Mr. Rodrigo Gallardo reports

XEBRA BRANDS ANNOUNCES LETTER OF INTENT TO ACQUIRE CBD E-COMMERCE COMPANY BSK HOLDINGS INC.

Xebra Brands Ltd. has entered into a non-binding letter of intent, effective April 22, 2025, to acquire 100 per cent of the shares of BSK Holdings Inc., the owner of a portfolio of e-commerce cannabidiol health and wellness brands. The proposed acquisition is expected to be completed by the end of third quarter 2025, positioning Xebra to take a significant step into the U.S. CBD market, the largest market in the world.

BSK is one of the established leaders in the CBD space, with a proven portfolio of brands that have generated over $50-million (U.S.) in revenue since 2021, $2.1-million (U.S.) in earnings before interest, taxes, depreciation and amortization, and a blended gross margin (across all brands) of approximately 62 per cent while serving millions of customers across the U.S. BSK's leadership team is a pioneer in the cannabis and hemp industry, having founded and built some of the industry's most recognized brands, including Manitoba Harvest (the world's largest hemp food company), which sold to Tilray for $420-million in 2019; Phivida Holdings, one of the industry's first CBD beverage brands, which sold to Choom Holdings (now HighTide Inc.) in 2020, and others. BSK brings expertise in building and scaling profitable cannabis, hemp and CBD companies to Xebra Brands, creating a truly North American operator.

The North American CBD market was estimated at $6.7-billion (U.S.) in 2023 and is expected to grow at a compound annual growth rate of 14.2 per cent from 2024 to 2030. Through the acquisition of BSK, Xebra immediately becomes an significant player in the CBD and hemp market in the U.S., with strong growth potential. With established popular brands such as Keoni and AMMA, and a strong e-commerce expertise, BSK brings a large database of U.S. customers, established brands and a team of industry experts who will not only continue to expand operations in the U.S. but also build the company's Elements brand.

"We couldn't be more excited to announce the acquisition of BSK," said Rodrigo Gallardo, interim chief executive officer of Xebra. "BSK has a proven track record of building successful cannabis and hemp companies, combined with expertise in launching and scaling CPG brands, and the proposed acquisition is expected to be a significant milestone and catalyst in Xebra's growth trajectory. This acquisition accelerates our entry into the U.S. market, enhances our operational presence in Mexico and aligns with our vision of becoming a leader in the North American CBD market."

"Partnering with Xebra allows BSK to enter the Mexican market under the only company legally permitted to import seeds, cultivate, manufacture, operate and sell cannabis (1 per cent THC) in Mexico," said Fraser Macdougall, chief executive officer of BSK. "Together, we aim to become a leader in the U.S. and Mexican CBD category, leveraging our combined technologies and expertise."

Transaction highlights:

• Strategic platform for North American growth: The transaction combines BSK's e-commerce model with Xebra's operations, creating a powerful platform for rapid CBD market development in North America.
• Amplified Mexican CBD market penetration: BSK's e-commerce capabilities enhance Xebra's existing operations, which Xebra expects to drive faster market access and sales growth in Mexico.
• Expanded product portfolio: The acquisition broadens Xebra's offerings, adding BSK's brands like Keoni and AMMA, alongside Xebra's Elements line, ensuring a comprehensive range of CBD options tailored for diverse markets.

Key synergies:

• E-commerce strategy: develop at e-commerce platform tailored to the Mexican market, driving on-line sales and brand awareness;
• Product line expansion: launch Elements-branded CBD products alongside BSK's brands, ensuring compliance with Mexican regulations;
• Marketing and consumer engagement: use targeted marketing campaigns to boost brand awareness and educate consumers about CBD benefits;
• Logistics and distribution: establish efficient logistics networks, ensuring timely delivery and product integrity.

Transaction overview

Pursuant to the terms and conditions of the letter of intent, Xebra and BSK will negotiate and enter into a binding definitive agreement incorporating the principal terms of the proposed acquisition as described in the letter of intent. There is no assurance that a definitive agreement will be negotiated or entered into. It is anticipated the proposed acquisition will be structured as a three-cornered amalgamation whereby a newly incorporated subsidiary of Xebra will amalgamate with BSK under the Business Corporations Act (British Columbia) and continue as a wholly owned subsidiary of Xebra.

As consideration for the acquisition of all of the outstanding common shares of BSK and subject to the definitive exchange ratio in the definitive agreement, it is expected holders of outstanding common shares of BSK will be issued, on an aggregate basis, approximately 45 per cent of the share capital of Xebra Brands. The deemed value of the shares at the current market value represents an approximate transaction value of $4.5-million.

The completion of the proposed acquisition is subject to a number of conditions precedent, including, but not limited to, satisfactory due diligence review, negotiation and execution of the definitive agreement and accompanying transaction documents, approval by the boards of directors of each of Xebra and BSK, approval of the shareholders of BSK, and obtaining necessary third party consents and approvals, as required.

Overview of BSK Holdings Inc.

BSK is a leading United States-based CBD company known for its Keoni and AMMA brands. BSK has generated over $50-million in revenue over the past three years and has a historical customer base that exceeds two million individuals. BSK has established itself as a top player in the U.S. CBD market. Its emphasis on e-commerce positions it as one of the fastest-growing CBD companies in the U.S.

As the e-commerce sector in Mexico continues to expand -- reaching $39-billion in sales in 20231 and expected to grow further -- Xebra and BSK are well positioned to capitalize on this growth. The Mexican e-commerce market, currently valued at $39-billion, is projected to double within five years, presenting significant opportunities for Xebra's CBD expansion.

Keith Dolo, a director of Xebra, is also a director of BSK. As such, Mr. Dolo will not take part in any deliberations or votes relating to the proposed transaction within each respective board of directors.

About Xebra Brands Ltd.

Xebra Brands is a leading cannabis company focused on developing and delivering innovative products to consumers worldwide. As the first and only company legally permitted to import seeds and cultivate, manufacture, operate and sell cannabis (1 per cent tetrahydrocannabinol) in Mexico, Xebra is pioneering the Mexican cannabis sector.

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