AI assistant
Hydaway Digital Corp. — M&A Activity 2026
Apr 14, 2026
48371_rns_2026-04-14_f68440af-b59b-4eeb-a4b0-58bedbe2f86f.pdf
M&A Activity
Open in viewerOpens in your device viewer
FORM 51-102F4
BUSINESS ACQUISITION REPORT
Item 1. Name and Address of Company
1.1 Name and Address of Company
HYDAWAY DIGITAL CORP.
204 – 252 West Esplanade
North Vancouver, British Columbia, V7M 0E9
1.2 Executive Officer
Karl Kottmeier
Chief Executive Officer
(604) 687-7422
Item 2. Details of Acquisition
2.1 Nature of Business Acquired
Hydaway Digital Corp. (the "Company") completed its acquisition of all of the issued and outstanding shares of 100098940 Ontario Inc. ("RealityChek") pursuant to the terms of a share purchase agreement dated January 26, 2026 (the "Share Purchase Agreement") with RealityChek.
RealityChek is a cyber security company currently finalizing design, development, testing, optimization, and deployment of the RealityChek artificial intelligence detection and verification platform (the "Platform"). The Platform is a multi-modal, multi-media content analysis system that identifies synthetic or AI-generated content and confirms authentic content through a blockchain-anchored verification layer. After the Platform verifies the authenticity of a file, document, image, audio, or video, it is immutably recorded on the blockchain so that its integrity can be independently verified at any time.
In addition, RealityChek is currently completing design and development of an interactive content-labelling game (the "Game") that strengthens and improves the Platform by generating human-verified training data. The Game enables players to identify synthetic content, tag manipulated regions and contribute to the continuous improvement of RealityChek's models.
The RealityChek Platform may be accessed at https://RealityChek.com.
2.2 Date of Acquisition
February 4, 2026.
2.3 Consideration
Under the terms of the Share Purchase Agreement, the Company has acquired all of the issued and outstanding shares of RealityChek. In consideration for RealityChek, the Company issued to the shareholders of RealityChek 6,000,000 common shares of the Company (the "Consideration Shares") at a deemed price of $0.14 per share for a total purchase price of $840,000 (the "Purchase Price").
As additional consideration, the Company will also issue up to an additional 1,862,712
-2-
common shares of the Company (the "Milestone Shares") on satisfaction of the following milestones:
- 776,130 Milestone Shares on the date the RealityChek Platform has successfully completed a 2,000,000 image data set all properly labelled and 200,000 images human labelled.
- 776,130 Milestone Shares on the date the RealityChek Platform has successfully completed an additional 2,000,000 image data set all properly labelled and 200,000 images human labelled.
- 310,452 Milestone Shares on the date the RealityChek Platform has successfully reached 100,000 users.
The Consideration Shares are subject to resale restrictions, under which 2,656,427 common shares are subject to no restrictions on resale, 1,017,506 common shares shall be subject to restrictions on resale until each of the dates which are three, six and nine months from the closing and 291,051 shall be subject to restrictions on resale until the date which is twelve months from the closing. Milestone Shares will be subject to a four month hold period under securities laws from the date that the milestone is successfully completed and, if required, any additional hold periods required by the TSX Venture Exchange.
2.4 Effect on Financial Position
Prior to the acquisition of RealityChek, the Company was focused on computer rendering and GPU rental service provider located in North Vancouver, British Columbia. As a result of the acquisition of RealityChek, the Company also offers a multimodal AI detection and content verification platform powered by blockchain-anchored authentication. The Company continues to be a computer rendering and GPU Rental service provider.
The Company does not presently have any plans or proposals for material changes in the Company's or RealityChek's affairs (corporate structure, personnel or management) that will have an impact on the financial performance and financial position of the Company.
2.5 Prior Valuations
None.
2.6 Parties to Transaction
The acquisition was not with an informed person, associate or affiliate of the Company.
2.6 Date of Report
April 13, 2026.
Item 3. Financial Statements
The following financial statements attached as Schedule "A" hereto are included in this Business Acquisition Report:
1) Audited financial statements of RealityChek for the fiscal year ended December 31, 2025 and the period from August 26, 2024 to December 31, 2024.
1000989940 ONTARIO INC.
FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025 AND THE PERIOD FROM INCORPORATION ON AUGUST 26, 2024 TO DECEMBER 31, 2024
(EXPRESSED IN CANADIAN DOLLARS)
bakertilly
Baker Tilly WM LLP
900 – 400 Burrard Street
Vancouver, British Columbia
Canada V6C 3B7
T: +1 604.684.6212
F: +1 604.688.3497
[email protected]
www.bakertilly.ca
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of 100098940 Ontario Inc.:
Opinion
We have audited the financial statements of 100098940 Ontario Inc. (the "Company"), which comprise the statements of financial position as at December 31, 2025 and 2024, and the statements of comprehensive loss, statements of changes in shareholders' equity (deficiency) and statements of cash flows for the year ended December 31, 2025 and the period from incorporation on August 26, 2024 to December 31, 2024, and notes to the financial statements, including material accounting policy information.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2025 and 2024, and its financial performance and its cash flows for the year ended December 31, 2025, and the period from incorporation on August 26, 2024 to December 31, 2024, in accordance with 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 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 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.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the financial statements, which describes conditions indicating that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS Accounting Standards, 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 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.
ASSURANCE • TAX • ADVISORY
Baker Tilly WM LLP is a member of Baker Tilly Canada Cooperative, which is a member of the global network of Baker Tilly International Limited. All members of Baker Tilly Canada Cooperative and Baker Tilly International Limited are separate and independent legal entities.
bakertilly
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the 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 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 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 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 financial statements, including the disclosures, and whether the 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.
Baker Tilly WM LLP
CHARTERED PROFESSIONAL ACCOUNTANTS
Vancouver, B.C.
April 13, 2026
Now, for tomorrow
1000989940 ONTARIO INC
STATEMENTS OF FINANCIAL POSITION
AS AT DECEMBER 31, 2025 AND 2024
(Expressed in Canadian dollars)
| December 31, 2025 | December 31, 2024 | |
|---|---|---|
| $ | $ | |
| Assets | ||
| Current assets: | ||
| Cash | 76,524 | - |
| Total assets | 76,524 | - |
| Liabilities and shareholders' equity | ||
| Current liabilities: | ||
| Accounts payable and accrued liabilities | 38,049 | 12,600 |
| Shares to be issued (note 5) | 27,965 | - |
| Total liabilities | 66,014 | 12,600 |
| Shareholders' equity (deficiency) | ||
| Share capital (note 4) | 105,563 | 39 |
| Deficit | (95,053) | (12,639) |
| Total shareholders' equity (deficiency) | 10,510 | (12,600) |
| Total liabilities and shareholders' equity (deficiency) | 76,524 | - |
NATURE OF BUSINESS AND GOING CONCERN (Note 1)
SUBSEQUENT EVENTS (Note 11)
Approved on behalf of the Board:
"Karl Kottmeier"
Director
The accompanying notes are an integral part of these financial statements.
4
1000989940 ONTARIO INC.
STATEMENTS OF COMPREHENSIVE LOSS
FOR THE YEAR ENDED DECEMBER 31, 2025 AND THE PERIOD FROM INCORPORATION ON AUGUST 26, 2024
TO DECEMBER 31, 2024
(Expressed in Canadian dollars)
| 2025 | 2024 | |
|---|---|---|
| $ | $ | |
| Operating expenses | ||
| Professional fees and other | 35,549 | 39 |
| Research and development (note 6) | 46,865 | 12,600 |
| Total operating expenses | 82,414 | 12,639 |
| Net loss and comprehensive loss for the period | (82,414) | (12,639) |
| Loss Per Share - Basic and Diluted | (0.07) | (0.04) |
| Weighted average number of common shares outstanding - basic and diluted | 1,108,189 | 388,000 |
The accompanying notes are an integral part of these financial statements.
1000989940 ONTARIO INC.
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2025 AND THE PERIOD FROM INCORPORATION ON AUGUST 26, 2024
TO DECEMBER 31, 2024
(Expressed in Canadian dollars)
| | Note | 2025
$ | 2024
$ |
| --- | --- | --- | --- |
| OPERATING ACTIVITIES | | | |
| Net loss for the year | | (82,414) | (12,639) |
| Shares issued for research and development | | 18,900 | |
| Changes in non-cash working capital items: | | | - |
| Accounts payable and accrued liabilities | | 38,049 | 12,600 |
| Shares to be issued | | 27,965 | |
| Cash flows used in operating activities | | 2,500 | (39) |
| FINANCING ACTIVITIES | | | |
| Proceeds from private placement | 4 | 76,524 | 39 |
| Share issuance costs | 4 | (2,500) | - |
| Cash flows from financing activities | | 74,024 | 39 |
| Change in cash during the period | | 76,524 | - |
| Cash, beginning of period | | - | - |
| Cash, end of period | | 76,524 | - |
| Supplemental cash flow information: | | | |
| Shares issued for accounts payable settlement | | 35,280 | - |
| Shares issued for services | | 31,500 | - |
| Taxes paid | | - | - |
| Interest paid | | - | - |
The accompanying notes are an integral part of these financial statements.
1000989940 ONTARIO INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY)
FOR THE YEAR ENDED DECEMBER 31, 2025 AND THE PERIOD FROM INCORPORATION ON AUGUST 26, 2024
TO DECEMBER 31, 2024
(Expressed in Canadian dollars)
| Note | Number of Shares | Share Capital $ | Deficit $ | Total $ | |
|---|---|---|---|---|---|
| Balance, at incorporation | 388,000 | 39 | - | 39 | |
| Net loss and comprehensive loss for the period | - | - | (12,639) | (12,639) | |
| Balance, December 31, 2024 | 388,000 | 39 | (12,639) | (12,600) | |
| Balance, January 1, 2025 | 388,000 | 39 | (12,639) | (12,600) | |
| Issuance of common shares, net of issuance costs | 546,600 | 74,024 | - | 74,024 | |
| Common shares issued for accounts payable settlement | 252,000 | 35,280 | - | 35,280 | |
| Cancellation of common shares | (252,000) | (35,280) | - | (35,280) | |
| Shares issued for services | 225,000 | 31,500 | - | 31,500 | |
| Net loss and comprehensive loss for the year | - | - | (82,414) | (82,414) | |
| Balance, December 31, 2025 | 1,159,600 | 105,563 | (95,053) | 10,510 |
The accompanying notes are an integral part of these financial statements.
1000989940 ONTARIO INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025 AND THE PERIOD FROM INCORPORATION ON AUGUST 26, 2024
TO DECEMBER 31, 2024
(Expressed in Canadian dollars)
- NATURE OF BUSINESS AND GOING CONCERN
1000989940 Ontario Inc. (the "Company") was incorporated on August 26, 2024 under the laws of Ontario. The address of the Company's corporate office and its principal place of business is 401-217 Queen St. W, Toronto, ON, M5V 0R2, Canada.
These financial statements have been prepared on the basis of accounting principles applicable to a going concern which assumes the Company will be able to continue in operations for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations. As at December 31, 2025, the Company has not generated any revenues or cash flows from operations and has working capital of $10,514 (2024 - working capital deficit of $12,600), which is insufficient to fund the Company's business activities for the twelve months from the date of the statement of financial position. The Company's ability to continue as a going concern is dependent upon successful results from its operating activities, its ability to attain profitable operations to generate funds and/or its ability to raise equity capital or borrowings sufficient to meet its current and future obligations. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern. These financial statements do not reflect adjustments that may be necessary if the going concern assumption was not appropriate. Such adjustments could be material.
- BASIS OF PREPARATION
Statement of Compliance
These financial statements are prepared in accordance with IFRS Accounting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").
Approval of the Financial Statements
The financial statements of the Company were authorized for issuance by the Board of Directors on April 13, 2026.
Basis of Measurement
These financial statements have been prepared on the historical cost basis except for certain financial instruments which are measured at fair value.
- MATERIAL ACCOUNTING POLICY INFORMATION
a) Share Capital
Equity instruments are contracts that give a residual interest in the net assets of the Company. The Company's common shares are classified as equity instruments.
Costs directly identifiable with the raising of share capital financing are deducted from share capital. Share issuance costs incurred in advance of share subscriptions are recorded as deferred assets. Share issuance costs related to uncompleted share subscriptions are recognized in profit or loss.
b) Share-Based Payments
Where the equity instruments are awarded to employees, the fair value is measured at grant date. Where equity instruments are granted to non-employees, they are recorded at the fair value of the goods or services received in profit or loss, unless they are related to the issuance of shares. Amounts incurred for the issuance of shares are recorded as a reduction of share capital.
When the value of goods or services received in exchange for the share-based payment cannot be reliably estimated, the fair value is measured by reference to the cash subscription price of the most recent common share issuance of the Company, as the Company's common shares are not publicly traded.
For grants of equity instruments with vesting conditions, each tranche is recognized on the graded vesting method over the period during which the equity instruments vest. At each financial position reporting date, the amount recognized as an expense is adjusted to reflect the actual number of equity instruments that are expected to vest.
1000989940 ONTARIO INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025 AND THE PERIOD FROM INCORPORATION ON AUGUST 26, 2024
TO DECEMBER 31, 2024
(Expressed in Canadian dollars)
c) Income Taxes
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the financial statements date, and includes any adjustments to tax payable or receivable in respect of previous years.
Deferred taxes are recorded using the liability method whereby deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the statement of financial position date. Deferred tax is not recognized for temporary differences which arise on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting, nor taxable profit or loss.
A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
d) Earnings (loss) Per Share
The Company presents basic and diluted earnings (loss) per share data for its common shares, calculated by dividing the loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted earnings per share adjusts the weighted average number of common shares outstanding for the effect of dilutive equity instruments such as share options or warrants, assuming that those equity instruments would be exercised for common shares. Diluted loss per share equals basic loss per share, because the effect of dilutive equity instruments would be anti-dilutive.
e) Financial Instruments
Financial Assets
On initial recognition financial assets are classified as measured at:
i. Amortized cost;
ii. Fair value through other comprehensive income ("FVOCI"); and
iii. Fair value through profit or loss ("FVTPL").
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at FVTPL, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVTPL are expensed in profit or loss. Financial assets are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.
Subsequent measurement of financial assets depends on their classification:
i. Amortized Cost
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. A gain or loss on a debt investment that is subsequently measured at amortized cost is recognized in profit or loss when the asset is derecognized or impaired. Interest income from these financial assets is included as finance income using the effective interest rate method. The effective interest rate is the rate that discounts estimated future cash payments through the expected life of the financial asset or liability, or where appropriate, a shorter period. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss.
1000989940 ONTARIO INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025 AND THE PERIOD FROM INCORPORATION ON AUGUST 26, 2024
TO DECEMBER 31, 2024
(Expressed in Canadian dollars)
The Company assesses all information available, including on a forward-looking basis the expected credit losses associated with any financial assets carried at amortized cost. At each reporting date, the Company measures the loss allowance for the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the credit risk on the financial asset has not increased significantly since initial recognition, the Company measures the loss allowance for the financial asset at an amount equal to the twelve month expected credit losses. The Company recognizes in profit or loss, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized.
The Company does not have any assets classified at amortized cost.
ii. FVOCI
Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets' cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains and losses, interest revenue, and foreign exchange gains and losses which are recognized in profit or loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to profit or loss and recognized in other gains (losses). Interest income from these financial assets is included as finance income using the effective interest rate method.
The Company does not have any assets classified at FVOCI.
iii. FVTPL
Assets that do not meet the criteria for amortized cost or FVOCI are measured at FVTPL. A gain or loss on an investment that is subsequently measured at FVTPL is recognized in profit or loss in the period in which it arises.
The Company's cash is classified at FVTPL.
Financial Liabilities and Equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement. An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by Company are recorded at the proceeds received, net of direct issue costs.
Financial liabilities are classified as measured at (i) FVTPL; or (ii) amortized cost.
A financial liability is classified as at FVTPL if it is classified as held-for-trading or is designated as such on initial recognition. Directly attributable transaction costs are recognized in profit or loss as incurred. The amount of change in the fair value that is attributable to changes in the credit risk of the liability is presented in OCI and the remaining amount of the change in the fair value is presented in profit or loss. The Company does not classify any financial liabilities at FVTPL.
Other non-derivative financial liabilities are initially measured at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these liabilities are measured at amortized cost using the effective interest method.
The Company classifies its accounts payable and accrued liabilities and shares to be issued at amortized cost.
A financial liability is derecognized when the contractual obligation under the liability is discharged, cancelled or expires or its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.
f) Significant Accounting Estimates and Judgments
The preparation of these financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these
10
1000989940 ONTARIO INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025 AND THE PERIOD FROM INCORPORATION ON AUGUST 26, 2024
TO DECEMBER 31, 2024
(Expressed in Canadian dollars)
estimates. These financial statements include estimates which, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are based on historical experience, current and future economic conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Significant assumptions about the future and other sources of estimation uncertainty that management has made at the financial position reporting date, that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following. Management has determined that there were no significant accounting estimates and or judgments used in the preparation of these financial statements.
g) New Accounting Standards
The Company has not yet adopted certain new standards, interpretations, and amendments to existing standards that have been issued by the IASB that are mandatory for accounting years beginning on or January 1, 2026, or later years.
i. IFRS 18 Presentation and Disclosure in Financial Statements
In April 2024, the IASB issued IFRS 18 Presentation and Disclosure in Financial Statements. This standard aims to improve the consistency and clarity of financial statement presentation and disclosures by providing updated guidance on the structure and content of financial statements. Key changes include enhanced requirements for the presentation of financial performance, financial position, and cash flows, as well as additional disclosures to improve transparency and comparability. In addition, IFRS 18 requires entities to classify income and expenses into five categories, three of which are new – i.e. operating, investing and financing – and the income tax and discontinued operation categories. The new standard sets out detailed requirements for classifying income and expenses into each category. These amendments are effective for annual periods beginning on or after January 1, 2027. The Company is currently assessing the impact that the adoption of IFRS 18 will have on its financial statements.
ii. Amendments to IFRS 9 Financial Instruments, and IFRS 7 Financial Instruments: Disclosures
In May 2024, the IASB issued Amendments to the Classification and Measurement of Financial Instruments. The amendments clarify that a financial liability is derecognized on the settlement date and introduce an accounting policy choice to derecognize a financial liability settled using an electronic payment system before the settlement date. Other clarifications include guidance on the classification of financial assets with ESG-linked features, non-recourse loans and contractually linked instruments.
The amendments are effective for annual periods beginning on or after January 1, 2026. Early adoption is permitted, with an option to early adopt only the amendments to the classification of financial assets (for contingent features). The Company is currently in the process of assessing the impact of the amendments on the financial statements and notes to the financial statements.
- SHARE CAPITAL
a) Authorized: Unlimited number of common shares without par value.
b) Issued and outstanding as at December 31, 2025 – 1,159,600 common shares (2024 - 388,000).
- On January 16, 2025, the Company completed a non-brokered private placement issuing 546,600 common shares at $0.14 per common share for gross proceeds of $76,524. The Company incurred issuance costs of $2,500.
- On January 16, 2025, the Company issued 252,000 common shares of the Company related to the settlement of accounts payable, at a fair value of $0.14 per common share.
11
1000989940 ONTARIO INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025 AND THE PERIOD FROM INCORPORATION ON AUGUST 26, 2024
TO DECEMBER 31, 2024
(Expressed in Canadian dollars)
- On May 13, 2025, the Company cancelled the 252,000 common shares previously issued related to the settlement of accounts payable, and reversed the previously recorded share capital of $35,280 based on the fair value of $0.14 per common share.
- On May 13, 2025, the Company issued 112,500 common shares at a fair value of $0.14 per common share in exchange for services.
- On August 13, 2025, the Company issued 112,500 common shares at a fair value of $0.14 per common share in exchange for services.
5. CONSULTING SERVICES
On May 13, 2025, the Company signed a shares for services agreement, under which it agreed to issue the common shares in exchange for the design, development, testing, optimization, and deployment of an artificial intelligence detection and verification platform (the "Platform"). The common shares to be issued in exchange for the Platform development are as follows:
- 112,500 common shares on May 13, 2025 (issued);
- 112,500 common shares on August 13, 2025 (issued);
- 150,000 common shares on the later of January 13, 2026, and having successfully completed a 2 million image data set all properly labelled and 200,000 of the images having been human labelled;
- 150,000 common shares on the later of March 13, 2026, and having successfully completed a 2 million image data set all properly labelled and 200,000 of the images having been human labelled; and
- 60,000 common shares on the later of June 13, 2026 and the platform having 100,000 users.
The Company records research and development expenses over the estimated vesting periods and hence, has recorded $59,465 as an expense for the year ended December 31, 2025 and $27,965 as shares to be issued as at December 31, 2025.
6. RELATED PARTY BALANCES AND TRANSACTIONS
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.
Key management includes the director and Chief Executive Officer ("CEO") During the year ended December 31, 2025, the director and CEO was issued 75,000 common shares at a fair value $0.14 per share for $10,500, for services rendered related to the Platform, and has been included in research and development expense within profit or loss.
During the period ended December 31, 2024, there were no related party transactions.
7. MANAGEMENT OF CAPITAL
The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern and to maintain a flexible capital structure which optimizes the cost of capital within a framework of acceptable risk. The Company does not have any externally imposed capital requirements to which it is subject.
The Company's capital structure consists of all components of shareholders' equity (deficiency). The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may issue common shares or debt instruments, or acquire or dispose of assets. The Company is dependent on the capital markets as its primary source of operating capital and the Company's capital resources are largely determined by its ability to compete for investor support of its projects. Management reviews its capital management approach on an ongoing basis and believes that this approach is reasonable given the relative size of the Company. There were no changes in the Company's approach to capital management during the year.
1000989940 ONTARIO INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025 AND THE PERIOD FROM INCORPORATION ON AUGUST 26, 2024
TO DECEMBER 31, 2024
(Expressed in Canadian dollars)
8. FINANCIAL INSTRUMENTS AND FINANCIAL RISK
IFRS 13, Fair Value Measurement, establishes a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:
- Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;
- Level 2 - inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
- Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Fair Value of Financial Instruments
The Company's cash is measured at fair value and is classified as Level 1 in the fair value hierarchy. The fair value of accounts payable and accrued liabilities approximates its carrying value due to the short term to maturity of these instruments.
Financial Risk Management Objectives and Policies
The risks associated with the Company's financial instruments and the policies on how the Company mitigates these risks are set out below. Management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.
Market Risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, other price risk, and currency risk. Management has determined that the Company is not exposed to material interest rate, other price or currency risk. The Company's exposure to and management of market risk has not changed materially from that of the prior year.
Credit Risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Financial instruments that potentially subject the Company to concentrations of credit risks consist principally of cash. To minimize the credit risk, the Company places these instruments with a high credit quality financial institution. As at December 31, 2025, the Company's maximum exposure to credit risk is $76,524, being the carrying value of the Company's cash. The Company's exposure to and management of credit risk has changed from that of the prior year, as the Company had no cash at December 31, 2024.
Liquidity Risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. In the management of liquidity risk, the Company intends to maintain an adequate amount of working capital to continue its operation and achieve its business objectives. Management closely monitors the Company's liquidity position and intends to complete future equity financings. As at December 31, 2025, the Company has accounts payable and accrued liabilities of $38,049 (2024 - $12,600) due within the next twelve months. The Company's exposure to and management of liquidity risk has not changed materially from that of the prior year.
13
1000989940 ONTARIO INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025 AND THE PERIOD FROM INCORPORATION ON AUGUST 26, 2024
TO DECEMBER 31, 2024
(Expressed in Canadian dollars)
9. INCOME TAXES
The following table reconciles the amount of income tax recoverable on application of the combined statutory Canadian federal and provincial income tax rates:
| 2025 | 2024 | |
|---|---|---|
| $ | $ | |
| Loss before income taxes | (82,414) | (12,639) |
| Combined statutory tax rate | 26.5% | 26.5% |
| Expected income tax recovery at combined statutory rate | (21,840) | (3,349) |
| Share issue costs | 130 | - |
| Change in unrecognized deferred tax assets | 21,710 | 3,349 |
| Income tax expense | - | - |
Significant components of the Company's deferred income tax assets (liabilities) not recognized are shown below:
| 2025 | 2024 | |
|---|---|---|
| $ | $ | |
| Non-capital losses carried forward | 95,053 | 12,639 |
| Share issuance costs | 2,500 | - |
| Deferred tax assets not recognized | (97,553) | (12,639) |
| Net deferred tax assets | - | - |
As at December 31, 2025, the Company had approximately $95,053 in non-capital loss carry forwards available to reduce taxable income for future years, which expire between 2044 and 2045.
10. SEGMENT DISCLOSURES
As at and for the periods ended December 31, 2025 and 2024, the Company had one operating segment, being the development of an artificial intelligence detection and verification platform. All of the Company's assets and liabilities are located in Canada.
1000989940 ONTARIO INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2025 AND THE PERIOD FROM INCORPORATION ON AUGUST 26, 2024
TO DECEMBER 31, 2024
(Expressed in Canadian dollars)
11. SUBSEQUENT EVENTS
On January 26, 2026, the Company signed a definitive share purchase agreement for the sale of the Company. Under the terms of the agreement, the shareholders of the Company were to receive 6 million common shares of Hydaway Digital Corp., a company listed on the TSX Venture Exchange, at a price of $0.14 per common share for a total purchase price of $840,000 (the "Transaction"). As additional consideration, the Company will also issue up to an additional 1,862,712 common shares to certain shareholders of the Company on satisfaction of the following milestones:
- 776,130 milestone shares on the date the Company's platform has completed a two-million-image data set all properly labelled and 200,000 images human labelled;
- 776,130 milestone shares on the date the Company's platform has completed an additional two-million-image data set all properly labelled and 200,000 images human labelled; and
- 310,452 milestone shares on the date the Company's platform has reached 100,000 users.
The Transaction closed on February 4, 2026, resulting in the Company becoming a wholly owned subsidiary of Hydaway Digital Corp.