2. LIQUIDITY AND GOING CONCERN

Going concern

The accompanying condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

Management has evaluated whether conditions or events, considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the date that these financial statements are issued. As of June 30, 2026, the Company had $6,613 in cash, cash equivalents and restricted cash and a working capital deficit of $108,123. The Company has incurred recurring operating losses, negative cash flows from operations, significant debt obligations due within the next twelve months due to an event of default on the Company's outstanding Term Loan (as defined below) and is not currently in compliance with certain Nasdaq listing requirements, including the minimum stockholders' equity and minimum bid price requirements. These conditions and events, considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern. 

Management’s plans to address these conditions include reducing costs through restructuring and other initiatives, including facility consolidations, headcount reductions, focusing on our proprietary brand offerings and expanding and optimizing our logistics business. To improve liquidity the Company is negotiating with lenders and key vendors, and is pursuing additional financing or strategic alternatives including through an offering of equity securities, the sale of assets or businesses, including the sale of Aurora Peat Products ULC ("APP"). Refer to Note 17 – Subsequent Events for further details. Excluding the sale of APP, these plans are not within the Company’s control, and therefore cannot be deemed probable. As a result, the Company has concluded that management’s plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern. 

These condensed consolidated financial statements do not include any adjustments to the specific amounts and classifications of assets and liabilities, which might be necessary should we be unable to continue as a going concern.

Nasdaq listing compliance

On April 1, 2026, the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notified the Company that it was not in compliance with the $2.5 million minimum stockholders' equity requirement under Nasdaq Listing Rule 5550(b)(1). Although Nasdaq subsequently granted the Company an extension to regain compliance, on July 2, 2026 Nasdaq determined that the Company had not satisfied the terms of that extension. The Company timely requested a hearing before the Nasdaq Hearing Panel on July 9, 2026, which stayed any further action by Nasdaq pending completion of the hearing process. The Company is evaluating available options to regain compliance; however, there can be no assurance that it will do so or that any additional extension will be granted.

In addition, on July 6, 2026, Nasdaq notified the Company that it was not in compliance with the minimum bid price requirement under Nasdaq Listing Rule 5550(a)(2) because its common stock had not maintained a closing bid price of at least $1.00 per share for 30 consecutive business days. The Company has a 180-day compliance period to regain compliance and is evaluating available alternatives.