Mercanto Holdings Inc. Reports Q3 Fiscal 2026 Financial Results and Provides Operational and Market Update

MONTREAL, June 25, 2026 /CNW/ - Mercanto Holdings Inc. (TSXV: MUSH) ("Mercanto" or the "Company") today reported financial results for its third quarter of fiscal 2026, ended April 30, 2026. The Company remained profitable in the quarter, the results of which reflect a temporary normalization of provincial vape-cartridge ordering following the category's launch, together with the planned suspension of certain THC-infused edible products. The unaudited condensed interim consolidated financial statements and related management's discussion and analysis ("MD&A") are available under the Company's profile on SEDAR+.

Q3 Fiscal 2026 Highlights (vs. Q3 Fiscal 2025)

• Revenue of $1,222,205 (Q3 2025: $887,862), up approximately 38% year-over-year;
• Net revenue, after excise taxes, of $1,089,866 (Q3 2025: $756,556), up approximately 44%;
• Gross profit of $410,276 (Q3 2025: $170,448), with gross margin expanding to 37.6% from 22.5%;
• Net income of $119,493, a return to profitability versus a net loss of $(88,366) in Q3 2025;
• Year-to-date (nine months ended April 30, 2026) revenue of $4,199,038 (prior year: $2,715,203), up approximately 55%, with year-to-date net income of $145,212 versus a net loss of $(254,438) a year earlier;
• EBITDA of $158,038;
• Cash of $542,380 at quarter-end, up approximately 108% year-over-year;
• Current on all cannabis excise tax obligations, paid in full and on time as of the date of this release;
• No long-term debt, other than lease liabilities; and
• 51,674,683 common shares outstanding, reflecting limited dilution since going public.

The Company stayed profitable and grew revenue approximately 38% year-over-year, even as third-quarter revenue eased from a record second quarter while the province worked down its vape launch inventory.

"This was a timing reset in the channel, not a change in demand," said Scott Jardin, Chief Financial Officer of Mercanto. "Provincial orders pulled back while the launch inventory was drawn down, and consumer sell-through held up throughout. Our asset-light model is exactly what lets us absorb a soft quarter and remain in the black -- with no long-term debt, our excise paid in full, and no need to dilute shareholders to fund the business. That discipline keeps Mercanto financially sound and resilient, and positions it to capture a larger share of the market over the longer term as weaker operators retreat."

Consumer sell-through of the Company's products held steady and, in certain weeks, increased during the quarter. Because reported revenue reflects provincial ordering rather than consumer purchasing, management believes it understates the underlying demand the Company's vape products were generating at retail.

Quarter in Context: Inventory Normalization and Portfolio Resilience

Québec's vape category launched in the second quarter of fiscal 2026. With no sell-through history for a new category, the province initially stocked cartridges at elevated levels to avoid out-of-stocks. As demand data accumulated, provincial vape-cartridge orders were reduced over an approximately six-to-seven-week period in the third quarter to draw that inventory down. As a result, the Company's provincial orders (sell-in) were temporarily lower than the consumer demand those products were generating at retail (sell-through), and revenue declined sequentially from $2,076,820 in the second quarter to $1,222,205 in the third. Separately, early in the quarter the Company indefinitely suspended its THC-infused beef jerky and saucisson products, as a sharp rise in Canadian meat prices would have required retail pricing the Company was unwilling to pass on to purchasers.

Notwithstanding these two category-specific headwinds, total revenue still grew approximately 38% year-over-year. Management attributes this resilience to the breadth of the Company's portfolio, which spans multiple cannabis categories -- including vape cartridges and batteries, hash, capsules and infused edibles. Because revenue is diversified across categories rather than concentrated in any single one, the Company is less exposed to the ordering or input-cost fluctuations of any individual product line, and that diversified base, rather than any one category, remains the foundation of its revenue.

Autumn Product Call

The Company recently participated in the province's autumn product call and will announce new product listings as they are brought to market.

Why Québec, and Why Now

Mercanto concentrates on the Québec market, supplemented by select niche products in other provinces and through medical platforms, and management believes the data supports that focus. According to the Société québécoise du cannabis (SQDC), Québec cannabis sales reached approximately $809.5 million in the year ended March 28, 2026, up roughly 9% year-over-year, while national retail cannabis sales grew only about 4% in calendar 2025 (Statistics Canada) and the two largest markets, Ontario and Alberta, were flat to lower in the most recent months reported.

Meanwhile, the broader industry is consolidating, with cannabis-sector insolvency filings accelerating -- frequently triggered by unpaid excise duty. For years, operators in arrears used unremitted excise as interest-free working capital to underprice compliant competitors like the Company, which pays its excise in full and on time. The Canada Revenue Agency has now shifted from accommodation to enforcement, which the Company believes is eroding that advantage and restoring a more level playing field. While the issue is not fully resolved, management expects further bankruptcies and consolidation, and believes disciplined, profitable operators are positioned to capture a larger share of the market over time.

Québec Vape Position

Mercanto participates in the vape category through two cartridge SKUs on shelf -- together approximately 8% of category shelf space, and including the only mid-THC cartridge currently listed in the province -- and through its battery, which is the best-selling battery in the province. Québec offers no all-in-one or disposable vapes, so every cartridge sold requires a separate battery, and Mercanto's device is one of only two authorized to power the entire provincial cartridge assortment. Management believes this provides durable, category-wide hardware revenue that does not depend on which producer's cartridge a consumer selects. Hardware has been accretive to results since launch.

Outlook

As the third-quarter inventory normalization completes, management expects provincial ordering to increasingly reflect underlying consumer demand beginning in the fourth quarter of fiscal 2026 and into fiscal 2027, and expects that shift to be reflected in the Company's results -- subject to market conditions. The Company also expects to benefit from recent changes to Québec's product-call and listing framework, under which approved products for certain categories receive a minimum one-year listing before the next product call. Management believes this brings greater predictability to listing cycles and supports production planning and demand forecasting. The Company further anticipates a modest seasonal lift as the summer progresses and continues to expand its product portfolio. As previously announced, the Company expects to launch a CBD 10 mg capsule in August 2026; together with its existing CBD 50 mg capsule, this would give the Company a presence across the principal strengths of the CBD capsule category -- a smaller but stable category in which management believes the Company would hold a leading position.

About Mercanto Holdings Inc.

Mercanto Holdings Inc. (TSXV: MUSH) is a cannabis company focused on the Québec market, operating through its wholly owned subsidiary, Teonan Biomedical Inc., which is licensed by Health Canada under a Standard Processing Licence to manufacture, package and sell cannabis products in Canada. Teonan develops and markets cannabis and cannabis-infused products for the Canadian regulated market, as well as functional-mushroom beverages under the Teonan™ brand. The Company pursues an asset-light model and a conservative balance sheet, developing and commercializing products in categories where it believes it can build a differentiated, profitable position. For more information, please refer to the Company's public filings available on SEDAR+.

Non-IFRS Financial Measures

This news release refers to EBITDA, a non-IFRS financial measure that does not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other issuers. The Company calculates EBITDA as net profit (loss) before depreciation and share-based compensation. For the quarter ended April 30, 2026, EBITDA of $158,038 reconciles to net income of $119,493 as follows: net income of $119,493, plus depreciation of $5,684, plus share-based compensation of $32,860. EBITDA should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS. Additional information is available in the Company's MD&A on SEDAR+.

Forward-Looking Information

This news release contains "forward-looking information" within the meaning of applicable Canadian securities legislation, including, without limitation, statements regarding: the expected normalization of provincial vape ordering and management's expectation that such normalization will be reflected in results in the fourth quarter of fiscal 2026 and into fiscal 2027; management's belief that reported results understate underlying demand and that consumer demand is stable to growing; the resilience and diversification of the Company's product portfolio; the indefinite suspension of, and any future decisions regarding, the Company's THC-infused edible products; the timing and outcome of the province's autumn product call and any resulting listings; the expected benefits of Québec's revised product-call and listing framework, including minimum listing periods for approved products; anticipated seasonal demand; the durability and contribution of the Company's hardware position; industry consolidation and expected further bankruptcies and restructurings; Canada Revenue Agency enforcement of excise obligations and the erosion of advantages previously held by non-compliant operators; the Company's continued profitability, margin discipline and maintenance of zero long-term debt; the timing and contribution of new product launches, including the expected August 2026 launch of a CBD 10 mg capsule, management's expectation of a leading position in the CBD capsule category, and the previously announced infused pre-roll; and the Company's business strategy, growth plans and commercial prospects generally.

Such information reflects management's current expectations and is based on assumptions including continued consumer demand, the accuracy and representativeness of available retail sell-through data, timely product launches, manufacturing and supply-chain continuity, the purchasing behaviour of provincial authorities, and general economic, competitive and regulatory conditions. It is subject to known and unknown risks and uncertainties, many beyond the Company's control, that could cause actual results to differ materially, including changes in provincial purchasing or listing decisions; fluctuations in consumer demand; pricing pressure and margin variability; input-cost inflation; reliance on a limited number of customers and suppliers; supply-chain disruptions; competitive and regulatory developments; the Company's ability to launch and scale new products; liquidity constraints; and the other risk factors described in the Company's continuous disclosure record filed on SEDAR+. Readers are cautioned not to place undue reliance on forward-looking information. Although the Company believes its assumptions and expectations are reasonable, there can be no assurance they will prove accurate, and the Company undertakes no obligation to update or revise such information except as required by applicable law.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Mercanto Holdings Inc.

For further information, please contact: [email protected]