AI assistant
Base Carbon — Interim / Quarterly Report 2026
May 15, 2026
48096_rns_2026-05-15_21e56aa6-b8f8-49c3-822a-c3611299bed6.pdf
Interim / Quarterly Report
Open in viewerOpens in your device viewer
basecarbon
BASE CARBON INC.
UNAUDITED CONDENSED INTERIM
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED
MARCH 31, 2026 AND 2025
(EXPRESSED IN UNITED STATES DOLLARS)
Base Carbon Inc.
Condensed Interim Consolidated Statements of Financial Position
(Thousands of US Dollars)
Unaudited
| Note | March 31, 2026 | December 31, 2025 | |
|---|---|---|---|
| ASSETS | |||
| Current assets | |||
| Cash and cash equivalents | 2,850 | 5,691 | |
| Short term investments | 39 | 40 | |
| Other receivables | 234 | 216 | |
| Short term loan receivable | 4 | 791 | 923 |
| Prepaid and other assets | 611 | 61 | |
| Carbon credit inventory | 6 | 16,413 | 21,229 |
| Current investments in carbon credit projects | 7 | 16,944 | 11,041 |
| Carbon credit revenue participation asset | 8 | 3,326 | 1,455 |
| 41,208 | 40,656 | ||
| Non-current assets | |||
| Property and equipment | 37 | 49 | |
| Non-current investments in carbon credit projects | 7 | 64,776 | 68,146 |
| Investments at fair value | 9 | 85 | 85 |
| Total Assets | 106,106 | 108,936 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||
| Current liabilities | |||
| Accounts payable and accrued liabilities | 243 | 780 | |
| Income tax liability | 10 | 37 | 33 |
| 280 | 813 | ||
| Non-current liabilities | |||
| Deferred tax liabilities | 10 | 7,591 | 7,612 |
| Lease liability | 10 | 20 | |
| Total liabilities | 7,881 | 8,445 | |
| Shareholders' Equity | |||
| Share capital | 11 | 44,587 | 45,815 |
| Contributed surplus | 12 | 1,774 | 1,750 |
| Retained earnings | 51,864 | 52,926 | |
| Total shareholders' equity | 98,225 | 100,491 | |
| Total Liabilities and Shareholders' Equity | 106,106 | 108,936 |
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
Approved and authorized on behalf of the Board of Directors:
Director /s/ "Michael Costa"
Director /s/ "Margot Naudie"
Base Carbon Inc.
Condensed Interim Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income
(Thousands of US Dollars, except per share amounts)
Unaudited
| For the three months ended | Note | March 31, 2026 | March 31, 2025 |
|---|---|---|---|
| Gains on investments in carbon credit projects | |||
| Realized cash settled gains on carbon credit revenue participation asset | 8 | 1,170 | - |
| Realized cash settled gains on investments in carbon credit projects | 7 | - | 790 |
| Total gains on investments in carbon credit projects | 1,170 | 790 | |
| Operating expenses | |||
| Consulting and professional fees | 199 | 376 | |
| Salaries and wages | 504 | 952 | |
| General and administrative | 132 | 396 | |
| Depreciation | 13 | 13 | |
| Share-based compensation | 12 | 36 | 44 |
| Write-down of inventory | 6 | 4,816 | - |
| Royalty license fee | 16 | 29 | 20 |
| Total operating expenses | 5,729 | 1,801 | |
| Operating (loss) | (4,559) | (1,011) | |
| Unrealized gains on investments in carbon credit projects | 7 | 4,396 | 1,580 |
| Foreign exchange (loss) gain | (5) | 10 | |
| Settlement of carbon credit revenue participation asset | 8 | (1,175) | - |
| Interest income | 15 | 70 | |
| Interest expense | (4) | (2) | |
| Other income | 4&16 | 253 | 75 |
| Net (loss) income before income tax | (1,079) | 722 | |
| Income tax recovery (expense) | 10 | 17 | (204) |
| Net (loss) income | (1,062) | 518 | |
| Comprehensive (loss) income | (1,062) | 518 | |
| Net (loss) earnings per share attributable to equity holders ("EPS") | |||
| Basic (loss) earnings per share | (0.01) | 0.00 | |
| Basic weighted average number of common shares | 101,829,095 | 108,727,826 | |
| Diluted (loss) earnings per share | (0.01) | 0.00 | |
| Diluted weighted average number of common shares | 101,829,095 | 109,034,368 |
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
Base Carbon Inc.
Condensed Interim Consolidated Statements of Cash Flow
(Thousands of US Dollars)
Unaudited
| For the three months ended | Note | March 31, 2026 | March 31, 2025 |
|---|---|---|---|
| Cash provided by (used in): | |||
| Operating Activities | |||
| Net (loss) income for the period | (1,062) | 518 | |
| Adjustment for: | |||
| Depreciation | 13 | 13 | |
| Share-based compensation | 12 | 36 | 44 |
| Unrealized (gain) on investment in carbon credit projects | 7 | (4,396) | (1,580) |
| Write-down of inventory | 6 | 4,816 | - |
| Settlement of carbon credit revenue participation asset | 8 | 1,175 | - |
| Foreign exchange loss/(gain) | 5 | (11) | |
| Changes in operating assets and liabilities: | |||
| Other receivables | (18) | (2) | |
| Related party receivable | 5 | - | 550 |
| Prepaid and other assets | (550) | (120) | |
| Accounts payable and accrued liabilities | (537) | (321) | |
| Income tax liability | 10 | 4 | 55 |
| Deferred income tax liability | 10 | (21) | 142 |
| Lease liability | (10) | (11) | |
| Investments in carbon credit projects | 7 | (1,183) | - |
| Net cash (used in) provided by operating activities | (1,728) | (723) | |
| Investing Activities | |||
| Short term investment | 1 | 4 | |
| Purchase of property and equipment | (1) | (3) | |
| Proceeds from (issuance of) short term loan receivable | 132 | (505) | |
| Net cash provided by (used in) investing activities | 132 | (504) | |
| Financing Activities | |||
| Proceeds from exercise of options | 22 | - | |
| Repurchase of shares | 11 | (1,256) | (216) |
| Net cash (used in) financing activities | (1,234) | (216) | |
| (Decrease) in cash and cash equivalents | (2,830) | (1,443) | |
| Change in cash related to foreign exchange | (11) | 10 | |
| Cash and cash equivalents, beginning of period | 5,691 | 14,799 | |
| Cash and cash equivalents, end of period | 2,850 | 13,366 |
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
Base Carbon Inc.
Condensed Interim Consolidated Statements of Changes in Equity
(Thousands of US Dollars, except as otherwise noted)
Unaudited
| Number of Common Shares | Share Capital ($) | Contributed surplus ($) | Retained earnings ($) | Shareholders' Equity ($) | |
|---|---|---|---|---|---|
| Balance, December 31, 2024 | 109,235,486 | 48,514 | 1,813 | 52,681 | 103,008 |
| Net income for the period | - | - | - | 518 | 518 |
| Stock based compensation | - | - | 44 | - | 44 |
| Shares purchased and cancelled under NCIB | (731,400) | (216) | - | - | (216) |
| Balance, March 31, 2025 | 108,504,086 | 48,298 | 1,857 | 53,199 | 103,354 |
| Balance, December 31, 2025 | 102,694,998 | 45,815 | 1,750 | 52,926 | 100,491 |
| Net loss for the period | - | - | - | (1,062) | (1,062) |
| Stock based compensation | - | - | 36 | - | 36 |
| Exercise of options | 30,000 | 34 | (12) | - | 22 |
| Shares purchased and cancelled under NCIB | (1,773,510) | (1,262) | - | - | (1,262) |
| Balance, March 31, 2026 | 100,951,488 | 44,587 | 1,774 | 51,864 | 98,225 |
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
Base Carbon Inc.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2026 and 2025
(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 unaudited condensed interim consolidated financial statements for the three months ended March 31, 2026, were prepared in accordance with International Accounting Standard 34, and do not include all the information required for full annual financial statements. These unaudited condensed interim consolidated financial statements should be read in conjunction with the Company's annual consolidated financial statements for the year ended December 31, 2025.
The Company has reclassified certain Condensed Interim Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income comparative figures to conform with the current period's presentation. These reclassifications had no impact on previously reported net income or equity.
These unaudited condensed interim consolidated financial statements were approved and authorized for issuance by the Board of Directors on May 13, 2026.
(b) New accounting standards and interpretations
Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and IFRS 7)
Effective January 1, 2026 amendments 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 company has adopted these amendments for the reporting period March 31, 2026. The amendments introduced additional disclosure requirements for financial instruments with contingent features and for equity instruments classified at fair value through other comprehensive income ("OCI"). The adoption of these amendments did not have an impact of the interim financial statements.
Base Carbon Inc.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2026 and 2025
(Thousands of US Dollars, except as otherwise noted)
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.
(c) Going concern
These unaudited condensed interim 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 unaudited condensed interim consolidated 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 unaudited condensed interim consolidated 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 March 31, 2026, the Company's subsidiaries and consolidation basis are as follows:
| Entity name | Functional currency | Place of incorporation | Ownership as at | |
|---|---|---|---|---|
| March 31, 2026 | December 31, 2025 | |||
| 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% |
- Material accounting policies
(a) Statement of compliance
These unaudited condensed interim consolidated financial statements for the three months ended March 31, 2026 are based on International Financial Reporting Standards as issued by the International Accounting Standards Board (the "IFRS Accounting Standards") and have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting. The accounting policies and
Base Carbon Inc.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2026 and 2025
(Thousands of US Dollars, except as otherwise noted)
methods of computation applied in these unaudited condensed interim consolidated financial statements are consistent with those applied in the company's audited consolidated financial statements as at and for the year ended December 31, 2025. These unaudited condensed interim consolidated financial statements do not include all of the information required for full annual financial statements, and they should be read in conjunction with the audited consolidated financial statements of the company for the year ended December 31, 2025.
(b) Use of Estimates, Assumptions and Judgments
The timely preparation of financial statements requires that management make estimates and assumptions and use judgment. Accordingly, actual results may differ from estimated amounts as future confirming events occur. Significant estimates and judgment used in the preparation of the financial statements are described in the company's audited consolidated financial statements for the year ended December 31, 2025.
- Short term loan receivable
Secured Debenture
During 2025, BCCPC advanced a total of $750 to a Canadian company under a secured debenture (the "Secured Debenture"), classified as a financial asset measured at amortized cost. The maturity date was extended on multiple occasions during 2025, with extension fees totaling $325 and interest fees totaling $48 charged to the borrower during 2025. Principal of $350, relating to the Secured Debenture, was repaid in cash to the Company in December 2025.
As at December 31, 2025, the aggregate principal balance, including accrued extension fees and interest, was $773.
On January 1, 2026, an automatic, prorated extension fee, based on the principal balance at December 31, 2025, of $103 was charged by the Company and the Secured Debenture was provided an extension to February 15, 2026.
On February 15, 2026, $200 of the loan principal was repaid in cash to the Company and the Secured Debenture was provided an additional extension to March 16, 2026.
On March 16, 2026, $200 of the loan principal was repaid in cash to the Company and an amendment to the Secured Debenture issued on February 15, 2026 extended the maturity date until September 30, 2026 and increased the interest rate from 7% to 10% per annum, effective March 16, 2026. An extension fee of $50 was charged by the Company and the borrower agreed to pay certain legal expenses in the amount of $100.
The total interest earned and accrued as at March 31, 2026 is $63 (2025 – $48), representing $15 interest earned and accrued during the three months ended March 31, 2026.
As at March 31, 2026, the aggregate principal balance, including accrued interest, was $641.
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).
7
Base Carbon Inc.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2026 and 2025
(Thousands of US Dollars, except as otherwise noted)
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. 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.
As at March 31, 2026, no additional funds relating to the operational support loan agreement had been drawn by SIPCO and the balance receivable by the Company remains at $150.
5. Related party receivable
Abaxx Technologies Inc. ("Abaxx"), a related party to the Company, owned approximately 20.1% of the Company's outstanding shares as at March 31, 2026. Abaxx and the Company also have two common board of director members.
The table below summarizes movements in the related party receivable balance between March 31, 2026, and December 31, 2025:
| As at | March 31, 2026 | December 31, 2025 |
|---|---|---|
| Balance, beginning of the period (in thousands of US dollars) | - | 1,464 |
| Repayments and offsets | - | (982) |
| Interest income | - | 68 |
| Payment for share purchase agreement | - | 1,000 |
| Repayment for share purchase agreement | - | (1,550) |
| Balance, end of the period | - | - |
As at December 31, 2025 and March 31, 2026, the related party receivable due to the Company was fully settled.
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.
In Q3 2025, 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 $nil (2025 - $20) was recognized during the period ended March 31, 2026.
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.
Base Carbon Inc.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2026 and 2025
(Thousands of US Dollars, except as otherwise noted)
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.
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.
The table below summarizes the changes in carbon credit inventory received under the prepayment phase of the Company's carbon credit projects for the three months ended March 31, 2026 and the year ended December 31, 2025:
| Number of carbon credits held in inventory | March 31, 2026 | December 31, 2025 |
|---|---|---|
| Balance, beginning of the period | 1,076,230 | 1,712,193 |
| Receipt of VMR0006 carbon credit inventory | - | 192,810 |
| Subtotal VMR0006 balance | - | 1,905,003 |
| Re-quantification of inventory to VM0050 | - | (828,773) |
| Balance, end of the period VM0050 | 1,076,230 | 1,076,230 |
| Carbon credit inventory value | ||
| (in thousands of US dollars) | March 31, 2026 | December 31, 2025 |
| --- | --- | --- |
| Balance, beginning of the period | 21,229 | 25,633 |
| Receipt of carbon credit inventory during the period | - | 2,448 |
| Loss on re-quantification of inventory to VM0050 (ii) | - | (2,932) |
| Write-down of inventory (i) and (iii) | (4,816) | (3,920) |
| Balance, end of the period | 16,413 | 21,229 |
During the year ended December 31, 2025, the Company received into inventory 192,810 VMR0006 carbon credits from the Rwanda Cookstoves Project with a total value of $2,448 based on the fair market value on the date received.
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 the Carbon Offsetting and Reduction Scheme for International Aviation ("CORSIA").
During the year ended December 31, 2025, the Company performed a detailed review of its inventory balances and identified three distinct and material write-downs: (i) write-down of VMR0006 inventory at
Base Carbon Inc.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2026 and 2025
(Thousands of US Dollars, except as otherwise noted)
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.
During the three months ended March 31, 2026, Base Carbon's total inventory of 1,076,230 carbon credits was valued at $16,413, a write-down of $4,816 when compared to the value of $21,229 as at December 31, 2025. This write-down is as a result of a decrease in the carbon credit price from $19.73 to $15.25.
No additional carbon credits were received into inventory or sold from inventory during the three months ended March 31, 2026.
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 March 31, 2026, and December 31, 2025:
| Current investments in carbon credit projects
(in thousands of US dollars) | March 31, 2026 | December 31, 2025 |
| --- | --- | --- |
| Rwanda Cookstoves Project | 1,650 | 7,164 |
| Vietnam Household Devices Project | 15,294 | 3,877 |
| Total current investments in carbon credit projects | 16,944 | 11,041 |
| Non-current investments in carbon credit projects
(in thousands of US dollars) | March 31, 2026 | December 31, 2025 |
| --- | --- | --- |
| Rwanda Cookstoves Project | 9,137 | 10,908 |
| Vietnam Household Devices Project | 46,298 | 49,080 |
| India ARR Project | 9,341 | 8,158 |
| Total non-current investments in carbon credit projects | 64,776 | 68,146 |
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
Base Carbon Inc.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2026 and 2025
(Thousands of US Dollars, except as otherwise noted)
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 projects 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.
Carbon credits issued and received into inventory or the RPA by the Company have been outlined in Note 6 – Carbon credit inventory and Note 8 – Carbon credit revenue participation asset.
11
Base Carbon Inc.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2026 and 2025
(Thousands of US Dollars, except as otherwise noted)
On September 22, 2025, carbon credit registry Verra approved 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 RPA carbon credits have been re-quantified under VM0050. Carbon credits issued under VM0050 currently meet the standards for potential use under CORSIA.
The estimated number of carbon credits expected to be issued over the life of the project which are all subject to revenue share arrangement set out in the project agreement, is now approximately 4.6 million VM0050 carbon credits. This is comprised of 1.1 million VM0050 carbon credits which is the basis for the Company's inventory, RPA carbon credits in the amount of 0.7 million and anticipated future VM0050 carbon credit issuances in the amount of 2.6 million carbon credits.
The table below summarizes the changes in the Rwanda Cookstoves Project during the three months ended March 31, 2026, and the year ended December 31, 2025:
| Rwanda Cookstoves Project
(in thousands of US dollars) | March 31, 2026 | December 31, 2025 |
| --- | --- | --- |
| Balance, beginning of the period | 18,072 | 7,812 |
| Unrealized (loss) gains on investment in carbon credit projects | (4,239) | 14,315 |
| Transfer to carbon credit revenue participation asset | (3,046) | (1,606) |
| Receipt of carbon credit inventory | - | (2,449) |
| Balance, end of the period | 10,787 | 18,072 |
Unrealized loss 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 discounted cashflow ("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 March 31, 2026, a price of $15.25 (December 2025 - $19.73) 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 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 March 31, 2026, to reflect current market conditions and observed forward pricing trends, Base Carbon incorporated a 5% (December 2025 – 1.5%) implied forward price curve growth factor. The implied forward price curve is derived from the spread between the current and future forward contracts.
12
Base Carbon Inc.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2026 and 2025
(Thousands of US Dollars, except as otherwise noted)
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 (December 2025 – 4.6 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% (December 2025 – 10%) is used for the project.
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 below for details on each inputs’ impact on these financial statements.
During the three months ended March 31, 2026, an unrealized loss of $4,239 (2025 – $192 gain) was recognized on the project. This was primarily driven by a lower carbon credit price and an increase in insurance costs.
Current and non-current investment balance for the Rwanda Cookstoves Project
As at March 31, 2026, the current balance of the investment in the Rwanda Cookstoves Project was $1,650 (2025 - $7,164). 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 March 31, 2026, the non-current balance of the investment in the Rwanda Cookstoves Project was $9,137 (2025 - $10,908). 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 three months ended March 31, 2026, and the year ended December 31, 2025, 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, the Company received carbon credits from the Rwanda Cookstoves Project, resulting in a partial 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). 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
13
Base Carbon Inc.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2026 and 2025
(Thousands of US Dollars, except as otherwise noted)
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 $20,829 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 $36,257 from the sale of carbon credits at a total cost of approximately $20,829 resulting in a full repayment of capital invested and a cash gain of approximately $15,428.
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$5.00 per carbon credit.
The Vietnam Household Devices Project was fully deployed as at December 31, 2024, after relevant project milestones were fulfilled by SIPCO. During the three months ended March 31, 2026, there were no carbon credits issued and settled for cash.
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 up to $200 to be used by SIPCO for costs related to the methodology change.
In November 2025, Verra's cookstove methodology, VMR0006, was included in CORSIA Phase 1 (2024-2026) eligibility. Additionally, on April 1, 2026, the Government of Vietnam issued a Decree (the "Decree") establishing the process by which the Government of Vietnam may issue a project letter of authorization pursuant to Article 6.2 of the Paris Agreement and the procedures by which carbon project developers may apply for government approval to transfer carbon credits to international counterparties with a "Corresponding Adjustment". In connection with the Decree, BCCPC and SIPCO elected to continue methodology VMR0006 for carbon credits generated by the project for vintage years up to and including 2026, resulting in an increase of approximately 3.8 million carbon credits expected to be issued relative to the estimates as of December 31, 2025. Carbon credits generated by the project for vintages 2027 onwards are expected to be transitioned to methodology VM0050, consistent with applicable CORSIA and Verra requirements. Refer to "Note 18 – Subsequents Event" for further details on the Government of Vietnam issued Decree.
The estimated carbon credits expected to be issued over the life of the project is now 18.4 million carbon credits (7.4 million VMR0006 cookstove and AMS-III.AV water purifier carbon credits previously issued under Phase 1, 5.3 million VMR0006 cookstove carbon credits, 2.4 million VM0050 cookstove and 3.3 million AMS-III.AV water purifier carbon credits expected to be issued in Phase 2). Under the expansion option if exercised, the Company anticipates an additional 5.1 million VM0050 and AMS-III.AV carbon credits to be generated.
14
Base Carbon Inc.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2026 and 2025
(Thousands of US Dollars, except as otherwise noted)
The table below summarizes the changes in the Vietnam Household Devices Project during the period ended March 31, 2026, and year ended December 31, 2025:
| Vietnam Household Devices Project
(in thousands of US dollars) | March 31, 2026 | December 31, 2025 |
| --- | --- | --- |
| Balance, beginning of the period | 52,957 | 55,972 |
| Unrealized gain (loss) on investment in carbon credit projects | 8,635 | (3,015) |
| Realized cash settled gains on investment in carbon credit projects | - | 1,811 |
| Settlements of investment in carbon credit projects | - | (1,811) |
| Balance, end of the period | 61,592 | 52,957 |
Realized cash settled gains on investment in the Vietnam Household Devices Project
During the three months ended March 31, 2026, BCCPC received $nil (2025 – $790) in cash payments from the delivery and monetization of carbon credits from the Vietnam project.
Unrealized gain on investment in Vietnam Household Devices Project
The Company reviewed and revalued the investment in the Vietnam Household Devices Project as of March 31, 2026, taking into account inputs such as expected carbon credit volumes, carbon credit prices, discount rates, and a discounted cashflow valuation of the project expansion option, which includes assumptions around the estimated future capital expenditures. 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, 2025, the project generated the expected 7.4 million carbon credits. Phase 1 of the project was completed in June 2025.
During Phase 2 of the project, from 2025 to 2032, the project is projected to generate an estimated 11.0 million (December 2025 – 7.6 million) carbon credits. This is based on the latest project monitoring reports, election to keep VMR0006 credits for vintages 2024, 2025 and 2026, the implementation of Verra's updated cookstove methodology for vintages 2027 and beyond, the project design document, 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 2027 to 2037, the project is expected to generate an estimated 5.1 million (December 2025 – 4.7 million) carbon credits. This is based on SIPCO's preliminary assumptions as well as the implementation of Verra's updated cookstove methodology for 2027 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.
15
Base Carbon Inc.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2026 and 2025
(Thousands of US Dollars, except as otherwise noted)
iii) Discount Rates:
In Phase 1 of the project, from 2023 to June 2025, the discount rate used was 8%. Phase 1 of the project was completed in June 2025.
During Phase 2 of the project, from 2026 to 2032, the discount rate used is 15% (2025 – 15%).
During the expansion option of the project, from 2026 to 2036, the discount rate used is 20% (2025 – 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 three months ended March 31, 2026, an unrealized gain of $8,635 (2025 - $1,389) was recognized on the project due to a higher crediting profile, a delay of the expansion costs and the unwinding of the discount rate. This gain is partially offset by lower carbon credit prices and an increase of insurance costs related to CORSIA eligible tagging.
Current and non-current investment balance for the Vietnam Household Devices Project
As at March 31, 2026, the current balance of the investment in the Vietnam Household Devices Project was $15,294 (December 2025 - $3,877). 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 March 31, 2026, the non-current balance of the investment in the Vietnam Household Devices Project was $46,298 (December 2025 - $49,080). 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 three months ended March 31, 2026, and year ended December 31, 2025, there were no transfers of assets between Level 1, Level 2 and Level 3 for the Vietnam Household Devices Project.
16
Base Carbon Inc.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2026 and 2025
(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 March 31, 2026:
| Key Input and Change in Assumptions (in thousands of US dollars) | Impact on Net Income as at March 31, 2026 | |
|---|---|---|
| Rwanda Cookstoves Project | Vietnam Household Devices Project | |
| Carbon credit price input increased by 1% | $140 increase in net income and total assets | $534 increase in net income and total assets |
| Carbon credit price input decreased by 1% | $140 decrease in net income and total assets | $534 decrease in net income and total assets |
| Carbon credit volume input increased by 1% | $112 increase in net income and total assets | $614 increase in net income and total assets |
| Carbon credit volume input decreased by 1% | $112 decrease in net income and total assets | $614 decrease in net income and total assets |
| Discount rates input increased by 1% | $29 decrease in net income and total assets | $288 decrease in net income and total assets |
| Discount rates input decreased by 1% | $30 increase in net income and total assets | $290 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 is 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 of the project 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.
Per the terms of the agreement and assuming all condition precedents are met, BCCPC will invest an aggregate of roughly $13,729 into the project, of which BCCPC has invested $9,341 as of March 31, 2026. 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.
17
Base Carbon Inc.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2026 and 2025
(Thousands of US Dollars, except as otherwise noted)
The table below summarizes the changes in the India ARR Project during the three months ended March 31, 2026, and the year ended December 31, 2025:
| India ARR Project
(in thousands of US dollars) | March 31, 2026 | December 31, 2025 |
| --- | --- | --- |
| Balance, beginning of the period | 8,158 | 6,100 |
| Capital deployed in the project during the period | 1,183 | 2,058 |
| Balance, end of the period | 9,341 | 8,158 |
During the three months ended March 31, 2026, $1,183 (2025 - $2,058) of capital was deployed towards the project. As at March 31, 2026, 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 March 31, 2026.
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. Pursuant to the revenue share arrangement, 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, representing the Company's share of the future sales, was recognized. The RPA 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, in Q3 2025 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. This resulted in a re-quantification of the RPA carbon credits associated with the Rwanda Cookstoves Project from 371,275 VMR0006 carbon credits to 243,973 VM0050 carbon credits.
During the three months ended March 31, 2026, 639,609 RPA carbon credits were issued from the Rwanda Cookstoves Project with a total value of $3,046 based on the fair market value on the date received. There was a corresponding transfer from the carrying value of the current investments in carbon credit projects to reflect the settlement.
During the three months ended March 31, 2026, the Company, through project partner DelAgua, completed sales of CORSIA-eligible RPA carbon credits, resulting in a realized cash settled gain on the RPA of $1,170 and a reduction in the carrying value of the RPA and settlement of $1,175. DelAgua remitted sale proceeds of approximately $700 to the Company. This payment is net of the revenue share arrangement amounts and a holdback of insurance premiums paid on all CORSIA-eligible carbon credits held by the parties.
18
Base Carbon Inc.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2026 and 2025
(Thousands of US Dollars, except as otherwise noted)
The table below summarizes the changes in RPA for the three months ended March 31, 2026 and the year ended December 31, 2025:
| Number of carbon credits held in RPA | March 31, 2026 | December 31, 2025 |
|---|---|---|
| Balance, beginning of the period | 243,973 | - |
| Issuance of RPA carbon credits | 639,609 | 243,973 |
| Sale RPA carbon credits | (200,537) | - |
| Balance, end of the period | 683,045 | 243,973 |
| Carbon credit RPA value | ||
| (in thousands of US dollars) | March 31, 2026 | December 31, 2025 |
| --- | --- | --- |
| Balance, beginning of the period | 1,455 | - |
| Issuance of RPA carbon credits during the period | 3,046 | 1,606 |
| Unrealized loss on carbon credit revenue participation asset | - | (151) |
| Settlement of carbon credit revenue participation asset | (1,175) | - |
| Balance, end of the period | 3,326 | 1,455 |
As at March 31, 2026, the RPA of 683,045 carbon credits was valued at $3,326, an increase of $1,871 when compared to the value of $1,455 as at December 31, 2025. The Company applied the gross carbon credit price set out in Rwanda Cookstoves Project – (i) Carbon Credit Price, adjusted by applicable costs to reflect Base Carbon's economic interest in the RPA.
As at March 31, 2026, the fair value of the RPA was determined using a combination of market inputs and management judgment and is classified as Level 3 in the fair value hierarchy. Refer to Note 15 – Fair Value and Risk Management for further detail.
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 March 31, 2026, the carrying value of the Company's investment remained unchanged from the initial cost of $85.
10. Income tax expense (recovery)
The components of income tax expense (recovery) are as follows:
| (in thousands of US dollars) | March 31, 2026 | March 31, 2025 |
|---|---|---|
| Current tax expense | 4 | - |
| Deferred tax (recovery) | (21) | (204) |
| Income tax (recovery) | (17) | (204) |
For the three months ended March 31, 2026, the Company recognized an income tax recovery of $17 (March 31, 2025 - $204), comprised of a deferred tax recovery of $21 (March 31, 2025 - $204) net of current tax expense of $4 (March 31, 2025 - $nil).
19
Base Carbon Inc.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2026 and 2025
(Thousands of US Dollars, except as otherwise noted)
11. Share capital
Common shares issued are as follows, expressed in thousands of US dollars:
| Number of Common Shares | Share Capital ($) | |
|---|---|---|
| Balance, December 31, 2024 | 109,235,486 | 48,514 |
| Shares repurchased and cancelled under NCIB (d) | (731,400) | (216) |
| Balance, March 31, 2025 | 108,504,086 | 48,298 |
| Balance, December 31, 2025 | 102,694,998 | 45,815 |
| Common shares issued with respect to exercise of options (b and c) | 30,000 | 34 |
| Shares repurchased and cancelled under NCIB (d) | (1,773,510) | (1,262) |
| Balance, March 31, 2026 | 100,951,488 | 44,587 |
Common Shares
(a) Authorized
Unlimited number of common shares without par value.
(b) Issued
30,000 common shares were issued upon the exercise of stock options during the three months ended March 31, 2026. No shares were issued during the three months ended March 31, 2025.
(c) Exercised
During the three months ended March 31, 2026, a total of 30,000 stock options were exercised, of which 30,000 common shares (2025 – nil) were issued.
(d) Repurchased and cancelled under NCIB
The Company established its original normal course issuer bid ("NCIB") program to purchase its common shares on June 17, 2022. On June 21, 2024, the Company renewed its NCIB, pursuant to which it 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, 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 March 31, 2026, Base Carbon purchased a cumulative 3,960,330 common shares for cancellation.
During the three months ended March 31, 2026, the Company purchased and cancelled 1,773,510 (2025 – 731,400 common shares) of its common shares, pursuant to its NCIB.
Base Carbon Inc.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2026 and 2025
(Thousands of US Dollars, except as otherwise noted)
(e) Repurchased and Cancelled Under Share Purchase Agreements
During the three months ended March 31, 2026 and 2025, no shares were repurchased under share purchase agreements.
12. Contributed surplus stock options
Contributed surplus consists of stock option expense. As at March 31, 2026 and 2025, 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, 2024 | 10,308,666 | 0.56 |
| Outstanding options, March 31, 2025 | 10,308,666 | 0.56 |
| Options exercisable, March 31, 2025 | 7,352,007 | 0.58 |
| Outstanding options, December 31, 2025 | 9,290,000 | 0.59 |
| Options exercised | (30,000) | 0.78 |
| Forfeited during the period | (150,000) | 0.78 |
| Outstanding options, March 31, 2026 | 9,110,000 | 0.59 |
| Options exercisable, March 31, 2026 | 7,323,340 | 0.60 |
During the three months ended March 31, 2026 no options were granted (2025 - nil). During the same period, 150,000 options were forfeited with a weighted average exercise price of $0.78, while no options were cancelled. Stock options in the amount of 30,000 were exercised, for a total consideration of $22. The share price on the date of exercise was $0.72.
During the three months ended March 31, 2026, the Company extended the expiry dates of 2.3 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 weighted average exercise price per option outstanding as at March 31, 2026 was $0.59 (2025 - $0.59).
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.
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 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 three months ended March 31, 2026, share-based compensation expense was $36 (2025 - $44).
21
Base Carbon Inc.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2026 and 2025
(Thousands of US Dollars, except as otherwise noted)
13. (Loss) earnings per share
For the three months ended March 31, 2026 and 5025, basic and diluted (loss) income per share has been calculated based on the net (loss) income attributable to common shareholders and the weighted average number of common shares outstanding. Diluted (loss) earnings per share includes the effect of stock options that are in-the-money, as shown below in thousands of US dollars, except number of shares and per share amount:
| Three months ended, | March 31, 2026 | March 31, 2025 |
|---|---|---|
| Net (loss) income attributable to common shareholders ($) | (1,062) | 518 |
| Weighted average number of common shares outstanding | 101,829,095 | 108,727,826 |
| Basic (loss) earnings per common share | (0.01) | 0.00 |
| Net (loss) income attributable to common shareholders ($) | (1,062) | 518 |
| Weighted average number of common shares outstanding | 101,829,095 | 108,727,826 |
| Adjustments to average shares due to stock options and others | - | 306,542 |
| Weighted average number of diluted common shares outstanding | 101,829,095 | 109,034,368 |
| Diluted (loss) earnings per common share | (0.01) | 0.00 |
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 March 31, 2026 totaled $98,225 (December 2025 - $100,491).
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 three months ended March 31, 2026, and the Company is not subject to any externally imposed capital requirements.
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).
Base Carbon Inc.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2026 and 2025
(Thousands of US Dollars, except as otherwise noted)
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 March 31, 2026, 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 three months ended March 31, 2026, the Company received carbon credits from the Rwanda Cookstoves Project, resulting in a partial settlement of the Level 3 financial assets.
| As at March 31, 2026 (thousands of US dollars) | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Cash and cash equivalents | 2,850 | - | - | 2,850 |
| Short term investments | 39 | - | - | 39 |
| Other receivables | 234 | - | - | 234 |
| Short term loan receivable | - | 791 | - | 791 |
| Investments at fair value | - | - | 85 | 85 |
| Current investments in carbon credit projects | - | - | 16,944 | 16,944 |
| Carbon credit revenue participation asset | - | - | 3,326 | 3,326 |
| Non-current investments in carbon credit projects | - | - | 64,776 | 64,776 |
| Accounts payable and accrued liabilities | (243) | - | - | (243) |
| 2,880 | 791 | 85,131 | 88,802 |
Base Carbon Inc.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2026 and 2025
(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, 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 |
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 March 31, 2026 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 March 31, 2026, the Company had cash and cash equivalents balance of $2,850, short term receivable of $791, and other receivables of $234 for a total of $3,875 of liquid current assets to settle current liabilities of $280. 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.
24
Base Carbon Inc.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2026 and 2025
(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 March 31, 2026, the Company is exposed to foreign currency risk with respect to Canadian and Barbadian dollar assets with a total balance of $117 (December 2025 - $321). The Company is also exposed to predominantly Canadian and Barbadian dollar liabilities with a total balance of $7,881 (December 2025 - $8,445). Most of this exposure relates to the deferred tax liability amount totalling $7,591 (December 2025 – $7,612), which is the estimated 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 March 31, 2026, the net income would have decreased by $86 had the United States and Barbados dollar strengthened by 5%. Had the US and Barbados dollar weakened by 5% at March 31, 2026, the net income would have increased by $86.
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
Extension of the Expiry of Certain Outstanding Options
The Company extended the expiry dates for certain outstanding stock options held by certain directors, officers, employees and consultants during the three months ended March 31, 2026. The modifications did not result in material incremental compensation expense.
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, intellectual property 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 three months ended March 31, 2026, the Company accrued $29 in royalty license fees for the realized cash settled gains on the RPA. For the three months ended March 31, 2025, the Company was invoiced and settled $20 in royalty license fees for the realized cash settled gains on investments in carbon credit projects.
Base Carbon Inc.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2026 and 2025
(Thousands of US Dollars, except as otherwise noted)
Abaxx Marketing, Promotional and Consulting Services
For the three months ended March 31, 2026, the Company incurred no marketing, promotional, or consulting expenses from related party Abaxx. During the period, the Company recorded a recovery of $66 following the reversal of a prior year-end estimate for Abaxx marketing services, as it was determined no further obligation existed. For the three months ended March 31, 2025, the Company incurred $107 in fees from Abaxx for similar services.
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 $13,729 in various tranches over the life of the project. As at March 31, 2026, the remaining contractual commitments are $4,388. 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 March 31, 2026.
18. Subsequent Events
Government of Vietnam Decree
Subsequent to quarter-end, the Government of Vietnam issued the Decree, establishing a comprehensive regulatory framework formalizing the authorization and corresponding adjustment process under Article 6.2 of the Paris Agreement and the procedures by which carbon project developers may apply for government approval to transfer carbon credits to international counterparties with a "Corresponding Adjustment". The Decree also sets a maximum international transfer ratio of 90% for qualifying mitigation activities, with the remaining share retained to support domestic climate objectives.
26