Mr. Ted Carefoot reports

QSE ANNOUNCES MANAGEMENT CEASE TRADE ORDER

Quantum Secure Encryption Corp. has made an application to the B.C. Securities Commission to approve a temporary management case trade order under National Policy 12-203 (Cease Trade Orders for Continuous Disclosure Defaults), which will prohibit trading securities by the company by the chief executive officer and chief financial officer of the company until such time as the required filings (defined below) and all continuous disclosure requirements have been filed by the company, and the MCTO has been lifted. During the period in which the MCTO is effective, the members of the general public who are not insiders of the company will continue to be able to trade in the company's listed securities. The MCTO was granted on Jan. 29, 2026.

The company made the application for the MCTO as it expected delays that it would be unable to file its audited financial statements for the year ended Sept. 30, 2025, and management's discussion and analysis, and related chief executive officer and chief financial officer certificates for this period before the Jan. 28, 2026, filing deadline.

The company and the auditor have noticed a delay in progress of the audit. As such, the annual filings were not filed on time.

The company anticipates that it will be in a position to remedy the default by filing the required filings before March 28, 2026. The MCTO will be in effect until the required filings are filed.

During this MCTO, all management, officers and directors of the company will be prohibited from trading in the company's securities pursuant to the company's blackout procedures.

The company intends to satisfy the provision of the alternative information guidelines set out in sections 9 and 10 of NP 12-203 as long as the required filings are outstanding.

We seek Safe Harbor.