STICKIT TECHNOLOGIES INC. — Interim / Quarterly Report 2024

Aug 16, 2024

STICKIT TECHNOLOGIES INC

STICKIT TECHNOLOGIES INC.

CONSOLIDATED FINANCIAL STATEMENTS (formerly Aquazoom Hydropower Solutions Inc.)

June 30, 2024

INDEX

Interim condensed Consolidated Statements of Financial Position Interim condensed Consolidated Statements of Comprehensive Income Interim condensed Consolidated Statements of Changes in Equity Interim condensed Consolidated Statements of Cash Flows Notes to the Interim condensed Consolidated Financial Statements	Page
	2 4 5 6 7-9

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STICKIT TECHNOLOGIES INC

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 condensed interim financial statements of the Company for the six months ended June 30, 2024, have been prepared by management and approved by the Audit Committee and Board of Directors of the Company. The Company’s independent auditors have not performed a review of these interim financial statements in accordance with the standards established by the Canadian Institute of Chartered Professional Accountants for a review of interim financial statements by an entity’s auditors.

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STICKIT TECHNOLOGIES INC

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

CAD in thousands

AD in thousands
Assets Current assets Cash and cash equivalents Trade accounts receivable- Stickit Thailand Other accounts receivable Inventories – finished goods Total current assets Non-current assets Right for use of leased assets Fixed assets Total non-current assets Total assets Liabilities and shareholders' equity Current liabilities Excess of losses over investment in associate joint venture companies Trade accounts payable Other accounts payable Total current liabilities Non-currentliabilities Deferred income Total non-current liabilities Total liabilities Shareholders' Equity Share capital Share premium Reserve for share-based payment transactions Foreign currency translation adjustments Accumulated deficit Total equity Total equity and liabilities		As of June 30, 2 0 2 4 2 0 2 3 523 695 42 142 110 38 34 745 839 - 10 25 10 25 755 864 147 78 - 68 366 25 513 171 69 - 69 171 582 189 48,123 4 4,047 4,168 964 964 211 (13) ) 53,167 ( ) 4,430 ( 178 693 755 864			As of December 31,
		2 0 2 4 523 42 142 38 745 10 10 755 147 - 366 513 69 69 582 48,123 4,047 964 211 ) 53,167 ( 178 755			2 0 2 3
					827 42 114 38
					1,021 - 17
					17
					1,038
					147 - 368
					515
					71
					71
					586
					48,123 4,047 964 204 (52,886)
					452
					1,038

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STICKIT TECHNOLOGIES INC

“ ” “ ” /s/ Eli Ben-Haroosh /s/ Sophie Galper-Komet August 16, 2024 Eli Ben Harosh Sophie Galper Komet Date of approval of the Chief Executive Officer and Chief Financial Officer financial statements Director The accompanying notes are an integral part of these financial statements.

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STICKIT TECHNOLOGIES INC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CAD in thousands

AD in thousands
Revenues Cost of revenue Gross profit (loss) Research and development expenses General and administrative expenses Other expenses Issuance costs in reverse acquisition Net Operating profit (loss) Share of losses of a company accounted for at equity method Finance expense Finance income Loss Other comprehensive loss: Amounts that will not be reclassified subsequently to profit or loss: Foreign currencies translation adjustments Total other comprehensive loss Total comprehensive loss Loss per share attributable to ordinary shareholders of the Company: Basic and diluted loss per share	For the period of six months ended June 30, 2 0 2 4 2 0 2 3 12 130 61 60 (49) 70 - 74 192 329 - 1 - - (241) (334) - 1 40 30 - (281) (365) 7 ) 52 ( 7 ) 52 ( (274) (417) ) 0.003 ( ) 0.38 (	For the period of three months ended June 30, 2 0 2 4 2 0 2 3 3 3 1 22 2 (19) - 5 162 144 - - - - (160) (168) - 34 29 (65) (194) (262) (4) ) 28 ( (4) ) 28 ( (198) (290) (0.0022) (0.27)	For the year ended December 31,
	2 0 2 4	2 0 2 4	2 0 2 3
	12 61 (49) - 192 - - (241) - 40 (281) 7 7 (274) ) 0.003 (	3 1 2 - 162 - - (160) 34 (194) (4) (4) (198) (0.0022)	203 154
			49 101 1,004 - 47,695
			) 48,751 ( 64 (8) 2
			) 48,821 (
			(165)
			) 165 (
			) 986 48, (
			) 0.046 (

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

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STICKIT TECHNOLOGIES INC

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY CAD in thousands

CAD in thousands
Balance as of January 1, 2024 (Audited) Loss for the period Other comprehensive income Balance as of June 30, 2024 (Non-Audited) Exercise of stock options Share-based payments Loss for the year Other comprehensive loss Balance as of June 30, 2023 (Non-Audited) Balance as of January 1, 2023 (Audited) Exercise of stock options Share-based payments Loss for the year Other comprehensive loss Reverse acqusition Balance as of December 31, 2023 Balance as of March 31, 2024 (Non-Audited) Loss for the period Other comprehensive income Balance as of June 30, 2024 (Non-Audited) Balance as of March 31, 2023 Exercise of stock options Share-based payments Loss for the period Other comprehensive loss Balance as of June 30, 2023		Share Capital 48,123 - - 48,123 1 - - - 4 3 () - - - 48,120 48,123 48,123 - - 48,123 4 () - - - 4		Share Premium 4,047 - - 4,047 1,067 - - - 4,168 3,101 1,100 - - - ) 154 ( 4,047 4,047 - - 4,047 4,168 - - - - 4,168		Share-based Payments transactions 964 - - 964 ) 3 9 9 ( 95 - - 964 1,862 ) 993 ( 95 - - - 964 964 - - 964 964 - - - 964*		Foreign Currencies translation adjustments 204 - 7 211 - - - ) 52 ( ) 13 ( 39 - - - 165 - 204 215 - ) 4 ( 211 15 - - - ) 28 ( ) 13 (		Accumulated Deficit (52,886) ) 281 ( - (53,167) - - ) 365 ( - (4,430) (4,065) - - ) 48,821 ( - - (52,886) (52,974) (194) ) 53,167 ( ) 4,168 ( - - ) 262 ( - (4,430)		Total 452 ) 281 ( 7 178 75 95 ) 365 ( ) 52 ( 693
												940 107 95 ) 48,821 ( 165 47,966
												452
												375 (194) ) 4 (
												178
												983 - - ) 262 ( ) 28 (
												693

• Represent amount less than CAD 1

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STICKIT TECHNOLOGIES INC

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

7

CONSOLIDATED STATEMENTS OF CASH FLOWS

CAD in thousands

CONSOLIDATED STATEMENTS CAD in thousands	OF CASH FLOWS
Cash flows from operating activities Loss Adjustments required for presenting cash flows from operating activities (Appendix A): Net cash used in operating activities Cash flows from investing activities Investment in associate joint venture company Purchase of fixed assets Net cash used in investing activities Cash flows from financing activities Shares issuance and premium on shares Cash from Reverse merge Net cash provided by financing activities Net decrease in cash and cash equivalents Exchange rate differences on balances of cash and cash equivalents Cash and cash equivalents at the beginning of period/year Cash and cash equivalents at the end of period/year	For the period of six months ended June 30, 2 0 2 4 2 0 2 3 (281) ) 365 ( (24) 49 (305) ) 316 ( - - - ) 1 ( - ) 1 ( - 75 - - 75 (305) ) 242 ( 1 ) 58 ( 827 995 523 695	For the period of three months ended June 30, 2 0 2 4 2 0 2 3 (194) ) 262 ( 66 59 (128) (202) - - - - - - - - - - - - (128) ) 202 ( (8) ) 32 ( 659 929 523 695	For the year ended December 31,
	2 0 2 4 (281) (24) (305) - - - - - - (305) 1 827 523	2 0 2 4 (194) 66 (128) - - - - - - (128) (8) 659 523	2 0 2 3
			) 48,821 ( 48,076
			(745)
			- -
			-
			107 316
			423
			) 322 ( 154 995
			827

STICKIT TECHNOLOGIES INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

CAD in thousands (except for number of shares and share price)

Appendix A - Adjustments required for presenting cash flows from operating activities:

Significant non-cash transactions: Depreciation Share-based payments Issuance costs in reverse acquisition Equity in net loss of investees Changes in operating assets and liabilities: Increase in accounts payable Increase (decrease) in trade accounts receivable decrease in inventories Decrease (increase) in other accounts receivable Increase (decrease) in trade accounts payable	For the period of six months ended June 30, 2 0 2 4 2 0 2 3 6 8 95 - - - 1 5 (25) (5) - - 7 (33) ) 3 4 ( 3 6 (24) 49	For the period of three months ended June 30, For the year ended December 31,	For the period of three months ended June 30, For the year ended December 31,
	2 0 2 4 6 - - 5 (5) - (33) 3 (24)	2 0 2 4 2 - - 18 (3) - 44 5 66	2 0 2 3 2 0 2 3
			5 20 1 95 - 47,695 - 69 4 348 3 (42) 74 4 (13) 6 (15) (119)
			59 48,076

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

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STICKIT TECHNOLOGIES INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

CAD in thousands (except for number of shares and share price)

Note 1 - General

• A. General description of the Company and its operations

STICKIT LIMITED an Israeli corporation ID 516091360 (hereafter: " Stickit LTD ”) incorporated on 2019 as a private company limited by shares, in Israel, and commenced its business operations in October, 2019. The registered office of the Company is Tel-Aviv, Hapeleh 7, Israel.

Stickit LTD. has a wholly owned subsidiary in the Spain Stickit Labs SL.

Stickit LTD develop, market and sell high-quality "Cannabis Sticks" based on a registered PCT patent no. 11582996 B2, for which the patent application was assigned to the Company for CAD 0.001 on 1 2021 by Mr. Asher Holzer, President of the Company; designed to be inserted into any cigarette/joint of any kind. The cannabis stick is reminiscent of a toothpick, which allows it to be easily inserted into any cigarette. The stick consists of a source extract of cannabis ingredients (the "green plant") - and not oilderived - it burns as fast as a cigarette and saves the cumbersome need of rolling and allows the user to consume more percent of active ingredients than any other product.

On October 23, 2023, Stickit Technologies Inc. (formerly Aquazoom Hydropower Solutions Inc.) (the “ Company ”) closed its business acquisition of Stickit LTD, accordingfelly, the Company changed its name to Stickit Technologies Inc. Pursuant to the terms of the Acquisition, the Company issued 110,816,407 common shares (111.1357 common shares in the capital of the Company for each ordinary share in the capital of Stickit) (the “Payment Shares”), at a deemed price of $0.4304 per Payment Share. Following completion of the Acquisition, Stickit LTD became a wholly owned subsidiary of the Company. Concurrently with completion of the Acquisition, the Company completed a financing of $441,000. The financing consisted of a total of 1,024,628 subscription receipts at a price of $0.4304 each, that were converted on a 1:1 basis into the Company’s common shares. In addition, in connection with closing of the Acquisition, the Company issued (i) 23,232 finder warrants to arms’-length finders in connection with the Company’s concurrent financing, and (ii) 5,342,404 incentive stock options to employees of the Company (111.1357 incentive options in exchange for each the outstanding Stick LTD warrants). The terms of the exercise of the options shall be consistent with the terms of the originally issued underlying Stick LTD’s securities. Each of the finder warrants will be exercisable into one common share of the Company at a price of $0.55 per Company’s common share in a period of 24 months from the date of issuance.

Immediately following the completion of the Acquisition, the following persons were appointed as directors of the Company: Eli Ben-Haroosh, Asher Holzer, Sophya Galper-Komet, Steven Glaser, Orit Berger. Also, immediately following the completion of the Acquisition, the following persons were appointed as officers of the Company: Eli Ben-Haroosh, Chief Executive Officer Sophya Galper-Komet, Chief Financial Officer and Corporate Secretary Asher Holzer, Executive Chairman of the Board of Directors.

On October 27thCompany’s shares commenced trading on the Canadian Securities Exchange (CSE) under the ticker symbol "STKT". Company's CSE listing statement was filed on Stickit's CSE portal and under the Company's profile on SEDAR+.

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STICKIT TECHNOLOGIES INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

CAD in thousands (except for number of shares and share price)

Note 1 – General (Cont.)

The purchase price, for the acquisition was approximately CAD 47.7 million, determined in accordance with the value of Stickit LTD.'s capital instruments on October 23, 2023. The excess purchase price over the carrying amount of assets and liabilities value of the company's in the amount of approximately CAD 47.7 million was recorded as registration expenses (issuance expenses) within the profit or loss statements.

The results of the merger transaction by share split resulted in the fact that, from a legal point of view, the company owns Stickit Ltd. Since the controlling owners of Stickit Ltd. gain control of the company, it was determined that Stickit Ltd. is the accounting acquirer of the activity and therefore the transaction was treated as a reverse acquisition which does not constitute Business combination.

Accordingly, in the consolidated financial statements the comparative financial information as of December 31, 2022 and for the two years ended on December 311, 2022, consist of the financial information of the Stickit Limited that is considered as the accounting acquirer for accounting of reverse acquisition.

In connection with the reverse acquisition, the Israeli Tax Authorities issue to Stickit LTD tax ruling that under certain compliance with condition, including a restriction on performing a disposition of the Company and Stickit LTD shares, is differing the tax evet arise in the acquisition to the date of actual disposal of the Company’s and Stickit LTD Stickit LTD shares.

B. Definitions

In these financial statements: Related parties - as defined in IAS 24 CAD - Canadian dollar

C. Material event in the reporting period

Effects of the “Iron Swords” war

Following the brutal attacks on Israel, the mobilization of army reserves and the Government declaration of a state of war (“Iron Swords” war) in October 2023, there was a decrease in Israel’s economic and business activity. The security situation has led, inter alia, to a disruption in the chain of supply and production, a decrease in the volume of national transportation, a shortage in manpower as well as a decrease in the value of financial assets and a rise in the exchange rate of foreign currencies in relation to the shekel.

The Company has examined the effects of the aforesaid and on the basis of several scenarios that were examined, has reached the conclusion that the Company is able to continue paying its liabilities in the foreseeable future. In this examination, the Company relied on forecasts and on the liquid assets at its disposal, unutilized credit facilities, possibilities for cost cutting, streamlining plans, unencumbered assets, and so forth.

D. Financial position

Stickit Limited has incurred continuous losses from its business operations and has generated negative cash flows from operating activities of CAD 53,168 during the first 6 months of 2024.

During 2023 the Company incurred losses of CAD 48,821 of which CAD 47,695 resulted from registration and issuance costs from a reverse merger, see Note 1 A. The Company has so far financed its operations mainly through equity resulting from capital raising.

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STICKIT TECHNOLOGIES INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

CAD in thousands (except for number of shares and share price)

Note 1 – General (Cont.)

The Company is expected to further generate losses from operations which will be expressed in negative cash flows from operating activity. Hence the continuation of the Company's operations depends on raising the required financing resources or reaching profitability, which are not guaranteed at this point. The Company`s ability to continue as a going concern, is dependent on the Company meeting the factors of the business plan designed by Management, forecasts and related key assumption, potential liquidity risks and cash flow projection.

As part of their ongoing responsibilities, the Company's Board of Directors and Management have undertaken a thorough review of the Company’s cash flow forecast and potential liquidity risks. Forecasts of operating results and cash flow projections were prepared for the period of 12 months from the date of approval of the financial statements. According to such projections, the Company's Board of Directors and Management believe that the Company have sufficient resources for the continuation of its activities and to meet its obligations for at least 12 months from the date of approval of the financial statements.

Note 2 – Basis of presentation

These interim consolidated financial statements as of June 31, 2024, were prepared in a condensed format in accordance with IAS 34, "Interim Financial Reporting" (hereafter: "Interim Consolidated Financial Statements").

Therefore, the Interim Consolidated Financial Statements do not include all the disclosure necessary for a complete presentation of financial condition, results of operations, cash flows and all the data and notes, which are required when preparing annual financial statements, in conformity with IFRS.

The Interim Consolidated Financial Statements have been approved by the Directors of the Company on August 16, 2024; and are the responsibility of directors of the Company, who are responsible for preparing the Interim Financial Information in accordance with IFRS.

The Interim Consolidated Financial statements should be read in conjunction with the Company's annual audited financial statements as of December 31, 2023, and for the year then ended and accompanying notes (hereinafter: "Annual Audited Consolidated Financial Statements").

Accounting principles used in the preparation of the Interim Consolidated Financial Statements are consistent with those principles used in the preparation of the latest Annual Audited Consolidated Financial Statements of the Company.

All significant accounting policies have been applied consistently with the Annual Audited Consolidated Financial Statements.

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