Financial statements
Page 1
Condensed Consolidated Interim Financial Statements For the Nine months ended November 30, 2025 and November 30, 2024 (Unaudited – Prepared by Management) (Expressed in Canadian Dollars)
Page 2
Page | 2 NOTICE OF NO AUDITOR REVIEW OF 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 an auditor has not reviewed the financial statements. The accompanying unaudited interim financial statements of the Company 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 financial statements in accordance with standards established by the Chartered Professional Accountants of Canada for a review of interim financial statements by an entity’s auditor.
Page 3
Page | 3 NEO Battery Materials Ltd. Condensed Consolidated Interim Statements of Financial Position (Unaudited - Expressed in Canadian Dollars) Assets November 30, 2025 February 28, 2025 Current Assets: Cash and cash equivalents $ 4,824,049 $ 369,694 Prepaid expenses (Note 6) 3,050,097 194,408 Sales tax and other receivables (Note 5) 774,916 31,877 8,649,062 595,979 Non-Current Assets: Tangible Assets (Note 7) 607,760 601,826 Intangible assets (Note 8) 60,180 56,695 Right-of-use asset (Note 9) 219,416 165,197 Total Assets $ 9,536,418 $ 1,419,697 Liabilities and Equity Current Liabilities: Accounts payable and accrued liabilities (Note 11& 13) $ 935,203 $ 486,021 Lease liability – current portion (Note 9) 70,727 27,037 1,005,930 513,058 Lease liability – long term (Note 9) 158,947 141,031 Total Liabilities 1,164,877 654,089 Shareholders’ Equity: Share capital (Note 12) 34,167,478 27,509,545 Reserves (Note 12) 16,493,115 10,280,495 Accumulated other comprehensive income (121,394) 14,744 Deficit (41,546,462) (36,827,018) 8,992,737 977,766 Non-controlling interest (“NCI”) (Note 4) (621,196) (212,158) Total Shareholders’ Equity 8,371,541 765,608 Total Liabilities and Equity $ 9,536,418 $ 1,419,697 Nature of Operations and Going Concern (Note 1) Contingency (Note 15) Subsequent Events (Note 16) Approved by the Board of Directors on January 29, 2026: "Spencer Sung Bum Huh" , Director "Larry Okada" , Director The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Page 4
Page | 4 The accompanying notes are an integral part of these condensed consolidated interim financial statements. NEO Battery Materials Ltd. Consolidated Statements of Loss and Comprehensive Loss (Unaudited - Expressed in Canadian Dollars) For the Three Months Ended November 30 For the Nine Months Ended November 30, 2025 2024 2025 2024 Expenses Amortization and depreciation (Note 7 & 8) $ 65,393 $ 56,020 $ 190,467 $ 166,993 Amortization of ROU asset (Note 9) 19,881 13,708 53,723 40,921 Advertising and marketing 126,257 7,382 126,257 36,626 Consulting and management fees (Note 13) 289,697 138,308 544,945 412,230 Corporate listing and filing fees 70,530 10,434 98,046 22,484 Investor relations 5,746 4,921 17,563 54,069 Office and general 84,241 18,920 163,616 46,853 Payroll expenses 566,733 128,698 735,052 353,692 Professional fees (Note 13) 153,609 334 313,463 128,106 Rent (non-lease portion) 70,149 15,372 111,983 52,740 Research and development 126,914 21,334 432,053 66,574 Stock-based compensation (Note 12) 778,101 1,486,860 1,940,277 2,119,256 Travel 110,781 4,467 229,329 21,854 Loss from operations 2,468,032 1,906,758 4,956,774 3,522,398 Other income (expenses) Interest and miscellaneous income 36,096 6,404 39,653 7,356 Interest expense - lease (Note 9) (8,590) (7,060) (22,570) (22,397) Interest expense - others (197,339) - (197,339) - Gain (loss) on foreign exchange - (974) 8,548 (2,821) Total other income (expenses) (169,833) (1,630) (171,708) (17,862) Net loss for the period 2,637,865 1,908,388 5,1128,482 3,540,260 Foreign currency translation (expense) (121,831) (8,324) (136,138) (19,612) Comprehensive loss for the period $ 2,759,696 $ 1,916,712 $ 5,264,620 $ 3,559,782 Net loss attributable to Controlling equity holders of the Company 2,385,775 1,847,585 4,719,444 3,359,012 Non-controlling interest (Note 4) 252,090 60,803 409,038 181,248 2,637,865 1,908,388 5,128,482 3,540,260 Loss per share attributable to controlling equity holders of the Company: Basic and diluted $ (0.02) $ (0.02) $ (0.04) $ (0.03) Weighted average number of common shares outstanding 124,534,675 115,928,561 123,666,711 115,879,106
Page 5
Page | 5 NEO Battery Materials Ltd. Condensed Consolidated Interim Statements of Cash Flows (Unaudited - Expressed in Canadian Dollars) For Nine months ended November 30, 2025 November 30, 2024 Operating Activities: Net loss for the period $ (5,128,482) $ (3,540,260) Adjustment for items which do not involve cash: Amortization (Note 7 & 8) 190,467 166,993 Amortization of ROU asset (Note 9) 53,723 40,921 Interest expense - lease liability (Note 9) 22,570 22,397 Interest expense - others 197,339 - Stock-based compensation 1,940,277 2,119,256 Income tax expense - 215 Changes in non-cash working capital components: Accounts payable and accrued liabilities 449,182 (19,335) Prepaid expenses (2,855,689) 72,824 Sales tax and other receivables (743,039) 1,459 (5,873,652) (1,135,530) Investing Activities: Additions to equipment and furniture (207,755) (9,946) Additions to intangible assets (7,703) (4,891) (215,458) (14,837) Financing Activities: Exercise of warrants - 77,000 Exercise of options 79,000 158,000 Private placement for cash, net 10,851,276 800,000 Lease payments (68,530) (38,514) 10,861,746 996,486 Effect of foreign currency translation adjustment (318,281) (28,858) Net changes in cash and cash equivalents 4,454,355 (153,881) Cash and cash equivalents - beginning of the period 369,694 941,976 Cash and cash equivalents - end of the period $ 4,824,049 $ 759,237 The accompanying notes are an integral part of these condensed consolidated interim financial statement
Page 6
Page | 6 ACCUMULATED OTHER NON- SHARE CAPITAL COMPREHENSIVE ACCUMULATED TOTAL FOR CONTROLLING SHARES AMOUNT RESERVES LOSS (“AOCL”) DEFICIT OWNER INTEREST TOTAL EQUITY Balance – February 28,2024 115,457,506 26,060,019 8,891,949 54,082 (32,949,382) 2,056,668 171,713 2,228,381 Exercise of warrants (Note 12) 260,000 49,924 27,076 - - 77,000 - 77,000 Exercise of stock options (Note 12) 645,000 162,883 (4,883) - - 158,000 - 158,000 Private placement (Note 12) 2,000,000 635,654 164,346 - - 800,000 - 800,000 Stock options compensation (Note 12) - - 2,119,256 - - 2,119,256 - 2,119,256 Foreign currency translation - - - (19,612) - (19,612) - (19,612) Net loss for the period - - - - (3,359,012) (3,359,012) (181,248) (3,540,260) Balance - November 30, 2024 118,362,506 26,908,480 11,197,744 34,470 (36,308,394) 1,832,300 (9,535) 1,822,765 ACCUMULATED OTHER NON- SHARE CAPITAL COMPREHENSIVE ACCUMULATED TOTAL FOR CONTROLLING SHARES AMOUNT RESERVES LOSS (“AOCL”) DEFICIT OWNER INTEREST TOTAL EQUITY Balance – February 29,2025 119,157,756 27,509,545 10,280,495 14,744 (36,827,018) 977,766 (212,158) 765,608 Private placement (Note 12) 22,389,757 7,091,354 4,309,422 - - 11,400,776 - 11,400,776 Share issuance cost - cash - (549,500) - - - (549,500) - (549,500) Share issuance cost – finder warrants - (25,859) 25,859 - - - - - Exercise of stock options (Note 12) 295,000 141,938 (62,938) - - 79,000 - 79,000 Stock options compensation (Note 12) - - 1,940,277 - - 1,940,277 - 1,940,277 Foreign currency translation - - - (136,138) - (136,138) - (136,138) Net loss for the period - - - - (4,719,444) (4,719,444) (409,038) (5,128,482) Balance - February 28, 2025 141,842,513 34,167,478 16,493,115 (121,394) (41,546,462) 8,992,737 (621,196) 8,371,541 The accompanying notes are an integral part of these condensed consolidated interim financial statements NEO Battery Materials Ltd. Condensed Consolidated Interim Statements of Changes in Equity For the Nine months ended November 30, 2025 and November 30, 2024 (Unaudited - Expressed in Canadian Dollars)
Page 7
NEO Battery Materials Ltd. Notes to Condensed Consolidated Interim Financial Statements For the Nine months ended November 30, 2025 and November 30, 2024 (Unaudited - Expressed in Canadian Dollars) Page | 7 1. Nature of Operations and Going Concern NEO Battery Materials Ltd. (the “Company” or “NEO Battery”) is a publicly listed company incorporated under the Business Corporations Act of British Columbia on February 10, 2006 as 0748496 B.C. Ltd. On March 1, 2006, the Company changed its name to BCGold Corp, and on March 16, 2017 to Pan Andean Minerals Ltd, and again on March 2, 2021, to NEO Battery Materials Ltd. The Company is listed on the TSX Venture Exchange (“TSX.V” or the “Exchange”) under the symbol “NBM”. The Company is a battery technology company focused on developing silicon-enhanced and customized, high-performance lithium-ion batteries for drones, unmanned systems (UAS), robotics, consumer electronics, electric vehicles (EV), energy storage systems (ESS) for AI data centers and power grids, and all battery- powered applications. On February 21, 2023, the Company’s shareholders approved the Continuation of the Company from British Columbia to Ontario. The head office, principal address of the Company, is located at 10th Floor – 4711 Yonge Street, Toronto, Ontario, Canada, M2N 6K8. The Company’s registered address is TD North, 77 King St W Tower Suite 700, Toronto, ON M5K 1G8. The Company’s ability to continue as a going concern is highly dependent upon its ability to obtain the financing necessary to continue operations. The key risk to the Company’s sustainability is securing funding for its research and development activities, and commercial plant construction in the near term. The Company’s operation is highly influenced by the capital market environment, supply chain, inflation, geographic stability, and global business environment in general. These consolidated financial statements have been prepared based on accounting principles applicable to a going concern, which assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations. The Company continues to incur operating losses, has limited financial resources, no source of operating cash flow, and no assurances that sufficient funding, including adequate financing, will be available to continue operations. These material uncertainties may cast a significant doubt on the validity of this assumption. As at November 30, 2025, the Company had an accumulated deficit of $41,546,462 (February 28, 2025 - $36,827,018), a net loss for the period ended November 30, 2025 of $5,128,482 (November 30, 2024 - $3,540,260) and a working capital of $7,643,132 (February 28, 2025 – $82,921). If the going concern assumption is not appropriate for these consolidated financial statements, adjustments could be necessary in the carrying values of assets, liabilities, reported income and expenses and the statement of financial position classifications used. Such adjustments could be material. 2. Basis of Preparation Statement of Compliance These unaudited condensed consolidated interim financial statements have been prepared in accordance with IAS 34 – Interim Financial Reporting as issued by the International Accounting Standards Board (“IASB”). Accordingly, certain disclosures included in annual financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the IASB have been condensed or omitted and these unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended February 28, 2025. The condensed consolidated interim financial statements were authorized for issue by the Board of Directors on October 30, 2025.
Page 8
NEO Battery Materials Ltd. Notes to Condensed Consolidated Interim Financial Statements For the Nine months ended November 30, 2025 and November 30, 2024 (Unaudited - Expressed in Canadian Dollars) Page | 8 2. Basis of Preparation - continued Basis of Presentation and Consolidation These consolidated financial statements have been prepared on a historical cost basis, except for financial instruments classified as financial instruments at fair value through profit or loss, which are stated at their fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information. Control is based on whether an investor has power over the investee and the ability to use its power over the investee to affect the amount of the returns. Basis of Presentation and Consolidation - continued Where the Company’s interest is less than 100%, the interest attributable to outside shareholders is reflected in non- controlling interest. Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Company’s equity therein. Non-controlling interests consist of the amount of those interests at the date that the Company’s interest dropped below 100% and the non-controlling interests’ share of changes in equity since that date. These consolidated financial statements incorporate the financial statements of the Company and the entity controlled directly by the Company being NEO Battery Material Korea Co., Ltd. (“Korea Co”) and NEO Battery Materials America, LLC. All significant intercompany transactions and balances have been eliminated for consolidation purpose. During the year ended February 29, 2024, the Company dissolved three of its subsidiaries, Circum-Pacific Holdings Ltd., Canada, Minera Chanpe SAC, Peru, and Cima De Oro SAC, Peru. The current non-controlling interest represents a 20% interest in Neo Battery Material Korea Co (Note 4). Critical Accounting Estimates and Judgements The preparation of these consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported expenses during the period. Actual results could differ from these estimates. Significant assumptions about the future and other sources of estimation uncertainty that management has made at the end of the reporting period, that could result in a material adjustment to the carrying amounts of assets and liabilities in the event that actual results differ from assumptions made, relate to, but are not limited to, the following: i) The incremental rate of borrowing used in the measurement of the lease liability was based on estimated interest rate the Company would borrow at from arm’s-length third parties as at the dates of adopting IFRS 16 and entering into its current long-term office lease. ii) The inputs used in accounting for stock-based compensation expense included in profit or loss calculated using the Black-Scholes option pricing model. iii) Management uses judgement to assess the existence of contingencies. By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. Management also uses judgement to assess the likelihood of occurrence of one or more future events. iv) The assessment of the Company's ability to execute its strategy by funding future working capital requirements requires judgment. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, such as expectations of future events that are believed to be reasonable under the circumstances.
Page 9
NEO Battery Materials Ltd. Notes to Condensed Consolidated Interim Financial Statements For the Nine months ended November 30, 2025 and November 30, 2024 (Unaudited - Expressed in Canadian Dollars) Page | 9 2. Basis of Preparation - continued Critical Accounting Estimates and Judgements - continued v) The Company assesses its tangible and intangible assets for impairment if there are events or changes in circumstances that indicate that carrying values may not be recoverable at each statement of financial position date. Such indicators include changes in the Company’s business plans, changes in the market and evidence of physical damage. Determination as to whether and how much an asset is impaired involves management’s judgment on highly uncertain matters. 3. Material Accounting Policies The accounting policies applied in the preparation of these unaudited condensed consolidated interim financial statements are consistent with those applied and disclosed in the Company’s audited consolidated financial statements for the year ended February 28, 2025 and reflect all the adjustments necessary for fair presentation in accordance with IFRS for the interim periods presented. New IFRS accounting standards and pronouncements - adopted The following amendments to standards were effective for annual periods beginning on or after January 1, 2025: Lack of exchangeability – Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates The amendments contain guidance to specify when a currency is exchangeable and how to determine the exchange rate when it is not. The amendments are effective for annual reporting periods beginning on or after January 1, 2025. There was no material impact on the Company's consolidated financial statements from the adoption of these amendments; however, the guidance contained was considered when determining the appropriate exchange rate to record transactions denominated in Korean Won. The functional currency and, unless otherwise indicated, the presentation currency of the Company is the Canadian (“CAD”) Dollar. The Company has operations in South Korea. The functional currency of its Korea subsidiary is South Korean Won (“KRW”). Transactions in currencies other than the functional currency are recorded at the rate of exchange prevailing on the date of the transaction. Monetary assets and liabilities that are denominated in foreign currencies are translated at the rate prevailing at each reporting date. Non-monetary items that are measured at historical cost in a foreign currency are translated at the exchange rate on the date of the initial transaction. Non-monetary items that are measured at fair values are reported at the exchange rate on the date when fair values are determined. Foreign currency translation differences are recognized in profit or loss, except for differences on the translation of foreign entities to reporting currency on consolidation, which are recognized in other comprehensive loss. On consolidation, the assets and liabilities of entities are translated into the reporting currency at the rate of exchange at the reporting date and the consolidated statement of loss and comprehensive loss are translated at the average exchange rates for the period. The exchange differences arising on translation for consolidation purposes are recognized in other comprehensive loss.
Page 10
NEO Battery Materials Ltd. Notes to Condensed Consolidated Interim Financial Statements For the Nine months ended November 30, 2025 and November 30, 2024 (Unaudited - Expressed in Canadian Dollars) Page | 10 3. Material Accounting Policies - continued New IFRS accounting standards and pronouncements – not yet adopted Below are the amendments to standards applicable for future periods that the Company has not yet adopted: Amendments to IFRS 9: Financial Instruments and IFRS 7: Financial Instruments: Disclosures In May 2024, the IASB issued amendments to update classification and measurement requirements in IFRS 9: Financial Instruments, and related disclosure requirements in IFRS 7: Financial Instruments: Disclosures. The IASB clarified the recognition and derecognition date of certain financial assets and liabilities, and amended the requirements related to settling financial liabilities using an electronic payment system. It also clarified how to assess the contractual cash flow characteristics of financial assets in determining whether they meet the solely payments of principal and interest criterion, including financial assets that have environmental, social and corporate governance (ESG)-linked features and other similar contingent features. The IASB added disclosure requirements for financial instruments with contingent features that do not relate directly to basic lending risks and costs and amended disclosures relating to equity instruments designated at fair value through other comprehensive income. The amendments are effective for annual periods beginning on or after January 1, 2026 with early application permitted. The Company is currently assessing the effect of these amendments on our financial statements. IFRS 18: Presentation and Disclosure in Financial Statements In April 2024, the IASB issued IFRS 18: Presentation and Disclosure of Financial Statements ("IFRS 18"), which replaces IAS 1: Presentation of Financial Statements. IFRS 18 introduces a specified structure for the income statement by requiring income and expenses to be presented into the three defined categories of operating, investing and financing, and by specifying certain defined totals and subtotals. Where company-specific measures related to the income statement are provided, IFRS 18 requires companies to disclose explanations around these measures, which are referred to as management-defined performance measures. IFRS 18 also provides additional guidance on principles of aggregation and disaggregation which apply to the primary financial statements and the notes. IFRS 18 will not affect the recognition and measurement of items in the financial statements, nor will it affect which items are classified in other comprehensive income and how these items are classified. Some of the requirements in IAS 1 are moved to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and IFRS 7 Financial Instruments: Disclosures. The IASB also made minor amendments to IAS 7 Statement of Cash Flows and IAS 33 Earnings per Share in connection with the new standard. The standard is effective for reporting periods beginning on or after January 1, 2027, including for interim financial statements. Retrospective application is required, and early application is permitted. The Company is currently assessing the effect of this new standard to its financial statements. 4. Non-controlling Interest On July 1, 2022, Neo Battery Materials Korea Co (“Korean Co”), a wholly-owned subsidiary of the Company, entered into an Investment Agreement with Automobile & PCB Inc. (“A&P”). Under the terms of Investment Agreement, Korea Co issued 517,657 common shares to A&P at a price of KRW 5,796 per common share for aggregate gross proceeds of KRW 2,999,820,383 (equivalent to CAD $2,978,822). Upon closing of the Investment Agreement, A&P acquired 40% of the issued and outstanding common shares of Korea Co, leaving the Company with a 60% ownership interest in Korea Co on an issued and outstanding basis.
Page 11
NEO Battery Materials Ltd. Notes to Condensed Consolidated Interim Financial Statements For the Nine months ended November 30, 2025 and November 30, 2024 (Unaudited - Expressed in Canadian Dollars) Page | 11 4. Non-controlling Interest - continued The Company controls and therefore includes the accounts of Korean Co in these consolidated financial statements. A non-controlling interest (“NCI”) of $1,363,322 was recognized as being equal to 40% of the net assets of Korean Co immediately after completion of the Investment Agreement. As funds are expended by Korean Co, it is anticipated that losses will arise in that entity, which will reduce the collective NCI amount, recorded within equity, by its pro-rata share of such losses. The Company’s share of such losses would be included within its expenses on a consolidated basis. Likewise on a consolidated basis the losses of Korean Co attributable to the NCI would reduce the Company’s reported loss. On January 29, 2024, the Company entered Purchase Agreement with A&P. Upon the terms of Purchase Agreement, the Company acquired 258,829 issued and outstanding shares of Korea Co, at a price of KRW6,491 per share (CAD$6.60 per share), for aggregate purchase price of KWR1,680,059,039 (equivalent to $1,708,707). Upon closing of Purchase Agreement, the Company holds 1,035,316 common shares of the Korea Co, representing 80% of the ownership in Korea Co, and A&P holds the remaining 20% of Korea Co. As at November 30, 2025, the details of the NCI movement are as follows: Non-controlling interest as at February 28, 2023 $ 1,057,657 Net loss of NEO Korea Co attributable to the non-controlling interest (40%) prior to execution of Purchase Agreement (March 1, 2023 – January 29, 2024) (639,072) Non-controlling interest prior to the execution of Purchase Agreement 418,585 Adjustment for NCI Consideration of acquiring 20% in net asset (1,708,707) Indicating a gain on selling 20% net asset for NCI party 1,489,964 (218,743) Non-controlling interest value – immediately after execution of acquisition of 20% as at January 29, 2024 199,842 Net loss of NEO Korea Co attributable to the non-controlling interest (20%) (January 30 – February 29, 2024) (28,129) Non-controlling interest as at February 29, 2024 $ 171,713 Net loss of NEO Korea Co attributable to the non-controlling interest (20%) (383,871) Non-controlling interest as at February 28, 2025 $ (212,158) Net loss of NEO Korea Co attributable to the non-controlling interest (20%) (409,038) Non-controlling interest as at November 30, 2025 $ (621,196) 5. Sales Tax and Other Receivables As at November 30, 2025, the balance of sales tax (GST & VAT) is $774,916 (February 29, 2024 - $31,877). 6. Prepaid Expenses November 30, 2025 ($) February 28, 2025 ($) Prepaid Expenses - current Rent (a) 2,564,856 84,510 Vendors 485,241 109,898 Short-term prepaid expenses 3,050,097 194,408 (a) Includes two production facilities located in Gimje-si, South Korea and employee housing
Page 12
NEO Battery Materials Ltd. Notes to Condensed Consolidated Interim Financial Statements For the Nine months ended November 30, 2025 and November 30, 2024 (Unaudited - Expressed in Canadian Dollars) Page | 12 7. Tangible Assets Equipment Furniture & Fixture Vehicle Total Cost: February 28, 2025 $ 873,232 $ 189,158 $ 22,157 $ 1,084,547 Additions 189,445 18,310 - 207,755 Foreign exchange effect (31,818) (6,892) (807) (39,517) November 30, 2025 $ 1,030,859 $ 200,576 $ 21,350 $ 1,252,785 Accumulated Depreciation: February 28, 2025 $ (430,188) $ (44,778) $ (7,755) $ (482,721) Additions (153,800) (29,328) (3,319) (186,447) Foreign exchange effect 21,082 2,662 399 24,143 November 30, 2025 $ (562,096) $ (71,444) $ (10,675) $ (645,025) Net Book Value: February 28, 2025 $ 443,044 $ 144,380 $ 14,402 $ 601,826 November 30, 2025 $ 467,953 $ 129,132 $ 10,675 $ 607,760 8. Intangible Assets As at November 30, 2025, the Company has been issued or has pending various intellectual property rights including patents and trademarks. The net book value of the Company’s intangible assets is as follows: Patents Trademark Total Cost: February 28, 2025 $ 69,489 $ 2,526 $ 72,015 Additions 7,703 - 7,703 Foreign exchange effect (292) - (292) November 30, 2025 $ 76,901 $ 2,526 $ 79,427 Accumulated Amortization: February 28, 2025 $ (14,959) $ (361) $ (15,320) Additions (3,897) (123) (4,020) Foreign exchange effect 93 - 93 November 30, 2025 $ (18,763) $ (484) $ (19,247) Net Book Value: February 28, 2025 $ 54,530 $ 2,165 $ 56,695 November 30, 2025 $ 58,137 $ 2,042 $ 60,180
Page 13
NEO Battery Materials Ltd. Notes to Condensed Consolidated Interim Financial Statements For the Nine months ended November 30, 2025 and November 30, 2024 (Unaudited - Expressed in Canadian Dollars) Page | 13 9. Right-Of-Use Asset & Lease Liability During the year ended February 28, 2022, the Korean Co entered into a lease agreement for land located in Gyeonggi Province’s Oseong Foreign Investment Zone, South Korea, with an initial term from February 23, 2022 to February 22, 2032 (10 years). Following the initial lease term and every subsequent 10-year period, Korean Co can renew the lease under certain conditions for a period of 10 years, for a total of 50 years. Annual lease payments are determined by the Gyeonggi Housing and Urban Corporation. The lease payments are discounted using an interest rate of 15%, which is the Company’s incremental borrowing rate. During the nine months ended November 30, 2025, the Korean Co entered into a R&D space lease agreement located in Gyeonggi Technopark, South Korea, with a term of 24 months expiring June 30, 2027. The lease payments are discounted using an interest rate of 15%, which is the Company’s incremental borrowing rate. As the lease was for a term of 12 months or less, no right-of-use asset and lease liability was recognized, and the lease payments associated with the lease is charged directly to profit or loss. Right-of-Use Assets Balance, February 29, 2024 $ 196,436 Additions (a) 20,370 Lease remeasurement (b) 13,308 Amortization expense (59,840) Foreign exchange effect (5,077) Balance, February 28, 2025 $ 165,197 Additions 112,073 Amortization expense (53,723) Foreign exchange effect (4,131) Balance, November 30, 2025 $ 219,416 Lease Liabilities Balance, February 29, 2024 $ 215,746 Additions 4,501 Lease remeasurement (b) 13,308 Interest expense 23,853 Lease payments (83,937) Foreign exchange effect (5,403) Balance, February 28, 2025 $ 168,068 Additions 112,073 Interest expense 22,570 Lease payments (68,530) Foreign exchange effect (4,507) Balance, November 30, 2025 $ 229,674 Current Portion $ 70,727 Non-current Portion $ 158,947 (b) Relates to a reclassification of the guarantee insurance payment on the Oseong Foreign Investment Zone lease from prepaid expenses to the right-of-use asset. (c) Relates to a change in the frequency of lease payments (from annual to quarterly) for the Oseong Foreign Investment Zone lease.
Page 14
NEO Battery Materials Ltd. Notes to Condensed Consolidated Interim Financial Statements For the Nine months ended November 30, 2025 and November 30, 2024 (Unaudited - Expressed in Canadian Dollars) Page | 14 9. Right-Of-Use Asset & Lease Liability - continued The Company’s undiscounted lease payments are summarized as follows: As at November 30, 2025 Less than 12 months $ 98,171 Greater than 12 months 209,803 Undiscounted lease payments $ 307,974 10. Financial Risk and Capital Management The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management processes, inclusive of documented investment policies, counterparty limits, and controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is summarized as follows: Credit risk Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company’s primary exposure to credit risk is on its cash held in bank accounts. The majority of cash and cash equivalents is deposited in bank accounts at a major bank in Canada. As most of the Company’s cash is held by one bank there is a concentration of credit risk. This risk is managed by using major banks that are high credit quality financial institutions as determined by rating agencies. Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis. The Company ensures that there are sufficient funds to meet its short- term business requirements, taking into account its anticipated cash flows from operations and its holdings of cash. Historically, the Company’s sole source of funding has been the issuance of equity securities for cash, primarily through private placements. The Company’s access to financing is always uncertain. There can be no assurance of continued access to necessary levels of equity funding. Foreign currency risk Foreign currency risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because they are denominated in currencies that differ from the respective functional currency. As at November 30, 2025, the Company had negligible financial assets or liabilities denominated in a foreign currency. Interest rate risk Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not exposed to significant interest rate risks.
Page 15
NEO Battery Materials Ltd. Notes to Condensed Consolidated Interim Financial Statements For the Nine months ended November 30, 2025 and November 30, 2024 (Unaudited - Expressed in Canadian Dollars) Page | 15 10. Financial Risk and Capital Management - continued Capital management The Company’s policy is, if permitted by market conditions, to maintain a strong capital base so as to support investor and creditor confidence and support future development of the business. The capital structure of the Company consists of equity, comprising share capital and reserves net of accumulated deficit. The Company is not subject to any externally imposed capital requirements. The Company’s capital management objectives, policies and processes have remained unchanged during the six months ended November 30, 2025. The three levels of the fair value hierarchy are as follows: Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities in active markets; Level 2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active market; quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data; and Level 3 – Unobservable inputs which are supported by little or no market activity. As required by IFRS 13, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Cash and cash equivalents are measured at fair value using Level 1 inputs. 11. Accounts Payable and Accrued Liabilities November 30, 2025 ($) February 28, 2025 ($) Trade payables 562,123 318,507 Accrued liabilities 373,080 167,514 Total 935,203 486,021 12. Share Capital The Company’s authorized share capital consists of an unlimited number of common voting shares without par value. Share Issuance - Private Placements Nine Months Ended November 30, 2025 On June 13, 2024, the Company completed a non-brokered private placement of 400,000 units at a price of $0.50 per unit for gross proceeds of $200,000. Each unit consisted of one common share and one non-transferable common share purchase warrant, with each warrant entitling the holder to purchase one common share at a price of $0.75 per common share for 24 months from the closing date of the offering. In connection with the private placement, the Company paid cash commissions of $14,000 and issued 28,000 finder’s warrants, fair valued at $6,707, entitling the holder to purchase one common share at a price of $0.50 per common share for 24 months from the closing date of the private placement. Under the fair value method, $62,173 of the proceeds were allocated to warrants. The fair value of the warrants was calculated using the Black-Scholes Option Pricing Model with the following assumptions: 2.70% risk-free interest rate, 2 years of expected life, 122.26% volatility and 0% dividend rate.
Page 16
NEO Battery Materials Ltd. Notes to Condensed Consolidated Interim Financial Statements For the Nine months ended November 30, 2025 and November 30, 2024 (Unaudited - Expressed in Canadian Dollars) Page | 16 12. Share Capital - continued Share Issuance - Private Placements - continued Nine Months Ended November 30, 2025 - continued On July 18, 2025, the Company completed a non-brokered private placement of 1,400,000 units at a price of $0.50 per unit for gross proceeds of $700,000. Each unit consisted of one common share and one non-transferable common share purchase warrant, with each warrant entitling the holder to purchase one common share at a price of $0.75 per common share for 24 months from the closing date of the offering. In connection with the private placement, the Company paid cash commissions of $10,500 and issued 63,000 finder’s warrants, fair valued at $19,152, entitling the holder to purchase one common share at a price of $0.50 per common share for 24 months from the closing date of the private placement. Under the fair value method, $62,173 of the proceeds were allocated to warrants. The fair value of the warrants was calculated using the Black-Scholes Option Pricing Model with the following assumptions: 2.70% risk-free interest rate, 2 years of expected life, 122.61% volatility and 0% dividend rate. On September 29, 2025, the Company completed a non-brokered private placement of 10,785,836 units at a price of $0.51 per unit for gross proceeds of $5,500,776. Each unit consisted of one common share and one non-transferable common share purchase warrant, with each warrant entitling the holder to purchase one common share at a price of $0.80 per common share for 36 months from the closing date of the offering. In connection with the private placement, the Company paid cash commissions of $204,000. Under the fair value method, $2,123,861 of the proceeds were allocated to warrants. The fair value of the warrants was calculated using the Black-Scholes Option Pricing Model with the following assumptions: 2.47% risk-free interest rate, 3 years of expected life, 123.22% volatility and 0% dividend rate. On October 30, 2025, the Company completed a non-brokered private placement of 9,803,921 units at a price of $0.51 per unit for gross proceeds of $5,000,000. Each unit consisted of one common share and one non-transferable common share purchase warrant, with each warrant entitling the holder to purchase one common share at a price of $0.80 per common share for 36 months from the closing date of the offering. In connection with the private placement, the Company paid cash commissions of $300,000. Under the fair value method, $1,881,566 of the proceeds were allocated to warrants. The fair value of the warrants was calculated using the Black-Scholes Option Pricing Model with the following assumptions: 2.47% risk-free interest rate, 3 years of expected life, 122.83% volatility and 0% dividend rate. Year Ended February 28, 2025 On October 28, 2024, the Company completed a non-brokered private placement of 2,000,000 units at a price of $0.40 per unit for gross proceeds of $800,003. Each unit consisted of one common share and one-half of one non- transferable common share purchase warrant, with each warrant entitling the holder to purchase one common share at a price of $0.75 per common share for 24 months from the closing date of the private placement. Under the fair value method, $152,070 of the proceeds were allocated to warrants. The fair value of the warrants was calculated using the Black-Scholes Option Pricing Model with the following assumptions: 3.09% risk-free interest rate, 2 years of expected life, 110.75% volatility and 0% dividend rate. Share Issuance - Exercise of Warrants Nine Months Ended November 30, 2025 For the nine months ended November 30, 2025, no warrants were exercised.
Page 17
NEO Battery Materials Ltd. Notes to Condensed Consolidated Interim Financial Statements For the Nine months ended November 30, 2025 and November 30, 2024 (Unaudited - Expressed in Canadian Dollars) Page | 17 12. Share Capital - continued Share Issuance - Exercise of Warrants - continued Year Ended February 28, 2025 During the year ended February 28, 2025, 200,000 and 155,250 warrants were exercised at a price of $0.16 and $0.75 per warrant, respectively, for total proceeds of $148,437. Upon the exercise of the warrants, $23,222 of the fair value of the warrants recorded was transferred from reserves to share capital. Share Issuance - Exercise of options Nine months ended November 30, 2025 During the nine months ended November 30, 2025, 95,000 and 2200,000 stock options were exercised at a price of $0.20 and $0.30 per share, respectively, for total proceeds of $79,000. Upon the exercise of the options, $662,938 of the fair value of the options recorded was transferred from reserves to share capital. Year Ended February 28, 2025 During the year ended February 28, 2025, 625,000, 600,000, and 120,000 stock options were exercised at a price of $0.20, $0.30, and $0.40, respectively, per share for total proceeds of $353,000. Upon the exercise of the options, $276,934 of the fair value of the options recorded was transferred from reserves to share capital. Share Purchase Warrants Share purchase warrant transactions are summarized as follows: Number of Warrants Weighted Average Exercise Price ($) Balance, February 29, 2024 16,957,753 0.56 Issued 1,000,000 0.75 Exercised (355,250) (0.42) Expired (5,341,668) (0.16) Balance, February 28, 2025 12,260,835 0.75 Issued 22,480,757 0.79 Exercised - - Expired (11,260,835) (0.75) Balance, November 30, 2025 23,480,757 0.79 As at November 30, 2025, outstanding warrants are as follows: Expiry Date Exercise Price ($) Number of Warrants Weighted Average Life Remaining (Years) October 28, 2026 0.75 1,000,000 0.91 June 17, 2027 0.75 400,000 1.55 June 17, 2027 0.50 28,000 1.55 July 18, 2027 0.75 1,400,000 1.63 July 18, 2027 0.50 63,000 1.63 September 29, 2028 0.80 10,785,836 2.83 November 03, 2028 0.80 9,803,921 2.93 23,480,757 2.69
Page 18
NEO Battery Materials Ltd. Notes to Condensed Consolidated Interim Financial Statements For the Nine months ended November 30, 2025 and November 30, 2024 (Unaudited - Expressed in Canadian Dollars) Page | 18 12. Share Capital - continued Stock Options The Company recently established an Omnibus Equity Incentive Plan (the "Plan"), which was approved by shareholders on June 4, 2025. The Plan is designed to align the interests of participants with those of shareholders and to attract, retain, and motivate key personnel. Prior to the adoption of the Plan, the Company operated under a rolling Stock Option Plan (the "Predecessor Plan") established in 2021. While the Predecessor Plan remains in effect for options granted prior to the adoption of the new Plan, no new awards will be granted under the Predecessor Plan following the approval of the Plan. The Plan allows for the granting of stock options and other equity-based awards, including Restricted Share Units (“RSUs”) to eligible participants such as directors, employees, consultants, and persons performing investor relations activities. The Plan permits the Net Exercise of options (a “Net Exercise” as defined in Exchange’s Policy 4.4 – Security Based Compensation), allowing participants to receive the net value of the options in shares or cash without having to pay the exercise price in cash. The aggregate number of shares issuable upon the exercise of stock options shall not exceed 10% of the Company’s issued and outstanding common shares at any given time. The maximum aggregate number of shares issuable under other awards, such as RSUs, shall not exceed 10% of the issued and outstanding shares as of the Plan’s effective date. No individual participant may be granted awards that would allow them to acquire more than 5% of the issued and outstanding shares within any 12-month period. For consultants, the total number of options or shares issuable under the Plan is capped at 2% of the issued and outstanding shares in any 12-month period. For persons performing investor relations activities, the total number of options or shares issuable is also limited to 2% of the issued and outstanding shares in any 12-month period. For persons performing investor relations activities, the total number of options or shares issuable is also limited to 2% of the issued and outstanding shares in any 12-month period. The number of RSUs granted to any participant cannot exceed 2% of the issued and outstanding shares at the time of the award. Insiders of the Company are subject to additional restrictions, whereby the aggregate number of shares issuable to them under the Plan and the number of awards granted within any 12-month period cannot exceed 10% of the issued and outstanding shares at any time. Options granted under the Plan are subject to vesting schedules determined by the Plan Administrator, with options for persons performing investor relations activities vesting over a minimum of 12 months and no more than 25% vesting in any three-month period, while RSUs cannot vest earlier than one year from the grant date. The policies of the TSX Venture exchange require such stock option plans to be approved annually by the Company's shareholders by way of an ordinary resolution. Options granted under the Plan are non-transferable and expire immediately if a participant is dismissed for cause, 90 days after a participant ceases to be a director, officer, employee, or consultant for reasons other than death unless otherwise determined by the Plan Administrator, or one year after the participant's death, subject to the Plan’s terms. Stock Options Granted Nine months ended November 30, 2025 During the nine months ended November 30, 2025, the Company granted a total of 6,699,240 stock options to its directors, officers, employees, and consultants. These options are exercisable at a weighted exercise price of $0.56 per option and will expire in three and five years from the grant date. These options vest based on their various vesting terms. Of the total 6,699,240 options, 1,010,000 were granted to related parties. The Company measured the fair value of these options at $2,820,546 using Black-Sholes Option Pricing Model based on the assumptions provided in the table below.
Page 19
NEO Battery Materials Ltd. Notes to Condensed Consolidated Interim Financial Statements For the Nine months ended November 30, 2025 and November 30, 2024 (Unaudited - Expressed in Canadian Dollars) Page | 19 12. Share Capital - continued Stock Options - continued Stock Options Granted - continued Nine months ended November 30, 2025 - continued Nov 20, 2025 Nov 3, 2025 Oct 30, 2025 Oct 14, 2025 Sep 29, 2025 Sep 18, 2025 Sep 12, 2025 Risk-free interest rate 2.75% 2.42% 2.71% 2.71% 2.74% 2.48% 2.75% Expected life 5 years 3 years 5 years 5 years 5 years 5 years 5 years Volatility 112.90% 113.06% 113.14% 114.94% 114.94% 118.24% 117.84% Expected dividend yield Nil Nil Nil Nil Nil Nil Nil Sep 5, 2025 Aug 19, 2025 Aug 12, 2025 Aug 8, 2025 Jul 28, 2025 May 9, 2025 Apr 28, 2025 Risk-free interest rate 2.82% 2.96% 2.96% 2.92% 3.07% 2.72% 2.76% Expected life 5 years 5 years 5 years 5 years 5 years 5 years 5 years Volatility 116.88% 118.85% 118.63% 118.64% 118.79% 119.19% 122.83% Expected dividend yield Nil Nil Nil Nil Nil Nil Nil Apr 25, 2025 Apr 18, 2025 Mar 14, 2025 Mar 13, 2025 Risk-free interest rate 2.78% 2.73% 2.72% 2.67% Expected life 5 years 5 years 5 years 5 years Volatility 122.80% 122.75% 116.54% 116.52% Expected dividend yield Nil Nil Nil Nil Year Ended February 28, 2025 During the year ended February 28, 2025, the Company granted 120,000, 2,000,000, and 1,350,000 stock options to its directors, officers, employees, and consultants, on October 28, 2024, November 14, 2024, and November 25, 2024, respectively. These options are exercisable at a price of $0.40, $0.55, and $0.94 per option and will expire on October 28, 2029, November 14, 2029, and November 25, 2029, respectively. A majority of the options issued vest on date of grant, with the exception of 250,000 options vesting on May 14, 2025 (November 14, 2024 issuance) and 950,000 options vesting on March 25, 2025 (November 25, 2024 issuance). Of the total 3,470,000 options, 1,350,000 were granted to related parties. The Company measured the fair value of these options at $1,163,913 using Black-Sholes Option Pricing Model based on the assumptions provided in the table below. October 28, 2024 November 14, 2024 November 25, 2024 Risk-free interest rate 3.04% 3.12% 3.18% Expected life 0.1 years 0.15 years 5 years Volatility 119.75% 116.32% 116.32% Expected dividend yield Nil Nil Nil During the nine months ended November 30, 2025, the Company recorded stock-based compensation of $1,933,332 (November 30, 2024 - $2,119,256).
Page 20
NEO Battery Materials Ltd. Notes to Condensed Consolidated Interim Financial Statements For the Nine months ended November 30, 2025 and November 30, 2024 (Unaudited - Expressed in Canadian Dollars) Page | 20 Share Capital - continued Stock Options - continued Stock Options Granted - continued Stock option transactions are summarized as follows: As at November 30, 2025, stock options outstanding and exercisable are as follows: Expiry Date Weighted Average Exercise Price ($) Number of Options Outstanding Number of Options Exercisable Weighted Average Remaining Life (Years) February 10, 2026 0.20 1,050,000 1,050,000 0.20 May 13, 2026 0.20 50,000 50,000 0.45 January 19, 2029 0.30 3,400,000 3,400,000 3.14 November 14, 2029 0.55 555,000 555,000 3.96 November 25, 2029 0.94 1,250,000 1,250,000 3.99 March 13, 2030 0.69 900,000 900,000 4.28 March 14, 2030 0.78 510,000 510,000 4.29 April 18, 2030 0.60 100,000 100,000 4.38 April 25, 2030 0.60 300,000 300,000 4.40 April 28, 2030 0.66 200,000 200,000 4.41 May 9, 2030 0.50 400,000 400,000 4.44 July 28, 2030 0.50 150,000 75,000 4.66 August 8, 2030 0.50 700,000 350,000 4.69 August 12, 2030 0.50 106,000 106,000 4.70 August 19, 2030 0.50 500,000 250,000 4.72 September 5, 2030 0.50 790,000 640,000 4.77 September 12, 2030 0.56 70,000 35,000 4.79 September 18, 2028 0.50 525,000 262,500 2.80 September 29, 2030 0.50 250,000 125,000 4.83 October 14, 2030 0.60 10,000 5,000 4.87 October 30, 2030 0.50 150,000 150,000 4.92 November 3, 2028 0.51 582,240 - 2.93 November 10, 2030 0.50 100,000 - 4.95 0.50 12,654,240 10,713,500 3.57 Number of Options Weighted Average Exercise Price ($) Balance, February 29, 2024 8,380,000 0.28 Granted 3,470,000 0.70 Forfeited (1,200,000) (0.28) Exercised (1,345,000) (0.26) Balance, February 28, 2025 9,305,000 0.44 Granted 6,6999,240 0.56 Forfeited (3,055,000) (0.49) Exercised (295,000) (0.27) Balance, November 30, 2025 12,654,240 0.50
Page 21
NEO Battery Materials Ltd. Notes to Condensed Consolidated Interim Financial Statements For the Nine months ended November 30, 2025 and November 30, 2024 (Unaudited - Expressed in Canadian Dollars) Page | 21 13. Related Party Transactions Related parties include the Company’s key management personnel with authority and responsibility for planning, directing and controlling activities of the Company. The Company has determined that its key management personnel is comprised of the Company’s Board of Directors and officers, and the entities controlled by the key management personnel. As at November 30, 2025 and February 28, 2025, there were $147,400 and $38,758, respectively, balances due to related parties. During the nine months ended November 30, 2025, 1,010,000 options were granted to related parties at the fair value of $682,961, which was recorded in the current period per the vesting schedule. During the nine months ended November 30, 2025 and 2024, the Company paid the following amounts to the officers and directors of the Company: 14. Segmented Information Reportable segments are those operations whose operating results are reviewed by the chief operating decision maker, being the individual at the Company making decisions about resources to be allocated to a particular segment, and assessing performance provided those operations pass certain quantitative thresholds. The Company operates in only one reportable segment, being the development of silicon anode materials for lithium-ion batteries. 15. Contingency The Company is from time to time, involved in legal proceedings arising in the ordinary course of business. It does not believe that adverse decisions in any pending or threatened proceedings, or any amount it may be required to pay by reason thereof, will have a material adverse effect on the financial condition or future results of the operations of the Company. 16. Subsequent Events Subsequent events to November 30, 2025: On January 21, 2026, the Company completed a non-brokered private placement of 11,666,667 units at a price of $0.60 per unit for gross proceeds of $7,000,000.20. Each unit consists of one common share of the Company and one non-transferable common share purchase warrant. Each whole warrant will be exercisable to acquire one common share of the Company at an exercise price of $0.85 CAD for a period of 36 months from the closing date of the offering. November 30, 2025 ($) November 30, 2024 ($) Management fees 474,151 124,278 Director fees 48,512 - Professional fees 80,049 36,222 602,712 160,499