BEACN Wizardry & Magic — Audit Report / Information 2026

Apr 25, 2026

BEACN

BEACN WIZARDRY AND MAGIC INC.

CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2025 and 2024

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BEACN WIZARDRY AND MAGIC INC.

Contents

	Page
Auditor's Report	3-6
Consolidated Statements of Financial Position	7
Consolidated Statements of Loss and Comprehensive Loss	8
Consolidated Statements of Changes in Shareholders' Equity	9
Consolidated Statements of Cash Flows	10
Notes to the Consolidated Financial Statements	11-27

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DAVIDSON

INDEPENDENT AUDITOR'S REPORT

To the Shareholders of BEACN Wizardry & Magic Inc.

Opinion

We have audited the accompanying consolidated financial statements of BEACN Wizardry & Magic Inc. (the "Company"), which comprise the consolidated statements of financial position as at December 31, 2025 and 2024, and the consolidated statements of loss and comprehensive loss, changes in shareholders' equity (deficiency), and cash flows for the years then ended, and notes to the consolidated financial statements, including material accounting policy information.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2025 and 2024, and its financial performance and its cash flows for the years then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IFRS Accounting Standards).

Basis for Opinion

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

Material Uncertainty Related to Going Concern

We draw attention to Note 1 of the consolidated financial statements, which indicates that the Company incurred a net loss of $1,884,534 during the year ended December 31, 2025. As stated in Note 1, these events and conditions indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current year. 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.

In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have determined the matter described below to be the key audit matter to be communicated in our auditor's report.

DAVIDSON & COMPANY LLP

1200 - 609 Granville Street

PO BOX 10372, Pacific Centre

Vancouver, BC V7Y 1G6

604 687 0947

davidson-co.com

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Sales

As described in Note 14 to the consolidated financial statements, during the year ended December 31, 2025, the Company recognized revenue from operations of $2,725,145. As detailed in Note 3 to the consolidated financial statements, the Company recognizes revenue when it satisfies its performance obligation, that is, when the customer obtains control of the product.

Sales are generated primarily through various third-party service organizations and consist of a large volume of low-value transactions.

Due to the significance of revenue for the Company's consolidated financial statements, use of third-party sales platforms, and the large volume of transactions, we consider this to be a key audit matter.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. Our audit procedures included, among others:

• Reviewing operating documents and gaining an understanding of the Company's controls over the revenue cycle including use of complimentary user entity controls for the third-party service organizations.
• Reviewing the Company's accounting policy for revenue recognition for compliance with IFRS.
• Obtaining and assessing the report certifying the effectiveness of internal controls implemented by service organizations used by the Company to record revenues.
• On a test basis, tracing sales transactions to source documents and cash receipts to assess that revenues have been recognized at appropriate prices and in the correct accounting period.

Other Information

Management is responsible for the other information. The other information obtained at the date of this auditor's report includes Management's Discussion and Analysis.

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

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

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

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

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

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

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

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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 Company's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's 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 Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance 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.

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 year 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.

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

Chartered Professional Accountants

April 23, 2026

Vancouver, Canada

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BEACN WIZARDRY AND MAGIC INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Presented in Canadian Dollars)

	Note	December 31, 2025	December 31, 2024
Assets
Current
Cash		$ 429,076	$ 792,185
Accounts receivable	5	110,797	173,503
Taxes receivable		81,347	78,915
Inventory	6	621,960	1,455,408
Prepaid and inventory deposits	7	217,250	252,696
		1,460,430	2,752,707
Non-current
Property and equipment, net	8	189,221	162,797
Right-of-use asset	11	73,982	104,937
		263,203	267,734
		$ 1,723,633	$ 3,020,441
Liabilities
Current
Accounts payable and accrued liabilities		$ 331,523	$ 184,826
Due to related parties	13	2,500	7,576
Promissory note	9, 16	404,792	389,792
Current portion of lease liability	11, 16	35,267	31,035
Current portion of convertible loan	10, 16	929,051	36,363
		1,703,133	649,592
Non-current
Lease liability	11, 16	46,845	74,475
Convertible loan	10, 16	-	786,510
		46,845	860,985
		$ 1,749,978	$ 1,510,577
Shareholders' equity (deficiency)
Share capital	12	8,143,711	7,799,308
Reserves	12	1,255,570	1,251,648
Deficit		(9,425,626)	(7,541,092)
		(26,345)	1,509,864
		$ 1,723,633	$ 3,020,441

These consolidated financial statements are approved by the Board on April 23, 2026.

Approved by the Board of Directors:

"Kevin Alexander"
"Scott Christopher"

Kevin Alexander
Scott Christopher

See the notes to the consolidated financial statements

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BEACN WIZARDRY AND MAGIC INC.
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(Presented in Canadian Dollars)

	Note	2025	Years ended December 31, 2024
Sales, net	14	$ 2,725,145	$ 3,466,706
Cost of sales		1,760,023	2,090,640
Gross profit		965,122	1,376,066
Expenses
Advertising and marketing		513,520	366,961
Consulting fees		174,796	217,490
Depreciation of property and equipment	8	90,611	94,889
Depreciation of right-of-use asset	11	30,955	25,322
Office, supplies, and miscellaneous		256,399	207,595
Professional fees	13	250,489	137,461
Prototype and pre-production costs		986	21,039
Research and development		72,758	84,774
Rent and operating costs	11	46,840	45,320
Salaries and benefits	13	1,145,769	1,421,630
Share-based payments	12(c)	3,922	11,618
Transfer agent, filing fees and shareholder communications		21,555	36,989
Travel and related costs		33,572	16,807
Total expenses		2,642,172	2,687,895
Operating loss		(1,677,050)	(1,311,829)
Other items
Foreign exchange gain (loss)		(78,575)	13,745
Interest and accretion expense	9,10,11,16	(128,909)	(53,025)
		(207,484)	(39,280)
Loss and comprehensive loss for the year		(1,884,534)	(1,351,109)
Basic and diluted loss per share		$ (0.03)	$ (0.02)
Weighted average number of common shares outstanding - basic and diluted		56,888,137	54,768,586

See the notes to the consolidated financial statements

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BEACN WIZARDRY AND MAGIC INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY)
(Presented in Canadian Dollars)

		Share Capital		Reserves
	Note	Number of shares	Amount	Share-based payments	Warrants	Finders' Warrants	Deficit	Total Shareholders' Equity (Deficiency)
Balance, December 31, 2023		52,946,836	$ 7,141,325	$ 360,656	$ 836,677	$ 42,697	$ (6,189,983)	$ 2,191,372
Share-based payments	12(c)	-	-	11,618	-	-	-	11,618
Shares issued on private placement	12(b)	3,723,910	670,304	-	-	-	-	670,304
Share issuance costs	12(b)	-	(12,321)	-	-	-	-	(12,321)
Loss and comprehensive loss for the year		-	-	-	-	-	(1,351,109)	(1,351,109)
Balance, December 31, 2024		56,670,746	7,799,308	372,274	836,677	42,697	(7,541,092)	1,509,864
Share-based payments	12(c)	-	-	3,922	-	-	-	3,922
Shares issued on private placement	12(b)	3,043,478	350,000	-	-	-	-	350,000
Share issuance costs	12(b)	-	(5,597)	-	-	-	-	(5,597)
Loss and comprehensive loss for the year		-	-	-	-	-	(1,884,534)	(1,884,534)
Balance, December 31, 2025		59,714,224	$ 8,143,711	$ 376,196	$ 836,677	$ 42,697	$ (9,425,626)	$ (26,345)

See the notes to the consolidated financial statements

9

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BEACN WIZARDRY AND MAGIC INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Presented in Canadian Dollars)

	2025	Years ended December 31, 2024
Cash provided by (used in):
Operating activities
Loss for the year	$ (1,884,534)	$ (1,351,109)
Items not affecting cash:
Depreciation property and equipment	90,611	94,889
Depreciation of right-of-use asset	30,955	25,322
Share-based payments	3,922	11,618
Interest and accretion expense	128,909	53,025
Changes in non-cash working capital items:
Accounts receivable	62,706	44,385
Taxes receivable	(2,432)	43,685
Prepaid and deposits	35,446	848,328
Inventory	833,448	(571,263)
Accounts payable and accrued liabilities	90,334	(96,707)
Due to related parties	(5,076)	(52,145)
Net cash used in operating activities	(615,711)	(949,972)
Investing activities
Purchases of property and equipment	(66,037)	-
Net cash used in investing activities	(66,037)	-
Financing activities
Proceeds from promissory note	-	100,000
Proceeds from convertible loan	-	786,510
Payment of lease liability	(31,035)	(26,696)
Interest paid	-	(1,869)
Proceeds from issuance of common shares	350,000	670,304
Share issuance costs	(326)	(12,321)
Net cash provided by financing activities	318,639	1,515,927
Change in cash	(363,109)	565,955
Cash, beginning of the year	792,185	226,230
Cash, end of the year	$ 429,076	$ 792,185
Supplemental cash flow information
Fair value of warrants issued on private placement	$ -	$ 282,484
Share issuance costs included in accounts payable	5,271	-
Property and equipment additions included in accounts payable	50,998	-
Cash paid on interest and taxes owed	-	-

See the notes to the consolidated financial statements

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BEACN WIZARDRY AND MAGIC INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(Presented in Canadian Dollars)

1. NATURE OF OPERATIONS AND CONTINUANCE OF OPERATIONS

BEACN Wizardry and Magic Inc. ("BEACN" or the "Company") was incorporated and domiciled in Canada under the Business Corporations Act (British Columbia) as a "Capital Pool Company" as defined in the TSX Venture Exchange's (the "Exchange") Listing Policy 2.4. The Company's registered records office is located at 204-1075 Pendergast St., Victoria, British Columbia, V8V 0A1, Canada.

These consolidated financial statements have been prepared in accordance with IFRS Accounting Standards ("IFRS") applicable to a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company incurred a net loss of $1,884,534 for the year ended December 31, 2025. To December 31, 2025, even though the Company has earned revenue from operations, the continuation of the Company as a going concern is dependent upon the ability of the Company to attain sufficient profitable operations and/or obtain necessary equity or other financing to continue operations.

The current market conditions and volatility increase the uncertainty of the Company's ability to continue as a going concern given the need to continue research and development, purchase inventory, establish profitable sales and raise additional funds. The Company will continue to search for new or alternate sources of financing but anticipates that the current market conditions may impact the ability to source such funds. The outcome of these matters cannot be predicted at the present time. These factors indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern.

2. BASIS OF PREPARATION - STATEMENT OF COMPLIANCE

These consolidated financial statements have been prepared in accordance with IFRS as issued by the International Accounting Standards Board ("IASB"). The consolidated financial statements have been prepared on a historical cost basis, except for financial instruments classified as financial instruments at fair value through profit and loss, which are stated at their fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting except for cash flow information.

The preparation of these consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

These consolidated financial statements, including comparatives, have been prepared on the basis of IFRS standards that are published at the time of preparation.

3. MATERIAL ACCOUNTING POLICY INFORMATION

(a) Principles of consolidation

Subsidiaries are all entities over which the Company has control. The Company controls an entity where it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Company. They are deconsolidated from the date that control ceases.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of loss and comprehensive loss, statement of changes in shareholders' equity and statement of financial position respectively.

As at December 31, 2025, the Company's only subsidiary was the wholly-owned Canadian company Beacon Hill Innovations Ltd. Its principal business focus is to be a supplier of tech peripherals for Gamers, YouTubers, Podcasters and anyone creating content on the internet.

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BEACN WIZARDRY AND MAGIC INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(Presented in Canadian Dollars)

3. MATERIAL ACCOUNTING POLICY INFORMATION (cont'd)

(b) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker ("CODM"), being the CEO. For the year ended December 31, 2025, the Company's CODM assessed that the Company had one reportable segment which was audio related hardware products.

(c) Significant accounting judgements and estimates

The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Management also needs to exercise judgement in applying the Company's accounting policies. Actual outcomes could differ from these estimates. The consolidated financial statements include estimates which, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the consolidated 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 the revision affects both current and future periods.

The critical estimates and judgements that management has made in the process of applying accounting policies and that have the most significant effect on the amounts recognized in the consolidated financial statements are as follows:

• the determination that the Company will continue as a going concern for the next year;
• the assessment of the net realizable value of inventory and write-down of inventory if applicable;
• the assessment of the timing of recognition of revenue;
• the assessment of potential liabilities for warranties and product refunds or returns;
• the measurement of the fair value of share-based payments; and
• the determination that lease payments under the extension term (one option of three years) are not reasonably certain because the extension is subject to a condition that is not under the landlord's control. Accordingly, the extension term of the lease has not been included in the initial measurement of the lease liability.

(d) Foreign currency

The functional and presentation currency of these consolidated financial statements is the Canadian dollar. Revenue and expenses are translated at the average rates for the period, unless exchange rates fluctuated significantly during the period, in which case the exchange rates at the dates of the transaction are used. Other foreign currency transactions are translated into the functional currency using exchange rates prevailing at the date of the transactions. At the end of each reporting period, foreign currency denominated monetary assets and liabilities are translated to the functional currency using the prevailing rate of exchange at the reporting period date. Gains and losses on translation of monetary items are recognized in the statements of loss and comprehensive loss.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

(e) Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. As at December 31, 2025 and 2024, the Company did not have any cash equivalents.

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BEACN WIZARDRY AND MAGIC INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(Presented in Canadian Dollars)

3. MATERIAL ACCOUNTING POLICY INFORMATION (cont'd)

(f) Trade receivables

Trade receivables are recognised initially at the amount of consideration that is unconditional, unless they contain significant financing components when they are recognised at fair value. They are subsequently measured at amortised cost using the effective interest method, less loss allowance.

(g) Inventories

Parts and finished goods are stated at the lower of cost and net realizable value. Cost includes the cost of purchased inventory and all costs directly attributable to the manufacture of the finished goods, including shipping and handling. Net realizable value is the estimated selling price in the ordinary course of business less any applicable selling expenses.

Inventories are written down to net realizable value when the cost of inventories is estimated to be unrecoverable due to obsolescence, damage or slow turnover. Actual net realizable value can vary from the estimate.

(h) Property and equipment

Property and equipment are stated at cost less accumulated depreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost can be measured reliably.

The carrying amount of a replaced asset is derecognized when replaced. Repairs and maintenance costs are charged to the consolidated statements of loss and comprehensive loss during the period in which they are incurred.

Depreciation is calculated at 55% declining balance for computer equipment and software. Amortization for moulds used in manufacturing, furniture and fixtures, and leasehold improvements is calculated using a straight-line method and useful life of five years.

Residual values, methods of depreciation, and useful lives of the assets are reviewed annually and adjusted, if required. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

(i) Accounts payable and accrued liabilities

These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

(j) Leases

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

• fixed payments (including in-substance fixed payments), less any lease incentives receivable;
• variable lease payments that are based on an index or a rate, initially measured using the index or rate as at the commencement date;
• amounts expected to be payable by the Company under residual value guarantees;
• the exercise price of a purchase option if the Company is reasonably certain to exercise that option; and

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BEACN WIZARDRY AND MAGIC INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(Presented in Canadian Dollars)

3. MATERIAL ACCOUNTING POLICY INFORMATION (cont'd)

(j) Leases (cont'd)

• payments of penalties for terminating the lease, if the lease term reflects the Company exercising that option.

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.

Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Right-of-use assets are measured at cost comprising the following:

• the amount of the initial measurement of lease liability;
• any lease payments made at or before the commencement date less any lease incentives received;
• any initial direct costs; and
• restoration costs.

(k) Financial instruments

Financial Assets - Classification

The Company classifies its financial assets in the following measurement categories:

• Those to be measured subsequently at fair value (either through Other Comprehensive Income ("OCI"), or through profit or loss ("FVTPL"), and
• Those to be measured at amortized cost.

The classification depends on the Company's business model for managing the financial assets and contractual terms of the cash flows. For assets measured at fair value, gains or losses are recorded in profit or loss or OCI.

The Company has classified cash and accounts receivables (excluding sales taxes) as subsequently measured at amortized cost.

Financial Assets - Measurement

At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, the transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVTPL are expensed in profit or loss. Financial assets are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.

Subsequent measurement of financial assets depends on their classification. These are the measurement categories under which the Company classifies its financial assets:

• Subsequently measured at amortized cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. A gain or loss on a debt investment that is subsequently measured at amortized cost is recognized in profit or loss when the asset is derecognized or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.

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BEACN WIZARDRY AND MAGIC INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(Presented in Canadian Dollars)

3. MATERIAL ACCOUNTING POLICY INFORMATION (cont'd)

(k) Financial instruments (cont'd)

• Fair value through OCI ("FVOCI"): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets' cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains and losses, interest revenue, and foreign exchange gains and losses which are recognized in profit or loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to profit or loss and recognized in other gains (losses). Interest income from these financial assets is included as finance income using the effective interest rate method.
• Fair value through profit or loss: Assets that do not meet the criteria for amortized cost or FVOCI are measured at FVTPL. A gain or loss on an investment that is subsequently measured at FVTPL is recognized in profit or loss and presented in the statement of loss and comprehensive loss in the period in which it arises.

Financial Liabilities

The Company classifies its financial liabilities into the following categories: financial liabilities at FVTPL and amortized cost.

A financial liability is classified as FVTPL if it is classified as held-for-trading or is designated as such on initial recognition. Directly attributable transaction costs are recognized in profit or loss as incurred.

The fair value changes to financial liabilities at FVTPL are presented as follows: the amount of change in fair value that is attributable to changes in the credit risk of the liability is presented in OCI; and the remaining amount of the change in the fair value is presented in profit or loss. The Company does not designate any financial liabilities at FVTPL.

Other non-derivative financial liabilities are initially measured at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these liabilities are measured at amortized cost using the effective interest rate method. The Company classifies its accounts payable and accrued liabilities, due to related parties, convertible loan, promissory note and lease liability as financial liabilities held at amortized cost.

(l) Convertible debt

Fair values of convertible debt at issuance are estimated based on present values of future cash flows relating to principal repayments and discounted at market rates of interest at measurement dates. The market rates of interest are determined by reference to the implied interest rate from the most recently executed transaction or interest rates of high interest rate issuers for similar liabilities that do not have conversion or other options.

Subsequent measurement of convertible debt is recorded at amortized cost.

(m) Income taxes

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

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

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BEACN WIZARDRY AND MAGIC INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(Presented in Canadian Dollars)

3. MATERIAL ACCOUNTING POLICY INFORMATION (cont'd)

(m) Income taxes (cont'd)

Deferred tax is recognized using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable income nor loss. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

(n) Provisions

Provisions for legal claims, service warranties and make good obligations are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. Provisions are not recognised for future operating losses.

Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the end of the reporting period. Management's best estimate is that there is no expenditure anticipated to be required to settle return or warranty obligations that may have existed at December 31, 2025.

Provision is made for estimated warranty claims in respect of products sold which are still under warranty at the end of the reporting period. These claims are expected to be settled in the next financial year. The Company generally offers 24-month warranties for its products. Management estimates the related provision for future warranty claims based on historical warranty claim information, as well as recent trends that might suggest that past cost information may differ from future claims. With respect to the year ended December 31, 2025, Management estimates the liability for warranty claims to be $nil.

(o) Share capital

Common shares are classified as equity. Transaction costs directly attributable to the issue of common shares and share options are recognized as a deduction from equity. Common shares issued for consideration other than cash, are valued based on their market value at the date the shares are issued. Proceeds from unit placements are allocated between shares and warrants according to their relative fair value.

(p) Revenue recognition

The Company recognizes revenue using a five-step model. The core principal is that revenue should be recognized to depict the transfer of control of goods and services to customers in an amount that reflects the consideration that the Company expects to be entitled for those goods and services.

The Company generates revenue from the sale of audio related products (the "Product") pursuant to contractual arrangements with its customers, including Shopify & Amazon ("B2C"), and Business to Business ("B2B").

---

BEACN WIZARDRY AND MAGIC INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(Presented in Canadian Dollars)

3. MATERIAL ACCOUNTING POLICY INFORMATION (cont'd)

(p) Revenue recognition (cont'd)

In accordance with IFRS 15, the Company only has one performance obligation, which is the sale of the Product to the customer. Therefore, revenue is recognized when control or title of the Product is transferred from the Company and collection is reasonably assured in accordance with specified contract terms. All revenue is generally earned at a point in time and is based on the consideration that the Company expects to receive for the transfer of the Product to the customer.

Payment terms with customers are generally 30 days from the date of the invoice. The Company generally does not have any sales contracts where the period between the transfer of the Product to the customer and payment by the customer exceeds one year. As a result, the Company does not adjust its revenue transactions for the time value of money.

B2B sales began in the fiscal year ended December 31, 2023 and the Company had a liability provision for returns of $Nil at December 31, 2025 (December 31, 2024 - $Nil). The validity of this assumption and the estimated amount of returns will be reassessed at each reporting date.

At December 31, 2025, and 2024, the Company determined that no provision for warranties or other revenues was necessary. The validity of this assumption and the estimated amount of warranty provisions will be reassessed at each reporting date.

The Company's shipping and handling costs related to delivery of products to customers are included in the cost of sales.

(q) Share-based payments

Share-based payments to employees are measured at the fair value of the instruments issued and recognized over the vesting periods. Share-based payments to non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured and are recorded at the date the goods or services are received. The corresponding amount is recorded to the share-based payment reserve. The fair value of options is determined using the Black-Scholes Option Pricing Model which incorporates all market vesting conditions. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognized for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest.

(r) Research and development expenditures

The Company anticipates it will qualify for certain investment tax credits related to its research and development activities in Canada. Research costs are expensed as incurred and are reduced by related investment tax credits ("ITC"), which are recognized when there is reasonable assurance that the ITCs will be received, and all attached conditions will be complied with. Except as detailed in Note 17, the investment tax credits, if any, that may result from the research and development costs presented in these financial statements are not determinable as at the statement of financial position date.

(s) Basic loss per share

Basic loss per share is computed using the weighted average number of common shares outstanding during the period. The computation of diluted loss per share assumes the conversion, exercise or contingent issuance of securities only when such conversion, exercise or issuance would have a dilutive effect on loss per share. The dilutive effect of convertible securities is reflected in diluted loss per share by application of the "if converted" method. The effect of potential issuances of shares from the exercise of outstanding options and warrants, if any, would be anti-dilutive for the period presented and accordingly, basic and diluted losses per share are the same.

17

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BEACN WIZARDRY AND MAGIC INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(Presented in Canadian Dollars)

3. MATERIAL ACCOUNTING POLICY INFORMATION (cont'd)

(t) Recent accounting pronouncements

Certain pronouncements were issued by the IASB that are mandatory for accounting periods commencing on or after January 1, 2025. Many are not applicable or do not have a significant impact to the Company and have been excluded.

(u) New standards and interpretations not yet adopted

Issuance of IFRS 18 Presentation and Disclosures in Financial Statements

On April 9, 2024, the IASB issued IFRS 18 Presentation and Disclosures in Financial Statements, which replaces IAS 1 while retaining many of its existing principles with limited changes. IFRS 18 is effective for reporting periods beginning on or after January 1, 2027, including comparative information. It does not affect the recognition or measurement of financial statement items but may impact the presentation of "operating profit or loss". Key changes introduced by IFRS 18 include:

• A revised structure for the statement of profit or loss;
• new requirements for management-defined performance measures reported outside the financial statements; and
• enhanced principles for aggregation and disaggregation across the financial statements and notes.

The Company is currently assessing the impact of IFRS 18 on its financial statements.

Certain other new accounting standards, amendments to accounting standards and interpretations have been published that are not mandatory for the December 31, 2025 reporting period and have not been early adopted by the Company. These standards, amendments or interpretations are not expected to have a material impact on the Company in the current or future reporting periods and on foreseeable future transactions.

4. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

The fair values of the Company's cash, accounts receivable, accounts payable and accrued liabilities, due to related parties and promissory note approximate their carrying values due to their short term nature.

The Company's other financial assets and liabilities are carried at amortized cost. There has not been any transfer between fair value hierarchy levels during the years ended December 31, 2025 and 2024.

The Company's financial instruments are exposed to certain financial risks, including credit risk, interest rate risk and liquidity risk.

---

BEACN WIZARDRY AND MAGIC INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(Presented in Canadian Dollars)

4. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (cont'd)

a) Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company's primary exposure to credit risk is on its cash and accounts receivable. The Company's bank accounts are held with major banks in Canada and the United States. Accordingly, the Company believes it is not exposed to significant credit risk on its cash. Sales to retail customers and B2B customers are required to be settled using major credit cards, mitigating credit risk. There are no significant concentrations of credit risk, whether through exposure to individual customers, specific industry sectors and/or regions.

The Company applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. To measure the expected credit losses, trade receivables are grouped based on shared credit risk characteristics and the days past due.

Trade receivables are written off where there is no reasonable expectation of recovery. Impairment losses on trade receivables are presented as net impairment losses within operating profit and loss. Subsequent recoveries of amounts previously written off are credited against the same line item.

There was no loss allowance as at December 31, 2025 and no change in the loss allowance during the year then ended.

b) Interest rate risk

Interest rate risk is the risk of losses that arise as a result of changes in contracted interest rates. The Company is not exposed to significant interest rate risk.

c) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company controls liquidity risk by ensuring that it has sufficient cash resources to pay for its financial obligations. As of December 31, 2025, the principal portion of the Company's convertible loan has a maturity greater than 90 days with interest accrued on the loan less than 90 days.

d) Equity market risk

The Company is exposed to price risk with respect to equity market prices. There is a potential adverse impact on the Company's ability to raise equity financing due to adverse movements in the Company's equity price or general movements in the level of the stock market. The Company monitors the movements of its equity price and the general stock market to determine the most beneficial course of action to be taken by the Company.

e) Currency risk

Foreign currency risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because they are denominated in currencies that differ from the respective functional currency.

The Company is exposed to foreign currency risk on fluctuations related to cash, accounts receivable and accounts payable that are denominated in United States dollars ("USD"). At December 31, 2025, the Company holds cash of US$136,055 (2024 - US$328,851) in USD bank accounts. A 1% change in foreign exchange rates would have an effect of US$983 (2024 - US$2,242) on foreign currency. During the year ended December 31, 2025, the Company had a foreign exchange loss of $78,575 (2024 - gain of $13,745).

19

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BEACN WIZARDRY AND MAGIC INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(Presented in Canadian Dollars)

5. ACCOUNTS RECEIVABLE

	December 31, 2025	December 31, 2024
Trade receivables	$ 110,797	$ 173,503
	$ 110,797	$ 173,503

Trade receivables are amounts due from customers for goods sold in the ordinary course of business. They are generally due for settlement within 30 days and are therefore all classified as current. Trade receivables are recognized initially at the amount of consideration that is unconditional.

6. INVENTORY

	December 31, 2025	December 31, 2024
WIP	$ -	$ 10,371
Finished goods	621,960	1,445,037
	$ 621,960	$ 1,455,408

The costs of individual items of inventory are determined using weighted average costs. Inventories recognized as an expense during the year ended December 31, 2025 amounted to $960,411 (2024 - $1,257,545). These were included in cost of sales. Write-downs of inventories to net realizable value due to shrinkage, damage and obsolescence of parts amounted to approximately $70,786 (2024 - $96,607) which is included in cost of sales.

7. PREPAID AND INVENTORY DEPOSITS

	December 31, 2025	December 31, 2024
Inventory deposit on purchase order	$ 208,508	$ 239,733
Promotional	8,742	12,963
	$ 217,250	$ 252,696

Prepaid and inventory deposits include parts and finished goods inventory that had not been shipped to the Company by the manufacturer at December 31, 2025.

8. PROPERTY AND EQUIPMENT

	Computer Equipment and Software	Moulds for Products	Furniture and Fixtures	Leasehold Improvements	Total
Balance, December 31, 2023	$ 28,663	$ 216,277	$ 4,792	$ 7,954	$ 257,686
Depreciation	(20,678)	(69,991)	(1,746)	(2,474)	(94,889)
Balance, December 31, 2024	7,985	146,286	3,046	5,480	162,797
Additions	12,269	101,996	2,770	-	117,035
Depreciation	(8,298)	(77,960)	(1,886)	(2,467)	(90,611)
Balance, December 31, 2025	$ 11,956	$ 170,322	$ 3,930	$ 3,013	$ 189,221

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BEACN WIZARDRY AND MAGIC INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(Presented in Canadian Dollars)

9. PROMISSORY NOTE

During the year ended December 31, 2020, the Company entered into a promissory note (the "Note") with a shareholder and related party of the Company with a maturity date of December 31, 2025. At December 31, 2025, the Company and the lender were in negotiations to further extend the maturity date. The Note was without interest until December 31, 2020, and thereafter incurs interest at a rate of 4% per annum, payable quarterly. The Company can repay all or part of the Note at any time without penalty.

As at December 31, 2023	$ 277,750
Advances	100,000
Interest expense	14,792
Interest paid	(2,750)
As at December 31, 2024	389,792
Interest expense	15,000
As at December 31, 2025	$ 404,792

10. CONVERTIBLE LOAN

On August 28, 2024, the Company entered into a convertible loan agreement (the "Loan") with three parties ("Lenders") for an aggregate principal amount of $786,510, two of which are shareholders and related parties to the Company. The Loan bears interest at a rate of 13.5% per annum, calculated and payable annually in cash and, if not converted, matures on February 28, 2026 (the "maturity date"). From and after the date of issue and until the maturity date, the Lenders may elect to convert the amount of the Loan then outstanding, not including interest, into common shares of the Company ("Conversion Share") at a conversion price of $0.18 per Conversion Share, in accordance with the terms of the convertible loan agreement. The Company assessed that the equity portion of the Loan was $Nil. The Company is entitled to extend the maturity date by six months at its discretion. During the year ended December 31, 2025, the Company and the Lenders agreed to extend the maturity date to August 28, 2026. The modifications did not result in a substantial change in the terms and conditions of the debt. Accordingly, it has been treated under IFRS 9 as a modification of debt. There was no substantial change in the carrying amount of the financial liability at the time of adjustment and so there has been no change reflected in the consolidated financial statements.

During the year ended December 31, 2025, the Company incurred $106,178 in interest expense which the Company and the Lenders have agreed to defer payment of until the maturity date (2024 - $36,363). See Note 16 for further details.

As at December 31, 2023	$	-
Advances		786,510
Interest expense		36,363
As at December 31, 2024		822,873
Interest expense		106,178
As at December 31, 2025	$	929,051

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BEACN WIZARDRY AND MAGIC INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(Presented in Canadian Dollars)

11. RIGHT-OF-USE ASSET AND LEASE LIABILITY

The Company leases an office under a non-cancellable lease with a term to May 31, 2025. In January 2025, the Company signed an extension on its office lease to May 31, 2028 and, as a result, recognized an additional $94,386 in lease liability amount in the year ended December 31, 2024. The consolidated statements of loss and comprehensive loss disclose the following amounts relating to leases:

• Depreciation charge of right-of-use assets – $30,955 (2024 – $25,322);
• Interest expense (included in interest and accretion expense) – $7,637 (2024 – $1,870); and
• Expense relating to short-term leases (included in rent and operating costs) – $31,035 (2024 – $28,566).

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case, the Company's incremental borrowing rate is used, being the rate that it would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions. To determine the incremental borrowing rate (8% per annum), the Company investigated borrowing rates at its Canadian bank at that time.

Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If the Company is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset's useful life.

Payments associated with short-term leases and all leases of low-value assets are recognized on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less without a purchase option and are included in rent and operating costs.

Right-of-use assets:

Balance, December 31, 2023	$	35,873
Additions		94,386
Amortization		(25,322)
Balance, December 31, 2024	$	104,937
Amortization		(30,955)
Balance, December 31, 2025	$	73,982

Lease liabilities:

Balance, December 31, 2023	$	37,820
Add: Additions		94,386
Add: Interest		1,870
Less: Rent payments		(28,566)
Balance, December 31, 2024	$	105,510
Add: Interest		7,637
Less: Rent payments		(31,035)
Balance, December 31, 2025	$	82,112
Less: Current portion		(35,267)
Long-term portion	$	46,845

December 31, 2025

Maturity Analysis – contractual undiscounted cash flows from minimum lease
Short-term portion - less than one year	$ 34,979
Long-term portion - one to five years	49,554
Total undiscounted lease liabilities	$ 84,533

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BEACN WIZARDRY AND MAGIC INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(Presented in Canadian Dollars)

12. SHARE CAPITAL

(a) Authorized:

As at December 31, 2025, the authorized share capital was comprised of an unlimited number of common shares. The common shares do not have a par value. All issued shares are fully paid.

(b) Share issuances:

Fiscal 2025

On December 5, 2025, the Company completed the first tranche of a non-brokered private placement, whereby the Company issued 3,043,478 common shares of the Company at a price of $0.115 per share for gross proceeds of $350,000.

In connection with the private placement, the Company incurred $5,597 in share issuance costs.

Fiscal 2024

On June 20, 2024, the Company completed the first tranche (the "First Tranche") of a non-brokered private placement. Under the First Tranche, the Company issued 2,890,578 common shares of the Company at a price of $0.18 per share for gross proceeds of $520,304.

On August 28, 2024, the Company completed the second tranche (the "Second Tranche") of a non-brokered private placement. Under the Second Tranche, the Company issued 833,332 common shares at a price of $0.18 per share for gross proceeds of $150,000.

In connection with the private placement, the Company incurred $12,321 in share issuance costs.

(c) Stock options

The Company has established a stock option plan for its directors, officers, and technical consultants under which the Company may grant options to acquire a maximum number of common shares equal to 10% of the total issued and outstanding common shares of the Company.

The continuity of options is as follows:

Expiry date	Exercise price	December 31, 2023	Expired	December 31, 2024	Cancelled	December 31, 2025
October 29, 2026	$ 0.30	3,075,000	-	3,075,000	(550,000)	2,525,000
January 22, 2027	$ 0.32	50,000	-	50,000	-	50,000
May 2, 2027	$ 0.32	100,000	-	100,000	-	100,000
May 17, 2027	$ 0.35	450,000	-	450,000	(100,000)	350,000
September 27, 2027	$ 0.27	50,000	-	50,000	-	50,000
September 23, 2028	$ 0.20	950,000	(25,000)	925,000	(450,000)	475,000
April 20, 2031	$ 0.10	337,500	-	337,500	(337,500)	-
Outstanding		5,012,500	(25,000)	4,987,500	(1,437,500)	3,550,000
Weighted average exercise price		$ 0.27	$ 0.20	$ 0.27	$ 0.23	$ 0.29

At December 31, 2025, 3,550,000 stock options were exercisable (December 31, 2024 – 4,814,500), and the weighted average remaining life of the outstanding and exercisable options is 1.17 years (December 31, 2024 – 2.55 years). The share-based payments expense recognized in the year ended December 31, 2025 for the vesting of options was $3,922 (2024 - $11,618).

23

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BEACN WIZARDRY AND MAGIC INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(Presented in Canadian Dollars)

12. SHARE CAPITAL (cont'd)

(c) Stock options (cont'd)

The assumptions used in the Black Scholes Option Pricing Model to estimate the fair value of options were:

	2025	2024
Expected dividend yield	Nil	Nil
Expected stock price volatility	85.41%	85.41%
Risk-free interest rate	1.80%	1.80%
Forfeiture rate	Nil	Nil
Expected options life in years	5 years	5 years

(d) Warrants

Expiry date	December 31,		December 31,		December 31,
	Exercise price	2023	Expired	2024	Expired	2025
November 29, 2024	$ 0.25	191,100	(191,100)	-	-	-
November 29, 2025(a)	$ 0.45	8,516,666	-	8,516,666	(8,516,666)	-
April 20, 2026	$ 0.10	250,000	-	250,000	-	250,000
July 25, 2026	$ 0.45	3,950,000	-	3,950,000	-	3,950,000
September 29, 2026	$ 0.45	500,000	-	500,000	-	500,000
Outstanding		13,407,766	(191,100)	13,216,666	(8,516,666)	4,700,000
Weighted average exercise price		$ 0.44	$ 0.25	$ 0.44	$ 0.45	$ 0.43

(a) On June 9, 2023, the exercise price of the 2,916,666 warrants was amended from $0.60 to $0.45 and the expiry date was extended to November 29, 2025.

At December 31, 2025, the weighted average remaining life of the outstanding warrants is 0.57 years (December 31, 2024 – 1.15 years).

13. RELATED PARTY TRANSACTIONS

The aggregate value of transactions and outstanding balances relating to key management personnel and entities over which they have control or significant influence were as follows:

For the year ended December 31, 2025:

	Salaries and benefits	Professional fees	Total
Craig Fraser, Chief Product Officer, Director and former Chief Executive Officer	$ 127,156	$ -	$ 127,156
Daniel Davies, Director and former Chief Technology Officer	$ 87,346	$ -	$ 87,346
Liberty Brunet, Corporate Secretary	$ 66,671	$ 5,833	$ 72,504
Derek Sobel, Chief Financial Officer, through Catapult Consulting Corp.	$ -	$ 60,000	$ 60,000
Kevin Alexander, Chief Executive Officer and Director	$ 21,857	$ 118,560	$ 140,417

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BEACN WIZARDRY AND MAGIC INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(Presented in Canadian Dollars)

13. RELATED PARTY TRANSACTIONS (cont'd)

For the year ended December 31, 2024:

	Salaries and benefits	Professional fees	Total
Craig Fraser, Chief Executive Officer, Director	$ 118,000	$ -	$ 118,000
Daniel Davies, Chief Technology Officer, Director	$ 118,000	$ -	$ 118,000
Liberty Brunet, Corporate Secretary	$ 38,462	$ -	$ 38,462
Kevin Alexander, Director	$ -	$ 83,990	$ 83,990

Amounts owing to/from related parties are non-interest bearing, unsecured, and have no fixed terms of repayment. The changes during the period were measured by the exchange amount, which is the amount agreed upon by the transacting parties. As at December 31, 2025, included in due to related parties are amounts owing to related parties of $2,500 (2024 - $7,576).

14. SEGMENTED INFORMATION

The Company's sales are generated in the following geographical areas:

	December 31, 2025	December 31, 2024
Geographic region:
North America	$ 2,423,888	$ 3,081,200
Other	301,257	385,506
	$ 2,725,145	$ 3,466,706

The Company's non-current, non-financial assets are located in the following geographical areas:

As at December 31, 2025	North America	Other
Property and equipment, net	$ 189,221	$ -
Right-of-use asset	73,982	-
Total	$ 263,203	$ -
As at December 31, 2024	North America	Other
---	---	---
Property and equipment, net	$ 162,797	$ -
Right-of-use asset	104,937	-
Total	$ 267,734	$ -

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BEACN WIZARDRY AND MAGIC INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(Presented in Canadian Dollars)

15. CAPITAL MANAGEMENT

The Company's capital consists of shareholders' equity (deficiency). The Company's objective when managing capital is to maintain adequate levels of funding to support the development of its businesses and maintain the necessary corporate and administrative functions to facilitate these activities. This is done primarily through equity financing and incurring debt. Future financing is dependent on market conditions and there can be no assurance the Company will be able to raise funds in the future. The Company invests all capital that is surplus to its immediate operational needs in short-term, highly liquid, high-grade financial instruments. There were no changes to the Company's approach to capital management during the year. The Company is not subject to externally imposed capital requirements.

16. DEBT RECONCILIATION

This section sets out an analysis of debt and the movements in debt for each of the periods presented.

	December 31, 2025	December 31, 2024
Promissory note	$ 404,792	$ 389,792
Convertible loan	929,051	822,873
Lease liability	82,112	105,510
Total debt	$ 1,415,955	$ 1,318,175
	Convertible Loan	Promissory Note
---	---	---
Debt as at December 31, 2023	$ -	$ 277,750
Financing cash flows	786,510	100,000
Additions	-	-
Interest expense	36,363	14,792
Interest payments (presented as financing cash flows)	-	(2,750)
Debt as at December 31, 2024	822,873	389,792
Financing cash flows	-	-
Interest expense	106,178	15,000
Interest payments (presented as financing cash flows)	-	-
Debt as at December 31, 2025	$ 929,051	$ 404,792

17. INCOME TAX

A reconciliation of income taxes at statutory rates with the reported taxes is as follows:

	December 31, 2025	December 31, 2024
Net loss for the year	$ (1,884,534)	$ (1,351,109)
Statutory tax rates	27.00%	27.00%
Expected income tax recovery	(509,000)	(365,000)
Change in statutory, foreign tax, foreign exchange rates and other	33,000	(22,000)
Permanent differences	3,000	4,000
Share issue costs	(2,000)	(3,000)
Adjustment to prior year provision versus statutory tax	-	(37,000)
Net change in valuation allowance	475,000	423,000
Total income tax (recovery)	-	-

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BEACN WIZARDRY AND MAGIC INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(Presented in Canadian Dollars)

17. INCOME TAX (cont'd)

The components of the Company's deferred income tax assets and liabilities are estimated as follows:

Deferred income tax assets:
Property and equipment	$ 223,000	$ 250,000
Non-capital loss carry forward	7,249,000	5,351,000
Right-of-Use assets/Lease liability	8,000	1,000
Investment tax credits	285,000	285,000
Share issue costs	36,000	95,000
Valuation allowance	(7,801,000)	(5,982,000)
Net deferred income tax assets	-	-

As at December 31, 2025, the Company has non-capital losses of $7,249,000 (2024 - $5,351,000) which will be available to reduce future taxable income earned in Canada. The non-capital losses will begin to expire in 2045.

18. SUBSEQUENT EVENTS

Subsequent to the year ended December 31, 2025, the Company completed the second of two tranches of a non-brokered private placement, whereby the Company issued an additional 3,043,478 common shares of the Company at a price of $0.115 per share for gross proceeds of $350,000.

Subsequent to the year ended December 31, 2025, 250,000 warrants with an exercise price of $0.10 per share expired.

27