaluation of the fair value of investments in carbon credit projects related to the Vietnam Household Devices Project and the Rwanda Cookstoves Project

Description of the key audit matter

We draw attention to Notes 3(a) and 7 to the consolidated financial statements. As of December 31, 2025, the Group has recorded investments in carbon credit projects with a balance of $79,187,000, including $52,957,000 relating to the Vietnam Household Devices Project and $18,072,000 relating to the Rwanda Cookstoves Project.

BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the International BDO network of independent member firms.

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The investments in carbon credit projects related to the Vietnam Household Devices Project and the Rwanda Cookstoves Project (the "Projects") are measured at fair value using a discounted cash flow ("DCF") model with the significant assumptions being the carbon credit volumes, carbon credit price, and discount rates.

We identified the evaluation of the fair value of investments in carbon credit projects related to the Projects as a key audit matter. This matter represented an area of significant risk of material misstatement given the magnitude of the Projects and the high degree of estimation uncertainty in determining the fair value. In addition, significant auditor judgment and involvement of those with specialized skills and knowledge were required in evaluating the results of our audit procedures due to the sensitivity of the fair value of the Projects to changes in the significant assumptions.

How the key audit matter was addressed in the audit

The primary procedures we performed to address management's determination of the fair value of the Projects included the following:

We evaluated the carbon credit volumes expected to be generated by the projects by:

Assessing the methodology used by management to determine the carbon credit volumes by comparing it to the applicable Voluntary Carbon Standard ("VCS") administered by Verra (the carbon credit registry), including consideration of the transition to VM0050 where applicable
Inspecting Verra approved verification requests for carbon credit issuances, as disclosed on the Verra registry

We involved valuation professionals with specialized skills and knowledge, who assisted in:

Evaluating management's estimation of the carbon credit price by comparing it to recent transaction prices for comparable carbon credit methodologies and vintages, including Article 6 Authorized and Carbon Offsetting and Reduction Scheme for International Aviation ("CORSIA") eligible credits where applicable
Evaluating the discount rates applied in management's model by comparing them to a discount rate range that was independently developed using publicly available market data for comparable entities and industries and adjusted for asset-specific risk.

Evaluation of the carrying value of carbon credit inventory

Description of the key audit matter

We draw attention to Notes 3(a), 3(b) and 6 to the consolidated financial statements. As of December 31, 2025, the carbon credit inventory balance is $21,229,000, which is related to the Rwanda Cookstoves Project. Carbon credit inventory is recognized upon receipt of issued carbon credits at the per-unit market price on the date of transfer from investments in carbon credit projects, which forms the cost basis. Inventory is subsequently measured at the lower of cost and net realizable value. During the year, the Group recorded a loss on re-quantification of inventory of $2,932,000 following the transition from VMR0006 to VM0050, as well as write-downs of inventory totaling $3,920,000 based on changes in market pricing.

We identified the evaluation of the carrying value of carbon credit inventory as a key audit matter. This matter represented an area of significant risk of material misstatement given the magnitude of the carbon credit inventory balance and the high degree of estimation uncertainty in the pricing inputs used in determining the net realizable value of the carbon credit inventory. In addition,

BDO

significant auditor judgment and involvement of those with specialized skills and knowledge were required in evaluating the results of our audit procedures, particularly in light of the methodology transition and market price volatility.

How the key audit matter was addressed in the audit

The primary procedures we performed to address management's evaluation of the carrying value of the inventory included the following:

Assessed management's methodology used to determine the net realizable value of carbon credit inventory, including evaluating the key assumptions and inputs such as carbon credit pricing, and comparing these to observable market data where available.
Involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the carbon credit price used in determining net realizable value by comparing it to recent transaction prices for comparable carbon credit methodologies and vintages, including VM0050 and Article 6 Authorized credits where applicable.

Other Information

Management is responsible for the other information. The other information comprises:

The information, other than the consolidated financial statements and our auditor's report thereon, included in the Management's Discussion and Analysis for the year ended December 31, 2025.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

We obtained the Management Discussion and Analysis prior to the date of this auditor's report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor's report. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards as issued by the IASB, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group's financial reporting process.

BDO

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Group as a basis for forming an opinion on the group financial statements. We are responsible for the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

BDO

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor's report is John Leavitt.

BDO Canada LLP

Chartered Professional Accountants, Licensed Public Accountants

Calgary, Alberta

March 31, 2026

Base Carbon Inc.
Consolidated Statements of Financial Position
(Thousands of US Dollars)

	Note	December 31, 2025	December 31, 2024
ASSETS
Current assets
Cash and cash equivalents		5,691	14,799
Short term investments		40	42
Other receivables		216	19
Short term loan receivable	4	923	-
Related party loan receivable	5	-	1,464
Prepaid and other assets		61	49
Carbon credit inventory	6	21,229	25,633
Current investments in carbon credit projects	7	11,041	8,816
Carbon credit revenue participation asset	8	1,455	-
		40,656	50,822
Non-current assets
Property and equipment		49	93
Non-current investments in carbon credit projects	7	68,146	61,068
Investments at fair value	9	85	85
Total Assets		108,936	112,068
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities		780	807
Income tax liability	10	33	937
		813	1,744
Non-current liabilities
Deferred tax liabilities	10	7,612	7,253
Lease liability		20	63
Total liabilities		8,445	9,060
Shareholders' Equity
Share capital	11	45,815	48,514
Contributed surplus	12	1,750	1,813
Retained earnings		52,926	52,681
Total shareholders' equity		100,491	103,008
Total Liabilities and Shareholders' Equity		108,936	112,068

The accompanying notes are an integral part of these consolidated financial statements.

Approved and authorized on behalf of the Board of Directors:

Director /s/ "Michael Costa"
Director /s/ "Margot Naudie"

Base Carbon Inc.

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)

(Thousands of US Dollars, except per share amounts)

For the years ended	Note	December 31, 2025	December 31, 2024
Gains on investments in carbon credit projects
Realized cash settled gains on investments in carbon credit projects	7	1,811	28,027
Total gains on investments in carbon credit projects		1,811	28,027
Carbon credit sales
Carbon credit sales		-	190
Carbon credit cost of sales		-	(269)
Gross loss on carbon credit sales		-	(79)
Operating expenses
Consulting and professional fees		1,788	1,979
Salaries and wages		3,026	2,867
General and administrative		690	1,448
Travel, marketing and promotion		517	493
Depreciation		53	51
Share-based compensation	12	129	162
Write-down of inventory	6	3,920	-
Royalty license fee	5	45	706
Total operating expenses		10,168	7,706
Operating (loss) income		(8,357)	20,242
Unrealized gains (losses) on investments in carbon credit projects	7	11,299	(45,014)
Foreign exchange gain (loss)		24	(10)
Loss on re-quantification of inventory	6	(2,932)	-
Unrealized loss on carbon credit revenue participation asset	8	(150)	-
Interest income		252	148
Interest expense		(12)	(25)
Loss on investments at fair value	9	-	(2,041)
Other income	4&16	400	-
Net income (loss) before income tax		524	(26,700)
Income tax recovery (expense)	10	(279)	(2,205)
Net income (loss)		245	(28,905)
Comprehensive income (loss)		245	(28,905)
Net earnings per share attributable to equity holders ("EPS")
Basic income (loss) per share		-	(0.25)
Basic weighted average number of common shares		105,373,241	114,879,977
Diluted income (loss) per share		-	(0.25)
Diluted weighted average number of common shares		106,615,829	114,879,977

The accompanying notes are an integral part of these consolidated financial statements.

Base Carbon Inc.
Consolidated Statements of Cash Flow
(Thousands of US Dollars)

For the years ended	Note	December 31, 2025	December 31, 2024
Cash provided by (used in):
Operating Activities
Net income (loss) for the period		245	(28,905)
Adjustment for:
Depreciation		53	51
Share-based compensation	12	129	162
Unrealized (gain) loss on investment in carbon credit projects	7	(11,299)	45,014
Write-down of inventory		3,920	-
Loss on re-quantification of inventory		2,932	-
Unrealized loss on carbon credit revenue participation asset		150	-
Foreign exchange (gain) loss		(24)	10
Loss on investments at fair value	9	-	2,041
Changes in operating assets and liabilities:
Other receivables		(197)	5
Related party receivable	5	1,464	(1,038)
Prepaid and other assets		(12)	32
Accounts payable and accrued liabilities		(27)	354
Income tax liability	10	(904)	929
Deferred income tax liability	10	359	1,269
Lease liability		(43)	(47)
Investments in carbon credit projects		(2,058)	(3,444)
Net cash (used in) provided by operating activities		(5,312)	16,433
Investing Activities
Short term investment		2	4
Purchase of property and equipment		(8)	(7)
Investment at fair value	9	-	(85)
Issuance of short-term loan receivable	4	(923)	-
Net cash used in investing activities		(929)	(88)
Financing Activities
Proceeds from exercise of options		89	2
Repurchase of shares	11	(2,980)	(2,939)
Net cash used in financing activities		(2,891)	(2,937)
(Decrease) Increase in cash and cash equivalents		(9,132)	13,408
Change in cash related to foreign exchange		24	(10)
Cash and cash equivalents, beginning of period		14,799	1,401
Cash and cash equivalents, end of period		5,691	14,799

The accompanying notes are an integral part of these consolidated financial statements.

Base Carbon Inc.
Consolidated Statements of Changes in Equity
(Thousands of US Dollars, except as otherwise noted)

	Number of Common Shares	Share Capital ($)	Contributed surplus ($)	Retained earnings ($)	Shareholders' Equity ($)
Balance, December 31, 2023	117,918,182	51,448	1,654	81,586	134,688
Net loss for the period	-	-	-	(28,905)	(28,905)
Stock based compensation	-	-	162	-	162
Exercise of options	13,000	5	(3)	-	2
Shares purchased and cancelled under NCIB	(8,695,696)	(2,939)	-	-	(2,939)
Balance, December 31, 2024	109,235,486	48,514	1,813	52,681	103,008
Balance, December 31, 2024	109,235,486	48,514	1,813	52,681	103,008
Net income for the period	-	-	-	245	245
Stock based compensation	-	-	129	-	129
Exercise of options	643,297	188	(192)	-	(4)
Shares purchased and cancelled under NCIB	(3,459,220)	(1,750)	-	-	(1,750)
Shares purchased and cancelled under share purchase agreements	(3,724,565)	(1,137)	-	-	(1,137)
Balance, December 31, 2025	102,694,998	45,815	1,750	52,926	100,491

The accompanying notes are an integral part of these consolidated financial statements.

Base Carbon Inc.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(Thousands of US Dollars, except as otherwise noted)

1. Nature of operations

Base Carbon Inc. ("Base Carbon" or, the "Company") is a publicly traded entity which is listed on Cboe Canada under the trading symbol "BCBN" and trading on the OTCQX Best Market under the symbol "BCBNF". Base Carbon runs general operations, including its ownership interest in carbon reduction and removal projects, through its wholly owned subsidiary, Base Carbon Capital Partners Corp. ("BCCPC").

Base Carbon, through BCCPC, is in the business of providing capital, development expertise and management operating resources to projects involved in both the global voluntary and compliance carbon markets and broader environmental markets. The Company seeks to be the preferred carbon project partner in providing capital and developmental resources to carbon projects globally and, where appropriate, will endeavour to utilize technologies within the evolving carbon industry to enhance efficiencies, commercial credibility, and trading transparency.

The Company exists under the Business Corporations Act (Ontario). The Company's registered and mailing address is 50 Carroll Street, Toronto, Ontario, M4M 3G3.

2. Basis of preparation

(a) Statement of compliance

These consolidated financial statements (the "financial statements") have been prepared in accordance with IFRS Accounting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").

The accounting policies as disclosed in the annual financial statements for the year ended December 31, 2025, have been applied consistently to the periods presented in these audited consolidated financial statements unless otherwise noted under Note 3 - Material Accounting Policies.

The Company has reclassified certain consolidated statements of income (loss) and comprehensive income (loss) comparative figures to conform with the current period's presentation. These reclassifications had no impact on previously reported net income or equity.

The Company's Rwanda Revenue Share Asset ("Rwanda RSA") has been renamed "Carbon credit revenue participation asset" as at December 31, 2025. This is a presentation change only and has no impact on measurement or previously recognized amounts.

These financial statements were approved and authorized for issuance by the Board of Directors on March 31, 2026.

(b) New accounting standards and interpretations

Lack of Exchangeability ("IAS 21")

Effective January 1, 2025, amendments to IAS 21 Lack of Exchangeability, provide guidance to specify when a currency is exchangeable and how to determine the exchange rate when it is not. It requires an entity to apply a consistent approach to assessing whether a currency is exchangeable into another currency and, when it is not, to determining the exchange rate to use and the disclosures to provide. This adopted amendment had no impact on the Company's audited consolidated financial statements as at December 31, 2025.

Base Carbon Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025, and 2024

(Thousands of US Dollars, except as otherwise noted)

Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and IFRS 7)

The amendment to IFRS 9, Financial Instruments ("IFRS 9") and IFRS 7, Financial Instruments: Disclosures ("IFRS 7") clarifies the date of recognition and derecognition of some financial assets and liabilities, including a new exception for certain financial liabilities settled through an electronic payment system before the settlement date. The amendment is effective for annual periods beginning on or after January 1, 2026 with earlier adoption permitted.

The Company is assessing the impact of this amendment.

Presentation and Disclosures in Financial Statements ("IFRS 18")

This is a new standard on presentation and disclosure in financial statements which replaces IAS 1, with a focus on updates to the statement of profit or loss. IFRS 18 introduces new requirements to:

present specified categories and defined subtotals in the statement of profit or loss
provide disclosures on management-defined performance measures (MPMs) in the notes to the financial statements
improve aggregation and disaggregation

An entity is required to apply IFRS 18 for annual reporting periods on or after January 1, 2027, with earlier adoption permitted. IFRS 18 requires retrospective application with specific transition provisions.

While the adoption of the standard will affect the Company's income statement presentation, the company is still assessing the overall impact of this standard.

These consolidated financial statements have been prepared on a going concern basis which presumes that the Company will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the normal course of its operations. Refer to Note 15 Risk Management – Liquidity Risk for details.

(d) Basis of measurement

These financial statements have been prepared on a historical cost basis except for the Company's financial instruments, stock options, investments in carbon credit projects, and investments at fair value, which are measured at fair value.

(e) Basis of consolidation

These financial statements include the accounts of the Company and its subsidiary companies after eliminating intercompany balances and transactions. Subsidiaries are entities over which the Company has the power to govern financial and operating policies, generally accompanying a shareholding of greater than 50% of the voting rights.

At December 31, 2025 and 2024, the Company's subsidiaries and consolidation basis are as follows:

Entity name	Functional currency	Place of incorporation	Ownership as at
			December 31, 2025	December 31, 2024
Base Carbon Capital Partners Corp. (BCCPC)	USD	Barbados	100%	100%
Base Carbon Corp.	USD	Canada	100%	100%
Base Carbon (US) Corp.	USD	United States	100%	100%

Base Carbon Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025, and 2024

(Thousands of US Dollars, except as otherwise noted)

3. Material accounting policies

(a) Use of judgements and estimates

The preparation of these financial statements require management to make certain judgments, estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual outcomes could differ from these estimates.

These financial statements include estimates that, by their nature, are uncertain. The impact of these estimates is pervasive throughout the financial statements and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are based on historical experience, current and future economic conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Judgements made in applying accounting policies that have the most significant effects on the amounts recognized in these financial statements are included in the following notes:

Accounting for investments in carbon credit projects – management assessed the contractual agreements to determine whether the investments in carbon credit projects are financial instruments and their classification and measurement (Note 3(e)).
Accounting for carbon credit inventory – management assessed that the carbon credits from the Rwanda Cookstoves Project are to be valued at the lower of cost and net realizable value ("NRV"), as the Company is not a commodity broker trader. Management also applied judgment in determining the cost basis on receipt of carbon credits from investments in carbon credit projects and in determining that revenue share obligations are excluded from NRV (Note 3(b)).
Accounting for carbon credit revenue participation asset – management applied judgment in assessing the derecognition of the original investment and recognition of the carbon credit revenue participation asset as a financial asset measured at fair value, including the determination of fair value in accordance with IFRS 13 based on the Company's contractual entitlement to future cash flows (Note 8).
Classification of investments in carbon credit projects as current or non-current – management applies judgment in determining whether investments in carbon credit projects are expected to be realized within twelve months of the reporting date. This assessment is based on the project's expected carbon credit issuance schedule, which is informed by the Project Design Document, approved monitoring reports, and subsequent updates to projected issuance timing. Where management expects carbon credits to be received and realized within twelve months, the investment is classified as current. Management reviews this assessment at each reporting date (Note 3(i), Note 7).

Information about assumptions and estimate uncertainties that have a significant risk of resulting in a material adjustment in these financial statements is included in the following notes:

Fair values of investments in carbon credit projects – management estimates the fair value using the cost approach or income approach depending on the stage of the investment in a carbon credit project, with such carbon credit investment classified as a financial instrument, the fair value determined by either the cost or income approach is presented through profit or loss ("FVTPL") (Note 3(e)).

The cost approach is a valuation technique where fair value approximates the cumulative cash spend at the period end and assessing that the cost per carbon credit has not fallen below the carbon credit price. Projects valued using the cost approach involve significant subjectivity and estimation uncertainty, including the carbon credit price assumption (Note 7).

Base Carbon Inc.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(Thousands of US Dollars, except as otherwise noted)

The income approach uses a discounted cashflow (“DCF”) model, summing the future discounted after-tax cashflows generated over the life of the project to a current net present value. The model reflects market expectations based on key inputs and assumptions, namely the carbon credit price, carbon credit volume, and discount rates. Projects valued using the income approach involve significant subjectivity and estimation uncertainty, including assumptions related to the carbon credit price, carbon credit volume, and discount rates (Note 7). The DCF is net of all expected future costs, including revenue share obligations, the Rwanda Green Fund (“RGF”), and other project-level costs.

As part of the operational stage of a carbon reduction project, the Company emphasizes the implementation of project management or oversight standards relating to measurement, reporting, verification and auditing to enhance the efficiencies and credibility of carbon credits.

With the exception of carbon credit market pricing inputs attained from a third-party pricing source, the valuation of the Company’s projects is performed internally, with the India Afforestation, Reforestation and Revegetation Project (“India ARR Project”) using the cost approach, and the Vietnam Household Devices Project and Rwanda Cookstove Project valued by the income approach utilizing a “discounted cash flow” analysis.

Initial valuation is performed by the Company’s Corporate Development Department, with subsequent assessment and review by the Company’s Finance Department. Further review is performed by the Company executives, namely: The Company CEO, President and CFO. Personnel at each stage all possess the requisite qualifications and expertise. The Company believes it has all the necessary internal expertise to coordinate and perform the valuation.

Further oversight is provided by both the Audit Committee and Board of Directors, to whom details of projects are presented for review, and in the case of the Board of Directors, approval.

The Company uses a third party to provide data to determine the carbon credit price assumption. The Finance Department reviews documentation provided by that third party to confirm that the pricing source is appropriate for use in the valuation of investments in carbon credit projects.

Carbon credit inventory – management determines the lower of cost and NRV of carbon credit inventory. Cost is established at the per-unit market price on the date of receipt (see Note 3(b)). NRV is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale (IAS 2.6). Where NRV falls below cost, an appropriate write-down is made. If there is a subsequent increase in NRV, reversals of previous write-downs are made. The selling price used in the NRV assessment is determined based on pricing inputs provided by a third-party pricing source. The revenue share arrangement costs under project agreements are excluded from NRV as management has determined that these represent a distribution of sale proceeds rather than a cost necessary to make the sale (see Note 3(b)).

(b) Carbon credit inventory

Carbon credit inventory is initially and subsequently measured at the lower of cost and NRV. In subsequent measurements, any write-down to NRV is recognized as an expense in the period in which the write-down occurs. Any reversal is recognized in the income statement in the period in which the reversal occurs. When carbon credits are received from investments in carbon credit projects, inventory is recognized at the per-unit market price of the carbon credits on the date of receipt. The fair value of the credits issued in accordance with the project agreement is transferred to inventory and forms the cost basis for ongoing measurement. The revenue share arrangement under the project agreement and financial costs related to the LOA (as defined below) issued by the Government of Rwanda (see Note 7) are not included in the cost of inventory. The corresponding gain on transition from financial asset to inventory is recognized in profit or loss in accordance with IFRS 9.5, as the receipt of inventory represents a partial settlement of the FVTPL

Base Carbon Inc.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(Thousands of US Dollars, except as otherwise noted)

financial instrument (see Note 3 (i)). The inventory recognition and the financial asset's fair value remeasurement are treated as separate transactions as they represent a partial derecognition of the financial asset under IFRS 9.3.

NRV is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale (IAS 2.6). The Company's NRV calculation includes only direct transaction costs such as brokerage, exchange fees, and registry transfer fees. The revenue share arrangement is excluded from NRV as management has determined that these represent a distribution of sale proceeds (IAS 2.6) rather than a cost necessary to execute the sale. This determination is based on the following factors: (a) the revenue share is entirely contingent on a future sale occurring, which is within the Company's control; (b) the amount is variable and dependent on the sale price achieved; (c) bilateral offset arrangements with the counterparty's parent entity could reduce or eliminate the net obligation; and (d) the obligation is dependent on the counterparty's continued performance under the agreement. The revenue share is recognized in cost of sales at the point of sale (see Note 3 (c)).

IFRS 15 Revenue from Contracts with Customers establishes a comprehensive framework for recognizing revenue from contracts with customers. Under IFRS 15, revenue is recognized based on the transfer of control of goods or services to the customer at an amount that reflects the consideration the Company expects to receive in exchange for those goods or services.

The Company recognizes revenue from the sale of carbon credits that are received and are initially recognized as inventory. The Company acts as principal in these transactions as it controls the carbon credits prior to transfer, sets the sale price, bears inventory risk, and contracts directly with buyers. Revenue is recognized upon transfer of control of the carbon credits to customers in an amount that reflects the consideration the Company receives. Revenue from the sale of carbon credits is recorded when the carbon credits have been transferred, and the Company's performance obligation has been satisfied.

Cost of sales comprises the carrying value of carbon credit inventory sold and, where applicable, the revenue share arrangement payable to project development partners. The revenue share arrangement is recognized in cost of sales at the point of sale as a distribution of realized proceeds, not as a cost of the inventory or a deduction from NRV (see Note 3(b)). Revenue is presented gross of the revenue share arrangement as the Company is the principal in the sale transaction.

(d) Functional and foreign currency translation

The presentation currency of these financial statements is United States dollars. The functional currency of the Company is also the United States dollar. The functional currency for the Company is determined by the currency of the primary economic environment in which it operates. The Company believes that the United States dollar as functional and presentation currency best reflects the current and future operating activities for the Company and will provide shareholders with an accurate reflection of the Company's various business activities. It will also enhance the future comparability of the Company's financial information to its industry peers listed on various global exchanges.

Currency exchange gains or losses on translation are included in the consolidated statement of income (loss) and comprehensive income (loss). Transactions denominated in foreign currencies are translated into the entity's functional currency as follows:

Monetary assets and liabilities are translated at the exchange rate in effect at the reporting date.
Non-monetary assets and liabilities are translated at historical exchange rates prevailing at each transaction date.

Base Carbon Inc.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(Thousands of US Dollars, except as otherwise noted)

Deferred tax assets and liabilities are translated at the exchange rate in effect at the reporting date with translation gains and losses recorded in income tax expense; and
Revenues and expenses are translated at the average exchange rates throughout the reporting period, except depreciation, which is translated at the rates of exchange applicable to the related assets, and share-based compensation expense, which is translated at the rates of exchange applicable at the date of grant of the share-based compensation.

(e) Financial instruments

Financial assets are measured at fair value at initial recognition. Financial assets are subsequently measured at FVTPL, fair value through other comprehensive income (FVOCI) or amortized cost based on the business model for managing those financial instruments and the contractual cash flow characteristics of those instruments.

The Company's investment in the Vietnam Household Devices Project is a financial asset measured at FVTPL using the income approach to determine the fair value of the investment. The contracts are in the scope of IFRS 9 – Financial Instruments, because they are not entered into for the purpose of the receipt or delivery of carbon credits in accordance with the Company's expected purchase, sale or usage requirements and can be settled net in cash by either:

contractually, as the seller has a right or is obligated to pay a pre-agreed price to buy back the carbon credits instead of physical delivery,
entering into offsetting forward sales contracts with another party, or
receiving a share of proceeds from sales to a third party instead of physical delivery.

The Company's investment in the Rwanda Cookstoves Project is a financial asset measured at FVTPL using the income approach to determine the fair value of the investment. The contracts are in the scope of IFRS 9, because the Company will take delivery of the contracted carbon credits once issued, and will enter into forward sales contracts with counterparties, or sell to counterparties at prevailing prices for cash settlement. The Rwanda Cookstoves Project includes pre-payment and non-prepayment phases with distinct delivery and settlement terms, as well as a revenue share arrangement with the project development partner. Refer to Note 7 for details of the investment structure, including the pre-payment and non-prepayment phases, and to Note 8 for the carbon credit revenue participation asset.

The Company's investment in the India ARR Project is a financial asset measured at FVTPL using the cost approach to determine the fair value of the investment. The contracts are in the scope of IFRS 9, because the Company will take delivery of the contracted carbon credits once issued, and will enter into forward sales contracts with counterparties, or sell to counterparties at prevailing prices for cash settlement.

Equity instruments are measured at FVTPL, unless the asset is not held for trading purposes, and we make an irrevocable election to designate the asset as FVOCI. This election is made on an instrument-by-instrument basis. No such elections were made during the year ended December 31, 2025.

Debt investments are classified based on the Company's business model for managing the assets and the contractual cash flow characteristics. Debt instruments are measured at:

Amortized cost if held to collect contractual cash flows that are solely payments of principal and interest (SPPI),
FVOCI if held to collect contractual cash flows and for sale, where the cash flows are SPPI, or
FVTPL for all other debt investments.

Currently, the Company's debt investment is measured at amortized cost.

Base Carbon Inc.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(Thousands of US Dollars, except as otherwise noted)

The Company applies the expected credit loss (ECL) model to debt investments measured at amortized cost or FVOCI, recognizing a loss allowance at each reporting date. For debt investments at FVTPL, changes in fair value (including credit risk) are recognized in profit or loss.

Debt investments are derecognized when the contractual rights to cash flows expire or are transferred, and the Company has transferred substantially all the risks and rewards of ownership.

Financial liabilities are initially measured at fair value and are derecognized when the obligations are discharged, cancelled, or expire.

IFRS 9 includes an expected credit loss model for all financial assets measured at amortized cost and debt instruments measured at FVOCI. Expected credit losses are the present value of cash shortfalls over the remaining expected life of the financial asset using either a 12-month expected credit losses or lifetime expected credit losses.

(f) Share based payments

Share based payment are securities instruments that call for settlement by issuing equity instruments, typically common shares, which are granted as an award to employees, contractors or directors. The awards are valued using the Black Scholes option valuation model. The cost is recognized on a graded vesting method basis, adjusted for expected forfeitures as an employee, contractor or director expense with a corresponding increase to equity in contributed surplus. Consideration paid by employees, contractors or directors on the exercise of stock options is recorded as share capital.

(g) Earnings (loss) per share

The Company presents basic and diluted earnings (loss) per common shares, calculated by dividing the earnings (loss) attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. The weighted average number of common shares outstanding are adjusted for the effects of all potential dilutive common shares.

(h) Income taxes

Income tax comprises current and deferred tax. Income tax is recognized in the consolidated statement of income (loss) and comprehensive income (loss) except to the extent that it relates to items recognized directly in equity, in which case the income tax is also recognized directly in equity.

Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted, at the end of the reporting period, and any adjustment to tax payable in respect of previous periods.

In general, deferred tax is recognized in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.

Deferred income tax is determined on a non-discounted basis using tax rates and laws that have been enacted or substantively enacted at the statement of financial position date and are expected to apply when the deferred tax asset or liability is settled. Deferred tax assets are recognized to the extent that it is probable that the assets can be recovered.

Deferred income tax assets and liabilities are presented as non-current.

Base Carbon Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025, and 2024

(Thousands of US Dollars, except as otherwise noted)

(i) Investments in carbon credit projects

Investments in carbon credit projects are classified and measured as financial instruments measured at FVTPL (Note 3(e)). During the years ended December 31, 2023 and 2022 the Company initially entered into investments in carbon credit projects that will be primarily net settled in cash as described in Note 7 – Investment in carbon credit projects.

The Company uses valuation techniques appropriate in the circumstances and for which sufficient data are available to measure fair value, while maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

The objective of using a valuation technique is to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants and the measurement date under current market conditions.

The three widely used valuation techniques are:

i) market approach – uses prices and other relevant information generated by market transactions involving identical or comparable assets, liabilities, or a group of assets and liabilities
ii) cost approach – reflects the amount that would be required currently to replace the service capacity of an asset (current replacement cost)
iii) income approach – converts future amounts (cash flows or income and expenses) to a single current (discounted) amount, reflecting current market expectations about those future amounts.

In some cases, a single valuation technique will be appropriate, whereas in others, multiple valuation techniques will be appropriate.

During the year ended December 31, 2025, in accordance with IFRS 13 Fair Value Measurement, the Company continued to use the income approach as the valuation technique for the Vietnam Household Devices Project and the Rwanda Cookstoves Project. The income approach uses a DCF model, summing the future discounted after-tax cashflows from the lifetime of the project to a current net present value. The DCF is net of all expected future costs, including the revenue share arrangement, the RGF contribution, and other project-level costs. The model reflects market expectations based on key inputs and assumptions, namely the carbon credit price, carbon credit volume, and discount rates. The gains from the remeasurement of investments in carbon credit projects were recorded in the "Unrealized gains (losses) on investments in carbon credit projects" line in the consolidated statement of income (loss) and comprehensive income (loss).

As at December 31, 2025, the fair value of investment in the India ARR Project was determined using the cost approach, as the project has not yet generated carbon credits.

Investments in carbon credit projects are disclosed as current assets if the project has generated carbon credits as at the reporting date and management expects carbon credits from such projects to be realized within 12 months of the reporting date.

When carbon credits are issued by a project and received by the Company, the financial asset partially settles (IFRS 9.3) and inventory is recognized at the per-unit observable market price on the date of receipt (see Note 3(b)). The gain arising on the difference between the allocated carrying value of the financial asset and the fair value of the inventory received is recognized in profit or loss (IFRS 9.5). The financial asset's carrying value is separately updated through the normal fair value remeasurement process to remove the delivered credits' expected cash flows. The inventory recognition and the financial asset's remeasurement are accounted for under their respective standards (IAS 2 and IFRS 9). Revenue share

Base Carbon Inc.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(Thousands of US Dollars, except as otherwise noted)

obligations are not recognized at the point of transition; they are recognized in cost of sales at the point of sale (see Note 3(b) and Note 3(c)).

4. Short term loan receivable

Secured Debenture

In February 2025, BCCPC invested $500 towards a secured debenture in a Canadian company (the "Secured Debenture") with an initial maturity date of July 15, 2025. The Secured Debenture is classified as a financial asset, and it will subsequently be measured at amortized cost.

In May 2025, BCCPC invested a further $250 and in July 2025, an extension fee of $75 was charged by the Company and the Secured Debenture was extended to a maturity date of October 15, 2025.

On October 15, 2025, an extension fee of $100 was charged by the Company and the Secured Debenture was provided a further extension to November 15, 2025.

On November 15, 2025, an extension fee of $150 was charged by the Company and the Secured Debenture was provided a further extension to February 15, 2026.

In December 2025, $350 of the loan principal was repaid in cash to the Company.

As at December 31, 2025, the aggregate principal balance, prior to including accrued interest, was $725.

The Secured Debenture bears interest at a rate of 7% per annum, calculated and payable monthly in cash or in-kind, and is secured against the assets of the investee. The interest earned and accrued as at December 31, 2025 is $48 (2024 – $nil).

Refer to "Note 19 – Subsequent Events" for details regarding the Secured Debenture that occurred after December 31, 2025.

Operational Support Loan Agreement

In June 2025, BCCPC entered into an operational support loan agreement with Sustainability Investment Promotion and Development Joint Stock Company ("SIPCO") in the amount of $200 in relation to costs associated with the transition from Verra's VMR0006 methodology to the VM0050 methodology for the Vietnam Household Devices Project, specifically the cookstoves project (Project ID 2923).

The facility is unsecured and interest-free, and may be drawn in one or more tranches before November 30, 2026, with $150 to SIPCO for the internal costs related to that transition and $50 payable to the Verification and Validation Body (VVB) to be engaged in the transition. As at year-end, $150 had been drawn by SIPCO. The operation support agreement matures on January 1, 2027, and BCCPC may off-set monies owed by SIPCO under the operation support loan against amounts payable to SIPCO for the purchase of future carbon credits generated from the Vietnam Household Devices Project on or before the maturity date.

5. Related party receivable

Abaxx Technologies Inc. ("Abaxx"), a related party to the Company, owned approximately 19.7% of the Company's outstanding shares as at December 31, 2025. Abaxx and the Company also have two common board of director members.

As at December 31, 2025, Abaxx had fully settled its obligations to the Company. Additional details are provided below.

Base Carbon Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025, and 2024

(Thousands of US Dollars, except as otherwise noted)

The table below summarizes movements in the related party receivable balance between December 31, 2025, and December 31, 2024:

As at	December 31, 2025	December 31, 2024
Balance, beginning of the period (in thousands of US dollars)	1,464	426
Loan issued	-	1,000
Repayments and offsets	(982)	(542)
Interest income	68	30
Payment for share purchase agreement	1,000	550
Repayment for share purchase agreement	(1,550)	-
Balance, end of the period	-	1,464

As at December 31, 2025, the outstanding related party receivable due to the Company was fully settled (2024 – $1,464).

Abaxx Loan

In September 2024, the Company issued an additional $1,000 unsecured loan to Abaxx. The terms were such that it had an original maturity loan of September 16, 2025, bearing an annualized interest rate of 9%, compounded monthly. Subsequent to maturity on September 16, 2025, the annualized interest rate increased to 15% on the amount of principal and interest outstanding.

Abaxx fully settled its obligations to the Company by offsetting $96 of marketing, promotional and consulting services and $45 of royalty invoices as described in “Note 16 – Related party transactions – Abaxx Technologies” below. The remaining balance of $841 was settled in cash.

Loan interest income of $68 (2024 - $30) was recognized during the year ended December 31, 2025.

Initial Abaxx Share Purchase Agreement

In December 2024, the Company and Abaxx entered into a share purchase and sale agreement whereby the Company agreed to purchase such number of common shares of the Company owned by Abaxx equal to the aggregate purchase price of $550 divided by the per share market value on closing, which was expected to occur in January 2025. The purchase price was paid to Abaxx in advance of closing during December 2024.

In January 2025, the Company and Abaxx amended the share purchase and sale agreement, whereby the Company agreed to purchase such number of common shares of the Company owned by Abaxx equal to the aggregate purchase price of $1,550 (inclusive of $550 from the December 2024 original agreement) divided by the per share market value on closing which was expected to occur in March 2025. The additional $1,000 purchase price was paid to Abaxx in advance of closing and the aggregate purchase price of $1,550 was subsequently returned to the Company in connection with the termination of the transaction by Abaxx in January 2025.

In connection with an extension of the termination provisions of the amended share purchase agreement, an extension fee of $75 was charged to Abaxx, which Abaxx paid upon termination of the agreement and the return of the $1,550 purchase price.

Base Carbon Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025, and 2024

(Thousands of US Dollars, except as otherwise noted)

6. Carbon credit inventory

When the Company receives carbon credits into inventory, inventory is recognized at the per-unit market price on the date of receipt. Any corresponding gain and the adjustment to the financial asset's carrying value are recognized in accordance with the policies described in Note 3(b) and Note 3(i).

The table below summarizes the changes in carbon credit inventory received under the prepayment phase of the Company's carbon credit projects for the years ended December 31, 2025 and December 31, 2024:

Number of carbon credits held in inventory	December 31, 2025	December 31, 2024
Balance, beginning of the period	1,712,193	-
Receipt of VMR0006 carbon credit inventory	192,810	1,732,193
Subtotal VMR0006 balance	1,905,003	1,732,193
Re-quantification of inventory to VM0050	(828,773)	-
Sale of carbon credit inventory	-	(20,000)
Balance, end of the period VM0050	1,076,230	-
Balance, end of the period VMR0006	-	1,712,193
Carbon credit inventory value
(in thousands of US dollars)	December 31, 2025	December 31, 2024
---	---	---
Balance, beginning of the period	25,633	-
Receipt of carbon credit inventory during the period	2,448	25,902
Loss on re-quantification of inventory to VM0050 (ii)	(2,932)	-
Write-down of inventory (i) and (iii)	(3,920)	-
Sale of carbon credit inventory	-	(269)
Balance, end of the period	21,229	25,633

In April 2024, BCCPC received 717,558 VMR0006 carbon credits from the Rwanda Cookstoves Project. The Company considers these carbon credits as inventory held for sale. Based upon the fair market value on the date the carbon credits were received by BCCPC, the 717,558 carbon credits received had a total value of $9,271.

In July 2024, the Company realized a cash settlement of $190 from the sale of 20,000 VMR0006 carbon credits to a third party. Based upon the fair market value of such carbon credits on the date received by the Company from the Rwanda Cookstoves Project, the carbon credits sold had a total cost of sale of $269, inclusive of $15 due to DelAgua through the revenue share arrangement, resulting in a gross accounting loss of $79.

In October 2024, the Company received an additional 1,014,635 VMR0006 carbon credits from the Rwanda Cookstoves Project with a total value of $16,269 based upon the fair market value on the date received.

During the year ended December 31, 2024, the Company added $346 to the inventory cost, representing Rwanda Green Fund ("RGF") contributions of $0.20 per credit, attributable to the first 1,925,000 carbon credits generated from the project. The $0.20 cost was applied to 1,732,193 carbon credits received from the project in the year.

During the year ended December 31, 2025, the Company received into inventory 192,810 (2024 - 1,732,193) VMR0006 carbon credits from the Rwanda Cookstoves Project with a total value of $2,448 (2024 - $25.9 million) based on the fair market value on the date received.

Base Carbon Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025, and 2024

(Thousands of US Dollars, except as otherwise noted)

On September 22, 2025, carbon credit registry Verra approved and filed the application of new methodology VM0050 to the Company's Rwanda Cookstoves Project. In Q3 2025, the Company employed this change in methodology, moving from VMR0006 to VM0050 for all historical and future credit issuances from the Rwanda Cookstoves Project. Credits issued under VM0050 currently meet the standards for use under Carbon Offsetting and Reduction Scheme for International Aviation ("CORSIA").

The Company performed a detailed review of its inventory balances and identified three distinct and material write-downs for the year ended December 31, 2025: (i) write-down of VMR0006 inventory at September 30, 2025, (ii) loss on re-quantification of inventory to VM0050, and (iii) write-down of VM0050 inventory at December 31, 2025.

(i) Based on the prevailing decline in VMR0006 carbon credit pricing during 2025, the Company determined a write-down of certain vintages was required. The write-down of inventory was in the amount of $2,064 at September 30, 2025.

(ii) Based on the approval of the new VM0050 methodology described above, the Company updated its inventory quantity and prices to reflect eligibility under the CORSIA scheme. Upon re-quantification, this resulted in a higher carbon credit price of $21.45. However, the inventory quantity declined from 1,905,003 VMR0006 to 1,076,230 VM0050 carbon credits at September 30, 2025. This resulted in a total loss on re-quantification of inventory to VM0050 of $2,932 at September 30, 2025.

(iii) At December 31, 2025, the Company, with its internal pricing model, determined that the net realizable value of VM0050 carbon credits decreased to $19.73 per credit. As a result, a further write-down of inventory in the amount of $1,856 was recognized at December 31, 2025.

As at December 31, 2025, the total inventory of 1,076,230 VM0050 carbon credits was valued at $21.2 million, a decrease of $4,404 when compared to the previously held VMR0006 carbon credits in inventory valued at $25.6 million for 1,712,193 VMR0006 carbon credits at December 31, 2024.

7. Investments in carbon credit projects

Categorization of current and non-current investment balances in carbon credit projects

The following table summarizes the current and non-current balances of investments in carbon credit projects as at December 31, 2025, and December 31, 2024:

Current investments in carbon credit projects (in thousands of US dollars)	December 31, 2025	December 31, 2024
Rwanda Cookstoves Project	7,164	2,723
Vietnam Household Devices Project	3,877	6,093
Total current investments in carbon credit projects	11,041	8,816
Non-current investments in carbon credit projects (in thousands of US dollars)	December 31, 2025	December 31, 2024
---	---	---
Rwanda Cookstoves Project	10,908	5,089
Vietnam Household Devices Project	49,080	49,879
India ARR Project	8,158	6,100
Total non-current investments in carbon credit projects	68,146	61,068

Base Carbon Inc.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(Thousands of US Dollars, except as otherwise noted)

For the Rwanda Cookstoves Project and Vietnam Household Devices Project, the current investments balance represents the discounted after-tax cashflows from the sale of carbon credits at fair value expected to be received from the project within the next twelve months of the balance sheet date. For the Rwanda Cookstoves Project and Vietnam Household Devices Project, the non-current investments balance represents the discounted after-tax cashflows from the sale of the carbon credits expected to be received from the project beyond the next twelve months of the balance sheet date. Refer to the following discussions under “Rwanda Cookstoves Project and Vietnam Household Devices Project” for more information.

The India ARR Project is not in the carbon credit generation stage and is valued at fair value, approximated by cost, and categorized as a non-current investment.

Rwanda Cookstoves Project

On January 25, 2022, the Company, through BCCPC, entered into a carbon reduction project agreement with DelAgua Health Rwanda (Voluntary) Limited ("DelAgua"), as in-country project developer, to supply cookstoves in Rwanda as part of an expansion of its existing carbon reduction project previously registered as a clean development mechanism (or CDM) project governed by the United Nations pursuant to the Kyoto Protocol. According to the terms of the agreement and the initial project methodology, BCCPC invested $8,825 to fund the manufacturing, distribution and monitoring of approximately 250,000 cookstoves across rural Rwanda in exchange for a revenue share arrangement applicable to the proceeds from the sale of the first 7.5 million carbon credits expected to be generated by the project.

The distribution of all 250,000 cookstoves to participating project households was completed in early 2023 and the project has been registered with Verra under project ID #4150, with the PDD (project design document) available on Verra's website. Also in 2023, the Company made its final investment into the project and because the project had not yet generated carbon credits, the cost approach was used to determine the fair value of the investment equal to the total disbursed investment payments of $8,825.

As announced during December 2023, the Government of Rwanda issued a letter of authorization (the "LOA") with respect to the Rwanda Cookstoves Project which resulted in Verra issuing its first ever Article 6 Authorized label for a carbon removal or reduction project. The Article 6 Authorized label is applied to carbon credits generated by a carbon removal or reduction project where the project host country agrees to apply to the corresponding adjustment concept with respect to such project. A corresponding adjustment is a concept included in Article 6 of the Paris Agreement and is intended to address the potential issue of double counting emission reductions. By applying a corresponding adjustment, the project host country agrees that the emission reductions from project under its jurisdiction will not count towards such country's national commitment (NDC under the Paris Agreement) to lower carbon emissions.

According to the LOA, a copy of which may be found on Verra's website under project ID 4150, 2% of any issued Article 6 Authorized labeled carbon credits are to be immediately retired to help offset global emissions, 10% of such carbon credits are to be transferred to the Government of Rwanda to help achieve its nationally determined emission reduction targets, and 5% of revenues generated from the initial sale of the remaining Article 6 Authorized labeled issued carbon credits will be remitted to the Rwanda Green Fund ("RGF"), a Government of Rwanda climate institution affiliated with the United Nations.

In April 2024, BCCPC and DelAgua executed an amended and restated project agreement to facilitate the implementation of the LOA pursuant to which the parties will split the 5% RGF remittance attributable to sales revenue from remaining Article 6 Authorized labeled carbon credits based upon each party's pro rata share of the proceeds from each carbon credit sale. Article 6 Authorized labeled carbon credits received by the parties will be net of the 12% volume reduction outlined in the LOA.

During 2024, the Company and DelAgua made the decision to update the project's methodology to Verra's VM0050 Energy Efficiency and Fuel-Switch Measures in Cookstoves, v1.0 to be potentially eligible for carbon credit sales into the Compliance Carbon Market through CORSIA.

Base Carbon Inc.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(Thousands of US Dollars, except as otherwise noted)

Carbon credits issued and received into inventory by the Company in 2024 have been outlined in Note 6 – Carbon credit inventory.

On July 7, 2025, 192,810 VMR0006 carbon credits were issued to BCCPC. Inventory of $2,448 was recognized at the per-unit market price on the date of receipt. The carrying value of the current investment was adjusted through the normal fair value remeasurement process to reflect the partial settlement.

On the same day, DelAgua received 371,275 VMR0006 carbon credits. As a result, the portion of the Rwanda Cookstoves Project investment related to the issued credits was derecognized, and a carbon credit revenue participation asset at the same fair value of $1,606, representing the Company's share of the future sales, was recognized. Refer to Note 8 – Carbon credit revenue participation asset for additional information.

On September 22, 2025, carbon credit registry Verra approved and filed the application of methodology VM0050 to the Company's Rwanda Cookstoves Project. In Q3 2025, the Company employed this change in the methodology, moving from VMR0006 to VM0050 for all carbon credits in the Rwanda Cookstoves Project. Those carbon credits previously received into inventory and those subject to the revenue share arrangement have been re-quantified under VM0050. Carbon credits issued under VM0050 currently meet the standards for use under CORSIA.

The estimate of the number of carbon credits expected to be issued over the life of the project is now 4.6 million VM0050 carbon credits. This is comprised of 1.1 million pre-payment VM0050 carbon credits which is the basis for the Company's inventory, carbon credits in the amount of 0.2 million carbon credit revenue participation asset, and anticipated future VM0050 carbon credit issuances in the amount of 3.3 million carbon credits.

The table below summarizes the changes in the Rwanda Cookstoves Project during the year ended December 31, 2025, and the year ended December 31, 2024:

| Rwanda Cookstoves Project
(in thousands of US dollars) | December 31, 2025 | December 31, 2024 |
| --- | --- | --- |
| Balance, beginning of the period | 7,812 | 8,825 |
| Unrealized gains on investment in carbon credit projects | 14,315 | 24,620 |
| Transfer to carbon credit revenue participation asset | (1,606) | - |
| Receipt of carbon credit inventory | (2,449) | (25,633) |
| Balance, end of the period | 18,072 | 7,812 |

Unrealized gain on investment in Rwanda Cookstoves Project

In 2024, the Rwanda Cookstoves Project began issuing credits and therefore the valuation technique for the Rwanda Cookstoves Project was changed from the cost approach to the income approach. The income approach uses a DCF model, totalling the future discounted after-tax cashflows from the lifetime of the project. The Company considers the income valuation technique to be the most relevant and reliable in representing the fair value of the Rwanda Cookstoves Project now that the project has issued carbon credits. The carbon credit price, carbon credit volumes and discount rates are considered to be unobservable inputs which the Company has determined to have the most significant impact on the valuation of the investment.

i) Carbon Credit Price

As at December 31, 2025, a price of $19.73 (2024 - $18.60) per carbon credit was used in 2026 and a forward pricing curve was extrapolated based on the available forward contracts for the duration of the DCF forecast period. This was determined with reference to recent market sale transactions of carbon credits, and a published futures option quote for carbon credits, with similar

Base Carbon Inc.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(Thousands of US Dollars, except as otherwise noted)

characteristics, including Article 6 Authorized and CORSIA eligible tagging. This approach reflects the most reliable market information currently available. Base Carbon will continue to monitor market developments and intends to refine and enhance its pricing methodology on a forward-looking basis.

As at December 31, 2025, to reflect current market conditions and observed forward pricing trends, Base Carbon incorporated a 1.5% forward price curve growth factor.

ii) Carbon Credit Volumes:

With the implementation of the new VM0050 methodology and factoring in the impact of the LOA with the Government of Rwanda, it is currently estimated that the project would generate approximately an aggregate of 4.6 million (2024 – 3.4 million) Article 6 Authorized and CORSIA eligible VM0050 carbon credits.

Failing to meet these projected carbon credit volumes, including further changes to the project methodology resulting in lower crediting volumes or future pricing, will result in significant impairment to the investment value, resulting in reversal of unrealized gains.

iii) Discount Rate:

A discount rate of 10% (2024 – 15%) is used for the project.

The decrease in the discount rate reflects project conditions and risk factors, including:

Lower methodology risk associated with the utilization of the new and more conservative VM0050 methodology
Increased operational certainty and future carbon credit generation as the Rwanda Cookstoves Project continues to generate regular carbon credit issuances.
Reduced price and market uncertainty due to the existence of more frequent sales and auctions of CORSIA eligible carbon credits.

Refer to the DCF Model Sensitivity Analysis below for details on each inputs' impact on these financial statements.

During the year ended December 31, 2025, an unrealized gain of $14.3 million (2024 – $24.6 million loss) was recognized on the project. This was primarily driven by a lower discount rate in addition to the unwinding of the discount rate period-over-period. This unrealized gain was partially offset by a decrease in current carbon credit prices and an increase in insurance costs related to CORSIA eligible tagging.

Current and non-current investment balance for the Rwanda Cookstoves Project

As at December 31, 2025, the current balance of the investment in the Rwanda Cookstoves Project was $7,164 (2024 - $2,723). This investment balance represents the discounted after-tax cashflows expected to be received within the next twelve months of the balance sheet date.

As at December 31, 2025, the non-current balance of the investment in the Rwanda Cookstoves Project was $10,908 (2024 - $5,089). This investment balance represents the discounted after-tax cashflows of the project expected to be received beyond the next twelve months of the balance sheet date.

There is limited market or observable market data for the investments in carbon credit projects, and it is classified as Level 3 in the fair value hierarchy. During the year ended December 31, 2025, and the year ended December 31, 2024, there were no transfers of assets between Level 1, Level 2 and Level 3 for the Rwanda Cookstoves Project. During the year ended December 31, 2025, and the year ended December 31, 2024, the Company received carbon credits from the Rwanda Cookstoves Project, resulting in a partial

Base Carbon Inc.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(Thousands of US Dollars, except as otherwise noted)

settlement of the Level 3 financial assets. The carbon credits received were recognized as inventory at the per-unit market price on the date of receipt (see Note 3(b)). Inventory is subsequently measured under IAS 2 and is not classified within the fair value hierarchy.

Vietnam Household Devices Project

In May 2022, the Company, through BCCPC, entered into transaction documents to facilitate the development of a cookstove and water purifier carbon reduction project in the country of Vietnam with Sustainability Investment Promotion and Development Joint Stock Company ("SIPCO"), as in-country project developer. Citigroup Global Markets Limited ("Citigroup") is the carbon credit off-taker to SIPCO for the Vietnam Household Devices Project. Project documentation provides BCCPC with monitoring rights through all stages of the project and other broad rights. BCCPC has fully funded its capital commitment of $20.8 million used to fund the manufacturing, distribution and monitoring of approximately 850,000 cookstoves and 364,000 water purifiers across several provinces of Vietnam which were fully distributed in early 2023. BCCPC has the option to expand the project up to an aggregate total of 1,200,000 cookstoves and 600,000 water purifiers for an additional prepayment. Other than with respect to the expansion option prepayment, BCCPC has no further capital expenditure obligations.

During the first phase ("Phase 1") of the project which was completed in June 2025, SIPCO sold and transferred to BCCPC, and SIPCO purchased back from BCCPC for offtake by Citigroup pursuant to a fixed price off-take arrangement, the first 7.4 million carbon credits generated by the project. In Phase 1 of the project, BCCPC received aggregate cash proceeds of approximately $36.3 million from the sale of carbon credits at a total cost of approximately $20.8 million resulting in a full repayment of capital invested and a cash gain of approximately US$15.5 million.

During the second phase ("Phase 2") and remaining life of the project, BCCPC has the option to purchase all further carbon credits generated by the project on a yearly basis for US$5 per carbon credit.

During the year ended December 31, 2025, there was no further capital contributed, as it was fully deployed as at December 31, 2024, after relevant project milestones were fulfilled by SIPCO. During the year ended December 31, 2025, carbon credits were issued and settled for cash, as detailed under the heading "Realized cash settled gains on investment in the Vietnam Household Devices Project".

As noted herein, Verra has published an updated methodology for cookstove projects, VM0050, and transition to this methodology would require a re-quantification of future carbon credit issuances from this project. During Q2 2025, BCCPC and SIPCO elected to begin work to apply Verra's new methodology to the Vietnam Household Devices Project and BCCPC provided SIPCO with an operational loan in the amount of $200 to be used by SIPCO for costs related to the methodology change. At December 31, 2025, the methodology update and re-quantification is in progress.

Based on the implementation of this updated methodology, the estimate of the carbon credits expected to be issued over the life of the project is now 15.0 million carbon credits (7.4 million VMR0006 cookstove and AMS-III.AV water purifier carbon credits previously issued under Phase 1, and 7.6 million VM0050 cookstove and AMS-III.AV water purifier carbon credits in Phase 2). Under the expansion option, the Company anticipates an additional 4.7 million VM0050 and AMS-III.AV carbon credits to be generated.

Base Carbon Inc.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(Thousands of US Dollars, except as otherwise noted)

The table below summarizes the changes in the Vietnam Household Devices Project during the year ended December 31, 2025, and year ended December 31, 2024:

| Vietnam Household Devices Project
(in thousands of US dollars) | December 31, 2025 | December 31, 2024 |
| --- | --- | --- |
| Balance, beginning of the period | 55,972 | 123,861 |
| Capital deployed in the project during the period | - | 1,652 |
| Unrealized loss on investment in carbon credit projects | (3,015) | (69,541) |
| Realized cash settled gains on investment in carbon credit projects | 1,811 | 28,027 |
| Settlements of investment in carbon credit projects | (1,811) | (28,027) |
| Balance, end of the period | 52,957 | 55,972 |

Realized cash settled gains on investment in the Vietnam Household Devices Project

During the year ended December 31, 2025, BCCPC received $1,811 (2024 – $28,027) in cash payments from the delivery and monetization of carbon credits from the Vietnam project, representing both a realized gain, as well as an amount derecognized from the financial asset balance of the investment during the year ended December 31, 2025.

Unrealized loss on investment in Vietnam Household Devices Project

The Company reviewed and revalued the investment in the Vietnam Household Devices Project as of December 31, 2025, taking into account inputs such as expected carbon credit volumes generated based upon the Company's election to implement Verra's updated methodology in 2025, carbon credit prices, discount rates, and a discounted cashflow valuation of the project expansion option. These inputs are considered to be unobservable inputs which the Company has determined to have the most significant impact on the valuation of the investment.

i) Carbon Credit Price:

Refer to Rwanda Cookstoves Project – i) Carbon Credit Price for price details and methodology.

ii) Carbon Credit Volumes:

During Phase 1 of the project, from 2023 to June 30, 2025, the project generated the expected 7.4 million (2024 – 7.4 million) carbon credits.

During Phase 2 of the project, from 2025 to 2032, the project is projected to generate an estimated 7.6 million (2024 – 10.1 million) carbon credits. This is based on the latest project monitoring reports, the project design document, the implementation of Verra's updated cookstove methodology in 2025 and other factors including expected use of cookstoves and water purifiers by participating households and the performance of such devices.

During the expansion option of the project, from 2026 to 2036, the project is expected to generate an estimated 4.7 million (2024 – 6.1 million) carbon credits. This is based on SIPCO's preliminary assumptions as well as the implementation of Verra's updated cookstove methodology for 2026 vintages onward, and other factors including expected use of cookstoves and water purifiers by participating households and the performance of such devices.

Failing to meet these projected carbon credit volumes, including due to further changes to the project methodologies resulting in a reduction of forecasted carbon credit volumes, and a reduction in prices in the future will result in significant impairment to the investment value.

Base Carbon Inc.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(Thousands of US Dollars, except as otherwise noted)

Discount Rates:

In Phase 1 of the project, from 2023 to 2025, the discount rate used was 8% (2024 – 8%). This Phase of the project ended during Q2 2025.

During Phase 2 of the project, from 2025 to 2032, the discount rate used is 15% (2024 – 15%).

During the expansion option of the project, from 2025 to 2036, the discount rate used is 20% (2024 – 20%).

The discount rates account for conditions and risk factors of the project, including:

Methodology risk relating to carbon reduction projects
Uncertainty of carbon credit volumes
Uncertainty of carbon credit price and market conditions
Foreign operations and political risk

Refer to the DCF Model Sensitivity Analysis for details on each inputs’ impact on these financial statements.

During the year ended December 31, 2025, an unrealized loss of $3,015 (2024 - $69.5 million loss) was recognized on the project due to lower crediting profile and the addition of insurance costs related to CORSIA eligible tagging. This is partially offset by an unwinding of the discount rate period-over-period and the future increase in credit prices expected.

Current and non-current investment balance for the Vietnam Household Devices Project

As at December 31, 2025, the current balance of the investment in the Vietnam Household Devices Project was $3,877 (2024 - $6,093). This investment balance represents the discounted after-tax cashflows expected to be received within the next twelve months of the balance sheet date.

As at December 31, 2025, the non-current balance of the investment in the Vietnam Household Devices Project was $49.1 million (2024 - $49.9 million). This investment balance represents the discounted after-tax cashflows of the project expected to be received beyond the next twelve months of the balance sheet date.

Base Carbon Inc.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(Thousands of US Dollars, except as otherwise noted)

DCF Model Sensitivity Analysis

The Company considers carbon credit price, carbon credit volumes, and the discount rates used in the DCF model as the main inputs impacting the valuation of the investments in the Rwanda and Vietnam projects. Based on a 1% increase or decrease in each of the inputs when compared to the base case inputs used in the DCF model, the Company's valuation would have the following estimate impacts on net income as at December 31, 2025:

Key Input and Change in Assumptions (in thousands of US dollars)	Impact on Net Income as at December 31, 2025
	Rwanda Cookstoves Project	Vietnam Household Devices Project
Carbon credit price input increased by 1%	$225 increase in net income and total assets	$516 increase in net income and total assets
Carbon credit price input decreased by 1%	$225 decrease in net income and total assets	$516 decrease in net income and total assets
Carbon credit volume input increased by 1%	$181 increase in net income and total assets	$532 increase in net income and total assets
Carbon credit volume input decreased by 1%	$181 decrease in net income and total assets	$538 decrease in net income and total assets
Discount rates input increased by 1%	$38 decrease in net income and total assets	$300 decrease in net income and total assets
Discount rates input decreased by 1%	$38 increase in net income and total assets	$298 increase in net income and total assets

India Afforestation, Reforestation, and Revegetation (ARR) Project

As announced on August 8, 2023, the Company, through BCCPC, entered into an agreement to facilitate the development of a nature-based carbon removal project, focused on the reforestation of degraded rural farmlands in the northern Indian state of Uttar Pradesh. Value Network Ventures Pte Ltd. ("VNV") is the Company's project development partner. The project's aim was to facilitate the planting of approximately 6,500,000 trees on rural farmlands and deserted lands in northern India. The planting of all project trees was completed during the year ended December 31, 2024.

During Q2 2025, the India ARR Project was submitted for validation and in Q4 2025, BCCPC and VNV agreed to transition to new Verra methodology VM0047 and applied for the ABACUS label. Work is currently underway for validation and verification under VM0047. Based on current project plans and subject to successful implementation and approval of the revised methodology, Management anticipates the potential issuance of approximately 1.2 million carbon credits over the applicable crediting period.

In December 2025, BCCPC and VNV amended the project agreement including capital payment schedules up to 2027, to better align with the agreed upon transition to Verra methodology VM0047. BCCPC agreed to an incremental $108 in payments to help facilitate the transition work to VM0047. Other than this, the quantum of payments was not changed, only the timing of payments.

Per the terms of the agreement and assuming all condition precedents are met, BCCPC will invest an aggregate of roughly $13.7 million into the project, of which BCCPC has invested $8,158 as of December 31, 2025. Approximately $6,000 of the total capital commitment is considered maintenance capital of which approximately $4,000 is expected to be funded through the sale of carbon credits generated by the project.

Base Carbon Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025, and 2024

(Thousands of US Dollars, except as otherwise noted)

The table below summarizes the changes in the India ARR Project during the year ended December 31, 2025, and the year ended December 31, 2024:

| India ARR Project
(in thousands of US dollars) | December 31, 2025 | December 31, 2024 |
| --- | --- | --- |
| Balance, beginning of the period | 6,100 | 4,400 |
| Capital deployed in the project during the period | 2,058 | 1,700 |
| Balance, end of the period | 8,158 | 6,100 |

During the year ended December 31, 2025, $2,058 (2024 - $1,700) of capital was deployed towards the project. As at December 31, 2025, the India ARR Project remains in the developmental stage and no carbon credits have been issued. Therefore, the project's accounting methodology remained unchanged from the prior period, with fair value approximated by its cost basis as at December 31, 2025.

8. Carbon credit revenue participation asset

On July 7, 2025, 371,275 VMR0006 carbon credits previously included in the investment in the Rwanda Cookstoves Project at a fair value of $1,606 were formally issued to DelAgua. Under the non-prepayment phase of the revenue share agreement, the Company is entitled to receive a share of the proceeds when DelAgua sells these credits, which represents a contractual and enforceable right to future cash flows.

As a result, the portion of the Rwanda Cookstoves Project investment related to these issued credits was derecognized, and a carbon credit revenue participation asset at the same fair value of $1,606, representing the Company's share of the future sales, was recognized. The carbon credit revenue participation asset reflects the Company's ongoing financial interest in the issued credits and will be measured at fair value going forward, with changes recognized through profit or loss. The reclassification ensures the carrying value aligns with the underlying rights and obligations following credit issuance.

As previously described, the Company received notification that carbon credit registry Verra had approved the application of CORSIA-compliant methodology VM0050 to the Company's Rwanda Cookstoves Project. In Q3 2025, there was a change in fair value due to re-quantification, and the Company recognized an additional $235 unrealized gain on the carbon credit revenue participation asset for a total value of $1,841 (2024 - $nil) at September 30, 2025.

As at December 31, 2025, the fair value of the carbon credit revenue participation asset was determined using a combination of observable market inputs and management judgment and is classified as Level 3 in the fair value hierarchy. Management considered recent transactions initiated by the project developer relating specifically to revenue share carbon credits under the Rwanda Cookstoves Project, as well as other relevant pricing data for credits with similar contractual terms and risk characteristics. Judgment was applied in assessing the relevance of these inputs, including the comparability of transaction terms and the exclusion of transactions not considered representative of orderly market conditions. The pricing used for the revenue participation asset differs from the pricing used for the Company's carbon credit inventory, as the asset represents a contractual right to future proceeds rather than ownership of carbon credits held for sale. Refer to Note 15 – Fair Value and Risk Management.

The pricing decrease of VM0050 carbon credits, as previously described, resulted in an unrealized loss on the carbon credit revenue participation asset of $386 (2024 - $nil) and a balance of $1,455 (2024 - $nil) at December 31, 2025.

Base Carbon Inc.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(Thousands of US Dollars, except as otherwise noted)

9. Investments at fair value

Denominator Collective LLC

During the year ended December 31, 2024, the Company, through BCCPC, invested $85 for the rights to future equity in Denominator Collective LLC, a Limited Liability Company based in Delaware, USA. As at December 31, 2025, the carrying value of the Company's investment remained unchanged from the initial cost of $85.

ACX Holdings

During the year ended December 31, 2024, the Company recognized a loss on investments at fair value of $1,441 resulting in a full write-down of its investment in ACX Holdings. No further fair value adjustments were recognized during the year ended December 31, 2025.

Hardwick Climate Business Limited

During the year ended December 31, 2024, the Company recognized a loss on investments at fair value of $600 resulting in a full write-down of its investment in Hardwick Climate Business Limited. No further fair value adjustments were recognized during the year ended December 31, 2025.

10. Income tax expense, income tax liability, and deferred income tax liability

Income tax (recovery) expense

The components of income tax (recovery) expense are as follows:

(in thousands of US dollars)	December 31, 2025	December 31, 2024
Current tax (recovery) expense
Current year	33	937
Prior year	(113)	-
Current tax (recovery) expense	(80)	937
Deferred tax (recovery) expense	359	1,268
Income tax (recovery) expense	279	2,205

Base Carbon Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025, and 2024

(Thousands of US Dollars, except as otherwise noted)

Income tax (recovery) expense differs from the amount that would have been expected by applying the statutory income tax rate to income (loss) before taxes. The principal reasons for this difference are as follows:

(in thousands of US dollars)	December 31, 2025	December 31, 2024
Consolidated net income (loss) before tax	524	(26,700)
Statutory tax rate	26.5%	26.5%
Expected income tax (recovery) expense	139	(7,076)
Increase (decrease) as a result of:
Effects of tax rate changes	-	3,808
Deferred tax assets not recognized	1,501	912
Credits and incentives	(391)	-
Tax rate differences for foreign subsidiaries	(847)	3,503
Foreign exchange	(317)	479
Other	194	579
Income tax (recovery) expense	279	2,205

The Company's statutory tax rate of 26.5% (2024 – 26.5%) is based on the combined federal and provincial corporate income tax rates in Canada.

At December 31, 2025, the Company had unrecognized deferred tax assets of $7,450 (2024 - $5,949). The increase in the unrecognized deferred tax asset was $1,501 for the year (2024 - $912).

The Company is eligible for a jobs credit in Barbados, which may reduce corporate income tax and other taxes otherwise payable. During the year ended December 31, 2025, the Company reduced its income tax expense by $391 as a result of the jobs credit.

Company paid current taxes of $812 during the year, which related to income tax liabilities in Barbados and the United States.

Recognized deferred tax assets and liabilities

The change in the Company's deferred tax liability balance is as follows:

(in thousands of US dollars)	December 31, 2025	December 31, 2024
Deferred tax (liability) asset, beginning of year	(7,253)	(5,984)
Recognized in deferred tax recovery (expense)	(359)	(1,269)
Deferred tax (liability) asset, end of year	(7,612)	(7,253)

Base Carbon Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025, and 2024

(Thousands of US Dollars, except as otherwise noted)

The components of the Company's recognized deferred tax assets are as follows:

(in thousands of US dollars)	December 31, 2025	December 31, 2024
Investment in carbon credit projects	(6,393)	(5,653)
Carbon credit inventory	(1,589)	(1,600)
Credits and incentives	216	-
Loss carryforwards - foreign	154	-
Total recognized deferred tax (liability) asset	(7,612)	(7,253)

The amounts recognized in deferred tax recovery (expense) in respect of the Company's recognized deferred tax assets are as follows:

(in thousands of US dollars)	December 31, 2025	December 31, 2024
Investment in carbon credit projects	(740)	350
Carbon credit inventory	11	(1,600)
Credits and incentives	216	-
Loss carryforwards - Barbados	154	(18)
Deferred tax recovery (expense)	(359)	(1,268)

Unrecognized deferred tax assets and temporary differences

The Company has not recognized deferred tax assets associated with certain deductible temporary differences as it is not probable that future taxable profits will be available to utilize the tax benefits. The significant components of the unrecognized deductible temporary differences are as follows:

(in thousands of US dollars)	December 31, 2025	December 31, 2024
Non-capital losses carried forward - Canada	20,523	15,788
Capital losses carried forward - Canada	9,684	8,489
Accrued interest	1,639	228
Investments	1,021	1,558
Undeducted financing fees	676	1,424
Other	31	33
Unrecognized deductible temporary differences	33,574	27,520

Loss carryforwards and interest carryforwards

The Company has tax loss carryforwards available for use against taxable income of future tax years. These carryforwards include Canadian capital loss carryforwards of $9,684 (2024 - $8,489) which may offset future capital gains and have no expiration, Canadian non-capital loss carryforwards of $20,523 (2024 - $15,788) which may be carried forward twenty years and expire by 2045, and Barbados loss carryforwards of $1,721 (2024 - nil) which may be carried forward five years and expire by 2030.

As of December 31, 2025, the Company has interest carryforwards of $1,639 (2024 - $228) available for use in future periods, which may be carried forward indefinitely.

Base Carbon Inc.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(Thousands of US Dollars, except as otherwise noted)

11. Share capital

Common shares issued are as follows, expressed in thousands of US dollars:

	Number of Common Shares	Share Capital ($)
Balance, December 31, 2023	117,918,182	51,448
Shares repurchased and cancelled under NCIB (d)	(8,695,696)	(2,939)
Exercise of options (c)	13,000	5
Balance, December 31, 2024	109,235,486	48,514
Balance, December 31, 2024	109,235,486	48,514
Common shares issued with respect to exercise of options (b and c)	643,297	188
Shares repurchased and cancelled under NCIB (d)	(3,459,220)	(1,750)
Shares purchased and cancelled under share purchase agreements (e)	(3,724,565)	(1,137)
Balance, December 31, 2025	102,694,998	45,815

Common Shares

(a) Authorized

Unlimited number of common shares without par value.

(b) Issued

643,297 common shares were issued upon the exercise of stock options during the year ended December 31, 2025. No shares were issued during the year ended December 31, 2024.

(c) Exercised

During the year ended December 31, 2025, a total of 885,333 stock options were exercised, of which 643,297 common shares (2024 – 13,000 common shares) were issued. 528,333 stock options were exercised using a cashless option, resulting in 286,297 shares being issued, with the remaining 357,000 stock options being exercised for a total consideration of $89.

(d) Repurchased and cancelled under NCIB

Pursuant to a normal course issuer bid ("NCIB"), Base Carbon was authorized to purchase, from time to time, over a period of 12 months beginning June 17, 2022, and ending June 16, 2023, up to 8,716,601 common shares representing approximately 7% of the total 127,663,680 issued and outstanding common shares and 10% of the Company's public float as of June 16, 2022. For this first NCIB period, Base Carbon purchased a cumulative 7,370,778 common shares for cancellation.

On June 21, 2023, the Company renewed its NCIB and was authorized to purchase over a period of 12 months beginning June 21, 2023, and ending June 20, 2024, up to 7,974,471 common shares. For this second NCIB period, Base Carbon purchased a cumulative 1,937,220 common shares for cancellation under the NCIB, all of which were purchased and cancelled during the year ended December 31, 2023.

On June 21, 2024, the Company renewed its NCIB, pursuant to which was authorized by Cboe Canada to purchase, from time to time, over a period of 12 months starting June 21, 2024, and ended June 20, 2025,

Base Carbon Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025, and 2024

(Thousands of US Dollars, except as otherwise noted)

up to 7,571,314 common shares. For this third NCIB period, Base Carbon purchased a cumulative 7,217,736 common shares for cancellation.

On June 23, 2025, the Company renewed its NCIB, pursuant to which it is authorized by Cboe Canada to purchase, from time to time, beginning on June 23, 2025, and ending June 22, 2026, up to 6,659,310 common shares representing approximately 6.4% of the 104,324,986 issued and outstanding common shares and 10% of the Company's public float as of June 17, 2025. On any given day during the new NCIB program, Base Carbon may purchase up to 69,082 common shares. Block trades for a greater number of common shares may be made once per calendar week. During this fourth NCIB period and as at December 31, 2025, Base Carbon purchased a cumulative 2,321,820 common shares for cancellation.

During the year ended December 31, 2025, the Company purchased and cancelled 3,459,220 (2024 - 8,695,696 common shares) of its common shares, pursuant to its NCIB.

(e) Repurchased and Cancelled Under Share Purchase Agreements

During the year ended December 31, 2025, a total of 3,724,565 shares were repurchased and cancelled. 3,700,000 shares were purchased from Abaxx. Refer to "Note 16 - Related party transactions" for additional transaction details with the related party, Abaxx. The remaining 24,565 shares were purchased from a past employee.

12. Contributed surplus stock options

Contributed surplus consists of stock option expense. As at December 31, 2025 and 2024, the Company had the following stock options outstanding, with exercise prices expressed in US dollars:

	Number of stock options	Weighted average exercise price ($)
Outstanding options, December 31, 2023	7,171,666	0.60
Granted during the period	4,145,000	0.54
Exercised during the period	(13,000)	(0.17)
Forfeited during the period	(995,000)	(0.66)
Outstanding options, December 31, 2024	10,308,666	0.56
Options exercisable, December 31, 2024	6,862,007	0.57
Outstanding options, December 31, 2024	10,308,666	0.56
Options exercised	(885,333)	0.28
Granted during the period	700,000	0.57
Forfeited during the period	(683,333)	0.69
Cancelled during the period	(150,000)	0.38
Outstanding options, December 31, 2025	9,290,000	0.59
Options exercisable, December 31, 2025	7,436,673	0.60

Base Carbon Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025, and 2024

(Thousands of US Dollars, except as otherwise noted)

The following table summarizes information about Base Carbon's outstanding stock options as at December 31, 2025:

December 31, 2025
Outstanding options				Exercisable options
Range of exercise prices	Number of options outstanding	Weighted average remaining contractual life (years)	Weighted average exercise price per share	Number of exercisable options	Weighted average exercise price per share
$0.20-$0.41	3,776,667	2	$ 0.36	2,983,333	$ 0.36
$0.42-$0.65	450,000	2	$ 0.62	50,000	$ 0.61
$0.66-$0.79	5,063,333	1	$ 0.76	4,403,340	$ 0.76
	9,290,000		$ 0.59	7,436,673	$ 0.60

During the year ended December 31, 2025, 700,000 (2024 – 4,145,000 options) options were granted with a weighted average exercise price of $0.57 (2024 - $0.54). During the same period, 683,333 options were forfeited with a weighted average exercise price of $0.69, while 150,000 options were cancelled with a weighted average exercise price of $0.38. Stock options in the amount of 885,333 were exercised, of which 528,333 were exercised using a cashless option and converted to 286,297 shares, with the remaining 357,000 being exercised for a total consideration of $89.

During the year ended December 31, 2025, the Company extended the expiry dates of 1.2 million stock options held by certain directors, officers and employees of the Company. The modifications did not result in a material change in the fair value of the stock options. Refer to "Note 16 - Related party transactions" for additional information.

The share price on the dates of exercise ranged from $0.57 - $0.63.

The weighted average exercise price per option outstanding as at December 31, 2025 was $0.59 (2024 - $0.56).

The fair value of share-based awards is determined using the Black-Scholes Option Pricing Model. The model utilizes certain subjective assumptions including the expected life of the option and expected future stock price volatility. Changes in these assumptions can materially affect the estimated fair value of the Company's stock options. The Company used the Black-Scholes Option Pricing Model for its stock options granted.

The following Black-Scholes model inputs were used for option tranches granted in respective periods:

	Year Ended December 31, 2025	Year Ended December 31, 2024
Risk-free interest rate	4%	4%
Exercise prices	$0.408 - $0.730	$0.362 - $0.725
Expected life of the option – employees & consultants	2 - 3 years	3 years
Expected life of the option – officers	3 years	3 years
Expected life of the option – directors	3 years	3 years
Expected dividend per share	$nil per share	$nil per share
Expected volatility of the Company's shares	45.1% - 50.3%	47.3%

Goods or services received or to be received by the entity need to be provided by the stock option grantees in its capacity as a supplier of goods or services. If the goods or services are provided by a counterparty in its capacity as a shareholder, then the transaction is not a share-based payment transaction. The options

Base Carbon Inc.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(Thousands of US Dollars, except as otherwise noted)

have vesting periods based on conditions of goods or services provided being met over time. The granted and vested options expire at the earlier of one year from the date of the termination of goods or services provided to the Company, and four years from the grant date.

During the year ended December 31, 2025, share-based compensation expense was $129 (2024 - $162).

13. Earnings (loss) per share

For the year ended December 31, 2025 and 2024, basic and diluted income (loss) per share has been calculated based on the net income (loss) attributable to common shareholders and the weighted average number of common shares outstanding. Diluted earnings (loss) per share includes the effect of stock options that are in-the-money, as shown below in thousands of US dollars, except number of shares and per share amount:

	December 31, 2025	December 31, 2024
Net income (loss) attributable to common shareholders ($)	245	(28,905)
Weighted average number of common shares outstanding	105,373,241	114,879,977
Basic earnings (loss) per common share	-	(0.25)
Net income (loss) attributable to common shareholders ($)	245	(28,905)
Weighted average number of common shares outstanding	105,373,241	114,879,977
Adjustments to average shares due to stock options and others	1,242,588	-
Weighted average number of diluted common shares outstanding	106,615,829	114,879,977
Diluted earnings (loss) per common share	-	(0.25)

14. Capital management

The Company manages its capital with the following objectives:

to ensure sufficient financial flexibility to achieve the ongoing business objectives including funding of future growth opportunities, and pursuit of accretive acquisitions; and
to maximize shareholder return through enhancing the share value.

The Company monitors its capital structure and adjusts according to market conditions in an effort to meet its objectives given the current outlook of the business and industry in general. The Company may manage its capital structure by issuing new shares, repurchasing outstanding shares, adjusting capital spending, or disposing of assets. The capital structure is reviewed by the Company's management and the Board of Directors on an ongoing basis.

The Company considers its capital to be shareholders' equity, being comprised of share capital, contributed surplus, and retained earnings, which as at December 31, 2025 totaled $101.1 million (2024 - $103.0 million).

The Company manages capital through its financial and operational forecasting processes. The Company reviews its working capital and forecasts its future cash flows based on operating expenditures, and other investing and financing activities. There were no changes in the Company's approach to capital risk management during the year ended December 31, 2025, and the Company is not subject to any externally imposed capital requirements.

Base Carbon Inc.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(Thousands of US Dollars, except as otherwise noted)

15. Fair Value and Risk Management

Fair value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are categorized into levels within a fair value hierarchy based on the nature of valuation inputs (Level 1, 2 or 3).

The fair value hierarchy has the following levels:

Level 1 – quoted prices represent unadjusted quoted prices for identical instruments exchanged in active markets.
Level 2 – significant other observable inputs includes directly or indirectly observable inputs, other than quoted prices for identical instruments exchanged in active markets.
Level 3 – significant unobservable inputs include inputs that are not based on observable market data.

The fair value of financial assets and financial liabilities are considered to be their carrying value when they are of short duration or when the instrument's interest rate approximates current observable market rates. The fair value of cash and cash equivalents, short term investment, short term loan receivable, related party receivable and other receivables approximate their carrying amounts due to the relatively short period to maturity.

The fair value of the Company's investment in carbon credit projects is calculated based on a discounted cash flow method for both the Vietnam Household Devices Project and the Rwanda Cookstoves Project and approximated by its cost for the India ARR Project (refer to Note 7 – Investments in Carbon Credit Projects).

Where other financial assets and financial liabilities are of longer duration, then fair value is determined using the discounted cash flow method using discount rates based on adjusted observable market rates.

The following table illustrates the classification of the Company's consolidated financial instruments within the fair value hierarchy as at December 31, 2025, according to the significance and reliability of the inputs used in determining fair value measurements. There were no transfers of assets between Level 1, Level 2 and Level 3. During the year ended December 31, 2025, the Company received carbon credits from the Vietnam Household Devices Project and the Rwanda Cookstoves Project, resulting in a partial settlement of the Level 3 financial assets.

As at December 31, 2025 (thousands of US dollars)	Level 1	Level 2	Level 3	Total
Cash and cash equivalents	5,691	-	-	5,691
Short term investments	40	-	-	40
Other receivables	216	-	-	216
Short term loan receivable	-	923	-	923
Investments at fair value	-	-	85	85
Current investments in carbon credit projects	-	-	11,041	11,041
Carbon credit revenue participation asset	-	-	1,455	1,455
Non-current investments in carbon credit projects	-	-	68,146	68,146
Accounts payable and accrued liabilities	(780)	-	-	(780)
	5,167	923	80,727	86,817

Base Carbon Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025, and 2024

(Thousands of US Dollars, except as otherwise noted)

The following table illustrates the classification of the Company's consolidated financial instruments within the fair value hierarchy as at December 31, 2024, according to the significance and reliability of the inputs used in determining fair value measurements. There were no transfers of assets between Level 1, Level 2 and Level 3. During the year ended December 31, 2024, the Company received carbon credits from the Vietnam Household Devices Project and the Rwanda Cookstoves Project, resulting in a partial settlement of the Level 3 financial assets.

As at December 31, 2024 (thousands of US dollars)	Level 1	Level 2	Level 3	Total
Cash and cash equivalents	14,799	-	-	14,799
Short term investments	42	-	-	42
Related party receivable	-	1,464	-	1,464
Other receivables	19	-	-	19
Investments at fair value	-	-	85	85
Current investments in carbon credit projects	-	-	8,816	8,816
Non-current investments in carbon credit projects	-	-	61,068	61,068
Accounts payable and accrued liabilities	(806)	-	-	(806)
	14,054	1,464	69,969	85,487

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counter party to a financial instrument fails to meet its contractual obligations.

The Company's credit risk is attributable to cash and cash equivalents, short term investments, short term loan receivable, other receivables, prepaid and other assets, related party receivable, and investments in carbon credit projects. Cash and cash equivalents and short-term investment are on deposit with a Barbadian, Canadian and United States chartered banks, from which management believes the risk of loss is remote. The Short-term receivable and other receivables are due from a prospective and current project partner and the revenue authorities, respectively, from which management believes the risk of loss to be remote. The Company's maximum exposure to credit risk as at December 31, 2025 is the sum of the carrying value of the aforementioned asset accounts.

The Company manages credit risk of the aforementioned asset accounts by:

assessing credit profile and worthiness of and completing due diligence on counterparties prior to agreements.
structuring agreements with defined services or benefits, terms, and remuneration, enforcing the Company's rights from such agreements, and
conducting post disbursement monitoring and executing dispute resolution processes.

Liquidity risk

The Company's approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due, including commitments arising from investments in carbon credit projects. As at December 31, 2025, the Company had cash and cash equivalents balance of $5,691, short term receivable of $923, and other receivables of $216 for a total of $6,830 of liquid current assets to settle current liabilities of $813. The ability of the Company to receive cash from current investments in carbon credit projects is dependent on the timing of estimated carbon credit issuances and sales. All the Company's current financial liabilities have contractual maturities of less than 90 days and are subject to normal trade terms.

Base Carbon Inc.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(Thousands of US Dollars, except as otherwise noted)

Market risk

Market risk is the risk of loss that may arise from changes in market forces including, but not limited to, interest rates, equity prices, voluntary carbon credit prices and foreign exchange. Refer to “Note 7 Investments in carbon credit projects” for more information on project sensitivity analysis.

Foreign currency risk

As at December 31, 2025, the Company is exposed to foreign currency risk with respect to Canadian and Barbadian dollar assets with a total balance of $321 (2024 - $204). The Company is also exposed to predominantly Canadian and Barbadian dollar liabilities with a total balance of $7,876 (2024 - $8,647). Most of this exposure relates to the deferred tax liability amount totalling $7,612 (2024 – $7,253), which is the estimate income tax on future proceeds from the sale of carbon credits.

Sensitivity analysis

The Company is exposed to foreign currency risk on fluctuations of financial instruments related to cash and cash equivalents, short term investments, other receivables, and accounts payable and accrued liabilities, and current and deferred tax liabilities.

As at December 31, 2025, the net income would have decreased by $37 had the United States and Barbados dollar strengthened by 5%. Had the US and Barbados dollar weakened by 5% at December 31, 2025, the net income would have increased by $37.

These changes are based on the results of foreign exchange gains/losses on translation of financial instruments related to cash and cash equivalents, investments, and accounts payable and accrued liabilities.

16. Related party transactions

Related parties of the Company include the Board of Directors, senior management, close family members and enterprises that have significant ownership of the Company or that are controlled by these individuals as well as certain persons performing similar functions.

Related party transactions conducted in the normal course of operations are measured at exchange value. Senior management is defined as those with authority and responsibility for planning, directing, and controlling activities of the Company, including directors and the executive team.

Management and Directors Compensation

During the year ended December 31, 2025, key management and directors received $2,211 in cash compensation, and $78 in share-based compensation from the Company. In the same period, 200,000 stock options were granted to a director.

During the year ended December 31, 2024, key management and directors received $2,047 in cash compensation, and $185 in share-based compensation from the Company. In the same period, 3,250,000 stock options were granted to senior management and directors.

Extension of the Expiry of Certain Outstanding Options

The Company extended the expiry dates for certain outstanding stock options held by directors and officers during the year. The modifications did not result in material incremental compensation expense.

Base Carbon Inc.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(Thousands of US Dollars, except as otherwise noted)

Abaxx Technologies Inc.

Refer to “Note 5 - Related party receivable” for additional transaction details with the related party, Abaxx.

Abaxx Royalties

In September 2021, a technology, IP and royalty agreement was executed between Abaxx and the Company, whereby the Company would owe a 2.5% royalty fee payment to Abaxx on Company revenue, including realized cash settled gains on investments in carbon credit projects.

During the year ended December 31, 2025, the Company was invoiced and settled by offset approximately $45 (2024 - $706) in royalty license fee for the realized cash settled gains on investments in carbon credit projects.

Abaxx Marketing, Promotional and Consulting Services

During the year ended December 31, 2025, Base Carbon incurred expenses of approximately $321 (2024 - $262) from Abaxx for marketing, promotional and consulting services provided to the Company. Of the current year balance, the Company offset $96 with the Abaxx loan, settled in cash $159 and accrued $66 of Abaxx services.

Abaxx Share Purchase and Sale Transaction

In April 2025, the Company and Abaxx entered into and completed a share purchase and sale transaction whereby the Company purchased and cancelled 3,700,000 of the Company's common shares owned by Abaxx for $1,123.

As at December 31, 2025, Abaxx had fully settled its obligations to the Company.

17. Commitments

India ARR Project Payments

With respect to the India ARR Project, BCCPC has, subject to conditions and achievement of project milestones, contractual commitments to make aggregate payments totalling $13.7 million in various tranches over the life of the project. As at December 31, 2025, the remaining contractual commitments are $5.6 million. These payments are anticipated to be due by October 2032, staged, partially funded by anticipated future carbon credit sales proceeds, and based on various conditions precedent / project milestones.

The Company had no other material contractual payment commitments as at December 31, 2025.

18. Subsequent events

Ongoing Carbon Project Capital Commitments

Subsequent to December 31, 2025, the Company made payments of $350 on January 29, 2026, and $833 on March 2, 2026, in relation to the India ARR Project. These payments were made in accordance with specific project milestones and subject to certain conditions being met by the Company's in-country development partner.

Base Carbon Inc.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(Thousands of US Dollars, except as otherwise noted)

Application for CORSIA-Eligible Label and Sale of Rwanda Cookstoves Project Carbon Credits by Project Partner, DelAgua

Subsequent to December 31, 2025, certain carbon credits previously issue by the Rwanda Cookstoves Project and held by BCCPC and project partner, DelAgua, were designated with the Verra's CORSIA – First Phase, 2024-2026 Eligible label. Also subsequent to December 31, 2025, DelAgua sold 200,000 carbon credits and remitted $673 of proceeds to BCCPC. These proceeds were net of the revenue sharing arrangement and the Company's share of insurance premiums on all carbon credits tagged CORSIA-eligible which are currently held in inventory by both BCCPC and DelAgua.

Receipt of carbon credit revenue participation asset relating to the Rwanda Cookstoves Project

Subsequent to December 31, 2025, an additional 639,609 carbon credits were generated by the Rwanda Cookstove Project and issued to DelAgua. Under the related revenue share arrangement, BCCPC participates in the proceeds from the sale of these carbon credits through its carbon credit revenue participation asset.

Partial Repayment and Amendment and Restatement of Secured Debenture

On January 1, 2026, an extension fee of $103 was charged by BCCPC on the Secured Debenture. On February 15, 2026, the maturity of the Secured Debenture was extended until March 16, 2026 in exchange for a partial repayment of $200 of the outstanding amounts owed pursuant to the Secured Debenture.

On March 16, 2026, the maturity of Secured Debenture was extended until September 16, 2026 in exchange for an extension fee of $50, payment of BCCPC's legal costs and a partial repayment of $200 of the outstanding amounts owed pursuant to the Secured Debenture.

Subsequent Common Share Buybacks

Subsequent to December 31, 2025, an additional 1,773,510 shares were purchased and cancelled through the Company's NCIB at an average cost of $0.71.

Subsequent Extension of the Expiry of Certain Outstanding Options

Subsequent to December 31, 2025, the Company extended the expiry dates of 2.2 million stock options held by certain directors, officers, employees, and consultants of the Company.

AI assistant

Base Carbon — Audit Report / Information 2025

48096_rns_2026-03-31_5e993daf-626f-4847-b126-6c794e63e1db.pdf

basecarbon

BASE CARBON INC.

Independent Auditor’s Report

Opinion

Basis for Opinion

Other Matter

Key Audit Matters

Evaluation of the fair value of investments in carbon credit projects related to the Vietnam Household Devices Project and the Rwanda Cookstoves Project

Description of the key audit matter

Evaluation of the carrying value of carbon credit inventory

Description of the key audit matter

Other Information

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

1. Nature of operations

2. Basis of preparation

(a) Statement of compliance

(b) New accounting standards and interpretations

Lack of Exchangeability ("IAS 21")

3. Material accounting policies

(a) Use of judgements and estimates

4. Short term loan receivable

Secured Debenture

Operational Support Loan Agreement

5. Related party receivable

Abaxx Loan

Initial Abaxx Share Purchase Agreement

6. Carbon credit inventory

7. Investments in carbon credit projects

Categorization of current and non-current investment balances in carbon credit projects

Rwanda Cookstoves Project

Unrealized gain on investment in Rwanda Cookstoves Project

Vietnam Household Devices Project

Realized cash settled gains on investment in the Vietnam Household Devices Project

Unrealized loss on investment in Vietnam Household Devices Project

Discount Rates:

Current and non-current investment balance for the Vietnam Household Devices Project

DCF Model Sensitivity Analysis

India Afforestation, Reforestation, and Revegetation (ARR) Project

8. Carbon credit revenue participation asset

9. Investments at fair value

Denominator Collective LLC

ACX Holdings

Hardwick Climate Business Limited

10. Income tax expense, income tax liability, and deferred income tax liability

Income tax (recovery) expense

Recognized deferred tax assets and liabilities

Unrecognized deferred tax assets and temporary differences

Loss carryforwards and interest carryforwards

11. Share capital

Common Shares

(a) Authorized

(b) Issued

(c) Exercised

(d) Repurchased and cancelled under NCIB

(e) Repurchased and Cancelled Under Share Purchase Agreements

12. Contributed surplus stock options

13. Earnings (loss) per share

14. Capital management

15. Fair Value and Risk Management

Fair value

Credit risk

Liquidity risk

Market risk

Foreign currency risk

Sensitivity analysis

16. Related party transactions

Management and Directors Compensation

Extension of the Expiry of Certain Outstanding Options

Abaxx Technologies Inc.

Abaxx Royalties

Abaxx Marketing, Promotional and Consulting Services

Abaxx Share Purchase and Sale Transaction

17. Commitments

India ARR Project Payments

18. Subsequent events

Ongoing Carbon Project Capital Commitments

Base Carbon Audit Report / Information 2025