BuildDirect.com Technologies Inc. — Audit Report / Information 2024

Apr 17, 2025

BUILDDIRECT.COM TECHNOLOGIES INC.

Consolidated Financial Statements

For the years ended December 31, 2024 and 2023

(Expressed in United States dollars)

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Doane Grant Thornton LLP 733 Seymour Street 20th Floor Vancouver, BC V6B 0S6 T +1 604 687 2711 F +1 604 685 6569

Independent auditor’s report

To the shareholders of BuildDirect.com Technologies Inc.

Opinion

We have audited the consolidated financial statements of BuildDirect.com Technologies Inc. and its subsidiaries ("the Group"), which comprise the consolidated statements of financial position as at December 31, 2024, and December 31, 2023 and the consolidated statements of operations and comprehensive loss, consolidated statements of changes in equity (deficiency) and consolidated statements of cash flows for the years then ended, and notes to the consolidated financial statements, including material accounting policy information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2024 and December 31, 2023, and its consolidated financial performance and its consolidated 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 Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

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

We have determined the matters described below to be the key audit matters to be communicated in our auditor’s report.

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Assessment of the Going Concern Assumption

Refer to Note 2 of the consolidated financial statements.

The Group has historically experienced losses and has an accumulated deficit of $132,570,904. In the current year, the Group has continued its strategy of cost cutting and improving cash flows. As a result, management has concluded that the Group will continue as a going concern. This conclusion required significant management judgement in respect of the expected financial results of the Group for the next 12 months.

Given the significant risk requiring significant auditor judgement to determine that the Group’s mitigating actions are sufficient, we have identified that the assessment of the Group’s ability to continue as a going concern as a key audit matter.

Our audit procedures included:

• We evaluated management’s models supporting the going concern assessment, and assessed whether the key assumptions in the model were supportable with reference to audited financial information;

• We inquired with the board and management on the future strategy of the business and the reasonableness of the assumptions in the model;

• We utilized the most recent post year-end financial information to determine whether there were any indications that management’s going concern model was inappropriate;

• We compared the most recent post year-end cash position to forecast to confirm the Group had sufficient liquidity in line with expectations; and

• We assessed the adequacy of the disclosures in the financial statements against the requirements of IFRS Accounting Standards and the consistency to the forecasts and explanations from management.

Information Other than the Consolidated Financial Statements and Auditor’s Report Thereon

Management is responsible for the other information. The other information comprises the Management Discussion and Analysis but does not include the consolidated financial statements and our auditor’s report thereon.

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.

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 Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

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

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

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

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

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Group as a basis for forming an opinion on the group financial statements. We are responsible for the direction, supervision and review of audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion.

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law

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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 of the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

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

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Vancouver, Canada April 15, 2025

Chartered Professional Accountants

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BUILDDIRECT.COM TECHNOLOGIES INC.

Consolidated Statements of Financial Position

(Expressed in United States dollars)

Consolidated Statements of Financial Position (Expressed in United States dollars)
		December 31,		December 31,
		2024		2023
Assets
Current Assets:
Cash and cash equivalents	$	2,347,491	$	2,601,893
Short-term investments		445,415		445,415
Trade and other receivables (note 3)		3,694,821		4,152,899
Inventories (note 4)		9,619,963		6,174,201
Prepaid materials, expenses and deposits		802,978		1,229,526
Total current assets		16,910,668		14,603,934
Non-current assets:
Property and equipment (note 5)		607,699		563,231
Intangible assets (note 6)		1,882,891		3,525,883
Right-of-use assets (note 7)		2,562,647		2,160,700
Non-current deposits		434,040		434,040
Goodwill (note 6)		2,530,622		2,530,622
Deferred tax asset (note 17)		2,824,396		1,539,299
Total non-current Assets		10,842,295		10,753,775
Total Assets	$	27,752,963	$	25,357,709
Liabilities And Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities (note 8)		8,500,775	$	5,895,863
Income taxes payable (note 17)		707,584		210,339
Current portion of lease (note 9)		1,154,315		1,319,526
Deferred revenue (note 10)		1,385,993		1,559,755
Current portion of long-term debt (note 11)		2,449,384		2,118,622
Current deferred consideration (note 6)		-		675,000
Total Current Liabilities		14,198,051		11,779,105
Non-current liabilities:
Lease liability (note 9)		1,695,228		1,310,248
Long-term debt (note 11)		8,640,727		8,009,600
Warrants (note 12)		63,968		75,224
Total non-current liabilities		10,399,923		9,395,072
Shareholders' Equity
Share capital (note 14)		123,136,971		123,109,599
Share based payment reserve		11,515,195		11,323,580
Deficit		(131,497,177)		(130,249,647)
Totalshareholders'equity		3,154,989		4,183,532
Total Liabilities&Equity	$	27,752,963	$	25,357,709

Commitments and contingencies (note 18) See accompanying notes to Consolidated Financial Statements.

Approved on behalf of the Board: Milan Roy Director Tim Howley Director

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BUILDDIRECT.COM TECHNOLOGIES INC.

Consolidated Statements of Operations and Comprehensive Loss (Expressed in United States dollars)

Years ended December 31, 2024 and 2023

Years endedDecember31,2024and2023
		2024		2023
Revenue (note 15)	$	65,464,840	$	72,279,398
Cost of goods sold (note 4)		40,122,847		44,432,069
Gross Profit		25,341,993		27,847,329
Operating expenses:
Fulfillment costs		3,952,323		4,904,468
Selling and marketing		5,638,856		5,611,109
Administration		13,432,757		13,927,912
Research and development		413,300		466,629
Depreciation and amortization		2,861,768		3,677,512
Total operating expenses		26,299,004		28,587,630
Loss from operations		(957,011)		(740,301)
Other income (expense):
Interest income		48,330		62,595
Interest expense		(1,372,684)		(2,014,920)
Rental income		148,929		246,680
Change in fair value of warrants (note 12)		11,256		(46,843)
Forgiveness of deferred consideration (note 6)		-		1,425,000
Finance fee		(20,000)		-
Foreign exchange gain		140,297		21,989
Restructuring costs		-		(102,415)
Loss on disposal of assets		(17,083)		(60,905)
Impairment loss on tangible assets and goodwill (note 6)		-		(2,129,334)
Loss on extinguishment of debt		-		(154,574)
Total other income (expense)		(1,060,955)		(2,752,727)
Loss before income taxes		(2,017,967)		(3,493,028)
Income tax recovery (expense) (note 17)		770,437		(279,172)
Total loss and comprehensive loss for theyear	$	(1,247,530)	$	(3,772,200)
Loss per share
Basic and diluted lossper share(note 22)	$	(0.03)	$	(0.09)

See accompanying notes to Consolidated Financial Statements.

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BUILDDIRECT.COM TECHNOLOGIES INC.

Consolidated Statements of Changes in Equity (Deficiency) (Expressed in United States dollars)

					Share based
Common Shares					payment
	Number		Amount		reserve		Deficit		Total
Balance - December 31, 2022	40,819,913	$	122,803,204	$	11,121,785	$	(126,477,447)	$	7,447,542
Issuance of share capital (note 14)	1,121,622		306,395		-		-		306,395
Loss and comprehensive loss	-		-		-		(3,772,200)		(3,772,200)
Share-based payment (note 14)	-		-		201,795		-		201,795
Balance - December 31,2023	41,941,535	$	123,109,599	$	11,323,580	$	(130,249,647)	$	4,183,532
Balance - December 31, 2023	41,941,535	$	123,109,599	$	11,323,580	$	(130,249,647)	$	4,183,532
Issuance of deferred share units	7,843		3,720		-		-		3,720
Exercise of options	83,328		23,652						23,652
Loss and comprehensive loss	-		-		-		(1,247,530)		(1,247,530)
Share-based payment (note 14)	-		-		191,615		-		191,615
Balance - December 31,2024	42,032,706	$	123,136,971	$	11,515,195	$	(131,497,177)	$	3,154,989

See accompanying notes to Consolidated Financial Statements.

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BUILDDIRECT.COM TECHNOLOGIES INC.

Consolidated Statements of Cash Flows

(Expressed in United States dollars)

Consolidated Statements of Cash Flows (Expressed in United States dollars)
		2024		2023
Cash provided by (used in):
Operating activities:
Loss for the year	$	(1,247,530)	$	(3,772,200)
Add (deduct) items not affecting cash:
Depreciation and amortization		2,861,768		3,677,512
Income tax expense		(770,437)		279,172
Share-based compensation expense		191,615		201,795
Loss on disposal of property and equipment		14,766		60,905
Interest paid on leases		123,406		201,222
Other interest and finance cost		962,115		1,833,831
Interest earned on lease receivables		(5,051)		(57,004)
Loss on extinguishment of debt		-		154,574
Impairment loss on intangible assets and goodwill		-		2,129,334
Change in fair value of warrants		(11,256)		46,842
Forgiveness of deferred consideration		-		(1,425,000)
Unrealized foreign exchange		(129,830)		(36,333)
Change in non-cash operating working capital (note 19)		188,818		958,090
Income taxespaid		(17,415)		(229,520)
Total operating activities		2,160,969		4,023,220
Investing activities:
Purchase of property and equipment		(150,416)		(42,756)
Principal received on lease receivables		191,709		266,908
Total investing activities		41,293		224,152
Financing activities:
Proceeds from exercise of equity instruments		27,372		306,395
Debt financing transaction costs		(26,968)		(20,133)
Interest paid		(375,629)		(1,132,383)
Principal lease payments		(1,433,178)		(1,431,970)
Promissory note repayment		(1,245,000)		(1,245,000)
Deferred consideration repayment		(675,000)		(675,000)
Loan advance		2,993,552		-
Loan repayment		(1,721,813)		(1,555,568)
Total financing activities		(2,456,664)		(5,753,659)
Effects of currencytranslation		-		426
Decrease in cash and cash equivalents		(254,402)		(1,505,861)
Cash and cash equivalents,beginning		2,601,893		4,107,754
Cash and cash equivalents,end	$	2,347,491	$	2,601,893

See accompanying notes to Consolidated Financial Statements.

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BUILDDIRECT.COM TECHNOLOGIES INC.

Notes to Consolidated Financial Statements (Expressed in United States dollars)

For the years ended December 31, 2024 and 2023

1. Nature of business:

BuildDirect.com Technologies Inc. (BuildDirect or the “Company”) was incorporated under the Canada Business Corporations Act (CBCA) on October 20, 1999. BuildDirect is an innovative marketplace for purchasing and selling building materials online. The BuildDirect platform connects homeowners and home improvement professionals in North America with suppliers and sellers of quality building materials from around the world, including flooring, tile, decking and more. The head office of the Company is located in Vancouver, British Columbia.

On December 31, 2020, BuildDirect completed the acquisition of 100% of the outstanding shares of Charter Distributing Company (“FloorSource”). FloorSource was incorporated in 1980 and is a wholesale flooring distributor with four locations (distribution centers and showrooms) in the state of Michigan (“MI”). FloorSource provides carpeting, carpet padding, hardwood, vinyl, laminate, and flooring supplies to customers such as contractors, project management companies and retailers.

On August 13, 2021, BuildDirect., VLCTY Capital Inc. (“VLCTY”, a Canadian company listed on the TSX Venture Exchange), and a wholly owned subsidiary company 9923896 Canada Inc. of VLCTY, entered into a three-cornered amalgamation agreement with VLCTY changing its name to BuildDirect.com Technologies Inc. The transactions represent a reverse acquisition whereby the Company is considered the acquirer of VLCTY; the resulting financial statements are presented as a continuance of BuildDirect (accounting acquirer).

On November 17, 2021, BuildDirect completed the acquisition of 100% of the outstanding shares of Superb Floor Covering, LLC (“Superb”). Superb was incorporated in 2008 and is headquartered in Troy, MI. Superb is a seller and installer of carpet, laminate, luxury vinyl, custom area rugs, and specialty flooring options.

2. Material accounting policies:

(a) Basis of presentation:

These consolidated financial statements are prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”) and using the accounting policies described herein.

These consolidated financial statements were approved by the Board of Directors on April 15, 2025.

(b) Consolidation

These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries (the “Group”), BuildDirect Technology Holdings Inc., 6702627 Canada Inc., Charter Distributing Company (“FloorSource”), and Superb Floor Covering, LLC (“Superb”). Subsidiaries are all entities over which the Company has control. The Company controls an entity where the Company 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. All inter-company balances and transactions have been eliminated on consolidation.

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Notes to Consolidated Financial Statements (Expressed in United States dollars)

BUILDDIRECT.COM TECHNOLOGIES INC.

For the years ended December 31, 2024 and 2023

2. Material accounting policies (continued):

(c) Going Concern:

The consolidated financial statements of the Group have been prepared under the assumption the Group operates on a going concern basis, which assumes the Group will be able to discharge its liabilities as they fall due.

(d) Segmented Information:

The Company’s Chief Operating Decision-Maker (CODM) consists of the Executive Leadership Team (“ELT”). The CODM is responsible for assessing the operational decisions, as well as the overall performance of the Company. The Company determines its segments based on the nature and geography of its operations. Management has determined that the Company operates as two operating segments.

(e) Business combinations:

The Company accounts for business combinations using the acquisition method when control is transferred to the Company. The consideration transferred in the acquisition is measured at fair value, as are the identifiable net assets acquired. The Company measures goodwill in business acquisitions as the fair value of the consideration transferred less the fair value of the identifiable assets acquired and liabilities assumed all measured as of the acquisition date.

Transaction costs, other than those associated with the issuance of debt or equity securities, are expensed as incurred.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

Deferred consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are measured at fair value at time of acquisition and subsequently measured at fair value through profit and loss.

(f) Cash and cash equivalents:

Cash and cash equivalents include cash on hand and short-term deposits which are highly liquid, with original maturities of less than three months at the date of acquisition.

(g) Inventory:

Inventory consists of building materials and is stated at the lower of cost and net realizable value. Costs are assigned based on the first in, first out principle. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.

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BUILDDIRECT.COM TECHNOLOGIES INC.

Notes to Consolidated Financial Statements (Expressed in United States dollars)

For the years ended December 31, 2024 and 2023

2. Material accounting policies (continued):

(h) Property and equipment:

Property and equipment, which are not acquired as part of a business combination, are stated at cost less accumulated depreciation and accumulated impairment losses. Property and equipment acquired as part of the business combination are recorded initially at the fair value on the acquisition date.

Depreciation is provided using the straight-line method at the following annual rates:

Asset	Rate
Computer equipment	5 years
Office furniture and fixtures	5 years
Office equipment	5 years
Right of use assets	5 years
Leasehold improvements	Over life of lease

(i) Leases:

The Company has a portfolio of both leases and subleases, including office space, warehouse space, and equipment. These leases have fixed terms of 2 to 8 years and may also include options to extend. Included in the measurement of the lease liabilities are all extension options that management is reasonably certain to exercise.

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. At the commencement date of a lease, the Company recognizes a right-of-use (“ROU”) asset and a lease liability for leases excluding leases for a period of 12-months or less, and leases in which the underlying asset is of a low value. The Company records these short-term and low value leases as an expense on a straight-line basis over the lease term.

The lease liabilities are initially measured as the present value of the minimum lease payments less lease incentives received at the commencement date and discounted using either the rate implicit in the lease or the Company’s incremental borrowing rates, if the implicit rate cannot be readily determined. The incremental borrowing rate was determined as the rate that the individual lessee would pay to borrow a similar asset with similar terms and conditions. The lease payments subsequently increase the lease liabilities by the interest and decrease the liability by the principal payments made.

When the Company acts as a lessor, it determines at lease inception whether the lease is classified as either a finance or operating lease. The lease is a finance lease when the terms of the lease transfers substantially all of the risks and rewards of ownership of the underlying asset to the lessee, otherwise the lease is an operating lease.

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BUILDDIRECT.COM TECHNOLOGIES INC.

Notes to Consolidated Financial Statements (Expressed in United States dollars)

For the years ended December 31, 2024 and 2023

2. Material accounting policies (continued):

Under finance leases, the Company uses the interest rate implicit in the lease to measure the net investment in the lease or the discount rate used for the head lease (adjusted for initial direct costs associated with the sublease) if the implicit rate cannot be readily determined. The finance income is recognized over the lease term reflecting a constant periodic rate of return on the lessor’s net investment in the finance lease. The Company recognizes lease payments received under operating leases as income on a straight-line basis over the lease term.

ROU assets are initially measured at the amount of the corresponding lease liabilities plus initial direct costs and any lease incentives received. The Company considers the dismantling and removal costs only if they relate directly to the leased asset. The ROU asset is subsequently depreciated over the underlying lease term under the straight-line method.

Interest expense on the lease liabilities are included on the consolidated statement of cash flow from operating activities, whereas the cash from the principal payments are presented as a separate line item within the cash flow from financing activities.

(j) Impairment of long-lived assets:

Long-lived assets, including property and equipment and intangible assets subject to amortization, are tested for recoverability whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Assets are grouped together to form a cash generating unit (“CGU”) which is the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets. An impairment loss is recognized when the carrying value exceeds its recoverable amount and is recognized in the consolidated statement of operations. Impairment losses recognized in respect of CGUs or CGU group are allocated, first to reduce the carrying amount of any goodwill allocated to the CGU or CGU group, and then to reduce the net carrying amount of the other assets in the CGU or CGU group on a pro rata basis. The recoverable amount is the greater of its value in use and its fair value less costs to sell. The value in use is the estimated future cash flows that is discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the assets or CGU. Impairment losses related to long-lived assets recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation and amortization, if no previous impairment loss had been recognized.

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Notes to Consolidated Financial Statements (Expressed in United States dollars)

BUILDDIRECT.COM TECHNOLOGIES INC.

For the years ended December 31, 2024 and 2023

2. Material accounting policies (continued):

(k) Goodwill:

Goodwill is the excess of purchase price over fair value of Company’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Subsequent to initial measurement, goodwill is carried at cost less accumulated impairment losses.

Goodwill is allocated to the cash generating unit or group of cash generating units expected to receive benefits from the business combinations. Goodwill is tested for impairment on an annual basis and is tested for impairment where events or changes in circumstances indicate the carrying value of cash generating unit exceeds its recoverable amount. Impairment losses for goodwill are not reversed.

(l) Revenue recognition:

(i) General recognition:

Revenue is recognized in accordance with the five-step model under IFRS 15 – Revenue from Contracts with Customers when the goods or services promised are transferred to the customer. The model separates the following steps: identification of a contract with customers, identification of individual performance obligations, determination of transaction price, allocation of the transaction price to the individual performance obligations and the determination in timing of revenue recognition. Revenue is recognized either at a point in time or over time, when (or as) the Company satisfies performance obligations by transferring the promised goods or services to its customers based on information or payment received from relevant counterparties. The Company recognizes revenue related to products and services at the point when the title to the products passes to the customer, which is upon shipment of the order, the customer takes control, and assumes risk of loss, and the collection of consideration is probable. The Company recognizes revenue related to installation services over the time that the service is provided.

Product sales represent revenue from the sale of products and shipping fees charged to customers. Service sales represent revenue from the logistic services provided by the Company to suppliers, commission earned by providing product services to sellers, and revenue from installation services provided by the Company to the customer.

Deferred revenue (contract liabilities) represents funds collected in advance for inventory sales which have not been received by the Company’s customers.

(ii) Principal versus agent consideration:

The Company records revenue on either a gross or net basis based on management’s assessment of whether the Company is acting as the principal or agent in the transaction. This determination is based on the identification of the specified goods or services to be provided to the customer and assessing whether the Company controls the good or service before the good or service is transferred to the customer. If the goods or services are identified and the Company controls the good or service before the good or service is transferred to the customer, the Company is considered the principal in the transaction and records revenue on a gross basis, otherwise the Company is considered the agent and records revenue on a net basis. The Company has concluded that it is acting as a principal for all the revenue streams.

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Notes to Consolidated Financial Statements (Expressed in United States dollars)

BUILDDIRECT.COM TECHNOLOGIES INC.

For the years ended December 31, 2024 and 2023

2. Material accounting policies (continued):

• (l) Revenue recognition (continued)

(iii) Return policy:

The Company provides customers a return policy and recognizes the expected return of goods on a gross basis in the consolidated statement of operations and reduces revenue by the expected amount of returns.

A provision is made at year end for expected returns and recorded against product sales.

(iv) Customer loyalty program:

The Company’s retail division operates a customer loyalty incentive program. Professional customers obtain the following loyalty points which they can redeem to receive discounts on future purchases, depending on their spend level:

tain the following loyalty points which they can pendingon their spend level:	redeem to receive discounts on future purchas
$5,000 - $14,999	1% on order total
$15,000 - $49,999	2% on order total
$50,000 and above	3% on order total

Loyalty points are considered to be a separate performance obligation as they provide customers with a material right they would not have received otherwise. Unused points expire if not used within one year. The Company allocates the transaction price between the material right and other performance obligations identified in a contract on a relative stand-alone selling price basis. The amount allocated to the material right is initially recorded as a contract liability and is later recognised in revenue when the points are redeemed by the customer.

The Company’s experience is that a portion of the loyalty points will expire without being used (‘breakage’). The Company recognises revenue from expected breakage in proportion to the points redeemed and trues-up this estimate when points expire. The Company has assessed it is highly improbable a significant reversal of revenue will arise if actual experience differs from expectations and therefore no further revenue constraint is needed.

(m) Fulfillment costs:

Fulfillment costs represent costs paid to third parties to manage and operate the Company’s distribution network and costs relating to the fulfillment of product orders. Fulfillment costs include costs attributable to buying, receiving, inspecting, and storing products, as well as picking, packaging, and preparing customer orders for shipment and freight-out costs.

• 10 -

Notes to Consolidated Financial Statements (Expressed in United States dollars)

BUILDDIRECT.COM TECHNOLOGIES INC.

For the years ended December 31, 2024 and 2023

2. Material accounting policies (continued):

(n) Deferred income taxes:

The Company uses the asset and liability method under IAS 12 Income Taxes to recognize deferred taxes for the income tax consequences attributable for differences between the financial statement carrying values of existing assets and liabilities and their respective income tax bases (temporary differences) and for losses carried forward. Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be reversed. Deferred tax assets are recognized to the extent that future taxable income will be available against which the deductible temporary differences, unused tax credits and tax losses can be utilized. Deferred tax assets and liabilities are only offset if there is a legally enforceable right to set off current income tax assets against current income tax liabilities and the deferred tax relates to the same taxable entity and the same taxation authority.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the deferred tax asset to be utilized. Unrecognized deferred tax assets are assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

(o) Share-based compensation:

Equity instruments awarded to employees are measured and recognized based on the fair value of the equity instruments using the Black-Scholes option model. The compensation cost is recognized as the fair value of the options as at the date granted and is recorded over the period in which the related employee services are rendered, as an expense and an increase to share based payment reserve. Awards for past service are recognized as an expense in the period when granted. When a stock option is exercised, the cash received is credited to share capital, with the share-based payment reserve accumulated being reclassified to equity.

Share-based payments to non-employees are measured at the fair value of the consideration received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measurable.

(p) Loss per share

Basic earnings per share (LPS) is calculated by dividing the loss for the year of the Company, by the weighted average number of common and preference shares outstanding during the year.

Diluted LPS is calculated using the treasury stock method by adjusting the average number of common shares outstanding for any dilutive instruments held by the Company.

• 11 -

Notes to Consolidated Financial Statements (Expressed in United States dollars)

BUILDDIRECT.COM TECHNOLOGIES INC.

For the years ended December 31, 2024 and 2023

2. Material accounting policies (continued):

• (q) Functional and presentational currency:

The consolidated financial statements are presented in US Dollars, which is also the functional currency of the parent company and its subsidiaries.

(r) Foreign currency translation:

Transactions in foreign currencies are translated to the respective functional currencies of the entity at exchange rates in effect at the transaction dates.

At the end of each reporting period, monetary assets and liabilities denominated in foreign currencies are translated to the functional currency using the exchange rate on the reporting date. Non-monetary assets and liabilities measured at fair value are translated using the exchange rates at the date when fair value was determined. Non-monetary assets and liabilities measured at historical cost in a foreign currency are translated using exchange rates that were in effect at the transaction dates.

Foreign currency gains and losses arising on period-end revaluations are recognized in the consolidated statements of loss and comprehensive loss, except for differences arising on translation of a financial liability designated as a hedge of a net investment in a foreign operation, or qualifying cash flow hedges, which are recognized in other comprehensive income (loss).

• s) Financial instruments:

• (i) Recognition and measurement:

Financial instruments are recorded at fair value on initial recognition. Non-derivative financial assets include cash and cash equivalents, short-term investments, and trade and other receivables which are subsequently measured at amortized cost. Non-derivative financial liabilities include accounts payable and accrued liabilities, loans payable, promissory note, are subsequently measured at amortized cost. Deferred consideration payable and warrants are measured at fair value through profit and loss. All other financial instruments are subsequently measured at cost or amortized cost, unless management has elected to carry the instruments at fair value through profit or loss.

Transaction costs incurred on the acquisition of financial instruments measured subsequently at fair value are expensed as incurred. All other financial instruments are adjusted by transaction costs incurred on acquisition and financing costs. These costs are amortized using the effective interest rate method.

The Company derecognizes a financial instrument when its contractual obligations are cancelled or expired. The Company has not derecognized any financial instruments.

• 12 -

Notes to Consolidated Financial Statements (Expressed in United States dollars)

BUILDDIRECT.COM TECHNOLOGIES INC.

For the years ended December 31, 2024 and 2023

2. Material accounting policies (continued):

s) Financial instruments (continued):

(i) Recognition and measurement (continued):

The Company recognizes a loss allowance under the expected credit loss (“ECL”) method for all financial assets, other than those that are measured at fair value through profit or loss. The loss allowance is equal to an amount equal to 12-month expected credit losses. For trade receivables, the Company uses the simplified approach and measures the loss allowance at an amount equal to the lifetime expected credit losses. The ECL model requires the Company to apply considerable estimates and judgments in applying a range of both historic and forward-looking information that includes various possible outlooks, time value of money, and applying current and forecasted economic conditions.

The loss allowance reduces the carrying value of the asset and the amount of the loss is recognized in the consolidated statement of operations within administration expenses. Receivables and the allowance recognized are written-off when a receivable is deemed uncollectible.

(t) Critical accounting estimates, assumptions and judgements:

The preparation of consolidated financial statements in accordance with IFRS Accounting Standards requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Management’s estimates, assumptions and judgements are based on historical experience and other reasonable factors, including the expectation of future events.

Estimates that could affect the carrying amount of the assets and liabilities in the next financial year, in a material way are outlined below:

(i) Estimating the useful lives of non-financial assets:

Management is required to estimate the useful life of both property and equipment, as well as intangible assets, and analyze them based on factors including, but not limited to, the expected use of the asset. A change in the useful life of either property, plant and equipment or an intangible asset can result in an increase or decrease in the annual depreciation or amortization of the asset.

(ii) Fair value of identifiable assets and acquired liabilities in business combinations:

The measurement of the fair value of the identifiable assets acquired, and liabilities assumed on the date of acquisition in a business combination is subject to management estimation and judgement. The assumptions and estimates with respect to determining the fair value of the acquired intangible assets and property and equipment generally require the most judgment. Changes in any of these assumptions or estimates used in determining the fair values of these acquired assets could impact the amounts recorded at the date of the business combination.

• 13 -

Notes to Consolidated Financial Statements (Expressed in United States dollars)

BUILDDIRECT.COM TECHNOLOGIES INC.

For the years ended December 31, 2024 and 2023

2. Material accounting policies (continued):

• (t) Critical accounting estimates, assumptions and judgements (continued)

(iii) Fair value of derivative financial instruments and warrants:

The estimated fair value of derivative financial instruments and warrants is determined based on an appropriate valuation model. Fair values are calculated using assumptions including, timing of future cash flows, discount rates, market price of the Company’s shares and future events that may be out of the Company’s control.

(iv) Share-based compensation:

Share-based compensation provided to employees of the Company requires management to estimate and make assumptions about the most appropriate inputs into the Black-Scholes model, including expected term, risk-free rate, volatility and forfeiture rate. The expected term is determined based on management’s estimate of the period between grant date and exercise date. Volatility is determined using a comparable peer group until such time as sufficient trading history is available for the Company’s own shares.

(v) Leases:

Judgement is required by management when the Company is required to classify its subleases, between operating and finance, the certainty around extensions and terminations included in lease contracts, as well as the discount rate applied to the lease portfolio.

The Company determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. The Company has lease contracts that include extension options. The Company applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Company reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate.

(vi) Going concern

The Company recognized a loss of $1,247,530 during the year ended December 31, 2024, (2023 - $3,772,200) and has positive operating cash flows of $2,160,969 (2023 – $4,023,220). As at December 31, 2024, the Company has current assets in excess of current liabilities of $2,712,617 and a current cash balance of $2,347,491. The Company believes that it will be able to meet its financial obligations as and when they fall due and as such, has prepared the consolidated financial statements on the going concern basis.

• 14 -

BUILDDIRECT.COM TECHNOLOGIES INC.

Notes to Consolidated Financial Statements (Expressed in United States dollars)

For the years ended December 31, 2024 and 2023

2. Material accounting policies (continued):

(vi) Going concern (continued)

Management has applied judgment in the assessment of the Company’s ability to continue as a going concern when preparing its consolidated financial statements. Management prepares the consolidated financial statements on a going concern basis unless management either intends to liquidate the entity or to cease trading or has no realistic alternative but to do so. In assessing whether the going concern assumption is appropriate, management considers all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period.

The Company continued its operational efficiency programs during the year, focusing on profitable sales and lowering operating costs. In addition, the Company secured an operating line of credit with a Tier 1 Canadian Bank, which provides significant liquidity and working capital flexibility. In management’s judgment, this alleviates any material uncertainties about the Company’s ability to continue as a going concern.

(vii) Functional currency

The functional currency for each of the Company’s subsidiaries is the currency of the primary economic environment in which the entity operates. Determination of functional currency may involve certain judgments to determine the primary economic environment, and the Company reconsiders the functional currency of its entities if there is a change in events and conditions that determined the primary economic environment.

(viii) Impairment of non-financial assets and goodwill

In assessing impairment of non-financial assets and goodwill management estimates the recoverable amount of cash generating units based on expected cash flows and uses an interest rate to discount. Estimation uncertainty relates to assumptions about future operating results and determination of a suitable discount rate.

(ix) Deferred tax asset

Recognition of deferred tax assets depends on management’s assessment of the probability future taxable income will be available against the deductible temporary differences and tax loss carryforwards can be utilized. Judgement is required around the impact of uncertainties in tax jurisdictions as well as the impact of any legal or economic limits.

• 15 -

BUILDDIRECT.COM TECHNOLOGIES INC.

Notes to Consolidated Financial Statements (Expressed in United States dollars)

For the years ended December 31, 2024 and 2023

2. Material accounting policies (continued):

• (u) New standards and interpretations:

The following new amendments to IAS 1 Presentation of Financial Statements has been adopted since the release of the Company’s financial statements for the year ended December 31, 2023.

Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)

The IASB has published Classification of Liabilities as Current or Non-Current (Amendments to IAS 1) which clarifies the guidance on whether a liability should be classified as either current or non-current. The amendments:

• clarify that the classification of liabilities as current or non-current should only be based on rights that are in place "at the end of the reporting period"

• clarify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability

• make clear that settlement includes transfers to the counterparty of cash, equity instruments, other assets or services that result in extinguishment of the liability.

This amendment is effective for annual periods beginning on or after January 1, 2024. Earlier application was permitted. The adoption of this amendment did not have any impact on the Company’s financial statements.

Standards and amendments issued but not yet effective

The following are the new standards and amendments issued by the IASB which are applicable to the Company’s financial statements. The Company will assess the impact of adopting these standards and amendments on its financial statements.

IFRS 18 Presentation and Disclosure in Financial Statements

In April 2024, the IASB issued IFRS 18 Presentation and Disclosure in Financial Statements, which is intended to give investors more transparent and comparable information about companies’ financial performance, thereby enabling better investment decisions. IFRS 18 introduces new sets of requirements to improve companies’ reporting of financial performance and give investors a better basis for analyzing and comparing companies through

• Improved comparability in the statement of profit or loss or income statement;

• Enhanced transparency of management-defined performance measures; and

• More useful grouping of information in the financial statements.

IFRS 18 also requires companies to provide more transparency regarding operating expenses, helping investors to find and understand the information they need. IFRS 18 is effective for annual reporting periods beginning on or after January 1, 2027, but companies can apply it earlier. IFRS 18 replaces IAS 1. It carries forward many requirements from IAS 1 unchanged.

• 16 -

BUILDDIRECT.COM TECHNOLOGIES INC.

Notes to Consolidated Financial Statements (Expressed in United States dollars)

For the years ended December 31, 2024 and 2023

2. Material accounting policies (continued):

• (u) New standards and interpretations (continued):

Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures

In May 2024, the IASB issued amendments to the classification and measurement requirements in IFRS 9. The amendments will address diversity in accounting practice by making the requirements more understandable and consistent. These include:

• Clarifying the classification and assessment of contractual cash flows of financial assets with environmental, social and corporate governance (“ESG”).

• Settlement of liabilities through electronic payment systems - the amendments clarify the date on which a financial asset or financial liability is derecognized. The IASB also decided to develop an accounting policy option to allow a company to derecognize a financial liability before it delivers cash on the settlement date if specified criteria are met.

With these amendments, the IASB has also introduced additional disclosure requirements to enhance transparency for investors regarding investments in equity instruments designated at fair value through other comprehensive income and financial instruments with contingent features, for example features tied to ESG-linked targets. The amendments are effective for annual reporting periods beginning on or after January 1, 2026.

Annual improvements to IFRS Accounting Standards

In July 2024, the IASB issued narrow amendments to IFRS Accounting Standards and accompanying guidance as part of its regular maintenance of the Standards. The amended Standards are:

• IFRS 1 First-time Adoption of International Financial Reporting Standards ;

• IFRS 7 Financial Instruments: Disclosures and its accompanying Guidance on implementing IFRS 7 ;

• IFRS 9 Financial Instruments ;

• IFRS 10 Consolidated Financial Statements ; and

• IAS 7 Statement of Cash Flows .

The amendments are effective for annual periods beginning on or after January 1, 2026, with earlier application permitted. Annual improvements are limited to changes that either clarify the wording in an IFRS Accounting Standard or correct relatively minor unintended consequences or oversights in the Accounting Standards. They also correct minor conflicts between the requirements of the Accounting Standards.

None of these amendments are expected to have a material impact on the Company’s consolidated financial statements.

• 17 -

BUILDDIRECT.COM TECHNOLOGIES INC.

Notes to Consolidated Financial Statements (Expressed in United States dollars)

For the years ended December 31, 2024 and 2023

3. Trade and other receivables:

		2024		2023
Trade receivables	$	3,651,869	$	3,655,285
Other receivables		42,952		497,614
	$	3,694,821	$	4,152,899

Ageing analysis of trade receivables follows:

	2024	2023
Current	$ 1,425,972	$ 1,410,445
1-30 days	1,186,937	1,319,813
31-60 days	535,993	659,566
61-90 days	209,843	176,771
Over 90 days	293,124	88,690
Total	$3,651,869	$3,655,285

4. Inventories :

Inventories:
		2024		2023
Building materials	$	7,896,994	$	5,961,157
Building materials in transit		1,722,969		213,044
Total	$	9,619,963	$	6,174,201

Prepaid freight, duty and other costs related to in-transit inventory is $320,244 and is included in prepaid & deposits current at December 31, 2024 (2023 - 750,895). Accounts payable and accrued liabilities includes $1,285,687 related to in-transit inventory (2023 - $134,545).

The cost of inventories and the cost of labour recognized as cost of goods sold during the year ended December 31, 2024 was $40,122,847 (2023 - $44,432,069)

• 18 -

BUILDDIRECT.COM TECHNOLOGIES INC.

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

For the years ended December 31, 2024 and 2023

5. Property and equipment:

Property and equipment:
		Office
		furniture
	Computer	and		Leasehold
	Equipment	fixtures	Equipment	improvements	Total
Cost:
Balance at January 1, 2023	$ 771,146	$ 102,252	$ 388,512	$ 632,141	$ 1,894,051
Additions	-	-	42,756	-	42,756
Disposals	(627,058)	(89,525)	(204,890)	-	(921,473)
Balance at December 31, 2023	144,088	12,727	226,378	632,141	1,015,334
Additions	-	12,469	119,137	18,810	150,416
Disposals	-	-	(26,148)	-	(26,148)
Balance as at December 31, 2024	$ 144,088	$ 25,196	$ 319,367	$ 650,951	$ 1,139,602
Accumulated amortization:
Balance at January 1, 2023	$ 696,985	$ 102,252	$ 317,889	$ 185,045	$ 1,302,171
Depreciation	21,807	-	27,523	22,075	71,405
Disposals	(627,058)	(89,525)	(204,890)	-	(921,473)
Balance at December 31, 2023	91,734	12,727	140,522	207,120	452,103
Depreciation	20,187	4,130	46,357	20,507	91,181
Disposals	-	-	(11,381)	-	(11,381)
Balance as at December 31, 2024	$ 111,921	$ 16,857	$ 175,498	$ 227,627	$ 531,903
Carrying amounts:
Balance as at December 31, 2023	$ 52,354	$ -	$ 85,856	$ 425,021	$ 563,231
Balance as at December 31, 2024	$ 32,167	$ 8,339	$ 143,869	$ 423,324	$ 607,699

Management regularly assesses property and equipment for impairment indicators and has determined that no impairment is required for the year ended December 31, 2024 (2023 - nil).

• 19 -

BUILDDIRECT.COM TECHNOLOGIES INC.

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

For the years ended December 31, 2024 and 2023

6. Intangible assets and Goodwill:

6. Intangible assets and Goodwill:
Goodwill	IntangibleAssets
	Computer Software Customer List Brand Total Intangible Assets
Cost: Opening balance as at January 1, 2023 $ 2,530,622 Additions - Disposals -	$ 819,219 $ 11,725,800 $ 2,360,000 $ 14,905,019 - - - - (468,834) - - (468,834)
Balance as at January 1, 2024 2,530,622 Additions - Disposals -	350,385 11,725,800 2,360,000 14,436,185 - - - - - - - -
Balance as at December 31,2024 $2,530,622	$350,385 $11,725,800 $2,360,000 $14,436,185
Accumulated amortization and impairment: Opening balance as at January 1, 2023 $ - Amortization - Disposals - Impairment of Superb CGU -	$ 725,322 $ 5,268,131 $ 755,797 $ 6,749,250 31,442 1,936,204 472,000 2,439,646 (407,928) - - (407,928) - 2,129,334 - 2,129,334
Balance as at December 31,2023 -	348,836 9,333,669 1,227,797 10,910,302
Amortization -	1,549 1,169,443 472,000 1,642,992
Balance as at December 31,2024 $-	$350,385 $10,503,112$1,699,797$12,553,294
Carrying amounts as at: December 31, 2023 $ 2,530,622 December 31,2024 $ 2,530,622	$ 1,549 $ 2,392,131 $ 1,132,203 $ 3,525,883 $ - $ 1,222,688 $ 660,203 $ 1,882,891

The Company operates as three groups of Cash Generating Units (“CGU”) BuildDirect, FloorSource, and Superb. All goodwill and intangible assets are assessed and tested at the CGU level to which they have been allocated.

been allocated.
	Goodwill	Intangible Assets
Allocation as at December 31, 2024
FloorSource	$ 2,530,622	$ 1,398,320
Superb	-	484,571
	$ 2,530,622	$ 1,882,891

The Company assesses impairment indicators at each interim period and performs an annual test of impairment for goodwill. The Company did not identify any indicators of impairment for intangible assets or goodwill for the year ended December 31, 2024.

• 20 -

BUILDDIRECT.COM TECHNOLOGIES INC.

Notes to Consolidated Financial Statements (Expressed in United States dollars)

For the years ended December 31, 2024 and 2023

6. Intangible assets and Goodwill (continued):

At December 31, 2024, the Company identified impairment indicators in respect of its customer list and brand intangibles allocated to the Superb CGU.

In testing the Superb CGU for impairment, the Company estimated the aggregate recoverable amount of the assets in the CGU and compared the result to the respective carrying values. The recoverable amount as determined by discounting future cashflows 5-10 years out using a 2% growth rate on revenue.

Key assumptions:

• After-tax discount rate 23.9%

• Terminal growth rate 2.0%

• Earnings % of revenue 6.5%

These assumptions represent management’s assessment of the future trends in the industry and have been based on information from both external and internal resources.

The recoverable amount for the customer relationship and brand were estimated to be greater than their carrying value. As such, no impairment was recognized in the year ended December 31, 2024 (2023 - $2,129,334). In conjunction with the impairment loss in 2023, the Company and the former owner of Superb entered into an agreement to forgive the remaining balance of deferred consideration. This resulted in a gain of $1,425,000 recognized in 2023. No similar adjustments occurred in 2024.

7. Right-of-use assets:

Right-of-use assets:
	Premises	Equipment	Total
Cost
Balance as January 1, 2023	$ 6,055,719	$ 489,075	$ 6,544,794
Modifications	(239,284)	-	(239,284)
Balance as January 1, 2024	5,816,435	489,075	6,305,510
Additions	1,529,542	-	1,529,542
Balance as at December 31, 2024	$ 7,345,977	$ 489,075	$ 7,835,052
Accumulated amortization:
Balance as January 1, 2023	$ 2,865,675	$ 112,677	$ 2,978,352
Amortization	1,088,256	78,202	1,166,458
Balance as January 1, 2024	3,953,931	190,879	4,144,810
Amortization	1,057,040	70,555	1,127,595
Balance as at December 31, 2024	$ 5,010,971	$ 261,434	$ 5,272,405

• 21 -

BUILDDIRECT.COM TECHNOLOGIES INC.

Notes to Consolidated Financial Statements (Expressed in United States dollars)

For the years ended December 31, 2024 and 2023

7. Right-of-use assets (continued):

Carrying amounts:	Premises:	Equipment	Total
Balance as at December 31, 2023	$ 1,862,504	$ 298,196	$ 2,160,700
Balance as at December 31, 2024	$ 2,335,006	$ 227,641	$ 2,562,647

Management regularly assesses right-of-use assets for impairment indicators and has determined that no impairment is required for the year ended December 31, 2024 (2023 - nil).

8. Accounts payable and accrued liabilities:

Accounts payable and accrued liabilities:
	2024	2023
Trade accounts payable and accruals	$ 8,154,874	$ 5,412,228
Payroll and health taxes	195,965	232,874
Other payables	149,936	250,761
	$ 8,500,775	$ 5,895,863

9. Leases:

Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes. The Company’s lease obligations have effective annual discount rates ranging from 2.75% to 12%.

(a) As a lessee:

Maturityanalysis contractual undiscounted cash flows	2024	2023
Less than one year	$ 1,290,366	$ 1,422,178
One to five years	1,726,170	1,359,255
More than fiveyears	278,300	-
Total undiscounted lease liabilities atperiod end	3,294,836	2,781,433
Lease liabilities included in the consolidated statement
of financial position as at period end	2,849,543	2,629,774
Current lease liabilities	(1,154,315)	(1,319,526)
Non-current lease liabilities	$ 1,695,228	$ 1,310,248

• 22 -

BUILDDIRECT.COM TECHNOLOGIES INC.

Notes to Consolidated Financial Statements (Expressed in United States dollars)

For the years ended December 31, 2024 and 2023

9. Leases (continued):

On November 18, 2024, FloorSource entered into a five-year lease for a 6,000 sq ft premises located in Brighton, Michigan. As part of the arrangement, FloorSource obtained trade fixtures such as inventory, racking and showroom area from the prior tenant, LL Flooring Inc. Management determined the lease obligation to be $501,757 at the inception of the lease, with a corresponding right-of-use asset.

On November 19, 2024, BuildDirect Technology Holdings Inc. entered into a five-year lease for a 14,000 sq ft premises located in Santa Fe Springs, California. Management determined the lease obligation to be $1,027,781 at the inception of the lease, with a corresponding right-of-use asset.

During the year ended December 31, 2023, the Company entered into an agreement with the property owner of one of their building leases, receiving a 24-month rent-free period starting November 15, 2023.

The following amounts relate to the leases recognized on the consolidated statement of operations:

	2024	2023
Interest on lease liabilities	$ 123,408	$ 201,222
Income from subleasingright-of-use assets	(149,853)	(541,820)
	$ (26,445)	$ (340,598)

• 23 -

Notes to Consolidated Financial Statements (Expressed in United States dollars)

BUILDDIRECT.COM TECHNOLOGIES INC.

For the years ended December 31, 2024 and 2023

9. Leases (continued):

• (b) As a lessor:

The Company has two subleases for an office and warehouse. The office lease is for a term of 6 years and the warehouse lease is for a term of 1 year, both without extension options.

• (i) Finance lease:

The Company classified the office lease as a finance lease, as it transfers substantially all the risks and rewards of the head lease to the sub-lessee. During the year ended December 31, 2024, the Company recognized interest income of $5,051 (2023 - $28,230) and recovered $196,759 of lease receivables (2023 -$491,898).

• (ii) Operating lease:

The Company classified the warehouse lease as an operating lease, as the risks and rewards of the head lease do not transfer to the sub-lessee.

10. Deferred revenue:

Deferred revenue represents cash received from customers in advance of delivery. All amounts are expected to be fulfilled in the subsequent reporting period.

	2024	2023
Beginning balance	$1,559,755	$ 1,767,136
Additions to deferred revenue	1,385,993	1,559,755
Revenue recognized	(1,559,755)	(1,767,136)
Endingbalance	$1,385,993	$1,559,755

• 24 -

BUILDDIRECT.COM TECHNOLOGIES INC.

Notes to Consolidated Financial Statements (Expressed in United States dollars)

For the years ended December 31, 2024 and 2023

11. Debt:

Debt:
								2024			2023
Total debt						$		11,090,111	$	10,128,222
Currentportion								(2,449,384)		(2,118,622)
Long-term debt						$		8,640,727	$	8,009,600
	Secured		Secured		Promissorry		Credit		Vehicle
	Note		Debt		Note		Facility		Financing		Total
Balance at December 31, 2023	$	1,720,096	$	5,777,509	$	2,630,617	$	-	$	-	$	10,128,222
Advances		-		1,700,000		-		1,259,370		34,182		2,993,552
Repayments		(1,637,739)		-		(1,245,000)		-		(1,742)		(2,884,481)
Non-cash interest		-		818,826		109,290		-		-		928,116
Capitalized fees		-		34,000		-		(26,968)		-		7,032
Foreign exchange		(82,357)		-		-		-		27		(82,330)
Balance at December 31, 2024	$	-	$	8,330,335	$	1,494,907	$	1,232,402	$	32,467	$	11,090,111
Current portion		-		-		1,211,575		1,232,402		5,407		2,449,384
Long-termportion		-		8,330,335		283,332		-		27,060		8,640,727
	$	-	$	8,330,335	$	1,494,907	$	1,232,402	$	32,467	$	11,090,111

(a) Secured note:

The Secured note agreement (the “2018 Notes”) had a principal amount of $1,720,096 (CDN$2,275,000) as at December 31, 2023. During the year ended December 31, 2024, the Company made $474,903 in regular principal repayments and $128,263 of interest on the 2018 Notes. On December 20, 2024, the remaining loan balance and accrued interest was repaid to the one lender from proceeds of the Company’s new Credit Facility (note 11(d)). As a result, the 2018 Notes were retired and all associated security and liens on the Company’s assets were fully released.

• 25 -

BUILDDIRECT.COM TECHNOLOGIES INC.

Notes to Consolidated Financial Statements (Expressed in United States dollars)

For the years ended December 31, 2024 and 2023

11. Debt (continued):

(b) Secured debt:

On February 15, 2022 and on June 29, 2022, the Company negotiated new loans in an aggregate amount of $3,000,000 and $1,500,000 respectively via the issuance of secured notes (the “2022 Notes”) to Pelecanus Investments Ltd. (“Pelecanus”), Lyra Growth Partners Inc. (“Lyra), and Beedie Investments Ltd. (“Beedie”) all related parties, and together (the “Insider Lenders”).

The Company issued an additional $1,000,000 on June 5, 2024 and $700,000 on October 8, 2024 (the “Additional Loans”) to the Insider Lenders. This secured debt bears interest at an annual rate of 12%, compounded monthly but does not require on-going cash principal and interest payments because full repayment is due upon final repayment of the loan. Commitment fees of 2% on the Additional Loans were capitalized to the loan principal. The loan matures on April 1, 2026.

This debt is secured by all property, assets, and rights of the Company, excluding the property assets and rights of FloorSource. These notes from the Insider Lenders were subordinated to the 2018 Notes, and are now subordinated to the new Credit Facility (see note 11(d) below). The Company has met all covenants associated with the 2022 Notes and Additional Loans as at December 31, 2024.

(c) Promissory note:

The promissory note was originally issued on December 31, 2020, in the amount of $6,193,725 bearing 5% interest, compounded annually and paid quarterly. The note formed part consideration on the acquisition of FloorSource and is secured by all present and future property, assets, and rights of FloorSource. Annual principal payments of $1,245,000 commenced on December 31, 2021 and continued on a quarterly basis in equal instalments of $311,250.

In accordance with IFRS 3 Business Combinations , the note was initially recorded at fair value using a discounted cash flow model with a risk adjusted discount rate of 12%. Subsequently accounted for using amortized cost, the resulting discount from using the 12% rate is accreted over the remaining term of the loan as a charge to interest expense.

The promissory note has a maturity date of the earlier of:

• (i) January 1, 2026,

• (ii) Acceleration upon the occurrence of any event of default, the holder has the right to declare the entire principal amount and all interest outstanding thereon and expenses and other amounts payable under note to be due and payable immediately.

• 26 -

BUILDDIRECT.COM TECHNOLOGIES INC.

Notes to Consolidated Financial Statements (Expressed in United States dollars)

For the years ended December 31, 2024 and 2023

11. Debt (continued):

(c) Promissory note (continued):

• (iii) a change in control defined as (1) the sale of more than 50% of the issued and outstanding stock or other equity securities (on an as-converted basis) of any of the Company; or (2) the sale, lease, transfer, exclusive license, or other disposition of substantially all of the assets of the Company.

Interest accrued for the year ended December 31, 2024 was $142,697 (2023 - $191,686). Interest payments of $122,816 were made for the year ended December 31, 2024 (2023 - $169,225). Principal payments of $1,245,000 were made for the year ended December 31, 2024 (2023 - $1,245,000).

(d) Credit Facility:

On December 20, 2024, the Company entered into a revolving credit facility (“RCF”) agreement with a Tier 1 Canadian Bank with an aggregate borrowing limit of up to CAD $9,466,000. The RCF is payable upon demand and subject to certain financial covenants calculated on a consolidated basis. The credit facility includes CAD$1,126,000 of Letters of Guarantee (“Facility 1”) and a CAD$8,340,000 revolving demand facility by way of prime plus 1.50% Canadian currency or prime plus 1.00% US dollar loans (“Facility 2”). The RCF has a general security agreement and a first priority position on all of the Company’s assets and property.

The facility does not have a fixed term and is due on demand. The RCF is also supported by the Export Development Canada’s (“EDC”) Trade Expansion Lending Program. Borrowing amount under the RCF is based on certain percentages of accounts receivable and inventory balances, less prior encumbrances.

As at December 31, 2024, the Company has drawn $1,259,370 on the facility (2023 - $Nil). The funds were used to repay principal and accrued interest of $1,316,589 of the 2018 Notes (see note11(a) above). In addition, Letters of guarantee of $254,747 have been issued under Facility 1 of the RCF as at December 31, 2024.

(e) Vehicle Financing:

On August 28, 2024, the Company financed a delivery vehicle in the amount of CAD$46,142 at a fixed rate of 9.49% with blended principal and interest payments over five years.

12. Warrants:

Warrants:
		2024		2023
	Number	Amount	Number	Amount
		$		$
Beginning of year	753,725	75,224	8,133,505	28,382
Matured during the year	-	-	(7,379,780)	-
Change in fair value	-	(11,256)	-	46,842
Endingbalance	753,725	63,968	753,725	75,224

• 27 -

builddirect.com technologies inc. Notes to Consolidated Financial Statements (Expressed in United States dollars)

For the years ended December 31, 2024 and 2023

12. Warrants (continued):

The warrants were issued on December 30, 2020 and expire on December 30, 2030; the exercise price is C$4.23. As the functional currency at the date of issuance was USD, the value of the warrants are accounted for as a derivative liability and carried at fair value through profit or loss. The Company recognized a change in fair value gain of $11,256 for the year ended December 31, 2024 (2023 – loss $46,843).

The December 30, 2020 warrants are convertible on a cashless basis, where the holder may exchange each warrant for the difference between the market price of the shares on the exercise date and the exercise price, and this value will be distributed into common shares at the conversion price of C$4.2281.

The fair value is determined by using the Black-Scholes pricing model with the following assumptions:

	2024	2023
Years to maturity	6.00	7.00
Volatility	67%	67%
Risk-free rate	0.45%	0.46%
Value of common shares	CAD $0.60	CAD $0.55

13. Related parties:

(a) Transactions with key management personnel:

Key management includes Directors, the Chief Executive Officer, the Chief Financial Officer, and the Chief Operating Officer; who have the authority and responsibility for planning, directing and controlling the activities of the Company. The remuneration paid and payable to these personnel is outlined below:

	2024		2023
Salaries and short-term benefits	$ 1,112,842	$	801,059
Share-based compensation	135,852		645,877
Non-executive directors’ fees	51,176		79,770
	$ 1,299,870	$	1,526,706

(b) Other related party transactions:

Pelecanus, Lyra and Beedie are related parties by virtue of their significant influence of the Company (note 11).

• 28 -

Notes to Consolidated Financial Statements (Expressed in United States dollars)

BUILDDIRECT.COM TECHNOLOGIES INC.

For the years ended December 31, 2024 and 2023

14. Shareholders’ equity:

• (a) Share capital:

Authorized:

Unlimited common shares, without par value

Unlimited preference shares, without nominal or par value

	Year ended	Year ended	Year ended	Year ended
	December 31, 2024		December 31, 2023
	Number	Amount	Number	Amount
		$		$
Common Shares:
Beginning of year	41,941,535	123,109,599	40,819,913	122,803,204
Exercise of deferred share units			-	-
(“DSU”)	7,843	3,720
Exercise of stock options	83,328	23,652	-	-
Issuance of common shares	-	-	1,121,622	306,395
Endingbalance	42,032,706	123,136,971	41,941,535	123,109,599

On January 3, 2023, BuildDirect obtained a second tranche of funding from a non-brokered private placement offering of 1,121,622 common shares issued at a price of CDN$0.37 per common share for total gross proceeds of $306,395 (CDN$415,100).

During the year ended December 31, 2024, a former board member exercised deferred share units for 7,843 common shares, and two former employees exercised stock options for 83,328 common shares.

(b) Share based payments:

Since July 2018, the Company has an incentive stock option plan under which up to a total 17,908,161 options can be issued. Stock options vest over a four-year period. 25% of a grant vests on the first anniversary, and the remaining 75% vests over 36 months, subsequent to the first 25% vesting.

The following summarizes stock option activity for the years ended December 31,2024 and 2023:

	2024			2023
		Weighted			Weighted
		average			average
		exercise			exercise
	Number	price	Number		price
Options to purchase common
shares:
Outstanding, beginning of	3,656,941	$ 0.42	1,231,319		1.26
year
Granted	900,000	0.31	3,250,000		0.31
Exercised	(83,328)	0.29	-		-
Cancelled or forfeited	(380,680)	0.45	(824,378)		1.25
Outstanding, end ofyear	4,092,933	$ 0.39	3,656,941		$ 0.42

• 29 -

BUILDDIRECT.COM TECHNOLOGIES INC.

Notes to Consolidated Financial Statements (Expressed in United States dollars)

For the years ended December 31, 2024 and 2023

14. Shareholders’ equity (continued):

On September 5, 2024, the Company granted 650,000 options to employees at an exercise price of C$0.42 and on October 8, 2024, the Company granted 150,000 stock options to one employee and one consultant at an exercise price of C$0.40.

In accordance with the Company's Omnibus Equity Incentive Plan (the "Plan"), these stock options vest over a 4-year period, are exercisable for common shares of the Company and expire 10 years from the grant date subject to the terms of the Plan.

On October 8, 2024, The Company also granted 100,000 stock options at an exercise price of C$0.40 to a third-party advisor under Plan. These stock options vest over a 12-month period, are exercisable for common shares of the Company, and expire 3 years from the grant date.

Former employees exercised 83,328 options during the year ended December 31, 2024.

Share-based payment expense of $191,615 has been recognized during the year ended December 31, 2024 (2023 - $201,795).

(b) Share-based Payment (continued):

The following tables summarizes information concerning outstanding and exercisable options:

As at December 31, 2024:

		Weighted average		Weighted average
		remaining		remaining
	Outstanding	contractual life	Options	contractual life
Exerciseprice	options	(years)	exercisable	(years)
$ 0.29	2,500,000	8.40	1,310,348	8.40
$ 0.41	450,000	8.98	421,875	8.98
$ 0.29	150,000	9.78	-	9.78
$ 0.29	100,000	2.77	-	2.77
$ 0.31	650,000	9.68	-	9.68
$ 0.54	42,509	3.50	42,509	3.50
$ 0.76	19,832	3.55	19,832	3.55
$ 1.36	46,356	6.96	41,809	6.96
$ 1.94	126,700	6.30	120,826	6.30
$ 2.12	7,536	5.83	7,536	5.83
$ 0.38	4,092,933	8.42	1,964,735	8.42

• 30 -

BUILDDIRECT.COM TECHNOLOGIES INC.

Notes to Consolidated Financial Statements (Expressed in United States dollars)

For the years ended December 31, 2024 and 2023

14. Shareholders’ equity (continued):

As at December 31, 2023

		Weighted average		Weighted average
		remaining		remaining
	Outstanding	contractual life	Options	contractual life
Exerciseprice	options	(years)	exercisable	(years)
$ 0.29	2,800,000	9.40	443,747	9.40
$ 0.41	450,000	9.99	-	9.99
$ 0.54	88,037	5.72	86,675	5.72
$ 0.76	98,501	2.96	98,408	2.96
$ 1.36	46,356	7.97	27,029	7.97
$ 1.94	166,511	7.14	120,028	7.14
$ 2.12	7,536	6.83	7,536	6.83
$ 0.42	3,656,941	9.14	783,423	9.14

15. Revenue:

Revenues from external customers are split into four main streams. Product revenue is earned from customers who purchase goods in store and online through the Company’s website. Service revenue is made up of three streams of revenue, freight, warehouse and installation revenue. Freight revenue is the amount collected for the freight shipping and handling of products, either ones sold on the Company’s website, or for third parties requiring the logistics services. Warehouse revenue is earned for the storage of third-party inventory. Installation revenue is the amount charged to customers for installation services. Product revenue, and service revenue related to freight and warehouse are recognized at the point in time when the customer obtains control of the good or when the service provided. Service revenue related to installation is recognized at the point in time when the service is provided or for larger scale installations over the period that the service is provided.

The Company recognizes the product, freight, warehouse and installation revenue on a gross basis.

As all payments for items purchased through the product and freight streams are paid for at the time of order, deferred revenue is recorded for the period between when the order is placed and when the order has been delivered at the customer's chosen destination.

For the year ended December 31, 2024, the Company recognized $27,655 (2023 - $34,386) of refund liability which is included in accounts payable and accrued liabilities.

	2024	2023
Product revenue	$ 58,998,170	$ 63,447,662
Service revenue
Freight	692,466	1,005,213
Warehouse	20,916	133,775
Installation	5,753,288	7,692,748
	$ 65,464,840	$ 72,279,398

• 31 -

BUILDDIRECT.COM TECHNOLOGIES INC.

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

For the years ended December 31, 2024 and 2023

16. Segment information:

The Company’s Chief Operating Decision-Maker (CODM), which consists of the Executive Leadership Team (“ELT”), regularly assesses the performance of, and makes resource allocation decisions based on, the two operating segments, BuildDirect.com and Independent Retailers (FloorSource & Superb) and therefore both reportable segments are broken out below. In presenting the following information, segment revenue has been based on the geographic location of customer and non-current assets have been based on the geographic location of the assets.

• (a) Revenue:

			2024	2023
	BuildDirect:
	United States	$ 14,534,308		$ 19,024,355
	Canada		681,371	725,479
	Acquired
	Retailers:
	United States		50,249,161	52,529,564
		$ 65,464,840		$ 72,279,398
	Non-current assets:
		December 31, 2024		December 31, 2023
	BuildDirect.com:
	United States	$	996,158	$ 370,000
	Canada		709,488	562,726
	Acquired Retailers:
	United States	9,136,649		9,821,049
		$ 10,842,295		$ 10,753,775

• (b) Non-current assets:

• 32 -

BUILDDIRECT.COM TECHNOLOGIES INC.

Notes to Consolidated Financial Statements (Expressed in United States dollars)

For the years ended December 31, 2024 and 2023

17. Income taxes:

• (a) Income tax expense (recovery):

		2024		2023
Current tax expense (recovery)
Current period	$	514,660	$	611,361
Deferred tax expense (recovery)
Origination and reversal of temporary differences	$	(906,425)	$	(1,503,953)
Change in unrecognized temporary differences		(246,718)		1,464,445
Adjustment forpriorperiod		(131,954)		(292,681)
Income tax expense(recovery)	$	(770,437)	$	279,172

The actual income tax provision differs from the expected amount calculated by applying the Canadian combined federal and provincial corporate tax rates to income before tax. These differences result from the following:

differences result from the following:
		2024		2023
Loss before income tax	$	(2,017,967)	$	(3,493,028)
Statutoryincome tax rate		27%		27%
Expected income tax expense (recovery)	$	(544,851)	$	(943,118)
Increase (decrease) in income taxes resulting from:
Non-taxable items		157,447		43,878
Change in unrecognized temporary differences		(246,718)		1,464,445
Adjustments related to prior periods		(131,954)		(292,681)
Tax rate differences and tax rate changes		(4,361)		6,648
Other		-		-
Income tax expense(recovery)	$	(770,437)	$	279,172

• (b) Recognized deferred tax assets and liabilities:

Deferred tax assets are attributable to the following:

		2024		2023
Deferred tax assets:
Accruals	$	-	$	546,080
Deferred consideration payable		435,195		435,195
Lease liabilities		685,182		492,034
Intangibles		2,349,254		706,626
Loss carryforwards		41,688		119,963
Inventory		127,510		-
Deferred tax assets	$	3,638,829	$	2,299,628
Set-off of tax		(814,433)		(760,329)
Net deferred tax asset	$	2,824,396	$	1,539,299

• 33 -

BUILDDIRECT.COM TECHNOLOGIES INC.

Notes to Consolidated Financial Statements (Expressed in United States dollars)

For the years ended December 31, 2024 and 2023

17. Income taxes (continued):

• (b) Recognized deferred tax assets and liabilities (continued):

Deferred tax liabilities are attributable to the following:

		2024		2023
Deferred tax liabilities:
Right of use assets		(661,571)		(561,751)
Property and equipment		(125,264)		(131,119)
Promissory note		(27,598)		(55,729)
Accruals		-		(11,730)
Deferred tax liabilities	$	(814,433)	$	(760,329)
Set-off of tax		814,433		760,329
Net deferred tax liability	$	-	$	-

• (c) Unrecognized deferred tax assets and liabilities:

	2024	2023
Tax losses	$ 209,377,640	$,231,054,372
Deductible temporary differences	13,483,396	12,290,919
	$ 222,861,036	$ 243,345,291

At December 31, 2024, the Company has non-capital losses carried forward for tax purposes, which are available to reduce taxable income in Canada of future years of approximately $209,117,678 (2023 – $231,072,901). The losses will expire between 2031 – 2044.

As of December 31, 2024, the Company does not have any unrecognized tax benefits related to uncertain tax positions.

In December 2021, the Organisation for Economic Co-operation and Development (“OECD”) issued model rules for a new global minimum tax framework (“Pillar Two”), and various governments around the world have issued, or are in the process of issuing, legislation on this. In Canada, the government released draft legislation on Pillar Two in August 2023, but the legislation has not yet been enacted or substantively enacted. The Company is in the process of evaluating the cash tax and accounting implications of the Pillar Two global minimum tax rules under IAS 12; however, whereas the Company has annual consolidated revenues below €750 million, the enactment of the legislation is not anticipated to impact the Company.

18. Commitments and contingencies:

• (a) Claims are made against the Company in the ordinary course of operations. The Company has made provisions for such claims, when necessary.

• (b) The Company issues letters of guarantee through its financial institution to provide guarantees for duty on cross-border shipments. Outstanding letters of guarantee amount to $254,747 (2023 - $445,415).

• 34 -

BUILDDIRECT.COM TECHNOLOGIES INC.

Notes to Consolidated Financial Statements (Expressed in United States dollars)

For the years ended December 31, 2024 and 2023

19. Supplemental Cash Flow Information:

Supplemental Cash Flow Information:
Change in non-cash operating working capital	2024	2023
Short-term investments	$ -	$ (127,415)
Trade and other receivables	271,420	(519,686)
Inventories	(3,445,762)	483,249
Prepaid materials, expenses and deposits	426,549	1,020,478
Accounts payable and accrued liabilities	3,110,373	308,845
Deferred revenue	(173,762)	(207,381)
Total change in non-cash operatingworkingcapital	$188,818	$958,090

20. Financial risk management:

The Company’s operations expose it to a variety of financial risks including liquidity risk, market risk and credit risk.

(a) Liquidity risk:

Liquidity risk is the risk that the Company will be unable to fulfill its obligations on a timely basis or at a reasonable cost. The Company manages its liquidity risk by monitoring its operating requirements and through ongoing review of working capital balances and management of cash. The Company prepares operating budgets and cash forecasts to ensure it has sufficient funds to fulfill its obligations. The ability to fund operating requirements depends on future operating performance and cash flows, which are subject to economic, financial, competitive, and other factors.

For the year ended December 31, 2024 there is net loss of $1,247,530 (2023 – $3,772,200), and positive cash flow from operations of $2,160,969 (2023 - $4,023,220).

Working capital decreased by $112,212 to $2,712,617 at December 31, 2024 from $2,824,829 at December 31, 2023 while cash decreased by $254,402 to $2,347,491 at December 31, 2024 compared to $2,601,893 at December 31, 2023. On December 20, 2024 the Company obtained a Credit Facility from a major Canadian financial institution (note 11(d)). As such, the Company believes that it will be able to meet its financial obligations.

The following table summarizes the amount of contractual undiscounted future cash flows for the Company’s financial liabilities, including interest as at December 31, 2024:

	2025		2026		2027		2028		2029	Total
Accounts payable and
accrued liabilities	$ 8,500,775	$	-	$	-	$	-	$	-	$ 8,500,775
Revolving credit facility	1,232,402		-		-		-		-	1,232,402
Promissory note	1,211,575		283,332		-		-		-	1,494,907
Loans payable	5,407		8,338,896		9,418		10,356		7,635	8,371,712
	$ 10,950,159	$	8,622,228		$ 9,418		$ 10,356		$ 7,635	$ 19,599,796

• 35 -

BUILDDIRECT.COM TECHNOLOGIES INC.

Notes to Consolidated Financial Statements (Expressed in United States dollars)

For the years ended December 31, 2024 and 2023

20. Financial risk management (continued):

• (b) Market risk:

• (i) Currency risk:

Currency risk reflects the risk that the Company’s earnings will decline due to fluctuations in exchange rates.

At December 31, 2024, the Company has cash and cash equivalents of C$8,794 (2023 – C$18,103).

At December 31, 2024, the Company has accounts payable and accrued liabilities of C$1,131,716 (2023 - C$502,358).

The Company’s drawn balance on its Credit Facility (note 11) is C$1,764,318 (U$1,232,402) (2023 -$Nil).

If the period-end foreign exchange rate of Canadian dollar had been 10% higher, or 10% lower, with all other variables held constant, the effect on the Company’s foreign exchange for the year ended December 31, 2024 would have been $817,381 (2023 - $219,160) higher or lower.

• (ii) Interest risk:

Interest risk is the risk that the fair value or cash flows from a financial instrument will fluctuate due to a change in market interest rates. The Company bears interest rate risk to the extent of its drawings on the revolving credit facility (note 11(d)). All other debt is at fixed rates. The interest rate risk on cash and short-term investments is considered insignificant due to the low interest rates in the current economic environment and short-term nature of its holdings and as such the Company does not take any actions to manage interest rate risk.

.

• (c) Credit risk:

Credit risk refers to the risk that a counterparty may default on its contractual obligations resulting in a financial loss. The Company, in its normal course of business, evaluates the financial condition of its customers on a regular basis, in addition to assessing the loss allowance under the ECL model. In addition, the Company requires a majority of its customers to prepay for orders before shipment can be made. Therefore, the Company has determined there is no significant exposure to customer credit risk.

• 36 -

Notes to Consolidated Financial Statements (Expressed in United States dollars)

BUILDDIRECT.COM TECHNOLOGIES INC.

For the years ended December 31, 2024 and 2023

20. Financial risk management (continued):

(d) Capital management:

The Company’s objective when managing its capital structure is to maintain a strong financial position and to provide returns with sufficient liquidity to undertake further growth for the benefit of its shareholders. The Company’s capital is comprised of long-term obligations and equity as outlined below:

	2024	2023
External debt	$ 11,090,111	$ 10,128,222
Less cash	(2,347,491)	(2,601,893)
Net external debt	8,742,620	7,526,329
Total shareholders’ equity	3,154,989	4,183,532
Total capitalization	$ 11,897,609	$ 11,709,861

There were no changes to the Company’s approach to capital management during the year. The Company’s strategy is to ensure it remains in compliance with all of its debt obligations to ensure continuous access to the required capital to fund growth. Management reviews results and forecasts to monitor the Company’s compliance.

(e)

Fair value hierarchy:

• Level 1: The fair value of financial instruments traded in active markets and based on quoted market prices at the end of the reporting period.

• Level 2: The fair value of financial instruments that are not traded in an active market and determined using valuation techniques using observable market data and rely little on entity-specific estimates If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

• Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3 (i.e. unlisted equity securities).

The carrying value of the Company’s cash, trade and other receivables, short-term investments, accounts payable and accrued liabilities approximate fair value due to their short-term nature. The carrying value of the revolving credit facility approximates fair value as it is prime-based and resets based on current market conditions. The terms of the Company’s promissory notes and loans payable were previously modified, as such, the carrying amounts approximate fair value.

The fair value of warrants liability as at December 31, 2024 are $63,968 and $75,224 as at December 31, 2023 (note 12).

• 37 -

BUILDDIRECT.COM TECHNOLOGIES INC.

Notes to Consolidated Financial Statements

(Expressed in United States dollars)

For the years ended December 31, 2024 and 2023

20. Financial risk management (continued):

		Level	1	Level	2	Level 3
Warrants liability (note	12)		-		-	$ 63,968

Warrants have key observable Level 1 inputs of exercise price and time to maturity, Level 2 input of risk free rate and Level 3 input of volatility. A 10% increase or decrease to volatility would revalue the liability to $84,942 and $44,568 respectively.

21. Expenses by nature:

	2024	2023
Building materials and consumables	$ 44,075,170	$ 49,336,537
Employee costs	11,596,353	11,233,770
Marketing and promotion	2,379,707	2,083,971
Professional services	1,277,888	2,482,216
Rent and other	4,039,350	4,003,898
Depreciation and amortization	2,861,768	3,677,512
Share-based compensation	191,615	201,795
	$ 66,421,851	$ 73,019,699

22. Loss per Share:

Loss per share represents loss from the period divided by the weighted average number of common and preference shares outstanding during the period. The weighted average number of shares is as follows:

follows:
	2024	2023
Beginning balance, shares outstanding	41,941,535	40,819,913
Effect of share issuances	57,272	1,112,404
Weighted average number of shares	41,998,807	41,932,317

Diluted loss per share is calculated by dividing the applicable loss by the sum of the weighted average number of shares outstanding and all additional common shares that would have been outstanding if potentially dilutive shares had been issued during the period. The calculation has not been provided as the effects of dilution would result in anti-dilutive loss per share.

Earnings (loss) per share are as follows:

	2024	2023
Net loss for the year	$ (1,247,530)	$ (3,772,200)
Basic weighted average number of shares	41,998,807	41,932,317
Basic loss per share	(0.03)	(0.09)

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BUILDDIRECT.COM TECHNOLOGIES INC.

Notes to Consolidated Financial Statements (Expressed in United States dollars)

For the years ended December 31, 2024 and 2023

23. Subsequent Event

On March 27, 2025 the Company acquired substantially all of the operational assets of Anchor Flooring and Supply Company LLC and Yorkshore Sales and Marketing Inc. for $593,000. The acquisition includes inventory, tangible assets, and customer lists.

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