Mr. Lachlan McLeod reports

ADASTRA HOLDINGS REPORTS FY2023 RESULTS; MARKING THIRD CONSECUTIVE YEAROF RECORD REVENUE

Adastra Holdings Ltd. has released its financial results for the fourth quarter of 2023 (Q4 2023) and the year ended Dec. 31, 2023 (FY2023). All currency amounts are listed in Canadian dollars.

"During 2023, Adastra experienced significant sales growth of $37.7-million, representing a 108-per-cent increase compared with the same period last year, and marking our third consecutive year of achieving record revenue. The increased demand for our in-house brand, Endgame Extracts, has been a key driver behind this success, evident in our continued success with numerous best-selling SKUs in B.C., Alberta and Ontario according to Headset. None of this would have been possible without our dedicated team. They have continuously worked hard to increase the production throughput of the company's facility in Langley to keep up with the growing demand," said Lachlan McLeod, interim chief executive officer of Adastra. "Looking ahead to 2024, we expect to continue this momentum and have already set new records, including receiving a record single purchase order of $1-million in March, 2024. Moreover, we're committed to a renewed focus on cost-saving measures aimed at ensuring profitability. As we continue to grow, we aim to further strengthen our financial position and drive sustainable success."

Key FY2023 financial highlights

• Record gross revenues of $37.7-million for FY2023 (fiscal 2023) compared with $18.1-million for fiscal 2022 (FY2022), representing a 108-per-cent increase, due to increased demand for the company's in-house brand Endgame Extracts and increased throughput of the company's facility in Langley, B.C.
• Record gross profit of $7.6-million for FY2023, representing a 24-per-cent increase compared with $6.1-million in FY2022.
• Loss from operations of $1.8-million for FY2023 compared with $800,000 for FY2022, an increase of 124 per cent from FY2022, due to the company's increased spending on marketing initiatives in FY2023 to increase brand awareness of the suite of products under the Endgame Extracts brand.
• Record cash provided by operating activities of $1.9-million in FY2023 compared with $900,000 in FY2022 as the company closely managed cash flows during the year.

Key Q4 2023 financial highlights

• Gross revenues of $9.1-million in Q4 2023, compared with $6.8-million in the fourth quarter of 2022 (Q4 2022), representing an increase of 34 per cent, due to an increase in throughput of the Langley facility and increased deliveries to provincial distributors.
• Net loss and comprehensive loss of $1.5-million during Q4 2023, compared with $2.6-million during the third quarter of 2023, a decrease of 43 per cent quarter over quarter.

FY2023 business highlights

• Endgame Extracts ranks second, fourth, seventh and 10th of the best-selling concentrates in British Columbia, according to Headset.
• In Alberta, Endgame Extracts ranks third, eighth and 10th of the best-selling Vapor Pens and second-, fifth-, ninth- and 10th-best-selling concentrates according to Headset.
• In Ontario, Endgame Extracts ranked the second-best-selling Vapor Pen according to Headset.

Financial statements and management's discussion and analysis

This earnings press release should be read in conjunction with Adastra's audited annual financial statements for the three and 12 months ended Dec. 31, 2023, and the related management's discussion and analysis (the MD&A), which can be found on Adastra's issuer profile on SEDAR+.

About Adastra Holdings Ltd.

Adastra has become one of Canada's leaders in the supply and manufacturing of ethnobotanical and cannabis products for lawful adult-use. It serves medical markets and engages in forward-looking therapeutic applications. With cannabis concentrate products sold through retailers at more than 2,000 locations across Canada, Adastra's Phyto Extractions and Endgame Extracts brands are now well established with a growing distribution presence. As a Health Canada licensed facility, it specializes in extraction, distillation and manufacturing of a range of cannabis-derived products. Adastra partners with health care professionals and practitioners within the regulated environment to create products suitable for the medical cannabis market, with the ultimate aim of addressing the needs of patients.

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