Mr. Mark Aiken reports

CHRISTINA LAKE CANNABIS REPORTS THIRD QUARTER 2023 RESULTS

Christina Lake Cannabis Corp. has released its financial results for the third quarter ended Aug. 31, 2023 (Q3 2023). All amounts are expressed in Canadian dollars unless otherwise noted.

Q3 2023 highlights:

• Revenue up 30 per cent to $8.9-million over nine-month period end Q3 2022;
• Distillate volumes sold increased by 85 per cent compared with the nine-month period ending Q3 2022;
• Gross profit of $4-million or 45.2 per cent before fair value adjustments for the nine-month period;
• Decreased general and administrative expenses by $137,000 or 4 per cent from prior-year period.

"Through a steadfast commitment to meeting our customers' ever-expanding demands and consistently delivering high-quality products, CLC has continued to maintain impressive sales growth in Q3," said Mark Aiken, chief executive officer of Christina Lake Cannabis. "Our agility in responding to dynamic market conditions is evident through the successful introduction of our expanded product lines, garnering positive customer feedback and substantial reorders. Our continued success is a testament to our relentless pursuit of excellence, our continuous drive for operating efficiency and our focus on innovation."

Distillate volumes sold increased by 85 per cent from the comparative period ending Q3 2022 resulting in revenue growth of 30 per cent to $8.9-million from $6.9-million despite market price compression in the price of distillate. Revenue growth was primarily driven by increased demand in distillate.

Gross margin before fair value adjustments was 45.2 per cent compared with 52.3 per cent in the prior-year period. The decline in gross margin is primarily attributed to a significant drop in the price of wholesale distillate. Cost of goods sold increased by 49 per cent from the comparative period due to the significant increase in distillate volume produced and sold as noted above. The company continues to work toward production efficiencies to combat price compression in the wholesale distillate market as production and sales continued to ramp up.

Total general and administrative (G&A) expenses declined by $137,000 or 4 per cent from the prior comparative period, driven by year-over-year reductions in consulting fees, management fees, insurance, marketing, share-based compensation, and repairs and maintenance expenses, which were partially offset by increases in depreciation, professional fees, research and development, salaries, and regulatory fees. G&A decreased to 35 per cent of revenue during the period, compared with 48 per cent in the prior year.

Income (loss) and comprehensive income (loss) in Q3 2023 was $495,000 which is a $1.7-million decrease from the prior-year period income of $2.2-million. The year-over-year decrease in income is primarily driven by an increase in changes in fair value of inventory sold of $1.1-million, a reduction in income from other items relating to a one-time settlement of $258,000 and debt modification of $386,000 in the comparative period, and a decrease in the fair value change in biological asset adjustment of $388,000.

Cash and working capital

As at Aug. 31, 2023, the company had working capital of $4,139,795 (Nov. 30, 2022 -- $3,683,558) which consisted of cash of $1,728,432 (Nov. 30, 2022 -- $1,810,639), receivables of $2,312,232 (Nov. 30, 2022 -- $1,906,820), prepaid expenses of $51,757 (Nov. 30, 2022 -- $3,885), inventory of $1,954,344 (Nov. 30, 2022 -- $5,766,418) and biological assets of $4,035,020 (Nov. 30, 2022 -- nil). Current liabilities, being accounts payable and accrued liabilities, current portion of loan and current portion of convertible debentures were $5,941,991 (Nov. 30, 2022 -- $5,832,954).

About Christina Lake Cannabis Corp.

Christina Lake Cannabis is a licensed producer of cannabis under the Cannabis Act. It has secured a standard cultivation licence and corresponding processing amendment from Health Canada (March, 2020, and August, 2020, respectively) as well as a research and development licence (early 2020). Christina Lake Cannabis's facility consists of a 32-acre property, which includes over 950,000 square feet of outdoor grow space, offices, propagation and drying rooms, research facilities, and a facility dedicated to processing and extraction. Christina Lake Cannabis also owns a 99-acre plot of land adjoining its principal site. Christina Lake Cannabis focuses its production on creating high-quality extracts and distillate for its business-to-business client base with proprietary strains specifically developed for outdoor cultivation to enhance extraction quality.

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