SEDAR Interim Financial Statements

CANNARA BIOTECH INC. Condensed Interim Consolidated Financial Statements For the three and six-month periods ended February 28, 2026 and 2025 (Unaudited) CANNARA BIOTECH INC. Table of Contents (Unaudited) Page Financial Statements of Cannara Biotech Inc. Condensed Interim Consolidated Statements of Financial Position 1 Condensed Interim Consolidated Statements of Net Income and Comprehensive Income 2 Condensed Interim Consolidated Statements of Changes in Equity 3 Condensed Interim Consolidated Statements of Cash Flows 4 Notes to Condensed Interim Consolidated Financial Statements 5 - 29 1 CANNARA BIOTECH INC. Condensed Interim Consolidated Statements of Financial Position As at February 28, 2026 and August 31, 2025 (Unaudited - in Canadian dollars) February 28, August 31, 2026 2025 Assets Current assets Cash $ 21,902,387 $ 14,360,016 Accounts receivable 12,474,114 14,106,082 Biological assets (note 3) 5,514,554 6,815,941 Inventory (note 4) 48,637,424 44,516,056 Prepaid expenses and other assets 2,600,898 2,360,103 91,129,377 82,158,198 Deposits 159,160 159,160 Deferred financing costs (note 7) 164,274 52,164 Deposits on property, plant and equipment 487,748 276,505 Property, plant and equipment (note 5) 89,654,794 85,651,268 Right-of-use asset (note 6) 212,918 349,005 $ 181,808,271 $ 168,646,300 Liabilities and Shareholders' Equity Current liabilities Accounts payable and accrued liabilities $ 11,919,434 $ 11,082,834 Excise tax payable 7,192,034 7,446,336 Sales tax payable 1,472,443 2,237,696 Deferred lease revenue 72,740 69,720 Revolving credit facilities (note 7) 6,758,000 6,758,000 Current portion of convertible debenture (note 7) – 4,072,270 Current portion of long-term debt 56,576 221,319 Current portion of deferred grant income 125,386 63,536 Current portion of lease liabilities (note 6) 222,913 281,158 Current portion of term loan (note 7) 1,965,961 1,965,961 29,785,487 34,198,830 Lease liabilities (note 6) 23,936 114,804 Convertible debenture (note 7) – 2,104,285 Deferred grant income 1,367,472 878,220 Deferred income tax liabilities 5,224,659 3,066,037 Term loan (note 7) 25,197,505 26,063,147 61,599,059 66,425,323 Shareholders’ equity Share capital (note 8) 104,098,909 89,764,540 Contributed surplus 13,229,826 12,278,157 Retained earnings 2,880,477 178,280 Total equity 120,209,212 102,220,977 Contingencies (note 13) Subsequent events (note 17) $ 181,808,271 $ 168,646,300 See accompanying notes to condensed interim consolidated financial statements. 2 CANNARA BIOTECH INC. Condensed Interim Consolidated Statement of Net Income and Comprehensive Income For the three and six-month periods ended February 28, 2026 and 2025 (Unaudited) Three-month periods ended Six-month periods ended February 28, February 28, February 28, February 28, 2026 2025 2026 2025 Revenue Revenue from sale of goods (note 14) $ 37,815,863 $ 36,773,886 $ 79,641,451 $ 71,672,647 Excise taxes (11,652,651) (11,274,302) (24,368,498) (22,172,371) Net revenue from sale of goods 26,163,212 25,499,584 55,272,953 49,500,276 Lease revenues (note 14) 983,182 959,445 1,953,226 1,913,563 Other income 33,048 127,128 66,438 242,732 27,179,442 26,586,157 57,292,617 51,656,571 Cost of sales Cost of goods sold (note 4) 15,453,021 15,649,408 31,979,567 30,853,361 Lease operating costs 154,153 104,140 274,620 188,837 Gross profit before fair value adjustments 11,572,268 10,832,609 25,038,430 20,614,373 Changes in fair value of inventory sold (5,858,294) (6,855,245) (12,919,868) (1 --- 2,773,976) Unrealized gain on changes in fair value of biological assets (note 3) 5,933,883 7,978,224 10,739,014 14,294,076 Gross profit 11,647,857 11,955,588 22,857,576 22,134,473 Operating expenses General and administrative (note 10) 3,199,490 2,726,610 6,376,034 5,399,312 Selling, marketing and promotion 2,816,289 2,340,678 5,525,948 4,569,412 Professional and legal fees 486,196 262,823 832,739 533,178 Research and development 400,695 171,446 688,144 343,135 Share-based compensation (note 9) 1,090,910 295,168 2,811,556 616,572 Depreciation (notes 5 and 6) 252,988 281,637 519,725 562,350 Loss on disposal of property, plant and equipment (note 5) 122,008 – 122,008 1,209 8,368,576 6,078,362 16,876,154 12,025,168 Operating income 3,279,281 5,877,226 5,981,422 10,109,305 Net finance expense (note 11) 459,408 1,147,842 1,120,603 2,346,007 Income before income taxes 2,819,873 4,729,384 4,860,819 7,763,298 Income taxes expense 1,157,225 1,414,843 2,158,622 2,142,894 Net income and comprehensive income $ 1,662,648 $ 3,314,541 $ 2,702,197 $ 5,620,404 Earnings per share (note 8) basic $ 0.02 $ 0.04 $ 0.03 $ 0.06 diluted $ 0.02 $ 0.04 $ 0.03 $ 0.06 Weighted average number of common shares: basic 96,357,537 90,560,558 95,029,610 90,288,258 diluted 98,423,497 92,253,849 97,295,876 91,922,025 See accompanying notes to condensed interim consolidated financial statements. 3 CANNARA BIOTECH INC. Condensed Interim Consolidated Statements of Changes in Equity For the six-month period ended February 28, 2026 and 2025 (Unaudited - in Canadian dollars) Share Contributed Retained Total Shares capital surplus earnings equity As at August 31, 2025 91,433,135 $ 89,764,540 $ 12,278,157 $ 178,280 $ 102,220,977 Net income – – – 2,702,197 2,702,197 Share-based compensation (note 9) Employee compensation – – 2,802,983 – 2,802,983 Other services – – 8,573 – 8,573 Settlement of restricted shares units (note 9) 886,250 617,950 (617,950) – – Convertible debenture conversion into common shares (note 7) 3,462,763 7,474,911 (1,241,937) – 6,232,974 Private placement – common shares issuance (note 8) 3,000,000 6,300,000 – – 6,300,000 Private placement – shares issuance cost (note 8) – (58,492) – – (58,492) As at February 28, 2026 98,782,148 $ 104,098,909 $ 13,229,826 $ 2,880,477 $ 120,209,212 Share Contributed Total Shares capital surplus Deficit equity As at August 31, 2024 90,018,952 $ 88,523,025 $ 12,326,377 $ (12,897,913) $ 87,951,489 Net income – – – 5,620,404 5,620,404 Share-based compensation (note 9) – – 616,572 – 616,572 Settlement of restricted shares units (note 9) 1,414,183 1,241,515 (1,241,515) – – As at February 28, 2025 91,433,135 $ 89,764,540 $ 11,701,434 $ (7,277,509) $ 94,188,465 See accompanying notes to condensed interim consolidated financial statements. 4 CANNARA BIOTECH INC. Condensed Interim Consolidated Statements of Cash Flows For the three and six-month periods ended February 28, 2026 and 2025 (Unaudited - in Canadian dollars) Three-month periods ended Six-month periods ended February 28, February 28, February 28, February 28, 2026 2025 2026 2025 Cash provided by (used in): Operating: Net income $ 1,662,648 $ 3,314,541 $ 2,702,197 $ 5,620,404 Items not involving cash: Changes in fair value of inventory sold 5,858,294 6,855,245 12,919,868 12,773,976 Unrealized gain on changes in fair value of biological assets (note 3) (5,933,883) (7,978,224) (10,739,014) (14,294,076) Depreciation of property, plant and equipment (note 5) 1,241,326 1,562,366 2,754 --- ,234 3,045,450 Depreciation of right-of-use assets (note 5) 68,043 72,666 136,087 143,160 Loss on disposal of property, plant and equipment 122,008 – 122,008 1,209 Loss on convertible debenture extension – 26,764 – 26,764 Interest expense (note 11) 385,720 910,819 937,764 1,897,755 Interest on lease liabilities (note 11) 8,060 13,120 16,161 26,824 Interest income (note 11) (84,270) (67,763) (166,971) (129,178) Share-based compensation (note 9) 1,090,910 295,168 2,811,556 616,572 Accretion and amortization of financing costs (note 11) 71,752 47,592 119,720 97,646 Income taxes expense 1,157,225 1,414,843 2,158,622 2,142,894 Net change in non-cash operating working capital items (note 16) (2,699,617) (9,017,167) (2,862,943) (8,684,967) 2,948,216 (2,550,030) 10,909,289 3,284,433 Financing: Proceed from private placement (note 8) 6,300,000 – 6,300,000 – Equity transaction costs paid (note 8) (42,552) – (42,552) – Repayment of term loan (note 7) (491,491) – (982,981) (491,491) Proceeds from credit facilities (note 7) – – – 500,000 Debt financing issuance costs paid (note 7) (32,599) (190,620) (112,110) (190,620) Interest paid on debt instruments (note 7) (122,726) (847,270) (634,017) (1,718,375) Payment of interest on letter of credit – (58,884) – (108,319) Lease payments (83,790) (86,186) (165,274) (168,974) Other long-term debt payments (83,296) (76,153) (164,743) (101,160) 5,443,546 (1,259,113) 4,198,323 (2,278,939) Investing: Deposits on property, plant and equipment (371,136) (309,938) (673,886) (656,131) Acquisitions of property, plant and equipment (note 5) (2,863,377) (1,158,795) (7,179,118) (2,029,871) Proceed from disposal of property, plant and equipment 140,000 – 140,000 3,068 Interest received 88,182 72,016 147,763 112,378 (3,006,331) (1,396,717) (7,565,241) (2,570,556) Net change in cash 5,385,431 (5,205,860) 7,542,371 (1,565,062) Cash, beginning of period 16,516,956 10,261,185 14,360,016 6,620,387 Cash, end of period $ 21,902,387 $ 5,055,325 $ 21,902,387 $ 5,055,325 See accompanying notes to condensed interim consolidated financial statements. 5 CANNARA BIOTECH INC. Notes to Condensed Interim Consolidated Financial Statements For the three and six-month periods ended February 28, 2026 and 2025 (Unaudited - in Canadian dollars) 1. Nature of operations Cannara Biotech Inc. ("Cannara" or the "Company") is a vertically integrated producer of premium‐ grade cannabis and cannabis‐derivative products for the Canadian market. The Company is domiciled in Canada and was incorporated under the laws of British Columbia on October 19, 2017. Its head office is located at 333 Décarie, Suite 200, Ville St-Laurent, Québec, H4N 3M9. The Company’s common shares trade under the symbol “LOVE” on the Toronto Stock Exchange (the “TSX”) in Canada, following its graduation from the TSX Venture Exchange (the “TSXV”) on March 2, 2026, “LOVFF” on the OTCQX® Best Market (“OTCQX”) in the United States, and “8CB0” on the Frankfurt Stock Exchange in Germany. Cannara owns and operates two Quebec‐based mega cultivation facilities spanning over 1,600,000 square feet. Cannara’s first purpose-built, modern indoor cultivation facility is located in Farnham, Quebec and measures over 600,000 square feet, comprising approximately 190,000 square feet of licensed cannabis production area and approximately 415,000 square feet of leased warehouse space ("Farnham Facility"). The second facility, acquired in June 2021, is a hybrid greenhouse facility that has been designed --- to replicate the indoor cultivation environment. The facility is comprised of 24 independent growing zones totaling 600,000 square feet, a 225,000 square feet Cannabis 2.0 processing center and a 200,000 square feet rooftop greenhouse located in Valleyfield, Quebec ("Valleyfield Facility"). Cannara operates through its wholly owned subsidiaries, Cannara Biotech (Quebec) Inc. and Cannara Biotech (Valleyfield) Inc., both holding active licenses issued by Health Canada under the Cannabis Act. The Company continues to invest in capital expenditures at its Valleyfield Facility, having activated 12 of its 24 growing zones to date, representing 300,000 square feet of active growing capacity. The Company sells its products under three flagship brands: Tribal, Nugz and Orchid CBD. The Company generated a net income of approximately $2.7 million during the six-month period ended February 28, 2026 (2025 – $5.6 million) and has retained earnings of approximately $2.9 million as at February 28, 2026 (August 31, 2025 – $0.2 million). The ability of the Company to continue to deliver recurrent profits from operations is dependent upon the continued success of its product and brand pipeline in addition to maintaining the consistency of its grow operations and lean cost structure. The Company expects to finance its operations through its sales, existing cash, available undrawn credit facilities and term loan, and, if necessary, additional equity or debt financing. CANNARA BIOTECH INC. Notes to Condensed Interim Consolidated Financial Statements For the three and six-month periods ended February 28, 2026 and 2025 (Unaudited - in Canadian dollars) 6 2. Basis of preparation and significant accounting policies (a) Statement of compliance These condensed interim consolidated financial statements have been prepared in accordance with IFRS® Accounting Standards as issued by the International Accounting Standards Board and International Accounting Standard ("IAS") 34, Interim Financial Reporting, as issued by the International Accounting Standards Board ("IASB"). These condensed interim consolidated financial statements were approved by the Board of Directors and authorized for issuance on April 13, 2026. (b) Basis of preparation The condensed interim consolidated financial statements were prepared using the same accounting policies as set forth in Notes 2 and 3 in the consolidated audited financial statements of the Company for the year ended August 31, 2025. These condensed interim consolidated financial statements do not include all the notes required in annual consolidated financial statements. Therefore, these condensed interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto of the Company for the year ended August 31, 2025. The preparation of the Company’s condensed interim consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of expenditures, assets and liabilities. Actual results could differ from those estimates. On an ongoing basis, estimates and judgements are reviewed and evaluated. The Company bases its estimates on the most probable set of economic conditions and planned course of action, historical experience, known trends and events, and various other factors believed to be reasonable under the circumstances, the result --- s of which form the basis for making judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Uncertainty about these assumptions and estimates could result in an outcome that requires material adjustments to the carrying amount of the asset or liability affected in future periods. Revisions to accounting estimates are recognized in the period in which these estimates are revised and in any future periods affected. The critical accounting judgments and key sources of estimation uncertainty are consistent with those presented in the Company’s audited consolidated financial statements and notes thereto for the year ended August 31, 2025. CANNARA BIOTECH INC. Notes to Condensed Interim Consolidated Financial Statements For the three and six-month periods ended February 28, 2026 and 2025 (Unaudited - in Canadian dollars) 7 3. Biological assets The Company’s biological assets consist of cannabis plants up to the point of harvest. The changes in the carrying values of biological assets are as follows: Carrying amount, August 31, 2024 $ 6,649,591 Production costs capitalized 22,433,561 Change in fair value due to biological transformation, less cost to sell 29,622,019 Transferred to inventory upon harvest (51,889,230) Carrying amount, August 31, 2025 $ 6,815,941 Production costs capitalized 11,891,255 Change in fair value due to biological transformation, less cost to sell 10,739,014 Transferred to inventory upon harvest (23,931,656) Carrying amount, February 28, 2026 $ 5,514,554 The estimates used in determining the fair value of cannabis plants are as follows: • expected average selling price per gram of harvested cannabis; • expected cost to complete and cost to sell; • expected yield per cannabis plant; • stage of completion in the production process (days remaining until harvest); and • expected plant loss based on their various stages of growth. The valuation of biological assets is based on an income approach in which the fair value at the point of harvesting is estimated based on selling prices less the costs to sell. For in-process biological assets, the fair value at point of harvest is adjusted based on the stage of growth at period-end. Stage of growth is determined by reference to the time incurred as a percentage of total weeks of growth as applied to estimated total fair value per gram (less costs to complete and costs to sell) to arrive at an in-process fair value for estimated biological assets, which have not yet been harvested. Because there is no actively traded commodity market for cannabis plants and dried product, the valuation of the biological assets is obtained using valuations techniques where the inputs are based upon unobservable market data and are classified as level 3 in the fair market value hierarchy. There has been no transfer between levels as at February 28, 2026. CANNARA BIOTECH INC. Notes to Condensed Interim Consolidated Financial Statements For the three and six-month periods ended February 28, 2026 and 2025 (Unaudited - in Canadian dollars) 8 3. Biological assets (continued) Management’s identified significant unobservable inputs, their values and sensitivity analysis are presented in the table below. The Company’s estimates are, by their nature, subject to change, and differences from the anticipated yield will be reflected in the gain or loss on biological --- assets in future periods. The income approach calculates the present value of expected future cash flows from the Company’s biological assets using the following inputs for the period ended February 28, 2026: Unobservable inputs Input values Sensitivity analysis Selling price Represents the average expected selling price per gram of dried cannabis, excluding excise taxes, where applicable, which is expected to approximate future selling prices. The average selling price varies depending on the estimated products for each genetic in the cultivation cycle. Management has used the selling price of packaged dried cannabis for its flower material and a wholesale price for cannabis used in derivatives products, representing a market value before transformation. $2.08 to $3.40 per gram as selling price for packaged dried cannabis (August 31, 2025 – $2.09 to $3.31 per gram) An increase or decrease of 5% applied to the selling price would result in a change of approximately $508,000 to the valuation. Yield per plant Represents the average number of grams of dried cannabis expected to be harvested from each cannabis plant from the two facilities. 81 grams per plant (August 31, 2025 – 89 grams per plant) An increase or decrease of 15% applied to the average yield per plant would result in a change of approximately $818,000 to the valuation. Stage of completion Calculated by taking the average number of days in the cultivation cycle over the total estimated duration of a cultivation cycle which is currently approximately 12 to 13 weeks from clone to harvest. Weighted average stage of completion is 48% (August 31, 2025 – 50%) An increase or decrease of 5% applied to the average stage of growth per plant would result in a change of approximately $250,000 to the valuation. As at February 28, 2026, it is expected that the Company’s biological assets will yield approximately 9,555 kilograms of dried cannabis when harvested (As at August 31, 2025 – 11,108 kilograms of dried cannabis. CANNARA BIOTECH INC. Notes to Condensed Interim Consolidated Financial Statements For the three and six-month periods ended February 28, 2026 and 2025 (Unaudited - in Canadian dollars) 9 4. Inventory Inventory consists of the following: February 28, 2026 Capitalized Fair value cost adjustment1 Total Raw materials - cultivation and supplies $ 7,501,751 $ − $ 7,501,751 Harvested cannabis Dried cannabis and work-in-progress 11,874,355 7,746,095 19,620,450 Finished goods 3,454,448 1,343,274 4,797,722 Derivative products Derivatives products and work-in-progress 8,887,556 3,807,699 12,695,255 Finished goods 2,780,929 475,929 3,256,858 Finished goods – cannabis accessories 765,388 − 765,388 $ 35,264,427 $ 13,372,997 $ 48,637,424 August 31, 2025 Capitalized Fair value cost adjustment1 Total Raw materials - cultivation and supplies $ 6,653,585 $ − $ 6,653,585 Harvested cannabis Dried cannabis and work-in-progress 11,244,376 9,276,198 20,520,574 Finished goods 2,137,733 930,175 3,067,908 Derivative products Derivative products and work-in-progress 6,959,089 3,456,914 10,416,003 Finished goods 2,501,105 510,824 3,011,929 Finished goods - cannabis accessories 846,057 − 846,057 $ 30,341,945 $ 14,174,111 $ 44,516,056 1 Fair value adjustment represents the fair value adjustment transferred from biological assets at harvest. The amount of inventory expensed as cost of goods sold during the three and six-month periods ended February 28, 2026 was $15,453,021 and $31,979,567 (2025 – $15,649,4 --- 08 and $30,853,361), including an impairment loss on inventory of $243,635 and $868,120 (2025 – $474,418 and $831,083), and $1,088,978 and $2,436,641 in fair value adjustment was recognized in change in fair value of inventory sold for cannabis that exceed its net realizable value (2025 – $872,717 and $1,436,448). CANNARA BIOTECH INC. Notes to Condensed Interim Consolidated Financial Statements For the three and six-month periods ended February 28, 2026 and 2025 (Unaudited - in Canadian dollars) 10 5. Property, plant and equipment Facility Computer production equipment Furniture Construction Land Buildings equipment and software Vehicles and fixtures in progress Total Cost Balance as at August 31, 2025 $ 2,330,099 $ 77,758,451 $ 20,831,519 $ 1,943,281 $ 52,515 $ 2,659,535 $ 4,654,319 $ 110,229,719 Additions – 112,025 2,647,566 81,153 – 43,968 4,424,329 7,309,041 Transfer – 549,104 – – – 75,454 (624,558) – Disposal – – (444,887) – – – – (444,887) Balance as at February 28, 2026 $ 2,330,099 $ 78,419,580 $ 23,034,198 $ 2,024,434 $ 52,515 $ 2,778,957 $ 8,454,090 $ 117,093,873 Accumulated depreciation Balance as at August 31, 2025 $ – $ (16,050,509) $ (5,781,119) $ (1,548,818) $ (32,560) $ (1,165,445) $ – $ (24,578,451) Depreciation – (1,745,241) (1,082,658) (78,395) (3,865) (133,348) – (3,043,507) Disposal – – 182,879 – – – – 182,879 Balance as at February 28, 2026 $ – $ (17,795,750) $ (6,680,898) $ (1,627,213) $ (36,425) $ (1,298,793) $ – $ (27,439,079) Net book value Balance as at February 28, 2026 $ 2,330,099 $ 60,623,830 $ 16,353,300 $ 397,221 $ 16,090 $ 1,480,164 $ 8,454,090 $ 89,654,794 As at February 28, 2026, the assets included in construction in progress represent mainly the assets of the unused portion of the Valleyfield Facility and capital expenditures related to the build-out of the post-processing area. These costs are transferred to other categories as the assets become available or ready for use. As part of its real estate segment, the Company uses the non-cannabis licensed area of the Farnham building to generate lease revenues. As at February 28, 2026, a net book value of $7,436,473 related to the Farnham building is recognized as an investment property (As at August 31, 2025 – $7,984,905). The fair value of the Farnham building is not reliably measured on a continuous basis and, as such, the fair value of the building is not known, and thus it was measured using the cost model as per IAS 16, Property, plant and equipment. CANNARA BIOTECH INC. Notes to Condensed Interim Consolidated Financial Statements For the three and six-month periods ended February 28, 2026 and 2025 (Unaudited - in Canadian dollars) 11 5. Property, plant and equipment (continued) Facility Computer production equipment Furniture Construction Land Buildings equipment and software Vehicles and fixtures in progress Total Cost Balance as at August 31, 2024 $ 2,330,099 $ 76,710,294 $ 16,346,551 $ 1,733,228 $ 42,140 $ 2,528,937 $ 4,708,667 $ 104,399,916 Additions – 118,089 5,444,688 269,194 16,075 130,598 2,048,537 8,027,181 Transfer – 1,422,030 680,855 – – – (2,102,885) – Disposal – – (406,104) – (3,700) – – (409,804) Derecognition of fully amortized assets – (491,962) (1,234,471) (59,141) (2,000) – – (1,787,574) Balance as at August 31, 2025 $ 2,330,099 $ 77,758,451 $ 20,831,519 $ 1,943,281 $ 52,515 $ 2,659,535 $ 4,654,319 $ 110,229,719 Accumulated amortization Balance as at August 31, 2024 $ – $ (13,193,888) $ (4,662,315) $ (1,264,345) $ (24,865) $ (913, --- 798) $ – $ (20,059,211) Depreciation – (3,348,583) (2,488,435) (343,614) (10,743) (251,647) – (6,443,022) Disposal – – 135,160 – 1,048 – – 136,208 Derecognition of fully amortized assets – 491,962 1,234,471 59,141 2,000 – – 1,787,574 Balance as at August 31, 2025 $ – $ (16,050,509) $ (5,781,119) $ (1,548,818) $ (32,560) $ (1,165,445) $ – $ (24,578,451) Net book value Balance as at August 31, 2025 $ 2,330,099 $ 61,707,942 $ 15,050,400 $ 394,463 $ 19,955 $ 1,494,090 $ 4,654,319 $ 85,651,268 During the three and six-month periods ended February 28, 2026, the Company recognized $1,511,724 and $3,043,507 (2025 – $1,474,429 and $2,946,154) as depreciation expense, of which $184,945 and $383,638 have been recognized in the consolidated statement of net income and comprehensive income (2025 – $208,971 and $419,190), and $1,326,779 and $2,659,869 (2025 – $1,265,458 and $2,526,964) have been included in the calculation of the biological assets and inventory valuation and for which some lots were ultimately used for research and development. CANNARA BIOTECH INC. Notes to Condensed Interim Consolidated Financial Statements For the three and six-month periods ended February 28, 2026 and 2025 (Unaudited - in Canadian dollars) 12 6. Right-of-use assets and lease liabilities (a) Right-of-use assets February 28, August 31, 2026 2025 Cost Balance, beginning of period $ 1,004,704 $ 987,986 Addition – 47,636 Disposal – (23,500) Derecognition of fully amortized assets – (7,418) Balance, end of period $ 1,004,704 $ 1,004,704 Accumulated depreciation Balance, beginning of period $ (655,699) $ (392,768) Depreciation (136,087) (282,099) Disposal – 11,750 Derecognition of fully amortized assets – 7,418 Balance, end of period $ (791,786) $ (655,699) Net book value Balance, end of period $ 212,918 $ 349,005 (b) Lease liabilities February 28, August 31, 2026 2025 Maturity analysis - contractual undiscounted cash flows: Less than one year $ 233,935 $ 304,170 One to five years 24,596 118,063 Total undiscounted lease liabilities $ 258,531 $ 422,233 Current $ 222,913 $ 281,158 Non-current 23,936 114,804 Lease liabilities included in the condensed interim consolidated statement of financial position $ 246,849 $ 395,962 Balance as at August 31, 2025 $ 395,962 Additions – Lease payments (165,274) Interest on lease liabilities 16,161 Balance as at February 28, 2026 $ 246,849 CANNARA BIOTECH INC. Notes to Condensed Interim Consolidated Financial Statements For the three and six-month periods ended February 28, 2026 and 2025 (Unaudited - in Canadian dollars) 13 7. Financing (a) Revolving credit facilities February 28, August 31, 2026 2025 Net carrying value, beginning of period $ 6,758,000 $ 6,259,298 Proceeds from revolving credit facilities – 500,000 Repayment of revolving credit facilities – (1,298) Net carrying value, end of period $ 6,758,000 $ 6,758,000 February 28, 2026 Expiry date Revolving credit facility A 6,258,000 2026-03-30 Revolving credit facility B 500,000 2026-03-16 Net carrying value, end of period $ 6,758,000 The Company has access to a $10 million revolving credit facility which is intended to be used for general working capital purposes. Each tranche drawn on the revolving credit facility has either a 30, 60 or 90-day term depending on management’s decision and can be renewed by the Company at the end of the period. The revolving credit facilities bear variable interest rates based on prime rate or the Canadian overnight repo rate average (“CORRA”) plus --- an applicable margin based on the credit agreement. As at February 28, 2026, the weighted average interest rate on the revolving credit facilities was 5.29% (As at August 31, 2025 – 5.75%). The term of the revolving credit facilities is December 31, 2027, and has the same security, guarantees and covenants as the term loan (note 7 (b)). The revolving credit facilities are classified as a current liability, as they are actively managed and expected to be settled by the Company within its normal operating cycle. For the three and six-month periods ended February 28, 2026, the Company recognized $80,056 and $176,591 as interest expense for the revolving credit facilities (2025 – $117,522 and $246,946). As at February 28, 2026, accrued interest of $61,665 was included in account payables and accrued liabilities (As at August 31, 2025 – $6,355). CANNARA BIOTECH INC. Notes to Condensed Interim Consolidated Financial Statements For the three and six-month periods ended February 28, 2026 and 2025 (Unaudited - in Canadian dollars) 14 7. Financing (continued) (b) Term loan February 28, August 31, 2026 2025 Net carrying value, beginning of period $ 28,029,108 $ 34,976,596 Repayment of term loan (982,981) (6,933,154) Addition of term loan issuance costs – (190,620) Amortization of deferred financing costs 117,339 176,286 Net carrying value, end of period $ 27,163,466 $ 28,029,108 Term loan (i) $ 27,471,166 $ 28,454,147 Less: unamortized financing costs (307,700) (425,039) 27,163,466 28,029,108 Short-term portion of term loan (1,965,961) (1,965,961) $ 25,197,505 $ 26,063,147 (i) The term loan bears a variable interest rate based on prime and/or CORRA rates plus an applicable margin based on the credit agreement. As at February 28, 2026, the interest on the term loan was 4.81% (As at August 31, 2025 – 5.77%). The term loan is reimbursable quarterly, and the term is December 31, 2027. The term loan is secured by a first-ranking mortgage against the Farnham and Valleyfield Facilities. As part of the financing agreement, the lender also issued a $5.1 million letter of credit to a provincial service provider to fund certain deposit requirements part of the Valleyfield acquisition in 2021 and $0.1 million to another supplier. A fee is charged in exchange for this service (note 11). For the three and six-month periods ended February 28, 2026, the Company recognized $302,761 and $699,205 as interest expense for the term loan (2025 – $622,986 and $1,326,851). As at February 28, 2026, accrued interest of $275,382 was included in account payables and accrued liabilities (As at August 31, 2025 – $80,982). The Company obtained approval for a $10 million committed delayed capital expenditures debt facility to finance the Company’s capital expansion projects. As at February 28, 2026, the Company had not made any draws and has incurred $164,274 of financing fees which are presented as deferred financing costs (As at August 31, 2025 – $52,164). The Company has to respect specific financial covenants which are: (a) maintaining a certain liquidity coverage at all the times, (b) maintaining a fixed charge coverage ratio equal to or more than 1.25 to 1.0, and (c) maintaining a funded debt to EBITDA ratio equal to or less than 3.5 to 1.0 at each quarter-end. As at February 28, 2026, the Company has met all of these financial covenants. CANNARA BIOTECH INC. Notes to Condensed Interim Consolidated Financial Statements For the three and six-month periods ended February 28, --- 2026 and 2025 (Unaudited - in Canadian dollars) 15 7. Financing (continued) (c) Convertible debenture The roll forward of the financial liability component of the convertible debentures is as follows: February 28, August 31, 2026 2025 Net carrying value, beginning of period $ 6,176,555 $ 6,442,350 Repayment – (1,000,000) Loss on modification of convertible debenture – 26,764 Interest expense 54,038 643,375 Accretion 2,381 64,066 Conversion of debenture into common shares (6,232,974) – Net carrying value, end of period $ – $ 6,176,555 Short-term portion of convertible debenture – (4,072,270) $ – $ 2,104,285 On October 1, 2025, the Company received a notice of conversion to convert the principal and accrued interest totaling $6,232,974 into 3,462,763 common shares of the Company for which the Company issued common shares from treasury. The net carrying balance of convertible debenture of $6,232,974 and the initial equity portion of $1,241,937 recorded in contributed surplus was reclassified to common shares on the conversion date. During the three and six-month periods ended February 28, 2026, the Company recognized nil and $54,038 as interest expense (2025 - $159,194 and $308,702; and as at August 31, 2025, accrued interest of $1,478,936 was included in the carrying amount of the convertible debenture). CANNARA BIOTECH INC. Notes to Condensed Interim Consolidated Financial Statements For the three and six-month periods ended February 28, 2026 and 2025 (Unaudited - in Canadian dollars) 16 8. Share Capital (a) Authorized The Company has authorized an unlimited number of voting and participating common shares. (b) Transactions on share capital Convertible debenture conversion During the first quarter of 2026, the Company issued 3,462,763 common shares following the conversion of the convertible debenture (note 7 c)). Private placement During the second quarter of 2026, the Company completed a non-brokered private placement of 3,000,000 common shares at a price of $2.10 per share for gross proceeds of $6.3 million. Transaction costs of $58,492 were incurred in connection with the issuance and were recorded as a reduction of share capital. CANNARA BIOTECH INC. Notes to Condensed Interim Consolidated Financial Statements For the three and six-month periods ended February 28, 2026 and 2025 (Unaudited - in Canadian dollars) 17 8. Share Capital (continued) (c) Earnings per share The calculation of basic earnings per share was calculated based on the net income attributable to common shareholders of the Company divided by the weighted average number of common shares outstanding during the year, while the diluted earnings per share was adjusted for the effects of potential dilutive common shares such as options and convertible debentures. The calculations for basic and diluted earnings per share for the three and six-month periods ended February 28, 2026 and 2025 was as follows: Three-month periods ended Six-month periods ended February 28, February 28, February 28, February 28, 2026 2025 2026 2025 Net income $ 1,662,648 $ 3,314,541 $ 2,702,197 $ 5,620,404 Issued common shares, beginning of the period 94,895,898 90,018,952 91,433,135 90,018,952 Effect of restricted share units settled for common shares 594,972 541,606 295,843 269,306 Effect of conversion debenture exercise for common shares – – 2,869,693 – Effect of private placement issuance 866,667 – 430,939 – Weighted average number of common shares, basic 96,357,537 90,560,558 95,029,610 90,288 --- ,258 Impact of dilutive securities: Restricted share units 543,625 1,693,291 837,804 1,633,767 Share options 1,522,335 – 1,428,462 – Weighted average number of common shares, diluted 98,423,497 92,253,849 97,295,876 91,922,025 Earning per share: basis $ 0.02 $ 0.04 $ 0.03 $ 0.06 diluted $ 0.02 $ 0.04 $ 0.03 $ 0.06 For the three and six-month periods ended February 28, 2026, the Company excluded the following instruments from the weighted average number of diluted common shares calculation as their effect would have been anti-dilutive: 3,000,000 share options (2025 – 5,056,655 share options and 3,166,667 shares as-if the convertible debentures were converted). CANNARA BIOTECH INC. Notes to Condensed Interim Consolidated Financial Statements For the three and six-month periods ended February 28, 2026 and 2025 (Unaudited - in Canadian dollars) 18 9. Share-based compensation (a) Stock option plan The Company has established a share option plan whereby certain person may be granted options to acquire shares under the terms of the employee share option plan or shares may be granted to third parties in exchange for services. The number and characteristics of share options granted under the employee share option plan are determined by the Board of Directors of the Company. During the quarter, the Company approved a new fixed equity incentive plan pursuant to which a maximum of 15% of the Company’s issued and outstanding common shares, calculated at the time of adoption, may be reserved for issuance upon the exercise or settlement of share options and restricted share units. The characteristics of share options granted to third parties for services are determined on a case-by-case basis. The share options granted under the employee share option plan vest 25% after the first anniversary of the grant date with the remainder vesting in 36 monthly consecutive equal instalments and expire after ten years maximum from the date of issue or as approved by the Board of Directors. The plan provides for the issuance of common shares at an exercise price determined by the Board of Directors which is not lower than the maximum discounted fair value of the common shares on the grant date as per TSX rules. Outstanding share options under the plan are granted with service requirements (or service conditions) and become exercisable upon vesting. The share options granted to third parties for services have vesting terms determined on a case-by-case basis. The activity of outstanding share options for the six-month period ended February 28, 2026 and 2025 was as follows: February 28, 2026 February 28, 2025 Weighted Weighted average average Number exercise price Number exercise price Outstanding, beginning of period 8,658,018 $ 1.48 4,539,687 $ 1.59 Granted 44,600 1.80 640,000 1.14 Forfeited (15,000) 1.80 (76,842) 1.80 Expired (62,618) 1.80 (46,190) 1.80 Outstanding, end of period 8,625,000 1.55 5,056,655 1.52 Exercisable, end of period 4,537,545 $ 1.41 3,584,215 $ 1.60 During the three and six-month periods ended February 28, 2026, the Company recorded a share-based compensation expense of $1,001,074 and $2,548,738 in the consolidated statement of net income and comprehensive income (2025 – $64,501 and $159,224). CANNARA BIOTECH INC. Notes to Condensed Interim Consolidated Financial Statements For the three and six-month periods ended February 28, 2026 and 2025 (Unaudited - in Canadian dollars) 19 9. Share-based compensation (continued) (a) Stock option plan (conti --- nued) During the first quarter of 2026, the Company granted 44,600 share options at an exercise price of $1.80 to certain employees, vesting in one year and expiring after seven years. During the second quarter of 2026, the Company approved the cancellation and re-issuance of 544,600 share options to certain board members and employees. The Company determined that, due to an administrative oversight, the issuance of certain options resulted in the Company exceeding the limits permitted under its share plan. The affected options were cancelled and were re-issued with substantially the same terms and conditions, including the same exercise prices, with vesting schedules and expiry dates intended to remain unchanged and to continue as if originally granted. As a result, it has been treated as a modification of options under IFRS 2. The Company determined that the fair value of the modified options was not greater than the original options at the modification date and, accordingly, no incremental share-based compensation expense was recognized. The original grant-date fair value continues to be recognized over the vesting period. During the first quarter of 2025, the Company granted 525,000 share options at an exercise price of $1.00 and 115,000 share options at an exercise price of $1.80 to certain employees subject to certain vesting conditions in accordance with the employee share option plan and expiring after seven years. The estimated fair value of the share options at the grant date was measured using the Black Scholes option pricing model and the following weighted average inputs and assumptions: Six-month period ended February 28, 2026 February 28, 2025 Share price (i) $ 1.72 $ 0.68 Exercise price $ 1.80 $ 1.14 Risk-free interest rate (ii) 2.85% 3.18% Expected life (iii) 7 years 7 years Expected price volatility (iv) 73% 73% Fair value of the option $ 1.18 $ 0.42 Expected dividend yield (v) Nil Nil (i) The share price is based on the market price on the date of the grant. (ii) The risk-free interest rate was based on the Bank of Canada government bonds rates in effect at grant date for time periods approximately equal to the expected life of the option. (iii) The expected life of the options reflects the assumption of future exercise patterns that may occur. (iv) Expected price volatility was estimated based on historical volatility of the Company’s shares. (v) The expected dividend yield has been estimated at nil as the Company has never paid cash dividends and does not expect to do so in the immediate future. CANNARA BIOTECH INC. Notes to Condensed Interim Consolidated Financial Statements For the three and six-month periods ended February 28, 2026 and 2025 (Unaudited - in Canadian dollars) 20 9. Share-based compensation (continued) (a) Stock option plan (continued) The number of outstanding share options that could be exercised for an equal number of common shares is as follows: Average Weighted exercise price Number Number average number Expiry date range $ outstanding exercisable of years remaining Mar 2026 to Feb 2027 $ 1.80 83,500 83,500 0.35 Mar 2027 to Feb 2028 1.80 590,000 562,850 1.48 Mar 2028 to Feb 2029 1.80 702,500 628,730 2.65 Mar 2029 to Feb 2030 1.00 to 1.80 2,100,000 2,084,528 3.58 Mar 2030 to Feb 2031 1.20 to 1.80 677,500 366,943 4,77 Mar 2031 and after 1.00 to 1.80 4,471,500 810,994 8.80 8,625,000 4,537,545 6.13 years (b) Restricted Share Units The Company has established a Restricted Share Unit Plan under which --- the aggregate number of restricted share units and share options that may be granted pursuant to the Company’s equity incentive plans shall not exceed a fixed maximum of 15% of the Company’s issued and outstanding common shares, calculated at the time of adoption. Under the Restricted Share Units Plan, the Company may grant to certain personnel restricted share units without performance conditions (“RSU”) or restricted share units with performance conditions (“PSU”). The restricted share units are time-based awards, and the numbers of share units granted will vest upon the continuous employment of the Participants on the second anniversary of the grant or as approved by the Board of Directors, without exceeding five years, and when applicable, if the performance conditions are met. Pursuant to the terms of the Restricted Share Units Plan, Participants will receive for no consideration, upon vesting of the RSUs or PSUs, common shares of the Company issued from treasury. During the second quarter of 2026, the Company issued 90,000 common shares in settlement of vested RSUs. In addition, performance conditions attached to certain restricted share unit awards were satisfied, resulting in vesting above the original target level. As a result, the Company issued 781,250 common shares in settlement of vested PSUs. The Company also approved the acceleration of vesting for 15,000 RSUs for which common shares were issued upon vesting. As a result, the book value totalling $617,950 was reclassified from contributed surplus to share capital. During the first quarter of 2025, the Company granted 90,000 RSUs without performance conditions and 625,000 PSUs with performance conditions which are exercisable for no consideration. CANNARA BIOTECH INC. Notes to Condensed Interim Consolidated Financial Statements For the three and six-month periods ended February 28, 2026 and 2025 (Unaudited - in Canadian dollars) 21 9. Share-based compensation (continued) (b) Restricted Share Units During the second quarter of 2025, the Company settled 1,414,183 RSUs for common shares. As a result, the book value of the RSUs totalling $1,241,515 was reclassed from contributed surplus to share capital. During the three and six-month periods ended February 28, 2026, the Company recorded a share- based compensation expense of $89,836 and $262,818 in the consolidated statement of net income and comprehensive income for the RSUs and PSUs (2025 – $230,667 and $457,348). The outstanding RSUs for the six-month period ended February 28, 2026 and 2025 are as follows: February 28, 2026 February 28, 2025 Weighted Weighted average average Number fair value Number fair value Outstanding, beginning of period 347,500 $ 1.24 1,504,183 $ 0.88 Granted – – 90,000 0.68 Settled (105,000) 0.83 (1,414,183) 0.88 Outstanding, end of period 242,500 $ 1.42 180,000 $ 0.77 Number Vesting date outstanding November 22, 2026 75,000 April 25, 2027 22,500 August 28, 2027 145,000 242,500 The outstanding PSUs for the six-month period ended February 28, 2026 and 2025 are as follows: February 28, 2026 February 28, 2025 Weighted Weighted average average Number fair value Number fair value Outstanding, beginning of period 625,000 $ 0.68 – $ – Granted – – 625,000 0.68 Adjustment for achievement of performance conditions 156,250 – – – Settled (781,250) 0.89 – – Outstanding, end of period – $ – 625,000 $ 0.68 CANNARA BIOTECH INC. Notes to Condensed Interim Consolidated Financial Statements For the three and six-mont --- h periods ended February 28, 2026 and 2025 (Unaudited - in Canadian dollars) 22 10. General and administrative Three-month periods ended Six-month periods ended February 28, February 28, February 28, February 28, 2026 2025 2026 2025 Salaries and benefits $ 1,623,934 $ 1,252,965 $ 3,014,342 $ 2,404,860 Administrative and regulatory expense 1,099,472 1,041,791 2,406,452 2,058,491 Facility expense 476,084 431,854 955,240 935,961 General and administrative $ 3,199,490 $ 2,726,610 $ 6,376,034 $ 5,399,312 11. Net finance expense Three-month periods ended Six-month periods ended February 28, February 28, February 28, February 28, 2026 2025 2026 2025 Interest income $ 84,270 $ 67,763 $ 166,971 $ 129,178 Foreign exchange gain 48,456 – – – Finance income 132,726 67,763 166,971 129,178 Interest on term loan 302,761 622,986 699,205 1,326,851 Interest on credit facilities 80,056 117,522 176,591 246,946 Interest on convertible debenture – 159,194 54,038 308,702 Interest on lease liabilities 8,060 13,120 16,161 26,824 Interest on other long-term debt 2,903 11,117 7,930 15,256 Fees related to letter of credit 32,469 47,466 65,372 97,816 Debt guarantee fees – 93,750 – 187,500 Accretion and amortization of financing costs 71,752 47,592 119,720 97,646 Other finance expense 94,133 53,928 134,766 105,743 Loss on convertible debenture extension – 26,764 – 26,764 Foreign exchange loss – 22,166 13,791 35,137 Finance expense 592,134 1,215,605 1,287,574 2,475,185 Net finance expense $ 459,408 $ 1,147,842 $ 1,120,603 $ 2,346,007 CANNARA BIOTECH INC. Notes to Condensed Interim Consolidated Financial Statements For the three and six-month periods ended February 28, 2026 and 2025 (Unaudited - in Canadian dollars) 23 12. Financial instruments Fair value measurements The fair value of cash, accounts receivable, accounts payable and accrued liabilities approximate their carrying amounts due to the short-term maturity of those instruments. The fair value of the revolving credit facilities, long-term debt and term loan approximate their carrying amounts, as the interest rate approximates the current market rate. 13. Contingencies In the normal course of business, the Company may be involved in various legal and regulatory proceedings. The Company believes that the resolution of these proceedings will not have a material favourable or unfavourable effect on its condensed interim consolidated statement of financial position or financial performance. As at February 28, 2026, there are no material claims in favor or against the Company. 14. Segment disclosures (a) Reportable segments The Company operates in two segments: (1) Indoor cannabis operations which encompasses the cultivation, processing and sale of dried cannabis and cannabis derivatives ("Cannabis operations") and (2) Real estate operations related to the Farnham and Valleyfield building ("Real estate operations"). The chief operating decision-maker assesses performance based on segment operating results which were defined as segment operating income (loss) before share-based compensation, depreciation, net finance expense, loss on disposal of property, plant and equipment and income taxes. The accounting policies of the segments are the same as those described in Note 3 of the audited financial statements of the Company for the year ended August 31, 2025. CANNARA BIOTECH INC. Notes to Condensed Interim Consolidated Financial Statements For the three and six-month periods ended February 28, 2026 and 2025 (Unaudite --- d - in Canadian dollars) 24 14. Segment disclosures (continued) (a) Reportable segments (continued) Three-month period ended February 28, 2026 Three-month period ended February 28, 2025 Cannabis Real estate Cannabis Real estate operations operations Other Total operations operations Other Total Revenue Revenue from sale of goods $ 37,815,863 $ – $ – $ 37,815,863 $ 36,773,886 $ – $ – $ 36,773,886 Excise taxes (11,652,651) – – (11,652,651) (11,274,302) – – (11,274,302) Net revenue from sale of goods 26,163,212 – – 26,163,212 25,499,584 – – 25,499,584 Lease revenue – 983,182 – 983,182 – 959,445 – 959,445 Other income 33,048 – – 33,048 127,128 – – 127,128 26,196,260 983,182 – 27,179,442 25,626,712 959,445 – 26,586,157 Cost of revenues Cost of goods sold 15,453,021 – – 15,453,021 15,649,408 – – 15,649,408 Lease operating costs – 154,153 – 154,153 – 104,140 – 104,140 Segment gross profit before fair value adjustments 10,743,239 829,029 – 11,572,268 9,977,304 855,305 – 10,832,609 Changes in fair value of inventory sold (5,858,294) – – (5,858,294) (6,855,245) – – (6,855,245) Unrealized gain on changes in fair value of biological assets 5,933,883 – – 5,933,883 7,978,224 – – 7,978,224 Segment gross profit 10,818,828 829,029 – 11,647,857 11,100,283 855,305 – 11,955,588 Operating expenses 6,902,670 – – 6,902,670 5,501,557 – – 5,501,557 Segment operating income 3,916,158 829,029 – 4,745,187 5,598,726 855,305 – 6,454,031 Share-based compensation – – 1,090,910 1,090,910 – – 295,168 295,168 Depreciation – – 252,988 252,988 – – 281,637 281,637 Loss on disposal of property, plant and equipment – – 122,008 122,008 – – – – Net finance expense – – 459,408 459,408 – – 1,147,842 1,147,842 Income (loss) before income taxes $ 3,916,158 $ 829,029 $ (1,925,314) $ 2,819,873 $ 5,598,726 $ 855,305 $ (1,724,647) $ 4,729,384 CANNARA BIOTECH INC. Notes to Condensed Interim Consolidated Financial Statements For the three and six-month periods ended February 28, 2026 and 2025 (Unaudited - in Canadian dollars) 25 14. Segment disclosures (continued) (a) Reportable segments (continued) Six-month period ended February 28, 2026 Six-month period ended February 28, 2025 Cannabis Real estate Cannabis Real estate operations operations Other Total operations operations Other Total Revenue Revenue from sale of goods $ 79,641,451 $ – $ – $ 79,641,451 $ 71,672,647 $ – $ – $ 71,672,647 Excise taxes (24,368,498) – – (24,368,498) (22,172,371) – – (22,172,371) Net revenue from sale of goods 55,272,953 – – 55,272,953 49,500,276 – – 49,500,276 Lease revenue – 1,953,226 – 1,953,226 – 1,913,563 – 1,913,563 Other income 66,438 – – 66,438 242,732 – – 242,732 55,339,391 1,953,226 – 57,292,617 49,743,008 1,913,563 – 51,656,571 Cost of revenues Cost of goods sold 31,979,567 – – 31,979,567 30,853,361 – – 30,853,361 Lease operating costs – 274,620 – 274,620 – 188,837 – 188,837 Segment gross profit before fair value adjustments 23,359,824 1,678,606 – 25,038,430 18,889,647 1,724,726 – 20,614,373 Changes in fair value of inventory sold (12,919,868) – – (12,919,868) (12,773,976) – – (12,773,976) Unrealized gain on changes in fair value of biological assets 10,739,014 – – 10,739,014 14,294,076 – – 14,294,076 Segment gross profit 21,178,970 1,678,606 – 22,857,576 20,409,747 1,724,726 – 22,134,473 Operating expenses 13,422,865 – – 13,422,865 10,845,037 – – 10,845,037 Segment operating income 7,756,105 1,678,606 – 9,434,711 9,564,710 1,724,726 – 11,289,436 Share-based compensation – – 2,811,556 2,811,556 – --- – 616,572 616,572 Depreciation – – 519,725 519,725 – – 562,350 562,350 Loss on disposal of property, plant and equipment – – 122,008 122,008 – – 1,209 1,209 Net finance expense – – 1,120,603 1,120,603 – – 2,346,007 2,346,007 Income (loss) before income taxes $ 7,756,105 $ 1,678,606 $ (4,573,892) $ 4,860,819 $ 9,564,710 $ 1,724,726 $ (3,526,138) $ 7,763,298 CANNARA BIOTECH INC. Notes to Condensed Interim Consolidated Financial Statements For the three and six-month periods ended February 28, 2026 and 2025 (Unaudited - in Canadian dollars) 26 14. Segment disclosures (continued) (b) Entity-wide disclosures All property, plant and equipment are located in Canada. (c) Sources of lease revenues As at February 28, 2026, the Company leased out over 65% of its Farnham Facility and realized 100% of its lease revenue with two lessees: • The lease term for Tenant A is up to September 30, 2032. Lease revenues from this tenant for the three and six-month periods ended February 28, 2026 amounted to $189,797 and $376,968 (2025 – $176,160 and $357,232). • The lease term for Tenant B is up to October 31, 2026 and could be extended for another period of two years at the option of the tenant at the end of the current term. Lease revenues from this tenant for the three and six-month periods ended February 28, 2026 amounted to $783,285 and $1,576,258 (2025 – $783,285 and $1,556,331). Income is generated from customers domiciled in Canada. (d) Source of cannabis and cannabis accessories revenues Three-month periods ended Six-month periods ended February 28, February 28, February 28, February 28, 2026 2025 2026 2025 Revenue from Canadian retailers $ 36,866,823 $ 34,410,102 $ 76,827,818 $ 68,511,870 Excise taxes (11,652,651) (11,274,302) (24,368,498) (22,172,371) 25,214,172 23,135,800 52,459,320 46,339,499 Revenue from wholesale 909,408 2,296,623 2,727,847 3,036,315 Revenue from online merchandise 39,632 67,161 85,786 124,462 $ 26,163,212 $ 25,499,584 $ 55,272,953 $ 49,500,276 For the six-month period ended February 28, 2026, the Company has 3 provincial distributors customers that each represent more than 10% of the cannabis revenues. Customer A accounted approximately for 49% of the revenues (2025 – 47%), Customer B for approximately 30% (2025 – 28%) and Customer C for approximately 10% (2025 – 12%). CANNARA BIOTECH INC. Notes to Condensed Interim Consolidated Financial Statements For the three and six-month periods ended February 28, 2026 and 2025 (Unaudited - in Canadian dollars) 27 15. Related parties (a) Key management personnel compensation Key management personnel are the people who have the authority and responsibility for planning, directing and controlling the business activities of the Company and include all of its directors and chief executives. The compensations of key management personnel, including directors’ fees, salaries and benefits and share-based compensation were as follows: Three-month periods ended Six-month periods ended February 28, February 28, February 28, February 28, 2026 2025 2026 2025 Salaries and benefits $ 300,000 $ 243,750 $ 600,000 $ 487,500 Share-based compensation 868,340 268,550 2,264,894 562,977 Board of Directors’ fees 43,750 32,500 87,500 75,000 $ 1,212,090 $ 544,800 $ 2,952,394 $ 1,125,477 (b) Other transactions with related parties Related parties include entities related by virtue of key management personnel and directors exercising significant influence or control over the entities’ financial and operating polici --- es. The following provides the transaction amounts by nature with related parties: Three-month periods ended Six-month periods ended February 28, February 28, February 28, February 28, 2026 2025 2026 2025 Nature of transactions: Other expenses $ 2,875 $ – $ 8,476 $ 7,200 Acquisition of property, plant and equipment 159,429 – 246,791 – Interest on debt financing (i) – 159,194 54,038 308,702 Debt financing guarantee fees (i) (iii) – 93,750 – 187,500 $ 162,304 $ 252,944 $ 309,305 $ 503,402 CANNARA BIOTECH INC. Notes to Condensed Interim Consolidated Financial Statements For the three and six-month periods ended February 28, 2026 and 2025 (Unaudited - in Canadian dollars) 28 15. Related parties (continued) (b) Other transactions with related parties (continued) February 28, 2026 August 31, 2025 Balances due to related parties are as follows: Accounts payable and accrued liabilities (i) $ (42,247) $ ‒ Accounts payable to key management personnel (ii) (135,636) (551,524) Accounts payable to Board of Directors members (43,750) (40,000) Convertible debenture, including accrued interest (i) ‒ (6,178,936) Lease liabilities (i) (203,410) (323,988) (i) The Company has a Board of Director member who is a shareholder in an entity with which the Company entered into various transactions with for the financing of the Farnham and Valleyfield Facilities in addition to a head office lease arrangement. During the three and six-month periods ended February 28, 2026, the Company paid $62,547 and $125,828 in rent for the head office lease (2025 – $61,445 and $123,625). (ii) Accounts payable relate to accrued salary and vacation for key management personnel. Related party transactions are recognized at the amounts of consideration established under contractual terms. 16. Cash flow information Net change in non-cash working capital items: Three-month periods ended Six-month periods ended February 28, February 28, February 28, February 28, 2026 2025 2026 2025 Accounts receivable $ 2,743,579 $ (2,635,690) $ 1,651,176 $ (2,512,330) Biological assets (4,520,412) (4,144,812) (9,231,386) (8,247,187) Inventory 2,680,670 1,493,300 4,519,824 4,314,769 Prepaid expenses and other assets (1,269,667) (853,082) (240,795) (1,419,286) Deposits ‒ 210,000 ‒ 210,000 Accounts payable and accrued liabilities (1,018,197) (141,718) 903,671 904,091 Excise tax payable (826,771) (3,044,937) (254,302) (2,466,547) Sales tax payable (530,212) 108,405 (765,253) 278,647 Deferred lease revenue 72,740 6,971 3,020 284,084 Deferred grant income (31,347) (15,604) 551,102 (31,208) $ (2,699,617) $ (9,017,167) $ (2,862,943) $ (8,684,967) CANNARA BIOTECH INC. Notes to Condensed Interim Consolidated Financial Statements For the three and six-month periods ended February 28, 2026 and 2025 (Unaudited - in Canadian dollars) 29 16. Cash flow information (continued) Supplemental information in the condensed interim consolidated statement of cash flows: Three-month periods ended Six-month periods ended February 28, February 28, February 28, February 28, 2026 2025 2026 2025 Variation of property, plant and equipment Included in accounts payable and accrued liabilities (446,242) 47,032 332,720 (995,214) Addition to right-of-use assets and lease liabilities – – – 47,636 Financed property, plant and equipment – – – 480,000 Settlement of RSUs for common shares 617,950 1,241,515 617,950 1,241,515 Conversion of convertible debenture into common shares – – 6,232,974 – 17. Subsequent events Stock options Subsequent --- to quarter-end, the Company granted 10,000 stock options at an exercise price of $1.87 to employees, vesting in one year and expiring after seven years. Revolving credit facilities Subsequent to quarter-end, the Company extended all tranches of the revolving credit facilities for an additional 90-day term at a weighted average interest rate of 4.89%. Subsequent to quarter-end, the Company drew $2 million under the $10 million capital expenditure facility for the construction of Valleyfield expansion project.