Ms. Emma Andrews reports

NEXTLEAF SOLUTIONS LTD. ACHIEVES STRONG FISCAL YEAR 2023 FINANCIAL PERFORMANCE, DEBT-FREE STATUS, AND POSITIVE CASH FLOW FROM OPERATIONS

Nextleaf Solutions Ltd. has released its annual financial results for fiscal year-end 2023, showcasing robust growth, strategic achievements and significant financial milestones.

Key financial highlights:

• Total gross revenue: Nextleaf, including its wholly owned subsidiaries, reports a remarkable total gross revenue of nearly $10-million ($9.96-million) for FY 2023.
• Gross profit: The gross profit for the same period stands at an impressive $2.3-million.
• Positive cash flow: The company achieved four consecutive quarters of consistent positive cash flow from operations, demonstrating operational efficiency and financial resilience.
• Debt-free status: Nextleaf solidified its financial position by retiring its senior note, achieving a significant milestone in becoming debt free and fortifying its balance sheet.

Fiscal year-end 2023 results

The company, including activities of its wholly owned subsidiary Nextleaf Labs Ltd., reports total gross revenue for fiscal year-end 2023 totalling nearly $10-million ($9.96-million) with a gross profit of $2.3-million.

Moreover, FY 2023 delivered four quarters of consistent positive cash flow, attributed to a reduction in operating expenses, increased revenue and improved gross margins. The company's strategic move to become debt free by retiring its senior note is a testament to a significant financial milestone and a strengthened balance sheet.

Nextleaf's year-over-year gross revenue increased by an impressive $4.6-million, representing a growth of 1.86 times (or 186.1 per cent) compared with the previous year. The significant momentum is attributed to the company's commercialization efforts, notably in the fourth quarter, generating approximately $3.3-million in revenue. This represents a 24-per-cent increase from the previous quarter and a remarkable 77.7-per-cent year-over-year growth from fourth quarter of FY 2022. The substantial financial turnaround underscores enhanced liquidity and adept management strategies.

Strategic milestones and commercial growth FY 2023

Nextleaf has experienced significant commercial growth in fiscal year 2023, marked by a series of impactful initiatives and successes:

• Diverse product launches: launched 15 new products into the Canadian recreational market, further diversifying the portfolio to meet evolving consumer preferences; this includes the introduction of three softgel SKUs, four ingestible oil SKUs and eight vape SKUs;
• Extensive product listings: secured and maintained 100-plus individual product listings across six provinces, demonstrating a commitment to widespread accessibility; Nextleaf brands and products are now available in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and Nova Scotia;
• Market expansion: entered two new provincial markets: Alberta and Manitoba, expanding Nextleaf's brand presence to a broader Canadian audience;
• Brand traction in Alberta: Glacial Gold gained immediate traction in Alberta, emerging as a top-selling brand for softgels and oils in the region;
• Regional leadership in B.C.: achieved the status of the No. 1 softgel brand in British Columbia in 2023, capturing over 40 per cent of wholesale market share and accounting for more than 50 per cent of all individual softgels sold in the province;
• Ontario market performance: secured the No. 4 position in softgel brand rankings in Ontario wholesale in fourth quarter; with two strong SKUs already in the market and the anticipation of four more in 2024, it is poised for continued growth and market penetration in the province.

These commercial milestones highlight Nextleaf's agility and effectiveness in responding to market dynamics, launching innovative products and establishing a strong market presence across provinces. As it looks ahead, it remains committed to furthering its commercial success, expanding its product offerings and solidifying its leadership position in the cannabis industry.

"This was a monumental year for our business. Two thousand twenty-three delivered the framework for financial stability. This provided the confidence that we have the tenacity, talent, technology and tactics to ride the waves inherent in this industry. Despite the complexity, we've remained very focused on delivering one simple premise: value," shared Emma Andrews, interim chief executive officer.

"We've worked through growing pains and roadblocks, overcoming setbacks and stigma. It has fortified our team, and I'm proud of how far we've come," continued Mr. Andrews. "We've put in a lot of hard work to get here, and we're just getting started. There's a collective understanding of the unique inflection point we are at."

About Nextleaf Solutions Ltd.

Nextleaf is an innovative cannabis processor with a portfolio of federally regulated emerging consumer brands, market validated cannabis derivative products, and high-purity and high-potency bulk ingredients. Nextleaf's multipatented, highly automated, closed-loop extraction and distillation technology sets the global standard for processing cannabis at scale.

The company currently manufactures over 80 different products across four categories for white-label clients and house brands. Formulated products and bulk ingredients are sold domestically to business-to-business partners and exported to applicable international jurisdictions.

With coast-to-coast distribution, Nextleaf brands are sold through both medical and recreational channels, and include award-winning legacy-era brand Glacial Gold, offering unparalleled value across multiple formats, including high-purity and high-potency vapes, oils, softgels, and infused prerolls. Additionally, newly launched house brand High Plains offers a broader assortment of cannabinoids and plant compounds, reaching additional market segments.

Nextleaf's commitment to constant innovation and speed-to-market advantage are guided by its team's unique depth of industry experience, complemented by its Health Canada research licence, allowing for unique sensory evaluation of cannabis through human trials and rapid prototyping. The company has been issued 19 U.S. patents and 75-plus patents globally on cannabinoid processing, including extraction, distillation and acetylation.

Nextleaf trades as OILS on the Canadian Securities Exchange, OILFF on the OTCQB market in the United States and L0MA on the Frankfurt Stock Exchange.

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