Ms. Margot Micallef reports

GABY INC. ANNOUNCES A STRATEGIC ACQUISITION OF HIGHLY REGARDED AND WELL ESTABLISHED CBD BRANDS: HEMPFUSION, SAGELY NATURALS AND APOTHECANNA

Gaby Inc. has entered into a share purchase agreement with Hempfusion Wellness Inc. to acquire all of the issued and outstanding shares in the capital of HF's wholly owned subsidiary Hempfusion Inc., the parent company of Sagely Enterprises Inc. and APCNA Holdings LLC.

Through the transaction, Gaby will acquire three high-quality CBD (cannabidiol) brands: Hempfusion, Sagely Naturals and apothecanna.

"We are always looking for ways to build shareholder value and strengthen the foundation of our business," said Margot Micallef, founder and chief executive officer of Gaby. "This acquisition allows us to expand our CBD division and realize additional revenue from an alternative channel outside the regulated cannabis industry. Gaby is extremely fortunate to be able to acquire these high-quality established brands for such great value," she continued. "Gaby's management team has extensive experience in building consumer-facing brands, putting Gaby in a strong position to create further shareholder value from this acquisition."

As previously announced at the annual and special meeting held on March 25, 2021, holders of Gaby shares passed a special resolution approving the consolidation of Gaby shares on the basis of one postconsolidation Gaby share for every 20 preconsolidation Gaby shares.

As consideration for the transaction, Gaby has agreed to issue to Hempfusion an aggregate of 13,011,148 Gaby shares (on a postconsolidation basis) on the closing of the transaction at the then-prevailing market price of the Gaby shares on the Canadian Securities Exchange at the time of issuance. The Gaby shares issued on closing will be subject to a lock-up agreement and will be released in three equal tranches of one-third each on that date that is six, 12 and 18 months following closing.

A copy of the share purchase agreement will be filed on the company's SEDAR profile.

Highlights of the transaction:

• Hempfusion is a topical and ingestible brand, sold in a variety of retail locations, including natural, food drug and mass, and on-line. It is unique in market as its topical product is listed with the U.S. Food and Drug Administration (FDA) as an over-the-counter pain relief topical that includes hemp-derived CBD and omegas as part of a skin-nourishing cosmetic blend and has been assigned a National Drug Code number by the FDA. It also has an unparalleled regulatory compliance portfolio, including self GRAS (generally recognized as safe) status on its exclusive hemp CBD extract and validation by the United Kingdom Food Standards Agency for novel food. Hempfusion participated in what is being referred to as the largest human toxicology study to date, which illustrated that CBD is safe for human consumption. According to Brightfield Group Wave 1 2022, Hempfusion was ranked in the top five in brand awareness amongst CBD consumers.
• Sagely Naturals finished 2021 holding as the No. 1 ranking topical brand in multioutlet retail locations in the United States and U.S. drug with market share held as 14 per cent and 24 per cent, respectively. In 2022, its relief and recovery active roll-on was rated as best for pain relief by Men's Health Magazine.
• apothecanna is primarily a direct-to-consumer brand although it is also sold in many retail locations. The products consist of topical creams and oils, capsules and tinctures. It has a strong following amongst the over-55 age demographic and, after an aggregate of two million bottles sold, still garners a 90-per-cent five-star rating by consumers. apothecanna has an extremely loyal on-line following with nearly 70-per-cent repeat purchase activity.
• Value of the brands: The brands together generated net revenue of over $5.4-million (U.S.) in 2022.
• Future of the brands: Because of their extensive regulatory portfolio, management of Gaby believes that the brands are uniquely poised for growth as soon as legislative clarity is given by applicable U.S. government officials on the regulatory and legal status of hemp-derived CBD. Currently focused on topical products, legislative clarity could open the door for ingestible products that could unlock the potential for significant revenue growth for the brands.
• Growth of the brands: The aggregate revenues from the brands have remained consistent from 2020 to 2022 despite limited investment by Hempfusion Wellness and Hempfusion. Management of Gaby believes that, through strategic marketing efforts, the brands could see substantial revenue growth in 2024 and beyond.
• Gaby's CBD brands: The transaction gives Gaby the infrastructure to grow its current CBD brands 2Rise and Lulu's, which brands currently produce approximately $400,000 of combined revenue annually. Management of Gaby believes that, by leveraging the newly acquired distribution infrastructure and sales channels, Gaby's existing CBD business could experience significant growth.

Closing of the transaction is subject to certain third party approvals, the approval of Hempfusion shareholders at a special meeting of shareholders to be called by Hempfusion and the satisfaction of customary closing conditions for a transaction of such nature. Subject to satisfaction or waiver of the conditions, the transaction is expected to close toward the end of Q2 2023.

About Gaby Inc.

Gaby is a California-focused retailer and the owner of Mankind Dispensary, one of the oldest licensed dispensaries in California. Mankind Dispensary is a known and highly respected dispensary with deep roots in the California cannabis community operating in San Diego. Gaby curates and sells a diverse portfolio of products, including its own proprietary brands -- Dank Space, Kind Republic and Lulu's -- through Mankind. A pioneer in the industry with a strong management team with experience in retail, consolidation and cannabis, Gaby is poised to grow its retail operations both organically and through acquisition.

Gaby's common shares trade on the Canadian Securities Exchange under the symbol GABY and on the OTC (over-the-counter) market under the symbol GABLF.

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