Ms. Meris Kott reports

PEGASUS MERCANTILE INC. ANNOUNCES DEBT SETTLEMENT UPDATE

Pegasus Mercantile Inc. has provided an update to its debt settlement announced on Dec. 15, 2025.

The company intends to settle outstanding indebtedness of $163,430 in exchange for an aggregate of 3,268,600 restricted common shares to creditors in exchange for their accounts payable. The settlement shares are being issued at a deemed price of five cents in accordance with the policies of the Canadian Securities Exchange.

The securities when issued will be subject to a four-month-and-one-day hold from the date of issuance.

The company's total debt settlement inclusive of the new update will be $260,400 and is subject to the approval of the CSE.

This debt settlement includes outstanding indebtedness to the company's directors and chief executive officer of $138,400 for director fees and consulting fees owing and approved by the board of directors of the company. As a result, the debt settlement is a related-party transaction within the meaning of Multilateral Instrument 61-101 (Protection of Minority Security Holders in Special Transactions). The company intends to rely on the exemptions from the formal valuation and minority approval requirements of MI 61-101 based on a determination that the fair market value of the debt settlement, insofar as it involves related parties, does not exceed 25 per cent of the market capitalization of the company.

About Pegasus Mercantile Inc.

The company is a prospect generator that provides high-growth companies with advisory services, including technology, financial, operational and management assistance. It is currently focused on the fast-growing market for global wellness products and novel consumer goods and services.

We seek Safe Harbor.