2026 – Q2 Financial Statements

Condensed Interim Financial Statements

For the Three and Six Months Ended June 30, 2026 and 2025

(Expressed in US Dollars) (Unaudited)

August 25, 2026

NOTICE OF NO AUDITOR REVIEW OF CONDENSED INTERIM FINANCIAL STATEMENTS

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

The accompanying unaudited condensed interim financial statements ("interim financial statements") have been prepared by and are the responsibility of the Company's management. The Company's independent auditor has not performed a review of these interim financial statements in accordance with the standards established by the Chartered Professional Accountants of Canada for a review of interim financial statements by an entity's auditor.

(Expressed in United States Dollars)

Going concern (note 2(b)) Subsequent events (note 22)

"H. Shepard Boone" "Philip Benson"

Director Director

Three and Six Months Ended June 30, 2026 and 2025 (Expressed in United States Dollars)

For the Six months ended June 30, 2026 and 2025 (Expressed in United States Dollars)

for the Period

For the Six months ended June 30, 2026 and 2025 (Expressed in United States Dollars)

Net Income (Loss) for the Period $391,251 $(409,976)

Notes to the Condensed Interim Financial Statements (Unaudited) For the Three and Six months ended June 30, 2026 and 2025 (Expressed in US dollars, unless otherwise noted)

1. Nature of Operations

   Yangaroo Inc. ("Yangaroo" or "the Company") is a technology provider in the media and entertainment industry, offering a cloud-based software platform for the management and distribution of digital media content. Yangaroo's Digital Media Distribution System ("DMDS") platform is a patented, cloud-based platform that provides customers with a centralized and fully integrated workflow directly connecting radio and television broadcasters, digital display networks, and video publishers for centralized digital asset management, delivery, and promotion. DMDS is used across the advertising, music, and entertainment award show markets.

   Yangaroo Inc. is a publicly listed company incorporated on July 28, 1999, under the laws of Ontario as Musicrypt.com Inc. and changed to its present name on July 17, 2007. Yangaroo trades on the TSX Venture Exchange under the symbol YOO.V.

   The address of the Company's corporate office and principal place of business is 360 Dufferin Street, Suite 203, Toronto, Ontario, M6K 1Z8.

2. Basis of Preparation

   1. Basis of Compliance

      These Interim Financial Statements have been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting. Accordingly, certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board (IASB), have been omitted. The preparation of these Interim Financial Statements in accordance with IAS 34 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies.

      These Interim Financial Statements should be read in conjunction with the audited financial statements for the year ended December 31, 2025.

      These Interim Financial Statements were authorized for issue by the Board of Directors on August 25, 2026.

   2. Basis of Measurement

      The Interim Financial Statements have been prepared on a historical cost basis except for certain financial instruments measured at fair value and on an accrual basis except for cash flow information.

      The Interim Financial Statements are presented in United States Dollars ("USD"), which is also the Company's functional currency.

      The financial statements were prepared on a going concern basis, which assumes that Yangaroo will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

      For the six months ended June 30, 2026, the Company generated net and comprehensive income of $391,251 (2025: loss of $409,976) and positive cash flows from operations of $711,920 (2025: $407,885), and has a working capital deficit of $753,376 as at June 30, 2026. The Company's ability to continue as a going concern is dependent upon the Company's ability to successfully refinance the term loan of $584,049, which is expected to mature on December 31, 2026, or to repay the term loan through equity financing, debt financing, or rights offerings from existing shareholders.

      There is no assurance that the Company will successfully raise sufficient funds through equity or debt financing. As a result of these conditions, there is material uncertainty that casts significant doubt regarding the Company's ability

      Notes to the Condensed Interim Financial Statements (Unaudited) For the Three and Six months ended June 30, 2026 and 2025 (Expressed in US dollars, unless otherwise noted)

      to continue as a going concern. These financial statements do not reflect the adjustments that might be necessary to the carrying amount of reported assets, liabilities, revenue, and expenses and the statement of financial position classification used if the Company was unable to continue operations in accordance with this assumption. Such adjustments could be material.

   3. Significant Accounting Judgements and Sources of Estimation Uncertainty

      The preparation of these condensed interim financial statements in conformity with IFRS requires management to make judgements, estimates, and assumptions that affect the reported amounts and the valuation of assets and liabilities and the disclosure of contingent assets and liabilities at the date of these condensed interim financial statements and the reported amounts of revenues and expenditures during the period reported.

      The most significant judgements and estimates made by management in preparing the Company's condensed interim financial statements are described as follows:

      Judgements:

      1. Revenue Recognition

         To the extent a contract includes multiple performance obligations, the Company applies judgement to determine whether these performance obligations are capable of being distinct in the context of the contract. If these criteria are not met, the promised services are accounted for as a combined performance obligation.

      2. Investment Tax Credits

         The Company uses judgement to determine the reasonable assurance of collection and estimates the valuation of investment tax credits to be accrued.

      3. Collectability of Accounts Receivable

         The Company applies judgement to measure estimated credit loss on accounts receivable at an amount equal to the lifetime expected credit loss ("ECL"). The Company applies judgement to evaluate each receivable at year end based on factors such as the age of the receivable, payment risk, and credit risk.

      4. Collectability of Government Assistance

         The Company applies judgement in continuously assessing whether there is a reasonable assurance that the grant will be received. In making this assessment, management considers both quantitative and qualitative criteria, including timing since application, observable adverse events, and significant changes in expected performance or financial condition of the counterparty.

      5. Share-Based Payments

         Share-based payments which include stock options and Restricted Share Units ("RSU") granted to employees, officers, and directors and warrants granted to agents and debenture holders, to the extent that they are not measured at the fair value of the services received, are based on the fair value at the date of the award. Stock options are valued using the Black-Scholes option pricing model, which includes inputs that require management's estimates and assumptions, and judgement with respect to the expected forfeiture rate. Judgement is also used in determining whether the performance indicators associated with RSU vesting dates have been met.

      6. Capitalized Software Development Costs

         The Company uses judgement to determine when internally generated development costs are available for intended use and to assess if expenditures meet the criteria for capitalization under IAS 38. Factors considered for capitalization include the technical and commercial feasibility of the product to generate revenue. Judgement is also applied in the determination of impairment and recoverability of any non-financial assets.

         Notes to the Condensed Interim Financial Statements (Unaudited) For the Three and Six months ended June 30, 2026 and 2025 (Expressed in US dollars, unless otherwise noted)

      7. Income Taxes

         The Company recognizes deferred tax assets only to the extent that it considers it probable that those assets will be recoverable. The Company makes assumptions about when deferred tax assets are probable to reverse, the extent to which it is probable that temporary differences will reverse and whether or not there will be sufficient taxable profits available to realize the tax assets when they do reverse. In making these judgments, the Company continually evaluates the magnitude and duration of any past losses, current profitability and whether it is sustainable, and earnings forecasts.

      8. Going Concern

         The Company has applied judgement to determine that the Company will remain a going concern based on management's belief in its ability to continue in operation for the foreseeable future (see note 2(b) for further details).

         Estimates:

         1. Goodwill

            The Company tests goodwill for impairment annually by comparing the carrying amount of the CGU to the estimated recoverable amount using a discounted cash flow analysis. The Company applies judgment in determining the key estimates used in this calculation such as the discount rate and long-term growth rate (see note 9 for further details).

         2. Convertible Debenture

            The Company measures the embedded derivative liability associated with the convertible debenture at the estimated fair value at each reporting date. The fair value of the embedded derivative liability is estimated using a Black Scholes option model, with the residual being allocated as the host debt liability component, which includes inputs that require management's estimates and assumptions

         3. Contingent Consideration

            The Company measures the contingent consideration payable in a business combination at the estimated fair value at each reporting date. The fair value is estimated using a probability weighted approach, which includes inputs that require management's estimates and assumptions.

3. Material Accounting Policy Information

   These Interim Financial Statements follow the same accounting policies and methods of their application as the Company's December 31, 2025, annual audited financial statements.

4. Capital Risk Management

   The Company includes share capital, share-based payments reserve, foreign currency translation reserve, and accumulated deficit in the definition of equity. As at June 30, 2026, the amount of equity was $1,861,229 (December 31, 2025 - $1,439,488). The Company's primary objective with respect to its capital management is to ensure that it has sufficient cash resources to further develop and market platform services, and to maintain its ongoing operations. To secure the additional capital necessary to pursue these plans, the Company may attempt to raise additional funds through the issuance of equity and warrants, debt, or by securing strategic partners.

   The Company has covenants in relation to the Credit Facility (see note 12). During the three and six months ended June 30, 2026, the Company was not in compliance with the covenants and the bank waived compliance with certain covenants until after December 31, 2026, the maturity date of the Credit Facility.

   Notes to the Condensed Interim Financial Statements (Unaudited) For the Three and Six months ended June 30, 2026 and 2025 (Expressed in US dollars, unless otherwise noted)

   The Company is not subject to any capital requirements imposed by a lending institution or regulatory body, other than of the TSX Venture Exchange ("TSXV") which requires adequate working capital or financial resources of the greater of (i) $50,000 and (ii) an amount required in order to maintain operations and cover general and administrative expenses for a period of 6 months. As of June 30, 2026, the Company has a working capital deficiency of $753,376 but has access to sufficient resources through the revolving portion of the Credit Facility to support its working capital requirements

5. Risk Management Financial Instruments and Risk Management

   The Company is exposed to a variety of financial risks by virtue of its activities: market risk (including currency risk, interest rate risk, and other price risk), credit risk, and liquidity risk. The overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on financial performance. Risk management is carried out by management under policies approved by the Board of Directors. Management is charged with the responsibility of establishing controls and procedures to ensure that financial risks are mitigated in accordance with the approved policies. The Company's exposure to financial instrument related risks and the methods used to manage those risks have not changed significantly over the last year.

   1. Market Risk:

      Market risk is the risk that the fair value or the future cash flows of a financial instrument will fluctuate because of changes in the market prices. Market risk is comprised of three types of risk such as foreign currency risk, interest rate risk, and other price risk. Two types of risk are applicable to the Company:

      1. Currency Risk:

         The Company operates internationally, and the US dollar is the presentation currency. The Company, however, does have revenues, expenses, assets, and liabilities denominated in currencies other than USD, primarily the Canadian dollar ("CAD"). The principal foreign currency risk as at June 30, 2025, is therefore the CAD.

         A 5% change in exchange rates would result in a $106,484 impact on profit or loss. Financial instruments and lease obligations in CAD currency at June 30, 2026, are as follows:

         	Jun 30, 2026 (CAD)	Jun 30, 2025 (CAD)
         Cash	$41,592	$35,408
         Accounts Receivable	237,513	236,700
         Prepaid and Other Assets	58,292	99,401
         Contract Assets	7,833	7,834
         Total Assets	$345,230	$379,343
         Trade and Other Payables	$413,474	$660,756
         Revolving Credit Facility	1,073,269	1,225,000
         Convertible Debentures	801,803	813,138
         Term Loan	829,934	1,434,705
         Lease Obligation	225,769	327,357
         Contract Liabilities	27,458	19,782
         Total Liabilities	$3,371,707	$4,480,738
         Net Liability Exposure	$3,026,477	$4,101,395

         Notes to the Condensed Interim Financial Statements (Unaudited) For the Three and Six months ended June 30, 2026 and 2025 (Expressed in US dollars, unless otherwise noted)

      2. 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. Interest rate risk is limited to potential decreases on the interest rate offered on cash held with chartered Canadian financial institutions and potential increases on the prime rate applied on the Credit Facility available to the Company. The Company's Credit Facility and convertible debt are floating interest rate facilities. A 100 bps or 1% increase in the floating rate would result in a $19,036 impact on profit or loss assuming all other factors are kept stable.

   2. Credit Risk:

      Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Financial instruments which are potentially subject to credit risk for the Company consists primarily of non-payment of cash, accounts receivable, contract assets, and government assistance receivable.

      The Company mitigates this risk by monitoring the credit worthiness of its customers and by offering the platform service to numerous smaller customers. As at and during the six months ended June 30, 2026, approximately 22% (June 30, 2025 - 22%) of accounts receivable are from three customers and 14% (June 30, 2025 - 18%) of revenue are from two customers, respectively.

      The definition of items that are past due is determined by reference to payment terms agreed to with individual customers, which are normally within 30 to 60 days.

      Aging of trade receivables are as follows:

      	June 30, 2026	December 31, 2025
      0 to 30 days	$1,093,177	$1,169,027
      31 to 60 days	215,314	239,004
      Over 60 days	369,344	288,100
      Gross Carrying Amount	$1,677,835	$1,696,131
      Loss Allowance	(64,217)	(65,107)
      Total	$1,613,618	$1,631,024

      The Company estimates credit losses to address any anticipated collectability issues based on the payment history and expected credit loss of each customer.

      Continuity of estimated credit losses:

      	June 30, 2026	December 31, 2025
      Balance, Beginning of Period	$65,107	$202,598
      Accounts Written Off	(890)	(150,159)
      Bad Debt Recovery	-	2,444
      Remeasurement of Loss Allowance	-	10,224
      Balance, End of Period	$64,217	$65,107

      Notes to the Condensed Interim Financial Statements (Unaudited) For the Three and Six months ended June 30, 2026 and 2025 (Expressed in US dollars, unless otherwise noted)

   3. Liquidity Risk:

      Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The Company's policy is to ensure that it will have sufficient cash to allow it to meet its liabilities when they become due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.

      The Company manages its liquidity risk by forecasting cash flows from operations and anticipating investing and financing activities. Senior management is also actively involved in the review and approval of planned expenditures.

      Typically, the Company ensures that it has sufficient cash on demand to meet expected operational expenses. To achieve this objective, the Company prepares annual expenditure budgets, which are regularly monitored and updated as considered necessary.

      The Company manages liquidity risk on the basis of expected maturity dates.

      Lease	Contract	Term Loan	Trade & Other	Revolving	Convertible Total
      Obligations	Liabilities	Facility	Payables	Credit Facility	Debt
      < 1 year $163,063	$71,976	$584,049	$557,829	$755,292	-	$2,132,209
      1- 3 years 88,601	-	-	-	-	450,993	539,594
      Balance at $251,664	$71,976	$584,049	$557,829	$755,292	$450,993	$2,671,803

      The following tables analyze financial liabilities and lease obligations by remaining contractual maturity (contractual and undiscounted cash flows).

      Lease	Contract	Term Loan	Trade & Other	Revolving	Convertible Total
      Obligations	Liabilities	Facility	Payables	Credit Facility	Debt
      < 1 year $181,394	$182,529	$827,571	$710,655	$673,624	-	$2,575,773
      1- 3 years 167,088	-	-	-	-	429,914	597,002
      Balance at $348,482	$182,529	$827,571	$710,655	$673,624	$429,914	$3,172,775

      June 30, 2026

      December 31, 2025

      At present, the Company expects to pay all liabilities at their contractual maturity. To meet these cash commitments, the Company anticipates generating sufficient cash inflows from operating activities and raising equity capital or obtaining the necessary financing to meet current and future obligations. Additionally, the Company utilizes a Credit Facility to provide cash on an as-needed basis.

      Notes to the Condensed Interim Financial Statements (Unaudited) For the Three and Six months ended June 30, 2026 and 2025 (Expressed in US dollars, unless otherwise noted)

6. Contingent Consideration

   As part of the Millenia3 acquisition, the Company incurred contingent consideration, consisting of additional cash payments as a result of the following:

   1. Fiscal 2023

      1. 5% of revenues if revenues for the months of November and December 2023 combined are less than

         $166,667; or

      2. 10% of revenues if revenues for the months of November and December 2023 combined are at least

         $166,667 and less than $250,000; or

      3. 15% of revenues if revenues for the months of November and December 2023 combined are at least

         $250,000

   2. Fiscal 2024 and 2025

      1. 5% of revenues if revenues for the applicable 12-month period are less than $1,000,000;

      2. 10% of revenues if revenues for the applicable 12-month period are at least $1,000,000 and less than

         $1,500,000; or

      3. 15% of revenues if revenues for the applicable 12-month period are at least $1,500,000

      Measurement periods: Annual periods ending on the 1st, 2nd, and 3rd of December 31, 2023, December 31, 2024, and December 31, 2025.

      During the six months ended June 30, 2026, the Company made its final payment of $78,926 to the seller of Millenia3 with respect to the earnout payment for fiscal 2025.

      Notes to the Condensed Interim Financial Statements (Unaudited) For the Three and Six months ended June 30, 2026 and 2025 (Expressed in US dollars, unless otherwise noted)

      	Office Equipment	Computer Equipment	Computer Software	Right of Use	Leasehold Improvements	Total
      Cost Balance, December 31, 2024	$35,580	$478,599	$328,673	$526,818	$45,619	$1,415,289
      Additions	1,185	25,414	-	-	-	26,599
      Derecognition of (30,577)		(386,197)	(328,673)	-	(12,187)	(757,634)
      Balance, December 31, 2025	6,188	117,816	-	526,818	33,432	684,254
      Additions	-	1,255	-	-	-	1,255
      Balance, June 30, 2026	$6,188	$119,071	-	$526,818	$33,432	$685,509
      Accumulated Depreciation Balance, December 31, 2024	32,594	397,371	327,812	177,356	30,997	966,130
      Depreciation Expense	1,313	37,759	861	132,998	6,687	179,618
      Derecognition of (30,577)		(386,197)	(328,673)	-	(12,187)	(757,634)
      Balance, December 31, 2025	3,330	48,933	-	310,354	25,497	388,114
      Depreciation Expense	698	18,635	-	66,499	3,343	89,175
      Balance, June 30, 2026	$4,028	$67,568	-	$376,853	$28,840	$477,289
      Carrying Amounts December 31, 2025	$2,858	$68,883	-	$216,464	$7,935	$296,140
      June 30, 2026	$2,160	$51,503	-	$149,965	$4,592	$208,220

7. Property and Equipment

Fully Depreciated Assets

Fully Depreciated Assets

Certain computer equipment under lease is included in property and equipment, with a total cost of $90,204 (2025

- $103,984). Accumulated depreciation for these assets under lease is $54,861 (2025 - $38,999)

Notes to the Condensed Interim Financial Statements (Unaudited) For the Three and Six months ended June 30, 2026 and 2025 (Expressed in US dollars, unless otherwise noted)

During the six months ended June 30, 2026, the Company capitalized internally generated software development costs of $360,341 (June 30, 2025 - $311,660). Costs capitalized include employee costs incurred on software development. Amortization expense of $403,585 was expensed to development costs during the six months ended June 30, 2026 (June 30, 2025 - $331,611).

The goodwill balance of $359,146 is related to the business acquisitions of Digital Media Services ("DMS") in fiscal year 2021 and Millenia3 in fiscal 2023. The Company tests goodwill for impairment on an annual basis or whenever there is an indication that the goodwill may be impaired. There has been no indication that the goodwill may be impaired since the annual impairment analysis performed at December 31, 2025.

During the year ended December 31, 2023, the Company recognized the Canadian Federal Government's Canada Emergency Wage Subsidy ("CEWS") expense of $165,485 due to a Canada Revenue Agency audit of the Company's claims from prior years. The Company has been reducing the payable and $32,436 remains in accrued liabilities at June 30, 2026.

1. Lease Obligations

   The Company has lease obligations until 2029 for computer equipment and property, with purchase options at the end of each lease term for computer equipment. The lease agreements have terms ranging between 3 to 4 years at inception and carry a weighted average incremental borrowing rate of 8.49% per annum (2025 - 8.44%). The remaining contractual balance on the lease obligations at June 30, 2026, was $251,664.

   	Computer Equipment	Property	Total Lease Liability
   Balance at December 31, 2024	$78,266	$369,793	$448,059
   Additions During the Period	7,114	-	7,114
   Principal Payments	(9,791)	(63,430)	(73,221)
   Accretion	4,361	11,040	15,401
   Balance at June 30, 2025	$79,950	$317,403	$397,353
   Current Lease Obligation	19,242	137,811	157,053
   Long-Term Lease Obligation	60,708	179,592	240,300
   Balance at June 30, 2025	$79,950	$317,403	$397,353
   Effective Annual Rate of Interest	10.87%	6.44%	8.44%
   Amount of Interest Recognized in Profit or Loss	4,361	11,040	15,401
   	Computer Equipment	Property	Total Lease Liability
   Balance at December 31, 2025	$69,605	$249,598	$319,203
   Additions During the Period	-	-	-
   Principal Payments	(14,833)	(81,422)	(96,255)
   Accretion	3,510	7,227	10,737
   Balance at June 30, 2026	$58,282	$175,403	$233,685
   Current Lease Obligation	17,544	133,628	151,172
   Long-Term Lease Obligation	40,737	41,776	82,513
   Balance at June 30, 2026	$58,281	$175,404	$233,685
   Effective Annual Rate of Interest	10.84%	6.23%	8.49%
   Amount of Interest Recognized in Profit or Loss	3,510	7,227	10,737

   Notes to the Condensed Interim Financial Statements (Unaudited) For the Three and Six months ended June 30, 2026 and 2025 (Expressed in US dollars, unless otherwise noted)

2. Loan Facility

   The Company has a credit agreement (the "Credit Facility") with a tier-1 Canadian financial institution (the "Bank"). The Credit Facility is secured by a first ranking security over all present and future assets and property of the Company.

   The Credit Facility includes a revolving credit facility in the amount of CAD $1,750,000 and a term loan facility with an initial principal balance of CAD $3,250,000.

   Revolving Credit Facility

   The revolving credit facility of USD $1,231,475 (CAD $1,750,000) is available by loan advances and is subject to standard borrowing base calculations and margining against trade accounts receivable. Interest payments are based on the Bank's prime rate plus 1.95% per annum. As at June 30, 2026, the Company has drawn $755,292 (June 30, 2025 - $897,925) of the revolving credit facility.

   Term Loan Facility

   The term loan facility of CAD $3,250,000 was fully advanced on May 21, 2021, and was used for the purchase of DMS and for general corporate purposes. The term of the loan is 42 months, amortized over 72 months, and had an initial 6-month interest only payment component. Interest payments are based on the Bank's prime rate plus 4.45%. The term loan facility is secured by the assets of the Company.

   On March 23, 2026, the Bank entered into a fourth amendment agreement with the Company such that the Company will be in good standing with the modified covenants related to the term loan facility. The Company incurred CAD $12,500 of amendment fees and has recorded these as deferred financing costs that are being amortized over the expected duration of the term loan facility. The amendment extended the term loan maturity date to December 31, 2026, and the Company must maintain a minimum Fixed Charge Coverage Ratio and Interest-Bearing Debt to EBITDA ratio which shall not be tested until December 31, 2026. The Company must maintain a minimum EBITDA target for the three months ended June 30, 2026, and each of quarterly periods until December 31, 2026.

   	June 30, 2026	December 31, 2025
   Term Loan Balance, Beginning of Period	$827,571	$1,159,680
   Add: Accrued Interest	32,515	99,259
   Less: Interest Paid	(32,515)	(98,024)
   Less: Principal Repayments	(237,273)	(371,486)
   Deferred Financing Costs	(6,249)	38,142
   Term Loan Balance, End of Period	$584,049	$827,571
   Current Portion of Term Loan	584,049	827,571
   Long-Term Portion of Term Loan	-	-
   Term Loan Balance, End of Period	$584,049	$827,571
   Revolving Credit Facility Balance, End of Period	$755,292	$673,624

   Notes to the Condensed Interim Financial Statements (Unaudited) For the Three and Six months ended June 30, 2026 and 2025 (Expressed in US dollars, unless otherwise noted)

3. Convertible Debentures

   On December 2, 2022, the Company completed a non-brokered private placement offering of unsecured, convertible debentures ("the Debentures") for gross proceeds of CAD $500,000. The Debentures will mature on November 30, 2027, and each CAD $1,000 Debenture will bear interest at a simple rate of Bank's prime plus 8.00% per annum (subject to increase to Bank's prime plus 10.00% per annum in the event of certain defaults). The holders of the Debentures were required to exercise a Subordination and Postponement Agreement in favour of the Credit Facility. During the term of the Subordination and Postponement Agreement, no payments to the holders of the Debentures in the form of cash will be permitted except for payments of interest. The holders of the Debentures will be entitled to convert the principal amount of the Debentures at any time on or prior to the maturity date into common shares of the Company at a conversion price of CAD $0.10. Interest will be payable within 30 days of the end of each semi-annual period ended November 30th and May 31st throughout the term of the Debentures in cash or common shares of the Company, at the discretion of the Company. As certain directors of the Company participated in the Debenture financing, the Debenture is considered a "related party" transaction. See note 18 - Related Party Transactions.

   During the six months ended June 30, 2026, $1,907 (June 30, 2025 - $1,371) of deferred financing fees were amortized.

   For accounting purposes, the debenture has been separated into a host debt liability and an embedded derivative liability component. The host debt is considered a liability as there is an unavoidable contractual obligation to pay cash. The book value of the conversion feature is variable as the Company's functional currency is USD and the CAD liability would vary based on FX, therefore the conversion feature is an FX embedded derivative liability. The fair value of the derivative is calculated using a Black Scholes option model and remeasured at every period through profit or loss, with the residual being allocated as the host debt liability component. The host debt is measured subsequently at amortized cost using the effective interest rate method.

   Embedded

   	Host Debt Liability	Derivative Liability
   Convertible Debenture Balance - December 31, 2024	$331,090	$86,394
   Accretion of Convertible Debentures	22,288	-
   Interest Accrued	51,126	-
   Fair Value Loss on Remeasurement of Embedded Derivative Liability	-	84,258
   Foreign Exchange Loss (Gain)	13,120	(25,337)
   Amortization of Issuance Costs	4,793	-
   Convertible Debenture Balance - December 31, 2025	$422,417	$145,315
   Accretion of Convertible Debentures	14,580	-
   Interest Accrued	22,147	-
   Fair Value Loss on Remeasurement of Embedded Derivative Liability	-	(22,639)
   Foreign Exchange Loss (Gain)	(15,403)	(4,072)
   Amortization of Issuance Costs	1,907	-
   Convertible Debenture Balance - June 30, 2026	$445,648	$118,604

   Notes to the Condensed Interim Financial Statements (Unaudited) For the Three and Six months ended June 30, 2026 and 2025 (Expressed in US dollars, unless otherwise noted)

4. Share Capital

   The Company is authorized to issue an unlimited number of common shares, without par value. The following is a summary of changes in common share capital:

   	Number of Shares	Value
   Balance at December 31, 2024	62,437,140	$27,826,282
   Exercise of Stock Options	500,000	$24,365
   Issuance of Shares	383,135	$16,173
   Balance at December 31, 2025	63,320,275	$27,866,820
   Exercise of Stock Options	-	-
   Issuance of Shares	256,187	8,087
   Balance at June 30, 2026	63,576,462	$27,874,907
   15. Share-Based Payments

   The Company has an Omnibus Equity Incentive Plan (the "OEI Plan"), which was originally approved on June 29, 2021, and subsequently amended most recently in 2025. The OEI Plan permits the grant of stock options as well as restricted share units, deferred share units, performance share units, and share appreciation rights (all awards other than options referred to as the "Non-Option Awards"). Pursuant to the terms of the OEI Plan, the maximum number of common shares issuable pursuant to new options together with options granted under the Plan cannot exceed 2,622,360 in the aggregate, being 4.2% of the issued and outstanding common shares of the Company at the time of amendment. The Non-Option Awards may be settled, if and when vested, in common shares of the Company or the cash equivalent, at the election of the Company on issuance of the awards.

   Stock Options

   The Company has issued stock options to acquire common shares as follows:

   Weighted Weighted

   	Average Exercise Price (CAD)	Outstanding Options	Vested Options	Average Remaining Life (Years)
   Balance at December 31, 2024	$0.11	533,000	533,000	0.14
   Granted	$0.04	500,000	500,000
   Expired	$0.11	(533,000)	(533,000)
   Exercised	$0.04	(500,000)	(500,000)
   Balance at December 31, 2025 Granted	- -	- -	- -	-
   Balance at June 30, 2026	-	-	-	-

   Notes to the Condensed Interim Financial Statements (Unaudited) For the Three and Six months ended June 30, 2026 and 2025 (Expressed in US dollars, unless otherwise noted)

   No stock options were issued or exercised during the three and six months ended June 30, 2026.

   During the six months ended June 30, 2025, 500,000 options were issued with an estimated fair value of $10,638. All 500,000 options were exercised June 2025 with an exercise price of $0.0375 CAD per share. 500,000 common shares were issued, the value of the Company's share capital increased by $24,365, $13,727 in proceeds were received, and the deduction to share-based payment reserves relating to the stock options was $10,638.

   Restricted Share Units

   The Company may grant Restricted Share Units ("RSUs") to any participant under the Omnibus Equity Incentive Plan.

   The fair value of RSUs is based on the closing price of the common shares of the Company on the trading day immediately preceding the date of the award and are recognized over the vesting period.

   On January 2, 2025, the Company issued 500,000 RSUs to Mr. Kanniah, the Company's Chief Financial Officer. These RSUs vest fully on the second anniversary of the grant date, upon which they will be payable in cash or in common shares, or a combination of both, at the discretion of the Company, subject to the terms of the Plan. The estimated fair value has been based on the quoted market price on the date of issuance of $0.04 per common share.

   On March 10, 2025, the Company issued 2,000,000 RSUs to Mr. Schuetrumpf, the Company's Chief Executive Officer. These restricted share units are expected to be settled through the issuance of 2,000,000 common shares of the Company. 1,000,000 of these RSUs are subject to certain performance requirements and as such will vest on the later of either the satisfaction of the performance requirements or March 10, 2026 (the "Performance RSUs"). Management has analyzed the performance of the key performance indicators related to the vesting date of the Performance RSUs and assessed that the probability they will be met at 25% based on historical data in meeting the KPIs. The remaining 1,000,000 RSUs will vest on December 31, 2026 (the "Service RSUs").

   The estimated fair value of the RSUs has been based on the quoted market price on the date of issuance of $0.04 per common share for the Performance RSUs and $0.05 for the Service RSUs.

   On May 8, 2026, the Company granted an aggregate of 2,060,000 restricted share units ("RSUs") and 400,000 deferred share units ("DSUs") to certain directors, officers, and employees of the Company pursuant to the Company's Omnibus Equity Incentive Plan (the "Plan"). The RSUs will vest one year from the date of grant and will be settled in common shares of the Company upon vesting, subject to and in accordance with the terms of the Plan. Except as provided under the Plan, the DSUs will vest and be settled in accordance with the terms of the Plan following the holder's cessation of service with the Company and not earlier than May 8, 2027.

   The compensation expense and charge to share-based payment reserves relating to the RSUs and DSUs for the six months ended June 30, 2026, was $22,403 (June 30, 2025 - $21,433).

   The following table shows the RSUs and DSUs outstanding as at June 30, 2026:

   Number of Units	June 30, 2026	December 31, 2025
   Balance, Beginning of Period	2,500,000	-
   RSU Granted	2,060,000	2,500,000
   DSU Granted	400,000	-
   Balance, End of Period	4,960,000	2,500,000
   Vested	-	-

   Notes to the Condensed Interim Financial Statements (Unaudited) For the Three and Six months ended June 30, 2026 and 2025 (Expressed in US dollars, unless otherwise noted)

   Shares for Services Arrangement

   As of March 10, 2025, the Company has also agreed to a Shares for Services Arrangement with Grant Schuetrumpf, CEO, with respect to a portion of Mr. Schuetrumpf's compensation, in lieu of cash. The lesser of USD $2,500 per month and CAD $5,000 per month (less applicable withholding taxes) is to be paid in addition to Mr. Schuetrumpf's existing salary, by way of share issuance (the "Shares for Services Arrangement"). Pursuant to the Shares for Services Arrangement, common shares of the Company will be issued each month over a period of two years effective as of January 1, 2025, to Mr. Schuetrumpf, the number of Shares to be calculated using the Market Price on the last trading day of each month, except with respect to the month of January 2025, which was calculated using the Discounted Market Price as at March 10, 2025. The issuance of any shares under the Shares for Services Arrangement was approved by the Toronto Venture Exchange and will be subject to applicable hold periods. No new insiders will be created, nor will any change of control occur, as a result of the issuance of these shares.

   For the months of January 2025 through March 2026, the Company issued a total of 639,322 common shares of the Company as follows:

   • January 2025: 62,469 shares at a price of $0.0375 CAD per share,

   • February, March, and April 2025: 137,881 shares at a price of $0.05 CAD per share,

   • June 2025: 31,520 shares at a price of $0.07 CAD per share,

   • May and July 2025: 49,603 shares at a price of $0.09 CAD per share,

   • August and October 2025: 64,136 shares at a price of $0.07 CAD per share,

   • September 2025: 37,526 shares at a price of $0.06 CAD per share,

   • November 2025: 37,681 shares at a price of $0.06 CAD per share,

   • December 2025 and January 2026: 88,202 shares at a price of $0.05 CAD per share,

   • February 2026: 55,158 shares at a price of $0.04 CAD per share,

   • March 2026: 75,146 shares at a price of $0.03 CAD per share.

Subsequent to the three months ended June 30, 2026, the Company issued 243,657 common shares of the Company for the months of April 2026 to July 2026. See note 22 for further details.

1. Basic and Diluted Income (Loss) per Share

   The income (loss) and weighted average number of common shares used in the calculation of basic and fully diluted income (loss) per share for the three and six months ended June 30, 2026 and 2025 were as follows:

   Three Months Ended Six Months Ended

   	June 30, 2026	June 30, 2025	June 30, 2026	June 30, 2025
   Numerator: Net Income	$353,701	$(281,168)	$391,251	$(409,976)
   Denominator: Opening Number of Common Shares - Basic	63,320,275	62,629,544	63,320,275	62,533,874
   Issuance of Common Shares	80,677	-	80,677	-
   Total Basic Number of Common Shares	63,400,952	62,629,544	63,400,952	62,533,874
   Adjustments for Calculation of Diluted Income per Share: Options and RSU in the Money	-	-	2,608,931	-
   Weighted Average Number of Common Shares - Fully Diluted	63,400,952	62,629,544	66,009,883	62,533,874
   Basic Income (Loss) per Share	$0.01	($0.00)	$0.01	($0.01)
   Fully Diluted Income (Loss) per Share	$0.01	($0.00)	$0.01	($0.01)

   Notes to the Condensed Interim Financial Statements (Unaudited) For the Three and Six months ended June 30, 2026 and 2025 (Expressed in US dollars, unless otherwise noted)

2. Segmented Information

   The Company has only one reportable segment and provides Advertising, Music, and Awards Management software workflow solutions to customers across multiple geographic regions. It considers the basis on which it is organized, including geographic areas and service offerings, in identifying its reportable segments. Operating segments of the Company are defined as components of the Company for which separate financial information is available and is evaluated regularly by the chief operating decision maker in allocating resources and assessing performance. The chief operating decision maker is the Chief Executive Officer of the Company. For revenues, the amounts included are from the originating country.

   Below is the breakdown of revenue and long-term assets by operating segment:

   For the Six Months Ended June 30, 2026	Canada	US	Total
   Advertising	$216,913	$2,697,757	$2,914,670
   Entertainment	293,359	687,798	$981,157
   Total Revenue	$510,272	$3,385,555	$3,895,827
   Property and Equipment	133,828	74,392	208,220
   Intangible Assets	1,684,553	15,222	1,699,775
   Goodwill	-	359,146	359,146

   For the Six Months Ended June 30, 2025	Canada	US	Total
   Advertising	$167,862	$2,399,254	$2,567,116
   Entertainment	248,918	617,465	866,383
   Total Revenue	$416,780	$3,016,719	$3,433,499
   Property and Equipment	215,562	157,068	372,630
   Intangible Assets	1,834,538	60,889	1,895,427
   Goodwill	-	359,146	359,146

   The Company also recognizes revenue at a point in time or over a period of time depending on the nature of the performance obligations satisfied. Revenue recognized over time includes monthly subscription fees for Music and Advertising, as well as the Award contract revenue. Everything else is recognized at a point in time.

   The breakdown based on timing is as follows:

   For the Six Months Ended June 30,	2026	2025
   Revenue Recognized at a Point in Time	$3,172,528	$2,843,897
   Revenue Recognized Over a Period of Time	723,299	589,602
   Total Revenue	$3,895,827	$3,433,499

   Notes to the Condensed Interim Financial Statements (Unaudited) For the Three and Six months ended June 30, 2026 and 2025 (Expressed in US dollars, unless otherwise noted)

3. Related Party Transactions

   Key management personnel are comprised of the Company's directors and executive officers. In addition to their salaries, key management personnel also participate in the Company's Omnibus Incentive Plan (note 15).

   Key management personnel compensation for the six months ended June 30, 2026 and 2025, was:

   	June 30, 2026	June 30, 2025
   Salaries and Short-Term Employee Benefits (i)	$349,282	$348,642
   Share Based Payments	18,737	34,693
   	$368,019	$383,335

   (i) Short-term employee benefits include bonuses, vacation pay, and commission.

   As at June 30, 2026, $35,924 (June 30, 2025 - $34,818) owing to officers and directors of the Company was included in trade and other payables. The amounts owing are unsecured, non-interest bearing, and due on demand.

4. Government Assistance

   The Company has recognized $429,977 in government assistance receivable relating to the refundable Employee Retention Credit ("ERTC") in the United States. ERTC claims are processed by the United States Internal Revenue Service and there is currently a processing backlog that has caused a delay in processing the Company's claim. Management believes that this amount is collectible and will continue to assess its claim status each reporting period.

5. Commitments and Contingencies

   In the ordinary course of business activities, the Company may be contingently liable for litigation and claims with customers, suppliers, and former employees.

   The Company is party to certain management employment agreements that provide severance in the event of termination without cause or in some cases change of control of the Company. Under these agreements, the Company would be required to pay severance for up to an aggregate total of $765,000. As at June 30, 2026, no amounts have been accrued as no triggering events have occurred.

   There were no material litigation and claims against the company as at and during the six months ended June 30, 2026.

6. Acquisition Related Settlement Gain

   Background

   On May 21, 2021, the Company completed the acquisition of certain assets and liabilities of Digital Media Services Inc. ("DMS"), including customer lists and contracts. Subsequent to the acquisition, a key customer terminated its contract, materially reducing the value of the acquired business. The Company subsequently initiated legal proceedings in connection with this acquisition.

   Settlements

   During the year ended December 31, 2025, the Company reached final settlement agreements in connection with the acquisition, for payments totaling $760,000. $60,000 of this settlement was received during the three and six months ended June 30, 2025.

   Notes to the Condensed Interim Financial Statements (Unaudited) For the Three and Six months ended June 30, 2026 and 2025 (Expressed in US dollars, unless otherwise noted)

7. Events After Reporting Period

On August 11, 2026, the Company received a net Employee Retention Tax Credit ("ERTC") refund of $157,575, together with $32,571 of interest. The ERTC relates to a U.S. government relief program established in response to the COVID-19 pandemic. The Company submitted ERTC claims for three quarters for the year ended December 31, 2021. The refund received relates to one of these quarters, while claims relating to the remaining two quarters remain outstanding. The Company intends to apply the proceeds from the ERTC refunds against the outstanding balance under its credit facility.