Mr. John Moynan reports

SLANG WORLDWIDE ANNOUNCES SECOND QUARTER 2023 FINANCIAL RESULTS

Slang Worldwide Inc. has released financial results for the three and six months ended June 30, 2023. All figures in this press release are stated in Canadian dollars unless otherwise noted.

"In Q2 2023, Slang achieved another significant milestone with our strongest adjusted gross margins to date, showcasing our dedication to driving financial results across all areas of the business. We also used the quarter to introduce a compelling range of new high-margin products, which will continue to position us as leaders in a rapidly evolving cannabis market," commented John Moynan, chief executive officer of Slang. "Our capacity to reduce operating expenses, streamline our vertically integrated operations and introduce new higher-margin revenue channels in our core markets continues to drive our margin expansion and enhance our bottom-line growth. With a strong operational infrastructure in place to advance new growth initiatives, we are strategically focused on constant innovation for our customers in order to deliver today's most demanded cannabis brands to key cannabis markets nationwide.

"Slang maintained strong sales growth in Vermont, increasing revenue by $1.8-million and $3.87-million, for the respective three-month and six-month periods ending June 30, 2023. Our wholesale sales in Vermont in Q2 2023 also grew by 380 per cent from Q1, showing strong growth momentum quarter-over-quarter. Despite Colorado's slower growth, we are still outperforming our competitors in the state, with O.pen maintaining its No. 1 ranking by the BDSA as the top-performing vape cartridge brand in the state throughout Q2. For the first six months of 2023, we increased sales of O.pen cartridges in Colorado by 16 per cent to 415,082 units from the comparable period of 2022 as our portfolio of leading brands has continued to drive solid sales performance."

Second quarter 2023 operational highlights and growth drivers:

• Reported continued strong growth in Vermont, with revenue increasing by $1.8-million and $3.87-million, for the three-month and six-month periods respectively ending June 30, 2023.
• Slang increased wholesale sales in Vermont in Q2 2023 by 380 per cent from the first quarter of 2023, showing strong quarter-over-quarter growth momentum.
• In Colorado, O.pen maintained its No. 1 ranking by the BDSA as the top-performing vape cartridge brand in Colorado throughout Q2. For the first six months of 2023, Slang increased unit sales of O.pen cartridges by 16 per cent from the comparable period of 2022.
• In June, launched the new two-gram disposable cartridge in Colorado, exceeding the company's initial sales goal by 241 per cent, selling over 7,200 new two-gram disposable cartridges in the first month alone, and producing over $570,000 in sales through Aug. 21, 2023.
• Subsequent to quarter-end, the company launched its first line of fast-acting cannabis-infused gummies under its Alchemy Naturals all-natural tetrahydrocannabinol gummy brand in Vermont.

Second quarter 2023 financial summary:

• Revenue from continuing operations for the three months ended June 30, 2023, was $8.44-million, compared with $9.87-million in the three months ended June 30, 2022. The year-over-year decline was primarily driven by a reduction of $1.63-million in Slang's distribution sales and $960,000 in its Emerging market sales, partially offset by a $1.05-million increase in core market sales driven by growth in Vermont. For the six months ended June 30, 2023, revenue from continuing operations increased 5.6 per cent to $19.3-million from $18.2-million in the prior-year six-month period.
• Gross profit of $4.4-million (52-per-cent gross margin) in Q2 2023, compared with $4.5-million (43-per-cent gross margin) in Q2 2022. Adjusted gross profit was $4.5-million (54-per-cent adjusted gross margin) in Q2 2023, compared with $4.3-million (43-per-cent adjusted gross margin) in Q2 2022, representing a 6.3-per-cent increase year-over-year.
• EBITDA (earnings before interest, taxes, depreciation and amortization) of $(1.2-million) in Q2 2023, compared with $(1.1-million) in Q2 2022. The reduction in EBITDA is primarily attributable to a $280,000 reduction in gross profit offset by a $210,000 reduction in operating expenses, both of which exclude depreciation costs.
• Adjusted EBITDA of $(760,000) in Q2 2023, compared with $(700,000) in Q2 2022. The reduction in adjusted EBITDA is primarily attributable to a $190,000 increase in operating expenses (excluding depreciation expenses, expected credit losses and share-based payments), offset by $130,000 increase in adjusted gross profit, excluding depreciation costs.
• Cash and restricted cash of $10.07-million on June 30, 2023, compared with $11.67-million in cash and restricted cash on March 31, 2023. The company received an additional $1.63-million in ERTC (employee retention tax credit) from the Internal Revenue Service subsequent to quarter-end. As of Aug. 15, 2023, Slang had $11.23-million in cash and restricted cash compared with $11.92-million on Dec. 31, 2022.

Second quarter 2023 financial review

The consolidated financial statements were prepared in accordance with international financial reporting standards. The attached table shows a selected presentation of the income statement for the three and six months ended June 30, 2023.

Conference call details

Management plans to host an investor conference call today, Aug. 24, at 10 a.m. ET to discuss the results.

Timing: Thursday, Aug. 24, 2023, at 10 a.m. ET

Dial-in: 1-888-440-5983 (United States toll-free) or 1-646-960-0202 (international)

Conference ID: 6291438

Webcast: A live webcast can be accessed via the company's website.

About Slang Worldwide Inc.

Slang Worldwide is the industry leader in branded cannabis consumer packaged goods, with a diversified portfolio of five distinct brands and products distributed across the U.S. Operating in 13 legal cannabis markets nationwide, Slang specializes in acquiring and developing market-proven regional brands, as well as launching innovative new brands to seize global market opportunities and match evolving consumer tastes. The company has over a decade of experience operating in the nascent and highly regulated cannabis sector, and its partners enjoy the benefits of that experience, with access to the Slang playbook for successful operations, sales and marketing. Its strong product pipeline from uniquely positioned and scalable brands like O.pen, Alchemy Naturals, Ceres, Firefly and partnerships with brands like Greenhouse Seed Company have a proven record of success with the brands consistently ranking among the top performers in the states where Slang operates.

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