Mr. John Celenza reports

CIZZLE BRANDS CORPORATION ANNOUNCES CLOSING OF TRANSFORMATIVE TRANSACTION WITH THE ACQUISITION OF FLOW WATER INC.'S CO-MANUFACTURING BUSINESS

Cizzle Brands Corp. has completed the acquisition of all of the issued and outstanding shares of Flow Water Inc. (the target) from RI Flow Sub LLC (the vendor).

The acquisition was completed pursuant to the terms of a definitive share purchase agreement, whereby Cizzle Brands Acquisition Inc. (AcquireCo), a wholly owned indirect subsidiary of the company, acquired all of the issued and outstanding shares of the target for an aggregate purchase price of approximately $83.75-million, subject to customary postclosing adjustments. As described below, the purchase price was financed through a comprehensive financing package, including a senior secured credit facility from Orion Infrastructure Capital (OIC), together with a vendor takeback loan from the vendor and two concurrent non-brokered private placements.

Immediately prior to completion of the acquisition, certain assets relating to the target's branded consumer packaged goods business, including brand-related intellectual property and trademarks, were transferred out of the target to a company owned by the vendor (which will continue to operate that business under the Flow brand). As a result, under Cizzle's ownership, the target will focus exclusively on its established and profitable beverage co-manufacturing business. Following the acquisition, Cizzle will change the name of the target to Cizzle Brands Manufacturing Inc. and its manufacturing facility in Aurora, Ont., will become known as the Cwench Hydration factory.

All dollar amounts in this news release are in Canadian dollars unless otherwise specified.

Financial impact and revenue contribution

Based on the company's posttransaction pro forma consolidated financial information, the acquisition is expected to immediately add meaningful scale to Cizzle's revenue base.

On a pro forma basis, the manufacturing business is expected to contribute approximately $21.5-million of revenue in the second half of fiscal 2026 and approximately $46.5-million of revenue in fiscal 2027.

As a result, the combined company is expected to generate pro forma consolidated revenue of approximately $41-million in fiscal 2026 and approximately $75-million in fiscal 2027, with additional synergies anticipated to further drive profitability.

Strategic rationale

The acquisition materially accelerates Cizzle's path to profitability and strengthens its long-term operating platform. Specifically, the acquisition:

• Is immediately accretive to Cizzle and positions the company to become EBITDA (earnings before interest, taxes, depreciation and amortization) positive and cash flow positive on a significantly accelerated basis, relative to the company's stand-alone growth trajectory for Cwench Hydration, Spoken Nutrition and HappiEats;
• Secures in-house manufacturing capacity for Cwench, materially reducing cost of goods sold as volumes scale while improving production control and reliability;
• Creates meaningful operational and commercial synergies, including procurement efficiencies, logistics optimization and expanded manufacturing flexibility.

Management commentary

"To say that this transaction is a pivotal moment in Cizzle's history would be an understatement," said John Celenza, founder and chief executive officer of Cizzle Brands. "By acquiring Flow's manufacturing business, we are adding a substantial and profitable manufacturing platform that immediately increases revenue, improves margins and materially accelerates our path to sustainable cash flow. Just as importantly, we now control a critical part of our value chain, which positions us to support the continued growth of Cwench and future brands with far greater efficiency. With Tetra Pak capacity in North America being quite scarce, this acquisition allows us to immediately become an industry leader in sustainable and eco-friendly packaging in the Tetra format."

Transaction structure, financing and strategic investment

To finance the acquisition and postclosing working capital, the company completed a comprehensive financing package comprising:

• A senior secured credit facility provided by OIC's growth strategy (the OIC loan), a leading North American infrastructure investment firm, pursuant to a definitive credit agreement;
• A vendor takeback loan provided by the vendor;
• Two non-brokered private placement financings for units and convertible debentures, respectively.

OIC loan

Under the OIC loan, OIC provided a senior secured credit facility to AcquireCo in an aggregate principal amount of $40-million (U.S.) with an additional drawdown of up to $10-million (U.S.) available. The credit facility has a term of five years and bears interest at a rate of 12 per cent per annum. The proceeds of the initial advance under the credit facility were used to partially finance the acquisition. The credit facility includes customary covenants, events of default and restrictions, consistent with facilities of this nature. In connection with the OIC loan, Cizzle also issued to OIC 7.5 million warrants to purchase common shares of Cizzle at a price of 40 cents per common share.

Vendor takeback loan

The vendor takeback loan is a one-year secured vendor promissory note with RI Flow Sub in the principal amount of $22.25-million. The vendor takeback loan bears interest at a rate of 12 per cent per annum. The vendor takeback loan is prepayable at any time, in whole or in part, without penalty.

Private placements

The private placements consisted of:

• A $4,725,000 offering of units of the company at a price of 40 cents per unit, with each unit comprising one common share and one-half of one common share purchase warrant; each whole warrant is exercisable to acquire one common share of Cizzle at a price of 60 cents per share for a period of 24 months, subject to acceleration in certain circumstances;
• $7.5-million principal amount of convertible notes, bearing interest at 7.2 per cent per annum, convertible at any time by the holders thereof at conversion price of 50 cents per common share and a three-year maturity date.

Cliff Rucker, through RI CZL Investor LLC and the owner of RI Flow Sub, participated as a lead investor in the equity financing, underscoring his conviction in the long-term potential of Cizzle following the completion of the acquisition and his alignment with the company's posttransaction strategy.

Net proceeds from the private placements were used to finance the acquisition and satisfy transaction-related obligations and will provide incremental working capital for the combined operations. Finders' fees, consisting of 500,000 common shares and 71,250 units were paid to certain persons in respect of the acquisition.

Advisers and counsel

Bennett Jones LLP acted as legal adviser to Cizzle and Stifel Nicolaus Canada Inc. acted as a financial adviser to Cizzle. Miller Thomson LLP acted as legal adviser to the vendor in relation to the acquisition. In connection with the credit facility, Greenberg Traurig LLP acted as U.S. legal adviser to OIC and Stikeman Elliott LLP acted as Canadian legal adviser to OIC. Jenner & Block LLP acted as U.S. legal adviser to Cizzle in connection with the credit facility.

About Cizzle Brands Corp.

Cizzle Brands is a sports nutrition company that is elevating the game in health and wellness. Through extensive collaboration and testing with leading athletes and trainers across several sports, Cizzle Brands has launched three game-changing brands: (i) Cwench Hydration, a better-for-you sports drink that is now carried in over 5,500 locations in Canada, the United States and Europe; (ii) Spoken Nutrition, a premium brand of athlete-grade nutraceuticals that carry the prestigious NSF Certified for Sport qualification; and (iii) HappiEats, upgrading everyday eats with high-performance foods such as Sport Pasta. All Cizzle Brands products are designed to help people of all ages achieve their best in competitive sports and in living a healthy, vibrant and active lifestyle.

We seek Safe Harbor.