Mr. Christian Bullock reports

PUREBREAD BRANDS TO ACQUIRE CAFFE ARTIGIANO, CREATING A 27-LOCATION BAKERY AND CAFE PLATFORM

Purebread Brands Inc. and Caffe Artigiano Inc. have signed a letter of intent with an arm's-length party under which Purebread Brands proposes to acquire Caffe Artigiano's cafe business, including its corporate and franchise operations in Canada.

The proposed transaction would bring together two established B.C. bakery and cafe brands and significantly increase the scale of Purebread Brands' operating platform.

The combined business would include 16 company-operated bakery and cafe locations together with Caffe Artigiano's 11-location franchise network, representing a combined system of 27 locations. Caffe Artigiano also has seven additional locations in its development pipeline.

The proposed transaction would bring Caffe Artigiano into the Purebread Brands portfolio, creating a larger platform positioned for continued growth. Led by chief executive officer Christian Bullock, Purebread Brands has built an experienced leadership team across hospitality, culinary innovation, operations, marketing and business development. That leadership will support Artigiano's next stage of growth while Artigiano's team adds deep specialty coffee expertise to the combined organization.

"Caffe Artigiano is one of the most recognized names in Canadian coffee. For more than 25 years, it has shaped Vancouver's cafe culture, and, under Dean Shillington's leadership, it has continued to set the standard with real care and conviction," said Mr. Bullock, chief executive officer of Purebread Brands.

"Artigiano is a natural fit for our family of brands, sharing the same commitment to craft, quality and community that has guided Purebread from day one. Bringing these businesses together gives us immediate scale, a 27-location operating and franchise network, and a strong pipeline for continued growth. We believe the combination gives both brands the talent, infrastructure and reach to enter new communities without losing what made people fall in love with them in the first place."

The acquisition positions Purebread Brands for its next stage of growth, uniting two of B.C.'s most recognized bakery and cafe brands under one organization while maintaining the qualities that define each.

The combination creates opportunities to increase utilization of Purebread's bakery production capabilities across a larger cafe network, expand distribution of Purebread products, and generate efficiencies across purchasing, production, distribution, marketing and administration.

"Caffe Artigiano and Purebread share the same instinct: Do the simple things exceptionally well, and stay true to the product," said Mr. Shillington, president and CEO of Artigiano. "Purebread has built one of the most authentic bakery brands in Western Canada. Together, our brands create a solid foundation for growth and a unique opportunity for our team and guests to become owners in the future success of the business."

Transaction terms

Pursuant to the proposed transaction, Purebread will acquire all of the issued and outstanding shares of Caffe Artigiano, Artigiano Franchise Inc. and certain related companies in consideration for the issuance to the vendors of such number of common shares of Purebread as will represent 49.0 per cent of the issued and outstanding common shares immediately following closing of the transaction at a price of 12.5 cents per consideration share. The number of consideration shares will be determined immediately prior to closing and is subject to adjustment. Based on the number of common shares issued and outstanding as of the date hereof, the company anticipates issuing approximately 61,578,491 consideration shares in connection with the transaction, representing an aggregate transaction value of approximately $7.7-million.

It is anticipated that an intercompany payable of up to $4-million owing by one of the targets will remain outstanding as an obligation of such target following closing. The parties anticipate entering into an intellectual property licence, rental and purchase agreement at closing, pursuant to which the vendors will retain certain intellectual property rights and license such rights to Purebread, with payments thereunder satisfying the intercompany debt. Upon satisfaction of the intercompany debt, Purebread will acquire the licensed intellectual property rights. Additional terms, including interest and repayment terms, will be confirmed by the parties in the definitive transaction agreements.

Existing credit facilities of the targets with Royal Bank of Canada in the amount of approximately $1.7-million are expected to remain in place following closing.

It is further anticipated that the vendors will complete a preclosing reorganization, pursuant to which the targets will be reorganized such that the vendors will retain the intellectual property rights subject to the IP agreement and certain real property interests.

On closing, the vendors will have the right to nominate one director to Purebread's board of directors and shall retain this right for so long as the vendors and their affiliates hold at least 10 per cent of the outstanding common shares of Purebread. In addition, it is anticipated that the vendors and any designees receiving consideration shares will enter into voting support and standstill agreements, pursuant to which such persons shall agree for a period of 12 months: (i) to abstain from voting their shares on any resolution to appoint the board of directors of Purebread, other than the vendor nominee; and (ii) that they will not, without the approval of Purebread's independent directors, acquire more than a 49.9-per-cent interest in the outstanding common shares of Purebread, solicit proxies or otherwise seek to control Purebread, subject to customary exceptions.

The parties have agreed to negotiate exclusively until the earliest of execution of definitive agreements, termination of the letter of intent and Dec. 15, 2026. Completion of the transaction is subject to, among other things: completion of satisfactory due diligence by Purebread; negotiation and execution of definitive transaction agreements; TSX Venture Exchange acceptance; receipt of all required board, shareholder, lender, landlord and other third party approvals; completion of the preclosing reorganization; Purebread addressing its existing material liabilities to the vendors' satisfaction; and other customary closing conditions. Subject to a determination by the TSX-V, the parties anticipate that the transaction will be considered a fundamental acquisition by Purebread as such term is defined under TSX-V Policy 5.3 (Acquisitions and Dispositions of Non-Cash Assets) by virtue of the transaction resulting in new insiders of Purebread as a result of the appointment of the vendor nominee, as well as certain persons receiving consideration shares resulting in postclosing holdings in excess of 10 per cent of the issued and outstanding common shares of the company. It is further anticipated that the transaction will result in the creation of a new control person (as defined under TSX-V policies). Creation of the new control person shall be subject to receipt of Purebread shareholder approval.

The parties do not anticipate completing a concurrent financing or, except as disclosed above, any other transactions in connection with the transaction, and no finders' fees are payable in connection with the transaction. As the proposed transaction is between arm's-length parties, the transaction is not considered a related-party transaction and is not anticipated to require a formal valuation or majority of the minority shareholder approval under Multilateral Instrument 61-101 (Protection of Minority Security Holders in Special Transactions).

Further details regarding the transaction will be announced following the execution of the definitive agreements.

About Caffe Artigiano Inc.

Founded in 1999, Caffe Artigiano helped shape Vancouver's modern coffee culture and elevate the craft of the barista. From the beginning, its cafes have been designed as neighbourhood gathering places built around quality coffee, food and hospitality.

The Caffe Artigiano business included in the proposed transaction currently comprises nine company-operated cafes and a 11-location franchise network, with seven additional locations in its development pipeline.

About Purebread Brands Inc.

Purebread Brands is the parent company of Purebread, one of Canada's leading premium artisan bakery and cafe brands, known for handcrafted baked goods, premium ingredients and its signature abundant displays.

Purebread currently operates seven bakery and cafe locations across British Columbia, and has developed centralized bakery production capabilities to support continued retail expansion.

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