Dear Zefiro Shareholders,
As calendar year 2025 comes to a close, we would like to thank you for being a valued investor in Zefiro Methane Corporation (“Zefiro” or the “Company”). The new management team, led by Catherine Flax, has been focused on strategic execution that drives shareholder value. The Company is proud to reflect on the progress and milestones it has achieved over the last six months. This includes reducing costs while simultaneously driving revenues from operating service lines that generate free cash flow. Zefiro has strengthened its operational foundations, refined vendor and partnership relationships, and continued to deliver innovative environmental solutions to clients.
Throughout 2025, the team demonstrated exceptional dedication and expertise, decommissioning over 200 wells, enabling Zefiro to navigate volatility while staying true to the mission of responsible and efficient environmental practices. The efforts this year have positioned Zefiro for continued growth and long-term success in the years to come.
Looking ahead, the Company remains fully committed to executing its strategic priorities, maintaining operational excellence, and creating lasting value for shareholders. The Company is deeply appreciative of your continued trust and support as we build upon the strong foundation laid in 2025 and pursue new opportunities.
With this perspective in mind, Zefiro would like to provide a closer look at the past year, highlighting the progress and key initiatives undertaken over the last six months following the transition to the new management team. This period has been especially important in shaping the Company’s direction, strengthening its operational capabilities, and positioning Zefiro for continued growth moving forward. To understand the impact of this leadership transition, it is important to first recognize the challenges the Company faced earlier in the year.
Financial Highlights
The Company had a challenging start to the calendar year due to multiple factors, including the recent administration change. This uncertainty, coupled with strategic and operational decisions made under prior leadership that current management believes were not optimally aligned with the Company’s core business, significantly impacted financial performance. During the period, the Company generated less than USD $15 million in revenue during the first six months, while operating expenses were well above budget. In addition, the prior management team entered into several debt agreements with 2026 maturities with no defined repayment strategy that the current management team could identify at the time of transition. These obligations include a USD $1.0 million principal balance maturing in March 2026 and approximately USD $3.0 million of principal maturing in November 2026, creating a challenging financial overhang that remains a key focus for the Company’s strategic planning.
The Company transitioned to new executive leadership in June, bringing in Catherine Flax as Interim CEO and Michael Downs as Interim CFO. This management transition allowed the Company to shift decisively away from non-core initiatives and renewed its focus on cash-generating operations. This strategic realignment quickly delivered results as Zefiro recorded its strongest quarter to date (quarter ended September 2025), generating approximately USD $12.1 million in revenue, a ~21% improvement over the prior quarterly record. At the same time, operating expenses were reduced by roughly USD $1.3 million, declining to USD $3.1 million, which contributed to positive net income and free cash flow for the period.
The second quarter of fiscal year 2026 results have been strong to date and are expected to exceed the prior-year’s quarter results by a meaningful margin. Revenue is expected to remain among the strongest quarters in the Company’s history, exceeding levels from the second quarter of last year by more than 20%. This continued growth reflects sustained customer demand, successful project execution, and the Company’s expanding footprint across both its Environmental Services and Environmental Markets divisions. Despite the seasonal weather impacted activity, the quarter represents another solid step forward and reflects the discipline, focus, and renewed operational rigor brought by the new management team.
Operational Highlights
Over the past six months, through its subsidiary Plants & Goodwin, Zefiro has completed significant work for its three largest private operator clients. These customers have generated approximately USD $14.6 million in revenue, representing roughly 66% of total revenue during this period. Collectively, these operators are among the most prominent in the energy industry, with a combined market capitalization exceeding USD $40 billion. Plants & Goodwin’s reputation for operational excellence in the industry has led to the continued growth in these relationships.
In addition to the core customers noted above, Zefiro has continued to secure significant engagements with other key partners. These efforts have helped diversify the Company’s customer base and strengthen overall revenue. Highlighted below are several of the most impactful deals from the past six months.
- Plants & Goodwin was selected as the prime contractor for a three-year Construction Manager at Risk (“CMAR”) contract totaling USD $19.6 million administered by the Ohio Department of Natural Resources (“ODNR”). The contract is funded through a federal grant program aimed at reducing methane emissions from marginal oil and gas wells in Ohio. (Press Release)
- The West Virginia Department of Environmental Protection ("WVDEP") has awarded Zefiro a project consisting of pre-plugging and post-plugging methane quantification, in addition to locating oil/gas wells for the purpose of identifying them as candidates to be plugged. Based on an increased scope of work provided by the WVDEP, Zefiro will realize approximately USD $1.3 million in revenue from carrying out this project as a subcontractor to North Wind Site Services. (Press Release)
- Plants & Goodwin helped advance a large-scale infrastructure project converting a coal-fired power plant into a cleaner, natural gas-fired power plant in Western Pennsylvania. This was achieved through a USD $1.5 million project to permanently decommission nine “marginal” conventional gas wells. (Press Release)
Supported by a strong revenue stream from its Environmental Services division, the Company has also been able to shift increased focus toward its Environmental Markets division, with particular emphasis on carbon credit generation.
In 2025, Zefiro also achieved a key milestone by successfully completing a remediation project with confirmed emissions reductions of 92,956 metric tons of CO₂ equivalent by plugging a well in Custer County, Oklahoma, in accordance with the American Carbon Registry (ACR) methodology for originating carbon offsets from plugging orphan oil/gas wells. The Company subsequently delivered 78,536 tCO₂e to three strategic buyers, marking its first revenue from carbon credits.
Outlook
As we look ahead, the third quarter of fiscal year 2026 has the potential to deliver another period of strong financial performance based on the current pipeline. Zefiro remains firmly focused on continued execution, sustainable growth within free cash flow, and long-term value creation. The Company is optimistic that the external pressures that have recently contributed to higher expenses will further subside, enabling the organization to dedicate its full attention to driving efficiency, enhancing shareholder value, and advancing our mission of improving environmental outcomes.
The Company maintains a strong near-term project pipeline, highlighted by an approximately USD $5 million engagement with a private infrastructure developer in Louisiana, marking Zefiro’s expansion into its eighth U.S. state.
As we conclude this year-end review, Zefiro enters 2026 with renewed momentum, strengthened leadership, and a clear strategic path forward. The progress achieved in the latter half of 2025 demonstrates what is possible when the organization is aligned, disciplined, and focused on its core mission. The entire Zefiro team is aligned in its mission and is working seamlessly together to achieve results like never before. While challenges remain, the Company is confident in its operational foundation, its people, and its long-term vision. Zefiro looks forward to building on this year’s achievements, advancing sustainable environmental solutions, and continuing to create meaningful value for all shareholders. We thank you for your ongoing support and partnership as Zefiro moves into the next phase of growth and opportunity.
Wishing you all the best for 2026,
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| Catherine Flax Chief Executive Officer |
Luke Plants Senior VP of Corporate Development |
Disclaimer
This letter may contain forward-looking statements within the meaning of applicable securities laws, including, U.S. and Canadian securities regulations and laws. These forward-looking statements are based on current expectations, estimates, projections, beliefs, and assumptions of management, including those of Zefiro Methane Corp., as of the date of this letter.
Forward-looking statements typically include words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “estimate,” “may,” “will,” “should,” “could,” “would,” “continue,” “forecast,” “potential,” “target,” “goal,” “vision,” “strategy,” and similar expressions or variations thereof. These statements may relate to, among other things, the company’s strategic initiatives, business plans, regulatory environment, growth prospects, financial performance, operational outlook, timing and scope of projects, future market conditions, funding and capital requirements, partnerships, or other business developments.
Such statements are not guarantees of future performance and are subject to a number of known and unknown risks, uncertainties, and other factors—many of which are outside the company’s control—that could cause actual results or outcomes to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to: fluctuations in commodity prices, changes in regulatory or political environments, operational risks, financing risks, market demand for emissions reduction or environmental services, delays in project execution, reliance on third-party partners or vendors, competition, and the overall economic environment.
Also, this letter may include market and industry data obtained from various publicly available sources and other sources believed by the Company to be true. Although the Company believes it to be reliable, the Company has not independently verified any of the data from third-party sources referred to in this presentation or analyzed or verified the underlying reports relied upon or referred to by such sources, or ascertained the underlying assumptions relied upon by such sources. The Company does not make any representation as to the accuracy of such information.
Zefiro Methane Corp. does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law. Readers are cautioned not to place undue reliance on these forward-looking statements.
This letter is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities of Zefiro Methane Corp., nor shall it form the basis of or be relied upon in connection with any investment decision.