An anonymous director reports

MERCANTO HOLDINGS INC. REPORTS Q1 FISCAL 2026 FINANCIAL RESULTS

Mercanto Holdings Inc. has released its financial results for the three months ended Oct. 31, 2025 (Q1 fiscal 2026).

Q1 fiscal 2026 highlights:

• Revenue of $900,013, representing a 9-per-cent increase year over year;
• Net revenue of $784,529, after excise taxes;
• Continued disciplined cost management, with material reductions in selling and marketing expenses;
• Cash balance of $310,237 at quarter-end;
• Successful execution of new product launches early in Q2 fiscal 2026, positioning the company in higher-growth vape categories;
• No long-term debt, maintaining a conservative and flexible balance sheet;
• Tight capital structure, with 51,674,683 common shares outstanding.

Financial performance overview

For Q1 fiscal 2026, Mercanto generated revenue of $900,013, compared with $824,225 in the same period last year. The increase reflects modest volume growth and continued presence in the Quebec market, which remains the company's largest province by revenue.

Gross margin for the quarter was impacted by temporary product-mix dynamics, including a higher proportion of flow-through SKUs (stock-keeping units) in Ontario and concentrates over all. These factors were partially offset by lower selling, freight and marketing expenses as management continued to operate with a disciplined, asset-light cost structure.

The company reported a net loss of $146,213 for the quarter, compared with a net loss of $55,222 in Q1 fiscal 2025.

Management believes its current liquidity profile, combined with favourable supplier terms and a capital-efficient operating model, provides adequate flexibility to support near-term operations and product rollouts.

Operational and subsequent highlights:

• Quebec listing framework improvements: Subsequent to quarter-end, Quebec implemented revised listing procedures that provide for minimum one-year in-store listing in some product categories (not all) and enhanced predictability. Management expects these changes to materially improve planning, forecasting and certain category stability going forward.
• Vape category expansion: In November, 2025, the company launched one vape battery and three vape cartridges in Quebec, alongside the transition of two existing SKUs from the discontinued nursery program to full-store availability. Early indicators from these launches have been very encouraging.
• Portfolio rebalancing: The company continues to evolve its product mix toward higher-growth categories, with a focus on formats that better align with consumer demand and long-term margin objectives.

Outlook

While Q1 fiscal 2026 reflected a period of transition following product rationalization and category shifts in Quebec, management believes the combination of improved listing mechanics, new vape product introductions and continued cost discipline positions Mercanto for improved revenue diversification and operational momentum in calendar 2026.

About Mercanto Holdings Inc.

Mercanto Holdings operates through its wholly owned subsidiary, Teonan Biomedical Inc., and is licensed by Health Canada to manufacture, package and sell cannabis products in Canada. The company's portfolio includes cannabis products sold under various brands, with distribution primarily in Quebec and select other provinces.

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