5. Share capital

Authorized

The Company has authorized an unlimited number of common shares participating, voting and without par value. Each holder of common shares is entitled to one vote for each share owned on all matters voted upon by shareholders.

On October 28, 2024, the Company completed a reverse share split at the ratio of 1-for-2, resulting in 10,846,721 common shares after conversion.

Conversion of convertible notes

On May 3, 2024, the Company issued convertible notes in the principal amount of $5,172,500. The convertible notes accrued interest at the rate of 10% per annum, payable in-kind semi-annually in arrears in the form of either cash or common shares of the Company, at the election of the holder, and had a maturity date of December 31, 2025.

Prior to January 1, 2025, the convertible notes would automatically convert to common shares in the event that the Company completed an initial public offering in the United States, at a conversion price equal to the greater of (i) a 20% discount to the initial public offering price and (ii) $4.00; or if there had been a change of control, at a conversion price of $4.00 per common share. On or after January 1, 2025, conversion would be at the option of the holder at a conversion price of $4.00 per common share. The Company had the option to redeem all or any portion of the convertible notes at a price equal to 100% of the outstanding principal plus accrued and unpaid interest up to but not including the date of redemption. In the event of a change of control, the Company would offer to repurchase the convertible notes at a price equal to 101% of the principal plus accrued and unpaid interest up to but not including the date of repurchase. The Company elected to account for the convertible notes in their entirety at fair value through profit and loss.

Subsequently, the note holders were given the option to convert at a conversion price of $4.00 per share prior to July 31, 2024. On June 28, 2024, all of the holders of the convertible notes elected to convert to common shares. The Company paid cash interest of $40,563 and accrued interest of $38,462 was converted, along with the principal amount of $5,172,500, into 1,308,798 common shares.

Private placement

On June 28, 2024, the Company issued 1,461,250 common shares as part of a private placement for total proceeds of $5,845,000 at $4.00 per common share. The Company incurred finders' fees of $375,000, which were recognized in equity as deduction from the gross proceeds received.

Initial Public Offering

On November 14, 2024, the Company completed the sale of 970,000 Units, with each Unit consisting of one common share and one warrant to purchase one common share (the "Unit") at the price of $4.125 per Unit. In addition, the underwriters exercised an option to purchase 145,500 warrants (the 'Overallotment Warrants") at a price of $0.01 per warrant.

Total gross proceeds from the IPO were $4,002,705, including the proceeds from the Overallotment Warrants. The Company incurred total issuance costs of $2,218,014, including underwriter fees, and legal and other professional fees incurred directly related to the issuance.

The incremental costs directly associated with the issuance were recognized as a deduction in equity and allocated based on the relative fair values of the warrants and common shares on a standalone basis.

The fair value of the common shares was based on the Company's stock price on the day of issuance of $2.65 and the fair value of the warrants was $1.7419 per warrant. The warrants were recognized in additional paid-in capital as they met the criteria for equity classification.

The fair value of the warrants was estimated using the Black-Scholes option pricing model with the following inputs:

		2024
Valuation date share price	$	2.65
Exercise price	$	4.64
Dividend yield		-
Risk-free interest rate		4.32%
Expected warrant life		5 years
Expected volatility		95%

Regulation A Offering

On March 10, 2025, the Company closed a Tier II Regulation A offering for gross proceeds of $4,172,000. The Company issued 1,490,000 units at a price of $2.80 per unit. Each unit consisted of one common share of the Company and one warrant to purchase one common share of the Company (each a "Regulation A Warrant"). The Regulation A Warrants have an exercise price of $2.80 per share and will expire 5 years from the date of issuance on March 10, 2030. The Company incurred total issuance costs of $483,020, including legal fees and placement fees directly related to the issuance. The issuance costs incurred were recognized as a reduction in equity and allocated based on the relative fair values of the Regulation A Warrants and common shares on a standalone basis. The fair value of the common shares was based on the Company's share price on the day of issuance of $3.40 and the fair value of the Regulation A Warrants was $2.63 per warrant. The Regulation A Warrants were recognized in additional paid-in capital as they met the criteria for equity classification.

June 2025 Public Offering

On June 2, 2025, the Company closed a public offering of 2,260,000 units, with each unit consisting of one common share of the Company, and one warrant to purchase one common share, at a price of $3.10 per unit (the "June 2030 Warrants"), for gross proceeds of $7,006,000, before deducting placement agent fees and other estimated offering expenses (the "June 2025 Public Offering"). The June 2030 Warrants were immediately exercisable for one of our common shares at an exercise price of $3.10 per share and will expire 5 years from the date of issuance on June 3, 2030. The units were offered pursuant to the Company's Registration Statement on FormS-1, initially filed with the SEC under the Securities Act on May 27, 2025 and declared effective by the SEC on May 29, 2025. The Company incurred issuance costs of $809,606, including legal fees and placement fees directly related to the issuance. The issuance costs incurred were recognized as a reduction in equity and allocated based on the relative fair values of the June 2030 Warrants and common shares on a standalone basis. The fair value of the common shares were based on the Company's share price on the day of issuance of $2.63 and the fair value of the June 2030 Warrants were $1.92 per warrant. The June 2030 Warrants were recognized in additional paid-in capital as they met the criteria for equity classification.

On July 14, 2025, 1,340,000 of Regulation A Warrants were exercised for cash, for proceeds of $3,752,000 during the year ended December 31, 2025 under inducement offer with a certain accredited and institutional holder (the "Holder"). The Company issued 1,340,000 Series A and 1,340,000 Series B warrants to the Holder as consideration of early exercise of its Regulation A Warrants. The new warrants meet equity classification criteria under ASC 815-40 and are not subject to remeasurement. The fair value of the new warrants is recognized as a deemed dividend, offsetting the increase in additional paid-in capital, resulting in no net impact on equity. The exercise price of each of the Series A and B warrants granted on July 14, 2025 under the inducement offer is $3.75 and expected life is for 5 years. The fair value of the warrants granted is $4,954,518 using the Black Scholes option pricing model.

As of December 31, 2025, 1,473,800 of the 1,490,000 Regulation A Warrants have been exercised for cash, for proceeds to the Company of $4,126,639 during the year ended December 31, 2025.

As of December 31, 2025, 129,905 Warrants issued as part of the IPO have been exercised for cash for proceeds to the Company of $602,756 during the year ended December 31, 2025.

On December 5, 2025, the Company entered into a warrant inducement agreement with the Holder for immediate exercise of all outstanding Series A and Series B warrants that the Company had originally issued on July 15, 2025. The exercise price of the outstanding Series A and Series B warrants was amended to $1.92 per share from the original exercise price of $3.75. As part of this inducement, the Holder agreed to exercise all outstanding warrants to purchase an aggregate of 2,680,000 shares of the Company's common stock at an exercise price of $1.92 per share (the amended exercise price). The gross proceeds from the exercise of the warrants are $5,145,600. In consideration for immediate cash exercise, the Company agreed to issue to the Holder unregistered Series C and Series D warrants to purchase an aggregate of 4,020,000 shares of the Company's common stock, each with an exercise price of $2.00 per share and expected life of 5.5 years. The amended and new warrants meet equity classification criteria under ASC 815-40 and are not subject to remeasurement. The incremental fair value attributable to the amended warrants and the fair value of the new warrants is recognized as a deemed dividend, offsetting the increase in additional paid-in capital, resulting in no net impact on equity. The incremental fair value attributable to the amended warrants is $884,331 and the fair value of the warrants granted is $5,998,449 using the Black Scholes option pricing model.

The Company's Regulation A, June 2025, July 2025 and December 2025 Warrants are not actively traded and are therefore classified as Level 3 within the fair value hierarchy. The fair value of these warrants is estimated using a Black-Scholes option pricing model. The valuation incorporates significant unobservable inputs and management judgment.

The fair value of the Regulation A, June 2025, July 2025 and December 2025 Warrants were estimated using the Black-Scholes model with the following assumptions:

		Issue Date March 10, 2025		Issue Date June 2, 2025		Issue Date July 15, 2025		Issue date December 5, 2025
Valuation date share price	$	3.40	$	2.63	$	3.13	$	2.05
Exercise price	$	2.80	$	3.10	$	3.75	$	2.00
Dividend yield		-		-		-		-
Risk-free interest rate		3.98%		4.01%		3.995%		3.72%
Expected warrant life		5.00 years		5.00 years		5.00 years		5.50 years
Expected volatility		97.81%		97.42%		73.19%		87.31%

Warrant activity as below:

	Number of common share warrants outstanding		Weighted average exercise price $	Weighted average remaining life (years)
Outstanding as at December 31, 2023	-		-	-
Granted Warrants issued as part of the IPO	1,115,000		4.64	5
Outstanding as at December 31, 2024	1,115,500		4.64	5

Granted Regulation A Warrants on March 10, 2025	1,490,000		2.80	4
Granted warrants on June 2, 2025	2,260,000		3.10	4
Granted Series A and B warrants issued on July 15, 2025	2,680,000		3.75	5
Exercise of Regulation A Warrants	(1,473,800	)	2.80	-
Exercise of Warrants issued as part of the IPO	(129,905	)	4.64	-
Exercise of Series A and B warrants issued on July 15, 2025	(2,680,000	)	3.75	-
Granted Series C and D Warrants on December 5, 2025	4,020,000		2.00	5
Total Warrants outstanding as at December 31, 2025	7,281,795		2.70	4.90

The number of warrants outstanding as at the year ended December 31, 2025:

	Warrants outstanding
	Expiry date	Exercise price	Number outstanding	Number exercisable
Warrants issued as part of the IPO	November 15, 2029	$ 4.64	985,595	985,595
Regulation A Warrants	March 10, 2030	$ 2.80	16,200	16,200
June 30, 2030 Warrants	June 2, 2030	$ 3.10	2,260,000	2,260,000
Series C and D Warrants	June 5, 2031	$ 2.00	4,020,000	4,020,000

Standby Equity Purchase Agreement

On February 10, 2025, the Company also announced that it had entered into a standby equity purchase agreement (the "SEPA") with YA II PN, Ltd. ("Yorkville"). Pursuant to the SEPA and subject to the satisfaction of certain conditions, Yorkville has committed to purchase the Company's common shares, no par value, in increments up to an aggregate gross sales price of $15,000,000 during the 36 months following the date of the SEPA (such shares, the "Shares"). The Shares will be sold at the Company's option pursuant to the SEPA at 97% of the Market Price (as defined pursuant to the SEPA) and purchases are subject to certain limitations set forth in the SEPA. As consideration for Yorkville's commitment to purchase the common shares pursuant to the SEPA, the Company paid Yorkville a structuring fee in the amount of $25,000 and issued to Yorkville 105,840 common shares with a share price of $2.83 at issuance. The Company also incurred legal fees of $391,898 related to the SEPA. These costs are expensed to consolidated statement of operations and comprehensive loss. As of December 31, 2025, the Company issued 3,677,853 common shares at market price of $8,706,270 for proceeds of $8,427,416. During the year ended December 31, 2025, $4,430,833 of the gross proceeds were held back to partially repay the Company's outstanding debenture and interest to Yorkville.

On December 29, 2025, the Company entered into an equity distribution agreement (the "ATM Agreement") with Maxim Group LLP and Yorkville Securities LLC ("Yorkville Securities" and together with Maxim, the "Agents") to create an at-the-market equity program (the "ATM"). Under the ATM Agreement, the Company may offer and sell its common shares from time to time through the Agents. The Company agreed to pay the Agents a commission equal to 3% of the gross sales from the sales of the shares pursuant to the ATM Agreement.