Mr. Ian Atacan reports

PHARMACIELO ANNOUNCES 2026 YEAR-END RESULTS

Pharmacielo Ltd. has released its audited financial results for the year ended March 31, 2026. The company also announced that it intends, subject to the approval of the TSX Venture Exchange, to issue common shares in satisfaction of accrued interest on its 11-per-cent secured debentures.

Financial and operating highlights

• The company reported revenue of $700,000 for the fourth quarter, compared with $500,000 in the corresponding quarter of 2025.
• Fourth-quarter gross profit was $300,000, compared with a gross loss of $300,000 in the corresponding quarter of 2025.
• The fourth-quarter net loss narrowed to $1.3-million from $2.2-million in the corresponding quarter of 2025, an improvement of approximately $900,000.
• The fourth quarter adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) loss narrowed to $600,000 from $800,000 in the corresponding quarter of 2025.
• Gross profit increased to $700,000 for the year, compared with $500,000 for the 15-month comparative period, reflecting lower production costs and the benefits of rightsizing operations.
• The full-year net loss narrowed to $3.6-million from $11.4-million, while the adjusted EBITDA loss improved to $2.5-million from $3.5-million, despite the shorter 12-month reporting period and lower revenue.
• Pharmacielo sold the unused La Margarita property for gross proceeds of approximately $10.0-million and recognized a gain of approximately $2.2-million on the sale of property, plant and equipment.
• The sale proceeds were used to fully repay the Banco Agrario loan, make approximately $3.6-million of debenture repayments and reduce other obligations.
• Following continued cost reductions, operational rightsizing and improved production efficiency, management reports that Q4 2025 was the first quarter that the company's Colombia subsidiaries were cash-flow positive, before Canadian corporate costs and financing costs.
• To date, the company has received $2.8-million as a bridge loan comprising certain members of management and the board of directors, $2.6-million advanced by Marc Lustig and $200,000 advanced by Doug Bache.
• The company intends, subject to TSX-V approval, to issue 9,721,443 common shares at an effective price of eight cents per share in satisfaction of $777,717.33 of accrued semi-annual interest payable on its 11-per-cent secured debentures.

Management commentary

Marc Lustig, chairman and chief executive officer of Pharmacielo, commented: "Our operating results confirmed the company continues to achieve measurable progress and is well positioned to take full advantage of an improving cannabis market. The sale of La Margarita generated approximately $10.0-million in proceeds, with a significant gain and, more importantly, provided the liquidity to repay the Banco Agrario loan, reduce our debentures, and address other obligations. At the same time, the improvement was not limited to the land sale. We continued to right-size the business, lower our cost base and improve production efficiency, resulting in stronger gross profit and a substantially reduced adjusted EBITDA loss for the year.

"The fourth quarter showed continued improvement in the underlying business. Revenue grew and gross profit improved from a loss in the corresponding quarter last year. Our Colombia subsidiaries have now reached cash-flow positivity at the operating level, before Canadian corporate and financing costs. This is an important milestone and provides a more sustainable foundation as we work to build recurring export volumes and expand sales of higher-margin dried flower, extracts and distillates.

"With such positive momentum in our business and in light of other strategic opportunities we are exploring, I will continue to invest in the business and plan to complete the $3.0-million insider bridge financing in which to date I have invested $2.6-million and director Doug Bache has invested $200,000. This financing has provided important working capital during the company's operational restructuring and commercial development efforts."

The comparative period ended March 31, 2025, covers 15 months following the company's change in fiscal year-end and is therefore not directly comparable with the 12-month period ended March 31, 2026.

* Adjusted EBITDA is a non-IFRS (international financial reporting standards) financial measure. It does not have a standardized meaning under IFRS accounting standards and may not be comparable to similar measures presented by other companies. Please refer to the company's MD&A (management's discussion and analysis) for the year ended March 31, 2026, for the reconciliation of net loss to adjusted EBITDA.

Operational progress and outlook

Pharmacielo continues to focus on global markets where its Colombian cultivation platform, high-quality processing plant and systems, and low-cost structure provide a substantial competitive advantage. The company is developing opportunities across Latin America, Australia, South Africa and strategic European markets, with particular emphasis on GACP-certified dried cannabis flower, CBD isolate, CBD extracts, THC extracts and distillates.

Management's near-term priorities are to increase recurring export sales orders and volumes, deepen relationships with the company's international partners, secure repeat purchase arrangements, and continue aligning production and inventory with customer demand. The company has completed its major growth capital expenditures at its production and extraction centre and does not expect to incur material capital expenditures in the near term.

The company's ability to achieve sustained positive net operating cash flow remains dependent on increasing sales volumes, effective cost management and securing sufficient working capital. Pharmacielo continues to evaluate financing and strategic opportunities to support its operations and reduce its remaining obligations.

Bridge financing

Since February, 2024, the company's working capital requirements have been supported through an insider bridge loan commitment totalling $3.0-million and bearing interest at 11 per cent per annum. The commitment has now been over 90-per-cent financed, comprising $2.6-million advanced by Mr. Lustig and $200,000 advanced by Mr. Bache.

The bridge financing has supported the company's working capital requirements, continuing operations and commercial activities during its operational restructuring and balance-sheet improvement initiatives.

Intention to issue interest shares

The company also announces that it intends, subject to the approval of the TSX-V, to issue 9,721,443 common shares of Pharmacielo, at an effective price of eight cents per interest share, in satisfaction of an aggregate of $777,717.33 of accrued semi-annual interest payable to holders of the company's 11-per-cent secured debentures.

The effective price of the interest shares was determined by dividing the cash interest otherwise payable by the number of shares issuable under each debenture, in accordance with the terms of the debentures and TSX-V Policy 4.3, Section 3.3.

Upon issuance, the interest shares will be subject to the balance, if any, of the applicable statutory hold period under Canadian securities laws.

The issuance of interest shares to L5 Capital Inc., Mr. Lustig, William Petron and Ian Atacan will constitute a related party transaction within the meaning of Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions. The company expects to rely on the exemptions from the formal valuation and minority shareholder approval requirements contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101, as the fair market value of the transaction will not exceed 25 per cent of the company's market capitalization.

For further detailed information and analysis, please see the audited consolidated financial statements and management's discussion and analysis for the year ended March 31, 2026, as filed on SEDAR+ and available at the Pharmacielo website.

About Pharmacielo Ltd.

Pharmacielo is a global company headquartered in Canada. The company produces dried flower and food- and medicinal-grade cannabis and extracts for the global natural pharmaceuticals and consumer products market. Its principal and wholly owned subsidiary is Pharmacielo Colombia Holdings S.A.S., based at its cultivation and processing centre in Rionegro, Colombia.

An anonymous director reports