Lifeist Refocuses CannMart on Roilty and Other High-Margin Revenue to Accelerate Path to Near-term Profitability

– Positive market reception to in-house Roilty brand enables focus on higher margin opportunities
– Company to curtail Phyto brand licensing agreement and streamline CannMart headcount by 30%

TORONTO, Aug. 31, 2022 (GLOBE NEWSWIRE) — Lifeist Wellness Inc. (“Lifeist” or the “Company”) (TSXV: LFST) (FRANKFURT: M5B) (OTCMKTS: NXTTF), a health-tech company that leverages advancements in science and technology to build breakthrough companies that transform human wellness, today announced that as a result of accelerating market demand for Roilty and other high margin brands, Lifeist’s wholly owned subsidiaries CannMart Labs Inc. and CannMart Inc (together “CannMart”), are further honing their focus on higher margin revenue streams with the goal to improve both gross and operating margins.

As a result, CannMart has:

• Taken immediate steps to significantly curtail CannMart’s licensing of the Phyto brand from Adastra Holdings Inc. (“Adastra”), through an agreement with Adastra to terminate such license early subject to certain terms and conditions, expected to result in a significant improvement in gross and operating margins at CannMart.
• Reduced headcount by approximately 30%, with the majority of reductions related to personnel who were involved with the Phyto product lines. The lower headcount is expected to result in over $2 million in annualized operating expense savings at CannMart.

“Over the past year, CannMart has established a vertically integrated model and generated consistent double-digit topline growth, in large part through the success of our in-house brand Roilty,” commented Daniel Stern, CEO of CannMart. “As a result of these successful initiatives, we are sharpening our focus further on higher margin revenue opportunities and exiting less profitable product lines. By focusing on higher-margin SKUs in our portfolio, especially in-house branded SKUs and particularly those manufactured in our state-of-the art BHO extraction facility, we can accelerate CannMart’s path to profitability. We thank Adastra for their valued partnership over the past two years, and we are excited to continue working with them as a vendor moving forward.”

“Parting ways with good people is never easy, however it is essential that all of Lifeist’s business units prioritize profitable growth,” said Meni Morim, CEO of Lifeist. “The Canadian cannabis industry difficulties are well documented; however, we are confident that the steps taken today provide the appropriate foundation for CannMart’s long term success and will contribute to Lifeist’s overall goal of running a sustainably growing and profitable wellness company.”

Roilty Brand Momentum

CannMart’s award-winning in-house brand, Roilty, has grown dramatically since its introduction in May of 2021, most recently generating more than $1.5 million in revenue in the second quarter of 2022. Roilty initially launched with two (2) products, and CannMart has since expanded the product portfolio, such that by the end of the third quarter of 2022, Roilty offers a total of 16 products available in nine provinces and territories across Canada, including British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Prince Edward Island, Yukon, Northwest Territories and Nunavut. All such provinces and territories, including CannMart’s largest customers, Alberta and Ontario, continue to pick up additional new Roilty vape and concentrate SKUs expected to launch in market in the fourth quarter of 2022 and drive continued revenue growth.

“The response to Roilty from retailers, sales associates (budtenders) and consumers has been overwhelmingly positive,” stated Daniel Stern, CEO of CannMart, adding, “The tongue-in-cheek brand brings levity and fun to the cannabis industry. Customers continue to note the price to quality, which leans into Roilty’s main tenant of supplying Canadian consumers with quality cannabis products without paying a brand premium.”

Early Termination of Phyto Brand Licensing Agreement

As part of the initiative to increase gross margins and operating profitability for CannMart, CannMart has entered into an agreement (the “Agreement”) with Adastra Holdings Inc. and its subsidiary, 1204581 BC Ltd. (together “Adastra”), relating to the early termination of CannMart’s licensing of the Phyto brand, subject to the completion of certain criteria (the “Criteria”). Furthermore, the Agreement stipulates a reduction in licensing fees from 50% to 0% of sales, net of agreed upon costs, of Phyto products from March 1, 2022, until early license termination.

The Criteria are:

1) Adastra’s set off amounts owing by Adastra to CannMart with respect to data sharing against other amounts owing by CannMart to Adastra, and for Adastra to continue to be responsible for the payment of 50% of the ongoing fees and expenses owed by CannMart for applicable data until Adastra enters into a separate agreement with the applicable third party for such data;

2) Completion of delivery by Adastra of 250,000 unfinished cannabis products sold to CannMart at discount pricing; and

3) Adastra must pay in cash an amount representing all functional outstanding unfinished Phyto branded product and all functional Phyto branded packaging material held by CannMart as at September 30, 2022.

If Adastra does not complete the Criteria or elects by written notice not to complete the Criteria, in either case, on or before September 30, 2022, any sales of Phyto product by CannMart made on or after December 1, 2022, will be subject to licensing fees of 50% of sales, net of agreed upon costs, until license expiry scheduled for October 31, 2023.

About Lifeist Wellness Inc.

Sitting at the forefront of the post-pandemic wellness revolution, Lifeist leverages advancements in science and technology to build breakthrough companies that transform human wellness. Portfolio business units include: CannMart, which operates a B2B wholesale distribution business facilitating recreational cannabis sales to Canadian provincial government control boards; CannMart Labs, a BHO extraction facility for the production of high margin cannabis 2.0 products; the CannMart.com marketplace, which provides U.S. customers with access to hemp-derived CBD and smoking accessories; Australian Vapes, Australia’s largest online retailer of vaporizers and accessories; and Mikra, a biosciences and consumer wellness company seeking to develop innovative therapies for cellular health.

Information on Lifeist and its businesses can be accessed through the links below:

www.lifeist.com
https://cannmart.com
www.australianvaporizers.com.au
www.wearemikra.com

Contacts

Meni Morim, Lifeist Wellness Inc., CEO
Matt Chesler, CFA, FNK IR, Investor Relations
Ph: 647-362-0390
Email: [email protected]

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release or has in any way approved or disapproved of the contents of this press release.

Forward Looking Information

This news release contains “forward-looking information” within the meaning of applicable securities laws. All statements contained herein that are not historical in nature contain forward-looking information. Forward-looking information can be identified by words or phrases such as “may”, “expect”, “likely”, “should”, “would”, “plan”, “anticipate”, “intend”, “potential”, “proposed”, “estimate”, “believe” or the negative of these terms, or other similar words, expressions and grammatical variations thereof, or statements that certain events or conditions “may” or “will” happen.

The forward-looking information contained herein, including, without limitation, statements related to CannMart’s goals to improve both gross and operating margins by focusing on higher margin revenue streams are made as of the date of this news release and is based on assumptions management believed to be reasonable at the time such statements were made, including, without limitation, CannMart’s ability to develop and sell higher margin revenue producing Cannabis 2.0 products, the continued demand for Roilty, Adastra’s ability to meet the Criteria under the Agreement and CannMart’s ability to benefit therefrom, Lifeist’s beliefs of the anticipated benefits to be achieved by reducing CannMart’s workforce, management’s continued focus on growing the business profitably, the expected demand for Cannabis 2.0 products and the growth of that market and the results of operations, operational matters, historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances. While we consider these assumptions to be reasonable based on information currently available to management, there is no assurance that such expectations will prove to be correct. By its nature, forward-looking information is subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct, and that objectives, strategic goals and priorities will not be achieved. A variety of factors, including known and unknown risks, many of which are beyond our control, could cause actual results to differ materially from the forward-looking information in this news release. Such factors include, without limitation: unforeseen developments that would delay CannMart’s ability to develop and launch additional higher margin cannabis 2.0 products as anticipated and in a timely manner, slowing demand for Roilty, the failure to achieve the benefits expected from both the early termination of the licensing agreement with Adastra and the reduction in personnel at CannMart, the risk that the expected demand for cannabis 2.0 products in general and those to be developed and manufactured by the Company does not develop as anticipated, the generation of revenue from such products not being as anticipated, regulatory risk, risks relating to the Company’s ability to execute its business strategy and the benefits realizable therefrom and risks specifically related to the Company’s operations. Additional risk factors can also be found in the Company’s current MD&A and annual information form, both of which have been filed under the Company’s SEDAR profile at www.sedar.com. Readers are cautioned not to put undue reliance on forward-looking information. The Company undertakes no obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable law. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement.

Source: Lifeist Wellness Inc.