Psyched Wellness Ltd. — Interim / Quarterly Report 2025

Jul 25, 2025

psyched wellness

Psyched Wellness Ltd.

Unaudited Condensed Interim Consolidated Financial Statements

For the Three and Six Months Ended May 31, 2025 and 2024

(Expressed in Canadian Dollars)

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Notice to Reader

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

The accompanying unaudited condensed interim consolidated financial statements have been prepared by and are the responsibility of the management of Psyched Wellness Ltd.

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

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

Psyched Wellness Ltd.

Unaudited Condensed Interim Consolidated Statements of Financial Position
(Expressed in Canadian Dollars)

	Notes	As at May 31, 2025	As at November 30, 2024
		$	$
Assets
Current
Cash and cash equivalents	4	4,438,670	6,357,977
Accounts receivable	5	64,450	47,121
Inventories	6	725,375	752,846
Prepaid expenses and advances	7	437,554	657,178
Total Current Assets		5,666,049	7,815,122
Property and equipment	8	22,167	24,867
Intangible assets	9	49,143	46,624
Total Assets		5,737,359	7,886,613
Liabilities
Current Liabilities
Accounts payable and accrued liabilities	10, 15	398,404	449,329
Deferred revenue		-	-
Total Liabilities		398,404	449,329
Equity
Share capital	11	27,115,627	27,048,127
RSU Reserve	12	83,692	127,183
Contributed surplus	13	1,756,774	1,722,425
Reserve for warrants	14	5,710,174	5,338,447
Accumulated other comprehensive loss		7,258	(52,242)
Accumulated deficit		(29,334,570)	(26,746,656)
Total Shareholders' Equity		5,338,955	7,437,284
Total Liabilities and Equity		5,737,359	7,886,613
Nature of operations and going concern	1
Contingencies and commitments	19
Segment Information	20

Approved on behalf of the Board of Directors:

"Jeffrey Stevens"
Jeffrey Stevens, Director

"Janeen Stodulski"
Janeen Stodulski, Director

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Psyched Wellness Ltd.
Unaudited Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
(Expressed in Canadian Dollars)

For the:	Notes	Three month ended May 31, 2025	Three month ended May 31, 2024	Six months ended May 31, 2025	Six months ended May 31, 2024
Revenue		$	$	$	$
Sales revenue	18	58,952	249,963	140,809	312,407
Cost of goods sold	6	(34,782)	(130,771)	(84,704)	(173,738)
Gross Profit		24,170	119,192	56,105	138,669
Expenses
Advertising and promotion		95,930	167,395	128,943	286,158
Management salaries and consulting fees	15	353,671	697,483	551,140	981,657
Stock-based compensation	12,13,15	32,964	282,582	72,332	401,362
Professional fees	15	143,333	145,220	343,702	259,249
Office and general		103,467	127,702	172,591	217,080
Regulatory compliance		31,475	16,683	40,319	33,790
Research and development costs	14	643,935	12,889	1,176,396	24,940
Depreciation	8	1,350	1,350	2,700	2,700
Total Expenses		(1,406,125)	(1,451,304)	(2,488,123)	(2,206,936)
Loss before Other Items		(1,381,955)	(1,332,112)	(2,432,018)	(2,068,267)
Other Income / (Expenses)
Investment income	4	36,624	41,267	94,853	100,499
Property taxes		(849)	(830)	(1,028)	(1,149)
Foreign exchange loss		(435,734)	(12,124)	(263,694)	(24,298)
Total Other Income		(399,959)	28,313	(169,869)	75,052
Net Loss		(1,781,914)	(1,303,799)	(2,601,887)	(1,993,215)
Other Comprehensive Loss
Exchange translation of foreign operations		423,625	(6,152)	59,500	(6,152)
Comprehensive loss		(1,358,289)	(1,309,951)	(2,542,387)	(1,999,367)
Weighted Average Number of Outstanding Shares
- Basic and diluted	11	288,816,834	243,685,571	288,540,735	243,685,571
Loss per Share
- Basic and diluted	11	(0.006)	(0.005)	(0.009)	(0.008)

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

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Psyched Wellness Ltd.

Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders' Equity

(Expressed in Canadian Dollars)

	Notes	Number of Shares	Share Capital	Reserve for Restricted Share Units	Contributed Surplus	Accumulated Other			Total
						Reserve for Warrants	Comprehensive Loss	Accumulated Deficit
Balance, November 30, 2023		233,777,550	24,632,003	543,469	1,465,853	6,355,769	(2,776)	(25,959,557)	7,034,761
Issuance of units from private placement	11	48,889,284	1,813,124	-	-	1,609,126	-	-	3,422,250
Unit issuance cost	11	-	(19,156)	-	-	(17,001)	-	-	(36,157)
Issuance of shares on RSUs exercised	11, 12	5,400,000	554,500	(554,500)	-	-	-	-	-
Stock-based compensation - RSUs	12	-	-	89,169	-	-	-	-	89,169
Stock-based compensation - Options	13	-	-	-	152,247	-	-	-	152,247
Stock-based compensation - Warrants	14	-	-	-	-	159,946	-	-	159,946
Expiry of warrants	14	-	-	-	-	(3,254,521)	-	3,254,521	-
Exchange loss on translation of foreign operations		-	-	-	-	-	(6,152)	-	(6,152)
Net loss for the period		-	-	-	-	-	-	(1,993,215)	(1,993,215)
Balance, May 31, 2024		288,066,834	26,980,471	78,138	1,618,100	4,853,319	(8,928)	(24,698,251)	8,822,849
Balance, November 30, 2024		288,066,834	27,048,127	127,183	1,722,425	5,338,447	(52,242)	(26,746,656)	7,437,284
Issuance of shares on RSUs exercised	11,12	750,000	67,500	(67,500)	-	-	-	-	-
Stock-based compensation - RSUs	12	-	-	24,009	-	-	-	-	24,009
Stock-based compensation - Options	13	-	-	-	48,322	-	-	-	48,322
Cancellation of options	13	-	-	-	(13,973)	-	-	13,973	-
Stock-based compensation - Advisory Warrants	14	-	-	-	-	371,727	-	-	371,727
Exchange loss on translation of foreign operations		-	-	-	-	-	59,500	-	59,500
Net loss for the period		-	-	-	-	-	-	(2,601,887)	(2,601,887)
Balance, May 31, 2025		288,816,834	27,115,627	83,692	1,756,774	5,710,174	7,258	(29,334,570)	5,338,955

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

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Psyched Wellness Ltd.

Unaudited Condensed Interim Consolidated Statements of Cash Flows

(Expressed in Canadian Dollars)

For the:	Notes	Three month ended May 31, 2025	Three month ended May 31, 2024	Six Months ended May 31, 2025	Six Months ended May 31, 2024
		$	$	$	$
Operating Activities
Net loss for the period		(1,781,914)	(1,303,799)	(2,601,887)	(1,993,215)
Adjustments for:		-
Stock-based compensation - RSUs	12	10,207	32,073	24,009	89,169
Share based compensation - options	13	22,756	90,563	48,322	152,247
Share based compensation - research costs - warrants	14	170,332	159,946	371,727	159,946
Depreciation expense	8	1,350	1,350	2,700	2,700
Write-off of intangible assets	8	-	(916)		(916)
		(1,577,269)	(1,020,783)	(2,155,129)	(1,590,069)
Net change in non-cash working capital items:
Accounts receivable		15,300	(11,584)	(17,329)	(19,737)
Inventories		32,723	30,440	27,471	30,547
Prepaid expenses and advances		(252,817)	(155,992)	219,624	(89,317)
Accounts payable and accrued liabilities		163,485	23,247	(50,925)	(7,291)
Deferred revenue		-	-	-	(1,983)
Cash Flows used in Operating Activities		(1,618,578)	(1,134,672)	(1,976,288)	(1,677,850)
Financing Activities
Proceeds from private placements	11	-	3,422,250	-	3,422,250
Issuance costs paid on private placements	11	-	(36,157)	-	(36,157)
Cash Flows provided by Financing Activities		-	3,386,093	-	3,386,093
Investing Activities
Additions of property and equipment		-		-	-
Additions of trademarks		-	-	(2,519)	-
Cash flows used in investing activities		-	-	(2,519)	-
Increase in cash and cash equivalents		(1,618,578)	2,251,421	(1,978,807)	1,708,243
Effects of exchange rate changes on cash and cash equivalents		423,625	(5,889)	59,500	(6,152)
Cash and cash equivalents, beginning of period		5,633,623	5,584,892	6,357,977	6,128,333
Cash and cash equivalents, end of period		4,438,670	7,830,424	4,438,670	7,830,424

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

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Psyched Wellness Ltd.

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the Three and Six Months Ended May 31, 2025 and 2024

(Expressed in Canadian Dollars)

1. Nature of Operations and Going Concern

Psyched Wellness Ltd. (“Psyched Wellness” or the “Company”) is incorporated in the Province of Ontario, Canada. Psyched Wellness is a Canadian-based life sciences company focused on the production and distribution of health and wellness products derived from the Amanita Muscaria mushroom. The Company’s objective is to create premium mushroom-derived products that have the potential to become a leading North American brand.

The Company’s common shares are listed on the Canadian Securities Exchange (the “CSE”) under the ticker symbol “PSYC.” The Company’s common shares are also listed in the United States (the “U.S.”) on the OTCQB® Venture Market under the ticker symbol “PSYCF,” and in Germany on the Frankfurt Stock Exchange under the ticker symbol “5U9”. The Company’s registered office address is 36 Toronto Street, Suite 701, Toronto, Ontario, M5C 2C5.

The business of distributing mushroom-derived products involves a high degree of risk, and there is no assurance that any prospective project in the health and wellness industry will be successfully initiated or completed. Further, regulatory evolution and uncertainty may require the Company to alter its business plan and make further investments to react to regulatory changes.

These unaudited condensed interim consolidated financial statements have been prepared on the basis that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities in the normal course of operations. The application of the going concern basis is dependent upon the Company achieving profitable operations to generate sufficient cash flows to fund continuing operations, or, in the absence of adequate cash flows from operations, obtaining additional financing to support operations for the foreseeable future. During the three and six months ended May 31, 2025, the Company incurred a comprehensive loss of $1,358,289 and $2,542,387, respectively (2024 - $1,309,951 and $1,999,367, respectively), and as of that date, the Company’s accumulated deficit was $29,334,570 (November 30, 2024 – accumulated deficit of $26,746,656). It is not possible to predict whether financing efforts will continue to be successful in the future or if the Company will attain profitable levels of operations. These conditions represent material uncertainties which may cast doubt on the Company’s ability to continue as a going concern.

These unaudited condensed interim consolidated financial statements do not give effect to adjustments that would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and liquidate its liabilities and commitments in other than the normal course of business and at amounts different from those in the accompanying financial statements. Such adjustments could be material.

2. Basis of Presentation

(a) Statement of Compliance

These unaudited condensed interim consolidated financial statements, including comparatives, have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IFRS”). These unaudited condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standards 34 – Interim Financial Reporting (“IAS 34”).

These unaudited condensed interim consolidated financial statements were reviewed, approved, and authorized for issuance by the Board of Directors (the “Board”) of the Company on July 25, 2025.

(b) Basis of Measurement

These unaudited condensed interim consolidated financial statements have been prepared in accordance with IFRS, on the historical cost basis except for financial instruments which are measured at fair value. In addition, these unaudited condensed interim consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

(c) Basis of Consolidation

These unaudited condensed interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Psyched Wellness Corp. (“Psyched Corp.”) and AME Wellness Inc. (“AME Wellness”). Subsidiaries consist of entities over which the Company is exposed to, or has rights to, variable returns as well as the ability to affect those returns through the power to direct the relevant activities of the entity. Subsidiaries are fully consolidated from the date control is transferred to the Company and are deconsolidated from the date control ceases. The unaudited condensed interim consolidated financial statements include all the assets, liabilities, revenues, expenses and cash flows of the Company and its subsidiaries after eliminating inter-entity balances and transactions.

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Psyched Wellness Ltd.

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the Three and Six Months Ended May 31, 2025 and 2024

(Expressed in Canadian Dollars)

2. Basis of Presentation (continued)

(d) Functional Currency

These unaudited condensed interim consolidated financial statements are presented in Canadian dollars (“$” or “CAD”), which is also the functional currency of the Company and Psyched Corp. The functional currency is the currency of the primary economic environment in which the Company operates. The functional currency of AME Wellness is the U.S. dollar (“USD”).

(e) Significant Accounting Judgments, Estimates and Assumptions

The preparation of these financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, revenue, and expenses. On an ongoing basis, management evaluates its judgments and estimates in relation to assets, liabilities, revenue, and expenses. Management uses historical experience and various other factors it believes to be reasonable under the given circumstances as the basis for its judgments and estimates. Actual outcomes may differ from these estimates under different assumptions and conditions. These estimates are reviewed periodically, and adjustments are made as appropriate in the period they become known.

Items for which actual results may differ materially from these estimates are described as follows:

Going concern

At each reporting period, management exercises judgment in assessing the Company’s ability to continue as a going concern by reviewing the Company’s performance, resources and future obligations. The conclusion that the Company will be able to continue as a going concern is subject to critical judgments of management with respect to assumptions surrounding the short and long-term operating budgets, expected profitability, investment and financing activities and management’s strategic planning. The assumptions used in management’s going concern assessment are derived from actual operating results along with industry and market trends. Management believes there is sufficient capital to meet the Company’s business obligations for at least the next 12 months, after taking into account expected cash flows, capital commitments, future financings and the cash and cash equivalents position at year-end.

Fair value of financial assets and financial liabilities

Fair value of financial assets and financial liabilities on the consolidated statements of financial position that cannot be derived from active markets, are determined using a variety of techniques including the use of valuation models. The inputs to these models are derived from observable market data where possible, but where observable market data are not available, judgment is required to establish fair values. The judgments include, but are not limited to, consideration of model inputs such as volatility, estimated life and discount rates.

Valuation of inventories

The valuation of work in process and finished goods requires the estimate of production costs incurred, which become part of the carrying amount for inventories. The Company must also determine if the cost of any inventories exceeds its net realizable value (“NRV”), such as cases where prices have decreased, or inventories have spoiled or otherwise been damaged. The Company estimates the NRV of inventories, taking into account the most reliable evidence available at each reporting date. The future realization of these inventories may be affected by market-driven changes that may reduce future selling prices. A change to these assumptions could impact the Company’s inventory valuation and gross profit.

Impairment

Long-lived assets, including property and equipment and intangible assets, are reviewed for indicators of impairment at each reporting period or whenever events or changes in circumstances indicate that the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is defined as the higher of: (i) value-in-use; or (ii) fair value less cost to sell. If the carrying amount of an asset exceeds its recoverable amount, an impairment charge is recognized immediately in profit or loss by the amount by which the carrying amount of the asset exceeds the recoverable amount. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the lesser of the revised estimate of recoverable amount, and the carrying amount that would have been recorded had no impairment loss been recognized previously.

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Psyched Wellness Ltd.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three and Six Months Ended May 31, 2025 and 2024
(Expressed in Canadian Dollars)

2. Basis of Presentation (continued)

(e) Significant Accounting Judgments, Estimates and Assumptions (continued)

Warrants, options and restricted share units

Management determines the costs for share-based compensation on stock options, restricted share units (“RSUs”), and share purchase warrants using market-based valuation techniques. The fair value of the market-based and performance-based share awards are determined at the date of grant using generally accepted valuation techniques. Assumptions are made and judgments are used in applying the valuation techniques. These assumptions and judgments include the expected volatility of the share price, expected forfeitures, expected dividend yield, expected term of the Warrants or options, and expected risk-free interest rate. Such assumptions and judgments are inherently uncertain. Changes in these assumptions can affect the fair value estimates of share-based compensation.

Income taxes

Income taxes and tax exposures recognized in the consolidated financial statements reflect management’s best estimate of the outcome based on facts known at the reporting date. When the Company anticipates a future income tax payment based on its estimates, it recognizes a liability. The difference between the expected amount and the final tax outcome has an impact on current and deferred taxes when the Company becomes aware of this difference.

In addition, when the Company incurs losses that cannot be associated with current or past profits, it assesses the probability of taxable profits being available in the future based on its budgeted forecasts. These forecasts are adjusted to take account of certain non-taxable income and expenses and specific rules on the use of unused credits and tax losses. When the forecasts indicate the sufficient future taxable income will be available to deduct the temporary differences, a deferred tax asset is recognized for all deductible temporary differences.

Expected credit losses on financial assets

Determining an allowance for expected credit losses (“ECL”) for amounts receivable and all debt financial assets not held at fair value through profit and loss (“FVTPL”) requires management to make assumptions about the historical patterns for the probability of default, the timing of collection and the amount of incurred credit losses, which are adjusted based on management’s judgment about whether economic conditions and credit terms are such that actual losses may be higher or lower than what the historical patterns suggest.

Provisions

The Company recognizes provisions if there is a present obligation as a result of a past event, it is probable that the Company will be required to settle the obligation and the obligation can be reliably estimated. The amount recognized as a provision reflects management’s best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation.

Research and development costs

Judgment is required to distinguish the research phase and the development phase to correctly identify costs that qualify for capitalization.

Functional currency

Foreign currency translation under IFRS requires each entity to determine its own functional currency, which becomes the currency that entity measures its results and financial position in. Judgment is necessary in assessing each entity’s functional currency. In determining the functional currencies of the Company and its subsidiaries, the Company considered many factors, including the currency that mainly influences sales prices for goods and services, the currency of the country whose competitive forces and regulations mainly determine the sales prices, and the currency that mainly influences labor, material and other costs for each consolidated entity.

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Psyched Wellness Ltd.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three and Six Months Ended May 31, 2025 and 2024
(Expressed in Canadian Dollars)

3. Summary of Material Accounting Policies

The accounting policies applied by the Company in these unaudited condensed interim consolidated financial statements are the same as those disclosed in Note 3 of the Company's audited consolidated financial statements for the years ended November 30, 2024 and 2023, unless otherwise noted.

4. Cash and Cash Equivalents

As at May 31, 2025, the Company had total cash and cash equivalents of $4,438,670 (November 30, 2024 – $6,357,977), including a balance of $4,067,534 (November 30, 2024 – $6,096,195) invested in money market funds with a U.S. bank, which are available on demand.

During the three and six months ended May 31, 2025, investment income of $36,624 and $94,853, respectively (2024 – $41,267 and $100,499, respectively) was received and reinvested into the money market funds.

5. Accounts Receivable

The Company's accounts receivable balance comprises amounts due from government taxation authorities in respect of the Harmonized Sales Tax and trade and other receivables from customers. The Company anticipates full recovery of these amounts and therefore no ECL has been recorded against these receivables during the three and six months ended May 31, 2025, which are due in less than one year.

	May 31, 2025	November 30, 2024
	$	$
Sales tax recoverable	14,239	9,401
Trade and other receivable	50,211	37,720
	64,450	47,121

6. Inventories

As at May 31, 2025 and November 30, 2024, the Company's inventories consisted of raw materials held with the Company's U.S.-based contract manufacturing organization partner and finished goods.

	May 31, 2025	November 30, 2024
	$	$
Raw materials	706,245	741,812
Finished goods	19,130	11,034
	725,375	752,846

During the three and six months ended May 31, 2025, inventories of finished goods expensed to cost of goods sold were $34,782 and $84,704, respectively (2024 – $130,771 and $173,738, respectively).

7. Prepaid Expenses and Deposits

	May 31, 2025	November 30, 2024
	$	$
Prepaid insurance	9,720	73,237
Advances made to suppliers	427,834	583,941
	437,554	657,178

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Psyched Wellness Ltd.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three and Six Months Ended May 31, 2025 and 2024
(Expressed in Canadian Dollars)

8. Property and Equipment

	Machinery	Total
	$	$
Cost at:
May 31, 2025 and November 30, 2024	36,641	36,641
Accumulated depreciation at:
November 30, 2023	6,374	6,374
Depreciation expense	2,700	2,700
May 31, 2024	9,074	9,074
November 30, 2024	11,774	11,774
Depreciation expense	2,700	2,700
May 31, 2025	14,474	23,548
Net book value:
November 30, 2024	24,867	24,867
May 31, 2025	22,167	22,167

9. Intangible Assets

During the year ended November 30, 2021, the Company had submitted an application with the United States Patent and Trademark Office to register the trademark "AME-1" in connection with its Amanita Muscaria Extract formulation. As at May 31, 2025, the Company has submitted applications for various provisional patents relating to Amanita Muscaria Extract formulation, extraction and usage. As the trademarks and patents are considered to have an indefinite life, they are not subject to amortization. Provisional patents are considered to have an indefinite life until they are either granted or rejected.

During the three and six months ended May 31, 2025, the Company incurred an additional cost of $2,519 (May 31, 2024 – $nil) in relation to internally-generated research costs incurred on AME-1.

10. Accounts Payable and Accrued Liabilities

Accounts payable of the Company are principally comprised of amounts outstanding for trade purchases relating to regular business activities. The Company's standard term for trade payable is 30 to 60 days.

	May 31, 2025	November 30, 2024
	$	$
Accounts payable	328,608	292,855
Accrued liabilities	69,796	156,474
	398,404	449,329

11. Share Capital

Authorized share capital

The Company is authorized to issue an unlimited number of common shares without par value. Common shares issued and outstanding as at May 31, 2025 and November 30, 2024 are as follows.

	Number of common shares	Amount
	#	$
Balance, November 30, 2023	233,777,550	24,632,003
Shares issued from private placement financing	48,889,284	1,881,502
Share issuance costs	-	(19,878)
Shares issued on vesting of RSUs	5,400,000	554,500
Balance, November 30, 2024	288,066,834	27,048,127
Shares issued on vesting of RSUs	750,000	67,500
Balance, May 31, 2025	288,816,834	27,115,627

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Psyched Wellness Ltd.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three and Six Months Ended May 31, 2025 and 2024
(Expressed in Canadian Dollars)

11. Share Capital (continued)

Share capital transactions for the six months ended May 31, 2025

During the six months ended May 31, 2025, the Company issued 750,000 common shares as a result of the vesting of RSUs. These common shares were valued at an amount of $67,500. See Note 12 for more details.

Share capital transactions for the year ended November 30, 2024

On April 30, 2024, the Company closed the final tranche (the "Tranche 2B") of a non-brokered private placement (the "Offering"). Pursuant to the Tranche 2B, the Company issued 48,889,284 units (each a "Unit") at a price of $0.07 per Unit for gross proceeds of $3,422,250 (US$2,500,000). Each Unit is comprised of one common share and one warrant (each a "Warrant") exercisable at $0.10 for a period of 60 months from issuance, exercisable on a cashless basis, subject to acceleration and compliance with the policies of the CSE. The Company recorded $1,881,502 for the issuance of shares and $1,540,748 for the issuance of warrants based on a relative fair value calculation. See Note 14 for more details.

In connection with the closing of the Tranche 2B, the Company paid total issuance costs of $36,157.

During the year ended November 30, 2024, the Company also issued 5,400,000 common shares as a result of the vesting of RSUs. These common shares were valued at an amount of $554,500. See Note 12 for more details.

Basic and diluted loss per share

Basic and diluted loss per share is calculated by dividing the net loss of $1,781,914 and $2,601,887 for the respective three and six months ended May 31, 2025 (2024 - $1,303,799 and $1,993,215, respectively) by the weighted-average number of common shares outstanding of 288,816,834 and 288,540,735, respectively, during the periods (2024 - 243,685,571).

For the three and six months ended May 31, 2025, the basic and diluted loss per share was $0.006 and $0.009, respectively (2024 - basic and diluted loss of $0.005 and 0.008, respectively).

12. Reserve for Restricted Share Units

On January 24, 2022, the Company implemented the RSU Plan. Under the RSU Plan, Eligible Persons (as such term is defined in the RSU Plan) may, at the discretion of the Compensation Committee of the Board, be allocated a number of RSUs, which are subject to a maximum vesting term of three years from the end of the calendar year in which RSUs were granted.

RSU transactions for the three and six months ended May 31, 2025

During the six months ended May 31, 2025, 750,000 RSUs were exercised. As a result, an amount of $67,500 was reallocated from reserve from RSUs to share capital.

RSU transactions for the year ended November 30, 2024

During the year ended November 30, 2024, 5,400,000 RSUs were exercised. As a result, an amount of $554,500 was reallocated from reserve from RSUs to share capital.

As at May 31, 2025, the Company had 1,000,000 RSUs outstanding, of which nil are exercisable. During the three and six months ended May 31, 2025, the Company recorded stock-based compensation of $10,208 and $24,010, respectively (2024 - $32,073 and $89,169, respectively) related to the vesting of RSUs.

13. Contributed Surplus

The Company maintains the Option Plan whereby certain key employees, officers, directors and consultants may be granted stock options for common shares of the Company. The Option Plan provides that the aggregate number of securities reserved for issuance will be up to 10% of the number of the common shares issued and outstanding from time to time. The Option Plan is administered by the Board, which has full and final authority with respect to granting stock options thereunder. As at May 31, 2025, the Company had 10,106,683 common shares that are issuable under the Option Plan.

Under the Option Plan, the exercise price of stock options grants will be determined by the Board, will not be less than the greater of the closing market prices of the underlying securities on: (a) the trading day prior to the date of grant of the stock options; and (b) the date of grant of the stock options. All stock options granted under the Option Plan will expire not later than the date that is ten years from the date that such options are granted. Stock options terminate earlier as follows: (i) immediately in the event of dismissal with cause; (ii) 90 days from the date of termination other than for cause employment (or such other date as Board or a committee thereof may determine); (iii) one year from the date of death or disability. Vesting terms are determined at the discretion of the Board.

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Psyched Wellness Ltd.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three and Six Months Ended May 31, 2025 and 2024
(Expressed in Canadian Dollars)

I3. Contributed Surplus (continued)

The following summarizes the options activity for the six months ended May 31, 2025, and year ended November 30, 2024:

	2025		2024
	Number of options	Weighted average exercise price	Number of options	Weighted average exercise price
	#	$	#	$
Outstanding, beginning of period	19,025,000	0.10	18,875,000	0.10
Granted	-	-	800,000	0.10
Granted	-	-	3,000,000	0.10
Cancelled	(250,000)	0.10	(3,650,000)	0.10
Outstanding, end of period	18,775,000	0.10	19,025,000	0.10

Options activities for the six months ended May 31, 2025

During the six months ended May 31, 2025, the Company cancelled an aggregate 250,000 options exercisable at $0.10 per common share. An amount of $13,973, representing the grant date fair value recognized as stock-based compensation of these options recorded in contributed surplus, was transferred to accumulated deficit upon the cancellation.

Options activities for the year ended November 30, 2024

On May 8, 2024, the Company granted 800,000 options to certain employees. The options are exercisable at a price of $0.10 per common share for a period of five years. The options vest four months from the date of grant and were valued using Black Scholes with the following assumptions: expected volatility of 129.36% based on the historical volatility, expected dividend yield of 0%, risk-free interest rate of 3.68% and an expected life of five years. The grant date fair value attributable to these options of $65,475 was recorded as stock-based compensation in connection with the vesting of options during the year ended November 30, 2024.

On May 14, 2024, the Company granted 3,000,000 options to certain directors, advisory board members, employees, advisors and consultants. The options are exercisable at a price of $0.10 per common share for a period of five years. The options vest four months from the date of grant and were valued using Black Scholes with the following assumptions: expected volatility of 129.14% based on the historical volatility, expected dividend yield of 0%, risk-free interest rate of 3.76% and an expected life of five years. The grant date fair value attributable to these options was $245,424 was recorded as stock-based compensation in connection with the vesting of options during the year ended November 30, 2024.

During the year ended November 30, 2024, the Company cancelled an aggregate 3,650,000 options exercisable at $0.10 per common share. An amount of $218,146, representing the grant date fair value recognized as stock-based compensation of these options recorded in contributed surplus, was transferred to accumulated deficit upon the cancellation.

The following table summarizes information of stock options outstanding and exercisable as at May 31, 2025:

Date of expiry	Number of options outstanding	Number of options exercisable	Exercise price	Weighted average remaining contractual life
	#	#	$	Years
July 13, 2025	4,975,000	4,975,000	0.10	0.12
February 5, 2026	4,300,000	4,300,000	0.10	0.68
March 15, 2028	200,000	200,000	0.10	2.79
September 1, 2028	5,500,000	2,250,000	0.10	3.26
May 8, 2029	800,000	800,000	0.10	3.94
May 14, 2029	3,000,000	3,000,000	0.10	3.95
	18,775,000	15,525,000	0.10	1.97

During the three and six months ended May 31, 2025, the Company recorded stock-based compensation of $22,756 and $48,322 respectively (2024 - $90,563 and $152,247, respectively) related to the vesting of stock options.

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Psyched Wellness Ltd.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three and Six Months Ended May 31, 2025 and 2024
(Expressed in Canadian Dollars)

14. Reserve for Warrants

The following summarizes the warrant activity for the six months ended May 31, 2025, and year ended November 30, 2024:

	2025		2024
	Number of warrants	Weighted average exercise price	Number of warrants	Weighted average exercise price
	#	$	#	$
Outstanding, beginning of period	180,943,771	0.16	120,874,220	0.16
Expired	-	0.43	(22,395,365)	0.43
Expired	-	0.31	(1,491,000)	0.31
Granted	-	0.10	35,066,632	0.10
Granted	-	0.10	48,889,284	0.10
Outstanding, end of period	180,943,771	0.10	180,943,771	0.10

Warrant issuances for the six months ended May 31, 2025

There was no warrant activity during the six months ended May 31, 2025.

Warrant issuances for the year ended November 30, 2024

On February 17, 2024, 22,395,365 warrants exercisable at $0.43 and 1,491,000 broker warrants exercisable at $0.31 expired unexercised, respectively. An amount of $3,254,521, representing the grant date fair value of these warrants, was transferred from the reserve for warrants to accumulated deficit upon the expiry.

On April 19, 2024, the Company entered into a master services agreement with Zerkalo, LLC, ("Zerkalo") pursuant to which the Company engaged Zerkalo to provide product development, marketing, distribution, and supply chain set up for a product derived from AME-I. On April 30, 2024, the Company issued 35,066,632 Advisory Warrants ("warrants") to Zerkalo in connection with the master services agreement. Each Warrant is exercisable at $0.10 for a period of 60 months from the date of issuance, exercisable on a cashless basis, subject to acceleration and compliance with the policies of the CSE. 23,377,755 warrants vest in quarterly installments over the span of 10 quarters, and the remaining 11,688,877 warrants vest only upon the completion of the product launch pursuant to the master services agreement. The grant date fair value of the warrants issued was estimated to be $1,579,366 using Black-Scholes with the following assumptions: expected volatility of 129.10% based on historical volatility, expected dividend yield of 0%, risk-free interest rate of 3.87% and an expected life of five years.

On April 30, 2024, the Company issued 48,889,284 Warrants in connection with the closing of Tranche 2B, as disclosed in Note 11. Each Warrant is exercisable at $0.10 for a period of 60 months from the date of issuance, exercisable on a cashless basis, subject to acceleration and compliance with the policies of the CSE. The grant date fair value of the warrants issued was estimated to be $2,201,924 using Black-Scholes with the following assumptions: expected volatility of 129.10% based on historical volatility, expected dividend yield of 0%, risk-free interest rate of 3.87% and an expected life of five years.

In connection with the closing of the Offering, issuance costs of $16,279 were allocated to warrants reserve.

The following table summarizes information of warrants outstanding as at May 31, 2025:

Date of expiry	Number of warrants outstanding	Exercise price	Weighted average remaining contractual life
	#	$	Years
June 12, 2028	9,585,000	0.10	3.03
August 31, 2028	87,402,855	0.10	3.25
April 30, 2029	48,889,284	0.10	3.92
April 30, 2029	35,066,632	0.10	3.92
	180,943,771	0.10	3.55

During the three and six months ended May 31, 2025, the Company recorded stock-based compensation of $170,332 and $371,727 (2024 - $159,946) related to the vesting of warrants, which was included in research and development costs on the consolidated statements of loss and comprehensive loss.

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Psyched Wellness Ltd.

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the Three and Six Months Ended May 31, 2025 and 2024

(Expressed in Canadian Dollars)

15. Related Party Transactions

In accordance with IAS 24 – Related Party Disclosures, key management personnel, including companies controlled by them, are those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any directors (executive and non-executive) of the Company.

The remuneration of directors and other members of key management personnel during the three and six months ended May 31, 2025 and 2024 were as follows:

	Three Months Ended		Six Months Ended
	May 31, 2025	May 31, 2024	May 31, 2025	May 31, 2024
	$	$	$	$
Management salaries and consulting fees	126,498	232,068	252,996	408,565
Professional fees	76,000	43,500	127,000	77,500
Stock-based compensation	32,964	122,636	72,332	241,416
	235,462	398,204	452,328	727,481

Pursuant to an executive agreement between Psyched Wellness and the Chief Executive Officer ("CEO") of the Company, the Company agreed to pay an annual base salary of $276,000 for the CEO's services. The CEO may also be eligible to receive an annual bonus at the discretion of the Compensation Committee of up to 50% of his annual base salary, based on criteria set by the Board. During the three and six months ended May 31, 2025, the Company recorded management salaries of $69,000 and $138,000, respectively (2024 – $69,000 and $138,000, respectively) in relation to the CEO's employment compensation. As at May 31, 2025, $32,659 (November 30, 2024 – $7,553) owing to the CEO was included in accounts payable and accrued liabilities. The amount outstanding is unsecured, non-interest bearing and due on demand.

Pursuant to a consulting agreement between Psyched Wellness and the Chief Operating Officer ("COO") of the Company, the Company agreed to pay an annual base salary of $230,000 for the COO's services. The COO may be eligible to receive an annual bonus at the discretion of the Compensation Committee of up to 50% of his annual fee, based on criteria set by the Board. During the three and six months ended May 31, 2025, the COO charged fees of $57,498 and $114,996, respectively (2024 - $57,498 and $114,996, respectively) for consulting services provided to the Company, which are included in management salaries and consulting fees. As at May 31, 2024, $19,166 (November 30, 2024 - $25,931) owing to the COO was included in accounts payable and accrued liabilities. The amount outstanding is unsecured, non-interest bearing and due on demand.

During the three and six months ended May 31, 2025, Branson Corporate Services Ltd. ("Branson"), where the Chief Financial Officer ("CFO") of the Company is employed, charged fees of $36,000 and $97,000 (2024 - $24,000 and $56,000, respectively), for CFO services, as well as other accounting and administrative services, which are included in professional fees. As at May 31, 2025, $36,160 (November 30, 2024 - $13,560) owing to Branson was included in accounts payable and accrued liabilities. The amount outstanding is unsecured, non-interest bearing and due on demand.

During the three and six months ended May 31, 2025, WilRo Consulting, a Company owned by a director of the Company, charged fees of $15,000 and $30,000, respectively (2024 - $10,000 and $21,500, respectively), for services provided to Psyched Wellness, which are included in management salaries and consulting fees. As at May 31, 2025, $5,250 (November 30, 2024 - $5,250) owing to the director was included in accounts payable and accrued liabilities.

On December 1, 2021, Psyched Wellness and its former Chief Commercial Officer ("CCO"), entered into an executive agreement, whereas the Company agreed to pay an annual base salary of $200,000 for the CCO's services. During the three and six months ended May 31, 2025, the Company recorded management salaries of $nil (2024 - $105,570 and $155,570) in relation to the former CCO's employment compensation. As at May 31, 2025, $nil (November 30, 2024 - $nil) owing to the former CCO was included in accounts payable and accrued liabilities.

Stock-based compensation

During the three and six months ended May 31, 2025, total stock-based compensation of $32,964 and $72,332, respectively, was recorded in connection with the vesting of certain options and RSUs granted to various officers and directors. (2024 - $122,636 and $241,416, respectively).

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Psyched Wellness Ltd.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three and Six Months Ended May 31, 2025 and 2024
(Expressed in Canadian Dollars)

16. Capital Management

The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern and to maintain optimal returns to shareholders and benefits for its stakeholders. As the Company has begun commercial operations, management will closely monitor its capital structure and adjusts according to market conditions to meet its objectives given the current outlook of the business and industry in general. The Board does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the management team to sustain the future development of the business.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. The Company’s capital management objectives, policies and processes have remained unchanged in the current financial reporting period.

The Company is not subject to any externally imposed capital requirements.

17. Risk Management

The Company is exposed to various risks as it relates to financial instruments. Management, in conjunction with the Board, mitigates these risks by assessing, monitoring and approving the Company’s risk management process. There have not been any changes in the nature of these risks or the process of managing these risks from the previous reporting periods.

Credit risk

Credit risk is the risk of loss associated with a counterparty’s inability to fulfill its payment obligations. The Company’s credit risk is primarily attributable to cash and cash equivalents, and accounts receivable (excluding sales tax recoverable), which expose the Company to credit risk should the borrower default on maturity of the instruments.

Cash and cash equivalents are held at reputable Canadian and U.S. chartered banks and in trust with the Company’s legal counsel, which is closely monitored by management. Management believes that the credit risk concentration with respect to cash and cash equivalents is minimal.

The Company’s second exposure to credit risk is on receivables. At each reporting period, management assesses the credit risk of its receivables balance. The Company believes it has no significant short-or-long-term credit risk with respect to accounts receivable. Trade receivable has been regularly collected, while sales tax and income tax receivable are due from the government. The Company anticipates full recovery of these amounts, and therefore has not recorded any ECL against these receivables, which are due in less than one year.

Liquidity risk

Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due. The Company’s liquidity and operating results may be adversely affected if the Company’s access to the capital market is hindered, whether as a result of a downturn in stock market conditions generally or related to matters specific to the Company. The Company generates cash flow primarily from its financing activities. The Company endeavors to have sufficient cash on demand to meet expected operational expenses, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot be reasonably predicted.

As at May 31, 2025, the Company had a cash and cash equivalents balance of $4,438,670 (November 30, 2024 – $6,357,977) to settle current liabilities of $398,404 (November 30, 2024 – $449,329), and had the following contractual undiscounted obligations:

	Carrying amount	Year 1	Year 2 to 3	Year 4 to 5
	$	$	$	$
Accounts payable and accrued liabilities	398,404	398,404	-	-

The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet its liabilities as they come due. The Company has undertaken several proposed restructuring initiatives and other corporate measures to rationalize its capital and debt structure to better position the Company for future opportunities and meet its obligations as they come due. Until these initiatives and efforts are finalized, there is no assurance that one or any of these initiatives will be successful.

Management believes there is sufficient capital to meet short-term business obligations, after taking into account cash flow requirements from operations and the Company’s cash and cash equivalents position as at May 31, 2025.

18

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Psyched Wellness Ltd.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the Three and Six Months Ended May 31, 2025 and 2024
(Expressed in Canadian Dollars)

17. Risk Management (continued)

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. As at May 31, 2025, the Company had no financial instruments which are interest-bearing, and had no hedging agreements in place with respect to floating interest rates. Management believes that the interest rate risk concentration with respect to financial instruments is minimal.

Foreign exchange risk

Foreign exchange risk is the risk that the Company will be subject to foreign currency fluctuations in satisfying obligations related to its foreign activities. The Company's operations are based in Canada and the U.S., and will have, from time to time, transactions denominated in foreign currencies, primarily in USD. The Company's primary exposure to foreign exchange risk is that transactions denominated in foreign currency may expose the Company to the risk of exchange rate fluctuations. Based on its current operations, management believes that the foreign exchange risk remains minimal but will continue to monitor the movement of foreign exchange between CAD and USD.

Fair value

Fair value estimates of financial instruments are made at a specific point in time based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair values.

As at May 31, 2025, the Company's financial instruments consisted of cash and cash equivalents, accounts receivable (excluding sales tax recoverable), and accounts payable and accrued liabilities. The fair value of cash and cash equivalents, accounts receivable (excluding sales tax recoverable) and accounts payables and accrued liabilities are approximately equal to their carrying value due to their short-term nature.

The Company classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

• Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2 – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
• Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

As at May 31, 2025, the Company did not have any financial instruments which were carried at fair value (November 30, 2024 – $nil).

18. Revenues

The Company's revenues for the three and six months ended May 31, 2025 and 2024 were comprised of the following:

	Three Months Ended		Six Months Ended
	May 31, 2025	May 31, 2024	May 31, 2025	May 31, 2024
	$	$	$	$
Mushroom-derived products	58,877	248,319	140,090	308,765
Apparels and accessories	75	1,644	719	3,642
	58,952	249,963	140,809	312,407

19. Contingencies and Commitments

The Company's operations are subject to a variety of provincial, state and federal regulations in Canada and the U.S. Failure to comply with one or more of those regulations could result in fines, restrictions on its operations, or losses of permits that could result in the Company ceasing operations in that specific state or local jurisdiction.

While management believes that the Company is in compliance with applicable local and state regulations as at May 31, 2025, regulations continue to evolve and are subject to differing interpretations. As a result, the Company may be subject to regulatory fines, penalties, or restrictions in the future.

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Psyched Wellness Ltd.

Notes to the Unaudited Condensed Interim Consolidated Financial Statements

For the Three and Six Months Ended May 31, 2025 and 2024

(Expressed in Canadian Dollars)

20. Segment Information

The Company's results are reported by geographical business units that operate in different countries. The Company has identified its operating segment based on the financial information that is reviewed and used by executive management (collectively, the Chief Operating Decision Maker, or "CODM") in assessing performance and in determining the allocation of resources. These segments reflect how the Company manages its business and how management classifies operations for planning and measuring performance.

The CODM considered as one operating segment Psyched Wellness Ltd. and Psyched Corp. (both reside in Canada), and AME Wellness as one operating segment (resides in the United States).

The following tables present financial information by segment for the three and six months ended May 31, 2025 and 2024:

	Three Months Ended		Six Months Ended
Revenue for the period ended	May 31, 2025	May 31, 2024	May 31, 2025	May 31, 2024
	$	$	$	$
Canada	-	-	-	-
USA	58,952	249,963	140,809	312,407
	58,952	249,963	140,809	312,407
	Three Months Ended		Six Months Ended
Comprehensive loss for the period ended	May 31, 2025	May 31, 2024	May 31, 2025	May 31, 2024
	$	$	$	$
Canada	(666,260)	(1,271,020)	(1,182,784)	(1,895,838)
USA	(692,029)	(38,931)	(1,359,603)	(103,529)
	(1,358,289)	(1,309,951)	(2,542,387)	(1,999,367)
Total assets at			May 31, 2025	November 30, 2024
			$	$
Canada			481,498	269,018
USA			5,255,861	7,617,595
			5,737,359	7,886,613
Total liabilities at			May 31, 2025	November 30, 2024
			$	$
Canada			230,424	348,365
USA			167,980	100,964
			398,404	449,329