Q4 Y25 Financials

Independent Auditor's Report

To the Shareholders of Diamond Estates Wines and Spirits Inc.:

Opinion

We have audited the consolidated financial statements of Diamond Estates Wines and Spirits Inc. and its subsidiaries (the "Company"), which comprise the consolidated statements of financial position as at March 31, 2026 and

March 31, 2025, and the consolidated statements of net loss and comprehensive loss, changes in shareholders' equity and cash flows for the years then ended, and notes to the consolidated financial statements, including material accounting policy information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at March 31, 2026 and March 31, 2025, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with IFRS® Accounting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audits of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note 2(c) in the consolidated financial statements, which indicates that the Company incurred a net loss during the year ended March 31, 2026 and, as of that date, the Company had an accumulated deficit. As stated in Note 2(c), these events and conditions, along with other matters as set forth in Note 2(c), indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have determined the matters described below to be the key audit matters to be communicated in our report.

MNP LLP

1122 International Blvd, 6th floor, Burlington ON, L7L 6Z8 T: 905.333.9888 F: 905.333.9583

Key Audit Matter Description

The Company maintains inventories of both bulk and bottled wine, which are valued using the average cost method. We considered this a key audit matter due to the magnitude of the manufactured wine inventories balance, the degree of judgment required in allocating overhead costs, and the high degree of audit effort in performing procedures relating to evaluating management's determination of the cost of the inventories. Refer to Note 3(c) and Note 6 to the consolidated financial statements for further details.

Audit Response

We responded to this matter by performing procedures in relation to the accuracy of the cost of inventories. Our audit work in relation to this included, but was not restricted to, the following:

• We attended management's inventory counts at all material locations, and performed test counts to ensure the quantities of inventories were accurate;

• We obtained an understanding of management's methodology for allocating direct costs to inventory, and verified a sample of costs in the year to supporting documentation;

• We obtained confirmation directly from Grape Growers of Ontario of all grape purchases made during the year and agreed the details to the amounts capitalized;

• We discussed with management the requirements to capitalize overheads based of normal capacity, and reviewed management's calculation for the adjusted overhead rates; and

• We tested the accuracy of overhead costs being allocated to inventories.

  Impairment of long-lived assets

  Key Audit Matter Description

  The Company performs impairment testing for long-lived assets on an annual basis, or more frequently when there is an indication of impairment. An impairment is recognized if the carrying value of an asset, or its cash generating unit (CGU), exceeds its estimated recoverable amount. The recoverable amount of an asset is the greater of its value in use and its fair value less costs of disposal. The recoverable amount of the CGUs were mainly determined using key assumptions including the appraisals of long-lived assets. Due to the significant estimation uncertainty and assumptions involved in determining impairment of long-lived assets, we have determined that impairment of long-lived assets is a key audit matter. Please refer to Note 3(g) and Note 13 to the consolidated financial statements for further details.

  We responded to this matter by performing procedures in relation to the assessment of the recoverable amount of long-lived assets. Our audit work in relation to this included, but was not restricted to, the following:

• We assessed the appropriateness of the cash-generating units determined by management and assessed cash-generating-units for the purpose of identifying impairment indicators;

• We evaluated the appropriateness of the fair value less cost of disposal method and related fair value models;

• We tested the mathematical accuracy of management's impairment testing models and supporting calculations;

• With the assistance of an external valuation specialist, we evaluated the reasonableness of the appraisals provided by management; and

• We assessed the appropriateness of the disclosures relating to the assumptions used in the impairment assessment in the notes to the consolidated financial statements;

Other Information

Management is responsible for the other information. The other information comprises Management's Discussion and Analysis.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audits of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audits or otherwise appears to be materially misstated. We obtained Management's Discussion and Analysis prior to the date of this auditor's report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS® Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Company as a basis for forming an opinion on the consolidated financial statements. We are responsible for the direction, supervision and review of the audit work performed for the purposes of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audits and significant audit findings, including any significant deficiencies in internal control that we identify during our audits.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor's report is Jaspreet Chahal.

Burlington, Ontario Chartered Professional Accountants

July 27, 2026 Licensed Public Accountants

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The accompanying notes form an integral part of these consolidated financial statements

Approved on behalf of the Board: "Ron McEachern" Director "Keith Harris" Director

The accompanying notes form an integral part of these consolidated financial statements

Shares issued in

The accompanying notes form an integral part of these consolidated financial statements

The accompanying notes form an integral part of these consolidated financial statements

1. Nature of Operations

   Diamond Estates Wines & Spirits Inc. ("Diamond" or the "Company") is a public company listed on the TSX-V whose shares trade under the symbol "DWS.V". Its principal business activities include the production, marketing and sale of wine, and through its agency division, operating as Trajectory Beverage Partners ("TBP"), distribution and marketing activities for various beverage alcohol brands that it represents in Canada. The address of the Company's registered office and principal place of business is 1067 Niagara Stone Road, Niagara-On-The-Lake, Ontario, L0S 1J0.

2. Basis of Presentation and Going Concern
   1. Statement of compliance

      These consolidated financial statements have been prepared in accordance with IFRS® Accounting Standards issued by the International Accounting Standards Board ("IASB"). The accounting policies set out below were consistently applied to all periods presented unless otherwise noted. The consolidated financial statements were authorized for issuance by the Board of Directors on July 27, 2026.

   2. Basis of presentation

      The consolidated financial statements are prepared on a going concern basis under the historical cost convention. Unless otherwise stated, the consolidated financial statements are presented in Canadian dollars which is the Company's and its subsidiaries' functional and presentation currency as (i) the Company is based in Canada, (ii) the majority of its operating costs are denominated in Canadian dollars, and (iii) all its financing is obtained in Canadian dollars.

   3. Going concern

The accompanying consolidated financial statements have been prepared using IFRS applicable to a going concern.

Net loss and comprehensive loss for the year ended March 31, 2026 was $1,293,355 (March 31, 2025 - $2,462,144). Additionally, the Company reported surplus cash flow from operations (before changes in non-cash working capital) of $1,818,276 for the year ended March 31, 2026 (March 31, 2025 - shortfall of $1,066,359). As at March 31, 2026, the Company had an accumulated deficit of $36,491,922 (March 31, 2025 - $35,198,567) and working capital of

$835,136 (March 31, 2025 - $6,039).

1. Basis of Presentation and Going Concern, continued

   (c) Going concern, continued

   Effective March 31, 2026, the Company agreed to the eighth amendment to its Second Amended and Restated Credit Agreement ("SARCA") with BMO (see note 15(a)) that, among other provisions, extended the maturity date to July 31, 2026. Effective August 22, 2025, the Company had previously entered into the sixth amendment to its SARCA under which BMO waived all covenant breaches up to July 31, 2025 (see note 15(b)). As at March 31, 2026, the Company is in compliance with all of its covenant obligations for the rolling 4 quarter period then ended. On November 15, 2024, the Company entered into the third amendment to its SARCA, the main component of which was a new non-revolving credit facility of $2,500,000 (which was repaid in June, 2025) (see note 15(c)). As of March 31, 2026, the Company has debt repayment requirements of approximately $14.1 million within the next twelve months, including all its term loans (see note 15), the current portion of its lease liabilities (see note 17) and annual seasonal grape purchase commitments in the fall of 2026, but excluding any convertible debentures (see note 18(b)(iv)). The Company has now resolved the matter with the provincial wholesaler of record as disclosed in note 30. These circumstances may cast significant doubt as to the ability of the Company to continue as a going concern and, accordingly, the appropriateness ultimately of the use of accounting principles applicable to the going concern assumption.

   In response to (prior) recurring operating losses and negative cash flows from operating activities, the Company has taken a number of actions to enhance its financial flexibility, to meet its obligations and to fund its ongoing business operations. This has been evidenced by the November, 2023 private placement for net cash proceeds of $8.2 million, the July, 2024 private placement for proceeds of $2.3 million, the debenture financing of $4.9 million arranged in November, 2022 and its subsequent rollovers (see note 18), the sale of Queenston Mile Vineyard ("QMV") in February, 2024 for net proceeds of $3.3 million and the other assets held for sale (see note 10), the completion of the agreement with Renaissance in August, 2024 for total proceeds of $2.3 million (see note 24), the updated credit agreement with BMO in March, 2026 the additional temporary BMO funding of $3.6 million, now repaid (see notes 15(b)), and significant progress on its debt reduction initiatives. To ensure the Company maintains an adequate level of liquidity, including compliance with debt covenants, the Company continues to maintain a strategic review process that engages in actions designed to reduce the cost structure, improve productivity and enhance future cash flow.

   The Company's ability to meet the covenant measurements under the terms of its credit agreements with its lenders is still dependent upon continued improvement in profitable commercial operations, divestiture of non-strategic assets, continued funding support from BMO and shareholders, and new equity and debt placements. However, there can be no assurance that management will be successful in this regard. These consolidated financial statements do not include any adjustments to the carrying value of assets or liabilities, to the recoverable amounts or the reported expenses and consolidated statement of financial position classifications that would be necessary if the going concern assumption were inappropriate, and these adjustments could be material.

2. Material Accounting Policies
   1. Basis of consolidation

      These consolidated financial statements include the accounts of the Company and its subsidiaries, all of which also have a year end of March 31, 2026.

      • Diamond Estates Wines & Spirits Ltd. 100%

      • De Sousa Wines Toronto Inc. 100%

      • Backyard Vineyards Corp. ("BYV") 100%

      • 10028088 Ontario Inc. o/a Shiny Apple Cider 100%

        A subsidiary is an entity controlled by the Company. Control exists when the Company has power over an investee, is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to use its power over the investee to affect its returns. The financial statements of a subsidiary are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries are changed when necessary to align them with the policies applied by the Company in these consolidated financial statements. All intercompany balances, income and expenses, and unrealized gains and losses resulting from intercompany transactions are eliminated in full.

   2. Financial instruments

      The Company's financial assets consist of accounts receivable, a derivative asset and a mortgage receivable. The Company's financial liabilities consist of accounts payable and accrued liabilities, term loans payable, debentures payable and a derivative liability.

      1. Measurement of financial instruments

         Financial instruments are classified into one of the following categories:

         • Assets and liabilities at amortized cost

         • Fair value through profit or loss ("FVTPL")

         • Fair value through other comprehensive income ("FVOCI")

Subsequent measurement of financial instruments is based on their initial classification.

Transaction costs related to financial assets and liabilities at FVTPL are recognized in profit and loss. When incurred, transaction costs are deducted against the fair value of all the other financial instruments on initial recognition.

The fair values of accounts receivable and accounts payable and accrued liabilities approximate their fair values due to the short-term or demand nature of these instruments. The fair values of the term loans approximate their carrying values as the contracted lending rates approximate the rates currently available for similar borrowing arrangements. Fair value of the debentures payable and derivative asset (liability) is determined by management using available market information or other valuation methodologies.

1. Material Accounting Policies, continued
   1. Financial instruments, continued
      1. Impairment of financial assets

         Financial assets are assessed for indicators of impairment at the end of each reporting period, such as:

         • Significant financial difficulty of the issuer or counterparty

         • Default or delinquency in interest or principal payments, or

         • It becoming probable that the borrower will enter bankruptcy or financial reorganization

         An expected credit loss model for financial assets is used under IFRS 9 in order to record allowances for loss. Under the model, expected credit losses are provided for on a forward-looking basis and are based on past history, current market conditions and estimates requiring management judgement.

      2. Financial assets and financial liabilities

         The Company classifies its financial assets and financial liabilities into one of the following categories, depending on the purpose for which the instrument was acquired or incurred:

         Financial Assets and Liabilities at FVTPL (Fair Value Through Profit or Loss)

         This category comprises derivatives, or financial assets and liabilities classified as held-for-trading or designated as FVTPL upon initial recognition. Following initial recognition, these instruments are measured at fair value, with any gains or losses arising from changes in fair value recognized in profit or loss. This includes the embedded derivative feature separated from the Company's debentures payable, which transitioned from a financial liability in the prior year to a financial asset in the current year (see note 18).

         Amortized Cost

         This category comprises non-derivative financial instruments (accounts receivables, accounts payable and accrued liabilities, term loans payable and debentures payable) that are not classified as held-for-trading or FVTPL. After initial recognition, these financial assets and liabilities are measured at amortized cost using the effective interest method.

      3. Hedge accounting

      The Company has chosen not to apply hedge accounting to any of its derivative financial instruments. As a result of this policy choice, these derivative instruments are recorded initially and subsequently at fair value and the change in fair value is recorded directly in the consolidated statements of net loss and comprehensive loss.

      3. Material Accounting Policies, continued

   2. Inventory

      Inventory that is purchased by the Company, including raw materials and wine, is valued at the lower of cost and net realizable value, with cost being determined on an average cost basis. Grapes produced from vineyards controlled by the Company that are part of inventory are measured at their fair value less costs to sell at the point of harvest. Inventory that is purchased by TBP is valued at the lower of cost and net realizable value, with cost being determined on a first-in, first-out basis.

      Inventory of wine that is produced by the Company is valued at the lower of cost and net realizable value, with cost being determined on an average cost basis.

      Inventories include all costs to purchase, convert and bring the inventories to their present location and condition. Such costs include purchase price net of discounts and rebates, applicable duties and taxes, transport and handling costs, less any government grants.

      The Company tracks other inventory costs, such as direct labour, fixed and variable production overhead, including depreciation of production equipment, maintenance of production buildings and equipment and production management. These costs are allocated to inventory on a per litre basis.

   3. Property, plant and equipment

      Depreciation is computed using the following annual rates and methods, which reflect the estimated useful life of the assets as follows:

      • Buildings 40 years straight-line

      • Vines 20 years straight-line

      • Machinery and equipment 5 to 40 years straight-line

      • Leasehold improvements Straight-line over term of lease

      • Vehicles 3 to 5 years straight-line

      • Computer equipment 5 years straight-line

        3. Material Accounting Policies, continued

   4. Biological assets

      The Company measures biological assets, consisting of grapes grown on vineyards controlled by the Company, at cost, which approximates fair value as there has been minimal biological transformation since the initial cost incurrence. The initial costs incurred are comprised of direct expenditures required to enable the biological transformation of agricultural produce.

      At the point of harvest, the fair value of biological assets is determined by reference to local market prices for grapes of a similar quality and the same varietal. At this point, agricultural produce is measured at fair value less cost to sell, which becomes the basis for the cost of inventories after harvest.

      Gains or losses arising from a change in fair value less costs to sell are included in the consolidated statements of income and comprehensive income in the period in which they arise.

   5. Intangible assets

Intangible assets acquired separately are initially recorded at fair market value and subsequently at cost less accumulated amortization and impairment losses. Subsequent expenditures on maintenance of computer software are expensed as incurred.

For an intangible asset acquired based on contingent consideration, the asset purchased is initially recognized including the fair value of the consideration issued at acquisition. After initial recognition, the fair value of any further payments contingent upon future events are expensed as incurred.

Intangible assets with finite lives are amortized straight line over their useful economic lives as follows:

Gains and losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in profit and loss when the asset is derecognized.

1. Material Accounting Policies, continued
   1. Intangible assets, continued

      The pre-1993 winery licenses and BYV, Equity Wine Group and Shiny Apple brand names have an indefinite life because the expected usage, period of control and other factors do not limit their life. Indefinite lived intangible assets are not subject to amortization and are assessed annually for impairment. The Company assesses the fair value of the intangible asset in its respective cash generating unit ("CGU") to the overall fair value of the CGU to determine if the overall asset base supports the value of the intangible asset or if it is impaired. An impairment charge is recorded to the extent the carrying value exceeds the fair value.

   2. Impairment of non-financial assets

      The Company reviews long-lived assets and definite life intangible assets for impairment when events or circumstances indicate an asset may be impaired. Assets are assigned to a CGU based on the lowest level at which they generate independent cash inflows. When there is an indication of impairment, an impairment charge is recorded to the extent the carrying value of a CGU exceeds the recoverable amount. The recoverable amount is the greater of the CGU's fair value less costs to dispose and its value in use, determined by discounting expected cash flows. An impairment loss is reversed if there is a reversal in circumstances that led to the impairment and if a CGU's recoverable amount increases to the extent that the related assets' carrying amounts are no larger than the amount that would have been determined, net of amortization, had no impairment loss been recorded.

   3. Government grants

Grants from the government are recognized at the amount of cash received or to be received when there is reasonable assurance that the grant will be received and the Company will comply with all conditions. Government grants are recognized in the consolidated statements of net loss and comprehensive loss as other revenue or a reduction of the expense that the grant is intended to compensate. In the Company's judgement, based on the provisions of the program, the VQA Wine Support Program was recorded as other revenue since it is intended to incentivize sales and the Winery Support Program grant is intended to compensate for inventory production costs that the Company has incurred to produce bulk wine inventory in the prior fiscal year. The grant has been allocated pro rata to the eligible wine produced in the prior year and is recognized in the consolidated statements of net loss and comprehensive loss as a reduction in the cost of goods sold in the period the eligible wine is sold or is recognized as a reduction in the cost of inventory to the extent that the eligible wine is unsold and remains in inventory.

1. Material Accounting Policies, continued
   1. Income taxes

Income tax expense comprises current and deferred tax. Income tax expense is recognized in profit or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Tax on income is accrued using the tax rate that would be applicable to expected total annual earnings.

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that the taxable profits will be available against which those deductible temporary differences can be utilized.

Such deferred tax assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither taxable profit nor accounting profit.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates and interests in joint ventures, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that the sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset tax assets against tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its tax assets and liabilities on a net basis.

3. Material Accounting Policies, continued

1. Provisions and contingencies

   Provisions are recognized when a legal or constructive obligation exists as a result of past events and it is probable that an outflow of resources that can be reliably estimated will be required to settle the obligation. Where the effect is material, the provision is discounted using an appropriate current market-based pre-tax discount rate. The increase in the provision due to passage of time is recognized as interest expense.

   When a contingency substantiated by confirming events can be reliably measured and is likely to result in an economic outflow, a liability is recognized at the best estimate required to settle the obligation. A contingent liability is disclosed where the existence of an obligation will only be confirmed by future events, or where the amount of a present obligation cannot be measured reliably or it is not probable to result in an economic outflow. Contingent assets are only disclosed when the inflow of economic benefits is probable. When the economic benefit becomes virtually certain, the asset is no longer contingent and is recognized in the consolidated financial statements.

2. Loss per share

   Basic loss per share amounts are calculated by dividing consolidated net loss for the reporting period attributable to common shareholders by the weighted average number of common shares outstanding during the period.

   Diluted loss per share amounts are calculated by dividing the consolidated net loss attributable to common shareholders by the weighted average number of shares outstanding during the year plus the weighted average number of shares that would be issued on the conversion of all the dilutive potential ordinary shares into common shares. Diluted income per share amounts are not presented if their inclusion would be anti-dilutive.

3. Share based compensation

   The Company offers a share option plan for its directors, officers and employees. Each tranche in an award is considered a separate award with its own vesting period and grant date fair value. The fair value of each tranche is measured using the Black-Scholes option pricing model. Share based payments expense is recognized upon vesting over the tranche's vesting period by increasing contributed surplus based on the number of awards expected to vest. Any consideration paid on exercise of share options is credited to share capital.

   For equity settled transactions, the Company measures goods or services received at their fair value, unless that fair value cannot be estimated reliably, in which case the Company measures their value by reference to the fair value of the equity instruments granted.

   3. Material Accounting Policies, continued

4. Deferred share units ("DSUs")

   The Company grants DSUs to directors as part of their compensation. The DSUs vest immediately upon grant and are only settled in shares. The fair value of each DSU is based on the value of the share at the date of the grant. The resulting compensation expense is charged to income as share based compensation with a corresponding increase to contributed surplus.

5. Foreign currency translation

   In preparing the consolidated financial statements of the Company, transactions in currencies other than the Company's functional currency are recorded at the rates of exchange prevailing at the dates of the transactions. These consolidated financial statements are presented in Canadian dollars, which is also the functional currency of the Company. At the end of each reporting period, monetary assets and liabilities are translated using the foreign exchange rate at that date. Non-monetary assets and liabilities are translated using the historical rate on the date of the transaction. All gains and losses on translation of these foreign currency transactions are included in profit or loss.

6. Revenue recognition

   The Company recognizes revenue from the sale of goods at a point in time when the performance obligation is fulfilled. Payments received from customers in advance of shipments are initially recorded in unearned revenue and deposits received.

   For transactions with provincial liquor boards and licensee retail stores, the Company's terms are "FOB shipping point". Accordingly, sales are recorded when the product is shipped from the Company's distribution facility. Sales to consumers through retail stores and estate wineries are recorded at the time the product is purchased.

   When the Company is acting as an agent, that portion of agency revenue is presented net of the related costs. Revenue is recognized when the related performance obligation is complete, there is certainty about receipt of the consideration and all related costs have been incurred. Commission income is recognized when products are sold and related performance obligations are fulfilled.

   The following are deducted from gross revenue to arrive at reported revenue: (i) excise taxes collected on behalf of the federal government, (ii) licensing fees and levies paid on wine sold through the Company's independent Ontario retail stores, (iii) incentive and discount programs and shelving payments provided to customers, (iv) product returns and (v) breakage.

   Revenue for custom processing, bulk wine storage and bottling is recognized over a period of time reflecting the Company's efforts to fulfil the related performance obligations.

   3. Material Accounting Policies, continued

7. Leases

   The Company recognizes a right-of-use ("ROU") asset and a lease liability at the lease commencement date. The ROU asset is initially measured at cost, and subsequently at cost less any accumulated depreciation and impairment losses, and adjusted for certain remeasurements of the lease liability.

   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 incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

   The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payments made. It is remeasured when there is a change in future lease payments arising from a change in rate, a change in the estimate of the amount expected to be payable under a residual value guarantee, or as appropriate, changes in the assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option is reasonably certain not to be exercised.

   The Company has applied judgement to determine the lease term for lease contracts which include renewal options. The assessment of whether the Company is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of lease liabilities and ROU assets recognized.

   Leases with a term less than twelve months or of a low value are expensed as incurred.

8. Right-of-use assets (as a lessor)

   When the Company acts as a lessor, it determines and classifies each lease as a finance lease or operating lease at the lease commencement date under the provisions of IFRS 16. When a lease transfers to the lessee substantially all the risk and rewards of ownership incidental to the ownership of the underlying asset, the lease is classified as a finance lease; otherwise, the lease is classified as an operating lease. When the Company is an intermediate lessor, it determines at lease inception date whether the sub-lease is a finance lease or an operating lease based on whether the contract transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the sub-lease is a finance lease; if not, then it is an operating lease.

   1. Material Accounting Policies, continued Derecognition of right-of-use asset

      When the intermediate lessor enters into the sub-lease:

      • It derecognizes the right-of-use asset relating to the head lease that it transfers to the sub-lessee, and recognizes the net investment in the sub-lease

      • Recognizes any difference between the right-of-use asset and the net investment in the sub-lease in profit or loss

   Finance lease receivable

   At the commencement date of a finance lease, the Company recognizes a finance lease receivable at the amount of its net investment in the lease, which is measured at the present value of lease payments to be made over the lease term.

   In calculating the present value of lease payments, the Company uses the interest rate implicit in the lease, or in the case of a sub-lease if the rate is not readily determinable, the discount rate used for the head lease. After the commencement date, the amount of the finance lease receivable is increased to reflect the accretion of interest and reduced for the lease payments received. In addition, the finance lease receivable is derecognized and impairment is measured in accordance with the expected credit loss (ECL) model pursuant to IFRS 9, Financial Instruments.

9. Debentures payable

   When a contract contains an embedded derivative, the economic and risk characteristics of both the embedded derivative and host contract are analyzed to understand whether or not they are closely related and to decide whether the embedded derivative should be accounted for separately from the host contract.

   The embedded features in the financial instrument issued by the Company are identified at inception. Each feature is evaluated separately and classified either as part of the host liability, as a separate embedded liability or an equity instrument in accordance with the substance of the contractual arrangement.

   3. Material Accounting Policies, continued

10. Uses of estimates and judgements

    The preparation of these consolidated financial statements requires management to make certain estimates, judgements and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period.

    Significant assumptions about the future and other sources of estimation uncertainty that management has made at the end of the reporting period, which could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, include, but are not limited to, the following:

    1. Fair value of grapes at the point of harvest

       Where possible, the fair value of grapes at the point of harvest is determined by reference to local market prices for grapes of a similar quality and the same varietal. For grapes for which local market prices are not readily available, the average price of similar grapes is used. The fair value of grapes is included in the cost of bulk wine inventory.

    2. Share based compensation

       Stock option and warrant fair values utilize option pricing models that require the input of assumptions, including the expected life, volatility of the Company's stock price, forfeitures and the risk free rate. Changes in the assumptions can materially affect the fair value estimate and therefore the existing models do not necessarily provide a reliable single measure of the fair value of the stock option or warrants issued.

    3. Inventory

       Management is required to make a number of estimates in determining the costs allocated to manufactured inventory, including fixed production overheads based on normal production capacity. Management must also determine if the cost of any inventories exceed its net realizable value ("NRV"), such as cases where prices have decreased or inventories have spoiled or otherwise been damaged. Any obsolescence provision of inventories assessment requires a degree of estimation and judgement. The level of any provision is assessed by considering recent sales experience, the ageing of inventories, damaged, obsolete or slow moving inventories and other factors that affect inventory obsolescence.

    4. Property, plant and equipment, intangible assets and right-of-use assets

       Property, plant and equipment, intangible assets and right-of-use ROU assets represent a significant proportion of the asset base of the Company as they amount to 46.5% (2025 -44.9%) of total assets. Therefore, estimates and assumptions made to determine their carrying value and related depreciation are critical to the Company's financial position and performance.

       3. Material Accounting Policies, continued

       IFRS requires management to test for impairment of property, plant and equipment, intangible assets and right-of-use assets if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment testing is an area involving management judgement, requiring assessment as to whether the carrying value of assets can be supported by either the net present value of future cash flows derived from such assets using cash flow projections which have been discounted at an appropriate rate or through appraisals where a fair value less cost to sell approach is being utilized.

       The charge in respect of periodic depreciation is derived after determining an estimate of an asset's expected useful life and the expected residual value at the end of its life. The useful lives and residual values of the Company's assets are determined by management at the time the asset is acquired and reviewed annually for appropriateness. The useful lives are based on historical experience with similar assets as well as anticipation of future events which may impact their life.

    5. Cash generating units

       For the purpose of impairment testing, assets are grouped into the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets (a cash generating unit, or "CGU"). Management is required to make significant judgments in identifying and defining its CGUs. This assessment impacts the level at which impairment testing is performed and, consequently, the determination of whether an impairment loss should be recognized. In determining the appropriate level for CGUs, management considers several key factors:

       • How management monitors and makes decisions about the Company's operations (e.g., by product line, business segment, brand, or individual location/store).

       • Interdependence of Cash Inflows: The degree of integration between operations and whether there is an active market for the output of an individual asset or group of assets

    6. Leases

       Critical accounting estimates were made in determining the lease term and incremental borrowing rate. In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). The assessment is reviewed if a significant event or a significant change in circumstances occurs, which affects this assessment and that is within the control of the lessee.

       1. Material Accounting Policies, continued

          In determining the carrying amount of right-of-use assets and lease liabilities, the Company is required to estimate the incremental borrowing rate specific to each leased asset or portfolio of leased assets if the interest rate implicit in the lease is not readily determined. Management determines the incremental borrowing rate of each leased asset or portfolio of leased assets by using the Company's specific risk portfolio, the security, term and value of the underlying leased asset and the economic environment in which the leased asset operates. The incremental borrowing rates are subject to change mainly due to macroeconomic changes in the environment.

    7. Compound financial instruments

The convertible debentures have been accounted for as a compound financial instrument under IAS 32 - Financial Instruments, and had both a liability and an embedded derivative component. The conversion feature of the convertible debentures was accounted for as a derivative liability/asset and was required to be fair valued on inception and at each reporting period. The estimates, assumptions and judgements made in relation to the fair value of the derivative liability/asset are subject to measurement uncertainty. The valuation techniques used to determine fair value require inputs that involve assumptions and judgements such as estimating the future volatility of the stock price and expected life. Such judgements and assumptions are inherently uncertain.

1. Recent Accounting Pronouncements

In April 2024, IFRS 18 was issued to achieve comparability of the financial performance of similar entities. The standard, which replaces IAS 1, impacts the presentation of primary financial statements and notes, including the statement of earnings where companies will be required to present separate categories of income and expense for operating, investing, and financing activities with prescribed subtotals for each new category. The standard will also require management-defined performance measures to be explained and included in a separate note within the consolidated financial statements. The standard is effective for annual reporting periods beginning on or after January 1, 2027, including interim financial statements, and requires retrospective application. The Company has not yet assessed the impact of the amendment on the consolidated financial statements.

In May 2024, both IFRS 9 and IFRS 7 were amended to clarify that a financial liability is derecognized on the 'settlement date' and introduce an accounting policy choice to derecognize financial liabilities settled using an electronic payment system before the settlement date. Other clarifications include the classification of financial assets with environmental, social, and governance linked features via additional guidance on the assessment of contingent features. Clarifications have been made to non-recourse loans and contractually linked instruments. Additional disclosures are introduced for financial instruments with contingent features and equity instruments classified at fair value through other comprehensive income. The amendments are effective for annual periods starting on or after January 1, 2026. Early adoption is permitted, with an option to early adopt the amendments for contingent features only. The Company has not yet assessed the impact of the amendment on the consolidated financial statements.

The Company has an allowance for doubtful accounts as at March 31, 2026 of $234,723 (March 31, 2025 - $397,832). Accrued accounts receivable include $1,124,748 (March 31, 2025 - $3,304,038) receivable from the Ontario government under the VQA Wine Support Program (see note 23). $3.1 million of the VQA amount accrued as at March 31, 2025 was received in June, 2025, the proceeds of which were used to repay the temporary $2.5 million BMO non-revolving loan (see note 15(b)). A further $4.9 million was received in the quarter ended December 31, 2025, the proceeds of which were used to pay down the regular BMO non-revolving term loan and fund seasonal inventory purchases of $5.5 million (March 31, 2025 - $2.4 million). Accrued accounts receivable also include

$Nil (March 31, 2025 - $823,271) due from Renaissance under the terms of its August, 2024 purchase and sales agreement (see note 24). In August, 2025, the Company received agreed-upon cash proceeds of $592,072, such that the remainder of $231,199 was expensed as a loss on sale of intangible assets.

The Company has a provision for inventory obsolescence as at March 31, 2026 of $Nil (March 31, 2025 - $Nil). During the year ended March 31, 2026, the Company has recorded funding of

$1,058,567 (March 31, 2025 - $840,640) under the Wine Sector Support Program ("WSSP"). Initial proceeds have been recorded as a reduction to the cost of bulk inventory and are released to cost of goods sold as sold. In August, 2024, the Company transferred inventory of $1,439,888 to Renaissance at cost under the terms of its purchase and sales agreement (see note 24).

1. Biological Assets

   Biological assets consist of grapes prior to harvest that are controlled by the Company. The Company owns land in Ontario to grow grapes in order to secure a supply of quality grapes for the making of wine. During the year ended March 31, 2026, the Company harvested 88.7 tons of grapes (2025 - 92.4 tons) valued at $226,761 (2025 - $182,934).

   The changes in the carrying amount of biological assets are as follows:

   2026 2025 Carrying value, beginning of year $ - $ -

   Net increase in fair value less costs to sell due to biological

   transformation 226,761 182,934

   Transferred to inventory on harvest (226,761) (182,934)

   Carrying value, end of year $ - $ -

   The Company is exposed to financial risk because of the long period of time between the cash outflow required to plant grape vines, cultivate vineyards, and harvest grapes and the cash inflow from selling wine and related products from the harvested grapes. Substantially all of the grapes from owned and leased vineyards are used in the Company's winemaking processes. Owned and leased vineyards, in combination with supply contracts with grape growers, are used to secure a supply of domestic grapes. These strategies reduce the financial risks associated with changes in the grape prices.

2. Mortgage Receivable

   As part of the consideration payable on the sale of Queenston Mile Vineyard that closed in February, 2024, the Company entered into a vendor take-back in the amount of $500,000. The receivable was secured by a mortgage on the subject property, which ranked behind first and second mortgages valued at $3,250,000. It bore interest at the BMO prime rate plus 3%, with interest payable monthly, and was due in full by April 30, 2025.

   The mortgage receivable was fully paid off in April, 2025.

3. Finance Lease Receivable

   On June 1, 2024, the Company entered into a sub-lease for its office premises in Oakville, Ontario. The sub-lease covers the period from June 1, 2024 to January 31, 2028, the same remaining lease period as for the liability under the head lease. Management has concluded that the sub-lease qualifies as a finance lease after considering the indicators for a finance lease under IFRS 16. As a result, the Company has de-recognized the right-of-use asset relating to the head lease and recognized the net investment in the sub-lease. The difference between (i) the carrying value of the right-of-use asset at May 31, 2024 of $487,000 (see note 12) and (ii) the net investment in the sub-lease of $288,760 has been recognized as a loss of $198,240 on de-recognition of an ROU asset in profit and loss for the year ended March 31, 2025 (see note 12(a)).

   The following table shows the continuity in the finance lease receivable during the years ended March 31, 2026 and 2025:

   2026 2025

   Finance lease receivable, beginning of year $ 236,738 $ -Sub-lease arrangements classified as finance leases - 288,760

   Finance income earned 11,774 12,269

   Payments received (70,138) (64,291) Finance lease receivable, end of year 178,374 236,738 Current portion (61,716) (58,363)

   Non-current portion $ 116,658 $ 178,375

4. Assets Held For Sale

   As at March 31, 2026, the Company has classified certain winery division properties and related operating assets and liabilities detailed below netting to $3,196,900 (March 31, 2025 - $3,131,614) as assets held for sale. Management is pursuing an active program to locate a buyer and intends to sell these assets within one year of the reporting date.

   Assets are carried at the lower of fair value less costs of disposal and carrying amount. Based on updated management estimates, an impairment provision of $412,072 relating to intangible assets and right-of-use assets has been recognized as at March 31, 2026 (March 31, 2025 - $410,000 relating to property, plant and equipment).

   		2026	2025
   Assets held for sale Accounts receivable		$ 23,849	$ 5,395
   Inventory		2,460,998	2,097,047
   Prepaid expenses		39,252	38,439
   Property, plant and equipment	(Note 11)	756,874	743,324
   Right-of-use assets (Note 12)		716,172	896,984
   Intangible assets (Note 13)		-	231,260
   Liabilities held for sale		3,997,145	4,012,449
   Accounts payable and accrued liabilities		84,073	55,017
   Lease liability		716,172	825,818
   		800,245	880,835
   Net assets held for sale		$ 3,196,900	$ 3,131,614

   Major changes in net assets held for sale during the reporting periods were as follows:

   	2026	2025
   Net assets held for sale, opening balance	$ 3,131,614	$ 3,540,285
   Impairment provision - intangible assets and right-of-use assets	(412,072)	-
   Impairment provision - property, plant and equipment	-	(410,000)
   Acquisition of property, plant and equipment	13,550	16,152
   Other working capital changes	463,808	(14,823)
   Net assets held for sale, closing balance	$ 3,196,900	$ 3,131,614

   DIAMOND ESTATES WINES & SPIRITS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED MARCH 31, 2026 AND 2025 (Stated in Canadian dollars, except per share amounts)
5. Property, Plant and Equipment

Page 24 of 54

Page 25 of 54

Page 26 of 54

13. Intangible Assets, continued

1. The pre-1993 winery licenses issued to Diamond Estates Wines & Spirits Ltd. and De Sousa Wines Toronto Inc. grant the licensees considerably more flexibility than post-1993 licenses with respect to blending practices, location of operations and other wine-making matters. These licenses are transferable at the discretion of the Alcohol and Gaming Commission of Ontario ("AGCO"). The Company determined the recoverable amount of the pre-1993 winery license by estimating its fair value less costs to sell, resulting in an impairment charge of $200,000 (2025

   - $Nil (see also note 32(b)).

2. As indefinite life intangibles, the Company's pre-1993 winery licenses and brand names are subject to an annual impairment test. Both of these intangible assets are associated with the manufactured wines CGU and an impairment test was performed on a FVLCS basis.

Coupon interest of $896,036 (March 31, 2025 - $1,129,574) owing on the 2022 to 2025 debentures (see note 18(e)) is included in accrued liabilities. Of the total unpaid coupon interest of $1,422,600 owing (with respect to the 2024 Replacement Debentures) up to their maturity date of November 9, 2025, $417,600 was settled in cash in December, 2025. Using a discount rate of 23.3%, the accrued balance payable of $1,005,000 as at the maturity date has been discounted by $172,606 to reflect its then fair value of $832,394. Accretion expense of $63,642 has been recorded on this liability up to March 31, 2026.

1. Term Loans Payable

   As at March 31, 2026, the balances outstanding on the Company's term loans were as follows:

   	2026	2025
   BMO term loans: Revolving term loan ("RT Facility")	$ 10,124,720	$ 10,832,406
   Non-revolving term loan ("NRT Facility)	1,265,000	2,712,118
   Demand non-revolving facility ("Demand NRT facility")	-	2,500,000
   	11,389,720	16,044,524
   Deferred financing costs	(4,167)	(22,500)
   	11,385,553	16,022,024
   Current portion of term loans	(11,385,553)	(16,022,024)
   	$ -	$ -

   Movement in term loans payable during the reporting periods was as follows:

   	2026	2025
   Term loans payable, beginning of year	$ 16,022,024 $	16,564,622
   New funding received in year	3,600,000	3,606,844
   Interest expense	938,369	1,216,647
   Repayments during year	(9,193,173)	(5,476,530)
   Change in deferred financing costs	18,333 110,441
   Term loans payable, end of year	11,385,553 16,022,024
   Current portion	(11,385,553) (16,022,024)
   Non-current portion	$ - $ -

   1. Effective March 31, 2026, the Company agreed to the eighth amendment to its Second Amended and Restated Credit Agreement (the "SARCA") with BMO, the major terms of which were as follows:

      1. Maturity Date: The maturity date was extended to July 31, 2026.

      2. Limited Guarantee: The limited recourse guarantee granted by Lassonde Industries Inc. ("Lassonde") in favour of BMO has been removed as the Bulge Amount has been repaid by the Company (see note 15(b)).

      3. Interest Rates: The interest rates are unchanged from the seventh amendment to the SARCA (see note 15(b)).

   2. On November 7, 2025, the Company agreed to the seventh amendment to its SARCA, the major terms of which were as follows:

      1. Maturity Date: The maturity date was extended to March 27, 2026.

         15. Term Loans Payable, continued

      2. Credit Facilities. The establishment of a bulge amount credit facility (the "Bulge Amount") of $3,600,000 which matures on the date ("Temporary Bulge Period") that is the earlier of (a) the date on which Diamond requests in writing that the Temporary Bulge Period be cancelled and terminated (provided that such early termination shall not cause any Credit Excess (as defined in the SARCA) to exist and (b) March 27, 2026;
      3. Lassonde Limited Guarantee: The addition of a limited recourse guarantee granted by Lassonde Industries Inc., in favour of BMO in an aggregate amount not exceeding the Bulge Amount then outstanding under the RT Facility.
      4. Interest Rates. The interest rates have been amended to be Prime Rate plus 2.65% during the Temporary Bulge Period and Prime Rate plus 2.40% at all other times. The prime rate was 4.45% as of March 31, 2026 (2025 - 4.95%).

         The Company had previously entered into further amendments to its SARCA, as follows:

         Effective August 22, 2025, the Company entered into a further amendment (the "Sixth Amendment") with BMO under which BMO waived all covenant breaches up to July 31, 2025. As at March 31, 2026, the Company is in compliance with all of its covenant obligations for the rolling 4 quarter period then ended.

         Effective February 28, 2025, the fifth amendment extended the maturity date to March 31, 2025.

         Effective January 31, 2025, the fourth amendment extended the maturity date to February 28, 2025.

   3. Effective November 15, 2024, the Company entered into a further major amendment (the "Third Amendment") to its SARCA, the notable terms of which were as follows:

      1. Credit Facilities: The establishment of a non-revolving credit facility (the "Demand NRT Facility") in the amount of $2,500,000 which matured on the date that is the earlier of:

         • the date BMO demands repayment of all outstanding secured obligations under the Demand NRT Facility;

           the date on which the Lender is satisfied that the VQA rebate for the 2025 fiscal year has

           been received by the Company (see note 5);

         • the fully drawn amount under the Demand NRT Facility is prepaid by the Company; and

         • July 31, 2025.

           This facility was paid off in June, 2025 from the proceeds of the VQA rebate (see note 5).

      2. Credit Facilities: The non-revolving term credit facility (the "NRT Facility") previously available in the amount of $8,673,000 has been reduced to $2,982,118.
         1. Term Loans Payable, continued
      3. Lassonde Limited Guarantee: The addition of a limited recourse guarantee granted by Lassonde Industries Inc., in favour of BMO in an aggregate amount not exceeding the Demand NRT Facility secured obligations under the SARCA.
      4. Interest Rates. The interest rates in respect of the following facilities has been amended to now be as follows:

         • the alternate base rate of Canada plus 2.40% in respect of each Base Rate Canada Loan under the RT Facility;

         • the alternate base rate of Canada plus 2.65% in respect of each Base Rate Canada Loan under the NRT Facility; and

         • the prime rate plus 3.15% in respect of each Prime Rate Loan under the Demand NRT Facility.

   4. Including changes up to the eighth amendment to its SARCA, the overall major terms of the BMO credit facilities as at March 31, 2026 consist of the following:

      1. Credit facilities: The revolving line of credit cannot exceed $10.5 million and the drawn amount of the non-revolving term loan cannot exceed its current amount of $1,265,000.
      2. Repayment: The repayment terms of the non-revolving term loan is repayable in 80 quarterly principal payments of 1.25% of the drawn amount, or $135,000.
      3. Interest rates: Under the current amendment, the interest rate on each component of the facility is as follows:

         • prime plus 2.40% under the revolving term facility; and

         • prime plus 2.40% under the non-revolving term facility.

      4. Covenants: The Amendment is subject to the following major covenants:

         • leverage ratio at less than or equal to 2.00 to 1; and

         • fixed charges coverage ratio at greater than or equal to 1.25 to 1.

           As at March 31, 2026, the Company is in compliance with all of its covenant obligations for the rolling 4 quarter period then ended (see note 2(c)).

      5. Other terms: All other terms of the SARCA, as amended, remain in full force and effect.

   5. The SARCA includes a master lease finance line facility under the BMO Equipment Leasing Group. In October, 2025, the final payment was made on this lease such that, as at March 31, 2026, a balance of $81,090 drawn on this facility (March 31, 2025 - $81,090) was included in lease liabilities.

1. Perigon Beverage Group Acquisition

   1. On October 9, 2024, the Company closed its acquisition of certain assets from the Perigon Beverage Group ("Perigon"). More specifically, Diamond has purchased the agency and supplier contracts of Perigon and its agency business.

   2. The purchase will be satisfied by the issuance of common shares of Diamond in four tranches as follows: 5,000,000 common shares of Diamond were issued to Perigon at the then-current price of $0.29 per share for a total of $1,450,000 and thereafter additional shares issuable in three equal installments payable every six months over the eighteen month period following closing, subject to certain adjustments based upon the achievement of gross margin targets.

   3. The acquisition has been accounted for as follows:

      1. the purchase price has been recorded as distribution rights (a component of intangible assets), and will be amortized on a straight-line basis over their estimated useful life of 11 years

      2. the contingent consideration payable will be expensed based on the value of the common shares issued to be issued every six months following closing.

   4. In July, 2025, the first of the three instalments was paid when the Company issued 1,035,817 common shares valued at $0.20 per share for a total of $210,633. In December, 2025, the second of the three instalments was paid when the Company issued a further 934,813 common shares valued at $0.21 per share for a total of $192,785 for total consideration of 1,970,630 shares valued at $403,418 (see note 19(a)).

2. Lease Liabilities

   Movement in the lease liabilities during the reporting periods was as follows:

   	2026	2025
   Lease liabilities, beginning of year	$ 705,709	$ 967,732
   Lease liabilities for assets acquired under lease	122,805	19,086
   Interest payable on lease liabilities	77,043	92,623
   Repayments during the year	(453,817)	(477,834)
   Movement relating to lease included in liabilities held for sale	109,646	104,102
   Lease liabilities, end of year	561,386	705,709
   Current portion	(204,302)	(243,412)
   Non-current portion	$ 357,084	$ 462,297

   The following amounts were recognized in profit and loss during the reporting periods:

   Interest expense on lease liabilities	$ 77,043 $	92,623
   Depreciation on right-of-use assets	104,327	94,136
   Expense related to short-term premises leases	167,589	65,030

   Additions to the lease liability are for equipment (see note 12). The value of the lease liability at commencement of the lease is estimated using the Company incremental borrowing rate of 6.0% per annum.

   A summary of the Company's future minimum lease payments related to the leases above is as follows:

   2027	$ 230,638
   2028	227,636
   2029	147,512
   Total future minimum lease payments	605,786
   Effects of discounting	(44,400)
   Total present value of minimum lease payments	$ 561,386

3. Debentures Payable

   1. On November 9, 2022, the Company completed a non-brokered private placement of

      $4,884,000 of 10.0% unsecured convertible debentures of the Company (the "2022 Debentures"), the net proceeds of which were used for general working capital and investment purposes. Certain insiders of the Company, including Lassonde and a related company controlled by its chairman, subscribed for $3.35 million of the total placement. The debentures have generally been rolled over and renewed annually at generally the same terms (save for differing annual conversion values) as described below, respectively becoming the 2023 Replacement Debentures, the 2024 Replacement Debentures and the 2025 Replacement Debentures.

   2. The major terms of the debentures are as follows:

2022 Debentures, 2023 Replacement Debentures, and 2024 Replacement Debentures

1. The debentures bear interest from the date of issue at 10.0% per annum, calculated monthly, in arrears. The coupon interest accrues on the principal outstanding under the debentures until such principal is repaid, converted or rolled over. The debentures mature one year from their date of issuance, unless the holder requested to accelerate the maturity date in the event the Company completed an equity financing within the next 12 months.

2. The debentures are convertible at the holder's option into common shares of the Company from the date of issuance until the maturity date at a set conversion price. (Conversion prices of the 2022 Debentures, the 2023 Replacement Debentures, the 2024 Replacement Debentures and the 2025 Replacement Debentures $0.80, $0.30, $0.24 and

   $0.22 respectively). If repayment of the debentures on the maturity date has constituted non-compliance by the Company under its senior borrowing obligations, the holder has the option to convert at the conversion price, or to roll the obligations over into new one-year debentures, on similar terms to be negotiated.

3. Upon any event of default, the principal amount and all accrued but unpaid interest of the debenture became immediately payable, together with a penalty fee equal to 1% of the obligations, and the holder could also thereupon have the option, but not the obligation, of (a) receiving common shares in accordance with the conversion terms of the debenture, or (b) remaining a holder.

   18. Debentures Payable, continued

4. 2025 Replacement Debentures.

   The terms of the 2025 Replacement Debentures are different from the prior debentures issuances in that, at maturity date, the conversion of the debenture into common shares can be forced. The Debenture includes a "BMO Compliance" requirement that restricts the Company from making any repayment, redemption, or interest-settlement unless such payment both complies with the terms of the existing BMO Credit Agreement and remains compliant on a pro forma basis after the payment is made, or unless the Company has obtained prior written consent from BMO. As based on the current projections, the Company does not expect that a cash payment of the debentures would be BMO Compliant, at maturity it is expected that the holders will be forced to convert the principal amount of the debenture at the conversion price. Any accrued interest at maturity would be converted at the market price of the Company's shares.

   If the Company completes a qualified financing while the debentures are outstanding, the holder has the option, but not the obligation, to notify the Company that the date of the closing of the qualified financing will be deemed to be the maturity date for all or part of the debenture. If the holder exercises this option, the Company may satisfy the obligations through the issuance of the same securities being issued in the qualified financing.

   Upon any event of default, the principal amount and all accrued but unpaid interest of the debenture become immediately payable, together with a penalty fee equal to 1% of the obligations, and the holder could also thereupon have the option, but not the obligation, of (a) receiving common shares in accordance with the conversion terms of the debenture, or (b) remaining a holder.

5. All securities issued in connection with the placement were subject to a four-month hold period expiring four months and one day from their date of issuance.