SEDAR Interim Financial Statements

MTL Cannabis Corp. Condensed Consolidated Interim Financial Statements For the three and nine months ended December 31, 2025 and 2024 [unaudited] [Expressed in Canadian dollars] 2 The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements. MTL Cannabis Corp. Condensed Consolidated Interim Statements of Financial Position [unaudited] [expressed in Canadian dollars] As at December 31, 2025 March 31, 2025 Notes $ $ ASSETS Current assets Cash 1,059,528 5,680,958 Trade and other receivables 3 11,553,452 11,821,096 Inventory 4 18,890,155 16,946,417 Biological assets 5 1,530,918 2,141,941 Prepaid expenses and deposits 1,447,550 460,925 34,481,603 37,051,337 Non-current assets Prepaid expenses and deposits 102,065 63,290 Right-of-use assets, net 6 16,676,015 11,755,639 Property, plant and equipment, net 7 17,925,968 18,670,035 Intangible assets and goodwill, net 8 16,368,383 18,615,383 TOTAL ASSETS 85,554,034 86,155,684 LIABILITIES Current liabilities Trade and other payables 12,369,229 19,364,554 Income taxes payable 893,004 695,939 Provision 9 — 5,000,000 Lease obligations 6 1,790,836 1,020,568 Notes payable 9 — 14,552,353 Borrowings 10 3,530,288 350,438 Convertible debentures 11 — 7,583,236 18,583,357 48,567,088 Non-current liabilities Lease obligations 6 18,650,227 13,874,879 Notes payable 9 8,526,477 — Borrowings 10 15,169,714 — Deferred tax liability 1,264,748 1,951,455 62,194,523 64,393,422 SHAREHOLDERS' EQUITY Share capital 12 12,306,550 11,075,877 Contributed surplus 12 13,041,482 4,981,294 Retained (deficit) earnings (1,988,521) 5,705,091 23,359,511 21,762,262 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 85,554,034 86,155,684 Contingencies 17 3 MTL Cannabis Corp. 2025 2024 2025 2024 Notes $ $ $ $ Revenue Product revenue 20,889,219 24,231,435 68,398,203 73,836,569 Referral revenue and other 1,530,408 1,367,881 5,277,281 4,039,513 Excise tax (5,248,498) (5,644,261) (15,206,840) (16,329,897) Net Revenue 17,171,129 19,955,055 58,468,644 61,546,185 Cost of revenue 7,622,164 9,534,776 29,718,633 28,615,753 Gross profit before fair value adjustments 9,548,965 10,420,279 28,750,011 32,930,432 Unrealized fair value adjustments on biological assets 5 42,521 475,921 2,124,074 5,250,248 Realized fair value adjustments on sale of inventory (455,022) (2,284,482) (3,013,815) (4,679,641) Gross profit 9,136,464 8,611,718 27,860,270 33,501,039 Operating expenses General and administrative 15 5,228,190 5,509,444 17,324,428 17,022,025 Sales and marketing 762,515 671,854 2,272,642 1,665,731 Amortization and depreciation 6,7,8 1,021,169 1,379,764 3,608,729 4,213,357 Share-based compensation 12 322,813 135,886 744,683 631,256 7,334,687 7,696,948 23,950,482 23,532,369 Operating income 1,801,777 914,770 3,909,788 9,968,670 Finance expense, net 14 1,218,887 1,874,613 11,226,816 5,491,219 Other (income) expenses (203,522) (49,560) 171,441 (172,656) Income before income taxes 786,412 (910,283) (7,488,469) 4,650,107 Current tax expense (recovery) 361,534 310,306 891,850 2,012,741 Deferred tax expense (recovery) (248,006) — (686,707) 405,864 113,528 310,306 205,143 2,418,605 Net income (loss) and comprehensive income (loss) for the period 672,884 (1,220,589) (7,693,612) 2,231,502 Income (loss) per share - basic and diluted 13 0.006 $ (0.010) $ (0.065) $ 0.019 $ Weighted average number of common shares outstanding - basic and diluted 120,302,960 116,997,561 118,235,583 116,997,561 The accompanying notes are an i --- ntegral part of these unaudited condensed consolidated interim financial statements Condensed Consolidated Interim Statements of Income (loss) and Comprehensive Income (loss) [unaudited] [expressed in Canadian dollars, except number of shares] Three months ended December 31, Nine months ended December 31, 4 MTL Cannabis Corp. Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity For the nine months ended December 31, 2025 and 2024 [unaudited] [expressed in Canadian dollars, except number of shares and warrants] Common shares Warrants Contributed surplus Retained earnings (deficit) Total # $ # $ $ $ Balance as at March 31, 2025 116,997,561 11,075,877 8,152,379 4,981,294 5,705,091 21,762,262 Share-based compensation (Note 12) — — — 744,683 — 744,683 Private Placement (Note 12) 3,305,399 1,230,673 1,652,699 440,162 — 1,670,835 Issuance of warrants (Note 11) — — 14,466,568 6,875,343 — 6,875,343 Expiration of warrants (Note 12) — — (999,999) — — — Net loss and comprehensive loss — — — — (7,693,612) (7,693,612) Balance as at December 31, 2025 120,302,960 12,306,550 23,271,647 13,041,482 (1,988,521) 23,359,511 Balance as at March 31, 2024 116,997,561 11,075,877 7,717,521 4,163,960 (614,165) 14,625,672 Issuance of warrants (Note 12) — — 434,858 53,146 — 53,146 Share-based compensation (Note 12) — — — 631,256 — 631,256 Remeasurement of amount payable to pre-RTO existing MTL Cannabis Corp. shareholders — — — — (327,000) (327,000) Net income and comprehensive income — — — — 2,231,502 2,231,502 Balance as at December 31, 2024 116,997,561 11,075,877 8,152,379 4,848,362 1,290,337 17,214,576 The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements. 5 MTL Cannabis Corp. Condensed Consolidated Interim Statements of Cash Flows [unaudited] [expressed in Canadian dollars] For the nine months ended December 31, 2025 2024 Notes $ $ Operating activities: Net (loss) income for the period (7,693,612) 2,231,502 Add (deduct) items not affecting cash: Deferred tax expense (recovery) (686,707) 405,864 Amortization and depreciation 6,7,8 5,302,598 5,539,934 Inventory impairment provision 4 498,247 984,549 Change in fair value adjustments on inventory sold 3,013,815 4,679,641 Change in fair value of biological assets (2,124,074) (5,250,248) Expected credit recovery 3 (137,165) (133,767) Share-based compensation 12 744,683 631,256 Impairment of property, plant and equipment 7 — 168,530 Loss on disposal of property, plant and equipment 7 — 31,046 Other income — (2,915) Finance expense 14 11,141,392 5,489,401 10,059,177 14,774,793 Changes in non-cash working capital items: Trade and other receivables 1,711,949 (2,384,510) Inventory (5,455,798) (11,491,317) Biological assets 2,735,097 5,626,118 Prepaid expenses and deposits (1,025,400) 1,339,506 Trade and other payables (6,995,325) 4,256,027 Income taxes payable 1,083,265 1,689,864 Provision paid 9 (375,284) — Income taxes paid (1,661,790) (679,650) Income taxes refunded 775,589 — Cash flows provided by operating activities 851,480 13,130,831 Investing activities: Purchase of property, plant and equipment 7 (1,996,468) (3,633,271) Cash flows used in investing activities (1,996,468) (3,633,271) Financing activities: Proceeds from borrowings, net 10 19,422,495 — Proceeds from Brokered Private Placement, net 12 1,670,835 — Repayment of notes payable 9 (11,460,141) (2,217,357) Repayment of borrowings 10 (1,592,461) (2,338,695) Repayment of conve --- rtible debentures 11 (8,907,979) (304,311) Payment of lease obligations 6 (2,609,191) (2,495,138) Cash flows used in financing activities (3,476,442) (7,355,501) Net change in cash during the period (4,621,430) 2,142,059 Cash, beginning of the period 5,680,958 1,352,135 Cash, end of the period 1,059,528 3,494,194 The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements. MTL Cannabis Corp. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS December 31, 2025 and 2024 [unaudited] (expressed in Canadian dollars, except share amounts) 6 1 Nature of business MTL Cannabis Corp. (the "Company" or “MTLC”), formerly Canada House Cannabis Group Inc. (“Canada House”), was incorporated on September 29, 1982 under the Company Act of the Province of British Columbia. The Company’s head office and principal place of business is located at 4225 Autoroute Transcanadienne, Pointe- Claire, Québec, Canada, H9R 1B4. The Company’s common shares are listed on the Canadian Securities Exchange under the symbol “MTLC”, and on the OTCQB Venture Market under the symbol “MTLNF”. The Company through its subsidiaries, engages in cultivation and production of cannabis products for recreational and medical purposes in Canada. It also operates clinics that work directly with primary care teams to provide specialized cannabinoid therapy services to patients suffering from medical conditions. The Company produces various cannabis products, including lines of dried flower, hash, and pre-rolls. On December 14, 2025, the Company entered into a definitive arrangement agreement (the “Arrangement Agreement”) with Canopy Growth Corporation (the “Purchaser”), as amended on January 6, 2026. As a part of the Arrangement Agreement, the Purchaser agreed to acquire all of the issued and outstanding common shares of the Company (the “Transaction”). Under the terms of the Arrangement Agreement, shareholders will receive common shares of the Purchaser and cash consideration for each share of the Company held. Upon completion of the Transaction, the Company’s shares will be delisted from all public markets, and the Company will cease to be a reporting issuer under Canadian securities laws. The Transaction is expected to close in the first calendar quarter of 2026, subject to shareholder approval and the satisfaction of customary closing conditions. These unaudited condensed consolidated interim financial statements (“financial statements”) of the Company for the three and nine months ended December 31, 2025 and 2024, comprise the results of the Company and its wholly owned subsidiaries Montréal Cannabis Médical Inc. (“MTL Cannabis”), Abba Medix Corp. ("Abba"), Canada House Clinics Inc. (“CHC”), The Longevity Project Corp. ("TLP"), IsoCanMed Inc. (“IsoCanMed”), and Margaree Health Group Inc. (“Margaree”). 2 Basis of preparation Statement of compliance These financial statements were prepared using the same accounting policies and methods as those used in the Company’s audited consolidated financial statements for the year ended March 31, 2025. These financial statements have been prepared in compliance with IAS 34 – Interim Financial Reporting, as issued by the International Accounting Standards Board (“IASB”). Accordingly, certain disclosures normally included in annual financial statements, prepared in accordance with IFRS® Accounting Standards as issued by the IASB and IFRIC® Interpretations of the IFRS Interpretatio --- ns Committee, have been omitted or condensed. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended March 31, 2025. These financial statements were approved and authorized for issuance by the Board of Directors of the Company on February 27, 2026. Functional currency and presentation currency These financial statements are presented in Canadian dollars, which is the functional currency of the Company and its subsidiaries. Use of estimates, judgments and assumptions The preparation of these financial statements in conformity with IFRS requires management to make estimates, judgments and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Summary of material accounting policies adopted in the period Share-based payments The Company grants restricted share units (“RSUs”) and deferred share units (“DSUs”) to employees and directors of the Company. The RSUs and DSUs are treated as equity-settled instruments for accounting purposes. The Company expects that vested RSUs and DSUs will be settled through the issuance of one common share per RSU MTL Cannabis Corp. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS December 31, 2025 and 2024 [unaudited] [expressed in Canadian dollars, except share amounts] 7 or DSU. The fair value is determined based on the market value of the Company’s shares at the time of grant. Compensation cost is recognized over the expected vesting period of the share-based compensation. New standards, amendments and interpretations not yet adopted by the Company IFRS 18 – Presentation and Disclosure in Financial Statements (“IFRS 18”) In April 2024, the IASB issued a new standard IFRS 18, introducing a defined structure for the statement of profit and loss and new specific disclosure requirements to the statement of profit and loss. The standard is effective for annual reporting periods beginning on or after January 1, 2027, and also applies to comparative information. The Company is still assessing the impact of adopting these amendments on its financial statements. All other IFRSs and amendments issued but not yet effective have been assessed by the Company and are not expected to have a material impact on the Company’s financial statements. 3 Trade and other receivables The Company’s trade and other receivables include the following: December 31, 2025 March 31, 2025 $ $ Trade receivable 11,518,550 9,665,692 SR&ED receivables 116,221 212,123 Government assistance receivable — 1,990,014 Other receivables 29,985 201,736 Less: expected credit losses (111,304) (248,469) 11,553,452 11,821,096 During the year ended March 31, 2025, the Company purchased light fixtures in the amount of $2,677,500. As a part of the Hydro-Québec Efficient Solutions Program, the Company obtained --- a subsidy for these lights in the amount of $1,990,014. The net cost of the lights is included as additions of property, plant and equipment (see Note 7). The subsidy was received during the three months ended June 30, 2025. For trade receivables, the change in allowance for credit losses for the nine months ended December 31, 2025 was as follows: December 31, 2025 $ Opening balance 248,469 Reduction in allowance for credit losses (137,165) Closing balance 111,304 4 Inventory The Company’s inventory consists of the following: December 31, 2025 March 31, 2025 $ $ Work in process 13,315,048 11,196,104 Finished goods 6,683,564 7,170,060 Carrying value 19,998,612 18,366,164 Less: provision (1,108,457) (1,419,747) 18,890,155 16,946,417 During the three and nine months ended December 31, 2025, the Company expensed $7,384,961 and $28,374,870 of inventory in cost of sales (2024 – $8,705,948 and $26,654,963). Included in the amount of inventory expensed to cost of sales is $589,449 and $1,672,529 (2024 – $651,030 and $1,670,917) of depreciation allocated from property and equipment and ROU assets. As of December 31, 2025, the carrying value of inventory includes MTL Cannabis Corp. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS December 31, 2025 and 2024 [unaudited] [expressed in Canadian dollars, except share amounts] 8 $966,792 of inventoried depreciation costs (March 31, 2025 – $598,601). During the nine months ended December 31, 2025, the Company recorded $498,247 of impairment (2024 – $nil). The Company’s impairment includes change in provision for inventory and any write-offs during the period. 5 Biological assets Biological assets consist of cannabis plants. The changes in the carrying value of biological assets are as follows: $ Balance – March 31, 2024 1,550,427 Production costs capitalized 8,382,985 Changes in fair values less costs to sell due to biological transformation 7,797,187 Plants sold during the period (375,528) Transferred to inventory upon harvest (15,213,130) Balance – March 31, 2025 2,141,941 Production costs capitalized 6,055,708 Changes in fair values less costs to sell due to biological transformation 2,124,074 Transferred to inventory upon harvest (8,790,805) Balance – December 31, 2025 1,530,918 The Company measures its biological assets at their fair value less costs to sell. This is determined using a model which estimates the expected harvest yield in grams for plants currently being cultivated, the expected selling price per gram and the expected costs to sell per gram. The fair value measurements for biological assets have been categorized as Level 3 fair values based on the inputs to the valuation technique used. The Company’s method of accounting for biological assets attributes value accretion on a straight-line basis throughout the life of the biological asset from initial cloning to the point of harvest. The following table quantifies each significant unobservable input, and also provides the impact a 10% increase or decrease in each input would have on the fair value of biological assets at period end: As at December 31, 2025 As at March 31, 2025 Assumption: Input 10% change Input 10% change i Weighted average of expected loss of plants until harvest [a] 10% $15,655 8% $20,018 ii Expected yields (dry grams of cannabis per plant) [b] 636 grams of dry flower $153,092 582 grams of dry flower $219,771 iii Weighted average number of growing weeks completed as a percentage of total growing weeks --- as at period-end 41% $153,092 51% $219,771 iv Estimated selling price (per gram) [c] $1.67 per gram dried flower $318,720 $1.74 per gram dried flower $419,754 v After harvest cost to complete and sell (per gram) $0.88 per gram dried flower $165,628 $0.82 per gram dried flower $199,984 [a] Weighted average of expected loss of plants until harvest represents loss of plants that do not survive to the point of harvest. It does not include any financial loss on a surviving plant. [b] Expected average yields for cannabis plants vary based on the mix of strains and number of plants existing at each reporting date. [c] The estimated selling price per gram represents the actual average sales price for the Company’s strains sold as bulk products. The Company estimates the harvest yields for cannabis at various stages of growth. As of December 31, 2025, it is expected that the Company’s biological assets will yield approximately 4,615,841 (March 31, 2025 – 4,035,798) grams of dry cannabis flower when harvested. The fair value adjustments on biological assets are presented separately on the condensed consolidated interim statements of income (loss) and comprehensive income (loss). MTL Cannabis Corp. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS December 31, 2025 and 2024 [unaudited] [expressed in Canadian dollars, except share amounts] 9 The Company's estimates, by their nature, are subject to changes that could result from volatility of market prices, unanticipated regulatory changes, harvest yields, loss of crops, changes in estimates and other uncontrollable factors that could significantly affect the future fair value of biological assets. 6 Leases Right-of-use asset Cost $ Balance – March 31, 2025 17,512,299 Additions 342,234 Modification 6,200,347 Balance – December 31, 2025 24,054,880 Accumulated depreciation Balance – March 31, 2025 5,756,660 Depreciation 1,622,205 Balance – December 31, 2025 7,378,865 Net Balance – March 31, 2025 11,755,639 Net Balance – December 31, 2025 16,676,015 Lease obligations $ Balance – March 31, 2025 14,895,447 Additions 342,234 Interest accretion 1,612,226 Lease payments (2,609,191) Modification 6,200,347 Balance – December 31, 2025 20,441,063 Current 1,790,836 Non-current 18,650,227 The Company’s right-of-use assets and lease obligations relate to the Company’s warehouse, office premises, licensed cultivation facility, and clinics. For its leased premises, the Company hypothecates all of its equipment and other moveable effects to its landlord up to the market value equivalent of one years’ rent as security against the lease obligation. The following table sets out a maturity analysis of the lease payments payable, showing the undiscounted lease payments to be paid on an annual basis, reconciled to the lease obligation. $ Less than one year 3,533,087 One to two years 3,529,088 Two to three years 3,552,281 Three to four years 3,225,305 Thereafter 14,745,771 Total undiscounted lease payments payable 28,585,532 Less: impact of present value 8,144,469 Balance – December 31, 2025 20,441,063 Additions during the period On July 1, 2025, the Company commenced a new lease for its clinic in Mount Pearl, Newfoundland. The lease expires on June 30, 2028, and includes a three-year renewal option. Prior to this agreement, the lease was month- to-month and a short-term lease under IFRS 16. As a result of the agreement, the Company recognized an additional right-of-use asset and lease liability in the amoun --- t of $168,493. On November 1, 2025, the Company commenced a new lease for its clinic in Charlottetown, Prince Edward Island. The lease expires on October 31, 2028. The lease previously expired on October 31, 2025. As a result of the agreement, the Company recognized an additional right-of-use asset and lease liability in the amount of $173,741. MTL Cannabis Corp. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS December 31, 2025 and 2024 [unaudited] [expressed in Canadian dollars, except share amounts] 10 Modifications during the period On July 29, 2025, the Company modified its lease agreement on its head office at 4225 Transcanadienne Highway. The modification extended the non-cancellable period from March 31, 2028 to March 31, 2029. The Company determined that the 5-year renewal option at the end of the non-cancellable period was still reasonably certain to be exercised. The Company determined that this modification did not result in a new lease. As a result of the modification, the Company remeasured the lease liability by discounting the lease payments over the revised lease term using a revised discount rate and made a corresponding increase to its right-of-use asset in the amount of $2,414,425. The leased premises is owned by a company controlled by the Chief Cultivation Officer and the Chief Operating Officer. On July 29, 2025, the Company modified its lease agreement on its production facility at 815 Tecumseh Ave. The modification extended the non-cancellable period from March 31, 2028 to March 31, 2029. The Company determined that the 5-year renewal option at the end of the non-cancellable period was still reasonably certain to be exercised. The Company determined that this modification did not result in a new lease. As a result of the modification, the Company remeasured the lease liability by discounting the lease payments over the revised lease term using a revised discount rate and made a corresponding increase to its right-of-use asset in the amount of $3,743,005. The leased premises is owned by a company controlled by the Chief Cultivation Officer and the Chief Operating Officer. On September 30, 2025, the Company modified its lease agreement at a clinic in Kingston, Ontario. The modification extended the maturity date from March 31, 2026 to March 31, 2029. As a result of the modification, the Company remeasured the lease liability by discounting the revised lease payments using a revised discount rate and made a corresponding increase to the ROU asset in the amount of $42,918. 7 Property, plant and equipment Equipment and supplies Computer equipment Leasehold improvements Building Land Total $ $ $ $ $ $ Cost Balance, March 31, 2025 8,315,504 209,283 4,009,186 11,601,380 121,957 24,257,310 Additions 1,446,581 — 549,887 — — 1,996,468 Government subsidy (360,000) — — (947,140) — (1,307,140) Balance, December 31, 2025 9,402,085 209,283 4,559,073 10,654,240 121,957 24,946,638 Accumulated depreciation Balance, March 31, 2025 4,028,098 80,443 143,712 1,335,022 — 5,587,275 Depreciation 663,790 37,183 155,321 577,101 — 1,433,395 Balance, December 31, 2025 4,691,888 117,626 299,033 1,912,123 — 7,020,670 Carrying value Balance, March 31, 2025 4,287,406 128,840 3,865,474 10,266,358 121,957 18,670,035 Balance, December 31, 2025 4,710,197 91,657 4,260,040 8,742,117 121,957 17,925,968 On September 11, 2025, the Company obtained approval for a subsidy in the amount of $947,140. The subsidy relates to energy savings from --- HVAC purchases as a part of the Hydro-Québec Efficient Solutions Program. The subsidy was deducted from the cost of property, plant and equipment. During the nine months ended December 31, 2025, the Company purchased light fixtures in the amount of $553,500. As a part of the Hydro-Québec Efficient Solutions Program, the Company obtained a subsidy for these lights in the amount of $360,000. The net cost of the lights is included as additions of property, plant and equipment. During the three and nine months ended December 31, 2025, the Company allocated $354,313 and $1,109,468 (2024 – $505,931 and $1,309,205) of depreciation expense to the production of biological assets and inventory. MTL Cannabis Corp. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS December 31, 2025 and 2024 [unaudited] [expressed in Canadian dollars, except share amounts] 11 8 Intangible assets and goodwill Customer relationships License Technology Trademarks and brand Goodwill Total Cost $ $ $ $ $ $ Balance, March 31, 2025 8,040,000 3,340,000 390,000 820,000 12,602,050 25,192,050 Balance, December 31, 2025 8,040,000 3,340,000 390,000 820,000 12,602,050 25,192,050 Accumulated amortization Balance, March 31, 2025 3,350,000 2,783,333 130,000 313,334 — 6,576,667 Amortization 1,507,500 556,667 58,500 124,333 — 2,247,000 Balance, December 31, 2025 4,857,500 3,340,000 188,500 437,667 — 8,823,667 Carrying Value Balance, March 31, 2025 4,690,000 556,667 260,000 506,666 12,602,050 18,615,383 Balance, December 31, 2025 3,182,500 — 201,500 382,333 12,602,050 16,368,383 9 Notes payable The following table presents the notes payable for the Company: December 31, 2025 March 31, 2025 $ $ Due to related parties [i] 8,526,477 4,533,268 Promissory notes [ii] — 10,019,085 Total notes payable 8,526,477 14,552,353 Current — 14,552,353 Non-current 8,526,477 — [i] Due to related parties Notes payable are due to certain related parties of the Company. The notes payable bear interest at 17% per annum and are unsecured. As of March 31, 2025, the notes payable balances were due on June 1, 2025. On June 1, 2025, the Company and the related parties entered into amending agreements for the notes payable. The amending agreements deferred repayment of the principal and accrued interest until March 31, 2026. All other terms of the notes remained the same. The Company considered the amendment an extinguishment at maturity and replacement with a new note. No gain or loss was recognized on extinguishment. On July 30, 2025, the Company and the related parties entered into amending agreements for the notes payable. The amending agreements deferred repayment of the principal and accrued interest until August 30, 2028. All other terms of the notes remained the same. The Company recognized a gain of $181,934 on modification of the notes, included in the line-item finance expense, net in the condensed consolidated interim statements of income (loss) and comprehensive (income) loss. On July 30, 2025, the Company also issued two new promissory notes to related parties in the amount of $2,312,358 per note. The new notes mature on August 30, 2028, and incur interest at 17% per annum. The notes were issued to defer repayment of the provision of $5,000,000 owed to the shareholders of MTL Cannabis prior to the Canada House acquisition. The remaining balance of $375,284 was repaid in cash. MTL Cannabis Corp. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS December 31, 2025 and 2024 --- [unaudited] [expressed in Canadian dollars, except share amounts] 12 The following table summarizes the changes to the Company’s due to related party notes payable: December 31, 2025 $ Balance – Beginning of the period 4,533,268 Notes payable issued in settlement of provision 4,624,716 Interest expense 802,351 Repayments (1,251,924) Modification (181,934) Balance – End of the period 8,526,477 [ii] Promissory notes On July 28, 2023, as part of the Canada House acquisition, the Company assumed three promissory notes (the “ISO Promissory Notes”) each with a principal value of $4,167,667, for an aggregate amount of $12,500,000, bearing interest at 5% payable annually. The initial maturity dates of the three promissory notes were December 12, 2023, June 12, 2024, and December 12, 2024. On June 1, 2025, the Company and all of the note holders agreed to amend the promissory notes (the “Third Amended ISO Promissory Notes”). The Third Amended ISO Promissory Notes extended the maturity date for all notes to August 31, 2025. All other terms of the notes remained the same. The Company considered the amendment an extinguishment at maturity and replacement with a new note. No gain or loss was recognized on extinguishment. On July 31, 2025, the Company fully repaid the Third Amended ISO Promissory Notes. December 31, 2025 $ Balance – Beginning of the period 10,019,085 Interest expense 189,132 Repayments (10,208,217) Balance – End of the period — 10 Borrowings The following table presents the borrowings for the Company: December 31, 2025 March 31, 2025 $ $ Unsecured loan [i] 355,147 350,438 RT Facility [ii] 856,038 — NRT 1 Facility [ii] 6,514,292 — NRT 2 Facility [ii] 10,974,525 — Total borrowings 18,700,002 350,438 Current 3,530,288 350,438 Non-current 15,169,714 — [i] Unsecured loan On July 28, 2023, as part of the Canada House acquisition, the Company assumed a three-year unsecured loan provided by a vendor, bearing interest at 2% per annum, payable annually. The loan matured on October 31, 2021, and is due on demand. During the three and nine months ended December 31, 2025, the Company incurred and accrued $1,575 and $4,709 of interest expense (2024 – $1,575 and $4,709). MTL Cannabis Corp. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS December 31, 2025 and 2024 [unaudited] [expressed in Canadian dollars, except share amounts] 13 December 31, 2025 $ Balance – Beginning of the period 350,438 Interest expense 4,709 Balance – End of the period 355,147 [ii] Credit facilities On July 30, 2025, the Company entered into a credit agreement (“Credit Agreement”) with a Canadian Schedule 1 Bank to assist with capital expenditures, finance working capital, and refinance existing debt assumed from the Canada House acquisition. The Credit Agreement was comprised of the following facilities: • an uncommitted demand revolving credit facility of up to $4,000,000 (the “RT Facility”). • A committed non-revolving term credit facility, by way of a single drawdown, in the amount of $6,750,000 (the “NRT 1 Facility”). • A committed non-revolving term credit facility, by way of a single drawdown, in the amount of $12,150,000 (the “NRT 2 Facility”). • An uncommitted delayed draw non-revolving term credit facility, available by way of one or more drawdowns, in the amount of $4,120,000 (the “DDTL Facility”). All facilities (the “Credit Facilities”) mature on July 28, 2028, and bear interest based on the Canadian Overnight Repo Rate Average (“CORRA”) plus an --- applicable margin, or the Canadian prime rate plus an applicable margin. The applicable margin is based on predetermined thresholds for total funded debt to Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”). Upon issuance, the effective interest rate of the NRT 1 Facility and the NRT 2 Facility were 6.85% and 7.05%, respectively. The Credit Facilities are classified as financial liabilities at amortized cost and accounted for using the effective interest rate method. In the case of CORRA loans, interest is repayable on the last day of the applicable interest period selected, on prepayment, and on termination. In the case of Canadian prime rate loans, interest is repayable on the last banking day of each calendar month, on prepayment, and on termination. The balance outstanding under the RT Facility shall be repaid on the maturity date with all accrued and unpaid interest. Prior to the maturity date, amounts which are repaid may be reborrowed under the RT Facility. The credit outstanding under the NRT 1 Facility, NRT 2 Facility, and DDTL Facility shall be repaid in monthly instalments, and the annual sum of the monthly instalments shall equal 5%, 20%, and 2.78% of the drawn amount, respectively. The instalments are paid on the last banking day of each calendar month following the closing date to and including the last full calendar month prior to the maturity date of July 28, 2028. Any balances outstanding after the last instalment payment are repaid at maturity together with all accrued and unpaid interest. The Credit Facilities can be prepaid at any time without penalty. As of December 31, 2025, the Company made drawdowns of $6,750,000 under the NRT 1 Facility, $12,150,000 under the NRT 2 Facility, and utilized $856,038 of the RT Facility. The DDTL Facility remains undrawn. The Company incurred cash transaction costs of $463,085 which are being amortized as accretion expense over the term of the Credit Facilities, included in the line-item finance expense, net in the condensed consolidated interim statements of income (loss) and comprehensive (income) loss. Transaction expenses were allocated to each facility based on the maximum draw amount, and the portion relating to the undrawn amount has been capitalized as a prepaid finance fee in the statement of financial position. The portion allocated to the drawn amount is included in the effective interest rate of each respective facility. The Credit Facilities are secured by a first ranking security over all present and after-acquired property, assets and undertaking in the form of security documents. The Credit Facilities contain a financial covenant requiring the Company to maintain a total funded to EBITDA ratio of 2.00:1.00 for each fiscal quarter from the closing date to June 29, 2026, and a total funded to EBITDA ratio of 1.50:1.00 for each fiscal quarter from and including June 30, 2026 to maturity. The Company is also subject to a fixed charges coverage ratio, requiring a ratio greater than 1.25:1.00 to be maintained at all times. As at December 31, 2025, the Company was in compliance with its financial covenants. MTL Cannabis Corp. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS December 31, 2025 and 2024 [unaudited] [expressed in Canadian dollars, except share amounts] 14 The following table summarizes changes to the Company’s NRT 1 Facility. December 31, 2025 $ Balance – Beginning of the period — Advances 6,750,000 Allocated transaction --- costs (115,686) Interest expense 179,993 Repayments (300,015) Balance – End of the period 6,514,292 The following table summarizes changes to the Company’s NRT 2 Facility. December 31, 2025 $ Balance – Beginning of the period — Advances 12,150,000 Allocated transaction costs (208,234) Interest expense 325,205 Repayments (1,292,446) Balance – End of the period 10,974,525 During the three and nine months ended December 31, 2025, the Company incurred $9,622 of interest expense on the RT Facility. 11 Convertible debentures 2017 Debentures (i) Archerwill Debentures (ii) Total $ $ $ Balance as at March 31, 2024 572,000 4,840,883 5,412,883 Interest accretion expense 72,085 2,420,353 2,492,438 Payments (72,085) (250,000) (322,085) Balance as at March 31, 2025 572,000 7,011,236 7,583,236 Interest accretion expense 19,149 1,320,762 1,339,911 Cash payments (591,149) (8,316,830) (8,907,979) Gain on extinguishment — (15,168) (15,168) Balance as at December 31, 2025 — — — (i) 2017 Debentures On July 28, 2023, as part of the Canada House acquisition, the Company assumed unsecured convertible debentures with an outstanding balance of $607,000 (the “2017 Debentures”). Each 2017 Debentures unit comprised a principal amount of $1,000 and bore interest at 18% per annum, payable monthly. As of July 28, 2023, the 2017 Debentures were due on demand and were no longer convertible. The Company determined that the fair value of the 2017 Debentures was $607,000. During the three and nine months ended December 31, 2025, the Company incurred $nil and $19,149 of interest expense (2024 – $18,170 and $54,311). On July 31, 2025, the Company repaid the 2017 Debentures. (ii) Archerwill Debentures On July 28, 2023, as part of the Canada House acquisition, the Company assumed a secured convertible debenture with a principal value of $6,500,000 (the “Archerwill Debenture”). The Archerwill Debenture bore interest at 8% per annum. The Archerwill Debenture was convertible into common shares at a conversion price of $0.57, MTL Cannabis Corp. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS December 31, 2025 and 2024 [unaudited] [expressed in Canadian dollars, except share amounts] 15 or repayable in cash upon maturity, which was August 8, 2025, unless converted earlier. The Archerwill Debenture was secured by a first ranking security over all present and after-acquired property. The Archerwill Debenture also contained a repayment clause where for each $1.00 paid towards principal or accrued interest of notes payable, $0.50 was payable towards the ISO Promissory Notes (Note 9), $0.25 was payable towards the notes payable to certain related parties (Note 9), and $0.25 was payable towards the Archerwill Debenture. Any repayment was first credited to any accrued and unpaid interest. In addition, for each repayment made, the Company issued the number of warrants equal to the repayment amount divided by the conversion price of $0.57. On July 31, 2025, the Company repaid the Archerwill Debentures in full. The final repayment resulted in the issuance of 14,466,568 warrants (the “Third Archerwill Prepayment Warrants”). The Third Archerwill Prepayment Warrants expire on August 5, 2027. The fair value of the Third Archerwill Prepayment Warrants was determined using the Black-Scholes model. Key assumptions used in the model were a share price of $0.80, an exercise price of $0.57, estimated volatility of 95%, an expected life of 2.01 years, and a risk-free rate of 2.76%. The --- fair value of $6,875,343 was recorded in the line item ‘Finance expense, net’ on the condensed consolidated interim statements of income (loss) and comprehensive income (loss). The Company also recognized a gain on extinguishment of $15,168 recorded in the line item ‘Finance expense, net’ on the condensed consolidated interim statements of income (loss) and comprehensive income (loss). 12 Share capital (a) Authorized The Company has authorized capital consisting of an unlimited number of common shares without par value. (b) Issued and outstanding Common shares # $ Balance – March 31, 2025 116,997,561 11,075,877 Private Placement 3,305,399 1,230,673 Balance – December 31, 2025 120,302,960 12,306,550 On September 19, 2025, the Company closed a brokered private placement offering of 3,147,999 units at a price of $0.65 per unit, for aggregate gross proceeds of $2,046,199 (the “Private Placement”). Each unit consists of one common share of the Company and one-half common share purchase warrant (“Unit Warrant”). Each Unit Warrant entitles the holder to purchase one common share of the Company at an exercise price of $0.98 per full Unit Warrant for a period of 36 months from the issuance date. The fair value of the Unit Warrants was determined using the Black-Scholes option pricing model with the following assumptions: an underlying share price of $0.67, an exercise price of $0.98, a risk-free rate of 2.47%, an expected volatility of 92.45%, an expected life of 3 years and an expected dividend yield of 0%. Total proceeds were allocated based on the relative fair value of the shares and the warrants. The Company allocated $1,630,108 to share capital, and $416,091 to contributed surplus, respectively. Total cash transaction costs were $375,364, resulting in net cash proceeds to the Company of $1,670,835. As at December 31, 2025, $88,648 of the unpaid cash transaction costs were paid. The Company issued 78,700 broker warrants (“Broker Warrants”), 220,360 broker options (“Broker Options”), and 157,400 common shares to agents as compensation for the Private Placement the (“Compensation Shares”). The Broker Warrants have the same terms as the Unit Warrants, and the Broker Options are exercisable to acquire one unit, at an exercise price of $0.65 per unit, for a period of 36 months from the issuance date. The fair value of the Broker Warrants was determined to be $26,919, estimated using the Black-Scholes Model. The inputs to compute the fair value of the Broker Warrants match the input of the Unit Warrants above. The fair value of the Broker Options was determined to be $126,033, estimated using the Black-Scholes Model. The inputs to compute the fair value of the Broker Options is based on the inputs used to compute the fair value of the Unit Warrants, and the following assumptions for the Broker Options: an underlying share price of $0.67, an exercise price of $0.65, a risk-free rate of 2.47%, an expected volatility of 92.45%, an expected life of 3 years and an expected dividend yield of 0%. The Compensation Shares were treated as transaction costs and fair value was determined to be $105,458, based on an underlying share price of $0.67. MTL Cannabis Corp. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS December 31, 2025 and 2024 [unaudited] [expressed in Canadian dollars, except share amounts] 16 The total transaction costs of $633,774 were allocated based on the relative fair value of the shares and the warrants. Transaction cos --- ts of $504,893 were recorded as a reduction to the common shares issued within equity. (c) Warrants The numbers of warrants outstanding at March 31, 2025 and December 31, 2025 were as follows: Number of warrants Weighted average exercise price # $ Outstanding as at March 31, 2025 8,152,379 1.03 Third Archerwill Prepayment Warrants (Note 11) 14,466,568 0.57 Unit Warrants (Note 12(b)) 1,573,999 0.98 Broker Warrants (Note 12(b)) 78,700 0.98 Expired warrants (666,666) 1.20 Expired warrants (333,333) 0.66 Outstanding as at December 31, 2025 23,271,647 0.75 The following table is a summary of the Company’s warrants outstanding as at December 31, 2025: Expiration date Warrants outstanding Weighted average exercise price # $ December 31, 2026 3,244,757 1.50 August 5, 2027 1,733,333 0.75 August 5, 2027 16,640,858 0.57 September 19, 2028 1,652,699 0.98 23,271,647 0.75 The following table is a summary of the Company’s warrants outstanding as at March 31, 2025: Expiration date Warrants outstanding Weighted average exercise price # $ August 30, 2025 666,666 1.20 August 30, 2025 333,333 0.66 December 31, 2026 3,244,757 1.50 August 5, 2027 1,733,333 0.75 August 5, 2027 2,174,290 0.57 8,152,379 1.03 (d) Share options The Company has a share option plan (the “Option Plan”) for directors, officers, employees and consultants of the Company. The Company’s Board of Directors determines, among other things, the eligibility of individuals to participate in the Option Plan and the term, vesting periods, and the exercise price of options granted to individuals under the Option Plan. Each share option converts into one common share of the Company on exercise. No amounts are paid or payable by the individual on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry. The Company’s Option Plan provides that the number of common shares reserved for issuance may not exceed 10% of the Common Shares that are outstanding unless the Board of Directors shall have increased such limit by a resolution of the Board. In addition, the aggregate number of Common Shares so reserved for issuance to one person may not exceed 5% of the total issued and outstanding common shares. If any options terminate, expire, or are cancelled, the number of options so terminated, expired or cancelled shall again be available under the plan. MTL Cannabis Corp. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS December 31, 2025 and 2024 [unaudited] [expressed in Canadian dollars, except share amounts] 17 The change in the number of share options outstanding during the period are as follows: December 31, 2025 December 31, 2024 Number of options Weighted average exercise price Number of options Weighted average exercise price # $ # $ Options outstanding, beginning of period 6,394,998 0.34 854,166 1.00 Options granted (Note 12(b)) — — 5,725,000 0.28 Options forfeited (301,667) 0.30 (10,833) 1.50 Options expired — — (3,336) 4.80 Options outstanding, end of period 6,093,331 0.34 6,564,997 0.37 Options exercisable, end of period 3,380,831 0.39 2,282,081 0.54 During the three and nine months ended December 31, 2025, the Company recognized $49,479 and $196,530 in share-based compensation expense for options (2024 – $135,886 and $631,256). The following table is a summary of the Company’s share options outstanding as at December 31, 2025: Options outstanding Options exer --- cisable Exercise price Number outstanding Weighted average remaining contractual life [years] Weighted average exercise price Number exercisable $ # # $ # 0.26 2,550,000 3.28 0.26 1,275,000 0.29 2,875,000 3.44 0.29 1,437,500 0.63 500,000 2.66 0.63 500,000 1.50 168,331 0.19 1.50 168,331 0.34 6,093,331 3.22 0.39 3,380,831 The following table is a summary of the Company’s share options outstanding as at December 31, 2024: Options outstanding Options exercisable Exercise price Number outstanding Weighted average remaining contractual life [years] Weighted average exercise price Number exercisable $ # # $ # 0.26 2,550,000 4.28 0.26 637,500 0.29 3,175,000 4.44 0.29 793,750 0.63 500,000 3.66 0.63 500,000 1.50 339,997 0.88 1.50 350,831 0.37 6,564,997 4.13 0.54 2,282,081 (e) RSUs On June 6, 2025, the Company adopted a Long-Term Incentive Plan (the “LITP”), which allows the Board of Directors to grant long-term equity-based awards, including RSUs, DSUs, and performance share units (“PSUs”), to eligible participants. The Company’s Board of Directors determines, among other things, the eligibility of individuals to participate in the LITP and the term and vesting period of the awards granted to individuals under the LITP. Each award converts into one common share of the Company. On June 6, 2025, the Company granted 2,000,000 RSUs to various members of management. The RSUs vest in three equal tranches on the first, second and third anniversaries of the grant date. The RSUs had a grant date fair MTL Cannabis Corp. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS December 31, 2025 and 2024 [unaudited] [expressed in Canadian dollars, except share amounts] 18 value of $0.35 per RSU based on the price of the Company’s common shares on the date of grant. The fair value of the awards is recognized over the vesting period of each tranche, with the expense recognized in share-based compensation expense and a corresponding increase to contributed surplus. During the three and nine months ended December 31, 2025, the Company recognized $107,806 and $243,735 in share-based compensation expense for RSUs (2024 – $nil and $nil). The changes in the number of RSUs during the nine months ended December 31, 2025 are as follows: Number of RSUs # Outstanding, beginning of period — Granted during the period 2,000,000 Outstanding, end of period 2,000,000 (f) DSUs On June 6, 2025, and August 28, 2025, the Company granted 3,000,000 and 750,000 DSUs, respectively, to various members of management. All DSUs vest on the third anniversary of the date of the grant. The DSUs had a grant date fair value of $0.35 and $0.67 per DSU, respectively, based on the price of the Company’s common shares on the date of grant. The fair value of the DSUs on the date of grant is expensed over the vesting period, with the expense recognized in share-based compensation expense and a corresponding increase to contributed surplus. During the three and nine months ended December 31, 2025, the Company recognized $165,528 and $304,418 in share-based compensation expense for DSUs (2024 – $nil and $nil). The changes in the number of DSUs during the nine months ended December 31, 2025 are as follows: Number of DSUs # Outstanding, beginning of period — Granted during the period 3,750,000 Outstanding, end of period 3,750,000 (g) Broker options Each broker option (Note 12(b)) is exercisable to acquire one unit, at an exercise price of $0.65 per unit, for a period of 36 months from the issuan --- ce date. Each unit is comprised of one common share and one-half common share purchase warrant. The changes in the number of broker options during the nine months ended December 31, 2025, are as follows: Number of Options # Outstanding, beginning of period — Granted during the period 220,360 Outstanding, end of period 220,360 13 Income (loss) per share The Company presents basic and diluted EPS data for its shares. Basic EPS is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the year. Diluted EPS is determined by adjusting net income (loss) and the weighted average number of common shares outstanding, for the effects of all dilutive potential shares. MTL Cannabis Corp. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS December 31, 2025 and 2024 [unaudited] [expressed in Canadian dollars, except share amounts] 19 For the three months ended December 31, For the nine months ended December 31, 2025 2024 2025 2024 $ $ $ $ Net income (loss) for the period 672,884 (1,220,589) (7,693,612) 2,231,502 Weighted average number of shares for basic EPS 120,302,960 116,997,561 118,235,583 116,997,561 Basic and diluted EPS $0.006 $(0.0110) $(0.065) $0.019 The Company has five categories of potentially dilutive securities: convertible debentures, warrants, share options, RSUs, and DSUs. Basic and diluted income (loss) per share were the same for the three and nine months ended December 31, 2025 and 2024, as the exercise of any potentially dilutive instruments would be anti-dilutive. 14 Finance expense, net Finance expense, net for the three and nine months ended December 31, 2025 and 2024 consists of the following: For the three months ended December 31, For the nine months ended December 31, 2025 2024 2025 2024 $ $ $ $ Interest on lease obligations (Note 6) 467,531 640,496 1,612,226 1,941,088 Interest on notes payable (Note 9) 337,076 397,667 991,483 1,578,326 Interest on borrowings (Note 10) 303,659 91,565 519,531 249,040 Interest on convertible debentures (Note 11) — 746,795 1,339,911 1,667,801 Gain on modification of notes payable (Note 9) — — (181,934) — Gain on extinguishment of convertible debentures (Note 11) — — (15,168) — Warrants issued (Note 11,12) — — 6,875,343 53,146 Other finance expense (income) 110,621 (1,910) 85,424 1,818 1,218,887 1,874,613 11,226,816 5,491,219 15 Nature of expenses General and administrative expenses for the three and nine months ended December 31, 2025 and 2024 consists of the following: For the three months ended December 31, For the nine months ended December 31, 2025 2024 2025 2024 $ $ $ $ Salaries, wages and benefits 2,341,703 3,381,927 10,296,565 10,030,665 General operating 1,683,775 1,583,389 4,500,660 4,184,720 Professional fees 1,129,813 447,807 2,297,549 2,577,023 Occupancy expense 72,899 96,321 229,654 229,617 5,228,190 5,509,444 17,324,428 17,022,025 16 Segmented information The Company reports segment information based on internal reports used by the Chief Operating Decision makers (“CODM”) to make operating and resource decisions and to assess performance. The CODM is represented by the Chief Executive Officer, Chief Operating Officer, Chief Cultivation Officer, and Chief Financial Officer. The CODM makes decisions and assesses performance of the Company through two reportable and operating segments. The Company cultivates and distributes cannabis related products via federally approved cannabis MTL Cannabis Corp. NOTES TO THE CO --- NDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS December 31, 2025 and 2024 [unaudited] [expressed in Canadian dollars, except share amounts] 20 programs by way of its Licensed Producer business. In addition, Company operates its clinic business through its CHC subsidiary. The Company derives substantially all of its revenue from these two segments. The Company primarily operates in one principal geographical area, Canada, accordingly all of the Company’s long-lived assets are located in Canada. For the three and nine months ended December 31, 2025, the Company generated revenue of $nil and $3,338,093 in Portugal (2024 – $nil and $669,500). The following table presents details on the Company’s segments for the three months ended December 31, 2025: Licensed producer CHC Corporate Consolidated $ $ $ $ Revenue Product revenue 20,398,181 95,508 — 20,493,689 Referral revenue and other 217,284 1,708,654 — 1,925,938 Less: excise tax (5,248,498) — — (5,248,498) Net revenue 15,366,967 1,804,162 — 17,171,129 Cost of sales 7,622,164 — — 7,622,164 Gross profit before fair value adjustments 7,744,803 1,804,162 — 9,548,965 Fair value adjustments on biological assets 260,750 — — 260,750 Fair value adjustments on sale of inventory (673,251) — — (673,251) Gross profit 7,332,302 1,804,162 — 9,136,464 Expenses 5,650,344 1,614,957 69,386 7,334,687 Operating income (loss) 1,681,958 189,205 (69,386) 1,801,777 Finance expense, net 1,342,858 97,282 (221,253) 1,218,887 Other (income) loss 205,833 (9,357) (399,998) (203,522) Income (loss) before income taxes 133,267 101,280 551,865 786,412 Income tax (recovery) expense 16,526 97,002 — 113,528 Net income (loss) and comprehensive income (loss) for the period 116,741 4,278 551,865 672,884 MTL Cannabis Corp. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS December 31, 2025 and 2024 [unaudited] [expressed in Canadian dollars, except share amounts] 21 The following table presents details on the Company’s segments for the nine months ended December 31, 2025: Licensed producer CHC Corporate Consolidated $ $ $ $ Revenue Product revenue 68,125,150 273,053 — 68,398,203 Referral revenue and other 220,860 5,056,421 — 5,277,281 Less: excise tax (15,206,840) — — (15,206,840) Net revenue 53,139,170 5,329,474 — 58,468,644 Cost of sales 29,718,633 — — 29,718,633 Gross profit before fair value adjustments 23,420,537 5,329,474 — 28,750,011 Fair value adjustments on biological assets 2,124,074 — — 2,124,074 Fair value adjustments on sale of inventory (3,013,815) — — (3,013,815) Gross profit 22,530,796 5,329,474 — 27,860,270 Expenses 17,684,276 4,655,580 1,610,626 23,950,482 Operating income (loss) 4,846,520 673,894 (1,610,626) 3,909,788 Finance expense, net 3,302,883 230,007 7,693,926 11,226,816 Other income 200,441 (29,789) 789 171,441 Income (loss) before income taxes 1,343,196 473,676 (9,305,341) (7,488,469) Income tax (recovery) expense (181,398) 386,541 — 205,143 Net income (loss) and comprehensive income (loss) for the period 1,524,594 87,135 (9,305,341) (7,693,612) The following table presents details on the Company’s segments for the three months ended December 31, 2024: Licensed producer CHC Corporate Consolidated $ $ $ $ Revenue Product revenue 24,151,972 79,463 — 24,231,435 Referral revenue and other 2,042 1,365,839 — 1,367,881 Less: excise tax (5,644,261) — — (5,644,261) Net revenue 18,509,753 1,445,302 — 19,955,055 Cost of sales 9,534,776 — — 9,534,776 Gross profit before fair value adjustments 8,974,9 --- 77 1,445,302 — 10,420,279 Fair value adjustments on biological assets 475,921 — — 475,921 Fair value adjustments on sale of inventory (2,284,482) — — (2,284,482) Gross profit 7,166,416 1,445,302 — 8,611,718 Expenses 4,671,433 1,310,618 1,714,897 7,696,948 Operating income (loss) 2,494,983 134,684 (1,714,897) 914,770 Finance expense, net 817,456 32,175 1,024,982 1,874,613 Other expense (income) (64,249) 14,689 — (49,560) Income (loss) before income taxes 1,741,776 87,820 (2,739,879) (910,283) Income tax expense 192,804 117,502 — 310,306 Net income (loss) and comprehensive income (loss) for the period 1,548,972 (29,682) (2,739,879) (1,220,589) MTL Cannabis Corp. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS December 31, 2025 and 2024 [unaudited] [expressed in Canadian dollars, except share amounts] 22 The following table presents details on the Company’s segments for the nine months ended December 31, 2024: Licensed producer CHC Corporate Consolidated $ $ $ $ Revenue Product revenue 73,632,607 203,962 — 73,836,569 Referral revenue and other 4,080 4,035,433 — 4,039,513 Less: excise tax (16,329,897) — — (16,329,897) Net revenue 57,306,790 4,239,395 — 61,546,185 Cost of sales 28,615,753 — — 28,615,753 Gross profit before fair value adjustments 28,691,037 4,239,395 — 32,930,432 Fair value adjustments on biological assets 5,250,248 — — 5,250,248 Fair value adjustments on sale of inventory (4,679,641) — — (4,679,641) Gross profit 29,261,644 4,239,395 — 33,501,039 Expenses 14,866,228 3,673,067 4,993,074 23,532,369 Operating income (loss) 14,395,416 566,328 (4,993,074) 9,968,670 Finance expense (income), net 2,458,963 105,199 2,927,057 5,491,219 Other income (143,271) (29,385) — (172,656) Income (loss) before income taxes 12,079,724 490,514 (7,920,131) 4,650,107 Income tax expense (recovery) 2,015,811 420,154 (17,360) 2,418,605 Net income (loss) and comprehensive income (loss) for the period 10,063,913 70,360 (7,902,771) 2,231,502 Non-current assets as at December 31, 2025 and March 31, 2025 were as follows: Licensed producer CHC Total $ $ $ December 31, 2025 Right-of-use assets, net 15,823,693 852,322 16,676,015 Property, plant and equipment, net 17,864,597 61,371 17,925,968 Intangible assets, net 10,711,717 5,656,666 16,368,383 44,400,007 6,570,359 50,970,366 March 31, 2025 Right-of-use assets, net 11,035,875 719,764 11,755,639 Property, plant and equipment, net 18,578,433 91,602 18,670,035 Intangible assets, net 12,241,717 6,373,666 18,615,383 41,856,025 7,185,032 49,041,057 17 Contingencies In the ordinary course of business, from time to time, the Company is involved in various claims related to operations, rights, commercial, employment or other claims. While the outcome of these matters may not be estimable at the reporting date, the Company makes provision, where possible, for the estimate outcome of such claims or proceedings. 18 Related party transactions Key management personnel are those persons having the authority and responsibility for planning, directing and controlling activities of the entity, directly or indirectly and consists of the Chief Executive Officer, Chief Financial Officer, Chief Cultivation Officer, Chief Operating Officer, President, and Directors. MTL Cannabis Corp. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS December 31, 2025 and 2024 [unaudited] [expressed in Canadian dollars, except share amounts] 23 Compensation expense, which consists of salaries, benefits and bonuses fo --- r the Company’s key management personnel for the three and nine months ended December 31, 2025, was $795,838 and $3,448,135 (2024 – $609,295 and $1,893,537). Compensation expense for the nine months ended December 31, 2025 includes 2,000,000 RSUs and 3,000,000 DSUs granted to key management personnel on June 6, 2025, and 750,000 DSUs granted on August 28, 2025. The aggregate fair value of the RSUs and DSUs granted was $700,000 and $1,552,000, respectively. The Company recognized $107,806 and $243,734 in expense for RSUs granted and $88,139 and $199,270 in expense for DSUs granted during the three and nine months ended December 31, 2025, respectively. During the three and nine months ended December 31, 2025, the Company purchased $875,161 and $2,248,250 (2024 – $308,500 and $2,710,088) of equipment and services at market rates from companies owned by key management personnel. As of December 31, 2025, the Company had an outstanding balance of $919,937 (March 31, 2025 – $3,150,207) recorded in trade and other payables. During the three and nine months ended December 31, 2025, the Company made rental and lease payments to related parties totaling $672,747 and $2,018,241 (2024 – $830,067 and $2,710,740). On July 30, 2025, the Company also issued two new promissory notes to the Chief Cultivation Officer and Chief Operating Officer in the amount of $2,312,358 per note. The new notes mature on August 30, 2028, subject to demand by the lender, and bear interest at 17% per annum (Note 9). During the three and nine months ended December 31, 2025, the Company accrued interest of $337,076 and $802,351 (2024 – $193,625 and $381,629) on notes payable balances from the Chief Cultivation Officer and Chief Operating Officer, or companies controlled by the Chief Cultivation Officer and Chief Operating Officer. The Company repaid $nil and $1,251,924 during the three and nine months ended December 31, 2025 (2024 – $374,855 and $864,979). As of December 31, 2025, the Company had an outstanding balance payable of $8,526,477 (March 31, 2025 – $4,533,268) recorded in notes payable in relation to these notes (Note 9). During the three and nine months ended December 31, 2025, the Company accrued interest of $nil and $114,817 (2024 – $111,725 and $332,386) on a promissory note from a director. The Company repaid $nil and $4,253,425 during the three and nine months ended December 31, 2025 (2024 – $98,570 and $318,319). As of December 31, 2025, the Company had an outstanding balance payable of $nil (March 31, 2025 – $4,138,607) recorded in notes payable (Note 9). 19 Capital management The Company’s capital management objectives are to maintain financial flexibility in order to pursue its strategy of organic growth and to provide returns to its shareholders. The Company defines capital as the aggregate of its capital shares, notes payable, borrowings, and convertible debentures. Total managed capital is as follows: December 31, 2025 March 31, 2025 $ $ Notes payable 8,526,477 14,552,353 Borrowings 18,700,002 350,438 Convertible debentures — 7,583,236 Share capital 12,306,550 11,075,877 39,533,029 33,561,904 The Company manages its capital structure in accordance with changes in economic conditions. In order to maintain or adjust its capital structure, the Company may elect to issue or repay financial liabilities, issue shares, repurchase shares, pay dividends or undertake any other activities as deemed appropriate under the specific circumstances. The Company is not s --- ubject to any externally imposed capital requirements.