Mr. Meni Morim reports

LIFEIST REPORTS FOURTH QUARTER 2023 FINANCIAL RESULTS

Lifeist Wellness Inc. has released its financial results for the three and 12 months ended Nov. 30, 2023, compared with the same period last year.

Fourth quarter highlights:

• Net revenue from continued operations of $4.7-million in Q4 2023 compared with $6.2-million in Q4 2022;
• Gross profit before inventory adjustment of $2.0-million in Q4 2023, representing gross margin of 42 per cent, compared with $1.9-million, or 31-per-cent gross margin, in Q4 2022; Q4 2023 gross profit was the highest quarterly gross profit in the company's history as the strategic focus on high-margin activities and operational efficiency continues to have a positive impact;
• Operating costs and professional fees increased to $5.6-million in Q4 2023 compared with $5.5-million in Q4 2022;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) loss improved to $5.0-million in Q4 2023 compared with $5.5-million in Q4 2022.

Full-year 2023 highlights:

• Net revenue from continued operations was $21.7-million in 2023 compared with $22.1-million in 2022;
• Gross profit before inventory adjustment increased to $6.6-million in 2023 compared with $5.9-million in 2022, with margins expanding from 27 per cent to 31 per cent;
• Adjusted EBITDA loss improved to $13.8-million in 2023 compared with $18.5-million in 2022;
• Working capital position of negative $300,000 at year-end.

"Our performance in the fourth quarter of 2023 reflects our strategic focus on high-margin activities and operational efficiency, resulting in the highest quarterly gross profit in our company's history," said Meni Morim, chief executive officer of Lifeist. "Though accompanied by unique hurdles, our focus towards enhancing gross profit has produced promising results. We are looking at more cost- and operational efficiency measures in 2024. We continue to work to position the company to navigate industry fluctuations, drive profitability and ensure sustainable growth. Despite the challenging landscape, we are committed to building Lifeist into a diversified wellness company with high-margin business units."

Financial summary

Net revenue was $4.7-million in Q4 2023 compared with $6.2-million in Q4 2022 due to continued supply chain challenges impacting CannMart's cannabis revenue in Q4 2023, as compared with Q4 2022.

Gross profit before inventory adjustment increased to $2.0-million in Q4 2023 versus $1.9-million in the same period last year, with margins expanding to 42 per cent in Q4 2023 from 31 per cent in Q4 2022. The increase in margins in Q4 2023 as compared with Q4 2022 reflects the success of the company's strategic focus on individual segments, geographies and products, as well as a continuous effort to improve production efficiencies across all segments.

Adjusted EBITDA loss improved to $5.0-million in Q4 2023 compared with $5.5-million in Q4 2022, and net loss from continuing operations was $6.3-million, or 0.5 cent per diluted share, in Q4 2023, compared with a loss of $8.1-million, or 0.5 cent per diluted share, in Q4 2022. The improvement in both adjusted EBITDA loss and net loss was due largely to operational efficiencies resulting in higher gross profit before inventory adjustment and a reduction in operating costs of $2.0-million in 2023 versus 2022, plus an earnout share charge recorded in 2022.

Balance sheet and cash flow

Cash and cash equivalents were $1.5-million at Nov. 30, 2023, compared with $3.8-million at Nov. 30, 2022.

Inventories were $4.5-million at Nov. 30, 2023, compared with $4.5-million at Nov. 30, 2022.

The working capital position was negative $300,000 at Nov. 30, 2023.

Net cash used in operations was $600,000 in Q4 2023 compared with $100,000 in Q4 2022 due in part to lower revenue from CannMart and an increase in overall operating costs.

Leadership change

Lifeist regrets to announce that Faraaz Jamal has officially stepped down from his leadership position with Mikra Cellular Sciences due to health reasons.

"Faraaz has played an instrumental role in building Lifeist and the Mikra brands, and his dedication and commitment have been invaluable," said Meni Morim, chief executive officer of Lifeist. "On behalf of everyone at Lifeist and Mikra, I wish to extend our heartfelt thanks to Faraaz for his outstanding contributions and wish him all the best."

Additional information

The company's complete financial statements and management's discussion and analysis for the financial year ended Nov. 30, 2023, are available on Lifeist's website and SEDAR+.

About Lifeist Wellness Inc.

Sitting at the forefront of the postpandemic wellness revolution, Lifeist leverages advancements in science and technology to build breakthrough companies that transform human wellness. Portfolio business units include: CannMart, which operates a business-to-business wholesale distribution business facilitating recreational cannabis sales to Canadian provincial government control boards; CannMart Labs, a BHO extraction facility for the production of high-margin cannabis 2.0 products; Aus Vapes, Australia's largest on-line retailer of vaporizers and accessories; and Mikra, a bioscience and consumer wellness company seeking to develop innovative therapies for cellular health.

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