An anonymous director reports

MERCANTO PROVIDES FORWARD-LOOKING OPERATIONAL UPDATE ON Q2 2026 PERFORMANCE AND PORTFOLIO TRENDS

Mercanto Holdings Inc. is providing a forward-looking operational update in advance of the formal release of its second quarter 2026 financial results. This update is intended to provide shareholders with early context regarding anticipated Q2 2026 performance across Mercanto's full product portfolio, as well as the operational dynamics that have influenced quarter-over-quarter results.

Q2 2026 context and portfolio dynamics

As previously disclosed, the Quebec vape cartridge category launched late in the second quarter of fiscal 2026, with Mercanto introducing three vape cartridge SKUs alongside an approved battery. While Mercanto's guidance relates to performance across its entire product portfolio, the introduction of vape cartridges and its battery has been the primary driver of the company's transformational quarter-over-quarter sales growth. The company's products were made available approximately one month into the quarter, leaving only approximately two months of vape cartridge and battery sales to be captured within the reporting period. This limited launch window coincided with the December holiday season and the initial rollout of an entirely new provincial product category, further contributing to variability in early sales patterns.

Given the novelty of the category, the staggered timing of the launch within the quarter and heightened holiday demand, initial sales activity was volatile and may not have been representative of normalized demand. Early purchasing patterns across the category have reflected uneven replenishment cycles, rapid sell-through in certain locations and temporary stockout weeks affecting both cartridges and batteries. These dynamics were not unique to Mercanto and were observed across multiple licensed producers participating in the initial rollout. As replenishment cycles have begun to stabilize, management is observing better-than-expected consistency in weekly ordering patterns and is encouraged by the current level of normalized sales.

Supply stabilization

Mercanto believes that the normalization of inventory flow and ordering cadence mark a meaningful transition point for the category, allowing for a more reliable assessment of underlying consumer demand, which management believes has normalized at levels above those originally anticipated at launch, subject to continuing market conditions.

Q2 2026 preliminary financial guidance and year-over-year comparison

The company is providing the following preliminary, unaudited financial guidance ranges for the second quarter ended Jan. 31, 2026, together with comparisons with the same quarter in the prior fiscal year:

• Revenue: $2.05-million to $2.2-million, representing over 110-per-cent growth compared with $1,003,116 in Q2 2025;
• Net profit (loss): $150,000 to $190,000, compared with a net loss of ($109,215) in Q2 2025;
• Earnings before interest, taxes, depreciation and amortization: $220,000 to$270,000, compared with EBITDA of ($96,038) in Q2 2025.

Notwithstanding the volatility inherent to a new category launch, early sell-through across Mercanto's vape portfolio has exceeded internal expectations, and is expected to meaningfully contribute to overall company performance for the quarter and the year. Management views the initial performance as a strong validation of product to market fit and brand positioning within the Quebec market.

Management views the successful entry into the vape category as potentially pivotal for Mercanto, given its impact on portfolio breadth, revenue diversification and overall growth trajectory into the future.

About Mercanto Holdings Inc.

Mercanto is a publicly traded cannabis company focused on the development, manufacturing and distribution of consumer cannabis products in Canada, with a particular emphasis on the Quebec market.

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