Zefiro Founder Updates Shareholders on British Columbia Securities Commission Ruling Ahead of Shareholder Vote

Executive Summary

• The British Columbia Securities Commission dismissed both the Concerned Shareholders’ application and a cross‑application by controlling lender David McGrath, leaving Zefiro’s governance issues exposed.
• XMST (under its Investor Rights Agreement) intends to exercise pre‑emptive rights to acquire 1,386,184 common shares and warrants/options for an additional 6,096,481 common shares (~7.63% of the diluted equity).
• The release highlights alleged improper issuance of 13,214,494 “Debt Settlement Shares,” failures to comply with MI 61‑101 disclosure requirements, and delayed filing of material contracts, raising concerns about incumbent directors’ governance practices.

Key Details

• Regulatory Outcome: BCSC dismissed the Concerned Shareholders’ application seeking to set aside XMST’s rights and block XMC from voting at the March 20, 2026 AGM; it also dismissed McGrath’s cross‑application restricting Dr. Debs’ share votes.
• Governance Concerns Raised:
• Issuance of 13,214,494 Debt Settlement Shares to interim CEO Catherine Flax, David McGrath and Michael McGavick on Jan 27 2026 was negotiated by the CFO with minimal board oversight.
• Material change reports failed to disclose: (i) McGrath’s negative control under the May 2025 loan; (ii) related‑party status of the Debt Settlement Shares; (iii) Dr. Debs’ opposition to the transaction.
• The May 2025 loan filing was delayed until Feb 6 2026, over eight months after execution and after the application was filed.
• Investor Rights Enforcement: XMST plans to acquire:
• 1,386,184 common shares (direct purchase)
• Warrants/options for an additional 6,096,481 common shares
• Represents ~7.63% of Zefiro’s diluted outstanding common equity.
• Future Actions Stated: Concerned Shareholders will continue to oppose any board actions that could entrench incumbents or dilute shareholder value and are urging shareholders to vote via the BLUE proxy.
• Forward‑Looking Statements: The release contains forward‑looking statements regarding future enforcement of rights, voting campaigns, and potential impacts on governance; these are subject to risks and uncertainties.

Notable Quotes

“In my view the great benefit of public markets is that they provide an avenue for genuine transparency and the ability to hold incumbent management to account.” – Dr. Talal A. Debs, Founder and Director, Zefiro Methane Corp.

This release contains material information about governance disputes, potential equity dilution, and regulatory outcomes that could affect Zefiro’s share price and shareholder rights.