Mr. Norton Singhavon reports

AVANT BRANDS REPORTS RECORD-BREAKING RESULTS IN FISCAL YEAR 2023

Avant Brands Inc. has released its audited financial results for the fiscal year ended Nov. 30, 2023 (fiscal 2023).

The company's fiscal year 2023 results demonstrate growth across key financial metrics. Highlights include:

• Record gross revenues: Increasing to a record $30.2-million, representing a 33-per-cent increase compared with FY 2022;
• Record cash flow from operations: Achieving a record $5.4-million, representing a 256-per-cent surge compared with FY 2022;
• Record adjusted earnings before interest, taxes, depreciation and amortization: Reaching a record $4.4-million, representing a 132-per-cent increase compared with FY 2022;
• Continued positive performance: Maintaining two consecutive fiscal years of positive cash flow and positive adjusted EBITDA.

Norton Singhavon, founder and chief executive officer, commented:

"We're thrilled by the remarkable growth across all key financial metrics during fiscal year 2023, showcasing our dedication to strategic excellence and operational efficiency. The successful integration of the Flowr Group (Okanagan) sets the stage for even greater success in fiscal year 2024 and beyond, bolstering our expansion efforts and strengthening our position at a global scale. Additionally, the two strategic acquisitions we made during the fiscal year 2023 underscores our commitment to long-term success and maximizing shareholder value in a dynamic market."

Fiscal 2023 financial highlights:

• Gross revenue was a record of $30.2-million (up 33 per cent versus FY 2022).
• Net revenue was a record of $26.3-million (up 31 per cent versus FY 2022).
• Recreational net revenue was a record of $15.8-million (up 10 per cent versus FY 2022).
• Export revenue was a record of $10.2-million (up 96 per cent versus FY 2022).
• Overall gross margin of 34 per cent (versus 32 per cent FY 2022):
  • Recreational gross margin of 48 per cent;
  • Export gross margin of 35 per cent;
  • Overall margin reduced by negative margin business-to-business sales of aged and out-of-spec product.
• Total of 7,105 kilograms of cannabis sold (up 93 per cent versus FY 2022).
• Overall weighted average selling price for flower decreased to $4.23 per gram from $6.07 per gram in FY 2022, with the recreational cannabis average selling price (net of excise) dropping to $6.31 from $7.75 per gram in FY 2022. This decline was influenced by higher bulk export sales and the expansion of adult-use brands like Flowr.
• Cash flow from operations was a record of positive $5.4-million (up 256 per cent versus FY 2022).
• Adjusted EBITDA was a record of $4.4-million (up 132 per cent versus FY 2022).
• Adjusted EBITDA margin (of net revenue) of 17 per cent.
• Selling, general and administrative expenses and corporate expenses of $8.8-million (up 26 per cent versus FY 2022).
• Net loss from operations of $1.5-million, compared with a loss of $8.5-million in FY 2022.
• Sixth consecutive quarter of positive cash flow from operations.

Fiscal 2023 corporate highlights:

• Canada's top-growing companies: The Globe and Mail recently published a list of Canada's top-growing companies of 2023, which was sector agnostic. Avant Brands ranked 49th out of 425 companies on this list, at 849-per-cent growth over its last three fiscal years. The list did not include any other public or private licensed producers, placing Avant as Canada's fastest-growing licensed producer on this list.
• The Flowr Group (Okanagan) Inc.: In Q1 2023, Avant acquired Flowr, gaining an 80,000-square-foot state-of-the-art indoor cultivation facility in Kelowna, B.C., through a Companies' Creditors Arrangement Act Proceeding (CCAA). By Q3 2023, Flowr achieved positive cash flow from operations, paving the way for significant cash flows for Avant. The Flowr facility is now the company's largest facility and is expected to be essential for Avant's future growth.
• Global distribution: The company's global distribution channels are experiencing significant growth, with a 78-per-cent year-over-year increase. This channel represents Avant's fastest-growing revenue stream, propelling the company into an exciting phase of expansion. It offers a prime opportunity for Avant to elevate its flagship brand, BLK MKT, at the global stage, marking a significant milestone in the company's journey toward international recognition and success.
• 3PL Ventures Inc.: The company executed a buyout of the remaining 50 per cent of the issued and outstanding shares of 3PL Ventures from F-20 Developments Corp., its previous joint venture partner, at its 60,000 square ft indoor facility, marking a strategic step forward. This acquisition grants Avant full control over operations and access to robust cash flows. It unlocks opportunities for innovation, streamlining and optimization. This strategic acquisition strengthens Avant's market position and underscores its commitment to excellence and growth.

Fiscal 2023 Canadian adult-use highlights:

• Launched two products in Quebec's nursery program. As a result of the success within the nursery program, the company secured two permanent general listings and received acceptance for an additional four listings, which management of the company believes will drive growth to its overall Canadian adult-use sales.
• Relaunched the Flowr brand, focusing on a unique price point that has driven substantial demand and sales. This strategic approach has attracted consistent attention and has also fostered positive responses from both consumers and budtenders alike.
• Avant products are in 70 per cent of all licenced stores (in the provinces and territories that Avant is listed):
  • British Columbia and Ontario combined penetration being 75 per cent;
  • B.C. penetration alone is at 87 per cent, with 27 SKUs (stock-keeping units) listed;
  • Ontario penetration alone is at 73 per cent, with 49 SKUs listed.
• BLK MKT was the No. 1 seller of premium one-gram prerolls in Ontario, and No. 2 across the entire one-gram segment.
• BLK MKT was the No. 2 bestselling 14-gram craft flower in Ontario.
• Tenzo had the No. 1 bestselling half-gram infused preroll in Ontario.
• Tenzo had an 87-per-cent increase in growth (unit sales) from Q1 to Q4 in the concentrates category in Ontario.

Key subsequent events:

• Executed strategic loan restructuring agreements with F-20 and MENA, resulting in a substantial reduction of approximately $1.2-million in quarterly payment obligations to F-20, thus enhancing financial flexibility and sustainability. See the news release dated Feb. 26, 2024.
• As a result of recently executed export agreements, the company expects to restore the company's growth trajectory for Q1 2024, with gross revenues forecasted at between $8.2-million and $8.7-million. This highlights the company's sustainable business model and dedication to future success.

Fiscal 2024 outlook

In the fourth quarter of fiscal 2023, Avant encountered a temporary decline in sales due to the accumulation of products for large export shipments, all of which were subsequently delivered in the first quarter of 2024. Additionally, declining purchase orders from the Ontario Cannabis Store (OCS) contributed to this decline. Various factors contributed to the decrease in OCS orders, including inflationary pressures, evolving trends in dried flower consumption and a heightened demand for larger-format value products.

Additionally, the downturn in Avant's market performance with the OCS was compounded by its limited product visibility and support within major Ontario retail chains (those with 10 or more stores). Avant's offerings frequently suffer from restricted availability and minimal promotional activities within these chains. This situation arises from Avant's current decision to abstain from engaging in data programs, commonly known as pay-to-play, which are typically mandatory for most major retail chains to promote and support products. This strategic choice, made by management of the company, is aimed at preserving the company's adult-use gross margins while also ensuring full compliance within the Alcohol and Gaming Commission of Ontario's inducement policy.

Despite the short-term challenges, Avant remains committed to aggressively competing in the Canadian adult-use market while expanding its global distribution channels. The company anticipates significant growth from global sales, with expected increases in gross revenues ranging between $8.2-million and $8.7-million for the first quarter of 2024. This growth trajectory aims to further solidify the position of BLK MKT as a globally recognized ultrapremium cannabis brand.

Conference call

Investors and stakeholders are invited to join Avant Brands as it navigates the exciting landscape of innovation and strategic growth within the global cannabis industry.

Conference call details:

Date: Feb. 29, 2024

Time: 4 p.m. Eastern Time/1 p.m. Pacific Time

Dial-in numbers:

Canada/United states toll-free: 1-800-319-4610

International toll: 1-604-638-5340

Following the call, a transcript will be promptly posted on Avant's website within 48 hours.

For those seeking a deeper understanding of the company's financial performance, the audited financial statements for the year ended Nov. 30, 2023, along with the related management discussion and analysis (the MD&A), will be available for download on the company's SEDAR+ profile or directly from the company's website.

Your participation is valued as the company discusses its achievements, strategies and vision for the future during this insightful conference call.

About Avant Brands Inc.

Avant stands at the forefront of the cannabis industry as a leading innovator and provider of ultrapremium cannabis products. With a network of operational facilities spanning Canada, Avant specializes in crafting high-quality cannabis products from exceptional cultivars.

Avant's diverse product range is distributed through three distinct sales channels: recreational, medical and export. Among its recreational offerings are renowned consumer brands like BLK MKT, Tenzo, Cognoscente and Treehugger, available across key markets, including British Columbia, Saskatchewan, Manitoba, Ontario, Atlantic Canada and the territories. Additionally, Avant's medical cannabis brand, GreenTec, serves qualified patients nationwide through its GreenTec Medical portal and trusted medical cannabis partners.

We seek Safe Harbor.