CORRECTION FROM SOURCE: Avant Brands Issues Correction to Previously Reported Q2 Fiscal 2023 Results News Release

Fourth Consecutive Quarter of Positive Cash Flow from Operations

• Record Gross Revenues of $9.0 million (+101% vs Q2 2022).
• Positive Adjusted EBITDA¹ of $1.7 million (+$2.7 million vs Q2 2022).
• Positive Cash Flow from Operations² of $2.1 million (+$2.7 million vs Q2 2022).
• Fourth consecutive quarter of both positive Adjusted EBITDA¹ and Cash Flow from Operations².

Note: This news release includes a correction to Avant's Adjusted EBITDA for Q2 2023 of $1.7 million, a Net Loss from operations of $0.27 million, and Gross margin of $2.7 million. This news release incorporates the corrections.

KELOWNA, BC / ACCESSWIRE / July 18, 2023 / Avant Brands Inc (TSX:AVNT)(OTCQX:AVTBF)(FRA:1BU0) ("Avant" or the "Company"), a leading producer of innovative premium cannabis products, today reported its financial results for the second quarter ended May 31, 2023, of the Company's fiscal year ("Q2 2023").

"We are excited to announce another quarter of record revenues," said Norton Singhavon, Founder and CEO of Avant. "Robust domestic and international demand for our products, combined with efficient operations, has allowed us to achieve positive cash flow and adjusted EBITDA. Moreover, the acquisition of the Flowr Group Okanagan has substantially enhanced our ability to fulfill this demand and continue delivering strong revenue growth."

Financial Highlights (Q2 F2023)

All figures compared with Q2 2022

• Gross Revenue of $9.0 million, which is a record quarter for the Company (+101% or +$4.5 million). The four most recent quarters have been the highest gross revenue quarters in the Company's history.
  • Total Net Revenue of $8.0 million (+96% or +$3.9 million).
  • Recreational Net Revenue of $4.8 million (+53% or +$1.6 million).
  • Export-B2B Net Revenue of $3.2 million (+311% or +$2.4 million).
• Overall gross margin³ of 34% (vs. 23%), as the Company continues to withstand the impact of price compression and inflation. The Company's gross margins slightly decreased when compared to its most recent fiscal quarter (Q1 2023) as a result of liquidating inventory produced by The Flowr Group (Okanagan) Inc. ("Flowr") prior to its acquisition.
  • Gross margin dollars of $2.7 million (+187% or +$1.7 million).
  • Recreational (Dried Flower Pre-rolls, and Concentrates/Infused products) gross margin of 62% (vs. 53%).
  • Export-B2B gross margin of 37% (vs. 14%), reflecting a blend of high margin exports of Avant's premium cannabis, combined with low margin liquidation of Flowr's pre-acquisition flower inventory.
  • Total of 2,676 kg of cannabis sold (+182% or +1,727 kg).
• Overall Weighted Average Selling price of $3.34 (-26%), primarily due to liquidation of Flowr's pre-acquisition inventory; plus some changes in recreational product mix.
• Recreational cannabis average selling price of $6.36 (-19%); reflecting an expanded product offering, with some lower price point products (e.g. partner products), while continuing to hold price points on the Company's flagship BLK MKT^TM flower & pre-roll products.
• Corporate Overhead net of depreciation and share based compensation of $1.8 million (-8% or -$0.1 million).
• Cash Flow from Operations before changes in non-cash working capital of $2.1 million (+$2.7 million).
• Adjusted EBITDA¹ of $1.7 million (+$2.7 million).
• Adjusted EBITDA Margin¹ (% of Net Revenue) of 21% (vs. -26%).
• Net Loss from operations of $0.27 million (an improvement of 94% or +$4.2 million).
• Adjusted Net Loss⁴ of $0.28 million, (a decrease of 86% or $1.7 million).
• Net and Comprehensive Loss of $0.4 million (+$3.5 million).
• As at the end of Q2 2023 the Company had approximately $0.8 million in cash and approximately $16.7 million in working capital.

Corporate & Operational Highlights (Q2 F2023)

The Company produced approximately 4,642 kilograms of cannabis (which includes dried flower and biomass) in the six months ended May 31, 2023. The Company sold approximately 4,100 kilograms of cannabis in the same period, which included the following highlights:

• Completed the acquisition of Avant Brands K1 Inc, which is the entity that owns Flowr.
• Fully integrated Flowr into Avant's cultivation framework and established a high run rate on flower output (approximately two 55 kilogram harvests per week).
• The Flowr integration contributed to the strong growth of the Company's Gross Revenue, Gross Margin Dollars, Adjusted EBITDA¹ and Cash Flow From Operations².
• Continued to execute cost-savings initiatives to enhance Gross Margins by reducing Cost of Goods Sold (COGS). These measures are designed to reduce the cost of various inputs, including, but not limited to, labour, energy, CO₂, packaging, freight, fertilizer and personal protective equipment (PPE).

Key Subsequent Events

• Received new product listing approvals, across multiple product categories (flower, infused pre-rolls, vapes, concentrates)- from various provincial liquor boards (including the Ontario Cannabis Store & British Columbia Liquor Distribution Branch), with first shipment dates expected to take place in Q3 and Q4 F2023.
• Received $2.8 million in purchase orders from a single export client in July 2023, with fulfillment scheduled to take place in Q3 F2023.
• Negotiated and executed new export supply agreements - with Avant signing its first export contract pertaining to the German market in July 2023.

Credit Facility

On July 17, 2023, the Company completed the closing of a $3.5 million credit facility (the "Credit Facility"), which will be secured by the real-estate of the Company's non-operational and non-licensed real property (the GreenTec BP in-construction facility) owned by GreenTec Holdings Ltd. ("GreenTec Holdings") and guaranteed by certain subsidiaries of the Company, including 3PL, Flowr Okanagan and GreenTec Holdings. The Credit Facility will bear an annual interest rate of 15%, as will be adjusted for any upward change in the Prime Rate from 8.25% at the time of any advance, with a 3-year amortization period commencing as the Credit Facility is drawn upon in tranches of a minimum amount of $500,000, subject to the satisfaction of customary conditions precedent, with a condition that Avant completes a minimum draw-down of $500,000 by July 31, 2023, subject to the satisfaction of customary conditions precedent. In connection with closing of the Credit Facility, the Company also issued 1,750,000 common share purchase warrants to the lender (the "Warrants") to acquire common shares in the capital of the Company (the "Shares") at an exercise price of $0.30 per Share on or before July 17, 2026. The Warrants will vest and become exercisable in accordance with the draw down schedule for the Credit Facility.

The Company had recently explored initiatives to monetize its non-core, non-licensed and non-operational assets, some of which included a "sale-leaseback" model of the GreenTec Holdings real-estate, however Management and the Board had determined that in order to protect the Company's interest and to preserve growth in Kelowna's rapidly growing real-estate market, that leveraging the equity in GreenTec Holdings through a credit facility, without any additional security of the Company's core or operational assets would result in the most efficient monetization strategy.

Desjardins Securities Inc. Claim

On May 25, 2023, the Company received a Statement of Claim from Desjardins Securities Inc. ("Desjardins") alleging damages (of approximately $1 million) for breach of contract claiming that they were not paid for work they did relating to the potential acquisition of The Flowr Corporation or its affiliates ("Flowr Corp"). Desjardins was engaged on a success-based fee structure by Avant on March 15, 2022 for a potential transaction where Avant would acquire Flowr in an all-share transaction (prior to its restructuring process). Avant and Flowr Corp could not come to agreeable terms and negotiations were terminated on April 23, 2022 (the "Failed Transaction"). The engagement with Desjardins had a 6-month tail-period which would have expired on October 23, 2022.

Subsequently, in February 2023, a 50% owned joint venture of the Company, Avant K1, acquired Flowr in connection with the proceedings under the Companies' Creditors Arrangement Act ("CCAA") for Flowr. Subsequent to that, in March 2023, nearly a full year following the Company's engagement of Desjardins in connection with the Failed Transaction, the Company acquired the remaining outstanding shares of Avant K1. Desjardins did minimal work in connection with the Failed Transaction and had absolutely no involvement in the eventual acquisition of Flowr by Avant K1 in connection with the CCAA proceedings or the Company's subsequent acquisition of Avant K1. Avant denies the baseless claims made by Desjardins and intends to defend itself vigorously.

RECONCILIATION OF NET INCOME TO EBITDA, ADJUSTED EBITDA, CASH FLOWS FROM OPERATIONS, GROSS MARGIN AND ADJUSTED NET INCOME (LOSS)

ADJUSTED EBITDA (NON-IFRS PERFORMANCE MEASUREMENT)

The Company has identified Adjusted EBITDA as a relevant industry performance indicator. Adjusted EBITDA is a non-IFRS financial measure used by management that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies.

Management defines Adjusted EBITDA as income (loss) from continuing operations, as reported, adjusted for depreciation and amortization, equity (gain) loss on investment in associate, financing costs, gains and losses on sale of marketable securities, share-based payments, fair value gain on acquisition, change in fair value of biological assets realized through inventory sold, and unrealized gains and losses on changes in fair value of biological assets. Management believes this measure provides useful information as it is a commonly used measure in the capital markets to approximate operating earnings. See table below for determination of specific components of Adjusted EBITDA.

ADJUSTED NET INCOME (NON-IFRS PERFORMANCE MEASUREMENT)

The Company has identified Adjusted Net Income as a relevant industry performance indicator. Adjusted Net Income is a non-IFRS financial measure used by management that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies.

Management defines Adjusted Net Income as income (loss) from continuing operations, as reported, adjusted for equity (gain) loss on investment in associate, Canadian emergency wage subsidy, share-based payments, fair value gain on acquisition, change in fair value of biological assets realized through inventory sold, and unrealized gains and losses on changes in fair value of biological assets. Management believes this measure provides useful information as it is a commonly used measure in the capital markets to approximate operating earnings. See table below for determination of specific components of Adjusted Net Income.

Conference Call

Management will host a conference call to discuss the financial results today, Tuesday, July 18, 2023, at 3:00 PM Eastern Time / 12:00 PM Pacific Time.

Conference Call Dial Details:

Canada/USA TF: +1-800-319-4610

International Toll: +1-604-638-5340

A transcript of the call will be posted on the Company's website at www.avantbrands.ca within two business days of the call.

A copy of the interim financial statements for the quarter ended May 31, 2023 (the "Financial Statements") and the related management's discussion & analysis (the "MD&A") will be available for download on the Company's SEDAR profile, or on its website at www.avantbrands.ca.

About Avant Brands Inc.

Avant is an innovative, market-leading premium cannabis company. Avant has multiple operational production facilities across Canada, which produce high-quality, handcrafted cannabis products, based on unique and exceptional cultivars. Avant's products are distributed via three complementary sales channels: recreational, medical and export. Avant's recreational consumer brands include: BLK MKT™, Tenzo™, Cognōscente™ and Treehugger™, which are sold in British Columbia, Saskatchewan, Manitoba, Ontario, Atlantic Canada, Québec and the territories. The Company's medical cannabis brand, GreenTec™, is distributed nationwide, directly to qualified patients through its GreenTec Medical portal and through various medical cannabis partners.

Avant is a publicly traded corporation listed on the Toronto Stock Exchange (TSX:AVNT), and cross-trades on the OTCQX Best Market (OTCQX:AVTBF) and Frankfurt Stock Exchange (FRA:1BU0). The Company is headquartered in Kelowna, British Columbia and has operations in British Columbia, Alberta and Ontario.

To learn more about Avant, access the investor presentation, or learn more about its consumer brands, please visit www.avantbrands.ca.

For additional information, please contact:
Investor Relations at Avant Brands Inc.
+1-800-351-6358

ir@avantbrands.ca

Note 1 - Adjusted EBITDA and Adjusted EBITDA Margin are non-International Financial Reporting Standards ("IFRS") measures. The Company calculates Adjusted EBITDA from continuing operations as net income (loss) before interest expense, income taxes, depreciation and amortization, unrealized gain (loss) on changes in fair value of biological assets, equity loss on investment in associate, loss on sale of assets, investment loss and share based payments. The Company calculates Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of Net Revenue. Management determined that the exclusion of the fair value adjustment is an alternative representation of performance. The fair value adjustment is a non-cash gain (loss) and is based on fair market value less cost to sell. The most directly comparable measure to Adjusted EBITDA (excluding fair value adjustment to biological assets and inventory) calculated in accordance with IFRS is net income (loss) from continuing operations. For more information on the reconciliation of Adjusted EBITDA to net income (loss), please refer to the MD&A at page 10 or view the reconciliation table at the end of this news release.

Note 2 - Cash Flows from Operations before changes in net-working capital is a non-IFRS performance measure and is calculated by adjusting the net loss from continuing operations for items not affecting cash, but before applying changes in non-cash operating working capital. Cash Flow from Operations is a non-IFRS financial measure used by management that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. The most directly comparable measure to Cash Flow from Operations before changes in net-working capital in accordance with IFRS is Cash Flows from Operations. For more information on the reconciliation of Cash Flow from Operations, please refer to the MD&A at page 9.

Note 3 - Gross margin before fair value adjustments. Gross margin is a non-IFRS financial measure used by management that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. For more information on the reconciliation of gross margin, please refer to the MD&A at page 8.

Note 4 - Adjusted Net Income is a non-IFRS performance measure and is calculated by adjusting the net income for items not affecting cash such as; equity loss on investment in associate, share based payments, fair value gain on acquisition, and fair value changes on biological assets. The Company has elected to report Adjusted Net Income, which is a non-IFRS measure, as it believes this metric provides more accurate results of the Company's financial performance to readers, as it removes the fair value changes on biological assets (amongst other minor adjustments). For more information on the reconciliation of Adjusted Net Income, please refer to the MD&A at page 10or view the reconciliation table at the end of this news release.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION:

This news release includes certain "forward-looking information" as defined under applicable Canadian securities legislation, including statements regarding the plans, intentions, beliefs and current expectations of the Company with respect to future business activities and operating performance. Forward-looking information is often identified by the words "may", "would", "could", "should", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" or similar expressions and includes information regarding: the Company's continued momentum and growth as one of the fastest growing Canadian cannabis companies; the Company's expectations for continued growth in sales, cash flow and profitability as a result of the acquisition of Flowr Okanagan; the Company's annualized savings in connection with the acquisition of Flowr Okanagan; the Company's continued exploration of acquisition and contract growth opportunities; the Company's expectations regarding incremental sales of high-quality flower resulting from contract grow opportunities, without requiring any capital investment by the Company; the expected savings from the Company's second wave of cost-saving initiatives at the Flowr Facility; the implementation of both revenue-generating and cost-saving initiatives at the Flowr Facility; the anticipated achievement of positive cash flow from operations at the Flowr Facility; the timing of the conference call to discuss the financial results; the availability of a transcript of the conference call on the Company's website; the anticipated the Company's capacity utilization rate; the availability of the Financial Statements and the MD&A on the Company's SEDAR profile and on its website; and expectations for other economic, business, and/or competitive factors. To the extent any forward-looking information in this news release constitutes "financial outlooks" within the meaning of applicable Canadian securities laws, such information is being provided as preliminary financial results and the reader is cautioned that this information may not be appropriate for any other purpose and the reader should not place undue reliance on such financial outlooks. Forward-looking information is necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking information. Financial outlooks, as with forward-looking information generally, are, without limitation, based on the assumptions and subject to various risks as set out herein. The Company's actual financial position and results of operations may differ materially from management's current expectations and, as a result, the Company's financial results may differ materially. Examples include statements that the Company will build long-term shareholder value and reduce operational expenses; or that the Company will increase its revenue and maintain stable costs.

Investors are cautioned that forward-looking information is not based on historical fact but instead reflects management's expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the Company. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information are the following: regulatory and licensing risks; changes in consumer demand and preferences; changes in general economic, business and political conditions, including changes in the financial markets; the global regulatory landscape and enforcement related to cannabis, including political risks and risks relating to regulatory change; compliance with extensive government regulation; public opinion and perception of the cannabis industry; the impact of COVID-19; and the risk factors set out in the Company's annual information form dated February 27, 2023, filed with Canadian securities regulators and available on the Company's profile on SEDAR at www.sedar.com.

Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors that could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking information, which speak only as of the date of this news release. The Company disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.

This news release refers to certain financial performance measures that are not defined by and do not have a standardized meaning under ("IFRS") as issued by the International Accounting Standards Board. These non-IFRS financial performance measures are defined in the MD&A. Non-IFRS financial measures are used by management to assess the financial and operational performance of the Company. The Company believes that these non-IFRS financial measures, in addition to conventional measures prepared in accordance with IFRS, enable investors to evaluate the Company's operating results, underlying performance and prospects in a similar manner to the Company's management. As there are no standardized methods of calculating these non-IFRS measures, the Company's approaches may differ from those used by others, and accordingly, the use of these measures may not be directly comparable. Accordingly, these non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

SOURCE: Avant Brands, Inc.