ZeroStack Corp.

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

1. NATURE OF OPERATIONS

ZeroStack Corp. (the “Company” or “ZeroStack”) (formerly Flora Growth Corp.) (with its subsidiaries, the ”Group”) was incorporated as Flora Growth Corp. under the laws of the Province of Ontario, Canada on March 13, 2019. The Company, which filed articles of amendment to change its name to ZeroStack Corp. on January 29, 2026, is a decentralized AI treasury company that is investing in the future of AI infrastructure through strategic ownership in 0G Tokens (as defined below), and an AI-focused asset management company. The Company is also a global pharmaceutical distributor through its wholly owned subsidiary Phatebo GmbH (“Phatebo”). The Company's registered office and principal place of business is located at 40 King Street, W Suite 2400, Toronto, Ontario, M5H 3S1, Canada.

These consolidated financial statements have been prepared on a going concern basis, meaning that the Company will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations.

Digital Asset Treasury Strategy. In early 2025 following a due diligence process, the Company began implementing an expansion strategy focused on identifying and pursuing complementary growth opportunities within the global digital asset market. On May 2, 2025 and September 19, 2025, the Company entered into various securities purchase agreements with certain investors pursuant to which the Company agreed to sell and issue various securities in private placement offerings. The Company used the net proceeds from these private offerings to further its new digital asset treasury strategy, mainly the one linked to 0G, the native tokens of the Zero Gravity (0G) blockchain ("0G Tokens" or "0G"), and to explore and expand the use of the native AI functionality of the 0G Tokens to enhance the business of the Company. See Note 9 and Note 16.

Sale of legacy hemp and cannabis business. On September 26, 2025, the Company transferred 100% of the issued and outstanding equity interests of the following direct and indirect wholly-owned subsidiaries, which collectively comprise the Company's legacy hemp and cannabis business: (i) Australian Vaporizers Pty LTD, an Australian limited company; (ii) Vessel Brand Canada Inc., a Canadian corporation; (iii) Klokken Aarhus Inc., a Canadian corporation; (iv) Rangers Pharmaceuticals A/S, a Danish stock-based corporation; (v) TruHC Pharma GmbH ("TruHC"), a German limited company; (vi) Vessel Brand Inc., a Delaware corporation; (vii) High Roller Private Label LLC, a Florida limited liability company; (viii) Just Brands LLC; a Florida limited liability company; (ix) Just Brands FL LLC, a Florida limited liability company; (x) Just Brands International LTD, a United Kingdom limited company; and (xi) United Beverage Distribution Inc., a South Dakota corporation and the Company's investment in an early-stage European cannabis company (collectively the "Cannabis Business") to Flora Growth US Holdings LLC, a Florida limited liability company and certain noteholders ("Noteholders") of the Company, in exchange for full satisfaction of the balance receivable under the promissory notes issued by the Company to such Noteholders as part of the Company's acquisition of United Beverage Distribution Inc. on February 4, 2025 (Note 12). See discussion in Note 5.

**2. **BASIS OF PRESENTATION

These consolidated financial statements have been presented in United States dollars and are prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). The Company has determined that the United States dollar is the most relevant and appropriate reporting currency as, despite continuing shifts in the relative size of its operations across multiple geographies, the majority of the Company’s operations are conducted in United States dollars and the Company’s financial results are prepared and reviewed internally by management in United States dollars.

Going concern

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. The going concern basis of presentation assumes that the Company will continue one year after the date these consolidated financial statements are issued and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

Pursuant to the requirements of ASC Topic 205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year from the date these consolidated financial statements are issued. This evaluation does not take into consideration the potential mitigating effects of management’s plans that have not been fully implemented or are not within control of the Company as of the date the consolidated financial statements are issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the consolidated financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.

The Group had cash of $5.6 million and an accumulated deficit of $277.8 million at December 31, 2025 and incurred a net loss of $119.7 million for the year then ended. In prior years, the Company believed that its level of cash was not sufficient to continue investing in growth, while at the same time meeting its obligations as they became due, and these conditions raised substantial doubt regarding the Group’s ability to continue as a going concern for a period of at least one year from the date of issuance of those consolidated financial statements. With the closing of the private equity offerings in the third and fourth quarters of 2025, the Company believes that its existing cash and the staking rewards from its unrestricted digital assets are and will be sufficient to meet its working capital requirements and future obligations for at least one year after the issuance date of these consolidated financial statements.

Presentation of comparative financial statements

On August 4, 2025, the Company consolidated its issued and outstanding common shares based on one new common share of the Company for every thirty-nine existing common shares of the Company. All common shares and per share amounts have been restated to give retroactive effect to the share consolidation. See discussion in Note 16.

Basis of consolidation

These consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions were eliminated on consolidation. Subsidiaries are entities the Company controls when it is exposed, or has rights, to variable returns from its involvement in the entity and can affect those returns through its power to direct the relevant activities of the entity. Subsidiaries are included in the consolidated financial results of the Company from the date of acquisition up to the date of disposition or loss of control. As at December 31, 2025, the Company had the following subsidiaries:

During the year ending December 31, 2024, the Company voluntarily dissolved the following U.S. companies:

• Cardiff Brand Corp.

• Kasa Wholefoods LLC

• Flora Beauty LLC

On February 4, 2025, the Company completed the closing of the acquisition of 100% of the issued and outstanding shares of United Beverage Distribution Inc., a United States corporation with a functional currency of the United States dollar. See discussion of the acquisition in Note 12.

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

During the year ended December 31, 2025, each of Franchise Global Health Inc. ("FGH"), Franchise Cannabis Corp. ("FCC"), CBDMed Therapeutics Inc., Harmony Health One Inc., 1200325 B.C. Ltd., Fayber Technologies Inc., ACA Mueller ADAG Pharma Vertriebs GmbH, Sativa Verwaltungs GmbH, and Sativa Verwaltungs GmbH and Co. KG (together, the "Insolvent Entities") made insolvency filings in the appropriate jurisdictions. Each of the Insolvent Entities was a direct or indirect subsidiary of the Company and was part of the Company's acquisition of FGH in December 2022. See discussion in Note 6.

On September 26, 2025, the Company sold the Cannabis Business to Flora Growth US Holdings LLC, a Florida limited liability company and Noteholders, in exchange for full satisfaction of the balance receivable under the promissory notes issued by the Company to such Noteholders as part of the Company's acquisition of United Beverage Distribution Inc. on February 4, 2025 (Note 12). See discussion in Note 5.

Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis, except for certain financial instruments that are measured at fair value as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The carrying values of trade and amounts receivable, indemnification receivables, prepaids and other current assets, and trade and other payables, accrued liabilities, current portion of long-term debt, and current portion of lease liability approximate their fair values due to their short periods to maturity. The Company calculates the estimated fair value of financial instruments, including investments, and contingent consideration, using quoted market prices when available. When quoted market prices are not available, fair value is determined based on valuation techniques using the best information available and may include quoted market prices, market comparable, and discounted cash flow projections.

The consolidated financial statements are presented in United States dollars ("USD" or "$") unless otherwise noted.

Use of estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

**3. **SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies used by the Company are as follows:

Cash and restricted cash

Cash in the consolidated statement of financial position includes cash on hand and deposits held with banks and other financial intermediaries that have a maturity of less than three months at the date they are acquired. Restricted cash in the consolidated statement of financial position includes cash required to be held in deposit accounts related to credit card accounts and merchant accounts.

Financial assets

Initial recognition and measurement

The Company aggregates its financial assets into classes at the time of initial recognition based on the Company's business model and the contractual terms of the cash flows. Non-derivative financial assets are classified and measured as "financial assets at fair value", as either fair value through profit or loss ("FVPL"), or "financial assets at amortized cost", as appropriate.

All financial assets are recognized initially at fair value plus, in the case of financial assets not at FVPL, directly attributable transaction costs on the trade date at which the Company becomes a party to the contractual provisions of the instrument.

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

Financial assets with embedded derivatives are considered in their entirety when determining their classification.

Subsequent measurement - Financial assets at amortized cost

After initial recognition, financial assets measured at amortized cost are subsequently measured at the end of each reporting period at amortized cost using the Effective Interest Rate ("EIR") method. Amortized cost is calculated by considering any discount or premium on acquisition and any fees or costs that are an integral part of the EIR. In these consolidated financial statements, cash, trade and amounts receivables, and indemnification receivables are classified in this category.

Subsequent measurement - Financial assets at FVPL

Financial assets measured at FVPL include financial assets such as the Company's equity investments in other entities, and any derivative financial instrument that is not designated as a hedging instrument in a hedge relationship. Financial assets measured at FVPL are carried at fair value in the consolidated statement of financial position with changes in fair value recognized in a separate caption in the consolidated statements of loss and comprehensive loss.

Derecognition

A financial asset is derecognized when the contractual rights to the cash flows from the asset expire, or the Group no longer retains substantially all the risks and rewards of ownership.

Impairment of financial assets

Financial assets classified subsequently as amortized cost are subject to impairment based on the expected credit losses (“ECL’s”). The Group’s financial assets subject to impairment are cash and trade and amounts receivables.

Trade and note receivables are recognized initially at fair value and subsequently measured at amortized cost, less any provisions for impairment. Impairment provisions are estimated using the ECL impairment model where any expected future credit losses are provided for, irrespective of whether a loss event has occurred at the reporting date. Estimates of expected credit losses consider the Group’s collection history by country and customer, deterioration of collection rates during the average credit period, as well as observable changes in and forecasts of future economic conditions that affect default risk. The Company utilizes a provision matrix to estimate lifetime ECL’s for trade receivables, supplemented by specific allowance based on customer-specific data. Changes in the allowance are recognized as bad debt expense in the consolidated statements of loss and comprehensive loss. When the Company determines that no recovery of the amount owed is possible, the amount is deemed irrecoverable, and the financial asset is written off. This is determined with judgment or otherwise when discharged by bankruptcy or other legal proceedings.

Inventory

Inventories are comprised of raw materials and supplies and finished goods. Inventories are initially valued at cost and subsequently at the lower of cost and net realizable value. Inventory cost is determined either on a weighted average cost or specific identification basis and any trade discounts and rebates are deducted from the purchase price. Raw material costs include the purchase cost of the materials, freight-in and duty. Costs incurred during the production process are capitalized as incurred to the extent that cost is less than net realizable value. These costs include materials, labor and manufacturing overhead used in the production processes. Finished goods include the cost of direct materials and labor and a proportion of manufacturing overhead allocated based on normal production capacity.

Net realizable value represents the estimated selling price for inventories in the ordinary course of business, less all estimated costs of completion and costs necessary to make the sale. The determination of net realizable value requires significant judgment, including consideration of factors such as shrinkage, the aging of and future demand for inventory and contractual arrangements with customers. Reserves for excess and obsolete inventory are based upon quantities on hand, projected volumes from demand forecasts and net realizable value. The impact of changes in inventory reserves is reflected in cost of sales.

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

Property and equipment

Property and equipment are measured at cost less accumulated depreciation and impairment losses, if any. Depreciation is provided for on a straight-line basis over the assets’ estimated useful lives, which management has determined to be as follows:

The Company assesses an asset's residual value, useful life and depreciation method at each financial year end and adjusts if appropriate. During their construction, property, plant and equipment are not subject to depreciation. The Company capitalizes all costs necessary to get the asset to its intended use, including interest on borrowings when significant. When the asset is available for use, depreciation commences. Depreciation expense is recorded within depreciation and amortization on the consolidated statements of loss and comprehensive loss.

Gains and losses on disposal of property and equipment are determined by comparing the proceeds from disposal with the carrying amount of the property and equipment and are recognized in the consolidated statements of loss and comprehensive loss of the related year.

Digital assets

Pursuant to ASU 2023-08, Intangibles - Goodwill and Other - Crypto Assets: Accounting for and Disclosure of Crypto Assets, codified into ASC subtopic 350-60, in-scope crypto assets are required to be measured at fair value in the statement of financial position, with gains and losses from changes in the fair value of such crypto assets recognized in net income each reporting period. ASU 2023-08 also requires certain interim and annual disclosures for crypto assets within the scope of the standard.

The Company adopted this guidance effective January 1, 2025 as this was the first year that the Group held digital assets. The Company’s digital assets are measured using Level 1 inputs under ASC 820, based on quoted prices from the principal market. ASC 820 defines “principal market” as the market with the greatest volume and level of activity for the asset or liability. The determination of the principal market (and, as a result, the market participants in the principal market) is made from the perspective of the reporting entity. The digital assets held by the Company are traded on a number of active markets globally. The Company determined that Kraken was the principal market for its digital assets, as it has high volumes for each of its digital assets and the Company has access to it. The Company recognizes gain or loss by utilizing daily close prices obtained from Kraken. The Company utilizes a first-in, first-out method to determine the cost basis for each type of digital asset in computing gains and losses.

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. Amortization is provided on a straight-line basis over the assets’ estimated useful lives, which do not exceed the contractual period, if any. The Group’s finite-lived intangible assets are amortized as follows:

The estimated useful lives, residual values, and amortization methods are reviewed at each year end, and any changes in estimates are accounted for prospectively. Amortization expense is recorded within depreciation and amortization on the consolidated statements of loss and comprehensive loss.

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

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.

Investments

Investments include investments in equity securities of entities over which the Company does not have a controlling financial interest or significant influence and are accounted for at fair value. Equity investments without readily determinable fair values are measured at cost with adjustments for observable changes in price or impairments (referred to as the "measurement alternative"). In applying the measurement alternative, the Company performs a qualitative assessment on a quarterly basis and recognizes an impairment if there are sufficient indicators that the fair value of the equity investments is less than carrying values. Changes in value are recorded in changes in financial instruments fair value on the consolidated statements of loss and comprehensive loss.

Impairment of long-lived assets

The Company reviews long-lived assets, including property and equipment and definite life intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. An impairment loss is recognized when the sum of projected undiscounted cash flows is less than the carrying value of the asset group. The measurement of the impairment loss to be recognized is based on the difference between the fair value and the carrying amount of the asset group.

Business combinations

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Company in exchange for control of the acquiree. Acquisition related costs are generally recognized in the consolidated statements of loss and comprehensive loss as incurred. At the acquisition date, the identifiable assets acquired, and the liabilities assumed, are recognized at their fair value.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any noncontrolling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the amounts of identifiable assets acquired and liabilities assumed on the acquisition date. If, after assessment, the net of the amounts of identifiable assets acquired and liabilities assumed on the acquisition date exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognized immediately in the consolidated statements of loss and comprehensive loss as a bargain purchase gain.

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity's net assets in the event of liquidation may be initially measured at the fair value of the acquiree's identifiable net assets.

Contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or liability is remeasured at subsequent reporting dates, with the corresponding gain or loss recognized in the consolidated statements of operations and comprehensive loss.

When a business combination is achieved in stages, the Company's previously held equity interest in the acquiree is remeasured to its acquisition date fair value and the resulting gain or loss, if any, is recognized in the consolidated statements of loss and comprehensive loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognized in other comprehensive income are reclassified to the consolidated statements of loss and comprehensive loss where such treatment would be appropriate if that interest were disposed of.

Purchase price allocations may be preliminary and, during the measurement period not to exceed one year from the date of acquisition, changes in assumptions and estimates that result in adjustments to the fair value of assets acquired and liabilities assumed are recorded in the period the adjustments are determined.

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

Impairment of goodwill and indefinite-lived intangible assets

Goodwill is allocated to the reporting unit in which the business that created the goodwill resides. A reporting unit is an operating segment, or a business unit one level below that operating segment, for which discrete financial information is prepared and regularly reviewed by segment management. The Group operates in two operating segments which are the reporting units and goodwill is allocated at the operating segment level. The Company reviews goodwill and indefinite-lived intangible assets annually for impairment in the fourth quarter, or more frequently, if events or circumstances indicate that the carrying amount of an asset may not be recoverable.

Financial liabilities

Initial recognition and measurement

Financial liabilities are measured at amortized cost, unless they are required to be measured at FVPL as is the case for held for trading or derivative instruments, or the Company has opted to measure the financial liability at FVPL.

Subsequent measurement - Financial liabilities at amortized cost

After initial recognition, financial liabilities measured at amortized cost are subsequently measured at the end of each reporting period at amortized cost using the EIR method. Amortized cost is calculated by considering any discount or premium on acquisition and any fees or costs that are an integral part of the EIR. In these consolidated financial statements, trade payables and other accrued liabilities, lease liability and long-term debt are measured at amortized cost.

Subsequent measurement - Financial liabilities at FVPL

Financial liabilities measured at FVPL include any derivative financial instrument that is not designated as a hedging instrument in a hedge relationship. Financial liabilities measured at FVPL are carried at fair value in the consolidated statement of financial position with changes in fair value recognized in other income or expense in the consolidated statements of loss and comprehensive loss. In these consolidated financial statements, the convertible notes included in long term debt have been subsequently measured at fair value.

Derecognition

A financial liability is derecognized when the obligation under the liability is discharged, cancelled, or expires with any associated gain or loss recognized in other income or expense in the consolidated statements of loss and comprehensive loss.

Provisions

Provisions are recognized when (a) the Group has a present obligation (legal or constructive) due to a past event, and (b) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Company expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is probable. The Company expenses legal costs as incurred related to such matters.

The expense relating to any provision is presented in the consolidated statements of loss and comprehensive loss, net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost in the consolidated statements of loss and comprehensive loss.

Share capital

Issued common shares are recorded as equity at par value. Additional proceeds from the issuance of common shares are classified as equity in additional paid in capital. Incremental costs directly attributable to the issue of common shares, stock options and warrants are recognized as a deduction from equity, net of any tax effects. Common shares are considered issued when consideration has been received. When warrants are sold bundled with common shares as units, the various components are allocated using their relative fair values.

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

Share based compensation

Share based compensation to employees is measured at the fair value of the instruments issued and amortized over the vesting periods. Share based compensation to non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued if it is determined the fair value of the goods or services cannot be reliably measured and are recorded at the date the goods or services are received. The Company operates an equity-based compensation plan. The corresponding amount is recorded to the additional paid-in capital caption within shareholders’ equity, and the expense to the consolidated statements of loss and comprehensive loss over the vesting period. The fair value of stock options issued in years prior to December 31, 2024 were determined at the time of issuance using the Black-Scholes option pricing model. The stock options issued in the year ended December 31, 2025 were determined at the time of issuance using a Monte Carlo simulation incorporating Brownian motion, which simulates a distribution of stock prices for the Company throughout the term of the stock options, based on certain assumptions of stock price behavior. For awards with graded vesting schedules based on achieving a specified share price, the Company has elected to calculate the fair value as a single award and recognize expense over the total expected vesting period rather than in tranches. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognized for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest. Upon exercise of a stock option, any amount related to the initial value of the stock option, along with the proceeds from exercise are recorded to share capital. Upon expiration of a stock option, any amount related to the initial value of the stock option is recorded to accumulated deficit. The Company also grants employees and non-employees restricted stock awards (“RSAs”). The fair value of the RSAs is determined using the fair value of the common shares on the date of the grant. The Company has elected to recognize forfeitures as they occur. The Company also grants employees and non-employees stock appreciation rights (“SARs”). The fair value of the SARs is determined using the Black–Scholes pricing model which incorporates all market vesting conditions. For SARs awards with multiple vesting schedules, fair value was determined using a Monte Carlo simulation incorporating Brownian motion.

Foreign currency translation

These consolidated financial statements are presented in USD, which is the Group's reporting currency; however, the functional currency of the entities in these financial statements are their respective local currencies, including USD and euro.

Translation into functional currency

Transactions in foreign currencies are recorded in the functional currency at exchange rates prevailing on the dates of the transactions. At the end of each reporting period, monetary assets and liabilities denominated in foreign currencies are translated at the period end exchange rates. Non-monetary items are translated at the exchange rates in effect on the date of the transactions. Foreign exchange gains and losses arising on translation are presented in the consolidated statements of loss and comprehensive loss.

Translation into presentation currency

The assets and liabilities of foreign operations are translated into USD at year-end exchange rates. Revenue, expenses, and cash flows of foreign operations are translated into USD using average exchange rates of the reporting period. Exchange differences resulting from translating foreign operations are recognized in other comprehensive income and accumulated in shareholders' equity. The cumulative exchange differences are reclassified to the consolidated statements of loss and comprehensive loss upon the disposal of the foreign operation.

Revenue recognition

The Group primarily generates revenue as a global distributor of pharmaceuticals. See disaggregation of the Group's revenue by operating segments and sales by country in Note 25.

The Company uses the following five-step contract-based analysis of transactions to determine if, when and how much revenue can be recognized:

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

Revenue is recognized at the transaction price, which is the amount of consideration to which the Group expects to be entitled in exchange for transferring promised goods to a customer. Gross revenue excludes duties and taxes collected on behalf of third parties. Revenue is presented net of expected price discounts, sales returns, sales taxes, customer rebates and other incentives.

The Group's contracts with customers for the sales of products consist of one performance obligation. Revenue from product sales is recognized at the point in time when control is transferred to the customer, which is on shipment or delivery, depending on the contract terms. The Group's payment terms generally range from 0 to 30 days from the transfer of control, and sometimes up to two months.

The Company elected as a permitted practical expedient to not adjust the customer contract consideration for significant financing components when the period between the transfer of the Group's goods and services and customer payment is one year or less.

The Company elected as a permitted practical expedient to expense, as incurred, the costs of obtaining a customer contract such as sales commissions and other selling transaction costs when the amortization period of the assets otherwise would be one year or less. Accordingly, the Group has no assets recorded for costs to obtain a customer contract as at December 31, 2025 and 2024 as there are no contracts where the underlying asset would have a life exceeding one year.

The Company elected as a permitted practical expedient for shipping and handling not to be a separate performance obligation.

Advertising costs

Advertising costs are expensed as incurred and recorded within the general and administrative caption on the consolidated statements of loss and comprehensive loss. Advertising costs were less than $0.1 million in 2025 ($nil in 2024).

Leases

At the inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified ass et for a period in exchange for consideration. The Company recognizes a right-of-use asset and a lease liability at the commencement date of the lease. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset, less any lease incentives received. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's estimated incremental borrowing rate.

The lease term at the lease commencement date is determined based on the noncancellable period for which the Group has the right to use the underlying asset, together with any periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option, periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option and periods covered by an option to extend (or not to terminate) the lease in which the exercise of the option is controlled by the lessor. The Company considers several factors when evaluating whether the options in its lease contracts are reasonably certain of exercise, such as length of time before an option exercise, expected value of the leased asset at the end of the initial lease term, importance of the lease to the Group's operations, costs to negotiate a new lease, any contractual or economic penalties, and the economic value of leasehold improvements.

For finance leases, from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term, the right-of-use asset is amortized on a straight-line basis and the interest expense is recognized on the lease liability using the effective interest method. For operating leases, lease expense is recognized on a straight-line basis over the term of the lease and presented as a single charge in the consolidated statements of operations and comprehensive income. The lease liability is subsequently measured at amortized cost using the effective interest method.

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

Right-of-use assets are adjusted for impairment losses, if any. The estimated useful lives and recoverable amounts of right-of-use assets are determined on the same basis as those of property, plant and equipment.

The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases (lease term of 12 months or less) and leases for which the underlying asset is of low value. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term. The Company has elected not to separate non-lease components from lease components for real estate leases.

Income taxes

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in the consolidated statements of loss and comprehensive loss except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive loss.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable income or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis, or their tax assets and liabilities will be realized simultaneously.

A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

An unrealized tax benefit may arise in connection with a period that has not yet been reviewed by the relevant tax authority. A change in the recognition or measurement of an unrealized tax benefit is reflected in the period during which the change occurs.

Interest and penalties in respect of income taxes are not recognized in the consolidated statement of operations as a component of income taxes but as a component of interest expense.

Loss per share

Basic loss per share is calculated using the weighted average number of shares outstanding during the year. Pre-funded Warrants are included in the computing earnings per share because the exercise price of the Pre-funded Warrants is nominal and there are no conditions that must be satisfied prior to their exercise. Diluted loss per share reflects the potential dilution of common share equivalents, such as outstanding options and warrants, in the weighted average number of common shares outstanding during the period, if dilutive. The diluted loss per share calculation excludes any potential conversion of options and warrants that would be anti-dilutive.

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

Non-controlling interests

Non-controlling interests of subsidiaries ("NCI") are recognized either at fair value or at the NCI's proportionate share of the net assets, determined on an acquisition-by-acquisition basis at the date of acquisition. Subsequently, the NCI's share of net loss and comprehensive loss is attributed to the NCI.

During 2024, the Company completed the acquisition of TruHC through two closings. At the first closing on April 22, 2024, the Company acquired a controlling 77% interest in TruHC. The Company acquired the remining 23% of TruHC at the second closing on November 27, 2024, at which time the NCI was derecognized. See discussion in Note 12. TruHC was sold as part of the Cannabis Businesses on September 26, 2025. See discussion in Note 5.

Discontinued operations and assets and liabilities held for sale

On September 26, 2025 the Company closed the sale of the Cannabis Business in exchange for full satisfaction of the balance receivable under the promissory notes issued by the Company to the Noteholders as part of the Company's acquisition of United on February 4, 2025. The assets and liabilities of the Cannabis Business are reflected in the accompanying consolidated balance sheets as assets and liabilities held for sale, respectively. The results of operations of the Cannabis Business are included in loss from discontinued operations, net of tax in the accompanying consolidated statements of operations and comprehensive loss. See discussion in Note 5.

Adoption of accounting standards and amendments

In June 2022, the FASB issued Accounting Standards Update 2022-03—Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”), which requires that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The effects of adoption are accounted for prospectively with any adjustments from the adoption of the amendments recognized in earnings and disclosed on the date of adoption. ASU 2022-03 is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company adopted ASU 2022-03 effective as of January 1, 2024, and there was no impact on the Company’s consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting – Improvements to Reportable Segments Disclosures. The amendments enhance disclosures of significant segment expenses by requiring disclosure of significant segment expenses regularly provided to the chief operating decision maker (CODM), extend certain annual disclosures to interim periods, and permit more than one measure of segment profit or loss to be reported under certain conditions. The amendments are effective for the Company in fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted ASU 2023-07 effective as of December 31, 2024 and the segment disclosures in Note 25 in these consolidated financial statements are reflective of that adoption.

In December 2023, the FASB issued Accounting Standards Update 2023-08, Crypto Assets (Subtopic 350-60) ("ASU 2023-08"), which addresses the accounting and disclosure requirements for certain crypto assets. The guidance requires entities to subsequently measure certain crypto assets at fair value, with changes in fair value recorded in net income in each reporting period. In addition, entities are required to provide additional disclosures about the holdings of certain crypto assets. For all entities, the ASU's amendments are effective for fiscal years beginning after December 15, 2024. The Company adopted ASU 2023-08 effective as of January 1, 2025 and the disclosures around the Company's digital assets are reflective of that adoption.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which improve the transparency of disclosures related to the income tax rate reconciliation and income taxes paid. The amendments are effective for the Company in fiscal years beginning after December 15, 2024. The Company adopted ASU 2023-09 effective as of January 1, 2025 and the disclosures around the Group's income taxes are reflective of that adoption.

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

Accounting pronouncements not yet adopted

Certain new standards, amendments and interpretations, and improvements to existing standards have been published by the FASB and the SEC but are not yet effective and have not been adopted early by the Company. Management anticipates that all the relevant pronouncements will be adopted in the first reporting period following the date of application unless noted. Information on new standards, amendments and interpretations, and improvements to existing standards which could potentially impact the Company's financial statements are detailed as follows:

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires all public entities to disclose information about purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depletion for each income statement line item that contains those expenses. The amendments are effective for the Company in fiscal years beginning after December 15, 2026. Early adoption is permitted on either a prospective or retrospective basis. The Company is currently evaluating the guidance and its impact to the consolidated financial statements.

Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Company’s consolidated financial statements.

4. CRITICAL JUDGMENTS AND ESTIMATION UNCERTAINTIES

The preparation of the Company’s consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, revenues, and expenses. These estimates and judgements are subject to change based on experience and new information which could result in outcomes that require a material adjustment to the carrying amounts of assets or liabilities affecting future periods. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized prospectively.

Going concern considerations

The accompanying consolidated financial statements have been prepared assuming that the Group will continue as a going concern. Management must assess the Group’s ability to continue as a going concern each reporting period. This assessment involves the use of internal budgets and estimates of revenues, expenses and cash flows, which requires a significant amount of management judgement. With the Group’s new digital asset treasury strategy, this assessment also involves determining the liquidity of 0G.

Determination of functional currency

The Company determines the functional currency through an analysis of several indicators. Primary considerations include the currency in which the Group’s goods and services are sold and the currency of the country whose competitive forces and regulations mainly determine the sales prices of its goods and services. The Company also considers the currency in which funds from financing debt and equity activities are generated and the currency in which receipts from operating activities are retained. Management judgment is applied when there are indicators supporting more than one currency for a Company subsidiary.

Digital assets

The Group's accounting for digital assets involves significant management judgment and estimation uncertainty. In applying ASC 350-60, Intangibles-Goodwill and Other-Crypto Assets, management evaluates whether digital assets meet the definition of in-scope crypto assets and determines the appropriate accounting treatment. In accordance with ASU 2023-08, qualifying digital assets are measured at fair value, with changes in fair value recognized in earnings each reporting period. Management exercises judgment in identifying the principal market and determining fair value based on observable quoted prices in active markets, including the assessment of market accessibility and liquidity. When observable inputs are not directly available, management evaluates the appropriateness of valuation techniques and assumptions consistent with ASC 820. Additional judgment is required in assessing risks associated with custodial arrangements, including reliance on third-party service providers, as well as in monitoring regulatory, legal, and technological developments that may affect the Group's ability to access or transfer its digital assets.

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

Debt

The Company applies significant judgment and estimates in determining the fair value of the Zero Gravity Convertible Note at year end. The fair value of the note is not directly observable in the market and, as a result, was determined using the lower of the face value plus the interest payable of a Monte Carlo simulation incorporating Brownian motion. This valuation technique simulates a range of potential outcomes for the Company’s common stock price and the price of the 0G Token over the contractual term of the note. The fair value measurement is highly sensitive to key assumptions, including the expected term to maturity of 9.7 years, the closing price of the Company’s common stock of $6.26 and the closing price of the 0G Token of $0.98 as of December 31, 2025, the contractual conversion price of $33.34, a discount rate of 21.5%, an assumed risk-free interest rate of 3.84%, an interest rate on the note of 8.0%, and an expected volatility of 101%, which was derived from the historical daily returns of Solana due to limited observable trading history for the 0G Token. Changes in any of these assumptions could result in a materially different fair value measurement. Based on the observability of the inputs used in the valuation, the Zero Gravity Convertible Note was classified as a Level 3 financial instrument within the fair value hierarchy as of December 31, 2025.

The Company applies significant judgment and estimates in determining the fair value of the unsecured convertible note with an original principal amount of 95,333 Solana (the “PIPE Note”). See Note 14. As of December 30, 2025, the settlement date, the fair value of the PIPE Note was $13.9 million. Since the fair value of the PIPE Note is not directly observable, the Company estimated fair value using a Monte Carlo simulation incorporating Brownian motion, as well as a 19.5% discount for lack of marketability due to a lock up provision of the Solana tokens per the PIPE Note. This valuation technique simulates a range of potential outcomes for the Company’s common stock price and the price of Solana over the contractual term of the note. Significant assumptions used in the valuation include an expected term to maturity of 4.8 years, the closing price of the Company’s common stock of $6.33 and the closing price of Solana of $124.88 as of December 30, 2025, the contractual conversion price of $33.34, a discount rate of 112.9%, an assumed risk-free interest rate of 3.47%, an interest rate on the note of 8.0%, and an expected volatility of 101%, which was derived from the historical daily returns of Solana. The valuation further incorporates the note’s prepayment feature, including assumptions regarding whether the holder would elect to require prepayment on either the first or second anniversary of the issuance date. In modeling this feature, the simulation considers the higher of (i) the put value at each potential put date, calculated based on the higher of the Solana price or a USD equivalent of $240, or (ii) the present value of the note at maturity, including either conversion or repayment, plus the present value of interest that would be forgone through the maturity date. Changes in any of these assumptions could have a material impact on the estimated fair value. Based on the observability of the inputs used, the PIPE Note was classified as a Level 3 financial instrument within the fair value hierarchy as of December 30, 2025.

Business combinations

In a business combination, the Group may acquire assets and assume certain liabilities of an acquired entity. Judgement is used in determining whether an acquisition is a business combination or an asset acquisition. Estimates are made as to the fair value of the identifiable assets acquired and the liabilities assumed on the acquisition date, as well as the fair value of consideration paid and contingent consideration payable. In certain circumstances, such as the valuation of property, plant and equipment, intangible assets and goodwill acquired, the Company obtains assistance from third-party valuation specialists. The determination of these fair values involves a variety of judgment in assumptions, including revenue growth rates, expected operating income, discount rates, and earnings multiples.

Revenue recognition

Management judgment is required to determine when the Group is acting as principal or agent in a sales contract where the Company is an intermediary, which affects whether the amount of revenue recognized is presented on a gross or net basis, respectively. The Company first considers whether it has obtained control over the product when acting as an intermediary before transferring it to the customer, and if the Group combines or transforms the product with other goods and services before transferring the good to the customer. The Company considers secondary factors, including whether the Group is primarily responsible for the fulfillment of the product obligations to the customer, whether the Group has inventory risk (acquiring and/or paying for the product prior to transferring to the customer, Company liability for damages and sales returns), and whether the Company has price discretion when selling the product to its customers. Management considers the terms of the customer and supplier contracts, as well as established business practices for the arrangements.

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

Management judgment is required to determine the effects on the sales contract transaction price for the potential impacts of sales returns, discounts, rebates, and other customer incentives. The Company considers the terms of the contract, historical experience, as well as actual and expected customer activity after the end of the reporting period.

The Group's primary sale of products requires management judgment to determine at what point in time control passes to the customer to recognize revenue. The Company considers the customer contract terms, logistic supplier terms, local law, and established business practices to make this determination.

Share based compensation transactions

The Company measures the cost of equity-settled transactions with employees and applicable non-employees by reference to the fair value of the equity instruments at the date at which they are vested. Estimating fair value for share based compensation requires judgment to determine the appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the stock price, stock option, risk-free interest rates, volatility, and dividend yield. For awards with market or performance-based features, the Company applies judgment to determine its expectation of achieving the agreement milestones. Due to the Company's limited history of publicly traded common shares, the volatility and expected term assumptions require additional judgment. The Company considers the Company's actual trading volatility to date compared to actual and expected volatility of comparable companies of similar size and industry that have been publicly traded longer than the Company's shares.

For expected term, the Company generally uses the maximum stated term in the award agreement unless there is reasonable likelihood established to shorten the expected term for potential early exercises.

Classification of pre-funded warrants

The Company has issued pre-funded warrants exercisable for shares of its common stock. The classification of these instruments as equity requires significant judgment and is based on an evaluation of the warrants' contractual terms under applicable accounting guidance, including ASC 480, ASC 815, and ASC 505. In making this determination, management assessed whether the warrants contain any obligation to settle in cash or other assets, whether they are indexed to the Company's own stock, and whether sufficient authorized and unissued shares are available to settle the warrants in shares at all times.

Management also evaluated provisions such as anti-dilution adjustments, fundamental transaction clauses, and change-in-control features to determine whether any could require settlement in a manner not solely within the Company's control. Based on this assessment, management concluded that the pre-funded warrants meet the criteria for equity classification. Changes in facts or circumstances, including amendments to the warrant agreements or changes in the Company's capital structure, could result in a different classification in future periods and could have a material impact on the Group's financial position and results of operations.

Income taxes and valuation allowances for deferred tax assets

In assessing the probability of realizing income tax assets recognized, management makes estimates related to expectations of future taxable income, applicable tax planning opportunities, expected timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. In making its assessments, management gives additional weight to positive and negative evidence that can be objectively verified. Estimates of future taxable income are based on forecasted cash flows from operations and the application of existing tax laws in each jurisdiction. The Company considers relevant tax planning opportunities that are within the Company's control, are feasible and within management's ability to implement. Examination by applicable tax authorities is supported based on individual facts and circumstances of the relevant tax position examined considering all available evidence. Where applicable tax laws and regulations are either unclear or subject to ongoing varying interpretations, it is reasonably possible that changes in these estimates can occur that materially affect the amounts of income tax assets recognized net of valuation allowances. Also, future changes in tax laws could limit the Company from realizing the tax benefits from the deferred tax assets. The Company reassesses unrecognized income tax assets at each reporting period.

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

The Company applies judgment when determining whether the earnings of its foreign subsidiaries (outside Canada) will be indefinitely reinvested in those subsidiaries and earnings will not be repatriated. The Company considers its historical practices and projected plans for such subsidiaries when making this assessment.

The Company must apply judgement when determining whether it has taken an uncertain tax position. Management has analyzed the tax positions taken by the Company, and has concluded that as of December 31, 2025 and 2024, there were no uncertain tax positions taken.

5. ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

On September 20, 2025, the Company entered into an Equity Transfer and Debt Repayment Agreement (the “Cannabis Sale Agreement”) with a group of investors (the “Cannabis Investors”), which included Clifford Starke and Sammy Dorf, each of whom were directors of the Company at the time of the transaction, and Dany Vaiman, the Company’s chief financial officer. Under the Cannabis Sale Agreement, the Cannabis Investors acquired assets from the Company relating to the Company’s hemp and cannabis related businesses, including Just Brands LLC, Just Brands FL LLC, Just Brands International LTD, High Roller Private Label LLC (together with Just Brands LLC, Just Brands FL LLC, Just Brands International LTD (“JustCBD”), Vessel Brand Inc., Vessel Brand Canada Inc. (together with Vessel Brand Inc., “Vessel”), United Beverage Distribution Inc. (“United”), Klokken Aarhus Inc., Rangers Pharmaceuticals A/S (together with Klokken Aarhus Inc. “Klokken”), TruHC, Australian Vaporizers Pty LTD and the Company’s investment in an early-stage European cannabis company. The sale of the Cannabis Business occurred following signing on September 26, 2025.

The consideration received by the Company for the sale of the Cannabis Business consisted of the cancellation by the Cannabis Investors of all of the Company's obligations pursuant to promissory notes owed to the Cannabis Investors with five year maturities currently held by the Company with an aggregate amount of principal and accrued interest of approximately $2.2 million.

The sale enabled the Company to concentrate on its international pharmaceutical distribution business. The sale was part of several strategic changes to become a digital assets treasury company.

The Company has presented the associated assets and liabilities of the Cannabis Business as held for sale. The major classes of assets and liabilities classified as held for sale as of December 31, 2025 and December 31, 2024 were as follows:

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

The following table summarizes the major classes of line items included in the loss from discontinued operations, net of tax, for the year ended December 31, 2025 and 2024:

The following table summarizes the significant operating and investing items related to the Cannabis Business for the year ended December 31, 2025 and 2024:

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

The subsidiaries sold included TruHC, Klokken Aarhus Inc. and Rangers Pharmaceuticals A/S, which were part of the commercial and wholesale segment; Just Brands LLC, Just Brands FL LLC, Just Brands International LTD, High Roller Private Label LLC, Vessel Brand Inc., Vessel Brand Canada Inc., United Beverage Distribution Inc. and Australian Vaporizers Pty LTD which made up the entirety of the house of brands segment; and the Company's investment in an early stage European cannabis company which was part of the Company's corporate segment.

The Company applies significant judgement in determining whether a disposal meets the criteria to present as held for sale at the reporting date, and whether the disposal represents a strategic shift that has (or will have) a major effect on its operations and financial results in order to be classified as a discontinued operation. The criteria evaluated are both quantitative and qualitative in nature, to evaluate the significance of the disposal relative to the operations of the Company as a whole. The Company has determined this disposition represents a strategic shift in operations that will have a major effect on the Company's operations and financial results, and accordingly, has been presented as discontinued operations.

For the year ended December 31, 2025, the Company recorded a gain on disposal of $nil as the sales price equaled the carrying value of the assets being sold.

For the year ended December 31, 2025, the Company recorded a gain on disposal of $0.5 million because of the derecognition of equity components related to the Cannabis Business for which the Company lost control.

6. INSOLVENCY AND DECONSOLIDATION OF CERTAIN SUBSIDIARIES

On March 14, 2025, each of FGH, FCC, CBDMed Therapeutics Inc., Harmony Health One Inc., 1200325 B.C. Ltd., and Fayber Technologies Inc. (collectively, the "Canadian Insolvent Entities") made a voluntary assignment in bankruptcy pursuant to section 49 Bankruptcy and Insolvency Act (Canada) in the Ontario Superior Court of Justice (the "Ontario Court"). On March 14, 2025, the Ontario Court appointed a trustee of the estate of each of the Canadian Insolvent Entities.

On March 18, 2025, ACA Mueller ADAG Pharma Vertriebs GmbH, Sativa Verwaltungs GmbH, and Sativa Verwaltungs GmbH and Co. KG (together "the German Insolvent Entities") each made filings for insolvency proceedings under German insolvency laws in the Constance Regional Court (the "German Court"). On March 18, 2025, the German Court appointed a trustee of the estate of each of the German Insolvent Entities.

The trustees have been appointed by the respective courts and the trustees have assumed and will continue to exercise control over all assets and liabilities of the Insolvent Entities. The assets of the Insolvent Entities are to be liquidated for distribution in accordance with the priorities established by the courts. The Company expects that no distributions will be available in the Insolvent Entities’ liquidations.

Each of the Insolvent Entities was a direct or indirect subsidiary of the Company and was part of the Company’s acquisition of FGH in December 2022. As a result of the insolvencies, the Company concluded that it no longer controls the Insolvent Entities for accounting purposes as of March 14, 2025, in accordance with ASC Topic 810, and, therefore, deconsolidated all assets and liabilities of the Insolvent Entities effective for the three months ended March 31, 2025 in the Company’s consolidated financial statements. Subsequent to the deconsolidation, the Company accounted for its investment in the Insolvent Entities using the cost method of accounting, which has been recorded recorded at $nil in the Company’s consolidated statement of financial position as of December 31, 2025. The Insolvent Entities’ results of operations are removed from the Company’s consolidated statements of loss and comprehensive loss effective March 14, 2025. The historical financial results for the Insolvent Entities have not been classified as a discontinued operation because their insolvency does not represent a strategic shift with a major effect on the Group’s operations and financial results.

The following table provides the combined carrying value of assets and liabilities of Insolvent Entities that have been deconsolidated at December 31, 2025:

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

The gain on deconsolidation of the Insolvent Entities is recorded in gain on disposal of the Insolvent Entities in the consolidated statements of loss and comprehensive loss. The Insolvent Entities reported a combined net loss and comprehensive loss of less than $0.1 million for the year ended December 31, 2025 (2024 – $1.0 million).

As part of the deconsolidation of the Insolvent Entities, the Group reported a gain of $0.6 million related to currency translation adjustments, recorded in comprehensive loss for the year ended December 31, 2025.

The contingencies and indemnification receivables relate to a legal claim filed against FGH, which was covered under an indemnification agreement between the Company and the former chief executive officer and shareholder of FGH. The voluntary assignment in bankruptcy of FGH triggered an automatic stay on the related legal proceedings.

7. TRADE AND AMOUNTS RECEIVABLE

The Group's trade and amounts receivable are recorded at amortized cost. The trade and other receivables balance as at December 31, 2025 and 2024 consists of trade accounts receivable, amounts recoverable from the Government of Canada for Harmonized Sales Taxes ("HST"), as well as Value Added Tax ("VAT") from various jurisdictions, and other receivables.

Changes in the trade accounts receivable allowance relate to establishing an allowance for expected credit losses. The Company recorded less than $0.1 million of write-offs of trade receivables during 2025 (2024 - $nil). The Group has no amounts written-off that are still subject to collection enforcement activity as at December 31, 2025. The aging of the Group's trade accounts receivable is as follows:

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

A continuity schedule of the allowance for expected credit losses for the year ended December 31, 2025 is as follows:

**8. **INVENTORY

Inventory is comprised of the following as at December 31, 2025 and 2024:

In the year ended December 31, 2025, $33.9 million of inventory was expensed to cost of sales (2024 - $33.7 million) and write-downs to cost of sales for impairment was $0.1 million (2024 - $nil). There were no reversals of previous inventory impairments in the years ended December 31, 2025 or 2024.

**9. **DIGITAL ASSETS

The Company used the proceeds from the May 2, 2025 private placement securities offering to purchase $0.4 million Solana, $0.4 million Ethereum, $0.1 million Sui and $0.1 million Ripple (Note16). The Company sold all these digital assets on September 2, 2025 for a gain of $0.7 million.

The Company received 0.856737 Bitcoin tokens on September 18, 2026, valued at $0.1 million, as proceeds from an investor in the September 19, 2025 private placement securities offering (Note 16).

The Company received 21,766,135 0G Tokens on September 26, 2025, in exchange for the issuance of 2,592,212 PIPE Pre-Funded Warrants (Note 18). The 0G Tokens were initially valued at $54.7 million, equal to the fair value of the PIPE Pre-Funded Warrants at issuance, which reflects the Company's common share closing price of $21.10 per unit on that date. These 0G Tokens were initially classified as restricted digital assets as they were held in an escrow account under the Company's name. On October 9, 2025, these digital assets were released from escrow as the conditions for their release were met.

The Company received 50,000,000 0G Tokens from Daniel Reis-Faria, the Company's Chief Executive Officer, on October 9, 2025, in exchange for the issuance of 5,954,743 PIPE Pre-Funded Warrants (Note 18). The 0G Tokens were initially valued at $113.3 million, equal to the fair value of the PIPE Pre-Funded Warrants at issuance, which reflects the Company's common share closing price of $19.02 per unit on that date.

The Company received 50,000,000 0G Tokens from Zero Gravity Labs Inc. ("Zero Gravity") on October 23, 2025, in exchange for an unsecured convertible note in an aggregate original principal amount of 50,000,000 0G Tokens (the "Zero Gravity Convertible Note"). The 0G Tokens were initially valued at $87.9 million, which reflects the value of the 0G Tokens at the closing price on October 23, 2025 (Note 14). These 0G Tokens are classified as restricted digital assets as the Company is not allowed to sell the tokens or the related staking rewards unless it obtains prior written consent from Zero Gravity.

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

The Company received 95,333 Solana on October 24, 2025, in exchange for the PIPE Note in an aggregate original principal amount of 95,333 Solana. The Solana were initially valued at $14.7 million, which reflects the value of the Solana at the closing price on October 24, 2025. A 20.5% discount for lack of marketability ("DLOM") was further considered because the Solana received were locked tokens that were to be unlocked in 28 equal monthly installments on the last day of each month until January 2028. As the Solana were unlocked, the Company earned staking rewards. A total of 829 Solana were earned for a total value of $0.1 million, which was recorded in the loss from changes in fair value of digital assets line of the consolidated statement of income and comprehensive loss for the year ended December 31, 2025. On December 29, 2025, the Company entered into a note settlement agreement with the note holder pursuant to which the PIPE Note was settled. As part of the settlement, the Company transferred all of its 96,162 Solana to the former holder. See Note 14.

The Company's digital assets consist of the following as of December 31, 2025:

The following table presents a reconciliation of the fair values of the Company's investments in digital assets for the year ended December 31, 2025:

The Company recorded $0.7 million in realized gains on the disposition of digital assets during the year ended December 31, 2025.

In accordance with ASC Topic 820, Fair Value Measurement, the Company measures the fair value of its digital assets based on the quoted end-of-day price on the measurement date for a single digital asset on an active trading platform. Management has determined that Kraken, an active exchange market, represents the principal market for the 0G and BTC that it holds, and the end-of-day quoted price is both readily available and representative of fair value (Level 1 inputs). The Company measured the fair value of its SOL based on the quoted end-of-day price on the measurement date for a single digital asset on Kraken, an active exchange market that represents the principal market for the SOL that it holds, and the end-of-day quoted price is both readily available and representative of fair value, then adjusts the value based on the DLOM (Level 2 inputs). The DLOM used by the Company to value the SOL changed from 20.5% on October 24, 2025 to 19.5% on December 30, 2025, the date the SOL was used to settle the PIPE Note.

The Company recorded a net loss of $143.0 million in the value of its digital assets for the year ended December 31, 2025, respectively, which was reported in the loss from changes in fair value of digital assets in the consolidated statements of loss and comprehensive loss.

**10. **PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

Depreciation expense for the year ended December 31, 2025 was less than $0.1 million (2024 - less than $0.1 million) and was recorded in depreciation and amortization in the consolidated statements of operations and comprehensive loss.

For the year ended December 31, 2024, the Company recorded an impairment charge of the remaining value of the property, plant and equipment of ACA Mueller ADAG Pharma Vertriebs GmbH, within the commercial and wholesale segment. The amount of less than $0.1 million (2025 - $nil) is included in "other asset impairments" in the consolidated statements of operations and comprehensive loss.

As at December 31, 2025, the Company's property, plant and equipment have no significant restrictions on title or pledges as security for liabilities, there are no significant commitments for future purchases, and there were no significant disposals during the year ended December 31, 2025.

11. INVESTMENTS

As discussed in Note 5, the Company's investment in an early-stage European cannabis company was fully divested as part of the Company's sale of the Cannabis Business on September 26, 2025. As at December 31, 2024, this investment consisted of common shares and warrants to purchase additional common shares in the early-stage European cannabis company. The Company purchased common shares from the investee during 2021 for Euro 2.0 million ($2.4 million), purchased its first tranche of warrants from existing investors in exchange for 11,250 common shares of the Company and obtained a second tranche of warrants from the investee as an inducement to exercise some of the first tranche of warrants. As at December 31, 2024, the Company owned approximately 9.6% of the investee, or approximately 9% on a diluted basis including exercisable warrants of the Company and other investors.

The warrants allowed the holder to purchase one common share of the investee for CAD 0.30 ($0.22) for the first tranche, and CAD 1.00 ($0.74) for the second tranche. The Company did not exercise the warrants and they expired on February 1, 2023.

The Company's cost of the investment was recorded based on the fair value of the consideration exchanged as at the respective transaction dates. The investee was not a publicly listed entity and had no active quoted prices for its common shares or warrants. The Company had elected the measurement alternative to record the common share investment at cost and test for impairment. The investment had impairment indicators during 2022 and 2023, and was fully impaired by the end of 2023. The Company also considers observable transactions of the common shares for indicators of fair value but there have been none. Cumulative impairment related to the common shares was $2.9 million and the net carrying value was $nil at December 31, 2024.

12. ASSET ACQUISITIONS AND BUSINESS COMBINATIONS

2025 Acquisition

United business combination

On January 30, 2025, the Company and United, a South Dakota corporation, entered into a Share Purchase Agreement (the "United Purchase Agreement") pursuant to which the Company purchased 100% of the issued and outstanding common shares of United (the "United Common Shares"). Under the terms of the United Purchase Agreement, the Company agreed to purchase the United Common Shares from the group of sellers listed in the United Purchase Agreement (the "United Sellers"), which included Clifford Starke and Sammy Dorf, each of whom were directors of the Company, and the Company's Chief Financial Officer, Dany Vaiman (together, the "Related Parties") for (i)23,688 shares of the Company, valued at $0.8 million utilizing the $34.32 share price on February 4, 2025, and representing 4.99% of the outstanding common shares of the Company as of January 30, 2025, issued to the United Sellers who are not Related Parties and (ii) promissory notes with five year maturities that accrue interest at a rate of 6% per annum in an aggregate principal amount of $2.1 million issued to the United Sellers. Total consideration for the United acquisition was $2.9 million.

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

United was founded in 2024 and is a distributor of cannabis-infused drinks. The acquisition allowed the Company to drive synergies with its existing portfolio of brands.

The purchase is accounted for as a business combination with amounts recognized as at the February 4, 2025 acquisition date for each major class of assets acquired and liabilities assumed are as follows:

As discussed in Note 2 and Note 5, the Company transferred 100% of the issued and outstanding equity interests of United and other entities to Flora Growth US Holdings LLC and certain Noteholders of the Company in exchange for full satisfaction of the balance receivable under the promissory notes.

2024 Acquisitions

TruHC business combination

On April 16, 2024, the Company entered into a Stock Purchase Agreement (the "TruHC Purchase Agreement") with TruHC (the "TruHC Seller") pursuant to which the Company acquired all of the issued and outstanding shares of TruHC in exchange for 71,044 common shares of the Company (the "TruHC Purchase Price"), valued at $4.3 million.

The TruHC Purchase Price was paid and satisfied by the Company in two closings. At the first closing on April 22, 2024, the Company issued 54,751 of its common shares, which was equal to 19.99% of the Company's issued and outstanding common shares prior to signing the TruHC Purchase Agreement, to the TruHC Seller. The common shares issued at the first closing on April 22, 2024, valued at $3.3 million, represented a 77% ownership in TruHC. The remaining 23% noncontrolling interest was valued at $1.0 million, which represents the 16,293 common shares to be issued at the second closing multiplied by the $60.84 share price at the first closing. The second closing occurred on November 27, 2024 when the Company issued 16,293 of its common shares, valued at $1.0 million, to the TruHC Seller after receiving shareholder approval for such issuance in accordance with the rules of the Nasdaq Stock Capital Market at its annual general meeting of shareholders, held August 14, 2024.

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

TruHC is an early-stage cannabis company based in Hamburg, Germany, that holds wholesale, processing and production licenses for medical cannabis as well as a facility offering flexible production space with European Union Good Manufacturing Practice ("EU-GMP") certified modules. The acquisition allowed the Company to leverage TruHC's German network and EU-GMP production facility and maximize the benefits of the recent cannabis legislation passed in Germany.

The purchase is accounted for as a business combination with amounts recognized as at the acquisition date for each major class of assets acquired and liabilities assumed are as follows:

As discussed in Note 2 and Note 5, the Company transferred 100% of the issued and outstanding equity interests of TruHC and other entities to Flora Growth US Holdings LLC and certain Noteholders of the Company in exchange for full satisfaction of the balance receivable under the promissory notes issued by the Company to such Noteholders as part of the Company's acquisition of United Beverage Distribution Inc. on February 4, 2025.

AV business combination

On June 4, 2024, the Company acquired 100% of the issued and outstanding common shares of AV in exchange for 14,103 common shares of the Company, valued at $0.6 million, which represents the 14,103 common shares issued multiplied by the $45.24 share price on June 4, 2024. AV was founded in 2010 and is an online retailer of vaporizers, hardware, and accessories in Australia. The acquisition provided the Company with a historically profitable business and allowed the Company to drive synergies with its existing portfolio of brands.

The purchase is accounted for as a business combination with amounts recognized as at the acquisition date for each major class of assets acquired and liabilities assumed are as follows:

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

As discussed in Note 2 and Note 5, the Company transferred 100% of the issued and outstanding equity interests of AV and other entities to Flora Growth US Holdings LLC and certain Noteholders of the Company in exchange for full satisfaction of the balance receivable under the promissory notes issued by the Company to such Noteholders as part of the Company's acquisition of United Beverage Distribution Inc. on February 4, 2025.

13. IMPAIRMENT OF ASSETS

The Company tests its goodwill for impairment as part of its annual fourth quarter impairment test, and at interim periods when impairment indicators exist. The Company's goodwill was assigned to the reporting units associated with the original acquisition of those operations. Management determined the Company's reporting units for impairment testing were its former reportable segments shown in Note 25, but with the former house of brands segment broken down into separate reporting units for the Company's JustCBD, Vessel, United and AV product groups of assets, and with the former commercial and wholesale segment broken down into separate reporting units for the Company's FGH and TruHC reporting units.

The Company may consider the results of both an income approach (discounted cash flows) and market approach (guideline public companies) when determining the recoverable amount of its reporting units. For the income approach, the significant assumptions used in the calculation of the recoverable amounts of the reporting units include forecasted revenue, expenses and net cash flows, terminal period cash flows and growth rates, and the weighted average cost of capital used as the discount rate. These assumptions are considered Level 3 inputs in the fair value hierarchy. The assumptions consider historical and projected data from internal sources as well as external industry trends and expectations. For the market approach, the significant assumptions include identifying and calibrating relevant guideline public companies and determining the financial metric to measure against. The results of the two approaches are considered, and judgment is applied in weighting each approach to determine the recoverable amount of the reporting unit.

For long-lived assets other than goodwill, which show impairment indicators are present, the Company compares its expected undiscounted future cash flows to the carrying value of the asset group. If the undiscounted future cash flows are less than the carrying value of the assets, then the fair value of the asset group is calculated using an income or market approach as discussed in the prior paragraph. The significant assumptions used in calculating the undiscounted future cash flows include determining the primary asset of the asset group which sets the length of time to project the cash flows, and the forecasted revenue, expenses and net cash flows relating to the asset group.

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

2025 Impairment Test of Discontinued Operations

For the year ended December 31, 2025, all the Company's goodwill was associated with the Cannabis Business. As such, the Company assessed the goodwill and long-lived assets of each of the Cannabis Business for indicators of impairment. While no indicators of impairment were noted, the Company determined the fair value of the disposal group was less than the carrying value of the net assets. The carrying value of the TruHC reporting unit was $4.9 million, comprised mainly of goodwill of $2.2 million and licenses of $2.5 million. Because the fair value of the disposal group was less than the carrying amount of the net assets, the Company recorded an impairment of $1.4 million within the commercial and wholesale segment. This item was recorded in the loss from discontinued operations, net of taxes caption on the unaudited condensed interim consolidated statements of loss and comprehensive loss.

Other Long-Lived Asset Impairment Tests for the year ended December 31, 2025

As discussed in Note 15, the Company had been subleasing retail space in Miami, Florida to a third party since the third quarter of 2023. The Company is leasing this retail space pursuant to a lease agreement that expires in November 2026, which is the same term as the sublease agreement. In March 2025, the sublessor informed the Company that it planned to terminate the sublease agreement, effective in May 2025. The Company considered this to be an indicator of impairment, and, thus, performed a quantitative analysis as of March 31, 2025 to determine if impairment existed by comparing the carrying amount of the operating lease right of use asset to the future undiscounted cash flows the asset is expected to generate over its remaining life. This analysis indicated the asset values may not be recoverable. The Company then calculated the fair value of this asset using an income approach. As a result, the Company recorded an impairment of operating lease right of use assets within its corporate asset group and segment totaling less than $0.1 million. These charges were recorded in the asset impairment caption on the consolidated statements of loss and comprehensive loss. The Company has found a new sublessor for this space under an agreement with similar payment terms as the original sublease. Therefore, there were no further indicators of impairment as of December 31, 2025.

2024 Impairment Test of Discontinued Operations

The Company qualitatively assessed whether it is more likely than not that the fair value of TruHC is less than its carrying amount, including goodwill. Based on that assessment, the Company determined that this condition, for TruHC, does not exist. As such, performing the first step of the two-step test impairment test for TruHC was unnecessary.

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

2024 Goodwill Impairment Test of AV

At September 30, 2024, the Company's AV reporting unit had external indicators of impairment due to new limitations by the Australian government that limits the sales of vaporizers containing nicotine to only pharmacies, which are likely to negatively impact AV's direct-to-consumer online sales. As such, the Company tested the AV reporting unit for impairment as at September 30, 2024 and determined that the carrying value of the AV reporting unit's assets exceeded the recoverable amount, resulting in goodwill impairment of $0.2 million recorded in the period ending September 30, 2024. The impairment is recorded in the loss from discontinued operations, net of taxes caption on consolidated statements of loss and comprehensive loss.

AV's September 30, 2024 carrying value of $0.6 million was comprised primarily of goodwill of $0.2 million and other long-lived assets of $0.2 million. The carrying value is reduced by inseparable market participant liabilities associated with the June 2024 acquisition of AV which includes $0.1 million of lease liability. The estimated recoverable amount of AV at September 30, 2024 was $nil, resulting in goodwill impairment of the remaining $0.2 million as the carrying value of the reporting unit's assets exceeds the recoverable amount. The impairment is recorded in the loss from discontinued operations, net of taxes caption on consolidated statements of loss and comprehensive loss.

The reporting unit's fair value was determined based on an income approach discounted cash flow model. After working capital adjustments, the resulting fair value was estimated at $nil. The income approach used a discount rate of 16%, operating margins from -31% to -41%, working capital requirements of 3% of revenue, and a terminal period growth rate of 2.5%. Revenue is expected to decrease 46% in 2024, decrease another 30% in 2025, then increase at 2.5% in 2026 and thereafter. The impairment test valuation is considered a Level 3 method within the ASC 820 fair value hierarchy.

After the impairment recorded at September 30, 2024, AV's carrying value was equal to its recoverable amount. As a sensitivity assessment to the recoverable amount calculations, increasing the discount rate by 3% in the income approach model would decrease the reporting unit fair value by $0.1 million. However, there would be no impact on the goodwill impairment amount for this unfavorable change in the model as the imputed fair value of the goodwill exceeded its carrying amount with the goodwill impaired to zero.

Other Long-Lived Asset Impairment Tests for the year ended December 31, 2024

For asset groups that had indicators of impairment, the Company performed a quantitative analysis as of each interim period in 2024 to determine if impairment existed by comparing the carrying amount of each asset group to the future undiscounted cash flows the asset group is expected to generate over their remaining lives. This analysis indicated that certain asset values may not be recoverable. The Company then calculated the fair value of these assets using an income approach. These analyses are discussed below. All the below charges were recorded in the loss from discontinued operations, net of taxes caption on the consolidated statements of loss and comprehensive loss for the year ended December 31, 2024. These impairment test valuations are considered a Level 3 method within the ASC 820 fair value hierarchy.

On May 7, 2024, Just Brands LLC agreed to a settlement and general release, whereby Just Brands LLC is to remove the products subject to the stop sales orders from the state of Florida and accept a five-year revocation of its food permit in the state of Florida. As a result of this settlement, the Company began negotiations to exit its current warehouse lease in Pompano Beach, FL, and searching for a new warehousing facility in a different state. The Company considered this to be an indicator of impairment and, thus, performed a quantitative analysis as of March 31, 2024 to determine if impairment existed by comparing the carrying amount of the operating lease right of use asset and related leasehold improvements to the future undiscounted cash flows the asset is expected to generate over its remaining life. This analysis indicated the asset values may not be recoverable. The Company then calculated the fair value of this asset using an income approach. As a result, the Company recorded an impairment of operating lease right of use assets and property, plant and equipment within its Vessel asset group within the house of brands segment totaling $0.9 million. The key inputs included in the recoverable amount calculations are the potential sub-lease recoveries and a 10% discount rate. As a sensitivity assessment to the recoverable amount calculations, increasing the discount rate in the income approach model by 3% would result in a nominal decrease of the recoverable amounts.

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

Likewise, a facility lease housing the High Roller Private Label LLC operations expired on June 30, 2024, and the Company had completed the move of these operations to the new warehouse in Pompano Beach, FL. The Company determined that much of the machinery and office equipment at the old facility would not be used at the new facility. As such, the Company looked to sell these assets. The Company was able to estimate the selling price of each asset as well as any potential cost of sales, which was then compared to the current book value of the assets. The difference of $0.1 million was recorded within its JustCBD asset group within the house of brands segment for the period ending June 30, 2024. The Company had been unsuccessful in selling these assets and had no intention of utilizing them in the future. As such, the Company believed the value of these assets was $nil and recorded impairment of $0.1 million within its JustCBD asset group within the house of brands segment for the period ending December 31, 2024. The key inputs included in the recoverable amount calculations are the expected selling prices of each asset. As a sensitivity assessment to the recoverable amount calculations, increasing the selling prices by 3% would result in a nominal increase of the recoverable amounts.

The Company determined that the reduced sales forecast of Vessel was an indicator of impairment as of June 30, 2024 and again at December 31, 2024. The Company performed a quantitative analysis to determine if impairment existed by comparing the carrying amount of each asset group to the future undiscounted cash flows the asset group is expected to generate over their remaining lives. This analysis indicated that the carrying amount of certain asset values may not be recoverable. The Company then calculated the fair value of these assets using an income approach. As a result, the Company recorded impairment of patents and tradenames within its Vessel asset group within the house of brands segment totaling $0.1 million and $0.3 million for the periods ended June 30, 2024 and December 31, 2024, respectively. The key inputs included in the recoverable amount calculations are 2024 sales 20% lower than 2023 sales and a royalty rate ofnil%.

The Company determined that the reduced sales forecast of JustCBD was an indicator of impairment as at December 31, 2024. The Company performed a quantitative analysis to determine if impairment existed by comparing the carrying amount of each asset group to the future undiscounted cash flows the asset group is expected to generate over their remaining lives. This analysis indicated that the carrying amount of certain asset values may not be recoverable. The Company then calculated the fair value of these assets using an income approach. As a result, the Company recorded impairment of tradenames within its JustCBD asset group within the house of brands segment totaling $0.4 million the period ended December 31, 2024. The key inputs included in the recoverable amount calculations are 2024 sales decreasing 42% compared to 2023 sales, then decreasing another 26% in 2025, royalty rate of 0.25%, and discount rate of 25.5%. As a sensitivity assessment to the recoverable amount calculations, increasing the discount rate in the income approach model by 3% would result in a nominal decrease of the recoverable amounts.

The Company determined that the new limitations by the Australian government that limits the sales of vaporizers containing nicotine to only pharmacies was an indicator of impairment as at September 30, 2024. The Company performed a quantitative analysis to determine if impairment existed by comparing the carrying amount of each asset group to the future undiscounted cash flows the asset group is expected to generate over their remaining lives. This analysis indicated that the carrying amount of certain asset values may not be recoverable. The Company then calculated the fair value of these assets using an income approach. As a result, the Company recorded impairments of brands within its AV asset group within the house of brands segment totaling $0.2 million. The key inputs included in the recoverable amount calculations are 2024 sales decreasing 46% compared to 2023 sales, then decreasing another 30% in 2025, royalty rate of 0.7%, and discount rate of 17.0%. As a sensitivity assessment to the recoverable amount calculations, increasing the discount rate in the income approach model by 3% would result in a nominal decrease of the recoverable amounts.

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

14. DEBT

The Company's debt consisted of the following:

Zero Gravity Convertible Note

On October 23, 2025, the Company received 50,000,000 0G Tokens from Zero Gravity in exchange for the issuance of the Zero Gravity Convertible Note in an aggregate original principal amount of 50,000,000 0G Tokens as part of the Cryptocurrency Offering discussed in Note 1. The Zero Gravity Convertible Note, which matures on September 22, 2035 and contains an option for the Company to prepay at any time by delivering the 0G Tokens back to the holder without penalty, was valued at $87.9 million on October 23, 2025. The Company has elected the fair value option under ASC 825-10-50-28 and accordingly measures the instrument at fair value each reporting period with changes in fair value recognized in the changes in financial instruments fair value line on the consolidated statements of loss and comprehensive loss. The fair value of the Zero Gravity Convertible Note was determined using a Monte Carlo simulation incorporating Brownian motion, which simulates a distribution of stock prices of the Company and the 0G Token prices throughout the term of the notes. The significant inputs to the valuation include an 9.9-year term to maturity, the closing value of 0G on October 23, 2025 ($1.76), the closing price of the Company’s common stock on October 23, 2025 ($13.87), a discount rate of 21.0%, a risk-free rate of return of 3.63%, a volatility of 102% based on the available historical volatility of Solana calculated from its historical daily returns, a contractual conversion price of $33.34, and an 8.0% interest rate on the note.

The Zero Gravity Convertible Note accrues interest payable in 0G Tokens, or in cash at $3.00 per token at the holder’s option, at a rate of eight percent (8.0%) per annum, payable quarterly in arrears on March 31, June 30, September 30 and December 31 (each such date, an "Interest Payment Date"). At the Company’s option, with respect to any Interest Payment Date through and including September 30, 2026, accrued interest for the applicable period can be payable in-kind by capitalizing and adding such accrued interest to the outstanding 0G Token principal amount. The Zero Gravity Convertible Note is denominated in 0G Tokens. However, at maturity, the original principal of the note is repayable in 0G whereas the holder can demand interest in either 0G Tokens or in cash at $3.00 per token. Shareholder approval of the issuance of the Common Shares underlying the Zero Gravity Convertible Note was obtained at the Shareholder Meeting, which occurred on December 19, 2025, and the Zero Gravity Convertible Note and accrued and unpaid interest became convertible into common shares (the "Zero Gravity Note Shares") at a conversion ratio of the U.S. Dollar Value (as defined in the Zero Gravity Convertible Note) of Tokens divided by $33.34, subject to updates in accordance with the terms of the Zero Gravity Convertible Note. This conversion is also limited to a 4.99% maximum ownership percentage of the number of Common Shares outstanding immediately after giving effect of such issuance. The 0G Tokens related to the Zero Gravity Convertible Note contain restrictions that prevent the Company from selling the tokens or the related staking rewards unless it obtains prior written consent from Zero Gravity.

As of December 31, 2025, the total outstanding amount on the Zero Gravity Convertible Note was 51,000,000 0G Tokens with a fair value of $50.7 million. The reduction in outstanding amount from the date of issuance was due mainly to a fair value adjustment of $37.1 million. The fair value of the Zero Gravity Convertible Note was determined as the lower of the prepayment amount and the fair value using a Monte Carlo simulation incorporating Brownian motion, which simulates a distribution of stock prices of the Company and the 0G Token prices throughout the term of the notes. The significant inputs to the valuation include an 9.7-year term to maturity, the closing value of 0G on December 31, 2025 ($0.98), the closing price of the Company’s common stock on December 31, 2025 ($6.26), a discount rate of 21.5%, a risk-free rate of return of 3.84%, a volatility of 101% based on the available historical volatility of Solana calculated from its historical daily returns, a contractual conversion price of $33.34, and an 8.0% interest rate on the note. The amount for the Zero Gravity Convertible Note is measured as a Level 3 fair value financial instrument within the fair value hierarchy.

PIPE Note

On October 24, 2025, the Company received 95,333 Solana in exchange for the issuance of the PIPE Note in an aggregate original principal amount of 95,333 Solana as part of the September 2025 private placement discussed in Note 14. The PIPE Note matures on October 24, 2030, but the holder can demand full prepayment during two 60-day windows after the 1st and 2nd anniversaries of issuance. The PIPE Note was valued at $14.7 million on October 24, 2025. The Company has elected the fair value option under ASC 825-10-50-28 and accordingly measures the instrument at fair value each reporting period with changes in fair value recognized in the changes in financial instruments fair value line on the consolidated statements of loss and comprehensive loss. The fair value of the PIPE Note was determined using a Monte Carlo simulation incorporating Brownian motion, which simulates a distribution of stock prices of the Company and Solana prices throughout the term of the notes. The significant inputs to the valuation include a 5.0-year term to maturity, the closing value of Solana on October 24, 2025 ($193.58), the closing price of the Company’s common stock on October 24, 2025 ($13.30), a discount rate of 112.5%, a risk-free rate of return of 3.30%, a volatility of 102% based on the available historical volatility of Solana calculated from its historical daily returns, a contractual conversion price of $33.34, and an 8.0% interest rate on the note. Because of the prepayment feature, the simulation analysis further considers if the holder would require the Company to prepay the note on either the 1st anniversary or the 2nd anniversary of the issuance date (the "Put Date"). The calculation is based on the higher of: i) the put value at each Put Date (calculated based on the higher of the Solana price or USD equivalent at $240) or ii) the present value of the Note at maturity (either conversion or repayment) plus the present value of forgone interest to the maturity date.

The PIPE Note accrues interest payable in Tokens at a rate of eight percent (8.0%) per annum, payable quarterly in arrears on March 31, June 30, September 30 and December 31 (each such date, an "Interest Payment Date"). At the Company’s option, with respect to any Interest Payment Date through and including September 30, 2026, accrued interest may be payable in kind by capitalizing and adding to the outstanding principal amount. The PIPE Note is denominated in Solana, but the holder can demand repayment of principal and interest in USD at a fixed conversion rate of $240. Shareholder approval was obtained at the Shareholder Meeting, which occurred on December 19, 2025, and the PIPE Note and accrued and unpaid interest became convertible into common shares at a conversion ratio of the U.S. Dollar value of Solana divided by $33.34. This conversion was also limited to a 4.99% maximum ownership percentage of the number of Common Shares outstanding immediately after giving effect of such issuance.

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

On December 29, 2025, the Company entered into a note settlement agreement (the "Note Settlement Agreement") with the holder pursuant to which the PIPE Note was settled. The Note Settlement Agreement provided that upon payment by the Company to the holder on December 30, 2025 of: (i)96,162 Solana with a value of $9.9 million based on the $124.88 closing price of Solana on December 30, 2025 as reported on its principal market, Kraken, and reduced by a 19.5% DLOM for the portion of the Solana that was locked, (ii) $1.8 million in cash and (iii)111,550 common shares of the Company, with a value of $0.7 million based on the $6.33 per share closing share price on December 30, 2025, then the Company was deemed to have paid the entire principal and interest of the PIPE Note in full, the Company had no further obligations under the PIPE Note, and the PIPE Note was deemed to be satisfied.

As of December 30, 2025, the date of settlement, PIPE Note was valued at $13.9 million. The fair value of the PIPE Note was determined using a Monte Carlo simulation incorporating Brownian motion, which simulates a distribution of stock prices of the Company and Solana prices throughout the term of the notes. The significant inputs to the valuation include a 4.8-year term to maturity, the closing value of Solana on the December 30, 2025 ($124.88), the closing price of the Company’s common stock on December 30, 2025 ($6.33), a discount rate of 112.9%, a risk-free rate of return of 3.47%, a volatility of 101% based on the available historical volatility of Solana calculated from its historical daily returns, a contractual conversion price of $33.34, and an 8.0% interest rate on the note. Because of the prepayment feature, the simulation analysis further considers if the holder would require the Company to prepay the note on either the 1st anniversary or the 2nd anniversary of the issuance date (the "Put Date"). The calculation is based on the higher of: i) the put value at each Put Date (calculated based on the higher of the Solana price or USD equivalent at $240) or ii) the present value of the Note at maturity (either conversion or repayment) plus the present value of forgone interest to the maturity date. The amount for the PIPE Note is measured as a Level 3 fair value financial instrument within the fair value hierarchy as at December 30, 2025.

The Company recorded a gain on the settlement of the PIPE note of $1.6 million, which was recorded in the changes in financial instruments fair value line on the consolidated statements of loss and comprehensive loss for the year ended December 31, 2025.

Euro credit facility

The Company, through its Phatebo subsidiary, has credit facilities totaling 2.4 million Euro, or $2.8 million (2024 -2.4 million Euro, or $2.5 million), at three different banks in Germany. These arrangements are open-ended without predetermined maturity dates. Principal and interest payments are due at the end of the respective terms, with interest payable either monthly or at the end of the term, depending on the lending institution. Interest rates can be adjusted every three to six months. As of December 31, 2025, the total outstanding amount on these credit facilities was 2.3 million Euro, or $2.7 million, (2024 - $2.0 million Euro, $2.1 million) with a weighted average interest rate of 7.44% and due within the next twelve months. These credit facilities are secured by various guarantees, including payment guarantees upon default.

United promissory notes (Related Parties)

As discussed in Note 12, the Company issued promissory notes with five-year maturities that accrue interest at a rate of 6% per annum in an aggregate principal amount of $2.1 million to the Sellers of United on February 4, 2025. The promissory notes required the first payments of principal and interest to be made in February 2026. On September 26, 2025, the Company transferred the equity and assets of the Cannabis Business in exchange for the cancellation of the promissory notes. See Note 5. At September 26, 2025, the total outstanding amount of these promissory notes was $2.2 million, $0.4 million of which was due within the next 12 months. Of the total amount outstanding at September 26, 2025, $1.9 million was owed to the Related Parties. These promissory notes were secured by payments guarantees and a default interest rate of 11% upon default.

ZeroStack Corp. (formerly Flora Growth Corp.)Notes to the consolidated financial statementsFor the years ended December 31, 2025 and 2024(in thousands of United States dollars, except number of shares and units and per share and per unit amounts, or as indicated)

Maturities

The following table shows the maturities of the Company's debt instruments outstanding as of December 31, 2025.

15. LEASES

The Company's leases primarily consist of administrative real estate leases in Germany and the United States. Management has determined all the Company's leases are operating leases through December 31, 2025. Information regarding the Company's leases is as follows: