Avant Brands Reports Fiscal 2021 Audited Results

• Delivered record gross revenues of $11 million – representing 25% growth from the prior year
• Increased recreational cannabis sales by $1.8 million or 29% – demonstrating the demand for Avant’s brands
• Improved production output by 13% – reflecting the initiatives to boost operational efficiencies
• Progressed towards positive Adjusted EBITDA ^(C) , with a $1.6 million loss
• Maintained a strong capital position with $14.3 million of cash, $23.8 million of working capital and all debt eliminated

KELOWNA, BC / ACCESSWIRE / February 24, 2022 / Avant Brands Inc. (TSX:AVNT)(OTCQX:AVTBF)(FRA:1BU0) (“ Avant ” or the “ Company “), a leading producer of handcrafted, high quality cannabis products, is pleased to announce its financial results for the Fourth Quarter and Fiscal 2021 ended November 30, 2021.

“2021 was a transformative year for Avant as we graduated on to the TSX, entered new international markets, licensed the 3PL JV, our newest and largest facility, launched innovative new products and emerged with one of the strongest balance sheets in the industry,” said Norton Singhavon, Founder and CEO of Avant. “ We continue to grow our market demand while remaining innovative and providing consumers in Canada and internationally with premium quality cannabis. We entered 2022 with considerable momentum, resulting in anticipated record revenues for Avant in Q1 2022 and we intend to continue to execute on our growth strategy. We are proud of what we have built at Avant and believe that our disciplined and focused approach has resulted in us being well positioned for long-term success.”

Key Financial Highlights

All figures are compared to the Company’s most recent fiscal year (2020) unless otherwise stated; all financial information in this press release is reported in Canadian dollars.

• Achieved record gross revenues of $11 million, compared to $8.8 million, an increase of $2.2 million or 25%
• Recreational cannabis sales of $7.8 million, compared to $6.0 million, an increase of $1.8 million or 29%, demonstrating the significant demand for Avant’s premium cannabis brands
• Cash outflow from operating activities before working capital of $1.0 million, compared to cash inflow of $1.4 million, the decrease was a result of the Company’s investment in new product development, packaging, and other initiatives that the Company expects will generate positive operating cash flows
• Gross margin before fair value adjustments ^(A) was $3.7 million, or 39%, compared to $4.0 million, or 50%, the decrease was a result of launching concentrate products through third-party manufacturers. The Company expects to receive the necessary licensing soon to increase the gross margin on these products
• Operating expenses ^(B) from continuing operations increased by $1.8 million or 46%. The increase in operating expenses in the current year is due to various one-time non-reoccurring expenses such as the fees related to the TSX graduation, multiple financings, and its associated legal fees
• Net loss from operations was $5.4 million, compared to net income from operations of $0.3 million. Comprehensive loss was $11.2 million, compared to $10.2 million. The comprehensive loss for the current year includes one-time non-recurring fees related to the TSX graduation, financings and associated legal fees, and a $1.0 million loss on extinguishment related to the repayment of debt
• Maintained a strong capital position with approximately $14.3 million of cash, $23.8 million of working capital and no debt
• Adjusted EBITDA ^(C) loss of $1.6 million, compared to adjusted EBITDA loss of $0.1 million, demonstrating the near-term profitability and fiscal discipline of the Company

Key Corporate Highlights

• Completed a full corporate rebrand of GTEC Holdings to Avant Brands Inc., to better align with our objective of being an innovative leader in premium cannabis
• Graduated from the TSX Venture to the Toronto Stock Exchange , and from the OTCQB Market to OTCQX Best Market
• Strengthened the Company’s Board of Directors with the appointment of Jurgen Schreiber as Chairman of the Board, Duane Lo as Chair of the Audit Committee and Ruairi Twomey as an additional independent director
• 3PL, a purpose-built 60,000 sq. ft. facility received its Standard Cultivation, Standard Processing and Medical Sales Licences , in accordance with Health Canada’s Cannabis Act and Regulations
• The Company raised $23 million through a bought deal at a unit price of $0.80 per unit
• Eliminated all of the Company’s debt , which was approximately $8 million
• Divested of the last non-core asset, Zenalytic Laboratories Ltd., for a combination of cash and stock, with an aggregate value of $300,000
• Filed base shelf prospectus for an aggregate offering up to $50 million to provide the Company with the flexibility to capitalize on financing opportunities during the 25-month period that it remains active

Key Sales and Market Highlights

• Increased production by 13% to 3,022 KG, compared to 2,685 KG, reflecting the Company’s initiatives to boost operational efficiencies. The production does not include product harvested from its 3PL facility, which commenced subsequent to the fiscal year-end
• Sold a total of 2,010 KG of cannabis, which represents an increase of 736 KG, or 58% in volume compared to the prior year
• BLK MKT™ continued to be a top selling premium brand in all Canadian Provinces where sold
• BLK MKT™ 1G pre-rolls rapidly emerged as a top selling pre-roll in British Columbia, and Ontario
• The Company’s core channel strategy of recreational cannabis sales accounted for 87% of total sales, compared to 79% during the prior year, which demonstrates the significant demand for the Company’s recreational products
• Overall weighted average selling price of flower decreased by 8% to $6.34 per gram (with recreational cannabis average being $7.26, including excise tax), compared to $6.90 per gram ($8.67 for recreational cannabis). The decrease is primarily due to product mix, market pricing pressures, and entry into the export market
• Expanded the sales team to increase engagement with provincial liquor boards, wholesale distributors, national chains and retail stores to enhance sales relationships
• Successfully initiated global cannabis exports with shipments totalling over 200 KG of dried cannabis during the fiscal year
• Continued to build an international client portfolio by signing three additional export agreements with customers in Israel and Australia
• After launching GreenTec Medical , an e-commerce medical sales business in February 2021, the Company has experienced a steady increase in B2C medical clients, while expanding the range of products by adding new cultivars and product formats
• In February 2022, the Company entered the concentrates market with the launch of new products in the live rosin and vape segments, leveraging the Company’s cultivation expertise and brand equity

Products and Innovations

• The first recreational brand to package in glass bottles
• The first recreational brand to include Terpene profile on product packaging
• Launched Canada’s first pre-roll blunt, with BLNT by BLK MKT™
• Launched Cognoscente ^TM , the first craft tasting flight for the 2021 holiday season
• Launched certified organic, eco-friendly flower, Treehugger in 2022
• Entered the concentrates market with the launch of new products in the live rosin and vape segments
• Enhanced the Company’s portfolio of unique cultivars, with the addition of approximately 50 cultivars, most of which are not currently available within the Canadian recreational market. The products are expected to launch under the Company’s recreational cannabis brands during the first half of Fiscal 2022

Strategic Outlook for Fiscal 2022

The Company anticipates that Fiscal 2022 will be a pivotal year for the organization, as it begins to realize the benefits of its previous investments in facilities, licensing, innovation and marketing. Management anticipates that these benefits will directly result in unprecedented growth for the Company during the current fiscal year. Some of the key initiatives for the current fiscal year include:

• Drive 3PL into full production, to deliver significant revenue growth to the Company
• Further develop innovation to expand its product offerings within the concentrates segment
• Secure Health Canada licence amendments to facilitate direct sales of concentrate products to provincial liquor boards, enhancing gross margins on these products
• Continue to operate in a fiscally responsible and disciplined manner while exploring opportunities to deploy our capital internally which may include: expansion, operational efficiencies or new product innovation; or externally, which may include: partnerships, investments or acquisitions
• Continue evaluating all operational costs and budgets with a goal to be profitable in the near future
• Expand its global export client base in existing markets and enter into new markets
• Further build on the initial success of Treehugger ^TM and Cognoscente ^TM brand activations

Strategic Acquisitions and Partnerships

With the recent licensing of 3PL, new roster of cultivars, and multiple global export deals signed, the Company believes it is well-positioned for growth during the current fiscal year. Management anticipates the Company may require further expansion or production in order to fulfill the demands of its domestic recreational sales, and its global exports in the near to mid-term.

The Company is actively pursuing opportunities to expand its production output through the acquisition of existing licensed facilities, partnerships with existing like-minded Licensed Producers, or contract growing of Avant’s unique cultivars.

Environmental, Social and Governance (“ESG”)

Market pressures are pushing organizations to transparently disclose their ESG policies and practices. Various regulatory and governance requirements are currently under development, including the proposed National Instrument 51-107 Disclosure of Climate-related Matters (“NI 51-107”) from the Canadian Securities Administrators. If adopted, NI 51-107 would mandate reporting issuers to disclose climate-related information in alignment with the four core disclosure elements of the Task Force on Climate-related Financial Disclosures.

With these developments in mind, ESG considerations have been added to the mandate of the Company’s Governance Committee. Management is developing an ESG framework, starting with identifying, understanding, and quantifying climate-related risks and opportunities to be used in creating a formal ESG strategy. This ESG strategy will include a formalized approach to governance oversight and activities, embedding ESG into corporate strategy and risk management, and identifying metrics and targets for measuring ESG performance for communication with our stakeholders.

Summary of Financial Data

Note (A) Gross margin before fair value adjustments. Please refer to the Company’s FY 2021 Financial Statements and MD&A for definitions and a reconciliation to IFRS.

Note (B) Operating expenses exclude non-cash items, such as depreciation and amortization and share-based payments. Please refer to the Company’s Financial Statements and MD&A for definitions and a reconciliation to IFRS.

Note (C) Adjusted EBITDA is a non-IFRS measure and the Company calculates adjusted EBITDA as loss from continuing operations, as reported, adjusted for depreciation and amortization, equity loss on investment in associate, financing costs, gains and losses on disposals of capital assets, gains and losses on sale of marketable securities, Canadian Emergency Wage Subsidy, impairment of accounts receivable, impairment of goodwill and intangible assets, interest and accretion, loss on extinguishment of loan, share-based payments, non-refundable deposit, deferred income tax, and unrealized gains and losses on changes in fair value of biological assets. The most directly comparable measure to adjusted EBITDA (excluding fair value adjustment to biological assets and inventory) calculated in accordance with IFRS is net income (loss) from continuing operations. Please refer to the Company’s MD&A for definitions and a reconciliation of Adjusted EBITDA to net income (loss) from continuing operations.

Note (D) Average recreational gross pricing per gram is calculated by determining the total recreational sales divided by the total number of recreational grams sold. The weighted average gross pricing per gram is calculated by determining the total flower sales divided by the total number of flower grams sold.

About Avant Brands Inc.

Avant is an innovative, market-leading premium cannabis company. Avant has multiple licensed and operational production facilities across Canada, which produce high-quality, handcrafted cannabis products for our highly desired, and award-winning consumer brands, sold across both recreational and medical channels.

Avant’s recreational consumer brands includes: BLK MKT ™, Tenzo ™, Cognōscente™ and Treehugger™, all produced from rare and exceptional cultivars, and sold in British Columbia, Ontario, Saskatchewan, Manitoba, New Brunswick, and the Yukon. The Company’s medical cannabis brand, GreenTec™, is distributed nationwide, directly to qualified patients through its GreenTec Medical portal, and through various medical cannabis partners.

Avant is a publicly traded corporation listed on the Toronto Stock Exchange (TSX: AVNT), and cross-trades on the OTCQX Best Market (OTCQX: AVTBF) and Frankfurt Stock Exchange (FRA: 1BU0). The Company is headquartered in Kelowna, British Columbia and has operations in British Columbia, Alberta and Ontario.

To learn more about Avant, to access the investor presentation, or learn more about its consumer brands, please visit www.avantbrands.ca .

For additional information, please contact:

Investor Relations at Avant Brands Inc.
1-800-351-6358
ir@avantbrands.ca

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION:

This news release includes certain “forward-looking information” as defined under applicable Canadian securities legislation, including statements regarding the plans, intentions, beliefs and current expectations of the Company with respect to future business activities and operating performance. Forward-looking information is often identified by the words “may”, “would”, “could”, “should”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” or similar expressions and includes information regarding: the Company’s ability to execute on its growth strategy; investments in new product development, packaging and other initiatives expected to generate positive operating cash flows; the Company receiving the necessary licenses to increase gross margins on concentrate products; the continued monetization of the 3PL facility, including the Company’s ability to drive 3PL into full production to deliver significant revenue growth to the Company; the launch of new products under the Company’s recreational cannabis brands; the Company’s ability to further develop innovation to expand its product offerings; the Company’s ability to secure Health Canada license amendments; the Company’s ability to facilitate direct sales of concentrate products to provincial liquor boards; the Company’s ability to continue operating in a fiscally responsible and disciplined manner; the continued evaluation of all operational costs and budgets; the expansion of the Company’s global export client base; the Company’s ability to build on the initial success of the initial Treehugger ^TM and Cognoscente ^TM brand activations; further expansion or production in order to fulfill demands of the Company’s domestic recreational sales and global exports; the Company’s pursuit of opportunities to expand production output; management’s development of an ESG framework; and expectations for other economic, business, and/or competitive factors. To the extent any forward-looking information in this news release constitutes “financial outlooks” within the meaning of applicable Canadian securities laws, such information is being provided as preliminary financial results for Q1 2022 and the reader is cautioned that this information may not be appropriate for any other purpose and the reader should not place undue reliance on such financial outlooks. Forward-looking information is necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking information. Financial outlooks, as with forward-looking information generally, are, without limitation, based on the assumptions and subject to various risks as set out herein. The Company’s actual financial position and results of operations may differ materially from management’s current expectations and, as a result, our revenue and cash on hand may differ materially from the revenue and cash values provided in this news release. Examples include statements that the Company will operate in a fiscally disciplined manner; preliminary financial results are subject to the completion of the Company’s financial closing procedures and have not been audited or reviewed by the Company’s independent auditor; that the Company will build long-term shareholder value and reduce operational expenses; or that the Company will increase its revenue and gross margins.

Investors are cautioned that forward-looking information is not based on historical fact but instead reflects management’s expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the Company. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information are the following: regulatory and licensing risks; changes in consumer demand and preferences; changes in general economic, business and political conditions, including changes in the financial markets; the global regulatory landscape and enforcement related to cannabis, including political risks and risks relating to regulatory change; compliance with extensive government regulation; public opinion and perception of the cannabis industry; the impact of COVID-19; and the risk factors set out in the Company’s annual information form dated March 16, 2021, filed with Canadian securities regulators and available on the Company’s profile on SEDAR at www.sedar.com .

Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. For instance, there can be no assurance that the Company’s financial results for Q1 2022, including the Company’s revenues or any other preliminary financial results for Q1 2022 will be as projected. Although the Company has attempted to identify important risks, uncertainties and factors that could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking information, which speak only as of the date of this news release. The Company disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.

This news release refers to certain financial performance measures that are not defined by and do not have a standardized meaning under International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. These non-IFRS financial performance measures are defined in the MD&A. Non-IFRS financial measures are used by management to assess the financial and operational performance of the Company. The Company believes that these non-IFRS financial measures, in addition to conventional measures prepared in accordance with IFRS, enable investors to evaluate the Company’s operating results, underlying performance and prospects in a similar manner to the Company’s management. As there are no standardized methods of calculating these non-IFRS measures, the Company’s approaches may differ from those used by others, and accordingly, the use of these measures may not be directly comparable. Accordingly, these non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

SOURCE: Avant Brands, Inc.

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