Quantum eMotion (NYSE American: QNC) widens H1 loss but adds $10M crypto IP asset
Quantum eMotion Corp. reported its June 30, 2026 half‑year results, remaining in early commercialization with minimal revenues of $12,061 and a larger net loss of $8,324,643 versus $4,868,768 a year earlier. Loss per share was $0.038 on 219.1 million weighted average shares.
Total operating expenses rose sharply as the company scaled R&D, general and administrative, and share‑based compensation. Key drivers included investment in U.S. expansion, NYSE American listing costs, and higher staff and promotional spending to support commercialization of its quantum cybersecurity platform.
Liquidity remains strong: cash and marketable securities were $33,530,205, with total assets of $48,314,885 and working capital of $34,318,761 as of June 30, 2026. A major development was the SKV Technology Inc. acquisition, recorded as a $10,085,274 intangible asset for the SecureKey cryptographic platform, offset by a new contingent liability of $9,009,072 tied to earn‑outs and royalties. Multiple R&D programs continued across quantum entropy, SecureKey, CMOS chip design, blockchain security, and Entropy‑as‑a‑Service, supported by up to $600,000 of NRC IRAP funding.
Positive
- Strong liquidity with cash and marketable securities of $33.53 million and working capital of $34.32 million supports ongoing R&D and commercialization without near‑term financing pressure.
- Strategic SKV Technology acquisition added a SecureKey cryptographic platform recorded as a $10.09 million intangible asset, broadening the product portfolio in high‑assurance cybersecurity markets.
Negative
- Net loss expanded to $8.32 million for the first half of 2026, up from $4.87 million, driven by higher R&D, G&A, and share‑based compensation.
- Revenue remains immaterial at $12,061 for the half year, indicating the business is still largely pre‑revenue while carrying a growing operating cost base.
Filing Explained
At June 30, 2026, SecureKey had been acquired with no shares issued at closing; $1.5 million was paid and $9.009 million remained contingent.
The filing is a Form 6-K, an interim report used by a foreign private issuer to furnish material information published in its home market. It reports that the April 2 SKV acquisition is completed: SecureKey has been integrated into QeM’s product offerings, while closing involved no cash or common shares.
The contractual consideration is not a committed
QeM recognized a contingent consideration liability of
Separate from the acquisition, QeM had
A separate
Key Figures
Key Terms
Entropy-as-a-Service technical
FIPS 140-3 validation regulatory
contingent consideration liability financial
FVOCI financial
Quantum Random Number Generator technical
FAQ
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AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of August 2026
Commission File Number: 001-43068
Quantum eMotion Corp.
2300 Alfred Nobel
Montreal Québec
Canada H4S 2A4
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ¨ Form 40-F x
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Quantum eMotion Corp. | ||
| Date: August 14, 2026 | By: | /s/ Marc Rousseau |
| Name: | Marc Rousseau | |
| Title: | Chief Financial Officer | |
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Management’s Discussion and Analysis for the Periods ended June 30, 2026, and 2025 | |
| 99.2 | Interim Financial Statements for the three and six month periods ended June 30, 2026, and 2025 | |
| 99.3 | Form 52-109F2 Certification of Interim Filings Full Certificate - CEO | |
| 99.4 | Form 52-109F2 Certification of Interim Filings Full Certificate - CFO |
Exhibit 99.1
QUANTUM eMOTION CORP.
Management’s Discussion and Analysis
Periods ended June 30, 2026, and 2025
The following management’s discussion and analysis (“MD&A”) of the financial position and results of the operations and cash flows of Quantum eMotion Corp. (the “Company”, “QeM” or “Quantum”) constitutes management’s review of the factors that affected the Company’s financial and operating performance for the quarter ended June 30,2026, compared to the same period of the prior year which have been prepared in accordance with International Financial Reporting Standards (IFRS.)
Further information regarding the Company and its operations are filed electronically on the System for Electronic Document Analysis and Retrieval + (“SEDAR+”) in Canada and can be obtained from www.sedarplus.ca.
| 1.1 | FORWARD LOOKING STATEMENTS |
This MD&A contains forward-looking information within the meaning of applicable Canadian securities legislation and forward-looking statements within the meaning of applicable U.S. securities laws (collectively, “forward-looking statements”). Forward-looking statements include, but are not limited to, statements relating to the Company’s strategy and action plan, its intellectual property, research and development activities, and financial reporting that reflect management’s current expectations, estimates, projections or assumptions about future events or results.
Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, without limitation: the Company’s ability to secure future financing (including through the exercise of outstanding stock options and warrants); the risk that ongoing or future research and development may not result in the timely achievement of additional patents; risks inherent in the high-technology industry; and the timing of market readiness and adoption of quantum solutions. These and other risks and uncertainties are described in this MD&A and in the Company’s annual information form and other continuous disclosure documents filed on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov.
Readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date they are made and, except as required by applicable securities laws, the Company does not undertake to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
| 1.2 | INCORPORATION AND NATURE OF OPERATIONS |
Quantum eMotion Corp. was incorporated under the Business Corporations Act of Ontario on July 19, 2007, and continued under the Canada Business Corporations Act on August 28, 2012.
The head office, principal address and records office of the Company are located at 2300 Alfred Nobel, Montreal, Qc, H4S 2A4.
On June 28, 2024, the Company established a wholly owned subsidiary, Quantum eHealth Technologies Inc. located at the same address; and on April 10, 2025, the Company established, Quantum eMotion America Inc. (“QeMA”), a wholly owned subsidiary in Irvine, California.
The Company is a developer of a new generation of quantum-based cryptographic solutions pursuant to the development of intellectual property and commercialization of cybersecurity solutions. (See 1.4 patent summary).
| 1.3 | SENIOR MANAGEMENT CHANGES |
The Company appointed Mr. Jason Thomas as Director of Product Development of QeMA effective April 1, 2026. Jason Thomas is an expert in high-assurance cryptographic systems with over 15 years of experience designing and delivering secure solutions for U.S. government and commercial markets. His expertise spans the full cryptographic lifecycle, including embedded systems, OS hardening, and NSA Type 1-aligned architectures supporting classified infrastructure.
The Company appointed Mr. John Young, MBA, as Chief Operating Officer of QeMA, effective April 1, 2025. Mr. Young has over 35 years of experience in cybersecurity and IT operations, having held senior roles at Fortune 50 companies, including IBM and McDonnell Douglas. Notably, he is one of only 11 professionals globally to hold all nine ISC2 cybersecurity certifications. Mr. Young is also a board member of QeM.
The Company appointed Ms. Farrah N. Khan, as Senior Vice President of Business Development of QeMA, effective April 1, 2025. Ms. Khan served as Mayor of Irvine-a city recognized as a global innovation hub. During her tenure, she spearheaded initiatives that attracted substantial investments in emerging technologies including artificial intelligence, quantum communications, biotechnology, and cybersecurity. Her vision and leadership helped position Irvine as a magnet for high-impact ventures and Fortune 500 partnerships.
The Company appointed Ms. Helen Woo, as Vice President of Business Development of QeMA, effective April 1, 2025. Ms. Woo brings a distinguished track record in corporate development, with deep expertise in navigating complex financial ecosystems and forging high-impact relationships across the public and private sectors. Her accomplishments have been recognized by the U.S. House of Representatives and the California State Senate, underscoring her leadership and civic engagement. In 2023, she was named Ambassador of the Year by the Greater Irvine Chamber of Commerce, and most recently honored as Ambassador of the Month by the Newport Beach Chamber of Commerce in February 2025.
The Company appointed Mr. Klaus Kepper, CPA, as the Controller / Finance Director of the Company on February 10, 2025. Mr. Kepper has over 30 years of experience in senior financial positions, mostly in the health care field. He also holds an MBA from Concordia University.
| 1.4 | COMPANY OVERVIEW AND STRATEGY |
RESEARCH AND DEVELOPMENT ACTIVITIES
Technology
Our primary objective is to make our cryptographic solutions, technology accessible as rapidly as possible to potential clients and partners, secure its effectiveness and ensure that the intellectual property is well protected. In order to stay focused on this objective, we are working closely with our partners to maximize the potential and security of our technology. The Company is developing complementary metal-oxide semiconductor (“CMOS”) implementations with l’École de Technologie Supérieure (“ETS”) to ensure greater competitiveness.
On May 19, 2026, QeM announced that it has signed an international project consortium agreement with JMEM TEK. the framework for developing a quantum-resilient Universal Security SoC platform that integrates QeM’s diode-based quantum entropy source with JMEM’s secure chip capabilities. The project is intended to support secure boot, root-of-trust functions, hardware-level security architecture, and future quantum-resilient deployments. The agreement also provides a structured implementation plan that includes an SoC prototype, PCIe boards and server appliances for CaaS/EaaS applications, cryptographic SDKs and APIs, and supporting compliance documentation aligned with frameworks such as FIPS 140-3 and FedRAMP.
On March 17, 2026, QeM announced that it is receiving advisory services and funding of up to $600,000 from the National Research Council of Canada Industrial Research Assistance Program (“NRC IRAP”) to support a research and development project focused on quantum-secure semiconductor technology in collaboration with JMEM Technology Co., Ltd (“JMEM Tek”).
On December 29, 2025, QeM announced a rare convergence of independent audit validation, quantum-attack performance testing, and formal certification progress, underscoring the real-world security performance of its patented quantum entropy technology. The publication of a perfect 100/100 security audit score and 5-Star Confidence Rating achieved by Krown Network and KrownDEX—one of the most stringent third-party security assessments ever completed in decentralized finance—where used entropy is produced by QeM’s Quantum Random Number Generator 2 engine.
On December 15, 2025, QeM announced its integration into Kirq, a quantum communication testbed developed by Numana. The collaboration supports QeM’s ongoing research, testing, and validation of quantum-safe cybersecurity technologies within a collaborative testing environment. The Kirq testbed provides an infrastructure for participating organizations to evaluate quantum and cybersecurity technologies in applied settings. Through its participation, Quantum eMotion will be able to integrate and evaluate its patented Quantum Random Number Generator (“QRNG”) technology alongside other contributors within the Kirq environment.
On December 2, 2025, QeM announced that in conjunction with Aegis Critical Energy Defence Corp. and in partnership with Malahat Battery Technologies, SEETEL New Energy Co., Ltd. of Taiwan, have developed the rugged 10-ft Tough Bhoy™ fully integrated energy storage system. The unit provides resilient, secure power for harsh climates, remote communities, military operations, and critical infrastructure. The system is further reinforced with quantum-secured cybersecurity through QeM’s Canadian-developed platform, protecting against advanced and future threats.
On November 26, 2025, QeM and Exascale Labs Inc. announced a multi-year initiative to integrate quantum-grade cryptographic technology directly into large-scale AI compute infrastructure. The partnership brings together Exascale’s full-stack GPU platform with QeM’s QRNG hybrid technology including cryptographic modules—setting the stage for one of the more secure environments for high-density AI workloads.
On October 23, 2025, QeM along with Energy Plug Technologies and SEETEL New Energy Co. Ltd. announced a strategic alliance to co-develop and commercialize a 261-kilowatt-hour (kWh) fully integrated AC plug-and-play Battery Energy Storage System (“BESS”) engineered for Arctic and high-resilience environments worldwide.
On October 14, 2025, QeM announced a joint agreement with Energy Plug Technologies Corp. and Malahat Battery Technology Corp. to develop and commercialize quantum—secured energy storage and defence systems for critical infrastructure. This partnership integrates QeM ’s patented technologies with Energy Plug and MBT’s advanced BESS and Energy Management Platforms to deliver cyber-resilient, quantum-safe power systems capable of protecting national and industrial energy assets from emerging cyber and post-quantum threats.
On October 6, 2025, announced that QeM has signed a contract with Lightship Security Inc. to conduct FIPS 140-3 validation of its Quantum Crypto Module, a key milestone toward NIST certification.
On September 29, 2025, announced a strategic alliance with JMEM Tek, a Taiwanese IC design company to co-develop a quantum resilient System-on – Chip (“SoC”). The unique platform generated by this alliance is to integrate three essential layers of protection into a single SoC: QeM’s QRNG; JMEM Tek’s Physical Unclonable Function (“PUF”); and Nist-aligned Post-Quantum Cryptography Module.
On September 22, 2025, QeM along with its partner Krown Technologies LLC (“Krown”) announced the successful completion of the Qastle Quantum-Safe Hot Wallet. This milestone represents a breakthrough in securing cryptocurrencies and digital assets against both today’s advanced cyber threats and the looming risks of quantum computing.
On July 2, 2025, Krown, in collaboration with QeM announced that significant progress has been made in the development of two quantum-secure cryptocurrency wallets: the Qastle Quantum Hot Wallet and the Excalibur Quantum Cold Wallet. These advancements mark a pivotal step in safeguarding digital assets against the emerging threats of quantum computing.
On June 26, 2025, QeM announced the completion of an internal quantum simulation project assessing aspects of its cryptographic architecture. The benchmarking project, conducted in collaboration with PINQ², utilized IBM's Qiskit quantum computing framework to simulate Grover's algorithm—a quantum search algorithm known for its theoretical ability to speed up brute-force attacks on symmetric encryption schemes. The analysis focused on evaluating the relative complexity of attacking symmetric encryption algorithms when enhanced with entropy from QeM's proprietary QRNG.
On May 26, 2025, QeM announced the successful completion and validation of its first-generation QRNG chip design. The 65-nm CMOS finalized design has been submitted for fabrication to Taiwan Semiconductor Manufacturing Company, a leading global semiconductor foundry. The chip integrates critical components such as an ultra-low-noise wideband amplifier and a high-precision analog-to-digital converter, both successfully prototyped and validated by academic teams at ÉTS Montréal and the Institut Quantique at Université de Sherbrooke. This significant milestone permits QeM to target the global QRNG chip market was valued at approximately USD 150 million in 2024 and is projected to reach USD 2 billion by 2033, registering a compound annual growth rate of 34.5% from 2026 to 2033.
On January 22, 2025, QeM announced results for its quantum-based hardware wallet, designed to improve security in blockchain and cryptocurrency transactions. Recent studies highlight that this innovative solution reduces the risk of monetary loss by up to 98% compared to conventional hierarchical deterministic (“HD”) wallets. Announced last July, the wallet leverages QeM’s proprietary QRNG technology and an intelligent key generation scheme, ensuring optimal performance for commercial blockchain applications. It provides a cost-effective and compact solution by reusing hardware components for generating both parent and child keys, thus reducing costs and complexity.
Significant Research and Development Projects
Project Name: Quantum-Based Unified Cryptography System (“QBUCS”)
Objective: To develop and validate a QBUCS in collaboration with JMEM Tek, integrating QeM’s quantum random number generation technology into practical cryptographic architectures. The project aims to demonstrate how quantum-grade entropy can strengthen secure communications, data protection, and cryptographic operations in real-world applications, while supporting future adoption of quantum-enhanced cybersecurity solutions.
Plan: The project plan is to work with JMEM Tek to design, integrate, and test a unified cryptographic system that incorporates quantum-generated randomness into selected security functions and application environments. Activities include defining the system architecture, adapting QeM’s QRNG and entropy delivery capabilities for integration with JMEM Tek’s technical environment, developing required software interfaces, conducting functional and security testing, and assessing the performance, reliability, and usability of the resulting solution. The project is also intended to support knowledge transfer, technical validation, and preparation for future commercialization opportunities.
Status of Plan: To date, the Company has advanced the QBUCS project with JMEM Tek through continued technical coordination, system definition, and development activities. Work has focused on aligning QeM’s quantum entropy technology with the project requirements, identifying integration pathways, and progressing the software and cryptographic components required to support the unified system. The project remains on track, with activities directed toward demonstrating the practical use of quantum-grade randomness within cryptographic workflows relevant to JMEM Tek’s targeted application
Expenditures: To June 30, 2026, the Company spent $306,384 on this project (cumulative $306,384).
Next Stage: The next stage is to continue technical integration and validation with JMEM Tek, including further testing of the QBUCS architecture, refinement of software interfaces, evaluation of performance and security parameters, and preparation for demonstration or pilot deployment. The Company will also continue documenting results and addressing technical issues identified during integration and testing.
Key Dependencies: The continuation and success of the project depend on sustained collaboration with JMEM Tek, timely access to the required technical inputs and testing environments, availability of qualified engineering and cryptographic expertise, and successful integration of QeM’s QRNG and entropy delivery technologies into the QBUCS architecture. To ensure tight collaboration and speed up development, the Company has already scheduled a face to face meeting with the Taiwanese partner (JMEM Tek) in Taiwan in the week of May 11th–15th 2026. As the Company maintains a strong balance sheet, there are currently no material threats to the continuation of this project.
Project Name: SecureKey
Objective: To develop and commercialize the SecureKey cryptographic engine and hardened runtime solutions that protect cryptographic keys during execution, eliminating plaintext key exposure in memory and enabling secure deployment across cloud, container, and enterprise environments.
Plan: The SecureKey project focuses on advancing the core cryptographic library, including the OpenSSL provider integration, high-performance encryption implementations, and runtime memory protection mechanisms. Development includes building deployable hardened container and virtual machine images (e.g., NGINX, VPN, and data services) that integrate SecureKey, along with ongoing performance optimization, platform compatibility (x86_64 and ARM), and integration with quantum entropy sources.
Status of Plan: During Q1/26, the Company progressed core SecureKey development, including enhancements to the OpenSSL provider, expanded platform support, and integration efforts with containerized application stacks. Initial work on hardened runtime images and commercial deployment models also advanced, supporting broader enterprise adoption and marketplace readiness.
Expenditures: To June 30, 2026, the Company spent $181,803 on this project (cumulative $181,803).
Next Stage: To finalize production-ready hardened container and VM offerings, expand integration with quantum entropy services, and accelerate commercialization through cloud marketplace listings and enterprise deployments.
Key Dependencies: Continued development resources, alignment with cloud marketplace requirements, and integration with QeM’s quantum entropy services. There are currently no material threats to the continuation of this project.
Project Name: FIPS
Objective: To achieve FIPS 140-3 validation for the SecureKey cryptographic module, ensuring compliance with recognized government and enterprise security standards and enabling adoption in regulated environments.
Plan: The FIPS project focuses on defining and implementing a certifiable cryptographic module boundary, integrating approved algorithms, and aligning with Cryptographic Module Validation Program (“CMVP”) requirements. This includes validation of required self-tests, entropy source, and engagement with accredited testing laboratories (Intertek) to support certification efforts.
Status of Plan: During Q1/26, the Company initiated formal FIPS readiness activities, including architectural alignment to FIPS 140-3 requirements, evaluation of entropy sources, and early engagement planning with certification laboratories (GAP analysis). Initial design decisions around module boundary, self-tests, and entropy integration were established to support certification objectives.
Expenditure: To June 30, 2026, the Company spent $158,922 on this project (cumulative $158,922).
Next Stage: To begin formal validation testing with a certification lab, and progress toward submission for FIPS 140-3 validation.
Key Dependencies: Engagement with an accredited FIPS testing laboratory and allocation of engineering resources. There are currently no material threats to the continuation of this projec
System Development Kit (“SDK”)
Objective: To provide developers and system integrators with a powerful, flexible interface to access and utilize quantum-grade randomness within their applications. Designed to work seamlessly with QeM’s QRNG and EaaS platform (as defined below), the SDK allows easy integration of true quantum entropy into cryptographic, Internet of Things, fintech, and enterprise security systems.
Plan: The SDK intends to build an extensive library of functions, encompassing Symmetric and Asymmetric cryptography. The milestones are to incorporate a wide variety of “helper primitives” encompassing “Hashing”, Packaging, Memory Management and much more. This library of functions is constantly being enhanced to broaden the Agility and Ease of Adoption of the SDK, thereby reducing the specialized knowledge necessary to apply it.
Status of Plan: The Company continued research and development into the SDK in 2025, by extending its application scope and specifically in the areas of self-test and self-health monitoring, since the Company expects that these areas will become very important in 2026 and beyond.
Expenditures: To June 30, 2026, the Company spent $159,378 on this project (cumulative $748,003).
Next Stage: To continue to embed quantum entropy directly into software workflows, allowing the SDK to help bridge the gap between cutting-edge quantum physics and real-world cybersecurity needs.
Key Dependencies: As the Company has a strong balance sheet there are currently no material threats to the continuation of this project.
Project Name: Entropy-as-a-Service (“EaaS”) System
Objective: EaaS is a cybersecurity technology designed to provide organizations with access to true, quantum-generated-randomness and is delivered as a cloud-based or on-premises service, to provide scalability and compliance, offering API-based integration for developers and system architects.
Plan: To integrate EaaS into existing IT infrastructures, enabling secure key generation, encryption, authentication, and digital signing across diverse applications in to offload the complexity of entropy generation to a dedicated quantum source.
Status of Plan: In 2025, the Company focused on reliability aspects. This meant enhancing resiliency in the case of various failures including power supply or corruption of the data center servers.
Expenditures: To June 30, 2026, the Company spent $104,281 on this project (cumulative $237,641).
Next Stage: In 2026 it is expected that the Company will also be creating extensions to its EAAS product palette, responding to needs stemming from more flexible authorization mechanisms as well as online monitoring.
Key Dependencies: As the Company has a strong balance sheet there are currently no material threats to the continuation of this project.
Project Name: CMOS
Objective: Miniaturize the current discrete QRNG system into a single CMOS chip, reducing PCB complexity and enabling integration with secure chips such as PUF and cryptographic processors.
Plan: Three milestones: 1) Amplifier design, completed and tested, identified as the most critical component, 2) ADC and DAC design, completed, fabricated, and tested, 3) Full chip integration combining all components into a single CMOS IC. Current focus is on stabilizing the amplifier and validating integrated system performance for commercial readiness.
Status of Plan: First two milestones achieved. Integration phase ongoing, with additional design iterations ongoing to improve stability and ensure commercial reliability.
Expenditures: To June 30, 2026, the Company spent $3,334 on this project (cumulative $133,203).
Next Stage: Full chip integration, fabrication, and system validation, expected within next 6–12 months.
Key Dependencies: As the Company has a strong balance sheet there are currently no material threats to the continuation of this project.
Project Name: Blockchain
Objective: Integrate and validate QRNG-generated entropy with commercial applications such as blockchain cold wallets, secure key generation, and federated learning. Aim to enhance security using true hardware randomness.
Plan: Define and prioritize use cases, develop APIs and integration interfaces, prototype implementations, validate security and performance. Key use cases include defense against backdoor attacks in federated learning, QRNG-based differential privacy for federated learning, decentralized randomness beacon, and MEV mitigation using VRF-seeded fair transaction ordering.
Status of Plan: Initial integration approach defined and architecture of theses use cases are under development.
Expenditures: To June 30, 2026, the Company spent $1,667 on this project (cumulative $107,923).
Next Stage: Develop proof of concept for selected use cases and validate integrations, expected within next 12 months.
Key Dependencies: As the Company has a strong balance sheet there are currently no material threats to the continuation of this project.
Patents
| Status of patents | |
|
First Patent Family: Method for generating random numbers and associated random number generator
The 1st generation technology is the revolutionary technology which is at the origin of Quantum eMotion. Several patents protect the exclusivity of this technology. In particular, two patents were obtained in the United States to fully cover the technology, and patents were also obtained in Australia, Brazil, Canada, China, Germany, Spain, Finland, France, Great Britain, Italy, India, South Korea, the Netherlands, Russia, Sweden and Thailand. Quantum eMotion mandated a law firm to perform a very exhaustive novelty verification, including independent professional patent searches in three different jurisdictions, which provides an extraordinary level of confidence in the strength of these patents | |
| Country | Status |
| United States | Two patents were granted in the United States, including a first one granted on August 7, 2018, and a second granted on October 8, 2019. |
| European Patent Office | EPO granted the patent on February 19, 2020. The European Patent has been validated in several countries: Germany, Spain, Finland, France, Great-Britain, Italy, Sweden and the Netherlands. |
| Australia, Brazil, Canada, China, India, Republic of Korea, Russia, Thailand | Patent granted |
|
Second Patent Family: Method and system for generating a random bit sample
The 2nd generation technology has a particular synergy with the 1st generation technology. Indeed, in practical applications, electronic elements such as amplifiers may impart classical noise into the quantum signal, which may make the signal not truly quantum, and thus not truly random. The 2nd generation technology provides means of extracting a purely random quantum signal as a quantum number source independently of the presence of classical noise. Several patents protect the exclusivity of this technology. In particular, two patents were obtained in the United States to fully cover the technology, and patents were also obtained in Australia, Germany, Spain, Finland, France, Great Britain, Indonesia, Italy, Japan, the Netherlands, Russia, Canada, China, India, South Korea and Sweden, and the patent application remains pending in Brazil and Thailand. | |
| Country | Status |
| European Patent Office | EPO granted the patent on October 23, 2019. The European Patent has been validated in Germany, Spain, United Kingdom, Finland, France, Italy, Sweden and the Netherlands. |
| United States | Two patents were granted. |
| Brazil, Thailand | Patent pending |
| Australia, Russia, Indonesia, Canada, China, India, Japan, South Korea | Granted |
|
Third Patent Family: System and Method for Generating a Random Number, and circuit for communicating an analog random signal
3rd generation technology harnesses the commercial availability and low costs of consumer electronics, such as audio processing hardware in particular, in quantum number generation, further democratizing the availability of truly random numbers. | |
| Country | Status |
| United States | Patent pending |
|
Fourth Patent Family Method of Operating A Blockchain Wallet
Cryptocurrency (e.g., blockchain) wallets make heavy use of large series of numbers referred to as keys. There are different schemes to generate keys, such as ND and HD, and each scheme has its advantages and disadvantages. When providing a blockchain wallet to an unknown user, it is not possible to adapt the key generation scheme to the user’s type of use, leading to mismatches between the types of key generation schemes and the users. Quantum eMotion’s 4th generation technology alleviates these inconveniences by providing a wallet which intelligently selects the key generation scheme, based on a comparison of cost values of the different key generation schemes. Moreover, by leveraging quantum eMotion’s QRNG technologies, a blockchain wallet combining the advantages of true random number generation with intelligent key generation scheme selection can now be made available to consumers, a product of an unparalleled level of functionality.
Quantum eMotion’s 4th generation technology is now patent pending worldwide. More specifically, the patent application was filed under the Patent Cooperation Treaty on March 28, 2024, bearing number PCT/CA2024/050391 and claiming March 30, 2023 as a priority date. The Patent Cooperation Treaty is an international treaty which provides a means of reserving international patent protection in more than 150 member states for a period of 30 months from the priority date. Accordingly, Quantum eMotion’s international pendency for the 4th generation technology will last until Sept. 30, 2025, at which point pendency will continue nationally in the countries and regions which will have been ultimately selected. | |
| Country | Status |
| Patent Cooperation Treaty | Rights reserved in all PCT member states until September 2025 |
|
Fifth Patent Family Hardware Wallet Apparatuses and Method of Generating Cryptographic Keys Using Same
Quantum eMotion Corp. is proud to announce that it has developed yet another technology associated to the cryptocurrency industry. More specifically, we have developed our own hardware wallet technology which has a low footprint and competitive cost, while allowing to leverage several of its other core technologies, such as the Quantum Random Number Generation (QRNG) and its intelligent key generation scheme selection technologies, in new commercial applications. A combination of a patent application and industrial secret for the hardware wallet technology will target international intellectual property protection.
Namely, Quantum eMotion’s 5th generation technology is now patent pending worldwide. More specifically, the patent application was filed under the Patent Cooperation Treaty. The Patent Cooperation Treaty is an international treaty which provides a means of reserving international patent protection in more than 150 member states until December 2026, at which point pendency will continue nationally in the countries and regions which will have been ultimately selected. | |
| Country | Status |
| Patent Cooperation Treaty | Rights reserved in all PCT member states until December 2026 |
1.4 COMPANY OVERVIEW AND STRATEGY
BUSINESS DEVELOPMENT ACTIVITIES
On May 4, 2026, QeM announced the launch and availability of eShield-Q, a new cybersecurity platform designed to address one of the fastest-growing risks in the digital economy: the exposure of cryptographic operations during application runtime. eShield-Q introduces a dedicated runtime cryptographic protection layer designed to protect critical secrets, including encryption keys, entropy sources, deterministic random bit generator states, and cryptographic execution environments, even under advanced attack conditions where memory, operating systems, kernels, or hypervisors may no longer be fully trusted. The platform reflects QeM’s “assume compromise” security model, recognizing that modern cryptography must increasingly be protected while it is actively in use.
On April 12, 2026, QeM entered into a mutual exclusive strategic partnership with Krown establishing a focused alliance to deploy quantum-secure technologies across the global crypto ecosystem. The partnership follows the recently announced six-year strategic agreement between Krown and BTC Inc., an influential organization in the Bitcoin ecosystem, creating a unique combination of technology, distribution, and market access at a pivotal time for digital asset security
On April 2, 2026, QeM completed the acquisition of 100% of the issued and outstanding shares of SKV Technology Inc. (“SKV”). As a result of the transaction, QeM has acquired the SecureKey™ platform, developed and commercialized by Jet Lab Technologies Inc. and held by SKV.
On March 6, 2026, QeM announced a security milestone for the Krown blockchain ecosystem as 45 billion KROWN tokens—valued at approximately $67.5 million—are now protected within vesting infrastructure supported by quantum-secure cryptographic technology.
On February 24, 2026, QeM started trading on the NYSE-American Exchange (the "NYSE American") under the symbol “QNC”. The uplisting to the NYSE American marked a significant advancement in the Company’s strategy to expand its shareholder base and increase its U.S. capital markets exposure.
On December 18, 2025, Greybox Solutions Inc. ("Greybox") announced the official launch of its first reimbursed chronic care and remote patient monitoring services for senior living in the United States, in partnership with QeM and Vigilant Care Monitoring LLC. The initiative includes the opening of Greybox’s U.S. operations and offices via the collaboration with QeM in Irvine, California, positioning the Company at the center of one of the most dynamic senior care, medical device and digital health ecosystems in North America.
On November 3, 2025, QeM and its Partner, Krown, announced the global launch of Qastle, the world’s first quantum-secured hot wallet to leverage Quantum EaaS and Post-Quantum Cryptography to safeguard digital assets against emerging cyber and quantum-based threats. Qastle is now live and available to users worldwide.
On October 8, 2025, QeM and its partner Krown announced the global release of Qastle, the world's first quantum-secured hot wallet designed for everyday use. Following extensive development and successful final testing, Qastle will officially launch on November 1st, 2025.
On September 9, 2025, QeM announced an investment in Krown of US $400,000 through a convertible debenture. QeM has the right to convert the debenture into equity which would represent a significant stake in Krown. The rationale is to strengthen the strategic collaboration between the Parties, particularly regarding the booming blockchain and crypto markets.
On June 30, 2025, QeM announced the conversion of $350,000 in an intangible asset into equity and an additional investment of $350,000 in Greybox, strengthening its position as the second-largest shareholder in that company. This strategic investment, made at an attractive valuation, reflects QeM’s strong confidence in Greybox’s rapid growth trajectory and unique position in the fast-evolving Remote Care Management and Digital Therapeutics sector. Greybox’s recent launch of the secure TakeCareTM platform across Quebec leading rehabilitation centers has led to strategic commercial wins, positioning the company as a rising leader in digital health with a scalable, value-based model across Canada and beyond.
On June 18, 2025, QeM announced that its partner Greybox has begun to deploy its secure digital health platform, TakeCareTM, across leading rehabilitation centers in Quebec.
On June 2, 2025, QeM closed a brokered private placement for proceeds of $12,000,000 upon the issuance of 8,000,000 units. See section 1.10 Cash Flows below, for more details on this transaction.
On April 8, 2025, QeM announced the official launch of its U.S. subsidiary, QeMA, headquartered in Irvine, California. This strategic expansion marked a significant milestone in QeM’s international growth, designed to accelerate sales, forge new partnerships, and drive business development across the U.S. cybersecurity sector. California was selected for QeM’s first American office due to its vibrant technology ecosystem, access to top-tier talent, strategic global connectivity, and strong support for innovative enterprises. Irvine, in particular, offers proximity to major defense, enterprise, and academic hubs, positioning QeMA for sustained growth and market leadership.
On February 24, 2025, QeM closed a brokered private placement for proceeds of $10,000,000 upon the issuance of 13,333,333 units. See section 1.10 Cash Flows below, for more details on this transaction.
On February 20, 2025, Krown officially unveiled Excalibur, the world’s first quantum-secured crypto cold wallet, powered by QeM’s QRNG technology. This next-generation hardware wallet redefines digital asset security by integrating true quantum randomness. After months of collaboration and meticulous development planning, Excalibur is designed to safeguard digital assets against even the most advanced cyber threats, including those posed by quantum computing. With its sleek, compact form—no larger than a thumb drive, Excalibur delivers unbreakable cryptographic security to crypto holders worldwide. As part of this partnership, Krown has secured a five-year, non-exclusive global license to integrate QeM’s proprietary QRNG technology into blockchain applications. Both companies will collaborate on the commercialization of Excalibur, operating under a revenue-sharing business model that aligns their mutual commitment to advancing secure digital asset storage.
On February 19, 2025, QeM announced a non-exclusive licensing agreement with Quantolio, a leading provider of AI-driven financial solutions. This strategic partnership grants Quantolio access to QeM’s proprietary EaaS technology, enabling advancements in financial applications and quantum artificial intelligence ("Quantum AI"). Under the terms of the agreement, Quantolio will integrate QeM’s quantum-based technology into its AI-powered financial platforms. QeM’s EaaS technology provides robust, high-entropy quantum randomness, ensuring enhanced security and performance in sensitive financial computations and AI-driven decision-making processes. Quantolio receives a non-exclusive,279,287 worldwide license to leverage QeM’s proprietary EaaS technology within finance, FinTech, and Quantum AI applications. In exchange, Once the Quantum-powered financial platforms are commercially available, Quantolio will pay QeM an annual licensing fee of $1.0 million, with additional revenue-sharing terms.
1.5 SELECTED PERIODIC INFORMATION
| Periods ended June 30 | |||||||||
2026 $ | 2025 $ | 2024 $ | |||||||
| Net revenues | 12,061 | - | - | ||||||
| Research & development | 931,482 | 518,502 | 468,258 | ||||||
| General and administrative | 2,779,107 | 1,041,026 | 653,648 | ||||||
| Marketing and selling | 393,202 | 260,638 | 51,260 | ||||||
| Share-based payments | 3,991,153 | 3,126,265 | 46,129 | ||||||
| Other | 241,759 | (77,672 | ) | 782 | |||||
| Net loss and comprehensive loss | 8,324,642 | 4,868,768 | 1,220,083 | ||||||
| Basic and diluted loss per share | 0.038 | 0.027 | 0.009 | ||||||
| Balance on | ||||||
June 30, 2026 $ | December 31, 2025 $ | |||||
| Cash and marketable securities | 33,530,205 | 39,190,779 | ||||
| Total assets | 48,314,885 | 42,886,847 | ||||
| Total liabilities | 10,159,356 | 647,856 | ||||
| Equity | 38,155,529 | 42,238,991 | ||||
1.6 Licenses, Intangible Assets and Property, Plant and Equipment
The carrying amount of non-current assets on June 30, 2026, is:
| PP&E | Licenses | Intangible Assets | Total | |||||||||
| $ | $ | |||||||||||
| Cost | ||||||||||||
| December 31, 2025 | 31,928 | 446,112 | - | 478,039 | ||||||||
| Additions | 16,987 | - | 10,085,274 | 10,102,261 | ||||||||
| June 30, 2026 | 48,915 | 446,112 | 10,085,274 | 10,580,301 | ||||||||
| Accumulated amortization, impairment and loss on derecognition | ||||||||||||
| December 31, 2025 | 2,951 | 139,028 | - | 141,979 | ||||||||
| Amortization | 6,067 | 11,153 | 504,264 | 521,484 | ||||||||
| June 30, 2026 | 9,018 | 150,171 | 504,264 | 663,463 | ||||||||
| Netbook value | ||||||||||||
| December 31, 2025 | 28,977 | 307,084 | - | 336,061 | ||||||||
| June 30, 2026 | 39,897 | 295,390 | 9,581,010 | 9,916,838 |
In relation to the license, the Company will pay a royalty of 5% calculated on the net sales price of products sold by the Company until the expiry of the last patent, which is expected to be in May 2035.
Contingent Liability
The carrying amount of non-current liability on June 30, 2026, is
| December 31, 2025 | - | - | ||||||
| Additions | 10,085,274 | 10,085,274 | ||||||
| Milestone payments | (1,500,000 | ) | (1,500,000 | ) | ||||
| Fair value adjustment | 423,798 | 423,798 | ||||||
| June 30, 2026 | 9,009,072 | 9,009,072 | ||||||
Acquisition of SKV Technology Inc.
On April 2, 2026, the Corporation acquired 100% of the issued and outstanding shares of SKV, a California-based entity which holds legal title to the SecureKey™ technology, a cryptographic software solution (the “SKV Acquisition”).
Consideration Amount and Range of Outcomes
No cash, Common Shares, or other consideration was paid at closing. The consideration for the SKV Acquisition consists entirely of contingent payments structured as follows: up to C$7,000,000 in milestones-based earn-out payments and up to C$15,000,000 in royalty payments.
The contractual range of undiscounted contingent consideration payments is from $Nil to a maximum of C$22,000,000, consisting of up to C$7,000,000 in milestone payments and up to C$15,000,000 in royalties. As at June 30, 2026, the first two milestones have been achieved resulting in a payment of C$1,500,000.
The milestone payments are tied to specific technical and commercial achievements. The royalty payments are based on cumulative sales of products incorporating the SecureKey technology over a five-year period. Achieving the maximum royalty amount of C$15,000,000 would require cumulative sales of approximately C$195,000,000 over the five-year royalty period.
Basis for Determining Consideration Amount
The consideration was negotiated at arm's length and reflects the Corporation’s assessment of the potential strategic value and expected synergies from integrating the SecureKey intellectual property with the Corporation’s existing assets and platforms. The assessment considered, among other factors: (i) the nature and scope of the intellectual property rights acquired; (ii) the existence of technical documentation supporting the technology and its readiness for integration, including documentation relevant to certification and validation efforts; (iii) the alignment of the SecureKey technology with the Corporation’s strategic initiatives; and (iv) current and expected market demand for cryptographic protection.
The Corporation’s evaluation indicated that developing equivalent technology internally would require significant development time, resource commitment, and would carry material technological and financial risks.
The contingent consideration structure was established to mitigate the risk of overpayment by linking payments to the achievement of specified technical and commercial outcomes. The Corporation will pay the maximum royalty amount only if aggregate sales over the five-year royalty period reach substantial levels.
Relationships Between the Corporation and Sellers
The transaction was conducted at arm’s length. No directors, officers, or insiders of the Corporation were involved as sellers or otherwise had an interest in the transaction. The Corporation engaged Jason Thomas, one of the sellers and founder of SKV, as an employee of the Corporation concurrently with the closing of the SKV Acquisition.
Stage of Development of Acquired Technology
The SecureKey technology is a cryptographic software solution designed to provide securitization of latent data. The technology includes associated certification-related work product completed prior to the SKV Acquisition and documentation prepared to support validation under the NIST FIPS framework applicable to cryptographic technology.
The technology has been functionally tested and validated by the developers. Technical documentation and source code were transferred to the Corporation, enabling the Corporation to commence integration work immediately following closing. The technology has been integrated into the Corporation's product offerings.
Accounting Treatment
The transaction has been accounted for as an asset acquisition under IFRS 3. At the acquisition date, the Corporation recognized an intangible asset representing the acquired intellectual property and a corresponding contingent consideration liability of $10,085,274 representing the fair value of the potential future milestone and royalty payments. The asset will be amortized over five years on a straight-line basis. The fair value was determined using an income approach (a discounted present value technique based on probability-weighted expected future payments), reflecting market participant assumptions regarding the probability of achieving the commercialization milestones and projected future sales, as well as the expected timing of payments over several years using a discount rate of 30%.
As stated above, the Company recognized an initial value for the contingent liability to be $10,085,274. The first two milestones, with a combined earn-out value of $1.5 million, were paid and recorded against contingent liability in the second quarter. In addition, the Company performed a fair value assessment of this liability as of June 30, 2026, and calculated a fair-value adjustment using the discounted cash flow method with a 30% discount factor of $423,798 which was expensed in the second quarter. The remaining balance of contingent liability as at June 30, 2026, is $9,009,072.
Milestone payments are contingent upon the achievement of specified technical and commercial milestones, the timing of which is uncertain and dependent on the Corporation’s development progress and market conditions. Royalty payments are expected to occur over a five-year period following the date of the first sale, contingent upon sales of products incorporating the SecureKey technology.
Significant uncertainties
The fair value measurement reflected the expected timing of payments over several years. Uncertainties exist regarding both the amount and timing of future outflows, including:
| · | Whether the technical milestones will be achieved; |
| · | Whether the Corporation will secure government or defense contracts meeting the specified thresholds; |
| · | Whether the Corporation will achieve cloud marketplace listings; |
| · | The level of commercial sales of products incorporating the SecureKey™ technology; |
| · | The timing of milestone achievements and sales; |
| · | Market conditions and competitive dynamics affecting commercialization; |
The fair value measurement of the contingent consideration was based on the following major assumptions:
| · | Market participant assumptions regarding the probability of achieving each commercialization milestone; |
| · | Projected future sales volumes and pricing for products incorporating the SecureKey technology; |
| · | Expected timing of milestone achievements and royalty payments; |
| · | A discount rate reflecting the Corporation's cost of equity and risks specific to the contingent payments; |
| · | The Corporation's ability to integrate the technology with its existing products and achieve anticipated synergies. |
1.7 SELECTED FINANCIAL INFORMATION AND OPERATING RESULTS
| Periods ended June 30 | ||||||||||||
| 2026 | 2025 | Variance Inc/(dec) | ||||||||||
| $ | $ | $ | ||||||||||
| Revenues | ||||||||||||
| Greybox | 8,342 | 0 | 8,342 | |||||||||
| Krown | 3,718 | 0 | 3,718 | |||||||||
| Total Revenues | 12,060 | 0 | 12,060 | |||||||||
| Expenses | ||||||||||||
| - Product development - compensation | 263,502 | 20,272 | 243,230 | |||||||||
| - Product development - third parties | 720,600 | 368,245 | 352,355 | |||||||||
| - Intellectual property | 58,818 | 39,985 | 18,833 | |||||||||
| - Regulatory & compliance | 130,235 | 90,000 | 40,235 | |||||||||
| - Tax credits and Grant | (241,674 | ) | - | (241,674 | ) | |||||||
| Total Research and Development | 931,482 | 518,502 | 412,980 | |||||||||
| - Compensation | 966,538 | 408,649 | 557,889 | |||||||||
| - Professional fees (D&O insurance; legal; audit;) | 1,114,791 | 317,916 | 796,875 | |||||||||
| - Administration (IT; Lease; travel) | 403,293 | 164,956 | 238,337 | |||||||||
| - Capital market costs (NYSE/TSXV; listing/filing fees) | 294,485 | 149,505 | 144,981 | |||||||||
| Total General and Administrative | 2,779,107 | 1,041,026 | 1,738,081 | |||||||||
| -Compensation | 56,746 | 4,674 | 52,071 | |||||||||
| -Market development / consulting | 47,630 | 80,800 | -33,170 | |||||||||
| - Conferences & promotion | 288,826 | 175,164 | 113,662 | |||||||||
| Total Marketing and Selling | 393,202 | 260,638 | 132,563 | |||||||||
| Share-based payments | 3,991,153 | 3,126,263 | 864,890 | |||||||||
| Amortization | 521,483 | 11,767 | 509,716 | |||||||||
| Fair-value adjustment | 423,798 | - | 423,798 | |||||||||
| Interest income | (642,562 | ) | (85,779 | ) | (556,783 | ) | ||||||
| Other (FX; bank charges; interest expense) | (60,960 | ) | (3,649 | ) | (57,311 | ) | ||||||
| Net financial expense (income) | (279,724 | ) | (89,428 | ) | (190,296 | ) | ||||||
| Total Expenses | 8,336,702 | 4,868,768 | 3,467,934 | |||||||||
| Net loss and comprehensive loss for the year | (8,324,643 | ) | (4,868,768 | ) | (3,455,873 | ) | ||||||
| Basic and diluted loss per share | 0.038 | 0.027 | - | |||||||||
| Weighted average number of common shares outstanding | 219,071,183 | 177,999,588 | - | |||||||||
| Periods ended June 30 | ||||||||||||
| Number of Employees at Year End | 2026 | 2025 | Variance Inc/(dec) | |||||||||
| Research and development | 9 | 2 | 3 | |||||||||
| General and administrative | 7 | 7 | 4 | |||||||||
| Marketing and selling | 1 | - | 1 | |||||||||
| Total | 17 | 9 | 8 | |||||||||
| · | Revenues: In the first half of 2026 revenues continue to be modest. Royalties with Greybox going forward will be at a royalty rate of 10% to 20% while royalties with Krown will increase to 10% starting in November 2026. |
| · | R&D: Increase of $412,980, relates primarily to additional R&D headcount and spending has been ramped up on key projects particularly with QBUCS, SecureKey and FIPS as reported under key projects; |
| · | G&A: Increase of $1.7 million: the increase relates primarily to higher D&O insurance premiums; additional headcount to develop the US market and increased compensation costs; higher legal and listing fees; and higher travel/conference costs; |
| · | Marketing: Increase of $132,563: relates primarily to a promotional in the important US market campaign to heighten awareness of the Company; |
| · | Net Financial Income: The gain of $190,296 relates to the interest income on investing excess cash partially offset by the increased amortization relating to the acquisition of SKV and the fair-value adjustment relating to the contingent liability. which was described in section 1.6 of this MD&A. |
| · | Share-based payments: The increase of $864,890 in this non-cash expense is related to the large number of options awarded in 2025. |
| · | Amortization: Increase of $509,716 relates primarily to the amortization of the intellectual property acquired through the acquisition of SKV discussed earlier in this report. The Company determined to amortize this asset over 5 years to correspond to the period of the corresponding contingent liability. |
| · | Fair-value adjustment: This expense of $423,798 also relates to the SKV acquisition. An impairment evaluation was made for the period from April 2, 2026, though June 30, 2026, and using the discounted cash flow approach, using a 30% discount rate resulted in the loss. |
1.8 SUMMARY OF QUARTERLY RESULTS
The following table sets forth selected quarterly financial information for each of the twelve most recently completed quarters.
| Three-month period ended | Net loss and comprehensive loss for the period | Basic and diluted loss per share | |||||||
| $ | $ | ||||||||
| June 30, 2026 | (4,736,314 | ) | (0.022 | ) | |||||
| March 31, 2026 | (3,588,329 | ) | (0.016 | ) | |||||
| December 31, 2025 | (4,345,054 | ) | (0.021 | ) | |||||
| September 30, 2025 | (1,687,499 | ) | (0.008 | ) | |||||
| June 30, 2025 | (1,517,433 | ) | (0.008 | ) | |||||
| March 31, 2025 | (3,351,336 | ) | (0.020 | ) | |||||
| December 31, 2024 | (1,151,251 | ) | (0.008 | ) | |||||
| September 30, 2024 | (597,403 | ) | (0.004 | ) | |||||
| June 30, 2024 | (727,891 | ) | (0.005 | ) | |||||
| March 31, 2024 | (492,193 | ) | (0.004 | ) | |||||
| December 31, 2023 | (792,952 | ) | (0.006 | ) | |||||
| September 30, 2023 | (556,376 | ) | (0.004 | ) | |||||
1.9 LIQUIDITY
On June 30, 2026, the Company had net working capital (current assets in excess of current liabilities) of $34,318,761 compared to net working capital of $37,116,981 on December 31, 2025. The decrease relates to the payment of a $1.5 million milestone in relation to the SKV acquisition; the impact of listing on the US exchange and ramping up Investments in R&D and promotional activity.
1.10 CASH FLOWS
| Periods ended June 30 | ||||||||||||
| 2026 | 2025 | Variance Inc/(dec) | ||||||||||
| Net cash from: | $ | $ | $ | |||||||||
| Operating activities | (4,379,483 | ) | (1,835,858 | ) | (2,219,617 | ) | ||||||
| Investing activities | 3,715,503 | (22,852,976 | ) | 26,685,999 | ||||||||
| Financing activities | 298,766 | 24,468,215 | (24,147,643 | ) | ||||||||
| Increase (decrease) in cash | 69,109 | -220,619 | - | |||||||||
| Cash, beginning of period | 246,653 | 1,359,406 | - | |||||||||
| Cash, end of period | 315,762 | 1,138,777 | - | |||||||||
Cash used in operations to June 30, 2026, increased by $2.2 million versus the same period in the prior year reflecting the increased investment in staff and promotional activity to transition the Company to commercialization; to establish a presence in the US market; as well as to increase its investment in product development to develop additional intellectual property.
In the first half of 2026, the Company redeemed some of its investments to fund its operations while in the first half of 2025 the Company invested its excess cash derived from its two financings. This was partially offset by the acquisition of SKV whereby the Company paid $1.5 million in earn-out payments as two milestones were achieved.
The cash received in the first half of 2026 in financing related to the exercise of stock options and warrants. There were no financings in 2026 as there were in 2025.
Summary of financing in the first half of 2025:
On February 24, 2025, the Company completed a brokered LIFE financing, issuing a total of 13,333,333 units at a price of $0.75 per unit for gross proceeds of $10,000,000. Each unit is comprised of one common share and one warrant of the Company. Each warrant entitles its holder to acquire one common share of the Company at a price of $1.10 for a period of 3 years following the closing of the date of issuance. There is no hold period for trading the warrants.
Unit issuance costs, which include a broker fee of 6.5% as well as legal and listing costs, of $811,413 were recorded in the first quarter of 2025. In addition, the Company issued 666,666 warrants representing 5% of the issued units to the Agent that brokered the private placement. Each warrant entitles its holder to acquire one common share of the Company at a price of $0.88 for a period of 2.5 years following the closing of the date of issuance. There is no hold period for trading the warrants.
| Financing | Projected expenditures of proceeds |
Actual expenditures of proceeds; variances and the impact of the variances, if any, on the Company’s ability to achieve its business objectives and milestones |
| February 24, 2025: Private placement of units for gross proceeds of $10,000,000 | The net proceeds were intended to be used to accelerate the pace of R&D efforts; hire staff for commercialization initiatives; be opportunistic in securing value-adding collaboration agreements; and for general working capital needs. |
No variance. The Company continues to invest in its research and development and promotional activity and used part of the proceeds to list in the US providing the company with valuable exposure to the US market; thereby carrying out its intended use of funds. |
|
June 2, 2025: Private placement of units for gross proceeds of $12,000,000 |
The net proceeds were intended to further accelerate R&D through hiring more staff and further expand our current R&D programs; significantly increase our promotional budgets to establish the QeM brand in the U.S. and elsewhere which is expected to accelerate the transition to commercialization; to be opportunistic in our search for collaboration partners and/or seek out M&A opportunities; and for general working capital purposes. |
No variance. The Company was able to acquire some valuable intellectual property through its acquisition of SKV. This new technology in combination with our own is expected to advance our commercialization capabilities which again was an important use of funds. The Company continues to seek M&A opportunities. |
1.11 STOCK OPTIONS
| June 30, 2026 | December 31, 2025 | |||||||||||||||
Number of options | Weighted average exercise price | Number of options | Weighted average exercise price | |||||||||||||
| $ | $ | |||||||||||||||
| Balance outstanding, beginning of period | 17,184,737 | 0.97 | 10,452,237 | 0.14 | ||||||||||||
| Granted | 2,980,618 | 4.23 | 10,245,000 | 1.57 | ||||||||||||
| Exercised | (101,000 | ) | 1.05 | (2,162,500 | ) | 0.25 | ||||||||||
| Expired / cancelled / Forfeited | (300,000 | ) | 0.08 | (1,350,000 | ) | 0.23 | ||||||||||
| Balance outstanding, end of year | 19,764,355 | 1.48 | 17,184,737 | 0.97 | ||||||||||||
| Balance exercisable, end of period | 11,552,487 | 0.49 | 11,017,237 | 0.45 | ||||||||||||
The weighted average remaining contractual life for options outstanding on June 30, 2026, is 7.46 (June 30, 2025 – 6.44) years.
Share-based compensation recognized under this plan amounted to $3,991,153 for the period ended June 30, 2026 (June 30, 2025 - $3,126,265). Options are awarded to officers, employees, consultants and occasionally to third parties and are recorded to general and administrative expenses.
1.12 OFF-BALANCE SHEET ARRANGEMENTS
The Company does not have any off-balance sheet arrangements.
1.13 FINANCIAL INSTRUMENTS
All financial instruments are recognized when the Company becomes a party to the contractual provisions of the financial instrument and are initially measured at fair value plus transaction costs, except for financial assets and financial liabilities carried at fair value through profit or loss, which are measured initially at fair value. Financial assets are derecognized when the contractual right to the cash flows from the financial assets expires, or when the financial asset and all substantial risks and rewards are transferred. Refer to Note 15 of the annual consolidated financial statements for the year ended December 31, 2025, for additional information on the Company’s financial instruments.
1.14 FINANCIAL RISK MANAGEMENT
In the normal course of operations, the Company is exposed to various financial risks. Refer to Note 15 of the annual consolidated financial statements for the year ending December 31, 2025, for additional information on the Company’s main financial risks.
1.15 MANAGEMENT OF CAPITAL
The capital structure of the Company consists of equity attributable to common shareholders, comprising issued share capital, reserves and deficit. The Company’s objectives when managing capital are to: (i) preserve capital; (ii) obtain the best available net return; and (iii) maintain liquidity.
The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. Refer to Note 15 of the annual consolidated financial statements for the year ending December 31, 2025, for additional information on the Company’s management of capital.
The Company is not subject to externally imposed capital requirements other than the terms of its GICs.
1.16 RELATED PARTY TRANSACTIONS
The Company’s related parties include companies owned by key management. The Company paid Management fees to key management through their management companies as follows up to June 30, 2026:
| · | LVR Capital Management, a company owned by Marc Rousseau, the Chief Financial Officer of the Company, was paid compensation of $36,000. As at June 30, 2026, $6,898 (December 2025 – $6,898) was due to that company. |
| · | Francis Bellido, the CEO of the Company was paid a salary of $247,500. As at June 30, 2026, $99,139.89 (December 2025 – $120,000) was due to Mr. Bellido. |
| · | Baystream Corporation, a company owned by Larry Moore, was paid $15,000 in director’s fees. As at June 30, 2026, $2,875 (December 2025 – $2,875) was due to that company. |
| · | Baystream Corporation which provides information Technology services to the Company, is owned by Larry Moore. Fees of $75,723 were paid to that company. As at June 30, 2026, $14,468 (December 2025 – $9,765) was due to that company. |
| · | Red River Solutions, which is a company owned by Wayne Teeple who is a director of the Company. That company was paid $15,000 in director’s fees. As at June 30, 2026, $8,475 was due to that company (December 2025 - $8,475). |
| · | Red River Solutions provides business development services to the company. That company was paid $83,000 for consulting services. As at June 30, 2026, that Company was owed $19,350 (December 2025 $5,700). |
| · | SLT Solutions, a company owned by Tullio Panarello, was paid $15,000 in director’s fees. As at June 30, 2026, $8,475 (2025 – $8,475) was due to that company. |
| · | CyberDef LLC, a company owned by John Young who is a director of the company was paid $10,436 (US$7,500) in director’s fees. As at June 30, 2026, that company was owed $10,680 (December 2025 $5,700). |
| · | CyberDef LLC was paid compensation of $101,228 (US$72,000) for serving as the Chief Operating Officer of Quatum eMotion America. As at June 30, 2026, nil (2025 – US$14,210) was due to that company. |
| · | Catherine Loubier was paid $7,143 (USD $5,000) in director’s fees. As at June 30, 2026 $7,143 was due to Catherine Loubier (December 2025 nil) |
| · | Fileglobal, a company owned by Larry Moore, a director of the Company, was paid $482,392 for providing research and development work to the Company. As at June 30, 2026, $37,390 (2025 – $35,353) was due to that company. |
Larry Moore did not seek re-election as director of the Company at the latest AGM on June 18, 2026.
Transactions with key management
The key management of the Company are the members of senior management and the Board. The remuneration and other expenses for the period ending March 31, 2026, for key management (including the amounts above) are as follows:
| June 30, 2026 | June 30, 2025 | |||||||
| $ | $ | |||||||
| Research & Development | 482,392 | 281,081 | ||||||
| Management salaries | 384,728 | 235,733 | ||||||
| Directors’ fees | 72,788 | 65,924 | ||||||
| Other fees | 158,723 | 36,023 | ||||||
| Share based compensation | 303,226 | 2,485,538 | ||||||
| 1,401,857 | 3,104,299 | |||||||
1.17 CRITICAL ACCOUNTING ESTIMATE AND JUDGEMENTS
The critical accounting estimates and judgements are described in Note 2 of the annual consolidated financial statements for the year ended December 31, 2025.
1.18 CHANGES IN MATERIAL ACCOUNTING POLICIES
The accounting policies used are those described in the Company’s annual consolidated financial statements in Note 3 for the year ended December 31, 2025.
1.19 OTHER
Disclosure of Outstanding Securities as of June 30, 2026.
Outstanding common shares: 219,419,670
Outstanding options: 19,764,355
Outstanding share purchase warrants: 7,250,000
(s) Francis Bellido, Chief Executive Officer
(s) Marc Rousseau, Chief Financial Officer
Montreal (Quebec), August 14, 2026
Exhibit 99.2
Interim condensed consolidated financial statements of
Quantum eMotion Corp.
Three and six month periods ended June 30, 2026, and 2025
(Unaudited, in Canadian dollars)
QUANTUM eMOTION CORP.
Table of Contents
| Page | |
| Interim Condensed Consolidated Financial Statements | |
| Interim Condensed Consolidated Statements of Financial Position | 1 |
| Interim Condensed Consolidated Statements of Loss and Comprehensive Loss | 2 |
| Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity | 3 |
| Interim Condensed Consolidated Statements of Cash Flows | 4 |
| Notes to the Interim Condensed Consolidated Financial Statements | 5 - 17 |
Quantum emotion Corp.
Interim Condensed Consolidated Statements of Financial Position
(Unaudited, in Canadian dollars)
| Notes | June 30, 2026 | December 31,
2025 | |||||||||
| $ | $ | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash | 315,762 | 246,653 | |||||||||
| Accounts and taxes receivable | 7 | 550,444 | 454,243 | ||||||||
| Grant receivable | 8 | 64,621 | - | ||||||||
| Prepaid expenses and other | 760,161 | 103,021 | |||||||||
| Investments | 3 | 33,689,193 | 36,943,960 | ||||||||
| 35,380,181 | 37,747,877 | ||||||||||
| Non-current assets: | |||||||||||
| Investments | 3 | 2,863,008 | 4,749,326 | ||||||||
| Intangible assets | 4 | 9,876,941 | 307,084 | ||||||||
| Property and equipment | 4 | 39,897 | 28,977 | ||||||||
| Right-of-use asset | 5 | 154,858 | 53,583 | ||||||||
| Total assets | 48,314,885 | 42,886,847 | |||||||||
| Liabilities and shareholders’ equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable and accrued liabilities | 990,416 | 591,878 | |||||||||
| Current portion of lease obligation | 6 | 71,004 | 39,018 | ||||||||
| Total current liabilities | 1,061,420 | 630,896 | |||||||||
| Non-current liabilities: | |||||||||||
| Contingent liability | 9,009,072 | - | |||||||||
| Lease obligation | 6 | 88,864 | 16,960 | ||||||||
| Total liabilities | 10,159,356 | 647,856 | |||||||||
| Shareholders’ equity | |||||||||||
| Share capital | 9 | 58,462,148 | 58,110,456 | ||||||||
| Warrants | 9 | 2,553,182 | 2,577,613 | ||||||||
| Contributed surplus | 9 | 11,846,312 | 7,932,393 | ||||||||
| Fair value reserve | 12 | 295,240 | 295,240 | ||||||||
| Deficit | (35,001,353 | ) | (26,676,710 | ) | |||||||
| 38,155,529 | 42,238,991 | ||||||||||
| Total liabilities and shareholders’ equity | 48,314,885 | 42,886,847 | |||||||||
See accompanying notes to interim condensed consolidated financial statements.
Approved on behalf of the Board:
| “Francis Bellido” | |
Francis Bellido
|
CEO |
| “Marc Rousseau” | |
Marc Rousseau
|
CFO |
1
Quantum emotion Corp.
Interim Condensed Consolidated Statements of Loss and Comprehensive Loss
(Unaudited, in Canadian dollars)
| Three months ended June 30 | Six months ended June 30 | ||||||||||||||||||
| Notes | 2026 | 2025 | 2026 | 2025 | |||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||
| Revenues | 1,479 | - | 12,061 | - | |||||||||||||||
| Expenses | |||||||||||||||||||
| Research and development | 532,177 | 306,624 | 931,482 | 518,502 | |||||||||||||||
| General and administrative | 1,538,866 | 582,473 | 2,779,107 | 1,041,026 | |||||||||||||||
| Marketing and selling | 219,914 | 154,296 | 393,202 | 260,638 | |||||||||||||||
| Share-based payments | 1,924,763 | 560,272 | 3,991,153 | 3,126,263 | |||||||||||||||
| 4,215,720 | 1,603,665 | 8,094,944 | 4,946,431 | ||||||||||||||||
| Other items | |||||||||||||||||||
| Amortization and depreciation | 4 | 502,919 | 6,128 | 521,485 | 11,766 | ||||||||||||||
| Net financial (income) expense | 11 | 19,155 | (92,360 | ) | (279,724 | ) | (89,428 | ) | |||||||||||
| 522,074 | (86,232 | ) | 241,761 | (77,672 | ) | ||||||||||||||
| Total expenses | 4,737,794 | 1,517,433 | 8,336,705 | 4,868,768 | |||||||||||||||
| Net loss and comprehensive loss | (4,736,314 | ) | (1,517,433 | ) | (8,324,643 | ) | (4,868,768 | ) | |||||||||||
| Basic and diluted loss per share | 0.022 | 0.008 | 0.038 | 0.027 | |||||||||||||||
| Weighted average number of common shares outstanding | 219,375,425 | 191,918,134 | 219,071,183 | 177,999,588 | |||||||||||||||
See accompanying notes to interim condensed consolidated financial statements.
2
Quantum emotion Corp.
Interim Condensed Consolidated Statements of Shareholders’ Equity
(Unaudited, in Canadian dollars)
| Notes | Number
of | Number
of shares to be issued | Share capital | Units
to be issued | Warrants | Contributed surplus | Deficit | Fair
value FVOCI | Total equity | ||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
Balance as of December 31, 2025 | 218,588,670 | - | 58,110,456 | - | 2,577,613 | 7,932,393 | (26,676,710 | ) | 295,240 | 42,238,991 | |||||||||||||||||||||||||||||
| Share-based payments | 9 | - | - | - | - | - | 3,991,153 | - | - | 3,991,153 | |||||||||||||||||||||||||||||
| Exercise of options | 9 | 101,000 | - | 181,261 | - | - | (77,234 | ) | - | - | 104,027 | ||||||||||||||||||||||||||||
| Exercise of warrants | 9 | 730,000 | - | 170,431 | - | (24,431 | ) | - | - | - | 146,000 | ||||||||||||||||||||||||||||
| Net loss and comprehensive loss | - | - | - | - | - | - | (8,324,643 | ) | - | (8,324,643 | ) | ||||||||||||||||||||||||||||
Balance as of June 30, 2026 | 219,419,670 | - | 58,462,148 | - | 2,553,182 | 11,846,312 | (35,001,353 | ) | 295,240 | 38,155,529 | |||||||||||||||||||||||||||||
| Balance
as of December 31, 2024 | 164,652,838 | 50,000 | 15,462,594 | 8,688 | 454,877 | 1,540,107 | (16,128,423 | ) | - | 1,337,843 | |||||||||||||||||||||||||||||
| Units issuance | 9 | 21,333,333 | - | 11,746,988 | - | 11,097,103 | - | - | - | 22,844,091 | |||||||||||||||||||||||||||||
| Units issuance costs | 9 | - | - | (1,668,201 | ) | - | (844,091 | ) | - | - | - | (2,512,292 | ) | ||||||||||||||||||||||||||
| Share-based payments | 9 | - | - | - | - | 3,126,265 | - | - | 3,126,265 | ||||||||||||||||||||||||||||||
| Exercise of warrants | 9 | 13,001,666 | (50,000 | ) | 3,898,354 | (8,688 | ) | - | - | - | - | 3,889,666 | |||||||||||||||||||||||||||
| Exercise of options | 9 | 1,312,500 | - | 405,750 | - | - | (159,000 | ) | - | - | 246,750 | ||||||||||||||||||||||||||||
| Net loss and comprehensive loss | - | - | - | - | - | - | (4,868,768 | ) | - | (4,868,768 | ) | ||||||||||||||||||||||||||||
| Balance
as of June 30, 2025 | 200,300,337 | - | 29,845,485 | - | 10,707,889 | 4,507,372 | (20,997,191 | ) | - | 24,063,555 | |||||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
3
Quantum emotion Corp.
Interim condensed consolidated statements of Cash Flows
(Unaudited, in Canadian dollars)
| Three months ended June 30 | Six months ended June 30 | ||||||||||||||||||
| Notes | 2026 | 2025 | 2026 | 2025 | |||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||
| Operating activities | |||||||||||||||||||
| Net loss | (4,736,314 | ) | (1,517,433 | ) | (8,324,643 | ) | (4,868,768 | ) | |||||||||||
| Adjustments to net loss for non-cash items | |||||||||||||||||||
| Share-based payments | 9 | 1,847,529 | 560,272 | 3,913,919 | 3,126,265 | ||||||||||||||
| Amortization and depreciation | 523,575 | 6,128 | 542,141 | 11,766 | |||||||||||||||
| Accretion expense (reversal) | (792 | ) | (2,162 | ) | - | ||||||||||||||
| Fair-value adjustment of contingent liability | 423,798 | 423,798 | |||||||||||||||||
| Net changes in non-cash working capital items | - | - | |||||||||||||||||
| Taxes receivable | (102,326 | ) | (8,194 | ) | (132,815 | ) | (47,807 | ) | |||||||||||
| Accounts receivable | 18,337 | (26,377 | ) | 6,261 | (26,377 | ) | |||||||||||||
| Tax credit and grant receivable | (667 | ) | (13,964 | ) | |||||||||||||||
| Interest receivable | (14,464 | ) | (40,362 | ) | |||||||||||||||
| Prepaid expenses and other | 55,500 | (3,207 | ) | (649,258 | ) | (22,634 | ) | ||||||||||||
| Accounts payable and accrued liabilities | 126,311 | (148,231 | ) | 329,763 | (8,301 | ) | |||||||||||||
| (1,859,513 | ) | (1,139,205 | ) | (3,945,160 | ) | (1,835,858 | ) | ||||||||||||
| Investing activities | |||||||||||||||||||
| Additions to property and equipment | 4 | (24,284 | ) | - | (16,987 | ) | (5,516 | ) | |||||||||||
| Payment of milestone to SKV Technology | 4 | (1,500,000 | ) | - | (1,500,000 | ) | - | ||||||||||||
| Advance to Greybox | (24,750 | ) | - | (474,750 | ) | - | |||||||||||||
| Purchase of investments | (265,737 | ) | (17,932,824 | ) | (2,433,534 | ) | (22,934,632 | ) | |||||||||||
| Proceeds from sale of investments | 3,671,672 | 68,172 | 8,140,774 | 87,172 | |||||||||||||||
| 1,856,901 | (17,864,653 | ) | 3,715,503 | (22,852,976 | ) | ||||||||||||||
| Financing activities | |||||||||||||||||||
| Proceeds from issuance of units | 9 | - | 12,380,710 | - | 22,000,000 | ||||||||||||||
| Share issuance costs | 9 | - | (856,788 | ) | - | (1,668,201 | ) | ||||||||||||
| Exercise of options | 9 | 88,374 | 97,062 | 181,261 | 246,750 | ||||||||||||||
| Exercise of warrants | 9 | - | 2,347,166 | 146,000 | 3,889,666 | ||||||||||||||
| Lease payment | (15,551 | ) | - | (28,495 | ) | - | |||||||||||||
| 72,823 | 13,968,150 | 298,766 | 24,468,215 | ||||||||||||||||
| Increase (decrease) in cash | 70,211 | (5,407,714 | ) | 69,109 | (220,619 | ) | |||||||||||||
| Cash, beginning of period | 245,551 | 6,546,491 | 246,653 | 1,359,406 | |||||||||||||||
| Cash, end of period | 315,762 | 1,138,777 | 315,762 | 1,138,777 | |||||||||||||||
See accompanying notes to interim condensed consolidated financial statements.
4
Quantum emotion Corp.
Notes to the interim condensed consolidated financial statements
Periods
ended June 30, 2026, and 2025
(Unaudited, in Canadian dollars)
1. Nature of operations
Quantum eMotion Corp. (the “Company”) was incorporated under the Business Corporations Act of Ontario on July 19, 2007.
The head office, principal address and records office of the Company are located at 2300 Alfred Nobel, Montreal, QC, H4S 2A4. The Company is a developer of a new generation of quantum-based cryptographic solutions pursuant to the development of intellectual property and subsequent commercialization of cybersecurity solutions.
| 2. | Basis of preparation and material accounting policies |
These interim condensed consolidated financial statements have been prepared by management in accordance with IAS 34 Interim financial reporting and using the same accounting policies and methods of computation as those used in preparing the audited annual consolidated financial statements for the year ended December 31, 2025. The unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited annual consolidated financial statements and accompanying notes for the year ended December 31, 2025, which have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
The Board of Directors approved and authorized for issue these interim condensed consolidated financial statements on August 14, 2026.
Business combinations and asset acquisition
The Company determines that it has acquired a business when the acquired set of activities and assets include an input and a substantive process that together significantly contribute to the ability to create outputs. The acquired process is considered substantive if it is critical to the ability to continue producing outputs, and the inputs acquired include an organized workforce with the necessary skills, knowledge, or experience to perform that process or it significantly contributes to the ability to continue producing outputs and is considered unique or scarce or cannot be replaced without significant cost, effort, or delay in the ability to continue producing outputs.
Where the acquisition does not constitute a business, the Company uses the optional concentration of fair value test as outlined in IFRS 3. Under this test, if the fair value of the business acquired is concentrated in a single identifiable asset, the Company considers the acquisition to be an asset acquisition and not a business combination and measures the asset at the purchase price.
Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of IFRS 9 Financial Instruments, is measured at fair value in accordance with IFRS 13 with the changes in fair value recognized in the statement of profit or loss in accordance with IFRS 9.
5
Quantum emotion Corp.
Notes to the interim condensed consolidated financial statements
Periods
ended June 30, 2026, and 2025
(Unaudited, in Canadian dollars)
| 3. | Investments |
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| $ | $ | |||||||
| Current investments, at amortized cost | ||||||||
| Guaranteed investment certificates having a principal of $21,665,000 and accrued interest of $170,935, non-redeemable, bearing interest between 3.05% and 3.30% per annum, maturing at various dates between June 2, 2026, and June 3, 2027 | 22,145,556 | 19,806,662 | ||||||
| Investment account, including accrued interest of $70,956, (2025 - $229,695), redeemable, bearing interest at 2.75% per annum | 9,614,560 | 15,754,152 | ||||||
| Commercial deposit, having a principal of US$1,008,261, bearing interest at 2.81% per annum, maturing on December 3, 2026 | 1,454,325 | 1,383,146 | ||||||
| Short-term advance, interest bearing at 12% and due on demand | 474,750 | - | ||||||
Balance, end of period | 33,689,193 | 36,943,960 | ||||||
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| $ | $ | |||||||
Non-current investments, at amortized cost
| ||||||||
| Guaranteed investment certificates having a principal of $2,000,000 and accrued interest of $329, non-redeemable, bearing interest at 3.00% and maturing on January 30, 2027 | - | 2,000,329 | ||||||
| Non-current investments, at FVOCI | ||||||||
| Investment in equity instruments of Greybox Solutions Inc. | 645,240 | 645,240 | ||||||
| Investment in equity instruments of Krown Technologies Inc. | 567,900 | 547,675 | ||||||
| Secured convertible promissory notes of US$1,100,000 with Vertical Growth Equity Inc. (“VGE”), bearing interest at 12% per annum, maturing in May 2026 and automatically convertible into a 9.99% participation upon the occurrence of certain milestones. Accrued interest amounted to $93,786. The convertible promissory note is secured by all the assets of VGE. As of June 30, 2026, the Company has yet to receive payment, and as a result, has sent a notice of default to the holder and extended the maturity date to August 2026. | 1,649,868 | 1,556,082 | ||||||
| Balance, end of period, FVOCI | 2,863,008 | 2,748,997 | ||||||
| Balance, end of period | 2,863,008 | 4,749,326 | ||||||
6
Quantum emotion Corp.
Notes to the interim condensed consolidated financial statements
Periods
ended June 30, 2026, and 2025
(Unaudited, in Canadian dollars)
3. Investments (Cont’d)
The Company designated the investments shown above as equity securities at FVOCI because these equity securities represent investments that the Company intends to hold for the long-term for strategic purposes. No strategic investments were disposed of during the period and there were no transfers of any cumulative gain or loss within equity relating to these investments.
| 4. | Intangible assets and property and equipment |
| Equipment | Licenses |
Intellectual |
Total | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Cost | ||||||||||||||||
| December 31, 2025 | 31,928 | 446,112 | - | 478,040 | ||||||||||||
| Additions | 16,987 | - | 10,085,274 | 10,102,261 | ||||||||||||
| June 30, 2026 | 48,915 | 446,112 | 10,085,274 | 10,580,301 | ||||||||||||
| Accumulated amortization and impairment | ||||||||||||||||
| December 31, 2025 | 2,951 | 139,028 | - | 141,979 | ||||||||||||
| Amortization | 6,067 | 11,153 | 504,264 | 521,485 | ||||||||||||
| June 30, 2026 | 9,018 | 150,181 | 504,264 | 663,463 | ||||||||||||
| Net book value | ||||||||||||||||
| December 31, 2025 | 28,977 | 307,084 | - | 336,061 | ||||||||||||
| June 30, 2026 | 39,897 | 295,931 | 9,581,010 | 9,916,838 | ||||||||||||
Acquisition of SKV Technology Inc.
On April 2, 2026, the Corporation acquired 100% of the issued and outstanding shares of SKV, a California-based entity which holds legal title to the SecureKey™ technology, a cryptographic software solution (the “SKV Acquisition”).
Consideration Amount and Range of Outcomes
No cash, Common Shares, or other consideration was paid at closing. The consideration for the SKV Acquisition consists entirely of contingent payments structured as follows: up to C$7,000,000 in milestones-based earn-out payments and up to C$15,000,000 in royalty payments.
7
Quantum emotion Corp.
Notes to the interim condensed consolidated financial statements
Periods
ended June 30, 2026, and 2025
(Unaudited, in Canadian dollars)
| 4. | Intangible assets and property and equipment (cont’d) |
The contractual range of undiscounted contingent consideration payments is from $Nil to a maximum of C$22,000,000, consisting of up to C$7,000,000 in milestone payments and up to C$15,000,000 in royalties. As at June 30, 2026, the first two milestones have been achieved resulting in a payment of C$1,500,000.
The milestone payments are tied to specific technical and commercial achievements. The royalty payments are based on cumulative sales of products incorporating the SecureKey technology over a five-year period. Achieving the maximum royalty amount of C$15,000,000 would require cumulative sales of approximately C$195,000,000 over the five-year royalty period.
Basis for Determining Consideration Amount
The consideration was negotiated at arm's length and reflects the Corporation’s assessment of the potential strategic value and expected synergies from integrating the SecureKey intellectual property with the Corporation’s existing assets and platforms. The assessment considered, among other factors: (i) the nature and scope of the intellectual property rights acquired; (ii) the existence of technical documentation supporting the technology and its readiness for integration, including documentation relevant to certification and validation efforts; (iii) the alignment of the SecureKey technology with the Corporation’s strategic initiatives; and (iv) current and expected market demand for cryptographic protection.
The Corporation’s evaluation indicated that developing equivalent technology internally would require significant development time, resource commitment, and would carry material technological and financial risks.
The contingent consideration structure was established to mitigate the risk of overpayment by linking payments to the achievement of specified technical and commercial outcomes. The Corporation will pay the maximum royalty amount only if aggregate sales over the five-year royalty period reach substantial levels.
Relationships Between the Corporation and Sellers
The transaction was conducted at arm’s length. No directors, officers, or insiders of the Corporation were involved as sellers or otherwise had an interest in the transaction. The Corporation engaged Jason Thomas, one of the sellers and founder of SKV, as an employee of the Corporation concurrently with the closing of the SKV Acquisition.
Stage of Development of Acquired Technology
The SecureKey technology is a cryptographic software solution designed to provide securitization of latent data. The technology includes associated certification-related work product completed prior to the SKV Acquisition and documentation prepared to support validation under the NIST FIPS framework applicable to cryptographic technology.
The technology has been functionally tested and validated by the developers. Technical documentation and source code were transferred to the Corporation, enabling the Corporation to commence integration work immediately following closing. The technology has been integrated into the Corporation's product offerings.
8
Quantum emotion Corp.
Notes to the interim condensed consolidated financial statements
Periods
ended June 30, 2026, and 2025
(Unaudited, in Canadian dollars)
| 4. | Intangible assets and property and equipment (cont’d) |
Accounting Treatment
The transaction has been accounted for as an asset acquisition under IFRS 3. At the acquisition date, the Corporation recognized an intangible asset representing the acquired intellectual property and a corresponding contingent consideration liability of $10,085,274 representing the fair value of the potential future milestone and royalty payments. The intangible asset will be amortized over five years on a straight-line basis. The fair value was determined using an income approach (a discounted present value technique based on probability-weighted expected future payments), reflecting market participant assumptions regarding the probability of achieving the commercialization milestones and projected future sales, as well as the expected timing of payments over several years using a discount rate of 30%.
As stated above, the Company recognized an initial value for the contingent liability to be $10,085,274. The first two milestones, with a combined earn-out value of $1.5 million, were paid and recorded against contingent liability in the second quarter. In addition, the Company performed a fair value assessment of this liability as of June 30, 2026, and calculated a fair-value adjustment using the discounted cash flow method with a 30% discount factor of $423,798 which was expensed in the second quarter. The remaining balance of contingent liability as at June 30, 2026, is $9,009,072.
Milestone payments are contingent upon the achievement of specified technical and commercial milestones, the timing of which is uncertain and dependent on the Corporation’s development progress and market conditions. Royalty payments are expected to occur over a five-year period following the date of the first sale, contingent upon sales of products incorporating the SecureKey technology.
Significant uncertainties
The fair value measurement reflected the expected timing of payments over several years. Uncertainties exist regarding both the amount and timing of future outflows, including:
| · | Whether the technical milestones will be achieved; |
| · | Whether the Corporation will secure government or defense contracts meeting the specified thresholds; |
| · | Whether the Corporation will achieve cloud marketplace listings; |
| · | The level of commercial sales of products incorporating the SecureKey™ technology; |
| · | The timing of milestone achievements and sales; |
| · | Market conditions and competitive dynamics affecting commercialization; |
9
Quantum emotion Corp.
Notes to the interim condensed consolidated financial statements
Periods
ended June 30, 2026, and 2025
(Unaudited, in Canadian dollars)
| 4. | Intangible assets and property and equipment (cont’d) |
The fair value measurement of the contingent consideration was based on the following major assumptions:
| · | Market participant assumptions regarding the probability of achieving each commercialization milestone; |
| · | Projected future sales volumes and pricing for products incorporating the SecureKey technology; |
| · | Expected timing of milestone achievements and royalty payments; |
| · | A discount rate reflecting the Corporation's cost of equity and risks specific to the contingent payments; |
| · | The Corporation's ability to integrate the technology with its existing products and achieve anticipated synergies. |
5. Right-of-use asset
| June 30, 2026 | December 31, 2025 | |||||||
| $ | $ | |||||||
| Balance at the beginning of the period | 53,583 | - | ||||||
| Additions | 129,770 | 77,684 | ||||||
| Amortization | (28,495 | ) | (24,101 | ) | ||||
| Balance at the end of the period | 154,858 | 53,583 | ||||||
6. Lease liability
| June 30, 2026 | December 31, 2025 | |||||||
| $ | $ | |||||||
| Balance at the beginning of the period | 55,978 | - | ||||||
| Additions | 129,770 | 77,684 | ||||||
| Payments | (28,495 | ) | (24,101 | ) | ||||
| Interest accretion | 2,615 | 2,396 | ||||||
| Balance at the end of the period | 159,868 | 55,978 | ||||||
| Current | 71,004 | 39,018 | ||||||
| Non-current | 88,864 | 16,960 | ||||||
The Company signed a three-year lease for its location at Temecula, California on May 1, 2026.
The lease ends on April 30, 2029.
10
Quantum emotion Corp.
Notes to the interim condensed consolidated financial statements
Periods
ended June 30, 2026, and 2025
(Unaudited, in Canadian dollars)
7. Tax credits receivable
| June 30, 2026 | December 31, 2025 | |||||||
| $ | $ | |||||||
| Balance at the beginning of the period | 353,035 | - | ||||||
| Additions | 51,034 | 353,035 | ||||||
| Payments received | (101,691 | ) | - | |||||
| Balance at the end of the period | 302,378 | 353,035 | ||||||
As at June 30, 2026, the Company had accounts receivable of $4,954, interest receivable of $20,260 and sales taxes receivable of $222,852 bringing the total of accounts and taxes receivable to $550,444.
8. Grants receivable
The Company received confirmation from the National Sciences and Engineering Research Council of Canada (NSERC) that the Company was awarded funding of up to $600,000 in support of a research and development project focused on quantum-secure semiconductor technology in collaboration with JMEM Tek. The Company received payment of $101,084 for claims made in the first quarter of 2026 and claimed $64,621 in the second quarter of 2026.
9. Share capital
| a) | Authorized |
The Company is authorized to issue an unlimited number of:
| · | voting Class A preferred shares |
| · | voting Class B preferred shares |
| · | voting Class C preferred shares |
| · | voting Class D preferred shares |
| · | special shares (non-voting) |
| · | common shares (voting) |
without nominal or par value.
Class A preferred shares are ranked senior to Class B preferred shares, Class B preferred shares are ranked senior to Class C preferred shares, Class C preferred shares are ranked senior to Class D preferred shares, Class D preferred shares are ranked senior to special shares, and special shares are ranked senior to common shares in priority of receiving dividends declared by the Company.
Holders of special shares and common shares shall be entitled to receive pro-rata for the remaining property of the Company after distribution to the holders of Class A, Class B, Class C and Class D preferred shares, on a pro-rata basis.
Dividends for Class A, Class B, Class C and Class D preferred shares are preferential and non-cumulative and are declared in accordance with their respective priority. Dividend rate per share for Class B, Class C and Class D preferred shares is 7% per annum. Dividends are declared at the discretion of the Company’s Board of Directors.
11
Quantum emotion Corp.
Notes to the interim condensed consolidated financial statements
Periods
ended June 30, 2026, and 2025
(Unaudited, in Canadian dollars)
9. Share capital (cont’d)
(b) Issued and outstanding
On June 2, 2025, the Company completed a brokered LIFE financing, issuing a total of 8,000,000 units at a price of $1.50 per unit for gross proceeds of $12,000,000. Each unit is comprised of one common share and one warrant of the Company. Each warrant entitles its holder to acquire one common share of the Company at a price of $1.82 for a period of 3 years following the closing of the date of issuance. There is no hold period for trading the warrants.
Unit issuance costs of $857,178, which include a broker fee of 6.0% as well as legal and listing costs, were recorded in the second quarter of 2025. In addition, the Company issued 320,000 warrants representing 4% of the units issued to the Agent that brokered the private placement. Each warrant entitles its holder to acquire one common share of the Company at a price of $1.66 for a period of 2.5 years following the closing of the date of issuance. There is no hold period for trading the warrants.
On February 24, 2025, the Company completed a brokered LIFE financing, issuing a total of 13,333,333 units at a price of $0.75 per unit for gross proceeds of $10,000,000. Each unit is comprised of one common share and one warrant of the Company. Each warrant entitles its holder to acquire one common share of the Company at a price of $1.10 for a period of 3 years following the closing of the date of issuance. There is no hold period for trading the warrants.
Unit issuance costs of $811,413, which include a broker fee of 6.5% as well as legal and listing costs, were recorded in the first quarter of 2025. In addition, the Company issued 666,666 warrants representing 5% of the issued units to the Agent that brokered the private placement. Each warrant entitles its holder to acquire one common share of the Company at a price of $0.88 for a period of 2.5 years following the closing of the date of issuance. There is no hold period for trading the warrants.
Common shares and warrants were valued based on their relative fair values. The fair value of the common shares was determined by the closing price on the date of the transaction. The fair value of the warrants was determined using the Black-Scholes pricing model and based on the following assumptions:
| June 2, 2025 | February 24, 2025 | |||||||
| Share price | $ | 1.50 | $ | 0.75 | ||||
| Expected volatility | 160.46 | % | 156.08 | % | ||||
| Risk-free interest rate | 2.62 | % | 2.62 | % | ||||
| Expected average life | 3.00 | 3.00 | ||||||
| Exercise price | $ | 1.82 | $ | 1.10 | ||||
As at June 30, 2026, no dividends were declared or unpaid (December 31, 2025 – $Nil).
12
Quantum emotion Corp.
Notes to the interim condensed consolidated financial statements
Periods
ended June 30, 2026, and 2025
(Unaudited, in Canadian dollars)
9. Share capital (cont’d)
(c) Stock options
The Company's share options are as follows for the reporting periods presented:
| June 30, 2026 | December 31, 2025 | |||||||||||||||
|
Number of options |
Weighted average exercise price | Number of options | Weighted average exercise price | |||||||||||||
| $ | $ | |||||||||||||||
| Balance outstanding, Beginning of period | 17,184,737 | 0.97 | 10,452,237 | 0.14 | ||||||||||||
| Granted | 2,980,618 | 4.23 | 10,245,000 | 1.57 | ||||||||||||
| Exercised | (101,000 | ) | 1.05 | (2,162,500 | ) | 0.25 | ||||||||||
| Cancelled / expired | (300,000 | ) | 0.08 | (1,300,000 | ) | 0.17 | ||||||||||
| Forfeited | - | - | (50,000 | ) | 1.78 | |||||||||||
| Balance outstanding, end of period | 19,764,355 | 1.48 | 17,184,737 | 0.97 | ||||||||||||
| Balance exercisable, end of period | 11,552,487 | 0.49 | 11,017,237 | 0.45 | ||||||||||||
Shareholders approved an amendment to convert the Company’s stock option plan pool to a rolling plan reserving a number of common shares equal to up to 10% of the Corporation’s issued and outstanding common shares as of the grant date of each option and to add a cashless exercise feature at the Company’s Annual General Meeting held on June 18, 2026. These changes were approved by the TSX Venture Exchange.
The weighted average share price at date of exercise for options exercised during the 3-month and 6-month periods respectively was $4.51 (June 30, 2025, and $4.61 and June 30, 2025 - $0.76).
The weighted average remaining contractual life for options outstanding on June 30, 2026, is 7.43 years (June 30, 2025 – 6.44 years).
Non-cash share-based compensation recognized under the plan amounted to $1,924,763 and $3,991,153 for the three-month and six-month periods ending June 30, 2026 (2025 – $560,272 and $3,126,265). Share-based compensation is provided to officers, employees and consultants and related to general and administrative expenses.
13
Quantum emotion Corp.
Notes to the interim condensed consolidated financial statements
Periods
ended June 30, 2026, and 2025
(Unaudited, in Canadian dollars)
9. Share capital (cont’d)
| (d) | Share purchase warrants |
The Company’s warrant movement for the six-month period ended June 30, 2026, (June 30, 2025, 25,618,322 at an average weighted price of $1.14) is as follows:
| Number
of warrants | Weighted
average exercise price | |||||||
| $ | ||||||||
| Balance outstanding, beginning of period | 7,980,000 | 1.22 | ||||||
| Warrants issued | - | - | ||||||
| Warrants exercised | (730,000 | ) | 0.20 | |||||
| Balance outstanding, end of period | 7,250,000 | 1.42 | ||||||
10. Related party transactions
The Company’s related parties include companies owned by key management. The Company paid management fees to key management through their management companies as follows up to June 30, 2026:
| · | LVR Capital Management, a company owned by Marc Rousseau, the Chief Financial Officer of the Company, was paid compensation of $36,000. As at June 30, 2026, $6,898 (December 2025 – $6,898) was due to that company. |
| · | Francis
Bellido, the CEO of the Company was paid a salary of $247,500. As at June 30, 2026, $99,139.89 (December 2025 – $120,000) was due to Mr. Bellido. |
| · | Baystream Corporation, a company owned by Larry Moore, was paid $15,000 in director’s fees. As at June 30, 2026, $2,875 (December 2025 – $2,875) was due to that company. |
| · | Baystream Corporation which provides information Technology services to the Company, is owned by Larry Moore. Fees of $75,723 were paid to that company. As at June 30, 2026, $14,468 (December 2025 – $9,765) was due to that company. |
| · | Red River Solutions, which is a company owned by Wayne Teeple who is a director of the Company. That company was paid $15,000 in director’s fees. As at June 30, 2026, $8,475 was due to that company (December 2025 - $8,475). |
| · | Red River Solutions provides business development services to the company. That company was paid $83,000 for consulting services. As at June 30, 2026, that Company was owed $19,350 (December 2025 $5,700). |
| · | SLT Solutions, a company owned by Tullio Panarello, was paid $15,000 in director’s fees. As at June 30, 2026, $8,475 (2025 – $8,475) was due to that company. |
| · | CyberDef LLC, a company owned by John Young who is a director of the company was paid $10,436 (US$7,500) in director’s fees. As at June 30, 2026, that company was owed $10,680 (December 2025 $5,700). |
| · | CyberDef
LLC was paid compensation of $101,228 (US$72,000) for serving as the Chief Operating Officer
of Quantum eMotion America. As at June 30, 2026, $Nil (2025 – US$14,210) was due to that company. |
14
Quantum emotion Corp.
Notes to the interim condensed consolidated financial statements
Periods ended June 30, 2026, and 2025
(Unaudited, in Canadian dollars)
10. Related party transactions (cont’d)
| · | Catherine Loubier, who is a director, was paid $7,143 (USD $5,000) in director’s fees. As at June 30, 2026 $7,143 was due to Catherine Loubier (December 2025 - $Nil) |
| · | Fileglobal, a company owned by Larry Moore, a director of the Company, was paid $482,392 for providing research and development work to the Company. As at June 30, 2026, $37,390 (2025 – $35,353) was due to that company. |
Larry Moore did not seek re-election as director of the Company at the latest AGM on June 18, 2026.
Transactions with key management
The key management of the Company are the members of senior management and the Board. The remuneration and other expenses for the period of key management (including the amounts above) is as follows:
Three months ended June 30 | Six months ended June 30 | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Research and development | 243,463 | 168,019 | 482,392 | 281,081 | ||||||||||||
| Management salaries | 241,636 | 142,733 | 384,728 | 235,733 | ||||||||||||
| Director’s fees | 39,852 | 32,709 | 72,788 | 65,924 | ||||||||||||
| Other fees | 86,861 | 16,613 | 158,723 | 36,023 | ||||||||||||
| Share based payments | 198,002 | 29,134 | 303,226 | 2,485,538 | ||||||||||||
| 809,814 | 389,208 | 1,401,857 | 3,104,299 | |||||||||||||
15
Quantum emotion Corp.
Notes to the interim condensed consolidated financial statements
Periods
ended June 30, 2026, and 2025
(Unaudited, in Canadian dollars)
11. Net financial (income) expense
Three
months ended | Six
months ended | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Financial income | (373,686 | ) | (110,348 | ) | (642,562 | ) | (112,156 | ) | ||||||||
| Financial expense | 430,825 | 13,351 | 430,835 | 16,875 | ||||||||||||
| Foreign currency gain | (37,984 | ) | 4,637 | (67,997 | ) | 5,853 | ||||||||||
| 19,155 | (92,360 | ) | (279,724 | ) | (89,428 | ) | ||||||||||
The Company included the cost of the fair-value adjustment relating to the contingent liability as a financial expense in the second quarter.
12. Financial instruments and risk management
| (a) | Management of capital |
The capital structure of the Company consists of equity attributable to shareholders, comprising issued share capital, contributed surplus and deficit. The Company’s objectives when managing capital are to: (i) preserve capital; (ii) obtain the best available net return; and (iii) maintain liquidity.
The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares. There were no changes to the Company’s approach to capital management during the period ended June 30, 2026.
| (b) | Fair value of financial instruments |
The classification of financial instruments as well as their carrying amounts are presented in the table below:
| June 30, 2026 | ||||||||||||
| Amortized cost | FVOCI | Total | ||||||||||
| $ | $ | $ | ||||||||||
| Financial assets | ||||||||||||
| Cash | 315,762 | - | 315,762 | |||||||||
| Investments | 33,689,193 | 2,863,008 | 36,552,201 | |||||||||
| Financial assets1 | 34,004,955 | 2,863,008 | 36,867,963 | |||||||||
| Non-current | — | 2,769,222 | 2,769,222 | |||||||||
| Financial liabilities | ||||||||||||
| Accounts payable and accrued liabilities | 990,416 | - | 990,416 | |||||||||
| Total | 990,416 | - | 990,416 | |||||||||
16
Quantum emotion Corp.
Notes to the interim condensed consolidated financial statements
Periods
ended June 30, 2026, and 2025
(Unaudited, in Canadian dollars)
12. Financial instruments and risk management (cont’d)
| December 31, 2025 | ||||||||||||
| Amortized cost | FVOCI | Total | ||||||||||
| $ | $ | $ | ||||||||||
| Financial assets | ||||||||||||
| Cash | 246,653 | - | 246,653 | |||||||||
| Investments | 38,944,289 | 2,748,997 | 41,693,286 | |||||||||
| Financial assets1 | 39,190,942 | 2,748,997 | 41,939,939 | |||||||||
| Non-current | 2,000,329 | 2,748,997 | 4,749,326 | |||||||||
| Financial liabilities | ||||||||||||
| Accounts payable and accrued liabilities | 591,878 | - | 591,878 | |||||||||
| Total | 591,878 | - | 591,878 | |||||||||
1 Excludes taxes receivable, as these amounts do not represent a contractual right to receive cash or another financial asset.
Financial assets at FVOCI are presented in accordance with the fair value hierarchy. This hierarchy groups financial assets and liabilities into three levels based on the significance of inputs used in measuring the fair value of the financial assets and liabilities as defined in note 3. The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair value measurement. The fair value of the investments classified as FVOCI (note 3), is measured under level 3 of the fair value hierarchy. There have been no transfers between levels in the reporting periods.
The fair value of investments not quoted in an active market may be determined by the Company using reputable pricing sources or indicative prices from bond/debt market makers. The Company would exercise judgment and estimates on the quantity and quality of pricing sources used. Where no market data is available, the Company might value positions using its own models, which are usually based on valuation methods and techniques generally recognized as standard within the industry. The inputs into these models are primarily adjusted market data and discounted cash flows. The models used to determine fair values are validated and periodically reviewed by experienced personnel at the Company, independent of the party that created them.
The models used for private equity securities are based mainly on observable transaction data or discounted future cash flows, adjusted for lack of marketability and control premiums. The models used for debt securities are based on the net present value of estimated future cash flows, adjusted as appropriate for liquidity, and credit and market risk factors.
Models use observable data, to the extent practicable. However, areas such as credit risk (both own and counterparty), volatilities and correlations require management to make estimates. Changes in assumptions about these factors could affect the reported fair value of financial instruments. The sensitivity to unobservable inputs is based on management’s expectation of reasonably possible shifts in these inputs, taking into consideration historical volatility and estimations of future market movements. The determination of what constitutes ‘observable’ requires significant judgment by the Company. The Company considers observable data to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.
17
Quantum emotion Corp.
Notes to the interim condensed consolidated financial statements
Periods
ended June 30, 2026, and 2025
(Unaudited, in Canadian dollars)
12. Financial instruments and risk management (cont’d)
The following table provides information on the valuation techniques and the inputs used.
Valuation |
Key inputs | Relationship
and sensitivity of unobservable inputs to fair value | ||
| 1) Vertical Growth Equity Inc. | ||||
| Discounted cash flow method | The Company uses future cash flows estimated using the interest rate on the instrument, discounted at a discount rate based on the investee company’s risk premiums.
|
A change in this discount rate applied would not have a significant impact on the value of the investment since the remaining maturity as at quarter-end is approximately 2 months. | ||
| 2) Greybox Solutions Inc. 1 | ||||
| Adjusted market method | In this approach, the Company used the fair value of the most recent financing round which was conducted at arm’s length. Management used this price to determine the value of the investee Company (inclusive of all classes of shares) and, based on a pro-rata share, calculated the price of the Company’s investment. Management then, based on judgment, applied a discount using judgment due to the non-voting characteristic of the investment.
|
Significant judgment was involved in determining the pro-rata value of the class of shares acquired. Additionally, had management applied a higher/lower discount of 10% the investment value would have decreased/increased by $70,000. | ||
| 3) Krown Technologies, Inc. | ||||
| Adjusted income approach | In this approach, the Company used the investee value determined using projected cash flows and applied a 35% discount based on judgment. The discount was set as such considering recent financial performance and the absence of recent rounds of financing.
|
A higher/lower discount of 15% would have resulted in a decrease/increase in fair value by approximately $90,000. | ||
18
Quantum emotion Corp.
Notes to the interim condensed consolidated financial statements
Periods
ended June 30, 2026, and 2025
(Unaudited, in Canadian dollars)
12. Financial instruments and risk management (cont’d)
| 4) SKV Technology inc. | ||
| Adjusted income approach | In this approach, the Company used the investee value determined using projected cash flows and applied a 30% discount based on judgment. The discount was set as such considering recent financial performance and the absence of recent rounds of financing. |
A higher/lower discount of 10% would have resulted in a decrease/increase in fair value by approximately $1.5 million.
|
1 Based on the terms of the investments, management assessed the initial fair value of the securities at $700,000 based on previous financing rounds conducted at arm’s length. However, since fair value is based on unobservable entity-specific inputs, the initial valuation was restricted to the transaction price determined to be $350,000, resulting in a deferred amount of $350,000, of which $59,760 is still deferred as of June 30, 2026. Management policy is to recognize in profit or loss the difference between the fair value at initial recognition and the transaction price based on subsequent financing rounds.
19
Exhibit 99.3
Form 52-109FV2
Certification of Interim Filings
I, Francis Bellido, Chief Executive Oficer of Quantum eMotion Corp., certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Quantum eMotion Corp .(the “issuer”) for the interim period ended June 30th, 2026. |
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
Date: August 14, 2026
| /s/ Francis Bellido | |
| Francis Bellido |
CEO
Exhibit 99.4
Form 52-109F2R
Certification of Refiled Interim Filings
This certificate is being filed on the same date that Quantum eMotion Corp (the “issuer”) has filed the Interim Financials Statements for the period ended June 30th 2026.
I, Marc Rousseau, Chief Financial Officer of Quantum eMotion Corp., certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of the issuer for the interim period ended June 30th 2026 |
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
Date: August 14, 2026
| /s/ Marc Rousseau | |
| Marc Rousseau |
CFO