Mr. Rodrigo Gallardo reports

XEBRA BRANDS ANNOUNCES CLOSING OF NON-BROKERED PRIVATE PLACEMENT OF UNITS AND SHARES FOR DEBT SETTLEMENT

Xebra Brands Ltd. has closed its non-brokered private placement of 12 million units of the company as previously announced on Oct. 2, 2023, and Jan. 31, 2024. The units were issued at a price of five cents per unit for gross proceeds of $600,000.

Each unit comprises one common share of the company and one common share purchase warrant. Each warrant entitles the holder thereof to acquire one common share at an exercise price of 10 cents per warrant share at any time for a period of 18 months following the closing of the offering.

All of the units sold under the offering were purchased by David Ross Macias Diaz, a director of the company, under a strategic investment agreement. Following the closing of the offering, Mr. Diaz holds 18.04 per cent and 30.56 per cent of the common shares of the company on a non-diluted basis and partially diluted basis, respectively. The company obtained such shareholder approval at its annual general and special meeting held on Nov. 7, 2023, for the issuance of the units to Mr. Diaz.

The net proceeds of the offering are expected to be used for working capital and general corporate purposes. All securities issued in connection with the offering will be subject to a hold period of four months and one day from the closing date. The offering is subject to the final acceptance of the Canadian Securities Exchange.

Certain early warning disclosures

Immediately prior to the offering, Mr. Diaz did not have ownership of any securities of Xebra. After giving effect to the offering, Mr. Diaz ownership stands at 12 million common shares and 12 million warrants, representing approximately an 18.04-per-cent ownership interest in the company's issued and outstanding common shares on a non-diluted basis and 30.56 per cent on a partially diluted basis, assuming the exercise in full of the warrants.

This press release and Mr. Diaz's corresponding early warning report, which will be available on SEDAR+ under Xebra's profile in the near term, constituting the required disclosure pursuant to Section 5.2 of National Instrument 62-104, Take-Over Bids and Issuer Bids. The requirement to file an early warning report was triggered because the acquisition of the units by Mr. Diaz caused Mr. Diaz's ownership in the company to exceed 10 per cent on a non-diluted and partially diluted basis. Mr. Diaz entered into the offering for investment purposes and intends to review his investment in the company on a continuing basis. Depending upon a number of factors, including market and other conditions, Mr. Diaz may, from time to time, increase or decrease his beneficial ownership, control, direction or economic exposure over securities of the company. This news release and the early warning report are issued under the early warning provisions of Canadian securities legislation.

Xebra is a corporation existing under the laws of British Columbia with its head office at Suite 410, 1111 Melville St., Vancouver, B.C., V6E 3V6.

Debt settlement

The company intends to settle a total of $262,712 of accrued liabilities for fees and expenses owed to certain officers, directors and consultants of the company. The company expects to settle the debt by issuing a total of 4,776,582 common shares at a price of 5.5 cents per common share. The board of directors and management of the company believe that the proposed debt settlement is in the best interests of the company as it allows the company to preserve its funds for operations and continued growth opportunities. The debt settlement is subject to CSE acceptance. The common shares issuable under the debt settlement will be subject to a hold period of four months and one day from the date of issuance.

Related party disclosures

Certain directors and officers of the company (the insiders) are expected to be issued 4,487,273 common shares pursuant to the debt settlement, directly and indirectly. Accordingly, the issuance of such common shares to the insiders pursuant to the debt settlement each constitutes a related party transaction, as such term is defined under Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions. Xebra is relying on exemptions from the formal valuation and minority shareholder approval requirements provided under MI 61-101 pursuant to Section 5.5(b) and Section 5.7(1)(b) of MI 61-101.

Convertible debenture offering

As previously announced on Oct. 2, 2023, and Jan. 31, 2024, the company and Mr. Diaz reserve the right to close an additional private placement of up to a principal amount of $400,000 of unsecured convertible debenture units in the near future. Each convertible debenture unit issued pursuant to the convertible debenture unit offering is expected to consist of: (i) $1,000 principal amount of unsecured convertible debenture of the company; and (ii) 20,000 common share purchase warrants. Each convertible debenture warrant shall entitle the holder to acquire one common share at an exercise price of 10 cents per convertible debenture warrant share at any time for a period of 18 months following the closing of the convertible debenture unit offering. The debentures are expected to mature on the date that is 36 months from the date of issuance and shall bear interest at a rate of 8 per cent per annum, payable semi-annually in arrears, and will not be redeemable by the company. The debentures will be convertible into common shares at the option of the holder at any time prior to the maturity date at a conversion price equal to five cents per debenture share.

About Xebra Brands Ltd.

Xebra Brands is an international leading cannabis company dedicated to providing high-quality CBD (cannabidiol) products to consumers around the world. With a focus on compliance, quality and innovation, Xebra is committed to leading the way in the CBD industry.

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