Mr. Rodrigo Gallardo reports

XEBRA BRANDS LTD. TERMINATES LETTER OF INTENT TO ACQUIRE BSK HOLDINGS INC.; ANNOUNCES DELAY IN COMPLETION OF ANNUAL FILINGS AND MCTO; ANNOUNCES LOAN

Xebra Brands Ltd. has terminated its non-binding letter of intent to acquire 100 per cent of the outstanding shares of BSK Holdings Inc., announced on April 24, 2025.

The contemplated transaction was subject to various conditions including satisfactory due diligence and regulatory approvals, and, following a thorough review and continuing discussions, Xebra determined that it is in the company's best interest to not proceed with the proposed acquisition.

"We sincerely appreciate the professionalism and collaboration shown by the BSK team throughout this process," said Rodrigo Gallardo, interim chief executive officer of Xebra Brands. "While we will not be moving forward with a corporate transaction, we maintain a high regard for BSK's expertise and vision."

Despite the decision to terminate the LOI, Xebra is pleased to confirm that its partnership with BSK remains active and productive. As previously announced on May 14, 2025, Xebra and BSK executed a manufacturing and distribution agreement to launch Xebra's Elements cannabidiol product line in the United States. This strategic collaboration will continue independently of the terminated acquisition plan.

"Our focus remains on bringing high-quality CBD products to U.S. consumers under the Elements brand," added Mr. Gallardo. "We look forward to building a strong commercial presence in the U.S. market with the support of BSK's operational capabilities."

Management cease trade order

Xebra announces that its audited financial statements, chief executive officer and chief financial officer certifications, and management's discussion and analysis for the year ended Feb. 28, 2025, were not released on or prior to the applicable filing deadline on June 30, 2025. The company was late in the preparation of the annual filings due to management changes, certain liquidity constraints and unforeseen delays in the procurement of necessary financial resources to initiate the audit. As further detailed below, the company has made arrangements to facilitate the completion of the audit, the annual filings and the filing thereof.

As a result of the delay, the company has voluntarily applied for and was granted a management cease trade order, which prohibits certain current directors, officers and insiders of the company from trading in securities of the company for so long as the annual filings are not filed. The issuance of such management cease trade order generally does not affect the ability of the general investing public to trade in the securities of the company. The company intends to provide updates in accordance with National Policy 12-203 (Management Cease Trade Orders) with respect to further developments in respect of this matter promptly following their occurrence.

Loan

Xebra announces that it has entered into a loan agreement with an existing shareholder and a co-founder of Xebra, pursuant to which the lender has agreed to provide a loan of up to $110,000 to the company in such principal amounts to be advanced to the company by the lender as agreed from time to time.

The loan is unsecured, bears interest at 10 per cent per annum and matures one year from the date of issuance of the loan. The loan will help finance the company's working capital and general corporate purposes, including, but not limited to, the audit of the annual filings.

About Xebra Brands Ltd.

Xebra Brands is a Canadian cannabis company with international reach, focused on the development and commercialization of cannabis-derived wellness products. Xebra is the first company to receive full authorization to import, cultivate, manufacture and sell cannabis (1 per cent tetrahydrocannabinol) in Mexico, and is actively expanding its Elements product line through strategic partnerships in North America.

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