Cizzle Brands Corp 40-F, filed Oct 28, 2026
Cizzle Brands Corp (CZZLF)
About this 40-F
Cizzle Brands Corp filed this 40-F on October 28, 2026, covering the fiscal year ended July 31, 2026.
Cizzle Brands reported fiscal 2026 revenue of $33.4 million, up 153% from $13.2 million, while gross profit reached $13.1 million and gross margin declined to 39% from 57%. AI summary
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 40-F
¨ Registration statement pursuant to Section 12 of the Securities Exchange Act of 1934
or
x Annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
| For the fiscal year ended July 31, 2026 | Commission File Number 333-298427 |
Cizzle Brands Corporation
(Exact name of Registrant as specified in its charter)
| British Columbia, Canada | 2000 | Not Applicable | ||
| (Province or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification Number) |
35 McCleary Court, Unit 21, Concord, Ontario L4K 3Y9, Canada
(416) 505-0929
(Address and telephone number of Registrant’s principal executive offices)
Bennett Jones (US) LLP
45 Rockefeller Plaza Suite 2602, New York, NY 10111
(212) 680-4120
(Name, address (including zip code) and telephone number (including area code) of agent for service in the United States)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A | N/A | N/A |
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
For annual reports, indicate by check mark the information filed with this Form:
| x Annual information form | x Audited annual financial statements |
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 230,252,282 of the Registrant’s common shares were issued and outstanding as of July 31, 2026.
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Yes ¨ No x
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
Yes ¨ No ¨
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.
Emerging growth company x
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ¨
| † | The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ¨
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ¨
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ¨
FORWARD LOOKING STATEMENTS
This Annual Report on Form 40-F (this “Annual Report”) of Cizzle Brands Corporation (the “Registrant”, “us”, “we”, or “our”) and the exhibits incorporated by reference herein contain “forward-looking information” and “forward-looking statements” within the meaning of applicable Canadian and United States securities laws (collectively, “forward-looking statements”). Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, and other future conditions. Forward-looking statements can be identified by terms and phrases such as “may”, “would”, “should”, “could”, “expect”, “intend”, “estimate”, “anticipate”, “plan”, “foresee”, “believe”, or “continue”, the negative of these terms and similar terminology, including references to assumptions, although not all forward-looking statements contain these terms and phrases. These forward-looking statements include all matters that are not historical facts. They appear in many places throughout this Annual Report and the documents incorporated by reference herein and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, business prospects, growth, strategies and the industry in which we operate.
Although we base the forward-looking statements contained in this Annual Report and the documents incorporated by reference herein on assumptions that we believe are reasonable, we caution you that actual results and developments (including our results of operations, financial condition and liquidity, and the development of the industry in which we operate) may differ materially from those made in or suggested by the forward-looking statements contained in this Annual Report and the documents incorporated by reference herein. In addition, even if results and developments are consistent with the forward-looking statements contained in this Annual Report and the documents incorporated by reference herein, those results and developments may not be indicative of results or developments in subsequent periods. In particular, and without limiting the generality of the foregoing, forward-looking statements in this Annual Report and the documents incorporated by reference herein include statements relating to:
·future products and services;
·expansion of product distribution;
·the Registrant’s growth;
·the expected contribution, ramp-up and profitability of the Registrant’s manufacturing business and of the Registrant’s dual branded and manufacturing operating model;
·the approximately C$184 million of remaining contracted customer production volume at the time of acquisition of the Registrant’s manufacturing business and the related contracted minimum take-or-pay revenue, and the timing and amount of revenue expected to be realized from contract and toll manufacturing;
·expectations regarding production capacity, capacity utilization, production efficiency, overhead absorption and unit cost improvements at The CWENCH Hydration Factory;
·the Registrant’s ability to manufacture CWENCH Hydration and other products in-house and the expected cost of goods sold benefits of doing so;
·the realization of integration benefits, synergies and operating leverage from the acquisition of the Registrant’s manufacturing business;
·the retention and performance of contract manufacturing customers and the renewal or extension of their agreements;
·marketing and business plans and short-term objectives;
·the intention to grow the business, operations and potential activities of the Registrant;
·revenue;
·use of available funds;
·business milestones and objectives;
·the protection of intellectual property;
·the Registrant’s ability to keep pace with changing consumer preferences;
·the Registrant’s ability to retain key personnel;
·the Registrant’s status as a foreign private issuer and an emerging growth company, and the potential that the Registrant may be classified as a passive foreign investment company;
·exploration of new products and opportunities;
·future risks to operations;
·the Registrant’s expectations regarding its business, financial condition and results of operations;
·future market share;
·the outcome of legal proceedings which involve the Registrant;
·strategic plans;
·strategic relationships with third parties;
·the performance of the Registrant’s business and operations;
·the competitive and business strategies of the Registrant;
·the Registrant’s anticipated operating cash requirements and future financing needs;
·the anticipated future gross revenues and profit margins of the Registrant’s operations;
·the Registrant’s business objectives and milestones and the anticipated timing of execution; and
·other risks described in this Annual Report and the documents incorporated by reference herein.
These statements reflect the Registrant’s current views with respect to future events and are based on assumptions and subject to a number of risks and uncertainties, some of which are unknown at this time. The Registrant believes that the risks and uncertainties impacting the Registrant’s forward-looking statements include, but are not limited to, those described or referenced in the “Risk Factors” section of the Registrant’s Annual Information Form for the year ended July 31, 2026, dated October 28, 2026, available on the SEDAR+ website at www.sedarplus.ca and attached hereto as Exhibit 99.1 (the “AIF”), or identified in the Registrant’s Management’s Discussion and Analysis for the year ended July 31, 2026, attached hereto as Exhibit 99.3 (the “Annual MD&A”) and in the Registrant’s subsequent regulatory filings, which include, but are not limited to, the following risks:
·the Registrant’s ability to meet its obligations as they become due;
·the Registrant’s ability to implement its growth strategies;
·the Registrant’s competitive advantages;
·the development of new products and product formats for the Registrant’s products;
·the Registrant’s ability to manage any indebtedness as required;
·the Registrant’s ability to obtain and maintain financing or to re-finance existing indebtedness on acceptable terms, as necessary;
·the impact of competition;
·changes and trends in the beverage industry and markets;
·changes in laws, rules and regulations;
·the Registrant’s ability to maintain and renew required licenses;
·the Registrant’s ability to maintain good business relationships with its customers, distributors and other strategic partners;
·the absence of material adverse changes in the industry and in Canadian, United States or global economies;
·the Registrant’s future business performance;
·the demand for the Registrant’s products; and
·the conditions of the markets that the Registrant serves.
These factors should not be construed as exhaustive and should be read with the other cautionary statements in the AIF, the Annual MD&A, and the documents incorporated by reference herein and therein.
A description of assumptions used to develop such forward-looking statements and a description of additional risk factors that may cause actual results to differ materially from forward-looking statements can be found in the AIF, under the headings “Forward-Looking Statements” and “Risk Factors”, and in the Annual MD&A, under the headings “Cautionary Statement on Forward-Looking Statements” and “Risk Factors and Uncertainties”. Although the Registrant has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended.
Readers are cautioned that the foregoing list of factors is not exhaustive. Readers are further cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Forward-looking statements contained in this Annual Report and the exhibits incorporated by reference herein are expressly qualified by this cautionary statement. The forward-looking statements contained in this Annual Report and the exhibits incorporated by reference herein represent the expectations of the Registrant as of the date of this Annual Report or the applicable exhibit and, accordingly, are subject to change after such date. The Registrant expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities law.
DIFFERENCES IN UNITED STATES AND CANADIAN REPORTING PRACTICES
The Registrant is permitted, under a multijurisdictional disclosure system adopted by the United States, to prepare this report in accordance with Canadian disclosure requirements, which are different from those of the United States. The Registrant prepares its financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”), and the audit is subject to Public Company Accounting Oversight Board auditing standards. IFRS Accounting Standards differ in certain respects from United States generally accepted accounting principles (“U.S. GAAP”) and from practices prescribed by the Securities and Exchange Commission (the “SEC”). Therefore, the Registrant’s financial statements filed with this Annual Report may not be comparable to financial statements prepared in accordance with U.S. GAAP. Because the Registrant’s financial statements are prepared in accordance with IFRS Accounting Standards, no reconciliation to U.S. GAAP is required or included.
CURRENCY
Unless otherwise indicated, all dollar amounts in this Annual Report are expressed in Canadian dollars. References to “C$” or “$” are to Canadian dollars and references to “US$” are to United States dollars. The Registrant’s audited annual consolidated financial statements are presented in Canadian dollars.
ANNUAL INFORMATION FORM
The AIF is attached as Exhibit 99.1 to this Annual Report and is incorporated by reference herein.
AUDITED ANNUAL FINANCIAL STATEMENTS
The Registrant’s audited annual consolidated financial statements as at and for the years ended July 31, 2026 and 2025, together with the notes thereto and the report of the independent registered public accounting firm thereon, are attached as Exhibit 99.2 to this Annual Report and are incorporated by reference herein.
MANAGEMENT’S DISCUSSION AND ANALYSIS
The Annual MD&A is attached as Exhibit 99.3 to this Annual Report and is incorporated by reference herein.
DISCLOSURE CONTROLS AND PROCEDURES
As of the end of the period covered by this Annual Report, the Registrant carried out an evaluation, under the supervision of the Registrant’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Registrant’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based upon that evaluation, the Registrant’s Chief Executive Officer and Chief Financial Officer have concluded that, as of July 31, 2026, the Registrant’s disclosure controls and procedures were effective, and that the design and operation of the Registrant’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by the Registrant in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
INTERNAL CONTROL OVER FINANCIAL REPORTING
Management’s Report on Internal Control Over Financial Reporting
This Annual Report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of the Registrant’s registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.
Attestation Report of the Registered Public Accounting Firm
Under the Jumpstart Our Business Startups Act, “emerging growth companies” are exempt from Section 404(b) of the Sarbanes-Oxley Act of 2002, which generally requires that a public company’s registered public accounting firm provide an attestation report relating to management’s assessment of internal control over financial reporting. The Registrant qualifies as an “emerging growth company” and, therefore, has not included in, or incorporated by reference into, this Annual Report such an attestation report as of the end of the period covered by this Annual Report.
Changes in Internal Control Over Financial Reporting
No change occurred in the Registrant’s internal control over financial reporting during the fiscal year ended July 31, 2026 that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
NOTICES PURSUANT TO REGULATION BTR
The Registrant was not required by Rule 104 of Regulation BTR to send any notices to any of its directors or executive officers during the fiscal year ended July 31, 2026.
AUDIT COMMITTEE
Identification of the Audit Committee
The Board of Directors of the Registrant (the “Board of Directors”) has a separately designated standing audit committee (the “Audit Committee”) established for the purpose of overseeing the accounting and financial reporting processes of the Registrant and audits of the financial statements of the Registrant in accordance with Section 3(a)(58)(A) of the Exchange Act.
As of the date of this Annual Report, the Audit Committee is composed of Michael Doolan (who serves as the Audit Committee’s chair), Geoff Bedford and Dominic Scarangella, all of whom are considered independent based on the criteria for independence prescribed by Rule 10A-3 of the Exchange Act and Rules 5605(a)(2) and (c)(2) of the Nasdaq Stock Market Rules (the “Nasdaq Stock Market Rules”).
The Board of Directors has also determined that each member of the Audit Committee is financially literate, meaning each such member has the ability to read and understand a set of financial statements that present a breadth and level of complexity of the issues that can reasonably be expected to be raised by the Registrant’s financial statements.
Audit Committee Financial Expert
The Board of Directors has determined that each of Michael Doolan and Geoff Bedford (i) qualifies as an “audit committee financial expert” (as defined in Item 407(d)(5)(ii) of Regulation S-K under the Exchange Act) and Rule 5605(c)(2)(A) of the Nasdaq Stock Market Rules; and (ii) is independent (as determined under Exchange Act Rule 10A-3 and Rule 5605(a)(2) of the Nasdaq Stock Market Rules).
The SEC has indicated that the designation or identification of a person as an audit committee financial expert does not make such person an “expert” for any purpose, impose any duties, obligations or liability on such person that are greater than those imposed on members of the Audit Committee and the Board of Directors who do not carry this designation or identification, or affect the duties, obligations or liability of any other member of the Audit Committee or Board of Directors.
CODE OF ETHICS
The Registrant has adopted a Code of Business Conduct and Ethics that applies to directors, officers and employees of the Registrant (the “Code”). The Code is posted on the Registrant’s website at www.cizzlebrands.com/governance. The Code meets the requirements for a “code of ethics” within the meaning of that term in General Instruction 9(b) of Form 40-F. Unless and to the extent specifically referred to herein, the information on the Registrant’s website shall not be deemed to be incorporated by reference in this Annual Report.
All waivers of the Code with respect to any of the employees, officers or directors covered by it will be promptly disclosed as required by applicable securities rules and regulations. Since adoption, and until July 31, 2026, the Registrant did not amend or waive or implicitly waive any provision of the Code with respect to any of the Registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The aggregate fees billed to us by our independent registered public accounting firm, MNP LLP (PCAOB ID 1930), for the fiscal years ended July 31, 2026 and 2025 as Audit Fees, Audit-Related Fees, Tax Fees and All Other Fees were as follows:
| Fiscal Year Ended July 31, | Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
| 2026 | C$415,160 | C$363,800 | C$40,703 | nil |
| 2025 | C$243,960 | C$32,100 | C$3,210 | nil |
“Audit Fees” are fees billed for services provided in auditing the Registrant's annual financial statements. “Audit-Related Fees” are fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Registrant’s financial statements and are not reported as Audit Fees. “Tax Fees” are fees billed for professional services rendered for tax compliance, tax advice and tax planning. “All Other Fees” are fees billed for products and services not included in the foregoing categories.
PRE-APPROVAL OF SERVICES PROVIDED BY INDEPENDENT AUDITOR
The Audit Committee pre-approves all audit and non-audit services to be provided to the Registrant by its independent registered public accounting firm, MNP LLP. The Audit Committee sets forth its pre-approval and/or confirmation of services authorized by the Audit Committee in the minutes of its meetings.
OFF-BALANCE SHEET ARRANGEMENTS
The Registrant does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Registrant’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
MATERIAL CASH REQUIREMENTS
Information regarding the Registrant’s material cash requirements from known contractual and other obligations, including in respect of the senior secured term loan credit facility from OIC, L.P. or its affiliates, the senior secured convertible promissory note issued to Ascent Partners Fund LLC, as amended, the convertible notes issued to K2 Principal Fund L.P. and Fattore Glen Investments Ltd., the promissory note in favor of NFS Capital Ltd., the secured vendor take-back note issued in connection with the acquisition of the Registrant’s manufacturing business, the secured revolving credit facility provided by eCapital Asset Based Lending Corp., and the Registrant’s lease obligations, is included under the heading “Liquidity and Capital Resources” in the Registrant’s Management’s Discussion and Analysis for the year ended July 31, 2026, attached hereto as Exhibit 99.3 and incorporated by reference herein.
RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION
None.
CORPORATE GOVERNANCE
Not applicable.
MINE SAFETY DISCLOSURE
None.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
UNDERTAKING AND CONSENT TO SERVICE OF PROCESS
A. Undertaking. The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the SEC staff, and to furnish promptly, when requested to do so by the SEC staff, information relating to the securities registered pursuant to Form 40-F, the securities in relation to which the obligation to file an annual report on Form 40-F arises or transactions in said securities.
B. Consent to Service of Process. The Registrant has previously filed a Form F-X in connection with its Registration Statement on Form F-10, as amended (File No. 333-298427), appointing Bennett Jones (US) LLP as its agent for service of process in the United States. Any change to the name or address of the Registrant’s agent for service shall be communicated promptly to the SEC by amendment to the Form F-X referencing the file number of the Registrant.
EXHIBIT INDEX
The following documents are being filed with the Commission as Exhibits to this Annual Report:
* To be filed by amendment.
SIGNATURES
Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereto duly authorized.
| CIZZLE BRANDS CORPORATION | |||
| By: | /s/ John Celenza | ||
| Name: | John Celenza | ||
| Title: | Chief Executive Officer, Executive Chairman and Director | ||
Date: October 28, 2026
Exhibit 99.1
ANNUAL INFORMATION FORM
For the Fiscal Year Ended July 31, 2026
October 28, 2026
Table of Contents
| ITEM 1. | CORPORATE STRUCTURE | 13 |
| ITEM 2. | GENERAL DEVELOPMENT OF THE BUSINESS | 14 |
| ITEM 3. | DESCRIPTION OF THE BUSINESS | 20 |
| ITEM 4. | RISK FACTORS | 32 |
| ITEM 5. | DIVIDENDS or Distributions | 51 |
| ITEM 6. | DESCRIPTION OF CAPITAL STRUCTURE | 52 |
| ITEM 7. | MARKET FOR SECURITIES | 56 |
| ITEM 8. | ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTIONS ON TRANSFER | 58 |
| ITEM 9. | DIRECTORS AND OFFICERS | 60 |
| ITEM 10. | PROMOTERS | 64 |
| ITEM 11. | LEGAL PROCEEDINGS AND REGULATORY ACTIONS | 65 |
| ITEM 12. | INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS | 65 |
| ITEM 13. | TRANSFER AGENTS AND REGISTRARS | 65 |
| ITEM 14. | MATERIAL CONTRACTS | 65 |
| ITEM 15. | INTERESTS OF EXPERTS | 66 |
| ITEM 16. | ADDITIONAL INFORMATION | 66 |
| SCHEDULE A | 69 |
| AUDIT COMMITTEE CHARTER | 69 |
GLOSSARY
Unless otherwise indicated, whenever used in this AIF, the following words and terms have the indicated meanings. Words importing the singular, where the context requires, include the plural and vice versa and words importing any gender includes all genders.
“AcquireCo” means Cizzle Brands Acquisition Inc., a corporation incorporated under the CBCA and an indirect wholly owned subsidiary of the Company.
“Acquisition” means the indirect acquisition by the Company, through AcquireCo, of all of the issued and outstanding shares of Flow Water Inc. (now CBMI) from the Vendor, which was completed on the Acquisition Date pursuant to the Share Purchase Agreement.
“Acquisition Date” means December 23, 2025, being the date on which the Acquisition was completed.
“AIF” means this annual information form of the Company for the fiscal year ended July 31, 2026.
“Annual Financial Statements” means the audited consolidated financial statements of the Company as at and for the fiscal year ended July 31, 2026, together with the notes thereto and the independent auditor’s report thereon.
“Ascent” means Ascent Partners Fund LLC.
“Ascent Note” means the senior secured convertible promissory note in the principal amount of US$6,720,867.21 issued by the Company to Ascent on May 5, 2026.
“Base Shelf Prospectus” means the short form base shelf prospectus of the Company dated October 7, 2025, qualifying the distribution of up to $150,000,000 of securities of the Company during the 25-month period following the date of that prospectus.
“BCBCA” means the Business Corporations Act (British Columbia), as amended from time to time.
“Board” means the board of directors of the Company.
“BrandCo” means Flow Canada LLC, an affiliate of the Vendor to which the Excluded Assets were transferred under the Pre-Closing Reorganization, and which continues to operate the Flow brand.
“CBCA” means the Canada Business Corporations Act, as amended from time to time.
“CBI” means Cizzle Brands Inc., a corporation incorporated under the laws of Canada.
“CBMI” means Cizzle Brands Manufacturing Inc., a corporation incorporated under the CBCA and an indirect wholly owned subsidiary of the Company, formerly named Flow Water Inc.
“Cboe Canada” means Cboe Canada Inc.
“CEO” means Chief Executive Officer.
“CFO” means Chief Financial Officer.
“Cizzle” or the “Company” means Cizzle Brands Corporation, formerly 1348512 B.C. Ltd., a company existing under the laws of the Province of British Columbia.
“Common Shares” means common shares in the authorized share structure of the Company, and each a “Common Share”.
Page 1
“Contracted Minimum Revenue” means the minimum payments that customers of the Manufacturing Business will be required to make under the take-or-pay provisions of their manufacturing agreements, whether or not they purchase their contracted volumes.
“Credit Agreement” means the credit agreement dated December 23, 2025 among AcquireCo, as borrower, 17550154 Canada Inc., as parent guarantor, the other guarantors party thereto, OIC, as administrative agent and collateral agent, and the lenders party thereto.
“Credit Facility” means the senior secured term loan credit facility established under the Credit Agreement.
“eCapital” means eCapital Asset Based Lending Corp.
“eCapital Facility” means the secured revolving credit facility, with borrowing limits of $4,000,000 and US$850,000, established in favour of the Company by eCapital in August 2025.
“Escrow Agent” means Odyssey Trust Company, in its capacity as escrow agent under the Escrow Agreement.
“Escrow Agreement” means the escrow agreement among the Company, the Principals and Odyssey Trust Company.
“Excluded Assets” means the assets relating to the marketing and distribution business of Flow Water Inc. and the associated branding and intellectual property, including the Flow brand and related trademarks, each of which was transferred to the Vendor or its affiliates under the Pre-Closing Reorganization and none of which was acquired by the Company.
“Facility” means the two adjacent leased industrial properties in Aurora, Ontario at which the Manufacturing Business is carried on, now known as The CWENCH Hydration Factory.
“Fattore Glen” means Fattore Glen Investments Ltd.
“Flow Agreement” means the non-exclusive manufacturing agreement between Flow Water Inc. (now CBMI) and CBI dated March 13, 2024, which became an intercompany arrangement on completion of the Acquisition.
“Flow Beverage” means Flow Beverage Corp.
“GAAP” means generally accepted accounting principles.
“IFRS” means IFRS Accounting Standards as issued by the International Accounting Standards Board.
“Interim Financial Statements” means the unaudited condensed consolidated interim financial statements of the Company as at and for the three and nine months ended April 30, 2026, together with the notes thereto.
“K2” means The K2 Principal Fund L.P.
“Legacy Option Plan” means the stock option plan of Target, as may be amended from time to time.
“LIFE Offering” means the sale, as part of the US Offering, of up to 902,527 Common Shares on a post-Share Consolidation basis by the Company to purchasers in Canada, other than Québec, at an assumed price of US$5.54 per Common Share, with the final price to be the price set under the US Offering, for aggregate gross proceeds of up to US$5,000,000 pursuant to the listed issuer financing exemption from Canadian prospectus requirements under Part 5A of National Instrument 45-106 – Prospectus Exemptions, as modified by Coordinated Blanket Order 45-935.
Page 2
“LIFE Offering Document” means the offering document of the Company dated October 23, 2026 filed under Part 5A of National Instrument 45-106 – Prospectus Exemptions in respect of the LIFE Offering.
“Manufacturing Business” means the Tetra Pak beverage co-manufacturing and production services business carried on by CBMI at the Facility, which the Company acquired under the Acquisition.
“MD&A” means management’s discussion and analysis.
“Nasdaq” means The Nasdaq Stock Market LLC.
“NI 51-102” means National Instrument 51-102 – Continuous Disclosure Obligations.
“NI 52-110” means National Instrument 52-110 – Audit Committees.
“NFS” means NFS Leasing Canada Ltd., an affiliate of the Vendor.
“NFS Promissory Note” means the promissory note of a subsidiary of the Company held by NFS.
“Nutrablend Agreement” means the non-exclusive manufacturing agreement dated February 22, 2024 between NBF Holdings Canada Inc. and CBI.
“OBCA” means the Business Corporations Act (Ontario) as amended from time to time.
“Offering” means the US Offering, including the LIFE Offering.
“OIC” means OIC Investment Agent, LLC, in its capacity as administrative agent and collateral agent under the Credit Agreement, and the lenders from time to time party to the Credit Agreement, as the context requires.
“Omnibus Plan” means the equity incentive compensation plan of the Company adopted by the Board on December 19, 2024, as amended from time to time.
“Pre-Closing Reorganization” means the series of transactions completed by Flow Water Inc. immediately before the Acquisition Date under which the Excluded Assets were transferred to the Vendor or its affiliates, including BrandCo.
“Prospectus Supplement” means the preliminary prospectus supplement to the Base Shelf Prospectus dated October 26, 2026, as amended or supplemented, relating to the distribution of Common Shares under the US Offering.
“Receiver” means Richter Inc., in its capacity as receiver of Flow Beverage and certain of its subsidiaries, including Flow Water Inc.
“Registration Statement” means the registration statement of the Company on Form F-10 (File No. 333-298427) filed with the SEC on August 19, 2026 under the multijurisdictional disclosure system adopted by the SEC and the Canadian securities regulatory authorities.
“RVO” means the reverse vesting order of the Ontario Superior Court of Justice (Commercial List) granted on October 7, 2025, under which the Vendor indirectly acquired all of the issued and outstanding shares of Flow Water Inc.
“SEC” means the United States Securities and Exchange Commission.
Page 3
“Share Consolidation” means the proposed consolidation of the Common Shares on the basis of one post-consolidation Common Share for every 25 pre-consolidation Common Shares, to be effected in connection with the closing of the Offering.
“Share Purchase Agreement” means the share purchase agreement dated December 23, 2025 among AcquireCo, the Vendor and the Company, under which the Company indirectly acquired all of the issued and outstanding shares of Flow Water Inc.
“Spun-Out Business” means the marketing and distribution business associated with the Excluded Assets, which BrandCo carries on under the Flow brand.
“Subco” means 1001070471 Ontario Inc.
“Target” means Harbour Mission Co. Ltd.
“Transition Services Agreement” means the transition services agreement dated December 23, 2025 among the Company, AcquireCo and BrandCo.
“Underwriters” means Joseph Gunnar & Co., LLC, as lead underwriter, and D. Boral Capital LLC.
“US Offering” means the proposed initial underwritten public offering of between 2,439,024 and 3,048,780 Common Shares on a post-Share Consolidation basis by the Company at a price of between US$4.92 and US$6.15 per Common Share for aggregate gross proceeds of not less than US$15,000,000, including the LIFE Offering, under the Prospectus Supplement and the Registration Statement.
“Offering Closing Date” means the date on which the Offering is completed, which is expected to be on or about October 30, 2026.
“Vendor” means RI Flow Sub LLC, a Delaware limited liability company.
“VHCS” means Van Houtte Coffee Services, a subsidiary of Keurig Dr Pepper.
“VTB Note” means the secured promissory note in the principal amount of C$22,250,000 issued by AcquireCo to the Vendor on the Acquisition Date in partial satisfaction of the purchase price payable under the Share Purchase Agreement, as amended.
“Warrants” means warrants to purchase Common Shares of the Company.
Page 4
ABOUT THIS ANNUAL INFORMATION FORM
All dollar amounts referred to in this AIF are stated in Canadian dollars, unless otherwise indicated. The Company prepares its financial statements in accordance with IFRS. References to “C$” are to Canadian dollars and references to “US$” are to United States dollars.
The information in this AIF is presented as at October 28, 2026 unless otherwise indicated.
In this AIF, unless the context otherwise requires, the “Company” refers to Cizzle Brands Corporation and its subsidiaries.
The Share Consolidation had not been effected as at the date of this AIF. Unless otherwise indicated, all references in this AIF to numbers of Common Shares, to securities convertible into or exercisable for Common Shares and to per share amounts are stated on a pre-Share Consolidation basis. See “Description of Capital Structure – Share Consolidation”.
Market Data
Unless otherwise indicated, market data and certain industry data and forecasts included in this AIF concerning the industry of the Company and the markets in which it operates including its general expectations, legislative regime and market opportunity, is based on information from industry publications and reports generated by several third parties and management estimates. Unless otherwise indicated, management estimates are derived from publicly available information released by independent industry analysts and third-party sources, as well as data from the Company’s internal research, and are based on assumptions made by the Company based on such data and its knowledge of such industry and markets, which the Company believes to be reasonable. These industry publications and reports generally indicate that the information contained therein was obtained from sources believed to be reliable, but do not guarantee the accuracy and completeness of such information. The Company has not independently verified the data in such publications, reports or resources, and such information is inherently imprecise. In addition, projections, assumptions and estimates of the Company’s future performance and the future performance of the industry in which the Company operates are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described under “Forward-Looking Statements” and “Risk Factors” in this AIF. While the Company believes its internal business research is reliable and market definitions are appropriate, neither such research nor definitions have been verified by any independent source. While the Company is not aware of any misstatement regarding any industry or government data presented herein, the industry involves risks and uncertainties that are subject to change based on various factors.
FORWARD-LOOKING STATEMENTS
This AIF includes “forward-looking information” and “forward-looking statements” within the meaning of applicable Canadian securities laws. All information, other than statements of historical facts, included in this AIF that addresses activities, events or developments that the Company expects or anticipates will or may occur in the future is forward-looking information. Forward-looking information is often identified by the words “may”, “would”, “could”, “should”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” or similar expressions and includes, among others, information regarding:
| · | future products and services; |
| · | expansion to product distribution; |
| · | the Company’s growth; |
| · | marketing and business plans and short-term objectives; |
| · | the intention to grow the business, operations and potential activities of the Company; |
Page 5
| · | revenue; |
| · | use of available funds; |
| · | business milestones and objectives; |
| · | the protection of intellectual property; |
| · | exploration of new products and opportunities; |
| · | future risks to operations; |
| · | the Company’s business objectives; |
| · | the Company’s expectations regarding its business, financial condition and results of operations |
| · | future market share; |
| · | intent to build or acquire manufacturing facilities; |
| · | the expected contribution, ramp-up and profitability of the Manufacturing Business and of the Company’s combined branded and manufacturing operating model; |
| · | the approximately C$184 million of remaining contracted customer production volume at the Acquisition Date and the related Contracted Minimum Revenue, and the timing and amount of revenue the Company expects to realize from co-manufacturing and toll manufacturing; |
| · | production capacity, capacity utilization, production efficiency, overhead absorption and unit cost at the Facility; |
| · | the realization of integration benefits, synergies and operating leverage from the Acquisition; |
| · | the retention and performance of the customers of the Manufacturing Business and the renewal or extension of their agreements; |
| · | the completion of the Offering, the use of its net proceeds, the completion of the Share Consolidation and the listing of the Common Shares on Nasdaq; |
| · | the repayment, amendment, conversion, extension or refinancing of the Company’s indebtedness, including the VTB Note, the Credit Facility and the Ascent Note; |
| · | the Company’s anticipated operating cash requirements and future financing needs; |
| · | the outcome of legal proceedings and regulatory matters involving the Company; |
| · | the effects of tariffs implemented between Canada, the United States and other countries; |
| · | strategic plans; and |
| · | strategic relationships with third parties. |
Page 6
These statements reflect the Company’s current views with respect to future events and are based on assumptions and subject to a number of risks and uncertainties, some of which are unknown at this time. Certain assumptions made in preparing the forward-looking statements contained in this AIF include:
| · | the Company’s ability to meet its obligations as they become due; |
| · | the Company’s ability to implement its growth strategies; |
| · | the Company’s competitive advantages; |
| · | the development of new products and product formats for the Company’s products; |
| · | the Company’s ability to manage any indebtedness as required; |
| · | the Company’s ability to obtain and maintain financing or to re-finance existing indebtedness on acceptable terms, as necessary; |
| · | the impact of competition; |
| · | changes and trends in the beverage industry and markets; |
| · | changes in laws, rules and regulations; |
| · | the Company’s ability to maintain and renew required licences; |
| · | the Company’s ability to maintain good business relationships with its customers, distributors and other strategic partners; |
| · | the Company’s ability to keep pace with changing consumer preferences; |
| · | the Company’s ability to protect intellectual property; |
| · | the Company’s ability to retain key personnel; |
| · | the Company’s ability to integrate the Manufacturing Business and to operate the Facility at planned levels of capacity and cost; |
| · | performance by the customers of the Manufacturing Business of their take-or-pay and other contractual obligations; |
| · | the Company’s ability to repay, extend, convert or refinance the VTB Note and its other indebtedness as it becomes due; |
| · | the receipt of all regulatory and stock exchange approvals required for the Offering, the Share Consolidation and the Nasdaq listing; |
| · | the continued availability of the Credit Facility and the eCapital Facility on their existing terms; |
| · | The absence of material adverse changes in the industry and in Canadian, US or global economies including respect of tariffs and trade; |
| · | The Company’s future business performance; |
| · | The demand for the Company’s products; and |
| · | The conditions of the markets that the Company’s serves. |
Although the Company believes that the assumptions underlying its statements are reasonable, they may prove to be incorrect. Given these risks, uncertainties and assumptions, investors should not place undue reliance on the forward-looking information.
Page 7
The purpose of forward-looking information is to provide the reader with a description of management’s expectations, and such forward-looking information may not be appropriate for any other purpose. In particular, but without limiting the foregoing, disclosure in this AIF under “Description of the Business” as well as statements regarding the Company’s objectives, plans and goals, including future operating results and economic performance may make reference to or involve forward-looking information. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, it can give no assurance that such expectations will prove to have been correct.
While the Company believes its plans, intentions and expectations reflected in the forward-looking information are reasonable, it cannot assure you that these plans, intentions or expectations will be achieved. The Company’s actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking information relating to the Company contained in this AIF as a result of various factors, including the risks, uncertainties and assumptions discussed under “Risk Factors”, which include, but are not limited to, the following:
| · | Ability to achieve and manage growth; |
| · | Failure to effectively expand sales capabilities could harm the Company’s ability to increase distribution and achieve broader market acceptance of its products; |
| · | The Company may need additional financing in the future, which may not be available when needed or may be costly and dilutive; |
| · | Changes in consumer preferences may reduce demand for some of the Company’s products; |
| · | The Company’s brand and image are keys to its business and any inability to maintain a positive brand image could have a material adverse effect on its results of operations; |
| · | The Company may be adversely impacted by the effects of high or prolonged inflation; |
| · | Competition from traditional and large, well-financed non-alcoholic beverage manufacturers may adversely affect the Company’s distribution relationships and may hinder development of its existing markets, as well as prevent the Company from expanding its markets; |
| · | The Company competes in an industry characterized by rapid changes in consumer preferences and public perception, so its ability to continue developing new products to satisfy the changing preferences of consumers will determine its long-term success; |
| · | The Company’s reliance on distributors, retailers and brokers could affect its ability to efficiently and profitably distribute and market its products, maintain its existing markets and expand its business into other geographic markets; |
| · | The Company incurs significant time and expense in attracting and maintaining key distributors; |
| · | If the Company loses any of its key distributors or national retail accounts, its financial condition and results of operations could be adversely affected; |
| · | It is difficult to predict the timing and amount of sales because most distributors and retailers are not required to place minimum orders with the Company; |
| · | If the Company does not adequately manage its inventory levels, its operating results could be adversely affected; |
Page 8
| · | If the Company fails to maintain relationships with its independent contract manufacturers, its business could be harmed; |
| · | The Company’s dependence on independent contract manufacturers could make management of its manufacturing and distribution efforts inefficient or unprofitable; |
| · | The Company relies upon its ongoing relationships with its key flavour suppliers. If the Company is unable to source its flavours on acceptable terms from its key suppliers, the Company could suffer disruptions in its business; |
| · | Criticism of the packaged beverage market generally could adversely affect the Company’s operating results; |
| · | If the Company is unable to maintain brand image or product quality, its business could suffer; |
| · | Increased competition could hurt the Company’s business; |
| · | Consolidation of retailers, wholesalers and distributors and the dominant position of a limited number of key players in the industry may result in downward pressure on sales prices; |
| · | The Company’s failure to accurately estimate demand for its products could adversely affect its business and financial results; |
| · | If the Company fails to obtain and retain high-visibility sponsorship or endorsement arrangements with celebrities, or if the reputation of any of the celebrities that the Company partners with is impaired, the business of the Company may suffer; |
| · | The Company’s distributors and vendors are material to the Company’s success. If the Company is unable to maintain good relationships with its existing distributors and vendors, its business could suffer; |
| · | Changing retail landscape could hurt the Company’s business; |
| · | Incorrect product design or development could hurt the Company’s business; |
| · | Product information misrepresentations could happen and may adversely affect the Company’s business; |
| · | The Company relies on third party distributors and other logistics providers; |
| · | The Company relies on key inputs; |
| · | The Company’s success relies on its quality control systems; |
| · | The Company is subject to risks and uncertainty regarding future product development; |
| · | Risks related to the Company’s human capital; |
| · | Increases in costs and/or shortages of raw materials and/or ingredients and/or fuel could harm the Company’s business; |
| · | Fluctuation of quarterly operating results; |
| · | No assurance of profitability; |
| · | Fluctuations in foreign currency exchange rates may adversely affect the Company’s operating results; |
| · | Significant changes in government regulation may hinder sales; |
Page 9
| · | Contamination or recalls of the Company’s ingredients or end products could adversely affect its business; |
| · | The Company’s intellectual property rights are critical to the Company’s success, and the loss of such rights could materially adversely affect its business; |
| · | Litigation or legal proceedings could expose the Company to significant liabilities and thus negatively affect its financial results; |
| · | Future effective tax rates could be subject to volatility or adversely affected by a number of factors; |
| · | Catastrophic events could impact the Company’s operations and affect the Company’s ability to grow its business; |
| · | Climate change may negatively affect the Company’s business; |
| · | The Company’s business is seasonal and adverse weather conditions could negatively affect its business; |
| · | The Company depends on key information systems and third-party service providers; |
| · | If the Company is unable to securely maintain its customers’ confidential or credit card information, or other private data relating to the Company or its employees, the Company could be subject to negative publicity, costly government enforcement actions or private litigation, which could damage its business reputation and negatively affect its results of operations; |
| · | The Company must continually maintain and/or upgrade its information technology systems; |
| · | Conflicts of interest; |
| · | Potential volatility of share price; |
| · | No assurance of active market for shares; |
| · | Dividends; |
| · | A return on the Company’s securities is not guaranteed; |
| · | Global financial conditions; |
| · | Future sales of common shares by existing shareholders; |
| · | Additional issuances and dilution; |
| · | Publication of inaccurate or unfavourable research and reports; |
| · | There are costs associated with maintaining a public listing; |
| · | The Company has a history of losses and negative operating cash flow, and there is a material uncertainty that may cast significant doubt on its ability to continue as a going concern; |
Page 10
| · | The Company has substantial indebtedness, and the agreements governing that indebtedness contain restrictive covenants and events of default; |
| · | The Company may not be able to repay, extend or refinance the VTB Note at maturity; |
| · | Risks relating to the Acquisition, including undisclosed liabilities, the incomplete historical financial records of the Manufacturing Business, integration risk and the failure to realize the anticipated benefits of the Acquisition; |
| · | Revenue of the Manufacturing Business is concentrated in a small number of customers; |
| · | The Manufacturing Business is carried on at a single leased facility; |
| · | The Manufacturing Business depends on the maintenance of licences, registrations and certifications; |
| · | The Company may not complete the Offering or obtain or maintain a listing of the Common Shares on Nasdaq; |
| · | The Share Consolidation may not have the intended effect on the market price of the Common Shares; |
| · | The Company is a foreign private issuer and may cease to qualify as such; |
| · | The conversion or exercise of the Company’s outstanding convertible securities will dilute existing shareholders; |
| · | The Company is exposed to interest rate risk; |
| · | The Company may fail to maintain effective internal control over financial reporting; |
| · | The Company’s insurance may be insufficient; |
| · | A product recall or food safety incident at the Facility could expose the Company to liability; and |
| · | The Company’s relationship with the Vendor gives rise to potential conflicts. |
These risks, uncertainties, assumptions and other factors could cause the Company’s actual results, performance, achievements and experience to differ materially from its expectations, future results, performances or achievements expressed or implied by the forward-looking information.
The forward-looking information made in this AIF relates only to events or information as of the date on which the statements are made in this AIF. In addition, even if results and developments are consistent with the forward- looking information contained in this AIF, those results and developments may not be indicative of results or developments in subsequent periods. The Company undertakes no obligation to update or revise publicly any forward-looking information, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events unless required under applicable securities laws. The Company’s forward-looking information is expressly qualified in their entirety by this cautionary statement.
An investor should read this AIF with the understanding that the Company’s actual future results may be materially different from what is expected.
Page 11
Future Oriented Financial Information
This AIF contains, and the Company has previously disclosed, future oriented financial information and financial outlook within the meaning of applicable Canadian securities laws, including the multi-year expectations the Company disclosed on February 5, 2026. In that disclosure the Company stated that it expected revenue of its manufacturing segment to grow at a compound annual rate of approximately 25% to between $85 million and $95 million annually by fiscal 2030, revenue of its branded segment to grow at a compound annual rate of approximately 45% to between $75 million and $85 million annually by fiscal 2030, consolidated net sales of between $160 million and $180 million annually by fiscal 2030, and consolidated adjusted EBITDA of approximately $15 million in fiscal 2027 growing at a compound annual rate of approximately 55% to approximately $59 million in fiscal 2030. That information was prepared by management using the assumptions described in the disclosure in which it appeared and was presented to assist readers in understanding management’s expectations for the Company’s combined branded and manufacturing operations based on information available to management at that time. It is not a forecast of actual results, and actual results will vary from it, possibly materially. Readers are cautioned that future oriented financial information and financial outlook may not be appropriate for any other purpose.
Page 12
| ITEM 1. | CORPORATE STRUCTURE |
1.1 Name, Address and Incorporation
The Company was incorporated on February 16, 2022, pursuant to the provisions of the BCBCA under the name “1348512 B.C. Ltd.” for the purposes of investigating and evaluating business opportunities to acquire or participate in.
On December 19, 2024, the Company completed a business combination with Cizzle Brands Ltd. by way of a three-cornered amalgamation (the “RTO Transaction”). In connection with the RTO Transaction, prior to the closing of the RTO Transaction, the Company changed its name to “Cizzle Brands Corporation”.
Our head office is located at 35 McCleary Ct, Unit 21, Concord, ON L4K 3Y9, Canada. Our registered and records office is located at 550 Burrard Street, Suite 2300, Vancouver, British Columbia V6C 2B5, Canada.
The Company is a reporting issuer in each of the provinces and territories of Canada.
The Common Shares are listed and posted for trading on Cboe Canada under the symbol “CZZL” and trade in the United States on the OTCQB Venture Market under the symbol “CZZLF”. The Common Shares are also quoted on the Frankfurt Stock Exchange under the symbol “8YF”. On August 19, 2026 the Company filed the Registration Statement with the SEC, and the Company has applied to list the Common Shares on Nasdaq under the symbol “CZZL”. The Company intends to effect the Share Consolidation, and the Common Shares are expected to be listed on Nasdaq, in connection with the closing of the Offering. Listing on Nasdaq will remain subject to the Company satisfying all of the applicable Nasdaq listing requirements, and no assurance can be given that the Common Shares will be approved for listing. See “Risk Factors”.
1.2 Intercorporate Relationships
The following diagram presents the intercorporate relationships among the Company and its subsidiaries as at the date of this AIF.
Page 13
The Company’s material subsidiaries as at the date of this AIF are as follows:
| 1. | CBI, a wholly owned subsidiary of the Company, which is the Company’s principal branded sales and commercial contracting entity; |
| 2. | 17550154 Canada Inc., a corporation incorporated under the CBCA and a wholly owned subsidiary of the Company, which holds all of the issued and outstanding shares of AcquireCo and the shares of which are pledged to the Vendor as security for the VTB Note; |
| 3. | AcquireCo, a corporation incorporated under the CBCA and a wholly owned subsidiary of 17550154 Canada Inc., which is the borrower under the Credit Agreement and the issuer of the VTB Note; and |
| 4. | CBMI, a corporation incorporated under the CBCA and a wholly owned subsidiary of AcquireCo, which carries on the Manufacturing Business at the Facility. CBMI is registered extra-provincially in Quebec, where it is declared under the name “Fabrication Marques Cizzle Inc.”. |
| ITEM 2. | GENERAL DEVELOPMENT OF THE BUSINESS |
The Company was created as a result of a spin out of Larose Ventures Ltd. pursuant to an order of the Supreme Court of British Columbia dated March 24, 2022. Prior to the completion of the RTO Transaction, the Company’s business was to identify and evaluate businesses with a view to completing a reverse takeover with one or more private companies.
Prior to the RTO Transaction, the Company also conducted two non-brokered private placements, namely (a) 937,500 common shares for gross proceeds of $100,000 on September 27, 2024; and (b) 312,500 common shares for gross proceeds of $60,000 on December 13, 2024. The proceeds of these placements were used to fund the RTO Transaction and for general corporate purposes.
Pre-RTO Business of the Target
The Target had acquired and built its business, in part, through the acquisition of Cizzle Brands Inc. (“CBI”) for a purchase price of $5,000,000. The Target changed its name to “Cizzle Brands Ltd.” on February 6, 2024 and completed the acquisition of CBI on February 8, 2024.
CBI was incorporated on August 8, 2023 as a company focused on discovering and commercializing novel ingredients. As the time of the acquisition, CBI was a holding company which owned the formulation of active ingredients which was further developed by the Company to become CWENCH Hydration, and trademark applications for CWENCH Hydration. CWENCH Hydration and Spoken. Total expenses of CBI prior to acquisition by Cizzle Brands Ltd. were de minimis and consisted of mainly incorporation/legal costs and trademark application costs. The Company’s product was only developed after CBI was acquired by the Target and such development was facilitated by CBI’s founder leveraging his experience with contract manufacturers and retail channels. Related expenses are recorded in the financial statements of “Cizzle Brands Ltd.”
The Target had also completed several private placements prior to the RTO Transaction.
| · | Between February and August 2024, a placement of units comprising one common share of the Target and one-half of one share purchase warrant exercisable into one common share of the Target at a price of $0.40 per share. A total of 77,223,270 Target Units were issued for gross proceeds of $15,444,654. In connection with the financing, the Target issued an additional 966,000 units to finders and paid $73,440 in cash as commission to arm’s length finders, along with $60,700 in cash and 303,500 Broker Warrants, each convertible into one unit at an exercise price of $0.20 per Target Unit, as commission to arm’s length agents in connection with the financing. The proceeds of the offering were used for the purchase of CBI and general corporate purposes. |
Page 14
| · | In November 2024, a placement of common shares of the Target pursuant to which 10,185,513 common shares of the Target were issued at a price of $0.30 per share for aggregate gross proceeds of $3,055,655. In connection with the financing, the Target also issued 332,876 common shares and $36,750 in cash as commission to arm’s length finders. |
RTO Transaction
On October 7, 2024, the Company entered into a business combination agreement with Cizzle Brands Ltd. (formerly, Harbour Mission Co, the “Target”), setting forth the terms pursuant to which the RTO Transaction would be completed. The Target was incorporated on January 10, 2024 under the laws of the Province of Ontario and its purpose on incorporation was to facilitate a transaction with one or more food and beverage companies.
On November 21, 2024, the Company incorporated 1001070471 Ontario Inc. (“Subco”) under the OBCA for the purposes of completing the RTO Transaction. Subco was incorporated for the purposes of the RTO Transaction; it had no material assets and did not conduct any operations or active business prior to the completion of the RTO Transaction.
On November 12, 2024, in connection with the RTO Transaction, the Target also completed a private placement of 3,458,940 subscription receipts for aggregate gross proceeds of $1,037,682. On the closing date of the subscription receipt financing, the proceeds were deposited in escrow pending the occurrence of the escrow release conditions. In connection with the financing, the Target issued 239,781 warrants to finders, each convertible into one common share of the Target at an exercise price of $0.30 per share, and $71,934 in cash to arm’s length finders.
On December 10, 2024, Cboe Canada conditionally approved the listing of the Common Shares of the Company under the symbol “CZZL” and the Common Shares were listed and posted for trading on Cboe Canada on December 30, 2024.
On December 19, 2024, the Company completed the RTO Transaction, acquiring the Target and taking over its principal business. In connection with the completion of the RTO Transaction, the following transactions were completed:
| · | Each subscription receipt outstanding was automatically converted into one common share of the Target. |
| · | Each common share of the Target outstanding was exchanged for one Common Share. |
| · | Each common share purchase warrant of the Target outstanding was exchanged for one common share purchase warrant of the Company on commensurate terms. |
| · | Each stock option of the Target outstanding was exchanged for one stock option of the Company on commensurate terms. |
| · | The Target amalgamated with Subco, and the amalgamated corporation became a wholly owned subsidiary of the Company. |
Page 15
In connection with the RTO Transaction, the Company was renamed “Cizzle Brands Corporation.” Upon completion of the RTO Transaction, the Company assumed the business of Target as described in “Description of the Business”.
2.1 Fiscal 2025
The Common Shares were listed and posted for trading on Cboe Canada on December 30, 2024. On February 25, 2025 the Common Shares began trading in the United States on the OTCQB Venture Market under the symbol “CZZLF” and became eligible for electronic clearing and settlement through the Depository Trust Company.
During fiscal 2025 the Company extended the distribution of CWENCH Hydration across Canadian grocery, pharmacy, specialty and gas and convenience channels, launched its Spoken Nutrition product line in January 2025 and entered into the distribution arrangement with VHCS described under “Description of the Business – Principal Markets”. The Company also became the official hydration partner of USA Hockey in April 2025 and entered into sponsorship arrangements with Massachusetts Hockey, Minnesota Hockey and the Michigan Amateur Hockey Association in May 2025.
On July 10 and July 15, 2025 the Company closed, in two tranches, a non-brokered private placement of 12,504,671 units at a price of $0.36 per unit for aggregate gross proceeds of $4,501,682. Each unit was comprised of one Common Share and one Warrant exercisable to acquire one Common Share at a price of $0.44 per Common Share for a period of 36 months from closing. The Company paid finders’ and referral fees of $20,088 in cash and issued 70,611 units. Insiders of the Company subscribed for 258,905 units and employees of the Company subscribed for 1,255,556 units. The participation of insiders constituted a “related party transaction” within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions, and the Company relied on the exemptions from the formal valuation and minority approval requirements in sections 5.5(a) and 5.7(1)(b) thereof on the basis that the fair market value of the insider participation did not exceed 25% of the Company’s market capitalization.
For the fiscal year ended July 31, 2025 the Company recorded net sales of $13,184,554, gross profit of $7,545,891 and a net loss and comprehensive loss of $13,858,831, and held cash of $3,137,254 at year end.
2.2 Fiscal 2026
On August 7, 2025 the Company appointed Ndamukong Suh, Michael Doolan and Geoff Bedford to the Board.
On August 19, 2025 the Company established the eCapital Facility, being a three-year secured revolving credit facility with borrowing limits of $4,000,000 and US$850,000, to provide non-dilutive working capital to support the growth of its branded business.
On September 9, 2025 the Company launched HappiEats Sport Pasta, the first product under its HappiEats brand. During the first half of fiscal 2026 the Company also secured retail listings for CWENCH Hydration across Circle K locations in Ontario, 149 Loblaws, Zehrs, Real Canadian Superstore and Atlantic Superstore locations, more than 500 Petro-Canada locations, all 84 Pure Hockey locations in the United States and 91 Popeye’s Supplements Canada locations, and became the official sport drink of the National Hockey League’s Ottawa Senators.
On October 7, 2025 the Company filed the Base Shelf Prospectus, qualifying the distribution of up to $150,000,000 of Common Shares, preferred shares, warrants, debt securities, subscription receipts and units during the 25-month period following the date of that prospectus.
Page 16
Acquisition of the Manufacturing Business
On the Acquisition Date the Company, through AcquireCo, indirectly acquired all of the issued and outstanding shares of Flow Water Inc. from the Vendor pursuant to the Share Purchase Agreement, and thereby acquired the Manufacturing Business. Immediately before closing, Flow Water Inc. completed the Pre-Closing Reorganization, under which the Excluded Assets were transferred to the Vendor or its affiliates, including BrandCo. The Company did not acquire the Flow brand or the Spun-Out Business. On December 30, 2025 Flow Water Inc. filed articles of amendment changing its name to “Cizzle Brands Manufacturing Inc.”, and the Facility was renamed The CWENCH Hydration Factory.
The total consideration payable to the Vendor under the Share Purchase Agreement was US$32,823,789.89, plus C$38,548,358.94, plus an amount equal to the aggregate cash balances of Flow Water Inc. at the financial adjustment time, less an amount equal to the indebtedness of Flow Water Inc. at that time, and adjusted for any inventory deficit or surplus. The purchase price was satisfied at closing by the issuance of the VTB Note and by a cash payment of the balance. For accounting purposes under IFRS 3, the consideration transferred for the Manufacturing Business was approximately $35.8 million, consisting of cash of approximately $13.6 million and the VTB Note, and the Company also repaid indebtedness of Flow Water Inc. of approximately $45.2 million on the Acquisition Date. See note 6 to the Annual Financial Statements. The Acquisition constituted a “significant acquisition” for the purposes of Part 8 of NI 51-102, and the Company filed a business acquisition report in respect of the Acquisition on September 18, 2026. See “Description of the Business – The Manufacturing Business” and “Material Contracts”.
The Company financed the cash component of the purchase price through the Credit Facility, a senior secured term loan credit facility provided by OIC. The Credit Facility has a five-year term and bears interest at 12% per annum, payable quarterly in arrears in cash or, subject to certain conditions and for a limited period, in kind. The Credit Facility is secured by a first lien on all of the assets of CBMI and is guaranteed by the Company and its manufacturing-related subsidiaries. The aggregate committed amount under the Credit Facility is C$68,855,000, comprising an initial term loan of C$55,084,000 and an additional commitment of C$13,771,000, being US$40,000,000 and US$10,000,000 respectively at the applicable rate of exchange. The initial term loan of C$55,084,000 was advanced at closing, of which US$32,823,789.89 funded the United States dollar component of the cash consideration, and the Company issued 7,500,000 Warrants to OIC exercisable at $0.40 per Common Share until December 23, 2030. As at July 31, 2026 the fair value of the initial term loan was C$57,654,795, and as at October 1, 2026 approximately US$42,577,083 of principal and accrued interest was outstanding under the Credit Facility.
AcquireCo satisfied the balance of the purchase price in part through the issuance of the VTB Note to the Vendor in the principal amount of C$22,250,000. The VTB Note bears interest at 12% per annum compounding monthly, with principal and accrued interest due at maturity, and is secured by a pledge of the shares of 17550154 Canada Inc. The VTB Note was originally scheduled to mature on December 23, 2026 but was extended pursuant to an amendment to the VTB Note dated October 7, 2026 subject to certain conditions. See “Developments Subsequent to the End of Fiscal 2026”.
Concurrently with the Acquisition, and as required under the Credit Agreement, the Company completed non-brokered private placements for aggregate gross proceeds in excess of C$10,000,000, consisting of (i) an offering of 11,892,500 units at a price of $0.40 per unit, with each unit comprised of one Common Share and one-half of one Warrant exercisable at $0.60 per Common Share for 24 months from closing, subject to acceleration, and (ii) convertible notes issued to K2 in the principal amount of C$5,000,000 and to Fattore Glen in the principal amount of C$2,500,000. Those notes bear interest at 7.2% per annum payable monthly, are convertible at the option of the holder at a price, at present, of $0.32 per Common Share and mature on December 23, 2028. The Company issued 500,000 Common Shares and 71,250 units as finders’ fees and 53,750 units for services.
Other Fiscal 2026 Developments
On January 21, 2026 the Company held its annual general meeting of shareholders, at which each of John Celenza, Geoff Bedford, Michael Doolan, Nunziato Fattore, Lauri Holomis and Ndamukong Suh was elected a director and MNP LLP was reappointed as auditor of the Company.
Page 17
During fiscal 2026 the Company continued to expand its brand partnerships and retail distribution. CWENCH Hydration became the official sports drink of USA Lacrosse in January 2026 and of the New York State Amateur Hockey Association in February 2026. The Company launched two new CWENCH Hydration flavours in January 2026, being Miracle On Ice, in partnership with USA Hockey and under a trademark licence from Miracle On Ice, LLC, and Golden Berry, in partnership with Nathan MacKinnon, and launched a limited edition Draft Day Blue flavour in June 2026. In February 2026 the Company launched SnakStars Sport Bites under its HappiEats brand.
The Company secured its first national retail listing in the United States in February 2026, at 109 Target locations and on Target.com, and in Canada secured listings at 197 Walmart Canada locations and more than 170 Save-On-Foods locations, expanded its Loblaws and Real Canadian Superstore distribution to approximately 400 locations and launched at approximately 180 Canadian Tire Gas+ locations. In April 2026 UNFI Canada recognized CWENCH Hydration as one of the fastest-growing brands in its network.
On April 30, 2026 the Company announced the appointment of David Giancoulos to the Board effective May 1, 2026.
On May 5, 2026 the Company completed a senior secured convertible note financing with Ascent for gross proceeds of US$6,200,000, issuing the Ascent Note, 21,460,534 Warrants exercisable at US$0.23488 (approximately C$0.32) per Common Share until May 5, 2031 and 429,210 Common Shares as a one-time closing fee. The Ascent Note bears interest at 9.5% per annum payable monthly, matures on November 5, 2027 and is convertible into Common Shares at the United States dollar equivalent of C$0.32 per Common Share. The Ascent Note is secured by a second-priority lien over substantially all of the assets of the Company and certain of its subsidiaries and is guaranteed by certain subsidiaries, in each case subject to intercreditor and standstill arrangements with OIC, the Vendor and eCapital.
In May 2026 the Company also completed a C$1,000,000 unsecured convertible note financing with a single accredited investor, which was converted in full and cancelled. In connection with that financing the Company issued 476,190 Common Shares, 2,857,143 Common Shares on conversion at a price of C$0.35 per Common Share and 1,428,571 Warrants exercisable at C$0.35 per Common Share. The Company also issued 1,552,595 Common Shares at a deemed price of C$0.32 per Common Share in settlement of approximately C$497,000 of indebtedness.
For the fiscal year ended July 31, 2026 the Company recorded net sales of $33,366,433, gross profit of $13,104,221 and a net loss and comprehensive loss of $42,399,147, and held cash of $5,959,920 at year end.
2.3 Developments Subsequent to the End of Fiscal 2026
On August 13, 2026 CWENCH Hydration was named the official hydration drink of the esports organization Luminosity Gaming.
On August 19, 2026 the Company filed the Registration Statement with the SEC under the multijurisdictional disclosure system, announced its intention to list the Common Shares on a national securities exchange in the United States and appointed Dominic Scarangella to the Board and to the Audit Committee.
On August 26, 2026 the Board approved an extension of the expiry time of the Warrants issued in connection with the Company’s unit private placement completed between February and August 2024, from August 28, 2026 to November 28, 2026, and the Company entered into a first supplemental warrant indenture to give effect to that extension.
On September 18, 2026 the Company filed a business acquisition report in respect of the Acquisition. In connection with that filing the Company obtained an order from the Ontario Securities Commission exempting it from the requirement in section 8.4 of NI 51-102 to include certain historical financial statements of the Manufacturing Business, on the condition that the business acquisition report and any prospectus of the Company include abbreviated financial statements of the acquired business. Full carve-out financial statements of the Manufacturing Business were impracticable because Flow Beverage did not maintain distinct accounts for that business, which was not accounted for as a separate entity, subsidiary, division or reporting segment.
Page 18
On September 29, 2026 the Company announced a multi-year agreement with Maple Leaf Sports & Entertainment under which CWENCH Hydration will become the official sports drink of the Toronto Maple Leafs and the Toronto Marlies. See “Description of the Business – Marketing Plan and Strategies”.
On October 7, 2026 the Company and the Vendor entered into an amending agreement in respect of the VTB Note. Under that agreement, on closing of the Offering the Company will pay the Vendor US$10,000,000 in repayment of principal and in satisfaction of interest, fees and expenses, the maturity date of the VTB Note will be extended from December 23, 2026 to December 31, 2027 and the Company will issue 2,000,000 Warrants to the Vendor, being 80,000 Warrants after giving effect to the Share Consolidation, exercisable for a period of two years at the price at which Common Shares are issued under the Offering. The extension of the maturity date is conditional on, among other things, the repayment being made by the date specified in the amending agreement and the amendment of a related agreement with OIC. OIC has agreed to consent to the Offering, the repayment and extension of the VTB Note and the related transactions. Also on October 7, 2026, the NFS Promissory Note, in the principal amount of US$2,951,200 and maturing in January 2027, was amended so that its maturity date will be extended to January 2028 if, on or before January 2027, the Company prepays US$1,475,600 of principal and pays an amendment fee of US$147,560.
On October 13, 2026 the Company filed a preliminary prospectus supplement to the Base Shelf Prospectus qualifying the distribution in the United States of Common Shares, and on October 26, 2026 it filed the Prospectus Supplement. The Company proposes to complete the US Offering for aggregate gross proceeds of not less than US$15,000,000, at a price of between US$4.92 and US$6.15 per Common Share on a post-Share Consolidation basis, including up to US$5,000,000 under the LIFE Offering. Joseph Gunnar & Co., LLC will act as lead underwriter and D. Boral Capital LLC as underwriter, and the Underwriters will be paid a commission of 6.5% of the gross proceeds of the Offering (3.75% on Common Shares sold to purchasers on the Company’s president’s list, and nil on Common Shares issued on the rollover or conversion of existing indebtedness), will receive a warrant to purchase that number of Common Shares equal to 5.0% of the Common Shares sold under the Offering (2.5% for president’s list purchasers), exercisable from six months until three years after closing at 120% of the offering price, and will receive a non-accountable expense allowance equal to 1.0% of the gross proceeds and reimbursement of their reasonable expenses up to an agreed maximum.
On October 23, 2026 the Company filed the LIFE Offering Document under Part 5A of National Instrument 45-106 – Prospectus Exemptions in respect of the proposed LIFE Offering of up to 902,527 Common Shares on a post-Share Consolidation basis at an assumed price of US$5.54 per Common Share, with the final price to be the price set under the US Offering, for aggregate gross proceeds of up to US$5,000,000. The LIFE Offering forms part of the US Offering and will be completed only on the concurrent completion of the US Offering. Common Shares issued under the LIFE Offering will not be subject to a hold period under Canadian securities laws. The LIFE Offering Document is available under the Company’s profile on SEDAR+ at www.sedarplus.ca and on the Company’s website. The Offering is expected to raise aggregate gross proceeds of not less than US$15,000,000.
On closing of the Offering the Company expects to: (i) pay the Vendor US$10,000,000 in repayment of principal of, and in satisfaction of interest, fees and expenses under, the VTB Note, extend the maturity date of the VTB Note to December 31, 2027 and issue 2,000,000 Warrants to the Vendor; (ii) issue 7,812,500 Common Shares to K2 on the conversion of C$2,500,000, being 50% of the principal amount of the K2 Note, and 7,812,500 Common Shares to Fattore Glen on the conversion of C$2,500,000, being the full principal amount of the Fattore Glen Note, in each case at a conversion price of $0.32 per Common Share; (iii) repay US$413,333.33 under the Ascent Note and issue 7,153,511 Common Shares to Ascent on the conversion of US$1,680,216.80, being approximately 25% of the principal amount of the Ascent Note; and (iv) effect the Share Consolidation and list the Common Shares on Nasdaq. Each of Ascent, K2 and Fattore Glen has agreed, subject to conditions, to enter into a standstill and lock-up agreement for a period of 90 days from closing, and the directors and executive officers of the Company are expected to enter into lock-up agreements with the Underwriters.
Page 19
Completion of the Offering, the Share Consolidation and the Nasdaq listing remains subject to a number of conditions, including market conditions, the satisfaction of the conditions in the underwriting agreement and the receipt of all required regulatory and stock exchange approvals, and no assurance can be given that any of them will be completed. Conversion share numbers are stated on a pre-Share Consolidation basis and assume conversion of the Ascent Note at US$0.23488, being the United States dollar equivalent of C$0.32 fixed at the closing of the Ascent financing. See “Risk Factors”.
As at October 1, 2026 the Company had indebtedness outstanding of approximately C$107,306,008 in the aggregate, consisting of approximately US$42,577,083 under the Credit Facility, C$24,406,539 under the VTB Note, US$6,720,867 under the Ascent Note, US$2,951,200 under the NFS Promissory Note, C$7,500,000 of principal under the convertible notes held by K2 and Fattore Glen and approximately C$981,004 under the eCapital Facility. Assuming completion of the Offering and the repayments and conversions made on the Offering Closing Date, the Company expects indebtedness outstanding of approximately C$84.0 million in the aggregate, consisting of approximately US$42,577,083 under the Credit Facility, C$10.4 million under the VTB Note, US$4.6 million under the Ascent Note, US$2,951,200 under the NFS Promissory Note, C$2,500,000 of principal under the K2 Note and approximately C$981,004 under the eCapital Facility, in each case before interest accruing after October 1, 2026 and translating United States dollar amounts at the Bank of Canada daily average exchange rate on October 23, 2026 of US$1.00 = C$1.3993. See “Risk Factors”.
| ITEM 3. | DESCRIPTION OF THE BUSINESS |
3.1 General
Cizzle is a consumer-packaged goods company, operating under the emerging “better-for-you” category of food and hydration. Cizzle exists to provide consumers with high-performing alternatives that are healthy, taste great, and meet their needs.
Following the Acquisition, the Company conducts its operations through two principal businesses. Its branded business develops, markets, sells and distributes products under the Company’s own brands, being CWENCH Hydration, Spoken Nutrition and HappiEats. Its manufacturing business comprises the Manufacturing Business, being the Tetra Pak beverage co-manufacturing and production services business that CBMI carries on at the Facility for both the Company’s own brands and third-party brands. Management believes that ownership of the Manufacturing Business may provide the Company with greater control over the supply and scaling of its ready-to-drink products, the opportunity to retain a greater portion of the economics associated with their manufacture, and an additional platform for revenue and potential cash flow generation. The extent and timing of those benefits will depend on, among other factors, production volumes, capacity utilization, operating efficiency, customer performance and successful integration of the Manufacturing Business.
Principal Products
The Company has launched three brands to market: (i) CWENCH Hydration, in the sports hydration category; (ii) Spoken™ Nutrition, its line of athlete-grade nutritional supplements; and (iii) HappiEats™, its line of food products.
CWENCH Hydration
Containing no sugar, all-natural ingredients, only 10 calories and 6+ performing electrolytes, CWENCH Hydration is a next generation sports hydration drink developed by strength coach, Andy O’Brien, and the Company’s management team. CWENCH Hydration is currently offered in two formats: (i) hydration powder mix; and (ii) 500ml ready-to-drink Tetra Paks, and is offered in five flavours: Berry Crush, Blue Raspberry, Cherry Lime, Rainbow Swirl and Tropical Flow, along with limited time flavour offerings Celly Freeze, Pink Lemon Flow, Rocket Berry Blast, PowerPlay Punch, Miracle On Ice™, Golden Berry and Draft Day Blue. The Miracle On Ice™ flavour is offered under a trademark licence from Miracle On Ice, LLC and in partnership with USA Hockey, and the Golden Berry and Draft Day Blue flavours were developed in partnership with Nathan MacKinnon and Gavin McKenna respectively. The hydration powder mix comes in two sizes, a 10-serving pack of individual sachets (70 grams in total) or a 45-serving container (315 grams).
Page 20
On October 15, 2026 the Company launched CWENCHIE™, a formulation and format of CWENCH Hydration developed specifically for children.
CWENCH Hydration is endorsed by world-class athletes, including 2024 National Hockey League (“NHL”) MVP and Colorado Avalanche forward, Nathan MacKinnon, Montreal Canadiens forward, Cole Caufield, National Basketball Association (“NBA”) All-Star and Miami Heat forward, Andrew Wiggins, Canadian Olympic soccer player, Adriana Leon, and Toronto Maple Leafs forward and first overall selection in the 2026 NHL Draft, Gavin McKenna, and up-and-coming professional hockey players Chloe Primerano and Jade Iginla.
To date, Cizzle Brands products have been ordered by more than 21 NHL teams, 21 Major League Baseball teams, 5 NFL teams and 4 NBA teams. Cizzle Brands products are currently available in more than 6,900 points of distribution across Canada, the United States and Europe, including SportChek, Canadian Tire, LifeTime, Metro, Longos, Sobeys, Fortinos, Loblaws, Circle K, Petro Canada, United Supermarkets, Pure Hockey, Pro Hockey Life, London Drugs, Golf Town, Healthy Planet, Farm Boy, INS Markets, MacEwen Gas, Source for Sports, Walmart Canada, Target, Save-On-Foods, Zehrs, Real Canadian Superstore, Atlantic Superstore, Canadian Tire Gas+ and Popeye’s Supplements Canada. CWENCH Hydration is also being distributed by a number of major distributors.
Spoken NutritionTM
Spoken NutritionTM is a premium line of nutritional supplements, designed to bring elite athletes into the Cizzle ecosystem. All Spoken Nutrition™ products carry the NSF Certified for Sport® designation, a certification program that confirms sports supplements and sports nutritional products do not contain substances banned by many major athletic organizations.
The team that formulated Spoken Nutrition’s™ products includes Dr. Matt Frakes (New York Giants Dietician), Brianne Brown (University of Miami Strength & Conditioning Coach), Alan Bishop (University of Houston Director of Men’s Basketball Sports Performance), David Lawrence (Strength Coach to Six NFL Super Bowl Winners), Ben Prentiss (Experienced NHL Strength Coach), Dr. Jordan Shallow (Doctor of Chiropractic and Strength Coach to Elite Athletes), Dr. Sachin Patel (Functional Medicine Doctor), and Cizzle’s Chief Performance Officer, Andy O’Brien.
Spoken Nutrition’s™ product line includes:
| · | Spoken™ Sleep Builder: containing only amino acids (such as l-theanine, glycine and glutamine), inositol and three forms of magnesium (orotate, glycerophosphate and glycinate), Spoken™ Sleep Builder is formulated to help people get more restorative sleep without the use of melatonin, 5-HTP and other herbal supplements. |
| · | Spoken™ Greens: Spoken™ Greens contains 20 high-impact, nutrient-rich ingredients in quantities that aims to assist in a healthy lifestyle. |
| · | Spoken™ Aminos + ATP: formulated to have a high dose of leucine, added tyrosine and Peak ATP to assist with increased muscle protein synthesis, increased dopamine and help with cellular energy. |
| · | Spoken™ Creatine: aims to increase body/lean muscle when used in conjunction with a resistance training regimen. It also aims to improve strength, power and performance. |
Page 21
| · | Spoken™ High EPA Fish Oil + D: made from sustainable wild-caught anchovy, sardine, and mackerel low in heavy metals, was intentionally formulated to contain 700mg of EPA (eicosapentaenoic acid) along with 300 mg of DHA (docosahexaenoic acid), Spoken’s™ High EPA Fish Oil + D is a high dose Omega-3 supplement, supplemented with lipase to enhance absorption. |
| · | Spoken™ MAG 3: formulated to be a beneficial source of magnesium for cardiovascular, cognitive, muscular, and brain health. Spoken™ MAG 3 not only aims to increase magnesium levels in the brain but also to raise blood serum magnesium levels. Each serving contains 225 mg of elemental magnesium from three highly bioavailable forms: Magnesium Glycinate, Magnesium Malate, and ATA Mg®, a patented acetyl taurinate magnesium salt. |
| · | Spoken™ Pro Resolving Mediators + EPA/DHA: formulated to manage pain, help our bodies avoid the ravages of injury and promote a natural, balanced recovery process. Each capsule of Spoken™ Pro Resolving Mediators + EPA/DHA contains 14-HDHA, 17-HDHA, and 18-HEPE, along with their source materials, eicosapentaenoic acid (EPA) and docosahexaenoic acid (DHA). |
| · | Spoken™ Vitamin D3 + K1/K2: each capsule of Spoken™ Vitamin D3 + K1/K2 provides 2000 IUs of Vitamin D, along with 120 mcg of K1 and 90 mcg of K2. |
| · | Spoken™ Essential Daily Packs: formulated to be the essential, all-in-one foundational vitamin and nutritional supplement for athletes and people living an active lifestyle, Spoken™ Essential Daily Packs are convenient all-in-one packs designed to fill the critical nutritional gaps that can impact performance. |
| · | Spoken™ Grass Fed Whey Protein: a protein supplement that contains 25 grams of grassfed whey protein, Tendoforte® collagen and 3 grams of fat from olive oil or cocoa. |
| · | Spoken™ Grass Fed Beef Protein: features 25 grams of complete protein from grass-fed beef bone broth |
HappiEats™ Sport Pasta™
Sport Pasta™ is handmade in Italy using a unique four-ingredient recipe including red lentil, white quinoa, and white bean flour, while maintaining the taste of traditional Italian pasta. It is slowly dried at low temperatures to preserve its nutritional qualities, and its formulation offers athletes easy digestion and sustained energy. Sport Pasta™ is higher in protein and fibre than conventional pasta, with a single serving (85 grams) of Sport Pasta containing 18 grams of protein and 10 grams of fibre.
Product Roadmap
The Company maintains a product roadmap and continues to develop further products and formats with its manufacturing partners. Management will evaluate market conditions to determine when and if to launch any further product, and no further launch has been announced as at the date of this AIF. The products most recently brought to market under this roadmap were SnakStars™ Sport Bites, launched in February 2026, and CWENCHIE™, launched in October 2026, neither of which required the Company to incur material development costs. Please refer to “Business Objectives and Milestones” for the timing and status of those launches.
A key feature of the Company’s strategy is to develop a distribution channel platform that would support many different “better-for-you” products as well as potential insourcing of key business functions, such as manufacturing. We are continually evaluating potential opportunities for both new products that fit our mission to elevate health and wellness, as well as manufacturing.
Page 22
3.2 The Manufacturing Business
The Manufacturing Business consists of the Tetra Pak beverage co-manufacturing and production services business that CBMI carries on at the Facility for both the Company’s own brands and third-party brands. Before the Acquisition, Flow Water Inc. was the outsourced manufacturer of CWENCH Hydration in ready-to-drink format. By acquiring the Manufacturing Business the Company secured its supply of ready-to-drink product, removed third-party manufacturing margin and obtained control over the scaling of its ready-to-drink production.
The operations of the Manufacturing Business are carried on at two adjacent leased industrial properties in Aurora, Ontario, which house the Tetra Pak manufacturing equipment and the related inventories necessary for continuous beverage production. The Facility holds the food production licences, registrations and certifications necessary to serve Canadian and United States customers, including a licence under the Safe Food for Canadians Act, a United States Food and Drug Administration registration, NSF International GMP and HACCP certification, OU Kosher certification and licences issued by the Canada Revenue Agency in respect of the production of alcoholic beverages. Certain of those certifications and permits are scheduled to expire within the next 12 to 18 months and will require renewal. See “Risk Factors”.
Take-or-Pay Contracts
At the Acquisition Date the Manufacturing Business had approximately C$184 million of remaining contracted customer production volume under existing customer agreements. Those agreements contain take-or-pay provisions under which customers will be required to make minimum payments of approximately C$158 million in the aggregate over the remaining terms of the agreements, whether or not they purchase any of their contracted volumes. Contracted Minimum Revenue is neither a forecast nor a guarantee of revenue. It depends on customers performing their obligations and is subject to the termination and other provisions of the underlying agreements. As at October 1, 2026, approximately C$160 million of contracted volume and C$136 million of Contracted Minimum Revenue remained.
In the aggregate, these agreements contain minimum annual volume commitments with commitment periods extending through 2027 for non-alcoholic products and through 2030 for alcoholic products. If a customer fails to purchase its minimum annual volume in a contract year, the customer will be required to pay a shortfall amount calculated by reference to the unpurchased volume and the applicable co-packing fee.
The current third-party customers of the Manufacturing Business are BeatBox, in which Anheuser-Busch acquired an 85% interest in 2026, Joyburst and the Spun-Out Business. CBMI also manufactures Flow-branded products for BrandCo at the Facility under a manufacturing services agreement dated the Acquisition Date. A substantial majority of the revenue of the Manufacturing Business is derived from BeatBox and the Spun-Out Business. See “Economic Dependence” and “Risk Factors”.
3.3 Principal Markets
In Canada, Cizzle has national distribution coverage with a strong focus in three geographic markets: (i) the Greater Toronto Area; (ii) the Montreal and Ottawa corridor; and (iii) the Greater Vancouver Area.
On January 29, 2025, the Company announced it had entered into a distribution agreement with Van Houtte Coffee Services (“VHCS”), a subsidiary of Keurig Dr Pepper, pursuant to which VHCS will distribute the Company’s CWENCH Hydration product lineup across Canada. As part of its agreement, VHCS will also take over distributorship for many of the Company’s existing accounts in various categories including sporting goods retailers and stadiums.
The Company’s distribution strategy in Canada was initially focused on a combination of: (i) direct sales to sports and specialty retailers, as well as “points of sweat” such as hockey arenas, fitness centres and training facilities; and (ii) broker/distributors in the sports and natural/organic channels. However, as brand awareness has grown, the Company has started distributing through major Canadian grocery and gas & convenience stores, including Loblaws, Metro, Longos, Sobeys, Fortinos, Circle K, PetroCanada, MacEwen Gas and others. As brand awareness continues to grow, we anticipate that Canadian distribution will expand further to mass merchandise and club channels.
Page 23
As with Canada, our distribution strategy in the United States involves a combination of: (i) direct sales to sports and specialty retailers, as well as "points of sweat" such as hockey arenas, fitness centres, training facilities; and (ii) broker/distributors in the sports and natural/organic channels. In the United States, our focus is on hockey-centric markets, including Connecticut, Minnesota and Colorado.
In addition to sales through retail channels, the Company maintains a solid online presence through its own website www.cwenchhydration.com as well as online retailers such as Amazon. Part of the Company's strategy is to continue its online marketing efforts in order to increase sales through e-commerce channels in a more aggressive and efficient manner.
3.4 Sales
In fiscal 2026 the Company’s manufacturing segment accounted for $21,541,535, or 64.6%, of the Company’s revenues and its branded business accounted for $11,824,898, or 35.4%, comprising its retail/wholesale segment, which accounted for $9,937,654, or 29.8%, and its consumer segment, which accounted for $1,887,244, or 5.7%. By brand, CWENCH Hydration accounted for approximately $9.1 million, or 27.3%, of the Company’s revenues, Spoken Nutrition for approximately $2.3 million, or 6.9%, and HappiEats for approximately $0.4 million, or 1.2%. In fiscal 2025, CWENCH Hydration delivered 92% of the Company’s revenues and Spoken Nutrition delivered 8%, and the Company had no manufacturing segment. As the Company brings new brands to market, the proportionate contribution of CWENCH Hydration will naturally adjust to reflect its share of revenue over the entire portfolio of brands.
3.5 Production
Since the Acquisition the Company has manufactured CWENCH Hydration in ready-to-drink format in-house, at the Facility. The Company continues to outsource the manufacture of its other products. CWENCH Hydration’s hydration powder mix is manufactured by JW Nutritionals, AN Labz and Invapharm. Spoken is manufactured by various manufacturers depending on the product, including Nutrablend, JW Nutritionals, WIN Nutrition, Pharmaline and RFI, LLC. Sport Pasta is presently manufactured by Federico Export SRL.
3.6 Components
The main ingredient in the CWENCH Hydration ready-to-drink is primarily a combination of water, flavours, and electrolytes. The CWENCH Hydration powder mix is primarily a combination of amino acids, electrolytes and vitamins and minerals.
The Company purchases raw materials (i.e., ingredients for its products) from various suppliers at fair market prices.
3.7 Specialized skills and knowledge
The Company’s branded business requires knowledge of the consumer packaged goods and sports nutrition industries. Since the Acquisition the Company also requires specialized skills and knowledge in aseptic beverage manufacturing, including the operation and maintenance of Tetra Pak filling and packaging equipment, food safety and quality assurance, and regulatory compliance in both Canada and the United States. The Company employs qualified plant, quality assurance and engineering personnel at the Facility, and competition for that personnel may be significant. See “Risk Factors”.
3.8 Research
The Company is continually exploring new product opportunities as well as piloting new flavours and ingredients. These efforts are a result of both in-house development work as well as in conjunction with third party researchers, facilities and manufacturers.
Page 24
3.9 Operations
The Company’s activities consist of developing, marketing, selling and distributing foods and beverages in the "better for you" category under a variety of brand names. The Company also carries on the Manufacturing Business, and outsources the manufacture of its remaining products to established third party manufacturers. The Company occupies its head office at 35 McCleary Court, Unit 21, Concord, Ontario under lease. CBMI occupies the Facility, being the premises at 145 and 155 Industrial Parkway South, Aurora, Ontario, under leases from Aurora Investments Inc., and owns the Tetra Pak manufacturing equipment and related plant located there. Under the Credit Agreement the Company agreed to use commercially reasonable efforts to register a notice of lease in respect of the Facility on title and to obtain a subordination, non-disturbance and attornment agreement from the landlord’s mortgagee in favour of the collateral agent.
The Company’s intellectual property and goodwill play an important role in the success of the business. However, the Company is not subject to any franchise, license, software or subscription list.
3.10 Business Objectives and Milestones
The table below outlines the key milestones and the estimated timing for the 16 months following the date of this AIF. These milestones and estimates are based on the Company’s reasonable expectations and reasonable courses of action and current assumptions and judgment. The Company expects that the milestones outlined in the chart will be achieved under the normalized scenario.
Many of these milestones are already underway. To align with projected revenues and cash usage, certain supporting resources will be scaled appropriately, focusing on efficient execution and on managing cash burn in line with the normalized operating plan.
| Description | Status | Estimated/Announced Timing |
Type of Expense |
| Expand the foundational account distribution of CWENCH Hydration and secure retail listings | The Company had more than 6,900 points of distribution as at August 19, 2026, up from over 5,300 as at October 2025. | Ongoing | Selling, General and Administrative Expenses |
| Expansion of marketing campaigns and advertising for CWENCH Hydration | During fiscal 2026 the Company executed marketing campaigns in support of the Miracle On Ice, Golden Berry and Draft Day Blue flavour launches, the Ottawa Senators, USA Lacrosse, New York State Amateur Hockey Association and Luminosity Gaming designations and the Maple Leaf Sports & Entertainment agreement. | Ongoing | Marketing |
| Launch of “Spoken Nutrition” product line through distribution in the fitness and sports communities | Launched in January 2025. Complete. | Complete | Selling, General and Administrative Expenses |
| Launch of “Sport Pasta” product line in conventional retailers and grocers | HappiEats Sport Pasta launched on September 9, 2025. Complete. | Complete | Selling, General and Administrative Expenses |
| Launch of CWENCHIE Hydration drinks designed specifically for children | CWENCHIE launched on October 15, 2026. Complete. | Complete | Selling, General and Administrative Expenses |
Page 25
| Launch of SnakStars snack products fortified with protein designed for the youth market | SnakStars Sport Bites launched on February 19, 2026. Complete. | Complete | Selling, General and Administrative Expenses |
| Integrate the Manufacturing Business and internalize the functions provided under the Transition Services Agreement | Complete. The Company has established stand-alone administrative, finance and quality functions at the Facility. | Complete | Selling, General and Administrative Expenses |
| Expand production capacity at The CWENCH Hydration Factory, including additional Tetra Pak aseptic filling and packaging capacity | In progress. Additional production line equipment is to be installed and commissioned at the cost of BrandCo under the Transition Services Agreement. | Ongoing | Capital Expenditures |
| Complete the Offering, effect the Share Consolidation and list the Common Shares on Nasdaq | The Registration Statement was filed on August 19, 2026, preliminary prospectus supplements were filed on October 13, 2026 and October 26, 2026 and the LIFE Offering Document was filed on October 23, 2026. An application to list the Common Shares on Nasdaq has been made. Completion remains subject to market conditions and to regulatory and stock exchange approval. | Ongoing | Selling, General and Administrative Expenses |
| Repay, extend or refinance the VTB Note and reduce the Company’s indebtedness | US$10,000,000 of the VTB Note is to be repaid on closing of the Offering and the maturity date is to be extended to December 31, 2027 under the amending agreement dated October 7, 2026. The balance will have to be repaid, extended or refinanced before maturity. | On closing of the Offering and thereafter to December 31, 2027 | Debt Service |
The Company also anticipates potential financings for growth purposes, such as inventory build for new customer volume requirements, marketing and sponsorship initiatives, or hiring to support growth and new initiatives, are expected to be of a size that would not materially impact the Company’s capitalization ($5,000,000 - $10,000,000 at a time). The Company may use a mix of common shares, debt, or hybrid securities (such as warrants) depending on market conditions.
The achievement of the foregoing milestones will depend on the ability of the Company to obtain additional financing, and there is no guarantee that such financing will be secured or that it will be available on a timely basis or on acceptable terms. Notwithstanding the receipt of the net proceeds of the Offering, the Company will require additional financing to fund its operations and to satisfy its obligations as they become due. See “Risk Factors”.
Page 26
3.11 Marketing Plan and Strategies
Brand Purpose, Core Beliefs and Value Proposition
The Company's mission is to elevate the game in health & wellness by positioning itself at the forefront of an emerging secular shift happening in consumer markets. Specifically, consumers are becoming increasingly aware of how unhealthy foods continue to have a significantly negative impact on health and quality of life. Globally, obesity rates have tripled since 1975 and increased nearly 33% since 2018. In the US 42.4% of adults and 19.7% of children are classified as obese.1 As a result, the number of people with Type 2 diabetes has increased 5x since 19802, with 34.2 million Americans now having Type 2 diabetes2 and rates climbing more steeply in children and young adults.3
The Company views the primary driver of the changes noted above to be diet, with ultra-processed foods often being rich in added sugars, unhealthy fats, and artificial ingredients. Sugar has become the new “bad word” in the world of health & wellness.
While some consumers attempt to eat healthier, their choices are often unappetizing, uninspired or expensive. This has created an opportunity for companies with strong brands, high quality ingredients and premium products to thrive.
The Company seeks to provide consumers with high-performing alternatives that are healthy, taste great, and meet their needs.
Marketing Strategies
The Company undertakes a number of marketing strategies to increase brand awareness, expand distribution into new channels and drive purchases of the Company’s products. All marketing activities, including channels and partners, are chosen and conducted with the brand as top of mind.
Our strategy involves trying to drive bottom-up distribution along with top-down demand to drive velocity. To achieve this, the Company is focused on direct sales to locations frequented by target consumers, followed by in- store demonstrations, product sampling and retail activations in specific retail channels. At the same time, the Company is actively investing in athlete and creator partnerships and sponsorship programs to create top-of-funnel awareness, including with 2024 NHL MVP and Colorado Avalanche forward, Nathan MacKinnon, Montreal Canadiens forward, Cole Caufield, NBA All-Star and Miami Heat forward, Andrew Wiggins, Canadian Olympic soccer player, Adriana Leon, and Toronto Maple Leafs forward and first overall selection in the 2026 NHL Draft, Gavin McKenna, and up-and-coming professional hockey players Chloe Primerano and Jade Iginla. These efforts are supported by active investment in digital and social media awareness initiatives.
3.12 Competitive Conditions
The global functional beverage market is estimated to be a $97 billion dollar industry4, of which $13 billion is comprised of the sports drink market5. Within the sports drink market, premium products are the fastest growing price category (51%) and zero sugar products are the fastest growing category in sugar content (46%).
1 https://www.who.int/news-room/fact-sheets/detail/obesity-and-overweight
2 https://diabetesatlas.org/
3 https://www.cdc.gov/diabetes/php/data-research/methods.html
4 https://grandviewresearch.com/industry-analysis/functional-drinks-market
5 https://www.alliedmarketresearch.com/sports-drink-market-A06554
Page 27
Although the sports drink market is dominated by a few key players, by positioning CWENCH Hydration as a premium, all-natural and sugar-free sports drink, the Company believes it is well-situated to capture a growing share of the sports drink market, and the functional beverage market more broadly.
The Manufacturing Business competes with other co-packers and contract manufacturers of beverages in Canada and the United States, including the in-house manufacturing capacity of its own customers and of their affiliates. Competition in that market is based principally on available and suitable capacity, format capability, price, quality, food safety accreditation, service levels and proximity to the customer’s markets. Management believes that the Facility is well positioned on each of those bases. The number of facilities in North America capable of filling beverages in aseptic Tetra Pak format is limited, and management believes that installed capacity for the 500ml Tetra Pak format in the United States is particularly limited relative to demand. The Company has uncommitted capacity available at the Facility and the ability to add further filling lines there, which management believes positions the Manufacturing Business to compete for United States volumes in that format. The Company’s ability to realize that opportunity depends on, among other things, securing customers for the available capacity and funding and commissioning additional lines. See “Risk Factors”.
The tables below highlight some of the key players and how CWENCH Hydration is differentiated from other products in the category.
Page 28
3.13 Intangible Properties
The Company invests heavily in building brand awareness for its products in key markets. Accordingly, the Company looks to proactively protect its products and brands through trademarks and contractual provisions. The enforcement of the Company’s intellectual property rights depends on any legal actions against any infringers being successful. These actions may not be successful or may be prohibitively expensive. The Company’s trademarks are registered, and its applications are filed, in the name of CBI, a wholly owned subsidiary of the Company, and not in the name of the Company itself. As at the date of this AIF CBI held 16 trademark files in Canada, of which 8 are registered, and 10 live files in the United States, of which 6 are registered. Two further United States applications have been abandoned, as described below. Marks are shown as they appear on the relevant register, so the presentation of a mark may differ between the two countries.
Page 29
The following marks are registered with the Canadian Intellectual Property Office:
| (1) | CIZZLE BRANDS – registration no. TMA1394347 (application no. 2364892) |
| (2) | HAPPiEATS & Design – registration no. TMA1409807 (application no. 2382122) |
| (3) | HAPPIEATS – registration no. TMA1409808 (application no. 2382123) |
| (4) | S Star Logo – registration no. TMA1351518 (application no. 2316637) |
| (5) | SPOKEN – registration no. TMA1363428 (application no. 2307224) |
| (6) | SPOKEN SLEEP BUILDER – registration no. TMA1394346 (application no. 2364891) |
| (7) | SPORT BITES – registration no. TMA1450178 (application no. 2429006) |
| (8) | SPORT PASTA – registration no. TMA1363705 (application no. 2325757) |
The following Canadian applications remain pending:
| (9) | CELLY FREEZE – application no. 2390468 (approved) |
| (10) | CELLY FREEZE & Design – application no. 2390467 (approved) |
| (11) | CWENCH – application no. 2294798 (under examination) |
| (12) | CWENCH HYDRATION – application no. 2294810 (under examination) |
| (13) | CWENCHIES – application no. 2308920 (advertised) |
| (14) | PR*TEIN BITES & Design – application no. 2429007 (under examination) |
| (15) | SNAKSTARS – application no. 2316638 (advertised) |
| (16) | SNAKSTARS PROTEIN BITES – application no. 2429008 (under examination) |
The following marks are registered on the Principal Register of the United States Patent and Trademark Office:
| (17) | CIZZLE BRANDS – registration no. 8056012, registered December 9, 2025 (serial no. 98878332) |
| (18) | CWENCH HYDRATION – registration no. 8357390, registered July 21, 2026 (serial no. 98743910) |
| (19) | S & Design – registration no. 8156057, registered March 3, 2026 (serial no. 98483939) |
| (20) | SPOKEN – registration no. 8408141, registered August 25, 2026 (serial no. 98631141) |
| (21) | SPOKEN SLEEP BUILDER – registration no. 8320589, registered June 30, 2026 (serial no. 98878318) |
| (22) | SPORT PASTA – registration no. 8182771, registered March 24, 2026 (serial no. 98540470) |
The following United States applications remain pending and have been suspended by the examining attorney:
| (23) | HAPPIEATS – serial no. 99081961 |
| (24) | HAPPIEATS & Design – serial no. 99082090 |
| (25) | SNAKSTARS – serial no. 98483875 |
| (26) | SPORT BITES – serial no. 99444059 |
Page 30
United States applications for SNAKSTARS PROTEIN BITES (serial no. 99444024) and PR*TEIN BITES & Design (serial no. 99444048) were abandoned in June 2026 for failure to respond to office actions, and the period within which CBI could petition to revive those applications has expired. CBI may file fresh applications for those marks, which would take new filing dates and would be subject to examination and to any intervening third-party rights. The Company does not consider either mark to be material to its business.
3.14 Cycles
Cizzle's business is not cyclical, however it is slightly seasonal for CWENCH Hydration with slightly increased sales during warm weather months. The Company produces and sells products throughout the entire year.
3.15 Economic Dependence
Since the Acquisition the Company has manufactured its CWENCH Hydration ready-to-drink products at the Facility, and the Flow Agreement has become an intercompany arrangement. The Manufacturing Business is carried on at a single facility, and a significant disruption or delay in production at the Facility could significantly reduce the Company’s revenues, because alternative manufacturing capacity in Canada and the United States may not be available at commercially reasonable rates, within a reasonably short period of time, or at all.
In addition, two customers each represented over 10% of the Company’s total revenues. Specifically, for fiscal 2026, Customer 1 and Customer 2, each a customer of the Manufacturing Business, generated 38.3% and 11.6%, respectively, of total revenues. In fiscal 2025, the two customers that each represented over 10% of total revenues generated 20.4% and 12.7%, respectively. A decline in orders from either could have a significant impact on revenues.
The customer concentration of the Manufacturing Business is more pronounced. A substantial majority of the revenue of that segment is derived from BeatBox, Joyburst and from the Spun-Out Business. The loss of any of those customers, a material reduction in the volumes they order, or a failure by either of them to perform its take-or-pay obligations would have a material adverse effect on the Company. BeatBox is majority owned by Anheuser-Busch, which has its own manufacturing capacity and may elect not to renew or extend its agreement on expiry or may seek to assign, terminate or renegotiate it. The Company’s agreement with the Spun-Out Business is with an affiliate of the Vendor, and that commercial relationship may be affected by any dispute under the Share Purchase Agreement, the VTB Note or the Transition Services Agreement. See “Risk Factors”.
3.16 Changes to Contracts
Other than as described below and under “General Development of the Business”, the Company does not expect any changes in the current financial year as a result of the renegotiation or termination of contracts.
On the Acquisition Date the Company acquired Flow Water Inc., which was then renamed CBMI, and the Flow Agreement became an intercompany arrangement. In connection with the Acquisition, CBMI entered into a manufacturing services agreement with BrandCo and the Company, AcquireCo and BrandCo entered into the Transition Services Agreement. On October 7, 2026 the Company and the Vendor entered into an amending agreement in respect of the VTB Note. See “General Development of the Business” and “Material Contracts”.
Page 31
3.17 Social or Environmental Policies
The packaging chosen by the Company for CWENCH Hydration is integral to the CWENCH Hydration story and brand. CWENCH Hydration's ready-to-drink products are offered in Tetra Pak cartons, a format the Company selected for product differentiation and consistency with its brand positioning. Tetra Pak cartons are made primarily from paperboard and are shelf-stable without refrigeration.
Since the Acquisition the Company has operated a beverage manufacturing facility and is accordingly subject to environmental laws and regulations governing, among other things, water use and discharge, wastewater and solid waste, air emissions and the handling and storage of regulated substances. As at the date of this AIF, management does not expect environmental protection requirements to have a material effect on the capital expenditures, earnings or competitive position of the Company.
3.18 Employees
As at the date of this AIF the Company has 135 employees, of whom 28 are employed in the Company’s branded business and 107 are employed at the Facility in the Manufacturing Business. All employees are located in Canada. None of the Company’s employees is represented by a trade union or subject to a collective agreement.
3.19 Foreign Operations
The Company manufactures its ready-to-drink products at the Facility in Canada. Manufacturing of the Company’s powder and supplement products currently takes place in the United States. The Sport Pasta is manufactured in Italy. Branded products (e.g., shaker bottles, towels) are manufactured in China. Management assessed the Company’s non-Canadian assets to be immaterial. The Company does not foresee any risks associated with foreign operations or any dependence of the segments upon the foreign operations, other than those noted under the heading “Risk Factors” in this AIF.
3.20 Lending
As of the date hereof, the Company does not conduct any lending operations, nor does it have in place any investment policies and/or investment restrictions.
| ITEM 4. | RISK FACTORS |
There are certain risks associated with owning securities of the Company that holders should carefully consider. The risks and uncertainties below are not the only risks and uncertainties facing the Company. Additional risks and uncertainties not presently known to the Company or that the Company currently considers immaterial may also impair the business, operations and future prospects of the Company and cause the price of its securities to decline. If any of the following risks actually occur, the business of the Company may be harmed and its financial condition and results of operations may suffer significantly. In that event, the trading price of the Company’s securities could decline, and holders may lose all or part of their investment. In addition to the risks described elsewhere in the Company’s filings on SEDAR+ at www.sedarplus.ca, holders of securities should carefully consider each of, and the cumulative effect of all of, the following risk factors.
4.1 Risks Relating to the Company’s Business, Industry and Operations
Ability to achieve and manage growth
The growth of the Company’s operations may place a strain on managerial, financial and human resources and the Company’s ability to continue its rate of growth will depend on a number of factors, including the availability of working capital, existing and emerging competition, the ability to maintain sufficient profit margins and to recruit and train additional qualified personnel, both with respect to sales and product development, the ability to expand its product offering and the ability to identify and successfully integrate acquisitions of other companies or products.
Page 32
Failure to effectively expand sales capabilities could harm the Company’s ability to increase distribution and achieve broader market acceptance of its products
Increasing the Company’s customer base and achieving broader market acceptance of its products platforms will depend, in part, on its ability to effectively expand its sales and effectively conduct marketing operations to drive new sales. The Company is substantially dependent on distribution partners, its online marketing efforts and on its direct sales force to obtain new customers. The bulk of the Company’s sales have historically come from a small number of key distributors that focus on the natural channel. In order to achieve its expansion goals, the Company must become less reliant on current key distributors and expand into conventional grocery/food, mass merchandise and club, and gas/convenience channels. If the Company is unable to expand its distribution, it may not be able to deliver sufficient volume for the Company to meet its internal targets. The Company’s ability to achieve significant revenue growth in the future will depend, in part, on its success in recruiting, training and retaining a sufficient number of distribution partners and experienced sales professionals. Our recent and planned distribution partners may not become productive as quickly as expected. If sales expansion efforts do not generate a significant increase in revenue, business and future growth prospects could be harmed.
The Company may need additional financing in the future, which may not be available when needed or may be costly and dilutive
The Company may require additional financing to support working capital needs in the future. The amount of additional capital required, the timing of capital needs and the availability of financing to fund those needs will depend on a number of factors, including the Company’s strategic initiatives and operating plans, the performance of its business and the market conditions for debt or equity financing. Additionally, the amount of capital required will depend on the Company’s ability to meet its sales goals and otherwise successfully execute its operating plan. The Company believes it is imperative that it meet these sales objectives in order to lessen its reliance on external financing in the future. The Company intends to continually monitor and adjust its operating plan as necessary to respond to developments in its business, its markets and the broader economy. Although the Company believes various debt and equity financing alternatives will be available to it to support its working capital needs, financing arrangements on acceptable terms may not be available to the Company when needed. Moreover, these alternatives may require significant cash payments for interest and other costs or could be highly dilutive to the Company’s existing shareholders. Any such financing alternatives may not provide the Company with sufficient funds to meet its long-term capital requirements. If necessary, the Company may explore strategic transactions that it considers to be in the best interest of the company and its shareholders, which may include, without limitation, public or private offerings of debt or equity securities, a rights offering, and other strategic alternatives; however, these options may not ultimately be available or feasible when needed.
Changes in consumer preferences may reduce demand for some of the Company’s products
Consumer demand and appetite for premium hydration products and beverages in general, and industry trends, may change over time. The Company’s future success will depend, in part, upon the Company’s continued ability to maintain customer loyalty to the Company’s existing product offering and develop and introduce new and innovative products over time. The Company’s ability to compete, grow and differentiate itself requires it to be competitive in the areas of taste, quality, innovation and wellness. There can be no assurance of the Company’s ability to do so. In addition, product lifecycles for some premium hydration brands and/or products and/or packages may be limited before consumers’ preferences change. While the Company’s main product profile has resonated positively in the market, and many of the Company’s consumers are becoming loyal to the Company’s brands and their taste profiles, there can be no assurance that such preferences will continue into the future. The Company may be unable to achieve volume growth through product and packaging differentiation in the markets in which the Company competes.
Page 33
The Company’s brand and image are keys to its business and any inability to maintain a positive brand image could have a material adverse effect on its results of operations.
The Company’s success depends maintaining brand image for its existing products and building brand image for new products and brand extensions. The Company cannot predict whether its advertising, marketing and promotional programs will have the desired impact on its products’ branding and on consumer preferences. In addition, negative public relations and product quality issues, whether real or imagined, could tarnish its reputation and image of the affected brands and could cause consumers to choose other products. The Company’s brand image can also be adversely affected by unfavourable reports, studies, articles, litigation, or regulatory or other governmental action, whether involving the Company’s products or those of its competitors.
The Company may be adversely impacted by the effects of high or prolonged inflation
Inflation increases the cost of goods and services the Company procures, the cost of capital projects and wages and benefits for the Company’s workforce. Although the Company may take measures to mitigate the impact of inflation through pricing actions or cost reduction measures, if the Company is not able to offset inflationary costs, its results of operations will be negatively impacted and possibly in a material manner. As a result, the impact of high and prolonged inflation could have a material adverse effect on the Company’s business, financial condition, or results of operations. Inflationary pressures also increase the cost of living, which decreases consumers’ disposable income and could impact the Company’s customers’ discretionary spending habits, which could reduce customer demand for the Company’s products and negatively impact the Company’s revenues and operating cash flow.
Competition from traditional and large, well-financed non-alcoholic beverage manufacturers may adversely affect the Company’s distribution relationships and may hinder development of its existing markets, as well as prevent the Company from expanding its markets.
The beverage industry is highly competitive. The Company competes with other beverage companies not only for consumer acceptance but also for shelf space in retail outlets and for marketing focus by its distributors, all of whom also distribute other beverage brands. The Company’s products compete with all non-alcoholic beverages, most of which are marketed by companies with substantially greater financial resources than the Company. Some of these competitors are placing severe pressure on independent distributors not to carry competitive brands such as the Company. The Company also competes with regional beverage producers and “private label” beverage suppliers. The Company’s direct competitors in the sports hydration category include traditional large beverage companies and distributors, and regional premium beverage companies. These national and international competitors have advantages such as lower production costs, larger marketing budgets, greater financial and other resources and more developed and extensive distribution networks than the Company. The Company may not be able to grow its volumes or maintain its selling prices, whether in existing markets or as it enters new markets. Increased competitor consolidations, market-place competition, particularly among branded beverage products, and competitive product and pricing pressures could impact the Company’s earnings, market share and volume growth. If, due to such pressure or other competitive threats, the Company is unable to sufficiently maintain or develop its distribution channels, the Company may be unable to achieve its current revenue and financial targets. As a means of maintaining and expanding its distribution network, the Company intends to introduce product extensions and additional brands. The Company may not be successful in doing this, or it may take the Company longer than anticipated to achieve market acceptance of these new products and brands, if at all. Other companies may be more successful in this regard over the long term. Competition, particularly from companies with greater financial and marketing resources than the Company, could have a material adverse effect on the Company’s existing markets, as well as on its ability to expand the market for its products.
Page 34
The Company competes in an industry characterized by rapid changes in consumer preferences and public perception, so developing new products to satisfy the changing preferences of consumers will determine its long-term success.
Failure to introduce new brands, products or product extensions into the marketplace as current ones mature or meet the changing preferences of consumers could prevent the Company from gaining market share and achieving long-term profitability. Product lifecycles vary and consumer preferences and loyalties change over time. Although the Company tries to anticipate these shifts and innovate new products, the Company may not succeed. Consumer preferences also are affected by factors other than taste, such as health, nutrition, and obesity concerns, shifting consumer needs, changes in consumer lifestyles, increased consumer information and competitive product and pricing pressures. Sales of the Company’s products may be adversely affected by the negative publicity associated with these issues. If the Company does not adequately anticipate or adjust to respond to these and other changes in consumer preferences, the company may not be able to maintain and grow its brand image and its sales may be adversely affected.
The Company’s reliance on distributors, retailers and brokers could affect its ability to efficiently and profitably distribute and market its products, maintain its existing markets and expand its business into other geographic markets.
The Company’s ability to maintain and expand its existing markets for its products, and to establish markets in new geographic distribution areas, is dependent on its ability to establish and maintain successful relationships with reliable distributors, retailers and brokers strategically positioned to serve those areas. Most of the Company’s distributors, retailers and brokers sell and distribute competing products, including non-alcoholic and alcoholic beverages, and its products may represent a small portion of their businesses. The success of this network will depend on the performance of the distributors, retailers and brokers of this network. There is a risk that the mentioned entities may not adequately perform their functions within the network by, without limitation, failing to distribute to sufficient retailers or positioning the Company’s products in localities that may not be receptive to such products. The Company’s ability to incentivize and motivate distributors to manage and sell its products is affected by competition from other beverage companies who have greater resources than the Company does. To the extent that the Company’s distributors, retailers and brokers are distracted from selling its products or do not employ sufficient efforts in managing and selling its products, including re-stocking the retail shelves with its products, the Company’s sales and results of operations could be adversely affected. Furthermore, such third-parties’ financial position or market share may deteriorate, which could adversely affect the Company’s distribution, marketing and sales activities.
The Company’s ability to maintain and expand its distribution network and attract additional distributors, retailers and brokers will depend on a number of factors, some of which are outside of the Company’s control. Some of these factors include:
| · | the level of demand for the Company’s brands and products in a particular distribution area; |
| · | the Company’s ability to price its products at levels competitive with those of competing products; and |
| · | the Company’s ability to deliver products in the quantity and at the time ordered by distributors, retailers and brokers. |
The Company may not be able to successfully manage all or any of these factors in any of its current or prospective geographic areas of distribution. The Company’s inability to achieve success with regards to any of these factors in a geographic distribution area will have a material adverse effect on its relationships in that particular geographic area, thus limiting the Company’s ability to maintain or expand its market, which will likely adversely affect its revenues and financial results.
Page 35
The Company incurs significant time and expense in attracting and maintaining key distributors.
The Company’s marketing and sales strategy depends in large part on the availability and performance of its independent distributors. The Company currently does not have, nor does it anticipate in the future that it will be able to establish, long-term contractual commitments from some of its current distributors. The Company may not be able to maintain its current distribution relationships or establish and maintain successful relationships with distributors in new geographic distribution areas. Moreover, there is the additional possibility that the Company may have to incur additional expenditures to attract and maintain key distributors in one or more of its geographic distribution areas in order to profitably exploit our geographic markets.
If the Company loses any of its key distributors or national retail accounts, its financial condition and results of operations could be adversely affected.
The Company may not be able to maintain its key distributor base. The loss of any of the Company’s key distributors or national accounts would have a material adverse effect on the Company’s revenues, liquidity and financial results, could negatively impact its ability to retain its relationships with its other distributors and its ability to expand its market, and would place increased dependence on its other independent distributors and national accounts.
It is difficult to predict the timing and amount of sales because most distributors and retailers are not required to place minimum orders with the Company.
The Company’s independent distributors and national accounts are not required to place minimum monthly or annual orders for the Company’s products. In order to reduce their inventory costs, independent distributors typically order products from the Company on a “just in time” basis in quantities and at such times based on the demand for the products in a particular distribution area. Accordingly, the Company cannot predict the timing or quantity of purchases by any of its independent distributors or whether any of its distributors will continue to purchase products from the Company in the same frequencies and volumes as they may have done in the past. Additionally, the Company’s larger distributors and national partners, may make orders that are larger than the Company historically has been required to fill. Shortages in inventory levels, supply of raw materials or other key supplies could negatively affect the Company.
If the Company does not adequately manage its inventory levels, its operating results could be adversely affected
The Company needs to maintain adequate inventory levels to be able to deliver products to distributors on a timely basis. The Company’s inventory supply depends on its ability to correctly estimate demand for its products. The Company’s ability to estimate demand for its products is imprecise, particularly for new products, seasonal promotions and new markets. If the Company materially underestimates demand for its products or are unable to maintain sufficient inventory of raw materials, the Company might not be able to satisfy demand on a short-term basis. If the Company overestimates distributor or retailer demand for its products, the Company may end up with too much inventory, resulting in higher storage costs, increased trade spend and the risk of inventory spoilage. If the Company fails to manage its inventory to meet demand, the Company could damage its relationships with its distributors and retailers and could delay or lose sales opportunities, which would unfavorably impact the Company’s future sales and adversely affect its operating results. In addition, if the inventory of the Company’s products held by its distributors and retailers is too high, they will not place orders for additional products, which would also unfavorably impact the Company’s sales and adversely affect its operating results.
Page 36
If the Company fails to maintain relationships with its independent contract manufacturers, its business could be harmed.
Other than its ready-to-drink products, which it manufactures at the Facility, the Company outsources the manufacture of its products, including its powder, supplement and food products, to third-party packagers and independent contract manufacturers (co-packers). The Company’s ability to maintain effective relationships with contract manufacturers and other third parties for the production and delivery of its beverage products in a particular geographic distribution area is important to the success of its operations within each distribution area. Competition for contract manufacturers’ business is intense, and this could make it more difficult for the Company to obtain new or replacement manufacturers, or to locate back-up manufacturers, in our various distribution areas, and could also affect the economic terms of the Company’s agreements with its existing manufacturers. The Company may not be able to maintain its relationships with current contract manufacturers or establish satisfactory relationships with new or replacement contract manufacturers, whether in existing or new geographic distribution areas. The failure to establish and maintain effective relationships with contract manufacturers for a distribution area could increase the Company’s manufacturing costs and thereby materially reduce gross profits from the sale of the Company’s products in that area. Poor relations with any of the Company’s contract manufacturers could adversely affect the amount and timing of product delivered to the Company’s distributors for resale, which would in turn adversely affect the Company’s revenues and financial condition. In addition, the Company’s agreements with our contract manufacturers are terminable at any time, and any such termination could disrupt the Company’s ability to deliver products to our customers.
The Company’s dependence on independent contract manufacturers could make management of its manufacturing and distribution efforts inefficient or unprofitable.
The Company is expected to arrange for its contract manufacturing needs sufficiently in advance of anticipated requirements, which is customary in the contract manufacturing industry for comparably sized companies. Based on the cost structure and forecasted demand for the particular geographic area where the Company’s contract manufacturers are located, the Company continually evaluates which of its contract manufacturers to use. To the extent demand for the Company’s products exceeds available inventory or the production capacity of its contract manufacturing arrangements, or orders are not submitted on a timely basis, the Company will be unable to fulfill distributor orders on demand. Conversely, the Company may produce more product inventory than warranted by the actual demand for it, resulting in higher storage costs and the potential risk of inventory spoilage. The Company’s failure to accurately predict and manage its contract manufacturing requirements and its inventory levels may impair relationships with its independent distributors and key accounts, which, in turn, would likely have a material adverse effect on the Company’s ability to maintain effective relationships with those distributors and key accounts.
The Company relies upon its ongoing relationships with its key flavour suppliers. If the Company is unable to source its flavours on acceptable terms from its key suppliers, the Company could suffer disruptions in its business.
The Company currently purchases its flavour concentrate from various flavour concentrate suppliers, and continually develops other sources of flavour concentrate for each of its products. Generally, flavour suppliers hold the proprietary rights to their flavours. Although the Company has the exclusive rights to flavour concentrates developed with its current flavour concentrate suppliers, the Company does not have the list of ingredients or formulas for its flavours and concentrates. Consequently, the Company may be unable to obtain these same flavours or concentrates from alternative suppliers on short notice. If the Company has to replace a flavour supplier, the company could experience disruptions in its ability to deliver products to its customers, which could have a material adverse effect on its results of operations.
Criticism of the packaged beverage market generally could adversely affect the Company’s operating results
Public criticism of single-use packaged products, including criticism by environmental organizations, could affect consumer opinions of packaged beverage products in general and/or the Company’s products and result in decreased demand. Because the Company’s ready-to-drink products are packaged in Tetra Pak cartons that are non-PET (polyethylene terephthalate), as well as BPA (bisphenol A) and BHA (butylated hydroxyanisole) free, the Company has generally benefited from public criticism of packaged beverages because the Company’s products are generally perceived as an environmentally friendly alternative to competing products. However, there can be no assurance that some environmental organizations and consumers will not consider all packaged beverage products to be similar, regardless of their inherent differences. Such indiscriminate consideration could result in decreased demand and profitability for the Company’s products. In addition, competitors are constantly innovating sustainable packaging alternatives, and the Company’s current perceived sustainability advantages may be reduced if competitors are able develop packaging that the consumers prefer.
Page 37
If the Company is unable to maintain brand image or product quality, its business could suffer
The Company’s success depends on the Company’s ability to build and maintain brand image for its existing products, new products and brand extensions. The Company has no assurance that the Company’s advertising, marketing and promotional programs will have the desired impact on the Company’s products’ brand image, consumer preferences and demand.
Increased competition could hurt the Company’s business
The beverage industry is highly competitive, and there can be no assurance that the Company will not encounter difficulties in maintaining its current revenues or market share or position due to competition in the beverage industry. The principal areas of competition are promotional pricing, packaging, development of new products and flavours and marketing campaigns. The Company’s products primarily compete with other isotonic products and also with a wide range of beverages produced by a relatively large number of manufacturers, most of which have substantially greater financial, marketing and distribution resources than the Company does. Important factors affecting the Company’s ability to compete successfully include the taste and flavour of the Company’s products, the Company’s commitment to sustainability, attractive and differentiated packaging, trade and consumer promotions, rapid and effective commercialization of new products, branded product advertising and pricing. The Company’s products compete with all beverage products and with products of much larger and substantially better- financed competitors, including the products of numerous nationally and internationally known producers. The Company also competes with companies that are smaller or primarily national or local in operations. The Company’s products also compete with private label brands such as those carried by grocery store chains, convenience store chains, and club stores.
Consolidation of retailers, wholesalers and distributors and the dominant position of a limited number of key players in the industry may result in downward pressure on sales prices
A significant portion of the Company’s products are distributed through retailers, wholesalers and distributors. A consolidation of retailers, wholesalers and distributors and the dominant position of certain key players in the industry could allow them to impose less favourable commercial terms to the Company, which could result in significant downward pricing pressure on the Company’s products and additional costs on the Company. If the Company is unable to successfully manage the potential impact of such less-favourable commercial terms, the Company’s financial results may be materially and adversely affected.
The Company’s failure to accurately estimate demand for its products could adversely affect its business and financial results
The Company may not correctly estimate demand for its products. The Company’s ability to estimate demand for its products is imprecise and may be less precise during periods of rapid growth, particularly in new markets. If the Company materially underestimates demand for its products or is unable to secure sufficient ingredients or raw materials including, but not limited to, TETRA Pak packaging, flavours, or functional ingredients, the Company might not be able to satisfy demand on a short-term basis. Moreover, industry-wide shortages of certain components of the Company’s products have been and could, from time to time in the future, be experienced. Such shortages could interfere with and/or delay production of certain of the Company’s products and could have a material adverse effect on the Company’s inventory as well as business and financial results. The Company generally does not use hedging agreements or alternative instruments to manage this risk.
Page 38
If the Company fails to obtain and retain high-visibility sponsorship or endorsement arrangements with celebrities, or if the reputation of any of the celebrities that the Company partners with is impaired, the business of the Company may suffer.
A principal component of the Company’s marketing program is to partner with well-known celebrities and professional and amateur athletes. Although we have partnered with several well-known athletes in this manner, some of these persons may not continue their endorsements, may not continue to succeed in their fields or may engage in activities which could bring disrepute on themselves and, in turn, on us and our brand image and products.
We also may not be able to attract and partner with new celebrities that may emerge in the future. Competition for endorsers is significant and adverse publicity regarding us or our industry could make it more difficult to attract and retain endorsers. Any of these failures by us or the celebrities that we partner with could adversely affect our business and revenues.
The Company’s distributors and vendors are material to the Company’s success. If the Company is unable to maintain good relationships with its existing distributors and vendors, its business could suffer
There can be no assurance of continued business relationships with distributors and vendors of the Company’s products. Unilateral decisions could be taken by the Company’s distributors, convenience chains, grocery chains, specialty chain stores, club stores and other customers to discontinue carrying all or any of the Company’s products that they are carrying at any time, which could cause the Company’s business to suffer materially.
Changing retail landscape could hurt the Company’s business
The rapid growth in sales through e-commerce retailers, e-commerce websites, mobile commerce applications and subscription services, and closures of physical retail operations, may result in a shift away from physical retail operations to digital channels and a reduction in impulse purchases. As the Company builds its e-commerce capabilities, the Company may not be able to develop and maintain successful relationships with existing and new e- commerce retailers without experiencing a deterioration of the Company’s relationships with key customers operating physical retail channels. Further, the ability of consumers to compare prices on a real-time basis using digital technology puts additional pressure on it to maintain competitive prices.
Sales in gas chains may also be affected by improvements in fuel efficiency and increased consumer preferences for electric or alternative fuel-powered vehicles, which may result in fewer trips by consumers to gas stations and a corresponding reduction in purchases by consumers at convenience gas retailers. If the Company is unable to successfully adapt to the rapidly changing retail landscape, its share of sales, volume growth, and overall financial results could be negatively affected.
Incorrect product design or development could hurt the Company’s business
The Company is actively innovating by releasing new products to remain competitive with other brands and to take advantage of market trends. Creating new products is not a risk-free process. Newly introduced products may be too early or too late for the market and may result in lower earnings than expected. Substantial costs may be incurred to develop these products which may never be recovered. Supply chain disruptions may cause delays in the release of the new products or the fulfillment of purchase orders related to these new products.
Page 39
Product information misrepresentations could happen and may adversely affect the Company’s business
While the Company actively works on compliance with applicable regulatory requirements, misrepresentations could happen, and they may induce the Company’s customers to purchase its products. The Company may omit, innocently, unintentionally, or on the basis that the information was not available at the time of the representation, to warn consumers of the risks of using a product, to overemphasize what the product could do, to overstate what the product is used for, or simply fail to list an ingredient. That misrepresentation could be the basis for a product liability action against the Company if a misrepresentation or omission were to occur, which could adversely affect the Company’s brand reputation, the demand for the Company’s products and the Company’s profitability.
The Company relies on third party distributors and other logistics providers
The Company relies on third party distributors, certain logistics providers and other courier services and may in the future rely on other third parties, to distribute its products or provide other services. If these distributors and service providers do not successfully carry out their contractual duties, if there is a delay or interruption in the distribution of the Company’s products, or if these third parties damage the Company’s products or reputation, it could have a material adverse effect on the Company’s business, financial condition, results of operations or prospects. Any damage to the Company’s products, such as product spoilage, could expose the Company to potential product liability, damage its reputation and the reputation of its brands or otherwise harm its business.
The Company relies on key inputs
The Company’s business is dependent on a number of key inputs and their related costs including raw materials and supplies related to its growing operations, as well as electricity, water and other local utilities. Any significant interruption or negative change in the availability or economics of the supply chain for key inputs could materially impact the business, financial condition and operating results of the Company. Some of these inputs may only be available from a single supplier or a limited group of suppliers. If a sole source supplier was to go out of business, the Company might be unable to find a replacement for such source in a timely manner or at all. If a sole source supplier were to be acquired by a competitor, that competitor may elect not to sell to the Company in the future. Any inability to secure required supplies and services or to do so on appropriate terms could have a materially adverse impact on the business, financial condition and operating results of the Company.
The Company’s success relies on its quality control systems
The quality and safety of the Company’s products are critical to the success of the Company’s business and operations. As such, it is imperative that the Company’s (and its service providers’) quality control systems operate effectively and successfully. Quality control systems can be negatively impacted by the design of the quality control systems, the quality training program, and adherence by employees to quality control guidelines. Although the Company strives to ensure that all of its service providers have implemented and adhere to high calibre quality control systems, the Company could experience a significant failure or deterioration of such quality control systems. If, as a result of a failure in the Company (or the Company’s service providers’) quality control systems, contamination of, or damage to, the Company’s inventory or packaged products occurs, the Company may incur significant costs in replacing the inventory and recalling products. The Company may be unable to meet customer demand and may lose customers who have to purchase alternative brands or products. In addition, consumers may lose confidence in the affected products. A loss of sales volume from a contamination event may occur, and such a loss may affect the Company’s ability to supply its current customers and to recapture their business in the event they are forced to switch products or brands, even if on a temporary basis. The Company may also be subject to legal action as a result of a contamination, which could result in negative publicity and affect the Company’s sales. During this time, the Company’s competitors may benefit from an increased market share that could be difficult and costly to regain.
Page 40
The Company is subject to risks and uncertainty regarding future product development
The Company expects to derive a portion of our future revenues from the sale of new products, some of which are still being actively developed and put into production. If the Company fails to adequately meet market demand for such products in a timely fashion, it may adversely impact the Company’s profitability.
Risks Related to the Company’s Human Capital
The Company’s business is dependent, to a large extent, upon the services of its senior management. The Company does not maintain key person life insurance for any members of its senior management. The loss of services of the Company’s Executive Chairman, Chief Executive Officer, Chief Financial Officer, Chief Operating Officer or any other key members of its senior management team could adversely affect the Company’s business until suitable replacements can be found. There may be a limited number of personnel with the requisite skills and industry experience to serve in these positions and the Company may be unable to locate or employ such qualified personnel on acceptable terms.
4.2 Risks Relating to the Acquisition and the Manufacturing Business
The Company may have assumed undisclosed liabilities in the Acquisition
In connection with the Acquisition there may be liabilities that the Company failed to discover or was unable to quantify in its due diligence. The historical financial records of the Manufacturing Business are incomplete and could not be audited to produce full carve-out financial statements, and the Company obtained exemptive relief from the Ontario Securities Commission permitting it to file abbreviated financial statements of the acquired business in place of the financial statements that section 8.4 of NI 51-102 would otherwise require. While the Vendor has provided representations and indemnities in respect of pre-closing matters, those indemnities are subject to a threshold of C$400,000, an aggregate cap of C$15,000,000 and time limits, and the Vendor’s representations relating to periods before the RVO are generally qualified by the Vendor’s knowledge. The indemnities may not be sufficient to compensate the Company for all undisclosed liabilities, and any such liabilities could have a material adverse effect on the Company.
The Company may fail to integrate the Manufacturing Business successfully
The Company’s ability to realize the anticipated benefits of the Acquisition will depend in part on integrating the Manufacturing Business into its existing operations in a timely and efficient manner. Integration presents challenges, including the harmonization of production processes, the integration of administrative and financial systems and the retention of key customer, supplier and employee relationships. The Manufacturing Business previously operated within the broader structure of Flow Beverage and did not maintain its own administrative support functions, and the Company must therefore establish and operate those functions on a stand-alone basis. There can be no assurance that the Company will integrate the Manufacturing Business successfully, and a failure to do so could have a material adverse effect on the Company.
The Company may not realize the anticipated benefits of the Acquisition
The Company completed the Acquisition expecting benefits that included expanded production capabilities, the commissioning of additional production line equipment and the revenue associated with take-or-pay contractual commitments. Some or all of those expected benefits may fail to materialize or may not be realized within the anticipated time periods. Their realization may be affected by factors beyond the Company’s control, including the willingness of counterparties to perform their contractual obligations, general economic conditions, changes in demand for co-manufactured products, the Company’s ability to operate the Facility at projected levels and the successful commissioning of new production line equipment. No assurance can be given that the revenue projections or cost estimates underpinning the purchase price for the Manufacturing Business will prove accurate.
Page 41
Revenue of the Manufacturing Business is concentrated in a small number of customers
A substantial majority of the revenue of the Manufacturing Business is derived from three customers, being BeatBox, Joyburst and the Spun-Out Business. The loss of either of those customers, a material reduction in the volumes they order, or a failure by either of them to perform its take-or-pay obligations, would have a material adverse effect on the Company. BeatBox is majority owned by Anheuser-Busch, which has its own manufacturing capacity and may elect not to renew or extend its agreement on expiry, or may seek to assign, terminate or renegotiate that agreement. The Company’s agreement with the Spun-Out Business is with an affiliate of the Vendor, and that commercial relationship may be affected by any dispute under the Share Purchase Agreement, the VTB Note or the Transition Services Agreement. Contracted Minimum Revenue is neither a forecast nor a guarantee of revenue, and the Company’s ability to recover shortfall amounts will depend on the solvency of the relevant customer and on the enforceability of the relevant agreement.
The Manufacturing Business is carried on at a single leased facility
All of the operations of the Manufacturing Business are carried on at the Facility, which CBMI occupies under lease. Any damage to, or interruption in the operation of, the Facility, whether caused by equipment failure, loss of utilities, fire, flood, severe weather, labour disruption, contamination or any other cause, would interrupt the Company’s manufacturing revenue and its supply of CWENCH Hydration in ready-to-drink format. The Company does not maintain an alternative aseptic Tetra Pak filling facility, and the number of facilities in Canada capable of filling beverages in that format is limited. In addition, the Company’s rights to occupy the Facility depend on its leases, which may not be renewed on acceptable terms on expiry, and on the landlord’s performance of its obligations and the conduct of the landlord’s mortgagee.
The Manufacturing Business depends on the maintenance of licences, registrations and certifications
The Manufacturing Business requires a licence under the Safe Food for Canadians Act, a United States Food and Drug Administration registration, NSF International GMP and HACCP certification, OU Kosher certification and licences issued by the Canada Revenue Agency in respect of the production of alcoholic beverages, among others. Certain of those certifications and permits are scheduled to expire within the next 12 to 18 months. A failure to maintain or renew any required licence, registration or certification could result in the Company being unable to produce products for some or all of its customers, in the loss of customer agreements, or in regulatory enforcement action, any of which could have a material adverse effect on the Company.
A product recall or food safety incident at the Facility could expose the Company to liability
As the manufacturer of beverages for its own brands and for third parties, the Company is exposed to the risk of product contamination, spoilage, tampering, mislabelling and other product defects, and to the resulting risk of product recalls, product liability claims, regulatory action and damage to its reputation and to the reputations of its customers’ brands. The Company’s manufacturing agreements may require it to indemnify its customers in respect of losses arising from such events. A recall of a product manufactured at the Facility, whether that product is one of the Company’s own or one it manufactures for a third party, could result in significant costs, in the loss of the affected customer and in liabilities that exceed the Company’s insurance coverage.
The Company’s relationship with the Vendor gives rise to potential conflicts
The Vendor is the Company’s principal lender under the VTB Note, the holder of a pledge over the shares of 17550154 Canada Inc., the counterparty to the indemnities given under the Share Purchase Agreement and, through BrandCo, both a customer of the Manufacturing Business and the Company’s counterparty under the Transition Services Agreement. An affiliate of the Vendor is also the holder of a promissory note of, and the lessor of equipment to, the Company’s subsidiaries. Those overlapping relationships may give rise to conflicts, and a dispute under any one of them could affect the others. If the Vendor were to enforce its security over the shares of 17550154 Canada Inc., the Company would lose the Manufacturing Business.
Page 42
4.3 Financial, Credit and Liquidity Risks
The Company has a history of losses and there is a material uncertainty about its ability to continue as a going concern
The Company has incurred losses and negative cash flows from operating activities in each financial period since its inception. For the fiscal year ended July 31, 2026 the Company recorded a net loss and comprehensive loss of $42,399,147 and negative cash flows from operating activities of $8,975,274 (fiscal 2025 – $13,858,831 and $8,900,360, respectively). As at July 31, 2026 the Company had cash of $5,959,920, a working capital deficiency of $52,110,837, total liabilities of $147,092,737 exceeding total assets of $122,833,446, a shareholders’ deficiency of $24,259,291 and short-term loans of $50,612,507. The Company’s ability to continue as a going concern will depend on its ability to generate positive cash flows from operations, to complete other financings and to repay, extend, convert or refinance its indebtedness as it becomes due. If the Company is unable to do so, it may be required to curtail or cease operations, and holders of Common Shares could lose all of their investment.
The Company has substantial indebtedness and is subject to restrictive covenants
The Company incurred significant indebtedness to finance the Acquisition, including the Credit Facility and the VTB Note, and has since incurred further indebtedness under the Ascent Note. As at October 1, 2026 the Company had indebtedness outstanding of approximately C$107,306,008 in the aggregate, as set out under “General Development of the Business – Developments Subsequent to the End of Fiscal 2026”, against total assets of $122,833,446 at July 31, 2026. That indebtedness could limit the Company’s ability to obtain additional financing, require a substantial portion of its cash flow to be dedicated to debt service, make the Company more vulnerable to a downturn in its business or in general economic conditions and restrict its operations through the covenants to which it is subject. The Credit Agreement contains restrictive covenants and events of default customary for a facility of its nature, and the Ascent Note contains a cross-default triggered by a default in respect of material indebtedness. A default under any one of the Company’s financing agreements could permit the acceleration of indebtedness under the others and could trigger enforcement proceedings resulting in the loss of all or part of the Company’s business, including the Manufacturing Business.
The Company may be unable to repay, extend or refinance the VTB Note at maturity
Under the amending agreement dated October 7, 2026, US$10,000,000 of the principal amount of the VTB Note will be repaid on closing of the Offering and the maturity date of the VTB Note will be extended to December 31, 2027. The Company does not expect the net proceeds of the Offering to be sufficient to repay the VTB Note in full, and it is currently generating negative operating cash flow. The Company will therefore need to extend or refinance the VTB Note, or raise additional debt or equity financing, before maturity. The Company has no commitment for any such extension or financing, and there is no assurance that one will be available on acceptable terms or at all. Additional equity financing would dilute existing shareholders, and additional debt financing may require the consent of the Company’s existing lenders.
The Company is exposed to interest rate risk
The Credit Facility bears interest at 12% per annum and the VTB Note and the Ascent Note bear interest at fixed rates. The Company’s interest expense is accordingly substantial in relation to its revenues and its cash flow from operations, and will remain so unless and until that indebtedness is repaid or refinanced. Any refinancing may be at higher rates, and the availability and cost of refinancing will depend on conditions in the credit markets, which are beyond the Company’s control.
Page 43
The Company may fail to maintain effective internal control over financial reporting
The Company’s internal control over financial reporting and its disclosure controls and procedures must now address the operations of the Manufacturing Business, which previously operated within the broader structure of Flow Beverage, which did not maintain distinct accounts or separate administrative support functions for it, and whose historical financial records are incomplete. Integrating that business into the Company’s control environment will require the design and implementation of new controls over inventory, costing, revenue recognition and plant operations. If the Company fails to maintain effective internal control over financial reporting, it may be unable to report its results accurately or on a timely basis, which could cause investors to lose confidence in its financial reporting, expose it to regulatory action and adversely affect the market price of the Common Shares.
The Company’s insurance may be insufficient
The Company maintains insurance of the types and in the amounts that it considers customary for its business, including property, liability, product recall and directors’ and officers’ liability insurance. That insurance is subject to deductibles, exclusions and policy limits, and it may not cover, or may not fully cover, a particular loss. The pre-acquisition insurance program of Flow Water Inc. did not transfer to the Company on the Acquisition, and the Company arranged its own coverage for the Manufacturing Business. Insurance may not continue to be available to the Company on commercially reasonable terms, and an uninsured or underinsured loss could have a material adverse effect on the Company.
Increases in costs and/or shortages of raw materials and/or ingredients and/or fuel could harm the Company’s business
The principal raw materials used by the Company, are the added flavours and electrolytes, TETRA Pak packaging and the corrugate outer packaging it’s shipped in, the costs of which are subject to fluctuations. Fluctuations in prices of raw materials for the Company’s products could have a material impact on the Company’s cost structure, margins and financial results. The Company generally does not use hedging agreements or alternative instruments to manage the risks associated with securing sufficient ingredients or raw materials. In addition, some of these raw materials are available from a limited number of suppliers, and the TETRA Pak packaging is only available from the Tetra Pak Group. With the careful use of multiple suppliers for most raw materials, as well as maintaining a close working relationship with the Tetra Pak Group, the Company has been able to maintain relatively stable sources and prices for its raw materials and production costs. There is no guarantee that this will continue in the future.
Fluctuation of quarterly operating results
Revenue is difficult to forecast and may fluctuate significantly from quarter to quarter. Delays, reduction in scope or cancellation of orders could have a material adverse effect on the Company’s business, financial condition and results of operations. Quarter-to-quarter comparisons of the Company’s operating results are not necessarily meaningful and should not be relied upon as indications of likely future performance. Reductions in revenue or net income between quarters or the Company’s failure to achieve expected quarterly earnings could cause the market price of the Company’s tradable securities to decline or have a material impact on their value.
No assurance of profitability
The Company has not achieved profitability in the past, and there can be no assurance that the achievement of such results will be achieved in the future. The future development of the Company’s interests may require additional financing. There are no assurances that such financing will be available, or if available, available upon terms acceptable to the Company. The Company may issue additional equity or debt securities in subsequent offerings to finance its operations or expansion which may cause dilution to shareholders. Debt and equity financing, if available, may involve agreements that include covenants limiting or restricting The Company’s ability to take specific actions, such as redeeming shares, making investments, incurring additional debt, making capital expenditures, declaring dividends or placing limitations on the Company’s ability to acquire, sell or license intellectual property rights or make strategic acquisitions.
Page 44
Fluctuations in foreign currency exchange rates may adversely affect the Company’s operating results
The Company is exposed to foreign currency exchange rate risk with respect to its sales, expenses, profits, assets and liabilities. While many of these risks offset each other within the Company’s operations, the Company still has net exposure to foreign currency fluctuations, particularly in regard to the U.S. dollar. The Company generally does not use instruments to hedge certain foreign currency risks and is not protected against foreign currency fluctuations.
As a result, the Company’s reported earnings may be affected by changes in foreign currency exchange rates. Moreover, any favourable impacts on profit margins or financial results from fluctuations in foreign currency exchange rates are likely to be unsustainable over time.
4.4 Legal, Regulatory and Tax Risks
Significant changes in government regulation may hinder sales
The production, distribution and sale of the Company’s products are subject to various federal, provincial and state regulations, including, but not limited to food and drug regulation; health and safety laws, various environmental statutes; and various other federal, provincial state and local statutes and regulations applicable to the production, transportation, sale, safety, advertising, labelling and ingredients of such products. New statutes and regulations may also be instituted in the future. If a regulatory authority finds that a current or future product or production run is not in compliance with certain of these regulations, the Company may be fined, or such products may have to be recalled and/or reformulated and/or have the packaging changed, adversely affecting the Company’s financial condition and operations. In particular, regulations that apply to functional ingredients may change and become more stringent over time, and the Company cannot predict how such developments may impact the costs or sales of its products.
Contamination or recalls of the Company’s ingredients or end products could adversely affect its business
While the Company has robust processes in place to avoid these situations, product contamination events or recalls may occur. The Company’s ingredients or end products could be subject to product liability claims or recalls due to contamination, poisoning or other factors. Product quality and/or ingredient content issues, efficacy or lack thereof, real or imagined, or allegations of product contamination, even if false or unfounded, could tarnish the image of the affected brands and may cause consumers to choose other products. In certain instances, the Company may be required to recall products from specific markets or batches. Product recalls could adversely affect the Company’s profitability and the Company’s brand image. While the Company has not experienced any material product liability litigation to date, there is no assurance that the Company will not experience such litigation in the future. In the event the Company were to be subject product liability claims or a product recall, its financial condition and business operations could be materially adversely affected.
Page 45
Litigation or legal proceedings could expose the Company to significant liabilities and thus negatively affect its financial results
The Company may become party, from time to time, to various litigation claims and legal proceedings, including, but not limited to, intellectual property, unfair business practices and false advertising, breach of contract claims and product liability. Defending any such proceedings could result in significant ongoing expenditures and the continued diversion of the Company’s management’s time and attention from the operation of the Company’s business, which could harm its business operations. The Company’s failure to successfully defend or settle any litigation or legal proceedings could result in liability that, to the extent not covered by the Company’s insurance, could have a material adverse effect on the Company’s financial condition, revenue and profitability, and could cause the market value of its tradable securities to decline.
Future effective tax rates could be subject to volatility or adversely affected by a number of factors
The Company’s future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:
| · | changes in the valuation of our deferred tax assets and liabilities; |
| · | expected timing and amount of the release of any tax valuation allowances; |
| · | tax effects of stock-based compensation; |
| · | costs related to intercompany restructurings; |
| · | changes in tax laws, regulations or interpretations thereof; or |
| · | future earnings being lower than anticipated in countries where we have lower statutory tax rates and higher than anticipated earnings in countries where we have higher statutory tax rates. |
The Company currently conducts activities in Canada and the United States through its subsidiaries pursuant to transfer pricing arrangements and may in the future conduct operations in other jurisdictions pursuant to similar arrangements. If two or more affiliated companies are located in different countries, the tax laws or regulations of each country generally will require that transfer prices be the same as those between unrelated companies dealing at arms’ length. While the Company believes that it operates in compliance with applicable transfer pricing laws and intends to continue to do so, its transfer pricing procedures are not binding on applicable tax authorities. If tax authorities were to successfully challenge the Company’s transfer pricing methodology as not reflecting arm’s length transactions, they could require the Company to adjust its transfer prices and thereby reallocate its income to reflect these revised transfer prices, which could result in a higher tax liability.
4.5 Environmental Risks
Catastrophic events could impact the Company’s operations and affect the Company’s ability to grow its business
Because of the Company’s increasing geographical presence, the Company’s business could be affected by unstable political conditions, civil unrest, large-scale terrorist acts, the outbreak or escalation of armed hostilities, major natural disasters or widespread outbreaks of infectious diseases. Such events could impact the production and distribution of the Company’s products. In addition, such events could disrupt global or regional economic activity, which could affect consumer purchasing power, thereby reducing demand for the Company’s products. The Company’s growth rate could decline as a result of these factors.
Page 46
Climate change may negatively affect the Company’s business
There is concern that a gradual increase in global average temperatures could cause significant changes in weather patterns around the globe and an increase in the frequency and severity of natural disasters. While warmer weather has historically been associated with increased sales of the Company’s products, changing weather patterns could result in decreased agricultural productivity in certain regions, which may limit availability or increase the cost of certain key ingredients used in the Company’s products. Increased frequency or duration of extreme weather conditions could also impair production capabilities, and disrupt the Company’s supply chain including, without limitation, the availability of and/or result in higher prices for functional ingredients and natural flavours, or impact demand for the Company’s products. In addition, public expectations with respect to environmental impact could result in increased energy, transportation and raw material costs and may require the Company to make additional investments in facilities and equipment. Climate change related natural disasters could negatively affect the economy as a whole, and thereby impact consumers’ ability to purchase the Company products. As a result, the effects of climate change could have a long-term adverse impact on the Company’s business and results of operations.
The Company’s business is seasonal and adverse weather conditions could negatively affect its business
The sales of the Company’s products are influenced to some extent by weather conditions in the markets in which the Company operates. Unusually cold or rainy weather during the summer months may reduce the demand for the Company’s packaged beverages and other products and contribute to lower revenues, which could negatively affect the Company’s profitability.
4.6 Risks Related to the Company’s Information Technology, Cyber Security and Data Protection
The Company depends on key information systems and third-party service providers
The Company depends on key information systems to accurately and efficiently transact its business, provide information to management and prepare financial reports. The Company relies on third-party providers for various networking, application hosting and related business process services which support its key information systems. Issues with performance by these third-parties may disrupt the Company’s operations and as a result, its operating expenses could increase, which could negatively affect its results of operations.
In addition, these systems and services are vulnerable to interruptions or other failures resulting from, among other things, natural disasters, terrorist attacks, software, equipment or telecommunications failures, processing errors, computer viruses, hackers, other security issues or supplier defaults. Security, backup and disaster recovery measures may not be adequate or implemented properly to avoid such disruptions or failures. Any disruption or failure of these systems or services could cause substantial errors, processing inefficiencies, security breaches, inability to use the systems or process transactions, loss of customers or other business disruptions, all of which could negatively affect the Company’s business and results of operations.
The Company’s intellectual property rights are critical to its success, and loss of such rights could materially affect its business
CBI has registered trademarks that are important to the Company’s business, and the Company depends on CBI’s rights in those marks. The Company regards trademarks, copyrights, trade secrets, and similar intellectual property as critical to its success and attempt to protect such intellectual property with registered and common law trademarks and copyrights, restrictions on disclosure and other actions to prevent infringement. However, there can be no assurance that other third parties will not infringe or misappropriate the Company’s trademarks and similar proprietary rights. If the Company loses some or all of its intellectual property rights, its business may be materially adversely affected.
Page 47
If the Company is unable to securely maintain its customers’ confidential or credit card information, or other private data relating to the Company or its employees, the Company could be subject to negative publicity, costly government enforcement actions or private litigation, which could damage its business reputation and negatively affect its results of operations
The protection of the Company’s customer, employee and company data is critical. The Company has procedures and technology in place to safeguard its customers’ debit card, credit card and other personal information, the Company’s employees’ private data and corporate records and intellectual property. However, if the Company experiences a data security breach of any kind, it could be exposed to negative publicity, government enforcement actions, private litigation or costly response measures. In addition, the Company’s reputation within the business community and with its customers may be affected, which could result in the Company’s customers discontinuing their purchases of its products and services or their use of the debit or credit card payment option. Any loss of the Company’s ability to securely offer its customers a credit card payment option would make its products less attractive by negatively affecting the Company’s customer experience and significantly increasing the administrative costs related to customer payment processing. This could cause the Company to lose customers and could have a negative effect on its results of operations.
In addition, the regulatory environment surrounding information security and privacy is increasingly demanding, with the frequent imposition of new and changing requirements. Compliance with changes in privacy and information security laws and standards may result in significant expenses due to increased investment in technology and the development of new operational processes.
The Company must continually maintain and/or upgrade its information technology systems
Information technology helps the Company operate efficiently, interface with customers, maintain financial accuracy and efficiency, and accurately produce its financial statements. If the Company does not allocate and effectively manage the resources necessary to build and sustain the proper technology infrastructure, the Company could be subject to transaction errors, processing inefficiencies, the loss of customers, business disruptions, or the loss of or damage to intellectual property through security breach. If the Company’s data management systems, including the Company’s enterprise resource planning system, do not effectively collect, store, process and report relevant data for the operation of the Company’s business, whether due to equipment malfunction or constraints, software deficiencies, or human error, the Company’s ability to effectively plan, forecast and execute its business plan and comply with applicable laws and regulations will be impaired, perhaps materially. Any such impairment could materially and adversely affect the Company’s financial condition, results of operations, the Company’s cash and the timeliness with which the Company reports its internal and external operating results.
Conflicts of Interest
Certain directors and officers of the Company are or will be, and may continue to be, involved in other business ventures through their direct and indirect participation in corporations, partnerships, joint ventures, etc. that may become potential competitors of the products the Company intends to provide. Situations may arise where the other interests of these directors and officers conflict with or diverge from the Company’s interests. Certain conflicts may be required to be disclosed in accordance with internal policies or procedures as well as remedies available under applicable corporate law, although such policies, procedures and remedies may not fully protect the Company. In addition, in conflict-of-interest situations, the directors and officers of the Company may owe the same duty to another company and will need to balance their competing interests. Circumstances (including with respect to future corporate opportunities) may arise that may be resolved in a manner that is unfavourable to the Company.
Page 48
4.7 Risks Relating to the Ownership of the Common Shares
The Company may not complete the Offering or obtain or maintain a Nasdaq listing
The Company has applied to list the Common Shares on Nasdaq and intends to complete the Offering. Listing on Nasdaq will remain subject to the Company satisfying all of the applicable Nasdaq listing requirements, including requirements as to minimum bid price, publicly held shares, round lot holders, market value of publicly held shares and stockholders’ equity, and to the approval of Nasdaq. The Company had a shareholders’ deficiency of $24,259,291 at July 31, 2026 and has a history of losses. Completion of the Offering will remain subject to market conditions and to the satisfaction of the conditions in the underwriting agreement. There is no assurance that the Company will complete the Offering, that Nasdaq will approve the listing of the Common Shares or that, if listed, the Company will continue to satisfy the Nasdaq continued listing requirements. A failure to complete the Offering would adversely affect the Company’s liquidity and its ability to repay its indebtedness, and a failure to obtain or maintain a Nasdaq listing could adversely affect the market price and the liquidity of the Common Shares, could impair the Company’s ability to raise capital in the United States and could affect the Company’s eligibility to use the multijurisdictional disclosure system.
The Share Consolidation may not have the intended effect
The Company intends to effect the Share Consolidation in connection with the closing of the Offering in order to satisfy the Nasdaq minimum bid price requirement for its initial listing. The market price of the Common Shares following the Share Consolidation may not rise or remain in proportion to the reduction in the number of Common Shares outstanding, and may decline. The Share Consolidation will also reduce the number of Common Shares outstanding, which may reduce the liquidity of the Common Shares and increase the number of shareholders who hold odd lots.
The Company is a foreign private issuer and may cease to qualify as such
The Company is a “foreign private issuer” within the meaning of the rules under the United States Securities Exchange Act of 1934 and, on a listing of the Common Shares on Nasdaq, will be entitled to rely on exemptions from certain Nasdaq corporate governance requirements and from certain rules under that Act, including the rules prescribing the furnishing and content of proxy statements and the reporting and short swing profit recovery provisions of section 16. Holders of Common Shares will accordingly receive less information, and different information, than they would receive from a United States domestic issuer. The Company may lose its status as a foreign private issuer, in which case it would be required to comply with those rules and would incur significant additional costs.
A substantial number of Common Shares may be issued on the exercise or conversion of outstanding securities
As at the date of this AIF the Company has outstanding Warrants, Options, RSUs and convertible notes exercisable for or convertible into a substantial number of Common Shares. In addition, on closing of the Offering the Company will issue Common Shares to Ascent, K2 and Fattore Glen on the conversion of a portion of their convertible indebtedness, 2,000,000 Warrants to the Vendor and a warrant to the Underwriters over 5.0% of the Common Shares sold under the Offering. The exercise or conversion of those securities, and the subsequent sale of the underlying Common Shares, will dilute existing holders of Common Shares and may adversely affect the market price of the Common Shares. The conversion price of certain of the Company’s convertible notes is subject to adjustment on a dilutive issuance, which may result in the issuance of more Common Shares than is presently anticipated. See “Description of Capital Structure”.
Potential Volatility of Share Price
The market price for Common Shares may be volatile and subject to wide fluctuations in response to numerous factors, many of which are beyond the Company’s control, including, but not limited to, the following: (i) actual or anticipated fluctuations in the Company’s quarterly results of operations; (ii) recommendations by securities research analysts; (iii) changes in the economic performance or market valuations of other issuers that investors deem comparable to the Company; (iv) addition or departure of the Company’s executive officers and other key personnel; (v) sales or anticipated sales of additional Common Shares; (vi) significant acquisitions or amalgamations, strategic partnerships, joint ventures or capital commitments by or involving the Company or its competitors; and (vii) news reports relating to trends, concerns, technological or competitive developments, regulatory changes and other related issues in the Company’s industry or target markets. Financial markets have historically experienced significant price and volume fluctuations that have particularly affected the market prices of equity securities of public entities and that have, in many cases, been unrelated to the operating performance, underlying asset values or prospects of such entities. Accordingly, the market price of the Common Shares may decline even if the Company’s operating results, underlying asset values or prospects have not changed. Additionally, these factors, as well as other related factors, may cause decreases in asset values that are deemed to be other than temporary, which may result in impairment losses. There can be no assurance that continuing fluctuations in price and volume will not occur. If such increased levels of volatility and market turmoil continue for a protracted period of time, the trading price of the Common Shares may be materially adversely affected.
Page 49
No Assurance of Active Market for Shares
There can be no assurance that an active and liquid market for the Common Shares will develop or be maintained. If an active public market does not develop or is not maintained, shareholders of the Company may have difficulty selling the Common Shares. The market price of the Common Shares may materially decline below the initial trading price.
Dividends
It is not anticipated that the Company will pay any dividends in the foreseeable future. The declaration of dividends will be at the discretion of Company’s board of directors, even if Company has sufficient funds, net of its liabilities, to pay such dividends, and the declaration of any dividend will depend on Company’s financial results, cash requirements, future prospects and other factors deemed relevant by its board of directors. In addition, the Company’s ability to pay a cash dividend is restricted by the covenants in the agreements governing its indebtedness, and is prohibited outright while the Ascent Note remains outstanding. See “Dividends and Distributions – Restrictions on Dividends”.
A return on the Company’s securities is not guaranteed
There is no guarantee that the Company’s securities will earn any positive return in the short term or long term. A holding of the Company’s securities is speculative and involves a high degree of risk and should be undertaken only by holders whose financial resources are sufficient to enable them to assume such risks and who have no need for immediate liquidity in their investment. A holding of the Company’s securities is appropriate only for holders who have the capacity to absorb a loss of some or all of their investment.
Global Financial Conditions
Global financial conditions have always been subject to volatility. This volatility may impact the ability of the Company to obtain equity or debt financing in the future and, if obtained, on terms favourable to the Company. Increased levels of volatility and market turmoil can adversely impact the Company’s operations and the value, and the price of the Common Shares could be adversely affected.
Future Sales of Common Shares by Existing Shareholders
If the Common Shares become listed on a stock exchange, sales of a substantial number of Common Shares in the public market could occur at any time. These sales, or the market perception that the holders of a large number of Common Shares intend to sell Common Shares, could reduce the market price of the Common Shares. Ascent, K2 and Fattore Glen have agreed, subject to certain conditions, not to sell securities of the Company for 90 days following the closing of the Offering, and the directors and executive officers of the Company are expected to enter into lock-up agreements with the Underwriters. When those restrictions expire or if they are waived, additional Common Shares will be available for sale in the public market, subject to applicable securities laws and stock exchange requirements, which could reduce the market price for the Common Shares.
Page 50
Additional Issuances and Dilution
The Company may issue and sell additional securities to finance its operations. The Company cannot predict the size or type of future issuances of securities or the effect, if any, that future issuances and sales of securities will have on the market price of the Company’s issued and outstanding securities from time to time. Sales or issuances of substantial amounts of the Company’s securities, or the perception that such sales could occur, may adversely affect prevailing market prices for the Company’s issued and outstanding securities from time to time. With any additional sale or issuance of the Company’s securities, holders will suffer dilution with respect to voting power and may experience dilution in the Company’s earnings per share.
Publication of Inaccurate or Unfavourable Research and Reports
The trading market for the Common Shares will rely in part on the research and reports that securities analysts and other third parties choose to publish about the Company. The Company will not control these analysts or other third parties. The price of the Common Shares could decline if one or more securities analysts downgrade the Common Shares or if one or more securities analysts or other third parties publish inaccurate or unfavourable research about the Company or cease publishing reports about the Company. If one or more analysts cease coverage of the Company or fail to regularly publish reports on the Company, the Company could lose visibility in the financial markets, which in turn could reduce the market price for the Common Shares or trading volume to decline.
There are costs associated with maintaining a public listing
As the Common Shares are listed on the CBOE and Frankfurt exchanges, and are quoted on the OTCQB, the Company is subject to the reporting requirements, rules and regulations under the applicable Canadian securities laws and rules of stock exchange(s) on which the Company’s securities may be listed. There are increased costs associated with legal, accounting and other expenses related to such regulatory compliance. Securities legislation and the rules and policies of the Canadian Securities Administrators and stock exchanges require listed companies to, among other things, adopt corporate governance and related practices, and to continuously prepare and disclose material information, all of which add to a company’s legal and financial compliance costs. The Company may also elect to devote greater resources than it otherwise would have on communication and other activities typically considered important by publicly traded companies.
| ITEM 5. | DIVIDENDS or Distributions |
The Company has not declared or paid any cash dividends on its Common Shares since the date of its incorporation. The Company intends to retain its earnings, if any, to finance the growth and development of its business and does not expect to pay dividends or to make any other distributions in the near future. The Board will review this policy from time to time having regard to the Company’s financing requirements, financial condition and other factors considered to be relevant, subject at all times to the contractual restrictions described below.
5.1 Restrictions on Dividends
The Company’s ability to declare or pay dividends or make other distributions is restricted by the covenants in the agreements governing its indebtedness. Under section 4(a) of the Ascent Note, for so long as the Ascent Note is outstanding the Company may not declare or make any Restricted Payment — which for that purpose includes any dividend or other distribution on, and any redemption or purchase of, the Common Shares — other than a Restricted Payment of Common Shares or securities convertible into or exercisable for Common Shares made to a person that is not a related party or an affiliate of the Company, and other than Restricted Payments of Common Shares or such securities made under employment and compensation arrangements with related parties or affiliates of the Company, including any management incentive plan or executive compensation plan. The Ascent Note therefore prohibits the Company from paying a cash dividend on the Common Shares while it remains outstanding. There is no financial test and no lender consent mechanic that would permit a cash dividend; the restriction is absolute while the Ascent Note is outstanding.
Page 51
| ITEM 6. | DESCRIPTION OF CAPITAL STRUCTURE |
6.1 General Description of Share Capital
The Company is authorized to issue an unlimited number of Common Shares and an unlimited number of preferred shares issuable in series on terms to be fixed by the Board. No preferred shares are issued or outstanding.
The following types of awards are also issuable under the Omnibus Plan: stock options to purchase Common Shares (“Options”), deferred share units (“DSUs”), performance share units (“PSUs”), restricted share units (“RSUs”) and share appreciation rights (“SARs” and, together with Options, DSUs, PSUs, and RSUs, collectively, “Awards”).
As at the date of this AIF the Company has issued and outstanding: (i) 230,434,141 Common Shares; (ii) 32,125,333 Options with exercise prices ranging from $0.20 to $0.45 per Common Share; (iii) 85,763,692 Warrants with exercise prices ranging from $0.30 to $0.60 per Common Share; (iv) 413,907 RSUs exercisable into Common Shares at a deemed price of $0.345; and (v) convertible notes in the aggregate principal amount of C$7,500,000 and US$6,720,867.21. There are no PSUs, DSUs or SARs outstanding as at the date of this AIF.
6.2 Common Shares
Each holder of Common Shares is entitled to one vote per Common Share held on all matters submitted to a vote of the shareholders, including the election of directors.
Holders of Common Shares are entitled to receive dividends, if any, as may be declared from time to time by the Board. In the event of the liquidation, dissolution or winding up of the Company, holders of Common Shares will be entitled to receive a proportionate share, on a per-share basis, of the assets legally available for distribution to shareholders after the payment of all of the Company’s debts and other liabilities.
Holders of the Common Shares have no pre-emptive, conversion or subscription rights, and there are no redemption or sinking fund provisions applicable to the Common Shares.
6.3 Warrants
The Company has multiple series of Warrants outstanding. Each Warrant entitles the holder thereof to purchase one Common Share at a fixed exercise price, ranging from $0.30 to $0.60 per Common Share (other than the Warrants issued to Ascent, which are exercisable at US$0.23488 per Common Share). The Warrants are subject to adjustment in certain customary events, subject to a de minimis amount, including (i) reclassifications of the Common Shares or a capital reorganization of the Company; (ii) consolidations, amalgamations, arrangements or mergers of the Company with or into any other corporation or other entity (other than consolidations, amalgamations, arrangements or mergers which do not result in any reclassification of the outstanding Common Shares or a change of the Common Shares into other shares); (iii) the sale, conveyance or transfer of the undertaking or assets of the Company as an entirety or substantially as an entirety to another corporation or other entity; (iv) the subdivision, re-division or change of the Common Shares into a greater number of Common Shares; or (v) the consolidation, reduction or combination of the Common Shares into a lesser number of Common Shares.
Page 52
The Warrants outstanding as at the date of this AIF consist of the following series: (i) 36,621,385 Warrants issued on the exchange of warrants of the Target that had been issued under the Target’s unit private placement completed between February and August 2024, exercisable at $0.40 per Common Share until November 2026; (ii) 239,781 Warrants issued to finders in connection with the Target’s November 2024 subscription receipt financing, exercisable at $0.30 per Common Share; (iii) 12,504,671 Warrants issued under the July 2025 private placement, exercisable at $0.44 per Common Share until July 2028; (iv) 5,946,250 Warrants issued under the December 2025 unit private placement, 35,625 Warrants comprised in the units issued to finders in connection with that placement and 26,875 Warrants comprised in the units issued for services, in each case exercisable at $0.60 per Common Share until December 2027; (v) 7,500,000 Warrants issued to OIC on the Acquisition Date, exercisable at $0.40 per Common Share until December 23, 2030; (vi) 21,460,534 Warrants issued to Ascent on May 5, 2026, exercisable at US$0.23488 (approximately C$0.32) per Common Share until May 5, 2031 and subject to forced exercise if the ten-day volume weighted average price of the Common Shares is C$0.96 or more, subject to volume conditions; and (vii) 1,428,571 Warrants issued in May 2026 in connection with the C$1,000,000 convertible note, exercisable at C$0.35 per Common Share.
On August 26, 2026 the Board approved an extension of the expiry time of the Warrants described in clause (i) above from August 28, 2026 to November 28, 2026, and the Company entered into a first supplemental warrant indenture with Odyssey Trust Company to give effect to that extension, conditional on prior receipt of applicable regulatory approvals, including the approval of Cboe Canada.
In connection with the amending agreement in respect of the VTB Note dated October 7, 2026, the Company agreed to issue 2,000,000 Warrants to the Vendor on closing of the Offering, being 80,000 Warrants after giving effect to the Share Consolidation, exercisable for a period of two years at the price at which Common Shares are issued under the Offering. On closing of the Offering the Company will also issue to the Underwriters a warrant to purchase that number of Common Shares equal to 5.0% of the Common Shares sold under the Offering, exercisable for three years from closing at 120% of the offering price.
6.4 Convertible Notes
On the Acquisition Date the Company issued convertible notes to K2 in the principal amount of C$5,000,000 (the “K2 Note”) and to Fattore Glen in the principal amount of C$2,500,000 (the “Fattore Glen Note”). Those notes bear interest at 7.2% per annum payable monthly, are convertible currently at the option of the holder at a price of $0.32 per Common Share, are unsecured and rank equally with the Company’s other unsecured and unsubordinated indebtedness, and mature on December 23, 2028. The conversion price of each of those notes was $0.50 per Common Share on issue. See “Risk Factors – A substantial number of Common Shares may be issued on the exercise or conversion of outstanding securities”. In connection with the Offering, K2 has delivered a notice electing to convert 50% of the principal amount of the K2 Note pending completion of the Offering, and Fattore Glen has agreed to convert the full principal amount of the Fattore Glen Note into Common Shares.
On May 5, 2026 the Company issued the Ascent Note in the principal amount of US$6,720,867.21. The Ascent Note bears interest at 9.5% per annum payable monthly in arrears, with a guaranteed minimum interest amount in respect of the first 18 months, matures on November 5, 2027 and is convertible at the holder’s option into Common Shares at a conversion price equal to the United States dollar equivalent of C$0.32 per Common Share, subject to adjustment, including on a dilutive issuance. Principal amortization payments are scheduled to commence on December 1, 2026, subject to the deferral described below. The Ascent Note is subject to a beneficial ownership limitation of 9.99% and is secured by a second-priority lien over substantially all of the assets of the Company and certain of its subsidiaries. In connection with the Offering, the Company has agreed to repay US$413,333.33 under the Ascent Note on closing, and Ascent has agreed to convert approximately 25% of the principal amount of the Ascent Note into Common Shares, to waive the mandatory prepayment provisions of the Ascent Note and to defer the commencement of principal amortization payments by six months. The conversion price applicable to the unconverted balance of the Ascent Note will be reset once, at the expiry of the 90-day standstill period, to the lower of the then-current market price of the Common Shares and the conversion price then in effect.
Page 53
6.5 Share Consolidation
In connection with the Offering, and in order to satisfy the minimum bid price requirement for a Nasdaq listing, the Company intends to consolidate the Common Shares on the basis of one post-consolidation Common Share for every 25 pre-consolidation Common Shares. No fractional Common Shares will be issued on the Share Consolidation, and a shareholder who would otherwise be entitled to a fractional Common Share will have that fractional share cancelled. The number of Common Shares issuable on the exercise or conversion of the Company’s outstanding Options, Warrants, RSUs and convertible notes, and the exercise or conversion price of each of them, will be adjusted in accordance with their terms. Unless otherwise indicated, all references in this AIF to numbers of Common Shares, to securities convertible into or exercisable for Common Shares and to per share amounts are stated on a pre-Share Consolidation basis. The Share Consolidation will remain subject to the approval of the Board and of Cboe Canada and to the filing of articles of amendment, and no assurance can be given that it will be effected. See “Risk Factors”.
6.6 Awards under the Omnibus Plan
The Company has in place an Omnibus Plan to attract and retain employees, directors and consultants, and to ensure that interests of key persons are aligned with the success of the Company and its affiliates. The Omnibus Plan is a “rolling” plan which provides that the aggregate maximum number of Common Shares reserved for issuance under the Omnibus Plan (and all equity compensation plans) shall not exceed fifteen percent (15%) of the Company’s issued and outstanding Common Shares from time to time on a non-diluted basis and is inclusive of any stock options issued under the Legacy Option Plan that was in place at Target prior to the RTO Transaction.
Subject to adjustment pursuant to provisions of the Omnibus Plan, the aggregate number of Common Shares: (i) issued to insiders of the Company under the Omnibus Plan or any other proposed or established security based compensation arrangement of the Company within any one (1) year period; and (ii) issuable to insiders at any time under the Omnibus Plan or any other proposed or established security based compensation arrangement of the Company, shall in each case not exceed ten percent (10%) of the total issued and outstanding Common Shares (on a non-diluted basis). Other than by will or under the law of succession or as otherwise set forth in the Omnibus Plan, Awards are not assignable or transferable. Every three (3) years after the effective date of the Omnibus Plan, all unallocated Awards under the Omnibus Plan shall be submitted for approval to the Board and the shareholders of the Company.
Options
Subject to the terms and conditions of the Omnibus Plan and any shareholder or regulatory approval which may be required, the Board may, from time to time by resolution, in its sole discretion: (i) designate the eligible participants who may receive Options under the Omnibus Plan; (ii) fix the number of Options, if any, to be granted to each eligible participant and the date or dates on which such Options shall be granted; (iii) determine the price per Common Share to be payable upon the exercise of each such Option (the “Option Price”); and (iv) determine the relevant vesting provisions, including criteria established by the Board which, without limitation, may include criteria based on the eligible participant’s personal performance and the financial performance of the Company or of its subsidiaries, and that may be used to determine the vesting of the Awards, when applicable, if applicable, and the expiry of the Options, which shall be no later than ten (10) years from the date the Option is granted.
DSUs
Under the Omnibus Plan, the Company may grant DSUs to a participant, entitling such participant to receive payment based on the value of one (1) Common Share once such Award has vested, subject to restrictions and conditions as the Board may determine at the time of grant. Conditions may be based on such factors as may be determined by the Board from time to time, including the achievement of preestablished performance criteria. As of the date of this AIF, there were no DSUs outstanding.
Page 54
Subject to the terms and conditions of Omnibus Plan and any shareholder or regulatory approval which may be required, the Board may, from time to time by resolution, in its sole discretion: (i) designate the participants who may receive DSUs under the Omnibus Plan; (ii) fix the number of DSUs, if any, to be granted to each eligible director and the date or dates on which such DSUs shall be granted; and (iii) determine the relevant conditions and vesting provisions of such DSUs.
Subject to the vesting and other conditions and provisions set forth in the Omnibus Plan and in any agreement relating to a grant of DSUs, each DSU will entitle a participant to receive: one (1) Common Share issued from treasury or purchased on the open market; (ii) to receive the cash equivalent of one (1) Common Share; or (iii) a combination of (i) and (ii), as determined by the Board in its sole discretion, on the date when the DSU is fully vested.
A participant who: (i) ceases to be a director; (ii) ceases to be employed by the Company or its subsidiaries; or (iii) ceases to provide services to the Company or its subsidiaries, as applicable, (of, if deceased, their estate, successors, heirs or legal representatives) may request the settlement of all (but not less than all) of their vested DSUs at any time during the period between the date on which they (i) cease to be a director of the Company; (ii) cease to be employed by the Company or its Subsidiaries; or (iii) cease to provide services to the Company or its Subsidiaries, as applicable, and the expiry date of the DSU, in such manner as the Board may determine from time to time and in accordance with such rules and regulations as the Board may prescribe from time to time. Any DSU which has not been settled prior to the expiry date of the DSU shall be automatically settled on the expiry date of the DSU.
RSUs
Under the Omnibus Plan, the Company may grant RSUs to a participant, entitling such participant to receive payment based on the value of one (1) Common Share once such Award has vested, subject to restrictions and conditions as the Board may determine at the time of grant. Conditions may be based on continuing employment (or engagement) with the Company or a subsidiary.
Subject to the terms and conditions of Omnibus Plan and any shareholder or regulatory approval which may be required, the Board may, from time to time by resolution, in its sole discretion: (i) designate the eligible participants who may receive RSUs under the Omnibus Plan for services rendered in a particular year; (ii) fix the number of RSUs, if any, to be granted to each eligible participant and the date or dates on which such RSUs shall be granted; and (iii) determine the relevant conditions and vesting provisions and the settlement date of such RSUs.
Subject to the vesting and other conditions and provisions set forth in the Omnibus Plan and in any agreement relating to a grant of RSUs, each RSU will entitle a participant to receive: one (1) Common Share issued from treasury or purchased on the open market; (ii) to receive the cash equivalent of one (1) Common Share; or (iii) a combination of (i) and (ii), as determined by the Board in its sole discretion, on the date when the RSU is fully vested.
PSUs
Under the Omnibus Plan, the Company may grant PSUs to a participant, entitling such eligible participant to receive payment based on the value of one (1) Common Share once such Award has vested, subject to restrictions and conditions as the Board may determine at the time of grant. Conditions may be based on continuing employment (or engagement) with the Company or a subsidiary and performance criteria.
Subject to the terms and conditions of Omnibus Plan and any shareholder or regulatory approval which may be required, the Board may, from time to time by resolution, in its sole discretion: (i) designate the eligible participants who may receive PSUs under the Omnibus Plan for services rendered in a particular year; (ii) fix the number of PSUs, if any, to be granted to each eligible participant and the date or dates on which such PSUs shall be granted; and (iii) determine the relevant conditions, performance criteria and vesting provisions and the settlement date of such PSUs.
Page 55
Subject to the vesting and other conditions and provisions set forth in the Omnibus Plan and in any agreement relating to a grant of PSUs, each PSU will entitle a participant to receive: one (1) Common Share issued from treasury or purchased on the open market; (ii) to receive the cash equivalent of one (1) Common Share; or (iii) a combination of (i) and (ii), as determined by the Board in its sole discretion, on the date when the PSU is fully vested.
SARs
Under the Omnibus Plan, the Company may grant SARs to a participant. A SAR is an Award entitling the recipient to receive a cash payment having a value equal to the excess of the Market Value of the Common Shares on the date of exercise over the determined initial price of the SAR, which price shall not be less than 100% of the Market Value of the Common Share on the date of grant.
Subject to the terms and conditions of the Omnibus Plan and any shareholder or regulatory approval which may be required, the Board may, from time to time by resolution, in its sole discretion: (i) designate the eligible participants who may receive SARs under the Omnibus Plan; (ii) fix the number of SARs, if any, to be granted to each eligible participant and the date or dates on which such SARs shall be granted; (iii) determine the initial price per SAR (the “SAR Price”); and (iv) determine the relevant conditions and vesting provisions, including the Performance Criteria, and the expiry of the SARs.
The SAR Price will be fixed by the Board when such SAR is granted but will not be less than the Market Value of such Common Shares on the at the time of the grant.
In no event shall a SAR be exercisable on a date which is later than five (5) years from the date the SAR is granted. Each SAR shall be exercisable at such time or times and pursuant to the achievement of such performance criteria or other vesting conditions as the Board at the time of granting of the particular SAR, may determine in its sole discretion.
6.7 Ratings
The Company has neither asked for, nor received, a credit rating from a credit rating agency.
| ITEM 7. | MARKET FOR SECURITIES |
7.1 Trading Price and Volume
The Common Shares are listed and posted for trading on Cboe Canada under the symbol “CZZL” and trade in the United States on the OTCQB Venture Market under the symbol “CZZLF”. The following table sets out the price range, being the monthly high and low trading prices, and the consolidated monthly volume traded, of the Common Shares on Cboe Canada for the periods indicated. Prices and volumes are stated on a pre-Share Consolidation basis, as traded.
| Month | High ($)(1)(2) | Low ($)(1)(2) | Volume(3) |
| August 2025 | $0.45 | $0.38 | 1,583,009 |
| September 2025 | $0.48 | $0.41 | 1,201,118 |
| October 2025 | $0.47 | $0.38 | 1,486,324 |
| November 2025 | $0.435 | $0.37 | 1,890,825 |
| December 2025 | $0.41 | $0.325 | 1,909,083 |
| January 2026 | $0.435 | $0.33 | 1,343,407 |
| February 2026 | $0.39 | $0.30 | 1,179,745 |
| March 2026 | $0.365 | $0.27 | 796,355 |
| April 2026 | $0.385 | $0.26 | 1,087,863 |
| May 2026 | $0.385 | $0.315 | 915,449 |
| June 2026 | $0.37 | $0.275 | 1,933,133 |
| July 2026 | $0.51 | $0.26 | 2,220,941 |
| August 2026 | $0.435 | $0.31 | 1,143,266 |
| September 2026 | $0.365 | $0.33 | 262,042 |
| October 1 to 23, 2026 | $0.40 | $0.27 | 1,913,136 |
Notes:
| (1) | Data source: Bloomberg; trading on Cboe Canada Lit, Dark and Speedbump markets. | |
| (2) | High and low daily trading prices in the month. | |
| (3) | Total volume traded in the month. | |
| (4) | Monthly trading data for September 2025 onward is sourced from the Prospectus Supplement. |
Page 56
7.2 Prior Sales
The following table summarizes the issuances of Common Shares or securities convertible into Common Shares during the fiscal year ended July 31, 2026 and the period from August 1, 2026 to the date of this AIF.
| Type of Securities | Date of Issue / Grant | Number of Securities | Issuance/Exercise Price Per Security |
Reason for Issuance |
| Options | August 1, 2025 | 50,000 | $0.425 | Grant under the Omnibus Plan |
| RSUs | August 1, 2025 | 440,725 | n/a | Grant under the Omnibus Plan |
| Options | August 8, 2025 | 1,410,000 | $0.42 | Grant under the Omnibus Plan |
| Options | August 26, 2025 | 75,000 | $0.45 | Grant under the Omnibus Plan |
| Common Shares | October 9, 2025 | 75,985 | $0.20 | Exercise of Options |
| Common Shares | December 23, 2025 | 11,892,500 | $0.40 | Non-brokered private placement of units (“2025 Unit Placement”) |
| Warrants | December 23, 2025 | 5,946,250 | $0.60 | 2025 Unit Placement |
| Convertible notes | December 23, 2025 | $7,500,000 principal amount | n/a | Non-brokered private placement to K2 and Fattore Glen |
| Common Shares | December 23, 2025 | 500,000 | $0.40 | Finders’ fees for the 2025 Unit Placement |
| Common Shares | December 23, 2025 | 71,250 | $0.40 | Finders’ fees for the 2025 Unit Placement |
| Warrants | December 23, 2025 | 35,625 | $0.60 | Finders’ fees for the 2025 Unit Placement |
| Warrants | December 23, 2025 | 7,500,000 | $0.40 | Issued to OIC under the Credit Agreement |
| Common Shares | December 23, 2025 | 53,750 | $0.40 | Units issued for services |
| Warrants | December 23, 2025 | 26,875 | $0.60 | Units issued for services |
| Options | February 2, 2026 | 200,000 | $0.385 | Grant under the Omnibus Plan |
| Options | February 9, 2026 | 25,000 | $0.37 | Grant under the Omnibus Plan |
| Options | February 24, 2026 | 100,000 | $0.36 | Grant under the Omnibus Plan |
| Options | March 2, 2026 | 250,000 | $0.34 | Grant under the Omnibus Plan |
| Options | March 5, 2026 | 170,000 | $0.34 | Grant under the Omnibus Plan |
| Options | March 26, 2026 | 475,000 | $0.34 | Grant under the Omnibus Plan |
| Options | March 30, 2026 | 125,000 | $0.33 | Grant under the Omnibus Plan |
| Common Shares | April 1, 2026 | 140,369 | $0.20 | Exercise of Options |
| Options | April 7, 2026 | 1,000,000 | $0.29 | Grant under the Omnibus Plan |
| Convertible note | May 5, 2026 | US$6,720,867.21 principal amount | n/a | Issuance of the Ascent Note |
| Warrants | May 5, 2026 | 21,460,534 | US$0.23488 | Issued to Ascent |
| Common Shares | May 5, 2026 | 429,210 | C$0.34 | Closing fee payable to Ascent |
| Common Shares | May 5, 2026 | 476,190 | C$0.35 | Closing shares on the $1,000,000 convertible note |
| Warrants | May 5, 2026 | 1,428,571 | C$0.35 | Issued with the $1,000,000 convertible note |
| Common Shares | May 5, 2026 | 2,857,143 | C$0.35 | Conversion of the $1,000,000 convertible note |
| Common Shares | June 1, 2026 | 22,004 | $0.33 | Vesting of RSUs |
| Options | June 11, 2026 | 1,200,000 | $0.32 | Grant under the Omnibus Plan |
| Common Shares | June 15, 2026 | 203,500 | $0.20 | Exercise of broker warrants |
| Common Shares | June 16, 2026 | 32,828 | $0.20 | Exercise of Options |
| Common Shares | June 18, 2026 | 15,767 | $0.20 | Exercise of Options |
| Options | July 14, 2026 | 25,000 | $0.30 | Grant under the Omnibus Plan |
| Common Shares | July 15, 2026 | 1,552,595 | $0.32 | Settlement of indebtedness |
| Options | July 23, 2026 | 250,000 | $0.30 | Grant under the Omnibus Plan |
| Options | August 19, 2026 | 470,000 | $0.335 | Grant under the Omnibus Plan |
| RSUs | August 20, 2026 | 413,907 | $0.345 | Grant under the Omnibus Plan |
| Common Shares | September 4, 2026 | 181,859 | $0.35 | Vesting of RSUs |
Notes:
| (1) | Each unit issued in the 2025 Unit Placement, and each unit issued as a finders’ fee or for services in connection with it, comprised one Common Share and one-half of one Warrant entitling the holder thereof to purchase one additional Common Share at a price of $0.60 for a period of twenty-four months from the date of issuance. The Common Share and Warrant components are shown separately above. | |
| (2) | The exercise of Options on October 9, 2025 was a cashless exercise satisfied by the surrender of 57,348 Options having the same terms as those exercised. | |
| (3) | The issuances on and after August 1, 2026 took place after the end of the most recently completed financial year. |
Page 57
| ITEM 8. | ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTIONS ON TRANSFER |
8.1 Escrowed Securities and Securities Subject to Contractual Restriction on Transfer
CBOE Escrow
In connection with the RTO Transaction, Cboe Canada has discretion, in certain circumstances, to impose escrow provisions on the Common Shares being issued to certain shareholders of Target. All Common Shares held by the Principals of the Company following the completion of the RTO Transaction were subject to the Escrow Agreement entered into with the Escrow Agent. “Principals” of the Company include all directors, all senior officers and any shareholder who held 20% or more of the Common Shares following the completion of the RTO Transaction. It also includes any shareholder of the Company who held, following the completion of the RTO Transaction, 10% or more of the Common Shares and who has elected or appointed, or has the right to elect or appoint, one or more directors or officers of the Company. Any spouse or relative of a Principal who resided with a Principal were also subject to the escrow requirements of Cboe Canada.
At the closing of the RTO Transaction, an aggregate of 41,223,327 common shares, 9,175,000 options to purchase Common Shares, and 750,000 warrants to purchase Common Shares were subject to escrow. One-quarter of these securities was released from escrow on each of the listing of the Common Shares on December 30, 2024 (the “Listing Date”) and the 6, 12 and 18 month anniversaries of the Listing Date. The final tranche was released on June 30, 2026, and accordingly no securities of the Company remain subject to escrow under the Escrow Agreement as at the date of this AIF.
| Designation of Class | Number of Securities Held in Escrow | Percentage of Class |
| Common Shares | Nil | Nil |
| Options to purchase Common Shares | Nil | Nil |
| Warrants to purchase Common Shares | Nil | Nil |
Page 58
The securities formerly held in escrow under the Escrow Agreement were released in accordance with the following schedule:
| Amount of Escrowed Securities | Release Date | |
| 1/4 of the Escrowed Securities | Released on the Listing Date | |
| 1/4 of the Escrowed Securities | Released on June 30, 2025 (6-month anniversary of the Listing Date) | |
| 1/4 of the Escrowed Securities | Released on December 30, 2025 (12-month anniversary of the Listing Date) | |
| 1/4 of the Escrowed Securities | Released on June 30, 2026 (18-month anniversary of the Listing Date) |
Notes:
As these Common Shares are no longer in escrow, they are not reflected in the table above titled “CBOE Escrow”
Contractual Restriction on Transfer
The contractual lock-up agreements entered into in connection with the RTO Transaction have expired in accordance with their terms. As at the date of this AIF, no Common Shares are subject to contractual restrictions on transfer. In addition, in connection with the Offering each of Ascent, K2 and Fattore Glen entered into a standstill and lock-up agreement under which it will not sell any securities of the Company for a period of 90 days from the closing of the Offering, and the directors and executive officers of the Company are expected to enter into lock-up agreements with the Underwriters.
| Designation of Class |
Number of Securities Subject to Restriction |
Release Date |
| Common Shares | Nil | Released in accordance with the schedule described above |
| Common Shares | Nil | Released in accordance with the schedule described above |
Page 59
| ITEM 9. | DIRECTORS AND OFFICERS |
9.1 Name, Occupation and Security Holding
The following table sets out the name, province or state, and country of residence, positions and offices held with the Company, the period during which each director has served as a director and the principal occupations of each of the directors and executive officers of the Company. Directors of the Company hold office until the next annual meeting of shareholders or until their successors are duly elected or appointed.
|
Name, Municipality of Residence and Position |
Principal Occupation for Past Five Years | Appointed As Of |
Number and of Securities4 Beneficially Owned Controlled |
|
John Celenza3 King City, Ontario Director, CEO and Corporate Secretary |
CEO of the Company Previously CEO of BioSteel Sports Nutrition Inc. (“BioSteel”) |
December 19, 2024 | 15,723,327 (6.82%)5 |
|
Steven Tschirhart Toronto, Ontario CFO |
CFO of the Company Previously Head of Coffee, Canada for Kraft Heinz |
December 19, 2024 | 123,435 (less than 1%)6 |
|
Anthony Mila King City, Ontario Co-President & Chief Marketing Officer |
Chief Marketing Officer of the Company; CEO of HighRise Marketing Inc.; Previously, Vice President, Sales of Otherlife; Chief Marketing Officer of BioSteel |
December 19, 2024 | 10,000,000 (4.34%)7 |
|
Blane Kaufman Toronto, Ontario Chief Operating Officer |
Chief Operating Officer of the Company; President, Midnight Investments; Previously, Head of Operations, BioSteel |
December 19, 2024 | 136,470 (less than 1%)8 |
|
Lauri Holomis Toronto, Ontario Director |
VP, Marketing, The Gretzky Foundation | December 19, 2024 | Nil (0%)9 |
|
Nunziato Fattore2,3 Toronto, Ontario Director |
Manager, Dendrite Inc. | December 19, 2024 | 3,554,946 (1.54%)10 |
|
Ndamukong Suh Portland, Oregon Director |
Managing Partner, House of Spears Management Previously Professional Football Player with Tampa Bay Buccaneers (2019–2021) Philadelphia Eagles (2022) |
August 7, 2025 | Nil (0%)11 |
|
Michael Doolan1,3 Toronto, Ontario Director |
Retired; Independent corporate director for the Company and Fredonia Mining Inc. (FRED.V) Previously, Director and Chair of the Audit Committee of Route1 Inc. (ROI.V) |
August 7, 2025 | 375,000 (less than 1%)12 |
|
Geoff Bedford1,2 Toronto, Ontario Director |
Retired; Independent corporate director for the Company Previously, Director, President & CEO of Neo Performance Materials |
August 7, 2025 | 385,000 (less than 1%)13 |
|
David Giancoulos2 Toronto, Ontario Director |
General Manager, Liquid Refreshment Beverages, Mark Anthony Group Inc. Previously, Commercial Development, Flow Water Inc.; Head of RTD, BioSteel | May 1, 2026 | Nil (0%)14 |
|
Dominic Scarangella1 Toronto, Ontario Director |
Corporate director. Previously, Chief Operating Officer of Artisan Complete; senior financial executive of Leon’s Furniture Limited | August 19, 2026 | Nil (0%)15 |
Notes:
| (1) | Member of the Audit Committee. | |
| (2) | Member of the Compensation Committee. | |
| (3) | Member of the Nominating & Corporate Governance Committee. | |
| (4) | For the purposes of this table, “Securities” means Common Shares | |
| (5) | Mr. Celenza also owns or controls 1,500,000 Options. | |
| (6) | Mr. Tschirhart also owns or controls 123,435 Warrants and 1,025,000 Options. | |
| (7) | Mr. Mila also owns or controls 1,000,000 Options. | |
| (8) | Mr. Kaufman also owns or controls 135,470 Warrants and 1,500,000 Options. | |
| (9) | Ms. Holomis owns or controls 350,000 Options. | |
| (10) | Mr. Fattore also owns or controls 750,000 Warrants and 250,000 Options. | |
| (11) | Mr. Suh owns or controls 770,000 Options held indirectly through Kinder HOS LLC, together with 470,000 Options granted on his appointment as a director. | |
| (12) | Mr. Doolan also owns or controls 275,000 Warrants and 470,000 Options. | |
| (13) | Mr. Bedford also owns or controls 275,000 Warrants and 470,000 Options. | |
| (14) | Mr. Giancoulos owns or controls 1,000,000 Options. | |
| (15) | Mr. Scarangella owns or controls 470,000 Options. |
Page 60
The directors of the Company are elected by the shareholders at each annual general meeting and typically hold office until the next annual general meeting at which time they may be re-elected or replaced.
As at the date of this AIF the directors and executive officers of the Company as a group, being 11 persons, beneficially own, or control or direct, directly or indirectly, 30,298,178 Common Shares, representing approximately 13.1% of the outstanding Common Shares. Assuming the exercise of the 9,275,000 Options and 1,558,905 Warrants held by them, they would beneficially own, or control or direct, directly or indirectly, 41,132,083 Common Shares, representing approximately 17.0% of the outstanding Common Shares on a partially diluted basis and 11.8% on a fully diluted basis. The information as to Common Shares beneficially owned, or over which control or direction is exercised, not being within the knowledge of the Company, has been furnished by the respective directors and executive officers.
The following are brief biographical descriptions of the officers and directors of the Company:
John Celenza is a pioneer in the sports nutrition and hydration industries. Prior to Cizzle, Mr. Celenza co-founded and served as CEO of BioSteel Sports Nutrition Inc., which was acquired by Canopy Growth Corporation in 2019. Under his leadership, BioSteel partnered with world-class athletes including Connor McDavid, Andrew Wiggins, Brooke Henderson, Genie Bouchard and Wayne Gretzky.
Steven Tschirhart is a strategic leader with extensive experience in the Consumer-Packaged Goods industry through progressive leadership positions in marketing, finance, and sales. Mr. Tschirhart held several roles at Kraft Foods and Kraft Heinz over the course of more than 17 years, including Head of Coffee, Canada; Finance Director, Grocery Division; Finance Lead, Meal Solutions; Finance Manager, Trade Analytics; and other Finance Manager roles.
Anthony Mila is a senior marketing professional. He currently serves as Chief Marketing Officer for the Company. Mr. Mila started his career at BioSteel Sports Nutrition Inc., where he held a variety of positions, culminating in the role of Chief Marketing Officer & Chief Creative Officer. While at BioSteel, Anthony was instrumental in building the BioSteel brand and worked with top athletes. He also created key Canadian sports properties, including BioSteel #CAMP and the All-Canadian Basketball Game. Subsequent to BioSteel, Mr. Mila founded a successful marketing agency, HighRise Marketing, which partnered with publicly traded companies, advanced the web3 space, and led the digital launch of Gretzky Whisky. Mr. Mila holds a Graduate Program Certificate from Columbia Business School.
Blane Kaufman is Chief Operating Officer of the Company. Mr. Kaufman is also President of Midnight Investments and has more than 10 years of experience in leading and managing operations in the consumer goods and sports nutrition industries. He formerly worked as Head of Operations at Biosteel Sports Nutrition, Inc., Director of Operations of Dream Water, and Biosteel Sports. Throughout his career, Mr. Kaufman has successfully scaled the operations, increasing production capacity, efficiency, and quality, while reducing the costs and risks. Mr. Kaufman holds a Bachelor of Arts from the University of Guelph.
Lauri Holomis has been an entrepreneur for nearly a decade as owner of Ryla Marketing & Consulting, a strategic marketing firm. She has also served in senior roles at various organizations, including The Gretzky Foundation where she served VP, Events and Marketing.
Nunziato Fattore has been a business owner for his entire career. He is the Manager at Dendrite Inc., a real estate portfolio company with significant assets in the Greater Toronto Area. He has also been the owner and operator of a number of Bruno's Fine Foods grocery store locations across the Greater Toronto Area for more than a decade.
Page 61
Ndamukong Suh is a Super Bowl winning, three-time First-Team All-Pro and five-time Pro Bowler who spent 13 seasons in the National Football League with the Detroit Lions, Miami Dolphins, Los Angeles Rams, Tampa Bay Buccaneers, and Philadelphia Eagles. A graduate of the University of Nebraska-Lincoln with a degree in construction management, Mr. Suh is the managing partner of House of Spears Management, a family office that has invested in more than 30 companies and operates a growing real-estate development portfolio. In July 2025, Mr. Suh launched the “No Free Lunch” podcast, sharing insights on wealth building and financial literacy for athletes and entrepreneurs.
Michael Doolan has over 35 years of experience in all aspects of financial management, with specific expertise in international mergers and acquisitions, offshore financing structures, and international treasury management. He has extensive experience as both a board member and an executive for private and public companies in several industries, including Route1 Inc. (ROI:TSXV), UGE International Inc. (UGE:TSXV), and Fredonia Mining Inc. (FRED:TSXV). Doolan most recently retired as Executive Vice President, Finance and Chief Financial Officer of Neo Performance Materials Inc. (CBOE:CA). Prior to that, he served as Senior Vice President and Chief Financial Officer of Falconbridge Limited (TSX: FAL; NYSE:FAL) of Toronto before its merger with Noranda.
Geoff Bedford has held several C-suite positions for publicly traded companies over the last 20 years, including President and CEO of Neo Performance Materials Inc. (NEO:TSX), President and CEO of Molycorp, Inc. (MCP:NYSE), EVP, Chief Operating Officer and previously Chief Financial Officer at Neo Material Technologies Inc. (NEM:TSX). He presently serves as Non-Executive Chairman at B.E.S.T Venture Opportunities Fund (BVOF:CSE). He has led innovation in high-growth sectors navigating complex regulatory environments across North America, Europe, and Asia, leveraging his expertise in strategic planning, global operations, and capital markets. Mr. Bedford is a Canadian Chartered Accountant who has completed Harvard Business School’s Making Corporate Boards More Effective program. Mr. Bedford holds a Bachelor of Science from the University of Western Ontario, and an MBA from Kellogg School of Management.
David Giancoulos has more than 25 years of experience in the consumer packaged goods industry. He served most recently as General Manager, Liquid Refreshment Beverages at Mark Anthony Group, and has previously held senior commercial roles at BioSteel Sports Nutrition Inc., Rockstar Energy, Red Bull and Flow Water Inc.
Dominic Scarangella is a Chartered Professional Accountant and holds the ICD.D designation. He began his career at Price Waterhouse and spent approximately 30 years at Leon’s Furniture Limited as a senior financial executive, retiring in 2018. He subsequently served as Chief Operating Officer of Artisan Complete through to the completion of its sale in January 2020.
9.2 Cease Trade Orders, Bankruptcies, Penalties or Sanctions
Cease Trade Orders
To the Company’s knowledge, except as disclosed herein, no director or executive officer of the Company is, as of the date hereof, or was within ten years before the date hereof, a director, chief executive officer or chief financial officer of any company (including the Company), that:
| · | was subject to a cease trade order, an order similar to a cease trade order, or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days that was issued while the director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer; or |
| · | was subject to a cease trade order, an order similar to a cease trade order, or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days, that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer. |
Page 62
Bankruptcies
Except as disclosed immediately below, to the Company’s knowledge, no director or executive officer of the Company, or a shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company:
| · | is, as of the date hereof, or has been within the ten years before the date hereof, a director or executive officer of any company (including the Company) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or |
| · | has, within the ten years before the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder. |
John Celenza, the Company's CEO, served as the CEO of BioSteel Sports Nutrition Inc. from 2009 to March 2023. Canopy Growth Corporation, majority shareholder of BioSteel Sports Nutrition Inc., elected to initiate creditor protection under the Companies' Creditors Arrangement Act (Canada) (“CCAA”) for the company, which occurred on September 14, 2023, over 6-months after Celenza ceased to be the CEO thereof.
Penalties or Sanctions
To the Company’s knowledge, no director or executive officer of the Company, or a shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company, has been subject to:
| · | any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or |
| · | any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision. |
9.3 Conflicts of Interest
Certain directors and officers of the Company are or may become directors or officers of other companies, or may hold interests in other businesses, with the result that conflicts may arise. In addition, the Vendor is the Company’s lender under the VTB Note, the holder of a pledge of the shares of 17550154 Canada Inc., the indemnitor under the Share Purchase Agreement and, through BrandCo, both a customer of the Manufacturing Business and the Company’s counterparty under the Transition Services Agreement, and an affiliate of the Vendor holds a promissory note of, and leases equipment to, the Company’s subsidiaries. Those overlapping relationships may give rise to conflicts. See “Risk Factors” and “Interest of Management and Others in Material Transactions”. Other than as disclosed in this AIF, to the knowledge of the Company there are no existing or potential material conflicts of interest among the Company, its subsidiaries and its directors and officers.
Page 63
The directors of the Company are required by law to act honestly and in good faith with a view to the best interests of the Company and to disclose any interests, which they may have in any project or opportunity of the Company. If a conflict of interest arises at a meeting of the Board, any director in a conflict is required to disclose his or her interest and abstain from voting on such matter. Conflicts, if any, will be subject to the procedures and remedies provided under the BCBCA.
9.4 Interest of Management and Others in Material Transactions
Prior to the RTO Transaction, Target acquired CBI in February 2024. The acquisition of CBI was not conducted at arm's length as the sole shareholder and director of CBI was John Celenza, who was also a director of the Target. This conflict of interest was disclosed and Mr. Celenza recused himself from any approvals or discussions related to the transaction in accordance with applicable corporate laws. The valuation process and the negotiation of the transaction was conducted by the Company's then independent arm's length directors.
| ITEM 10. | PROMOTERS |
John Celenza, CEO of the Company, may be considered a promoter of the Company in that he took the initiative in organizing the current business of the Company. Mr. Celenza beneficially owns, or controls or directs, 15,723,327 Common Shares and holds 1,500,000 Options.
Other than as disclosed in this AIF, no person who was a promoter of the Company:
| · | received anything of value directly or indirectly from the Company; |
| · | sold or otherwise transferred any asset to the Company within the last 2 years; |
| · | is as at the date hereof, or was within 10 years before the date hereof, a director, CEO or CFO of any person or company that was the subject of a cease trade order or similar order or an order that denied the relevant person or company access to any statutory exemptions for a period of more than 30 consecutive days while that person was acting in the capacity as director, CEO or CFO; |
| · | is as at the date hereof, or was within 10 years before the date hereof, a director, CEO or CFO of any person or company that was the subject of a cease trade order or similar order or an order that denied the relevant person or company access to any statutory exemptions for a period of more than 30 consecutive days that was issued after the person ceased to be a director, CEO or CFO and which resulted from an event that occurred while the person was acting in the capacity as director, CEO or CFO; |
| · | is as at the date hereof, or was within 10 years before the date hereof, a director or executive officer of any person or company that, while the person was acting in that capacity, or within a year of that person ceasing to act in the capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver or receiver manager or trustee appointed to hold its assets; |
| · | has, within 10 years before the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver-manager or trustee appointed to hold the assets of the person; |
| · | has been subject to any penalties or sanctions imposed by a court relating to Canadian securities legislation or by a Canadian securities regulatory authority or has entered into a settlement agreement with a Canadian securities regulatory authority; or |
Page 64
| · | has been subject to any other penalties or sanctions imposed by a court or regulatory body that would be likely to be considered important to a reasonable investor making an investment decision. |
| ITEM 11. | LEGAL PROCEEDINGS AND REGULATORY ACTIONS |
To the Company’s knowledge, there are no legal proceedings or regulatory actions material to the Company to which it is or has been a party, or of which any of its property is or was the subject matter, and no such proceedings or actions are known by the Company to be contemplated.
| ITEM 12. | INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS |
Other than as disclosed elsewhere in this AIF and in the Company’s financial statements, none of the directors or executive officers of the Company, nor any shareholder directly or indirectly beneficially owning, or exercising control or direction over, shares carrying more than ten (10%) percent of the voting rights attached to Common Shares, nor an associate or affiliate of any of the foregoing persons has any material interest, direct or indirect, in any transactions involving the Company that materially affected or would materially affect the Company or any of its subsidiaries. On the Acquisition Date the Company issued the Fattore Glen Note in the principal amount of C$2,500,000 to Fattore Glen, an entity associated with a family member of Nunziato Fattore, a director of the Company, on the same terms as the K2 Note, and Fattore Glen has agreed to convert the full principal amount of the Fattore Glen Note into 7,812,500 Common Shares in connection with the Offering. In May 2025 a family member of a director of the Company advanced an unsecured loan of $1,000,000 to the Company, which bore interest at 20% per annum after the first 90 days and in respect of which the Company paid an arrangement fee of $55,000. The loan was repaid in full in August 2025.
| ITEM 13. | TRANSFER AGENTS AND REGISTRARS |
13.1 Transfer Agents and Registrars
The Company’s registrar and transfer agent is Odyssey Trust Company, at its principal office in Toronto, Ontario.
| ITEM 14. | MATERIAL CONTRACTS |
14.1 Material Contracts
The only material contracts entered into by the Company, other than in the ordinary course of business, within the most recently completed financial year, or entered into before the most recently completed financial year and still in effect, are the following:
| 1. | the Share Purchase Agreement; |
| 2. | the Credit Agreement, together with the related guarantees, security documents and the warrant agreement under which the 7,500,000 Warrants were issued to OIC; |
| 3. | the VTB Note, the related share pledge agreement in respect of the shares of 17550154 Canada Inc., the limited recourse guarantee delivered in connection therewith and the amending agreement dated October 7, 2026; |
| 4. | the warrant indenture dated February 7, 2025 between the Company and Odyssey Trust Company, as supplemented by the first supplemental warrant indenture referred to under “Description of Capital Structure – Warrants”;; and |
| 5. | the Flow Agreement, which became an intercompany arrangement on completion of the Acquisition. |
Page 65
Cizzle Brands Inc. entered into a manufacturing agreement with Flow Water Inc. (“FWI”) dated March 13, 2024 (the “Flow Agreement”). Pursuant to the Flow Agreement, FWI processes CWENCH in Tetra Pak format from materials supplied by Cizzle Brands Inc. (the “Raw Materials”) in accordance with good manufacturing practices and Cizzle Brands Inc.'s specifications, and tests, labels, packages and stores the finished CWENCH products. FWI provides all labour, supervision, equipment, facilities, utilities, supplies and materials for its performance under the Flow Agreement. FWI provides the foregoing services at its facility in Aurora, Ontario. Cizzle Brands Inc. is responsible for providing FWI with Raw Materials specifications, allergen information, the Material Safety Data sheet, letters of guarantee, certificates of insurance, and any applicable Organic or Kosher certificates, as well as the quality and condition of the Raw Materials delivered to FWI. The Flow Agreement has an initial term of three years, with successive one-year renewal periods. The Flow Agreement is non-exclusive and the Company could obtain similar services from other suppliers.
Copies of the Company’s material contracts have been filed under the Company’s profile on SEDAR+ at www.sedarplus.ca.
A summary of the principal terms of the Share Purchase Agreement, the Credit Agreement, the VTB Note and the Ascent Note is set out under “General Development of the Business”, “Description of the Business – The Manufacturing Business” and “Description of Capital Structure”. Those summaries are qualified in their entirety by reference to the full text of the relevant agreement.
| ITEM 15. | INTERESTS OF EXPERTS |
15.1 Names of Experts
The Company’s independent auditor is MNP LLP, located at 1 Adelaide Street East, Suite 1900, Toronto, Ontario, M5C 2V9. MNP LLP is independent with respect to the Company within the meaning of the Rules of Professional Conduct of Chartered Professional Accountants of Ontario (registered name of The Institute of Chartered Accountants of Ontario).
15.2 Interests of Experts
No person or corporation whose profession or business gives authority to a statement made by the person or corporation and who is named as having prepared or certified a part of this AIF or as having prepared or certified a report or valuation described or included in this AIF holds any beneficial interest, direct or indirect, in any securities or property of the Company or of an Associate or affiliate of the Company and no such person is expected to be elected, appointed or employed as a director, senior officer or employee of the Company or of an Associate or affiliate of the Company and no such person is a promoter of the Company or an Associate or affiliate of the Company.
| ITEM 16. | ADDITIONAL INFORMATION |
16.1 Additional Information
Additional information relating to the Company may be found on SEDAR+ at www.sedarplus.ca.
Additional information, including directors’ and officers’ remuneration and indebtedness, principal holders of the Company’s securities and securities authorized for issuance under equity compensation plans is contained in the Company’s management information circular dated December 10, 2025 prepared in connection with the annual general meeting of shareholders held on January 21, 2026, which is available on SEDAR+ at www.sedarplus.ca.
Additional information is also provided in the Company’s financial statements and MD&A for its most recently completed financial year.
Page 66
16.2 Audit Committee
The Audit Committee is comprised of Michael Doolan, Geoff Bedford, and Dominic Scarangella. Each member of the Audit Committee is “independent” and “financially literate” as those terms are defined in NI 52-110. The Company has adopted a charter of the Audit Committee in the form set out at Schedule A. The chair of the Audit Committee is Michael Doolan.
The mandate of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities relating to financial accounting, reporting and internal controls. The Audit Committee is responsible for conducting reviews and discussions with management and the external auditors relating to the audit and financial reporting; assessing the integrity of internal controls and financial reporting procedures; overseeing the implementation of internal controls and procedures; reviewing the quarterly and annual financial statements and MD&A of the Company; selecting and monitoring the independence, performance and remuneration of the external auditors; overseeing all disclosure relating to financial information; and pre-approving any non-audit services to be provided to the Company by the external auditors and the fees for those services. The Audit Committee is also responsible for reviewing and following the procedures established in the Company’s codes, policies and guidelines as may be established from time to time.
Relevant Education and Experience
Each member of the Audit Committee is able to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company’s financial statements. In addition to each member’s general business experience, the education and experience of each member of the Audit Committee that is relevant to the performance of his responsibilities as a member of the Audit Committee is set out below.
Michael Doolan. Mr. Doolan has over 35 years of experience in all aspects of financial management, with specific expertise in international mergers and acquisitions, offshore financing structures and international treasury management. He retired most recently as Executive Vice President, Finance and Chief Financial Officer of Neo Performance Materials Inc., and he previously served as Senior Vice President and Chief Financial Officer of Falconbridge Limited. He has served as a director and audit committee chair of other reporting issuers.
Geoff Bedford. Mr. Bedford is a Canadian Chartered Accountant and has held several C-suite positions with publicly traded companies over the last 20 years, including President and Chief Executive Officer of Neo Performance Materials Inc., President and Chief Executive Officer of Molycorp, Inc. and Executive Vice President, Chief Operating Officer and, previously, Chief Financial Officer of Neo Material Technologies Inc.
Dominic Scarangella. Mr. Scarangella is a Chartered Professional Accountant and holds the ICD.D designation. He began his career at Price Waterhouse and spent approximately 30 years at Leon’s Furniture Limited as a senior financial executive, retiring in 2018.
Audit Committee Oversight
At no time since the commencement of the Company’s most recently completed financial year was a recommendation of the Audit Committee to nominate or compensate an external auditor not adopted by the Board.
Reliance on Certain Exemptions
Since the commencement of the Company’s most recently completed financial year, the Company has not relied on the exemptions in section 2.4, section 3.2, subsection 3.3(2), section 3.4, section 3.6 or section 3.8 of NI 52-110, or on an exemption from NI 52-110 in whole or in part granted under Part 8 thereof.
Page 67
Pre-Approval Policies and Procedures
The Audit Committee has not adopted specific policies and procedures for the engagement of non-audit services. Subject to the requirements of NI 52-110, the engagement of non-audit services is considered by the Board and the Audit Committee on a case-by-case basis.
External Auditor Service Fees
In the table below, “audit fees” are fees billed by the Company’s external auditor for services provided in auditing the Company’s annual financial statements for the subject year. “Audit-related fees” are fees not included in audit fees that are billed by the auditor for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements. “Tax fees” are fees billed by the auditor for professional services rendered for tax compliance, tax advice and tax planning. “All other fees” are fees billed by the auditor for products and services not included in the foregoing categories.
The aggregate fees billed by the Company’s external auditor in the last two fiscal years, by category, were as follows: for the year ended July 31, 2026, audit fees of $415,160, audit-related fees of $363,800, tax fees of $40,703 and all other fees of nil; and for the year ended July 31, 2025, audit fees of $243,960, audit-related fees of $32,100, tax fees of $3,210 and all other fees of nil.
Page 68
SCHEDULE A
AUDIT COMMITTEE CHARTER
CIZZLE BRANDS CORPORATION
This charter (“Charter”) sets out the purpose, composition, member qualification, roles and responsibilities, manner of reporting to the board of directors (the “Board”) of Cizzle Brands Corporation (“Cizzle”), and the general objectives and operation of Cizzle’s audit committee (the “Committee”).
Mandate of the Committee
The primary mandate of the Committee is oversight of Cizzle’s external auditors (“Auditors”), financial reporting and continuous disclosure, financial risk management, Cizzle’s whistleblower and fraud function, and compliance with tax and securities laws.
Roles & Responsibilities
In executing its mandate, the Committee shall have the following roles and responsibilities:
External Auditor
The Committee will: (a) select, evaluate and recommend to the Board, for shareholder approval, the Auditors and, if necessary, the replacement of the Auditor; (b) prior to the annual audit, evaluate the scope of the Auditor’s review, including the Auditor’s engagement letter and the annual audit plan, fee schedule and any related services proposals; (c) recommend to the Board the Auditors’ compensation; (d) pre-approve all nonaudit services to be provided by the Auditors; (e) directly oversee the work of the Auditor; (g) assist with resolving any disputes between Cizzle’s management and the Auditors regarding financial reporting; (h) ensuring that the Auditor is in good standing with the Canadian Public Accountability Board by receiving, at least annually, a report by the external auditor on the audit firm’s internal quality control processes and procedures; and (i) performing other audit, review or attestation services.
Financial Reporting
The Committee will: (a) review the audited consolidated financial statements of Cizzle, discuss those statements with management and with the Auditor, and recommend their approval to the Board; (b) review and discuss with management the quarterly consolidated financial statements, and if appropriate, recommend their approval by the Board; (c) review Cizzle’s management discussion and analysis, interim and annual press releases, and audit committee reports before Cizzle publicly discloses this information; (d) review and consider any significant reports and recommendations issued by the Auditor, together with management’s response, and the extent to which recommendations made by the Auditor have been implemented; and (e) reviewing and approving Cizzle’s hiring policies with respect to partners or employees (or former partners or employees) of a current or former auditor.
Financial Risk Management
The Committee will: (a) review with the Auditors and with management, the general policies and procedures used by Cizzle with respect to internal accounting and financial controls and remain informed of any weaknesses in internal control that could cause errors or deficiencies in financial reporting or deviations from the accounting policies of Cizzle or from applicable laws or regulations; (b) periodically review activities, organizational structure, and qualifications of the CFO and the staff in the financial reporting area, circumstances surrounding the departure of any officers in charge of financial reporting, and the appointment of individuals in these functions, and ensure that matters related to succession planning within Cizzle are raised for consideration at the Board; (c) review management plans regarding any changes in accounting practices or policies and the financial impact thereof; and (d) establishing procedures for: reviewing the adequacy of Cizzle’s insurance coverage, including the Directors’ and Officers’ insurance coverage. Fraud & Whistleblower Program
Page 69
The Committee will: (a) establish procedures for the confidential, anonymous submission by employees of Cizzle of complaints regarding questionable accounting or auditing matters and the receipt, retention and treatment of any such complaints; and (b) review fraud prevention policies and programs, and monitor their implementation.
Compliance with Laws
The Committee will: review regular reports from management and others (e.g., external auditors, legal counsel) with respect to Cizzle’s compliance with laws and regulations relating to financial controls, records and reporting including: (a) tax and financial reporting laws and regulations; (b) legal withholding requirements; (c) laws and regulations which expose directors to liability; and (d) orientation of new members and continuous education of all members.
The Committee is also responsible for the other matters as set out in this Charter and/or such other matters as may be directed by the Board from time to time.
Composition
The Committee must be comprised of a minimum of three directors of Cizzle. All members of the Committee must be financially literate as defined in NI 52-110. If upon appointment a member of the Committee is not financially literate, the person will be given a reasonable period of time to acquire the required level of financial literacy.
The Board will appoint a chair of the Committee (the Chair) to serve for a term of one (1) year on an annual basis. The Chair may serve as the chair of the Committee for any number of consecutive terms. The Chair shall be responsible for leadership of the Committee, including scheduling and chairing meetings, preparing agendas and briefing documents, and making regular reports to the Board. The Committee may form and delegate authority to subcommittees where appropriate.
The members of the Committee will be appointed by the Board annually, and from time to time to fill vacancies, as required. A Committee member may be removed or replaced at any time at the discretion of the Board and will cease to be a member of the Committee on ceasing to be an independent director.
Meetings & Minutes
The Committee shall meet as necessary, at a minimum of at least four (4) times per year, to enable it to fulfill its responsibilities and duties as set forth herein.
The quorum required to constitute a meeting of the Committee is set at a majority of members. The Chair will set the agenda for each meeting, after consulting with management and the external auditor. Agenda materials such as draft financial statements must be circulated to all Committee members prior to the meeting for members to have a reasonable amount of time to review the materials.
The external auditors (Auditors), will be provided with notice as necessary of any Committee meeting, will be invited to attend each such meeting and will receive an opportunity to be heard at those meetings on matters related to the Auditor’s duties.
The Committee will meet in camera separately with each of the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) at least annually to review the financial affairs of Cizzle. The Committee will meet with the Auditor in camera at least once each year, at such time(s) as it deems appropriate, to review the external auditor’s examination and report. Each of the Chair of the Committee, members of the Committee, Chair of the Board, external auditor, CEO, CFO or secretary shall be entitled to request that the Chair of the Committee call a meeting which shall be held within 48 hours of receipt of such request to consider any matter that such individual believes should be brought to the attention of the Board or the shareholders.
Page 70
The Committee will keep minutes of its meetings which accurately record the decisions reached by the Committee, and which minutes are filed with the minutes of the meetings of the Board.
Reporting
The Committee will report, at least annually, to the Board regarding the Committee’s examinations and recommendations.
Express Authority
The Committee shall have unrestricted access to Cizzle’s officers and employees. The Committee may conduct or authorize investigations into or studies of matters within the Committee’s scope of responsibilities and duties. In addition to all authority required to carry out the duties and responsibilities included in this Charter, the Committee has specific authority to: (a) engage, set and pay the compensation for independent counsel and other advisors as it determines necessary to carry out its duties and responsibilities, and any such consultants or professional advisors so retained by the Committee will report directly to the Committee; (b) communicate directly with management and any internal auditor, and with the Auditors without management involvement; and (c) incur ordinary administrative expenses that are necessary or appropriate in carrying out its duties, which expenses will be paid for by Cizzle.
Annual Review
The Committee shall review and assess the adequacy of this Charter periodically as conditions dictate, but at least annually, to ensure compliance with any rules or regulations and recommend any modifications to this Charter if and when appropriate to the Board for its approval.
The Board will conduct an annual performance evaluation of the Committee, taking into account the Charter, to determine the effectiveness of the Committee.
Page 71
Exhibit 99.2
Cizzle Brands Corporation
(Formerly 1348512 B.C. Ltd.)
Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
| Independent Auditor's Report |  |
To the Shareholders of Cizzle Brands Corporation:
Opinion
We have audited the consolidated financial statements of Cizzle Brands Corporation and its subsidiaries (the "Company"), which comprise the consolidated statements of financial position as at July 31, 2026 and 2025 and the consolidated statements of loss and comprehensive loss, changes in shareholders' equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of material accounting policy information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at July 31, 2026 and 2025, and its financial performance and its cash flows for the years then ended in accordance with IFRS® Accounting Standards as issued by the International Accounting Standard Board.
Basis for Opinion
We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audits of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 2 in the consolidated financial statements, which indicates that the Company incurred a net loss, generated negative cash flows from operating activities during the year ended July 31, 2026 and as of that date, the Company had an accumulated deficit and working capital deficiency. As stated in Note 2, these events and conditions, indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have determined the matters described below to be the key audit matters to be communicated in our report.
Business combination
Key Audit Matter Description
As described in Note 6 to the consolidated financial statements, during the year ended July 31, 2026, the Company acquired 100% of the shares of Flow Water Inc. The identifiable assets acquired, and the liabilities assumed are measured at fair value as of the acquisition date. Where the net of the fair value of the identified assets acquired and liabilities assumed is less than the fair value of consideration transferred, the difference is recognized as goodwill. In assessing fair value of the acquired assets, liabilities and consideration, management used various valuation techniques involving significant judgment and subjectivity.
We considered this to be a key audit matter due to the complexity involved in the valuation of the acquired intangible assets and consideration. This resulted in a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating the audit evidence related to management's estimates.
| MNP LLP | |
| 1 Adelaide Street East, Suite 1900, Toronto ON, M5C 2V9 | 1.877.251.2922 T: 416.596.1711 F: 416.596.7894 |
2
Audit Response
We responded to this matter by performing procedures over management's valuation techniques in determining fair value of the acquired intangible assets and consideration. Our audit work in relation to this included, but was not restricted to, the following:
| · | Analyzed the signed purchase agreement to obtain an understanding of the key terms and related accounting considerations; | |
| · | Evaluated the fair value of the consideration transferred; | |
| · | Utilized internal valuation experts to evaluate the reasonability of the valuation model used by management to determine the fair value of the intangible asset, and the appropriateness of the Company's discount rates; | |
| · | Assessed management’s assumptions about revenue growth rate forecasts, expected margin realization rates and terminal growth rates in light of historical results and projected future economic and market conditions; | |
| · | Engaged auditors’ experts to evaluate the reasonability of the valuation model used by management to determine the fair value of the property and equipment and tested the assumptions used in the property and equipment valuation model; | |
| · | Tested the mathematical accuracy of management’s valuation models and supporting calculations; and | |
| · | Assessed the appropriateness and completeness of disclosures relating to the business combination in the consolidated financial statements. |
Impairment of Goodwill and Intangible Assets
Key Audit Matter Description
We draw attention to Notes 3 and 4 of the consolidated financial statements for the Company's material accounting policy and the significant judgements and estimates applied in determining the recoverable amount of the identified cash generating unit (CGU) and Note 11 to the consolidated financial statements which disclosed that the Company has recorded goodwill and intangible assets of $55,000,663 as of July 31, 2026.
The Company performs impairment testing for goodwill and long-lived assets on an annual basis or more frequently when there is an indication of impairment. An impairment is recognized if the carrying amount of an asset, or its CGU, exceeds its estimated recoverable amount. The recoverable amount of an asset is the greater of its value in use and its fair value less costs of disposal. In determining the estimated recoverable amounts using a discounted cash flow model, the Company’s significant assumptions include future cash flows based on expected operating results, long term growth rates and the discount rate.
We considered this a key audit matter due to the significant judgment made by management in determination of CGU and estimating the recoverable amount for goodwill and long-lived assets and a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence relating to management’s estimates.
Audit Response
We responded to this matter by performing procedures over the impairment of goodwill and intangible assets. Our audit work in relation to this included, but was not restricted to, the following:
| · | Utilized internal valuation experts to evaluate the reasonability of the impairment model used by management and the appropriateness of the Company's discount rates; | |
| · | Assessed management’s assumptions about revenue growth rate forecasts, expected margin realization rates and terminal growth rates in light of historical results and projected future economic and market conditions; | |
| · | Tested the mathematical accuracy of management’s impairment model and supporting calculations; and | |
| · | Assessed the appropriateness and completeness of related disclosures in the consolidated financial statements. |
| 1 Adelaide Street East, Suite 1900, Toronto, Ontario, M5C 2V9 1.877.251.2922 T: 416.596.1711 F: 416.596.7894 MNP.ca |
 |
3
Other Information
Management is responsible for the other information. The other information comprises Management’s Discussion and Analysis.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audits of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audits or otherwise appears to be materially misstated. We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS® Accounting Standards as issued by the International Accounting Standard Board, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
| · | Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. | |
| · | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. | |
| · | Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. |
| 1 Adelaide Street East, Suite 1900, Toronto, Ontario, M5C 2V9 1.877.251.2922 T: 416.596.1711 F: 416.596.7894 MNP.ca |
|
4
| · | Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern. | |
| · | Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. | |
| · | Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Company as a basis for forming an opinion on the consolidated financial statements. We are responsible for the direction, supervision and review of the audit work performed for the purposes of the group audit. We remain solely responsible for our audit opinion. |
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audits and significant audit findings, including any significant deficiencies in internal control that we identify during our audits.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor's report is Eduard Shvekher.
 | |
| Toronto, Ontario | Chartered Professional Accountants |
| October 27, 2026 | Licensed Public Accountants |
| 1 Adelaide Street East, Suite 1900, Toronto, Ontario, M5C 2V9 1.877.251.2922 T: 416.596.1711 F: 416.596.7894 MNP.ca |
|
5
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Consolidated Statements of Financial Position
As at July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
| As at | As at | |||||||||||
| Notes | July 31, 2026 | July 31, 2025 | ||||||||||
| ASSETS | ||||||||||||
| Current Assets | ||||||||||||
| Cash | $ | 5,959,920 | $ | 3,137,254 | ||||||||
| Trade Receivables | 7 | 5,831,966 | 3,732,330 | |||||||||
| Prepaids and Other Assets | 8 | 5,165,220 | 1,863,991 | |||||||||
| Inventory | 9 | 4,680,310 | 4,512,687 | |||||||||
| Total Current Assets | 21,637,416 | 13,246,262 | ||||||||||
| Non Current Assets | ||||||||||||
| Property and Equipment | 10 | 27,556,090 | 273,678 | |||||||||
| Prepaids and Other Long Term Assets | 8 | 588,177 | 130,865 | |||||||||
| Right of Use Assets | 16 | 18,051,100 | 86,878 | |||||||||
| Intangible Assets and Goodwill | 11 | 55,000,663 | 4,269,661 | |||||||||
| TOTAL ASSETS | $ | 122,833,446 | $ | 18,007,344 | ||||||||
| LIABILITIES | ||||||||||||
| Accounts Payable and Accrued Liabilities | 12 | $ | 9,824,738 | $ | 6,707,799 | |||||||
| Contract Liability | 12 | 2,218,107 | - | |||||||||
| Short Term Loans | 13 | 50,612,507 | 1,227,997 | |||||||||
| Current Portion of Lease Liabilities | 16 | 2,995,715 | 66,537 | |||||||||
| Derivative Liability | 15 | 8,097,186 | - | |||||||||
| Total Current Liabilities | 73,748,253 | 8,002,333 | ||||||||||
| Lease Liabilities | 16 | 15,689,689 | 32,187 | |||||||||
| Long Term Loans | 14 | 57,654,795 | - | |||||||||
| Total Liabilities | 147,092,737 | 8,034,520 | ||||||||||
| SHAREHOLDERS’ EQUITY (DEFICIT) | ||||||||||||
| Common Shares | 18 | 27,844,885 | 21,775,344 | |||||||||
| Warrant Reserve | 19 | 4,067,488 | 3,601,132 | |||||||||
| Contributed Surplus | 20 | 4,643,805 | 3,012,670 | |||||||||
| Accumulated Deficit | (60,815,469 | ) | (18,416,322 | ) | ||||||||
| Total Shareholders’ equity (deficit) | (24,259,291 | ) | 9,972,824 | |||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 122,833,446 | $ | 18,007,344 |
Going concern (note 2a)
Subsequent Events (note 26)
Approved by the Board of Directors
| /s/ | /s/ | |||
| Name | Name | |||
| Director | Director | |||
6
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Consolidated Statements of Loss and Comprehensive Loss
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
| For the year ended | For the year ended | ||||||||
| Notes | July 31, 2026 | July 31, 2025 | |||||||
| Net Sales | 23 | $ | 33,366,433 | $ | 13,184,554 | ||||
| Cost of Sales | (20,262,212) | (5,638,663) | |||||||
| Gross Profit | 13,104,221 | 7,545,891 | |||||||
| Expenses | |||||||||
| Marketing | 5,224,013 | 5,798,961 | |||||||
| Selling, General and Administrative | 21 | 17,133,677 | 11,310,731 | ||||||
| Share Based Compensation | 20 | 1,723,943 | 2,712,828 | ||||||
| Foreign Exchange (Gain) Loss | 1,478,773 | 38,153 | |||||||
| Depreciation and Amortization | 10, 11, 16 | 4,013,476 | 625,277 | ||||||
| Total Expenses | (29,573,882 | ) | (20,485,950 | ) | |||||
| Other Expense/(Income) | (17,716 | ) | 418,772 | ||||||
| Change in fair value | 13, 14, 15 | 18,095,357 | - | ||||||
| Finance costs (net) | 13, 14 | 7,826,851 | - | ||||||
| Listing Expense | 5 | - | 500,000 | ||||||
| Loss before taxes | (42,374,153 | ) | (13,858,831 | ) | |||||
| Other comprehensive income (loss) | |||||||||
| Deferred tax (expense) recovery | 24 | (24,994 | ) | - | |||||
| Loss and Comprehensive Loss | (42,399,147 | ) | (13,858,831 | ) | |||||
| LOSS PER SHARE | |||||||||
| Loss per share, basic and diluted | $ | (0.19 | ) | $ | (0.07 | ) | |||
| Weighted average number of shares outstanding (basic and diluted) | 219,983,783 | 193,338,589 |
7
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Consolidated Statement of Shareholders’ Equity
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
| Common Shares | Warrants | Contributed | Accumulated | Total Equity | |||||||||||||||||||||
| Notes | Number | Dollar | Reserve | Surplus | Deficit | (Deficiency) | |||||||||||||||||||
| Balance as at July 31, 2024 | 176,639,270 | $ | 12,888,852 | $ | 1,598,790 | $ | 793,058 | $ | (4,557,491 | ) | 10,723,209 | ||||||||||||||
| Proceeds from Private Placement | 3, 18, 19 | 29,899,124 | 7,254,181 | 2,090,852 | - | 9,345,033 | |||||||||||||||||||
| Share Issuance Costs | 18 ,19 | 403,486 | (239,120 | ) | 29,671 | - | - | (209,449 | ) | ||||||||||||||||
| Effect of RTO | 18 | 1,666,666 | 500,000 | - | - | - | 500,000 | ||||||||||||||||||
| Exercise of warrants | 18 ,19 | 2,725,000 | 1,188,181 | (118,181 | ) | - | - | 1,070,000 | |||||||||||||||||
| Shares issued for Service | 18 | 595,645 | 183,250 | - | - | - | 183,250 | ||||||||||||||||||
| Share Based Compensation | 20 | - | - | - | 2,219,612 | - | 2,219,612 | ||||||||||||||||||
| Net Loss and Comprehensive Loss | - | - | - | - | (13,858,831 | ) | (13,858,831 | ) | |||||||||||||||||
| Balance as at July, 31, 2025 | 211,929,191 | $ | 21,775,344 | $ | 3,601,132 | $ | 3,012,670 | $ | (18,416,322 | ) | $ | 9,972,824 | |||||||||||||
| Common Shares | Warrants | Contributed | Accumulated | Total Equity | |||||||||||||||||||||
| Notes | Number | Dollar | Reserve | Surplus | Deficit | (Deficiency) | |||||||||||||||||||
| Balance as at July, 31, 2025 | 211,929,191 | 21,775,344 | 3,601,132 | 3,012,670 | $ | (18,416,322 | ) | 9,972,824 | |||||||||||||||||
| Share Based Compensation | 20 | - | - | - | 1,723,943 | 1,723,943 | |||||||||||||||||||
| Exercise of stock options, broker warrants and RSUs | 18, 19, 20 | 490,453 | 133,283 | (4,836 | ) | (92,808 | ) | - | 35,639 | ||||||||||||||||
| Shares issued for debt and accounts payable | 13, 18, 19 | 5,368,888 | 1,962,450 | 2,667 | - | - | 1,965,117 | ||||||||||||||||||
| Untis issued in private placement | 18 ,19 | 11,892,500 | 4,231,636 | 525,364 | - | - | 4,757,000 | ||||||||||||||||||
| Finders Fees | 18 ,19 | 571,250 | 225,353 | 3,149 | - | - | 228,502 | ||||||||||||||||||
| Unit Issuance Costs | 18 ,19 | - | (483,181 | ) | (59,988 | ) | - | - | (543,169 | ) | |||||||||||||||
| Net Loss | - | - | - | - | (42,399,147 | ) | (42,399,147 | ) | |||||||||||||||||
| Balance as at July, 31, 2026 | 230,252,282 | 27,844,885 | 4,067,488 | 4,643,805 | (60,815,469 | ) | (24,259,291 | ) | |||||||||||||||||
8
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Consolidated Statements of Cashflow
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
| For the year ended | For the year ended | ||||||||||
| Notes | July 31, 2026 | July 31, 2025 | |||||||||
| Cashflow from Operating Activities | |||||||||||
| Net Loss | $ | (42,374,153 | ) | $ | (13,858,831 | ) | |||||
| Depreciation of property and equipment | 10 | 1,769,387 | 61,477 | ||||||||
| Amortization of right of use assets | 16 | 2,371,911 | 67,316 | ||||||||
| Amortization of intangible asset | 11 | 3,891,583 | 505,089 | ||||||||
| Interest expense and financing fee | 13, 14, 16 | 6,426,401 | 22,447 | ||||||||
| Change in fair value of loans and derivative liabilities | 14, 15 | 18,095,357 | - | ||||||||
| Unrealized foreign exchange loss | 1,439,050 | - | |||||||||
| Share based compensation | 20 | 1,723,943 | 2,712,828 | ||||||||
| Deferred tax recovery | 24 | 24,994 | - | ||||||||
| Loss on settlement of debt (warrants issued) | 15 | 744,257 | - | ||||||||
| Change in working capital | |||||||||||
| Trade receivables | 7 | (1,147,303 | ) | (2,428,897 | ) | ||||||
| Prepaids and other assets | 8 | (3,277,933 | ) | 1,303,343 | |||||||
| Inventory | 9 | 138,784 | (3,135,697 | ) | |||||||
| Accounts payable and accrued liabilities | 12 | (1,019,659 | ) | 5,481,430 | |||||||
| Customer Deposits | 12 | 2,218,107 | - | ||||||||
| Other long term assets | - | (130,865 | ) | ||||||||
| Listing Expense | 5 | - | 500,000 | ||||||||
| Net cash flows used in operating activities | (8,975,274 | ) | (8,900,360 | ) | |||||||
| Cashflow from Financing Activities | |||||||||||
| Issuance of shares, units, and warrants net of issuance costs | 18, 19 | 4,477,972 | 9,660,379 | ||||||||
| Short term loans, net of interest and repayment | 13 | 16,409,172 | 1,227,997 | ||||||||
| Issuance of long-term loans, net of issuance costs and repayment | 14 | 7,678,999 | - | ||||||||
| Deferred financing costs | 8 | - | (94,528 | ) | |||||||
| Lease payments | 16 | (2,514,222 | ) | (75,180 | ) | ||||||
| Net cash flows provided in financing activities | 26,051,921 | 10,718,668 | |||||||||
| Cashflow from Investing Activities | |||||||||||
| Purchase and disposal of property and equipment | 10 | (646,799 | ) | (175,820 | ) | ||||||
| Additions to intangibles | 11 | (48,246 | ) | (24,750 | ) | ||||||
| Investment in Flow | 6 | (13,558,936 | ) | - | |||||||
| Net Cash Flows used in Investing Activities | (14,253,981 | ) | (200,570 | ) | |||||||
| Net increase (decrease) in cash | 2,822,666 | 1,617,738 | |||||||||
| Cash, beginning of period | 3,137,254 | 1,519,516 | |||||||||
| Cash, end of period | $ | 5,959,920 | $ | 3,137,254 | |||||||
9
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
| 1. | NATURE OF OPERATIONS |
Cizzle Brands Corporation (“Cizzle Brands” or the “Company”), (formerly 1348512 B.C. Ltd.) was incorporated on February 16, 2022 in the province of British Columbia. The Company manufactures and sells beverages and nutrition products.
On December 19, 2024, 1348512 B.C. Ltd. completed the reverse take over (‘RTO’) of Cizzle Brands Limited ("CBL”), and changed its name to Cizzle Brands Corporation. The Company commenced trading of its common shares on the Cboe Stock Exchange (“CBOE”) under the symbol “CZZL”. On August 5, 2025, Cizzle Brands Inc. and Cizzle Brands Ltd. amalgamated.
The address of the Company’s corporate office is 35 McCleary Court, Unit 21, Concord, ON, L4K 3Y9.
| 2. | BASIS OF PRESENTATION |
| a. | Going concern |
These consolidated financial statements have been prepared on a going concern basis, which assumes that Company will continue to operate for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business. During the year ended July 31, 2026, the Company incurred a comprehensive loss of $42,399,147 (year ended July 31, 2025 - $13,858,831) and had negative cash flows from operating activities of $8,975,274 (year ended July 31, 2025 - $8,900,360). As at July 31, 2026, the Company had an accumulated deficit of $60,815,469 (July 31, 2025 - $18,416,322) and a working capital deficiency of $52,110,837 (July 31, 2025 - working capital of $5,243,929). These conditions and events, considered in the aggregate, raise significant doubt about the Company’s ability to continue as a going concern.
These consolidated financial statements do not include adjustments to the recoverability and classification of recorded assets and liabilities and related expenses that might be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and liquidate its liabilities and commitments in other than the normal course of business at amounts different from those in the accompanying consolidated financial statements. Such adjustments could be material.
The Company’s ability to continue as a going concern is highly dependent upon the Company’s ability to obtain the ongoing support of its creditors, lenders and investors, obtain profitable operations, generate significant sales and/or raise additional capital.
10
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
During the years ended July 31, 2026, the Company funded its working capital requirements and its capital and operating expenditures through proceeds from revenues and issuance of debt and equity. There is no guarantee or assurance that the Company will be able to obtain adequate financing in the future or that such financing will be on terms advantageous to the Company.
The global economy, including the financial and credit markets, have experienced extreme volatility and disruptions, including fluctuating inflation rates and interest rates, foreign currency impacts, declines in consumer confidence, and declines in economic growth. Management monitors recent developments in relation to global tariffs and trade policy which may affect customer demand and input costs.
To continue as a going concern, the Company must generate sufficient income and cash flows to repay its obligations, finance working capital, and fund capital investments. The future of the Company is dependent on its ability to attain sufficient funds and profitable operations, maintain compliance with covenants relating to lending agreements, continue receiving financial support from shareholders, and obtain new financing. There is no certainty that the Company will raise these necessary funds from financing or operations.
Should the Company be unable to continue as a going concern, adjustments to the carrying value of assets and liabilities, the expenses, and the statement of financial position classifications used would be necessary.
| b. | Statement of Compliance |
The consolidated financial statements have been prepared in accordance with IFRS® Accounting Standards as issued by the International Accounting Standards Board (“IFRS”)
The consolidated financial statements were authorized for the issuance by the Board of Directors on October 27, 2026.
| c. | Basis of Measurement |
These consolidated financial statements have been prepared on a historical cost basis, except for certain financial instruments, including the derivative liability and loans measured at fair value through profit or loss, which are measured at fair value, and are presented in Canadian dollars, which is the functional and presentation currency of the Company and its subsidiaries. The functional currency for Cizzle Brands USA Inc. is US dollars.
| d. | Basis of Consolidation |
The consolidated financial statements of the Company and its wholly owned subsidiaries have been prepared using uniform accounting policies and methods of computation for like transactions and events. The chart below summarizes the entities included in the consolidated financial statements as at July 31, 2026. 17550154 Canada Inc. and Cizzle Brands Acquisition Inc. were both incorporated on December 15, 2025, respectively, and Cizzle Brands Manufacturing Inc. (formerly Flow Water Inc.) was acquired on December 23, 2025 (Note 6). Accordingly, these three entities were not included in the consolidated financial statements as at and for the year ended July 31, 2025.
11
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
| Entity Name | Place of Incorporation | Functional Currency |
| Cizzle Brands Corporation (formerly 1348512 B.C. Ltd.) | British Columbia, Canada | Canadian Dollars |
| Cizzle
Brands Inc. (On August 5, 2025, Cizzle Brands Inc. amalgamated with Cizzle Brands Ltd.) |
Ontario, Canada | Canadian Dollars |
| Cizzle Brands USA Inc. | Delaware, USA | United States Dollars |
| 17550154 Canada Inc. | Ontario, Canada | Canadian Dollars |
| Cizzle Brands Acquisition Inc. | Ontario, Canada | Canadian Dollars |
| Cizzle Brands Manufacturing Inc. | Ontario, Canada | Canadian Dollars |
| e. | Functional currency and foreign currency translation |
These consolidated financial statements are presented in Canadian dollars. Transactions in foreign currencies are translated into the functional currency of the relevant parent/subsidiary company using the exchange rate in effect on the transaction date. Foreign exchange gains and losses resulting from the settlement of such transactions and the remeasurement of monetary items at the reporting date exchange rate are recognized in a net loss. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction. The functional currency of the subsidiary remains unchanged during the reporting period. As of July 31, 2026, there have been no transactions in Cizzle Brands USA Inc.
12
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
| 3. | MATERIAL ACCOUNTING POLICIES |
| a. | Cash |
Cash represents cash deposits held at financial institutions. Cash is held at major financial institutions and is subject to credit risk to the extent it exceeds federal deposit insurance limits.
| b. | Revenue recognition |
The Company recognizes revenue in accordance with IFRS 15, Revenue from Contracts with Customers. Revenue is measured at the amount of consideration to which the Company expects to be entitled in exchange for transferring goods or services to customers, net of applicable sales taxes, discounts, and allowances. The Company’s revenue arises primarily from the sale of products to retail/wholesale customers, consumer and manufacturing and co-packing services, which amounted to $9,937,654 (2025 - $12,196,011), $1,887,244 (2025 - $988,543) and $21,541,535 (2025 – nil), respectively, for the year ended July 31, 2026.
Identification of Performance Obligations
The Company’s contracts with customers generally include a single performance obligation.
In relation to the revenue arising from the sale of products, the performance obligation is the delivery of goods purchased to retail/ wholesale customers and consumers.
The Company provides toll manufacturing and co-packing services to customers within its Manufacturing segment. Under these arrangements, customers supply raw materials, and the Company performs processing and packaging activities to produce finished goods.
The Company does not control or take title to raw materials provided by customers at any point in time.
The Company does not provide significant after-sale services, rights of return, or other material promises that would give rise to multiple performance obligations.
Timing of Revenue Recognition
For revenue arising from the sale of products, the Company recognizes revenue when the control of the products has been transferred to the customers which is recognized at a point in time.
For the revenue arising from toll manufacturing and co-packing services, the transfer of control is determined to occur when the finished product has successfully passed quality control inspection and has been made available for collection at the agreed delivery point, consistent with the contractual terms.
13
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
Consideration and Payment Terms
The Company’s standard payment terms with customers generally range from 30 to 60 days from the invoice date, depending on the customer and nature of the relationship. Certain customers may receive extended credit terms based on the contractual arrangements. The Company also offers discounts to the customers that pay earlier than the due date and volume-based discounts. The Company estimates variable consideration using the most likely amount method and includes such amounts in the transaction price only to the extent that it is highly probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty is subsequently resolved. Estimates of variable consideration are reviewed and updated at each reporting date, reflecting the latest available information and the Company’s assessment of contract performance to date.
Returns and Warranties
The Company does not offer a general right of returns or refunds, other than in the situation where the products are defective or damaged. The customers are provided with a limited period of time to inspect the delivered products and inform the Company. Historical experience indicates that lost shipments or returns are rare. The Company monitors such occurrences and, if they were to become material, would record an estimate of expected returns or losses as a reduction of revenue.
Refunds
The Company’s refund policy stipulates that once an order has been shipped, customers cannot return or modify their order unless a defect is reported. The Company ensures all products are defect-free prior to shipment through rigorous quality control processes. In the rare event a defect is reported upon delivery, the Company reviews the claim to determine eligibility for a refund or replacement.
Contract Liability
Contract Liabilities represent consideration received from customers before the Company transfers the related goods or services and are recognized as contract liabilities under IFRS 15. Contract Liabilities include advance payments received for future product orders and advance payments received from tolling customers for raw materials. Contract Liabilities are recognized as revenue when, or as, the Company satisfies the related performance obligations by transferring control of the goods or services to the customer. Contract liabilities expected to be applied within twelve months of the reporting date are classified as current liabilities.
14
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
Loyalty points programme
The Company has a loyalty points programme, which allows customers to accumulate points that can be redeemed for free products or price reductions. A portion of the transaction price is allocated to the loyalty points awarded to customers based on relative stand-alone selling price and recognised as a contract liability until the points are redeemed.
| c. | Prepaids |
Prepaid expenses are recognized as current assets in the consolidated financial statements and are either expensed or reclassified to the appropriate asset category as the related benefits are realized, in accordance with the accrual basis of accounting under IFRS.
| d. | Inventory |
Inventories are valued at the lower of cost and net realizable value. Cost is determined using a weighted average cost method and includes expenditures incurred in acquiring and manufacturing the inventories and bringing them to their existing location and condition to sell. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. If the net realizable value is less than cost, inventories are written down. If the net realizable value subsequently increases, a reversal of the loss initially recognized is applied to cost of sales. For the year ended July 31, 2026, an inventory write-down of $9,409 was recognized in cost of sales (2025 - $nil).
Cizzle Brands inventory includes raw materials, and finished product held for sale in the ordinary course of business.
| e. | Cost of Sales |
Cost of Sales includes the purchase price of the product, procurement and manufacturing costs, as well as expenses required to prepare the product for sale. Such expenses include inbound freight, handling, conversion costs, and other costs directly attributable to bringing the product into a sellable condition.
15
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
| f. | Property and equipment |
Property and equipment are stated at acquisition cost less accumulated depreciation and impairment losses, if any. Depreciation is provided over the estimated useful lives of the assets using the following annual rates and term:
| Office Equipment | 3 – 5 years | Straight Line |
| Leasehold Improvements | The earlier of 3 - 8 years or lease term | Straight Line |
| Equipment | 5 – 15 years | Straight Line |
| Vehicles | 3 years | Straight Line |
An item of property and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the general and administrative expenses. The asset residual values, useful lives and methods of depreciation are reviewed at each reporting period and adjusted prospectively if appropriate.
Property and equipment are reviewed at each reporting date to determine whether events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If any such indication exists, then the assets or CGU’s (“Cash Generating Unit”) recoverable amount is estimated. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount (higher of fair value less costs of disposal or value in use). An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation, if no impairment loss had been recognized.
There have been no impairment losses recognized the current period.
| g. | Intangible assets |
Intangible assets are recorded at cost less accumulated amortization and impairment losses, if any. Intangible assets acquired in a business combination are measured at fair value at the acquisition date.
16
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
Intellectual Property
Intellectual property relates to curtain formulations acquired during 2024.
The Company amortizes the intellectual property over a 10-year period, on a straight-line basis, reflecting the expected benefit period of the acquisition. The amortization expense is recognized in the statement of comprehensive loss.
Management reviews the carrying amount of intellectual property to determine if any impairment indicators exist in accordance with the Company’s policy for impairment of non-financial assets.
Customer Relationship
The customer relationships intangible asset was acquired during 2026. (Note 6). Customer relationships are amortized on a straight-line basis over their estimated useful life of five years, reflecting the period over which the Company expects to derive economic benefits from the acquired customer base. The amortization expense is recognized in the consolidated statement of loss and comprehensive loss. Management reviews the carrying amount of customer relationships for indicators of impairment in accordance with the Company’s policy for impairment of non-financial assets.
| h. | Impairment of non-financial assets |
The carrying amount of the Company’s non-financial assets is reviewed at each financial reporting date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment loss. Non-financial assets with finite lives are tested for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. In addition, non-financial assets with non-finite useful life and goodwill are subject to an annual impairment assessment. An impairment loss is recognized when the carrying amount of an asset or its Cash Generating Unit ("CGU") exceeds its recoverable amount.
The recoverable amount of an asset or CGU is the greater of its fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the CGU to which the asset belongs.
17
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
An impairment loss is only reversed if there is an indication that the impairment loss may no longer exist and there has been a change in the estimates used to determine the recoverable amount, however, not to an amount higher than the carrying amount that would have been determined had no impairment loss been recognized in previous years. Any impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount in earnings of continuing or discontinued operations, as appropriate.
For the year ended July 31, 2026, no impairment of non-financial assets was recorded (2025 - $nil).
| i. | Lease accounting |
The Company has lease arrangements for its office, plant and production equipment. The determination of whether an arrangement is or contains a lease is based on the right to control an identified asset over the term of the arrangement. Qualifying leases are recorded as a right-of-use (“ROU”) asset for the right to use the underlying asset, and a lease liability for the obligation to make lease payments in the consolidated statements of financial position. Lease payments associated with low value leases and leases with a term of under twelve months are expensed.
At the commencement date of a lease, a ROU asset is recognized at cost and depreciated on a straight-line basis over the term of the agreement. ROU assets measured at cost are comprised of the initial lease liability, any lease payments made at or before the commencement date, and initial direct costs. ROU assets are remeasured when a modification to the underlying lease results in a remeasurement of the corresponding lease liability.
At the commencement date of a lease, a lease liability is recognized at the present value of all future lease payments discounted using either the interest rate implicit in the lease or using the Corporation’s incremental borrowing rate if the implicit rate is not readily available. Discounted future lease payments are comprised of fixed payments less any incentives received, variable payments based on an index or rate, amounts expected to be payable under residual value guarantees, the exercise price of a purchase option (where the option to exercise is reasonably certain), and penalties for terminating a lease (where the expectation of termination is reasonably certain).
The carrying value of the lease liability is increased by the interest on the lease liability and decreased by the lease payments made. The interest charge is allocated to each period during the lease term. Interest on the lease liability is calculated using the discount rate at the commencement date. Variable lease payments that do not depend on an index or rate are expensed in the period in which they occur.
18
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
Any modification to an existing lease agreement triggers reassessment of the lease contract. If the lease modification is not accounted for as a separate lease, the lease liability is remeasured at the effective date of the modification by discounting the revised lease payments using a revised discount rate. A remeasurement of the lease liability will result in a corresponding adjustment to the ROU asset.
Incremental borrowing rates
The Company’s incremental borrowing rate is used to estimate the initial value of the lease liability and associated right of use asset. The Company’s incremental borrowing rate is determined with reference to the borrowing rate for a similar asset within a country for a similar lease term. For determination of the applicable lease term, management takes into consideration any options for lease extensions, as well as contractually agreed break clauses within each lease.
| j. | Share capital |
Share capital represents the amount received for shares that have been issued less transaction costs directly attributable to the issuance of common shares net of any related income tax benefits.
The Company uses valuation techniques that include inputs that are observable market data to estimate the fair value of common share purchase warrants. The valuation techniques require the input of subjective assumptions including expected volatility and expected life of the instrument. Warrants attached to units are valued based on the fair value and the difference between the proceeds raised and the value assigned to the warrants is the fair value of the shares. When the warrants are exercised, the related amount of warrant reserve is transferred to share capital. Any consideration paid on the exercise of the warrants is credited to share capital.
| k. | Share based compensation |
The Company uses the Black-Scholes valuation model to estimate the fair value of equity instruments granted in connection with equity-settled share-based payments.
The share-based compensation cost is recorded as an expense in the consolidated statements of loss and comprehensive loss.
19
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of awards expected to vest. Estimates are subsequently revised if there is any indication that the number expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognized in the current period. No adjustment is made to any expense recognized in prior periods if awards ultimately exercised are different to that estimated on vesting. When share options are exercised, any consideration paid is credited to share capital in addition to the amount previously vested and recorded in contributed surplus.
An award with different vesting dates is considered a separate grant for the calculation of fair value and the resulting fair value is amortized over the vesting period of the respective grants.
The Company is also required to estimate the future forfeiture rate of stock options based on historical information in its calculation of share-based payments.
| l. | Loss per share |
Basic loss per share is computed by dividing net loss attributable to common shareholders by the weighted average number of shares outstanding in the period. Diluted loss) per share is calculated by the treasury stock method. Under the treasury stock method, the weighted average number of common shares outstanding for the calculation of diluted loss per share assumes that the proceeds to be received on the exercise of dilutive share options and warrants are used to purchase common shares at the average market price during the period. As the Company incurred a net loss for the period ended July 31, 2025, the outstanding stock options, conversion options and warrants were excluded from the calculation of diluted loss per share because their effect is anti-dilutive.
| m. | Financial Instruments |
The Company classifies the fair value of financial instruments according to the following hierarchy based on the number of observable inputs used to value the instruments:
Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2 – quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
20
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. A financial asset or liability is measured initially at fair value plus, for an item not measured at fair value through profit or loss (“FVTPL”), transaction costs that are directly attributable to its acquisition or issuance.
Financial assets
At initial recognition, a financial asset is classified and measured at: amortized cost, fair value through profit or loss (“FVTPL”) or fair value through other comprehensive income (“FVOCI”) depending on the business model and contractual cash flows of the instrument.
Amortized cost - assets that are held for collection of contractual cash flows where those cash flows are solely payments of principal and interest are measured at amortized cost. Interest revenue is calculated using the effective interest method and gains or losses arising from impairment, foreign exchange and derecognition are recognized in profit or loss.
Fair value through other comprehensive income - assets that are held for collection of contractual cash flows and for selling the financial assets, and for which the contractual cash flows are solely payments of principal and interest, are measured at fair value through other comprehensive income. Interest income calculated using the effective interest method and gains or losses arising from impairment and foreign exchange are recognized in profit or loss. All other changes in the carrying amount of the financial assets are recognized in other comprehensive income. Upon derecognition, the cumulative gain or loss previously recognized in other comprehensive income is reclassified to profit or loss.
Mandatorily at fair value through profit or loss - assets that do not meet the criteria to be measured at amortized cost, or fair value through other comprehensive income, are measured at fair value through profit or loss. All interest income and changes in the financial assets’ carrying amount are recognized in profit or loss.
Designated at fair value through profit or loss – on initial recognition, the Company may irrevocably designate a financial asset to be measured at fair value through profit or loss in order to eliminate or significantly reduce an accounting mismatch that would otherwise arise from measuring assets or liabilities, or recognizing the gains and losses on them, on different bases. All interest income and changes in the financial assets’ carrying amount are recognized in profit or loss.
The Company assesses the objective of its business model for holding a financial asset at a level of aggregation which best reflects the way the business is managed, and information is provided to management. Information considered in this assessment includes stated policies and objectives.
21
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
The cash flows of financial assets are assessed as to whether they are solely payments of principal and interest on the basis of their contractual terms. For this purpose, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as consideration for the time value of money, the credit risk associated with the principal amount outstanding, and other basic lending risks and costs. In performing this assessment, the Company considers factors that would alter the timing and amount of cash flows such as prepayment and extension features, terms that might limit the Company’s claim to cash flows, and any features that modify consideration for the time value of money.
Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. A substantial modification to the terms of an existing financial asset results in the derecognition of the financial asset and the recognition of a new financial asset at fair value. In the event that the modification to the terms of an existing financial asset do not result in a substantial difference in the contractual cash flows the gross carrying amount of the financial asset is recalculated and the difference resulting from the adjustment in the gross carrying amount is recognized in net loss.
The Company recognizes a loss allowance for the expected credit losses associated with its financial assets, other than financial assets measured at fair value through profit or loss. Expected credit losses are measured to reflect a probability-weighted amount, the time value of money, and reasonable and supportable information regarding past events, current conditions and forecasts of future economic conditions. The Company applies the simplified approach for trade receivables. Using the simplified approach, the Company records a loss allowance equal to the expected credit losses resulting from all possible default events over the assets’ contractual lifetime. The Company assesses whether there has been a significant increase in credit risk since initial recognition or a financial asset is credit-impaired at the reporting date. Regular indicators that a financial instrument is credit impaired include significant financial difficulties as evidenced through borrowing patterns or observed balances in other accounts and breaches of borrowing contracts such as default events or breaches of borrowing covenants. For financial assets with significant increase in credit risk since initial recognition and financial assets assessed as credit-impaired at the reporting date, the Company continues to recognize a loss allowance equal to lifetime expected credit losses. For financial assets measured at amortized cost, loss allowances for expected credit losses are presented in the statement of financial position as a deduction from the gross carrying amount of the financial asset. Financial assets are written off when the Company has no reasonable expectations of recovering all or any portion thereof.
22
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
The Company’s cash and trade receivables are measured at amortized cost. The Company has no financial assets measured at FVTPL or FVTOCI
Financial Liability
At initial recognition, the Company measures financial liabilities at their fair value plus transaction costs that are directly attributable to their issuance, with the exception of financial liabilities subsequently measured at fair value through profit or loss for which transaction costs are immediately recorded in profit or loss. Where an instrument contains both a liability and equity component, these components are recognized separately based on the substance of the instrument, with the liability component measured initially at fair value and the equity component assigned the residual amount.
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by IFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognised in the consolidated statement of loss and comprehensive loss. Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in IFRS 9 are satisfied. The Company designated certain loans and convertible loans as at fair value through profit or loss. The amount of the change in fair value that is attributable to changes in the Company’s own credit risk is recognized in other comprehensive loss.
Financial liabilities at amortized cost are subsequently measured using the effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the effective interest rate amortisation process. Accounts payable and accrued liabilities, contract liability and certain loans are measured at amortized cost.
Financial liabilities are derecognized when the liability is extinguished. A substantial modification of the terms of an existing financial liability is recorded as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of a financial liability extinguished and the consideration paid is recognized in net loss. Where a financial liability is modified in a way that does not constitute an extinguishment, the modified cash flows are discounted at the liability’s original effective interest rate. Transaction costs paid to third parties in a modification are amortized over the remaining term of the modified debt.
23
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
Derivative Liability
The Company issued warrants in connection with certain financing arrangements. The warrants are classified as derivative financial liabilities as the contractual terms of the instruments do not meet the “fixed-for-fixed” equity classification criteria under IAS 32, Financial Instruments: Presentation. As a result, the warrants are accounted for as financial liabilities measured at fair value through profit or loss in accordance with IFRS 9, Financial Instruments.
Upon initial recognition, the warrants are measured at their fair value on the issuance date. Where warrants are issued in connection with debt instruments or other financing arrangements, the fair value of the warrants is recorded separately and allocated as part of the overall transaction consideration.
Where the fair value of a financial instrument at initial recognition differs from the transaction price, and that fair value is neither evidenced by a quoted price in an active market for an identical asset or liability (a Level 1 input) nor based on a valuation technique that uses only data from observable markets, the Company defers the difference between the fair value at initial recognition and the transaction price (the “day-one difference”) in accordance with IFRS 9. After initial recognition, the deferred day-one difference is recognized in profit or loss only to the extent that it arises from a change in a factor, including time, that market participants would take into account when pricing the instrument. The Company recognizes the deferred day-one difference in profit or loss on a straight-line basis over the contractual term of the related instrument, within change in fair value of financial instruments. Any unrecognized balance is recognized in profit or loss when the related instrument is converted, exercised, repaid or otherwise derecognized.
Subsequent to initial recognition, the warrant liability is remeasured at fair value at each reporting date. Changes in the fair value of the warrants are recognized in the consolidated statements of loss and comprehensive loss within finance income or expense for the period in which the change occurs.
The warrant liability is derecognized when the warrants are exercised, expire, or are otherwise extinguished. Upon exercise, the carrying amount of the warrant liability together with the proceeds received is recognized in share capital. If the warrants expire unexercised, the carrying amount of the warrant liability is recognized in the consolidated statements of loss and comprehensive loss.
24
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
| n. | Business Acquisition |
Business combinations are accounted for under the acquisition method when the acquired set of activities and assets meets the definition of a business and control is transferred to the Company. The consideration transferred in the acquisition is measured at fair value on the date of the acquisition, as are the identifiable net assets acquired. Transaction costs incurred in connection with a business combination are expensed as incurred. Goodwill represents the excess of consideration over the fair value of the net identifiable assets acquired in a business combination. Goodwill is tested for impairment annually or more frequently if certain indicators arise that indicate it is impaired.
| o. | Income taxes |
Tax expense recognized in profit or loss comprises the sum of current and deferred taxes not recognized in other comprehensive income or directly in equity.
Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the date of the consolidated statement of financial position.
Deferred tax is recognized using the liability method on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. However, the deferred tax is not recognized if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss and that at the time of the transaction, does not give rise to equal taxable and deductible temporary differences. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the reporting date and are expected to apply when the related deferred tax asset is realized, or the deferred tax liability is settled. A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized. Changes in deferred tax assets or liabilities are recognized as a component of tax income or expense in profit or loss except where they related to items that are recognized in other comprehensive income or directly in equity, in which case, related deferred tax is also recognized in other comprehensive income or equity, respectively
25
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
| p. | New standards, amendments and interpretations not yet adopted by the Company |
The amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Company’s consolidated financial statements are disclosed below. The Company intends to adopt these amended standards and interpretations, if applicable, when they become effective.
IFRS 18, Presentation and Disclosure in Financial Statements
In April 2024, the IASB issued IFRS 18, Presentation and Disclosure in Financial Statements. IFRS 18 replaces IAS 1 Presentation of Financial Statements and introduces new presentation requirements within the statement of income or loss, including specified totals and subtotals, disclosure of management-defined performance measures, and aggregation and disaggregation of financial information based on identified roles of the primary financial statements and the notes. This new standard is effective for reporting periods beginning on or after January 1, 2027 and is to be applied retrospectively. Earlier application is permitted. The Company is currently assessing the potential impact of adopting this standard.
Amendments to IFRS 9 and IFRS 7 Classification and Measurement of Financial Instruments
In May 2024, the IASB issued amendments to IFRS 9 and IFRS 7 Classification and Measurement of Financial Instruments. These amendments clarify the date of recognition and derecognition of some financial assets and liabilities, with a new exception for some financial liabilities settled through an electronic cash transfer system; add new disclosures for certain instruments with contractual terms that can change cash flows (such as some instruments with features linked to the achievement of environment, social and governance targets); and update the disclosures for equity instruments designated at fair value through other comprehensive income. These amendments apply to annual reporting periods beginning on or after January 1, 2026. Earlier application is permitted and the amendments are to be applied retrospectively. The Company is currently evaluating the impact these amendments may have on its consolidated financial statements and related disclosures.
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 consolidated financial statements.
| 4. | estimates and judgments and key sources of estimation uncertainty |
The Company's consolidated financial statements are prepared in accordance with IFRS recognition and measurement principles that often require management to make judgments, estimates, and assumptions that affect the application of accounting policies, and the reported amounts presented and disclosed in the consolidated financial statements.
26
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
Management reviews these estimates and assumptions on an ongoing basis based on historical experience, changes in business conditions, and other relevant factors as it believes to be reasonable under the circumstances. Changes in facts and circumstances may result in revised estimates, and actual results could differ from those estimates. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
Share-based compensation and warrants
The estimation of share-based compensation and requires the selection of an appropriate valuation model and consideration as to the inputs necessary for the valuation model chosen. The Company has chosen the Black-Scholes valuation model. The Company has made estimates as to the volatility of its own share, the probable life of share options granted, the forfeiture rate of options granted, and the time of exercise of those share options.
Fair value of financial liabilities
The fair value of the liabilities is determined using valuation techniques that incorporate observable market inputs where available and, where necessary, unobservable inputs reflecting the Company’s credit risk, contractual terms, and prevailing market conditions for comparable debt instruments. Where significant unobservable inputs are used, the liabilities are classified within Level 3 of the fair value hierarchy.
Fair value of warrant liability
The fair value of the warrants is determined using an option pricing model that incorporates observable and unobservable inputs, including the Company’s share price, expected volatility, risk-free interest rate, expected life of the warrants and dividend yield.
Impairment of non-financial assets
Property, equipment and intangible assets are tested for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. When an indication of impairment is identified, the carrying value of the asset or group of assets is measured against the recoverable amount. The Company evaluates impairments losses, other than goodwill impairment, for potential reversals when events or circumstances warrant such consideration.
27
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
Going concern risk assessment
The assessment of the Company’s ability to continue as a going concern and raising additional debt or equity financing or attaining commercial operations and generating sufficient revenues to achieve and sustain profitability for the ensuing year, and to fund planned operating activities, involves significant judgment based on historical experience and other factors including expectation of future events that are believed to be reasonable under the circumstances.
Expected credit loss
The Company assesses impairment for accounts receivable quarterly in accordance with IFRS 9. The Expected Credit Loss (“ECL”) model requires significant judgment, particularly in evaluating how changes in economic conditions influence ECLs. These are determined on a probability-weighted basis. In line with IFRS 9, the Company applies a simplified approach to calculate ECLs on trade receivables, utilizing a provision matrix that reflects historical credit loss experience and forward-looking estimates. Under this approach, the Company applies a provision based on the aging of accounts receivable. The provision rates are reviewed regularly to ensure they appropriately reflect the current credit risk and economic environment.
Reserve for inventory obsolescence
The Company values inventory at the lower of cost or net realizable value. Based upon a consideration of quantities on hand, actual and projected sales volume, anticipated product selling prices and product lines planned to be discontinued, slow-moving and obsolete inventory is written down to its net realizable value. Furthermore, significant changes in demand for the Company's products would impact management's estimates in establishing its inventory provision. Management performs quarterly assessments to evaluate whether inventory requires a write-down to its net realizable value, and any necessary adjustments are recognized as an increase to cost of sales. The Company recognizes impairment losses on inventory when items are damaged, lost, or otherwise unsellable, and all write-downs are recognized in profit or loss in the period they are identified.
28
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
Impairment of goodwill
The values associated with goodwill involve significant estimates and assumptions, including those with respect to the determination of cash generating units, future cash inflows and outflows, discount rates and asset lives. At least annually, the carrying amount of goodwill is reviewed for potential impairment. Among other things, this review considers the recoverable amounts of the CGUs based on the higher of value in use or fair value less costs of disposal using discounted estimated future cash flows. These significant estimates require considerable judgement which could affect the Company’s future results if the current estimates of future performance and fair value change.
Determination of cash-generating units
The Company’s assets are aggregated into CGU’s. CGU’s are based on an assessment of the unit’s ability to generate independent cash inflows. The determination of these CGU’s is based on management’s judgement in regard several factors such as shared infrastructure, geographical proximity, exposure to market risk and materiality.
Impairment of long-lived assets
The Company evaluates the recoverability of long-lived assets, including property and equipment, right of use assets, and definite life intangible assets, whether events or changes in circumstances indicate that the carrying value of the asset, or asset group, may not be recoverable. When the Company determines that the carrying value of the long-lived asset may not be recoverable based upon the existence of one or more of the indicators, the assets are assessed for impairment based on the estimate of future discounted cash flows expected to result from the use of the asset and its eventual disposition. If the carrying value of an asset exceeds its estimated future discounted cash flows, an impairment loss is recorded for the excess of the asset’s carrying value over its fair value. Management judgement is required in the determination of indicators of impairment, as well as the estimation of future undiscounted cash flows, and as necessary, the fair value of those assets or asset groups in which indicators of impairment have been identified.
Fair value of financial instruments
The individual fair values attributed to the different components of a financing transaction, and/or derivative financial instruments, are determined using valuation techniques. The Company uses judgement to select the methods used to make certain assumptions and in performing the fair value calculations in order to determine (a) the values attributed to each component of a transaction at the time of their issuance; (b) the fair value measurements for certain instruments that require subsequent measurement at fair value on a recurring basis; and (c) for disclosing the fair value of financial instruments subsequently carried at amortized cost. These valuation estimates could be significantly different because of the use of judgement and the inherent uncertainty in estimating the fair value of these instruments that are not quoted in an active market.
29
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
Business combinations
Classification of an acquisition as a business combination or an asset acquisition depends on whether the assets acquired constitute a business, which can be a complex judgment. Whether an acquisition is classified as a business combination or asset acquisition can have a significant impact on the entries made on and after acquisition. In determining the fair value of all identifiable assets, liabilities and contingent liabilities acquired, the most significant estimates relate to intangible assets and property and equipment. For any intangible asset identified, depending on the type of intangible asset and the complexity of determining its fair value, an independent valuation expert or management may develop the fair value, using appropriate valuation techniques, which are generally based on a forecast of the total expected future net cash flows. The evaluations are linked closely to the assumptions made by management regarding the future performance of these assets and any changes in the discount rate applied. For property and equipment acquired, the assumptions are made regarding replacement cost and useful life.
Income Taxes
The Company is subject to assessments by tax authorities, who may interpret tax legislation differently than the Company. When there is uncertainty over income tax positions, the Company assesses whether it is probable that the relevant tax authority will accept the uncertain tax position. This assessment affects the amount of income tax expense recognized by the Company. If the Company concludes that it is not probable that a tax authority will accept the uncertain tax position, the effect of the uncertain tax position is reflected in the determination of the Company’s income tax expense or recovery based on the most likely amount or, if there are a wide range of possible outcomes, the expected value. Any interest and penalties related to unrecognized tax liabilities are presented within provision for income taxes within the consolidated statements of operations.
Estimated useful lives and amortization of intangible assets
Amortization of intangible assets is recorded on a straight-line basis over their estimated useful lives, which do not exceed the contractual period, if any. Intangible assets that have indefinite useful lives are not subject to amortization and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired.
30
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
| 5. | REVERSE TAKEOVER TRANSACTION |
On December 19, 2024, Cizzle Brands Corporation (“CBC” or the “Company”) completed a Qualifying Acquisition (the “Transaction”) with Cizzle Brands Limited (“CBL”) by way of a three-cornered amalgamation, resulting in the reverse take-over of CBC by the former shareholders of CBL.
The Transaction was completed pursuant to the terms of a definitive amalgamation agreement among the Company, Cizzle Brands Ltd. (“CBL”), and CBC Acquisition SubCo (“SubCo”), a wholly owned subsidiary of the Company.
Prior to completion of the Transaction, the Company consolidated all its issued and outstanding common shares on a 1.80-for-1 basis.
In consideration for the Transaction, the Company issued 194,506,598 common shares to the former shareholders of CBL. The acquisition-date fair value of the consideration is based on the number of equity interests CBL would have had to issue to give the owners of CBC the same percentage of equity interest in the combined entity that results from the reverse acquisition. Each share was measured at the market price of $0.30, representing total consideration of approximately $500,000.
Immediately after completion of the Transaction, the former shareholders of CBL owned approximately 99% of the issued and outstanding common shares of the Company, and the existing shareholders of the Company owned approximately 1%. As a result, the Transaction constituted a reverse take-over (“RTO”) of the Company by the former shareholders of CBL.
These consolidated financial statements represent a continuation of the financial position, results of operations, and cash flows of CBL, together with the equity structure of CBC.
Transaction-related costs of approximately $380,920, consisting primarily of professional and regulatory fees, were incurred by CBL in connection with the RTO and are included in general and administrative expenses in the consolidated statements of loss and comprehensive loss.
In conjunction with the Qualifying Acquisition, CBL completed a private placement of common shares for gross proceeds of $1,037,682, through the issuance of 3,458,940 common shares at a price of $0.30 per share.
31
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
| Equity Consideration of Cizzle Brands Ltd: | ||||
| Total common shares outstanding of CBC at merger | 1,666,666 | |||
| Per share value | $ | 0.30 | ||
| $ | 500,000 | |||
| Fair Value of net assets (liabilities) assumed | $ | - | ||
| Listing Expense | $ | 500,000 | ||
| Total Expense | $ | 500,000 |
| 6. | BUSINESS ACQUISITION |
On December 23, 2025, the Company completed the acquisition of all the issued and outstanding shares of Flow Water Inc. (the “Acquisition”) pursuant to a definitive share purchase agreement. Flow Water Inc. (“Flow”) operates a beverage manufacturing facility in Aurora, Ontario. Immediately prior to the closing of the Acquisition, certain brand-related intellectual property and trademarks associated with the Flow consumer beverage business were transferred to Flow’s previous parent entity. Accordingly, the Company acquired substantially all the manufacturing operations and related assets and liabilities of the business. The acquired entity was subsequently renamed Cizzle Brands Manufacturing Inc.
The cash consideration was financed by the Company through a combination of a senior secured credit facility, convertible debenture, and proceeds from concurrent equity private placements. The Acquisition was accounted for as a business combination in accordance with IFRS 3, Business Combinations, and the results of the acquired business have been consolidated from the acquisition date. The goodwill resulting from the acquisition represents the sales and growth potential of Cizzle Brands Manufacturing Inc. and is not tax deductible.
The following table summarizes the fair value of consideration paid on the acquisition date and the allocation of the purchase price to the assets acquired and liabilities assumed.
32
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
| Fair Value of Net
Assets Aquired | ||||
| Contract Asset | $ | 952,333 | ||
| Inventory | 306,407 | |||
| Prepaid Expenses | 480,608 | |||
| Property and Equipment | 28,405,000 | |||
| Right-of-Use Assets | 20,336,133 | |||
| Goodwill | 25,574,339 | |||
| Intangibles | 29,000,000 | |||
| Trade and other payables | (4,108,110 | ) | ||
| Lease obligations | (19,936,133 | ) | ||
| Loan | (45,201,641 | ) | ||
| Purchase consideration transferred | $ | 35,808,936 | ||
| Purchase Consideration | ||||
| Cash Consideration | 13,558,936 | |||
| VTB Note | 22,250,000 | |||
| $ | 35,808,936 | |||
The Company fully paid the loan of $45,201,641, on the date of acquisition, which was financed from the proceeds of a long-term loan (Note 14).
Consolidated revenue and loss for the year ended July 31, 2026, of Flow after the acquisition date, as recorded in the consolidated statement of loss and comprehensive loss for the year ended July 31, 2026, included $21,541,535 and $806,028 (gain), respectively.
Intangible assets acquired have been valued using an income approach.
Goodwill arising on the acquisition of the Flow Water Inc. has been allocated to the Cizzle Brands Manufacturing Inc. cash-generating unit (the “CGU). The Company tested the CGU for impairment as at July 31, 2026, determining its recoverable amount on a VIU basis using a discounted cash flow model. Key assumptions include forecast revenue and EBITDA margins under existing customer agreements through 2030, a post-tax discount rate of 18.0% (pre-tax 24.1%) and a terminal growth rate of 3.0%. The Company determined that the recoverable amount of the CGU exceeds the carrying amount of the CGU.
| 7. | TRADE RECEIVABLES |
| As at July 31, 2026 | As at July 31, 2025 | |||||||
| Trade receivables | $ | 6,006,689 | $ | 3,823,232 | ||||
| Expected credit losses | (174,723 | ) | (90,902 | ) | ||||
| Trade receivables | $ | 5,831,966 | $ | 3,732,330 | ||||
33
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
| As at July 31, 2026 | As at July 31, 2025 | |||||||
| Current | $ | 4,962,845 | $ | 2,656,563 | ||||
| 1-30 Days | 337,504 | 488,758 | ||||||
| 31-60 Days | 33,711 | 251,819 | ||||||
| 61-90 Days | 277,211 | 152,086 | ||||||
| Over 91 Days | 395,419 | 274,007 | ||||||
| Expected credit loss | (174,723 | ) | (90,902 | ) | ||||
| Total aged trade receivables | $ | 5,831,966 | $ | 3,732,330 | ||||
| 8. | PREPAIDS AND OTHER ASSETS |
| As at July 31, 2026 | As at July 31, 2025 | |||||||
| Inventory | $ | 74,232 | $ | 576,689 | ||||
| Marketing and promotion | 1,086,003 | 563,221 | ||||||
| Deposits | 832,537 | 117,342 | ||||||
| IT subscriptions | 183,183 | 208,045 | ||||||
| Insurance | 160,921 | 87,330 | ||||||
| Transportation | 7,706 | 5,716 | ||||||
| Professional fees | 569,057 | 136,925 | ||||||
| Lease | 19,166 | - | ||||||
| Deferred financing costs | 490,908 | - | ||||||
| Sales tax receivable | 1,739,728 | - | ||||||
| Other assets | 589,956 | 168,724 | ||||||
| Total prepaids | $ | 5,753,397 | $ | 1,863,991 | ||||
| 9. | INVENTORY |
| As at July 31, 2026 | As at July 31, 2025 | |||||||
| Finished Goods | $ | 3,539,246 | $ | 4,117,204 | ||||
| Raw Materials | 1,141,064 | 395,483 | ||||||
| Total Inventory | $ | 4,680,310 | $ | 4,512,687 | ||||
An obsolete inventory provision of $9,409 has been recorded in cost of sales for the year ended July 31, 2026 (July 31, 2025 - $nil). The total amount of inventory reflected in the cost of sales was $7,699,206 (2025 - $5,423,995) for the year ended July 31, 2026.
34
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
| 10. | PROPERTY AND EQUIPMENT |
| Cost | Office
Equipment and Furniture | Leasehold Improvements | Equipment | Vehicles | Total | |||||||||||||||
| As at July 31, 2024 | $ | 126,024.00 | $ | 41,622.67 | $ | - | $ | - | $ | 167,646.97 | ||||||||||
| Additions | 175,820 | - | - | - | 175,820 | |||||||||||||||
| As at July, 31, 2025 | $ | 301,844 | $ | 41,623 | $ | - | $ | - | $ | 343,467 | ||||||||||
| Additions | 249,170 | 1,222,294 | 27,606,205 | 30,000 | 29,107,670 | |||||||||||||||
| Disposals | (65,730 | ) | - | - | - | (65,730 | ) | |||||||||||||
| As at July, 31, 2026 | $ | 485,284 | $ | 1,263,917 | $ | 27,606,205 | $ | 30,000 | $ | 29,385,407 | ||||||||||
| Accumulated Depreciation | ||||||||||||||||||||
| As at July 31, 2024 | $ | 3,660.94 | $ | 4,651.00 | $ | - | $ | - | $ | 8,311.97 | ||||||||||
| Additions | 52,117 | 8,325 | - | - | 60,442 | |||||||||||||||
| Adjustments | 2,090 | (1,055 | ) | - | - | 1,035 | ||||||||||||||
| As at July, 31, 2025 | $ | 57,868 | $ | 11,920 | $ | - | $ | - | $ | 69,789 | ||||||||||
| Additions | 82,834 | 92,471 | 1,578,390 | 5,833 | 1,759,528 | |||||||||||||||
| As at July, 31, 2026 | $ | 140,702 | $ | 104,392 | $ | 1,578,390 | $ | 5,833 | $ | 1,829,317 | ||||||||||
| Net Book Value | ||||||||||||||||||||
| As at July 31, 2025 | $ | 243,976 | $ | 29,702 | $ | - | $ | - | $ | 273,678 | ||||||||||
| As at July 31, 2026 | $ | 344,583 | $ | 1,159,526 | $ | 26,027,816 | $ | 24,167 | $ | 27,556,090 | ||||||||||
For the year ended July 31, 2026, $1,648,493 (2025 - $503,067) of depreciation has been included in the cost of goods sold.
Certain equipment is pledged as security as part of the Company’s lease arrangement.
35
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
| 11. | INTANGIBLE ASSETS AND GOODWILL |
| Costs | Intellectual Property | Website | Trademark | Goodwill | Customer Relationship | Total | ||||||||||||||||||
| As at July, 31, 2025 | $ | 5,000,000 | $ | 24,750 | $ | - | $ | - | $ | $ | 5,024,750 | |||||||||||||
| Additions | - | - | 48,247 | 25,574,339 | 29,000,000 | 54,622,586 | ||||||||||||||||||
| As at July, 31, 2026 | $ | 5,000,000 | $ | 24,750 | $ | 48,247 | $ | 25,574,339 | $ | 29,000,000 | $ | 59,647,336 | ||||||||||||
| Accumulated Amortization | ||||||||||||||||||||||||
| As at July, 31, 2025 | $ | 750,000 | $ | 5,089 | $ | - | $ | - | $ | - | $ | 755,089 | ||||||||||||
| Additions | 500,000 | 8,250 | - | - | 3,383,333 | 3,891,583 | ||||||||||||||||||
| As at July, 31, 2026 | $ | 1,250,000 | $ | 13,339 | $ | - | $ | - | $ | 3,383,333 | $ | 4,646,672 | ||||||||||||
| Net Book Value | ||||||||||||||||||||||||
| As at July, 31, 2025 | 4,250,000 | 19,661 | - | - | - | 4,269,661 | ||||||||||||||||||
| As at July, 31, 2026 | 3,750,000 | 11,411 | 48,247 | 25,574,339 | 25,616,667 | 55,000,663 | ||||||||||||||||||
| 12. | ACCOUNTS PAYABLE AND ACCRUED LIABILITIES |
| As at July 31, 2026 | As at July 31, 2025 | |||||||
| Accounts payable | $ | 8,779,224 | $ | 5,202,773 | ||||
| Accrued liabilities | 1,045,514 | 1,505,026 | ||||||
| Total accounts payable and accrued liabilities | $ | 9,824,738 | $ | 6,707,799 | ||||
| Contract Liaiblities | As at July 31, 2026 |
|||
| Contract liability July 31, 2025 | $ | - | ||
| Amounts received | 3,000,000 | |||
| Amounts recognized in revenue | (781,893 | ) | ||
| Total Contract Liabilities | $ | 2,218,107 | ||
36
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
| 13. | SHORT TERM LOANS |
| Vendor
take Back | Promissory Note | Convertible Debenture | Secured
Promissory Note | Ascent Note | Revolver | Other Notes | Total | |||||||||||||||||||||
| Opening Balance | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 1,227,997.00 | 1,227,997 | |||||||||||||
| Additions | 22,250,000 | 3,880,000 | 7,500,000 | 754,109 | 5,921,016 | 12,333,055 | 1,000,000 | 53,638,180 | ||||||||||||||||||||
| Issuance of Shares | - | - | - | (380,000 | ) | - | - | (1,028,571 | ) | (1,408,571 | ) | |||||||||||||||||
| Units Issued | - | - | - | (217,321 | ) | - | - | - | (217,321 | ) | ||||||||||||||||||
| Payments | - | (263,890 | ) | (325,479 | ) | (361,876 | ) | (1,367,031 | ) | (12,606,205 | ) | (1,227,997 | ) | (16,152,479 | ) | |||||||||||||
| Loss on settlement | - | - | - | 77,321 | - | - | 28,571 | 105,892 | ||||||||||||||||||||
| Fair value Adjustment | - | - | 5,385,000 | - | 3,797,065 | - | - | 9,182,065 | ||||||||||||||||||||
| Interest and accretion expense | 1,674,337 | 275,449 | 325,479 | 127,767 | 1,367,031 | 273,150 | - | 4,043,213 | ||||||||||||||||||||
| Foreign exchange (gain) loss | - | - | - | - | 193,530 | - | - | 193,530 | ||||||||||||||||||||
| As at July, 31, 2026 | 23,924,337 | 3,891,559 | 12,885,000 | - | 9,911,611 | - | - | 50,612,507 | ||||||||||||||||||||
Vendor Take Back
On December 23, 2025, as part of the Acquisition (Note 6), the Company entered into a $22,250,000 secured Vendor Take Back Note (“VTB Note”) with a maturity date of December 23, 2026, carrying an interest rate of 12% per annum, compounding monthly. Principal and interest are due on maturity. The VTB Note is subject to certain covenants, and as at July 31, 2026, the Company was in compliance with all the covenants.
Promissory Note
In January 2026, the Company entered into a promissory note agreement (“Promissory Note”) and drew $4.0 million under the facility. The promissory note bears interest at 14% per annum, payable monthly in arrears, and matures 12 months from the funding date. The promissory note is measured at amortized cost in accordance with IFRS 9. A $120,000 origination fee paid to the lender was accounted for as a directly attributable transaction cost and deducted from the initial carrying amount of the liability. The loan is subsequently measured using the effective interest method. The Promissory Note is subject to certain covenants, and as at July 31, 2026, the Company was in compliance with all the covenants.
Secured Promissory Note
On December 4, 2025, the Company entered into a secured promissory note (“Secured Promissory Note”) for gross proceeds of $800,000, carrying interest at a rate of 1% per month, calculated daily, and was repayable on demand by the lender after February 4, 2026, unless repaid earlier by the Company. During the year ended July 31, 2026, the Secured Promissory Note was fully settled through issuance of common shares, warrants and cash payment. The settlement resulted in a loss on settlement of $77,321 which was recorded in the consolidated statements of loss and comprehensive loss.
37
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
Revolver
On August 19, 2025, the Company entered into a revolving credit facility with Canadian and United States dollar borrowing limits of $4,000,000 and USD$850,000 respectively. Borrowings in Canadian dollars bore interest at the Canadian Prime Rate plus 4.75 percent, subject to a minimum rate equal to the greater of 1.5 percent or the Canadian Overnight Repo Rate Average (CORRA). Borrowings in US dollars bore interest at Term Secured Overnight Financing Rate (SOFR) plus 5 percent, subject to a minimum rate equal to the greater of 1.5 percent or SOFR. Availability is determined through a borrowing base that includes eligible trade receivables inventory. This value is determined by applying a lender-determined appraisal discount to the estimated recoverable amount of inventory in an orderly sale scenario. A minimum tangible net worth of $1,000,000 is to be maintained monthly. The facility is repayable on demand. As at July 31, 2026, the outstanding balance under the facility was $nil.
Other Notes
On April 1, 2026, the Company received gross proceeds of $1,000,000 under an unsecured promissory note. On May 15, 2026, the unsecured promissory note was exchanged for an unsecured convertible promissory note in the principal amount of $1,000,000 in exchange for, and in cancellation of, the previously issued $1,000,000. As additional part of the exchange, the Company issued 476,190 common shares and 1,428,571 common share purchase warrants exercisable at $0.35 per share to the holder (Note 15). The warrants expire on the fifth anniversary of the issue date and were classified as derivative liability in the consolidated statements of financial position (Note 15). The unsecured convertible promissory note had a term of 18 months from the date of issuance and bore interest at 9.5% per annum, payable monthly in arrears, and was convertible at the option of the holder into common shares at a conversion price of $0.35 per common share. Immediately following issuance, the holder elected to convert the full $1,000,000 principal amount into 2,857,143 common shares at the conversion price of $0.35 per common share, and the note was settled. The common shares issued on conversion were recorded at their fair value of $1,028,571, based on a market price of $0.36 per share, resulting in a loss on settlement of debt of $28,571 which was recorded in the consolidated statements of loss and comprehensive loss.
Convertible Debentures
On December 23, 2025, the Company issued unsecured convertible unsecured debentures (“Convertible Debentures”) for total cash proceeds of $7,500,000, with a maturity date of December 23, 2028. Total proceeds included convertible debentures amounting to $2,500,000 that were issued to a family member of a director of the Company and is considered a related party transaction. The Convertible Debentures issued to the related party were issued on the same terms and conditions as those issued to non-arm’s length investors.
38
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
The Convertible Debentures bear interest at a rate of 7.20% per annum, payable monthly, and are convertible into common shares of the Company at an initial conversion price of $0.50 per share, which would be adjusted if the Company subsequently issues convertible securities at a lower conversion price. The Company issued Senior Secured Convertible Note on May 5, 2026 at a conversion price of US$0.23488 (approximately $0.32) per share, and accordingly the conversion price of the Convertible Debentures was reset to C$0.32 per share effective May 5, 2026.
The Company elected to designate the entire Convertible Debentures at FVTPL. The fair value of the Convertible Debentures as at July 31, 2026, was $12,885,000. The fair value of the Convertible Debentures on July 31, 2026, was estimated using a valuation model with the following main inputs: volatility 70%, share price $0.51, risk free interest rate 3.2%, exercise price $0.32.
Ascent Note
On May 5, 2026, the Company issued a senior secured convertible promissory note to Ascent Partners Fund LLC (the “Ascent Note”) in the principal amount of $9,426,181 (USD$6,720,867) for gross cash proceeds of $8,459,561 (USD$6,212,500). The Ascent Note matures on November 5, 2027, and bears interest at 9.5% per annum, with interest payable monthly. The difference between the principal amount and the cash proceeds represents original issue discount. The Ascent Note is convertible into common shares at the option of the holder at an initial conversion price of US$0.23488 per share.
The Company also issued to the lender 21,460,534 warrants to acquire common shares of the Company at exercise price of US$0.23488 per share. The warrants expire on May 5, 2031, and were classified as derivative liabilities at FVTPL (Note 15). The cash proceeds were allocated to the Ascent Note ($5,921,016) and warrants ($2,521,524) using their relative fair value on the issuance date. In addition, the Company issued 429,210 common shares to the lender which were measured at $154,516 on the issuance date using the share market price and accounted for as debt issuance cost and recorded in the consolidated statements of loss and comprehensive loss.
39
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
The Company elected to designate the Ascent Note at FVTPL. The fair values of the Ascent Note and the Ascent Warrants at initial recognition were determined using valuation techniques that incorporate significant unobservable inputs (Level 3) (Note 15). The transaction price was recognized based on the cash proceeds that was not the best evidence of fair value at initial recognition. The day-one difference between the cash proceeds and fair values amounted to of $7,925,094, which was deferred and will be recognized on a systematic basis based on the term of the instruments. The changes in the aggregate day-one difference were as follows:
| Ascent Note | Ascent Warrants | Total | ||||||||||
| Opening Balance | $ | 0 | $ | 0 | $ | 0 | ||||||
| Day-one difference on initial recognition (May 5, 2026) | 5,558,115 | 2,366,979 | 7,925,094 | |||||||||
| Amounts recognized in profit or loss during the year | (904,020 | ) | (115,749 | ) | (1,019,769 | ) | ||||||
| As at July, 31, 2026 | 4,654,095 | 2,251,230 | 6,905,325 | |||||||||
The fair value of the Ascent Note on July 31, 2026, was estimated using a valuation model with the following main inputs: volatility 75%, share price $0.51, risk free interest rate 4.05%, exercise price US$0.23488. The fair value of the Ascent Warrants on July 31, 2026, was estimated using a valuation model with the following main inputs: volatility 75%, share price $0.51, risk free interest rate 4.05%, exercise price US$0.23488.
Other Notes
During the year ended July 31, 2025, the Company entered into two merchant cash advance financing arrangements which provided the Company with working capital in exchange for a fixed repayment amount, remitted as a percentage of the Company’s sales. The two cash advances were settled during the year ended July 31, 2026.
On May 20, 2025, the Company entered into a short-term loan agreement with a related party, comprising of a close family member of one of the Company’s directors. Under the terms of the agreement, the related party advanced $1,000,000 to the Company. The loan was unsecured and repayable on demand. An arrangement fee of $55,000 was paid to the lender on the date of the loan advance. The loan was interest-free for the first 90 days following the advance of the principal amount, after which it carried interest at 20% per annum until repayment. The transaction was conducted on terms and conditions agreed by the related party and the Company and was approved by the Board of Directors in accordance with the Company’s related party transaction policy. During the year ended July 31, 2025, no principal or interest repayments were made.
As of August 2025, the related party loan was fully repaid.
| 14. | LONG TERM LOANS |
| Senior Debt | ||||
| Opening Balance | $ | - | ||
| Additions | 52,880,640 | |||
| Fair Value of Warrants | (1,707,604 | ) | ||
| Fair Value Adjustment | 5,443,305 | |||
| Foreign exchange (gain) loss | 1,038,454 | |||
| As at July, 31, 2026 | 57,654,795 | |||
40
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
Senior Debt - OIC Credit Facility
On December 23, 2025, the Company entered into a credit agreement (“OIC Credit Facility”) with Orion Infrastructure Capital. The aggregate amount committed under the OIC Credit Facility is $68,855,000 comprising (i) a $55,084,000 initial term loan facility (“Initial Term Loan”) and (ii) a $13,771,000 additional commitment.
The Company received total net proceeds of $52,880,640, after original issue discount of $2,203,360 (US$40 million), under the Initial Term Loan and issued to the lender 7,500,000 warrants to acquire common shares of the Company at exercise price of $0.40 per share. The warrants expire five years after issuance date and were classified as derivative liability in the consolidated statements of financial position (Note 15). The cash proceeds received on the issuance date were allocated to the OIC Credit Facility ($51,173,036) and warrants ($1,707,604) using their relative fair value on the issuance date. Portion of the cash proceeds was utilized to pay the loan assumed in business acquisition (Note 6). Transaction costs associated with the issuance of the OIC Credit Facility were recognized as finance costs in the consolidated statements of loss and comprehensive loss. The Initial Term Loan bears an interest rate of 12% payable quarterly. All interest payments prior to June 30, 2026, were payable in kind unless the Company elected to make cash payments. The Initial Term Loan has a maturity date of December 23, 2030, and is payable at maturity.
The OIC Credit Facility contains certain prepayment options subject to a prepayment premium and an exit premium that would be calculated based on the 30-day volume-weighted average price (“VWAP”) of the common share of the Company.
The OIC Credit Facility was designated at FVTPL and classified within Level 3 of the fair value hierarchy under IFRS 13. The fair value of the OIC Credit Facility as at July 31, 2026, was $57,654,795.
The fair value of the OIC Credit facility on July 31, 2026, was estimated using a valuation model with the following main inputs: volatility 70% (December 23, 2025- 65%), share price $0.51 (December 23, 2025 - $0.40), risk free interest rate 3.2% (December 23, 2025 – 2.9%).
41
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
| 15. | DERIVATIVE LIABILITY |
In conjunction with the OIC Credit Facility, the Company issued 7,500,000 common share purchase warrants to the lender (the “OIC Warrants”). Each warrant entitles the holder to purchase one share at an exercise price of $0.40 per share until December 23, 2030. The warrants contain a cashless exercise provision, which violated the fixed-for-fixed criterion, and accordingly these warrants have been classified as a financial liability at FVTPL on issuance. The fair value of the warrants on July 31, 2026 and December 23, 2025 (issuance date) was estimated using the Black-Scholes option pricing model using the following main inputs: volatility 70% (December 23, 2025- 65%), share price $0.51 (December 23, 2025 - $0.40), risk free interest rate 3.2% (December 31, 2025 – 2.9%)
In conjunction with the Senior Secured Convertible Note (Note 13), on May 5, 2026, the Company issued 21,460,534 common share purchase warrants to the holder (the “Ascent Warrants”). Each Ascent Warrant entitles the holder to purchase one common share at an exercise price of US$0.23488 per share until May 5, 2031. As the exercise price is denominated in US dollars, which differs from the Company’s functional currency, and the cashless exercise provision, the Ascent Warrants do not meet the fixed-for-fixed criterion and have been classified as a derivative financial liability at FVTPL. The fair value of the Ascent Warrants was assessed using the Black-Scholes option pricing model.
In conjunction with the exchange of the unsecured promissory note for an unsecured convertible promissory note (Note 13), on May 15, 2026, the Company issued 1,428,571 common share purchase warrants to the holder (the “Convertible Note Warrants”). Each Convertible Note Warrant entitles the holder to purchase one common share at an exercise price of $0.35 per share until May 15, 2031. The Convertible Note Warrants contain a cashless exercise provision, which violated the fixed-for-fixed criterion, and accordingly the Convertible Note Warrants do not meet the fixed-for-fixed criterion and accordingly the Convertible Note Warrants have been classified as a derivative financial liability at FVTPL. The fair value of the Convertible Note Warrants on July 31, 2026 and May 15, 2026 (issuance date) was estimated using the Black-Scholes option pricing model using the following main inputs: volatility 70% (May 15, 2026 – 70%), share price $0.51 (May 15, 2026 – $0.36), risk-free interest rate 3.27% (May 15, 2026 – 3.36%), expected life of 4.79 years (May 15, 2026 – 5.00 years) and expected dividend yield of nil. The fair value of the Convertible Note Warrants was $312,421 on issuance and $487,232 as at July 31, 2026.
42
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
The following table provides a reconciliation of the warrant liability for the year ended July 31, 2026:
| OIC Warrants | Ascent Warrants | Other
Warrant Liability | Total | |||||||||||||
| December 23, 2025 | $ | - | $ | - | $ | - | $ | - | ||||||||
| Issued | 1,707,604 | 2,521,524 | 312,421 | 4,541,549 | ||||||||||||
| Change in fair value | 710,641 | 2,584,535 | 174,811 | 3,469,987 | ||||||||||||
| Foreign exchange loss | 41,546 | 44,104 | - | 85,650 | ||||||||||||
| July 31, 2026 | 2,459,791 | 5,150,163 | 487,232 | 8,097,186 | ||||||||||||
The following table is a summary of the Company’s warrants outstanding as at July 31, 2026:
| Expiration Date | Warrants outstanding |
Weighted
average exercise price |
|||||
| # | $ | ||||||
| December 23, 2030 | 7,500,000 | $ | 0.40 | ||||
| May 5, 2031 | 21,460,534 | $ | 0.33 | ||||
| May 15, 2031 | 1,428,571 | $ | 0.35 | ||||
| Total | 30,389,105 | $ | 0.35 | ||||
The weighted average remaining contractual life of warrants outstanding as at July 31, 2026, was 4.67 years.
| 16. | RIGHT OF USE ASSETS AND LEASE LIABILITIES |
| Office | Equipment | Warehouse | Vehicle | Total | ||||||||||||||||
| Right of use assets, as at July 31, 2024 | $ | 182,361 | $ | - | $ | - | $ | - | 182,361 | |||||||||||
| Additions | - | - | - | - | - | |||||||||||||||
| Adjustments | - | - | - | - | - | |||||||||||||||
| Right of use assets as at July 31, 2025 | $ | 182,361 | $ | - | $ | - | $ | - | $ | 182,361 | ||||||||||
| Additions | - | 12,093,418 | 8,147,333 | 95,381 | 20,336,133 | |||||||||||||||
| Adjustments | - | - | - | - | - | |||||||||||||||
| Right of use assets as at July 31, 2026 | $ | 182,361 | $ | 12,093,418 | $ | 8,147,333 | $ | 95,381 | $ | 20,518,494 | ||||||||||
| Accumulated Amortization | ||||||||||||||||||||
| Accumulated amortization as at July 31, 2024 | $ | 28,167 | $ | - | $ | - | $ | - | 28,167 | |||||||||||
| Amortization Expense | 67,316 | - | - | - | 67,316 | |||||||||||||||
| Accumulated amortization as at July 31, 2025 | 95,483 | - | - | - | 95,483 | |||||||||||||||
| Amortization Expense | 60,130 | 1,481,041 | 817,386 | 13,353 | 2,371,911 | |||||||||||||||
| Accumulated amortization as at July 31, 2026 | $ | 155,613 | $ | 1,481,041 | $ | 817,386 | $ | 13,353 | $ | 2,467,394 | ||||||||||
| As at July 31, 2025 | $ | 86,878 | $ | - | $ | - | $ | - | $ | 86,878 | ||||||||||
| As at July 31, 2026 | $ | 26,748 | $ | 10,612,377 | $ | 7,329,947 | $ | 82,028 | $ | 18,051,100 | ||||||||||
| Office | Equipment | Warehouse | Vehicle | Total | ||||||||||||||||
| Total lease liabilities as at July 31, 2024 | $ | 151,456 | $ | - | $ | - | $ | - | 151,456 | |||||||||||
| Interest Expense | 22,447 | - | - | 22,447 | ||||||||||||||||
| Lease Payments | (75,180 | ) | - | - | - | (75,180 | ) | |||||||||||||
| Lease liabilities as at July 31, 2025 | $ | 98,724 | $ | - | $ | - | $ | - | $ | 98,724 | ||||||||||
| Additions | - | 12,091,875 | 7,747,333 | 95,381 | 19,934,590 | |||||||||||||||
| Interest Expense | 11,591 | 521,161 | 357,263 | 3,886 | 893,901 | |||||||||||||||
| Lease Payments | (78,128 | ) | (1,537,456 | ) | (885,045 | ) | (13,593 | ) | (2,514,222 | ) | ||||||||||
| Foreign Exchange | - | 272,411 | - | - | 272,411 | |||||||||||||||
| Lease liabilities as at July 31, 2026 | $ | 32,187 | $ | 11,347,992 | $ | 7,219,552 | $ | 85,673 | $ | 18,685,404 | ||||||||||
| Total lease liabilities as at July 31, 2025 | ||||||||||||||||||||
| Current | $ | 32,187 | $ | 1,911,974 | $ | 1,029,910 | $ | 21,645 | $ | 2,995,715 | ||||||||||
| Long term | - | 9,436,017 | 6,189,642 | 64,029 | $ | 15,689,689 | ||||||||||||||
| Total | $ | 32,187 | $ | 11,347,992 | $ | 7,219,552 | $ | 85,673 | $ | 18,685,404 | ||||||||||
43
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
For the year ended July 31, 2026, $2,311,781 of right-of-use asset depreciation has been included in the cost of goods sold. In measuring lease liability for the leases entered into during the year ended July 31, 2026, the Company estimated IBR in a range of 7.45% -20%.
The following table provides a maturity analysis of the Company’s lease liabilities. The amounts disclosed in the maturity analysis are the contractual undiscounted cashflow before deducting interest or finance charges.
| Balance sheet | Office | Equipment | Warehouse | Vehicle | Total | |||||||||||||||
| Lease liabilities | $ | 32,187 | $ | 11,347,992 | $ | 7,219,552 | $ | 85,673 | $ | 18,685,404 | ||||||||||
| Right of use assets | 26,748 | 10,612,377 | 7,329,947 | 82,028 | 18,051,100 | |||||||||||||||
| Contractual lease obligation | ||||||||||||||||||||
| Within 1 year | 33,172 | 2,029,988 | 1,557,343 | 27,187 | 3,647,690 | |||||||||||||||
| 2 to 3 years | - | 5,349,059 | 2,984,697 | 54,374 | 8,388,130 | |||||||||||||||
| more than 4 years | - | 6,146,478 | 4,628,542 | 15,859 | 10,790,878 | |||||||||||||||
| 33,172 | 13,525,525 | 9,170,582 | 97,420 | 22,826,698 | ||||||||||||||||
| Effect of discounting | (985 | ) | (2,177,533 | ) | (1,951,030 | ) | (11,746 | ) | (4,141,294 | ) | ||||||||||
| 32,187 | 11,347,992 | 7,219,552 | 85,673 | 18,685,404 | ||||||||||||||||
| Less: Current portion | 32,187 | 1,911,974 | 1,029,910 | 21,645 | 2,995,715 | |||||||||||||||
| Non-current portion | - | 9,436,017 | 6,189,642 | 64,029 | 15,689,688 | |||||||||||||||
44
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
| 17. | RELATED PARTY TRANSACTIONS |
During the years ended July 31, 2026 and 2025, key management personnel are defined as those individuals having authority and responsibility for planning, directing, and controlling the activities of the Company. The Company considers its Executive Chairman and Chief Executive Officer (“EC&CEO”), its Co-President & Chief Revenue Officer, its Co-President & Chief Marketing Officer, its Chief Operating Office (“COO”), and its Chief Financial Officer and Corporate Secretary(“CFO”), to be its key management personnel, in addition to its board of directors. Compensation of key management is included in the consolidated statements of loss and comprehensive loss as follows:
| For the year ended July 31, 2026 |
For the year ended July 31, 2025 |
||||||
| Salaries, consulting fees, bonus and benefits | $ | 2,349,461 | $ | 2,750,791 | |||
| Share-based payments | 516,429 | 522,920 | |||||
| Total | $ | 2,865,890 | $ | 3,273,711 | |||
Salaries, consulting fees, bonus and benefits have been included in selling, general and administrative expenses in the consolidated statements of loss and comprehensive loss.
As at July 31, 2026, the Company has an outstanding balance of $461,584 (2025 - $874,671) payable on demand to the officers of the Company, related to outstanding remuneration, which is included in accounts payable and accrued liabilities.
On January 25, 2024, CBL purchased 100% of the shares of Cizzle Brands Inc. for cash consideration of $5,000,000. The acquisition was accounted as an asset acquisition, and the fair value of the asset acquired comprising of intellectual property, was determined based on the total consideration paid in cash. Cizzle Brands Inc. was a related party, which was previously owned by an officer of the Company. The transaction was conducted on terms and conditions agreed to by the related party and the Company and was approved by the Board of Directors in accordance with the Company’s related party transaction policy.
On May 20, 2025, the Company entered into a short-term loan agreement with a related party, as disclosed in Note 13.
During the July 2025 private placement, four officers of the Company received units valued at $545,206 in lieu of cash compensation.
45
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
During the year ended July 31, 2026, Directors received share-based payments valued at $551,007.
| 18. | SHARE CAPITAL |
Authorized:
An unlimited number of common shares, no par value. There are no rights, preferences, or restrictions attached to that class.
Transactions during the year ended July 31, 2026:
During the year ended July 31, 2026, 615,504 stock options were exercised (through a net-share settlement, resulting in the issuance of 264,949 common shares), 203,500 broker warrants were exercised at an exercise price of $0.2 per warrant resulting in no broker warrants outstanding as at July 31, 2026 (July 31, 2025- 203,500) and 44,007 RSUs were exercised.
In December 2025, the Company issued 53,750 units to settle accounts payable of $21,500. Each unit consists of one common share and one-half of one common share purchase warrant, resulting in the issuance of 53,750 common shares and 26,875 warrants. The units were measured at a fair value of $24,167, of which $21,500 was allocated to share capital and $2,667 to the warrant reserve, and a loss on settlement of $2,667 was recognized in the consolidated statements of loss and comprehensive loss.
In May 2026, the Company issued 4,885,928 common shares to settle outstanding debts and in connection with the modification of a loan agreement (Note 13). The shares were issued at prices ranging from $0.36 to $0.38 per share and were recorded in share capital at $1,786,434. The shares issued were valued using the Company’s share price at the date of issuance. The issuance shares for debt resulted in a loss on extinguishment of $118,175 which was recorded in the consolidated statements of loss and comprehensive loss.
In May 2026, in connection with the issuance of Ascent Note (Note 13), the Company issued 429,210 common shares to the Ascent Note holder. The shares were accounted for as debt issuance cost and were measured at $154,516 based on the market price on the issuance date and recorded in the consolidated statements of loss and comprehensive loss.
In December 2025, the Company completed a private placement raising gross proceeds of $4,757,000 through the issuance of 11,892,500 units at a price of $0.40 per unit. Each unit consisted of one common share of the Company and one-half of one common share purchase warrant. Each whole warrant entitles the holder to acquire one additional common share of the Company at an exercise price of $0.60 per share for a period of 24 months from the date of issuance, subject to acceleration in certain circumstances. Based on the relative fair value allocation of the units issued in the financing, $4,231,636 of the proceeds was allocated to share capital and $525,364 was allocated to warrants.
46
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
In connection with the private placement, the Company issued 500,000 common shares and 71,250 units as finders fees. The common shares were valued at $0.40 per share based on the share price on the issuance date. The terms of the units are identical to the terms of the units issued in private placement, measured at fair value with $25,352 allocated to share capital and $3,149 allocated to warrants. The total finders’ fees in the amount of $543,169, including fees paid in cash, were deducted from share capital and warrants.
Transactions during the year ended July 31, 2025:
In August 2024, the Company completed the offering and issued 3,750,000 units at a price of $0.20 per unit for gross proceeds of $750,000. Each unit consists of one common share and one-half Warrant. Each warrant is exercisable into one common share at an exercise price of $0.40 and expires in August 2028. The gross proceeds from the units were allocated using the relative fair value method. As a result, $665,754 was allocated to share capital and $84,246 was allocated to warrant reserves.
In October and November 2024, the Company issued 10,185,508 common shares at a price of $0.30/share for gross proceeds of $3,055,654.
In conjunction with the go public transaction, in December 2024, the Company issued 3,458,940 common shares at a price of $0. 30 per share for gross proceeds of $1,037,682.
In July 2025, the Company closed a private placement with total proceeds of $3,956,491, consisting of a total of 10,990,252 units at a price of $0.36/unit. Each Unit consists of one common share of the Company and one share purchase warrant of the Company. Each Warrant entitles the holder thereof to purchase one additional Share of the Company at a price of $0.44 for a period of thirty-six months from the date of issuance. The gross proceeds from the units were allocated using the relative fair value method. As a result, $2,192,907 was allocated to share capital and $1,763,584 was allocated to warrant reserves. Included in this private placement were 1,514,461 units issued to four officers of the Company in lieu of cash compensation. The value of the units was allocated to share capital for an amount of $302,184 and warrant reserves for an amount of $243,022.
In connection with the August 2024 offering, the Company incurred costs of $17,840, these issuance costs were allocated $14,075 to common shares and $3,765 to the warrant reserve. The allocation was made in the same proportion as how the proceeds from the issuance of the Units were allocated between common shares and warrants.
47
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
In connection with the October and November 2024 share issuances, the Company incurred costs of $75,493. Additionally, the Company issued 332,875 commission shares with a total fair value of $99,863 to finders.
In connection with the offering which occurred in conjunction with the go public transaction, the Company issued 239,781 broker warrants with a total fair value of $42,369. Each broker’ warrant is exercisable at a price of $0.30 and expires in November 2026.
In connection with the July 2025 private placement, the Company incurred costs of $20,088, these issuance costs were allocated $11,157 to common shares and $8,931 to warrant reserve. The allocation was made in the same proportion as how the proceeds from the issuance of the Units were allocated between common shares and warrants.
The Company issued 1,666,666 common shares at a value of $0.30 to the shareholders of Cizzle Brands Corporation as part of the reverse takeover transaction (Note 5).
During the year ended July 31, 2025, 2,625,000 warrants with an exercise price of $0.40 were exercised in exchange for 2,625,000 common shares. In addition, 100,000 broker units were exercised with an exercise price of $0.20 per unit in exchange for $20,000. As a result, 100,000 common shares and 50,000 warrants were issued.
During the year ended July 31, 2025, the Company issued 595,645 common shares to settle debts of $183,250. The shares issued were valued using the Company’s stock price at the date of issuance.
| 19. | WARRANT RESERVE |
The warrants issued were valued using the Black-Scholes Model. The following table presents information regarding warrants issued by the Company:
| # of warrants | Weighted
Avg Exercise Price | Weighted
Avg Remaining Life | Expiry Date | |||||||||||
| As at July 31, 2024 | 37,371,385 | $ | 0.40 | 1.76 | ||||||||||
| Issuance of warrants (1)(4) | 1,875,000 | $ | 0.40 | 2.00 | August 1, 2028 | |||||||||
| Issuance of Broker warrants (2) | 239,781 | $ | 0.30 | 0.33 | November, 2026 | |||||||||
| Issuance of Broker warrants (6) | 12,504,671 | $ | 0.44 | 2.00 | July 2028 | |||||||||
| Exercise of Warrants (3) | (2,625,000 | ) | $ | 0.40 | 1.76 | |||||||||
| As at July, 31, 2025 | 49,365,837 | $ | 0.40 | 1.82 | ||||||||||
| Issuance of units (7) | 5,946,250 | $ | 0.60 | 1.42 | December 2027 | |||||||||
| Issuance of units (8) | 35,625 | $ | 0.60 | 1.42 | December 2027 | |||||||||
| Issuance of units (9) | 26,875 | $ | 0.60 | 1.42 | December 2027 | |||||||||
| As at July, 31, 2026 | 55,374,587 | $ | 0.42 | 1.78 | ||||||||||
48
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
| (1) | In August 2024, the Company issued 1,875,000 warrants in connection with the private placement of Units (Note 18). The warrants have an estimated fair value of $84,246 ($0.04 per warrant). Each warrant entitles the holder thereof to acquire one half common share of the Company for a price of $0.20 for a period of two years from the date of issuance. |
| (2) | In November 2024, the Company issued 239,781 broker warrants associated with in connection with the private placement of common shares (Note 18). The warrants have an estimated fair value of $42,369 ($0.18 per warrant). Each warrant entitles the holder thereof to acquire one common share of the Company for a price of $0.30 for a period of two years from the date of issuance. |
| (3) | During the year ended July 31, 2025, 2,625,000 warrants were exercised at a price of $0.40 in exchange for 2,625,000 common shares |
| (4) | In addition, 100,000 broker warrants were exercised at a price of $0.20 per warrant in exchange for $20,000. As a result, 100,000 common shares and 50,000 warrants (Note 18) were issued. |
| (5) | In prior reporting periods, broker units were included within the share capital and warrants reserve disclosure. To enhance transparency and provide greater clarity, broker units are now disclosed separately from other share and warrant instruments. This change in presentation does not impact previously reported financial figures but improves the granularity of information provided to users of the consolidated financial statements. Note 18 (3). |
| (6) | In July 2025, the Company issued 12,504,713 warrants in connection with the private placement of Units (Note 18). The warrants have an estimated fair value of $2,006,606 ($0.16 per warrant). Each Warrant entitles the holder thereof to purchase one common share of the Company for a price of $0.44 for a period of thirty-six months from the date of issuance. |
| (7) | In connection with the December 2025 private placement, the Company issued 5,946,250 common share purchase warrants, Note 18. Each whole warrant entitles the holder to acquire one common share of the Company at an exercise price of $0.60 per share for a period of 24 months from the date of issuance, subject to acceleration in certain circumstances. Based on the relative fair value allocation at the date of issuance, $525,364 of the gross proceeds from the private placement was allocated to the warrants and recorded in the warrant reserve within shareholders’ equity. |
| (8) | In connection with the issuance of 71,250 units as finders’ fees in private placement (Note 18), the Company issued 35,625 common share purchase warrants. The warrants were measured at a fair value of $3,149 at the date of issuance and were recognized as share issuance costs, with a corresponding amount recorded in the warrant reserve within the statement of shareholders’ equity. |
49
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
| (9) | In connection with the issuance of 53,750 units to settle accounts payable (Note 18), the Company issued 26,875 common share purchase warrants. The warrants were measured at a fair value of $2,667 at the date of issuance based on their relative fair value allocation. The fair value of the warrants was recognized as share issuance costs, with a corresponding amount recorded in the warrant reserve within the statement of shareholders’ equity. |
The below inputs and assumptions were used in the fair value determination of the warrants:
| July 31, 2025 | July 31, 2026 | |||||||
| Common share price | $0.20 - $0.30 | $ | 0.40 | |||||
| Exercise price of warrants | $0.30 - $0.44 | $ | 0.60 | |||||
| Expected life, in years | 2.00 - 4.00 | 2.00 | ||||||
| Volatility | 98% - 113% | 70 | % | |||||
| Risk free interest rate | 2.78% - 3.17% | 2.47 | % | |||||
There were no forfeitures of warrants recorded during the year ended July 31, 2026 (nil- from January 10, 2024 (the date of incorporation) to July 31, 2024.)
| 20. | SHARE BASED COMPENSATION |
| # of Options | Weighted Average Exercise Price per Share Option |
Expiry Date | Weighted
Avg Remaining Contractual life (year) | ||||||||
| As at July 31, 2024 | 19,120,000 | $ | 0.20 | February 2034 to July 2034 | 7.52 | ||||||
| Granted (August 1, 2024 to October 31, 2024) | 2,290,000 | $ | 0.21 | May 2034 to October 2034 | 8.43 | ||||||
| Granted (November 1, 2024 to January 31, 2025) | 5,145,000 | $ | 0.31 | November 2034 to January 2035 | 8.84 | ||||||
| Granted (February 1, 2025 to April 30, 2025) | 800,000 | $ | 0.40 | February 2035 to April 2035 | 9.17 | ||||||
| Granted (May 1, 2025 to July 31, 2025) | 1,077,000 | $ | 0.45 | May 2035 to April 2035 | 9.31 | ||||||
| Granted (May 1, 2025 to July 31, 2025) | $ | 0.44 | May 2035 to April 2035 | 9.56 | |||||||
| Forfeited | (968,334 | ) | $ | 0.21 | |||||||
| As at July, 31, 2025 | 27,463,666 | $ | 0.23 | 8.18 | |||||||
| Granted - August 1 to July 31, 2026 | 5,355,000 | $ | 0.35 | August 2035 to July 2036 | 9.53 | ||||||
| Cancelled | (135,000 | ) | $ | 0.20 | |||||||
| Exercised - August 1 to July 31, 2026 | (615,504 | ) | $ | 0.20 | |||||||
| Forfeited | (412,829 | ) | $ | 0.24 | |||||||
| As at July, 31, 2026 | 31,655,333 | $ | 0.25 | 7.93 |
50
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
The Company uses the Black-Scholes method to calculate option values, the below assumptions were used for all options issues:
| Year End
July 31, 2026 | Year End
July 31, 2025 | |||||||
| Common share price | $0.26 - $0.44 | $0.20 - $0.44 | ||||||
| Weighted average exercise price per share option | $0.29 - $0.45 | $0.20 - $0.45 | ||||||
| Expected life, in years | 6.50 | 6.50 | ||||||
| Volatility | 56% | 98% | ||||||
| Risk free interest rate | 2.86% - 3.41% | 2.64% - 3.16% | ||||||
The stock option plan is applicable to employees and directors of the Company. The options are granted at the Company’s current fair market value of the common shares under terms and conditions determined by the Board. Under the terms of the plan, the options generally vest proportionately over a three-year period and expire ten years from the date of the grant. There were 5,355,000 options issued during the year ended July 31, 2026 (9,312,000 options issued during the year ended July 31, 2025), to employees and contractors. The Company recognized a total of $1,723,943 of share-based compensation for the year ended July 31, 2026 (2025 - $2,712,828). Included in the total share-based compensation expense is an amount of $189,709, which represents shares and warrants issued to officers of the Company (Note 17). The Company may issue up to 15% of common shares outstanding as options under its stock-option plan.
During the year ended July 31, 2026, 615,504 options were exercised for common shares in a cashless exercise in which only 264,949 common shares were issued. During the year, 412,829 options were forfeited and 135,000 options were cancelled. The average market price of options exercised was $0.351 per share.
Of the total options outstanding as at July 31, 2026, there are 20,922,172 vested options and 10,733,161 unvested options.
The maximum term of the options is 10 years. The share price is the fair value of the shares based on the private placement share price on the day of the grant. The volatility is based on comparable public companies within comparable industries.
Restricted Share Units
On August 1, 2025, the Company granted 455,394 restricted share units (“RSUs”) vesting on August 30, 2026. During the year ended July 31, 2026, the vesting of 44,007 RSUs was accelerated on May 28, 2026, of which 22,004 common shares were issued and 22,003 were withheld to satisfy tax obligations on vesting. As at July 31, 2026, 305,652 RSUs were outstanding (2025 – nil).
51
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
| 21. | SELLING, GENERAL AND ADMINISTRATIVE EXPENSE |
The breakdown of Selling, General and Administrative Costs by nature are as follows:
| For the year ended | ||||||||
| July 31, 2026 | July 31, 2025 | |||||||
| Payroll and accrued bonus | $ | 5,499,329 | $ | 2,964,243 | ||||
| Transportation | 1,895,132 | 1,524,626 | ||||||
| Professional fees | 5,616,569 | 4,538,125 | ||||||
| Other selling, general and administrative expense | 4,122,647 | 2,283,737 | ||||||
| Total Selling, general and administrative expense | $ | 17,133,677 | $ | 11,310,731 | ||||
| 22. | FINANCIAL INSTRUMENTS, RISKS AND CAPITAL MANAGEMENT |
The Company has exposure to counterparty credit risk, liquidity risk, and market risk associated with its financial assets and liabilities. The Company’s risk management program seeks to minimize potential adverse effects on the Company’s financial performance and ultimately shareholder value. The Company manages its risks and risk exposures through a combination of insurance, a system of internal controls, and sound business practices.
The carrying values of cash, trade receivables, accounts payable and accrued liabilities, approximate their fair values due to their relatively short periods to maturity.
Credit risk
Credit risk arises from cash held with banks and trade receivables and these financial assets are subject to the expected credit loss model. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses on financial assets. The Company minimizes the credit risk of cash by depositing with only reputable financial institutions and minimizes the credit risk of trade receivables by monitoring the counterparty’s creditworthiness and setting exposure limits.
To optimize cash flow and reduce the balance of prepaid expenses, the Company is actively negotiating improved credit terms with its suppliers. By securing longer payment periods and more favorable terms, the Company aims to reduce the need for large upfront payments, thereby enhancing liquidity and working capital management. These efforts are expected to strengthen the Company's financial position and support its long-term growth and sustainability.
52
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
The Company applies the simplified approach to provide for expected credit losses as prescribed by IFRS 9, which permits the use of the lifetime expected loss provision for all trade receivables and contract assets. The expected credit loss provision is based on the Company’s historical collections and loss experience and incorporates forward-looking factors, where appropriate. The provision matrix below shows the expected credit loss rate for each aging category of trade receivables as at July 31, 2026.
The Company’s policy is to write off accounts receivable balances that are outstanding for more than 120 days when collection is no longer considered probable. As at July 31, 2026, the Company identified accounts receivable balances exceeding 120 days. Subsequent to the year end, the Company collected $122,334 of these balances; accordingly, only the remaining uncollected amount was written off during the year.
| July 31, 2026 | Total | Current | 0 - 30 Days | 31-60 Days | 61-90 Days | Over 91 Days | ||||||||||||||||||
| Default rates | 1.10 | % | 0.99 | % | 27.68 | % | 4.87 | % | 23.78 | % | ||||||||||||||
| Trade receivable | $ | 6,006,689 | 4,962,845 | 337,504 | 33,711 | 277,211 | 395,419 | |||||||||||||||||
| Expected credit loss | 174,723 | 54,493 | 3,344 | 9,330 | 13,511 | 94,045 | ||||||||||||||||||
| July 31, 2025 | Total | Current | 0 - 30 Days | 31-60 Days | 61-90 Days | 91-120 Days | ||||||||||||||||||
| Default rates | 0.18% | 3.03 | % | 1.40 | % | 2.89 | % | 23.09 | % | |||||||||||||||
| Trade receivable | $ | 3,823,232 | 2,656,563 | 488,757 | 251,819 | 152,086 | 274,007 | |||||||||||||||||
| Expected credit loss | 90,902 | 4,886 | 14,809 | 3,534 | 4,400 | 63,273 | ||||||||||||||||||
Trade receivables with specific customers, each with 10% or more of total Company trade receivables are summarized as follows:
| As
at July 31, 2026 | As
at July 31, 2025 | |||||||
| Customer 1 | $ | 2,144,353 | $ | 720,601 | ||||
| Customer 2 | 1,018,785 | - | ||||||
| Total Major Trade Receivables | $ | 3,163,138 | $ | 720,601 |
Sales with specific customers, each with 10% or more of total Company sales, are summarized as follows:
| For
the year ended July 31, 2026 | For
the year ended July 31, 2025 | |||||||
| Customer 1 | $ | 12,795,346 | $ | 2,683,586 | ||||
| Customer 2 | 3,870,236 | 1,677,980 | ||||||
| Total Sales | $ | 16,665,583 | $ | 4,361,566 |
53
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity risk by continuously monitoring forecasts and actual cash flows and taking the necessary actions to maintain enough liquidity for operations and for growth objectives.
The following table summarizes the contractual undiscounted cash flow of the Company’s financial liabilities and other contractual obligations as at July 31, 2026, including principal, interest and lease payments, by fiscal year:
| As at July 31, 2026 | Carrying amount | Maturing in less than 1 year | Maturing in the next 13 to 60 Months | Maturing
after 60 months | ||||||||||||
| Accounts payable and accrued liabilities | $ | 9,824,738 | $ | 9,824,738 | $ | - | $ | - | ||||||||
| Short term loans | 50,612,507 | 37,255,421 | 11,776,050 | - | ||||||||||||
| Lease liabilities | 18,685,404 | 3,647,690 | 19,179,008 | - | ||||||||||||
| Long term debt | 57,654,795 | 7,267,319 | 116,938,600 | 10,626,768 | ||||||||||||
| Total | $ | 136,777,444 | $ | 57,995,168 | $ | 147,893,658 | $ | 10,626,768 | ||||||||
| As at July 31, 2025 | Carrying amount | Maturing in less than 1 year | Maturing in the next 13 to 60 Months | Maturing
after 60 months | ||||||||||||
| Accounts payable and accrued liabilities | $ | 6,707,799 | $ | 6,707,799 | $ | - | $ | - | ||||||||
| Short term loans | 1,227,997 | - | - | - | ||||||||||||
| Lease liabilities | 98,724 | - | - | - | ||||||||||||
| Total | $ | 8,034,520 | $ | 6,707,799 | $ | - | $ | - | ||||||||
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, will affect the fair value of a financial instrument or its future cash flows.
The Company operates internationally with a sales coming from United States and other countries. The Company is, therefore, subject to foreign currency risk. The Company reports its financial results in Canadian dollars. The Company incurs expenses in both Canadian and U.S. dollars. To date, the Company has not used foreign currency forward contracts or other hedging strategies to manage its foreign currency exposure.
54
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
As of July 31, 2026, the Canadian entities US-dollar net monetary assets totaled approximately US$2,289,011. A 10% strengthening in the Canadian dollar against the United States dollar as at July 31, 2026, would have increased the comprehensive loss and decreased shareholders’ equity by approximately $321,125. A 10% weakening would have had the equal but opposite effect. This analysis assumes that all other variables remain constant.
Capital management
The Company’s objective in managing capital is to ensure a sufficient liquidity position to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders. The Company defines capital as equity and debt, comprised of issued common shares, warrants, contributed surplus, and accumulated deficit. The Company seeks to ensure that it has sufficient cash resources to maintain its ongoing operations and finance its research and development activities, corporate and administration expenses, working capital, and overall capital expenditures.
| 23. | SEGMENTED INFORMATION |
The Company has determined that it operates three reportable segments for the purposes of IFRS 8 Operating Segments: Retail/Wholesale, Consumer, and Manufacturing. The Chief Operating Decision Maker (the “CODM”) reviews revenue performance and allocates resources based on these three operating segments. The Company sells its product in Canada, the United States and Internationally.
| For the year ended July 31, 2026 | ||||||||||||||||
| Retail/Wholesale | Consumer | Manufacturing | Total | |||||||||||||
| Canada | $ | 5,472,114 | $ | 461,031 | $ | 21,541,535 | $ | 27,474,679 | ||||||||
| United States | 3,979,846 | 1,426,214 | - | 5,406,059 | ||||||||||||
| Other | 485,694 | - | - | 485,694 | ||||||||||||
| Total Segmented Revenues | $ | 9,937,654 | $ | 1,887,244 | $ | 21,541,535 | $ | 33,366,433 | ||||||||
| For the year ended July 31, 2025 | ||||||||||||||||
| Retail/Wholesale | Consumer | Manufacturing | Total | |||||||||||||
| Canada | $ | 8,388,430 | $ | 410,655 | $ | - | $ | 8,799,085 | ||||||||
| United States | 2,906,003 | 577,888 | - | 3,483,891 | ||||||||||||
| Other | 901,578 | - | 901,578 | |||||||||||||
| Total Segmented Revenues | $ | 12,196,011 | $ | 988,543 | $ | - | $ | 13,184,554 | ||||||||
55
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
Management also monitors revenue by geographic market for internal analysis, including pricing decisions and overall business strategy. However, discrete measures of profitability, assets, and liabilities by segment or geography are not regularly reported to or reviewed by the CODM. Revenue disaggregated by segment and geographic market is presented in the table below. Geographic markets comprise Canada, the United States, and Other.
Management has also assessed that the Company’s non-Canadian assets are immaterial.
Revenue disaggregated by segment and geographic market is presented below to provide additional information to users of the consolidated financial statements.
Operating segments are reported in a manner consistent with the internal reporting used for the consolidated financial statements.
| 24. | INCOME TAX |
A detailed assessment was performed based on expected future performance and taxable income. The recovery of income taxes attributable to the loss before taxes differs from amounts computed in applying the combined federal and provincial tax rate of 26.5% as a result of the following:
| July 31, 2026 | July 31, 2025 | |||||||
| Net loss before taxes | (42,374,153 | ) | (13,858,831 | ) | ||||
| Combined tax rates | 26.5 | % | 26.5 | % | ||||
| Income tax recovery | (11,229,151 | ) | (3,672,590 | ) | ||||
| Adjustments | ||||||||
| Non-deductible expenses and other | 1,303,071 | 146,256 | ||||||
| Foreign tax rate differential | - | - | ||||||
| Listing expense | - | 132,500 | ||||||
| Stock compensation | 456,845 | 718,899 | ||||||
| Fair value adjustment to debt | 3,854,583 | - | ||||||
| Share issue costs charged to equity | (407,489 | ) | (67,748 | ) | ||||
| Origination and reversal of | 6,047,135 | 2,742,683 | ||||||
| Income tax expense (recovery) | 24,994 | - | ||||||
56
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
Temporary differences and unused tax losses for which deferred tax assets (liabilities) have been recognized and their movement during the year are attributable to the following:
| Opening August 1, 2025 | Recognized through Goodwill | Recognized through income/expense | Closing July 31, 2026 | |||||||||||||
| Property and equipment | - | (4,714,845 | ) | (165,808 | ) | (4,880,654 | ) | |||||||||
| Intangible assets | - | (7,679,991 | ) | 896,333 | (6,783,658 | ) | ||||||||||
| Non-capital losses available for carryforward | - | 12,394,836 | (715,575 | ) | 11,679,261 | |||||||||||
| Long term debt | - | (14,949 | ) | (14,949 | ) | |||||||||||
| Total | - | - | - | - | ||||||||||||
| Opening 01-Aug-24 | Recognized through Goodwill | Recognized through income/expense | Closing July 31, 2025 | |||||||||||||
| Property and equipment | - | - | - | - | ||||||||||||
| Intangible assets | - | - | - | - | ||||||||||||
| Non-capital losses available for carryforward | - | - | - | - | ||||||||||||
| Long term debt | - | - | - | - | ||||||||||||
| Total | - | - | - | - | ||||||||||||
Deferred taxes are provided as a result of temporary differences that arise due to the differences between the income tax values and the carrying amount of assets and liabilities. Deferred tax assets have not been recognized in respect of the following temporary differences:
| July 31, 2026 | July 31, 2025 | |||||||
| Property plant and equipment | 237,112 | 106,180 | ||||||
| Intangible assets | 13,339 | 5,089 | ||||||
| Non-capital losses carried forward | 121,248,483 | 13,228,559 | ||||||
| SR&ED expenditure carryforward | 479,645 | 462,005 | ||||||
| Investment tax credits | - | 17,640 | ||||||
| Non-deductible interest | 28,177,250 | |||||||
| Share issue costs | 2,282,728 | 562,080 | ||||||
| Lease liabilities | 1,171,734 | 11,846 | ||||||
| 153,610,291 | 14,393,398 | |||||||
Share issue costs will be fully amortized in 2030.
The Company concluded that there is uncertainty regarding the future recoverability of the Company's deferred income tax assets in future periods. Therefore, deferred tax assets have not been recognized in the financial statements with respect to non-capital losses in the amount of $121,248,483 (2025 - $13,228,559).
The Company has not recorded a deferred tax asset related to these unused losses and other temporary differences as it is uncertain if future taxable income will be available against which these unused tax attributes can be utilized.
57
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
The Company has non-capital losses for tax purposes that may be used to reduce taxable income in the future. The potential tax benefits pertaining to these tax losses have been recognized in the consolidated financial statements to the extent described above. The losses for which no deferred tax asset has been recognized will expire as follows:
| Expiry | Canada | ||||
| 2037 | 19,786,965 | ||||
| 2038 | 5,353,858 | ||||
| 2039 | 7,427,795 | ||||
| 2040 | 10,452,818 | ||||
| 2041 | 11,131,993 | ||||
| 2042 | 22,642,235 | ||||
| 2043 | 11,841,768 | ||||
| 2044 | 10,513,407 | ||||
| 2045 | 11,758,966 | ||||
| 2046 | 10,338,677 | ||||
| 121,248,483 | |||||
| 25. | COMMITMENTS |
On August 1, 2024, the Company entered into a Sponsorship Agreement with Canlan Ice Sports Corp. ("Canlan Sports"). Under this agreement, the Company has been granted exclusive promotional, advertising, sponsorship, and marketing rights associated with community-based hockey in Canada and the United States. The agreement includes the naming rights for the Canlan Sports Etobicoke facility, which will be known as "CWENCH Centre". The total consideration for the sponsorship rights is $2,250,000, payable in quarterly installments over a five-year term ending on July 31, 2029. During the year ended July 31, 2026, the Company paid $607,375 under the agreement. The amounts have been recorded as a marketing expense.
| 26. | SUBSEQUENT EVENTS |
Toronto Maple Leafs Sponsorship Agreement
On September 29, 2026, the Company announced that it had entered into a three-year sponsorship agreement with MLSE making CWENCH Hydration the Official Sports Drink of the Toronto Maple Leafs and the Toronto Marlies. The agreement has a contractual effective date of July 1, 2026 and expires on June 30, 2029.
58
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
In exchange for these rights, the Company has committed to material multi-year licence fees, payable in instalments, and to provide value-in-kind product to MLSE during each year of the agreement. The agreement was executed and became operational in September 2026. Management expects to recognize the licence fees as marketing expense over the periods in which the promotional rights are received.
Proposed U.S. Listing and Offering
On August 19, 2026, the Company filed a registration statement on Form F-10 with the United States Securities and Exchange Commission under the multijurisdictional disclosure system and applied to list its common shares on the Nasdaq Capital Market under the symbol “CZZL”. The Company has prepared a prospectus supplement to its short form base shelf prospectus dated October 7, 2025 in connection with a proposed underwritten public offering of common shares in the United States and Canada (the “Offering”), assuming gross proceeds of US$15.0 million, together with a concurrent offering in Canada under the listed issuer financing exemption. The Company intends to use the net proceeds of the Offering to repay a portion of the indebtedness incurred to finance the acquisition of the Manufacturing Business, including US$10.0 million under the VTB Note, to fund capital expenditures to expand production capacity at The CWENCH Hydration Factory, and for general corporate purposes.
In connection with the proposed listing, the Company intends to effect a consolidation of its common shares on the basis of one post-consolidation common share for every 25 pre-consolidation common shares. Completion of the Offering and the Nasdaq listing is subject to market conditions and regulatory approvals, and there can be no assurance that the Offering will be completed on the terms described or at all.
Extension of VTB Note Maturity
On October 7, 2026, the Company entered into an amending agreement with the holder of the VTB Note. Under the amendment, the maturity date of the VTB Note will be extended from December 23, 2026 to December 31, 2027, conditional on, among other things, the repayment of US$10.0 million of the VTB Note from the proceeds of the Offering by the payment deadline set out in the amending agreement and the amendment of a related agreement with the Company’s senior lender. On payment of the US$10.0 million, and as consideration for the extension, the Company will issue to the holder 2,000,000 common share purchase warrants (80,000 following the consolidation), each exercisable at the Offering price for a term of two years.
59
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
Promissory Note
October 7, 2026, the Company entered into an amendment to its US$2,951,200 promissory note, which matures in January 2027. Under the amendment, the maturity date will be extended to January 2028 if, on or before January 2027, the Company prepays US$1,475,600 of principal and pays an amendment fee of US$147,560.
Senior Lender Consent
The Company’s senior lender has agreed to provide its consent to the Offering, the VTB Note repayment and extension and the related transactions.
Convertible Note Conversions and Standstill Agreements
In connection with the Offering, the Company entered into standstill and lock-up agreements with the holders of its convertible notes. Under these agreements, each of Ascent, The K2 Principal Fund L.P. (“K2”) and Fattore Glen Investments Ltd. (“Fattore Glen”) has agreed not to sell any shares of the Company for a period of 90 days following the closing of the Offering, subject to customary exceptions.
Ascent has agreed, subject to certain conditions, to convert 25% of the principal amount of its note into common shares in connection with the Offering, and the Company has agreed to repay US$413,333 to Ascent from the proceeds of the Offering. Following closing, approximately US$4.6 million of principal is expected to remain outstanding under the Ascent note.
The C$5.0 million convertible note issued to K2 on December 23, 2025 provides for an adjustment to its conversion price where the Company subsequently issues convertible securities at a lower conversion price. As a result of the issuance of the Ascent note on May 5, 2026, at a conversion price of C$0.32 per share, the conversion price applicable to the K2 note was adjusted to C$0.32 per share (from C$0.50). In October 2026, K2 delivered a notice electing to convert C$2,500,000 of principal into 7,812,500 common shares at C$0.32 per share, and the Company will issue a replacement note for the remaining C$2.5 million of principal on the same terms. Under a standstill agreement dated October 5, 2026, K2 has agreed not to convert more than 50% of the principal of the note during the 90 days following closing of the Offering.
Fattore Glen has agreed to convert 100% of its C$2.5 million convertible note into 7,812,500 common shares at C$0.32 per share in connection with the Offering.
60
Cizzle Brands Corporation (Formerly 1348512 B.C. Ltd.)
Notes to the Consolidated Financial Statements
For the years ended July 31, 2026 and July 31, 2025
(expressed in Canadian Dollars)
As these agreements were entered into after July 31, 2026, they did not impact the Company’s financial position, results of operations or cash flows for the year ended July 31, 2026. The Company will assess the accounting for the conversions, amendments, standstill consideration and warrants under IFRS in the period in which they occur.
Share-Based Awards
Subsequent to July 31, 2026, the Company granted 470,000 stock options exercisable at C$0.335 per share and 413,907 restricted share units and issued 181,859 common shares on the vesting of restricted share units.
Extension of Warrant Expiry
On August 26, 2026, the Board approved an extension of the expiry time of the warrants issued in connection with the Company’s unit private placement completed between February and August 2024, from August 28, 2026 to November 28, 2026, and the Company entered into a first supplemental warrant indenture with Odyssey Trust Company to give effect to that extension, conditional on receipt of applicable regulatory approvals, including the approval of Cboe Canada.
61
Exhibit 99.3
MANAGEMENT DISCUSSION AND ANALYSIS
For the three months and year ended July 31, 2026
(Expressed in Canadian Dollars)
MANAGEMENT’S DISCUSSION AND ANALYSIS
The following Management’s Discussion and Analysis (“MD&A”) dated October 27, 2026 is intended to assist readers in understanding the business environment, performance and risk factors of Cizzle Brands Corporation ("Cizzle Brands" or the "Company"). The following MD&A should be read in conjunction with the audited consolidated financial statements of the Company and the notes to those statements for the years ended July 31, 2026 and 2025. The accompanying audited consolidated financial statements have been prepared by and are the responsibility of the Company’s management. The audited consolidated financial statements, including comparatives, have been prepared per International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. Unless otherwise noted herein, all references to “$” are to the currency of the Canadian dollars.
In addition to reviewing this MD&A, readers are encouraged to read the Company’s public information filings available on the Company’s profile on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedarplus.ca.
The Company’s fiscal year commences August 1st of each year and ends on July 31st of the following year. The Company’s current three months ended July 31, 2026, is referred to as the “current fiscal quarter”, “fourth quarter of fiscal 2026”, “Q4 2026” or using similar words. The Company’s prior three months ended July 31, 2025, is referred to as the “fourth quarter of fiscal 2025”, “Q4 2025” or using similar words.
The Company’s fiscal year covers the twelve months beginning August 1, 2025, and ending July 31, 2026. This period is referred to as “fiscal 2026”, the “current year” or similar terminology. The comparable twelve-month period ended July 31, 2025, is referred to as “fiscal 2025”, the “prior year” or using comparable expressions.
www.cizzlebrands.com | Page 2 |
COMPANY OVERVIEW
Cizzle Brands Corporation ("Cizzle Brands" or the "Company"), formed through a reverse take-over in 2024, is committed to health and wellness through innovative beverage and nutrition products. In May 2024, the Company launched CWENCH Hydration, a sports drink designed with natural ingredients and aimed at enhancing athletic performance. CWENCH Hydration contains no sugar, less than 10 calories per serving, and features a mix of 6+ electrolytes, promoting effective hydration. In January 2025, the Company launched SPOKEN Nutrition, a premium brand of athlete-grade nutraceuticals that carry the NSF Certified for Sport® qualification, making SPOKEN products eligible for use by athletes in several major-league and minor-league organizations, as well as the NCAA. In September 2025, the Company launched HappiEats Sport Pasta. HappiEats is the Company’s line of food products whose mission is to fuel high-performing lifestyles with better-for-you products made from real, high-quality ingredients. Sport Pasta is a high-protein, lower glycemic index pasta designed for athletes of all ages.
On December 23, 2025, the Company acquired Flow Water Inc. (which was subsequently renamed Cizzle Brands Manufacturing Inc.), a company which had previously sought creditor protection under the Companies’ Creditors Arrangement Act. This entity operates a manufacturing facility, now known as The CWENCH Hydration Factory. The CWENCH Hydration Factory produces beverages in Tetra Pak packaging (including CWENCH Hydration’s ready-to-drink format), enabling Cizzle Brands to operate both as a branded consumer products company (the “Brands Business”) and as a contract manufacturer (the “Manufacturing Business”). In addition to producing and marketing its owned product portfolio, the Company now provides contract and toll manufacturing services at the CWENCH Hydration Factory to third-party customers utilizing its production capabilities and technical expertise. Under this model, the Company manufactures finished goods on behalf of customers and earns service-based and tolling fees. In providing these services, the Company does not typically assume raw material ownership risk for finished goods, although it may purchase certain ancillary materials used in production. This dual operating model enhances asset utilization and diversifies revenue streams across the Brands Business and the Manufacturing Business.
In February 2026, the Company launched SnakStars Sport Bites, a new high-protein, high-fibre snack created to address a clear gap in the kids’ snack foods.
As part of the Brands Business, Cizzle Brands strategy is to partner with high-profile athletes such as Nathan MacKinnon, Andrew Wiggins, Cole Caufield and Adriana Leon, as well as established and respected doctors, trainers and dieticians such as Andy O’Brien, Dr. Jordan Shallow, Dr. Matt Frakes, Brianne Brown, Ben Prentiss and David Lawrence to develop its products, enhance brand visibility and foster authentic connections with performance-driven consumers. This strategic collaboration is aimed to position the Company as a trusted choice for athletes and health-conscious individuals seeking clean, effective hydration and nutrition options.
Management’s strategy is to become a leader in the health, wellness and hydration markets, leveraging its athlete endorsements and product formulations to differentiate itself from competitors.
www.cizzlebrands.com | Page 3 |
OUTLOOK & STRATEGY
Management’s strategy is to grow the Brands Business and Manufacturing Business while improving operating efficiency and liquidity. For fiscal 2027, the Company’s priorities include expanding distribution for its branded products, improving sales execution, increasing utilization at The CWENCH Hydration Factory and managing operating and financing costs. The Company’s ability to execute these priorities will depend on customer demand, production volumes, retailer and distributor performance, input costs, available liquidity and other risks described in this MD&A.
Consumers are becoming increasingly aware of how unhealthy foods continue to have a significant negative impact on health and quality of life. Globally, obesity rates have tripled since 1975 and increased nearly 33% since 2018. In the US 42.4% of adults and 19.7% of children are classified as obese.1 As a result, the number of people with Type 2 diabetes has increased 5x since 1980,2 with 34.2 million Americans now having Type 2 diabetes2 and rates climbing more steeply in children and young adults. 3
The Company views the primary driver of the changes noted above to be diet, with ultra-processed foods often being rich in added sugars, unhealthy fats, and artificial ingredients. Management believes that sugar has become the new “bad word” in the world of health & wellness.
While some consumers attempt to eat healthier, their choices are often unappetizing, uninspired or expensive. This presents an opportunity for companies like Cizzle Brands with strong branding, quality ingredients, and premium products to succeed, though outcomes will depend on various factors.
These combined trends are why the Company has positioned itself to provide consumers with high-performing alternatives that are healthy, taste great, and meet their needs.
The Brands Business
CWENCH Hydration is the Company’s principal hydration brand and includes ready-to-drink and powdered formats. The brand is positioned in the premium, zero-sugar sports hydration category and contains 10 calories and more than six electrolytes. Future performance will depend on distribution gains, reorder velocity, product mix, trade investment, consumer demand and the Company’s ability to maintain product availability and margins. The CWENCH portfolio also includes CWENCHIE, a smaller, kid-friendly format of CWENCH Hydration, with added Vitamin C, which the Company launched on October 15, 2026.
The Company’s second product line to market is SPOKEN Nutrition, a premium brand of athlete-grade nutraceuticals that carry the prestigious NSF Certified for Sport® qualification, making SPOKEN products eligible for use by athletes in several major-league and minor-league organizations, as well as the NCAA.
The Company’s third product line to market is HappiEats, its line of food products. HappiEats mission is to fuel high-performing lifestyles with better-for-you products made from real, high-quality ingredients. The first product launched under the HappiEats brand is Sport Pasta, a high-protein, lower glycemic index pasta designed for athletes of all ages. The second product is SnakStars Sport Bites, a brand of high-fibre, high-protein snack products fortified with 8g - 12g of protein designed for the youth snack market.
1https://www.who.int/news-room/fact-sheets/detail/obesity-and-overweight
2IFS Diabetes Atlas
3CDC Diabetes Data & Statistics
www.cizzlebrands.com | Page 4 |
The Company continues to evaluate additional products and brand extensions, with launch decisions and timing based on market conditions, consumer demand, retailer interest, product economics, operational capacity and available capital.
To grow the Brands Business, the company has deployed a growth strategy that uses a fly-wheel approach whereby we create aspirational products, used by aspirational people who inspire key adopters to use the products, which then drives mainstream awareness and purchasing decisions.
The initial focus was to generate endorsements from athletes with strong awareness in some of our key demographics. As CWENCH Hydration was formulated by Andy O’Brien to meet the needs of his clients, it has been endorsed by professional athletes, including 2024 National Hockey League (“NHL”) MVP and Colorado Avalanche forward, Nathan MacKinnon, Montreal Canadiens forward, Cole Caufield, National Basketball Association (“NBA”) All-Star and Miami Heat forward, Andrew Wiggins, Toronto Maple Leafs forward and first overall selection in the 2026 NHL Draft, Gavin McKenna, and up-and-coming hockey players Chloe Primerano and Jade Iginla.
Strategically, the launch of SPOKEN Nutrition was designed to fill a void in the nutritional supplements industry with products designed for elite athletes’ needs. Formulated by professional strength and conditioning coaches Andy O’Brien, Dr. Jordan Shallow, Dr. Matt Frakes, Dave Lawrence, Brianne Brown and Ben Prentiss, SPOKEN’s line of supplements are NSF for Sport certified thereby ensuring professional athletes can take them without risk of violating any banned substances rules or regulations. By developing a line of superior nutritional supplements, the Company is able to bring a broad range of athletes into its ecosystem, further its strategy of aspirational products for aspirational people.
To date, the Company’s products have been ordered by more than 21 NHL Teams, 20 Major League Baseball teams, 6 NFL Teams and 4 NBA teams.
At the same time that Cizzle Brands has been developing entrenched relationships with professional athletes and trainers, it has been focused on building awareness in key foundational accounts, with a specific emphasis on youth hockey. It has entered into a sponsorship with the NHL’s Ottawa Senators to become the Official Sports drink of the Senators and to launch a limited-time flavour of CWENCH Hydration called PowerPlay Punch that will be branded with the Senators’ logo and sold in the Capital Region of Canada, as well as a sponsorships with USA Hockey, the national governing body for the sport of ice hockey in the United States that includes more than one million players, coaches, officials and volunteers across the country. In addition, the Company has sponsored over 500 youth hockey teams across Canada, as well as key tournaments and the naming rights to The CWENCH Centre, a Canlan Community, a sports facility in Toronto, Ontario. Subsequent to year end, the Company entered into a three-year agreement with Maple Leaf Sports & Entertainment (“MLSE”) making CWENCH Hydration the Official Sports Drink of the Toronto Maple Leafs and the Toronto Marlies (see “Subsequent Events”).
www.cizzlebrands.com | Page 5 |
Management believes the combined effect of this positioning creates strong brand awareness among key demographics for the Company. To support this, the Company is building a strategic sales channel mix, with initial focus on "points of sweat" (e.g. gyms, arenas, training facilities) and speciality sports retailers, along with selected grocery retailers, to ensure its products are available at locations where our key demographics shop. This helps ensure high velocity of sales while preserving margins.
Cizzle Brands’ products are currently available through a broad network of retail locations across North America and Europe, including Target, Walmart Canada, Sport Chek, Canadian Tire, Pro Hockey Life, LifeTime Fitness, Source for Sports, Metro, Fortinos, London Drugs, Sobeys, Loblaws, Real Canadian Superstore, Circle K, PetroCanada and other leading retailers. CWENCH Hydration is also being distributed by a number of major distributors, including Van Houtte Coffee Services Inc., a subsidiary of Keurig Dr. Pepper.
As the brand presence of CWENCH Hydration expands, management intends to further diversify the Company’s sales channel mix by increasing penetration into additional grocery retailers, convenience outlets, gas stations, pharmacies, wholesale clubs, food service providers, and online sales platforms throughout North America and Europe. This strategy is designed to enhance product accessibility across a broad spectrum of consumer touchpoints, thereby supporting volume growth and meeting the needs of multiple market segments.
The Manufacturing Business
The CWENCH Hydration Factory adds contract and toll manufacturing capabilities to the Company’s operations and made a contribution to the Company’s fiscal 2026 revenue and Adjusted EBITDA. Management’s priorities are to build on this year’s performance by growing third-party volumes, increasing capacity utilization and production efficiency, and improving fixed-cost absorption. The Factory also enables the Company to produce certain owned products internally. Future results will depend on customer demand and production volumes, plant performance, input availability and operating costs.
The acquisition expanded the Company’s operating capabilities. The discussion below addresses actual operating performance during the reporting period and does not include anticipated integration benefits or synergies.
Acquisition of the Manufacturing Business
For accounting purposes under IFRS 3, the consideration transferred for the Manufacturing Business was approximately $35.8 million, subject to customary post-closing and working capital adjustments. This amount differs from the approximately $83.75 million transaction value disclosed in other transaction materials, which was determined on a different basis and included amounts not treated as consideration transferred for purchase-price accounting purposes. The acquisition was financed through a senior secured credit facility with Orion Infrastructure Capital (the “OIC Credit Facility”), the Convertible Debentures, the VTB Note and the concurrent December 2025 private placement. The acquisition has been accounted for as a business combination under IFRS 3, Business Combinations, and the results of the Manufacturing Business have been consolidated from the acquisition date. Transaction costs were expensed.
www.cizzlebrands.com | Page 6 |
On acquisition, the Company recognized property and equipment of $28.4 million, right-of-use assets of $20.3 million and goodwill of $25.6 million and a customer relationships intangible asset of $29.0 million. Goodwill represents the sales and growth potential of the Manufacturing Business and is not deductible for tax purposes. On September 18, 2026, the Company filed a Business Acquisition Report in respect of the acquisition (see “Subsequent Events”).
| Fair
Value of Net Assets Acquired | ||||
| Contract Asset | $ | 952,333 | ||
| Inventory | 306,407 | |||
| Prepaid Expenses | 480,608 | |||
| Property and Equipment | 28,405,000 | |||
| Right-of-Use Assets | 20,336,133 | |||
| Goodwill | 25,574,339 | |||
| Intangibles | 29,000,000 | |||
| Trade and other payables | (4,108,110 | ) | ||
| Lease obligations | (19,936,133 | ) | ||
| Loan | (45,201,641 | ) | ||
| Purchase consideration transferred | $ | 35,808,936 | ||
| Purchase Consideration | ||||
| Cash Consideration | 13,558,936 | |||
| VTB Note | 22,250,000 | |||
| $ | 35,808,936 | |||
Q4 AND FISCAL 2026 HIGHLIGHTS
Fourth Quarter of Fiscal 2026
| · | Appointed David Giancoulos to the Board of Directors, effective May 1, 2026. |
| · | Completed a US$6.7 million senior secured convertible note financing with Ascent in May 2026 (see “Fourth Quarter Financing Activities”). |
| · | Issued a C$1.0 million unsecured convertible note in May 2026 in exchange for a previously issued promissory note, which the holder converted in full into 2,857,143 common shares (see “Fourth Quarter Financing Activities”). |
| · | Launched a limited edition Draft Day Blue CWENCH Hydration flavour in June 2026. |
| · | Settled approximately $0.5 million of indebtedness, including the Wingfield secured promissory note, through the issuance of an aggregate of 1,552,595 common shares at a deemed price of $0.32 per share. |
| · | Q4 2026 revenue increased 211% to $12.3 million from $4.0 million in Q4 2025. |
| · | Q4 2026 gross profit was $4.3 million, compared with $2.3 million in Q4 2025; gross margin was 35%, compared with 58%. |
| · | Q4 2026 Adjusted EBITDA was $0.6 million, compared with a loss of $2.5 million in Q4 2025. |
www.cizzlebrands.com | Page 7 |
Fiscal 2026
| · | Grew to more than 6,900 points of distribution as at August 19, 2026. |
| · | Fiscal 2026 revenue increased 153% to $33.4 million from $13.2 million in fiscal 2025. |
| · | Fiscal 2026 gross profit was $13.1 million, compared with $7.5 million in fiscal 2025; gross margin was 39%, compared with 57%. |
| · | Fiscal 2026 Adjusted EBITDA loss improved by $4.7 million to $4.2 million, compared with $8.9 million in fiscal 2025. |
| · | Appointed Ndamukong Suh, Michael Doolan and Geoff Bedford to the Board of Directors in August 2025. |
| · | Established the eCapital Facility in August 2025, a three-year secured revolving credit facility with borrowing limits of $4.0 million and US$0.85 million with eCapital Asset Based Lending Corp., to provide non-dilutive working capital to support the Brands Business. |
| · | Launched HappiEats Sport Pasta in September 2025. |
| · | Filed a short form base shelf prospectus on October 7, 2025, qualifying the distribution of up to $150 million of securities over the following 25 months. |
| · | Acquired Flow Water Inc. (renamed Cizzle Brands Manufacturing Inc.) and its Aurora beverage manufacturing facility on December 23, 2025. The acquisition was financed through a senior secured credit facility, a C$22.25 million VTB Note, C$7.5 million of convertible notes and a $4.8 million private placement. |
| · | Launched the Miracle On Ice CWENCH Hydration flavour in partnership with USA Hockey and under a trademark licence from Miracle On Ice, LLC, and the Golden Berry flavour in partnership with Nathan MacKinnon, in January 2026. |
| · | Became the official sports drink of USA Lacrosse in January 2026 and of the New York State Amateur Hockey Association in February 2026. |
| · | Launched SnakStars Sport Bites in February 2026. |
| · | Secured the Company’s first national retail listing in the United States in February 2026, at 109 Target locations and on Target.com. |
| · | Expanded Canadian distribution in February 2026 through launches at more than 170 Save-On-Foods locations and approximately 180 Canadian Tire Gas+ locations. |
| · | Expanded Canadian distribution in April 2026 through launches at 197 Walmart Canada locations and approximately 400 Loblaws and Real Canadian Superstore locations. |
| · | Received a UNFI Canada award in April 2026 for the fastest growth in average monthly case movement since launch. |
www.cizzlebrands.com | Page 8 |
OUR FINANCIAL MODEL
The Company’s financial model is structured to support ongoing investment in order to generate sustainable, high-margin growth over the long term. The Company’s strategic focus is on developing and marketing premium, innovative products that command robust pricing and margin profiles. This is achieved through continued investment in brand development, operational systems, and distribution channels. Strategic partnerships with key athletes, customers, and suppliers are intended to enhance credibility and extend market reach. By prioritizing product quality, innovation, and the cultivation of strong network relationships, management believes it is establishing a solid platform for durable value creation and future expansion.
Net Sales
Revenue is recognized across three primary channels: Retail / Wholesale sales to distributors and retailers, Direct-to-Consumer transactions via e-commerce platforms, and Contract Manufacturing services, with revenue derived from service based tolling fees.
For sales to Retail / Wholesale and Direct-to-Consumer, the Company recognizes revenue in accordance with IFRS 15, Revenue from Contracts with Customers. Revenue is measured at the amount of consideration to which the Company expects to be entitled in exchange for transferring goods or services to customers, net of applicable sales taxes, discounts, and allowances. The Company’s contracts with customers generally include a single performance obligation: the delivery of goods purchased. The Company does not provide significant after-sale services or rights of return. The Company’s customer loyalty points programme, which allows customers to accumulate points that can be redeemed for free products or price reductions, gives rise to a separate performance obligation; a portion of the transaction price is allocated to the loyalty points awarded and recognized as a contract liability until the points are redeemed.
Most products are manufactured in Canada and the U.S., with select specialty items sourced from Italy and China. Revenue is monitored by region: Canada, USA, and Other. Distribution strategies are adapted to each market, with growth expected in Canadian mass merchandise and club channels, and a targeted approach in U.S. hockey-focused areas. Cizzle Brands maintains strong visibility online and at retail locations, leveraging its own websites and third-party platforms to drive ongoing e-commerce expansion.
The Company’s Manufacturing segment generates revenue primarily from toll manufacturing and co-packing services, under which customers supply raw materials and the Company processes and packages finished goods on their behalf. Revenue is recognized at a point in time, when the finished product has successfully passed quality control inspection and has been made available for collection at the agreed delivery point, consistent with the contract terms, representing the point at which control transfers to the customer. Certain contracts include variable consideration, such as volume-based and early-payment discounts, which are estimated using the most likely amount method and included in revenue only to the extent that it is highly probable that a significant reversal will not occur.
The Company recognizes revenue in accordance with IFRS 15 when control of the goods or services is transferred to the customer. For contract manufacturing services, this generally occurs when production is completed, the goods have passed quality control inspection, and the goods have been made available for collection at the agreed delivery point in accordance with the contract terms.
www.cizzlebrands.com | Page 9 |
Cost of Sales
Cost of Sales includes the purchase price of the product, procurement and manufacturing costs, as well as expenses required to prepare the product for sale. Such expenses may encompass inbound freight, handling, conversion costs, and other costs directly attributable to bringing the product into a sellable condition. Cost of Sales also include depreciation and amortization related to the Company’s manufacturing equipment and warehouse facility used in the production process.
Gross Profit
Management defines “Gross Profit” as Net Sales less Cost of Sales. This metric offers essential insight into the Company’s core operating results before accounting for operating expenses. Gross profit serves as a valuable indicator of overall business performance, helping management assess operating efficiency and profitability. Maintaining strong gross profit is crucial for supporting ongoing investment in our brands, enabling the Company to innovate, enhance product quality, and drive long-term growth.
Gross Margin
Gross Margin is calculated by dividing Gross Profit by Net Sales. Expressed as a percentage, Gross Margin reflects the proportion of revenue that remains after cost of sales are covered, providing a clear measure of the Company’s ability to manage costs relative to sales. This metric enables management to evaluate pricing strategies, cost controls, and the Company’s competitive position, supporting broader decisions that strengthen financial health and future prospects.
Marketing
Marketing spend refers to the total investment allocated towards promotional activities that are designed to build brand awareness, encourage trial, and reinforce recognition of our product quality and market positioning. These expenditures are strategically directed to enhance our brand’s visibility, attract new consumers, and support our reputation for excellence in the marketplace. By investing in marketing, we aim to drive long-term growth and strengthen our competitive standing through consistent and impactful brand-building initiatives.
Selling, General and Administrative
SG&A expenses consist of salaries and benefits for employees, research and development activities, transportation and distribution costs, and professional fees such as legal, audit, and consulting services. These costs support day-to-day business operations, innovation, product delivery, and regulatory compliance, ensuring the business is ready to scale and respond to future growth opportunities.
www.cizzlebrands.com | Page 10 |
Share-based Compensation
Share-based compensation refers to the options, warrants and shares that the company grants to its employees and contractors as part of their overall remuneration. These awards are typically provided in exchange for services rendered and serve as an incentive for retention and performance. By offering equity-based incentives, the Company aligns the interests of our workforce with those of our shareholders, encouraging long-term value creation and commitment.
Foreign Exchange Loss
Foreign exchange gain or loss reflects the impact of currency conversion costs incurred during the period when transacting in foreign currencies.
Depreciation and Amortization
Depreciation and amortization allocate the costs of fixed, intangible, and right-of-use assets over their useful lives using standard accounting methods. This depreciation and amortization expense presented within operating expenses excludes amounts recorded in cost of sales related to manufacturing assets.
Other Income (Expenses)
Other Income includes any earnings that do not fit into the main income streams. This category is intended to capture occasional or irregular income that contributes to the total financial picture.
Change in Fair Value
Change in fair value represents gains or losses arising from the remeasurement of certain financial liabilities recorded at fair value through profit or loss, including convertible debt and warrant liabilities, in accordance with IFRS 9 Financial Instruments. The valuation of these instruments is affected by market-based and instrument-specific inputs, including the Company’s share price and volatility, expected term, interest rates, contractual conversion and repayment features, and foreign exchange rates. An increase in the estimated liability is recorded as a loss, while a decrease is recorded as a gain. These remeasurement amounts are generally non-cash in the period recognized and do not represent an equivalent current-period cash outflow, although the underlying instruments may result in future cash payments, share issuances or dilution in accordance with their terms.
Listing Expense
Listing Fees represent shares issued in connection with the RTO, recorded at fair value as a non-cash expense.
Finance Costs (net)
Finance costs (net) includes interest expense on the Company’s debt and costs associated with financing activities, including transaction costs incurred in connection with arranging the debt facilities and acquisition related financing.
www.cizzlebrands.com | Page 11 |
EBITDA Loss
EBITDA Loss is calculated as our net loss, excluding depreciation, amortization, and interest expense. EBITDA Loss is a non-IFRS financial measure. We use EBITDA Loss to provide a clearer view of our operating performance and cash flow.
Adjusted EBITDA Loss
Adjusted EBITDA builds on the EBITDA Loss metric by further excluding certain non-cash and non-recurring items to better reflect our ongoing operating performance. In addition to removing depreciation, amortization, and interest expense, Adjusted EBITDA also excludes share-based compensation. This adjustment is made to provide clarity on our core earnings by eliminating fluctuations related to expenses paid that do not impact our cash position.
We also exclude other financing costs associated with acquisitions, including transaction costs incurred in connection with arranging debt facilities and acquisition-related financing. These items are removed to ensure Adjusted EBITDA reflects only our core, recurring operating performance.
In addition, Adjusted EBITDA excludes any gains or losses arising from the change in fair value of debt instruments. These amounts, which result from periodic remeasurement under IFRS 9, do not represent ongoing cash operating results and are excluded to present a clearer picture of underlying profitability.
Furthermore, Adjusted EBITDA excludes the impact of foreign exchange (forex) gains or losses. These fluctuations can arise from the translation of monetary assets and liabilities denominated in foreign currencies and do not necessarily reflect the underlying operating performance of our business.
We also adjust for one-time legal and stock-related expenses that are non-recurring, such as legal costs associated with significant corporate transactions. By excluding these items, which are not expected to be ongoing, Adjusted EBITDA provides investors and management with a more consistent and comparable measure of our recurring operating profitability and cash flow generation ability.
Adjusted EBITDA is a non-IFRS financial measure, and while it is used, it should not be considered as a substitute for net income or cash flows from operating activities as determined in accordance with IFRS.
www.cizzlebrands.com | Page 12 |
SELECTED ANNUAL INFORMATION
The following table sets out selected financial information of the Company for the three most recently completed fiscal years, derived from the audited consolidated financial statements.
| Year Ended July 31 | ||||||||||||
| 2026 | 2025 | 2024* | ||||||||||
| $ | $ | $ | ||||||||||
| Net Sales | $ | 33,366,433 | $ | 13,184,554 | $ | 2,072,317 | ||||||
| Loss and Comprehensive Loss | $ | (42,399,147 | ) | $ | (13,858,831 | ) | $ | (4,557,491 | ) | |||
| Loss per share, basic and diluted | $ | (0.19 | ) | $ | (0.07 | ) | $ | (0.03 | ) | |||
| Weighted average number of shares outstanding (basic and diluted) | 219,983,783 | 193,338,589 | 160,583,499 | |||||||||
| Total assets | $ | 122,833,446 | $ | 18,007,344 | $ | 12,284,284 | ||||||
| Long term loans | $ | 57,654,795 | $ | - | $ | - | ||||||
| Lease liabilities (non-current) | $ | 15,689,689 | $ | 32,187 | $ | 88,298 | ||||||
*For the period from January 10, 2024 (the date of incorporation of Cizzle Brands Ltd) to July 31, 2024
The increase in net sales, total assets and non-current financial liabilities in fiscal 2026 primarily reflects the acquisition of the Manufacturing Business in December 2025 and the related acquisition financing. The increase in net loss primarily reflects non-cash changes in the fair value of the Company’s debt and warrant liabilities, finance costs and foreign exchange losses associated with the acquisition financing. The Company has not declared or paid any dividends.
www.cizzlebrands.com | Page 13 |
RESULTS FROM OPERATIONS – FOURTH QUARTER ENDED JULY 31, 2026
| Three Months Ended July 31 | |||||||||||||
| 2026 | 2025 | ||||||||||||
| $ | % of Net Sales | $ | % of Net Sales | ||||||||||
| Net Sales | 12,317,104 | 100 | % | $ | 3,960,435 | 100 | % | ||||||
| Cost of Sales | (8,016,577 | ) | -65 | % | (1,674,383 | ) | -42 | % | |||||
| Gross Profit | 4,300,527 | 35 | % | 2,286,052 | 58 | % | |||||||
| Expenses | |||||||||||||
| Marketing | (1,324,786 | ) | -11 | % | (1,865,830 | ) | -47 | % | |||||
| Selling, General and Administrative | (5,292,131 | ) | -43 | % | (3,161,136 | ) | -80 | % | |||||
| Share Based Compensation | (89,534 | ) | -1 | % | (1,249,759 | ) | -32 | % | |||||
| Foreign Exchange Gain (Loss) | (2,070,087 | ) | -17 | % | 26,062 | 1 | % | ||||||
| Depreciation and Amortization | (3,537,391 | ) | -29 | % | (160,614 | ) | -4 | % | |||||
| Total Expenses | (12,313,929 | ) | -100 | % | (6,411,277 | ) | -162 | % | |||||
| Other Income (Expense) | (119,927 | ) | -1 | % | (559,291 | ) | -14 | % | |||||
| Change in Fair value | (15,543,206 | ) | -126 | % | - | 0 | % | ||||||
| Finance costs (net) | (1,099,120 | ) | -9 | % | - | 0 | % | ||||||
| Loss before taxes | (24,775,655 | ) | -201 | % | (4,684,516 | ) | -118 | % | |||||
| Provision for taxes | (24,994 | ) | 0 | % | - | 0 | % | ||||||
| Loss and Comprehensive Loss | (24,800,649 | ) | -201 | % | (4,684,516 | ) | -118 | % | |||||
| Loss per share, basic and diluted | $ | (0.11 | ) | $ | (0.02 | ) | |||||||
| Weighted average number of shares outstanding (basic and diluted) | 225,963,549 | 195,617,880 | |||||||||||
| EBITDA | (18,093,235 | ) | (4,476,740 | ) | |||||||||
| Adjusted EBITDA | 626,095 | (2,476,137 | ) | ||||||||||
| 1. | Net Sales |
Revenue for the fourth quarter increased 211% year-over-year to $12.3 million ($4.0 million in Q4 2025), driven primarily by $9.9 million of contract manufacturing revenue from the Manufacturing Business, which was acquired in December 2025 and therefore had no contribution in the prior-year period. Within the Brands Business, revenue declined to $2.5 million ($4.0 million in Q4 2025), primarily due to lower Canadian distributor sales from the non-repeat of prior-year pipe fill orders, lower sales through specialty retailers, lower CWENCH non-consumable sales, and higher trade investment, including listing fees and other customer programs and promotional offers. Lower U.S. distributor and wholesale sales also contributed to the decline. These factors were partially offset by growth in SPOKEN and HappiEats.
www.cizzlebrands.com | Page 14 |
| 2. | Cost of Sales |
The Company incurred cost of sales of $8.0 million ($1.7 million in Q4 2025), or 65% of revenue for the three months ended July 31, 2026 (42% in Q4 2025). During the fourth quarter, cost of sales increased, largely driven by the acquisition of the Manufacturing Business ($6.6 million). Within the Brands Business, margins declined as a result of higher trade investment and a shift in mix toward the 30-count CWENCH Sticks format, which carries a higher unit cost. Included in cost of sales is approximately $2.2 million of depreciation and amortization related to the Manufacturing Business.
Excluding approximately $2.2 million of depreciation and amortization included in cost of sales, cost of sales would have been approximately $5.8 million, or 47% of revenue, and gross margin before depreciation and amortization would have been approximately 53%. Gross margin before depreciation and amortization is a non-IFRS financial measure and should not be considered a substitute for gross margin determined in accordance with IFRS.
| 3. | Marketing Expenses |
The Company incurred marketing expenses totalling $1.3 million ($1.9 million in Q4 2025). The decrease primarily reflected lower advertising, production, customer marketing and sample spending, partially offset by higher partnership spending from new agreements and contractual year-two increases under existing agreements.
| 4. | Selling, General and Administrative Expenses |
In the three months ended July 31, 2026, the Company recorded selling, general and administrative (SG&A) expenses totalling $5.3 million ($3.2 million in Q4 2025). The increase was primarily attributable to the Manufacturing Business, which was acquired in December 2025 and therefore had no expenses in the prior-year period. Brands Business SG&A was consistent with the prior-year period, as higher salaries and benefits and higher third-party warehousing costs were offset by lower research and development, professional fees and other operating expenses.
| 5. | Share Based Compensation |
Share-based compensation expense for the three months ended July 31, 2026 was $0.1 million ($1.2 million in Q4 2025). This figure reflects the cost of equity instruments, including stock options, RSUs, and shares granted to employees as part of the Company’s overall remuneration and retention programs. Option expense is estimated using the Black-Scholes model, while RSUs and issued shares are valued based on the share price at the grant or issuance date. The decrease in share-based compensation reflects the front-loaded expense pattern of the Company’s graded-vesting options. Expense is highest in the year of grant, when all tranches are being expensed, and declines as tranches fully vest. Fewer new options were granted in fiscal 2026 than in fiscal 2025. The expense is non-cash.
| 6. | Foreign Exchange Gain (Loss) |
The Company recorded a foreign exchange loss of $2.1 million during the quarter (gain of less than $0.1 million in Q4 2025), primarily related to the revaluation of US dollar denominated debt associated with the acquisition financing.
www.cizzlebrands.com | Page 15 |
| 7. | Depreciation and Amortization |
Depreciation and amortization was $3.5 million ($0.2 million in Q4 2025). The increase primarily reflects catch-up amortization of acquisition-related intangible assets recognized under the revised purchase price allocation, covering the period from the December 23, 2025 acquisition of Cizzle Brands Manufacturing Inc. (“CBMI”). This amount excludes approximately $2.2 million of depreciation and amortization related to the Manufacturing Business that is included in cost of sales.
| 8. | Other Income / (Expense) |
Other expense of $0.1 million in Q4 2026 (other expense of $0.6 million in Q4 2025) was primarily driven by a loss on the share-based settlement of debt.
| 9. | Change in Fair Value |
In Q4, the Company recorded a loss of $15.5 million on the change in fair value of its debt instruments (nil in Q4 2025). The loss principally reflected increases in the estimated fair values of the K2 and Fattore convertible notes and the Ascent note and warrant liabilities, together with changes in the OIC debt and warrant liabilities. The valuations incorporated the instruments’ contractual conversion, repayment and warrant terms and market-based inputs at July 31, 2026. The loss is a non-cash accounting remeasurement in the quarter and is separate from interest expense and financing cash flows. Management therefore considers Adjusted EBITDA, together with the Company’s liquidity, debt maturities and operating cash flows, when assessing underlying operating performance; however, the related instruments remain obligations and may result in future cash settlement or dilution under their contractual terms.
| 10. | Finance Costs (net) |
In Q4, finance costs (net) totalled $1.1 million (nil in Q4 2025), comprising $0.9 million of interest expense on the Company’s debt and right-of-use assets and $0.2 million of other financing-related costs and charges associated with debt facilities and acquisition financing activities.
| 11. | EBITDA and Adjusted EBITDA |
| Three Months Ended July 31 | ||||||||
| 2026 | 2025 | |||||||
| Net Loss | $ | (24,800,649 | ) | $ | (4,684,516 | ) | ||
| Interest Expense | 929,497 | 47,162 | ||||||
| Deferred Tax Expense | 24,994 | - | ||||||
| Depreciation and Amortization | 5,752,922 | 160,614 | ||||||
| EBITDA | (18,093,235 | ) | (4,476,740 | ) | ||||
| Share Based Compensation | 89,534 | 1,249,759 | ||||||
| Foreign Exchange | 2,070,087 | (26,062 | ) | |||||
| RTO & Listing Expense | - | - | ||||||
| Change in fair value | 15,543,206 | - | ||||||
| Other Finance Costs | 169,623 | - | ||||||
| Other Expense (Income) | 119,927 | 559,291 | ||||||
| Corporate Development Costs | 726,954 | 217,615 | ||||||
| Adjusted EBITDA | 626,095 | (2,476,137 | ) | |||||
www.cizzlebrands.com | Page 16 |
The Company reported Adjusted EBITDA of $0.6 million for Q4 2026, compared to a $(2.5) million loss in Q4 2025. The year-over-year improvement in Adjusted EBITDA primarily reflects the contribution from the Manufacturing Business and lower marketing expenditures during the quarter, partially offset by lower gross profit in the Brands Business. The net loss for the quarter was $24.8 million ($4.7 million in Q4 2025), primarily reflecting non-cash changes in fair value, finance costs and foreign exchange losses associated with the Company’s acquisition financing.
| 12. | Segment Information |
Sales by region and channel are classified based on the location and type of the Company’s direct customer, not the location of ultimate consumption or use; accordingly, sales classified as Canadian may relate to products subsequently exported to the United States.
For the quarter ended July 31, 2026, 91% of the Company's total sales were in Canada (64% in Q4 2025). By channel, and in each case as a percentage of total sales, Retail/Wholesale accounted for 16% (92% in Q4 2025), Contract Manufacturing accounted for 80% (0% in Q4 2025), and direct-to-consumer for 3% (8% in Q4 2025). Sales to the United States and other countries comprised the remaining 9% (36% in Q4 2025). Retail/Wholesale, Consumer (direct-to-consumer) and Manufacturing (contract manufacturing) are the Company’s three reportable segments, as disclosed in Note 23 of the audited consolidated financial statements.
| For the Three Months Ended July 31, 2026 | ||||||||||||||||||||
| Retail / | Contract | |||||||||||||||||||
| Wholesale | Manufacturing | Consumer | Total | |||||||||||||||||
| Canada | $ | 1,196,470 | $ | 9,865,472 | $ | 87,009 | $ | 11,148,951 | 91 | % | ||||||||||
| United States | $ | 750,793 | $ | - | $ | 341,546 | $ | 1,092,339 | 9 | % | ||||||||||
| Other | $ | 75,814 | $ | - | $ | - | $ | 75,814 | 1 | % | ||||||||||
| Total Segmented Revenues | $ | 2,023,076 | $ | 9,865,472 | $ | 428,555 | $ | 12,317,104 | 100 | % | ||||||||||
| 16 | % | 80 | % | 3 | % | 100 | % | |||||||||||||
| For the Three Months Ended July 31, 2025 | ||||||||||||||||||||
| Retail / | Contract | |||||||||||||||||||
| Wholesale | Manufacturing | Consumer | Total | |||||||||||||||||
| Canada | $ | 2,444,397 | $ | - | $ | 97,981 | $ | 2,542,378 | 64 | % | ||||||||||
| United States | $ | 1,044,600 | $ | - | $ | 227,988 | $ | 1,272,588 | 32 | % | ||||||||||
| Other | $ | 145,469 | $ | - | $ | - | $ | 145,469 | 4 | % | ||||||||||
| Total Segmented Revenues | $ | 3,634,466 | $ | - | $ | 325,969 | $ | 3,960,435 | 100 | % | ||||||||||
| 92 | % | 0 | % | 8 | % | 100 | % | |||||||||||||
Contract manufacturing revenue generated by the Manufacturing Business was $9.9 million for the quarter, compared to no contribution in the prior-year period. Within the Brands Business, revenue in the United States decreased by $0.2 million, as growth in e-commerce and SPOKEN was offset by lower distributor sales. In Canada, Retail/Wholesale sales declined by $1.2 million year over year, primarily due to the absence of significant distributor orders recognized in the prior-year period and higher trade investment.
www.cizzlebrands.com | Page 17 |
RESULTS FROM OPERATIONS – YEAR ENDED JULY 31, 2026
| Year Ended July 31 | |||||||||||
| 2026 | 2025 | ||||||||||
| $ | % of Net Sales | $ | % of Net Sales | ||||||||
| Net Sales | $ | 33,366,433 | 100 | % | $ | 13,184,554 | 100 | % | |||
| Cost of Sales | (20,262,212 | ) | -61 | % | (5,638,663 | ) | -43 | % | |||
| Gross Profit | 13,104,221 | 39 | % | 7,545,891 | 57 | % | |||||
| Expenses | |||||||||||
| Marketing | (5,224,013 | ) | -16 | % | (5,798,961 | ) | -44 | % | |||
| Selling, General and Administrative | (17,133,677 | ) | -51 | % | (11,310,731 | ) | -86 | % | |||
| Share Based Compensation | (1,723,943 | ) | -5 | % | (2,712,828 | ) | -21 | % | |||
| Foreign Exchange Gain (Loss) | (1,478,773 | ) | -4 | % | (38,153 | ) | 0 | % | |||
| Depreciation and Amortization | (4,013,476 | ) | -12 | % | (625,277 | ) | -5 | % | |||
| Total Expenses | (29,573,882 | ) | -89 | % | (20,485,950 | ) | -155 | % | |||
| Other Income (Expense) | 17,716 | 0 | % | (418,772 | ) | -3 | % | ||||
| Change in Fair value | (18,095,357 | ) | -54 | % | - | 0 | % | ||||
| Listing Expense | - | 0 | % | (500,000 | ) | -4 | % | ||||
| Finance costs (net) | (7,826,851 | ) | -23 | % | - | 0 | % | ||||
| Loss before taxes | (42,374,153 | ) | -127 | % | (13,858,831 | ) | -105 | % | |||
| Provision for taxes | (24,994 | ) | 0 | % | - | 0 | % | ||||
| Loss and Comprehensive Loss | (42,399,147 | ) | -127 | % | (13,858,831 | ) | -105 | % | |||
| Loss per share, basic and diluted | $ | (0.19 | ) | $ | (0.07 | ) | |||||
| Weighted average number of shares outstanding (basic and diluted) | 219,983,783 | 193,338,589 | |||||||||
| EBITDA | (29,314,230 | ) | (13,166,846 | ) | |||||||
| Adjusted EBITDA | (4,181,400 | ) | (8,898,558 | ) | |||||||
| 13. | Net Sales |
For the year ended July 31, 2026, revenue increased 153% to $33.4 million ($13.2 million in fiscal 2025), primarily attributable to $21.5 million of contract manufacturing revenue from the Manufacturing Business, which had no contribution in the prior-year period. Brands Business revenue was $11.8 million ($13.2 million in fiscal 2025). The decline in the Brands Business primarily reflected lower Canadian distributor sales, the non-repeat of prior-year pipe fill orders and higher trade investment. These declines were partially offset by new Canadian retail listings, growth in U.S. distributor and e-commerce channels, growth in SPOKEN, and the launch of HappiEats.
| 14. | Cost of Sales |
For the year ended July 31, 2026, cost of sales was $20.3 million, or 61% of revenue, compared with 43% in the prior-year period. The increase primarily reflected the addition of the Manufacturing Business, which contributed incremental production costs, including $4.0 million of equipment and facility depreciation and amortization. The year-over-year comparison was also affected by the absence of supplier rebates recorded in the first quarter of the prior year, higher co-packing costs associated with displayers in the current year, royalties on partnership SKUs and a shift in mix toward the higher-cost 30-count CWENCH Sticks format. In addition, higher trade spending reduced net revenue realization, resulting in cost of sales representing a higher percentage of revenue than in the prior-year period.
www.cizzlebrands.com | Page 18 |
Excluding approximately $4.0 million of depreciation and amortization included in cost of sales, cost of sales would have been approximately $16.3 million, or 49% of revenue, and gross profit before depreciation and amortization would have been approximately $17.1 million, representing a gross margin before depreciation and amortization of approximately 51%. Gross profit and gross margin before depreciation and amortization are non-IFRS financial measures and should not be considered substitutes for gross profit or gross margin determined in accordance with IFRS.
| 15. | Marketing Expenses |
The Company incurred marketing expenses totalling $5.2 million ($5.8 million in fiscal 2025). The decrease primarily reflected lower advertising, production, customer marketing and sample spending, partially offset by higher partnership, digital and trade marketing spending. The increase in partnership spending reflected new agreements and contractual year-two increases under existing agreements.
| 16. | Selling, General and Administrative Expenses |
For the year ended July 31, 2026, selling, general and administrative expenses were $17.1 million, compared with $11.3 million in the prior-year period. The increase was primarily attributable to the Manufacturing Business, which was acquired in December 2025 and therefore had no expenses in the prior-year period. Within the Brands Business, SG&A increased modestly as higher salaries and benefits, third-party warehousing and e-commerce platform costs within Building and IT, and professional fees were partially offset by lower research and development and other operating expenses.
| 17. | Share Based Compensation |
Share-based compensation expense for the year ended July 31, 2026 was $1.7 million ($2.7 million in fiscal 2025). This figure reflects the cost of equity instruments, including stock options, RSUs, and shares granted to employees as part of the Company’s overall remuneration and retention programs. Option expense is estimated using the Black-Scholes model, while RSUs and issued shares are valued based on the share price at the grant or issuance date.
| 18. | Foreign Exchange Gain (Loss) |
The Company recorded a foreign exchange loss of $1.5 million for the year (less than $0.1 million in fiscal 2025), primarily related to the revaluation of US dollar denominated debt associated with the acquisition financing, reflecting a loss of $2.1 million in the fourth quarter, partially offset by foreign exchange gains earlier in the year.
www.cizzlebrands.com | Page 19 |
| 19. | Depreciation and Amortization |
Depreciation and amortization was $4.0 million, compared with $0.6 million in fiscal 2025. The increase primarily reflects amortization of acquisition-related intangible assets recognized in connection with the acquisition of Cizzle Brands Manufacturing Inc. (“CBMI”). This amount excludes approximately $4.0 million of depreciation and amortization related to the Manufacturing Business that is included in cost of sales.
| 20. | Other Income / (Expense) |
Other income of less than $0.1 million (other expense of $0.4 million in fiscal 2025) reflects other income recognized earlier in the year, including gains from the sale of non-core vending machines, largely offset by other expense of $0.1 million in the fourth quarter, primarily a loss on the share-based settlement of debt.
| 21. | Change in Fair Value |
For the year ended July 31, 2026, the Company recorded a loss of $18.1 million on the change in fair value of its debt instruments (nil in fiscal 2025). The loss primarily arose from the remeasurement of the K2 and Fattore convertible notes, the OIC senior debt and related warrants, and the Ascent convertible note and warrants. For the year, the loss reflected fair value losses of approximately $5.4 million on the OIC senior debt, approximately $5.4 million on the K2 and Fattore convertible notes, approximately $3.8 million on the Ascent note and approximately $3.5 million on the warrant liabilities, comprising approximately $2.6 million on the Ascent Warrants, $0.7 million on the OIC Warrants and $0.2 million on the Convertible Note Warrants. The amounts for the Ascent note and warrants include $1.0 million of deferred day-one difference recognized in profit or loss. As at July 31, 2026, $6.9 million of day-one difference on the Ascent note and warrants remained deferred and will be recognized in change in fair value over the remaining terms of those instruments, or earlier on their conversion, exercise or repayment. These valuations reflect contractual terms and market inputs at the measurement date and can fluctuate materially between reporting periods. The resulting loss increased the reported net loss but was non-cash in fiscal 2026 and did not represent an equivalent use of cash during the year. Management reviews the charge separately from operating performance because it is excluded from Adjusted EBITDA, while continuing to monitor the underlying debt service, maturity, conversion and dilution implications of the instruments.
| 22. | Finance Costs (net) |
For the year ended July 31, 2026, finance costs (net) were $7.8 million (nil in fiscal 2025), comprising $3.8 million of interest expense on the Company’s debt and right-of-use assets and $4.0 million of other financing-related costs and charges associated with debt facilities and acquisition financing activities.
| 23. | EBITDA and Adjusted EBITDA |
The Company reported an Adjusted EBITDA loss of $(4.2) million for the year ended July 31, 2026, compared to $(8.9) million in the prior year. The $4.7 million improvement primarily reflects the contribution of the Manufacturing Business since its acquisition in December 2025 and lower marketing expenses, partially offset by lower gross profit in the Brands Business. The net loss for the year was $42.4 million ($13.9 million in fiscal 2025), reflecting non-cash changes in fair value of $18.1 million, finance costs of $7.8 million and foreign exchange losses associated with the Company’s acquisition financing.
www.cizzlebrands.com | Page 20 |
| Year Ended July 31 | ||||||||
| 2026 | 2025 | |||||||
| Net Loss | $ | (42,399,147 | ) | $ | (13,858,831 | ) | ||
| Interest Expense | 5,036,901 | 66,708 | ||||||
| Deferred Tax Expense | 24,994 | - | ||||||
| Depreciation and Amortization | 8,023,022 | 625,277 | ||||||
| EBITDA | (29,314,230 | ) | (13,166,846 | ) | ||||
| Share Based Compensation | 1,723,943 | 2,712,828 | ||||||
| Foreign Exchange | 1,478,773 | 38,153 | ||||||
| RTO & Listing Expense | - | 880,920 | ||||||
| Change in fair value | 18,095,357 | - | ||||||
| Other Finance Costs | 2,789,950 | - | ||||||
| Other Expense (income) | (17,716 | ) | 418,772 | |||||
| Corporate Development Costs | 1,062,523 | 217,615 | ||||||
| Adjusted EBITDA | (4,181,400 | ) | (8,898,558 | ) | ||||
| 24. | Segment Information |
Sales by region and channel are classified based on the location and type of the Company’s direct customer, not the location of ultimate consumption or use; accordingly, sales classified as Canadian may relate to products subsequently exported to the United States.
| For the Year Ended July 31, 2026 | ||||||||||||||||||||
| Retail / | Contract | |||||||||||||||||||
| Wholesale | Manufacturing | Consumer | Total | |||||||||||||||||
| Canada | $ | 5,472,114 | $ | 21,541,535 | $ | 461,031 | $ | 27,474,679 | 82 | % | ||||||||||
| United States | 3,979,846 | - | 1,426,214 | $ | 5,406,059 | 16 | % | |||||||||||||
| Other | 485,694 | - | - | $ | 485,694 | 1 | % | |||||||||||||
| Total Segmented Revenues | $ | 9,937,654 | $ | 21,541,535 | $ | 1,887,244 | $ | 33,366,433 | 100 | % | ||||||||||
| 30 | % | 65 | % | 6 | % | 100 | % | |||||||||||||
| For the Year Ended July 31, 2025 | ||||||||||||||||||||
| Retail / | Contract | |||||||||||||||||||
| Wholesale | Manufacturing | Consumer | Total | |||||||||||||||||
| Canada | $ | 8,388,430 | $ | - | $ | 410,655 | $ | 8,799,085 | 67 | % | ||||||||||
| United States | 2,906,003 | - | 577,888 | $ | 3,483,891 | 26 | % | |||||||||||||
| Other | 901,578 | - | - | $ | 901,578 | 7 | % | |||||||||||||
| Total Segmented Revenues | $ | 12,196,011 | $ | - | $ | 988,543 | $ | 13,184,554 | 100 | % | ||||||||||
| 93 | % | 0 | % | 7 | % | 100 | % | |||||||||||||
www.cizzlebrands.com | Page 21 |
For the year ended July 31, 2026, 82% of the Company's total sales were in Canada (67% in fiscal 2025). By channel, and in each case as a percentage of total sales, Retail/Wholesale accounted for 30% (93% in fiscal 2025), Contract Manufacturing for 65% (0% in fiscal 2025), and direct-to-consumer for 6% (7% in fiscal 2025). Sales to the United States and other countries comprised the remaining 18% (33% in fiscal 2025).
Manufacturing drove growth in fiscal 2026, with the Manufacturing Business contributing revenues of $21.5 million, compared to none last year, highlighting the positive financial impact of the acquisition. This integration is expected to support long-term goals.
Within the Brands Business, revenue in the United States increased by $1.9 million, or 55%, year over year, supported primarily by sales through distributor and e-commerce channels, led by SPOKEN and CWENCH ready-to-drink products. Revenue in international markets was $0.4 million lower than the prior-year period, reflecting reduced opportunistic sales. In Canada, Brands Business revenue declined by $2.9 million as the Company lapped significant pipe-fill orders recognized in the prior year, partially offset by new listings at Loblaws and Sobeys. Fiscal 2026 results therefore reflected growth in the United States, offset by lower contribution from international markets and the Canadian retail and wholesale channel.
SUMMARY OF QUARTERLY RESULTS
The following table sets out selected unaudited quarterly financial information for the eight most recently completed quarters.
| Three Months Ended | |||||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | ||||||||||||||||||||||
| Net Sales | $ | 3,300,153 | $ | 5,131,580 | $ | 12,617,596 | $ | 12,317,104 | $ | 33,366,433 | $ | 2,790,934 | $ | 2,856,072 | $ | 3,577,113 | $ | 3,960,435 | $ | 13,184,554 | |||||||||||
| Cost of Sales | (1,534,047 | ) | (3,487,046 | ) | (7,224,542 | ) | (8,016,577 | ) | (20,262,212 | ) | (1,040,653 | ) | (1,216,689 | ) | (1,706,938 | ) | (1,674,383 | ) | (5,638,663 | ) | |||||||||||
| Gross Profit | 1,766,106 | 1,644,534 | 5,393,054 | 4,300,527 | 13,104,221 | 1,750,281 | 1,639,383 | 1,870,175 | 2,286,052 | 7,545,891 | |||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||
| Marketing | (1,485,704 | ) | (1,278,673 | ) | (1,134,850 | ) | (1,324,786 | ) | (5,224,013 | ) | (1,366,047 | ) | (976,396 | ) | (1,590,688 | ) | (1,865,830 | ) | (5,798,961 | ) | |||||||||||
| Selling, General and Administrative | (3,148,554 | ) | (3,304,890 | ) | (5,388,102 | ) | (5,292,131 | ) | (17,133,677 | ) | (2,684,802 | ) | (2,887,742 | ) | (2,577,051 | ) | (3,161,136 | ) | (11,310,731 | ) | |||||||||||
| Share Based Compensation | (770,387 | ) | (476,035 | ) | (387,987 | ) | (89,534 | ) | (1,723,943 | ) | (370,388 | ) | (455,462 | ) | (637,219 | ) | (1,249,759 | ) | (2,712,828 | ) | |||||||||||
| Foreign Exchange Gain (Loss) | (15,701 | ) | 771,307 | (164,292 | ) | (2,070,087 | ) | (1,478,773 | ) | (882 | ) | (15,876 | ) | (47,457 | ) | 26,062 | (38,153 | ) | |||||||||||||
| Depreciation and Amortization | (158,109 | ) | (158,545 | ) | (159,431 | ) | (3,537,391 | ) | (4,013,476 | ) | (198,185 | ) | (195,060 | ) | (71,418 | ) | (160,614 | ) | (625,277 | ) | |||||||||||
| Total Expenses | (5,578,455 | ) | (4,446,836 | ) | (7,234,662 | ) | (12,313,929 | ) | (29,573,882 | ) | (4,620,304 | ) | (4,530,536 | ) | (4,923,833 | ) | (6,411,277 | ) | (20,485,950 | ) | |||||||||||
| Other Income | 125,601 | 11,112 | 930 | (119,927 | ) | 17,716 | 6,773 | 124,348 | 9,398 | (559,291 | ) | (418,772 | ) | ||||||||||||||||||
| Change in Fair value | - | 118,574 | (2,670,725 | ) | (15,543,206 | ) | (18,095,357 | ) | - | - | - | - | - | ||||||||||||||||||
| Listing Expense | - | - | - | - | - | - | (500,000 | ) | - | - | (500,000 | ) | |||||||||||||||||||
| Finance costs (net) | (59,605 | ) | (2,540,054 | ) | (4,128,072 | ) | (1,099,120 | ) | (7,826,851 | ) | - | - | - | - | - | ||||||||||||||||
| Loss before taxes | (3,746,353 | ) | (5,212,670 | ) | (8,639,475 | ) | (24,775,655 | ) | (42,374,153 | ) | (2,863,250 | ) | (3,266,805 | ) | (3,044,260 | ) | (4,684,516 | ) | (13,858,831 | ) | |||||||||||
| Provision for taxes | - | - | - | (24,994 | ) | (24,994 | ) | - | - | - | - | - | |||||||||||||||||||
| Loss and Comprehensive Loss | (3,746,353 | ) | (5,212,670 | ) | (8,639,475 | ) | (24,800,649 | ) | (42,399,147 | ) | (2,863,250 | ) | (3,266,805 | ) | (3,044,260 | ) | (4,684,516 | ) | (13,858,831 | ) | |||||||||||
| Loss per share, basic and diluted | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.04 | ) | $ | (0.11 | ) | $ | (0.19 | ) | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.07 | ) | |
| Weighted average number of shares outstanding (basic and diluted) | 211,954,795 | 217,311,508 | 224,568,414 | 225,963,549 | 219,983,783 | 181,258,236 | 196,932,409 | 197,172,801 | 195,617,880 | 193,338,589 | |||||||||||||||||||||
| EBITDA | (3,539,100 | ) | (4,010,482 | ) | (3,671,412 | ) | (18,093,235 | ) | (29,314,230 | ) | (2,593,462 | ) | (3,003,405 | ) | (3,093,239 | ) | (4,476,740 | ) | (13,166,846 | ) | |||||||||||
| Adjusted EBITDA | (2,698,216 | ) | (2,418,297 | ) | 309,019 | 626,095 | (4,181,400 | ) | (2,228,965 | ) | (1,775,495 | ) | (2,417,961 | ) | (2,476,137 | ) | (8,898,558 | ) | |||||||||||||
www.cizzlebrands.com | Page 22 |
Quarterly results reflect the seasonal and developing nature of the Brands Business, including the timing of distributor and retailer orders, new product launches, trade investment and changes in sales mix. Results from Q2 fiscal 2026 onward also include the contribution of Cizzle Brands Manufacturing Inc. following its acquisition on December 23, 2025, which increased revenue but reduced comparability with earlier quarters. Net losses from Q2 fiscal 2026 onward were also significantly affected by non-cash changes in the fair value of debt and warrant liabilities, higher finance costs related to the acquisition financing, and foreign exchange gains and losses on U.S. dollar-denominated obligations. Accordingly, quarterly net loss may fluctuate materially and should be considered together with revenue, gross profit, Adjusted EBITDA, liquidity and cash flows.
LIQUIDITY AND CAPITAL RESOURCES
| 25. | Net Working Capital |
Working capital is a capital management measure and is defined as current assets less current liabilities. The Company had a working capital deficit of $52.1 million as of July 31, 2026 (working capital of $5.2 million at July 31, 2025). The working capital is made up of $6.0 million in cash ($3.1 million at July 31, 2025), $5.8 million in trade receivables ($3.7 million at July 31, 2025), and $9.8 million in inventory, deposits, prepaids and other current assets ($6.4 million at July 31, 2025). This is offset by accounts payable, accrued liabilities, and contract liabilities of $12.0 million ($6.7 million at July 31, 2025), Short Term Loans of $50.6 million ($1.2 million at July 31, 2025), Current Portion of Lease Liabilities of $3.0 million ($0.1 million at July 31, 2025), and a Derivative Liability of $8.1 million ($0 million at July 31, 2025). The decrease in working capital was primarily attributable to the Short Term Loans, which include the vendor take-back promissory note issued in connection with the acquisition of the Manufacturing Business, which matures on December 23, 2026 and is presented as short-term debt. Subsequent to year end, the Company entered into an agreement to extend the maturity of the VTB Note to December 31, 2027, subject to conditions (see “Subsequent Events”). Also included in Short Term Loans are the Convertible Debentures ($12.9 million). In accordance with amendments to IAS 1, Presentation of Financial Statements, which were effective from January 1, 2024, if a holder of a convertible debt can demand a settlement of the debt, including conversion to shares, at any time, the Company is required to present the convertible debt and associated derivative liability as current liabilities. Changes in non-cash working capital used $3.1 million of cash in fiscal 2026 (provided $1.2 million in fiscal 2025). Increases in trade receivables ($1.1 million) and prepaids and other assets ($3.3 million) and a decrease in accounts payable and accrued liabilities ($1.0 million) were partly offset by $2.2 million of customer deposits received and a $0.1 million decrease in inventory. Balances assumed on the acquisition of the Manufacturing Business are excluded from these changes and are reflected in investing activities. The use of cash for non-cash working capital was driven primarily by increases in trade receivables and other assets in the Manufacturing Business after acquisition, partially offset by a decrease in trade receivables in the Brands Business. A decrease in Brands Business accounts payable and accrued liabilities increased the use of cash.
www.cizzlebrands.com | Page 23 |
| Year Ended | ||||||||
| July 31, 2026 | July 31, 2025 | |||||||
| Cash and Cash Equivalents | $ | 5,959,920 | $ | 3,137,254 | ||||
| Change in Balance | ||||||||
| Accounts Receivable | 1,147,303 | 2,428,897 | ||||||
| Prepaid Expenses and Other Assets | 3,277,933 | (1,303,343 | ) | |||||
| Inventory | (138,784 | ) | 3,135,697 | |||||
| Accounts Payable and Accrued Liabilities | 1,019,659 | (5,481,430 | ) | |||||
| Customer Deposits | (2,218,107 | ) | - | |||||
| Changes in Net Working Capital | $ | 3,088,004 | $ | (1,220,179 | ) | |||
| 26. | Cash Flows |
The following table presents our cash flows for the years ended July 31, 2026, and July 31, 2025:
| Year Ended July 31 | ||||||||
| 2026 | 2025 | |||||||
| Cash, beginning of period | $ | 3,137,254 | $ | 1,519,516 | ||||
| Cashflow from Operating Activities | $ | (8,975,274 | ) | $ | (8,900,360 | ) | ||
| Cashflow from Financing Activities | $ | 26,051,921 | $ | 10,718,668 | ||||
| Cashflow from Investing Activities | $ | (14,253,981 | ) | $ | (200,570 | ) | ||
| Net Increase (Decrease) in Cash | $ | 2,822,666 | $ | 1,617,738 | ||||
| Cash, end of period | $ | 5,959,920 | $ | 3,137,254 | ||||
Cash flow used in operating activities
Net cash used in operating activities was $9.0 million for the year ended July 31, 2026, compared with $8.9 million in the prior-year period. Cash used in operating activities in the current year primarily reflected the net loss, adjusted for non-cash items, and the use of cash for non-cash working capital described above. In the prior-year period, cash used in operating activities was driven primarily by inventory build to support growth and higher accounts receivable, partially offset by an increase in accounts payable and lower prepaid balances.
Cash flow (used in) provided by Financing activities
Net cash provided by financing activities was $26.1 million for the year ended July 31, 2026 ($10.7 million in fiscal 2025), primarily reflecting debt incurred in connection with the acquisition of the Manufacturing Business, the concurrent private placements completed in December 2025 and the US$6.2 million Ascent convertible note financing completed in May 2026, net of repayments and financing costs.
www.cizzlebrands.com | Page 24 |
Cash flow used in Investing activities
Net cash used in investing activities was $14.3 million for the year ($0.2 million in fiscal 2025), primarily attributable to the $13.6 million of cash consideration paid for the acquisition of the Manufacturing Business and capital expenditures at The CWENCH Hydration Factory.
Debt and Maturities
The following table summarizes the Company’s borrowings as at July 31, 2026:
| As at July 31, 2026 | ||||||||||||||||
| Principal | Carrying | |||||||||||||||
| (original | Principal | amount | ||||||||||||||
| Instrument | Currency | currency) | (C$) | (C$) | Measurement | Interest rate / payment | Maturity | |||||||||
| Vendor Take Back Note | CAD | 22,250,000 | 22,250,000 | 23,924,337 | Amortized cost | 12.0%, compounding monthly; accrued and paid at maturity | December 23, 2026 | |||||||||
| Promissory Note | USD | 2,951,200 | 4,139,130 | 3,891,559 | Amortized cost | 14.0%; paid in cash monthly | January 2027 | |||||||||
| Senior Debt | USD | 40,000,000 | 56,100,982 | 57,654,795 | FVTPL | 12.0%; payable quarterly (paid in kind to June 30, 2026; cash thereafter) | December 23, 2030 | |||||||||
| Convertible Debentures | CAD | 7,500,000 | 7,500,000 | 12,885,000 | FVTPL | 7.20%; paid in cash monthly | December 23, 2028 | |||||||||
| Senior Secured Convertible Note | USD | 6,720,867 | 9,426,181 | 9,911,611 | FVTPL | 9.5%; paid in cash monthly; principal amortization from December 1, 2026 | November 5, 2027 | |||||||||
| Total borrowings | $ | 99,416,293 | $ | 108,267,302 | ||||||||||||
The Vendor Take Back Note ($22.25 million principal; carrying amount including accrued interest of $23.9 million) bears interest at 12.0% compounded monthly, with principal and interest due on December 23, 2026. The Promissory Note (US$2,951,200 principal; carrying amount of $3.9 million) bears interest at 14% per annum payable monthly and matures in January 2027. The Senior Debt Initial Term Loan (US$40.0 million principal; fair value of $57.7 million) bears interest at 12% payable quarterly and matures on December 23, 2030; the aggregate committed amount under the Credit Facility is USD $50 million, comprising the USD $40 million initial term loan and a further commitment of USD $10 million that remains undrawn and is subject to the conditions in the credit agreement; interest payable prior to June 30, 2026 was paid in kind, and interest is payable in cash thereafter. The Convertible Debentures ($7.5 million; fair value of $12.9 million) bear interest at 7.20% payable monthly and mature on December 23, 2028. Their conversion price was reset to C$0.32 per share (from C$0.50) effective May 5, 2026, and $2.5 million of the Convertible Debentures were issued to a related party (see “Related Party Transactions”). The Senior secured convertible note (US$6.7 million principal; fair value of $9.9 million) bears interest at 9.5% payable monthly, with scheduled monthly principal amortization payments beginning December 1, 2026 and the balance due on November 5, 2027; subject to specified conditions, certain amortization payments may be settled in common shares. In addition, the Company has available to it the eCapital Facility, a three-year secured revolving credit facility with borrowing limits of $4.0 million and US$0.85 million established with eCapital Asset Based Lending Corp. No amounts were drawn under the eCapital Facility as at July 31, 2026.
www.cizzlebrands.com | Page 25 |
The VTB Note and the Promissory Note mature within the next twelve months, the Senior Secured Convertible Note principal amortization begins in December 2026, and cash interest on the Senior Debt is now payable quarterly. As at July 31, 2026, short-term loans totalled $50.6 million. The Company was in compliance with the covenants under the VTB Note and the NFS Promissory Note as at July 31, 2026. The Company’s ability to meet these obligations depends on completing the proposed Offering, satisfying the conditions of the amendments to the VTB Note and the Promissory Note entered into on October 7, 2026, the conversion of convertible notes as described under “Subsequent Events”, and generating cash flow from operations. See “Risk Factors – Going Concern”. In addition to its debt and lease obligations, the Company has multi-year sponsorship commitments, including its sponsorship agreement with Canlan Ice Sports Corp. and the MLSE sponsorship agreement entered into subsequent to year end (see “Subsequent Events”).
CURRENT SHARE INFORMATION
Cizzle is authorized to issue an unlimited number of common shares with no par value and no special rights or restrictions attached. Since January 2024, the Company has completed several financings, including private placements and offerings, resulting in the issuance of common shares, warrants, and broker warrants. Key transactions included the issuance of founder shares, shares for consulting services, shares as part of a reverse takeover, and shares issued for services. Warrants and broker warrants were also issued and exercised during the period, with proceeds and costs allocated between share capital and warrant reserves based on relative fair value. All warrants have defined exercise prices and expiry dates, and their fair value was determined using the Black-Scholes Model.
As at July 31, 2026, the Company had 230,252,282 common shares, 55,374,587 warrants, 31,655,333 stock options and 305,652 RSUs outstanding, as well as 30,389,105 warrants classified as derivative liabilities (the OIC Warrants, the Ascent Warrants and the Convertible Note Warrants). Detailed figures and terms for each issuance are provided in the financial statements and accompanying notes.
MATERIAL ACCOUNTING POLICIES
The Company did not make changes to its existing accounting policies during the year. Following the acquisition of the manufacturing business and the establishment of new debt facilities, additional accounting policies were applied in connection with the recognition and measurement of financial instruments, lease arrangements, and contract manufacturing revenue in accordance with applicable requirements under IFRS 15 Revenue from Contracts with Customers, IFRS 9 Financial Instruments, and other relevant standards within International Financial Reporting Standards.
These policies are described in further detail in the notes to the consolidated financial statements. IFRS 18, Presentation and Disclosure in Financial Statements, which replaces IAS 1 and introduces new requirements for the presentation of the statement of loss and the disclosure of management-defined performance measures, is effective for the Company’s fiscal year beginning August 1, 2027. The Company is assessing its impact (see Note 3(p) of the audited consolidated financial statements).
www.cizzlebrands.com | Page 26 |
CRITICAL JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The Company’s management makes judgments in its process of applying the Company’s accounting policies in the preparation of its audited consolidated financial statements. In addition, the preparation of financial data requires that the Company’s management make assumptions and estimates of the effects of uncertain future events on the carrying amounts of the Company’s assets and liabilities at the end of the reporting period and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates as the estimation process is inherently uncertain. Estimates are reviewed continuously based on historical experience and other relevant factors. Revisions to estimates and the effects on the carrying amounts of the Company’s assets and liabilities are accounted for prospectively.
Note 4 of the Audited Consolidated Financial Statements for the year ended July 31, 2026, reflects the critical judgments, estimates, and assumptions used to prepare the Company's audited consolidated financial statements.
The most significant estimates and judgments affecting the fiscal 2026 financial statements are:
Impairment of goodwill and other non-financial assets
Goodwill arising on the acquisition of the Manufacturing Business has been allocated to the Cizzle Brands Manufacturing Inc. cash-generating unit (the “CGU”), which comprises The CWENCH Hydration Factory as a whole. The Company tested the CGU for impairment as at July 31, 2026, determining its recoverable amount on a value-in-use basis using a discounted cash flow model. Key assumptions include forecast revenue and EBITDA margins under existing customer agreements through calendar 2030, a post-tax discount rate of 18.0% (pre-tax 24.1%) and a terminal growth rate of 3.0%. The forecast excludes revenue from customer agreements that had not been executed at the valuation date.
The recoverable amount of the CGU of $78.0 million exceeded its carrying amount of $78.0 million by less than $0.1 million, and no impairment was recognized. The carrying amount includes goodwill of $25.6 million and customer relationships of $25.6 million, and both the recoverable amount and the carrying amount are determined after deducting lease liabilities. As the recoverable amount approximates the carrying amount, an adverse change in any key assumption would result in an impairment. Holding other assumptions constant, a 1% increase in the discount rate would reduce the recoverable amount by approximately $4.4 million, a 1% decrease in EBITDA margins would reduce it by approximately $2.6 million, and a 0.5% decrease in the terminal growth rate would reduce it by approximately $1.3 million. Forecast revenue is concentrated among a small number of customers, and the loss of, or a reduction in volumes from, a significant customer could result in an impairment.
Fair value of debt and derivative liabilities
The OIC Credit Facility, the Convertible Debentures and the Ascent senior secured convertible note are designated at fair value through profit or loss, and the OIC Warrants, the Ascent Warrants and the Convertible Note Warrants are classified as derivative liabilities measured at fair value. These instruments are classified within Level 3 of the fair value hierarchy. Fair values are estimated using valuation models that incorporate significant unobservable inputs, including expected equity volatility (70%, or 75% for the Ascent note and warrants), the Company’s share price, the risk-free interest rate, and the volume-weighted average price-based exit premiums, which are estimated using a Monte Carlo simulation. The warrants are valued using the Black-Scholes option pricing model. Changes in these inputs can result in material changes in the reported fair values, which are recognized in net loss; the Company recognized a loss of $18.1 million on the change in fair value of these instruments in fiscal 2026.
www.cizzlebrands.com | Page 27 |
RISK FACTORS AND UNCERTAINTIES
The Company is exposed to business risks that are inherent to the consumer-packaged goods industry along with being a newly formed company. The Company is focused on growing its business with new and existing customers and scaling to achieve continued growth and profitability. The details of these risks are set out in the Annual Information Form, which is available on SEDAR+.
| 1. | Going Concern |
The audited consolidated financial statements (the “financial statements”) have been prepared on a going concern basis in accordance with International Financial Reporting Standards (“IFRS”) as issued by International Accounting Standards Board (IASB). The going concern basis of presentation assumes the Company will continue to operate for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business. During the year ended July 31, 2026, the Company incurred a comprehensive loss of $42.4 million ($13.9 million in prior year). The Company also incurred negative cash flows from operations of $9.0 million during the year ended July 31, 2026 ($8.9 million in 2025) and had a working capital deficit of $52.1 million as at July 31, 2026 (working capital surplus of $5.2 million as at July 31, 2025). The Company has an accumulated deficit of $60.8 million ($18.4 million at July 31, 2025) and a shareholders’ deficiency of $24.3 million (July 31, 2025 – shareholders’ equity of $10.0 million). In addition, a significant portion of the Company’s indebtedness matures within the next twelve months, and changes in tariff and trade policy may affect customer demand and input costs.
As disclosed in Note 2a, the Audited Consolidated Financial Statements for the years ended July 31, 2026 and 2025 do not include adjustments to the recoverability and classification of recorded assets and liabilities and related expenses that might be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and liquidate its liabilities and commitments in other than the normal course of business at amounts different from those in the accompanying audited consolidated financial statements. Such adjustments could be material. These conditions indicate the existence of a material uncertainty that may cast significant doubt on the Company’s ability to continue as a going concern.
The Company’s ability to continue as a going concern is dependent on securing ongoing support from creditors, lenders, and investors, achieving profitable operations, generating sufficient sales, and/or raising additional capital, including through the proposed Offering and the extension or refinancing of indebtedness as it matures (see “Subsequent Events”).
www.cizzlebrands.com | Page 28 |
| 2. | Limited Operating History |
Cizzle Brands faces inherent risks associated with being a new company, having only been in operation since early 2024 and having commercialized its first product in May 2024. As a newly established company, it lacks an extensive track record, which can limit its ability to predict future performance reliably and may pose challenges in securing sustained market traction. Additionally, the Company's ability to achieve growth targets, optimize its operations, and establish brand loyalty is still evolving. The limited operating history also increases exposure to unforeseen operational challenges, market fluctuations, and the competitive dynamics of the health beverage industry.
| 3. | Substantial Indebtedness and Restrictive Covenants |
The Company incurred significant indebtedness to finance the acquisition of the Manufacturing Business, including the OIC Credit Facility and the VTB Note, and has since incurred further indebtedness under the Ascent note. That indebtedness could limit the Company’s ability to obtain additional financing, require a substantial portion of its cash flow to be dedicated to debt service, make the Company more vulnerable to a downturn in its business or in general economic conditions and restrict its operations through the covenants to which it is subject. The credit agreement governing the OIC Credit Facility contains restrictive covenants and events of default customary for a facility of its nature, and the Ascent note contains a cross-default triggered by a default in respect of material indebtedness. A default under any one of the Company’s financing agreements could permit the acceleration of indebtedness under the others and could trigger enforcement proceedings resulting in the loss of all or part of the Company’s business, including the Manufacturing Business. The shares of the subsidiary that indirectly holds the Manufacturing Business are pledged as security for the VTB Note.
| 4. | Repayment, Extension or Refinancing of the VTB Note |
The VTB Note matures on December 23, 2026 unless the conditions to the amending agreement entered into on October 7, 2026 are satisfied, in which case the maturity date will be extended to December 31, 2027. Those conditions include the repayment of US$10.0 million of the VTB Note from the proceeds of the Offering by the payment deadline set out in the amending agreement and the amendment of a related agreement with the Company’s senior lender. If the Offering is not completed, or if those conditions are not satisfied, the VTB Note will mature on December 23, 2026 and the Company does not currently have the resources to repay it. Even if the extension takes effect, the net proceeds of the Offering will not be sufficient to repay the VTB Note in full, and the Company will need to extend or refinance the balance, or raise additional debt or equity financing, before maturity. The Company has no commitment for any such extension or financing, and there is no assurance that one will be available on acceptable terms or at all.
| 5. | Future Capital Needs |
The Company will require additional financing to support working capital needs in the future. The amount of additional capital required, the timing of capital needs and the availability of financing to fund those needs will depend on a number of factors, including the Company’s strategic initiatives and operating plans, the performance of its business, and the market conditions for debt or equity financing. Additionally, the amount of capital required will depend on the Company’s ability to meet its sales goals and otherwise successfully execute its operating plan. The Company believes it is imperative that it meet these sales objectives in order to lessen its reliance on external financing in the future. The Company intends to continually monitor and adjust its operating plan as necessary to respond to developments in its business, its markets and the broader economy. Although the Company believes various debt and equity financing alternatives will be available to it to support its working capital needs, financing arrangements on acceptable terms may not be available to the Company when needed. Moreover, these alternatives may require significant cash payments for interest and other costs or could be highly dilutive to the Company’s existing shareholders. Any such financing alternatives may not provide the Company with sufficient funds to meet its long-term capital requirements. If necessary, the Company may explore strategic transactions that it considers to be in the best interest of the company and its shareholders, which may include, without limitation, public or private offerings of debt or equity securities, a rights offering, and other strategic alternatives; however, these options may not ultimately be available or feasible when needed.
www.cizzlebrands.com | Page 29 |
| 6. | Changes in Consumer Preferences |
Consumer demand and appetite for premium hydration products and beverages in general, as well as industry trends, may change and evolve over time. The Company’s future success will depend, in part, upon the Company’s continued ability to maintain customer loyalty to the Company’s existing product offering and develop and introduce new and innovative products over time. The Company’s ability to compete, grow and differentiate itself requires it to be competitive in the areas of taste, quality, innovation and wellness. There can be no assurance of the Company’s ability to do so. In addition, product lifecycles for some premium hydration brands and/or products and/or packages may be limited before consumers’ preferences change. While the Company’s main product profile has resonated positively in the market, and many of the Company’s consumers are becoming loyal to the Company’s brands and their taste profiles, there can be no assurance that such preferences will continue into the future. The Company may be unable to achieve volume growth through product and packaging differentiation in the markets in which the Company competes.
| 7. | Dependence on a Single Manufacturing Facility |
The Manufacturing Business is conducted at a single production facility, The CWENCH Hydration Factory in Aurora, Ontario. The Company’s contract and toll manufacturing revenue, and its ability to produce CWENCH Hydration in-house, depend on the continued operation of this facility. Any event that interrupts or curtails production, including equipment failure or extended downtime, fire, flood or other casualty, labour disruption, loss of utilities, supply interruption, contamination, loss of a required licence or permit, or damage to the premises, could prevent the Company from meeting its production commitments, result in penalties or the loss of customers, and have a material adverse effect on the Company. The Company does not currently maintain a secondary facility capable of replacing the facility’s output on short notice.
www.cizzlebrands.com | Page 30 |
| 8. | Integration of a Previously Distressed Acquired Business |
The Manufacturing Business was acquired in December 2025 from a business that had sought creditor protection. Acquisitions of this nature carry heightened risk, including that the condition of acquired equipment, inventory, records, information systems and internal controls is worse than anticipated, that anticipated synergies and cost savings are not realized or are realized more slowly than expected, that integration diverts management attention, and that the Company becomes responsible for liabilities of the acquired business that were not identified at closing. Prior to the acquisition, the acquired business had reported material weaknesses in its internal control over financial reporting, including with respect to its control environment, information technology general controls, and the tracking, costing and reconciliation of inventory. The Manufacturing Business was included in management’s evaluation of disclosure controls and procedures and internal control over financial reporting as at July 31, 2026, and management concluded that they were effective as at that date (see “Management’s Statement of Responsibility”). However, these controls have operated for a limited period, and there can be no assurance that control deficiencies will not be identified in the future, which could result in errors in the financial reporting attributable to the Manufacturing Business.
| 9. | Reliance on Contract Manufacturing Customers and Minimum Volume Commitments |
A significant portion of the Manufacturing Business’s revenue is derived from a limited number of third-party customers under multi-year contract and toll manufacturing agreements, certain of which include minimum volume or take-or-pay commitments. For the year ended July 31, 2026, one contract manufacturing customer accounted for approximately 38% of the Company’s total revenue (see “Financial Instruments, Risks and Capital Management – Credit Risk”). These figures represent contractual commitments and are not a guarantee of revenue that will actually be realized. A customer may fail or refuse to meet its minimum commitments, dispute amounts owing, seek to renegotiate, defer or terminate its agreement, request early release or waiver of committed volumes, become insolvent, or otherwise fail to perform, and the Company may elect or be required to grant accommodations. The loss of, or a material reduction in volumes from, any significant contract manufacturing customer, or an inability to enforce or collect on minimum-volume or take-or-pay obligations, could materially reduce the revenue and cash flow expected from the Manufacturing Business. Contract manufacturing revenue is also subject to estimation under IFRS 15, including estimates of total units to be delivered and of penalties for minimum purchase commitments, and actual results may differ.
| 10. | Counterparty Credit and Concentration Risk |
Certain contract manufacturing customers are themselves early-stage or growth-stage beverage companies. The financial difficulty, insolvency or restructuring of a significant customer could result in unpaid receivables, the loss of contracted volumes, and the impairment of related assets, including raw materials or finished goods the Company holds for that customer.
www.cizzlebrands.com | Page 31 |
| 11. | Production Equipment, Leases and Third-Party Security Interests |
Certain equipment and other assets used at the facility may be subject to leases, conditional sales arrangements, bailee or consignment arrangements, or security interests in favour of third parties, including former secured creditors and equipment lessors of the predecessor business. If the Company is unable to maintain these arrangements on acceptable terms, if a counterparty asserts rights over equipment, inventory or other property located at the facility, or if a dispute arises in respect of property held under bailment, the Company’s ability to operate the facility and to satisfy its production commitments could be adversely affected.
| 12. | Capacity Utilization and Production Efficiency |
The profitability of the Manufacturing Business depends on achieving and maintaining sufficient capacity utilization and production efficiency, including absorption of fixed overhead, line throughput, yield and uptime. The Company may not achieve its production efficiency targets, may experience delays in obtaining, expanding or qualifying production capacity, and may incur unplanned maintenance, repair or capital expenditures. A failure to achieve targeted utilization and efficiency, or to scale production in line with contracted volumes, could result in higher unit costs, reduced margins and an inability to meet customer commitments.
| 13. | Food Safety, Product Quality, Regulatory Compliance and Recalls |
Operating a beverage manufacturing facility subjects the Company to extensive food safety, manufacturing, labelling and licensing requirements, including those administered by the Canadian Food Inspection Agency and other authorities, and to the requirements of customers and certification bodies. A failure to maintain required licences, certifications or quality standards, or the actual or alleged contamination, adulteration, mislabelling or defect of products produced at the facility (whether the Company’s own products or those produced for third parties), could result in production stoppages, regulatory action, loss of certifications, product recalls, liability to customers and consumers, and reputational harm. Certain of the licences, registrations and certifications held in respect of the facility are scheduled to expire within the next 12 to 18 months and will require renewal.
| 14. | Supply of Packaging and Raw Materials |
The facility produces beverages in Tetra Pak format and depends on the timely supply of packaging materials, ingredients and other inputs, certain of which may be available only from a limited number of suppliers. Interruptions in the supply of, or increases in the cost of, packaging or raw materials, including as a result of supplier concentration, supply chain disruption, tariffs or currency fluctuations, could increase costs, disrupt production and adversely affect margins.
| 15. | Tariffs and Trade Policy |
The Company operates across Canada, the United States and other markets and may be affected by existing or future tariffs, duties, import or export restrictions, retaliatory trade measures and other changes in trade policy. Such measures may directly or indirectly increase the cost or reduce the availability of ingredients, raw materials, packaging, finished goods, manufacturing and production equipment, replacement parts, technology, freight, warehousing, energy and other operating inputs and services, including where suppliers pass through higher costs arising elsewhere in their supply chains. These changes may also cause supply disruptions, delays, foreign-exchange volatility and changes in sourcing or production requirements. In addition, tariffs and broader trade uncertainty may increase prices, reduce consumer spending, alter customer purchasing or production decisions, delay product launches or expansion plans, and reduce demand from retail, distribution, contract manufacturing and other customers. The Company may be unable to offset these effects through pricing, sourcing alternatives, productivity initiatives or other measures, which could adversely affect sales, production volumes, margins, cash flows and financial condition.
www.cizzlebrands.com | Page 32 |
FINANCIAL INSTRUMENTS, RISKS AND CAPITAL MANAGEMENT
The Company has exposure to counterparty credit risk, liquidity risk, and market risk associated with its financial assets and liabilities. The Company’s risk management program seeks to minimize potential adverse effects on the Company’s financial performance and ultimately shareholder value. The Company manages its risks and risk exposures through a combination of insurance, a system of internal controls, and sound business practices.
The carrying values of cash, trade receivables, accounts payable and accrued liabilities, approximate their fair values due to their relatively short periods to maturity.
Credit risk
Credit risk arises from cash held with banks and trade receivables and these financial assets are subject to the expected credit loss model. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses on financial assets. The Company minimizes the credit risk of cash by depositing with only reputable financial institutions and minimizes the credit risk of trade receivables by monitoring the counterparty’s creditworthiness and setting exposure limits.
Trade receivables and Total Sales with specific customers, each with 10% or more of total Company trade receivables and sales are summarized as follows:
| Trade Receivables | Total Sales | ||||||||||||||||
| As at | For the Year Ended | ||||||||||||||||
| July 31, 2026 | July 31, 2025 | July 31, 2026 | July 31, 2025 | ||||||||||||||
| Customer 1 | $ | 2,144,353 | $ | 720,601 | $ | 12,795,346 | $ | 2,683,586 | |||||||||
| Customer 2 | 1,018,785 | - | 3,870,236 | 1,677,980 | |||||||||||||
| Customer 3 | - | - | - | - | |||||||||||||
| Total | $ | 3,163,138 | $ | 720,601 | $ | 16,665,583 | $ | 4,361,566 | |||||||||
www.cizzlebrands.com | Page 33 |
For the year ended July 31, 2026, one customer of the Manufacturing Business accounted for approximately 38% of total revenue (2025 largest was 20%), and the two customers with sales of 10% or more together accounted for approximately 50% of total revenue (2025 – 33%). As at July 31, 2026, two customers accounted for approximately 54% of trade receivables. The loss of, or a significant reduction in volumes from, any of these customers could have a material adverse effect on the Company’s revenue and cash flows (see “Risk Factors”).
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity risk by continuously monitoring forecasts and actual cash flows and taking the necessary actions to maintain enough liquidity for operations and for growth objectives. The ability to settle obligations in cash is dependent on the Company raising financing in a timely manner and by maintaining sufficient cash in excess of anticipated needs.
| Accounts Payable and Accrued Liabilities | ||||||
| As at | ||||||
| July 31, 2026 | July 31, 2025 | |||||
| Accounts payable | 8,779,224 | 5,202,773 | ||||
| Accrued liabilities | 1,045,514 | 1,505,026 | ||||
| Total | 9,824,738 | 6,707,799 | ||||
| As at | Accounts Payable and Accrued Liabilities | |||||
| July 31, 2026 | Carrying Amount | Maturing in less than 1 year | ||||
| Accounts payable and accrued liabilities | 9,824,738 | 9,824,738 | ||||
| Short term liabilities | 50,612,507 | 37,255,421 | ||||
| Lease liabilities | 18,685,404 | 3,647,690 | ||||
| Long term debt | 57,654,795 | 7,267,319 | ||||
| Total | 136,777,444 | 57,995,168 | ||||
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates will affect the fair value of a financial instrument or its future cash flows.
The Company operates internationally with sales coming from United States and other countries. The Company is, therefore, subject to foreign currency risk. The Company reports its financial results in Canadian dollars. The Company incurs expenses in both Canadian and U.S. dollars. To date, the Company has not used foreign currency forward contracts or other hedging strategies to manage its foreign currency exposure.
www.cizzlebrands.com | Page 34 |
Capital management
The Company’s objective in managing capital is to ensure a sufficient liquidity position to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders. The Company defines capital as equity and debt, comprised of issued common shares, warrants, contributed surplus, and accumulated deficit. The Company seeks to ensure that it has sufficient cash resources to maintain its ongoing operations and finance its research and development activities, corporate and administration expenses, working capital, and overall capital expenditures.
Foreign Currency Risk
The Company’s functional and presentation currency is the Canadian dollar. The Company earns a portion of its Brands Business revenue in U.S. dollars and incurs certain expenses in U.S. dollars. Following the acquisition financing, the Company’s most significant foreign currency exposure relates to its U.S. dollar-denominated liabilities, including the Ascent senior secured convertible note (principal of US$6.7 million), the Ascent warrants, which have a U.S. dollar exercise price, the OIC Credit Facility Initial Term Loan (US$40.0 million) and the Promissory Note (US$3.0 million). A weakening of the Canadian dollar against the U.S. dollar increases the Canadian dollar carrying amount of these liabilities. The Company recorded a foreign exchange loss of $1.5 million in fiscal 2026 ($2.1 million in the fourth quarter), primarily from the revaluation of this U.S. dollar-denominated debt. The Company does not currently use foreign currency forward contracts or other hedging instruments.
RELATED PARTY TRANSACTIONS
Compensation for key management personnel, including the Company’s CEO and directors, was as follows for the years ended July 31, 2026 and 2025:
| For the year ended | For the year ended | |||||||
| July 31, 2026 | July 31, 2025 | |||||||
| Salaries, consulting fees, bonus and benefits | $ | 2,349,461 | $ | 2,750,791 | ||||
| Share-based payments | 516,429 | 522,920 | ||||||
| Total | $ | 2,865,890 | $ | 3,273,711 | ||||
In addition to key management compensation, related party transactions during fiscal 2026 included $2.5 million of the Convertible Debentures issued on December 23, 2025 to a family member of a director of the Company, and the repayment in August 2025 of a $1.0 million loan advanced in May 2025 by a family member of a director. As at July 31, 2026, $0.5 million (July 31, 2025 – $0.9 million) was payable to officers of the Company for outstanding remuneration. For further details, see Notes 13 and 17 of the audited consolidated financial statements.
www.cizzlebrands.com | Page 35 |
FOURTH QUARTER FINANCING ACTIVITIES
Ascent
On May 5, 2026, the Company completed a secured convertible debt financing with Ascent Partners Fund LLC. The Company issued a senior secured convertible promissory note with a principal amount of US$6.7 million for gross proceeds of US$6.2 million. In connection with the financing, the Company also issued 21,460,534 common share purchase warrants exercisable at US$0.23488 per share (approximately C$0.32) until May 5, 2031, and 429,210 common shares as a one-time closing fee. The financing provides additional liquidity to support the Company’s working capital requirements, growth initiatives and general corporate purposes.
The note matures on November 5, 2027 and bears interest at 9.5% per annum, payable monthly. Beginning December 1, 2026, the Company is required to make scheduled monthly principal amortization payments, with the remaining balance payable at maturity. The note is convertible at the holder’s option into common shares at an initial conversion price of US$0.23488 per share (the United States dollar equivalent of C$0.32), subject to customary anti-dilution and other adjustments, beneficial ownership limitations, exchange cap restrictions and applicable securities exchange requirements. The note is secured by a second-priority lien over substantially all of the Company’s assets and is guaranteed by certain subsidiaries.
The note and related warrants are reflected in the Company’s audited consolidated financial statements as at and for the year ended July 31, 2026, with the warrants classified as a derivative liability. The note is designated at fair value through profit or loss, and the original issue discount and transaction costs are reflected in its fair value. As at July 31, 2026, the note had a fair value of $9.9 million and the Ascent warrants had a fair value of $5.2 million.
Convertible Notes
In May 2026, the Company issued to a single accredited investor an unsecured convertible promissory note in the principal amount of C$1.0 million in exchange for, and cancellation of, a previously issued C$1.0 million promissory note held by the same investor. The unsecured note had an 18-month term, bore interest at 9.5% per annum payable monthly in arrears, and was convertible into common shares at the holder’s option at C$0.35 per share, subject to customary adjustments. The unsecured note ranked pari passu with the Company’s other unsecured indebtedness and did not include the security or subsidiary guarantees provided in connection with the May 5, 2026 convertible note financing.
In connection with the issuance, the Company also issued 476,190 common shares and a warrant exercisable for up to 1,428,571 common shares at C$0.35 per share. Immediately following issuance, the holder converted the full C$1.0 million principal amount into 2,857,143 common shares, and the unsecured note was cancelled. The warrant remains outstanding.
Wingfield settlement
During the fourth quarter, the Company fully settled the indebtedness outstanding to Wingfield Mortgage Corp. under its secured promissory note. The settlement was completed through the issuance of 1,000,000 common shares at a deemed price of $0.32 per share, representing $320,000 of consideration, together with cash payment of the remaining balance. The total indebtedness settled was $931,876, including principal, accrued interest and continuation fees. Following completion of the settlement, no further amounts remained owing under the note.
www.cizzlebrands.com | Page 36 |
This transaction reduced the Company’s outstanding indebtedness and eliminated this specific financing obligation during the fourth quarter.
Shares for Debt
In May 2026, the Company entered into shares-for-debt agreements with certain creditors providing for the issuance of an aggregate of 552,595 common shares at a deemed price of CAD$0.32 per share to settle approximately CAD$176,830.50 of outstanding obligations. This included the settlement of US$5,000 of advisory fees through the issuance of 21,345 common shares, CAD$120,000 of advisory fees through the issuance of 375,000 common shares, and a CAD$50,000 partial settlement of amounts owing to another creditor through the issuance of 156,250 common shares, with the remaining balance continuing to be payable under the underlying arrangements.
SUBSEQUENT EVENTS
Extension of Warrant Expiry
On August 26, 2026, the Board approved an extension of the expiry time of the warrants issued in connection with the Company’s unit private placement completed between February and August 2024, from August 28, 2026 to November 28, 2026, and the Company entered into a first supplemental warrant indenture with Odyssey Trust Company to give effect to that extension, conditional on receipt of applicable regulatory approvals, including the approval of Cboe Canada.
Business Acquisition Report
On September 18, 2026, the Company filed a Business Acquisition Report in respect of its December 23, 2025 acquisition of Flow Water Inc., subsequently renamed Cizzle Brands Manufacturing Inc. The report provides additional information regarding the acquired Tetra Pak co-manufacturing business, the purchase consideration and related financing, and includes unaudited pro forma financial information, abbreviated financial statements of the acquired business and an audited schedule of assets acquired and liabilities assumed as at the acquisition date. The Business Acquisition Report does not represent a new acquisition or a change to the acquisition date; it is a continuous-disclosure filing relating to the previously disclosed acquisition. The pro forma information is presented for illustrative purposes and is not necessarily indicative of the results that would have occurred had the acquisition been completed at an earlier date or of future operating results.
www.cizzlebrands.com | Page 37 |
Toronto Maple Leafs Sponsorship Agreement
On September 29, 2026, the Company announced that it had entered into a three-year sponsorship agreement with MLSE making CWENCH Hydration the Official Sports Drink of the Toronto Maple Leafs and the Toronto Marlies. The agreement has a contractual effective date of July 1, 2026 and expires on June 30, 2029. It provides the Company with category rights for sports drinks and protein-enhanced granola bites, virtual dasherboard advertising during the broadcasts of 20 home games at Scotiabank Arena each season, rinkboards and murals at the Ford Performance Centre, digital and social media inventory, product sampling at select home games, and CWENCH branding on the Toronto Marlies bench at Coca-Cola Coliseum. In exchange for these rights, the Company has committed to multi-year licence fees, payable in instalments, and to provide value-in-kind product to MLSE during each year of the agreement. The Company expects to recognize the licence fees as marketing expense over the periods in which the promotional rights are received.
CWENCHIE Launch
On October 15, 2026, the Company launched CWENCHIE, a sub-brand of CWENCH Hydration offered in a smaller, kid-friendly format with added Vitamin C. CWENCHIE is available in 200 mL packages in Blue Razzleberry, Grape Splash and Orange Burst flavours.
Proposed U.S. Listing and Offering
On August 19, 2026, the Company filed a registration statement on Form F-10 with the United States Securities and Exchange Commission under the multijurisdictional disclosure system and applied to list its common shares on the Nasdaq Capital Market under the symbol “CZZL”. The Company has prepared a prospectus supplement to its short form base shelf prospectus dated October 7, 2025 in connection with a proposed underwritten public offering of common shares in the United States and Canada (the “Offering”), assuming gross proceeds of US$15.0 million, together with a concurrent offering in Canada under the listed issuer financing exemption. Joseph Gunnar & Co., LLC is acting as lead underwriter and D. Boral Capital LLC as underwriter for the Offering. The Company intends to use the net proceeds of the Offering to repay a portion of the indebtedness incurred to finance the acquisition of the Manufacturing Business, including US$10.0 million under the VTB Note, to fund capital expenditures to expand production capacity at The CWENCH Hydration Factory, and for general corporate purposes.
In connection with the proposed listing, the Company intends to effect a consolidation of its common shares on the basis of one post-consolidation common share for every 25 pre-consolidation common shares, concurrently with the closing of the Offering. On that basis the 230,434,141 common shares outstanding as of the date of this MD&A would become approximately 9,217,365 common shares after the cancellation of fractions, and the number of common shares issuable on the exercise or conversion of the Company’s outstanding options, warrants, RSUs and convertible notes, and the exercise or conversion price of each of them, would be adjusted in accordance with their terms. Unless otherwise noted, share amounts in this MD&A are presented on a pre-consolidation basis. Completion of the Offering and the Nasdaq listing is subject to market conditions and regulatory approvals, and there can be no assurance that the Offering will be completed on the terms described or at all.
www.cizzlebrands.com | Page 38 |
Amendments to Acquisition Debt
On October 7, 2026, the Company entered into an amending agreement with the holder of the VTB Note. Under the amendment, the maturity date of the VTB Note will be extended from December 23, 2026 to December 31, 2027, conditional on, among other things, the repayment of US$10.0 million of the VTB Note from the proceeds of the Offering by the payment deadline set out in the amending agreement and the amendment of a related agreement with the Company’s senior lender. On payment of the US$10.0 million, and as consideration for the extension, the Company will issue to the holder 2,000,000 common share purchase warrants (80,000 following the consolidation), each exercisable at the Offering price for a term of two years.
Also on October 7, 2026, the Company entered into an amendment to its US$2,951,200 promissory note in favour of NFS Leasing Canada Ltd., an affiliate of the vendor of the Manufacturing Business, which matures in January 2027. Under the amendment, the maturity date will be extended to January 2028 if, on or before January 2027, the Company prepays US$1,475,600 of principal and pays an amendment fee of US$147,560.
The Company’s senior lender has agreed to provide its consent to the Offering, the VTB Note repayment and extension and the related transactions.
Convertible Note Conversions and Standstill Agreements
In connection with the Offering, the Company entered into standstill and lock-up agreements with the holders of its convertible notes. Under these agreements, each of Ascent, The K2 Principal Fund L.P. (“K2”) and Fattore Glen Investments Ltd. (“Fattore Glen”) has agreed not to sell any shares of the Company for a period of 90 days following the closing of the Offering, subject to customary exceptions.
Ascent has agreed, subject to certain conditions, to convert 25% of the principal amount of its note, being US$1,680,216.80, into common shares in connection with the Offering, and the Company has agreed to pay US$413,333 to Ascent from the proceeds of the Offering. Ascent has also indicated its intention to participate in the Offering. Following closing, approximately US$4.6 million of principal is expected to remain outstanding under the Ascent note.
The C$5.0 million convertible note issued to K2 on December 23, 2025 provides for an adjustment to its conversion price where the Company subsequently issues convertible securities at a lower conversion price. As a result of the issuance of the Ascent note on May 5, 2026 at a conversion price of C$0.32 per share, the conversion price applicable to the K2 note was adjusted to C$0.32 per share (from C$0.50). In October 2026, K2 delivered a notice electing to convert C$2,500,000 of principal into 7,812,500 common shares at C$0.32 per share, and the Company will issue a replacement note for the remaining C$2.5 million of principal on the same terms. Under a standstill agreement dated October 5, 2026, K2 has agreed not to convert more than 50% of the principal of the note during the 90 days following closing of the Offering.
www.cizzlebrands.com | Page 39 |
Fattore Glen has agreed to convert 100% of its C$2.5 million convertible note into 7,812,500 common shares at C$0.32 per share in connection with the Offering.
As these agreements were entered into after July 31, 2026, they did not impact the Company’s financial position, results of operations or cash flows for the year ended July 31, 2026. The Company will assess the accounting for the conversions, amendments, standstill consideration and warrants under IFRS in the period in which they occur.
Share-Based Awards
Subsequent to July 31, 2026, the Company granted 470,000 stock options exercisable at C$0.335 per share and 413,907 restricted share units, and issued 181,859 common shares on the vesting of restricted share units.
MANAGEMENT’S STATEMENT OF RESPONSIBILITY
The accompanying audited consolidated financial statements of Cizzle Brands and all information contained herein are the responsibility of management and have been approved by the Board of Directors. The audited consolidated financial statements include some amounts based on management’s best estimates that have been made using careful judgment. Management has prepared the audited consolidated financial statements in accordance with International Financial Reporting Standards. Financial and operating data elsewhere in the report are consistent with the information contained in the audited consolidated financial statements. Although no cost-effective system of internal controls will prevent or detect all errors and irregularities, these systems are designed to provide reasonable assurance that assets are safeguarded from loss or unauthorized use, transactions are correctly recorded, and the financial records are reliable for preparing audited consolidated financial statements.
The Company’s Chief Executive Officer and Chief Financial Officer have evaluated, or caused to be evaluated under their supervision, the effectiveness of the Company’s disclosure controls and procedures and internal control over financial reporting, as defined in National Instrument 52-109, as at July 31, 2026, and have concluded that they were effective as at that date. There were no changes in the Company’s internal control over financial reporting during the year ended July 31, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Because of their inherent limitations, disclosure controls and procedures and internal control over financial reporting, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance that their objectives are met and may not prevent or detect all misstatements, including those due to fraud.
www.cizzlebrands.com | Page 40 |
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
Readers are cautioned that period-over-period operating performance reflects only a partial period of ownership of the acquired business, as the comparative period does not include these operations. The results presented focus on actual operating performance during the reporting period and are not intended to be predictive of future periods.
This MD&A includes “forward-looking information” and “forward-looking statements” within the meaning of applicable Canadian securities laws. All information, other than statements of historical facts, included in this MD&A that addresses activities, events or developments that the Company expects or anticipates will or may occur in the future is forward-looking information. Forward-looking information is often identified by the words “may”, “would”, “could”, “should”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” or similar expressions and includes, among others, information regarding:
| · | future products and services; |
| · | expansion to product distribution; |
| · | the Company’s growth; |
| · | the expected contribution, ramp and profitability of the Manufacturing Business and of the Company’s dual branded and manufacturing operating model; |
| · | the contracted customer production volume related contracted minimum take-or-pay revenue, and the timing and amount of revenue expected to be realized from contract and toll manufacturing; |
| · | expectations regarding production capacity, capacity utilization, production efficiency, overhead absorption and unit cost improvements at The CWENCH Hydration Factory; |
| · | the Company’s ability to manufacture CWENCH Hydration and other products in-house and the expected cost of goods sold benefits of doing so; |
| · | the realization of integration benefits, synergies and operating leverage from the acquisition of the Manufacturing Business; |
| · | the retention and performance of contract manufacturing customers and the renewal or extension of their agreements; |
| · | marketing and business plans and short-term objectives; |
| · | the intention to grow the business, operations and potential activities of the Company; |
| · | revenue; |
| · | use of available funds; |
| · | business milestones and objectives; |
| · | the protection of intellectual property; |
| · | exploration of new products and opportunities; |
| · | future risks to operations; |
| · | the Company’s business objectives; |
| · | the Company’s expectations regarding its business, financial condition and results of operations |
| · | future market share; |
| · | the outcome of legal proceedings which involve the Company; |
| · | strategic plans; and |
| · | strategic relationships with third parties. |
www.cizzlebrands.com | Page 41 |
These statements reflect the Company’s current views with respect to future events and are based on assumptions and subject to a number of risks and uncertainties, some of which are unknown at this time. Certain assumptions made in preparing the forward-looking statements contained in this MD&A include:
| · | the Company’s ability to meet its obligations as they become due; |
| · | the Company’s ability to implement its growth strategies; |
| · | the Company’s competitive advantages; |
| · | the development of new products and product formats for the Company’s products; |
| · | the Company’s ability to manage any indebtedness as required; |
| · | the Company’s ability to obtain and maintain financing or to re-finance existing indebtedness on acceptable terms, as necessary; |
| · | the impact of competition; |
| · | changes and trends in the beverage industry and markets; |
| · | changes in laws, rules and regulations; |
| · | the effect of tariffs, duties, trade restrictions and other changes in trade policy on the cost and availability of materials and other operating inputs, supply chains and customer demand; |
| · | the Company’s ability to maintain and renew required licences; |
| · | the Company’s ability to maintain good business relationships with its customers, distributors and other strategic partners; |
| · | the Company’s ability to keep pace with changing consumer preferences; |
| · | the Company’s ability to protect intellectual property; |
| · | the Company’s ability to retain key personnel; |
| · | The absence of material adverse changes in the industry and in Canadian, US or global economies |
| · | The Company’s future business performance; |
| · | The demand for the Company’s products; and |
| · | The conditions of the markets that the Company’s serves. |
Although the Company believes that the assumptions underlying its statements are reasonable, they may prove to be incorrect. Given these risks, uncertainties and assumptions, investors should not place undue reliance on the forward-looking information.
Forward-looking information regarding the Manufacturing Business is based on assumptions including that the Company will achieve targeted production efficiency and capacity utilization at The CWENCH Hydration Factory, that the facility will operate without material interruption, that contract manufacturing customers will meet their minimum volume and take-or-pay commitments and will not default on, terminate or seek to renegotiate their agreements, that required licences, certifications and quality standards will be maintained, that packaging and raw material supply will be available on acceptable terms, and that the Company will successfully integrate the Manufacturing Business and realize anticipated synergies. Material factors that could cause actual results to differ materially from those expressed in such forward-looking information include achieving production efficiency targets, delays in obtaining, expanding or qualifying production capacity at the facility, counterparty risk in relation to contract and co-pack customers (including the risk that minimum volume or take-or-pay commitments are not met), reliance on a single manufacturing facility, the integration of and assumption of liabilities relating to a previously distressed acquired business, third-party leases or security interests in equipment or property located at the facility, food safety, product quality, recall and regulatory risks, and the supply and cost of packaging and raw materials. See “Risk Factors”.
www.cizzlebrands.com | Page 42 |
The purpose of forward-looking information is to provide the reader with a description of management’s expectations, and such forward-looking information may not be appropriate for any other purpose. In particular, but without limiting the foregoing, disclosure in this MD&A under “Description of the Business” as well as statements regarding the Company’s objectives, plans and goals, including future operating results and economic performance may make reference to or involve forward-looking information. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, it can give no assurance that such expectations will prove to have been correct.
While the Company believes its plans, intentions and expectations reflected in the forward-looking information are reasonable, it cannot assure you that these plans, intentions or expectations will be achieved. The Company’s actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking information relating to the Company contained in this MD&A as a result of various factors, including the risks, uncertainties and assumptions previously discussed, which include, but are not limited to, the following:
| · | Ability to achieve and manage growth; |
| · | Failure to effectively expand sales capabilities could harm the Company’s ability to increase distribution and achieve broader market acceptance of its products; |
| · | The Company may need additional financing in the future, which may not be available when needed or may be costly and dilutive; |
| · | Changes in consumer preferences may reduce demand for some of the Company’s products; |
| · | The Company’s brand and image are keys to its business and any inability to maintain a positive brand image could have a material adverse effect on its results of operations; |
| · | The Company may be adversely impacted by the effects of high or prolonged inflation; |
| · | Tariffs, duties, import or export restrictions, retaliatory measures and other changes in trade policy may increase materials and other input costs, disrupt supply chains and adversely affect customer demand; |
| · | Competition from traditional and large, well-financed non-alcoholic beverage manufacturers may adversely affect the Company’s distribution relationships and may hinder development of its existing markets, as well as prevent the Company from expanding its markets; |
| · | The Company competes in an industry characterized by rapid changes in consumer preferences and public perception, so its ability to continue developing new products to satisfy the changing preferences of consumers will determine its long-term success; |
| · | The Company’s reliance on distributors, retailers and brokers could affect its ability to efficiently and profitably distribute and market its products, maintain its existing markets and expand its business into other geographic markets; |
| · | The Company incurs significant time and expense in attracting and maintaining key distributors; |
| · | If the Company loses any of its key distributors or national retail accounts, its financial condition and results of operations could be adversely affected; |
| · | It is difficult to predict the timing and number of sales because most distributors and retailers are not required to place minimum orders with the Company; |
| · | If the Company does not adequately manage its inventory levels, its operating results could be adversely affected; |
www.cizzlebrands.com | Page 43 |
| · | If the Company fails to maintain relationships with its independent contract manufacturers, its business could be harmed; |
| · | The Company’s dependence on independent contract manufacturers could make management of its manufacturing and distribution efforts inefficient or unprofitable; |
| · | The Company relies upon our ongoing relationships with its key flavor suppliers. If the Company is unable to source its flavors on acceptable terms from its key suppliers, the Company could suffer disruptions in its business; |
| · | Criticism of the packaged beverage market generally could adversely affect the Company’s operating results; |
| · | If the Company is unable to maintain brand image or product quality, its business could suffer; |
| · | Increased competition could hurt the Company’s business; |
| · | Consolidation of retailers, wholesalers and distributors and the dominant position of a limited number of key players in the industry may result in downward pressure on sales prices; |
| · | The Company’s failure to accurately estimate demand for its products could adversely affect its business and financial results; |
| · | If the Company fails to obtain and retain high-visibility sponsorship or endorsement arrangements with celebrities, or if the reputation of any of the celebrities that the Company partners with is impaired, the business of the Company may suffer; |
| · | The Company’s distributors and vendors are material to the Company’s success. If the Company is unable to maintain good relationships with its existing distributors and vendors, its business could suffer; |
| · | Changing retail landscape could hurt the Company’s business; |
| · | Incorrect product design or development could hurt the Company’s business; |
| · | Product information misrepresentations could happen and may adversely affect the Company’s business; |
| · | The Company relies on third party distributors and other logistics providers; |
| · | The Company relies on key inputs; |
| · | The Company’s success relies on its quality control systems; |
| · | The Company is subject to risks and uncertainty regarding future product development; |
| · | Risks related to the Company’s human capital; |
| · | Revenues derived entirely from packaged beverages; |
| · | Increases in costs and/or shortages of raw materials and/or ingredients and/or fuel could harm the Company’s business; |
| · | Fluctuation of quarterly operating results; |
| · | No assurance of profitability; |
| · | Fluctuations in foreign currency exchange rates may adversely affect the Company’s operating results; |
| · | Significant changes in government regulation may hinder sales; |
| · | Contamination or recalls of the Company’s ingredients or end products could adversely affect its business; |
| · | The Company’s intellectual property rights are critical to the Company’s success, and the loss of such rights could materially adversely affect its business; |
| · | Litigation or legal proceedings could expose the Company to significant liabilities and thus negatively affect its financial results; |
www.cizzlebrands.com | Page 44 |
| · | Future effective tax rates could be subject to volatility or adversely affected by a number of factors; |
| · | Catastrophic events could impact the Company’s operations and affect the Company’s ability to grow its business; |
| · | Climate change may negatively affect the Company’s business; |
| · | The Company’s business is seasonal and adverse weather conditions could negatively affect its business; |
| · | The Company depends on key information systems and third-party service providers; |
| · | If the Company is unable to securely maintain its customers’ confidential or credit card information, or other private data relating to the Company or its employees, the Company could be subject to negative publicity, costly government enforcement actions or private litigation, which could damage its business reputation and negatively affect its results of operations; |
| · | The Company must continually maintain and/or upgrade its information technology systems; |
| · | Conflicts of interest; |
| · | Limited operating history as a public company; |
| · | Potential volatility of share price; |
| · | No assurance of active market for shares; |
| · | Dividends; |
| · | A return on the Company’s securities is not guaranteed; |
| · | Global financial conditions; |
| · | Future sales of common shares by existing shareholders; |
| · | Additional issuances and dilution; |
| · | Publication of inaccurate or unfavourable research and reports; and |
| · | As a public company, there are costs associated with maintaining a public listing. |
These risks, uncertainties, assumptions and other factors could cause the Company’s actual results, performance, achievements and experience to differ materially from its expectations, future results, performances or achievements expressed or implied by the forward-looking information.
The forward-looking information made in this MD&A relates only to events or information as of the date on which the statements are made in this MD&A. In addition, even if results and developments are consistent with the forward-looking information contained in this MD&A, those results and developments may not be indicative of results or developments in subsequent periods. The Company undertakes no obligation to update or revise publicly any forward-looking information, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events unless required under applicable securities laws. The Company’s forward-looking information is expressly qualified in their entirety by this cautionary statement.
An investor should read this MD&A with the understanding that the Company’s actual future results may be materially different from what is expected.
The forward-looking information and statements contained herein are presented for the purposes of assisting readers in understanding the Company's expected financial and operating performance and its plans and objectives and may not be appropriate for other purposes.
For a more detailed discussion of risks and other factors, see the Company’s Annual Information Form under the heading “Risk Factors”, or otherwise disclosed in the public filings made with applicable securities regulatory authorities and available under the Company’s SEDAR+ profile.
www.cizzlebrands.com | Page 45 |
Exhibit 99.4
Certificate of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, John Celenza, certify that:
| 1. | I have reviewed this annual report on Form 40-F of Cizzle Brands Corporation; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report; |
| 4. | The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting. |
| 5. | The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting. |
| Date: October 28, 2026 | |
| /s/ John Celenza | |
| John Celenza | |
| Chief Executive Officer |
Exhibit 99.5
Certificate of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Steven Tschirhart, certify that:
| 1. | I have reviewed this annual report on Form 40-F of Cizzle Brands Corporation; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report; |
| 4. | The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting. |
| 5. | The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting. |
| Date: October 28, 2026 | |
| /s/ Steven Tschirhart | |
| Steven Tschirhart | |
| Chief Financial Officer |
Exhibit 99.6
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the annual report of Cizzle Brands Corporation (the “Company”) on Form 40-F for the year ended July 31, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John Celenza, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: October 28, 2026 | |
| /s/ John Celenza | |
| John Celenza | |
| Chief Executive Officer |
This certification accompanies the Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed “filed” by the Company for purposes of § 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section.
Exhibit 99.7
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the annual report of Cizzle Brands Corporation (the “Company”) on Form 40-F for the year ended July 31, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Steven Tschirhart, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: October 28, 2026 | |
| /s/ Steven Tschirhart | |
| Steven Tschirhart | |
| Chief Financial Officer |
This certification accompanies the Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed “filed” by the Company for purposes of § 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section.
Exhibit 99.8
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the annual report on Form 40-F (the “Form 40-F”) of our auditor's report dated October 27, 2026 relating to the consolidated financial statements of Cizzle Brands Corporation consisting of the consolidated statements of financial position as at July 31, 2026 and 2025 and the related consolidated statements of loss and comprehensive loss, changes in shareholders' equity and cash flows for the years then ended, which appears as Exhibit 99.2 to the Form 40-F being filed with the United States Securities and Exchange Commission.
We also consent to reference to us under the heading Interests of Experts in the Annual Information Form, filed as Exhibit 99.1 to the Form 40-F.
Chartered Professional Accountants
Licensed Public Accountants
October 27, 2026
Toronto, Canada
MNP LLP
| 1 Adelaide Street East, Suite 1900, Toronto ON, M5C 2V9 | 1.877.251.2922 T: 416.596.1711 F: 416.596.7894 |