Mr. John Celenza reports

CIZZLE BRANDS ADDS VERTICAL INTEGRATION WITH $83.75M acqUISITION OF FLOW WATER INC.; SECURES MINIMUM VOLUME COMMITMENTS WORTH $184M IN MANUFACTURING CONTRACTS

Cizzle Brands Corp. has provided a corporate update detailing the strategic rationale and financial outlook for its acquisition of Flow Water Inc. (the manufacturing business).

Cizzle Brands recently acquired Flow Water's lucrative manufacturing business adding vertical integration to Cizzle Brands in a transaction valued at approximately $83.75-million.

As previously announced on Dec. 24, 2025, the company has acquired the manufacturing business for aggregate proceeds of approximately $83.75-million. Through this transaction, Cizzle has secured a profitable manufacturing business that is fully divested of the Flow brand marketing overhead as well as previous corporate liabilities.

Strategic rationale: vertical integration and market scarcity

The acquisition transforms Cizzle from a brand builder into a vertically integrated beverage platform. The acquisition was driven by three primary value creators:

Capitalizing on Tetra Pak demand: As consumer preference shifts demand away from PET (plastic) bottles toward more eco-friendly options, demand for aseptic Tetra Pak packaging is expected to surge. With North American production capacity for Tetra Pak currently constrained, the acquisition positions Cizzle as a key infrastructure holder in this high-growth sector.

Immediate revenue scale: The manufacturing facility, now known as The Cwench Hydration Factory, enters the Cizzle portfolio with a robust order book. The manufacturing business has approximately $184-million of remaining contracted manufacturing volume under existing customer agreements. These customer contracts include take-or-pay provisions providing for minimum payments and a guaranteed revenue floor of approximately $158-million if customers do not utilize any of the contracted volumes. Current manufacturing clients include BeatBox (which recently announced it is being acquired by Anheuser-Busch InBev) and the spunout Flow Water brand.

Vertical integration for Cwench: Prior to the acquisition, Flow Water served as the outsourced manufacturer for Cizzle's flagship ready-to-drink (RTD) product, Cwench Hydration. By owning the manufacturing process, Cizzle immediately secures its supply chain, removes third party margin, significantly reducing cost of goods sold (COGS) and gains full control over production scaling.

A clean asset: diamond in the rough

The acquisition leveraged a unique opportunity arising from the restructuring of Flow Beverage Corp. in late 2025. Through a court-supervised receivership process, the manufacturing business was structurally separated from the liabilities that historically burdened its former parent company.

Key financial highlights of the manufacturing business on closing of the acquisition include:

Debt-free balance sheet: The manufacturing business holds no equipment lease obligations or long-term debt, other than pursuant to the Tripartite agreement for Line 5 (described below), and the property lease on The Cwench Hydration Factory. The building lease is in good standing with six years remaining on the term and includes an option to renew for a further 10 years. The building lease will be capitalized as a right-of-use asset in accordance with IFRS (international financial reporting standards).

Fully paid infrastructure: Five of the six manufacturing lines in The Cwench Hydration Factory are owned free and clear. Line 5 is subject to a tripartite agreement with BeatBox and NFS Leasing Canada Ltd. whereby BeatBox entered into a lease with NFS for Line 5 but the manufacturing business compensates BeatBox for use.

Paid-in-full upgrades: On closing, the vendor settled approximately $14-million in remaining finance leases for Line 4 and paid all commissioning costs for a new high-speed Line 6 (330-millilitre Tetra Pak), ensuring the facility is modernized and turnkey.

Pure-play manufacturing: The Flow brand and related intellectual property and marketing operations were spun out prior to closing. Cizzle has acquired only the profitable, cash-generating manufacturing business.

$130-million tax loss carryforward: As part of the acquisition, Cizzle acquired an estimated $130-million in tax loss carryforwards related to the manufacturing business. This enables the company to minimize future tax obligations from the manufacturing business, maximizing cash flow retention for years to come.

Management commentary

"We identified a rare window to acquire a premier manufacturing asset without the burden of its predecessor's balance sheet," said John Celenza, chief executive officer of Cizzle Brands. "We are no longer just a brand; we are an infrastructure owner. Not only does this secure the long-term future of Cwench Hydration with improved margins, it also provides us with a highly lucrative co-manufacturing division serving some of the world's biggest beverage portfolios. We have built a moat around our business that few in the beverage space can replicate."

Operational and financial outlook

Prior to the receivership of Flow Beverage Corp., the manufacturing facility was operating at 42-per-cent efficiency. Currently, the plant is operating at 56-per-cent efficiency and the company expects to improve efficiency to 65 per cent within the next nine months based on management's experience with the acquisition of Flow's manufacturing facility in Virginia through a previous company.

The Cwench Hydration Factory currently has total capacity of up to 204 million units per year. Line 6 is expected to come on line in May, 2026, which will add additional capacity of up to 48 million units per year. There is also space to add two additional production lines (lines 7 and 8) which would add additional capacity of up to 86 million units per year. At full capacity The Cwench Hydration Factory should be able to produce up to 338 million units per year. This would represent a more than 2x revenue increase based on what it is producing today.

Cizzle expects the following pro forma financials for the consolidated company based on the current order book and operational efficiencies:

Manufacturing revenue: The manufacturing business is expected to contribute approximately $24-million in year-to-go (YTG) FY 2026 and $53-million in FY 2027.

Consolidated revenue: Adjusting for intercompany transactions, the combined company anticipates pro forma consolidated revenue of approximately $44-million in fiscal 2026 and $79-million in fiscal 2027, driven by recognized synergies and capacity expansion.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization): On a consolidated basis, the company expects to report its first adjusted EBITDA positive quarter in Q4 2026 and expects to generate $14-million in adjusted EBITDA for FY 2027.

Debt service: As previously mentioned, the acquisition was financed through a combination of debt and equity financing. The $40-million (U.S.) credit agreement with Orion Infrastructure Capital (OIC) carries interest at 12 per cent per annum and is structured whereby interest for the first six months is not paid in cash but rather added to the principal amount due at the end of the term. The 12-month secured promissory note from the vendor of $22.25-million carries interest at 12 per cent per annum which will be paid out in a bullet payment at the end of the term. On a normalized basis, the company expects to maintain a three-times debt service coverage ratio within the manufacturing business on the facility-based debt.

About Cizzle Brands Corp.

Cizzle Brands is a vertically integrated 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 5,700 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. It also owns and operates The Cwench Hydration Factory, a manufacturing facility that produces Cwench Hydration and other leading beverage brands in Tetra Pak packaging. All Cizzle Brands products are designed to help people of all ages achieve their best in competitive sports and in living a healthy, vibrant, active lifestyle.

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