TRUST

B:X

TrustBIX Inc.

Consolidated Financial Statements

Years Ended September 30, 2024 and 2023

(Expressed in Canadian Dollars)

KMSS

Kenway Mack Slusarchuk Stewart LLP Chartered Professional Accountants

Celebrating 35 years

Independent Auditors' Report

To: The Shareholders of TrustBIX Inc.

Opinion

We have audited the consolidated financial statements of TrustBIX Inc. and its subsidiaries (collectively, the "Company"), which comprise the consolidated statements of financial position as at September 30, 2024 and 2023 and the consolidated statements of changes in (deficiency) equity, loss and comprehensive loss, cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of material accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as at September 30, 2024 and 2023, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards.

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note 1 to the consolidated financial statements which indicates that at September 30, 2024 the Company had a shareholders' deficiency of $2,289,605 and a working capital deficiency of $2,156,197. These conditions, along with other matters as set forth in Note 1, indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern. Our opinion is not qualified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and not otherwise addressed in our report. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Except for the matter described in the Material Uncertainty Related to Going Concern section of our report, we have determined that there are no key audit matters to be communicated in our auditors' report.

Information Other than the Consolidated Financial Statements and Auditors' Report Thereon

Management is responsible for the other information. The other information comprises the information included in Management's Discussion and Analysis.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

150 13 Avenue SW, Suite 300 Calgary AB T2R 0V2 Tel: 403.233.7750 Fax: 403.266.5267

714 10 Street, Suite 3 Canmore AB T1W 2A6 Tel: 403.675.1010 Fax: 403.675.6789

www.kmss.ca

An independent member of DFK INTERNATIONAL

Independent Auditors' Report (continued)

We obtained Management's Discussion and Analysis prior to the date of this auditors' report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditors' report. We have nothing to report in this regard.

Responsibilities of Management and Those Charged With Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditors' Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance, regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Independent Auditors' Report (continued)

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

The engagement partner on the audit resulting in this Independent Auditors' report is Roland A. Bishop, CPA, CA.

Kenney Macd Sharehuk Stewart up

January 27, 2025
Calgary, Alberta

Chartered Professional Accountants

TrustBIX Inc.
Consolidated Statement of Financial Position
(Expressed in Canadian Dollars)
As at September 30, 2024 and 2023

| | 2024
$ | 2023
$ |
| --- | --- | --- |
| Assets | | |
| Current assets | | |
| Cash | 72,242 | 83,997 |
| Accounts receivable (note 5) | 39,299 | 170,543 |
| Share subscriptions receivable (note 16(a)) | - | 50,000 |
| Inventory (note 6) | 52,019 | 54,583 |
| Deposits and prepaid expenses (note 7) | 309,069 | 11,547 |
| | 472,629 | 370,670 |
| Property and equipment (note 8) | 19,530 | 23,703 |
| Intangible assets (note 9) | 232,781 | 8,092 |
| Right-of-use assets (note 10) | 16,404 | 22,971 |
| Investment (note 11) | 180,244 | 180,244 |
| | 921,588 | 605,680 |
| Liabilities | | |
| Current liabilities | | |
| Accounts payable and accrued liabilities (note 12) | 1,679,786 | 1,556,748 |
| Unearned revenue and customer deposits (note 13) | 751,516 | 286,286 |
| Debenture (note 14) | 35,000 | 37,706 |
| Loans payable – current portion (note 15) | 155,592 | 71,000 |
| Lease liability – current portion (note 10) | 6,932 | 5,572 |
| | 2,628,826 | 1,957,312 |
| Loans payable (note 15) | 568,854 | 578,388 |
| Lease liability (note 10) | 13,513 | 20,445 |
| | 3,211,193 | 2,556,145 |
| Shareholders' Deficiency | | |
| Share capital issued (note 16(a)) | 13,969,422 | 13,572,063 |
| Share capital committed (note 16(b)) | - | 54,000 |
| Warrants (note 16(c)) | 7,641 | 284,164 |
| Contributed surplus | 3,796,221 | 3,491,432 |
| Deficit | (20,062,889) | (19,352,124) |
| | (2,289,605) | (1,950,465) |
| | 921,588 | 605,680 |

Nature of operations and going concern (note 1)

Approved by the Board of Directors

(Signed) "Hubert Lau" Director (Signed) "Lap Shing (Andrew) Kao" Director

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

TrustBIX Inc.
Consolidated Statements of Changes in (Deficiency) Equity
(Expressed in Canadian Dollars)
For the years ended September 30, 2024 and 2023

	Share capital issued $	Share capital committed $	Warrants $	Contributed surplus $	Deficit $	Total $
Balance – September 30, 2022	12,764,699	-	370,630	3,156,389	(16,278,316)	13,402
Net loss and comprehensive loss for the year	-	-	-	-	(3,073,808)	(3,073,808)
Common shares issued in private placement, net of share issue costs (note 16(a))	807,364	54,000	-	-	-	861,364
Issuance of convertible debenture (note 14)	-	-	-	10,170	-	10,170
Partial repayment of convertible debenture (note 14)	-	-	-	(7,797)	-	(7,797)
Expiration of warrants (note 16(c))	-	-	(86,466)	86,466	-	-
Stock-based compensation (note 16(d))	-	-	-	246,204	-	246,204
Balance – September 30, 2023	13,572,063	54,000	284,164	3,491,432	(19,352,124)	(1,950,465)
Net loss and comprehensive loss for the year	-	-	-	-	(710,765)	(710,765)
Common shares issued for asset acquisition (note 4)	250,000	-	-	-	-	250,000
Common shares issued in private placement (note 16(a))	147,359	(54,000)	7,641	-	-	101,000
Amendment of debenture (note 14)	-	-	-	(2,374)	-	(2,374)
Expiration of warrants (note 16(c))	-	-	(284,164)	284,164	-	-
Stock-based compensation (note 16(d))	-	-	-	22,999	-	22,999
Balance – September 30, 2024	13,969,422	-	7,641	3,796,221	(20,062,889)	(2,289,605)

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

TrustBIX Inc.
Consolidated Statements of Loss and Comprehensive Loss
(Expressed in Canadian Dollars)
For the years ended September 30, 2024 and 2023

| | 2024
$ | 2023
$ |
| --- | --- | --- |
| Revenue | | |
| Licence | 284,205 | 270,827 |
| Hardware and installation | 420,396 | 648,817 |
| Professional and development services | 98,837 | 239,308 |
| Maintenance | 774,547 | 969,449 |
| | 1,577,985 | 2,128,401 |
| Expenses | | |
| Consulting fees | 666,121 | 1,014,794 |
| Wages and benefits | 614,044 | 1,539,939 |
| Hardware for resale and supplies | 317,358 | 431,134 |
| Office | 275,406 | 334,576 |
| Professional fees | 110,636 | 394,368 |
| Bad debts | 74,982 | - |
| Amortization and depreciation | 49,283 | 615,157 |
| Travel, trade shows and conferences | 27,968 | 98,193 |
| Advertising and promotion | 22,080 | 41,886 |
| Foreign exchange loss | 3,303 | 17,660 |
| Research and development (note 20) | - | (52,008) |
| | 2,161,181 | 4,435,699 |
| Loss before other (expenses) income and income taxes | (583,196) | (2,307,298) |
| Other (expenses) income | | |
| Interest income | 1,801 | 1,992 |
| Interest expense | (10,964) | (13,686) |
| Accretion expense | (118,406) | (109,373) |
| Gain on sale of property and equipment (note 8) | - | 20,444 |
| Gain on refinancing of loan payable (note 15) | - | 204,520 |
| Impairment loss (note 9) | - | (870,407) |
| | (127,569) | (766,510) |
| Loss before income taxes | (710,765) | (3,073,808) |
| Income taxes | - | - |
| Net loss and comprehensive loss for the year | (710,765) | (3,073,808) |
| Basic and diluted loss per share (note 17) | (0.01) | (0.04) |

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

TrustBIX Inc.
Consolidated Statements of Cash Flows
(Expressed in Canadian Dollars)
For the years ended September 30, 2024 and 2023

| | 2024
$ | 2023
$ |
| --- | --- | --- |
| Cash provided by (used in) | | |
| Operating activities | | |
| Net loss for the year | (710,765) | (3,073,808) |
| Adjustments to reconcile net loss to cash flows from operating activities: | | |
| Stock-based compensation expense | 22,999 | 246,204 |
| Amortization and depreciation | 49,283 | 615,157 |
| Accretion expense | 118,406 | 109,373 |
| Bad debts | 74,982 | - |
| Interest expense | 4,244 | 5,187 |
| Impairment loss (note 9) | - | 870,407 |
| Gain on sale of property and equipment (note 8) | - | (20,444) |
| Gain on refinancing of loan payable (note 15) | - | (204,520) |
| Cash used in operating activities before changes in items of working capital | (440,851) | (1,452,444) |
| Net change in items of non-cash working capital (note 18) | 337,455 | 812,500 |
| | (103,396) | (639,944) |
| Investing activities | | |
| Cash acquired in asset acquisition (note 4) | 1,016 | - |
| Purchase of property and equipment | (2,135) | (1,078) |
| | (1,119) | (1,078) |
| Financing activities | | |
| Proceeds from issuance of convertible debenture (note 14) | - | 150,000 |
| Partial repayment of convertible debenture (note 14) | - | (115,000) |
| Proceeds from issuance of common shares and warrants in private placements (note 16(a) and (c)) | 151,000 | 762,682 |
| Proceeds from common shares committed to be issued (note 16(b)) | - | 54,000 |
| Proceeds from loans payable (note 15) | - | 23,000 |
| Repayment of loans payable (note 15) | (44,000) | (258,000) |
| Share issue costs (note 16(a)) | - | (5,318) |
| Lease payments (note 10) | (9,816) | (13,226) |
| Interest paid | (4,424) | - |
| | 92,760 | 598,138 |
| Decrease in cash during the year | (11,755) | (42,884) |
| Cash – Beginning of year | 83,997 | 126,881 |
| Cash – End of year | 72,242 | 83,997 |

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

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

1 Nature of operations and going concern

TrustBIX Inc.'s (the "Company" or "TrustBIX") business operations consist of information solutions for the agri-food industry, including:

ViewTrak Technologies Inc., a wholly owned subsidiary of TrustBIX, which has developed solutions with an emphasis on the livestock sector. Its technologies include:
Auction Master Pro ("AMP") - livestock auction market software solution to help build and operate auction activities; and
Electronic Pork Grader - pork probe technology to help producers price pork by evaluating fat thickness, lean meat thickness, meat percentage and class.
Insight Global Inc., a wholly owned subsidiary of TrustBIX, which has developed industrial Internet-of-Things ("IoT") products and traceability solutions. Its technologies include:
BIX Location Services - IoT devices to track, protect and identify the movement of high-value moveable equipment used in agriculture and other industries; and
BIX (Business InfoXchange System) - a proprietary platform that uses innovative, blockchain-derived technology and data to deliver independent validation of food provenance and sustainable production practices within the supply chain.
Alberta Food Security Inc., a wholly owned subsidiary of TrustBIX, which holds the exclusive Alberta territory license and an Ontario territory license, along with the opportunity to acquire certain additional licenses, for an innovative Controlled Environment Agriculture vertical indoor farming technology.

The Company and its wholly owned subsidiaries, ViewTrak Technologies Inc. ("ViewTrak"), Insight Global Technology Inc. ("Insight"), BIX Operations Inc. ("BIX Operations"), and Alberta Food Security Inc. ("AFS") are incorporated and domiciled in Canada. The Company and its subsidiaries' principal office is located at #137 - 9650 20th Avenue NW, Edmonton, AB T6N 1G1.

Going concern

These consolidated financial statements have been prepared on a going concern basis in accordance with International Financial Reporting Standards ("IFRS"), which contemplates the realization of assets and satisfaction of liabilities in the normal course of business as they come due.

As at September 30, 2024, the Company had a net working capital deficit of $2,156,197 (2023 - $1,586,642). For the year ended September 30, 2024, the Company incurred a net loss of $710,765 (2023 - $3,073,808) and net cash outflow from operating activities of $103,396 (2023 - $639,944). As at September 30, 2024, the Company had an accumulated deficit of $20,062,889 (2023 - $19,352,124). In addition, the Company has lease commitments in the amount of $25,596 (note 10) and has entered into a contribution agreement with Prairies Economic Development Canada (formerly Western Economic Diversification Canada) ("PrairiesCan") for a repayable financial contribution under the Regional Relief and Recovery Fund with a remaining principal balance of $943,000 (note 15).

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

1 Nature of operations and going concern (continued)

Going concern (continued)

Operations during the fiscal year ended September 30, 2024, have been financed primarily from non-brokered private placements.

On November 13, 2023, the company received TSX Venture Exchange ("TSXV") final acceptance for the acquisition of Alberta Food Security Inc. (note 4) and management is actively pursuing new business opportunities. The Company may also continue to raise financing, including equity and debt, as needed, for working capital and to expand the business.

There can be no assurance that management's efforts will be successful. This uncertainty casts significant doubt upon the Company's ability to continue as a going concern and, accordingly, the appropriateness of the use of accounting principles applicable to going concern.

These consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported revenues and expenses that would be necessary if the Company were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations. Such adjustments could be material.

2 Basis of presentation

Statement of compliance

These consolidated financial statements have been prepared in accordance with IFRS, as issued by the International Accounting Standards Board (the "IASB") and were authorized for issue by the Company's Board of Directors on January 27, 2025.

Basis of measurement

These consolidated financial statements have been prepared in Canadian dollars, which is the Company's presentation and functional currency, and are prepared on a historical cost basis, except for certain financial instruments, which are measured at fair value.

Use of management critical judgment, estimates and assumptions

The preparation of consolidated financial statements requires management to make critical judgments, estimates and assumptions that affect the reported amounts of certain assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses recorded during the year. In making estimates and judgments, management relies on external information and observable conditions where possible, supplemented by internal analysis as required. Actual results may differ from those estimates. Estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

2 Basis of presentation (continued)

Use of management critical judgment, estimates and assumptions (continued)

The critical accounting estimates and judgments made by management in applying the Company's accounting policies were:

Estimates:

i) Impairment of financial assets

Financial assets measured at amortized cost are assessed for impairment losses based on expected credit losses ("ECL"). At the end of the reporting period, if credit risk has not increased significantly after initial recognition, the amount of loss allowance is calculated based on the ECL resulting from default events that are possible within 12 months after the reporting date (the "12-month ECL"). On the other hand, at the end of the reporting period, if credit risk has increased significantly after initial recognition, the amount of loss allowance is calculated based on the ECL resulting from all possible default events over the life of the financial instrument (the "lifetime ECL").

The Company applied the simplified approach to provide for ECL prescribed by IFRS 9, which permits the use of the lifetime ECL provision for trade receivables and contract assets without a significant financing component.

Judgment is used in order to determine the expected loss rates. To measure ECL, they have been grouped based on days past due. The expected loss rates per group are based on historical credit losses experienced within the previous 24 months. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables, if necessary. Trade accounts receivables are written off when there is no reasonable expectation of recovery. Impairment losses on trade accounts receivables are presented as net bad debts on the consolidated statements of loss and comprehensive loss.

ii) Impairment of non-financial assets

Changing the assumptions selected by management could significantly affect the Company's impairment evaluation and hence its results.

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

2 Basis of presentation (continued)

Use of management critical judgment, estimates and assumptions (continued)

Estimates (continued):

iii) Acquisition

During the year, the Company acquired 100% of the outstanding shares of AFS for 25,000,000 common shares of the Company (note 4). Management has made estimates regarding the fair value of the consideration paid in the acquisition.

iv) Intangibles

Intangible assets, which primarily includes the AFS license (notes 4 and 9), represents approximately 23% of total assets as at September 30, 2024 (2023 – approximately 1%).

Management uses estimates and judgment to determine the fair values and useful lives of intangible assets acquired and developed. Future events, or changes in estimates and assumptions used, could have a material impact on amortization or impairment charges. Such charges, in and of themselves, do not result in cash outflow and would not immediately impact liquidity.

v) Share-based compensation and warrants

The Company uses the Black-Scholes option pricing model to determine the fair value of share-based payments and warrants issued pursuant to equity offerings. Inputs to the model are subject to various estimates relating to the Company's share price, volatility, interest rates and expected life of the options and warrants issued. These inputs are estimated based on historical industry benchmark figures. Changing the assumptions selected by management, in particular the Company's share price and volatility, could significantly affect the fair value of the share-based payments and warrants.

vi) Investment

The fair value of the investment is measured using the fair value model as set out in the material accounting policies below. The determination of the fair value of the investment requires the use of estimates such as market multiples and recent comparable equity transactions of the investee. Any change in any of these assumptions could produce a different fair value, which could have a material impact on the results of operations.

vii) Leases

The Company estimates the incremental borrowing rate used to measure the lease liability for each lease contract. This includes estimation in determining the asset-specific security impact.

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

2 Basis of presentation (continued)

Use of management critical judgment, estimates and assumptions (continued)

Estimates (continued):

viii) Compound financial instruments

The fair value of a convertible debenture issued is allocated to each respective component using the residual value method. The fair value of a convertible debenture is allocated between the liability and equity components with the fair value of the liability component determined first, based on a discounted cash flow approach using the interest rate estimated to be equal to the rate of interest of a similar debt instrument without a conversion feature, and with the residual value being assigned to the equity component.

Critical judgements:

i) Revenue recognition

Judgment is used involving the allocation of the transaction price. One contract may include multiple products or services and the transaction price must be allocated to the performance obligations on a relative stand-alone selling price basis. Management determines the stand-alone selling price at contract inception based on observable prices of the type of hardware provided or service rendered. If a discount is granted, it is allocated to both performance obligations based on their relative stand-alone selling prices.

The revenue and profits recognized are based on the delivery of performance obligations and an assessment of when, or as, control is transferred to the customer. In determining the amount of revenue and profits to record, and related consolidated statement of financial position items, such as contract fulfillment assets, trade receivables, accrued income and unearned revenue to recognize in the period, the Company forms a number of key judgments and assumptions. This includes an assessment of the costs the Company incurs to deliver the contractual commitments and whether such costs should be expensed or capitalized, and the achievement of contractual milestones. Revenue is recognized when the performance obligations in a contract have been satisfied by transferring goods or services to the customer.

For bundled solutions, the Company applies judgment to consider whether those goods or services are: (i) distinct – to be accounted for as separate performance obligations; (ii) not distinct – to be combined with other promised goods or services until a bundle is identified that is distinct; or (iii) part of a series of distinct goods and services that are substantially the same and have the same pattern of transfer to the customer. At contract inception, the total transaction price is estimated, using the most likely amount method and the Company allocates this to the identified performance obligations in proportion to their relative stand-alone selling prices and recognizes revenue when, or as, those performance obligations are satisfied. The Company may offer discounts in a contract but no change to the performance obligations to be delivered. Such variable consideration is included in the total transaction price to be allocated across all performance obligations unless it relates to only one performance obligation in the contract.

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

2 Basis of presentation (continued)

Use of management critical judgment, estimates and assumptions (continued)

Critical judgements (continued):

ii) Acquisitions

Management has made judgements relating to the determination of whether the acquisition completed during the year (note 4) represents an asset acquisition or a business combination. Management determined that the acquisition completed during the year was an asset acquisition as substantially all of the fair value of the gross assets acquired is concentrated in the license asset.

iii) Research and development expenditures

Expenditures on research activities are recognized as an expense when incurred. Management applies judgment in determining when research activities have ended and development activities, which are capitalized, have begun. These judgments include whether the product being developed is feasible, both technically and commercially, future economic benefits are probable and the Company has sufficient resources to complete the project.

iii) Deferred income taxes

Deferred income tax assets are assessed to determine the likelihood that they will be realized from future taxable income (note 21). The Company used judgment in its determination not to record a deferred income tax asset at each consolidated statement of financial position date.

iv) Leases

The Company uses judgment to determine the lease term by considering the facts and circumstances that can create an economic incentive to exercise an extension option, or not exercise a termination option, by assessing relevant factors included in the lease term. Extension options are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). Potential future cash outflows have not been included in the lease liability because it is not reasonably certain that the lease will be extended. The assessment of the lease term is reviewed if a significant event or a significant change in circumstances occurs, which affects this assessment and is within the control of the Company.

v) Determination of Reportable Operating Segments

Management has exercised judgment in evaluating the defined aspects of its operating segments, aggregation criteria, and quantitative thresholds that form the reportable operating segments of the Company. The Company's Chief Executive Officer is the Company's Chief Operating Decision Maker ("CODM") who is responsible for allocating resources and assessing the performance of the operating segments. Operating segments are reported in a manner consistent with the internal reporting provided to the CODM.

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

2 Basis of presentation (continued)

Use of management critical judgment, estimates and assumptions (continued)

Critical judgements (continued):

vi) Impairment of non-financial assets

At each consolidated statement of financial position date, management reviews the carrying value of its non-financial assets, other than inventories and deferred income tax assets, to determine whether there is any indication of impairment. Judgment is required in management's identification of indications of impairment. Management considers external sources of information in determining whether any impairment indicators exist including, but not limited to, any observable indications that the asset has declined during the period significantly such as changes in current or expected laws or regulations in the industry the intangible assets are used to service, new further advanced technology brought to market and the Company's market capitalization. Management also considers internal sources of information such as less than expected economic performance of the asset and whether the asset continues to show technical feasibility.

vii) Share-based compensation and warrants

Separate from the fair value calculation, the amount recognized as share-based compensation expense is adjusted to reflect the actual number of awards for which the related service and non-market vesting conditions are met. If the Company determines that it is not probable that the non-market vesting conditions will be met, no expense is recognized. Assessment of probability of the non-market vesting condition is re-evaluated at each consolidated statement of financial position date.

3 Summary of material accounting policies

Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries (note 1). Subsidiaries are all entities over which the Company has control, where control is defined as possessing power over the investee, having exposure to variable returns from its involvement with the investee and having the ability to use its power over the investee to affect its returns.

Foreign currencies

Foreign currency transactions are translated into the Company's functional currency at the rates prevailing on the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into Canadian dollars at the reporting date rates of exchange, and non-monetary assets and liabilities at historical exchange rates. Revenues and expenses are translated at the average exchange rates in the month they occur, except for revenues and expenses from non-monetary assets, which are translated using the same rates as the related assets. Translation gains and losses are recorded in net loss and comprehensive loss.

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

3 Summary of material accounting policies (continued)

Revenue recognition

The Company's main sources of revenue are from sale, installation and support of the information solutions the Company provides.

Contracts with multiple products or services

The Company sells its products and services on a stand-alone basis or as a bundled solution with separately identifiable performance obligations that add value to the customer on a stand-alone basis. For bundled transactions, each distinct performance obligation is recognized separately at its assessed transaction price. When the fair value cannot be determined for a performance obligation, the Company determines a value that most reasonably reflects the selling price that might be achieved in a stand-alone transaction. Any discounts identified are proportionately allocated to all separately identifiable components based on their relative selling price.

The Company disaggregates revenue by performance obligation in the consolidated statements of loss and comprehensive loss as well as by geography (note 22).

Software licences

Revenue for software licences, where hardware, installation and training are essential to the functionality of the software, is recognized when the performance obligation has been performed. This is considered to be when hardware is installed and all services are complete. All other software revenue is recognized on delivery when the customer has the right to use the software.

Professional and development services

Revenue for professional services is recognized when the performance obligation has been performed, which is considered as services are delivered to the customer. Development revenue is recognized using the percentage of completion method, comparing costs incurred to date to estimated total costs on a project-by-project basis.

Post-contract customer support (PCS)

PCS, which consists primarily of maintenance revenue, is recognized on a systematic basis over the period during which the related services and activities are rendered and all obligations are performed.

Hardware and installation

Hardware revenue, which also includes the sales of probes, is recognized when the performance obligation has been performed, which is considered to be on delivery. Revenue for installation, where not essential to the functionality of the hardware, is recognized as the services are delivered to the customer and all obligations are performed.

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

3 Summary of material accounting policies (continued)

Revenue recognition (continued)

Contract assets

Contract costs, such as commissions paid to personnel, are treated as a contract asset and are classified as such on the consolidated statements of financial position if the benefit is expected to be greater than one year and those costs are expected to be recoverable under the terms of the contract. There are no contract assets as at September 30, 2024 and 2023.

Contract liability

Prepaid revenue received from customers pertaining to the revenue streams is treated as unearned revenue and is classified as such on the consolidated statements of financial position.

Investment

The Company measures its non-marketable equity securities at fair value as required by IFRS 9 – Financial Instruments ("IFRS 9"). The determination of fair value requires management judgment and estimation, and may change over time. The Company adjusts the carrying value of its non-marketable equity securities to fair value at the end of each reporting period. All gains and losses are recognized in other income (expense).

Business combinations

In accordance with IFRS 3 – Business Combination ("IFRS 3"), a transaction is recorded as a business combination if the significant assets, liabilities, or activities, in addition to property, assumed constitute a business. IFRS 3 defines a business as an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing goods or services to customers, generating investment income (such as dividends or interest) or generating other income from ordinary activities. IFRS 3 also includes an optional concentration test to determine whether an acquired set of activities and assets is a business. Where there are no such integrated activities, the transaction is treated as an asset acquisition. The estimation of the fair value of the assets and liabilities acquired in an acquisition is subject to judgement concerning estimating market values and predicting future events.

Financial instruments

A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. The Company recognizes a financial asset or a financial liability when it becomes a party to the contract of a financial instrument. A purchase or sale of financial assets is recognized or derecognized at the trade date.

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

3 Summary of material accounting policies (continued)

Financial instruments (continued)

Financial assets

The Company's financial assets consist of cash, accounts receivable, share subscription receivable and investment in Provision Analytics Inc. All financial assets are recognized initially at fair value plus transaction costs that are attributable to the acquisition of the financial asset.

Subsequent measurement of financial assets depends on the Company's business model for managing the asset and the cash flow characteristic of the asset. There are three measurement categories into which the Company classifies its financial assets:

Amortized cost: Assets that are held for collection of contractual cash flows, where those cash flows represent solely payment of principal and interest ("SPPI"), are measured at amortized cost.
FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets' cash flows represent SPPI, are measured at fair value through other comprehensive income ("FVOCI").
FVPL: Assets that do not meet the criteria for amortized cost or FVOCI are measured at fair value through profit or loss ("FVPL"). A gain or loss is subsequently measured and is recognized in profit or loss and presented net within other gains or losses in the period in which it arises.

Subsequent measurement of cash, accounts receivable and share subscription receivable is at amortized cost using the effective interest rate method. The investment in Provision Analytics Inc. does not represent cash flows which are SPPI and therefore is classified as a financial asset measured at FVPL.

Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership.

Financial liabilities

The Company's financial liabilities comprise accounts payable and accrued liabilities, lease liability, debenture and loans payable. All financial liabilities are recognized initially at fair value. After initial recognition, the financial liabilities are measured at amortized cost using the effective interest rate method. The effective interest rate method amortization is included in accretion expense in the consolidated statements of loss and comprehensive loss. Gains and losses are recognized in the consolidated statements of loss and comprehensive loss when the liabilities are derecognized.

Financial liabilities are derecognized when the contractual obligations associated with the liability are discharged, cancelled or expire.

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

3 Summary of material accounting policies (continued)

Cash

Cash consists of cash on hand or deposits held with banks.

Inventory

Inventories are recorded at the lower of cost and net realizable value. The cost of inventories is based on the first-in, first-out principle and includes expenditures incurred in acquiring the inventories, assembly and other costs incurred in bringing them to their existing location and condition. Inventories include components and parts and finished goods. Components and parts consist mainly of computer components and parts. Finished goods include pork carcass grading probes, computer equipment for sale to auction markets and livestock dealers and Insight trackers.

Property and equipment

Property and equipment are measured at cost, net of accumulated depreciation and accumulated impairment losses, if any. Cost includes expenditures that are directly attributable to the acquisition of the asset. Property and equipment are depreciated over their estimated useful lives using the declining balance basis as follows:

Office furniture and equipment	20%
Computer hardware	30%
Computer software	30%

Intangible assets

The Company capitalized software development costs for BIXS software internally developed (BIXS software). The Company capitalizes costs for internally generated software to be used by customers during the development stage. This occurs when the preliminary project stage is complete, management authorizes and commits to funding the projects and it is feasible that the projects will be completed and the software will perform the intended function. Costs incurred prior to meeting these criteria are charged to net income in the period in which they are incurred. Capitalization of costs related to the software project stops when it enters the post-implementation and operation stage.

Costs capitalized during the development stage consist of payroll and related costs for employees who are directly associated with, and who devote time to, a project to develop or implement software. The Company capitalizes the direct costs of materials and services, which generally include outside contractors. It does not capitalize any general and administrative costs, or costs incurred during the development stage related to training. Costs related to upgrades and enhancements to software, if those upgrades and enhancements result in additional functionality, are capitalized.

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

3 Summary of material accounting policies (continued)

Intangible assets (continued)

Intangible assets also include software acquired as part of the acquisition of Insight and a license acquired as part of the acquisition of AFS (note 4). Intangible assets are amortized over their estimated useful lives on a straight-line basis as follows:

Software	Three (3) years
License	Ten (10) years

In determining and reassessing the estimated useful life over which the intangible assets should be amortized, the Company considers the effects of obsolescence, technology, competition and other economic factors. If different determinations are made with respect to the estimated useful life of the software or license, the amount of amortization charges in a particular period could differ materially.

Indefinite-lived intangible assets represent trademarks of the Company. The Company does not amortize intangible assets with indefinite useful lives.

Leases

At the inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, we assess whether:

the contract involves the use of an identified asset;
the Company has the right to obtain substantially all the economic benefits from the use of the identified asset throughout the period of use; and
the Company has the right to the direct use of the assets.

Lessee accounting

Leases are recognized as a right-of-use ("ROU") asset and a corresponding lease liability at the date at which the leased asset is available for use. Each lease payment is allocated between the lease liability and finance cost. The finance cost is charged to interest expense over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the lease liability for each period. The ROU asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

3 Summary of material accounting policies (continued)

Leases (continued)

Lease payments included in the measurement of the lease liability include the net present value of the following:

fixed payments (including in-substance fixed payments), less any lease incentives receivable;
amounts expected to be payable by the Company under residual value guarantee;
the exercise price of a purchase option if the Company is reasonably certain to exercise that option; and
payments of penalties for terminating the lease, if the lease term reflects the Company exercising that option.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the Company's incremental borrowing rate is used. The incremental borrowing rate is the rate that the Company would have to pay to borrow at prevailing interest rates, market precedents and the Company's specific credit spread, on similar terms and security.

ROU assets are initially measured at cost, comprising the following:

the amount of the initial measurement of the lease liability;
any lease payments made at or before the commencement date less any lease incentives received;
any initial direct costs; and
restoration costs.

The ROU assets are typically depreciated on a straight-line basis over the lease term, unless the Company expects to obtain ownership of the leased asset at the end of the lease. The lease term consists of:

the non-cancellable period of the lease;
periods covered by options to extend the lease, where the Company is reasonably certain to exercise the option; and
periods covered by options to terminate the lease, where the Company is reasonably certain not to exercise the option.

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

3 Summary of material accounting policies (continued)

Leases (continued)

If the Company expects to obtain ownership of the leased asset at the end of the lease, the ROU asset is depreciated over the underlying asset's estimated useful life. The ROU asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

Impairment

Financial assets at amortized cost

Financial assets measured at amortized cost are assessed for impairment losses based on expected credit losses. At the end of the reporting period if credit risk has not increased significantly after initial recognition, the amount of loss allowance is calculated based on the 12-month ECL. On the other hand, at the end of the reporting period, if credit risk has increased significantly after initial recognition, the amount of loss allowance is calculated based on the lifetime ECL.

For trade accounts receivables, the Company applied the simplified approach to provide for expected credit losses prescribed by IFRS 9, which permits the use of the lifetime expected loss provision for trade accounts receivable and contract assets without a significant financing component.

Non-financial assets

The carrying amounts of the Company's non-financial assets, other than inventory and deferred tax assets, are reviewed at each reporting date (or more frequently if required) to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated.

The recoverable amount of an asset or cash generating unit ("CGU") is the higher of its estimated value in use ("VIU") and its estimated fair value less costs of disposal ("FVLCD"). VIU is based on the estimated future cash flows from the asset or CGU, 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 or CGU. FVLCD is based on the best information available to reflect the amount that could be obtained from the disposal of the asset or CGU in an arm's length transaction between knowledgeable and willing parties, net of estimates of the costs of disposal.

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 profit or loss.

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

3 Summary of material accounting policies (continued)

Income taxes

Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted at year-end, adjusted for amendments to tax payable with regard to previous years.

Deferred tax is provided using the consolidated statements of financial position liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the consolidated statements of financial position reporting dates applicable to the period of expected realization or settlement. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

Income taxes recoverable represent the current estimated refund of taxes from taxation authorities.

Loss per share

Basic loss per share is calculated by dividing the net loss for the period attributable to equity owners of the Company by the weighted average number of common shares outstanding during the period.

Diluted loss per share is calculated by adjusting the weighted average number of common shares outstanding for dilutive instruments. The number of shares included with respect to options, warrants and similar instruments is computed using the treasury stock method.

Share capital

Common shares are classified as equity. Transaction costs directly attributable to the issue of common shares are recognized as a deduction from equity, net of any tax effects.

Proceeds from the issue of common share purchase warrants ("warrants") treated as equity are recorded as a separate component of equity. Costs incurred on the issue of warrants are netted against proceeds. Warrants issued with common shares are measured at fair value at the date of issue using the Black-Scholes option pricing model, which incorporates certain input assumptions including the warrant price, risk-free interest rate, expected warrant life and expected share price volatility. The fair value is included as a component of equity and is transferred from warrants to common shares on exercise.

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

3 Summary of material accounting policies (continued)

Share-based payments

Share-based payments are comprised of stock options granted to employees, directors and others which are equity-settled share-based payments and common shares issued in exchange for goods or services.

When stock options are granted to employees or those providing similar services, pursuant to specific stock option agreements, they are accounted for at fair value using accepted valuation techniques and result in compensation expenses when the stock options are issued. The expenses are recognized in the consolidated statements of loss and comprehensive loss over the vesting period of the stock options granted, with a corresponding amount recorded in contributed surplus. On settlement of the stock options, any amount previously recorded in contributed surplus and consideration paid is credited to share capital.

When issued in exchange for goods or services, the equity instruments are recorded at the fair value of the goods or services received. Where the fair value of goods or services received cannot be reliably measured, the equity instruments are measured based on the fair value of the equity instruments granted.

Compound Financial Instruments

The liability component of compound financial instruments is initially recognized at the fair value of a similar liability that does not have an equity conversion option. The equity component is initially recognized at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortized cost using the effective interest rate method. The equity component of a compound financial instrument is not remeasured.

Interest related to the financial liability is recognized in the consolidated statements of loss and comprehensive loss. On conversion at maturity, the financial liability is reclassified to equity and no gain or loss is recognized.

Provisions

Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. The timing or amount of the outflow may still be uncertain.

Provisions are measured at management's best estimate of the expenditure required to settle the obligation at the end of the reporting period and are discounted to present value using the expected future cash flows at a rate that reflects current market assessments of the time value of money and the risks specific to the liability.

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

3 Summary of material accounting policies (continued)

Government assistance

Grants that assist in reducing specific costs are accounted for as a reduction of related expenditures and are recorded when there is reasonable assurance that the Company has complied with the terms and conditions of the approved government program. Grants that assist in reducing general costs are accounted for as other income in the consolidated statements of loss and comprehensive loss.

Government assistance consists of grants with Protein Industry Canada ("PIC") and the National Research Council of Canada Industrial Research Assistance Program ("IRAP") (note 20) and a contribution agreement with PrairiesCan for a repayable financial contribution under the Regional Relief and Recovery Fund (note 20).

New accounting pronouncements not yet adopted

There are no new IFRS standards that have been recently issued by the IASB that are relevant or expected to have a significant impact.

4 Acquisition of AFS

On October 31, 2023, pursuant to the terms of a definitive agreement, the Company acquired 100% of the issued and outstanding shares of AFS for 25,000,000 common shares of the Company, subject to certain resale restrictions.

The Company applied the optional concentration test permitted under IFRS 3 to the acquisition which resulted in the acquired assets being accounted for as an asset acquisition. The amounts recognized on the date of acquisition of the identifiable assets and liabilities were as follows:

	$
Assets acquired:
Cash	1,016
License	261,099
Liabilities acquired:
Accounts payable and accrued liabilities	(12,115)
	250,000
Share consideration (25,000,000 common shares)	250,000

The license acquired is amortized over the useful life of ten years on a straight-line basis (note 9).

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

5 Accounts receivable

Included in accounts receivable are the following:

| | 2024
$ | 2023
$ |
| --- | --- | --- |
| Trade accounts receivable | 115,776 | 152,965 |
| Allowance for trade receivables | (79,024) | (4,042) |
| Other receivables | 2,547 | 21,620 |
| | 39,299 | 170,543 |

6 Inventory

Inventory consists of the following:

| | 2024
$ | 2023
$ |
| --- | --- | --- |
| Components and parts | 31,068 | 39,441 |
| Finished goods | 20,951 | 15,142 |
| | 52,019 | 54,583 |

Inventory expensed during the year is included in hardware for resale and supplies in the consolidated statements of loss and comprehensive loss.

7 Deposits and prepaid expenses

Deposits and prepaid expenses consists of the following:

| | 2024
$ | 2023
$ |
| --- | --- | --- |
| Deposits | 256,541 | 999 |
| Prepaid expenses | 52,528 | 10,548 |
| | 309,069 | 11,547 |

As at September 30, 2024, deposits include AFS orders of indoor farming technology (note 13).

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

8 Property and equipment

	Computer hardware $	Computer software $	Office furniture and equipment $	Total $
Cost
Balance, September 30, 2022	109,304	19,708	15,086	144,098
Additions	1,078	-	-	1,078
Disposition	(7,839)	(7,460)	(607)	(15,906)
Balance, September 30, 2023	102,543	12,248	14,479	129,270
Additions	-	-	2,135	2,135
Balance, September 30, 2024	102,543	12,248	16,614	131,405
Accumulated depreciation
Balance, September 30, 2022	(81,686)	(19,009)	(10,979)	(111,674)
Depreciation	(7,417)	(455)	(751)	(8,623)
Disposition	6,727	7,460	543	14,730
Balance, September 30, 2023	(82,376)	(12,004)	(11,187)	(105,567)
Depreciation	(5,330)	(160)	(818)	(6,308)
Balance, September 30, 2024	(87,706)	(12,164)	(12,005)	(111,875)
Net book value
Balance, September 30, 2023	20,167	244	3,292	23,703
Balance, September 30, 2024	14,837	84	4,609	19,530

The Company follows the guidance of IAS 36 to determine if impairment indicators exist for its property and equipment. When impairment indicators exist, the Company is required to make a formal estimate of the recoverable amount of its property and equipment. In making this judgment, management evaluates external and internal factors, such as significant adverse changes in the technological, market, economic or legal environment in which the Company operates. No indicators of impairment were identified during the year ended September 30, 2024 (2023 – none).

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

9 Intangible assets

	Software $	Trademarks $	License $	Total $
Cost
Balance, September 30, 2022 and 2023	2,035,509	8,092	-	2,043,601
Addition	-	-	261,099	261,099
Balance, September 30, 2024	2,035,509	8,092	261,099	2,304,700
Accumulated amortization and impairment
Balance, September 30, 2022	(567,986)	-	-	(567,986)
Amortization	(597,116)	-	-	(597,116)
Impairment	(870,407)	-	-	(870,407)
Balance, September 30, 2023	(2,035,509)	-	-	(2,035,509)
Amortization	-	-	(36,410)	(36,410)
Balance, September 30, 2024	(2,035,509)	-	(36,410)	(2,071,919)
Net book value
Balance, September 30, 2023	-	8,092	-	8,092
Balance, September 30, 2024	-	8,092	224,689	232,781

Trademarks are indefinite-lived intangible assets and are not amortized.

The license was acquired as part of the purchase of AFS (note 4).

The Company follows the guidance of IAS 36 to determine if impairment indicators exist for its intangible assets. When impairment indicators exist, the Company is required to make a formal estimate of the recoverable amount of its intangible assets. In making this judgment, management evaluates external and internal factors, such as significant adverse changes in the technological, market, economic or legal environment in which the Company operates. No indicators of impairment were identified during the year ended September 30, 2024. During the year ended September 30, 2023, due to the longer than expected sales cycle of the Insight product, the Company tested the Insight software for impairment and recognized an impairment loss of $870,407.

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

10 Lease liability and right-of-use asset

Right-of-use asset

Below is a summary of the activity related to the Company's right-of-use ("ROU") asset for the years ended September 30, 2024 and 2023.

	$
ROU asset as at September 30, 2022	32,389
Depreciation	(9,418)
ROU asset as at September 30, 2023	22,971
Depreciation	(6,567)
ROU asset as at September 30, 2024	16,404

Lease liability

The following is a summary of the activity related to the Company's lease liability for the years ended September 30, 2024 and 2023:

	$
ROU lease liabilities as at September 30, 2022	34,056
Lease payments	(13,226)
Accretion of lease liabilities	5,187
ROU lease liabilities as at September 30, 2023	26,017
Lease payments	(9,816)
Accretion of lease liabilities	4,244
ROU lease liabilities as at September 30, 2024	20,445
Of which are:
Current lease liabilities	6,932
Non-current lease liabilities	13,513
	20,445

The Company's anticipated cash outflows related to the lease obligation for the twelve (12) months ending September 30th are as follows:

	$
2025	10,064
2026	10,313
2027	5,219
	25,596

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

11 Investment

On November 7, 2019, TrustBIX invested US$250,000 in a Calgary, Alberta-based company, Provision Analytics Inc., through a convertible debenture offering maturing in 24 months. It accrued simple interest on an annual basis at the rate of 2.5% per annum.

The investment plus accrued interest was converted into non-marketable preferred shares on November 23, 2021 at the transaction price of US$262,997 ($333,427). During the year ended September 30, 2022, the Company sold half of the investment in Provision Analytics for gross proceeds of $180,907.

No significant changes were recorded to initial fair value measurement as at September 30, 2024.

The Company does not have control or significant influence over Provision Analytics and has no participation in its policy-making processes. Each preferred share is convertible, at the option of the Company into common shares.

12 Accounts payable and accrued liabilities

Included in accounts payable and accrued liabilities are the following:

	2024	2023
	$	$
Trade accounts payable	1,036,536	924,742
Accrued liabilities	643,250	632,006
	1,679,786	1,556,748

13 Unearned revenue and customer deposits

Unearned revenue and customer deposits consists of the following:

	2024	2023
	$	$
Customer deposits	433,253	2,808
Unearned revenue	318,263	283,478
	751,516	286,286

As at September 30, 2024, customer deposits include deposits from AFS customers towards their orders of indoor farming technology, deposits from new ViewTrak Auction Master Pro customers and deposits from existing ViewTrak customers towards migration to the ViewTrak Auction Master Pro software program.

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

14 Debenture

| | 2024
$ | 2023
$ |
| --- | --- | --- |
| Balance, beginning of year | 37,706 | - |
| Proceeds from issuance of convertible debenture | - | 150,000 |
| Amount classified as equity for conversion feature | - | (10,170) |
| Convertible debenture at initial recognition | - | 139,830 |
| Partial repayment of convertible debenture | - | (115,000) |
| Reduction of amount classified as equity for conversion feature | - | 7,797 |
| | - | (107,203) |
| Amendment to convertible debenture | 2,374 | - |
| Interest (recovery) accretion | (656) | 5,079 |
| Payment of interest | (4,424) | - |
| Balance, end of year | 35,000 | 37,706 |

On January 27, 2023, the Company issued a convertible debenture with a principal balance of $150,000 at an interest rate of 10% per annum, with the interest to be paid only in cash, for a term of one (1) year. The convertible debenture was convertible into units of the Company, composed of one (1) common share and one half (1/2) warrant exercisable at a price of $0.05 per common share for a term of one (1) year, at a price of $0.05 per unit.

The liability component of the convertible debenture was initially recognized at the fair value of a similar liability that did not have an equity conversion option and using a discount rate of 18%. The equity component of the convertible debenture was recognized at the difference between the fair value of the convertible debenture as a whole and the fair value of the liability component.

During the year ended September 30, 2023, the Company repaid $115,000 of the principal balance of the convertible debenture.

On December 29, 2023, the Company amended the terms of the convertible debenture to extend the maturity date from January 5, 2024 to January 5, 2025 and to remove the option of the holder to convert the convertible debenture into common shares of the Company, such that no securities will be issued as payment for the convertible debenture. All other terms of the previously convertible debenture remained the same.

The holder of the debenture was a director of the Company between April 14, 2023 and November 13, 2023 (note 19).

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

15 Loans payable

A summary of loans payable as at September 30, 2024 and 2023 are as follows:

	2024 $	2023 $
Loan payable to related party (note 19)	23,000	23,000
Repayable Regional Relief and Recovery Fund contribution	701,446	626,388
	724,446	649,388
Current portion	(155,592)	(71,000)
Long term portion	568,854	578,388

Repayable Regional Relief and Recovery Fund contribution

On July 27, 2020, the Company entered into a contribution agreement with PrairiesCan for a repayable financial contribution under the Regional Relief and Recovery Fund. Under the contribution agreement, PrairiesCan supported the Company with an investment of $1,000,000 for general working capital requirements (the "Contribution"). Repayment of the Contribution was to commence on January 31, 2023 and continue in equal monthly instalments until the Contribution was fully repaid by December 31, 2025. The Contribution is unsecured and non-interest bearing, unless repayment is not made as scheduled. Interest is calculated at an average bank rate plus 3%, compounded monthly, on repayments not made as scheduled. The interest calculation ends when repayments are back on schedule.

The Contribution was initially recognized at a fair value of $506,300. The initial carrying value of the Contribution was calculated using the effective interest rate method, discounting estimated cash flows using the Company's effective interest rate of 18%.

On December 29, 2022, the repayment terms were revised, changing the amount of the monthly installment payments and extending the final installment payment to December 31, 2027. The original Contribution was derecognized from the consolidated statements of financial position and a new Contribution was recognized at a fair value of $563,649, resulting in a gain on refinancing of loan payable of $204,520 in other income in the consolidated statements of loss and comprehensive loss.

The short-term and long-term components of the Contribution at September 30, 2024 are as follows:

	$
Current portion	132,592
Non-current portion	568,854
	701,446

During the year ended September 30, 2024, the Company incurred $119,059 (2023 - $104,294) of interest accretion expense on the Contribution.

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

15 Loans payable (continued)

Repayable Regional Relief and Recovery Fund contribution (continued)

The Company's anticipated cash outflows on the Contribution for the twelve (12) months ending September 30th are as follows:

	$
2025	247,002
2026	309,336
2027	309,336
2028	77,326
	943,000

16 Share capital

Authorized

Unlimited common shares, with no par value

Unlimited preferred shares, voting, convertible, designated as Series 1 and Series 2

a) Common shares issued

	Number	$
Balance as at September 30, 2022	79,649,831	12,764,699
Issued pursuant to private placement (i)	23,219,499	807,364
Balance as at September 30, 2023	102,869,330	13,572,063
Issued for asset acquisition (note 4)	25,000,000	250,000
Issued pursuant to private placement (ii)	4,500,000	82,359
Issued pursuant to private placement (iii)	6,500,000	65,000
Cancellation of common shares held in escrow (iv)	(20,000,000)	-
Balance as at September 30, 2024	118,869,330	13,969,422

(i) Between February 10, 2023 and March 22, 2023, the Company completed a non-brokered private placement, in four (4) tranches, which consisted of the issuance of an aggregate total of 23,219,499 common shares at a subscription price of $0.035 per common share for gross proceeds of $812,682 of which $50,000 remained receivable at September 30, 2023. Share issue costs of $5,318 have been netted against share capital issued.

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

16 Share capital (continued)

a) Common shares issued (continued)

(ii) A non-brokered private placement financing for 4,500,000 units (“Units”) at a price of $0.02 per Unit for gross proceeds of $90,000. Each Unit consisted of one common share and one common share purchase warrant, which entitles the holder to purchase one common share at a price of $0.05 for a period of one (1) year from the date of closing. The gross proceeds of $90,000 were allocated between share capital and warrants in the amounts of $82,359 and $7,641 (note 16(c)), respectively.

(iii) A non-brokered private placement financing for 6,500,000 common shares at a price of $0.01 per common share for gross proceeds of $65,000.

(iv) Effective April 23, 2024, the Company cancelled 20,000,000 common shares which were held in escrow (the “Escrow Shares”) and were to be released if certain conditions, pursuant to the acquisition of Insight Global Technology Inc. were met. The required conditions were not met, resulting in the cancellation of the Escrow Shares without issuance of any consideration.

b) Common shares committed

As at September 30, 2023, the Company had received subscriptions of $54,000 towards a private placement (note 16(a)(ii)).

c) Warrants

A summary of the warrants outstanding as at September 30, 2024 and 2023 and changes during the periods ended on those dates is as follows:

	September 30, 2024		September 30, 2023
	Number	Weighted average exercise price $	Number	Weighted average exercise price $
Outstanding – Beginning of year	4,848,889	0.30	6,324,334	0.30
Issued	4,500,000	0.05	-	-
Expired	(4,848,889)	0.30	(1,475,445)	0.30
Outstanding – End of year	4,500,000	0.05	4,848,889	0.30

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

16 Share capital (continued)

c) Warrants (continued)

During the year ended September 30, 2024, the Company issued warrants in connection with a private placement (note 16(a)(ii)). The fair value of the warrants was determined using the Black-Scholes option pricing model with the following weighted average assumptions: stock price of $0.01, exercise price of $0.05, volatility of 145%, an expected life of one (1) year, a dividend yield of nil% and a risk-free interest rate of 4.6%.

4,848,889 warrants expired unexercised on October 4, 2023.

Of the 4,500,000 warrants at September 30, 2024, 3,200,000 expired unexercised on October 16, 2024 and 1,300,000 expired unexercised on December 18, 2024.

d) Stock options and compensation expense

The Company has adopted a twenty percent (20%) fixed stock option plan (the "Stock Option Plan") for directors, officers, employees, management company employees and consultants. In accordance with the Stock Option Plan and as approved at the Annual General and Special Meeting of Shareholders on April 14, 2023, the Company has reserved up to a total of 18,886,094 common shares for issuance. The Board of Directors determines the price per common share, the number of common shares which may be allocated to each eligible participant, and all other terms and conditions of the stock options, subject to the rules of the TSX Venture Exchange.

A summary of the stock options outstanding as at September 30, 2024 and 2023 and changes during the periods ended on those dates is as follows:

	September 30, 2024		September 30, 2023
	Number	Weighted average exercise price $	Number	Weighted average exercise price $
Outstanding – Beginning of year	10,131,848	0.22	12,731,848	0.21
Granted	8,400,000	0.01	2,900,000	0.05
Forfeited	(133,334)	0.30	(558,333)	0.17
Cancelled	(1,561,666)	0.18	(1,341,667)	0.14
Expired	(2,096,663)	0.39	(3,600,000)	0.08
Outstanding – End of year	14,740,185	0.08	10,131,848	0.22
Options exercisable – End of year	9,140,185	0.13	9,385,181	0.23

On November 11, 2022, the Company issued 2,900,000 stock options to directors, officers, employees and non-employees, exercisable at $0.05 and vested 100% immediately, and expiring on April 30, 2023.

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

16 Share capital (continued)

d) Stock options and compensation expense (continued)

The fair value of the stock options granted to non-employees was measured at the value of services the Company received.

On January 9, 2024, the Company approved the grant of 8,400,000 stock options to directors, officers, employees and consultants. The stock options have an exercise price of $0.01 and will vest one third on each of the grant, first anniversary and second anniversary dates. The stock options will expire after three years if not exercised.

The fair value of the stock options granted to non-employees was measured at the value of services the Company received.

The Company used the Black-Scholes option pricing model to estimate the fair value of the stock options granted to directors, officers, employees. The Company considered historical volatility of its common shares as well as industry benchmarking in estimating its future stock price volatility. The risk-free interest rate for the expected life of the stock options was based on the yield available on government benchmark bonds with an approximate equivalent remaining term at the time of the grant. The expected life is based on the contractual term, taking into account expected director, employee and non-employee exercise and expected post-vesting employment termination behaviour. The following weighted average assumptions were used to estimate the Black-Scholes fair value of the options granted during the years ended September 30, 2024 and 2023:

	2024	2023
Annualized volatility	166%	113%
Risk-free interest rate	3.8%	4.3%
Expected life of options in years	3	0.5
Dividend rate	nil%	nil%
Exercise price	$0.01	$0.05
Market price on date of grant	$0.01	$0.07
Weighted average fair value	$0.004	$0.03

Stock-based compensation expense for the year ended September 30, 2024 was $22,999 (2023 – $246,204), with a corresponding increase in contributed surplus included in shareholders' deficiency.

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

16 Share capital (continued)

d) Stock options and compensation expense (continued)

The following table summarizes information on stock options outstanding as at September 30, 2024:

Exercise price $	Number outstanding	Weighted average remaining contractual life in years	Options exercisable
0.01	8,400,000	2.28	2,800,000
0.10	4,200,000	2.64	4,200,000
0.30	1,840,000	2.34	1,840,000
0.60	300,185	1.00	300,185
	14,740,185	2.36	9,140,185

17 Loss per share

	2024 $	2023 $
Net loss	(710,765)	(3,073,808)
	2024 #	2023 #
Weighted average number of common shares outstanding – basic and diluted	114,129,166	73,190,395
	$	$
Basic and diluted loss per share	(0.01)	(0.04)

For the years ended September 30, 2024 and 2023, potential shares issuable in exchange for warrants, stock options and the previously convertible debenture have been excluded in the diluted loss per share calculation as their effects would have been anti-dilutive. In addition, 20,000,000 common shares issued by the Company, pursuant to the acquisition of Insight, which were held in escrow until their cancellation on April 23, 2024, have been excluded.

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

18 Supplementary cash flow information

Changes in items of non-cash working capital for the years ended September 30, 2024 and 2023:

	2024 $	2023 $
Accounts receivable	56,262	(100,158)
Inventory	2,564	20,228
Deposits and prepaid expenses	(297,522)	74,520
Accounts payable and accrued liabilities	110,921	921,793
Unearned revenue	465,230	(103,883)
	337,455	812,500

19 Related party transactions and balances

During the years ended September 30, 2024 and 2023, the Company incurred the following amounts in the normal course of business and they have been valued at amounts that are considered established and agreed to by the related parties:

	2024 $	2023 $
Sublease rental income from a company controlled by a director	-	937
Office and administrative services to a company controlled by a close family member of a director and member of key management	4,187	5,383
Project management services to a company controlled by a former member of key management	-	52,500

During the year ended and as at September 30, 2024, the Company had received deposits of $80,000 from a Company controlled by close family members of a director and member of key management for an order of AFS indoor farming technology (note 7).

During the year ended and as at September 30, 2024, the Company paid deposits of $214,541 to a Company with common key management for the manufacturing of AFS indoor farming technology (note 13).

The compensation to key management, and their close family members, during the years ended September 30, 2024 and 2023 are as follows:

	2024 $	2023 $
Salaries and short-term employee benefits	84,223	465,695
Stock-based compensation	22,341	151,092
Consulting fees	286,115	234,276
	392,679	851,063

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

19 Related party transactions and balances (continued)

During the year ended September 30, 2024, the Company granted 6,600,000 stock options with a fair value of $26,428 to directors and members of key management, exercisable at $0.01 per common share (note 16(d)).

During the year ended September 30, 2023, the Company granted 1,320,000 stock options with a fair value of $35,266 to directors and members of key management, exercisable at $0.05 per stock option (note 16(d)).

Accounts payable and accrued liabilities

Accounts payable and accrued liabilities as at September 30, 2024 and 2023 include the following amounts due to:

| | 2024
$ | 2023
$ |
| --- | --- | --- |
| Salaries and consulting fees due to members of key management
and companies controlled by them or close family members | 415,913 | 292,345 |
| Companies with common key management | 127,096 | - |
| Company controlled by a former member of key management for
consulting fees | - | 5,701 |
| Company presently controlled by a close family member of a
director and member of key management for other services | 8,923 | 4,527 |
| | 551,932 | 302,573 |

As at September 30, 2023, a director of the Company held the outstanding previously convertible debenture with a remaining principal balance of $35,000 (note 14). The director resigned effective November 13, 2023.

On August 3, 2023, the Company issued a promissory note (note 15) to a close family member of a director and member of key management for $23,000. The promissory note bears interest at a rate of 1% per month and matures on August 2, 2025. As at September 30, 2024, $3,220 of interest is payable on the promissory note and included in accounts payable and accrued liabilities. The Company may pay the outstanding balance at any time before the maturity date without penalty.

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

20 Government assistance

Government assistance is accounted for as a reduction of related expenditures and are recorded when there is reasonable assurance that the Company has complied with the terms and conditions of the approved grant program.

Protein Industry Canada ("PIC")

On March 31, 2021 the Company signed an agreement with PIC, Farmers Edge Inc., and OPIsystems Inc. to create a platform for Canada's plant-based food, feed and ingredient sector. The project is partially funded through PIC, up to a maximum of $334,057.

For the year ended September 30, 2024, the Company recognized funding of $nil (2023 – $69,035), which is netted against research and development on the consolidated statements of loss and comprehensive loss.

National Research Council of Canada Industrial Research Assistance Program ("IRAP")

On April 1, 2021, the Company received approval of funding up to $300,000 from the IRAP, to develop traceability of products and sustainability metrics for poultry produced using Arden Biotechnology Ltd.'s natural feed supplement, Sustavian.

For the year ended September 30, 2024, the Company recognized funding of $nil (2023 – $119,628), which is netted against research and development on the consolidated statements of loss and comprehensive loss.

For the year ended September 30, 2024, the Company recognized funding of $3,000 (2023 - $nil), from IRAP, for travel reimbursement, which is netted against travel, trade shows and conferences on the interim condensed consolidated statements of loss and comprehensive loss.

Loan payable

During the year ended September 30, 2020, the Company entered into a contribution agreement with PrairiesCan and received a $1,000,000 Contribution (note 15).

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

21 Income taxes

The recovery of income taxes differs from that which would be expected by applying the federal and provincial statutory income tax rates of 23.38% (2023 – 23.26%) to loss before income taxes. A reconciliation of the difference is as follows:

	2024 $	2023 $
Loss before income taxes	(710,765)	(3,073,808)
Expected income tax recovery at statutory income tax rates	(166,177)	(714,968)
Tax effects of
Non-deductible expenses	45,471	229,950
Current year deductions for tax purposes	(11,753)	(60,055)
Tax losses for which no deferred tax asset was recognized	133,668	553,986
Effect of change in future tax rate and other	(1,209)	(8,913)
Income tax recovery	-	-

As at September 30, 2024, the Company has available Canadian non-capital losses in the amount of $17,505,594 (2023 – $17,012,986 to reduce Canadian taxable income in future years.

The non-capital loss carry-forwards will expire as follows:

	$
2030	25,588
2031	145,683
2032	-
2033	85,986
2034	127,596
2035	468,659
2036	467,374
2037	405,922
2038	2,330,176
2039	2,206,646
2040	2,232,389
2041	2,065,378
2042	4,099,207
2043	2,352,382
2044	567,591
	17,580,576

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

21 Income taxes (continued)

As at September 30, 2024 and 2023, temporary differences for which no deferred tax asset was recognized were as follows:

	2024 $	2023 $
Deferred tax assets
Loss carry-forwards	4,110,339	3,957,220
Deductible temporary differences	38,466	57,917
	4,148,805	4,015,137
Potential tax assets not recognized	(4,148,805)	(4,015,137)
Net deferred tax assets	-	-

Given the Company's past losses, management does not believe that it is more probable than not that the Company can realize its deferred tax assets and therefore has not recognized any amount in the consolidated statements of financial position.

22 Segment disclosures

Management has organized the Company under three reportable segments: ViewTrak, the development and sale of information solutions for the livestock industry and related services, BIX, which leverages blockchain-derived technology and unique incentive solutions to deliver independent validation of food provenance and sustainable production practices within the agri-food supply chain, and AFS, which holds the exclusive Alberta territory license for an innovative Controlled Environment Agriculture vertical indoor farming solution.

	September 30, 2024
	AFS $	ViewTrak $	BIX $	Consolidated $
Revenue from external customers	-	1,566,993	10,992	1,577,985
Expenses	(101,351)	(1,635,072)	(375,475)	(2,111,898)
Amortization and depreciation	(36,410)	(12,873)	-	(49,283)
Other income (expenses)	-	(127,569)	-	(127,569)
Net loss	(137,761)	(208,521)	(364,483)	(710,765)

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

22 Segment disclosures (continued)

	September 30, 2023
	AFS $	ViewTrak $	BIX $	Consolidated $
Revenue from external customers	-	1,954,273	174,128	2,128,401
Expenses	-	(2,883,477)	(937,065)	(3,820,542)
Amortization and depreciation	-	(18,041)	(597,116)	(615,157)
Other income (expenses)	-	103,897	(870,407)	(766,510)
Net loss	-	(843,348)	(2,230,460)	(3,073,808)

For the year ended September 30, 2024, BIX includes $nil (2023 - $596,850) of amortization and depreciation related to the Insight software (note 9) and AFS includes $36,410 (2023 - $nil) of amortization and depreciation related to the AFS license (note 9).

Geographical segmentation

The Company's segments are managed on a worldwide basis. Substantially all of the Company's assets are located in Canada. The following is a summary of revenue by geographic location in which the Company's customers are located:

	2024 $	2023 $
Canada	277,101	503,363
United States	1,227,414	1,434,521
Other	73,470	190,517
	1,577,985	2,128,401

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

23 Financial instruments and financial risk management

For accounting recognition and measurement purposes, cash, accounts receivable, share subscription receivable, accounts payable and accrued liabilities, loans payable and debenture are classified as amortized cost. The carrying value of cash, accounts receivable, share subscription receivable, accounts payable and accrued liabilities and debenture approximates their fair value due to the immediate or short-term maturity of these financial instruments. The loans payable were measured using the estimated incremental borrowing rate and approximates fair value.

Financial instruments recognized on the consolidated statements of financial position dates at fair value are classified in a hierarchy based on the significance of the estimates used in their measurement, as follows:

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

The non-marketable equity securities in Provision Analytics (note 11) are an investment in a privately held company without readily determinable market values and is classified as Level 3.

During the years ended September 30, 2024 and 2023, there have been no transfers between levels of the fair value hierarchy.

Financial risk management

The Company's activities are exposed to a variety of financial risks: market risk, credit risk and liquidity risk. The Company's overall risk management program focuses on the unpredictability of financial and economic markets and seeks to minimize potential adverse effects on the Company's financial performance. Risk management is carried out by financial management in conjunction with overall corporate governance.

a) Market risk

i) Currency risk

Some of the Company's transactions, assets and liabilities are denominated in US dollars and Chinese RMB and thus the Company is exposed to risk arising from changes in exchange rates.

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

23 Financial instruments and financial risk management (continued)

Financial risk management (continued)

a) Market risk (continued)

i) Currency risk (continued)

The following table presents the Company's exposure in Canadian dollars to the US dollar and Chinese RMB as at September 30, 2024 and 2023:

	2024	2023
	$	$
Cash – USD	52,382	25,312
Accounts receivable – USD	565	105,412
Accounts payable and accrued liabilities – USD	(126,690)	(147,581)
	(73,743)	(16,857)
	2024	2023
	$	$
Accounts receivable - RMB	-	60,783
	2024	2023
	$	$
CAD$ - USD	0.7408	0.7398
CAD$ - RMB	5.1948	5.3996

As at September 30, 2024, based on the Company's foreign currency exposure noted above, varying the foreign exchange rates to reflect a 10% strengthening of the US dollar would have increased net loss by approximately $7,000 (2023 - $2,000) and the Chinese RMB would have decreased net loss by approximately $nil (2023 - $6,000), assuming all other variables remained constant.

An assumed 10% weakening of the US dollar and China RMB would have had an equal but opposite effect to the amounts shown above, assuming all other variables remained constant.

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

23 Financial instruments and financial risk management (continued)

Financial risk management (continued)

a) Market risk (continued)

ii) Market price risk

The Company is exposed to market price risk on its equity investment in Provision Analytics Inc. (note 11). Market price risk is the risk of loss arising from changes in the fair value of a financial instrument as a result of changes in market prices.

The sensitivity of the fair value of the investment to changes in market prices is monitored by the Company and it estimates that a 20% increase or decrease in the market price would result in an approximately $36,000 increase or decrease, respectively, in the fair value of the investment.

iii) Interest rate risk

The Company does not have any variable rate financial liabilities and is therefore management does not believe it is exposed to significant interest rate risk as at September 30, 2024 and 2023.

b) Credit risk

The Company, in the normal course of business, is exposed to credit risk from its customers. The allowance for doubtful accounts and past due receivables is reviewed by management at each consolidated statement of financial position reporting date. Accounts are considered past due when customers have failed to make the contractually required payment when due, which is generally within 60 days of the billing date.

The following table presents a summary of the activity related to the allowance for doubtful accounts:

	2024	2023
	$	$
Balance – Beginning of year	4,042	4,537
Accounts written off, net of recoveries	74,982	(495)
Balance – End of year	79,024	4,042

Management believes the risks associated with concentrations of credit risk with respect to accounts receivable are limited due to the nature of the customers and the generally short-term payment cycle.

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

23 Financial instruments and financial risk management (continued)

Financial risk management (continued)

b) Credit risk (continued)

The aging of the Company's trade accounts receivable is as follows:

	2024		2023
	$	%	$	%
Current	13,475	12	67,037	44
31 – 60 days	4,076	4	2,941	2
61 – 90 days	8,623	7	703	0
Greater than 90 days	89,602	77	82,284	54
	115,776	100	152,965	100

c) Liquidity risk

As at September 30, 2024 and 2023, the Company's financial liabilities that mature within one year are:

	2024	2023
	$	$
Accounts payable and accrued liabilities	1,679,786	1,556,748
Loans payable	155,592	71,000
Debenture	35,000	37,706
Lease liability	6,932	5,572
	1,877,310	1,671,026

Accounts payable and accrued liabilities from two (2) vendors of the Company (2023 – two (2)) represented $589,780 or 35% (2023 - $470,665 or 30%) of the Company's total accounts payable and accrued liabilities and are due within one (1) year.

The Company's long-term liabilities include loans payable of $568,854 (2023 - $578,388) (note 15) and a lease liability of $13,513 (2023 - $20,445) (note 10).

Anticipated cash outflows on the lease liability and loans payable as at September 30, 2024 are disclosed in note 10 and 15, respectively.

Liquidity risk is the risk the Company will encounter difficulty in meeting financial obligations as they come due. See note 1 for additional disclosure on the Company's financial condition. The Company manages its liquidity risk through the management of its capital structure and financial leverage. It also monitors its cash position to its actual cash position and timing of payments to suppliers, ensuring that sufficient funds are available when payments come due. The Board of Directors reviews and approves any material transactions out of the ordinary course of business.

TrustBIX Inc.

Notes to the Consolidated Financial Statements

(Express in Canadian Dollars)

September 30, 2024 and 2023

24 Capital management

In general, the overall capital of the Company is evaluated and determined in the context of its financial objectives and its strategic plan. The Company views its capital resources as the aggregate of its cash and debt, summarized as follows:

	2024	2023
	$	$
Cash	72,242	83,997
Debenture	(35,000)	(37,706)
Loans payable – short term	(155,592)	(71,000)
Loan payable – long term	(568,854)	(578,388)
	(687,204)	(603,097)

The Company is focused on obtaining capital through internally generated cash flows, private placements and debt financing (note 1) to ensure sufficient liquidity to pursue its growth and expansion strategy, while taking a conservative approach toward financial leverage and management of financial risk.

25 Subsequent events

On December 5, 2024 and December 30, 2024, the Company closed two (2) tranches of a non-brokered private placement financing for a total aggregate of 4,340,000 common shares ("Common Shares") at a price of $0.02 per Common Share for total aggregate gross proceeds of $86,800. Pursuant to the private placement, an officer of the Company acquired 100,000 Common Shares for $2,000 and a director of the Company acquired 540,000 Units for $10,800.

On January 22, 2025, the repayment terms of the loan payable with PrairiesCan (note 15) were revised, changing the amount of the monthly installment payments. Under the revised terms, the Company's anticipated cash outflows for the twelve (12) months ending September 30th are:

	$
2025	90,000
2026	335,840
2027	413,769
2028	103,400
	943,000

26 Comparative figures

The financial statements for the prior year have been reclassified, where applicable, to conform to the presentation used in the current year. The changes do not affect prior year earnings.

AI assistant

TrustBIX Inc. — Audit Report / Information 2024

47295_rns_2025-01-27_52e15983-f757-4d9a-8dfa-0b16d3391996.pdf

Independent Auditors' Report

Opinion

Basis for Opinion

Material Uncertainty Related to Going Concern

Key Audit Matters

Information Other than the Consolidated Financial Statements and Auditors' Report Thereon

Responsibilities of Management and Those Charged With Governance for the Consolidated Financial Statements

Auditors' Responsibilities for the Audit of the Consolidated Financial Statements

1 Nature of operations and going concern

Going concern

1 Nature of operations and going concern (continued)

Going concern (continued)

2 Basis of presentation

Statement of compliance

Basis of measurement

Use of management critical judgment, estimates and assumptions

2 Basis of presentation (continued)

i) Impairment of financial assets

ii) Impairment of non-financial assets

2 Basis of presentation (continued)

iii) Acquisition

iv) Intangibles

v) Share-based compensation and warrants

vi) Investment

vii) Leases

2 Basis of presentation (continued)

viii) Compound financial instruments

i) Revenue recognition

2 Basis of presentation (continued)

ii) Acquisitions

iii) Research and development expenditures

iii) Deferred income taxes

iv) Leases

v) Determination of Reportable Operating Segments

2 Basis of presentation (continued)

vi) Impairment of non-financial assets

vii) Share-based compensation and warrants

3 Summary of material accounting policies

Basis of consolidation

Foreign currencies

3 Summary of material accounting policies (continued)

Revenue recognition

Contracts with multiple products or services

Software licences

Professional and development services

Post-contract customer support (PCS)

Hardware and installation

3 Summary of material accounting policies (continued)

Revenue recognition (continued)

Contract assets

Contract liability

Investment

Business combinations

Financial instruments

3 Summary of material accounting policies (continued)

Financial instruments (continued)

Financial assets

Financial liabilities

3 Summary of material accounting policies (continued)

Cash

Inventory

Property and equipment

Intangible assets

3 Summary of material accounting policies (continued)

Intangible assets (continued)

Leases

Lessee accounting

3 Summary of material accounting policies (continued)

Leases (continued)

3 Summary of material accounting policies (continued)

Leases (continued)

Impairment

3 Summary of material accounting policies (continued)

Income taxes

Loss per share

Share capital

3 Summary of material accounting policies (continued)

TrustBIX Inc. Audit Report / Information 2024