Ms. Emma Andrews reports

NEXTLEAF SOLUTIONS REPORTS QUARTERLY RESULTS WITH RECORD REVENUE

Nextleaf Solutions Ltd. has released its financial results for the quarter ended Dec. 31, 2023. The company achieved record quarterly revenue growth, driven by market expansion, strong performance across its product portfolio, and successful operational investments and initiatives, bolstering the overall health of the business.

Quarterly financial highlights:

• Reports third profitable quarter;
• This quarter marked the company's highest gross sales period, generating over $4.1-million;
• Achieved a 190-per-cent increase in quarterly gross sales year-over-year (Q1 FY (fiscal year) 2024 versus Q1 FY 2023), driven by strong sales performance across all product categories;
• Recorded a notable 25.1-per-cent increase in gross sales compared with the previous quarter (Q1 FY 2024 versus Q4 FY 2023);
• The company maintained a debt-free position.

Market expansion and product performance:

• Expanded market presence and increased distribution channels throughout Alberta.
• Strategically invested in inventory across key categories to bolster commercialization efforts and expand territory sales.

The company's revenue growth is driven by sustained momentum across all product categories within its consumer brand portfolio, including vapes, oils and softgels.

The company's house brands, including acclaimed legacy-to-legal brand Glacial Gold and High Plains Cannabis, launched into Alberta only two months prior to the start of Q1 (in August, 2023).

The company substantially increased its distribution province-wide and achieved successful sell-through of all initial purchase orders, receiving reorders on all items within the quarter.

"I have a personal affinity towards Alberta and its success for us as a company, having spent over 20 years there. This was my first full quarter as interim CEO [chief executive officer], so I spent time visiting retailers in Alberta to support our company's launch. It was gratifying to see first-hand how the products are gaining immediate traction and how the value proposition is resonating early on with retailers, particularly with our softgel SKUs [stock-keeping units]," shares Emma Andrews, interim CEO.

Nextleaf anticipates launching nine new products nationwide in Q2 FY 2024, further bolstering its year-over-year revenue growth.

Q2 FY 2024 product launches include:

• Glacial Gold CBD (cannabidiol) 50 softgels, 10 pack;
• Glacial Gold balanced 10:10 softgels, 10 pack;
• Glacial Gold CBD 50 softgels, 100 pack;
• Glacial Gold balanced 10:10 softgels, 100 pack;
• Glacial Gold Max THC (tetrahydrocannabinol) Blueberry Dream hybrid vape, 1.2 grams;
• Glacial Gold High THC Fuzzy Mango vape, one g;
• Glacial Gold Max THC Grape Escape Double D infused prerolls, three by 0.7 g;
• Glacial Gold Max THC Cherry K.O. Double D infused prerolls, three by 0.7 g;
• High Plains 1,000-milligram (mg) THC indica oil drops, 35 millilitres (mL).

Operational investments and initiatives

Key investments made during this quarter included building up inventory to support sales expansion and commercialization initiatives, as well as equipment purchases to support manufacturing. The company also engaged new contract manufacturing partners to increase capacity and meet growing demand.

Equity and stock options

Nextleaf has issued an aggregate of 535,714 common shares to company executives as compensation for services rendered, at a deemed price of 14 cents per share.

The company has cancelled 1,275,000 options to purchase common shares under its stock option plan.

The company awarded various employees, executives and directors options to purchase up to 9,925,000 common shares pursuant to the company's stock option plan, with an exercise price of 14 cents per share.

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 B2B (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, soft gels 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 is 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 more than 75 patents globally on cannabinoid processing, including extraction, distillation and acetylation.

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