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Enterprise Group, Inc. Management Reports 2026
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ENTERPRISE
GROUP, INC.
Management's Discussion and Analysis
For the three months ended March 31, 2026 and 2025
ENTERPRISE GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
For the three months ended March 31, 2026 and 2025
This Management Discussion and Analysis (MD&A) should be read in conjunction with the audited consolidated financial statements and the notes contained therein of Enterprise Group, Inc. ("Enterprise", the "Company" or the "Corporation") for the three months ended March 31, 2026 and 2025. The Company prepares its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The documents are available at www.sedarplus.ca and at www.enterprisegrp.ca.
This MD&A was prepared effective May 13, 2026.
FORWARD-LOOKING INFORMATION
Certain information in the MD&A, other than statements of historical fact, may include forward-looking information that involves various risks and uncertainties. Forward-looking statements may contain words such as "may", "will", "should", "could", "anticipate", "believe", "expect", "intend", "plan", "potential", "continue", and similar expressions and statements relating to matters that are not historical facts. These may include, without limitation, statements based on current expectations involving a number of risks and uncertainties related to pipeline and facilities construction and maintenance services associated with the oil and gas industries and utility services and the domestic and worldwide supplies and commodity prices of oil and gas.
These risks and uncertainties include, but are not limited to, seasonal weather patterns, maintaining and increasing market share, government regulation of energy and resource companies, terrorist activity, the price and availability of alternative fuels, the availability of pipeline capacity, potential instability or armed conflict in oil producing regions, overall economic environment, the success of integrating and realizing the potential of acquisitions, ability to attract and retain key personnel, technological change, demand for services provided by Enterprise, and fluctuations in the value of the Canadian dollar relative to the US dollar.
These risks and uncertainties may cause actual results to differ from information contained herein. There can be no assurance that such forward-looking information will prove to be accurate. Actual results and future events could differ materially from those anticipated in such forward-looking information. The forward-looking information is based on the estimates and opinions of management on the dates they are made and are expressly qualified in their entirety by this notice. The Company assumes no obligation to update forward-looking information should circumstances or management's estimates or opinions change as a result of new information or future events. Readers should not place undue reliance on forward-looking information.
COMPANY PROFILE
Enterprise Group, Inc. is a consolidator of services-including specialized equipment rental to the energy/resource sector. The Company works with particular emphasis on systems and technologies that mitigate, reduce or eliminate CO2 and Greenhouse Gas emissions for itself and its clients. The Company is well known to local Tier One and international resource companies with operations in Western Canada. With corporate headquarters in St. Albert, Alberta, Canada; site offices in Morinville, Edmonton, Drayton Valley, Whitecourt, and Grande Prairie, Alberta; and Fort St. John, British Columbia, Enterprise is strategically located near its customers. The Corporation's strategy is to provide natural gas turbine power generation and critical site infrastructure equipment to energy producers and industrial customers, displacing diesel to reduce fuel costs and emissions. Enterprise has a proven history of acquiring companies that are accretive to the operations and adding value to the acquired companies through capital expenditure and organic growth.
ENTERPRISE GROUP, INC.
Current operations
In September 2012, Enterprise acquired Artic Therm International Ltd. ("Artic Therm" or "ATI"). Founded in 1998, Artic Therm is an industry leader in providing flameless heat technology to the broad-based construction and energy industries. ATI provides flameless heaters ranging in heat output from 375,000 to 3,300,000 BTUs.
On January 3, 2014, Enterprise acquired Hart Oilfield Rentals Ltd. ("Hart"). Hart is a full-service site service infrastructure company providing services and rentals to customers operating within the Western Canadian Sedimentary Basin. Hart's broad conventional and modular/combo rental equipment fleet is designed to provide "one-stop" on-site infrastructure to support drilling and completion operations. Hart services highly active plays of West Central Alberta and Northeast British Columbia, including Cardium, Duvernay, Montney and the Deep Basin from three service locations in Alberta (Drayton Valley, Whitecourt, and Grande Prairie).
On October 1, 2014, Enterprise acquired Westar Oilfield Rentals Inc. ("Westar"), a full-service site service infrastructure company based in Fort St. John, British Columbia. This acquisition provided the Company with a foothold in the Fort St. John market and a platform from which to introduce all of Enterprise's services. On October 1, 2020, Westar acquired Johnston Power Sourcing Inc. ("JPSI"). JPSI was amalgamated in into Westar on January 1, 2021.
In April 2022, Enterprise Group officially launched a new wholly owned subsidiary, Evolution Power Projects, Inc. ("EPP"). EPP is the leading provider of low emission, mobile power systems and associated surface infrastructure to the energy, resource, and industrial sectors. The company's innovative methods are delivering to its client's low emission natural gas-powered systems and micro-grid technology, allowing clients to eliminate diesel entirely.
On May 7, 2025, Enterprise acquired Flex Leasing Power and Service ULC ("FlexEnergy Canada"). With this strategic transaction, Enterprise became the exclusive supplier for FlexEnergy turbines in Canada, further solidifying its market leadership and positioned Enterprise at the forefront of addressing the growing demand for reliable and efficient natural gas to electric power solutions. The acquisition made Enterprise the exclusive provider to rent, lease, sell and service FlexEnergy turbines in Canada. Long-term leasing contracts, along with long-term maintenance contracts, create recurring revenue streams for Enterprise. Post acquisition, the name of FlexEnergy Canada was changed to Evolution Power Solutions, Inc. ("EPS").
Previous divestitures
On March 22, 2018, the Company closed a transaction to divest substantially all the assets of Calgary Tunnelling & Horizontal Augering Ltd. ("CTHA"). CTHA provided specialized trenchless solutions for the energy, utility, and infrastructure industries. Gross cash proceeds, including working capital, from the transaction was $20,194,992. CTHA was acquired by the Company on June 14, 2013, including working capital, for a purchase price of $16,185,000.
On July 7, 2016, the Company closed a transaction to divest substantially all the assets of T.C. Backhoe & Directional Drilling Ltd. ("TCB"). TCB provided directional drilling and installation of underground power, telecommunications, and natural gas lines to the utility infrastructure segment. Gross cash proceeds from the transaction including working capital $19,842,198. TCB was acquired by the Company on April 1, 2007, for a purchase price of $14,200,000.
Seasonality of Operations
The Corporation provides services to the energy industry and infrastructure utility sectors. The energy services industry is seasonal in nature. In general, the level of activity in the Canadian energy industry is influenced by seasonal weather patterns. Wet weather and the spring thaw can make the ground unstable. Consequently, transportation authorities enforce road bans that restrict movement of rigs and other heavy equipment, thereby reducing activity levels. Certain producing areas are inaccessible other than during the winter months because the ground surrounding the drilling sites consists of swampy terrain. Seasonal factors and unexpected weather patterns may lead to declines in the activity levels of exploration and production companies and corresponding declines in the demand for the services of the Corporation. Services provided to the infrastructure sector tend to be more evenly distributed throughout the calendar year although the spring thaw does affect movement of equipment even in the urban/suburban areas resulting in April and May being the slowest months of the year historically. The acquisition of Evolution Power Solutions and the recurring revenue it provides through long term rentals of its natural gas turbines, and its Flexcare service contracts, has lessened the impact of seasonality on the company as a whole.
ENTERPRISE GROUP, INC.
OVERALL PERFORMANCE AND RESULTS OF OPERATIONS
| | Three months
March 31, 2026 | | Three months
March 31, 2025 | |
| --- | --- | --- | --- | --- |
| Revenue | $12,003,053 | | $10,328,085 | |
| Gross margin | $6,094,753 | 51% | $5,175,343 | 50% |
| Adjusted EBITDA(1) | $5,427,289 | 45% | $4,415,855 | 43% |
| Adjusted EBITDA(1) per share - Basic | $0.07 | | $0.06 | |
| Adjusted EBITDA(1) per share – Diluted | $0.07 | | $0.05 | |
| Income before tax | $3,148,560 | | $3,721,671 | |
| Net income and comprehensive income | $2,408,724 | | $2,977,898 | |
| Earnings per share – Basic | $0.03 | | $0.04 | |
| Earnings per share – Diluted | $0.03 | | $0.04 | |
(1) Identified and defined under "Non-IFRS Measures".
-
Activity levels continued to increase in the first quarter of 2026, supported by sustained strong growth in the Alberta market. Revenue for the three months ended March 31, 2026, was $12,003,053 compared to $10,328,085 in the prior period, an increase of $1,674,968 or 16%. Gross margin for the three months ended March 31, 2026, was $6,094,753 compared to $5,175,343 in the prior period, an increase of $919,410 or 18%. Adjusted EBITDA for the three months ended March 31, 2026, was $5,427,289 compared to $4,415,855 in the prior period, an increase of $1,011,434 or 23%.
-
During the quarter, Enterprise repurchased and cancelled 717,300 of its outstanding common shares at an average purchase price of $1.22 per share. Management feels the share price is not reflective of the true value of the Company and will continue to support its share price when reasonable to do so. As such, On April 2, 2026, the Company renewed its normal course issuer bid.
-
During the quarter a combined total of 1,932,500 warrants and broker warrants were exercised resulting in net proceeds of $1,838,402 with 1,500 warrants expiring on March 11, 2026, unexercised. Originally issued on March 12, 2024, exercising of 5,003,801 warrants, broker warrants and broker options combined for net proceeds to the company of $4,720,942 over the lifetime of the issuance.
-
On May 1, 2026, The Company purchased property consisting of land and buildings in Whitecourt, Alberta for $3,150,000. The property was acquired using cash proceeds from the sale of its Acheson Alberta properties and operational cashflow. The new Whitecourt location will be used as the base for Evolution Power Project's Alberta operations, allowing the company to better serve the expanding power generation activity in the Province.
-
The prior period results were positively impacted by a $1,125,000 gain associated with a negotiated settlement discount on the closing of the Company's previous debt facility. This gain did not impact gross margin or adjusted EBITDA but did increase income before tax and earnings per share by $0.01.
ENTERPRISE GROUP, INC.
Selected Consolidated Expenses
| | Three months
March 31, | Three months
March 31, |
| --- | --- | --- |
| Selected Consolidated Expenses: | 2026 | 2025 |
| General and administrative | $667,464 | $759,488 |
| Finance expense | $597,871 | $569,699 |
| Depreciation | $1,484,218 | $1,217,919 |
General and administrative expenses
General and administrative expenses for the three months ended March 31, 2026, decreased to $667,464 compared to the prior period of $759,488. The decreases are primarily from a reduction of rent and utility costs, decreases in advertising and promotional costs and reduced insurance premiums for the 2026 renewal.
Finance expense
Finance expense includes interest charges on all outstanding debt including: the bank loan facility, leases, and mortgage facilities. The Company has utilized debt to support operations and partially fund capital expenditures. Finance expense for the three months ended March 31, 2026, remained relatively consistent compared to the prior period.
Depreciation
Depreciation for the three months ended March 31, 2026, was $1,484,218 compared to $1,217,919 in the prior period. The increase for the three months is a result of capital asset additions during 2025/2026 and increased equipment from the acquisition of EPS in the second quarter of 2025.
Cash Flow Information
A summary of cash flow information for three months ended March 31, 2026, and 2025, is set out below:
| | Three months
ended March 31, | Three months
ended March 31, |
| --- | --- | --- |
| Cash Flow Information: | 2026 | 2025 |
| Net cash provided by operating activities | $977,622 | $5,032,037 |
| Net cash provided (used) by financing activities | 2,921,607 | (17,936,463) |
| Net cash (used) in investing activities | (2,396,729) | (5,592,547) |
| Change in cash and cash equivalents | 1,502,500 | (18,496,973) |
| Cash and cash equivalents, beginning of period | 11,139,404 | 30,674,798 |
| Cash and cash equivalents, end of period | $12,641,904 | $12,177,825 |
The Company continues to generate positive cashflow from operations. Operating activities provided net cash of $977,622 or $0.01 per share compared to $5,032,037 or $0.06 per share in the prior period. The change in cash from operation is due to a net increase in deposits of $3,902,632 from the prior period, to be largely used for the purchase of power equipment. Net cash used by financing activities reflects a net increase to the bank loan facility of $3,500,000 which was offset by regular debt reduction payments made during the quarter of $1,038,580. Financing activities also includes $1,838,402 raised from exercise of warrants and $875,657 used to repurchase shares as part of the Company's normal course issuer bid program.
Net cash used in investing activities is primarily for cash paid to purchase property, plant and equipment of $2,468,580.
POST REPORTING DATE EVENT
On May 1, 2026, the Company purchased property consisting of land and buildings in Whitecourt, Alberta for $3,150,000. The property was acquired using funds from company cashflow.
ENTERPRISE GROUP, INC.
OUTLOOK
Canada's natural gas sector continues to demonstrate resilience in 2026, supported by ongoing investment in LNG export capacity and midstream infrastructure. These developments are enhancing long-term market access and reinforcing Canada's role as a reliable supplier of lower-emission energy to global markets, particularly amid sustained international LNG demand growth. Industry activity remains constructive, with stable drilling and completion levels and continued capital deployment, though operators are maintaining a disciplined focus on cost efficiency and returns in response to commodity price volatility and a more uncertain macroeconomic environment.
Trade conditions remain an important consideration. Canadian energy exports continue to benefit from tariff-free access to the United States under the United States-Mexico-Canada Agreement, which remains a critical framework supporting cross-border energy flows. However, evolving trade policy discussions and the upcoming 2026 USMCA review introduce a higher degree of policy uncertainty than in prior years. While certain tariffs and broader supply chain pressures have contributed to modest cost inflation, particularly for U.S.-sourced equipment, these factors have not materially disrupted procurement, project execution, or capital program timing. The Company continues to maintain supply chain flexibility and access to key suppliers. Importantly, the Company's exposure to tariff-related impacts remains limited given its customer base is concentrated in natural gas and infrastructure markets, which are less directly affected.
The Company's business development strategies continue to generate new client opportunities, with customers adopting its turbine power generation technology to support improved reliability, lower fuel costs, operational cost savings, and enhanced operating efficiency. The Company remains focused on disciplined capital allocation, operational efficiency, and collaboration with customers and Indigenous partners to deliver reliable energy solutions, support emissions reduction objectives, and create sustainable long-term shareholder value.
ENTERPRISE
GROUP, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
| Three months March 31, 2026 | Three months March 31, 2025 | Year ended December 31, 2025 | Year ended December 31, 2024 | Year ended December 31, 2023 | |
|---|---|---|---|---|---|
| Revenue | $12,003,053 | $10,328,085 | $36,353,628 | $34,646,888 | $33,500,501 |
| Adjusted EBITDA (1) | $5,427,289 | $4,415,855 | $11,790,275 | $13,039,867 | $13,285,880 |
| Income before income tax | $3,148,560 | $3,721,671 | $4,544,478 | $4,668,801 | $6,169,904 |
| Net income and comprehensive income | $2,408,724 | $2,977,898 | $3,532,781 | $4,543,553 | $6,169,904 |
| Basic earnings per share | $0.03 | $0.04 | $0.05 | $0.07 | $0.12 |
| Diluted earnings per share | $0.03 | $0.04 | $0.04 | $0.07 | $0.12 |
| Weighted average common shares outstanding – basic | 80,737,906 | 77,468,513 | 78,469,683 | 61,620,671 | 50,027,864 |
| Weighted average common shares outstanding – diluted | 81,670,684 | 82,065,569 | 80,734,652 | 66,354,258 | 51,444,531 |
| Total common shares outstanding | 81,611,176 | 77,531,187 | 80,392,976 | 77,227,989 | 49,687,374 |
| Total assets | $133,429,251 | $104,583,537 | $128,252,455 | $118,341,207 | $72,806,744 |
| Total liabilities | $42,464,201 | $18,958,419 | $40,842,521 | $36,027,139 | $32,011,620 |
| Total equity | $90,965,050 | $85,625,118 | $87,409,934 | $82,314,068 | $40,795,124 |
(1) Identified and defined under "Non-IFRS Measures".
ENTERPRISE
GROUP, INC.
SUMMARY OF QUARTERLY RESULTS
| 2026 | 2025 | 2024 | ||||||
|---|---|---|---|---|---|---|---|---|
| Mar 31 | Dec 31 | Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | Jun 30 | |
| Revenue | $12,003,053 | $10,329,266 | $9,210,402 | $6,485,914 | $10,328,085 | $7,812,010 | $6,801,309 | $7,707,282 |
| Net income (loss) for the period | $2,408,724 | $664,312 | $819,592 | $(929,022) | $2,977,898 | $673,207 | $(197,592) | $76,423 |
| Earnings (loss) per share – Basic | $0.03 | $0.01 | $0.01 | $(0.01) | $0.04 | $0.01 | $0.00 | $0.00 |
| Earnings (loss) per share – Diluted | $0.03 | $0.01 | $0.01 | $(0.01) | $0.04 | $0.01 | $0.00 | $0.00 |
| Weighted average common shares outstanding - basic | 80,737,906 | 78,178,111 | 77,505,965 | 77,528,389 | 77,468,513 | 61,620,671 | 59,432,820 | 58,500,384 |
| Weighted average common shares outstanding - diluted | 81,670,684 | 80,443,080 | 83,029,771 | 83,301,028 | 82,065,569 | 66,354,258 | 64,655,157 | 63,705,971 |
Quarterly information is discussed in the "Overall Performance and Results of Operations" section of this MD&A.
OUTSTANDING SHARE DATA
| May 13, 2026 | March 31, 2026 | December 31, 2025 | |
|---|---|---|---|
| Common shares outstanding | 81,211,876 | 81,611,176 | 80,392,976 |
| Stock options outstanding | 4,258,000 | 4,258,000 | 4,258,000 |
| Warrants outstanding | nil | nil | 1,689,969 |
| Broker warrants | nil | nil | 100,000 |
| Total | 85,469,876 | 85,869,176 | 86,440,945 |
As at May 13, 2026, Management's ownership position is 30%.
OFF-BALANCE SHEET ARRANGEMENTS
Enterprise enters into short-term leases with various vendors to provide office space and equipment in our normal course of operations. Our commitments under leases are disclosed in the table labeled "Contractual Obligations." Enterprise does not have off-balance sheet arrangements as at March 31, 2026.
CRITICAL ACCOUNTING JUDGEMENTS IN APPLYING ACCOUNTING POLICIES
The following are significant management judgements, apart from those involving estimation uncertainty, in applying the accounting policies of the Company that have the most significant effect on the financial statements:
i. Leases
Any contracts which contain the right to use an asset for a period of time in exchange for consideration can
ENTERPRISE GROUP, INC.
contain a lease. Contracts must meet three criteria as follows:
- an identified asset explicitly within the contract or implicitly upon delivery,
- the Company has the right to obtain all the economic benefits through the period of use as defined by the contract, and
- the Company has the right to use the identified asset through the period of use and direct 'how and for what purpose' the asset is used through the period of use.
ii. Deferred taxes
Management estimates the probability of future taxable income in which deferred tax assets can be utilized based on the Company's forecasted budget. The Company also takes into consideration non-taxable income and expenses and the various tax rules in effect or expected to be in effect at a future date. If a positive forecast of taxable income indicates the probable use of a deferred tax asset, then the asset is recognized. The recognition of deferred tax assets that are subject to certain legal or economic limits or uncertainties is assessed by management based on specific circumstances.
ESTIMATION UNCERTAINTY
The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimates are revised and in any future periods affected.
Information about significant areas of estimation uncertainty in applying accounting policies that have the most significant effect on the amounts included in the financial statements included, but were not limited to, the following:
i. Property, plant and equipment and intangible assets
The Company estimates useful life, residual value and depreciation methods based on industry norms, historical experience, market conditions and future cash flows. In determining estimated residual value, adjustments may be required by the Company to reflect differences between the specific assets carried by the Company and the similar assets used to indicate the fair value less costs of disposal, creating a degree of uncertainty. It is possible that future results could be materially affected by changes in the above factors.
ii. Impairments
An asset or cash generating unit ("CGU") is impaired when its carrying value exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions in an arm's length transaction of similar assets or observable market prices less incremental costs for disposing of the asset. Adjustments may be required by the Company to reflect differences between the value of specific assets carried by the Company and the similar assets used to indicate the fair value less costs of disposal, creating a degree of uncertainty. The value in use calculation is based on a discounted cash flow model, which incorporates the Company's budget and business plan. The recoverable amount is most sensitive to the discount rate used in the discounted cash flow model as well as the expected future cash flows and the growth rate used for extrapolation purposes. To arrive at cash flow projections the Company uses estimates of economic and market information over the projection period, including growth rates in revenues, estimates of future expected changes in operating margins, cash expenditures, the amount of property, plant and equipment required to achieve the cashflow projections, other future estimates of capital expenditures and changes in future working capital requirements.
iii. Impairment of financial assets
At the end of each reporting period, management monitors the expected credit loss against the net financial assets carried on the statement of financial position to assess credit risk and expected credit losses. Past events, current conditions and reasonable supportable forecasts are considered to identify and determine the extent of impairment, if any.
ENTERPRISE GROUP, INC.
iv. Income tax
The Company follows the asset/liability method for calculating deferred taxes. Tax interpretations, regulations and legislation in the various jurisdictions in which the Company operates are subject to change. As such, income taxes are subject to measurement uncertainty. Deferred tax assets are assessed by management at the end of the reporting period to determine the likelihood that they will be realized from future taxable earnings. Assessing the recoverability of deferred tax assets requires the Company to make significant estimates related to the expectations of future cash flows from operations and the application of existing tax laws in each jurisdiction.
v. Share-based payments
The Company estimates the fair value of stock option awards and warrants using the Black-Scholes Option Pricing Model. Certain key assumptions used in the model include the expected interest rate, expected volatility, forfeitures, dividend yield and expected term.
vi. Leases
When the Company enters into lease contracts the lease rate and term may not be readily determinable. Rates with lessors are often not explicit in the contract. As such, the Company uses its incremental borrowing rate to discount the cash flows related to the lease and determine the fair value. Optional terms to extend or terminate a lease may be contractually defined. Management estimates what the impact the option will have on the term of the lease and adjusts the carrying value of the lease accordingly.
vii. Business combinations
In a business combination, the Company may acquire assets and assume certain liabilities of an acquired entity. Estimates are made as to the fair value of property, plant and equipment, intangible assets, and goodwill, among other items. In certain circumstances, such as the valuation of property, plant and equipment, intangible assets and goodwill acquired, the Company may rely on independent third party valuators. The determination of these fair values involves a variety of assumptions, including revenue growth rates, expected operating income, discount rates, and earnings multiples.
RISKS AND UNCERTAINTIES
Financial risk management
The Company's activities expose it to a variety of financial risks such as credit risk, liquidity risk and market risk. The Board of Directors oversees management's establishment and execution of the Company's risk management framework.
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Company is exposed to credit risk through cash and cash equivalents and trade and other receivables. The Company manages the credit risk associated with its cash and cash equivalents by holding its funds in financial institutions with high credit ratings. Credit risk for trade and other receivables are managed through established credit monitoring activities.
The Company has trade receivables from customers in the oil and gas industry, as well as customers in the utilities/infrastructure construction industry. Credit risk is mitigated due to significant customers being large industry leaders, following a program of credit evaluation and limiting the amount of customer credit where deemed necessary. The Company monitors trade receivables against an expected credit loss model to assess reasonability of impairment over accounts receivable. Individual invoices within trade receivables are written off when there is no reasonable expectation of collecting payment. The Company has recorded a provision for doubtful accounts at March 31, 2026, of $nil (December 31, 2025 - $nil).
At March 31, 2026, $2,356,000 or 29% of trade receivables was from one customer compared to $2,279,000 or 35% from one customer as at December 31, 2025.
10
ENTERPRISE GROUP, INC.
| March 31, 2026 | December 31, 2025 | |
|---|---|---|
| Current (less than 90 days) | $ 7,925,040 | $ 6,406,507 |
| Past due (more than 90 days) | 62,691 | 189,180 |
| Total | $ 7,987,731 | $ 6,595,687 |
Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations. On an ongoing basis the Company manages liquidity risk by maintaining adequate cash and cash equivalents balances and appropriately utilizing available lines of credit. For the three months ended March 31, 2026, the Company generated 21% of revenue from one customer (2025 - 36% from two customers). No other customers comprise more than 10% of revenues.
The Company is committed to maintain its strong balance sheet and financial liquidity. The Company believes it has enough liquidity through cash flow and borrowing capacity on its credit facility to execute its business plan. The Company's priority is to continue to spend sufficient maintenance capital to keep its equipment fleet modern and meet specific customer demands.
The following are undiscounted contractual maturities of financial liabilities, excluding estimated interest and the impact of netting agreements March 31, 2026:
| Contractual Obligations
March 31, 2026 | Total | 2026 | 2027 | 2028 | 2029 | 2030 | After 5 years |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Trade and other payables | $2,879,594 | $2,879,594 | $nil | $nil | $nil | $nil | $nil |
| Loans and borrowings | 29,414,767 | 4,733,413 | 3,902,246 | 3,592,120 | 1,962,744 | 3,302,967 | 11,921,277 |
| Total contractual obligations | $32,294,361 | $7,613,007 | $3,902,246 | $3,592,120 | $1,962,744 | $3,302,967 | $11,921,277 |
Rent expense for short-term leases and leases of low-value assets expensed for the three months ended March 31, 2026, was $67,994 (2025 - $164,475). At March 31, 2026, the Company was committed to short term leases and the total commitment at that date was $nil (2025 - $136,885).
The Company has no significant commitments to capital resources other than those disclosed in this MD&A.
Market Risk
Market risk is the risk of changes in market prices, such as interest rates, which will affect the Company's income or the value of its financial instruments. Management has assessed the effect of a 1% interest rate increase or decrease in the prime lending rate at March 31, 2026, to impact the Company's annual interest expense by approximately $272,000 (December 31, 2025 - $243,000). The majority of the Company's debt is at fixed interest rates and changes in market prices do not have a significant impact. The Company has not entered into any derivative agreements to mitigate this risk.
Capital Management
The primary objective of capital management is to ensure the Company has sufficient capital to support its business and maximize shareholder value. The Company manages its capital in proportion to the risk of the underlying assets and makes adjustments in light of changes in economic conditions and risks. The Company's strategy remains unchanged from prior periods. Management considers its capital structure to include funded debt and adjusted shareholder equity of the Company. Adjusted shareholder equity comprises all components of equity (share capital, contributed surplus, and deficit). Included in funded debt is the bank loan facility which requires the Company to maintain certain financial covenants as defined below. The Company's objectives when managing capital are to finance its operations and growth strategies and to provide an adequate return to its shareholders. In order to maintain or adjust the capital structure, the Company may issue new shares or sell assets to reduce debt. As at March 31, 2026, the Company has met these objectives.
ENTERPRISE
GROUP, INC.
| March 31, 2026 | December 31, 2025 | |
|---|---|---|
| Bank loan facility | $14,781,284 | $12,171,545 |
| Current portion of loans and borrowings | 4,733,413 | 4,397,835 |
| Long term loans and borrowings | 9,900,070 | 10,288,632 |
| Net funded debt | 29,414,767 | 26,858,012 |
| Shareholders’ equity | 90,965,050 | 87,409,934 |
| Total capital | $120,379,817 | $114,267,946 |
Included in net funded debt is the bank loan facility which requires the Company to maintain certain financial covenants. As at March 31, 2026, the Company is in compliance with the required covenants.
Financial Instruments
The classification of a financial asset or liability is determined at the time of initial recognition. The Company does not enter into derivative contracts.
i. Financial assets
A financial asset is recognized when the Company has the contractual right to collect future cash flows. The Company's financial assets include cash and cash equivalents, trade and other receivables and deposits. The contractual terms of these noted instruments result in cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets are initially recognized at fair value adjusted for applicable transactions costs. Any income or expenses related to financial assets, including impairment of trade receivables, is recognized in other income (expenses) through profit and loss.
Financial assets are subsequently measured at amortized cost using the effective interest method. Financial assets are derecognized when the contractual right to hold and collect future cash flows expires or substantially all risks and rewards have been transferred. Discounting of the future cash flows will be included if the impact is material.
ii. Financial liabilities
A financial liability is recognized when the Company has the contractual obligation to pay future cash flows. The Company's financial liabilities include loans and borrowings and trade and other payables.
Financial liabilities are initially recognized at fair value adjusted for applicable transactions costs. Interest-related charges and changes in an instrument's fair value due to contract modifications are reported through profit or loss.
The financial liabilities are subsequently measured at amortized cost using the effective interest method. Financial liabilities are derecognized when the contracted consideration and risks have been transferred, or if the future obligation expires, is extinguished, or is cancelled.
In the event of a modification that does not result in derecognition, a modification adjustment is recognized through profit or loss. The adjustment is calculated as the change between the original contractual cash flows and the present value of the modified cash flows at the original contracted effective interest rate. Management will monitor debt instruments for significant events that affect future cash flows. Events that could lead to a modification may include amendments, large debt repayments, or large draws on a debt instrument.
Financial instruments are classified into one of the following levels of fair value hierarchy:
Level 1 - Fair value measurements based on unadjusted quoted prices in active markets for identical assets or liabilities that can be accessed at the measurement date.
Level 2 - Fair value measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly.
ENTERPRISE GROUP, INC.
Level 3 - Fair value measurements derived from valuation techniques that include unobservable inputs.
Other Risks
Other risks include:
- Commodity pricing – Fluctuation in the price of petroleum products is a business risk that impacts the Company directly. Oil and gas prices determine the economic feasibility of exploration and drilling activity in the oil and gas industry, to which the Company provides its services. High prices increase demand for the Company's services, while adverse or lower prices impact the Company's ability to generate revenues.
- Production declines and new discoveries – New discoveries of oil and gas reserves lead to an increase in the demand for the Company's services. On the other hand, declines in production result in decreased demands for the Company's services. Either situation directly impacts the operating results of the Company.
- Weather – The Company operates heavy equipment, the movement of which requires reasonable weather and road conditions. In the spring season this is especially true, with spring breakup making many secondary roads impassable. Since heavy equipment cannot be moved under these conditions, the Company's operating results are subject to significant decreases during this time period. To mitigate this risk, the Company is diversifying its operations to other industries enabling the Company to perform services elsewhere during the spring. The Company also rents flameless heaters which are in greater demand during cold weather. The extent of cold weather and the duration of winter will have a significant impact on operating results. To mitigate this risk, the Company is diversifying the use of its blower capacity and drying capabilities, contained within the flameless heaters, in warmer months.
- Available workforce – The ability to perform services is contingent upon sufficient and appropriately skilled staff being available. Obtaining personnel is crucial to the Company's ability to meet demand for its services.
- Recession risk – Should economic environment slide into a recession, demand for the Company's services would be reduced and have a negative impact on revenues and earnings. This would result in the Company implementing cost control measures and possibly expand its services into other industries in order to manage through the recession.
- Cyclicality – The Company has a significant portion of its revenues tied directly to the oil and gas industry in Western Canada. These revenues are subject to any cyclicality of the industry. To mitigate this risk the Company continues to diversify its customer base and revenue streams.
- Operating risk and liability insurance – The Company believes the insurance coverage it has in place is appropriate for the nature of its services provided and its associated risks, however such coverage may not be adequate. To mitigate this risk, management reviews the Company's insurance coverage on a regular basis.
- Competition – The Company's ability to provide cost-effective, quality service to its customers is essential to help mitigate the Company's business risk of competition.
- Access to capital – The Company is dependent on access to equity or debt financing to fund capital expansion programs when operating cash flows are not sufficient to do so. To date, sufficient capital has been obtained to meet the Company's capital expansion and acquisition requirements. Any further capital expansion or acquisitions that cannot be funded through operating cash flows will require external financing, the availability of which is dependent on economic factors such as interest rates, investor and creditor confidence, and industry profitability.
- Cyber security – The Company's operations may be disrupted or threatened by cyber attacks or viruses. The business requires the continued operation of information technology systems and network infrastructure. Management believes it has implemented reasonable security measures to prevent disability or failure. However, if the Company's systems cannot be recovered in a timely manner, the Company may be unable to meet critical business functions, which could have a material adverse effect on the business, financial condition, and results of operations.
ENTERPRISE GROUP, INC.
- Pandemics, natural disasters or other unanticipated events – The occurrence of pandemics, natural disasters, such as fires, floods, earthquakes, or hurricanes; or other unanticipated events, such as cyberattacks, terrorist attacks or railway blockades, in any of the areas in which the Company, its customers or its suppliers operate could cause interruptions in the Company's operations. In addition, pandemics, natural disasters or other unanticipated events could negatively impact the demand for, and price of, oil and natural gas which in turn could have a material adverse effect on the Company's business, financial condition, results of operations and cash flows. In addition, and without limitation of the foregoing, the Company is also exposed to risks relating to public health emergencies and infectious diseases, and related government responses, which could have a negative impact on global financial conditions and could have a material and adverse effect on the Company's business, financial condition and results of operations. The Company cannot accurately predict the impact these interruptions will have on its ability to execute its business plans.
A change in any one of these factors could have a material impact on the financial performance of the Company. The above discussion of risks is not intended to be all-inclusive. The intention of this discussion is to highlight for the reader the typical risks for this industry. Readers should carefully consider, among other things, the risks described herein, and in the Company's Annual Information Form dated March 11, 2026.
RELATED PARTY TRANSACTIONS
The Company has entered into transactions in the normal course of business with corporations controlled by an officer and director of the Company. These transactions were recorded at the exchange amount established and agreed to by the parties. Management and consulting fees were paid to a company controlled by Leonard Jaroszuk, Chief Executive Officer, as compensation for serving in his role as a director and officer for the Company.
| Three months ended March 31, | 2026 | 2025 |
|---|---|---|
| Management and consulting fees | $225,736 | $214,613 |
INTERNAL CONTROL OVER FINANCIAL REPORTING AND DISCLOSURE CONTROLS
Management's Report on Internal Control Over Financial Reporting
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting and has designed internal controls to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Management has used a recognized framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) to evaluate the effectiveness of internal controls over financial reporting.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management has evaluated the design and operation of the Company's internal control over financial reporting as of March 31, 2026, and has concluded that such internal controls over financial reporting were effective. There are no material weaknesses that have been identified by management in this regard.
Management's Report on Disclosure Controls
As of March 31, 2026, the Company's management evaluated the effectiveness of its disclosure controls and procedures as defined in the rules of the Canadian Securities Administrators. This evaluation is performed under the supervision of, and with the participation of, the Chief Executive Officer and the Chief Financial Officer. The Chief Executive Officer and the Chief Financial Officer have concluded that the Company's disclosure controls and procedures are effective as of March 31, 2026.
ENTERPRISE GROUP, INC.
NON-IFRS MEASURES
In addition to using financial measures prescribed by IFRS, certain non IFRS measures are used in this MD&A. Non-IFRS measures should not be construed as an alternative to net income or cash flow from operating activity as an indicator of financial performance or to cash flow from operating activities as a measure of liquidity and cash flow. Non-IFRS performance measures do not have any standardized meaning prescribed by IFRS and therefore the Company's methods of calculating non-IFRS measures may not be comparable to similar measures presented by other companies. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. This measure has been described and presented in the same manner in which the chief operating decision maker makes operating decisions and assesses performance.
Adjusted EBITDA
Adjusted EBITDA is a useful supplemental measure as it provides an indication of the results generated by the Company's principal business activities prior to consideration of how those activities are financed and how the results are taxed. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, loss (gain) on disposal of property, plant and equipment, fair value adjustments, impairment losses, share-based payments and subsidies/debt settlements.
Reconciliation of net income to Adjusted EBITDA:
| Three months March 31, 2026 | Three months March 31, 2025 | Year ended December 31, 2025 | Year ended December 31, 2024 | Year ended December 31, 2023 | |
|---|---|---|---|---|---|
| Net income | $2,408,724 | $2,977,898 | $3,532,781 | $4,543,553 | $6,169,904 |
| Add: | |||||
| Interest | 597,871 | 569,699 | 1,873,367 | 2,789,445 | 1,912,251 |
| Income tax (recovery) | 739,836 | 743,773 | 1,011,697 | 125,248 | nil |
| Depreciation and amortization | 1,527,767 | 1,230,455 | 5,483,827 | 5,248,883 | 5,005,936 |
| (Gain) loss on disposal of property, plant and equipment | (30,556) | (35,592) | 416,549 | 60,028 | (153,483) |
| Share-based payments | 183,647 | 54,622 | 597,054 | 302,710 | 351,272 |
| Gain on debt settlement | nil | (1,125,000) | (1,125,000) | nil | nil |
| Adjusted EBITDA | $5,427,289 | $4,415,855 | $11,790,275 | $13,039,867 | $13,285,880 |
ENTERPRISE
GROUP, INC.
ADDITIONAL INFORMATION
Additional information, including the Company's Annual Information Form, can be found on SEDAR at www.sedarplus.ca or the Company web site at www.enterprisegrp.ca.
MANAGEMENT TEAM / BOARD OF DIRECTORS
Leonard D. Jaroszuk, Chief Executive Officer and Chairman of the Board
Desmond O'Kell, President, Director
Warren Cabral, CPA, CA, Chief Financial Officer
John Campbell, CPA, CA, CFA, CPA (Illinois), Lead Director
John Pinsent, FCPA, FCA, ICD.D., Director
Neil Darling, Director
CONTACT INFORMATION
200, 340 Circle Drive
St. Albert, Alberta,
Canada T8N 7L5
Phone: (780) 418-4400
Fax: (780) 418-1941
Toll Free: (888) 303-3361
Email: [email protected]
Website: www.enterprisegrp.ca
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