Mr. Bill Besenhofer reports

THE FRESH FACTORY REPORTS Q1 2023 RESULTS WITH TOTAL BILLED REVENUE OF $5.5M

The Fresh Factory B.C. Ltd. has released financial results for the first quarter ending March 31, 2023.

Bill Besenhofer, chief executive officer and co-founder of The Fresh Factory, commented: "As we reflect on the remarkable progress we've made during the last few quarters, I am pleased to announce that our billed revenue for the first quarter of the year has soared to $5.5-million, marking year-over-year growth of 41.6 per cent. This achievement can be attributed to the successful onboarding of new customers in late 2022 and the substantial organic growth of our existing customer base, contributing 24 per cent to the overall increase. Additionally, we take great pride in our commitment to excellence, as we have once again passed our annual SQF audit for the seventh consecutive year. While we anticipate ongoing inflationary pressure in the early part of this year, we are confident in our ability to navigate these challenges. With robust infrastructure and a dedicated team in place, we are well positioned to sustainably accelerate our growth and solidify The Fresh Factory's position as a frontrunner in the fresh, clean-label food and beverage industry in the United States."

Financial and operational highlights -- Q1 2023 versus Q1 2022:

• Total billed revenue of $5.5-million ($7.5-million (Canadian)) in Q1 2023 versus $3.9-million ($5.3-million (Canadian)) for Q1 2022, mainly driven by new customers added in late 2022 and incremental growth of existing business.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $(400,000) ($(500,000) (Canadian)) in Q1 2023 versus $(400,000) ($(500,000) (Canadian)) in Q1 2022.
• Adjusted gross margins of $1.5-million ($2.1-million (Canadian)) in Q1 2023 versus $1-million ($1.4-million (Canadian)) in Q1 2022.
• Net proceeds from financing activities of $1.7-million ($2.3-million (Canadian)) in Q1 2023 versus $200,000 ($300,000 (Canadian)) cash used for Q1 2022.
• As of April 28, 2023, the company has purchased 167,000 of the eligible 539,186 common shares at a cost of $100,000 ($100,000 (Canadian)), representing a weighted average price of 50 cents (68 Canadian cents) per share under its normal course issuer bid (NCIB).

Strategic areas of focus

The Fresh Factory is building a platform to serve emerging food and beverage brands in the fresh food sector with an emphasis on better-for-you brands. The company has established four key areas of focus on which it will report on a quarterly basis moving forward.

Execution -- focus on safety, high-quality operations and strong margins:

• Adjusted gross margins, on a percentage basis, increased by 7.6 percentage points from 19 per cent in Q4 2022 to 26.6 per cent in Q1 2023, driven by improved efficiencies and pricing action.
• Operating profit, on a percentage basis, increased by five percentage points from 4.6 per cent in Q4 2022 to 9.6 per cent in Q1 2023 due to improved efficiencies and pricing action.
• The company successfully completed its annual SQF (Safe Quality Foods) audit. This is the seventh straight year the company has been SQF audited.

Growth -- invest in and grow with the right brands across diversified channels:

• Total revenue in Q1 2023 continues to remain broadly diversified across direct-to-consumer, quick-service restaurants, retail customers and food service customers.
• The company continued to expand its manufacturing capabilities and its capacity throughout Q1 2022 at its Carol Stream facility. These new capital investments are expected to positively impact the company's revenue and operating cash flow in future periods.
• The company produced 2.9 million total units in Q1 2023, a 45-per-cent increase from Q1 2022.
• The company completed two non-brokered private placements totalling 32,917 proportionate voting shares at a price of 60 cents per Proportionate voting share and 41,666 subordinate voting shares of the company at a price of 60 cents per subordinate voting share for gross proceeds of $2-million ($2.7-million (Canadian)).

Sustainability -- become a market leader in sustainability:

• The company continues to work on its multiyear plan toward increased sustainability by starting a project to replace the lights in its factory with more efficient motion-sensored LED (light-emitting diode) lights.
• The company continues to compost 100 per cent of its food waste and donate 100 per cent of produce extras.

This earnings news release should be read in conjunction with the company's interim financial statements for the first quarter ending March 31, 2023, and the related management's discussion and analysis, both of which will be available to download on The Fresh Factory's profile on SEDAR.

For conversion purposes, this release used 73 cents as the conversion rate from Canadian dollar to U.S. dollar.

All figures in this news release are in U.S. dollars unless otherwise stated.

About The Fresh Factory B.C. Ltd.

The Fresh Factory is a vertically integrated company focused on accelerating the growth of the fresh, clean-label, plant-based food and beverage brands of tomorrow. The Fresh Factory owns or partners with emerging brands in the plant-based space to develop, manufacture and sell products made from fresh produce and recognizable ingredients. It operates from its centrally located manufacturing facility near Chicago, serving customers across the United States. As a public benefits corporation, The Fresh Factory is ESG-focused (environmental, social, governance), driven to make a lighter, greener impact on the environment and a stronger, positive impact on local communities and the food system as a whole.

We seek Safe Harbor.