MD&A Q2 2026

(formerly, Algernon Health Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

For the six months ended February 28, 2026 Dated April 29, 2026

Prepared by Management without review by the Company's auditor

This Management's Discussion and Analysis ("MD&A") is intended to help the reader understand Grey Matters Health Inc., ("Grey Matters" or the "Company"), its operations, financial performance, current and future business environment and opportunities and risks. This MD&A is intended to supplement and complement the audited consolidated financial statements and notes thereto, prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") for the year ended August 31, 2025 (the "financial statements").

This MD&A is prepared as of April 29, 2026. All dollar figures stated herein are expressed in Canadian dollars, unless otherwise specified.

For the purposes of preparing this MD&A, management, in conjunction with the Board of Directors, considers the materiality of information. Information is considered material if: (i) such information results in, or would reasonably be expected to result in, a significant change in the market price or value of the Company's common shares; or (ii) there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision; or (iii) if it would significantly alter the total mix of information available to investors. Management, in conjunction with the Board of Directors, evaluates materiality with reference to all relevant circumstances, including potential market sensitivity.

FORWARD LOOKING INFORMATION

This MD&A contains forward-looking statements that relate to the Company's current expectations and views of future events. In some cases, these forward-looking statements can be identified by words or phrases such as "may", "might", "will", "expect", "anticipate", "estimate", "intend", "plan", "indicate", "seek", "believe", "predict" or "likely", or the negative of these terms, or other similar expressions intended to identify forward-looking statements. The Company has based these forward-looking statements on its current expectations and projections about future events and financial trends that it believes might affect its financial condition, results of operations, business strategy and financial needs. These forward-looking statements include, among other things, statements relating to:

• the Company's intentions with respect to its business and operations;

• the Company's expectations regarding its ability to raise capital and grow its business;

• the Company's expectations with regard to its marketing and promotional programs;

• the Company's growth strategy and opportunities; and

• anticipated trends and challenges in the Company's business and the industry in which it operates.

  Forward-looking information is based on reasonable assumptions, estimates, analysis and opinions of the Company's management in light of its experience and its perception of trends, expected developments, current conditions, as well as other factors that the Company's management believes to be relevant and reasonable in the circumstances at the date of this MD&A, but which may prove to be incorrect. The Company believes that the expectations and assumptions reflected in such forward-looking information are reasonable. Key assumptions upon which the Company's forward-looking information is based include:

• those related to general economic conditions;

• those related to conditions, including competitive conditions, in the market in which the Company operates;

• those related to the Company's use of marketing and promotional materials;

• the Company's ability to obtain requisite licences and necessary governmental approvals; and

• the Company's ability to attract and retain key personnel.

  Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used. Forward-looking statements are also subject to risks and uncertainties facing the Company's business, any of which could have a material impact on its outlook.

  Some of the risks the Company faces and the uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements include:

• the Company's dependence on management, key personnel and consultants;

• the Company's dependence on laboratory developed tests and research skills;

• the Company may require additional financing, which may be dilutive to existing shareholders;

• price volatility of publicly traded securities, including the Company's Common Shares;

• the impact of environmental and safety laws and health regulations and its effect on the Company's business;

• there is no assurance the Company will reach and maintain profitability;

• there is competition in the Company's industry; and

• the Company's directors may have conflicts of interest.

  If any of these risks or uncertainties materialize, or assumptions underlying the forward-looking statements prove incorrect, actual results may vary material from those anticipated in those forward-looking statements. The assumptions referred to above and described in greater detail in Appendix 1 under "Risks Related to the Business" should be considered carefully by readers.

  The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except to the extent required by applicable law. Further information concerning risks and uncertainties associated with these forward-looking statements and the Company's business may be found in the Company's other public filings which are available on the Canadian Securities Administrators' website at www.sedarplus.ca and the Company's website at www.greymatters-health.com.

  CONFLICTS OF INTEREST

  Certain directors and officers of the Company are, or may become, directors and officers of other companies, and conflicts of interest may arise between their duties as officers and directors of the Company and as officers and directors of such other companies.

  OVERVIEW

  Grey Matters Health Inc. (the "Company" or "Grey Matters") was incorporated on April 10, 2015 under the British Columbia Business Corporations Act. The registered office of Grey Matters is located at Suite 1500 - 1055 West Georgia Street, Vancouver, British Columbia, V6E 4N7.

  On April 21, 2026, the Company completed its name change to Grey Matters Health Inc. (formerly Algernon Health Inc.) and stock symbol on the CSE to GREY (formerly AGN) with its shares beginning trading under the new name and symbol on the CSE at market-open on April 21, 2026.

  Additionally, on April 21, 2026, the Company consolidated all of its issued and outstanding common shares on the basis of 10 to 1. Unless otherwise noted, all common share, preferred share, options, restricted share units, common warrants, common agents warrants, preferred warrants and preferred agents warrants information have been retroactively adjusted to reflect this consolidation.

  On May 22, 2025, the Company acquired NoBrainer Imaging Centers, Inc. ("NIC") which moves the Company into the Alzheimer's Disease ("AD") diagnostic and treatment market and expands on the Company's existing neurological research programs. The acquisition provides the Company with exclusive master franchise licensing rights to open AD screening, diagnostic and treatment centers across Canada and in multiple U.S. markets. While this acquisition represents a new business initiative and focus for the Company, the Company will continue to maintain and advance its drug development research programs.

  Previously, Grey Matters was solely a clinical stage pharmaceutical development company focused on developing repurposed therapeutic drugs in the area of non-alcoholic steatohepatitis ("NASH"), a type of liver disease, chronic kidney disease ("CKD"), as well as advancing a stroke program using N.N-Dimethyltryptamine ("DMT"). Up until December 20, 2022, all the research and development work was carried out by the Company's 100% owned Canadian subsidiary, Nash Pharmaceuticals Inc. ("Nash Pharma") and its 100% owned Australian subsidiary, Algernon Research Pty Ltd. ("AGN Research"), which was incorporated on January 6, 2020. Through its ongoing research programs, the Company is seeking to minimize investment and drug development risk by taking advantage of regulatory approved drugs and discovering alternative clinical uses by accelerating entry into phase II clinical trials (human). On December 9, 2022, the Company established an additional 100% owned subsidiary incorporated in British Columbia, Algernon NeuroScience Inc. ("AGN Neuro") and on December 20, 2022, AGN Neuro acquired all of the assets of the Company's DMT program and all research and development activities pertaining to DMT began to be carried out by AGN Neuro.

  As at February 28, 2026, the Company has an accumulated deficit of $31,187,069 (August 31, 2025 -

  $30,564,596) and for the six months then ended incurred a net loss of $1,096,436 (February 28, 2025 -

  $753,330). The Company will need to raise sufficient working capital to maintain operations. Without additional financing, the Company may not be able to fund its ongoing operations, advance it AD program or complete research and development ("R&D") activities. Management anticipates that the Company will continue to raise adequate funding through equity or debt financings, although there is no assurance that the Company will be able to obtain adequate funding on favorable terms. These uncertainties may cast significant doubt on the Company's ability to continue as a going concern. These consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. These consolidated financial statements do not reflect adjustments, which could be material, to the carrying value of assets and liabilities, which may be required should the Company be unable to continue as a going concern.

  BUSINESS MODEL

  On May 22, 2025 the Company acquired NIC which moves the Company into the AD diagnostic and treatment market, which expands on the Company's existing neurological research programs and provides the Company with exclusive master franchise licensing rights to open AD screening, diagnostic and treatment centers across Canada and in multiple U.S. markets. While this acquisition represents a new business initiative and focus for the Company, the Company will continue to maintain and advance its drug development research programs, described below.

  Grey Matters was a drug re-purposing company that investigates safe, already approved drugs, including naturally occurring compounds, for new disease applications, moving them efficiently and safely into new human trials, developing new formulations and seeking new regulatory approvals in global markets. Grey Matters specifically investigates compounds that have never been approved in the United States ("US") or the European Union ("EU") to avoid off label prescription writing, which can interfere with the normal economic pricing models of newly approved drug treatments.

  The Company's early research identified a number of drug candidates that had already been approved for other diseases outside of the US and EU. Only drugs that have not been approved in the US or EU were chosen to avoid off-label prescription writing. The Company was actively investigating new disease areas including: CKD, idiopathic pulmonary fibrosis ("IPF") and chronic cough, stroke and traumatic brain injury ("TBI"). In addition to these indications, the Company has additional drug candidates it is considering advancing where the Company has performed preclinical studies and filed intellectual property.

  On March 26, 2024, the Company closed an agreement with Seyltx Inc. ("Seyltx"), a privately owned U.S. based drug development company, for the acquisition of the Company's Ifenprodil research and development program focused on IPF and chronic cough for the purchase price of USD $2.0M or approximately CAD $2.7 in cash and 1,896,700 common shares in Seyltx, representing a 20% equity position in Seyltx on a fully-diluted basis following the completion of a Phase 2a clinical trial in IPF and chronic cough completed by Grey Matters. Seyltx will continue to advance Ifenprodil into further clinical trials for chronic cough. Grey Matters's clinical management team will be available to provide support, oversight, and management of the study.

  On February 1, 2021, the Company established a clinical research program for the treatment of stroke focused on DMT. DMT is a known psychedelic compound that is part of the tryptamine family. Repurposing DMT from its psychedelic effects to a new potential treatment for stroke could have a positive impact on the millions of people that suffer the debilitating consequences of a stroke each year. The Company's decision to investigate DMT and move it into human trials for stroke is based on multiple independent, positive preclinical studies demonstrating that DMT helps promote neurogenesis as well as structural and functional neural plasticity. These are key factors involved in the brain's ability to form and reorganize synaptic connections, which are needed for healing following a brain injury.

  The Company conducted a Phase 1 clinical study of an intravenous formulation ("IVF") of DMT for the treatment of stroke in the Netherlands at the Centre for Human Drug Research ("CHDR") in Leiden. The Company commenced screening subjects on November 16, 2022 and dosed the first subject in the clinical study in January 2023, with dosing in the first cohort completed in February 2023, the second cohort completed in April 2023 and third cohort completed in June 2023.

  The Company completed a feasibility study and has finalized its clinical trial design for a 40 patient Phase 2 DMT Stroke study. The Phase 2 human stroke trial will study an intravenous sub-psychedelic dose of DMT in patients who are hospitalized after having suffered an acute ischemic stroke. The Company is planning to conduct the study at multiple locations in Europe using the Company's existing finished product supply of intravenous DMT.

  On February 23, 2022, the Company awarded a contract to Zhejiang Ausun Pharmaceutical CO, LTD ("Auson") of China to begin the manufacturing of a cGMP supply of its repurposed drug Repirinast and has initiated a new CKD research program.

  Since Grey Matters' lead compound in CKD was sold outside of the US and EU, there is historical data available on its mechanism of action as it relates to the disease it was originally developed to treat. The Company has decided not to pursue independent confirmation as to whether these known pathways are involved in the specific biochemical interaction that produced the pharmacological effect seen in the Company's animal model research.

  Business Development

  Alzheimer's Disease

  On May 22, 2025 the Company acquired NIC, through share exchange agreements with the NIC shareholders, which moves the Company into the AD diagnostic and treatment market, which expands on the Company's existing neurological research programs and provides the Company with exclusive master franchise licensing rights to open AD screening, diagnostic and treatment centers across Canada and in multiple U.S. markets.

  The Company has now introduced NovaScan Neuroimaging ClinicsTM as its brand name and visual identity of its planned U.S. network of brain ET scanning centers.

  The Company plans to open neuroimaging medical clinics in the U.S. by testing a number of possible business models.

  Comprehensive Alzheimer's Disease Clinics: A New Standard of Care

  AD is a chronic neurodegenerative disease that destroys brain cells, resulting in the steady decline over years of a person's thinking ability and memory. The most common cause of dementia, AD begins with the appearance of a build-up of proteins in the brain in the form of amyloid plaques and neurofibrillary tangles, the key defining features of the presence of the disease.

  The Company's planned neuroimaging clinics will be the first dedicated, brain optimized PET neuroimaging facilities of their kind in the U.S., focussed on the early-stage detection of AD, and will also provide PET scans for other forms of dementia, epilepsy, neuro-oncology, and movement disorders.

  Prior to being able to receive AD treatment, a patient must undergo a final confirmatory test for plaque, also

  U.S. Medicare and Medicaid covered, of either a brain specific PET scan or a spinal tap, the latter being an invasive and less desirable diagnostic procedure.

  The Company may look at offering additional diagnostic and treatment services in the U.S. with a comprehensive service menu that could include:

• Cognitive and genetic screening including the APOE genetic test which can indicate a predisposition to acquiring AD

• Laboratory developed blood tests for early detection of phosphorylated tau protein (an established biomarker for AD, correlated to amyloid plaque)

• Personalized wellness, nutrition, and longevity programs

The clinics will be anchored by the most advanced PET technology, namely, the FDA cleared Oncovision CareMiBrain™ brain-specific, PET scanner. The PET scan is also covered by U.S. Medicare and Medicaid.

On September 25, 2025, the Company signed a definitive equipment order and financing agreement with Catalyst MedTech for the provision of four, U.S. FDA cleared Oncovision CareMiBrain™ brain-specific, PET scanner systems to be utilized in four planned NovaScan neuroimaging medical clinics. Additionally, the agreement includes the option to acquire an additional six systems for the establishment of additional

U.S. clinics, on an adjusted cost basis.

The terms include financing the scanners with a 20% deposit by the Company, with monthly payments at an average annual interest rate of 7% per annum, and a balloon payment owing after 2 years of operations.

The Company plans on opening its inaugural brain PET scanning clinic at the HCA Florida University Medical Office Building in Davie, Florida, located on the campus of the HCA Florida University Hospital after signing a five-year lease with a renewal option for an additional five years. The Company plans to open multiple clinics throughout the United States.

Alzheimer's Disease, PET Scanning, and the Addressable Market

Prior to the recent development of having approved AD therapies available, there has not been any urgent clinical need to provide widespread genetic screening to patients or to conduct the now available blood tests that correlate with the presence of plaque in the brain. When the U.S. FDA first approved Leqembi, Eisai and Biogen's drug for AD, in a post-earnings call, GE HealthCare CEO Peter Arduini called it a "profound growth opportunity" for all providers offering PET scans and molecular imaging.

In a 2024 article published by Scientific American, the global economic burden of AD was estimated to be US$1 trillion in 2019 with a projected increase of up to US$10 trillion projected in 2050. The recent U.S. FDA approval of two new AD antibody therapies that require a brain specific PET scan (or alternatively a spinal tap) before AD treatments can be started, have created a billion-dollar market opportunity for the brain specific PET scan and AD treatment space.

The current number of full body PET/CT scanners in the U.S. is vastly insufficient to serve the massive newly opening AD treatment market. The majority of PET/CT scanners, 45% which are located in hospitals, and are primarily prioritized as cancer diagnostic and theranostic tools, and for cardiac imaging, make it challenging to schedule brain specific scans on a timely basis.

In the U.S. alone there are an estimated 7 million people living with AD along with 750,000 in Canada, numbers that are expected to double by the year 2030. With 45% of AD patients estimated to have early-stage disease, (and therefore eligible to receive treatment), the related market to provide PET scans at an approximate cost of US $5,000 (CAD$7,100) per scan, is expected to exceed US$18 billion. In addition, the recent decision by the U.S. Centers for Medicare and Medicaid Services to lift their coverage limit of only one beta-amyloid PET scan per lifetime for AD patients, allows physicians to order several scans for the purpose of disease staging and as a theranostic, further dramatically increasing the size the potential PET imaging market.

With the recent advancement of a genetic test that can help predict a person's lifetime risk of developing AD, and multiple blood tests that confirm the presence of phosphorylated tau proteins (an established biomarker for AD, correlated to amyloid plaque), new screening tools have now arrived to help identify patients with pre-clinical and early-stage disease. According to the University of Michigan National Poll on Ageing, less than 1% of the population has ever received the brain plaque blood test.

In a 2020 study, published in JAMA Neurology, about 30 percent of 4,486 patients, between the ages of 60 to 80 yrs. old, who were clinically normal and cognitively unimpaired at baseline after an extensive battery of neurocognitive assessments, tested positive for amyloid-beta protein after a PET scan. Since the approved AD drug data suggests that treatment in early-stage AD patients has better outcomes, early and comprehensive genetic and blood screening along with a confirmatory PET scans could accelerate and facilitate treatment more quickly for patients, in order to help delay the onset of cognitive disability.

Some data also suggest that AD can even be prevented with much earlier treatment. In a March 2025 study led by Dr. Randall J. Bateman, the Charles F. and Joanne Knight Distinguished Professor of Neurology at WashU Medicine showed that early intervention in patients in their 30s, 40s and 50s with anti-amyloid drugs may reduce the risk in people destined to develop AD. "We've entered into a new era of Alzheimer's research where we can not only modify the course of the disease, but where prevention is possible with therapeutic intervention," said Dr. Howard Fillit, MD, Co-Founder and Chief Science Officer at the Alzheimer's Drug Discovery Foundation.

Grey Matters' new healthcare initiative is focussed on delivering near term cash flow and profitability by capitalizing on the major gap between the expansive need for brain specific PET scan imaging for the diagnosis of AD.

While the entry into the AD space represents a new business initiative for Grey Matters, the Company will continue to maintain and advance its current drug development research programs, including its active work on restoring brain function following stroke and traumatic brain injury through its subsidiary Algernon Neuroscience.

Clinical Trials and Other Brain Diseases

The shortage of PET scanners for brain specific scanning has an impact beyond patient care. With 162 AD drugs under development, there is also a significant opportunity to provide PET scan imaging services to drug development companies engaged in clinical trials, as another source of revenue for Grey Matters.

In addition to AD, the PET system can also be used to diagnose other forms of dementia, epilepsy, neuro-oncology, and movement disorders providing potential additional patient-based revenue for the Company.

Through its recent acquisition and decision to establish the world's first comprehensive AD diagnostic clinics, Grey Matters is uniquely positioned to address the gap between the urgent and growing demand for brain-specific diagnostics for AD and the limited PET scan imaging equipment currently available.

The recent U.S. FDA approval of Kisunla and the 2023 approval of Leqembi, both monoclonal antibody therapies which clear the amyloid plaque clusters out of the brain, and the FDA's agency's clearance of the Oncovision CareMiBrain™ brain-specific, PET scanner systems, has ushered in a new pathway to advanced AD care - one that emphasizes early screening and early intervention for a disease that doctors have sometimes referred to as a death sentence.

These two developments together have opened billion-dollar market opportunities for AD brain specific imaging (PET Scan) and AD treatments in the U.S., which are also expected to be repeated globally as the treatments are approved in various international jurisdictions.

Grey Matters's company-owned AD medical clinics and franchised clinics model will be instrumental in rapidly scaling access to these services across North America and, in the future, globally.

IPF & Chronic Cough

As previously described, on March 26, 2024, the Company sold its Ifenprodil research and development program focused on IPF and chronic cough to Seyltx.

DMT/Stroke

The Company has completed a feasibility study and has finalized its clinical trial design for a 40 patient Phase 2 DMT Stroke study. The Phase 2 human stroke trial will study an intravenous sub-psychedelic dose of DMT in patients who are hospitalized after having suffered an acute ischemic stroke. The Company is planning to conduct the study at multiple locations in Europe using the Company's existing finished product supply of intravenous DMT.

DMT/TBI

The Company added a clinical research program for the treatment of TBI with DMT and plans to be the first company globally to investigate DMT for TBI in humans and, subject to available funding, is planning a Phase 2 clinical trial.

Chronic Kidney Disease

On February 23, 2022, the Company awarded a contract Ausun of China to begin the manufacturing of a cGMP supply of its repurposed drug Repirinast and has initiated a new CKD research program. Ausun has now developed and optimized a new synthetic route to Repirinast. Ausun has also developed and validated all analytical methods for testing.

Repirinast was originally developed by Mitsubishi Tanabe Pharma ("Mitsubishi") and was sold and marketed in Japan under the brand name RometTM for the treatment of asthma. RometTM was marketed for over 25 years in Japan. Mitsubishi discontinued manufacturing and sales of the drug in 2013.

Repirinast was approved in Japan for patients with bronchial asthma in 1987, to prevent attacks when administered regularly. A pediatric formulation was also approved in 1990. Unlike most allergy medications, Repirinast does not have a direct antihistaminic effect. The drug acts on mast cells and inhibits the release of chemical mediators by IgE-related antigen antibody interactions.

Repirinast is one of several repurposed drug candidates that were part of Grey Matters' acquisition of NASH on October 22, 2018.

Medical and Scientific Advisory Board Update

There have been no changes to the Company's medical and scientific advisory board. The Company is in the process of establishing an AD advisory board.

Corporate

On April 21, 2026, the Company completed its name change to Grey Matters Health Inc. (formerly Algernon Health Inc.) and stock symbol on the CSE to GREY (formerly AGN) with its shares beginning trading under the new name and symbol on the CSE at market-open on April 21, 2026.

Additionally, on April 21, 2026, the Company consolidated all of its issued and outstanding common shares on the basis of 10 to 1. Unless otherwise noted, all common share, preferred share, options, restricted share units, common warrants, common agents warrants, preferred warrants and preferred agents warrants information have been retroactively adjusted to reflect this consolidation.

On October 15, 2025, the Company completed its name change to Algernon Health Inc. with its shares beginning trading under the new name on the CSE at market-open on Monday October 20, 2025. The stock symbol remains the same.

Financing

During the six months ended February 28, 2026, the Company announced a non-brokered private placement for gross proceeds of $500,000 (the "Offering") of units (the "Units") at an issue price of $0.70 per Unit. The Company subsequently announced an increase to the size of the Offering to $858,000.

Each Unit will consist of one Class A common share in the capital of the Company ("a "Common Share") and one-half Common Share purchase warrant (a "Common Warrant"). Each full Common Warrant will entitle the holder to acquire one Common Share (a "Common Warrant Share") at an exercise price of $1.50 (the "Exercise Price") per Common Warrant Share for a period of twelve months from the issuance date (the "Issuance Date"), after which on the first anniversary of the Issuance Date (the "First Anniversary"), the Exercise Price will increase to $2.50 per Common Warrant Share for a period of twelve months from the First Anniversary, and on the second anniversary of the Issuance Date (the "Second Anniversary"), the Exercise Price will increase to $5.00 per Common Warrant Share for a period of thirty-six months from the Second Anniversary.

The Common Warrants are subject to an acceleration of their Exercise Price if prior to the First Anniversary, the Common Shares trade on the CSE at a price of $2.00 or greater for a period of twenty consecutive trading days. Following thirty days written notice to the Common Warrant holders, the Exercise Price will increase to $2.50 per Common Warrant Share until the date of the Second Anniversary, and on the Second Anniversary, the Exercise Price will increase to $5.00 per Common Warrant Share for a period of thirty-six months from the Second Anniversary per the original terms of the Common Warrants.

On November 14, 2025, the Company closed the first tranche (the "First Tranche") of the Offering for gross proceeds of $177,000 from the sale of 252,875 Units, on November 28, 2025, the Company closed the second tranche (the "Second Tranche") of the Offering for gross proceeds of $210,000 from the sale of 300,000 Units, on December 23, 2025, the Company closed the third tranche (the "Third Tranche") of the Offering for gross proceeds of $352,500 from the sale of 503,553 Units and on December 31, 2025, the Company closed the fourth and final tranche (the "Fourth Tranche") of the Offering for gross proceeds of

$117,501 from the sale of 167,859 Units. Following the Fourth Tranche, the financing was closed for a total of $857,001 from the sale of 1,224,287 Units from the closing of tranches of the Offering between November 14, 2025 and December 31, 2025.

The total fair value of the Common Warrants associated with the Units of the Offering was $75,958.

The Company did not pay any cash finder's fees or issue any finder's warrants pertaining to the Offering.

An alteration to the Company's authorized share structure and Articles, to include an unlimited number of preferred shares, of which an unlimited number of preferred shares were to be designated as Series 1 Preferred Shares was approved by the Company's shareholders at the annual and special meeting held on September 19, 2025.

The Series 1 Preferred Shares include a ten percent annual dividend payable in Common Shares or preferred shares at the discretion of the Company's Board of Directors and each Series 1 Preferred Shares and were convertible into, without payment of any consideration and without further action on the part of the holder thereof, ten Class A Common Shares of the Company. Following the share consolidation completed on April 21, 2026, the balance of preferred shares outstanding remains the same, however they now are convertible into common shares on a one for one basis. The Series 1 Preferred Shares are voting shares and carry one vote each.

On November 5, 2025, the Company converted 1,268,334 subscription receipts into 1,268,334 Series 1 preferred shares (the "Series 1 Preferred Shares") and 634,167 Series 1 Preferred Share warrants (the "Preferred Warrants") pertaining to a private placement of subscription receipts that closed on July 24, 2025. The Company also issued 28,000 finders warrants to purchase Series 1 Preferred Shares to eligible finders in connection with the private placement of the subscription receipts. Additionally, 450,000 Preferred Shares and 450,000 Preferred Warrants were issued pertaining to the acquisition of NIC completed on May 22, 2025. The issuance of these shares fully satisfied the securities to be issued recorded on the statement of changes in shareholders' equity as at August 31, 2025.

During the six months ended February 28, 2026, 768,334 preferred shares were converted into 768,334 common shares. The 768,334 common shares were issued from treasury and the 768,334 preferred shares were cancelled.

On April 22, 2026, the Company announced a non-brokered private placement for gross proceeds of CAD

$1,000,000 (the "Offering") of units (the "Units") at an issue price of CAD $0.40 per Unit.

Each Unit will consist of one Class A common share in the capital of the Company (a "Common Share") and one Common Share purchase warrant (a "Warrant"). Each Warrant will entitle the holder to acquire one Common Share (a "Warrant Share") at an exercise price of CAD $0.60 (the "Exercise Price") per Warrant Share for a period of 24 months from the issuance date (the "Expiry Date").

The Warrants are subject to an acceleration of their Expiry Date in the event the volume weight average trading price of the Common Shares exceeds CAD $0.80 for 10 consecutive trading days. The Company may, within 10 business days of the occurrence of such event, deliver a notice to the holders of the Warrants accelerating the Expiry Date of the Warrants to a date that is not less than 30 days following the date of such notice and the issuance of a press release by the Company announcing the acceleration notice (the "Accelerated Exercise Period"). Any unexercised Warrants shall automatically expire at the end of the Accelerated Exercise Period.

The Offering is expected to close in tranches on or before May 21, 2026.

The Company may pay cash finder's fees and finders warrants to eligible finders, up to eight percent of the proceeds raised and units issued for investors introduced to the Company by the eligible finder.

The Company will use the proceeds of the Offering to advance its Alzheimer's Disease program towards the opening of its first U.S. brain-specific neuroimaging clinic, general and administrative expenses, and for working capital purposes.

Use of Proceeds of Offerings

The Company received gross proceeds totalling $857,001 from a private placement of units in November and December of 2025. The net proceeds will be used for advancing the Company's AD program initiatives, working capital and general corporate purposes and administrative expenses.

RESULTS OF OPERATIONS

Six months ended February 28, 2026 and February 28, 2025

The Company had a net loss of $1,096,436 for the six months ended February 28, 2026 compared to a net loss of $753,330 for the six months ended February 28, 2025. The Company's significant operating expenses for the six months ended February 28, 2026 included the following:

• Research and development expenses of $27,968 (2025 - $42,310)

• Salaries and benefits of $304,599 (2025 - $276,336)

• Marketing expenses of $277,628 (2025 - $210,046)

• Professional fees expenses of $258,735 (2025 - $119,587)

• General and administrative expenses of $152,704 (2025 - $48,608)

• Shareholder communications expenses of $74,742 (2025 - $56,963)

• Share-based payment expenses of $455 (2025 - $nil)

  Research and development expenses totaled $27,968 for the six months ended February 28, 2026 (2025 - $42,310) and reflects the limited research and development activities performed during the two periods as a result of cash constraints on the Company.

  Salaries and benefits for the six months ended February 28, 2026 were $304,599 (2025 - $276,336). Salaries and benefits increased for the six months ended February 28, 2026 as a result of additional consulting fees incurred in regards to the Company's PET scanning program.

  Marketing expenses were $277,628 for the six months ended February 28, 2026 (2025 - $210.046). Marketing expenses increased for the six months ended February 28, 2026 as a result of increased marketing efforts due to the Company's advancement of its PET scanning program.

  Professional fees expenses were $258,735 for the six months ended February 28, 2026 (2025 - $119,587) and were higher than the same period in the prior year as a result of professional fees incurred in connection with the advancement of the Company's PET scanning program.

  General and administrative expenses were $152,704 for the six months ended February 28, 2026 (2025 -

  $48,608) and were higher than the same period in the prior year as a result of the inclusion of amortization of the franchise rights, totaling $55,403, acquired as part of the acquisition of NIC within general and administrative expenses for the six months ended February 28, 2026.

  Shareholder communications expenses were $74,742 for the six months ended February 28, 2026 (2025 - $56,963) and were consistent with the same period in the prior year.

  Share-based payment expenses were $455 for the six months ended February 28, 2026 (2025 - $nil) and were consistent with the same period in the prior year.

  Three months ended February 28, 2026 and February 28, 2025

  The Company had a net loss of $499,524 for the three months ended February 28, 2026 (Q2 2026) compared to a net income of $372,267 for the three months ended February 28, 2025 (Q2 2025). The Company's significant operating expenses for the three months ended February 28, 2025 included the following:

• Research and development expenses of $1,517 (Q2 2025 - $9,510)

• Salaries and benefits of $151,838 (Q2 2025 - $137,940)

• Marketing expenses of $142,016 (Q2 2025 - $90,399)

• Professional fees expenses of $88,044 (Q2 2025 - $93,807)

• General and administrative expenses of $73,414 (Q2 2025 - $12,224)

• Shareholder communications expenses of $42,799 (Q2 2025 - $28,647)

Research and development expenses totaled $1,517 for the three months ended February 28, 2026 (Q2 2025 - $9,510) and reflects the limited research and development activities performed during the two periods as a result of cash constraints on the Company.

Salaries and benefits for the three months ended February 28, 2026 were $151,838 (Q2 2025 - $137,940). Salaries and benefits increased for the three months ended February 28, 2026 as a result of additional consulting fees incurred in regards to the Company's PET scanning program.

Marketing expenses were $142,016 for the three months ended February 28, 2026 (Q2 2025 - $90,399). Marketing expenses increased for the three months ended February 28, 2026 as a result of increased marketing efforts due to the Company's advancement of its PET scanning program.

Professional fees expenses were $88,044 for the three months ended February 28, 2026 (Q2 2025 -

$93,807) and were consistent with the same period in the prior year.

General and administrative expenses were $73,414 for the three months ended February 28, 2026 (Q2 2025 - $12,224) and were higher than the same period in the prior year as a result of the inclusion of amortization of the franchise rights, totaling $27,702, acquired as part of the acquisition of NIC within general and administrative expenses for the three months ended February 28, 2026.

Shareholder communications expenses were $42,799 for the three months ended February 28, 2026 (Q2 2025 - $28,647) and were consistent with the same period in the prior year.

Summary of Quarterly Results

The following table sets out selected quarterly information of the Company derived from financial statements prepared by management, for those periods reported to date. The Company's condensed consolidated interim financial statements are prepared in accordance with IFRS applicable to interim financial statements and are expressed in Canadian dollars.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity risk is the risk that the Company will encounter difficulty in satisfying financial obligations as they become due. The Company manages its liquidity risk by forecasting cash flows from operations and anticipated investing and financing activities. The Company's objective in managing liquidity risk is to maintain sufficient readily available reserves in order to meet its liquidity requirements.

At February 28, 2026, the Company had a working capital deficit of $1,862,416 (August 31, 2025 -

$1,627,768). This included cash of $195,349 (August 31, 2025 - $176,501) available to meet short-term business requirements and current liabilities of $2,493,598 (August 31, 2025 - $2,182,240). The Company's accounts payable and accrued liabilities have contractual maturities of less than 30 days and are subject to normal trade terms. The Company has no long-term debt.

At present, the Company has no current operating income. The Company will need to raise sufficient working capital to maintain operations. Without additional financing, the Company may not be able to fund its ongoing operations and complete development activities. The Company intends to finance its future requirements through a combination of debt and/or equity issuance. There is no assurance that the Company will be able to obtain such financings or obtain them on favourable terms. These uncertainties may cast doubt on the Company's ability to continue as a going concern.

Non-GAAP Financial Measure

The Company uses "working capital" to assess liquidity and general financial strength and is calculated as current assets less current liabilities(1). Working capital does not have any standardized meaning prescribed by IFRS and is referred to as a "Non-GAAP Financial Measure." It is unlikely for Non-GAAP Financial Measures to be comparable to similar measures presented by other companies.

• Working capital is calculated as current assets (February 28, 2026 - $631,182; August 31, 2025 - $554,472), less current liabilities (February 28, 2026 - $2,493,598; August 31, 2025 - $2,182,240).

Cash Used in Operating Activities

Operating activities used $822,892 in cash for the six months ended February 28, 2026 compared to cash used in operating activities of $493,460 for the six months ended February 28, 2025. The increase in cash used in operating activities was primarily due to a higher net loss during the six months ended February 28, 2026.

Cash From (Used in) in Investing Activities

Investing activities used $14,238 in cash for the six months ended February 28, 2026 compared to cash used in investing activities of $15,219 for the six months ended February 28, 2025. The cash used in investing activities for both periods relates to cash used for the addition of intangible assets.

Cash flows from Financing Activities

Cash flows from financing activities totaled $856,002 for the six months ended February 28, 2026 and related the to a private placement of units completed during the period. Cash flows from financing activities totaled $208 for the six months ended February 28, 2026 and related to the exercise of warrants during the period.

OUTSTANDING SHARE DATA

As at February 28, 2026 and the date of this report, the Company has:

(1) Following the share consolidation completed on April 21, 2026, the Series 1 preferred shares are convertible into, without payment of any consideration and without further action on the part of the holder thereof, one common share of the Company.

OFF-BALANCE SHEET ARRANGEMENTS

There are no off-balance sheet arrangements.

CONTRACTUAL COMMITMENTS

There are no contractual commitments to disclose.

INTANGIBLE ASSETS

Accumulated Amortization

Acquisition of

Nash Pharma(1)

Trademark Application

Costs(2)

Patent Application

Costs(3)

Acquired Franchise Rights(4)

Total

(1) On October 19, 2018, the Company completed the acquisition transaction of Nash Pharma. No amortization was taken on the intangibles acquired as the assets with finite life are not available for use. On an annual basis, the intangibles with finite life are reviewed for impairment. The Company will impair or write-off the intangible assets related to the acquisition of Nash Pharma following the performance of an annual impairment test or an additional impairment test when indicators of impairment exist and the recoverable value is less than the carrying value.

(2) The Company has filed trademark applications for the name "ALGERNON". The Company amortizes trademarks over their estimated useful life of ten years. The Company recorded $1,496 of amortization within general and administrative expenses on the condensed interim consolidated statement of loss and comprehensive loss for the six months ended February 28, 2026 (2025 -

$1,269).

(3) The Company has filed new method of use patents for lead compounds for treatment of disease areas including NASH, CKD, and Stroke. In addition to method of use, the applications for the Stroke lead compounds also includes claims for composition of matter as well as formulations, dosages, and devices. The likelihood of the application success is not known. The Company amortizes its patent application costs over their remaining estimated useful life representing the remaining months to expiration of the associated patent. The Company recorded $12,841 of amortization within research and development expenses on the condensed interim consolidated statement of loss and comprehensive loss for the six months ended February 28, 2026 (2025 -

$10,275).

(4) On May 22, 2025, the Company completed the acquisition transaction of NIC. Through the acquisition the Company acquired the exclusive master franchise rights NATC for the Canadian market (with the exception of the cities of Oakville and Ottawa, Ontario, which are being developed by NATC), and for Florida, excluding Miami, as well as additional franchise rights for Los Angeles and five more major U.S. cities in other U.S. states. The Company amortizes these franchise rights over their estimated useful life of ten years. The Company recorded $55,403 of amortization within general and administrative expenses on the condensed interim consolidated statement of loss and comprehensive loss for the six months ended February 28, 2026.

RELATED PARTY TRANSACTIONS AND KEY MANAGEMENT COMPENSATION

Key management personnel are considered to be those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly. Key management includes senior officers and directors of the Company.

Short-term benefits

(1) No director fees paid.

Share-based payments

There were no share-based payment expenses during the six months ended February 28, 2026 or 2025. Related party transactions not included in compensation to key management personnel are as follows:

Accounts payable and accrued liabilities include the following amounts due to related parties that are unsecured, non-interest bearing and due on demand:

RESEARCH AND DEVELOPMENT PROGRAM

Previously Grey Matters was solely a drug re-purposing company that investigates safe, already approved drugs, including naturally occurring compounds, for new disease applications, moving them efficiently and safely into new human trials, developing new formulations and seeking new regulatory approvals in global markets. Grey Matters specifically investigates compounds that have never been approved in the U.S. or Europe to avoid off label prescription writing, which can interfere with the normal economic pricing models of newly approved drug treatments.

The Company's early research identified a number of drug candidates that had already been approved for other diseases outside of the U.S and E.U. Only drugs that have not been approved in the U.S or Europe were chosen to avoid off-label prescription writing. The Company is actively investigating new disease areas including: CKD, stroke and TBI. In addition to these indications, the Company has additional drug candidates it is considering advancing where the Company has performed preclinical studies and filed intellectual property.

All the research and development ("R&D") work are carried out by the Company's 100% owned Canadian subsidiary, Nash Pharma, including through Nash's wholly owned subsidiary, Algernon Research Pty Ltd. as well as Algernon Neuro beginning in December 2022.

The breakdown of the major components of the research and development programs for the six months ended February 28, 2026 and 2025.

For the six months ended February 28,

2026

February 28,

2025

SEGMENTED DISCLOSURES

Prior to May 22, 2025, the Company was a Canadian clinical stage pharmaceutical development company that operated in two geographical segments: drug development in Canada, and the facilitation of the Company's lead drug candidates into clinical trials in Australia and one reportable operating segment: drug development (the "Drug Development Segment").

Through the acquisition of NIC completed on May 22, 2025 (note 4), the Company has entered into a new reportable operating segment, the AD diagnostic and treatment market (the "AD Segment"). During the six months ended February 28, 2026, the Company incurred $539,545 of expenses pertaining to the AD Segment.

Segment and geographical information of the Company's long-term assets as at February 28, 2026 are allocated as follows:

Segment and geographical information of the Company's long-term assets as at August 31, 2025 are allocated as follows:

MATERIAL ACCOUNTING POLICIES

The Company's significant accounting policies are disclosed in Note 3 of the Company's annual audited consolidated financial statements for the year ended August 31, 2025.

Significant Accounting Judgments, Estimates and Assumptions

The preparation of financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenues and expenses during the reporting period.

Actual outcomes could differ from these estimates, and as such, the estimates and underlying assumptions are reviewed on an ongoing basis.

The Company assesses at each reporting date if the intangible assets have indicators of impairment. In determining whether the intangible assets are impaired, the Company assesses certain criteria, including observable decreases in value, significant changes with adverse effect on the entity, evidence of technological obsolescence and future plans.

The following are the accounting policies subject to such judgments and the key sources of estimation uncertainty that the Company believes could have the most significant impact on the reported results and financial position.

Control

At the time of acquisition, the Company assesses whether it has control or significant influence over the acquiree. When control exists, the Company consolidates the results of the acquired entity whereas when significant influence exists, the Company accounts using the equity method of accounting. Management applies judgment using qualitative factors to determine if they have the power to participate in financial and operating policy decisions.

Investment in privately-held company

The Company's investment in Seyltx, a privately-held company, is initially recorded at fair value at the acquisition date. At the end of each reporting period, the Company's management evaluates and updates the fair value of the investment, reflecting the updated valuations in the consolidated financial statements.

Valuation of private company investments can be challenging due to limited availability, reliability, or completeness of financial information from the investee. The fair value of these investments may rely on significant inputs that are not derived from observable market data. Adjustments to fair value, whether upward or downward, are made when supported by strong and objective evidence, such as a substantial equity financing event involving an independent investor or significant corporate, political, or operational developments that, in management's judgment, affect the investee's prospects and, consequently, its fair value. The use of this valuation approach may involve uncertainties and determinations based on the Company's judgment and any value estimated from these may not be realized or realizable.

The Company acquired 1,896,700 shares in Seyltx, and has assessed that no control or significant influence resides with the Company considering the percentage of ownership interest and various other qualitative factors. Consequently, in accordance with accounting principles, the investment in Seyltx is classified as a financial asset and accounted under IFRS 9, Financial Instruments.

Share-based compensation

The fair value of equity instruments is subject to the limitations of the Black-Scholes option pricing model, as well as other pricing models, such as the Geske option pricing model and Monte Carlo simulation method, for equity instruments involving compound or complex options that incorporate market data and involve uncertainty in estimates used by management in the assumptions. Because option pricing models require inputs of highly subjective assumptions, including the volatility of share prices and probabilities of exercise patterns, changes in subjective input assumptions can materially affect the fair value estimate.

The Company estimates volatility based on the Company's historical share prices, excluding specific time frames in which volatility was affected by specific transactions that are not considered to be indicative of the entities' expected share price volatility.

Intangible assets - Treatment and Recoverability

Recoverability of the carrying value of intangible assets requires management to determine whether future economic benefits from sale or otherwise are likely. Evaluation may be more complex where activities have not reached a stage that permits a reasonable assessment of the viability of the asset.

Management must make certain estimates and assumptions about future events or circumstances including, but not limited to, the interpretation of research results, as well as the Company's financial ability to continue sales activities and operations.

At each reporting date, the Company assesses if the intangible assets have indicators of impairment. In determining whether the intangible assets are impaired, the Company assesses certain criteria, including observable decreases in value, significant changes with adverse effect on the entity, evidence of technological obsolescence, and future plans.

Intangible assets - Assessment of Useful Life

Intangible assets acquired as a part of the acquisition of Nash Pharma are intangible assets with a finite life that are not available for use. On an annual basis, intangible assets with finite life are reviewed for impairment and the Company impairs or writes off intangible assets when it abandons a drug or determine an amortization policy when a compound is approved.

Intangible assets acquired that are available for use are amortized over their estimated useful life as determined by the Company.

Determination of the functional currency

In concluding that the Canadian dollar is the functional currency of Grey Matters, Nash Pharma, AGN Neuro and NIC, and the Australian dollar is the functional currency of AGN Research, management considered the currency that mainly influences the cost of providing goods and services in the primary economic environment in which each entity operates, or if there has been a change in events or conditions that determined the primary economic environment.

Asset Acquisitions

The Company evaluates acquisitions of assets and other similar transactions to assess whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a screen test to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen is met, the transaction is accounted for as an asset acquisition. If the screen is not met, further determination is required as to whether or not the Company has acquired inputs and processes that have the ability to create outputs which would meet the definition of a business. Significant judgment is required in the application of the screen test or subsequently the assessment of inputs and processes to determine whether an acquisition is a business combination or an acquisition of assets.

Going concern

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

There have been no material revisions to the nature and amount of changes in estimates of amounts reported in its audited consolidated financial statements for the year ended August 31, 2025.

FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

The Company's financial instruments as at February 28, 2026 included cash, accounts receivable, restricted cash equivalents and accounts payable and accrued liabilities.

The Company classifies its financial instruments into the following categories:

• cash is classified as financial assets at FVTPL;

• accounts receivable are classified as measured at amortized cost;

• restricted cash equivalents are classified as financial assets at FVTP;

• Investment in Seyltx Inc. is classified as FVTPL and

• accounts payable and accrued liabilities are classified as financial liabilities, which are measured at amortized cost.

  Fair Value

  Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values.

  The Company classifies and discloses fair value measurements based on a three-level hierarchy:

• Level 1 - inputs are unadjusted quoted prices in active markets for identical assets or liabilities;

• Level 2 - inputs other than quoted prices in Level 1 that are observable for the asset or liability, either directly or indirectly; and

• Level 3 -inputs for the asset or liability are not based on observable market data.

The Company classified its financial instruments at Level 1 and as follows:

The Company's risk exposure and the impact on the Company's financial instruments are summarized below:

Credit risk

Credit risk is the risk of loss associated with a counter party's inability to fulfill its payment obligations. The Company's credit risk is primarily attributable to its cash and accounts receivable. The Company's accounts receivable is mainly comprised of GST receivable, accrued interest receivable from GIC's held with bank, and accrued Australia R&D tax credit receivable. GST receivable and Australia R&D tax credit receivable are not financial instruments as they do not arise from contractual obligations. The Company limits exposure to credit risk on bank deposits by holding demand deposits in high credit quality banking institutions in Canada and Australia. Management believes that the credit risk with respect to receivables is minimal.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in satisfying financial obligations as they become due. The Company manages its liquidity risk by forecasting cash flows from operations and anticipated investing and financing activities. The Company's objective in managing liquidity risk is to maintain sufficient readily available reserves in order to meet its liquidity requirements. All of the Company's financial obligations are due within one year.

At February 28, 2026, the Company had a working capital deficit of $1,862,416 (August 31, 2025 -

$1,627,768). This included cash of $195,349 (August 31, 2025 - $176,501) available to meet short-term business requirements and current liabilities of $2,493,598 (August 31, 2025 - $2,182,240). The Company's accounts payable and accrued liabilities have contractual maturities of less than 30 days and are subject to normal trade terms.

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices. Market risk comprises three types of risk: interest rate risk, foreign currency risk, and other price risks. The Company is not exposed to significant interest rate risk and other price risk.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The risk that the Company will realize a loss as a result of a decline in the fair value of the cash is limited because of the short-term investment nature. The Company's financial assets exposed to interest rate risk consist of cash and restricted cash equivalents. Restricted cash equivalents consist of GICs held at banking institutions that bear interest at prime less 2.20% (August 31, 2025 - 2.25%) and mature five months from the purchase date.

Other price risk

Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices, other than those arising from interest rate risk or foreign currency risk. The Company holds marketable securities from its investment in Seyltx. The Company is not exposed to significant other price risk as there is no active trading market for the common shares held in Seyltx.

Foreign currency risk

Foreign currency risk is related to fluctuations in foreign exchange rates. The Company has certain expenditures that are denominated in US dollars ("US$"), Australian dollars ("AUD$"), Euros, the British Pound Sterling ("GBP£") and Swedish Krona ("Krona") and other operating expenses that are mainly in Canadian dollars ("CAD$").

The Company holds funds in its Australian subsidiary in AUD$ and may fund additional cash calls to this foreign subsidiary in the future. The Company's exposure to foreign currency risk arises primarily on fluctuations in the exchange rate of the CAD$ relative to the US$ and the AUD$.

As at February 28, 2026, the Company had monetary assets of US$121,439 or $165,666 (August 31, 2025

- US$1,663 or $2,285) at the CAD$ equivalent and monetary liabilities of US$624,242 or $851,591 (August 31, 2025 - US$521,489 or $716,630) at the CAD$ equivalent. The Company's sensitivity analysis suggests that a change in the absolute rate of exchange in US$ by 10% will increase or decrease net loss and comprehensive loss by approximately $68,592 (August 31, 2025 - $71,435).

As at February 28, 2026, the Company had monetary assets of AUD$5,443 or $5,284 (August 31, 2025 -AUD$5,443 or $4,892) at the CAD$ equivalent and monetary liabilities of AUD$23,468 or $22,780 (August 31, 2025 - AUD$23,468 or $21,090) at the CAD$ equivalent. The Company's sensitivity analysis suggests that a change in the absolute rate of exchange in AUD$ by 10% will increase or decrease comprehensive loss by approximately $1,750 (August 31, 2025 - $1,620).

As at February 28, 2026, the Company had monetary liabilities of $272,484 Euros or $439,136 (August 31, 2025 - $272,484 Euros or $437,664) at the CAD$ equivalent. The Company's sensitivity analysis suggests that a change in the absolute rate of exchange in the Euro by 10% will increase or decrease net loss and comprehensive loss by approximately $43,914 (August 31, 2025 - $43,766).

As at February 28, 2026, the Company had monetary liabilities of GBP£77,452 or $142,280 (August 31, 2025 - GBP£77,452 or $143,604) at the CAD$ equivalent. The Company's sensitivity analysis suggests that a change in the absolute rate of exchange in the GBP£ by 10% will increase or decrease net loss and comprehensive loss by approximately $14,228 (August 31, 2024 - $14,360).

As at February 28, 2026, the Company had monetary liabilities of $114,900 Krona or $17,361 (August 31, 2025 - $114,900 Krona or $16,672) at the CAD$ equivalent. The Company's sensitivity analysis suggests that a change in the absolute rate of exchange in the Krona by 10% will increase or decrease net loss and comprehensive loss by approximately $1,736 (August 31, 2025 - $1,667).

The Company has not entered into any foreign currency contracts to mitigate this risk. Foreign currency risk is considered low relative to the overall financial operating plan.

APPENDIX 1

RISKS RELATED TO THE BUSINESS

The Company has a limited history of operations and is considered a development stage company. As such, the Company is subject to many risks common to such enterprises, including under-capitalization, cash shortages, limitations with respect to personnel, financial and other resources and lack of revenues. There is no assurance that the Company will be successful in achieving a return on shareholders' investment and the likelihood of its success must be considered in light of its early stage of operations.

The Company has no history of earnings or cashflow from operations. The Company does not expect to generate material revenue or achieve self-sustaining operations for several years, if at all. To the extent that the Company has negative cash flow in future periods, the Company may need to allocate a portion of its cash reserves to fund such negative cash flow.

The financial statements have been prepared on a going concern basis under which an entity is considered to be able to realize its assets and satisfy its liabilities in the ordinary course of business. The Company's future operations are dependent upon the identification and successful completion of equity or debt financing and the achievement of profitable operations at an indeterminate time in the future. There can be no assurances that the Company will be successful in completing an equity or debt financing or in achieving profitability.

The financial statements do not give effect to any adjustments relating to the carrying values and classification of assets and liabilities that would be necessary should the Company be unable to continue as a going concern.

Although a substantial amount of the Company's effort will focus on the continued research and pre-clinical and clinical testing, potential approval and commercialization of its existing product candidates, the success of its business also depends in part upon its ability to identify, license or discover additional product candidates. The Company's research programs or licensing efforts may fail to yield additional product candidates for clinical development for a number of reasons, including but not limited to the following:

• the Company's research or business development methodology or search criteria and process may be unsuccessful in identifying potential product candidates;

• the Company may not be able or willing to assemble sufficient resources to acquire or discover additional product candidates;

• the Company's product candidates may not succeed in pre-clinical or clinical testing;

• the Company's product candidates may be shown to have harmful side effects or may have other characteristics that may make the products unmarketable or unlikely to receive marketing approval;

• competitors may develop alternatives that render the Company's product candidates obsolete or less attractive;

• product candidates the Company develops may be covered by third parties' patents or other exclusive rights;

• the market for a product candidate may change during the Company's program so that such a product may become unreasonable to continue to develop;

• a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all; and

• a product candidate may not be accepted as safe and effective by patients, the medical community or third-party payors.

  If any of these events occurs, the Company may be forced to abandon its development efforts to identify, license or discover additional product candidates, which could have a material adverse effect on its business, prospects, results of operations and financial condition and could potentially cause the Company to cease operations. Research programs to identify new product candidates require substantial technical, financial and human resources. The Company may focus its efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful.

  Violations of laws and regulations could result in repercussions, and psychedelic inspired drugs may never be approved as medicines

  In Canada, under the CDSA, DMT is classified as a Schedule III drug and as such, medical and recreational use is illegal under the Canadian laws. Certain other jurisdictions, including the jurisdictions in which the Corporation has engaged third-party contractors, including Finland (EU) and the United Kingdom, have similarly regulated DMT. There is no guarantee that DMT will ever be approved as medicines in any jurisdiction in which the Company or its third-party contractors operate. The Company's third party contractors will conduct programs involving DMT in strict compliance with the laws and regulations regarding the production, storage and use of DMT. As such, all facilities engaged with such substances by or on behalf of the Company do so under current licenses and permits issued by appropriate federal, state and local governmental agencies. While a portion of the Company's research programs will be focused on using psychedelic inspired compounds, the Company does not have any direct or indirect involvement with the illegal selling, production or distribution of any substances in the jurisdictions in which it operates and does not intend to have any such involvement. However, a violation of any Canadian laws and regulations, such as the CDSA, or of similar legislation in the other jurisdictions, including Finland (EU) and the United Kingdom, could result in significant fines, penalties, administrative sanctions, convictions or settlements arising from civil proceedings initiated by either government entities in the jurisdictions in which the Company or its third party contractors operate, or by private citizens, or through criminal charges. The loss of the necessary licenses and permits for Schedule III drugs by the Company's third party contractors could have an adverse effect on Grey Matters' operations.

  None of the Company's product candidates has to date received regulatory approval for their intended commercial sale.

  None of the Company's product candidates has to date received regulatory approval for their intended commercial sale. The Company cannot market a pharmaceutical product in any jurisdiction until it has completed rigorous preclinical testing and clinical trials and passed such jurisdiction's extensive regulatory approval process. In general, significant research and development and clinical studies are required to demonstrate the safety and efficacy of a product candidate before it can be submitted for regulatory approval. Even if a product candidate is approved by the applicable regulatory authority, the Company may not obtain approval for an indication whose market is large enough to recover the Company's investment in that product candidate. In addition, there can be no assurance that we will ever obtain all or any required regulatory approvals for any of our product candidates.

  The Company relies on contract research organizations consultants to design, conduct, supervise and monitor research due to a lack of internal resources to perform these functions.

  Outsourcing these functions involves risk that third party providers may not perform to the Company's standards, may not produce results in a timely manner or may fail to perform at all. If any contract research organization fails to comply with applicable regulatory requirements, the research and data generated may be deemed unreliable to regulatory authorities. Additional pre-clinical and clinical trials may be required before approval of marketing applications will be given. The Company cannot provide assurance that all third party providers will meet the regulatory requirements for research and pre-clinical trials. Failure of third party providers to meet regulatory requirements could result in repeat pre-clinical and clinical trials, which would delay the regulatory approval process or result in termination of pre-clinical and clinical trials. Any of the foregoing could have a material adverse effect on the Company's business, prospects, results of operations and financial condition.

  Reliance on Third Parties for Research

  The Company relies on third parties for the execution of a significant portion of its regulatory, pharmacovigilance medical information, and logistical responsibilities and such third parties may fail to meet their obligations as a result of inadequacies in their systems and processes or execution failure.

  The Company also relies on third parties to perform critical services, including preclinical testing, clinical trial management, analysis and reporting, regulatory, pharmacovigilance, medical information and logistical services.

  These third parties may not be available on acceptable terms when needed or, if they are available, may not comply with all regulatory and contractual requirements or may not otherwise perform their services in a timely or acceptable manner. This non-compliance may be due to a number of factors, including inadequacies in third-party systems and processes or execution failure. The Company may also experience unexpected cost increases that are beyond its control. As a result, the Company may need to enter into new arrangements with alternative third parties that may be costly. The time that it takes the Company to find alternative third parties may cause a delay, extension or termination of its preclinical studies or clinical trials and the Company may incur significant costs to replicate data that may be lost. These third parties may also have relationships with other commercial entities, some of which may compete with Grey Matters. In addition, if such third parties fail to perform their obligations in compliance with regulatory requirements and the Company's protocols, Grey Matters' preclinical studies or clinical trials may not meet regulatory requirements or may need to be repeated and its regulatory filings, such as marketing authorizations or new drug submissions, may not be completed correctly or within the applicable deadlines. As a result of Grey Matters' dependence on third parties, the Company may face delays or failures outside of its direct control in its efforts to develop product candidates.

  Regulatory approval risk

  Grey Matters' and its contract research organization's research and development activities and are and will be significantly regulated by a number of governmental entities, including Health Canada, the EMA, the Home Office in the U.K. and the FDA. Regulatory approvals are required prior to each clinical trial and Company and its contract research organizations may fail to obtain the necessary approvals to commence or continue clinical testing in one or more jurisdictions. The time required to obtain approval by regulatory authorities is unpredictable but typically takes many years following the commencement of clinical trials. Any analysis of data from clinical activities Grey Matters and its contract research organizations perform is subject to confirmation and interpretation by regulatory authorities, which could delay, limit or prevent regulatory approval. Approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate's clinical development and may vary

  by jurisdiction. The Company and its contract research organizations could fail to receive regulatory approval for Grey Matters' planned research for many reasons, including but not limited to:

• disagreement with the design or implementation of its clinical trials;

• failure to demonstrate that a product candidate is safe and effective for its proposed indication;

• failure of clinical trials to meet the level of statistical significance required for approval;

• failure to demonstrate that a product candidate's clinical and other benefits outweigh its safety risks;

• disagreement with Grey Matters' interpretation of data from preclinical studies or clinical trials;

• the insufficiency of data collected from clinical trials to support the submission and filing of a submission to obtain regulatory approval;

• deficiencies in the manufacturing processes or the failure of facilities of collaborators with whom Grey Matters contracts for clinical supplies to pass a pre-approval inspection;

• changes in the approval policies or regulations that render Grey Matters' preclinical and clinical data insufficient for approval.

Psychedelic therapy is a new and emerging industry with ambiguous existing regulations and uncertainty as to future regulations. Certain psychedelics may be illegal substances other than when used for scientific or medical purposes. As such, new risks may emerge, and management may not be able to predict all such risks or be able to predict how such risks may result in actual results differing from the results contained in any forward-looking statements. This industry is subject to extensive controls and regulations, which may significantly affect the financial condition of market participants. The marketability of any product may be affected by numerous factors that are beyond the control of the Company and cannot be predicted, such as changes to government regulations, including those relating to taxes and other government levies which may be imposed. Changes in government levies, including taxes, could make future capital investments or operations uneconomic. The psychedelic therapy industry is also subject to numerous legal challenges, which may significantly affect the financial condition of market participants and which cannot be reliably predicted.

Despite the current status of DMT as a controlled substance in Canada, the EU, the United Kingdom and United States, there may be changes in the status of DMT under the laws of certain jurisdictions. Possession of psilocybin, for example, was voted to be decriminalised in May 2019 in Denver and in November 2020, voters in Oregon approved the legal medical use of "psilocybin products," including magic mushrooms, to treat mental health conditions in licensed facilities with registered therapists (Measure 109). The legalization of psychedelics with inadequate regulatory oversight may lead to the development of psychedelic tourism in such states in clinics without proper therapeutic infrastructure or adequate clinical research. While drug laws pertaining to DMT are less likely to be as forthcoming, the expansion of such an industry which could put patients at risk may bring reputational and regulatory risk to the entire industry, leading to challenges for Grey Matters to achieve regulatory approval. The legalization of psilocybin, and potentially other psychedelic compounds (including DMT) in the future may also impact commercial sales for Grey Matters due to a reduced barrier to entry leading to a risk of increasing competition.

Due to the nature of the business of Grey Matters and the fact that certain of its contracts involve the possession, manufacture, production or supply of DMT, the use of which is not legal under U.K., EU, U.S. or Canadian law and in certain other jurisdictions, Grey Matters may face difficulties in enforcing its contracts in the courts in the UK, EU, U.S. or Canada. The inability to enforce any of its contracts could have a material adverse effect on its business, operating results, financial condition or prospects.

In order to manage its contracts with contractors, Grey Matters will ensure that such contractors are appropriately licensed. Were such contractors to operate outside the terms of these licenses, Grey Matters may experience an adverse effect on its business, including the pace of development of its product.

The success of the industry in which the Corporation operates may be significantly influenced by the public's perception of psychedelic inspired medicinal applications. There is no guarantee that future scientific research, publicity, regulations, medical opinion, and public opinion relating to psychedelic inspired medicine will be favourable. The industry in which the Company operates is in its early stages and is constantly evolving, with no guarantee of viability. The market for psychedelic inspired medicines is uncertain, and any adverse or negative publicity, scientific research, limiting regulations, medical opinion and public opinion relating to the consumption of psychedelic inspired medicines may have a material adverse effect on the Company's operational results, consumer base and financial results. While the Company is undertaking research programs using psychedelic inspired compounds, and does not advocate for the legalization of any psychedelic substances or deal with psychedelic substances except within laboratory and clinical trial settings conducted within approved regulatory frameworks, any unfavourable publicity or consumer perception regarding psychedelic substances (in addition to psychedelic inspired medicines) could also have a material adverse effect on the Company's operational results, consumer base and financial results.

Because the psychedelic therapy industry is in a nascent stage with uncertain boundaries, there is a lack of information about comparable companies available for potential investors to review in deciding about whether to invest in Grey Matters and, few, if any, established companies whose business model Grey Matters can follow or upon whose success Grey Matters can build. Accordingly, investors will have to rely on their own estimates in deciding about whether to invest in Grey Matters. There can be no assurance that Grey Matters' estimates are accurate or that the market size is sufficiently large for its business to grow as projected, which may negatively impact its financial results.

The Company's prospects must be considered in light of the risks, expenses, shifts, changes and difficulties frequently encountered with companies whose businesses are regulated by various federal, state and local governments. The health care, wellness, workers compensation and similar companies are subject to a variety of regulatory requirements and the regulatory environment is ever changing particularly with recent legislation, the full impact of which is not yet understood as regulations have not been issued. Failure to follow applicable regulatory requirements will have a materially negative impact on the business of the Company. Furthermore, future changes in legislation cannot be predicted and could irreparably harm the business of the Company.

The Company will require equity and/or debt financing to support on-going operations, to undertake capital expenditures or to undertake acquisitions or other business combination transactions. There can be no assurance that additional financing will be available to the Company when needed or on terms which are acceptable. The Company's inability to raise financing to fund capital expenditures or acquisitions could limit its growth and may have a material adverse effect upon its business, prospects, results of operations and financial condition.

If additional funds are raised through further issuances of equity or convertible debt securities, existing shareholders could suffer significant dilution, and any new equity securities issued could have rights, preferences and privileges superior to those of holders of common shares. Any debt financing secured in the future could involve restrictive covenants relating to capital raising activities and other financial and operational matters, which may make it more difficult for the Company to obtain additional capital and to pursue business opportunities, including potential acquisitions.

Because of the early stage of the industry in which the Company will operate, the Company expects to face additional competition from new entrants. To become and remain competitive, the Company will require research and development, marketing, sales and client support. The Company may not have sufficient resources to maintain research and development, marketing, sales and client support efforts on a competitive basis which could materially and adversely affect the business, financial condition and results of operations of the Company.

The Company could be adversely affected if it does not adequately protect its intellectual property rights. The Company regards its marks, rights, and trade secrets and other intellectual property rights as critical to its success. To protect its investments and the Company's rights in these various intellectual properties, it may rely on a combination of patents, trademark and copyright law, trade secret protection and confidentiality agreements and other contractual arrangements with its employees, clients, strategic partners, acquisition targets and others to protect proprietary rights. There can be no assurance that the steps taken by the Company to protect proprietary rights will be adequate or that third parties will not infringe or misappropriate the Company's copyrights, trademarks and similar proprietary rights, or that the Company will be able to detect unauthorized use and take appropriate steps to enforce rights. In addition, although the Company believes that its proprietary rights do not infringe on the intellectual property rights of others, there can be no assurance that other parties will not assert infringement claims against the Company. Such claims, even if not meritorious, could result in the expenditure of significant financial and managerial resources.

The Company will rely on trade secrets to protect technology where it does not believe patent protection is appropriate or obtainable. Trade secrets are difficult to protect. While commercially reasonable efforts to protect trade secrets will be used, strategic partners, employees, consultants, contractors or scientific and other advisors may unintentionally or willfully disclose information to competitors.

If the Company is not able to defend patents or trade secrets, then it will not be able to exclude competitors from developing or marketing competing products, and the Company may not generate enough revenue from product sales to justify the cost of development of products and to achieve or maintain profitability.

The Company's clinical trials for each product candidate may fail to adequately demonstrate the safety and efficacy of that candidate, which could force the Company to abandon its product development plans for that product candidate. Before obtaining regulatory approval for the commercial sale of any of its product candidates, the Company must demonstrate, through lengthy, complex and expensive pre-clinical testing and clinical trials, that each product is both safe and effective for use in each target indication. Clinical trial results are inherently difficult to predict, and the results the Company has obtained or may obtain from third-party trials or from its own trials may not be indicative of results from future trials. The Company may also suffer significant setbacks in advanced clinical trials even after obtaining promising results in earlier studies. Although the Company intend to modify any of its protocols in ongoing studies or trials to address any setbacks, there can be no assurance that these modifications will be adequate or that these or other factors will not have a negative effect on the results of its clinical trials. This could significantly disrupt the Company's efforts to obtain regulatory approvals and commercialize its product candidates. Furthermore, the Company may voluntarily suspend or terminate its clinical trials if at any time it believes that they present an unacceptable safety risk to patients, either in the form of undesirable side effects or otherwise. If the Company cannot show that its product candidates are both safe and effective in clinical trials, it may be forced to abandon its business plan.

The Company will rely on third parties to conduct its product development, chemistry activities, as well as pre-clinical and clinical trials. If these third parties do not perform as contractually required or as otherwise expected the Company may not be able to obtain regulatory approval for its product candidates, which may prevent it from becoming profitable.

As part of the regulatory process, the Company would need to conduct clinical trials for any drug candidate to demonstrate safety and efficacy to the satisfaction of the regulatory authorities, including the FDA for the

U.S. and Health Canada for Canada should it decide to seek approval in those jurisdictions. Clinical trials are subject to rigorous regulatory requirements and are expensive and time-consuming to design and implement. The Company may experience delays in clinical trials for any of its drug candidates, and the projected timelines for continued development of the technologies and related drug candidates by the Company may otherwise be subject to delay or suspension. Any planned clinical trials might not begin on time; may be interrupted, delayed, suspended, or terminated once commenced; might need to be redesigned; might not enroll a sufficient number of patients; or might not be completed on schedule, if at all. Clinical trials can be delayed for a variety of reasons, including the following:

• delays in obtaining regulatory approval to commence a trial;

• imposition of a clinical hold following an inspection of our clinical trial operations or trial sites by the FDA or other regulatory authorities;

• imposition of a clinical hold because of safety or efficacy concerns by the FDA, a data safety monitoring board or committee or by the Company;

• delays in reaching agreement on acceptable terms with prospective contract research organizations and clinical trial sites;

• delays in obtaining required monitoring board approval at each site for clinical trial protocols;

• delays in identifying, recruiting and training suitable clinical investigators;

• delays in recruiting suitable patients to participate in a trial;

• delays in having patients complete participation in a trial or return for post-treatment follow-up;

• clinical sites dropping out of a trial to the detriment of enrollment;

• time required to add new sites;

• delays in obtaining sufficient supplies of clinical trial materials, including comparator drugs;

• delays resulting from negative or equivocal findings of a data safety monitoring board for a trial; or

• adverse or inconclusive results from pre-clinical testing or clinical trials.

  Patient enrollment, a significant factor in the timing of clinical trials, is affected by many factors, including the size and nature of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, competing clinical trials, and clinicians' and patients' perceptions as to the potential advantages of the biologic being studied in relation to other available therapies, including any new biologics that may be approved for the indications we are investigating. Any of these delays in completing our clinical trials could increase costs, slow down the product development and approval process, and jeopardize the Company's ability to commence product sales and generate revenue.

  The Company may be required to suspend or discontinue clinical trials because of adverse side effects or other safety risks that could preclude approval of its drug candidates.

  Clinical trials may be suspended or terminated at any time for a number of reasons. A clinical trial may be suspended or terminated by the Company, its collaborators, the FDA, or other regulatory authorities because of a failure to conduct the clinical trial in accordance with regulatory requirements or the Company's clinical protocols, presentation of unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using the investigational biologic, changes in governmental regulations or administrative actions, lack of adequate funding to continue the clinical trial, or negative or equivocal findings of the data safety monitoring board for a clinical trial. The Company may voluntarily suspend or terminate its clinical trials if at any time it believes that they present an unacceptable risk to participants. If the Company elects or is forced to suspend or terminate any clinical trial of any proposed product that it develops, the commercial prospects of such proposed product will be harmed and the Company's ability to generate product revenue from such proposed product will be delayed or eliminated. Any of these occurrences could have a materials adverse effect on the Company's business, prospects, results of operations and financial condition.

  The Company faces product liability exposure, which, if not covered by insurance, could result in significant financial liability.

  The risk of product liability is inherent in the research, development, manufacturing, marketing and use of pharmaceutical products. Product candidates and products that we may commercially market in the future may cause, or may appear to have caused, injury or dangerous drug reactions, and expose the Company to product liability claims. These claims might be made by patients who use the product, healthcare providers, pharmaceutical companies, corporate collaborators or others selling such products. If the Company's product candidates during clinical trials were to cause adverse side effects, the Company may be exposed to substantial liabilities. Regardless of the merits or eventual outcome, product liability claims or other claims related to the Company's product candidates may result in:

• decreased demand for our products due to negative public perception;

• injury to our reputation;

• withdrawal of clinical trial participants or difficulties in recruiting new trial participants;

• initiation of investigations by regulators;

• costs to defend or settle related litigation;

• a diversion of management's time and resources;

• substantial monetary awards to trial participants or patients;

• product recalls, withdrawals or labeling, marketing or promotional restrictions;

• loss of revenues from product sales; and

• the inability to commercialize any of product candidates, if approved.

  The Company intends to obtain clinical trial insurance once a clinical trial is initiated. However, the insurance coverage may not be sufficient to reimburse the Company for any expenses or losses it may suffer. Insurance coverage is becoming increasingly expensive, and, in the future, the Company, or any of its collaborators, may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts or at all to protect against losses due to liability. Even if the Company's agreements with any future collaborators entitle it to indemnification against product liability losses, such indemnification may not be available or adequate should any claim arise. The Company's inability to obtain sufficient product liability insurance at an acceptable cost to protect against product liability claims could prevent or inhibit the commercialization of its product candidates. If a successful product liability claim or series of claims is brought against the Company for uninsured liabilities or in excess of insured liabilities, its assets may not be sufficient to cover such claims and its business operations could be impaired.

  Should any of the events described above occur, this could have a material adverse effect on the Company's business, prospects, results of operations and financial condition.

  In light of the Company's current resources and limited experience, it may need to establish successful third-party relationships to successfully commercialize its future product candidates.

  The long-term viability of the Company's future product candidates may depend, in part, on the Company's ability to successfully establish new strategic collaborations with pharmaceutical and biotechnology companies, non-profit organizations and government agencies. Establishing strategic collaborations and obtaining government funding is difficult and time-consuming. Potential collaborators may reject collaborations based upon their assessment of the Company's financial, regulatory or intellectual property position or based on their internal pipeline; government agencies may reject contract or grant applications based on their assessment of public need, the public interest, the ability of the Company's products to address these areas, or other reasons beyond our expectations or control. If the Company fails to establish a sufficient number of collaborations or government relationships on acceptable terms, it may not be able to commercialize any future drug candidates or generate sufficient revenue to fund further research and development efforts.

  Even if the Company establishes new collaborations or obtains government funding, these relationships may never result in the successful development or commercialization of any drug candidates for several reasons, including the fact that:

• the Company may not have the ability to control the activities of its partners and cannot provide assurance that they will fulfill their obligations to us, including with respect to the license, development and commercialization of drug candidates, in a timely manner or at all;

• such partners may not devote sufficient resources to the Company's drug candidates or properly maintain or defend our intellectual property rights;

• relationships with collaborators could also be subject to certain fraud and abuse laws if not structured properly to comply with such laws;

• any failure on the part of the Company's partners to perform or satisfy their obligations to the Company could lead to delays in the development or commercialization of drug candidates and affect the Company's ability to realize product revenue; and

• disagreements, including disputes over the ownership of technology developed with such collaborators, could result in litigation, which would be time-consuming and expensive, and may delay or terminate research and development efforts, regulatory approvals and commercialization activities.

If the Company or its collaborators fail to maintain our existing agreements or in the event we fail to establish agreements as necessary, the Company could be required to undertake research, development, manufacturing and commercialization activities solely at its own expense. These activities would significantly increase capital requirements and, given the Company's lack of sales, marketing and distribution capabilities, significantly delay the commercialization of future drug candidates

The business of the Company is subject to rapid technological changes. Failure to keep up with such changes could have a material adverse effect on the Company's business, prospects, results of operations and financial condition. The Company is subject to the risks of companies operating in the medical and healthcare business.

The market in which Grey Matters competes is characterized by rapidly changing technology, evolving industry standards, frequent new service and product announcements, introductions and enhancements and changing customer demands. As a result, an investment in the common shares of the Company is highly speculative and is only suitable for investors who recognize the high risks involved and can afford a total loss of investment.

The Company regards the protection of its copyrights, service marks, trademarks, trade dress and trade secrets as critical to its future success and relies on a combination of copyright, trademark, service mark and trade secret laws and contractual restrictions to establish and protect its proprietary rights in products and services. The Company has entered into confidentiality and invention assignment agreements with its officers and contractors, and nondisclosure agreements with parties with which it conducts business in order to limit access to and disclosure of its proprietary information. There can be no assurance that these contractual arrangements or the other steps taken by the Company to protect its intellectual property will prove sufficient to prevent misappropriation of the Company's technology or to deter independent third-party development of similar technologies.

To date, the Company has not been notified that its technologies infringe the proprietary rights of third parties, but there can be no assurance that third parties will not claim infringement by the Company with respect to past, current or future technologies. The Company expects that participants in its markets will be increasingly subject to infringement claims as the number of services and competitors in the Company's industry segment grows. Any such claim, whether meritorious or not, could be time-consuming, result in costly litigation, cause service upgrade delays or require the Company to enter into royalty or licensing agreements. Such royalty or licensing agreements might not be available on terms acceptable to the Company or at all. As a result, any such claim could have a material adverse effect upon the Company's business, prospects, results of operations and financial condition.

The Company may become party to litigation from time to time in the ordinary course of business which could adversely affect its business. Should any litigation in which the Company becomes involved be determined against the Company such a decision could adversely affect the Company's ability to continue operating and the market price for the Company's common shares. Even if the Company is involved in litigation and wins, litigation can redirect significant company resources.

Commercial success of the Company will depend in part on not infringing upon the patents and proprietary rights of other parties and enforcing its own patents and proprietary rights against others. The research and development programs will be in highly competitive fields in which numerous third parties have issued patents and pending patent applications with claims closely related to the subject matter of the Company's programs. The Company is not currently aware of any litigation or other proceedings or claims by third parties that its technologies or methods infringe on their intellectual property.

While it is the practice of the Company to undertake pre-filing searches and analyses of developing technologies, they cannot guarantee that they have identified ever patent or patent application that maybe relevant to the research, development, or commercialization of its products. Moreover, the Company can provide no assurance that third parties will not assert valid, erroneous, or frivolous patent infringement claims.

There is high potential that the Company will face intense competition from other companies, some of which can be expected to have longer operating histories and more financial resources and research and manufacturing than the Company. Increased competition by larger and better financed competitors could materially and adversely affect the business, financial condition and results of operations of the Company. At present, management believes that there are a number of drug development companies, on a global scale, that are advancing compounds for the treatment of NASH, CKD and stroke and are in various stages of development from pre-clinical up to and including Phase 3 human trials.

Competitive pressures created by any one of these companies, or by the Company's competitors collectively, could have a material adverse effect on the Company's business, prospects, results of operations and financial condition.

The Company believes that the principal competitive factors in its market are its ability to develop drug compounds that are more efficacious than the current gold standard treatment of other drugs under development, to protect its intellectual property and to also be the first company to deliver its medical device products to the market on a timely and cost-effective basis.

Better performing drugs and the expansion of existing technologies may increase the competitive pressures on the Company by enabling the Company's competitors to receive regulatory approval to market for certain drugs before its compounds are approved, offer a lower-cost product.

The success of the Company is dependent upon the ability, expertise, judgment, discretion and good faith of its senior management. While employment/consulting agreements are customarily used as a primary method of retaining the services of key management, these agreements cannot assure the continued services of such persons. Any loss of the services of such individuals could have a material adverse effect on the Company's business, prospects, results of operations and financial condition.

The Company has no earnings or dividend record, and does not anticipate paying any dividends on the common shares in the foreseeable future. Dividends paid by the Company would be subject to tax and, potentially, withholdings.

The Company's common shares are listed on the CSE. There can be no assurance that an active and liquid market for the common shares will be maintained and an investor may find it difficult to resell any securities of the Company.

The operations of the Company may require licenses and permits from various governmental authorities. There can be no assurance that such licenses and permits will be granted.

The business of the Company may not be insurable or the insurance may not be purchased due to high cost. Should such liabilities arise, they could reduce or eliminate any future profitability and result in increasing costs and a decline in the value of the Company.

The market price of the Company's common shares may be subject to wide fluctuations in response to many factors, including variations in the operating results of the Company and its subsidiaries, divergence in financial results from analysts' expectations, changes in earnings estimates by stock market analysts, changes in the business prospects for the Company and its subsidiaries, general economic conditions, legislative changes, and other events and factors outside of the Company's control. In addition, stock markets have from time to time experienced extreme price and volume fluctuations, which, as well as general economic and political conditions, could adversely affect the market price for the Company's common shares.

If the Company cannot successfully develop, manufacture and distribute its products, or if the Company experiences difficulties in the development process, such as capacity constraints, quality control problems or other disruptions, the Company may not be able to develop market-ready commercial products at acceptable costs, which would adversely affect the Company's ability to effectively enter the market. A failure by the Company to achieve a low-cost structure through economies of scale or improvements in cultivation and manufacturing processes could have a material adverse effect on the Company's commercialization plans and the Company's business, prospects, results of operations and financial condition.

The Company's management's lack of experience in marketing, selling, and distributing our products could lead to poor decision-making which could result in cost-overruns and/or the inability to produce the desired products. Although management of the Company intends to hire experienced and qualified staff, this inexperience could also result in the company's inability to consummate revenue contracts or any contracts at all. Any combination of the aforementioned may result in the failure of the Company and a loss of your investment.

If appropriate opportunities present themselves, the Company intends to acquire businesses, technologies, services or products that the Company believes are strategic. The Company currently has no understandings, commitments or agreements with respect to any other material acquisition and no other material acquisition is currently being pursued. There can be no assurance that the Company will be able to identify, negotiate or finance future acquisitions successfully, or to integrate such acquisitions with its current business. The process of integrating an acquired business, technology, service or product into the Company may result in unforeseen operating difficulties and expenditures and may absorb significant management attention that would otherwise be available for ongoing development of the Company's business. Future acquisitions could result in potentially dilutive issuances of equity securities, the incurrence of debt, contingent liabilities and/or amortization expenses related to goodwill and other intangible assets, which could materially adversely affect the Company's business, results of operations and financial condition. Any such future acquisitions of other businesses, technologies, services or products might require the Company to obtain additional equity or debt financing, which might not be available on terms favourable to the Company, or at all, and such financing, if available, might be dilutive.

The Company must rely largely on its own market research to forecast sales as detailed forecasts are not generally obtainable from other sources at this early stage of the industry. A failure in the demand for its products to materialize as a result of competition, technological change or other factors could have a material adverse effect on the Company's business, prospects, results of operations and financial condition.

Certain of the directors and officers of the Company are, or may become directors and officers of other companies, and conflicts of interest may arise between their duties as officers and directors of the Company and as officers and directors of such other companies.

The ongoing economic slowdown and downturn of global capital markets has generally made the raising of capital by equity or debt financing more difficult. Access to financing has been negatively impacted by the ongoing global economic risks. As such, the Company is subject to liquidity risks in meeting our development and future operating cost requirements in instances where cash positions are unable to be maintained or appropriate financing is unavailable. These factors may impact the Company's ability to raise equity or obtain loans and other credit facilities in the future and on terms favourable to the Company. If uncertain market conditions persist, the Company's ability to raise capital could be jeopardized, which could have an adverse impact on the Company's operations and the trading price of the Company's shares on the stock exchange.

Once the Company's opens its brain-specific PET scanning clinic, a significant portion of the services that will be performed will be derived from patient referrals from unaffiliated physicians and other third parties. Those physicians and other third parties do not have any contractual obligation to refer patients to us. If we are not successful in obtaining referral business from these physicians and other third parties, our imaging procedure volume would be negatively affected, which would reduce our net revenue and operating margins.

Further, commercial third-party payors have implemented managed care programs that could limit the ability of physicians to refer patients to us. For example, health maintenance organizations sometimes contract directly with providers and require their enrollees to obtain these services exclusively from those contracted providers. Some insurance companies and self-insured employers also limit these services to contracted providers. These "closed panel" systems are now common in the managed care environment. Other systems such as preferred physician organizations create an economic disincentive for referrals to providers outside the system's designated panel of providers. We will seek to be a designated provider under these systems. If we are unable to compete successfully for these managed care contracts, our net revenues and our prospects for growth could be adversely affected.

The physicians that will be employed by our contracted radiology groups will from time to time subject to malpractice claims. Under the terms of any management agreements with those radiology groups, we will structure the relationship in a manner that we believe does not constitute our practice of medicine, or subject us to professional malpractice claims for acts or omissions of physicians employed by the contracted radiology practices. Nevertheless, claims relating to services provided by the contracted

radiology practices have been asserted against us in the past and may be asserted against us in the future. In addition, we may be subject to other professional liability claims, including for improper use or malfunction of our diagnostic imaging equipment, or for accidental contamination, or injury from exposure to radiation.

We will seek to mitigate this risk through the purchase of professional liability insurance. Any claim made against us that is not fully covered by insurance could be costly to defend, result in a substantial damage award against us and divert the attention of our management from our operations, all of which could have an adverse effect on our financial performance. In addition, successful claims against us may adversely affect our business or reputation.

We will contract with commercial insurance and managed care providers to provide diagnostic imaging services to their members. Some of our healthcare provider customers do not have significant financial resources, liquidity or access to capital. If these customers experience financial difficulties they may be unable to pay us for the services that we provide. A significant deterioration in general or local economic conditions could have a material adverse effect on the financial health of certain of our healthcare provider customers. If our health care provider customers suffer financial hardship they could delay or default on their payment obligations to us, reducing our accounts receivable and negatively impacting our results of operations.