Mr. Bill Petron reports

PHARMACIELO ANNOUNCES Q1 2023 FINANCIAL RESULTS

Pharmacielo Ltd., the Canadian parent of Pharmacielo Colombia Holdings SAS, has released its financial results for the first quarter ended March 31, 2023.

Management commentary

Bill Petron, chairman and chief executive officer of Pharmacielo, commented: "Despite lower revenue in the first quarter of the year, we fully expect 2023 to be a period of growth following a fiscal 2022 where our sales team drove revenue of almost three times the prior year. Results will fluctuate quarter-to-quarter due to the size of the business currently, however, we are steadily making progress toward the achievement of our strategic objectives. Our global sales team has a robust pipeline of opportunities both in existing and new markets, and we expect higher-margin dried flower to progressively become a larger proportion of our sales over the next several quarters. Our ongoing efficiency program is generating results with discretionary expenses down significantly over the past two years and, with no remaining capital expenditures required, we are positioned to quickly turn to profitability and cash flow generation as the revenue line grows."

Summary financials:

• Pharmacielo had cash equivalents of $500,000 at March 31, 2023, compared with $200,000 at Dec. 31, 2022. On Aug. 30, 2022, the company announced that its previously disclosed non-brokered private placement of debenture units was oversubscribed, with a total of $15.1-million raised or committed. In 2023, year-to-date, the company has raised $1.8-million as part of the third tranche of the offering.
• For further detailed information and analysis, please see the financial statements and management's discussion and analysis for the period ending March 31, 2023, as posted at SEDAR and at the company's website.

Summary of recent developments

Strengthening the company's sales team to support its go-to-market strategy

Pharmacielo has grown its global business development organization -- recruited technical business developers in Europe and appointed a global president of sales. The team has already made significant early progress, with sales to countries including Argentina, Brazil, Colombia, Mexico, Morocco, Paraguay, Uruguay, South Africa and Spain, as well as progress in markets such as Germany, the Czech Republic, Portugal, Poland and Australia.

Streamlining the business to minimize operating costs:

The company's adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) loss in Q1 2023 was $1.9-million compared with $1.6-million in Q1 2022, primarily driven by lower revenue in the quarter. Management continues to focus on reducing discretionary expenses to lower the company's use of cash and ensure a leaner organization with a lower cost base, while continuing to invest in the sales team, to drive top-line growth. Pharmacielo has recently initiated additional steps in this continuing efficiency plan, which it expects will result in a reduction of its annualized fixed costs by approximately 25 per cent compared with 2022.

Preparing for dried flower export

In February, 2022, the Colombian government passed regulation to enable dried flower export. With Pharmacielo's upstream and downstream scale and quality, the company is uniquely positioned to be a formidable competitor with psychoactive flower currently being imported into the European Union (EU) and other markets from Canada and other producing countries. On April 19, 2023, Pharmacielo announced that it had partnered with Cannprisma Pharma LDA, a Portuguese contract manufacturing organization (CMO), to supply high-quality EU-GMP (good manufacturing practices)-certified medicinal cannabis flower to the European market. Pharmacielo will provide GACP (good agricultural and collection practices) flower to Cannprisma, which will convert the flower to EU-GMP standards and distribute it directly from Portugal to European customers. Pharmacielo continues to expect additional dried flower trial shipments during 2023, with commercial shipments in the second half of 2023. The company has taken the necessary steps to ensure psychoactive flower and extract quotas are in place for 2023 and 2024 exports. On Sept. 14, 2022, Pharmacielo announced that it had received a five-ton quota to grow THC (tetrahydrocannabinol)-dominant cannabis strains for export as dried flower to support the fulfillment of current sales agreements, beginning in 2023.

Solidifying the path to EU-GMP certification

Pharmacielo is currently working toward EU-GMP certification of all of its products, including CBD (cannabidiol) isolate, full and broad-spectrum CBD products, and THC distillates. Management expects the company to achieve certification in the second half of 2023. This will better position Pharmacielo to sign larger, longer-term supply agreements with global pharmaceutical and cosmetics customers. The EU-GMP certification is highly respected by global customers and is expected to be an important differentiator for Pharmacielo.

Successfully refocused the company's product strategy

With a growing business development organization, and the short-term potential to sell dried flower into several markets globally, management has refocused Pharmacielo's product strategy to emphasize THC broad-spectrum products, as well as dried flower. These products are expected to have long-term high-margin profiles that are more sustainable than CBD isolate. The company has had several recent wins, including: a sales agreement with a Brazilian Phytotherapeutic customer for a proprietary CBD derivative formulation; a shipment of CBD full-spectrum oil to another Brazilian customer; a shipment of 300 kilograms (kg) of CBD full-spectrum oil to a Spanish pharmaceutical company; and an agreement to supply THC final products to be commercialized in Germany. Most recently, Pharmacielo received ICANN GAP (good agricultural practice) and GACP certifications, which open commercial access to the Israeli market. The company expects to begin shipping dried flower to Israel in during 2023.

Non-brokered private placement of debenture units

In 2023, year-to-date, the company raised $1.78-million, as part of the third tranche of its previously announced non-brokered private placement, consisting of an aggregate of 1,780 debenture units. The units were issued at a price of $1,000 per unit for aggregate proceeds of $1.78-million. To date, since its announcement of the initial offering, the company has raised $12,575,000 principal amount of units. As disclosed in the company's news release dated Dec. 22, 2021, the company intends to use the proceeds from the sale of the new units for operations, working capital, EU-GMP certification and the build-out of its international psychoactive dried flower sales program.

About Pharmacielo Ltd.

Pharmacielo is a global company, headquartered in Canada, with a focus on ethical and sustainable cultivating, processing and supply of all-natural, pharmaceutical-grade medical dried cannabis flower and cannabis products to large channel distributors. Pharmacielo's principal (and wholly owned) subsidiary is Pharmacielo Colombia Holdings SAS, headquartered at its cultivation and processing centre located in Rionegro, Colombia.

The board of directors and executive team of Pharmacielo comprise a diversely talented group of international business executives and specialists with relevant and varied expertise. Pharmacielo recognized the significant role that Colombia's ideal location plays in building a sustainable business in the medical cannabis industry, and the company, together with its directors and executives, is executing on a business plan focused on supplying the international marketplace.

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