Toggle3D.ai Inc. — Interim / Quarterly Report 2025

Mar 28, 2025

Toggle3D.ai

TOGGLE3D.AI INC.

Financial Statements

For the period from February 1, 2024 to January 31, 2025

(Expressed in Canadian dollars)

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TOGGLE3D.AI INC.

Statement of Financial Position

(Expressed in Canadian dollars)

	Note	January 31, 2025	January 31, 2024
ASSETS
Current
Cash and cash equivalents	5	31,261	119,784
Advances to related party	9	1,172,381	899,392
Prepaid expenses		10,649	23,569
Taxes Receivables		26,688	-
Total assets		1,240,979	1,042,745
LIABILITIES
Current
Accounts payable and accrued liabilities	7, 9	298,487	45,926
Advances from related party	9	384,360	24,533
Total liabilities		682,847	70,459
SHAREHOLDERS' EQUITY
Share capital	8	7,804,858	7,273,301
Reserves	8(e)(f)	474,038	389,117
Deficit		(7,720,764)	(6,690,132)
Total shareholders' equity		558,132	972,286
Total liabilities and shareholders' equity		1,240,979	1,042,745

Nature of operations and going concern (Note 1)

Subsequent events (Note 13)

Approved and authorized for issue on behalf of the Board of Directors:

/s/ "Anthony Pizzonia"

Director

/s/ "Evan Gappelberg"

Director

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

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TOGGLE3D.AI INC.

Statement of Loss and Comprehensive Loss

(Expressed in Canadian dollars)

	Note	January 31, 2025	January 31, 2024
			$
Revenue		751	1,170
Operating expenses
Amortization	6	-	833,333
General and administrative	9, 10(a)	501,707	1,018,461
Interest income		-	(38,143)
Research and development	10(b)	195,649	151,789
Sales and marketing	10(c)	98,670	124,050
Share-based compensation	8(f)	211,771	434,412
Foreign exchange		23,586	733
		1,031,383	2,524,635
Other income
Impairment of intangible assets	6	-	4,166,667
Net loss and comprehensive loss		(1,030,632)	(6,690,132)
Net loss per share
Basic and diluted		(0.03)	(0.35)
Weighted average number of common shares
Basic and diluted		32,262,769	19,037,255

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

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TOGGLE3D.AI INC.

Statements of Cash Flows

(Expressed in Canadian dollars)

	January 31, 2025	January 31, 2024
Operating activities
Net loss for the period	(1,030,632)	(6,690,132)
Adjustments for:
Amortization	-	833,333
Impairment of intangible assets	-	4,166,667
Share-based compensation	178,771	434,412
Changes in non-cash working capital:
Prepaid expenses	12,920	(23,569)
Taxes receivable	(26,687)	-
Accounts payable and accrued liabilities	252,561	70,141
Advances from related party	359,827	-
Cash used in operating activities	(253,240)	(1,209,148)
Investing activities
Cash advanced to related parties	(272,990)	(899,392)
Cash used in investing activities	(272,990)	(899,392)
Financing activities
Proceeds from private placement	-	2,158,356
Proceeds from sale of shares for employee pay program	437,708	69,649
Proceeds from shares for services	-	-
Cash provided by financing activities	437,707	2,228,005
Effect of foreign exchange on cash	-	318
Change in cash and cash equivalents during the period	(88,523)	119,465
Cash and cash equivalents, beginning of period	119,784	1
Cash and cash equivalents, end of period	31,261	119,784
Supplemental cash flow information:
Non-cash investing and financing activities:
Common shares issued for intangible assets		5,000,000

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

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TOGGLE3D.AI INC.

Statements of Changes in Shareholders' Equity

(Expressed in Canadian dollars)

	Common shares	Share capital	Reserves	Deficit	Total shareholders' equity
	#	$	$	$	$
Balance, February 14, 2023 (incorporation)	-	-	-	-	-
Shares issued on incorporation	100	1	-	-	1
Shares issued for employee pay program	48,213	48,213	(48,213)	-	-
Units issued in private placement	8,632,473	2,158,356	-	-	2,158,356
Shares issued for purchase of intangible assets	19,999,900	5,000,000	-	-	5,000,000
Share-based compensation	-	-	249,685	-	249,685
Net loss for the period	-	-	-	(664,457)	(664,457)
Balance, July 31, 2023	28,680,686	7,206,570	201,472	(664,457)	6,743,585
Shares issued for employee pay program	289,277	66,731	2,918	-	69,649
Share-based compensation	-	-	184,727	-	184,727
Net loss for the period	-	-	-	(6,025,675)	(6,025,675)
Balance, January 31, 2024	28,969,963	7,273,301	389,117	(6,690,132)	972,286
Shares issued for employee pay program	6,400,060	473,557	(35,850)	-	437,707
Share-based compensation	200,000	58,000	120,771	-	178,771
Net loss for the period	-	-	-	(1,030,632)	(1,030,632)
Balance, January 31, 2025	35,570,023	7,804,858	474,038	(7,720,764)	558,132

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

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TOGGLE3D.AI INC.

Notes to the Financial Statements

For the period from February 14, 2023 (incorporation) to January 31, 2024

(Expressed in Canadian dollars)

1. NATURE OF OPERATIONS AND GOING CONCERN

Toggle3D.ai Inc. ("Toggle3D" or the "Company") develops and operates intellectual property which includes the Toggle3D web application. Toggle3D is a software as a service solution that utilizes generative artificial intelligence to convert computer-aided design files, apply 4K texturing, and enable seamless publishing of 4K 3D models. The Company was incorporated under the Business Corporations Act (Ontario) on February 14, 2023 and is a recent spin out of the parent company, Nextech3D.ai Corporation ("Nextech"), a Metaverse company and provider of augmented reality solutions. Nextech is the parent of the Company as it controls the Board of Directors. The Company's registered and head office is located at PO Box 64039 RPO Royal Bank Plaza, Toronto, Ontario, M5J 2T6.

The Company's shares are traded on the Canadian Securities Exchange (the "CSE") under the trading symbol "TGGL", on the OTCQB Venture Market under the trading symbol "TGGLF", and on the Frankfurt Stock Exchange under the trading symbol "Q0C". The Company began trading on the CSE on June 13, 2023 as a result completion of a spinout from Nextech (the "Plan of Arrangement") as set out below.

Pursuant to the Plan of Arrangement: (i) the certain assets were transferred to the Company in consideration of the issuance of an aggregate of 15,999,900 Company shares to Nextech; (ii) an aggregate of 4,000,000 Company shares were distributed to the shareholders of Nextech on a pro rata basis. The securities of the Company issuable pursuant to the Plan of Arrangement to Nextech, shareholders of Nextech were issued in reliance upon the prospectus exemption contained in Section 2.11 of National Instrument 45-106.

Immediately following completion of the Plan of Arrangement, shareholders of Nextech who receive shares of the Company will continue to hold an interest in each part of the current business of Nextech through the continued ownership of their Nextech shares and the ownership of Company shares distributed to them.

The completion of the transaction was subject to the satisfaction of various conditions including but not limited to: i) the completion of a concurrent financing of 8,632,473 units comprised of one common share and one common share purchase warrant for gross proceeds of $2,158,356 ($0.25 per unit); and ii) receipt of all requisite regulatory, CSE, court or governmental authorizations and third party approvals or consents.

These financial statements for the period from February 1, 2024 to January 31, 2024 (the "financial statements") have been prepared on a going concern basis, which assumes that the Company will be able to meet its obligations and continue its operations for at least the next twelve months. During the period from February 1, 2024 to January 31, 2024, the Company did not generate significant revenues and used cash in operating and investing activities. As at January 31, 2025, the Company has working capital of $558,132 (January 31, 2024 - $972,286) and an accumulated deficit of $7,720,764 (January 31, 2024 - $6,690,132). For the period from February 1, 2024 to January 31, 2025, the Company incurred a net loss of $1,030,632 (January 31, 2024 - $6,690,132). The continued operations of the Company are dependent on its ability to generate future cash flows or obtain additional financing through debt or equity. Management is of the opinion that sufficient working capital will be obtained from external financing to meet the Company's liabilities and commitments as they become due, although there is a risk that additional financing will not be available on a timely basis or on terms acceptable to the Company. These factors may cast significant doubt on the Company's ability to continue as a going concern. These financial statements do not reflect any adjustments, which may be material, that may be necessary if the Company is unable to continue as a going concern.

2. BASIS OF PREPARATION

a) Statement of compliance

These financial statements were approved by the Board of Directors and authorized for issue on March 28, 2025.

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

b) Basis of presentation

The financial statements have been prepared using the historical cost basis, except for certain financial assets and liabilities which are measured at fair value, as specified by IFRS Accounting Standards for each type of asset, liability, income, and expense as set out in the accounting policies below.

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TOGGLE3D.AI INC.

Notes to the Financial Statements

For the period from February 14, 2023 (incorporation) to January 31, 2024

(Expressed in Canadian dollars)

2. BASIS OF PREPARATION (continued)

c) Functional and presentation currency

The financial statements are presented in Canadian dollars ("CAD"), which is the functional currency of the Company. An entity's functional currency is the currency of the primary economic environment in which an entity operates.

3. MATERIAL ACCOUNTING POLICY INFORMATION

a) Cash and cash equivalents

Cash consists of cash held in reputable financial institutions. Cash equivalents comprises highly liquid financial assets held in reputable financial institutions possessing a maturity of three months or less at the time of issuance that are readily convertible to known amounts of cash and are subject to insignificant risk of changes in fair value.

b) Foreign currency transactions

The Company translates each transaction denominated in a foreign currency by applying the spot exchange rate between the functional currency and the foreign currency at the date of the transaction. At the end of the reporting period, monetary assets and liabilities denominated in a foreign currency are restated using the closing exchange rate at the reporting date, and non-monetary assets and liabilities measured at fair value are translated using the exchange rate at the date when fair value was measured. Exchange differences are recognized in profit or loss for the period in which they arise. However, if fair value changes for a non-monetary item measured at fair value are recognized in other comprehensive income, the exchange difference component of the change in fair value is recognized in other comprehensive income.

c) Intangible assets

Intangible assets consist of platform software from Nextech as a result of the spinout and are recognized and measured at cost less accumulated amortization. The Company amortizes intangible assets over three years.

d) Impairment of non-financial assets

The carrying amounts of the Company's non-financial assets such as intangible assets are reviewed at each reporting date to determine whether there is any indication of impairment. If indicators exist, then the asset's recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit ("CGU") is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets. If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs.

An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognized in the statement of comprehensive loss. Impairment losses recognized in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis.

Assets that have been impaired are tested for possible reversal of the impairment whenever events or changes in circumstance indicate that impairment may have reversed. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years.

e) Financial instruments

Classification

The Company classifies its financial instruments in the following categories: at fair value through profit or loss ("FVTPL") and amortized cost.

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TOGGLE3D.AI INC.

Notes to the Financial Statements

For the period from February 14, 2023 (incorporation) to January 31, 2024

(Expressed in Canadian dollars)

3. MATERIAL ACCOUNTING POLICY INFORMATION (continued)

The Company determines the classification of its financial assets at initial recognition. The classification of debt instruments is driven by the Company's business model for managing the financial assets and their contractual cash flow characteristics.

Financial liabilities are classified as amortized cost, unless they are required to be classified as FVTPL (such as instruments held for trading or derivatives) or if the Company has opted to classify them at FVTPL.

Measurement

Financial instruments are recognized initially at fair value net of any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortized cost using the effective interest method. The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest and any transaction costs over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability or (where appropriate) to the net carrying amount on initial recognition. Other financial liabilities are de-recognized when the obligations are discharged, cancelled, or expired. In cases where the fair value option is chosen for financial liabilities, the part of a fair value change relating to an entity's own credit risk is recorded in other comprehensive income rather than profit or loss, unless this creates an accounting mismatch.

Derivatives embedded in contracts where the host is a financial asset in the scope of the standard are never separated. Instead, the hybrid financial instrument as a whole is assessed for classification.

A single expected credit loss model is used for calculating impairment for financial assets, which is based on changes in credit quality since initial recognition.

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 will recognize in profit or 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

Financial assets

The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all of the associated risks and rewards of ownership to another entity. Gains and losses on derecognition are generally recognized in the statements of income (loss). However, gains and losses on derecognition of financial assets classified as FVTOCI remain within accumulated other comprehensive income (loss).

Financial liabilities

The Company derecognizes financial liabilities only when its obligations under the financial liabilities are discharged, cancelled, or expired. Generally, the difference between the carrying amount of the financial liability derecognized and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

f) Share-based payments

The Company grants stock options to purchase common shares of the Company to directors, officers, employees, and consultants. An individual is classified as an employee when the individual is an employee for legal or tax purposes or provides services similar to those performed by an employee, including directors of the Company. The fair value of the stock options granted is measured at grant date and each tranche is recognized on a graded basis over the vesting period. The fair value of the options granted is measured using the Black-Scholes option pricing model taking into account the terms and conditions upon which the options were granted. At the end of each reporting period, the amount recognized as an expense for unvested options is adjusted to reflect the number of the options that are expected to vest. If the options are forfeited subsequent to vesting or expire, the amount recorded to the reserves is transferred to deficit.

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TOGGLE3D.AI INC.

Notes to the Financial Statements

For the period from February 14, 2023 (incorporation) to January 31, 2024

(Expressed in Canadian dollars)

3. MATERIAL ACCOUNTING POLICY INFORMATION (continued)

Where equity instruments are granted to parties other than employees, they are recorded by reference to the fair value of the services received. If the fair value of the services received cannot be reliably estimated, the Company measures the services received by reference to the fair value of the equity instruments granted, measured at the date the counterparty renders service.

All equity-settled share-based payments are reflected in reserves, unless exercised. Upon exercise, shares are issued from treasury and the amount reflected in reserve is credited to share capital, adjusted for any consideration paid.

g) Employee pay program

On July 26, 2023, the Company introduced an employee pay program for the purpose of maintaining a sustainable cash position by allowing the Company to pay for services through the issuance and sale of the Company's common shares. Under this program, the Company issues warrants with a specified exercise price to its contractors. The warrants convert to common shares pursuant to services being completed by contractors. Subsequently, a third-party program administrator completes the sale of the common shares, and the proceeds are used to facilitate cash disbursements in connection with contractor services rendered. The contractors are guaranteed an amount equal to the greater of (i) value of the common shares measured at their exercise price (the "cost of shares") and (ii) the proceeds from the sale of the common shares.

The Company recognizes expenses as contractors render services, with the offset recorded within accounts payable and accrued liabilities at an amount equal to the cost of shares. When the Company completes the sale of the common shares, it records an increase in share capital at the fair value of the shares. In cases where the common shares are sold below their cost, the Company compensates contractors for the shortfall.

h) Valuation of equity units issued in private placements

The Company follows the residual method with respect to the measurement of common shares and common share purchase warrants issued as private placement units. Proceeds from private placements are first allocated to the common shares contained in the units based on the market value of shares on the date of issuance, with any residual amount allocated to warrants in the units. If the proceeds are less than or equal to the estimated fair market value of the share issuance, total proceeds are allocated to the fair value of the common shares and nothing is allocated to the fair value of the warrants. The fair value of common shares is recorded in share capital and the fair value of warrants is recorded in reserves. Consideration received on the exercise of warrants is recorded as share capital, and the amount previously recognized in reserves is transferred to share capital. For warrants that expire unexercised, the initial fair value recorded remains in reserves.

Share issuance costs may consist of professional, consulting, regulatory, and other costs directly attributable to equity transactions. Share issuance costs are recorded as a reduction to share capital.

i) Revenue

The Company recognizes revenue in accordance with IFRS 15 Revenue from Contracts with Customers. Revenue represents the fair value on consideration received or receivable from customers for goods and services provided by the Company, net of discounts and sales taxes. The Company generates revenue from the sale of software licenses and technology services.

j) Loss per share

The Company presents basic and diluted loss per share data for its common shares, calculated by dividing the loss attributable to equity shareholders of the Company by the weighted average number of common shares issued and outstanding during the period. Diluted loss per share is calculated by adjusting the loss attributable to equity shareholders and the weighted average number of common shares outstanding for the effects of all potentially dilutive common shares. The calculation of diluted loss per share assumes that the proceeds to be received on the exercise of dilutive share options and warrants are used to repurchase common shares at the average market price during the period.

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TOGGLE3D.AI INC.

Notes to the Financial Statements

For the period from February 14, 2023 (incorporation) to January 31, 2024

(Expressed in Canadian dollars)

3. MATERIAL ACCOUNTING POLICY INFORMATION (continued)

Deferred tax assets and liabilities are recognized for deferred tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted or 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 profits 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.

k) New accounting standards and interpretations adopted

The Company adopted the following amendments to accounting standards, which are effective for annual periods beginning on or after January 1, 2025:

Disclosure of accounting policies - amendments to IAS 1 and IFRS Practice Statement 2

The amendments to IAS 1 Presentation of financial statements and IFRS Practice Statement 2 Making materiality judgements provide guidance and examples to help entities apply materiality judgements to accounting policy disclosures. The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their 'significant' accounting policies with a requirement to disclose their 'material' accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures. The amendments have had an impact on the Company's disclosures of accounting policies, but not on the measurement, recognition or presentation of any items in the Company's financial statements.

Definition of accounting estimates - amendments to IAS 8

The amendments to IAS 8 Accounting policies, changes in accounting estimates and errors clarify the distinction between changes in accounting estimates, changes in accounting policies and the correction of errors. They also clarify how entities use measurement techniques and inputs to develop accounting estimates. The amendments had no impact on the Company's financial statements.

Deferred tax related to assets and liabilities arising from a single transaction - amendments to IAS 12

The amendments to IAS 12 Income Taxes narrow the scope of the initial recognition exception, so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences such as leases and decommissioning liabilities. The amendments had no impact on the Company's financial statements.

The Company has not early adopted any other new accounting standard, interpretation or amendment that has been issued but is not yet effective.

4. SIGNIFICANT ACCOUNTING JUDGEMENTS AND SOURCES OF ESTIMATION UNCERTAINTY

The preparation of the Company's financial statements and applying its accounting policies requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, the accompanying disclosures, as well as the disclosure of contingent liabilities. Uncertainty about these judgments, assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

The judgements, key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below.

a) Determination of functional currency

The functional currency for the Company is the currency of the primary economic environment in which each entity operates. Determination of functional currency involves certain judgements to determine the primary economic environment of an entity. The Company reassesses the functional currency of an entity when there is a change in events and conditions which previously determined the primary economic environment of an entity.

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TOGGLE3D.AI INC.

Notes to the Financial Statements

For the period from February 14, 2023 (incorporation) to January 31, 2024

(Expressed in Canadian dollars)

4. SIGNIFICANT ACCOUNTING JUDGEMENTS AND SOURCES OF ESTIMATION UNCERTAINTY (continued)

b) Review of asset carrying values and impairment assessment

The assessment of the fair value of intangible assets requires the use of estimates and assumptions for recoverable service costs, customer demands, discount rates, foreign exchange rates, future capital requirements, and operating performance. Changes in any of the estimates or assumptions used in determining the fair values could impact the impairment analysis.

Each asset or CGU is evaluated every reporting period to determine whether there are any indicators of impairment. If any such indicators exist, which is often judgment-based, a formal estimate of the recoverable amount is performed, and an impairment charge is recognized to the extent that the carrying amount exceeds the recoverable amount.

The evaluation of asset carrying values for indications of impairment includes consideration of both external and internal sources of information, including such factors as market and economic conditions, technological obsolescence, competitive landscape, regulatory changes as well as operation budgets and forecasts.

The determination of fair value less costs to sell and value in use requires management to make estimates and assumptions about expected production, sales contract volumes, service costs and contract prices, discount rates, operating costs, taxes, and future capital expenditures. The estimates and assumptions are subject to risk and uncertainty; hence, there is the possibility that changes in circumstances will alter these projections, which may impact the recoverable amount of the assets. In such circumstances, some or all of the carrying value of the assets may be further impaired or the impairment charge reversed with the impact recorded in profit or loss.

c) Share-based payments

Management is required to make a number of estimates when determining the fair value of the stock options and share-based compensation to be recognized each reporting period. These estimates include assumptions about volatility of share price, risk-free rate and expected life of the instruments.

d) Research and development costs

Research costs are expensed as incurred, while development costs are potentially eligible for capitalization as intangible assets if specific conditions outlined in IAS 38 Intangible Assets are met. Management is required to exercise judgment in determining whether development costs qualify for capitalization.

5. CASH AND CASH EQUIVALENTS

As at January 31, 2025, in connection with the share-based employee pay program the Company had cash held in a trust account of $31,261 (January 31, 2024 - $119,784). The cash does not earn interest and is used to pay for consultant fees.

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TOGGLE3D.AI INC.

Notes to the Financial Statements

For the period from February 14, 2023 (incorporation) to January 31, 2024

(Expressed in Canadian dollars)

6. INTANGIBLE ASSETS

A summary of the Company's intangible assets is as follows:

Cost	$
Balance, February 14, 2023 (incorporation)	-
Additions	5,000,000
Balance, January 31, 2024	5,000,000
Accumulated amortization
Balance, February 14, 2023 (incorporation)	-
Amortization	833,333
Impairment	4,166,667
Balance, January 31, 2024	5,000,000
Carrying amounts
Balance, January 31, 2024	-

On June 13, 2023, Nextech completed the spin out of Toggle3D.ai Inc. whereby Nextech transferred intellectual property and technology assets related to the Toggle3D platform to the Company with a fair value of $5,000,000 in exchange for the issuance of 19,999,900 common shares of the Company (note 8(c)).

During the period ended January 31, 2024, the Company identified impairment indicators and, subsequently, estimated the recoverable amount of its intangible assets, as such it has recognized an impairment loss of $4,166,667.

7. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

A summary of the Company's accounts payable and accrued liabilities is as follows:

	January 31, 2025	January 31, 2024
		$
Accounts payable	235,006	35,415
Accrued liabilities	63,481	10,511
	298,487	45,926

8. SHARE CAPITAL

a) Authorized

The Company is authorized to issue unlimited number of common shares with no par value.

b) Issued and Outstanding

As at January 31, 2025, 35,570,023 common shares were issued and outstanding.

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TOGGLE3D.AI INC.

Notes to the Financial Statements

For the period from February 14, 2023 (incorporation) to January 31, 2024

(Expressed in Canadian dollars)

8. SHARE CAPITAL (continued)

c) Share issuances

During the period ended January 31, 2025, the Company had the following share capital transactions:

• On March 12, 2024, the Company issued 200,000 common shares to two officers in satisfaction of employment services provided with a fair value of $58,000.
• The Company issued 6,400,060 common shares upon the exercise of 6,400,060 warrants related to the employee pay program, with a share price between $0.03 and $0.45, were sold for cash proceeds of $406,623.

During the period from February 14, 2023 (incorporation) to January 31, 2024, the Company had the following share capital transactions:

• On February 14, 2023, upon incorporation, the Company issued 100 common shares for gross proceeds of $1.
• On June 13, 2023, the Company issued 19,999,900 common shares in exchange for intangible assets with a fair value of $5,000,000 (Note 6).
• On June 13, 2023, the Company closed a private placement related to the spinout of the Company from Nextech in which the Company issued 8,632,473 units for gross proceeds of $2,158,356. Each warrant is exercisable into one common share at an exercise price of $0.50 until June 13, 2026. Applying the residual method, the proceeds were fully allocated to share capital.
• The Company issued 337,490 common shares upon the exercise of 337,490 warrants related to the employee pay program. Of the common shares issued, 259,489 common shares, with a share price between $0.12 and $1.10, were sold for cash proceeds of $69,649.

d) Employee pay program

During the period from February 14, 2023 (incorporation) to January 31, 2024, as part of the employee pay program, the Company granted 737,550 warrants to its contractors. Each warrant has an exercise price of $1.00 and is exercisable into one common share until July 26, 2024. As at January 31, 2024, 337,490 warrants have been exercised into common shares, of which 86,000 common shares remained unsold.

On March 12, 2024, as part of the employee pay program, the Company granted 1,000,000 warrants to the contractors of an entity under common control and recharged the related costs to advances to related parties (Note 8). Each warrant has an exercise price of $0.46 and is exercisable into one common share until March 12, 2025. As at January 31, 2024, 1,000,000 warrants have been exercised into common shares, of which all have been sold.

On May 31, 2024, as part of the employee pay program, the Company granted 5,000,000 warrants to the contractors of an entity under common control and recharged the related costs to advances to related parties (Note 8). Each warrant has an exercise price of $0.12, and is exercisable into one common share until May 31, 2025, respectively. As at January 31, 2024, 5,000,000 warrants have been exercised into common shares, of which all have been sold.

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TOGGLE3D.AI INC.

Notes to the Financial Statements

For the period from February 14, 2023 (incorporation) to January 31, 2024

(Expressed in Canadian dollars)

8. SHARE CAPITAL (continued)

e) Warrants

A summary of the Company's warrants activity is as follows:

	Number of warrants	Weighted average exercise price
	#	$
Balance, February 14, 2023	-	-
Granted	9,370,023	0.54
Exercised	(337,490)	1.00
Balance, January 31, 2024	9,032,533	0.52
Granted	6,000,000	0.18
Exercised	(6,400,060)	0.23
Balance, January 31, 2025	8,632,473	0.50

A summary of the Company's outstanding warrants is as follows:

Date of expiry	Number	Weighted average exercise price	Weighted average remaining life
	#	$	Years
May 31, 2025	-	0.11	0.58
June 13, 2026	8,632,473	0.50	1.62
Balance, January 31, 2025	8,632,473	0.50	1.36

The weighted average share price on the date of exercise for warrants exercised during the period ended January 31, 2025 was $0.08. During the period ended January 31, 2025, there were no warrants exercised.

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TOGGLE3D.AI INC.

Notes to the Financial Statements

For the period from February 14, 2023 (incorporation) to January 31, 2024

(Expressed in Canadian dollars)

8. SHARE CAPITAL (continued)

f) Options

A summary of the Company's stock option activity is as follows:

	Number of stock options	Weighted average exercise price
	#	$
Balance, February 14, 2023		-
Granted	2,100,000	1.07
Forfeited	(720,000)	1.04
Balance, January 31, 2024	1,380,000	1.09
Granted	1,100,000	0.08
Cancelled	(136,000)	1.09
Forfeited	(418,000)	1.06
Balance, January 31, 2025	1,926,000	0.51

A summary of the Company's outstanding stock options is as follows:

Date of expiry	Number of stock options outstanding	Number of stock options exercisable	Weighted average exercise price	Weighted average remaining life
	#	#	$	Years
July 5, 2026	826,000	498,000	1.09	1.42
November 26, 2027	500,000	500,000	0.06	2.82
January 10, 2028	600,000	-	0.10	2.94

During the period ended January 31, 2025, the Company granted 1,100,000 options to its employees as share-based compensation, in which 600,000 options vest in five equal tranches, with the first tranche vesting six months after the grant date and other 500,000 options vested immediately on the grant date.

The fair value of all options granted is estimated on the grant date using the Black-Scholes option pricing model. The weighted average fair value of options granted during the period ended January 31, 2025 was $0.42.

During the period ended January 31, 2025, the Company's share-based compensation expense was $(36,570)$ and an expense of $211,771$, respectively (2024 - $48,981$ and $434,412$ respectively) in relation to the vesting of stock options.

A summary of the Company's weighted average inputs used in the Black-Scholes option pricing model for stock options granted during the period ended January 31, 2025 is as follows:

Share price	$1.01
Exercise price	$1.08
Expected life	3 years
Risk-free interest rate	3.91%
Expected volatility	100.00%
Expected annual dividend yield	0.00%

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TOGGLE3D.AI INC.

Notes to the Financial Statements

For the period from February 14, 2023 (incorporation) to January 31, 2024

(Expressed in Canadian dollars)

9. RELATED PARTY TRANSACTIONS

The Company considers the executive officers and directors as the key management of the Company, including those persons having the authority and responsibility for the planning, directing, and controlling of the activities of the Company.

A summary of the Company's related party transactions is as follows:

	January 31, 2025 January 31, 2024
Management fees included in general and administrative	-	917,361

On June 14, 2023, the Company entered into a management agreement it's parent company, Nextech which stipulates that a management fee of up to $150,000 per month will be paid to Nextech for services performed by executive officers, and technology consultants as well as for shared services such as, finance, human resources, and sales operations. The monthly amount represents the Company's portion of shared expenses with Nextech.

As at January 31, 2025, $344 of the accounts payable and accrued liabilities are owed to an entity owned by a director of the Company (January 31, 2024 - $394).

A summary of the Company's advances to related parties is as follows:

	Prepaids	Loans	Total
	$	$	$
As at, February 14, 2023	-	-	-
Advances	1,106,667	241,853	1,348,520
Repayments	(450,158)	-	(450,158)
Effects of movement in exchange rates	-	1,030	1,030
Balance, January 31, 2024	656,509	242,883	899,392
Prepayments and advances	1,532,455	520,290	2,052,745
Repayments	(1,177,279)	(602,413)	(1,779,692)
Effects of movement in exchange rates	-	(64)	(64)
Balance, January 31, 2025	1,011,685	160,696	1,172,381

During the period ended January 31, 2025, the Company advanced $520,290 cash as a loan with an entity under common control, which is included under advances to related parties. The costs in connection with these benefits were recharged to the loan with an entity under common control (Note 7(d)).

Additionally included under advances to relates parties are prepayments to Nextech for management fees and expenses paid by Nextech on behalf of the Company.

A summary of the Company's advances from related party is as follows:

	$
As at, February 14, 2023 (incorporation)	-
Advances	25,314
Repayments	(580)
Effects of movement in exchange rates	(201)
Balance, January 31, 2024	24,533
Advances	343,720
Effects of movement in exchange rates	16,107
Balance, January 31, 2025	384,360

During the period ended January 31, 2025, an entity under common control advanced $384,360 (period ended January 31, 2024: $24,533) as a cash loan with no set terms of repayment.

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TOGGLE3D.AI INC.

Notes to the Financial Statements

For the period from February 14, 2023 (incorporation) to January 31, 2024

(Expressed in Canadian dollars)

10. EXPENSE BY NATURE

a) General and administrative

A summary of the Company's general and administrative expenses is as follows:

	2025	2024
		$
Compliance fees	103,342	43,874
Computer, software, and maintenance	1,353	902
Management fees (Note 9)	308,852	917,361
Office, general, and other expenses	4,137	10,066
Professional and legal fees	84,023	46,258
	501,707	1,018,461

b) Research and development

A summary of the Company's research and development expenses is as follows:

	2025	2024
		$
Consultant fees	133,945	116,129
Computer, software, and maintenance	61,704	35,660
	195,649	151,789

c) Sales and marketing

A summary of the Company's sales and marketing expenses is as follows:

	2025	2024
		$
Advertising	21,000	42,591
Computer, software, and maintenance	35,638	23,981
Investor relations	42,032	57,478
	98,670	124,050

11. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

As at January 31, 2025, the Company's financial assets and liabilities include cash and cash equivalents, advances to parent, accounts payable and accrued liabilities, and advances from related party. These instruments are classified as amortized cost.

The carrying values of cash and cash equivalents, accounts payable and accrued liabilities and advances from related party approximate their fair values because of their short-term nature.

The Company is exposed to certain financial risks through its financial instruments as follows:

a) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to fulfil its contractual obligations. The Company is exposed to credit risk through its cash and cash equivalents as well as advances to parent. There is no significant concentration of credit risk other than cash deposits. The Company mitigates credit risk related to cash and cash equivalents by placing cash with sound financial institutions.

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TOGGLE3D.AI INC.

Notes to the Financial Statements

For the period from February 14, 2023 (incorporation) to January 31, 2024

(Expressed in Canadian dollars)

b) 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 main source of cash resources is through equity financing. The Company is exposed to liquidity risk through its accounts payable and accrued liabilities and advances from related party. The Company's financial obligations are limited to its current liabilities which have contractual maturities or are repayable on demand.

As at January 31, 2025, the Company had cash and cash equivalents of $31,261 (January 31, 2024 - $119,784) and working capital of $558,132 (January 31, 2024 - $972,286).

c) Foreign currency risk

Foreign exchange risk arises on financial instruments that are denominated in a currency other than the functional currency in which they are measured. The Company is exposed to foreign exchange risk from fluctuations in the US dollar to the Canadian dollar. The Company has not hedged its exposure to currency fluctuations. As at January 31, 2025, the Company is not significantly exposed to currency risk as its financial instruments are mainly denominated in Canadian dollars.

d) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates. Company believes that interest rate risk is low as there is no financial asset or liability that has variable interest rate.

12. CAPITAL MANAGEMENT

The Company's definition of capital includes equity comprising share capital, reserves, and deficit. The Company's objective when managing capital is to maintain its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders. As at January 31, 2025, the Company had shareholders' equity of $558,132 (January 31, 2024 $972,286).

The Board of Directors does not establish quantitative return on capital criteria for management but rather relies on the expertise of the Company's management and consultants to sustain future development of the business. The Company obtains funding primarily through equity issuances. Management reviews its capital management approach on an ongoing basis and believes that this approach is reasonable given the relative size of the Company.

As at January 31, 2025, the Company was not subject to any externally imposed capital requirements.

13. SUBSEQUENT EVENTS

On February 21, 2025, the Company issued 2,566,666 common shares to its chief executive officer, in consideration of outstanding indebtedness owing. The shares were issued at a deemed price of $0.06 per share.