Audited Consolidated Financial Statements

Elixxer Ltd.

For the years ended December 31, 2024 and 2023

INDEX

Independent Auditor's Report 2 - 5
Consolidated Statements of Financial Position 6
Consolidated Statements of Loss and Comprehensive Loss 7
Consolidated Statements of Changes in Shareholders' Deficiency 8
Consolidated Statements of Cash Flows 9
Notes to Consolidated Financial Statements 10 - 26

CAN Partners LLP
Chartered Professional Accountants
PUBLIC ACCOUNTANTS and ADVISORS
7030 Woodbine Ave., Suite 405
Markham ON, L3R 6G2
T 905 604 6665

INDEPENDENT AUDITORS' REPORT

To the Shareholders of Elixer Ltd.:

Opinion

We have audited the consolidated financial statements of Elixer Ltd. and its subsidiaries (the "Company"), which comprise the consolidated statements of financial position as at December 31, 2024, and the consolidated statements of loss and comprehensive loss, changes in shareholders' deficiency, and cash flows for the year 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 Company as at December 31, 2024, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with IFRS® Accounting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

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

Emphasis of Matter - Material Uncertainty Related to Going Concern

We draw attention to Note 1 in the consolidated financial statements, which indicates that the Company incurred a net loss during the year ended December 31, 2024 and, as of that date, the Company had an accumulated deficit. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of these matters.

Other Matters - Comparative Information

The consolidated financial statements of the Company for the year ended December 31, 2023 were audited by another auditor who expressed an unqualified opinion on those statements on November 4, 2024.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2024. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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

Convertible Debentures Receivable

Refer to Note 6 – Convertible Debenture Receivable

In 2018, the Company entered into a four-year secured convertible loan agreement in the amount of $4,000,000 (the “Tricho-Med Debenture”). The debenture was not converted into equity of Tricho-Med. In October 2020, the Company filed an application with the Superior Court of Quebec for the surrender and taking in payment of Tricho-Med’s assets, which were pledged as security under the terms of the Tricho-Med Debenture. Several claims and counterclaims have been filed in connection with the pledged land and building. Further details of these legal proceedings are disclosed in Note 12 to the financial statements.

Management has classified the convertible debenture receivable, including its embedded conversion feature, as a financial asset measured at fair value through profit or loss.

As at December 31, 2024, management determined the fair value of the Tricho-Med Debenture to be $1,239,122. This amount was estimated based on the fair value of the underlying land and building, pledged as security, net of other outstanding liens, fees, and commissions.

We identified this matter as a key audit matter due to the significance of the balance and the significant judgment involved in estimating the fair value of the underlying collateral.

How the Key Audit Matter Was Addressed in the Audit

Our audit procedures in this area included, among others:

Reviewing management’s valuation of the convertible debenture receivable as at December 31, 2024;
Examining relevant legal documentation and obtaining legal counsel’s response in respect of the ongoing litigation and potential financial implications;
Evaluating the key assumptions used in management’s fair value assessment, including:
The valuation report for the land and building, originally constructed in 2019 for cannabis cultivation;
Estimated net proceeds from the potential sale of the property;
Estimated liens, fees, and commissions;
The discount rate applied to determine the present value of the estimated net proceeds; and
The expected timing of realization of such proceeds;
Recalculating management’s estimate of the fair value loss on the convertible debenture receivable;
Assessing the adequacy and appropriateness of the related disclosures in Notes 6 and 12 to the consolidated financial statements.

Other Information

Management is responsible for the other information. The other information comprises the Management Discussion and Analysis.

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

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

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

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

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

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

Auditors' Responsibilities for the Audit of the Consolidated Financial Statements

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

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

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

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 or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

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

Markham, Ontario
April 29, 2025
Chartered Professional Accountants
Licensed Public Accountants
5

Elixxer Ltd.
Consolidated Statements of Financial Position
(Expressed in Canadian dollars unless otherwise stated)

| | Notes | December 31, 2024
$ | December 31, 2023
$ |
| --- | --- | --- | --- |
| Assets | | | |
| Current Assets | | | |
| Cash | | 20,301 | 20,301 |
| Taxes and other receivables | | 50,316 | 10,785 |
| Total current assets | | 70,617 | 31,086 |
| Non-current assets | | | |
| Equity instruments | 5 | 824,506 | 750,569 |
| Convertible debentures receivable | 6 | 1,239,122 | 2,026,044 |
| Total non-current assets | | 2,063,628 | 2,776,613 |
| Total assets | | 2,134,245 | 2,807,699 |
| Current liabilities | | | |
| Accounts payable and accrued liabilities | 11 | 3,312,874 | 2,750,454 |
| Debentures payable | 8 | 588,944 | 501,620 |
| Other loans payable | 9,11 | 11,325,281 | 9,156,044 |
| Total current liabilities and total liabilities | | 15,227,099 | 12,408,118 |
| Shareholders’ deficiency | | | |
| Share capital | 10 | 53,444,922 | 53,444,922 |
| Warrants reserve | 10 | 3,975,747 | 3,975,747 |
| Contributed surplus | | 17,432,018 | 17,432,018 |
| Accumulated other comprehensive income | | 32,001 | 57,591 |
| Accumulated deficit | | (87,977,542) | (84,510,697) |
| Total shareholders’ deficiency | | (13,092,854) | (9,600,419) |
| Total liabilities and shareholders’ deficiency | | 2,134,245 | 2,807,699 |

Going concern uncertainty (Note 1)
Contingent liabilities and commitments (Note 12)

Approved on behalf of the Board of Directors:

(Signed) (Signed)

"Ferras Zalt" "Edward Milewski"

Director Director

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

Elixxer Ltd.
Consolidated Statements of Loss and Comprehensive Loss
(Expressed in Canadian dollars)

	For the year ended December 31
	Notes	2024	2023
		$	$
Expenses
Administrative expenses	4	489,691	1,283,446
Finance expenses	4	2,218,458	2,607,170
Net loss on financial assets measured at fair value through profit or loss	5	712,985	116,958
Foreign exchange losses		45,711	732
		3,466,845	4,008,306
Net loss for the year		(3,466,845)	(4,008,306)
Other comprehensive loss
Foreign exchange loss on translation of foreign subsidiaries, net of taxes of $Nil (2023-$Nil)		(25,590)	(7,234)
Comprehensive loss		(3,492,435)	(4,015,540)
Loss per share - basic and diluted		(0.31)	(0.35)
Weighted average number of common shares outstanding – basic and diluted		11,338,887	11,338,887

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

Elixxer Ltd.
Consolidated Statements of Changes in Shareholders' Deficiency
(Expressed in Canadian dollars)

	Common shares	Share capital	Warrants reserve	Contributed surplus	Accumulated other comprehensive income	Accumulated deficit	Total
	#	$	$	$	$	$	$
Balance at January 1, 2023	11,338,887	53,444,922	3,975,747	17,432,018	64,825	(80,502,391)	(5,584,879)
Foreign exchange loss on translation of foreign subsidiaries, net of taxes of $Nil	-	-	-	-	(7,234)	-	(7,234)
Net loss for the year	-	-	-	-	-	(4,008,306)	(4,008,306)
Balance at December 31, 2023	11,338,887	53,444,922	3,975,747	17,432,018	57,591	(84,510,697)	(9,600,419)
Balance at January 1, 2024	11,338,887	53,444,922	3,975,747	17,432,018	57,591	(84,510,697)	(9,600,419)
Foreign exchange loss on translation of foreign subsidiaries, net of taxes of $Nil	-	-	-	-	(25,590)	-	(25,590)
Net loss for the year	-	-	-	-	-	(3,466,845)	(3,466,845)
Balance at December 31, 2024	11,338,887	53,444,922	3,975,747	17,423,018	32,001	(87,977,542)	(13,092,854)

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

Elixxer Ltd.
Consolidated Statements of Cash Flows
(Expressed in Canadian Dollars)

| | Notes | Year ended
December 31, | |
| --- | --- | --- | --- |
| | | 2024 | 2023 |
| | | $ | $ |
| Operating activities | | | |
| Net loss for the year | | (3,466,845) | (4,008,306) |
| Finance expenses | 4 | 2,218,458 | 2,607,170 |
| Net loss on financial assets measured at fair value through profit or loss | | 712,985 | 116,957 |
| Interest payments | | - | (1,018,530) |
| Unrealized foreign exchange loss (gain) | | 12,512 | (8,014) |
| | | (522,890) | (2,310,723) |
| Change in non-cash working capital items | | | |
| Increase (decrease) in account payables | | 562,421 | (132,040) |
| (Increase) decrease in other receivables | | (39,531) | 44,178 |
| Net cash from (used) in operating activities | | - | (2,398,585) |
| Investing activities | | | |
| Proceeds on sale of equity instruments | | - | 2,353,461 |
| Cash flows from investing activities | | - | 2,353,461 |
| Decrease in cash during the year | | - | (45,124) |
| Cash, beginning of year | | 20,301 | 65,425 |
| Cash, end of year | | 20,301 | 20,301 |
| Non-cash financing activity: | | | |
| During the period, the Company increased its indebtedness to a financier, AIP, by $287,069 in connection with various expenses paid directly by AIP on behalf of the Company (note 10(b)). | | 287,069 | 93,850 |

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

Elixxer Ltd.
Notes to the Consolidated Financial Statements
(Amounts expressed in Canadian dollars unless otherwise stated)
For the years ended December 31, 2024, and 2023

Nature of operations and going concern uncertainty

Elixxer Ltd. (“Elixxer” or the “Company”) was incorporated under the Canada Business Corporations Act on July 9, 2004. Elixxer is a publicly listed company, and its shares are listed for trading on the TSX Venture Exchange (the “TSX-V”) under the symbol “ELXR”. Its shares were cease traded until April 17, 2025. The registered office of Elixxer is located at 1100 Boulevard Rene - Levesque Ouest, Suite 700, Montréal, Québec, Canada H5B 4N4.

Elixxer and its wholly owned subsidiaries, LGC Finance Limited (formerly Leni Gas Cuba Limited) (“LGC Finance”), LGC Capital EU OU (“LGC Estonia”) and LGC Capital Spain S.L (“LGC Spain”), which are currently all dormant, are collectively referred to as the “Company” in these Statements.

Elixxer invests in the legal global cannabis market. The Company’s aim is to be involved and invested in jurisdictions globally that allow the legal cultivation and production of cannabis products, with the exception of investments in businesses operating in the United States. At December, 2024, the Company held investment positions in Canada and Italy.

All amounts in these Statements are expressed in Canadian dollars unless otherwise noted. Certain amounts in these Statements may be expressed in British pounds (“GBP”), United States dollars (“USD”), and Euros (“EUR”).

Going Concern Uncertainty

These Statements have been prepared on the basis of accounting principles applicable to a going concern, which assume that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its obligations in the normal course of operations. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but not limited to, twelve months from the end of the reporting period. The use of these principles may not be appropriate.

To date, the Company has not earned significant revenues and is considered to be in the development stage. Operating and administration expenditures comprise a significant portion of the Company’s activities. Investing in the legal cultivation and production of cannabis products is highly speculative and involves inherent risks.

The Company’s current committed cash resources are insufficient to cover expected expenditures for the next twelve months. The Company’s ability to continue as a going concern is dependent on being able to obtain the necessary equity or debt financing to satisfy its liabilities as they become due. There can be no assurance that management will be successful in securing adequate financing, or in being able to restructure its debt obligations.

The Company has suffered significant losses in recent years, has no revenue, and it will be necessary to raise additional capital to fund its activities, as well as restructure its existing debt obligations, if it is to continue as a going concern. The Company is currently being funded and supported by its largest creditor and shareholder, AIP Convertible Private Debt Fund L.P. (“AIP Fund”), which has a vested interest in ensuring Elixxer continues operations. To carry out planned activities and fund administrative costs, AIP Fund has agreed to support the Company for the time being. When the Company commences trading on the TSX-V again, both AIP Fund and Arlington Capital Inc. (“Arlington”), which together own over 60% of the Company’s common shares, have agreed to support the Company and provide funds to meet and maintain the ongoing capital requirements established by TSX-V. The Company’s future plans are to identify an operating business to merge into the Company, at which time it will endeavor to raise additional funds and restructure its debt.

The Company reported a net loss for the year ended December 31, 2024, of $3,466,845 (2023 – net loss $4,008,306) and cash from operating activities of $nil (December 31, 2023 – cash outflow of $2,398,585) since all expenses are being funded by AIP Fund. At December 31, 2024, the Company had a shareholder’s deficiency of $13,092,854 (December 31, 2023 – deficiency $9,600,419). The shareholders’ deficiency, recurring losses and the need for continued financing to further development activities indicate the existence of a material uncertainty that casts significant doubt as to the Company’s ability to continue as a going concern. However, as the Company is currently being funded and supported by AIP Fund, which was owed a total of $12,755,200 at December, 31, 2024 (see note 10(b)), there appears scope to fundamentally restructure the Company’s balance sheet upon a merger opportunity being identified and AIP Fund, as the Company’s largest creditor and shareholder, has agreed to support the Company in this regard and has a vested interest in helping the Company achieve this. These Statements do not give effect to

Elixxer Ltd.
Notes to the Consolidated Financial Statements
(Amounts expressed in Canadian dollars unless otherwise stated)
For the years ended December 31, 2024, and 2023

any adjustments to the carrying values and classifications of assets and liabilities that might be necessary if the Company is unable to continue as a going concern. Such adjustments could be material.

2. Summary of material accounting policies

2.1 Basis of preparation

Statement of compliance

The Company's consolidated financial statements were prepared in compliance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"), and interpretations of the International Financial Reporting Interpretations Committee ("IFRIC").

The consolidated financial statements have been prepared on a historical basis, except for equity instruments and convertible debentures receivable which have been measured at fair value.

The Board of Directors authorized these consolidated financial statements for issuance on April 29, 2025.

Basis of consolidation

These consolidated financial statements include the financial statements of Elixzer and its wholly owned subsidiaries as described in note 1. All intra-group balances, income and expenses, and unrealized gains and losses, resulting from intra-group transactions are eliminated in full on consolidation.

The financial statements of the Company's subsidiaries are prepared using the same reporting year and same accounting policies as Elixzer.

Functional and presentation currency

These consolidated financial statements are presented in Canadian dollars, which is the functional currency of Elixzer. The functional currency of LGC Finance is the GBP and that of LGC Estonia and LGC Spain are each the EUR. As noted above, these subsidiaries are currently dormant.

2.2 Use of estimates and judgments

The preparation of the consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, at the date of these consolidated financial statements. Uncertainties about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amounts of assets or liabilities affected in future periods.

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

(a) Share-based payments and warrants

The estimation of the fair value of options and warrants at the date of grant requires the selection of an appropriate valuation model and consideration as to the inputs necessary for the valuation model chosen. The fair value of each option or warrant is evaluated using the Black-Scholes pricing model or a valuation model based on stochastic simulations at the date of grant. The Company has made estimates as to the volatility, the expected life of options or warrants, and where applicable, expected forfeiture rates. The expected life of the option or warrant is based on historical data. The expected volatility is based on the historical volatility of the Company's shares or those of comparable companies, as applicable, over the period of the expected life of the stock option or warrant. These estimates may not necessarily be indicative of future actual patterns. The assumptions and model used for estimating the fair value are disclosed in notes 10 (b) and 10 (c), if applicable.

Elixxer Ltd.
Notes to the Consolidated Financial Statements
(Amounts expressed in Canadian dollars unless otherwise stated)
For the years ended December 31, 2024, and 2023

(b) Fair value measurement of equity instruments and convertible debentures receivable
The determination of the fair value of equity instruments which are traded on the recognisable stock exchange is based on quoted market prices or dealer price quotations for assets traded in an active market at the statement of financial position date without any deduction for estimated future selling costs. Equity instruments are priced at current bid prices.

The fair value of equity instruments which are not traded on a recognisable stock exchange is based on the best information available at each reporting date, including the entity's own data and taking into account all information about market participant assumptions that is reasonably available, using appropriate valuation techniques such as discounted cash flow analysis or net asset value methods.

The fair value of the Company's convertible debentures receivable is measured using a discounted cash flow ("DCF") model. The inputs to this model are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as net realizable values, discount rates, and time to realization. Changes in assumptions relating to these factors could affect the reported fair value of this financial instrument.

(c) Interest rate of comparable financial instruments
The Company reviews the interest rates of comparable debt instruments with similar maturity term and credit rating as the loan being analysed. Based on the review, the Company assigns a FV Interest Rate to each of its loans receivable. The Company may judgmentally exclude certain outliers in this analysis.

2.3 New Accounting Standards Issued and Effective
The Company has reviewed new and revised accounting pronouncements that have been issued. The Company has not early adopted any new standards and management has determined that there are no standards that are expected to have a significant impact on the Statements of the Company in the current or future reporting periods. The following amendments are effective for accounting periods beginning January 1, 2024 and have been adopted by the Company:

Liability in a Sale and Leaseback (Amendments to IFRS 16, Leases);
Classification of Liabilities as Current or Non-Current (Amendments to IAS 1, Presentation of Financial Statements);
Non-current Liabilities with Covenants (Amendments to IAS 1, Presentation of Financial Statements); and
Supplier Finance Arrangements (Amendments to IAS 7, Statement of Cash Flows, and IFRS 7, Financial Instruments: Disclosures)

These standards are not expected to have a material impact on Elixxer in the current or future reporting periods.

2.4 New and amended accounting standards and interpretations, not yet effective
The amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Company's Statements are disclosed below. The Company intends to adopt these amended standards and interpretations, if applicable, when they become effective.

The following amendment is effective for the period beginning January 1, 2025:

Lack of exchangeability (Amendments to IAS 21, The Effects of Changes in Foreign Exchange Rates);

The Company does not expect the above amendment to have a significant impact on the Company.

The following amendment is effective for the period beginning January 1, 2027:

IFRS 18 "Presentation and Disclosure in Financial Statements";
IFRS 18 includes requirements for all entities applying IFRS for the presentation and disclosure of information in financial statements and has an effective date of January 1, 2027. The effects of the adoption of IFRS 18 on the Company's financial statements have not yet been determined

Elixxer Ltd.
Notes to the Consolidated Financial Statements
(Amounts expressed in Canadian dollars unless otherwise stated)
For the years ended December 31, 2024, and 2023

Material accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these Statements.

Share capital and warrants issued through issuance of units

Proceeds from shares and warrants are allocated between share capital and warrants on a relative fair value basis, whereby the fair value of the warrants is determined using the Black-Scholes pricing model or a valuation model based on stochastic simulations and the fair value of share capital is based on the trading value on the TSX-V. On the exercise of the warrants, the carrying amounts are transferred from warrants to share capital, whereas on expiry of the warrants, carrying amounts are transferred to contributed surplus. Costs incurred in connection with the issuance of shares or warrants are allocated based on the fair value of each component and netted against each such component.

Contributed surplus consists of share-based compensation expense relating to options vesting, net of exercises and forfeitures. In addition, all expiries, cancellations and forfeitures related to warrants and are moved to contributed surplus.

Accumulated other comprehensive loss consists of cumulative translation adjustments on the translation of the Company's foreign subsidiaries financial statements into Canadian dollars.

Share-based compensation

Where employees are rewarded using share-based payments, the fair value of the employee's services are determined by reference to the fair value of the equity instruments granted. The fair value of each option is determined using the Black-Scholes option pricing model at the date of grant. Each tranche in an award with graded vesting is considered a separate grant with a different vesting date and fair value. All share-based remuneration is recognized as an expense with a corresponding increase to contributed surplus. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Estimates of forfeitures are subsequently revised, if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognized in the current period.

Share-based payments for non-employee services, including warrants, are measured at the fair value of the goods or services received and are recorded at the date the goods or services are received. If the Company cannot estimate reliably the fair value of the goods and services received, the Company shall measure their value and the corresponding increase in equity, indirectly, by reference to the fair value of the equity instrument granted.

Upon exercise of share options, the proceeds received are allocated to share capital, together with the cumulative expense recorded in contributed surplus. On the exercise of warrants, the proceeds received as well as the carrying amount of the warrants are transferred from warrants to share capital, whereas on expiry of the warrants the carrying amount is transferred to contributed surplus.

Taxes

Current income taxes

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the current income tax amount are those that are enacted or substantively enacted at the reporting date.

Current income tax relating to items recognized directly in total comprehensive income or loss, or equity is recognized in other comprehensive income or loss, or equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred income taxes

Deferred income tax is provided using the liability method on temporary differences at the reporting date between the tax basis of assets and liabilities and their carrying amounts for financial reporting purposes.

Elixxer Ltd.
Notes to the Consolidated Financial Statements
(Amounts expressed in Canadian dollars unless otherwise stated)
For the years ended December 31, 2024, and 2023

Deferred income tax asserts are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable income will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized. Deferred income taxes are not recognized for temporary differences which arise on initial recognition of an asset or liability that affects neither the accounting nor taxable income or loss at the time of the transaction.

Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the asset is realized or the liability settled, based on tax rates and tax laws that have been enacted or substantively enacted at the end of the reporting period. Deferred income tax assets and liabilities are presented as non-current.

The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the deferred income tax asset to be utilized. Unrecognized deferred income tax assets are reassessed at the end of each reporting period and are recognized to the extent that it has become probable that future taxable income will be available to allow the deferred income tax asset to be recovered. Deferred income tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

Commodity taxes

Expenses are recognized net of the amount of sales taxes, except where the sales taxes incurred are not recoverable from the taxation authority, in which case the sales taxes are recognized as part of the expense item.

Net earnings (loss) per share

Net earnings (loss) per share computations are based upon the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share amounts are calculated by dividing the net income (loss) attributable to ordinary shares by the weighted average number of common shares outstanding during the period plus the weighted average number of common shares that would be issued on conversion of all the potentially dilutive common shares into common shares. When the Company reports a loss, the diluted net loss per common share is equal to the basic net loss per common shares due to the anti-dilutive effect of the outstanding warrants and share options.

Foreign currency translation

(i) Foreign operations

The assets and liabilities of subsidiaries that have a functional currency different from that of Elixer are translated into Canadian dollars at the closing rate at the date of the statement of financial position and revenues and expenses are translated at the average rate for the period and the difference is recorded in other comprehensive income (loss). Upon disposal or substantive disposal of a foreign subsidiary, the foreign currency translation reserve is removed from accumulated other comprehensive income (loss) and recognized in net income (loss). In addition, upon disposal of an equity instrument held by a foreign operation, the related foreign exchange amount initially accounted for in other comprehensive income (loss), in excess of the amount reclassified in net income (loss), is reclassified to accumulated deficit.

(ii) Transactions in foreign currency

Transactions in foreign currencies are translated into Canadian dollars at the exchange rates prevailing at the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated into Canadian dollars at exchange rates at the reporting date. All differences that arise on retranslation are recognized in net income (loss). Non-monetary assets and liabilities measured at historical cost in a foreign currency are translated using the exchange rates at the date of the initial transactions.

Elixxer Ltd.
Notes to the Consolidated Financial Statements
(Amounts expressed in Canadian dollars unless otherwise stated)
For the years ended December 31, 2024, and 2023

Financial instruments

Initial classification
The classification of the Company's financial instruments is as follows:

Classification	Financial instrument	Description
Financial assets measured at amortized cost	Cash	Cash balances with banks.
	Interest receivable	Interest due but unpaid in respect of loans or debentures receivable.
Financial assets measured at FVTPL	Convertible debentures receivable	Convertible debentures receivable including conversion feature.
	Equity instruments	Equities of publicly traded and private entities.
Financial liabilities at amortized cost	Accounts payable and accrued liabilities, and other loan payables	Amounts payable to officers, directors, suppliers and third parties and loan payable to third parties.
	Debentures payable	Debentures payable.

Criteria for classification
Under IFRS 9 the Company can classify, measure and account for its other receivables at amortized cost, FVOCI (with recycling) and FVTPL, while equity instruments can be classified as FVOCI (with no recycling) or FVTPL. The Company analyzes each financial asset on an individual basis. The analysis and classification is driven by the following criteria:

Classification	Criteria
Amortized cost	• Held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
• Contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets measured at FVOCI (with recycling)	• Held within a business model in which assets are managed to achieve a particular objective by both collecting contractual cash flows and selling financial assets; and
• Contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
FVTPL	• Investments acquired with the purpose of sale; or
• Evidence of historical short-term profit making on similar instruments.
FVOCI (with no recycling)	• Investment made primarily for non-financial benefits such as strategic alliances and strategic investments.

Measurement
After classification at amortized cost, FVTPL or FVOCI, the Company uses the following policy for initial measurement and subsequent measurement at each reporting period for its financial assets and liabilities:

Classification	Initial measurement	Subsequent measurement	Changes in fair value
Amortized cost	Fair value less expected credit losses	Amortized cost using the effective interest method	Reported in the consolidated statements of loss and comprehensive loss when realized or impaired. Interest accretion on loans is recorded in “Finance income” in the consolidated statements of loss and comprehensive loss.
FVTPL	Fair value	Re-measured at subsequent reporting dates to fair value. Re-measured using the Black-Scholes option pricing valuation model or other techniques if quoted market prices are not available. See notes 5 and 6.	Reported in “Net (gain) loss on financial assets measured at FVTPL” in the consolidated statements of loss and comprehensive loss.
Financial liabilities	Fair value	Amortized cost using the effective interest method.	Reported in the consolidated statements of loss and comprehensive loss when liability is extinguished. Interest accretion is recorded in “Finance expense” in the consolidated statements of loss and comprehensive loss.

Elixxer Ltd.
Notes to the Consolidated Financial Statements
(Amounts expressed in Canadian dollars unless otherwise stated)
For the years ended December 31, 2024, and 2023

All assets and liabilities for which fair value is measured or disclosed in the Statements are categorized within the fair value hierarchy of IFRS 13, Fair Value Measurement, described based on the lowest-level input that is significant to the fair value measurement as a whole, as follows:

Level 1 — Quoted, unadjusted, market prices in active markets for identical assets or liabilities; or
Level 2 — Valuation techniques for which the lowest-level input that is significant to the fair value measurement is directly or indirectly observable; such techniques may include using recent market transactions; reference to the current fair value of another instrument that is substantially the same; a discounted cash flow analysis or other valuation models; or
Level 3 — Valuation techniques for which the lowest-level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognized in the Statements on a recurring basis at fair value, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization, based on the lowest level input that is significant to the fair value measurement as a whole, at the end of each reporting period.

Impairment of financial assets
Financial assets carried at amortized cost

Under the impairment provisions of IFRS 9, Financial Instruments, the Company assesses all information available, including on a forward-looking basis the expected credit losses (“ECL”) associated with any financial assets carried at amortized cost. The ECL methodology of IFRS 9 determines whether a financial asset carried at amortized cost is in good standing (Stage 1 asset) or whether there has been a significant increase in credit risk (SICR) (Stage 2 asset) or impairment (Stage 3 asset). To assess whether there is a SICR or impairment, the Company compares the risk or probability of default occurring on the asset as at the reporting date with the risk or probability of default as at the date of initial recognition based on all information available, and reasonable and supportive forward-looking information. Losses are recognized in the consolidated statements of loss and comprehensive loss, in the “provision for expected credit losses” account, and either reflected in: (i) an “allowance for expected credit losses” account which is netted against the loans or other receivables; or (ii) the actual write-off of the loans or other receivables if impaired. When a subsequent event causes the amount of the expected credit loss to decrease, the decrease is reversed through the consolidated statements of loss and comprehensive loss. Under IFRS 9, a Stage 1 financial asset carried at amortized costs comprises those assets in good standing where there has been no SICR since initial recognition, while a Stage 2 financial asset comprises financial instruments that have experienced a SICR since initial recognition, while a Stage 3 financial asset comprises financial instruments which are impaired.

Segment reporting

The Company operates in one reportable segment. The information provided is consistent with the internal reporting provided to the chief operating decision maker.

Elixxer Ltd.
Notes to the Consolidated Financial Statements
(Amounts expressed in Canadian dollars unless otherwise stated)
For the years ended December 31, 2024, and 2023

4. Finance income and expense and administrative expenses

The following is a breakdown of the nature of expenses included in administration expenses and finance expenses for the years ended December 31, 2024 and 2023:

	For the years ended December 31,
	2024	2023
	$	$
Administrative expenses:
Consultancy fees	338,356	795,000
Directors' fees and consultancy (note 10)	203,511	222,723
Salaries and other employee benefits (note 10)	-	455,857
Professional fees	74,423	84,249
Office expenses	1,031	(2,738)
Legal fees	11,651	(151,716)
Investor / public relations	-	1,875
Regulatory	26,256	(32,686)
Other administration expense recovery	(165,537)	(89,118)
	489,691	1,283,446
Finance expenses:
Interest on loans payable (note 8)	2,057,617	2,245,416
Accretion expense on loans payable (note 8)	111,620	316,518
Interest on debentures payable (note 7)	49,221	45,236
	2,218,458	2,607,170

The negative balances reported in the administrative expenses table above relates to the reversal of certain sales tax liabilities from prior years that will no longer be payable pursuant to statute of limitations rules. As such, in reversing the liabilities, there has been a recovery/credit booked to administrative expenses which is where the sales tax was originally expensed.

5. Equity Instruments

Equity instruments as at December 31, 2024 and 2023 are summarized as follows:

	Freia Farmaceutici SRL	Little Green Pharma Limited	Total
	$	$	$
Balance, January 1, 2022	711,558	2,405,564	3,117,122
Sale of shares	-	(2,353,461)	(2,353,461)
Revaluation gain (loss)	39,011	(52,103)	(13,092)
Balance, December 31, 2023	750,569	-	750,569
Revaluation gain	73,937	-	73,937
Balance, December 31, 2024	824,506	-	824,506

Freia Farmaceutici S.R.L. ("Freia")

In May 2020, the Company's equity interest in Freia decreased from 22.31% to 19.36% due to additional financing from Freia investors other than Elixxer. As at that date, management conducted a review of its investment in Freia and concluded that it no longer exerted significant influence over the operations of Freia and, consequently, the Company reclassified the value of its equity investment in Freia to equity instruments and adjusted the carrying value of the equity investment up to its estimated fair value.

As at December 31, 2024, the fair value of the Company's investment in Freia was estimated to be $824,506 (December 31, 2023 - $750,569). As of December 31, 2024, the Company booked a valuation gain of $73,937 (year ended December 31, 2023 - gain $39,011) on its equity interest in Freia, which was reflected in the net gain or loss on financial assets measured at FVTPL line item in the consolidated statements of loss and comprehensive loss.

The fair value of the Freia equity interest was determined to be a level 3 fair value measurement under IFRS 13 as it was based upon an unobservable valuation input. A net asset approach has been used to determine the fair value of the Company's equity

Elixxer Ltd.
Notes to the Consolidated Financial Statements
(Amounts expressed in Canadian dollars unless otherwise stated)
For the years ended December 31, 2024, and 2023

interest in Freia. The net assets of Freia as detailed on the balance sheet in its annual audited financial statements represent the unobservable input used to determine the fair value of the Company's equity interest in Freia. An increase (decrease) in Freia's net assets would increase (decrease) the fair value of the Company's equity investment. If Freia's net assets increased or decreased by $100,000 the fair value of the Company's equity interest would increase or decrease by $19,360. There was no change in the fair value hierarchy during 2024.

(b) Little Green Pharma Limited ("LGP")
As at December 31, 2023, the fair value of the Company's equity interest in LGP, based on quoted market prices on the Australian Stock Exchange, was $Nil as it no longer owned any LGP shares. During the year ended December 31, 2023, the Company sold 13,775,326 LGP shares for total proceeds of $2,353,461 on which it booked a valuation loss of $52,103.

The fair value of the LGP equity investment was determined to be a Level 1 fair value measurement under IFRS 13 as it was based upon unadjusted quoted market prices in active markets for identical assets as noted above. There was no change in the fair value hierarchy during 2024.

Convertible debentures receivable

Tricho-Med Corporation ("Tricho-Med") convertible debentures receivable

On January 8, 2018, the Company announced that it had finalized a transaction with Quebec-based Tricho-Med and had entered into a four-year secured convertible loan agreement in the amount of $4,000,000 (the "Tricho-Med Debenture"). Upon Tricho-Med obtaining a license to cultivate cannabis from the relevant regulatory authorities, the Tricho-Med Debenture was to automatically convert into common shares of Tricho-Med. On conversion, the Company would then receive 49% of Tricho-Med's then-issued and outstanding shares. In the event that Tricho-Med did not become a publicly listed company within twelve months of having obtained the license, the Company would receive such number of shares such that it would own 54% of the then-issued and outstanding shares of Tricho-Med. Upon conversion into equity, the Company would also be entitled to a 5% royalty on Tricho-Med's net sales for an unlimited time period. The Tricho-Med Debenture bears interest at an annual rate of 10%, had a term of four years, matured on December 21, 2021, and is secured by first-ranking security on all of the assets of Tricho-Med, principally comprising its land and building, capital assets, inventory and accounts receivable. Total amounts drawn down under the Tricho-Med Debenture were $4,000,000. The Tricho-Med Debenture was ultimately not converted into shares of Tricho-Med and in October 2020 the Company filed an application with the Superior Court of Quebec for surrender and taking in payment of Tricho-Med's assets, which were pledged as security under the terms of the Tricho-Med Debenture. Several claims and counterclaims have been filed in connection with the pledged land and building. Further details of these legal proceedings are disclosed in Note 12.

As at December 31, 2024, the fair value of the Tricho-Med Debenture was determined to be $1,239,122 (December 31, 2023 - $2,026,044), which was estimated based on the fair value of the underlying Tricho-Med land and building, that is pledged as security under the terms of the Tricho-Med Debenture, net of other outstanding liens, fees and commissions. The Company has no information relating to the value, if any, of the other Tricho-Med assets that it holds as security. The Tricho-Med building comprises an industrial building built in 2019 that was to be used as a cannabis cultivation operation. We have no information regarding the status of this cultivation operation. The decrease in fair value during the period ended December 31, 2024 was $786,922 (December 31, 2023 - $103,865) resulted from revised assumptions relating to the net proceeds to be realised from a sale of the land and building and was reflected in the net gain or loss on financial assets measured at FVTPL line item in the consolidated statements of loss and comprehensive loss.

The fair value of the convertible debenture was determined to be a level 3 fair value measurement under IFRS 13 as it was based upon unobservable valuation inputs. There was no change in the fair value hierarchy during 2023 and 2024. A discounted cash flow approach has been used to determine the fair value of the land and building that the Company holds as collateral with the following significant unobservable inputs:

Estimated net proceeds from a sale of the land and building – based on an appraised value of the land and building of $3,260,000 less sales commission of $163,000 (5%) and less prior ranking liens to be discharged of $1,789,726 net proceeds were estimated to be $1,307,274. An increase (decrease) in the estimated net proceeds would increase (decrease) the fair value. If the estimated net proceeds increased or decreased by $326,000 (10% of the appraised

Elixxer Ltd.
Notes to the Consolidated Financial Statements
(Amounts expressed in Canadian dollars unless otherwise stated)
For the years ended December 31, 2024, and 2023

value), with a 5.5% discount rate and a 1-year exit date, the fair value would increase to $1,532,677 or decrease to $945,568 respectively, from $1,239,122.

Discount rate used to discount net proceeds to fair value – at December 31, 2024 a discount rate of 5.5% for land and building was utilized. An increase (decrease) in the discount rate would decrease (increase) the fair value. If the discount rate rose 0.5% to 6.0% or declined 0.5% to 5.0%, with net proceeds of $1,307,274 and a 1-year exit date, the fair value would decline to $1,233,278 or increase to $1,245,023 respectively, from $1,239,122.
Exit date for the realization of net proceeds – 1 year or one year after the December 2024 year end to account for a one-year sale period as set out in the property's appraisal. An increase (decrease) in the exit date would decrease (increase) the fair value. If the exit period increased 0.5 years to 1.5 years or declined 0.5 years to .5 years, with net proceeds of $1,307,274 and a 5.5% discount rate, the fair value would decline to $1,206,391 or increase to $1,272,742 respectively, from $1,239,122.
Debentures payable

A breakdown of debentures payable as at December 31, 2024 and 2023 was as follows:

	$
Balance, January 1, 2023	457,164
Interest accrued	45,236
Foreign currency gain on translation	(780)
Balance, December 31, 2023	501,620
Interest accrued	49,221
Foreign currency loss on translation	38,103
Balance, December 31, 2024	588,944

For the year ended December 31, 2024, interest expense recognized by the Company in respect of the debentures payable totaled $49,221 (year ended December 31, 2023 - $45,236), while it recorded a foreign currency translation gain of $38,103 (year ended December 31, 2023 – loss $780) in the consolidated statements of loss and comprehensive loss. Interest accrues at the rate of 12% per annum on the unpaid balance of the debt until it is paid in full. The debenture payable is past due and in default.

Other loans payable

Loans payable as at December 31, 2024 and 2023 were as follows:

	Windsor Family Credit
	Union (a)	AIP Fund (b)	Total
	$	$	$
Balance, January 1, 2023	40,000	7,572,640	7,612,640
Interest expense	-	2,245,416	2,245,416
Accretion	-	316,518	316,518
Interest payments	-	(1,018,530)	(1,018,530)
Balance, December 31, 2023	40,000	9,116,044	9,156,044
Interest	-	2,057,617	2,057,617
Accretion	-	111,620	111,620
Balance, December 31, 2024	40,000	11,285,281	11,325,281

All amounts were due within one year as at December 31, 2024 and December 31, 2023 and, accordingly, were reported as a current liability on the consolidated statements of financial position.

(a) Windsor Family Credit Union

During April 2020, the Company received $40,000 from Windsor Family Credit Union for relief to support small business as a result of COVID-19. The loan was interest free until December 31, 2023, no minimum monthly interest payments are required

Elixxer Ltd.
Notes to the Consolidated Financial Statements
(Amounts expressed in Canadian dollars unless otherwise stated)
For the years ended December 31, 2024, and 2023

until January 1, 2024, there is no penalty for early repayment, and up to 25%, or $10,000, of loan forgiveness if 75%, or $30,000, of loan principal is paid in full on or before December 31, 2023. As at December 31, 2024, the $40,000 was not repaid and the loan was in default.

(b) AIP Convertible Private Debt Fund L.P.

On October 7, 2020, the Company closed its previously announced secured loan for the principal amount of $4,000,000 with AIP Fund effective August 28, 2020. The loan has a term of 24 months, bears interest at the rate of 17% per annum and is secured by a general security agreement on all of the present and future assets of the Company.

On closing, the Company paid to AIP: (i) a facility fee of $200,000; (ii) a closing fee of $250,000; legal fees of $3,500; and (ii) a monitoring agent fee of $195,000, in respect of the loan. The Company also issued to AIP Fund a bonus consisting of 463,333 common shares of the Company at the trading price of $1.00 per share, representing 20% of the net amount of the loan. These shares were subject to a hold period of four months and one day from the date of their issuance. Elixxer used the proceeds of the loan for working capital purposes and to pursue future investments.

On April 29, 2022, the Company entered into an agreement with AIP Fund to amend its existing secured loan. The Company closed its amended loan with AIP Fund. Further to the amendment, AIP Fund loaned the Company an additional $4,000,000 which will: (i) have a maturity of 24 months from the date of closing; (ii) bear interest at the rate of 17% per annum; and (iii) be secured by a general security agreement on the assets of the Company in favour of AIP Fund.

On closing with the approval of the TSX-V, the Company paid to AIP: (i) a facility fee of $200,000; (ii) a closing fee of $250,000; (iii) legal fees of $3,500; and (iv) a monitoring fee of $195,000. The Company also issued to AIP a bonus of 643,518 common shares of the Company at a trading price of $1.08 per share, representing 20% of the net amount of the additional disbursement. The Company used the loan proceeds from the amended loan for working capital purposes, the repayment of the AIP Fund bridge loan of $3,000,000 and repayment of the $308,516 balance of the GMF unconverted loan.

During the year ended December 31, 2024, the value of accretion expense recognized in respect of these loans amounted to $111,620 (December 31, 2023 - $316,518). In addition, for December 31, 2024, interest charged in respect of the AIP loan totaling $2,057,617 (December 31, 2023 - $2,245,416) has been recorded in the consolidated statements of loss and comprehensive loss. As at December 31, 2024, interest accrued but unpaid in respect of the loan totaling $3,285,281 (December 31, 2023 - $1,227,664) has been recorded in the consolidated statement of financial position under other loans payable.

Upon maturity of the loan facilities with AIP Fund, the Company extended the facilities and received waivers of certain covenant breaches. The facilities are now set to mature on May 31, 2025 At the date of issue of these consolidated financial statements, the Company is in good standing under these facilities.

Share capital

(a) Authorized – Common Shares

The Company has authorized an unlimited number of voting and participating common shares, without par value. At December 31, 2024 and 2023, 11,338,887 common shares were issued and outstanding. Please refer to the statements of changes in shareholders' equity for movements in share capital during the years ended December 31, 2024 and 2023.

(b) Stock options

The following table summarizes stock option movements during the years ended December 31, 2024 and 2023:

	Number of options #	Weighted average exercise price $
Outstanding, January 1, 2023	102,000	5.54
Forfeited and cancelled during 2023	(22,000)	(7.50)
Outstanding balance, December 31, 2023 and 2024	80,000	5.00

Elixxer Ltd.
Notes to the Consolidated Financial Statements
(Amounts expressed in Canadian dollars unless otherwise stated)
For the years ended December 31, 2024, and 2023

The 80,000 options outstanding and exercisable as at December 31, 2024 mature on January 16, 2025 and have a weighted average remaining contractual life of 0.29 years. There were no options granted during the years ended December 31, 2024 and 2023.

	Number of warrants #	Weighted average remaining contractual life (in years)	Weighted average exercise price $
Outstanding balance, January 1, 2023	5,141,747	3.54	5.00
Warrants expired during the year	-	-	-
Outstanding balance, December 31, 2023	5,141,747	2.54	5.00
Warrants expired during the year	-	-	-
Outstanding balance, December 31, 2024	5,141,747	1.54	5.00

266,667 of the warrants will expire on October 13, 2025 and 4,875,080 of the warrants will expire on June 28, 2026.

Related party transactions

In addition to the related party transactions disclosed elsewhere, the Company entered into the following related party transactions in the year ended December 31, 2024:

(a) For the year ended December 31, 2024, the Company recorded a compensation expense for key management personnel and Board of Directors fees of $388,356 and $203,511, respectively, (year ended December 31, 2023 – $489,956 and $224,000, respectively).

(b) The Company also incurred interest charges on loans received from AIP Fund, a related party. For the year ended December 31, 2024, interest charged in respect of the loans amounted to $2,057,617 (year ended December 31, 2023 – $2,245,416) as recorded under finance expenses in the consolidated statements of loss and comprehensive loss. As at December 31, 2024, interest accrued but unpaid in respect of the loan totalling $3,285,281 (December 31, 2023 - $1,227,664) has been recorded in the consolidated statement of financial position under other loans payable.

On November 16, 2022, the Company finalized the terms of an agreement with AIP Asset Management Inc. on behalf of AIP Fund in connection with merger and acquisition ("M&A") advisory services that AIP had been providing since November 2021 to identify and evaluate potential transactions and has been assisting the Company with structuring and due diligence with regards to these potential transactions. The agreement called for a monthly work fee retainer of $75,000 payable in cash since the beginning of the engagement agreement, which terminated in November 2023. In 2023, the Company expensed M&A advisory service (consulting) fees of $750,000 in respect of this agreement. During the year ended December 31, 2024, the Company paid fees of $Nil (year ended December 31, 2023 - $711,000) and as at December 31, 2024, owed fees in respect of the agreement of $1,089,000 (December 31, 2023 - $1,089,000), which has been recorded in the consolidated statement of financial position as part of accounts payable and accrued liabilities. To December 31, 2024, AIP Fund had also advanced $380,919 to the Company to help it pay its expenses.

At December 31, 2024, the Company owed AIP Fund $12,755,200 (December 31, 2023 - $10,298,894), including unpaid M&A advisory service fees of $1,089,000 (December 31, 2023 - $1,089,000) and $380,919 (December 31, 2023 - $93,850) which is included in accounts payable and accrued liabilities, for Elixxer expenses paid by AIP Fund.

Financial instruments and risk management

General objectives, policies and procedures

The Company's Board of Directors has overall responsibility for the determination of the Company's risk management objectives and operating processes that ensure effective implementation of the policies set out below. The Company's Board of Directors receives reports through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.

Elixxer Ltd.
Notes to the Consolidated Financial Statements
(Amounts expressed in Canadian dollars unless otherwise stated)
For the years ended December 31, 2024, and 2023

The Company's objective when managing capital are to safeguard its ability to continue its operations as a going concern. There was a shareholders' deficiency as at December 31, 2024, of $13,092,854 (December 31, 2023 – shareholders' deficiency $9,600,419), as well as significant recurring losses, calling into question its ability to continue as a going concern (see note 1). The Company has suffered significant losses in recent years, has no revenue, and it will be necessary to raise additional capital to fund its activities, as well as restructure its debt obligations, if it is to continue as a going concern. The Company is currently being funded and supported by AIP Fund, its largest shareholder and creditor, which has a vested interest in ensuring Elixxer continues operations. As detailed in note 10(b), AIP Fund was owed a total of $12,755,200 at December 31, 2024, while $1,001,071 was owed to current and former directors and officers of the Company at that date. To carry out planned activities and pay administrative expenses, AIP Fund has agreed to fund the Company for the time being. When the Company commences trading on the TSX-V again, both AIP Fund and Arlington Capital Inc. ("Arlington"), which together own over 60% of the Company's common shares, have agreed to support the Company and provide funds to meet and maintain the ongoing capital requirements established by TSX-V. The Company's future plans are to identify an operating business to merge into the Company, at which time it will endeavor to raise additional funds and restructure its debt.

The Company has not paid any dividends and has no plans to do so.

Principles of risk management

The Company's risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adhere to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company's activities. The Company is exposed through its activities to the following risks: credit risk; liquidity risk; foreign exchange risk; and market risk. In addition, the Company does not enter into financial instrument agreements, including derivative financial instruments, for speculative purposes.

The following table shows the carrying amounts and fair values of financial assets and liabilities, including their classification and levels in the IFRS 13 fair value hierarchy, at December 31, 2024 and December 31, 2023:

	Fair value level	December 31, 2024		December 31, 2023
		Carrying amount $	Fair value $	Carrying amount $	Fair value $
Financial assets
Cash – amortized cost	2	20,301	20,301	20,301	20,301
Sales tax receivable – amortized cost	2	42,316	42,316	10,785	10,785
Equity instruments – FVTPL	3	824,506	824,506	750,569	750,569
Convertible debentures receivable - FVTPL	3	1,239,122	1,239,122	2,026,044	2,026,044
Financial liabilities
Accounts payable and accrued liabilities amortized cost	2	3,312,874	3,312,874	2,750,454	2,750,454
Debentures payable – amortized cost	2	588,944	588,944	501,620	501,620
Other loans payable – amortized cost	2	11,325,281	11,325,281	9,156,044	9,156,044

For assets and liabilities measured at fair value as at December 31, 2024, there were no transfers between the Level 1, Level 2, and Level 3 fair value hierarchies. During the year ended December 31, 2024 and 2023. The fair value of the convertible debentures receivable classified as Level 3 was estimated using valuation techniques that included the fair value of the underlying assets held as collateral for the loan, while the fair value of the equity instruments was based on a net asset approach using the net assets of Freia as detailed on Freia's balance sheet. See note 6 and 5(a) above, respectively.

Credit risk

Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations. The Company's maximum exposure to potential credit losses is the carrying value of its financial instruments. In 2024, the provision for expected credit losses for financial assets measured at amortized cost, specifically cash, taxes receivable and loans to directors and officers, totalled $Nil (year ended December 31, 2023 - $Nil).

Elixxer Ltd.
Notes to the Consolidated Financial Statements
(Amounts expressed in Canadian dollars unless otherwise stated)
For the years ended December 31, 2024, and 2023

The Company is exposed to credit risk from its cash, convertible debentures receivable, including interest thereon, and sales tax receivable. The Company's maximum exposure to credit risk is limited to the carrying amount of cash, convertible debentures receivable, and sales tax receivable as at December 31, 2024 and 2023 was as follows:

	December 31, 2024	December 31, 2023
	$	$
Cash	20,301	20,301
Convertible debentures receivable (current and non-current)	1,239,122	2,026,044
Taxes receivable	42,316	10,785
	1,301,739.	2,057,130

The Company reviews the banks and financial institutions it deals with to ensure that standards of credit worthiness are maintained.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. At the date of issue of these Statements, the Company is currently unable to generate sufficient funds to meet its obligations as they become due and is being supported by AIP Fund. As noted above and in note 1, its continuation as a going concern is dependent upon it raising additional capital to fund its activities, as well as restructuring its financial obligations, principally debt owing to AIP Fund. The Company recently extended the maturity of it loan facilities with AIP Fund to May 31, 2025 and received waivers of certain covenant breaches (see note 8(b) and 13). Currently, the Company is being funded and supported by AIP Fund, its largest creditor and shareholder, which was owed $12,755,200 at December 31, 2024, while $1,001,071 was owed to current and former directors and officers at that date.

The Company has no revenue and limited visibility on when it can realize on its largest asset, the Tricho-Med convertible debenture receivable, which is subject to litigation. The Company reported a net loss for the year ended December 31, 2024, of $3,466,845 (December 31, 2023 – net loss $4,008,306) and cash used in operating activities of $nil (December 31, 2023 – cash used of $2,398,585) since all expenses are being funded by AIP Fund. At December 31, 2024, the Company had a shareholder's deficiency of $13,092,854 (December 31, 2023 – deficiency $9,600,419). The shareholders' deficiency, recurring losses and the need for continued financing to further development activities indicate the existence of a material uncertainty that casts significant doubt as to the Company's ability to continue as a going concern. However, as the Company is currently being funded and supported by AIP Fund there appears scope to fundamentally restructure the Company's balance sheet upon a merger opportunity being identified.

To carry out planned activities and pay administrative costs in the meantime, AIP has agreed to fund the Company. When the Company commences trading on the TSX-V again, both AIP Fund and Arlington, which together own over 60% of the Company's common shares, have agreed to support the Company and provide funds to meet and maintain the ongoing capital requirements established by TSX-V. As noted, the Company's future plans are to identify an operating business to merge into the Company, at which time it will endeavor to raise additional funds and restructure its debt and AIP Fund, as the Company's largest creditor and shareholder, has agreed to support the Company in this regard and has a vested interest in helping the Company achieve this.

Elixxer Ltd.
Notes to the Consolidated Financial Statements
(Amounts expressed in Canadian dollars unless otherwise stated)
For the years ended December 31, 2024, and 2023

The following are the remaining contractual maturities of financial liabilities as of December 31, 2024 and 2023. The contractual amounts are gross and undiscounted:

Contractual cash flows
December 31, 2024	Carrying amounts	0 - 3 months	4 - 12 months	Total
Accounts payable and accrued liabilities	$ 3,312,874	$ 3,312,874	$ -	$ 3,312,874
Debentures payable	588,944	588,944	-	588,944
Other loans payable	11,325,281	11,325,281	-	11,325,281
	$ 15,227,099	$ 5,227,099	$ -	$ 15,227,099
December 31,2023	Carrying amounts	0 - 3 months	4 - 12 months	Total
---	---	---	---	---
Accounts payable and accrued liabilities	$ 2,750,454	$ 2,750,454	$ —	$ 2,750,454
Debentures payable	501,620	501,620	—	501,620
Other loans payable	9,156,044	5,267,664	3,888,380	9,156,044
	$ 12,408,118	$ 8,519,738	$ 3,888,380	$ 12,408,118

Market risk

Market risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuate because of changes in market prices. The Company's primary market exposures are to foreign exchange risk, interest rate risk and other price risk.

Foreign exchange risk

Foreign exchange risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company's foreign exchange risk arises primarily with respect to balances denominated in GBP, USD, and EUR. The value of the Company's financial assets and liabilities may be affected unfavourably by fluctuations in currency rates and exchange control regulations. The Company has not entered into hedging instruments to manage exposure to currency movements.

As at December 31, 2024 and 2023, the Company's exposure to foreign exchange rates for financial instruments denominated in foreign currencies and presented in Canadian dollars are as follows:

December 31, 2024

Equity instruments

Accounts payable and accrued liabilities

Debentures payable

December 31, 2023

Equity instruments

Accounts payable and accrued liabilities

Debentures payable

GBP	USD	EUR
-	-	824,506
-	(698,399)	-
-	(588,944)	-
-	(1,287,343)	824,506
GBP	USD	EUR
---	---	---
-	-	750,569
(1,685)	(394,683)	-
-	(501,620)	-
(1,685)	(896,303)	750,569

The above foreign currencies were translated into Canadian dollars at the following foreign exchange rates at December 31, 2024 and 2023:

GBP: $1 = £0.55 (Dec. 31, 2023: $1 = £0.59)

USD: $1 = US$0.70 (Dec. 31, 2023: $1 = US$0.76)

EUR: $1 = €0.67 (Dec. 31, 2023: $1 = €0.68)

The impact of foreign currencies has been determined based on the balances of financial assets and liabilities at December 31, 2024 and 2023. This sensitivity does not represent the consolidated statement of comprehensive loss and the comprehensive loss impact that would be expected from a movement in foreign currency exchange rates over the course of a period of time.

Elixxer Ltd.
Notes to the Consolidated Financial Statements
(Amounts expressed in Canadian dollars unless otherwise stated)
For the years ended December 31, 2024, and 2023

Fluctuation in foreign currency rate	CAD/GBP Rate $	CAD/USD Rate $	CAD/EUR Rate $
Year ended December 31, 2024
+ 5%	-	(64,367)	41,255
- 5%	-	64,367	(41,255)
Year ended December 31, 2023
+ 5%	(84)	(44,815)	37,528
- 5%	84	44,815	(37,528)

Interest rate risk

The Company does not use any hedging instruments to manage interest rate risks. The Company is also exposed to the risk of variability in fair values on its fixed rate financial assets and liabilities at FVTPL. As at December 31, 2024 and 2023, all convertible debentures except the Tricho-Med convertible debentures have been fully impaired, resulting in no exposure to the discount rates. As at December 31, 2024 and 2023, a 100 bp increase/decrease in the discount rates would have the following impact on the fair values of the Tricho-Med convertible debentures receivable:

Effect on fair value in dollars	December 31, 2024	December 31, 2023
100 bp increase	(13,272)	(62,104)
100 bp decrease	13,526	64,687

Contingent liabilities and commitments

From time to time, the Company and/or its subsidiaries may become defendants in legal actions and the Company intends to defend itself vigorously against all legal claims. Elixxer is not aware of any claims against the Company that could reasonably be expected to have a materially adverse impact on the Company's consolidated financial position, results of operations or the ability to carry on any of its business activities except as noted below.

Tricho-Med Case

On July 12, 2019, the Company was advised that it has been served by Tricho-Med ("TM") with a motion for a declaratory judgement whereby TM is seeking the cancellation of the convertible debenture it entered into with the Company in December, 2017 and to repay the entire amount advanced by the Company representing $4,000,000 plus the interest accrued thereon. Under the terms of the convertible debenture, upon TM receiving its license to cultivate cannabis from Health Canada, the loan amount was to be converted into that number of common shares of TM equivalent to 49% of TM's capital on a fully diluted basis together with a 5% net sales royalty on all of TM's future revenues. The Company believes that this action is without merit and the Company is well within its rights to continue to hold its position with respect to its investment in TM.

In October 2020, the Company filed an application with the Superior Court of Quebec for surrender and taking in payment of TM's immovable property pledged as security under the debenture (note 6). The Company was advised by legal counsel that the application would be heard by the Superior Court of Quebec in April 2026.

On April 21, 2021, TM submitted a counterclaim against the Company seeking $500,000 in damages for allegedly reclaiming its security. The Company believes that this counterclaim has no merit, lacking sufficient evidence or specificity, and accordingly no amounts have been accrued related to this counterclaim.

In October 2024, a subcontractor of TM holding a legal hypothec filed a claim to enforce the judicial sale of the immovable property. The Superior Court of Quebec subsequently ordered the sale to satisfy claims by secured creditors. As of December 31, 2024, the property had not yet been sold. Upon sale, the Company's hypothec will convert into a personal monetary claim without impacting the amount recoverable. The Company also retains the right to challenge the sale if it is conducted below market value.

Elixxer Ltd.
Notes to the Consolidated Financial Statements
(Amounts expressed in Canadian dollars unless otherwise stated)
For the years ended December 31, 2024, and 2023

Other
During February 2021, the Company was subject to a claim by a former Chief Executive Officer in respect of the termination of his consulting agreement in the amount of approximately $1,077,802 plus costs and interest. This was offset by Elixer's counter claim of $312,000, resulting in a net claim of $765,802 plus costs and interest. No amounts have been accrued as the outcome is not yet determinable.

Income taxes
A reconciliation of the expected income tax recovery applicable to the loss before income tax at the Canadian statutory income tax rate to income tax recovery for the year ended December 31, 2024, and 2023 was as follows:

	For the years ended December 31,
	2024	2023
	$	$
Loss before income tax	(3,466,845)	(4,008,306)
Income tax recovery at the combined Federal and Provincial tax rate 26.5% (2022: 26.5%)	(918,714)	(1,062,201)
Non-recognition of tax benefits related to tax losses and deductible temporary differences	1,115,236	698,634
Non-deductible (taxable) portion of capital items	(188,941)	30,994
Other	(7,582)	332,573
Tax recovery	-	-

Deferred tax assets have not been recognized in respect of the following deductible temporary differences as at December 31, 2024 and 2023:

	December 2024	December 2023
	$	$
Non-capital loss carry-forwards	37,704,603	33,307,731
Investments, other and loans receivable and loans to associates and joint ventures	17,821,449	18,095,154
Convertible debenture receivable	6,926,121	6,139,199
Share and convertible debentures issue costs	72,356	437,714
Debentures and loan payable	272,565	218,241
Provisions and accruals	325,906	459,912
	63,123,000	58,657,951

As at December 31, 2024, Elixer Ltd. had non-capital loss carry-forwards in the amount of $37,704,603 which is available to reduce future years' taxable income. These non-capital loss carry-forwards expire between the years 2034 and 2044. As at December 31, 2024, management has not recognized deferred tax assets in respect of the tax losses and certain temporary differences as it is not probable that the benefit of these assets can be realized in the foreseeable future. Management will continue to monitor the situation and revise its estimates as appropriate.

As at December 31, 2024, taxable temporary differences related to the investment in subsidiaries were not recognized because the Company controls the reversal of the temporary differences, and it is probable that the temporary differences will not reverse in the foreseeable future.

AI assistant

Elixxer Ltd. Audit Report / Information 2024

45493_rns_2025-04-29_32164467-909f-4cbc-8219-265a6ad8cecf.pdf

INDEPENDENT AUDITORS' REPORT

Opinion

Basis for Opinion

Emphasis of Matter - Material Uncertainty Related to Going Concern

Other Matters - Comparative Information

Key Audit Matters

Convertible Debentures Receivable

Refer to Note 6 – Convertible Debenture Receivable

How the Key Audit Matter Was Addressed in the Audit

Other Information

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

Auditors' Responsibilities for the Audit of the Consolidated Financial Statements

2. Summary of material accounting policies

2.1 Basis of preparation

Statement of compliance

Basis of consolidation

Functional and presentation currency

2.2 Use of estimates and judgments

(a) Share-based payments and warrants

4. Finance income and expense and administrative expenses

5. Equity Instruments

Freia Farmaceutici S.R.L. ("Freia")

AI assistant

Elixxer Ltd. — Audit Report / Information 2024

45493_rns_2025-04-29_32164467-909f-4cbc-8219-265a6ad8cecf.pdf

INDEPENDENT AUDITORS' REPORT

Opinion

Basis for Opinion

Emphasis of Matter - Material Uncertainty Related to Going Concern

Other Matters - Comparative Information

Key Audit Matters

Convertible Debentures Receivable

Refer to Note 6 – Convertible Debenture Receivable

How the Key Audit Matter Was Addressed in the Audit

Other Information

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

Auditors' Responsibilities for the Audit of the Consolidated Financial Statements

2. Summary of material accounting policies

2.1 Basis of preparation

Statement of compliance

Basis of consolidation

Functional and presentation currency

2.2 Use of estimates and judgments

(a) Share-based payments and warrants

4. Finance income and expense and administrative expenses

5. Equity Instruments

Freia Farmaceutici S.R.L. ("Freia")

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Elixxer Ltd. Audit Report / Information 2024