Jemtec Inc. — Interim / Quarterly Report 2026

Dec 18, 2025

JEMTEC Inc.

Condensed Interim Financial Statements
For the three months ended October 31, 2025 and 2024
(Expressed in Canadian dollars)
(Unaudited)

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Notice of No Review of Interim Financial Statements

Under National Instrument 51-102, Part 4, subsection 4.3(3) (a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.

The accompanying unaudited condensed interim financial statements of the Company have been prepared by and are the responsibility of the Company's management.

The Company's independent auditor has not performed a review of these financial statements in accordance with standards established by the Chartered Professional Accountants of Canada for a review of interim financial statements by an entity's auditor.

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JEMTEC INC.
Condensed Interim Statements of Operations and Comprehensive Income
(Expressed in Canadian Dollars)
(Unaudited)

	Notes	Three months ended October 31, 2025	Three months ended October 31, 2024
Revenue
Monitoring services		$ 239,328	$ 229,836
Equipment rental, servicing and repairs		189,732	154,136
Replacement and other		71,708	73,867
		500,768	457,839
Direct costs
Equipment rental and installation		86,336	134,936
Monitoring and activation		96,567	107,220
Depreciation		15,412	15,412
Consulting		-	14,000
Shipping and other		22,323	10,817
Travel		20,596	8,857
Lease interest		3,388	4,566
		244,622	295,808
Gross profit		256,146	162,031
Expenses
Accounting and administrative fees	11, 12	12,000	11,700
Depreciation		7,057	6,802
Directors’ fees	11, 12	16,631	16,631
Foreign exchange loss		1,344	1,103
Lease interest		509	34
Office		19,076	17,596
Professional fees		8,211	8,000
Salaries and benefits	11, 12	72,705	67,858
Share-based payments		-	5,841
Shareholder communications		2,998	3,064
Vehicle		1,031	1,415
		141,562	140,044
Income before other items		114,584	21,987
Interest income		12,571	15,538
Income before income taxes		127,155	37,525
Income taxes
Current income tax expense		34,200	11,000
Deferred income tax		-	1,000
Net income and comprehensive income for the period		$ 92,955	$ 25,525
Earnings per share
Basic	10	$ 0.033	$ 0.009
Diluted	10	$ 0.033	$ 0.009
Weighted-average number of shares outstanding
Basic	10	2,794,679	2,794,679
Diluted	10	2,837,767	2,808,995

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

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JEMTEC INC.
Condensed Interim Statements of Financial Position
(Expressed in Canadian Dollars)
(Unaudited)

	Notes	October 31, 2025	July 31, 2025
Assets
Current assets
Cash		$ 2,713,054	$ 2,508,060
Accounts receivable		182,985	234,886
Prepaid expenses and deposits		17,970	27,911
Total current assets		2,914,009	2,770,857
Property and equipment	7	173,890	196,359
Deferred income tax assets		49,000	55,000
Total assets		$ 3,136,899	$ 3,022,216
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued liabilities	9	$ 260,005	$ 217,869
Customer deposits		6,696	7,191
Deferred revenue		5,800	6,696
Income taxes payable		31,800	23,400
Current portion of lease liabilities	6	87,488	88,888
Total current liabilities		391,789	344,044
Lease liabilities	6	95,455	115,472
Deferred income tax liabilities		44,000	50,000
Total liabilities		531,244	509,516
Shareholders' equity
Share capital	10	1,410,764	1,410,764
Share-based payments reserves		604,013	604,013
Retained earnings		590,878	497,923
Total shareholders' equity		2,605,655	2,512,700
Total liabilities and shareholders' equity		$ 3,136,899	$ 3,022,216

The accompanying notes are an integral part of these condensed interim financial statements.

Approved on behalf of the Board and authorized for issue on December 18, 2025.

/s/ Eric Caton
Director

/s/ Leslie N. Markow
Director

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JEMTEC INC.
Condensed Interim Statements of Changes in Shareholders' Equity
(Expressed in Canadian Dollars)
(Unaudited)

	Number of Common Shares	Share Capital	Share-Based Payments Reserves	Retained Earnings	Total Shareholders' Equity
Balance, July 31, 2024	2,764,679	$ 1,410,764	$ 593,593	$ 381,737	$ 2,386,094
Share-based payments	-	-	5,841	-	5,841
Net income for the period	-	-	-	25,525	25,525
Balance, October 31, 2024	2,764,679	$ 1,410,764	$ 599,434	$ 407,262	$ 2,417,460
Balance, July 31, 2025	2,794,679	$ 1,410,764	$ 604,013	$ 497,923	$ 2,512,700
Net income for the period	-	-	-	92,955	92,955
Balance, October 31, 2025	2,794,679	$ 1,410,764	$ 604,013	$ 590,878	$ 2,605,655

The accompanying notes are an integral part of these condensed interim financial statements.

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JEMTEC INC.
Condensed Interim Statements of Cash Flows
(Expressed in Canadian Dollars)
(Unaudited)

	Three months ended October 31, 2025	Three months ended October 31, 2024
Cash provided by (used for):
Operating activities
Net income for the period	$ 92,955	$ 25,525
Adjustment to reconcile net income to net cash used in operating activities:
Depreciation	22,469	22,214
Interest on lease liabilities	3,897	4,600
Share-based payments	-	5,841
Deferred income tax (recovery) expense	-	1,000
Changes in non-cash operating working capital
Accounts receivable	51,901	(13,502)
Prepaid expenses and deposits	9,941	8,421
Accounts payable and accrued liabilities	42,136	24,571
Deferred revenue	(1,391)	-
Income taxes payable	8,400	(24,000)
Net cash provided by operating activities	230,308	54,670
Investing activity
Purchase of equipment	-	(897)
Financing activity
Lease payment	(25,314)	(24,784)
Increase in cash during the period	204,994	28,989
Cash, beginning of period	2,508,060	2,406,673
Cash, end of period	$ 2,713,054	$ 2,435,662
Cash
Cash	$ 681,978	$ 594,658
Short-term deposits	2,031,076	1,841,004
	$ 2,713,054	$ 2,435,662
Supplementary Information
Interest received	$ 12,571	$ 15,538
Interest paid	$ 3,897	$ 4,600
Income taxes paid	$ 25,800	$ 35,000

The accompanying notes are an integral part of these condensed interim financial statements.

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JEMTEC INC.

Notes to the Condensed Interim Financial Statements

For the three month periods ended October 31, 2025 and October 31, 2024

(Unaudited)

1. Nature of operations

JEMTEC Inc. (the "Company") was incorporated under the Ontario Business Corporations Act and is listed on the TSX Venture Exchange ("TSXV"). The Company's core business is the provision of services and technologies for offender monitoring with Canadian federal and provincial correctional departments. The Company's services include global positioning systems, electronic monitoring, alcohol detection, and voice verification technologies, as they relate to location verification of offenders and individuals under restrictions in the community.

The corporate head office of the Company is located at Suite 200, 38 Fell Avenue, North Vancouver, BC, and its registered office is located at Suite 1800, 130 King Street West, Toronto, ON.

1. Basis of presentation

a) Statement of compliance

These condensed interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting, as issued by the International Accounting Standards Board ("IASB") and interpretations issued by the IFRS Interpretations Committee (IFRICs). They do not include all of the information required by International Financial Reporting Standards ("IFRS") for complete annual financial statements, and should be read in conjunction with the Company's 2025 annual financial statements. They have been prepared using the accounting policies that were described in Note 3 to the Company's annual financial statements as at and for the year ended July 31, 2025.

These condensed interim financial statements were approved by the Board of Directors of the Company on December 18, 2025.

b) Functional and presentation currency

The Company's functional and reporting currency is the Canadian dollar. Monetary assets and liabilities denominated in another currency are translated at the prevailing period-end exchange rates. Other non-monetary assets and liabilities denominated in another currency are translated at historical exchange rates. Revenues and expenses are translated at the exchange rates in effect at the time of the transaction. Gains and losses arising from fluctuations in exchange rates are included in operations for the periods in which they occur.

c) Other comprehensive income

Other comprehensive income is the change in shareholders' equity during a period from transactions and other events and circumstances from non-owner sources. The Company had on elements of other comprehensive income for the period ended October 31, 2025.

d) Estimates and judgments

The preparation of financial statements requires management to make estimates 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 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 the revision affects both current and future periods.

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JEMTEC INC.

Notes to the Condensed Interim Financial Statements

For the three month periods ended October 31, 2025 and October 31, 2024

(Unaudited)

2. Basis of presentation (Continued)

d) Estimates and judgments (continued)

Significant areas requiring the use of management estimates and judgments relate to:

Recognition of deferred taxes

The Company estimates the expected manner and timing of the realization or settlement of the carrying value of its tax assets and liabilities and applies tax rates that are enacted or substantively enacted on the estimated dates of realization or settlement.

Discount rate used for right-of-use asset/lease liability

The Company uses estimation in determining the incremental borrowing rate used to measure the lease liability, right-of-use asset, specific to the asset, underlying currency and geographic location. Where the rate implicit in the lease is not readily determinable, the discount rate of the lease obligations is estimated using a discount rate similar to the Company's specific borrowing rate. This rate represents the rate that the Company would incur to obtain the funds necessary to purchase an asset of a similar value, with similar payment terms and security in a similar environment.

3. Material accounting policies

a) Cash and cash equivalents

Cash and cash equivalents are comprised of cash deposits in the bank and highly liquid investments with original maturities of three months or less that is readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. As at October 31, 2025, the Company did not have any cash equivalents.

b) Property and equipment

Property and equipment is stated at cost less accumulated depreciation. The cost of an item of property and equipment consists of the purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for its intended use. Property and equipment is depreciated over the estimated useful lives of the respective assets at the following rates:

• Vehicle 30% declining balance
• Computer 55% declining balance
• Furniture 20% declining balance
• Right-of-use asset straight-line over the contract period

Useful lives and methods of depreciation are reviewed at each reporting period and adjusted prospectively if appropriate. An impairment review is performed, either individually or at the cash-generating unit level, when there are indicators that the carrying amount of the asset may exceed its recoverable amount. To the extent that this occurs, the asset is written down to its estimated net realizable value.

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JEMTEC INC.

Notes to the Condensed Interim Financial Statements

For the three month periods ended October 31, 2025 and October 31, 2024

(Unaudited)

3. Material accounting policies (Continued)

c) Revenue recognition

The Company recognizes revenues from customers applying the five-step model framework in IFRS 15, as follows:

• Identify the contract(s) with a customer;
• Identify the performance obligations in the contract;
• Determine the transaction price;
• Allocate the transaction price to the performance obligations in the contract; and
• Recognize the revenue when the entity has satisfied the performance obligation(s).

Monitoring revenue is recognized as the services are provided to the customer pursuant to the underlying terms, conditions and rates included in the contracts. In cases where the performance obligations are not satisfied at the reporting period date, the related revenue is deferred to future periods and recognized as the services are provided.

Equipment rental revenue is recognized over the term of the agreement based on daily or monthly rates. Equipment servicing and repair revenue is recognized at the time the service is provided. Revenues from the sale of parts and supplies required to service, repair and maintain equipment are recognized when control of the goods has been transferred, which occurs when the goods are delivered to the customer.

Replacement revenue is recognized at the time the goods are provided and control transfers to the customer, which is evidenced by the delivery of goods. Other revenue consists of miscellaneous services that are provided and invoiced monthly.

The usual term of customer contracts and agreements is one to seven years. Generally, customers have the option to renew or cancel the lease. Rental and service agreements upon the expiration of each term or, in certain other circumstances, may be cancelled upon specific notice provided to the Company. In situations where contracts and agreements are terminated, and the monitoring equipment is rented on a daily basis, it is returned to the Company with no further obligation on behalf of the customer.

Interest income is recorded when earned.

d) Financial instruments – recognition and measurement

The following table shows measurement categories as at October 31, 2025 for each of the Company's financial assets and financial liabilities:

Financial Instrument
Cash	Fair value through profit or loss (“FVTPL”)
Accounts receivable	Amortized cost
Accounts payable and accrued liabilities	Amortized cost
Lease liabilities	Amortized cost

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JEMTEC INC.

Notes to the Condensed Interim Financial Statements

For the three month periods ended October 31, 2025 and October 31, 2024

(Unaudited)

3. Material accounting policies (Continued)

e) Share-based payments

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in the stock options note 10(b).

The fair value is measured at grant date and each tranche is recognized on a graded-vesting basis over the period in which options vest. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in the Statement of Operations and Comprehensive Income (Loss) such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to reserves.

Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.

f) Earnings per share

Basic earnings per share is computed using the weighted average number of common shares outstanding during the year. Diluted earnings per share amounts are calculated giving effect to the potential dilution that would occur if securities or other contracts to issue common shares were exercised or converted to common shares using the treasury stock method. The treasury stock method assumes that proceeds received from the exercise of stock options and warrants are used to redeem common shares at the prevailing market value. The difference between the number of shares assumed issued and the number of shares assumed purchased is then added to the basic weighted average number of shares outstanding to determine the fully diluted number of common shares outstanding. No exercise or conversion is assumed during periods in which a net loss is incurred as the effect is anti-dilutive.

g) Leases

Lessee

At the inception of a contract, the Company assesses whether a contract is, or contains, a lease based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset (the "ROU"), the Company assesses whether the contract involves the use of an identified asset, either explicitly or implicitly, including consideration of supplier substitution rights, the Company has the right to obtain substantially all the economic benefits from the use of the asset throughout the period of use; and whether the Company has the right to direct the use of the asset.

The Company applies the exemption not to recognize right-of-use assets and lease liabilities for leases relating to low-value assets and leases whose term ends within 12 months of the date of initial application. The ROU asset is initially measured based on the initial amount of the lease liability plus any initial direct costs incurred less any lease incentives received. The ROU asset is depreciated to the end-of-the-useful-life or the lease term, whichever comes earlier, using the straight-line method. The lease term includes periods covered by an option to extend if the Company is reasonably certain to exercise the option. The ROU asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

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JEMTEC INC.

Notes to the Condensed Interim Financial Statements

For the three month periods ended October 31, 2025 and October 31, 2024

(Unaudited)

3. Material accounting policies (Continued)

g) Leases (Continued)

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's incremental borrowing rate. The lease liability is measured at amortized cost using the effective interest method and remeasured when there is a change in future lease payments.

The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payments made. It is remeasured when there is a change in future lease payments arising from a change in an index or a rate, a change in the estimate of the amount expected to be payable under a residual value guarantee, or as appropriate, changes in the assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option is reasonably certain not to be exercised.

Lessor

Leases are classified according to the substance of the transaction. Leases that transfer substantially all the risks and rewards incidental to ownership of the underlying assets to the lessees are accounted for as finance leases. Upon initial recognition, the leased asset is recorded as an amount receivable and measured as the present value of the minimum lease payments. All other leases are accounted for as operating leases. All leases at October 31, 2025 and 2024 are classified as operating leases.

h) Future accounting changes

Certain pronouncements amendments to existing standards were issued by the IASB that are mandatory for announcing periods commencing on or after January 1, 2025. The adoption of these do not have a significant impact to the Company and have been excluded. The following have not yet been adopted and are being evaluated to determine their impact on the Company.

IFRS 18 Presentation and Disclosure in Financial Statements

IFRS 18 introduces three sets of new requirements to give investors more transparent and comparable information about companies' financial performance for better investment decisions.

1. Three defined categories for income and expenses—operating, investing and financing—to improve the structure of the income statement, and require all companies to provide new defined subtotals, including operating profit.
2. Requirement for companies to disclose explanations of management-defined performance measures (MPMs) that are related to the income statement.
3. Enhanced guidance on how to organize information and whether to provide it in the primary financial statements or in the notes.

This new standard is effective for reporting periods beginning on or after January 1, 2027.

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JEMTEC INC.

Notes to the Condensed Interim Financial Statements

For the three month periods ended October 31, 2025 and October 31, 2024

(Unaudited)

3. Material accounting policies (Continued)

i) Income taxes

i) Current income tax

Current income tax is recognized for the estimated income taxes payable or receivable on taxable income or loss for the current year and any adjustment to income taxes payable in respect of previous years.

ii) Deferred income tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

The carrying amount of deferred 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 profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset under certain circumstances when there is a legally enforceable right to set off tax assets against tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its tax assets and liabilities on a net basis. Deferred tax assets and liabilities that arise from a single transaction are recognized on a gross basis.

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JEMTEC INC.

Notes to the Condensed Interim Financial Statements

For the three month periods ended October 31, 2025 and October 31, 2024

(Unaudited)

4. Financial instruments and financial risk management

The Company's risk exposure and impact on the Company's financial instruments are summarized below:

a) Credit risk

The Company's principal business activities are located in Canada. The Company performs certain credit evaluation procedures and does not require collateral for financial instruments subject to credit risk. The Company believes that credit risk is limited as the Company routinely assesses the financial strength of its customers and establishes an allowance for uncollectible accounts. As a consequence, the Company believes that its accounts receivable credit risk beyond such allowances is limited. As at October 31, 2025, the Company's allowance for uncollectible accounts was $Nil (2024 - $Nil). As at October 31, 2025, there is a concentration of credit risk in accounts receivable whereby three (2024 - two) customers account for 100% (2024 - 98%) of the outstanding balance.

The Company maintains cash deposits with financial institutions which, from time to time, may exceed federally insured limits. The Company believes it is not exposed to any significant credit risk from cash. At October 31, 2025, the Company had cash balances on deposit that exceeded federally insured limits by $2,513,054 (July 31, 2025 – $2,308,060). All of these funds are on deposit with Schedule I banks in Canada.

b) Liquidity risk

Cash resources, repayment obligations and spending plans are monitored, and actions are taken with the objective of ensuring that there is sufficient capital in order to meet short-term business requirements. As at October 31, 2025, the Company had cash of $2,713,054 (July 31, 2025 - $2,508,060) to settle $391,789 (July 31, 2025 - $344,044) in current liabilities which fall due for payment within 12 months of the year end date.

c) Market risk

The market risk exposure to which the Company is exposed is interest rate risk. The Company's bank account earns interest income at variable rates. The Company's future interest income is exposed to short-term rate fluctuations. This is not a significant risk to the Company.

d) Foreign exchange risk

Foreign currency exchange rate risk is the risk that the fair value or future cash flows will fluctuate as a result of changes in foreign exchange rate. Only insignificant balances of the Company's accounts payable and accrued liabilities are denominated in US dollars and therefore the Company's exposure to foreign currency exchange risk is limited.

e) Fair value

The recorded value of the Company's financial assets and liabilities approximate their fair values due to their demand nature and their short-term to maturity.

f) Sensitivity analysis

Based on management's experience of the financial markets, the Company does not expect any movements in the underlying market risk variables to have a significant impact on the Company's values of assets and liabilities or on the Company's financial performance over a twelve-month period.

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JEMTEC INC.

Notes to the Condensed Interim Financial Statements

For the three month periods ended October 31, 2025 and October 31, 2024

(Unaudited)

5. Capital management

The Board of Directors determines the Company's capital structure and makes adjustments to it based on funds available to the Company in order to support the Company's operations. The Board of Directors has not established quantitative return on capital criteria for capital management.

The Company has sufficient cash on hand to meet its short-term obligations and fund its operations and administrative costs. The Company will use existing working capital and raise additional amounts as needed. The Board of Directors reviews its capital management approach on an ongoing basis and believes that its approach, given the relative size of the Company, is reasonable.

The Company's objective when managing capital is to safeguard the Company's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders.

The Company considers the items included in the Statements of Changes in Shareholders' Equity as capital. 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. In order to maintain or adjust the capital structure, the Company may issue new shares through private placements, sell assets to reduce debt, or return capital to shareholders. The Company is not subject to any externally imposed capital requirements. There was no change to the Company's capital management policy during the year ended July 31, 2025.

6. Lease liabilities

The Company has lease agreements for a company office space. The continuity of the lease liabilities for the quarter ended October 31, 2025 is as follows:

	October 31, 2025	July 31, 2025
Lease liabilities
Lease liabilities recognized as at beginning of year	$ 204,360	$ 237,729
Additions	-	48,235
Lease payments	(25,314)	(100,532)
Lease interest	3,897	18,928
	$ 182,943	$ 204,360
Current portion	$ 87,488	$ 88,888
Non-current portion	95,455	115,472
	$ 182,943	$ 204,360

During the period, the Company incurred short-term lease expense for office space of $5,850 (2024 – $5,850).

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JEMTEC INC.

Notes to the Condensed Interim Financial Statements

For the three month periods ended October 31, 2025 and October 31, 2024

(Unaudited)

7. Property and Equipment

	Right-of-use
	Vehicle	Assets	Furniture	Computer	Total
Costs, July 31, 2025	$ 32,091	$ 399,832	$ 50,222	$ 5,047	$ 487,192
Additions	-	-	-	-	-
Costs, October 31, 2024	$ 32,091	399,832	50,222	5,047	487,192
Accumulated depreciation, July 31, 2025	22,735	215,421	49,880	2,797	290,833
Depreciation for the period	702	21,441	17	309	22,469
Accumulated depreciation, October 31, 2025	23,437	236,862	49,897	3,106	313,302
Net book value, October 31, 2025	$ 8,654	$ 162,970	$ 325	$ 1,941	$ 173,890
	Right-of-use
	Vehicle	Assets	Furniture	Computer	Total
Costs, July 31, 2024	$ 32,091	$ 351,597	$ 50,222	$ 1,746	$ 435,653
Additions	-	48,235	-	3,301	51,536
Costs, July 31, 2025	32,091	399,832	50,222	5,047	487,192
Accumulated depreciation, July 31, 2024	18,725	130,061	49,795	1,517	200,098
Depreciation for the year	4,010	85,360	85	1,280	90,735
Accumulated depreciation, July 31, 2025	22,735	215,421	49,880	2,797	290,833
Net book value, July 31, 2025	$ 9,356	$ 184,411	$ 342	$ 2,250	$ 196,359

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JEMTEC INC.

Notes to the Condensed Interim Financial Statements

For the three month periods ended October 31, 2025 and October 31, 2024

(Unaudited)

8. Bank credit facility and loan agreement

The Company has a credit facility with an available borrowing limit of $75,000. The loan is due on demand, bears interest at the bank's prime rate plus 1.3% per annum, and is secured by a general security agreement over all of the assets of the Company. As at and during the period ended October 31, 2025 and 2024, the loan has not been utilized.

9. Accounts payable and accrued liabilities

	October 31, 2025	July 31, 2025
Trade payable and accrued liabilities	$ 214,450	$ 177,212
Government service tax and remittance liabilities	45,555	40,657
	$ 260,005	$ 217,869

10. Share capital and reserves

a) Authorized

Common shares: Unlimited, no par value

First preference shares: Unlimited, no par value, issuable in series - None issued as at October 31, 2025 and July 31, 2025

Second preference shares: 25,000 Series A, no par value, redeemable, $0.60 non-cumulative dividend - None issued as at October 31, 2025 and July 31, 2025

As at October 31, 2025, 2,794,679 common shares were outstanding.

b) Stock options

The Company adopted a fixed stock option plan that permits the directors of the Company to grant incentive stock options to employees, directors and consultants of the Company. The maximum number of shares issuable under the plan, which follows the policies of the TSXV regarding stock option awards, is equal to 10% of the issued and outstanding common shares. Stock options granted under the plan vest as determined by the Board when the option is granted. The option exercise price is generally set as the market price at the time of grant; however, a discount from the market price is permitted under the plan, subject to the policies of the TSX-V.

On April 2, 2024, the Company granted 100,215 stock options to officers and directors, at a price of $0.60 per share, expiring 4 years after the date of grant and vest at a rate of 25% every three months from the date of grant to April 30, 2025. The fair value of the options granted was estimated on the date of grant at $28,000 using the Black-Scholes option-pricing model with the following assumptions: i) risk-free interest rate 3.64%; ii) expected life of 4.0 years; iii) expected annualized volatility 54.47%; and iv) no dividend yield.

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JEMTEC INC.

Notes to the Condensed Interim Financial Statements

For the three month periods ended October 31, 2025 and October 31, 2024

(Unaudited)

10. Share capital and reserves (Continued)

In estimating the fair value of stock options issued using the Black-Scholes option pricing model, the Company is required to make assumptions. The expected volatility assumption is based on the historical volatility of the Company's common share price on the TSX-V. The risk-free interest rate assumption is based on yield curves on Canadian government zero-coupon bonds with a remaining term equal to the stock options' expected life. The Company uses historical data to estimate option exercise, forfeiture and employee termination within the valuation model.

A summary of changes in stock options is presented below:

	Number of Options	Weighted Averaged Exercise Price
Balance, July 31, 2021	100,000	$0.750
Granted, March 4, 2022	139,000	$2.090
Forfeited, December 31, 2023	(25,000)	$0.750
Forfeited, December 31, 2023	(34,750)	$2.090
Granted, April 2, 2024	100,215	$0.600
Balance, October 31, 2025	279,465	$1.196

Options outstanding at October 31, 2025 are as follows:

Date of Grant	Number of Options Granted	Expiry	Exercise Price	Number Exercisable as at October 31, 2025	Number Outstanding as at October 31, 2025	Weighted Average Remaining Contractual Life
May 14, 2018	125,000	May 13, 2028	$0.750	75,000	75,000	2.53 years
February 1, 2022	139,000	January 31, 2026	$2.090	104,250	104,250	0.34 years
April 2, 2024	100,215	July 31, 2028	$0.600	100,215	100,215	2.75 years
				279,465	279,465

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JEMTEC INC.

Notes to the Condensed Interim Financial Statements

For the three month periods ended October 31, 2025 and October 31, 2024

(Unaudited)

10. Share capital and reserves (Continued)

c) Earnings per share

The following is a reconciliation of the denominator in calculating basic and diluted earnings per share:

	October 31, 2024	October 31, 2024
Net income for the quarter	$ 92,955	$ 25,525
Basic weighted average number of shares outstanding	2,794,679	2,794,679
Effect on dilutive securities from stock options	43,088	14,316
Diluted weighted average number of shares outstanding	2,837,767	2,808,995
Earnings per share, basic	$ 0.033	$ 0.009
Earnings per share, diluted	$ 0.033	$ 0.009

11. Related party transactions

The Company's related parties consist of five officers and directors (and companies controlled by them), as follows:

Position	Nature of Transaction
President, CEO and Director	Management services
Director	Director and Chairman of the Board
Director	Director and Chair of Audit Committee
CFO	Management services

There are standard compensation arrangements under which the directors of the Company are compensated for services in their capacity as directors (including any additional amounts payable for committee participation or special assignments). An annual payment of $20,000 (2024 - $20,000) is made to three directors, $25,000 (2024 - $25,000) is made to the Chairman and a fee of $1,000 (2024 - $1,000) is paid per Board meeting attended. In addition to these amounts, the Chair of the Audit Committee is paid an additional $4,000 (2024 - $4,000) per year for the review of interim and annual financial reports. The directors did not receive compensation for services as consultants during the quarters ended October 31, 2025 and 2024.

Nature of expenditures	Three months ended October 31, 2025	Three months ended October 31, 2024
Accounting and administrative fees	$ 12,000	$ 11,700
Directors' fees	16,631	16,631
Salaries and benefits	72,705	67,858
Share-based payments	-	5,841
	$ 101,336	$ 102,030

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JEMTEC INC.

Notes to the Condensed Interim Financial Statements

For the three month periods ended October 31, 2025 and October 31, 2024

(Unaudited)

11. Related party transactions (Continued)

During the quarter ended October 31, 2025, $16,631 (October 31, 2024 – $16,631) was accrued or paid to the directors of the Company as directors' fees. As at October 31, 2025, $Nil (July 31, 2025 - $Nil) is due to the directors and is included in accounts payable and accrued liabilities.

During the quarter ended October 31, 2025, accounting fees of $12,000 (October 31, 2024 - $11,700) was accrued or paid to a Firm where a Partner in the Firm is an officer of the Company. As at October 31, 2025, $8,400 (July 31, 2025 - $4,200) is owing to this officer and is included in accounts payable and accrued liabilities.

These transactions with related parties have been valued in these financial statements at the fair value. All amounts due to related parties are unsecured, non-interest bearing and have no specific repayment terms.

12. Key management compensation

Remuneration of key management comprises:

For three months ended	Share-based payments	Accounting and administrative fees	Salaries and benefits	Directors' fees	Total compensation
October 31, 2025	$ -	$ 12,000	$ 72,705	$ 5,041	$ 89,746
October 31, 2024	$ 1,946	$ 11,700	$ 67,858	$ 5,041	$ 86,545

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JEMTEC INC.

Notes to the Condensed Interim Financial Statements

For the three month periods ended October 31, 2025 and October 31, 2024

(Unaudited)

13. Fair value of financial instruments

At October 31, 2025 and July 31, 2025, the Company held financial instruments carried at fair value on the Statements of Financial Position. The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation techniques:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities. Cash, accounts receivable, accounts payable and accrued liabilities, and lease liability are valued using quoted market prices and have been included in Level 1 of the fair value hierarchy.

Level 2 – Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly

Level 3 – Inputs that are not based on observable market data.

The following table illustrates the classification of the Company's financial instruments within the fair value hierarchy as at October 31, 2025 and July 31, 2025:

October 31, 2025	Level 1	Level 2	Level 3	Total
Financial assets
Cash	$ 2,713,054	-	-	$ 2,713,054
July 31, 2025	Level 1	Level 2	Level 3	Total
Financial assets
Cash	$ 2,508,060	-	-	$ 2,508,060

14. Commitment

The Company is committed under an agreement to lease office facilities to September 30, 2026, with minimum monthly payments of $1,153. In addition, the Company entered into a short-term lease agreement for office space in Toronto starting September 2024, with minimum monthly payments of $1,950.

15. Segmented information

The Company currently has one reportable operating segment, being the provision of services and technologies for offender monitoring within Canada to Canadian federal and provincial correctional departments, and private customers. All of the Company's long-term assets are located in Canada.

16. Economic dependence

The Company earned the majority of its revenues from three (2024 – two) customers that individually exceeded 10% of trade revenues and, in aggregate, amounted to 98% (2024 – 97%) of trade revenues.

The Company is economically dependent on a limited number of key suppliers for the continued provision of monitoring services, monitoring equipment, replacement parts, and maintenance services. If one or more of these suppliers discontinued providing goods and services, the Company would be required to find new providers on similar economic terms in order to continue providing services and goods to its customers.