ZeroStack Corp.

Maturities of operating lease liabilities as of December 31, 2025 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)

Some of the Company's leases contain renewal options to continue the leases for another term equivalent to the original term, which are generally up to five years. The lease liabilities above include renewal terms that management has executed or is reasonably certain of renewing, which only included leases that would have expired in 2025 or 2026.

In March 2025, the Company began leasing 10,400 sq. ft. of warehouse and office space in Hilzingen, Germany, for $1,000 a month, pursuant to a lease agreement that expires in February 2030.

The Company's operating lease of retail space in Miami, FL expires November 30, 2026. The lease includes an option to extend the lease term for the entire space for a period of five years at the end of the current lease term. At December 31, 2024, the renewal option is not included in the related operating right of use asset recorded. The Company had been subleasing this retail space to a third party since the third quarter of 2023. The Company received notification from the sublessor in March 2025 of its intention to exit the sublease. In July 2025, the Company began subleasing the retail space to a new third party with the new sublease agreement effective through November 30, 2026 and containing one option to renew for five more years.

16. SHARE CAPITAL

Authorized and issued

The Company is authorized to issue an unlimited number of common shares, no par value. 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 below.

The Company had the following significant common share transactions:

Year ended December 31, 2025

SEPTEMBER 2025 PRIVATE PLACEMENT

On September 19, 2025, the Company entered into securities purchase agreements with certain investors pursuant to which the Company agreed to sell and issue the following securities in private placement offerings (collectively, the “PIPE Offering”): (i)116,340 common share units (“PIPE Common Share Units”) at a unit price of $25.19, payable in cash, for aggregate gross proceeds of $2.9 million, with each unit consisting of one common share (“PIPE Common Share”) and 0.2 of a warrant to purchase one common share at an exercise price of $25.19 (“PIPE Warrant”); (ii)419,975 pre-funded warrant units (“PIPE Pre-Funded Warrant Units”) at a unit price of $25.1899, payable in cash, for aggregate gross proceeds of $10.6 million, with each unit consisting of one pre-funded warrant to purchase one common share at an exercise price of $0.0001 (“PIPE Pre-Funded Warrant”) and 0.2 of a PIPE Warrant; (iii)8,546,955 PIPE Pre-Funded Warrants at a unit price of $25.1899, payable in 71,766,135 0G Tokens (as defined below); and (iv) an unsecured convertible note in an aggregate original principal amount of 95,333 Solana (the “PIPE Note”).

On September 19, 2025, the Company entered into an arrangement with Zero Gravity pursuant to which the Company agreed to (i) borrow 50,000,000 0G Tokens from Zero Gravity under a term loan agreement ("Loan Agreement"), and (ii) issue to Zero Gravity in a private placement offering 1,786,423 warrants to purchase one common share at an exercise price of $0.01 ("Loan Agreement Warrants"). On September 22, 2025, the Company entered into the Zero Gravity Convertible Note that will replace the Loan Agreement and Loan Agreement Warrants, subject to closing. The Zero Gravity Convertible Note was issued on October 23, 2025, at which date the 50,000,000 0G Tokens were received.

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 issued 116,340 PIPE Common Shares on September 26, 2025, in connection with the closing of the PIPE Offering. The PIPE Common Shares were issued for cash proceeds in bundled transactions that included PIPE Warrants and, in certain cases, PIPE Pre-Funded Warrants. For each transaction, cash proceeds were allocated among the underlying securities based on relative fair values at issuance. The fair values of the PIPE Common Shares and PIPE Pre-Funded Warrants reflect the Company's common share closing price of $21.10 per share on that date. The fair value of the PIPE Warrants was determined using the Black-Scholes option pricing model with the following inputs: share price of $21.10, risk-free interest rate of 3.7%, expected volatility of 102.5%, expected term of 1,825 days, and dividend yield of 0%. Of the $13.3 million of total cash proceeds, $2.5 million were allocated to PIPE Common Shares. PIPE Common Shares are recorded net of $1.1 million of issuance costs. A total of 69,520 of the PIPE Pre-Funded Warrants were exercised for the Company's common shares during the year ended December 31, 2025. See Note 18.

SEPTEMBER 2025 AT THE MARKET ("ATM") OFFERING

On September 23, 2025, the Company entered into an ATM sales agreement (the "Sales Agreement") with Revere Securities LLC (the "Agent") pursuant to which the Company may sell from time to time, at its option, common shares through the Agent in its capacity as sales agent. The sale of common shares, if any, will be made under the Company's Registration Statement, by any method that is deemed to be an "at the market offering" as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended (the "Securities Act").

Subject to the terms and conditions of the Sales Agreement, the Agent is to use its commercially reasonable efforts, consistent with its normal trading and sales practices and applicable state and federal laws, rules and regulations and the rules of the Nasdaq Capital Market, to sell on the Company's behalf all of the Common Shares requested to be sold by the Company. The Company may instruct the Agent not to sell Common Shares if the sales cannot be effected at or above the price designated by the Company in any such instruction. The Company or the Agent may suspend the offering of Common Shares being made through the Agent under the Sales Agreement upon proper notice to the other parties.

Unless otherwise agreed between the Company and the Agent, settlement for sales of the Common Shares are to occur on the first trading day following the date on which any sales are made. Sales of the Common Shares are to be settled through the facilities of The Depository Trust Company or by such other means as the Company and the Sales Agents may agree.

The aggregate compensation payable to the Agent, in cash, upon each sale of Common Shares through the Agent pursuant to the Sales Agreement, is an amount equal to:(i) 3.00% of the first $150 million in aggregate gross proceeds from the sale of Common Shares, (ii) 2.00% of the next $350 million in aggregate gross proceeds from the sale of the Common Shares, and (iii) 1.25% of any gross proceeds in excess of $500 million from the sale of the Common Shares. In addition, the Company has agreed in the Sales Agreement to provide indemnification and contribution to the Agent against certain liabilities, including liabilities under the Securities Act, in addition to certain other covenants, representations and warranties customary for an agreement of this type.

The Company is not obligated to make any sales of Common Shares under the Sales Agreement. The offering of Common Shares pursuant to the Sales Agreement will terminate upon the termination of the Sales Agreement by the Company or by the Agent, only with respect to itself, under the circumstances specified in the Sales Agreement.

The Company issued a total of 134,089 common shares of the Company at an average purchase price of $11.20 per share for gross proceeds of $1.5 million in the year ended December 31, 2025. See Note 26 for issuances subsequent to December 31, 2025.

MAY 2025 PRIVATE PLACEMENT

On May 2, 2025, the Company entered into a securities purchase agreement (the "May 2025 Securities Purchase Agreement") with certain investors (the "May 2025 Investors") in connection with the issuance and sale by the Company to the May 2025 Investors via a private placement (the "May 2025 Private Placement") of an aggregate of 80,340 common shares (the "May 2025 Common Shares") at a purchase price of $11.70 per share and 18,642 pre-funded warrants of the Company (the "May 2025 Pre-funded Warrants") at a purchase price of $11.6961 per warrant each to purchase one common share which were immediately exercisable and expire when exercised in full, at an exercise price of $0.0039 per share.

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 net proceeds from the sale of the May 2025 Common Shares and May 2025 Pre-funded Warrants were approximately $1.1 million after deducting estimated expenses relating to the May 2025 Private Placement. From these net proceeds the Company used $0.4 million to purchase Solana, $0.4 million to purchase Ethereum, $0.1 million to purchase Sui, $0.1 million to purchase Ripple, and the balance for general corporate and working capital purposes and to pay any fees and expenses of the offering.

A total of 18,642 of these pre-funded warrants were exercised for common shares during the year ended December 31, 2025. See Note 18. The Company filed a registration statement on Form S-3 on May 14, 2025.

FEBRUARY 2025 PAYMENT TO UNITED OWNERS

As discussed in Note 12, the Company issued 23,688 of its common shares valued at $0.8 million to certain prior owners of United, who were also Related Parties, as part of the Company's acquisition of 100% of the issued and outstanding common shares of United on February 4, 2025.

OTHER ISSUANCES

On November 28, 2025, the Company entered into a share purchase agreement (the "ELOC Agreement") with White Lion Capital LLC ("White Lion") pursuant to which White Lion has agreed to purchase from the Company up to an aggregate of $25.0 million of common shares from time to time over the term of the ELOC Agreement, which amount may be increased to up to an aggregate of $50.0 million of common shares upon mutual agreement by the parties and subject to the satisfaction of certain conditions (the "Total ELOC Commitment"). Also, on November 28, 2025, the Company entered into a registration rights agreement with White Lion (the "Registration Rights Agreement"). Pursuant to its obligations under the Registration Rights Agreement, the Company has filed with the SEC the registration statement that includes this prospectus to register the resale under the Securities Act of the common shares that may be issued to White Lion pursuant to the Total ELOC Commitment under the ELOC Agreement. On December 10, 2025, the Company issued 13,469 common shares to White Lion valued at $0.1 million as a commitment fee for the ELOC Agreement.

The ELOC Agreement was negotiated and executed on an arm’s-length basis between independent parties with no existing relationship, and the pricing and other material terms are based on observable market inputs and customary conditions for similar financing arrangements. Accordingly, the Company has accounted for and disclosed the ELOC Agreement as a transaction with a non-related party.

As discussed in Note 14, the Company issued 111,550 common shares of the Company valued at $0.7 million on December 30, 2025 in connection with the Note Settlement Agreement.

Year ended December 31, 2024

DECEMBER 2024 EQUITY OFFERINGS

On December 16, 2024, the Company closed a registered direct offering of 73,077 of the Company's common shares at a public offering price of $48.75 per Common Share for gross proceeds of $3.6 million. The Company paid $0.8 million in issuance costs relating to the December 2024 registered direct offering.

On December 10, 2024 and December 11, 2024, the Company sold an aggregate of 10,899 of the Company’s common shares at a price of $65.13 per common share for gross proceeds of $0.7 million pursuant to separate subscription agreements entered into between the Company and certain institutional investors. The common shares to be issued were offered pursuant to the Company's Offering Statement on Form 1-A, initially filed by the Company with the SEC under the Securities Act, on July 16, 2024, as subsequently amended with the SEC on each of August 7, 2024, October 15, 2024, and November 22, 2024, and most recently qualified by the SEC on November 29, 2024. The Company paid $0.1 million in issuance costs relating to the December 2024 Form 1-A offering.

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)

APRIL AND NOVEMBER 2024 PAYMENTS TO TRUHC OWNERS

As discussed in Note 12, the Company issued 54,751 of its common shares valued at $3.3 million to the prior owners of TruHC as part of the first closing of the Company's acquisition of TruHC on April 22, 2024. The first closing made up 77% of the total agreed upon share price of 71,044 common shares of the Company. The remaining 16,293 common shares of the Company valued at $1.0 million were issued to the prior owners of TruHC as part of the second closing on November 27, 2024, after receiving shareholder approval for such issuance in accordance with the rules of the Nasdaq Capital Market at its annual general meeting of shareholders, held August 14, 2024.

JUNE 2024 PAYMENT TO AV OWNERS

As discussed in Note 12, the Company issued 14,103 of its common shares valued at $0.6 million to the prior owners of AV as part of the Company's acquisition of 100% of the issued and outstanding common shares of AV on June 4, 2024.

APRIL 2024 EQUITY OFFERING

On April 8, 2024, the Company closed an offering of 43,590 of the Company's common shares at a public offering price of $74.10 per Common Share for gross proceeds of $3.2 million. The Company paid $0.4 million in issuance costs relating to the April 2024 equity offering.

The offering of the securities described above was made pursuant to the Company's effective shelf registration statement on Form S-3 (Registration No. 333-274204), filed with the SEC on August 25, 2023 and amended on August 30, 2023, which was declared effective, on September 6, 2023, and the base prospectus included therein, as supplemented by the preliminary prospectus supplement filed with the SEC on April 4, 2024 and the final prospectus supplement filed with the SEC on April 5, 2024.

AT THE MARKET ("ATM") OFFERING

On April 26, 2024, the Company entered into an ATM Issuances Sales Agreement (the "ATM Sales Agreement") with Aegis Capital Corp. (the "ATM Agent") pursuant to which the Company could sell from time to time, at its option, common shares through the ATM Agent in its capacity as sales agent. The sale of common shares, if any, was to be made under the Company's registration statement filed on Form S-3 (File No. 333-274204) (the "Registration Statement"), by any method that is deemed to be an "at the market offering" as defined in Rule 415(a)(4) under the Securities Act.

Subject to the terms and conditions of the ATM Sales Agreement, the ATM Agent was to use its commercially reasonable efforts, consistent with its normal trading and sales practices and applicable state and federal laws, rules and regulations and the rules of the Nasdaq Capital Market to sell on the Company's behalf all of the common shares requested to be sold by the Company. The ATM Agent was to offer the common shares, subject to the terms and conditions of the ATM Sales Agreement, on a daily basis or as otherwise agreed upon by the Company and the ATM Agent. The Company was to designate the maximum amount of common shares to be sold through the ATM Agent on a daily basis or otherwise determine such maximum amount, together with the ATM Agent. The Company could instruct the ATM Agent not to sell common shares if the sales cannot be effected at or above the price designated by the Company in any such instruction. The Company or the ATM Agent could suspend the offering of common shares being made through the ATM Agent under the ATM Sales Agreement upon proper notice to the other parties.

The aggregate compensation payable to the ATM Agent, on behalf of the ATM Agent, was to be up to 3.0% of the aggregate gross proceeds from each sale of the common shares sold through the ATM Agent pursuant to the ATM Sales Agreement. In addition, the Company had agreed in the ATM Sales Agreement to provide indemnification and contribution to the ATM Agent against certain liabilities, including liabilities under the Securities Act.

The Company was not obligated to make any sales of common shares under the ATM Sales Agreement. The offering of common shares pursuant to the ATM Sales Agreement was to terminate upon the termination of the ATM Sales Agreement by the Company or by the ATM Agent, only with respect to itself, under the circumstances specified in the ATM Sales Agreement. The Company did not sell any of its common shares under the ATM Sales Agreement. On December 12, 2024, the Company and the ATM Agent mutually agreed to terminate the ATM Sales Agreement effective as of December 12, 2024. On December 12, 2024, the Company filed a prospectus supplement to de-register the common shares registered with the SEC for issuance under the ATM Program.

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)

OTHER ISSUANCES

On March 8, 2024, the Company entered into a settlement agreement with a third party pursuant to which the Company issued 1,283 common shares of the Company, valued at $0.1 million, to a third party to settle outstanding amounts owed.

17. SHARE BASED COMPENSATION

The Company adopted the Flora Growth Corp. 2022 Incentive Compensation Plan (the “2022 Plan”) to attract, retain and motivate independent directors, executives, key employees and consultants. The 2022 Plan was approved by the Company’s shareholders on July 5, 2022, and reserves an aggregate of 7,693 of the Company’s common shares for issuance in connection with Awards (as defined in the 2022 Plan) granted under the 2022 Plan. The 2022 Plan was amended on June 6, 2023, with approval from the Company’s shareholders, to increase the shares available under the 2022 Plan from 7,693 to 24,359. The 2022 Plan was amended, again, to increase the number of shares issuable thereunder from 24,359 to 64,103 shares on August 14, 2024, with approval from the Company’s shareholders. The 2022 Plan was amended, again, to increase the number of shares issuable thereunder from 64,103 to 115,385 shares on June 30, 2025, with approval from the Company’s shareholders. And on December 19, 2025 the 2022 Plan was amended, again, to increase the number of shares issuable thereunder from 115,385 to 1,506,892 shares. Previously, the Company’s shareholders had adopted a “rolling” stock option plan (the “Prior Plan”) which authorized the Company to grant stock options constituting up to 10% of the Company’s issued and outstanding common shares at the time of each option grant. Since the adoption of the 2022 Plan, no further grants have been made or will be made under the Prior Plan; however, any currently outstanding stock options granted prior to July 5, 2022 will remain in effect until they have been exercised or terminated or have expired in accordance with the terms of the Prior Plan. Under the 2022 Plan, the compensation committee of our board of directors (the “Committee”) may grant a variety of awards including stock options, stock appreciation rights (“SAR”s), restricted stock, restricted stock units, dividend equivalents and other stock-based awards.

OPTIONS

Stock options granted under the Prior Plan are non-transferable and non-assignable and may be granted for a term not exceeding five years. Under the 2022 Plan, stock options may be granted with a term of up to ten years and in the case of all stock options, the exercise price may not be less than 100% of the fair market value of a Common Share on the date the award is granted. Stock option vesting terms are subject to the discretion of the Committee. Common shares are newly issued from available authorized shares upon exercise of awards.

Information relating to share options outstanding for the years ended December 31, 2025 and 2024 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)

Information relating to share options outstanding and exercisable as at December 31, 2025 is as follows:

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. The significant inputs to the valuation include a 10-year term to expiration, the closing price of the Company’s common shares on the December 19, 2025 grant date ($7.31), a risk-free rate of return of 4.12% per annum, and a volatility of 102% based on the historical volatility of Solana calculated from its historical daily returns.

The total expense related to the options granted in the year ended December 31, 2025 was $0.3 million (2024 – less than $0.1 million). This expense is included in the share based compensation line on the consolidated statement of loss and comprehensive loss. The options granted in 2025 vest based on the Company's volume weighted average price ("VWAP") of the Company's Common Shares as follows:

During the year ended December 31, 2025,107 (2024 -726) unexercised stock options expired following the termination of certain employees and independent directors and were charged to deficit.

There were no options exercised in the years ended December 31, 2025 and 2024. The total fair value of options vested in the year ended December 31, 2025 was $nil (2024 - less than $0.1 million).

For the years ended December 31, 2025 and 2024, there has been no recognized income tax benefits associated with stock options, and no amounts capitalized as part of the cost of an asset.

At December 31, 2025 the total remaining stock option cost for nonvested awards is expected to be $7.5 million over a weighted average future period of 0.7 years until the awards vest. A total of 1,178,020 options issued in 2025 will vest based on the VWAP of the Company’s Common Shares, as described above, provided if the award holder is still employed or engaged by the Company or the twelve-month anniversary of the date the award holder’s service ceased.

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)

RESTRICTED STOCK AWARDS

Restricted stock is a grant of common shares which may not be sold or disposed of, and which is subject to such risks of forfeiture and other restrictions as the Committee, in its discretion, may impose. A participant granted restricted stock generally has all of the rights of a shareholder of the Company, unless otherwise determined by the Committee. Subject to certain exceptions, the vesting of restricted stock awards is subject to the holder's continued employment or engagement through the applicable vesting date. Unvested restricted stock awards will be forfeited if the holder's employment or engagement ceases during the vesting period and may, in certain circumstances, be accelerated. The Company values restricted stock awards based on the closing share price of the Company's common shares as of the date of grant. The fair value of the restricted stock award is recorded as expense over the vesting period.

Information relating to restricted stock awards outstanding for the years ended December 31, 2025 and 2024:

The total expense related to the restricted stock awards for the year ended December 31, 2025 was less than $0.1 million (2024 - $1.6 million). This expense is included in the share based compensation line on the consolidated statements of loss and comprehensive loss. For the years ended December 31, 2025 and 2024, there have been no recognized income tax benefits associated with restricted stock awards.

The Company issued 31,669 restricted stock awards that vested immediately on December 15, 2024 at a total fair value of $1.6 million. The remaining restricted stock awards issued are to vest in 2026 provided the award holder is still employed or engaged by the Company. As of December 31, 2025, the Company had less than $0.1 million of unrecognized compensation expense related to restricted stock awards which is to be recognized over the next year.

There were no restricted stock awards expired or were forfeited in the year ended December 31, 2025 (2024 -91).

STOCK APPRECIATION RIGHTS ("SARs")

SARs grant a right to receive, upon exercise thereof, the excess of the fair market value of one common share on the date of exercise over the grant price of the SAR. The grant price of a SAR shall not be less than 100% of the fair market value of a common share on the date of the grant. SARs generally vest over a period of zero to three years and have a term of ten or eleven years. The SARS granted by the Company to date are only payable in the Company's common shares and have no cash payments options.

On August 14, 2024, the Company granted 41,139 and 13,712 SARs to its Chief Executive Officer and Chief Financial Officer, respectively, which was approved by a majority of the Company's shareholders at the Company's annual meeting held on August 14, 2024. The fair value of the SARs at August 14, 2024 was determined using a Monte Carlo simulation incorporating Brownian motion. The significant inputs to the valuation include an 11-year term to maturity, the Company's closing share price at August 14, 2024 ($35.49), estimated volatility (110%) based on the Company's common share and comparable companies' historical volatilities, and risk-free rate of 3.8% per annum to discount the ending result to present value. The valuation also includes a derived service period, which is the median time to vest, as calculated by the model. This derived service period inherently contains some degree of estimation uncertainty.

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 15, 2024, the Company granted 11,286 SARS to officers, directors, employees and consultants of the Company pursuant to the 2022 Plan. The fair value of the SARS at December 15, 2024 was determined using a Black Scholes pricing model with the following assumptions: the $50.70 price of the Company's common shares; expected dividend yield of 0%; expected volatility of 110% based on the Company's common share and comparable companies' historical volatilities; risk-free interest rate of 4.35% and an expected life of 10.0 years.

On June 30, 2025, Flora's shareholders approved the repricing and amendment of vesting terms of certain outstanding SARS granted to certain employees and executive officers of the Company, including the SARs granted on August 14, 2024 and on December 15, 2024. The new base price of these SARs will be $22.62, the closing share price of the Company's stock as of June 30, 2025.

The vesting terms of the SARs granted on December 15, 2023 and August 14, 2024 to the Company's Chief Executive Officer were amended such that the first of nine tranches will vest upon the Company's share price increasing by 25% from $22.62, with each tranche thereafter requiring an additional 25% increase in share price. The vesting terms of the SARs granted on December 15, 2023 and August 14, 2024 to the Company's Chief Financial Officer were amended such that the first of eight tranches will vest upon the Company's share price increasing by 25% from $22.62, with each tranche thereafter requiring an additional 25% increase in share price. In accordance with ASC 718, the Company treated this modification of terms as an exchange of the original award for a new award. The fair value of the new SARs award was determined using a Monte Carlo simulation incorporating Brownian motion. The significant inputs to the valuation include a 10.1-year term to maturity, the Company's closing share price at June 30, 2025 ($22.62), estimated volatility (110%) based on the Company's common share and comparable companies' historical volatilities, and risk-free rate of 4.2% to discount the ending result to present value. The valuation also includes a new derived service period, which is the median time to vest, as calculated by the model. The new valuation resulted in an incremental value of less than $0.1 million, which, along with the unrecognized compensation cost, will be recognized as compensation cost over the new requisite service period.

The SARS granted on December 15, 2024, and amended on June 30, 2025, were vested at the grant date and the expense was accelerated at that time. There is no incremental fair value for these awards.

Mr. Clifford Starke resigned as director and Chief Executive Officer of the Company on October 1, 2025. Under terms of Mr. Starke's SARs agreement, this triggered the full vesting of his remaining outstanding SARS. Under terms of Mr. Starke's separation agreement, all his 41,139 SARs were cancelled on December 19, 2025.

Information relating to SARs outstanding for the years ended December 31, 2025 and 2024:

The total expense related to the SARs in the year ended December 31, 2025 was $0.9 million (2024 - $1.1 million). This expense is included in the share based compensation line on the consolidated statements of loss and comprehensive loss. For the years ended December 31, 2025 and 2024, there have been no recognized income tax benefits associated with SARs.

There were no SARs exercised for the years ended December 31, 2025 and 2024.

The SARs granted in 2024 will vest in tranches based on the derived service period, ranging from zero to one year, provided that the recipient is still employed or engaged by the Company.

**18. **WARRANTS

MAY 2025 PRIVATE PLACEMENT

As discussed in Note 16, the May 2, 2025 Private Placement included the 18,642 May 2025 Pre-funded Warrants at a purchase price of $11.6961 per warrant each to purchase one common share which shall be immediately exercisable and expire when exercised in full, at an exercise price of $0.0039 per share. The May 2025 Pre-Funded Warrants are classified as equity because they are freestanding financial instruments, are immediately exercisable, permit the holder to receive a fixed number of the Company's common shares and do not provide any guarantee of value or return. Due to the nominal exercise price and no expiration date, the May 2025 Pre-funded Warrants were allocated a value of $0.2 million at issuance based on the number issued multiplied by $11.6961 per unit cash immediately received. There were 18,642 May 2025 Pre-funded Warrants exercised during the year ending December 31, 2025. There were no May 2025 Pre-funded Warrants outstanding as of December 31, 2025. The intrinsic value of May 2025 Pre-funded Warrants exercised was $0.4 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)

SEPTEMBER PRIVATE PLACEMENT

As discussed in Note 16, the Company issued an aggregate of 3,004,249 PIPE Pre-Funded Warrants and 105,666 PIPE Warrants on September 26, 2025, in connection with the first closing of the PIPE Offering. The Company issued another 5,962,681 PIPE Pre-Funded Warrants and 1,586 PIPE Warrants on October 9, 2025, in connection with the second closing of the PIPE Offering. Subject to shareholder approval, which occurred on December 19, 2025, each PIPE Pre-Funded Warrant entitles the holder to purchase one common share at an exercise price of $0.0001, and each PIPE Warrant entitles the holder to purchase one common share at an exercise price of $25.19. The PIPE Pre-Funded Warrants have no expiry date, whereas the PIPE Warrants expire 1,825 days after shareholder approval.

The PIPE Pre-Funded Warrants and the PIPE Warrants are classified as equity because they are freestanding financial instruments, are immediately exercisable, permit the holder to receive a fixed number of the Company's common shares and do not provide any guarantee of value or return.

Of the total PIPE Pre-Funded Warrants issued in connection with the first closing of the PIPE Offering,2,592,212 were exchanged for 0G Tokens and recorded at fair value of $54.7 million, based on the Company's common share closing price of $21.10 per share on the issuance date. Of the total PIPE Pre-Funded Warrants issued in connection with the second closing of the PIPE Offering,5,954,743 were exchanged for 0G Tokens and recorded at fair value of $113.3 million, based on the Company's common share closing price of $19.02 per share on the issuance date.

The remaining PIPE Pre-Funded Warrants and PIPE Warrants were issued for cash proceeds in bundled transactions that, in certain cases, also included PIPE Common Shares. For each transaction, cash proceeds were allocated among the underlying securities based on relative fair values at issuance. The fair values of the PIPE Common Shares and PIPE Pre-Funded Warrants from the first closing of the PIPE Offering reflect the Company's common share closing price of $21.10 per share on that date. The fair value of the PIPE Warrants was determined using the Black-Scholes option pricing model with the following inputs: share price of $21.10, risk-free interest rate of 3.7%, expected volatility of 102.5%, expected term of 1,825 days, and dividend yield of 0%. Of total cash proceeds of $13.3 million, $9.0 million was allocated to PIPE Pre-Funded Warrants and $1.7 million allocated to PIPE Warrants. The fair values of the PIPE Common Shares and PIPE Pre-Funded Warrants from the second closing of the PIPE Offering reflect the Company's common share closing price of $18.97 per share on that date. The fair value of the PIPE Warrants was determined using the Black-Scholes option pricing model with the following inputs: share price of $18.97, risk-free interest rate of 3.7%, expected volatility of 102.4%, expected term of 1,825 days, and dividend yield of 0%. Of total cash proceeds of $0.2 million, $0.2 million was allocated to PIPE Pre-Funded Warrants and less than $0.1 million allocated to PIPE Warrants.

There were 69,520 PIPE Pre-Funded Warrants exercised during the year ending December 31, 2025, and the total number of PIPE Pre-Funded Warrants outstanding was 8,897,410 as of December 31, 2025, all of which were vested were exercisable and have no expiry date. The intrinsic value of PIPE Pre-Funded Warrants exercised was $0.4 million.

There were no warrants exercised for the year ended December 31, 2024. The total fair value of warrants and pre-funded warrants granted during the year ended December 31, 2025 was $179.1 million (2024 - $nil).

For all warrants, common shares are newly issued from available authorized shares upon exercise of awards.

Information relating to warrants outstanding for the years ended December 31, 2025 and 2024, excluding the Pre-Funded and PIPE Pre-Funded Warrants:

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 tables show warrants outstanding as at December 31, 2025, excluding the Pre-Funded and PIPE Pre-Funded Warrants**:**

19. RELATED PARTY DISCLOSURES

Key management personnel compensation

In addition to their contracted fees, directors and officers also participate in the Company's stock option program. Certain executive officers are subject to termination notices of 6 to 24 months and change of control payments (Note 20). Key management personnel compensation is comprised of the following:

The Company defines key management personnel as those persons having authority and responsibility for planning, directing, and controlling the activities of the Company directly or indirectly, and was determined to be executive officers and directors (executive and non-executive) of the Company. The remuneration of directors and key executives is determined by the Board having regard to the performance of individuals and market trends.

As at December 31, 2025, $0.2 million of the above directors' and officers' compensation was included in the trade payables and accrued liabilities (2024 - $0.1 million). These amounts are unsecured, non-interest bearing and due on demand.

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)

Related party transactions

On January 30, 2025, the Company and United entered the United Purchase Agreement pursuant to which the Company purchased 100% of the United Common Shares. Under the terms of the United Purchase Agreement, the Company agreed to purchase the United Common Shares from the United Sellers, which included Clifford Starke and Sammy Dorf, each of whom were directors of the Company at the time of the transaction, and the Company's chief financial officer, Dany Vaiman (together with Clifford Starke and Sammy Dorf, 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 ZeroStack 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 Sellers. See Note 12.

On September 20, 2025, the Company entered into the Cannabis Sale Agreement with 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. 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. See Note 5.

On October 9, 2025, Daniel Reis-Faria, the Company's chief operating officer, contributed 50,000,000 0G tokens valued at $113.3 million in exchange for 5,954,743 PIPE Prefunded Warrants as part of the second closing of the PIPE Offering. See Note 9 and Note 18.

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. Michael Heinrich, the Company's executive chairman and a member of the Board, is the chief executive officer of Zero Gravity.

Prior to its acquisition by the Company, Harmony Health One ("Harmony"), a subsidiary of FGH, entered into an Intellectual Property License Agreement with Hampstead Private Capital Limited ("Hampstead") - a corporation controlled by the former Chief Executive Officer of the Company and former Chief Executive Officer of FGH. Under the terms of this agreement, Harmony is to pay Hampstead a royalty in the amount of 3.5% of the gross revenues from the sale of Harmony products. No royalty amounts had been recorded by the Company for the years ended December 31, 2025 and December 31, 2024, as there were no sales for the period after the Company acquired FGH. As discussed in Note 6, both FGH and Harmony made voluntary assignments in bankruptcy and a trustee of the estate of each was appointed on March 14, 2025.

20. COMMITMENTS AND CONTINGENCIES

Contingencies are possible liabilities arising from past events which, by their nature, will only be resolved when one or more future events not wholly within our control occur or fail to occur. The assessment of such contingencies inherently involves the exercise of significant judgment and estimates of the outcome of future events. Management assesses loss contingencies related to legal proceedings, tax or other regulatory actions pending against the Company, as well as unasserted claims that may result in such actions. The Company, its legal counsel and other subject matter advisors evaluate the perceived merits of any legal proceedings or unasserted claims or actions as well as the perceived merits of the nature and amount of relief sought or expected to be sought, when determining the amount, if any, to recognize as a provision or assessing the impact on the carrying value of assets. The Company recognizes legal expenses on contingency and provision matters when incurred.

An indemnification arrangement exists when one party has contractually agreed to reimburse another party for losses incurred because of circumstances that existed prior to the arrangement. The Company and its legal counsel assess whether a legal agreement exists and the maximum potential loss to be reimbursed.

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)

Provisions

The Company's current known provisions and contingent liabilities consist of termination benefits and legal disputes. The sales tax provision included in the annual report for the year ended December 31, 2024 was part of the Cannabis Business sold on September 26, 2025, and is included in the current liabilities held for sale line on the consolidated statement of financial position.

The legal disputes balance as of December 31, 2025 involves a legal proceeding that was brought against the Company and Vessel Brand Inc., which was formerly a wholly owned subsidiary of the Company, by the lessor of the warehousing and office space in Carlsbad, CA on June 2, 2025, in the Superior Court of California, County of San Diego. The lessor is claiming breach of lease and written guaranty agreements by the Company and is seeking damages for $1.2 million in unpaid rent,10% interest on its damages, and reasonable attorneys' fees of the lessor. The Company has assessed the claims and concluded that it is probable that a liability has been incurred and the Company is able to reasonably estimate the loss of $1.2 million. As a result, without acknowledgement (explicitly or implicitly) of any amount of liability arising from this claim, the Company recognized a provision of $1.2 million to reflect the value of the claim. At December 31, 2025, this balance was included in the contingencies line on the consolidated statement of financial position.

The settlement of legal disputes in 2025 was a result of FGH making a voluntary assignment in bankruptcy on March 14, 2025, which triggered an automatic stay on a FGH legal proceeding. The legal proceeding involved a former shareholder of ACA Mueller, an entity that was part of the Company's acquisition of FGH in December 2022, who filed a statement of claim against FGH in the Constance Regional Court in Germany. As the Company no longer controlled FGH as of March 14, 2025, all assets and liabilities of FGH were deconsolidated at that time. See Note 6.

On April 30, 2024, a group representing the sellers of Just Brands LLC to the Company in February 2022 (the "Plaintiffs") brought an action against the Company in the United States District Court for the Southern District of New York (the "Court") claiming that the Company failed to promptly issue additional shares in accordance with a specific formula set forth in the securities purchase agreement after the two-year anniversary of the closing, which occurred on February 24, 2024. The plaintiffs claim that they were entitled to 16,218 common shares and $38.0 million to complete the acquisition of Just Brands LLC. On March 27, 2025, the Court dismissed both the claims brought under the securities laws without prejudice and the state law claims for lack of subject matter jurisdiction because the parties did not have diversity of citizenship in order to maintain those claims in the Court. The Plaintiffs did not amend their complaint against the Company within the thirty-day period allotted by the Court, and, thus, as of April 28, 2025, this litigation was no longer active. On May 9, 2025, the Plaintiffs filed a new action in New York State Supreme Court claiming that the Company failed to issue additional shares in accordance with a specific formula set forth in the securities purchase agreement after the two-year anniversary of the closing, which occurred on February 24, 2024. The Plaintiffs sought specific performance of the issuance of shares as well as monetary damages. The Company had assessed the claims and concluded that it was probable that a liability has been incurred and that the Company was able to reasonably estimate the loss based on the fair value of 16,218 common shares of the Company, which was valued at $0.7 million as of December 31, 2024. On September 18, 2025, the Company and the Plaintiffs entered into a settlement and release agreement (the "Settlement Agreement") whereby the Company paid the Plaintiffs $1.8 million and the Plaintiffs forfeited and waived any claim to shares of the Company, as well as released, waived and forever discharged the Company from any and all known and unknown claims, both current and in the future. The Settlement Agreement was accepted by the New York State Supreme Court, and this litigation is no longer considered active. The $1.1 million difference between the $1.8 million paid by the Company to the Plaintiffs and the $0.7 million estimate prior to the settlement was recorded in the changes in financial instruments fair value on the consolidated statement of loss and comprehensive year ended 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 Company records liabilities for legal proceedings in those instances where it can reasonably estimate the amount of the loss and where liability is probable. The Company is engaged from time to time in various legal proceedings and claims that have arisen in the ordinary course of business. The outcome of all the proceedings and claims against the Company is subject to future resolution, including the uncertainties of litigation. Based on information currently known to the Company and after consultation with outside legal counsel, management believes that the probable ultimate resolution of any such proceedings and claims, individually or in the aggregate, will not have a material adverse effect on the financial condition of the Company, taken as a whole as at December 31, 2025.

As discussed above, on June 2, 2025, Vessel Brand, Inc., and the Company were served by the plaintiffs in the Superior Court of California in the County of San Diego for breach of lease and written guaranty agreement in a civil case for $1.2 million plus interest and legal fees. The Company believes that an unfavorable settlement in this matter is probable, and the loss can be reasonably estimated, and, as such, has accrued a liability of $1.2 million to reflect the value of the claim as of December 31, 2025.

Management contracts

The Company is party to management contracts with certain of its executive officers. As at December 31, 2025, these contracts would require payments totaling approximately $3.1 million to be made in the event that such executive officers are terminated (i) "without cause" or (ii) within twelve months following a "change in control" (as such terms are defined in the management contracts). If due to a "change of control", the payments would total $3.9 million. As a triggering event has not taken place, these amounts have not been recorded in these consolidated financial statements.

**21. **INCOME TAXES

The Company is domiciled in Canada.

A disaggregation of loss before income taxes for the year ended December 31, 2025 is as follows:

The components of the income tax provision include 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)

The reconciliation of the combined Canadian federal and provincial statutory income tax rate of 25% for the year ended December 31, 2025 to the effective rate is as follows. As the Company is domiciled in Canada, the reconciliation is to the Company's home country income tax rate rather than the applicable statutory rates in the United States. The statutory tax rate as of December 31, 2025 in other countries relevant to the Company's subsidiaries include the following: United States 21% and Germany 27.73%.

The reconciliation of the combined Canadian federal and provincial statutory income tax rate of 26.5% for the year ended December 31, 2024 to the effective rate is as follows.

The Company's effective tax rate differs from the statutory rate primarily due to changes in valuation allowance, non-taxable gains and losses, and jurisdictional rate differentials.

The Components of the Company's deferred income tax assets and liabilities at December 31, 2025 and 2024 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)

Deferred taxes are a result of temporary differences that arise due to the differences between the income tax values and the carrying values of assets and liabilities. The Company's deferred tax asset valuation allowances are primarily the result of uncertainties regarding the future realization of recorded tax benefits on the tax loss carryforwards from operations in various jurisdictions. Current evidence does not suggest the Company will realize sufficient taxable income of the appropriate character within the carryforward period to allow the Company to realize the deferred tax benefits. If the Company were to identify and implement tax planning strategies to recover these deferred tax assets or generate sufficient income of the appropriate character in these jurisdictions in the future, it could lead to the reversal of these valuation allowances and income tax expense.

The Company asserts that the earnings of its foreign subsidiaries (outside Canada) will be indefinitely reinvested in those subsidiaries and earnings will not be repatriated. The Company may need to accrue and pay taxes if those earnings were repatriated to Canada.

Unused loss carryforwards in Canada totaling $56.9 million expire beginning 2037. Unused loss carryforwards in the United States totaling $0.3 million have an indefinite carryforward period. Deferred tax assets have not been recognized for legal entities where it is not probable that future taxable profit will be available against which the Company can use the benefits. Tax attributes are subject to review, and potential adjustment, by tax authorities. The tax years that remain subject to examination by significant tax jurisdictions of the Company as of December 31, 2025 are as follows: Canada 2020 to 2023 and United States 2020 to 2023.

The amount of current income tax expense for the year ended December 31, 2025 was less than $0.1 million and deferred income tax benefit was $0.1 million within the consolidated statements of loss and comprehensive loss. The amount of current income tax expense recorded for the year ended December 31, 2024 was $nil and deferred income tax expense was less than $0.1 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)

Income taxes paid, net of refunds, during the year ended December 31, 2025 were immaterial.

The Company had no unrecognized income tax benefits because of uncertain income tax positions for the years ended December 31, 2025 and 2024.

**22. **LOSS PER SHARE

The Company calculates basic loss per share based upon the weighted average number of common shares outstanding during the period, while the calculation of diluted earnings per share includes the dilutive effect of potential common shares outstanding during the period. The calculation of diluted earnings per share excludes all potential common shares, with the exception of Pre-Funded Warrants, if their inclusion would have an anti-dilutive effect. Restricted stock award recipients under the 2022 Plan have a non-forfeitable right to receive dividends declared by the Company and are therefore included in computing earnings per share. A total of 8,897,410 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.

The following securities were not included in the computation of diluted shares outstanding because the effect would be anti-dilutive as the Company has a net loss for each period presented:

**23. **FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Environmental

The Company's growth and development activities are subject to laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally becoming more restrictive. The Company believes its operations are materially in compliance with all applicable laws and regulations. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations.

Fair value

The Company's financial instruments measured at amortized cost as at December 31, 2025 and December 31, 2024 consist of cash, restricted cash, trade and amounts receivable, trade payables, contingencies, other accrued liabilities, contingent purchase consideration liabilities, lease liabilities, and certain debt. The amounts reflected in the consolidated statements of financial position approximate fair value due to the short-term maturity of these instruments.

Financial instruments recorded at the reporting date at fair value are classified into one of three levels based upon the fair value hierarchy. Items are categorized based on inputs used to derive fair value based on:

Level 1 - quoted prices that are unadjusted in active markets for identical assets or liabilities

Level 2 - inputs other than quoted prices included in level 1 that are observable for the asset/liability either directly or indirectly; and

Level 3 - inputs for the instruments are not based on any observable market data.

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's contingent purchase considerations consisted of the estimated fair value of contingent purchase consideration from the acquisition of JustCBD in February 2022. The amount for JustCBD was measured at FVPL as a Level 2 fair value financial instrument within the fair value hierarchy in prior periods. The fair value was determined using a simplified calculation which took the expected shares to be issued (16,218) multiplied by the Company's closing share price at the end of each reporting period. The contingent purchase consideration was fully settled on September 22, 2025 when the Company paid $1.8 million to the former owners of JustCBD. The difference between the $1.8 million paid and the $0.7 million balance in contingent purchase consideration at December 31, 2024 was recorded in the changes in financial instruments fair value line on the consolidated statement of loss and comprehensive loss for the year ended December 31, 2025.

The following tables present information about the Company's financial instruments and their classifications as at December 31, 2025 and 2024 and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value.

The following table present a reconciliation of the fair value measurements using significant unobservable inputs (Level III) as of December 31, 2025 (2024 – none):

Risk management overview

The Company has exposure to credit, liquidity and market risks from its use of financial instruments. This note provides information about the Company's exposure to each of these risks, the Company's objectives, policies and processes for measuring and managing risk. Further quantitative disclosures are included throughout these consolidated financial statements.

Credit risk

Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company's trade and amounts receivables and cash held with banks and other financial intermediaries.

The carrying amount of the cash, restricted cash, trade and amounts receivables, and indemnification receivable represents the maximum credit exposure as presented in the statement of financial position.

The Company provides credit to certain customers in the normal course of business and has established credit evaluation and monitoring processes to mitigate credit risk. Credit risk for customers is assessed on a case-by-case basis and an allowance for specific expected credit losses is recorded where required, in addition to an estimate of lifetime expected credit losses for the portfolio of accounts receivable. See credit risk analysis for trade receivables at Note 7.

The Company held cash and restricted cash of $5.6 million as at December 31, 2025 (2024 - $5.2 million), of which, $5.6 million (2024 - $5.2 million) is held with large financial institutions and national central banks. The remaining cash amount of less than $0.1 million cash (2024 - less than $0.1 million) are held with financial intermediaries in the United States, Canada, and Germany. The Company has assessed no significant increase in credit risk from initial recognition based on the availability of funds, and the regulatory and economic environment of the financial intermediary. As a result, the loss allowance recognized during the period was limited to twelve months of expected credit losses. Based on historical information, and adjusted for forward-looking expectations, the Company has assessed an insignificant loss allowance on these cash and restricted cash balances as at 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)

Market risk

Market risk is the risk that changes in market conditions, such as commodity prices, foreign exchange rates, and interest rates, will affect the Company's net income or the value of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable limits, while maximizing the Company's returns.

Foreign currency exchange rate risk is the risk that the fair value of future cash flows will fluctuate due to changes in foreign exchange rates. The Company does not currently use foreign exchange contracts to hedge its exposure to currency rate risk as management has determined that this risk is not significant. As such, the Company's financial position and financial results may be adversely affected by the unfavorable fluctuations in currency exchange rates.

As at December 31, 2025, the Company had the following monetary assets and liabilities denominated in foreign currencies:

As at December 31, 2024, the Company had the following monetary assets and liabilities denominated in foreign currencies:

Monetary assets and liabilities denominated in Canadian dollars and euros are subject to foreign currency risk. The Company has estimated that as at December 31, 2025, the effect of a 10% increase or decrease in Canadian dollars and euros against the Unites States dollar on financial assets and liabilities would result in an increase or decrease of approximately $0.2 million (December 31, 2024 - $0.3 million) to net loss and comprehensive loss.Subsequent to December 31, 2025 and through the date of issuance of these financial statements, the exchange rates remained within the 10% range discussed above, and the Company does not expect significant changes in unsettled transactions from 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 Company calculates this sensitivity analysis based on the net financial assets denominated in each currency using the December 31 exchange rate, then changing the rate by 10%. Management determined 10% is a 'reasonably possible' change in foreign currency rates by considering the approximate change in rates in the prior twelve months.

It is management's opinion that the Company is not subject to significant commodity or interest rate risk.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with its financial liabilities. The Company's financial liabilities consist of trade payables and accrued liabilities, debt, and lease liabilities as presented on the statement of financial position. The Company had cash and restricted cash as presented on the statement of financial position. As discussed in Note 14, the Company has 0.1 million Euros ($0.1 million USD) available on credit facilities through its German subsidiary as of December 31, 2025. The Company has no other available credit lines of facilities to draw borrowings from should additional liquidity be needed. The Company's policy is to review liquidity resources and ensure that sufficient funds are available to meet financial obligations as they become due. Further, the Company's management is responsible for ensuring funds exist and are readily accessible to support business opportunities as they arise.

Trade payables and accrued liabilities consist of invoices payable to trade suppliers for administration and professional expenditures. The Company processes invoices within a normal payment period. Trade payables have contractual maturities of less than 90 days. Some suppliers of materials and inventory require full prepayment from the Company prior to providing such goods to the Company. See schedule of future lease commitments at Note 15 and other commitments at Note 20.

The Company's long-term investments in equity of other entities are not publicly traded and there is not an active market to sell the investments for cash.

Concentration risk

Management considers concentration risk with counterparties considering the level of purchases and sales of its business segments (Note 25).

At December 31, 2025, the Company held approximately $121.0 million of 0G cryptocurrency, representing approximately 93% of total assets. The Company maintains custody of substantially all its 0G holdings with a limited number of digital asset custodians and transacts primarily through a limited number of digital asset trading platforms.

Accordingly, the Company is exposed to concentration risk associated with the operational performance, financial condition, and regulatory compliance of these custodians and trading platforms. If any such custodian or trading platform were to experience financial distress, cybersecurity incidents, operational disruptions, insolvency, loss of required licenses, or other adverse developments, the Company could experience delays in accessing its assets, incur losses, or be required to transfer assets to alternative service providers, which may not be available on commercially reasonable terms.

Management monitors the financial and operational condition of its custodians and trading counterparties; however, no assurance can be provided that such measures would prevent losses in the event of failure or disruption of these counterparties. Any such event could have a material adverse effect on the Company’s financial position, results of operations, and cash flows.

**24. **CAPITAL MANAGEMENT

The Company considers the aggregate of its common shares, options, SARs, warrants and borrowings as capital. The Company's capital management objective is to ensure sufficient resources are available to meet day to day operating requirements and to safeguard its ability to continue as a going concern to provide returns for shareholders and benefits for other shareholders.

The Company's capital management objectives were being met in 2025 primarily from the use of cash balances from the 2024 and 2025 issuances of common shares, warrants and pre-funded warrants and generating revenue in 2025 from the Company's reportable segments as presented in Note 25.

The Company holds digital assets as part of its treasury strategy that may be converted to cash and used as a source of liquidity if necessary, however, the Company does not presently intend to liquidate its digital assets holdings to fund its capital requirements and obligations.

The Company's officers and senior management take full responsibility for managing the Company's capital and do so through quarterly meetings and regular review of financial information. The Board is responsible for overseeing this process.

As discussed in Note 1, the Company adopted a new digital asset treasury strategy during 2025. This strategy may involve acquiring digital assets with liquid assets that exceed working capital requirements. It may also involve issuing debt or equity securities or engaging in other capital-raising transactions with the objective of using a significant portion of the proceeds to purchase cryptocurrency from time to time, subject to market conditions. The Company will continue to monitor market conditions in determining whether to engage in financings to purchase additional cryptocurrency. This overall strategy also contemplates that the Company may (i) periodically sell cryptocurrency for general corporate purposes, including to generate cash for treasury management (which may include debt repayment or the repurchase of our securities, if appropriate at such time), for acquisitions, or for strategies that generate tax benefits in accordance with applicable law, (ii) enter into additional capital raising transactions that are collateralized by its digital asset holdings, and (iii) pursue strategies to create income streams or otherwise generate funds using its cryptocurrency holdings.

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 is not subject to any external capital requirements.

**25. **SEGMENTED INFORMATION

The Company formerly reported its financial results for the followingtwo operating segments, which are also its reportable segments: commercial and wholesale (primarily Phatebo and TruHC), which sell pharmaceutical products, and house of brands (JustCBD, Vessel, United and AV subsidiaries), which sells a mix of products across multiple categories including food and beverage, cannabis accessories and technology, personal care and wellness. As discussed in Note 5, the Company disposed of the entirety of the house of brands segment on September 26, 2025. As a result, the Company had only one operating segment, commercial and wholesale, for most of 2025. This segment reflects how the Company's operations are managed, how the Company's Chief Executive Officer, who is the chief operating decision maker, allocates resources and evaluates performance, and how the Company's internal management financial reporting is structured. The chief operating decision maker uses net income to evaluate income generated from segment assets in deciding whether to reinvest profits into the segment or into other parts of the Company, such as for acquisitions. Net income is used to monitor actual results versus budget and prior year, which is used to assess the performance of the segment.

The Company operates its distribution business within its Germany subsidiary. The Corporate segment reflects balances and expenses that do not directly influence business unit operations or the Company's digital assets.

As discussed in Note 1, the Company began implementing an expansion strategy focused on identifying and pursuing complimentary growth opportunities within the global digital asset market in 2025. As a result of this strategy, management has re-evaluated its segment reporting structure and determined that a new segment, digital assets, would be created, beginning with this annual report. There were no other impacts to the current or prior periods.

In 2025, the Company made sales to two customers that each exceeded 10% of its consolidated revenue. In 2024, the Company made sales to two customers that each exceeded 10% of its consolidated revenue.

The following table shows information regarding the Company's segments for the year ended 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 following table shows information regarding the Company's segments for the year ended December 31, 2024.

(1) Other segment items include professional fees, general and administrative, travel expenses, research and development, operating lease expense, bad debt expense, other expenses (net), and foreign exchange loss (income).

Other significant items:

(2) Total assets in the Corporate segment include assets held for sale.

All the Company's revenue for the years ended December 31, 2025 and 2024 originated from Germany. Disaggregation of net loss before income taxes by geographic area:

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)

Disaggregation of property, plant and equipment and other long-lived assets by geographic area:

26. SUBSEQUENT EVENTS

STAKING REWARDS

On January 21, 2026, the Company commenced staking its 0G Tokens and earned 2,223,707 Tokens between that date and February 23, 2026. Staking yields may fluctuate and could decrease materially or be eliminated due to a variety of factors, including but not limited to:

• changes in network participation rates or total staked supply;

• modifications to protocol reward structures or governance decisions;

• smart contract or protocol-level risks;

• market price volatility of the underlying digital assets;

• technical, security, or operational risks affecting the blockchain network; and

• regulatory developments or changes in applicable laws and guidance.

NAME CHANGE

Effective January 29, 2026, the Company filed Articles of Amendment under the Business Corporations Act (Ontario) to change its name from "Flora Growth Corp." to "ZeroStack Corp."

DIGITAL ASSET VALUATION

The Company holds 125,645,134 0G tokens with a fair value of $78.5 million utilizing the closing price on February 23, 2026.

OTHER

There were 1,366,939 PIPE Pre-Funded Warrants exercised subsequent to December 31, 2025.

The Company, through the September 2025 ATM, issued a total of 18,265 common shares of the Company at an average purchase price of $6.29 per share for gross proceeds of $0.1 million subsequent to December 31, 2025.