LITHOS GROUP LTD.

Condensed Interim Consolidated Financial Statements

Six Months Ended October 31, 2025 and 2024

(Expressed in Canadian Dollars)

NOTICE OF NO AUDITOR 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 interim financial statements of the Company for the six months ended October 31, 2025, have been prepared by and are the responsibility of the Company's management.

The Company's independent auditor Charlton & Company 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.

December 22, 2025
Vancouver, Canada

LITHOS GROUP LTD.
Condensed Interim Consolidated Statements of Financial Position
(Expressed in Canadian Dollars)

As at	Notes	October 31, 2025	April 30, 2025
Assets
Current
Cash		$ 904	$ 21,197
GST receivable		13,059	6,839
Prepaid expenses	14	15,751	15,751
		29,714	43,787
Property, plant and equipment	9	1,018,547	1,063,622
Total assets		$ 1,048,261	$ 1,107,409
Liabilities
Current
Accounts payable and accrued liabilities	14	$ 1,938,869	$ 1,870,200
Deferred grant liability	10	595,533	595,533
Notes payable	11	1,063,596	929,491
Derivative liability	11	12,058	9,892
Total liabilities		3,610,056	3,405,116
Shareholders' equity (deficiency)
Share capital	13, 14	36,905,301	36,905,301
Reserves	13	841,365	814,672
Accumulated other comprehensive loss		410,945	403,183
Deficit		(40,719,406)	(40,420,863)
Total shareholders' equity (deficiency)		(2,561,795)	(2,297,707)
Total liabilities and shareholders' equity (deficiency)		$ 1,048,261	$ 1,107,409

Nature of operations (note 1)
Going concern (note 2)

Approved on behalf of the Board by:
"Michael Westlake"
Director

"Scott Taylor"
Director

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

LITHOS GROUP LTD.
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
Six Months Ended October 31, 2025 and 2024
(Expressed in Canadian Dollars)

	Notes	Three Months Ended		Six Months Ended
		October 31, 2025	October 31, 2024	October 31, 2025	October 31, 2024
		$	$	$	$
Expenses
Business development		-	48,882	-	114,372
Consulting fees	12	-	250,732	8,308	637,790
Depreciation	7,9,10	30,189	1,497,647	60,082	2,349,844
Filing fees and shareholder information		8,002	25,981	17,979	89,880
Interest and finance fees		57,430	134,368	117,214	322,688
Investor relations		-	(24,309)	-	50,792
Office and general		5,866	81,217	10,623	166,229
Professional	12	23,082	57,542	39,603	190,220
Rent	12	-	6,856	-	28,601
Travel		-	11,152	-	19,073
Salaries		4,300	(29,997)	5,773	150,537
Share-based payments	12	26,693	1,194,610	26,693	2,007,230
		(155,562)	(3,254,681)	(286,275)	(6,127,256)
Foreign exchange gain (loss)		(10,102)	(15,609)	(10,102)	(23,927)
Change in fair value of derivative	11	(2,166)	-	(2,166)	284,478
Gain on settlement of debt		-	-	-	211,942
Grant income	10	-	75,927	-	456,899
Net Loss		(167,830)	(3,194,363)	(298,543)	(5,197,864)
Other comprehensive loss		(19,321)	(209,760)	7,762	(265,162)
Loss and comprehensive loss for the Period		(187,151)	(3,404,123)	(290,781)	(5,463,026)
Basic and diluted loss per share		(0.02)	(0.38)	(0.03)	(0.61)
Weighted average number of common shares outstanding – basic and diluted		9,106,722	8,461,757	9,106,722	8,461,226

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

LITHOS GROUP LTD.
Consolidated Statements of Changes in Shareholders' Equity (Deficiency)
(Expressed in Canadian Dollars)

	Number of shares	Share capital	Reserves	AOCI	Deficit	Total
Balance, April 30, 2024	8,453,817	$ 36,766,312	$ 1,578,335	$ 297,855	$ (15,330,899)	$ 23,311,603
Exercise of warrants	7,959	10,000	-	-	-	10,000
Share-based payments	-	-	2,007,230	-	-	2,007,230
Foreign currency translation adjustment	-	-	-	(563,017)	-	(563,017)
Loss for the period	-	-	-	-	(5,197,864)	(5,197,864)
Balance, October 31, 2024	8,461,776	$ 36,776,312	$ 3,585,565	$ (265,162)	$ (20,528,763)	$ 19,567,952
Balance, April 30, 2025	9,106,722	$ 36,905,301	$ 814,672	$ 403,183	$ (40,420,863)	$ (2,297,707)
Share-based payments	-	-	26,693	-	-	26,693
Foreign currency translation adjustment	-	-	-	7,762	-	7,762
Loss for the period	-	-	-	-	(298,543)	(298,543)
Balance, October 31, 2025	9,106,722	$ 36,905,301	$ 841,365	$ 410,945	$ (40,719,406)	$ (2,561,795)

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

LITHOS GROUP LTD.
Condensed Interim Consolidated Statements of Cash Flows
Six Months Condensed Interim Consolidated Statements of Cash Flows
Ended October 31, 2025 and 2024
(Expressed in Canadian Dollars)

	2025	2024
Operating Activities	Notes
Loss for the year	$ (298,543)	$ (5,197,864)
Items not involving cash:
Depreciation	60,082	2,349,844
Interest accrued on notes payable	117,214	56,877
Accretion of notes payable	-	265,811
Share-based payments	26,693	2,007,230
Change in fair value of derivative	2,166	(284,478)
Gain on modification of debt	-	(211,942)
Changes in non-cash working capital items:
GST receivable	(6,220)	39,711
Prepaid expenses	-	54,308
Accounts payable and accrued liabilities	68,669	601,575
Cash used in operating activities	(29,939)	(318,928)
Investing Activities
Acquisition of equipment	9	(19,859)
Cash used in investing activities	-	(19,859)
Financing Activities
Lease payments		(20,882)
Proceeds from government grants	10	552,063
Expenditures under government grants	10	(834,276)
Proceeds from private placements	13	10,000
Cash provided by financing activities	-	(293,095)
Change in foreign exchange – cash and other	9,646	(4,816)
Change in cash during the year	(29,939)	(631,822)
Cash, beginning of year	21,197	691,178
Cash, end of year	$ 904	$ 54,540

Supplemental cash flow information (note 16)

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

LITHOS GROUP LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Six Months Ended October 31, 2025 and 2024

(Expressed in Canadian Dollars, unless otherwise stated)

1. NATURE OF OPERATIONS

Lithos Group Ltd. (the "Company" or "Lithos") was incorporated as NY85 Capital Inc. under the Business Corporations Act on October 22, 2010 in the province of British Columbia. On October 1, 2012, the shareholders of the Company approved the name change from NY85 Capital Inc. to Alchemist Mining Inc. On August 15, 2023, the Company changed its name to Lithos Energy Ltd. On December 8, 2023, the Company de-listed from the Canadian Securities Exchange ("CSE") and commenced trading on Cboe Canada ("Cboe") under the ticker symbol "LITS". On January 24, 2024, the Company changed its name from "Lithos Energy Ltd." to "Lithos Group Ltd." On April 7, 2025, the Company delisted from the Cboe and re-listed on the CSE. The common shares of the Company are listed for trading under the symbol LITS. The Company's head office is located at Suite 2380 - 1055 West Hastings Street, Vancouver, British Columbia, V6E 2E9.

On August 4, 2023, the Company acquired all of the issued and outstanding common shares of Aqueous Resources LLC ("Aqueous"), a private entity located in Denver, Colorado, by issuing 1,750,000 common shares. Aqueous is the sole owner of patented technology for electro-pressure membrane process and method for recovery and concentration of lithium chloride from aqueous sources. The acquisition of Aqueous was accounted for as an asset acquisition (note 7).

On May 13, 2025, the Company consolidated its shares on a basis of 10 old shares for 1 new share. The share consolidation has been reflected retrospectively in these consolidated financial statements.

2. GOING CONCERN

These consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations.

During the six months ended October 31, 2025, the Company incurred a net loss of $298,543 (2024 - $5,197,864). As at October 31, 2025, the Company has an accumulated deficit of $40,719,406 (2024 - $20,528,763) and a working capital deficiency of $3,580,342 (2024 - working capital deficiency of $2,929,864). These factors indicate the existence of a material uncertainty that may raise significant doubt about the Company's ability to continue as a going concern.

The application of the going concern concept is dependent upon the Company's ability to satisfy its liabilities as they become due and to obtain the necessary financing to complete the development of its technologies and the attainment of profitable operations. Management is actively engaged in seeking to raise the necessary capital to meet its funding requirements. There can be no assurance that management's plan will be successful. If the going concern assumption were not appropriate for these consolidated financial statements, then adjustments may be necessary in the carrying values of assets and liabilities, the reported expenses and the consolidated statement of financial position classifications used. Such adjustments could be material.

3. BASIS OF PRESENTATION

Approval of the consolidated financial statements

These consolidated financial statements for the six months ended October 31, 2025 were reviewed by the Audit Committee and approved and authorized for issue on December 22, 2025 by the Board of Directors of the Company.

LITHOS GROUP LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Six Months Ended October 31, 2025 and 2024
(Expressed in Canadian Dollars, unless otherwise stated)

3. BASIS OF PRESENTATION (Continued)

Statement of compliance

These consolidated financial statements have been prepared in accordance with IFRS Accounting Standards ("IFRS"), as issued by the International Accounting Standards Board ("IASB").

Basis of preparation

These consolidated financial statements are presented in Canadian dollars, which is also the Company and its Canadian subsidiaries' functional currency. Aqueous Resources LLC, Lithos Alabama LLC, and Lithos Technology LLC's functional currency is the US dollar ("USD"). These consolidated financial statements have been prepared on a historical cost basis, except for certain financial assets and financial liabilities measured at fair value.

Basis of consolidation

These consolidated financial statements include the accounts of the Company and its controlled entities. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. All significant intercompany transactions and balances have been eliminated on consolidation.

	Country of incorporation	Percentage owned
		October 31, 2025	April 30, 2025
1282112 B.C. Ltd.	Canada	Dissolved	100%
Aqueous Resources LLC	USA	100%	100%
Iron Forge Holdings (I) Ltd.	Canada	100%	100%
Lithos Technology Corp.	Canada	Dissolved	100%
Lithos Technology LLC	USA	Dissolved	100%
Lithos Alabama LLC	USA	Dissolved	100%

Significant accounting judgments, estimates and assumptions

The preparation of consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, contingent assets, and contingent liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes may differ from these estimates.

Significant accounting judgments

Acquisitions

Judgment is used when determining whether an acquisition is a business combination or an asset acquisition. When applicable, management may consider the optional use of the concentration test, when in substance, an acquisition represents the purchase of a single asset or group of similar assets. Judgment is also used in measuring the fair value of equity instruments issued as consideration in an asset acquisition or business combination.

LITHOS GROUP LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Six Months Ended October 31, 2025 and 2024

(Expressed in Canadian Dollars, unless otherwise stated)

3. BASIS OF PRESENTATION (Continued)

The Company measures all assets acquired and liabilities assumed at their acquisition-date fair values. In a business combination, the excess of the aggregate of the consideration transferred over the net assets of the acquisition-date amounts of all identifiable assets acquired and the liabilities assumed, is recognized as goodwill as of the acquisition date.

Cash generating unit ("CGUs")

The identification of cash generating units involves significant judgment when identifying and allocating assets and liabilities to the smallest group of assets that is largely independent of the cash inflows from other assets or groups of assets. Management considers the organizational structure and business operations when making this determination. These judgments are critical in the impairment process and could have a material impact on the accuracy of impairment testing.

Going concern

The assessment of the Company's ability to continue as a going concern and to raise sufficient funds to pay for its ongoing operating expenditures, meet its liabilities for the ensuing year, and to fund planned and contractual technology development programs, involves significant judgment based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances.

Title to mineral property interest

Although the Company has taken steps to verify title to mineral properties that it currently has under option, these procedures do not guarantee the Company's title. Such properties may be subject to prior agreements or transfer and title may be affected by undetected defects.

Significant accounting estimates and assumptions

Valuation of equity consideration granted for acquisitions

The valuation of share consideration granted involves management judgment in determining the valuation of the share consideration granted. Judgment is exercised in assessing the fair value of the shares granted as well as any potential lock-up provisions on the common shares or performance shares.

Estimated useful life of intangible assets and property, plant and equipment

Amortization of capital and intangible assets is dependent upon estimates of useful lives based on management's judgment. Additional determination must be made by management whether the identified intangible assets have an indefinite life or if not, management determines its lifespan. In management's view, the Lithos Technology and the Aqueous Technology have finite lives and will have a useful lives of 7 years.

Impairment of exploration and evaluation assets

The application of the Company's accounting policy for exploration and evaluation expenditures requires judgment in determining whether it is likely that future economic benefits will flow to the Company, which may be based on assumptions about future events or circumstances.

Estimates and assumptions made may change if new information becomes available. If, after an expenditure is capitalized, information becomes available suggesting that the recovery of the expenditure is unlikely, the amount capitalized is written off in the profit or loss in the period the new information becomes available.

LITHOS GROUP LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Six Months Ended October 31, 2025 and 2024

(Expressed in Canadian Dollars, unless otherwise stated)

3. BASIS OF PRESENTATION (Continued)

Discount rate used to present value lease liability

Management is required to estimate the Company's incremental borrowing rate. This rate is used to discount the future lease cash flows to determine the carrying value of the lease liability. Management estimates its incremental borrowing rate based on the risk-free rate and a credit risk premium for a period commensurate with the term of the lease.

Impairment considerations of capital assets, intangible assets and goodwill

Goodwill impairment testing requires management to make critical estimates within the impairment testing model. On an annual basis, the Company tests whether goodwill is impaired.

Determining whether any charge to impairment against the Company's capital assets and finite lived intangible assets require management to estimate the recoverable amount, which is defined as the higher of fair value less the cost of disposal or value in use. Many factors used in assessing recoverable amounts are outside of the control of management and it is reasonably likely that assumptions and estimates will change from period to period. Impairment is reviewed on an annual basis or as events and conditions change.

The recoverable value of goodwill and intangible assets is determined using discounted cash flow models, which incorporate assumptions about future events including future cash flows, growth rates and discount rates.

Deferred income tax

The Company recognizes deferred tax assets to the extent their recovery is probable. Assessing the recoverability of deferred tax assets requires management to make significant estimates of future taxable profit against which deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilized. In addition, changes in tax laws could limit the ability of the Company to obtain tax deductions in future periods.

Share-based payments

The determination of the fair value related to share-based payments are subject to estimate. Estimating fair value for share-based payment transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. Where a share-based payment includes performance conditions that impact the vesting of the award, management applies estimates to the likelihood the performance obligation will be met and the percentage of forfeitures.

Derivatives

Determining the fair value of the warrant derivative liability requires estimates relating to the choice of a valuation model and may involve the estimation of price volatility, the expected term, and risk-free interest rates. The Company elects to use the Black-Scholes Option Pricing Model. Any changes in the estimates or inputs utilized to determine fair value could have a significant impact on the Company's future operating results.

LITHOS GROUP LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Six Months Ended October 31, 2025 and 2024
(Expressed in Canadian Dollars, unless otherwise stated)

4. MATERIAL ACCOUNTING POLICY INFORMATION

Property, Plant and Equipment

On initial recognition, property, plant and equipment is valued at cost, being the purchase price and directly attributable costs of acquisition or construction required to bring the asset to the location and condition necessary to be capable of operating in the manner intended by the Company, including appropriate borrowing costs and the estimated present value of any future unavoidable costs of dismantling and removing items.

Property, plant and equipment is subsequently measured at cost less accumulated depreciation, less any accumulated impairment losses. The Company begins to depreciate an asset when it becomes available for use, which is when it is in the location and condition necessary for it being capable of operating in the manner intended by management.

Property, plant and equipment is depreciated on a straight-line basis over their estimated useful lives as follows:

Property, plant, equipment	Term
Leasehold improvements	Over the term of the lease
Pilot plant equipment	10 years

An item is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on disposal of the asset, determined as the difference between the net disposal proceeds and the carrying amount of the asset, is recognized in profit or loss.

Exploration and evaluation assets

Pre-exploration costs are expensed in the period in which they are incurred. Once the legal right to explore an exploration and evaluation asset has been acquired, all costs related to the acquisition of the property and exploration on the property are capitalized on a property-by-property basis. All expenditures are capitalized until such time the properties are placed into commercial production, sold, abandoned or impaired. If commercial production is achieved from a mineral property, the related capitalized costs will be tested for impairment and reclassified to mineral property in production and will be accounted for under IAS 16.

The carrying values of capitalized amounts are reviewed annually, or when indicators of impairment are present. If it is determined that the carrying amount of an exploration and evaluation asset is impaired, that property is written down to its estimated net realizable value.

From time-to-time, the Company may acquire or dispose of all or part of its mineral property interests under the terms of property option agreements. Options are exercisable entirely at the discretion of the optionee and, accordingly, option payments are recorded as property costs or recoveries when paid or received. When recoveries exceed the carrying value of the mineral property, the excess is reflected in the consolidated statements of loss and comprehensive loss.

Restoration and environmental obligations

The Company recognizes liabilities for statutory, contractual, constructive or legal obligations associated with the retirement of long-term assets, when those obligations result from the acquisition, construction, development or normal operation of the assets. The net present value of future restoration cost estimates arising from the decommissioning of plant and other site preparation work is capitalized to the related asset along with a corresponding increase in the restoration provision in the period incurred.

LITHOS GROUP LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Six Months Ended October 31, 2025 and 2024
(Expressed in Canadian Dollars, unless otherwise stated)

4. MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Discount rates using a pre-tax rate that reflect the time value of money are used to calculate the net present value.

The Company's estimates of restoration costs could change as a result of changes in regulatory requirements, discount rates and assumptions regarding the amount and timing of the future expenditures. These changes are recorded directly to the related asset with a corresponding entry to the restoration provision. The Company's estimates are reviewed annually for changes in regulatory requirements, discount rates, effects of inflation and changes in estimates.

Changes in the net present value, excluding changes in the Company's estimates of restoration costs, are charged to the statement of comprehensive loss for the period. The net present value of restoration costs arising from subsequent site damage that is incurred on an ongoing basis during production is charged to the statement of comprehensive loss in the period incurred.

The costs of restoration projects that were included in the provision are recorded against the provision as incurred. The costs to prevent and control environmental impacts at specific properties are capitalized in accordance with the Company's accounting policy for exploration and evaluation assets.

As of October 31, 2025 and 2024, the Company did not have any decommissioning liabilities.

Intangible assets

The Company's intangible assets consists of its conductive fracturing imaging technology ("CFI" or the "Lithos Technology") and its patented electro-pressure membrane process technology for recovery and concentration of lithium chloride from aqueous sources ("AcQUA").

The assets are carried on the Company's financial statements using the cost model. The intangible assets have finite lives and will be amortized over their useful economic lives of 7 years. The intangible assets are assessed for impairment whenever there is an indication that the intangible assets may be impaired. The amortization period and the amortization method for the intangible assets is reviewed at least annually. A change in the expected useful lives of the expected pattern of consumption of future economic benefits embodied in the assets is accounted for by changing the amortization period or method, as appropriate, and treated as changes in accounting estimates. The Company's intangible assets are combined with goodwill into a single cash-generating unit.

Goodwill

Goodwill represents the excess of the purchase price paid for an acquisition over the fair value of the net tangible and intangible assets acquired. Following the initial recognition, goodwill is measured at cost less any accumulated impairment losses.

Goodwill has an indefinite useful life, is not subject to amortization and therefore, subject to impairment testing annually for any impairment, or more frequently in the case that events or circumstances indicate. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Company's cash-generating units or group of CGUs that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

LITHOS GROUP LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Six Months Ended October 31, 2025 and 2024
(Expressed in Canadian Dollars, unless otherwise stated)

4. MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The Company measures goodwill as the fair value of the consideration transferred less the recognized amount of the identifiable assets and liabilities assumed, all measured at the acquisition date. Transactions costs, other than those associated with the issue of equity instruments, incurred in connection with a business combination are expensed as incurred.

Impairment of non-current assets

At the end of each reporting period, the Company reviews the carrying amounts of its non-current assets to determine whether there is any indication that those assets have suffered an impairment loss. Individual assets are grouped together as a cash generating unit for impairment assessment purposes at the lowest level at which there are identifiable cash flows that are independent from other group assets.

If any such indication of impairment exists, the Company makes an estimate of its recoverable amount. The recoverable amount is the higher of fair value less costs to sell and value in use.

Where the carrying amount of a cash generating unit exceeds its recoverable amount, the cash generating unit is considered impaired and is written down to its recoverable amount. In assessing the value in use, the estimated future cash flows are adjusted for the risks specific to the cash generating unit and are discounted to their present value with a discount rate that reflects the current market indicators.

Where an impairment loss subsequently reverses, the carrying amount of the cash generating unit is increased to the revised estimate of its recoverable amount, to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the cash generating unit in prior years. A reversal of an impairment loss is recognized as income through profit or loss.

Financial instruments

Financial assets

(i) Recognition and measurement of financial assets

The Company recognizes a financial asset when it becomes a party to the contractual provisions of the instrument.

(ii) Classification of financial assets

The Company classifies financial assets at initial recognition as financial assets: measured at amortized cost, measured at fair value through other comprehensive income or measured at fair value through profit or loss.

Financial assets measured at amortized cost

A financial asset that meets both of the following conditions is classified as a financial asset measured at amortized cost:

LITHOS GROUP LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Six Months Ended October 31, 2025 and 2024
(Expressed in Canadian Dollars, unless otherwise stated)

4. MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

The Company's business model for such financial assets is to hold the assets in order to collect contractual cash flows; and
The contractual terms of the financial asset gives rise on specified dates to cash flows that are solely payments of principal and interest on the amount outstanding.

A financial asset measured at amortized cost is initially recognized at fair value plus transaction costs directly attributable to the asset. After initial recognition, the carrying amount of the financial asset measured at amortized cost is determined using the effective interest method, net of impairment loss, if necessary.

Financial assets measured at fair value through other comprehensive income ("FVTOCI")

Elected investments in equity instruments measured at fair value through other comprehensive income is recognized initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, the asset is measured at fair value with changes in fair value included as "financial asset at fair value through other comprehensive income" in other comprehensive income.

Financial assets measured at fair value through profit or loss ("FVTPL")

A financial asset measured at fair value through profit or loss is recognized initially at fair value with any associated transaction costs being recognized in profit or loss when incurred. Subsequently, the financial asset is re-measured at fair value, and a gain or loss is recognized in profit or loss in the reporting period in which it arises.

The Company's financial assets consist of cash, which is measured at FVTPL.

Impairment of financial assets at amortized cost

The Company recognizes a loss allowance for expected credit losses on financial assets that are measured 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 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 shall recognize in the consolidated statements of 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.

Derecognition of financial assets

The Company derecognizes a financial asset if the contractual rights to the cash flows from the asset expire, or the Company transfers substantially all the risks and rewards of ownership of the financial asset. Any interests in transferred financial assets that are created or retained by the Company are recognized as a separate asset or liability. Gains and losses on derecognition are generally recognized in the consolidated statements of loss and comprehensive loss.

LITHOS GROUP LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Six Months Ended October 31, 2025 and 2024
(Expressed in Canadian Dollars, unless otherwise stated)

4. MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial liabilities

Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the financial instrument. A financial liability is derecognized when it is extinguished, discharged, cancelled or when it expires. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or financial liabilities subsequently measured at amortized cost. All interest-related charges are reported in profit or loss within interest expense, if applicable.

The Company's financial liabilities include accounts payable and accrued liabilities, notes payable, and lease liability which are all measured at amortized cost and its derivative liability which is measured at FVTPL.

Convertible debt

Compound financial instruments issued by the Company comprise convertible debentures that can be converted to share capital at the option of the holder. If the number of shares to be issued is fixed and does not vary, the liability component of a compound financial instrument is recognized initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognized initially as the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Embedded derivatives are contained in non-derivative host contacts and are treated as separate derivatives when they meet the definition of a derivative, and their risks and characteristics are not closely related to those of the host contracts. Embedded derivatives are recorded at fair market value with mark-to-market adjustments recorded in the statement of loss and comprehensive loss. The Company uses the Black-Scholes Option Pricing Model to calculate the fair value of its derivatives.

Income taxes

Income tax expense consisting of current and deferred tax expense is recognized in the consolidated statements of loss and comprehensive loss. Current tax expense is the expected tax payable on the taxable income for the year, using tax rates substantively enacted at year-end, adjusted for amendments to tax payable with regard to previous years.

Deferred tax assets and liabilities and the related deferred income tax expense or recovery are recognized for deferred tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the substantively enacted tax rates expected to apply when the asset is realized or the liability settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that substantive enactment occurs.

A deferred tax asset is recognized to the extent that it is probable that future taxable income will be available against which the asset can be utilized. To the extent that the Company does not consider it probable that a deferred tax asset will be recovered, the deferred tax asset is reduced. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

LITHOS GROUP LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Six Months Ended October 31, 2025 and 2024
(Expressed in Canadian Dollars, unless otherwise stated)

4. MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Share-based payments

Under the Company's equity incentive plan, it may grant stock options, restricted share units ("RSUs"), and performance share units ("PSUs") to acquire common shares of the Company to directors, officers, employees and consultants. The fair value of share-based payments to employees is measured at grant date using the Black-Scholes Option Pricing Model, and is recognized over the vesting period. Fair value of share-based payments for non-employees is recognized and measured at the date the goods or services are received based on the fair value of the goods or services received. If it is determined that the fair value of goods and services received cannot be reliably measured, the share-based payment is measured at the fair value of the equity instruments issued using the Black-Scholes Option Pricing Model.

The fair value of share-based payments is recognized as an expense with a corresponding increase in reserves. The amount recognized as an expense is adjusted to reflect the number of stock options, RSUs or PSUs that are expected to vest.

Where a grant of stock options is cancelled or settled during the vesting period, excluding forfeitures when vesting conditions are not satisfied, the Company immediately accounts for the cancellation as an acceleration of vesting and recognizes the amount that otherwise would have been recognized for services received over the remainder of the vesting period. Any payment made to the employee on the cancellation is accounted for as the repurchase of an equity interest, except to the extent the payment exceeds the fair value of the equity instrument granted, measured at the repurchase date. Any such excess is recognized as an expense. Consideration received on the exercise of stock options is recorded in share capital and the related options reserves is transferred to share capital.

The fair value of RSUs and PSUs is equal to the market price of the Company's common shares on the date of grant. RSUs are redeemable on the vesting date, into an equal number of common shares of the Company. The PSUs vest on the successful completion of certain revenue and financing objectives as set out in the agreements. When awards include a performance condition that impacts the vesting of the award, the Company records an expense when it becomes probable that the performance condition will be met and the expense will be attributed over the explicit or implicit service period. The Company accounts for forfeitures as they occur. Any previously recognized expense related to the unvested forfeited awards will be reversed during the period of forfeiture. For the expired or the forfeited awards that have vested, the Company reclassifies the related balance within shareholders' equity (deficiency) from reserves to deficit.

Loss per share

Basic loss per share is calculated by dividing the net loss for the year by the weighted average number of common shares outstanding during the year. Diluted loss per share is calculated using the treasury stock method. Under the treasury stock method, the weighted average number of common shares outstanding used in the calculation of diluted loss per share assumes that the deemed proceeds received from the exercise of share options, RSUs, PSUs, share purchase warrants and their equivalents would be used to repurchase common shares of the Company at the average market price during the year.

Existing share options, RSUs, PSUs, and share purchase warrants have not been included in the computation of diluted loss per share as to do so would be anti-dilutive. Accordingly, basic and diluted loss per share is the same.

LITHOS GROUP LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Six Months Ended October 31, 2025 and 2024
(Expressed in Canadian Dollars, unless otherwise stated)

4. MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Share capital

Proceeds from the exercise of stock options and warrants are recorded as share capital in the amount for which the option or warrant enabled the holder to purchase a share in the Company. Share capital issued for non-monetary consideration is valued at the closing market price at the date of issuance. The proceeds from the issuance of units are allocated between common shares and warrants based on the residual value method. Under this method, the proceeds are allocated first to share capital based on the fair value of the common shares at the time the units are priced and any residual value is allocated to the warrants reserve. Consideration received for the exercise of options or warrants is recorded in share capital and the related residual value is transferred to share capital. For those options and warrants that expire, the recorded value is transferred to deficit.

Leases

The Company considers whether a contract is, or contains, a lease. A lease is defined as 'a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration'.

At lease commencement date, the Company recognizes a right-of-use asset and a lease liability on the statement of financial position. The Company depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Company also assesses the right-of-use asset for impairment when such indicators exist.

At the commencement date, the Company measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available. If the interest rate implicit in the lease is not readily available, the Company discounts using the Company's incremental borrowing rate. Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised.

Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments. When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero.

The Company has elected to account for short-term leases and leases of low-value assets using the practical expedients basis. Instead of recognizing a right-of-use asset and lease liability, the payments in relation to these are recognized as an expense in profit or loss on a straight-line basis over the lease term. On the consolidated statement of financial position, right-of-use assets have been included under non-current assets and lease liabilities have been included under current and non-current liabilities.

During the six months ended October 31, 2025, the Company recognized rent expense of $Nil (2024 - $28,601) in relation to short-term leases.

LITHOS GROUP LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Six Months Ended October 31, 2025 and 2024
(Expressed in Canadian Dollars, unless otherwise stated)

4. MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Provisions

Provisions are recorded when a present legal or constructive obligation exists as a result of past events where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at consolidated statement of financial position date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. The increase in the obligation due to the passage of time is recognized as finance expense. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount receivable can be measured reliably.

Related parties

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. Parties are also considered to be related if they are subject to common control. 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.

Foreign exchange

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates. Transactions in currencies other than the Company and its subsidiaries' functional currencies are recorded at exchange rates prevailing on the dates of the transactions. At the end of each reporting period, monetary assets and liabilities denominated in foreign currencies are translated at the period end exchange rate while non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at the exchange rates approximating those in effect on the date of the transactions. Exchange gains and losses arising on translation are included in profit or loss.

On translation of the entities whose functional currency is not the Canadian dollar, expenses are translated at the exchange rates approximating those in effect on the date of the transactions. Assets and liabilities are translated at the rate of exchange at the reporting date and equity is translated at historical rates. Exchange gains and losses, including results of re-translation, are recorded as a cumulative translation adjustment in other comprehensive income.

Government grants

The Company recognizes government grants and assistance when there is reasonable assurance that the grant will be received and any conditions associated with the grant have been met. Grant funding that is used to finance construction or is used towards the acquisition of property, plant and equipment is accounted for using the capital approach. Under the capital approach, the Company recognizes the grant funding as a deferred grant liability that is amortized over the useful life of the assets it was used to purchase. Grant funding that is used to cover operating expenses is recognized using the income approach. Under the income approach, the Company recognizes the grant funding as other income in the consolidated statements of loss and comprehensive loss.

LITHOS GROUP LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Six Months Ended October 31, 2025 and 2024
(Expressed in Canadian Dollars, unless otherwise stated)

4. MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

New accounting policies

Amendments to IAS 1, Presentation of Financial Statements: Classification of Liabilities as Current or Non-Current

During the year ended April 30, 2025, the Company adopted the amendments to IAS 1-Presentation of financial statements: Classification of liabilities as current or non-current. The amendments to clarify the requirements for classifying liabilities current or non-current. The amendments specify that the conditions that exist at the end of a reporting period are those that will be used to determine if a right to defer settlement of a liability exists. The amendments also clarify the situations that are considered a settlement of a liability. The adoption of the amendment during the six months ended October 31, 2025 did not have a significant impact on the Company's consolidated financial statements.

Future accounting standards and interpretations issued but not yet adopted

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. IFRS 18 is effective for annual reporting 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 consolidated financial statements.

5. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Financial instruments are agreements between two parties that result in promises to pay or receive cash or equity instruments. The carrying values of these instruments approximate their fair values due to their short term to maturity.

Fair value measurements of financial instruments are required to be classified using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The levels of the fair value hierarchy are defined as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Inputs for assets or liabilities that are not based on observable market data.

The Company's financial instruments classified as Level 1 in the fair value hierarchy include cash. The Company has recorded its derivative liability as a level 2 financial instrument. The carrying values of the Company's accounts payable and accrued liabilities, notes payable, and lease liability approximate their fair values due to the short-term maturity of these instruments.

The Company has exposure to the following risks from its use of financial instruments:

Credit risk;
Liquidity risk; and
Market risk.

LITHOS GROUP LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Six Months Ended October 31, 2025 and 2024
(Expressed in Canadian Dollars, unless otherwise stated)

5. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (Continued)

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. The Company manages credit risk, in respect of cash, by placing cash at major financial institutions in Canada and the United States. The Company's credit risk is limited to its cash balance.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquid funds to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.

The current contractual financial liabilities of the Company as of October 31, 2025, included $3,610,056 (April 30, 2025 - $3,405,116) in accounts payable and accrued liabilities and $1,938,869 (April 30, 2025 - $1,870,200) in notes payable. The majority of the monetary current liabilities are due within 90 days of October 31, 2025. The Company continues to seek additional sources of capital through financing opportunities.

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Company's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return on capital.

The parent Company's functional currency is the Canadian dollar. The Company is subject to foreign exchange risk as it incurs a significant number of transactions denominated in USD. A 10% variance in the foreign exchange rates would expose the Company to a positive or negative impact on its statement of loss and comprehensive loss of approximately $114,000 during the six months ended October 31, 2025. The Company does not engage in any hedging activities to reduce its foreign currency risk.

As at October 31, 2025 and 2024, the Company is not exposed to significant price or interest rate risk.

6. ADVANCES RECEIVABLE

On December 1, 2022, the Company's subsidiary, Lithos Technology LLC entered into a Membership Interest Purchase and Subscription Agreement (the "Membership Agreement") to acquire one-third of the outstanding membership and equity interest of Aqueous Resources LLC ("Aqueous") consisting of 500 Series Preferred Units of Aqueous, plus, warrant certificates to acquire an additional 2,400 units of Series A preferred membership (the "Investment"). Aqueous is the sole owner of pending patent technology for electro-pressure membrane process and method for recovery and concentration of lithium chloride from aqueous sources. The subscription price for the Investment was USD $600,000 (the "Total Consideration"), of which USD $200,000 was payable on the signing of the agreement and USD $400,000 was payable by January 2, 2023.

As at July 31, 2023, the Company paid a deposit of $271,058 (USD $200,000) to Aqueous and during the year ended April 30, 2024, the Company paid an additional $134,085 (USD $100,000).

LITHOS GROUP LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Six Months Ended October 31, 2025 and 2024

(Expressed in Canadian Dollars, unless otherwise stated)

6. ADVANCES RECEIVABLE (Continued)

During the year ended April 30, 2024, the parties terminated the Membership Agreement and entered into a definitive agreement to purchase a 100% interest in Aqueous. As a result, the advances were converted into unsecured, non-interest-bearing demand loans to Aqueous (note 7). The loans were eliminated on consolidation upon the acquisition of Aqueous.

7. INTANGIBLE ASSETS AND GOODWILL

	Intangible assets		Goodwill	Total
	AcQua	Lithos Technology
Cost	$	$	$	$
Balance, April 30, 2024	10,563,784	10,000,000	5,163,487	25,727,271
Impairment	(10,712,865)	(10,000,000)	(5,163,487)	(25,876,352)
Foreign currency translation	149,081	-	-	149,081
Balance, April 30, 2025 and October 31, 2025	-	-	-	-
Accumulated depreciation
Balance, April 30, 2024	1,113,225	1,428,571	-	2,541,796
Depreciation	1,531,302	1,428,571	-	2,959,873
Impairment	(2,678,217)	(2,857,142)	-	(5,535,359)
Foreign currency translation	33,690	-	-	33,690
Balance, April 30, 2025 and October 31, 2025	-	-	-	-
Net Book Value, April 30, 2024	9,450,559	8,571,429	5,163,487	23,185,475
Net Book Value, April 30, 2025 and October 31, 2025	-	-	-	-

Lithos Technology Corp.

On March 6, 2023, the Company entered into an amalgamation agreement with Lithos Technology Corp. ("Lithos Technology"), a private arm's length Alberta company, pursuant to which the Company agreed to acquire all of the issued and outstanding common shares of Lithos Technology by way of "three-cornered" amalgamation, whereby a wholly-owned subsidiary of the Company ("NewCo") and Lithos Technology amalgamated to form a new entity ("AmalCo"), and AmalCo became a wholly-owned subsidiary of Lithos upon completion of the transaction (the "Lithos Transaction"). At the closing of the Lithos Transaction, each of the outstanding common shares of Lithos Technology were cancelled and each respective Lithos Technology shareholder received their pro rata portion of an aggregate of 1,500,000 common shares in the capital of the Company. In addition, the Company issued 1,000,000 performance shares to certain employees and consultants of Lithos Technology. The performance shares were released in June 2023 upon the completion of the first brine shipment from 3 Proton Lithium.

LITHOS GROUP LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Six Months Ended October 31, 2025 and 2024

(Expressed in Canadian Dollars, unless otherwise stated)

7. INTANGIBLE ASSETS AND GOODWILL (Continued)

On April 27, 2023, the Lithos Transaction closed and the Company acquired and gained control of 100% of Lithos Technology's issued and outstanding shares. The Lithos Transaction was accounted for as a business combination in accordance with IFRS 3 – Business Combinations, as such the Company used the acquisition method of accounting.

Goodwill arose over the acquisition of Lithos Technology due to the benefit of expected revenue growth and future market developments that will result from the conductive fracturing imaging technology. These benefits were not recognized separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets. None of the goodwill arising on the Lithos Transaction is expected to be deductible for tax purposes.

Aqueous Resources LLC

On August 4, 2023, the Company closed its securities exchange agreement dated June 13, 2023 with Aqueous Resources LLC, a private arm's length limited liability company based in Denver, Colorado, USA, pursuant to which the Company acquired all of the outstanding membership interests of Aqueous from the holders of the membership interests in exchange for common shares in the capital of the Company (the "Aqueous Transaction"). On completion of the Aqueous Transaction, Aqueous became a wholly-owned subsidiary of the Company.

Pursuant to the terms of the securities exchange agreement, the Company acquired all the outstanding membership interests of Aqueous, and as consideration, issued 1,750,000 common shares, on a pro rata basis, to the members (the "Aqueous Transaction"). The common shares are subject to a lock-up, where-by they will released from escrow in equal tranches every six months over a three year period commencing in February 2024. The consideration was measured at fair value using the closing market price at the date the Aqueous Transaction closed of $6.40 per share, adjusted for a discount for lack of marketability. The estimated fair value of the consideration paid was $9,233,960.

Aqueous did not meet the definition of a business as it met the concentration test requirements in accordance with IFRS 3 - Business Combinations, and as such, was accounted for as an asset acquisition. On completion of the acquisition, Aqueous became a wholly-owned subsidiary of Lithos. No change of control of the Company occurred as a result of the Aqueous Transaction.

Consideration:

Common shares (Note 13)	$ 9,233,960
Finders' fee (a) (Note 13)	640,000
	$ 9,873,960
Fair value of net assets acquired:
Cash	$ 42,303
Prepaid expense	2,340
Property, plant and equipment (Note 9)	13,575
ROU asset (Note 12)	33,259
Intangible asset – AcQUA	10,260,227
Accounts payable and accrued liabilities	(40,642)
Loan payable (Note 6)	(401,845)
Lease liability (Note 12)	(35,257)
	$ 9,873,960

(a) The Company issued an aggregate of 100,000 common shares with a fair value of $640,000 as a finders' fee in connection with the Aqueous Transaction.

LITHOS GROUP LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Six Months Ended October 31, 2025 and 2024
(Expressed in Canadian Dollars, unless otherwise stated)

7. INTANGIBLE ASSETS AND GOODWILL (Continued)

The intangible assets, goodwill, and property plant and equipment form a single cash generating unit. On an annual basis, the Company tests the cash generating unit for impairment. During the year ended April 30, 2025, the Company recorded an impairment charge of $20,344,027 (2024 - $nil).

8. EXPLORATION AND EVALUATION ASSETS

Rhodes Marsh Property, Nevada, USA

On January 27, 2023, the Company acquired the Rhodes Marsh property pursuant to the acquisition of Iron Forge. The Rhodes Marsh property is an early-stage exploration project located in Mineral County, Nevada, USA. The project is comprised of two separate claim blocks within the Rhodes Marsh area, northwest of Las Vegas. During the year ended April 30, 2025, the project was fully impaired as the Company did not have any budgeted or planned exploration programs.

PacMan Project, Arizona, USA

On April 27, 2023, the Company acquired the PacMan property pursuant to the acquisition of Lithos. The property consists of 120 mineral claims which were staked on the Wilcox Playa, Arizona. As at April 30, 2024, the claims were not renewed and as a result, the property was fully impaired.

A breakdown of costs incurred on the mineral properties during the year ended April 30, 2025 is as follows:

	Rhodes Marsh	PacMan	Total
	$	$	$
Balance, April 30, 2024	1,146,941	-	1,146,941
Exploration costs
Claim maintenance	17,247	-	17,247
Impairment	(1,164,188)	-	(1,164,188)
Balance, April 30, 2025 and October 31, 2025	-	-	-

LITHOS GROUP LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Six Months Ended October 31, 2025 and 2024
(Expressed in Canadian Dollars, unless otherwise stated)

PROPERTY, PLANT, AND EQUIPMENT

	Leasehold improvements	Pilot plant Equipment	Total
Cost	$	$	$
Balance, April 30, 2024	5,498	888,997	894,495
Additions	-	304,784	304,784
Impairment	(4,793)	-	(4,793)
Foreign currency translation	(705)	8,039	7,334
Balance, April 30, 2025 and October 31, 2025	-	1,201,820	1,201,820
Accumulated depreciation
---	---	---	---
Balance, April 30, 2024	325	37,104	37,429
Additions*	557	103,865	104,422
Impairment	(1,759)	-	(1,759)
Foreign currency translation	877	(2,771)	(1,894)
Balance, April 30, 2025	-	138,198	138,198
Additions	-	60,082	60,082
Foreign currency translation	-	(15,007)	(15,007)
Balance, October 31, 2025	-	183,273	183,273
Net Book Value, April 30, 2025	-	1,063,622	1,063,622
Net Book Value, October 31, 2025	-	1,018,547	1,018,547

*The additions in the year ended April 30, 2025, were reduced by $42,066 as a result of a prior year unadjusted entry that was double booked during the year ended April 30, 2024. The amount remains outstanding in accounts payable.

DEFERRED GRANTS

Office of Economic Development and International Trade Grant

In June 2023, the Company's subsidiary, Aqueous, was awarded a definitive contract for up to USD $250,000 by the Colorado Global Business Development division of the Office of Economic Development and International Trade ("OEDIT"). This grant supports businesses commercializing innovative and disruptive technologies in the advanced industries that will be created or manufactured in Colorado.

During the six months ended October 31, 2025, the Company received $Nil (2024 - USD $139,813) in grant funding under the program.

Department of Energy Grant

In October 2023, Aqueous was awarded a grant by the U.S. Department of Energy (the "DOE") of up to USD$1,300,000. The DOE funds projects for leading small businesses to pursue scientific, clean energy, and climate research, development, and demonstration projects.

LITHOS GROUP LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Six Months Ended October 31, 2025 and 2024

(Expressed in Canadian Dollars, unless otherwise stated)

10. DEFERRED GRANTS (Continued)

During the six months ended October 31, 2025, the Company received USD $Nil (2024 - $ USD ($58,350) in grant funding under the program.

As at October 31, 2025, the Company had $nil (2024 - $332,920) in deferred grant income related to funds that had been received but not yet spent in accordance with the DOE application.

During the six months ended October 31, 2025, a total of $Nil (2024 - $296,165) was recorded as deferred grant liability for the funds used to purchase capital assets (note 9).

11. NOTES PAYABLE

On November 3, 2023 the Company completed a non-brokered private placement pursuant to which it issued 550 non-convertible note units (the "Notes") for gross proceeds of USD $550,000 ($752,565). The Notes were priced at USD $1,000 each and had 1,818 share purchase warrants attached, for a total of 99,990 share purchase warrants. The Notes had a term of 91 days and bear interest at the rate of 15% per annum payable on maturity. Each warrant entitles the holder thereof to acquire one common share each of the Company at a price of USD $0.55 per warrant for a period of five years from closing. Subsequent to their issuances, the Company extended the maturity date of the notes to June 30, 2024 and again to December 30, 2024. As at October 31, 2025, the notes are overdue.

The warrants attached to the Notes are exercisable in USD which differs from the functional currency of the Company. As a result, the warrants are classified as a financial liability on the consolidated statements of financial position as an embedded derivative. The embedded derivative is initially measured at fair value and re-measured at each period end, with movements recorded as a gain or loss (change in fair value of derivative) on the consolidated statements of loss and comprehensive loss. On initial recognition, the difference between the fair value of the derivative component and the face value of the loan is allocated to the loan liability component.

As a result, the recorded liability to repay the loan is lower than its face value. The debt component is accreted up to its face value over the term using the effective interest rate method.

Upon initial recognition on November 3, 2023, the fair value of the derivative was determined to be $488,388 using the Black Scholes Option Pricing Model to fair value the warrant component. The following assumptions were used in determining fair value: risk-free interest rate of 3.78%; time to maturity of 5 years; and a volatility rate of 108.34%.

As at April 30, 2025, the adjusted fair value of the derivative was determined to be $9,892 (2024 - $430,972). The fair values were determined using the Black-Scholes Option Pricing Model with the following assumptions: risk-free interest rate of 3.07% (2024 - 2.07%); time to maturity of 3.52 years (2024 - 4.52 years); and a volatility rate of 159.28% (2024 - 108.34%).

LITHOS GROUP LTD.

Notes to the Condensed Interim Consolidated Financial Statements

Six Months Ended October 31, 2025 and 2024

(Expressed in Canadian Dollars, unless otherwise stated)

11. NOTES PAYABLE (continued)

A reconciliation of the Notes at October 31, 2025 is as follows:

	Liability component	Derivative component	Total
	$	$	$
Balance, April 30, 2023	-	-	-
Issuance of Notes	264,177	488,388	752,565
Interest expense	54,633	-	54,633
Accretion expense	364,256	-	364,256
Foreign exchange	4,417	-	4,417
Change in fair value of derivative	-	(57,416)	(57,416)
Balance, April 30, 2024	687,483	430,972	1,118,455
Interest expense	115,005	-	115,005
Accretion expense	124,132	-	124,132
Foreign exchange	2,871	-	2,871
Change in fair value of derivative	-	(421,080)	(421,080)
Balance, April 30, 2025	929,491	9,892	939,383
Interest expense	57,430	-	57,430
Accretion expense	-	-	-
Foreign exchange	14,732	-	14,732
Change in fair value of derivative	-	2,166	2,166
Balance, October 31, 2025	1,001,653	12,058	1,013,711

12. RIGHT-OF-USE ASSET AND LEASE LIABILITY

The Company entered into an office lease with a 5-year term commencing on November 1, 2022. The office lease has an acceleration right whereby the Company accelerated the expiration date of the lease to October 31, 2024. The acceleration right was exercised as a result of the subsequent share exchange transaction (note 7).

The weighted average incremental borrowing rate applied to lease liabilities is 16.47%.

Right-of-use asset

Balance, April 30, 2024	$ 13,693
Depreciation of right-of-use asset	(13,623)
Foreign currency translation	(70)
Balance, April 30, 2025 and October 31, 2025	$ -

LITHOS GROUP LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Six Months Ended October 31, 2025 and 2024
(Expressed in Canadian Dollars, unless otherwise stated)

12. RIGHT-OF-USE ASSET AND LEASE LIABILITY (Continued)

Lease liability

Balance, April 30, 2024	$ 19,918
Accretion of interest	892
Payment of lease liabilities	(21,091)
Foreign currency translation	281
Balance, April 30, 2025 and October 31, 2025	$ -

13. SHARE CAPITAL

Authorized

Unlimited number of common shares without par value.

Issued

No shares were issued in the six months ended October 31, 2025.

For the year ended April 30, 2025:

On May 6, 2024, the Company issued 2,959 common shares for warrants with an exercise price of $2.00 per warrant for total gross proceeds of $5,919 which was received during the prior year.

On May 16, 2024, the Company issued 5,000 common shares for warrants with an exercise price of $2.00 per warrant for total gross proceeds of $10,000.

On April 28, 2025, the Company issued 644,946 common shares with a fair value of $128,989 to settle current liabilities of $494,109. The Company recognized a gain on the settlement of $365,120, of which $233,015 was recognized in equity for those individuals acting in the capacity of shareholders (note 14), and the remaining $132,106 was recognized in the consolidated statement of loss and comprehensive loss.

For the year ended April 30, 2024:

On May 29, 2023, the Company closed a private placement of 123,382 common shares at a price of $4.40 per share for gross proceeds of $542,880.

On June 9, 2023, the Company settled accounts payable of $69,435 by issuing 6,200 common shares at a price of $6.60 per share and by paying cash of $34,717. The Company recognized a loss of $6,199 on the settlement.

On August 4, 2023, the Company issued 1,750,000 common shares to the holders of the membership interests of Aqueous in exchange for common shares in the capital of Aqueous Resources LLC. The shares are subject to a voluntary lockup whereby 10% of the shares were released on closing and 15% of the shares are released every six months thereafter. In addition, the Company issued 100,000 common shares with a fair value of $640,000 as a finders' fee in connection the transaction (note 7).

LITHOS GROUP LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Six Months Ended October 31, 2025 and 2024
(Expressed in Canadian Dollars, unless otherwise stated)

13. SHARE CAPITAL (Continued)

On March 8, 2024, the Company issued 7,500 common shares at $5.60 per common share on the exercise of options. On the exercise of the options $14,050 was reclassified from reserves to share capital.

On March 12, 2024, The Company issued 13,245 common shares with a value of $100,000 for advisory services.

On March 15, 2024, the Company issued an aggregate of 99,287 units at a price of $7.00 per unit for gross proceeds of $695,010 in a non-brokered private placement. Each unit is comprised of one common share and one common share purchase warrant. Each warrant will entitle the holder thereof to purchase one common share at a price of $9.00 per warrant share and exercisable for 3 years. In connection with the financing, the Company paid $26,103 in share issuance costs. The warrants were assigned a value of $nil under the residual value method.

On April 15, 2024, the Company issued an aggregate of 64,468 units at a price of $7.00 per unit for gross proceeds of $451,279 in a non-brokered private placement. Each unit is comprised of one common share and one common share purchase warrant. Each warrant will entitle the holder thereof to purchase one common share at a price of $9.00 per warrant share and exercisable for 3 years. In connection with the financing, the Company paid $3,003 in share issuance costs. The warrants were assigned a value of $19,341 under the residual value method.

The Company issued 253,701 common shares on the exercise of 253,701 warrants with an exercise price ranging from $1.45 to $2.00. The Company received gross proceeds of $493,926.

Equity incentive plan

The Company adopted its Omnibus Equity Incentive Plan (the "Omnibus Plan") on November 22, 2022. The Omnibus Plan provides flexibility to the Company to grant equity-based incentive awards in the form of stock options, restricted share units (each, a "RSU"), performance share units (each, a "PSU") and deferred share units (each, a "PSU") to directors, officers, employees, and consultants of the Company. The purpose of the Omnibus Plan is to, among other things, provide the Company with a share related mechanism to attract, retain and motivate qualified directors, officers, employees and consultants of the Company and to reward such of those directors, officers, employees and consultants for their contributions toward the long-term goals and success of the Company and to enable and encourage such directors, employees and consultants to acquire Shares as long-term investments and proprietary interests in the Company.

The Omnibus Plan is a rolling plan which, subject to the adjustment provisions provided for therein (including a subdivision or consolidation of Common Shares), provides that the aggregate maximum number of Common Shares that may be issued upon the exercise or settlement of awards granted under the Omnibus Plan shall not exceed 20% of the Company's issued and outstanding common shares from time to time. The Omnibus Plan is considered an "evergreen" plan, since the common shares covered by awards which have been exercised, settled or terminated shall be available for subsequent grants under the Omnibus Plan and the number of awards available to grant increases as the number of issued and outstanding common shares increases.

LITHOS GROUP LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Six Months Ended October 31, 2025 and 2024
(Expressed in Canadian Dollars, unless otherwise stated)

13. SHARE CAPITAL (Continued)

Stock options

On April 27, 2023, the Company granted 35,000 options to purchase common shares to a director and officer of the Company. Each option is exercisable into one common share at an exercise price of $3.00 until April 27, 2025. The options were fully vested on the date of grant. The fair value of the options granted was determined to be $127,238 using the Black-Scholes Option Pricing model using the following assumptions: Risk-free rate of 3.73%; Expected life of 1 year, expected volatility of 100% and dividend yield of nil.

On June 5, 2023, the Company granted 102,000 options to purchase common shares to the directors of the Company. Each option is exercisable into one common share at an exercise price of $7.00 until June 5, 2026. On the date of grant 34,000 options vested immediately and 34,000 options will vest on each of the first and second anniversaries. The fair value of the options granted was determined to be $340,480 using the Black-Scholes Option Pricing model using the following assumptions: Risk-free rate of 4.28%; Expected life of 1.5 years, expected volatility of 100% and dividend yield of nil.

On July 17, 2023, the Company granted 25,000 options to purchase common shares to a consultant of the Company. Each option is exercisable into one common share at an exercise price of $6.00 until July 17, 2026. On the date of grant 8,333 options were vested and 8,333 options vest on the first and second anniversaries. The fair value of the options granted was determined to be $71,737 using the Black-Scholes Option Pricing model using the following assumptions: Risk-free rate of 4.63%; Expected life of 1.5 years, expected volatility of 100% and dividend yield of nil.

On November 7, 2023, the Company granted 30,000 stock options with an exercise price of $5.60. The options vest on a quarterly basis, commencing three months from the grant date. The options have a term of 18 months. The fair value of the options granted was determined to be $56,201 using the Black-Scholes Option Pricing model using the following assumptions: Risk-free rate of 4.47%; Expected life of 0.75 years, expected volatility of 73.51% and dividend yield of nil.

During year ended April 30, 2025, the Company recognized share-based payments of $97,817 (2024 - $362,460) on vested options and a reversal of $129,265 (2024 - $nil) of share-based compensation for the unvested, forfeited options. During the year ended April 30, 2025, a total of 149,500 options were forfeited, and $444,201 was reclassified from reserves to deficit.

No stock options were granted in the six months ended October 31, 2025.

The continuity of stock option transactions are summarized as follows:

April 30, 2025
	Number of Options	Weighted Average Exercise Price
Outstanding, beginning of year	184,500	$ 5.93
Issued	-	-
Expired	(35,000)	(3.00)
Exercised	-	-
Forfeited	(149,500)	(6.62)
Outstanding, end of year	-	$ -

LITHOS GROUP LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Six Months Ended October 31, 2025 and 2024
(Expressed in Canadian Dollars, unless otherwise stated)

13. SHARE CAPITAL (Continued)

Restricted share units

RSUs are measured at their fair value on the date of grant based on the closing price of the Company's common shares on the date prior to the grant and are recognized as share-based payments over the vesting period, with a corresponding credit to reserve for share-based payments.

During the year ended April 30, 2025, the Company granted 177,110 (2024 - 159,500) RSUs with a fair value of $347,074 (2024 - $958,950). The RSUs are subject to various vesting conditions and during the year ended April 30, 2025, the Company recognized share-based payments of $556,106 (2024 - $663,400). During the year ended April 30, 2025, 193,157 (2024 - nil) RSUs were forfeited or cancelled with a fair value of $684,789 (2024 - $nil). As at April 30, 2025 and October 31, 2025 there were 117,953 exercisable RSUs. The vested RSUs are convertible into common shares at the election of the holder.

Grant date	Fair value	RSUs outstanding	RSUs exercisable
October 31, 2023	$6.20	25,500	17,000
January 29, 2024	$6.30	28,000	28,000
June 1, 2024	$4.65	34,875	17,875
September 19, 2024	$1.30	55,078	55,078
Total		143,453	117,953

Performance share units

PSUs are recorded at fair value based on the market price of the Company's common shares on the grant date and is recorded over the estimated vesting periods. During the year ended April 30, 2025, the Company granted 60,000 (2024 - 586,889) PSUs to officers, employees and consultants of the Company and 340,000 (2024 - nil) PSUs were forfeited. The PSUs granted had a fair value of $279,000 (2024 - $3,437,733) on the grant date. The PSUs are subject to certain vesting conditions, whereby 25% will vest upon each successful completion of an equity financing raising USD $5,000,000 or the Company earning USD $5,000,000 in sales revenues. Taking into account anticipated forfeitures, the likelihood of milestone conditions being met, and vesting periods, the Company recognized a reversal of $(392,346) (2024 - share-based payment of $392,346) during the year ended April 30, 2025, in share-based payments through the consolidated statements of loss and comprehensive loss, as the likelihood of vesting is remote. As at April 30, 2025 and October 31, 2025, the total number of PSUs outstanding are 306,889 (2024 - 586,889) exercisable is nil (2024 - nil).

LITHOS GROUP LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Six Months Ended October 31, 2025 and 2024
(Expressed in Canadian Dollars, unless otherwise stated)

13. SHARE CAPITAL (Continued)

Warrants

The continuity of warrant transactions are summarized as follows:

	October 31, 2025		April 30, 2025
	Number of Warrants	Weighted Average Exercise Price	Number of Warrants	Weighted Average Exercise Price
Outstanding, beginning of year	1,346,068	$ 3.10	1,648,249	$ 2.89
Issued	-	-	-	-
Exercised	-	-	(7,959)	2.00
Expired	-	-	(294,222)	2.00
Outstanding, end of year	1,346,068	$ 3.10	1,346,068	$ 3.10

The following summarizes information about warrants outstanding at April 30, 2025:

Expiry date	Exercise price	Warrants outstanding
January 13, 2026	$2.00	1,041,952
June 8, 2026	$1.45	40,371
March 15, 2027	$9.00	99,287
April 15, 2027	$9.00	64,468
November 3, 2028	USD $5.50	99,990
Total		1,346,068

As at October 31, 2025, the weighted average remaining life of the warrants is .57 years.

14. RELATED PARTY TRANSACTIONS

Key management personnel compensation

The remuneration of the Company's directors and other members of key management, who have the authority and responsibility for planning, directing and controlling the activities of the Company consists of the following amounts.

	October 31, 2025	October 31, 2024
	$	$
Accounting fees	22,500	45,000
Consulting fees	-	332,627
Salaries and wages	-	112,288
Share-based payments:
Stock options	-	5,589
PSU compensation expense	-	642,134
RSU compensation expense	13,265	1,215,949
	35,762	2,353,587

LITHOS GROUP LTD.
Notes to the Condensed Interim Consolidated Financial Statements
Six Months Ended October 31, 2025 and 2024
(Expressed in Canadian Dollars, unless otherwise stated)

14. RELATED PARTY TRANSACTIONS (Continued)

As at April 30, 2025 and October 31, 2025, there was $1,237,885 (2024 - $734,186) in unpaid consulting and professional fees, which was included in accounts payable and accrued liabilities. The amounts are unsecured, non-interest bearing and due on demand.

As at April 30, 2025 and October 31, 2025, there was $9,000 (2024 - $nil) outstanding in prepaid expenses paid by the CEO.

15. CAPITAL MANAGEMENT

The Company considers its capital to be comprised 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 attempt to issue new equity instruments. Although the Company has been successful at raising funds in the past through the issuance of share capital, it is uncertain whether it will continue this method of financing due to the current difficult market conditions.

In order to facilitate the management of its capital requirements, the Company prepares expenditure budgets that are updated as necessary depending on various factors, including successful capital deployment and general industry conditions. Management reviews the capital structure on a regular basis to ensure that the above objectives are met. There have been no changes to the Company's approach to capital management during the year ended April 30, 2025. The Company is not subject to external restrictions on its capital.

16. SUPPLEMENTAL CASH FLOW INFORMATION

Investing and financing activities that do not have a direct impact on cash flows are excluded from the statement of cash flows. During the years ended April 30, 2025 and 2024, the Company recorded the following non-cash investing and financing transactions:

During the year ended April 30, 2024, the Company acquired Aqueous. As consideration for the transaction, the Company issued common shares to acquire Aqueous' net assets (note 7). Refer to note 13 of these consolidated financial statements for non-cash financing activities impacting share capital and reserves.

During the year ended April 30, 2025, the Company reclassified $99,425 from deferred grant income to deferred grant liability, reclassified $1,128,990 from reserves to deficit for forfeited and expired equity instruments (note 13), and issued 644,946 common shares with a fair value of $128,989 to settle $494,109 in accounts payable and accrued liabilities. Of the total gain recognized $233,015 was recorded to reserves (note 13).

During the six months ended October 31, 2025 the Company paid $nil (2024 - $Nil) in interest and $nil (2024 - $nil) in taxes.

AI assistant

Lithos Group — Interim / Quarterly Report 2026

46827_rns_2025-12-23_3e127a65-54a9-4b93-8b7a-d28de64109fc.pdf

NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS

2. GOING CONCERN

3. BASIS OF PRESENTATION

Approval of the consolidated financial statements

3. BASIS OF PRESENTATION (Continued)

Statement of compliance

Basis of preparation

Basis of consolidation

Significant accounting judgments, estimates and assumptions

Significant accounting judgments

Acquisitions

3. BASIS OF PRESENTATION (Continued)

Cash generating unit ("CGUs")

Going concern

Title to mineral property interest

Significant accounting estimates and assumptions

Valuation of equity consideration granted for acquisitions

Estimated useful life of intangible assets and property, plant and equipment

Impairment of exploration and evaluation assets

3. BASIS OF PRESENTATION (Continued)

Discount rate used to present value lease liability

Impairment considerations of capital assets, intangible assets and goodwill

Deferred income tax

Share-based payments

Derivatives

4. MATERIAL ACCOUNTING POLICY INFORMATION

Property, Plant and Equipment

Exploration and evaluation assets

Restoration and environmental obligations

4. MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Intangible assets

Goodwill

4. MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Business combinations

Impairment of non-current assets

Financial instruments

Financial assets

Financial assets measured at amortized cost

4. MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

4. MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Financial liabilities

Convertible debt

Income taxes

4. MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Share-based payments

Loss per share

4. MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Share capital

Leases

4. MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

Provisions

Related parties

Foreign exchange

Government grants

4. MATERIAL ACCOUNTING POLICY INFORMATION (Continued)

New accounting policies

Future accounting standards and interpretations issued but not yet adopted

5. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

5. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (Continued)

Credit risk

Liquidity risk

Market risk

6. ADVANCES RECEIVABLE

6. ADVANCES RECEIVABLE (Continued)

7. INTANGIBLE ASSETS AND GOODWILL

Lithos Technology Corp.

7. INTANGIBLE ASSETS AND GOODWILL (Continued)

Aqueous Resources LLC

7. INTANGIBLE ASSETS AND GOODWILL (Continued)

8. EXPLORATION AND EVALUATION ASSETS

10. DEFERRED GRANTS (Continued)

11. NOTES PAYABLE

11. NOTES PAYABLE (continued)

12. RIGHT-OF-USE ASSET AND LEASE LIABILITY

12. RIGHT-OF-USE ASSET AND LEASE LIABILITY (Continued)

Lease liability

Lithos Group Interim / Quarterly Report 2026