Jemtec Inc. — Management Reports 2026

Mar 30, 2026

JEMTEC INC.

Management Discussion and Analysis

January 31, 2026

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JEMTEC Inc.
Management Discussion & Analysis

This management discussion and analysis ("MD&A") of JEMTEC Inc. ("Jemtec" or the "Company") provides analysis of Jemtec's financial results for the fiscal quarter ended January 31, 2026. The following information should be read in conjunction with the accompanying condensed interim financial statements and the notes thereto as at January 31, 2026. This MD&A is meant to be an update of the MD&A for the fiscal year ended July 31, 2025, dated November 27, 2025, and does not necessarily repeat information that has not significantly changed since the audited annual financial statements were issued.

The item numbering in this discussion refers to the numbering and headings as per the Form 51-102F1. Inapplicable items have been omitted.

This discussion includes statements about the Company's expectations for the future. The Company's management team believes that these expectations are reasonable; however, actual outcomes may differ materially from these expectations due to changes in operating performance, unexpected competition and other technical, market and economic factors.

Item 1. Date: March 30, 2026

This Management Discussion and Analysis, dated March 30, 2026, accompanies the condensed interim financial statements of the Company for the quarter ended January 31, 2026.

Item 2. Overall Performance and Description of Business

JEMTEC is incorporated under the laws of Ontario, Canada. The Company is the leading provider of integrated technology systems for community-based corrections in Canada. The Company's core business is the provision of services and technology for offender monitoring in Canadian federal and provincial correctional departments.

The common shares of JEMTEC Inc. trade through the facilities of the TSX-Venture Exchange under the symbol JTC.

JEMTEC's mission is to lead the Canadian criminal justice market by providing our customers integrated services and state-of-the-art technology systems. Our vital essence as a company is to make our society a better and safer place. Each of our technologies and programs is designed with this corporate mission in mind and we believe that working together with criminal justice professionals, we can help ensure public protection and the delivery of effective and accountable correctional services.

The management approach of offering different levels of technology allows corrections, courts and police to select from a variety of options ensuring the correct level of offender control at the lowest overall cost. Offender location detection/verification technologies include: offender reporting via telephone contact, offender reporting kiosks with integrated database, GPS active and passive tracking, voice verification, electronic monitoring house arrest systems, remote alcohol in-home monitoring and private monitoring services.

JEMTEC's business model is project driven. Since 1987, the Company has provided Canadian federal and provincial government agencies with offender monitoring services and technologies under project agreements with terms of 1 to 5 years.

Over the past year, most of the Company's agreements have been renewed and/or extended.

On March 5, 2015, Public Works and Government Services Canada ("PWGSC") confirmed that Jemtec's solution had been evaluated as the winning proposal to provide Correctional Services of Canada ("CSC") Electronic Monitoring services throughout Canada effective immediately for its Electronic Monitoring Research Pilot. The contract is for an initial three-year period with two additional one-year options selectable by CSC. In March 2020, PWGSC confirmed that it was going to exercise the additional (second) one-year option. In March 2020, following a competitive RFP process, PWGSC issued a new contract to Jemtec for one year with up to four additional one-year extensions. In March 2021, the current agreement

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JEMTEC Inc.
Management Discussion & Analysis

was extended for one year from April 1, 2021 to March 31, 2022. In March 2022, the current agreement was extended for another one year from April 1, 2022 to March 31, 2023. In March 2023, the current agreement was extended to another one year to March 31, 2024. In March 2024, the current agreement was extended for its final year to March 31, 2025. In March 2025, the current agreement was extended to December 31, 2025. In November 2025, the current agreement was extended to March 2026. In March 2026, the current agreement was extended to June 2026.

In February 2017, the Company extended its agreement with the Province of Saskatchewan ("Saskatchewan") for a three-year term to March 31, 2020 with two optional extensions of up to one year each. In March 2020, the current agreement was extended for one year from April 1, 2020 to March 31, 2021. In March 2021, the current agreement was extended for another one year from April 1, 2021 to March 31, 2022. In March 2022, the current agreement was extended for a period of six months from April 1, 2022 to September 30, 2022. In October 2022, the current agreement was extended for a period of six months to March 31, 2023. In March 2023, the Company signed a 5 year lease agreement with Saskatchewan to provide offender management and monitoring technology.

Item 3. Selected Annual Information

We have summarized selected information from the Company's condensed interim financial statements, which are prepared in Canadian dollars and in accordance with International Financial Reporting Standards ("IFRS").

	For the three months ended January 31,			For the six months ended January 31,
	2026	2025	2024	2026	2025	2024
Revenue	$ 455,174	$ 452,076	$ 418,549	$ 955,941	$ 909,915	$ 790,269
Interest income	12,106	14,140	14,203	24,677	29,678	27,861
	467,280	466,216	432,752	980,618	939,593	818,130
Total expenses	416,443	407,917	416,234	802,626	843,773	791,553
Income tax (expenses)	(14,600)	(16,000)	(1,484)	(48,800)	(28,000)	(3,534)
Net income	$ 36,237	$ 42,299	$ 15,034	$ 129,192	$ 67,820	$ 23,043
Earnings per share
Basic	$ 0.013	$ 0.015	$ 0.005	$ 0.046	$ 0.024	$ 0.008
Diluted	$ 0.013	$ 0.015	$ 0.005	$ 0.045	$ 0.024	$ 0.008

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JEMTEC Inc.
Management Discussion & Analysis

Item 4 and 5. Discussion of Operations and Summary of Quarterly Results

Unaudited summarized income statement information for the last eight quarters is as follows:

	Quarters Ended
	January 31 2026	October 31 2025	July 31 2025	April 30 2025	January 31 2025	October 31 2024	July 31 2024	April 30 2024
Revenue	$ 455,174	$ 500,768	$ 473,225	$ 471,687	$ 452,076	$ 457,839	$ 472,176	$ 429,610
Interest income	12,106	12,571	12,459	12,713	14,140	15,538	13,853	14,617
Total Expenses	416,443	386,184	461,038	417,159	407,917	435,852	442,496	391,776
Income tax	(14,600)	(34,200)	(5,500)	(17,500)	(16,000)	(12,000)	(8,100)	(16,900)
Net income	$ 36,237	$ 92,955	$ 19,146	$ 50,741	$ 42,299	$ 25,525	$ 35,433	$ 34,811
Earnings per share
Basic	$ 0.013	$ 0.033	$ 0.007	$ 0.018	$ 0.015	$ 0.009	$ 0.013	$ 0.012
Diluted	$ 0.013	$ 0.033	$ 0.007	$ 0.018	$ 0.015	$ 0.009	$ 0.013	$ 0.012

Revenues

Revenues have increased by 1% during the quarter ended January 31, 2026 compared to the quarter ended January 31, 2025 primarily due to the expansion with the province of Saskatchewan. The Company earned revenues on its agreements with Saskatchewan, CSC, interest on cash balances and from private bail clients waiting release from court dates.

	Quarters Ended January 31,
	2026	2025	2024
Revenue
Monitoring services	$ 187,848	$ 232,627	$ 235,130
Equipment rental, servicing and repairs	189,731	155,075	101,420
Replacement and other	77,595	64,374	81,999
Total revenue	$ 455,174	$ 452,076	$ 418,549

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.

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JEMTEC Inc.
Management Discussion & Analysis

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.

Direct costs

During the quarter ended January 31, 2026, direct costs increased by 9% compared to the quarter ended January 31, 2025 primarily due to the fluctuations in monitoring and activation fees, shipping and Travel.

Category		Changes – fiscal quarter ended January 31, 2026 compared to fiscal quarter ended January 31, 2025
Monitoring and activation fees		Decrease: CBSA program ended in Q1 2026.
Shipping expenses		Increase: Replacement parts for Saskatchewan program.
Travel		Increase: Travel to interface with CSC for services and testing.

Expenses

During the quarter ended January 31, 2026, expenses decreased by 8% compared to the quarter ended January 31, 2025 primarily due to the fluctuations in accounting and administrative, salaries and benefits and share-based payments.

Category		Changes – fiscal quarter ended January 31, 2026 compared to fiscal quarter ended January 31, 2025
Accounting and administrative		Decrease: No additional fees for 2025 year end audit.
Salaries and benefits		Increase: New life insurance policies.
Share-based payments		Decrease: Fully amortized in 2025 fiscal year.

Income Tax

For the quarter ended January 31, 2026, the Company recognized a current income tax expense of $15,600 (January 31, 2025 - $16,000) and a deferred income tax expense (recovery) of $(1,000) (January 31, 2025 - $Nil). The current income tax expense was related to income tax in Canada.

Net Income

For the quarter ended January 31, 2026, the Company recorded a net income of $36,237, compared to a net income of $42,299 during the quarter ended January 31, 2025. This decrease in net income is primarily associated with the increase in direct costs of the Saskatchewan contract and the decrease in certain expenses related to the loss of contracts.

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JEMTEC Inc.
Management Discussion & Analysis

Item 6 and 7. Liquidity and Capital Resources

Liquidity

At January 31, 2026, the Company had cash and cash equivalents of $2,613,808 and working capital of $2,562,955. All cash and cash equivalents are on deposit with a Schedule I bank in Canada in current or interest accruing accounts.

	As at January 31, 2026	As at July 31, 2025
Current assets	$ 2,910,324	$ 2,770,857
Non-current assets	195,420	251,359
Total assets	3,105,744	3,022,216
Current liabilities	347,369	344,044
Non-current liabilities	116,483	165,472
Total liabilities	463,852	509,516
Stockholders' equity	$ 2,641,892	$ 2,512,700
Working capital	$ 2,562,955	$ 2,426,813

Working capital components include cash and cash equivalents in current or interest-bearing accounts, accounts receivable, prepaid expenses and deposits, accounts payable and accrued liabilities, customer deposits, deferred revenue, income tax payable/recoverable and current portion of lease liabilities.

Accounts receivable and accounts payable are expected to increase or decrease as sales volumes change. Deferred revenue will fluctuate in relation to the Company's private bail project. Private bail clients typically pay in advance for one or more months' monitoring.

A combination of increase in revenues and direct costs and expenses resulted in a net income of $36,237 for the quarter ended January 31, 2026 after a tax provision of $14,600, compared to a net income of $42,299 for the quarter ended January 31, 2025 after a net tax expense of $16,000.

During its fiscal year ending July 31, 2026, the Company anticipates being in net income position from normal operations and any revenues or expenses resulting from an expansion of the Company's business or acquisition program.

The Company's management is not aware of any trends or other expected fluctuations in its liquidity that would create any deficiencies, except those that could arise from termination or cancellation of contracts. The Company's management believes that its cash balances will be sufficient to meet the Company's short-term goals and will continue to review long-term requirements as necessary for operations and planned growth.

Capital Requirements and Resources

The Company anticipates that it will have little need to acquire property and equipment over the next year. If the Company is required to purchase additional equipment to service an agreement, the Company would utilize its available cash to finance these capital expenditures.

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JEMTEC Inc.
Management Discussion & Analysis

Item 9. Transactions with Related Parties

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 (2025 - $20,000) is made to two directors, $25,000 (2025 - $25,000) is made to the Chairman and a fee of $1,000 (2025 - $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 (2025 - $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 January 31, 2026 and 2025.

Nature of expenditure	Three months ended January 31, 2026	Three months ended January 31, 2025	Six months ended January 31, 2026	Six months ended January 31, 2025
Accounting and administrative fees	$ 12,000	$ 22,600	$ 24,000	$ 34,300
Directors' fees	25,776	25,746	42,708	42,378
Salary and benefits	75,271	68,845	147,976	136,703
Share-based payments	-	3,220	-	9,061
	$ 113,047	$ 120,411	$ 214,384	$ 222,442

During the quarter ended January 31, 2026, $25,776 (January 31, 2025 - $25,746) was accrued or paid to the directors of the Company as directors' fees. At January 31, 2026, $5,417 (July 31, 2025 - $Nil) was due to the directors and was included in accounts payable and accrued liabilities.

During the quarter ended January 31, 2026, $12,000 (January 31, 2025 - $22,600) was accrued or paid to a Firm where a Partner in the Firm is an officer of the Company. At January 31, 2026, $4,200 (July 31, 2025 - $4,200) was owing to this officer and was 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.

Item 12. Critical Accounting Estimates

The preparation of financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expense during the reported periods. Actual results could differ from those estimates.

Reference should be made to Note 2 – Basis of Presentation and Note 3 - Significant Accounting Policies in the notes to the Company's audited financial statements for the years ended July 31, 2025 and 2024 for more information concerning the accounting principles used in the preparation of the Company's audited financial statements.

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JEMTEC Inc.
Management Discussion & Analysis

Item 13. Changes in Accounting Policies and Future Accounting Changes

Certain pronouncements were issued by the IASB or the IFRIC that are mandatory for annual periods commencing on or after January 1, 2025. 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.

Item 14. Financial Instruments and Other Instruments

Details of the Company's financial instruments, management's assessment of their related risks and details of management of those risks are as follows:

Financial Risk Management

The Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework. The Company's financial instruments consist of cash and cash equivalents, accounts receivable, and accounts payable and accrued liabilities (excluding government service tax liabilities).

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 January 31, 2026, the Company had $2,613,808 in cash balances.

The fair values of the Company's financial instruments approximate their book values due to the short-term nature of these instruments.

Financial Instruments Risk Exposure

The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board approves and monitors the risk management processes. The Company does not have any asset backed commercial paper.

Credit Risk

The Company's main exposure to credit risk is on its bank accounts. All cash balances are held in a Canadian Schedule I bank.

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JEMTEC Inc.
Management Discussion & Analysis

Liquidity Risk

The Company's approach to managing liquidity is to ensure that it will have sufficient liquidity to settle obligations and liabilities when due. As at January 31, 2026, the Company had cash of $2,613,808 to settle $347,369 in current liabilities, which fall due for payment within twelve months of the statement of financial position.

The Company's cash is invested in business accounts which are available on demand.

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.

Foreign Exchange Risk

As at January 31, 2026, all of the Company's cash balances were held in Canada in Canadian dollars. As a result, the Company's exposure to fluctuations in foreign exchange rates on cash is limited.

Item 15. Other Information

Share Capital

The Company has three classes of share capital:

• Common shares: Unlimited, no par value
• First preference shares: Unlimited, no par value, issuable in series - None issued as at January 31, 2026 and July 31, 2025
• Second preference shares: 25,000 Series A, no par value, redeemable, $0.60 non-cumulative dividend - None issued as at January 31, 2026 and July 31, 2025

As at January 31, 2026 and March 26, 2026, 2,794,679 common shares were outstanding.

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 279,467. Options granted under the plan vest as determined by the Board when the options are 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 TSXV.

There are 279,465 options issued of which 279,465 are vested at January 31, 2026.

Warrants

None outstanding.

Additional Information

Additional information relating to the Company is available on the SEDAR website at www.sedar.com and on the Company's website at www.JEMTEC.ca

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