ShinyBud Achieves Record Revenue and Gross Profit in the First Quarter Fiscal 2023; Reports 37% Gross Margin and Positive Adjusted EBITDA

Retail Pharmacy Acquisition Pipeline Continues to Expand

^{(All amounts are in Canadian dollars unless otherwise stated)}

TORONTO, June 29, 2022 /CNW/ - ShinyBud Corp. ("ShinyBud" or the "Company") (TSXV: SNYB) today reported financial results for its fiscal 2023 first quarter for the three months ended April 30, 2022 (the "first quarter").

"We achieved record revenue and gross profit for the quarter and maintained a strong gross margin in a highly-competitive, deeply discounted retail sector," said Kevin Reed, Chairman and Chief Executive Officer.

Mr. Reed added, "With our cannabis business established, we are excited to differentiate our company from other cannabis retailers by broadening our growth strategy to encompass pharmacy. We believe that the convergence of cannabis, health and wellness, pharmacies and medical care services is where the growth potential lies for ShinyBud, and that adding pharmacies to our corporate portfolio will bring benefits to both our customers and our shareholders."

 Fiscal 2023 First Quarter Highlights

^{Three months ended April 30, 2022 compared to the three months ended April 30, 2021.}

• Record quarterly revenue grew 74% to $7.6 million
• Record quarterly gross profit of $2.8 million, a 72% increase
• Opened two new corporate locations, including Eastern Ontario's only drive-thru cannabis store
• Strong gross margin of 37.4% compared to 37.9% year-over-year and 35.2% quarter-over-quarter
• Comprehensive net loss of $1.8 million comprised of a $0.42 million loss from store-level operations and a $1.3 million loss from corporate activities
• EBITDA⁽¹⁾ of negative $0.6 million compared to a gain of $0.8 million
• Adjusted EBITDA⁽¹⁾ decreased to $0.05 million from $0.8 million
• Cash balance of $2.6 million as at April 30, 2022
• Launched ShinyBuddy Club customer loyalty program in March 2022

Financial Highlights

Summary of financial information for the first fiscal quarter of 2023 for the three months ended April 30, 2022 compared to the three months ended April 30, 2021.

	Three Months Ended April 30,
	2022	2021	Change
	$	$
Sales	7,574,520	4,342,192	74 %
Gross profit	2,835,680	1,644,538	72 %
Gross profit margin	37.4 %	37.9 %	0 %
General and administrative	4,035,520	1,045,335	286 %
(Loss) income before other income (expenses)	(1,335,504)	554,389	(341 %)
Net (loss) income and net comprehensive (loss) income	(1,758,475)	363,774	(583 %)
Basic and diluted (loss) income per share	(0.16)	0.05	(420 %)
EBITDA^(1)	(568,311)	789,519	(172 %)
Adjusted EBITDA^(1)	46,345	789,519	(94 %)

"ShinyBud's first fully consolidated quarter as a corporate entity and collective management team reveals a strong performing retail platform underlying our cannabis line of business," stated Jude Pinto, Chief Financial Officer and Chief Information Officer. "Following record revenue and a healthy gross margin, we will focus on enhancing EBITDA and maintaining a cannabis store portfolio in the range of 25 to 35 stores as our near-term retail growth plans will focus on pharmacy. Given the current macro market volatility, management believes that expanding ShinyBud's operations into a retail sector that is complementary to cannabis and offers solid standalone business economics is a prudent approach to protecting shareholder value."

Consolidated Performance

^{Three months ended April 30, 2022 compared to the three months ended April 30, 2021.}

• During the first quarter, ShinyBud opened two new cannabis stores in Windsor and Ottawa, Ontario, increasing its corporate store count from 28 to 30 stores. Subsequent to the quarter, the Company opened an additional location in Stittsville, Ontario for a current total of 31 corporate stores.
• Record quarterly revenue of $7.6 million, 74% higher than the prior year period primarily driven by the growth in ShinyBud's retail network through new store openings and acquisitions. completed in connection with a business combination with Mihi Inc. completed in January 2022. The ShinyBuddy Data Program contributed $0.49 million in revenue compared to $0.13 million in the prior year.
• Record quarterly gross profit of $2.8 million and 72% higher than the prior year interim period primarily driven by an expanded store network. During the first quarter, the Company focused on maintaining its strong gross margin of 37.4% by offering a carefully curated product offering and adding higher margin cannabis products.
• Total general and administrative expenses increased to $4.1 million, a 286% increase from the prior year period primarily due to the level of activity related to expanding the retail store network from eight stores to 30 stores and establishing scalable corporate functions to deliver against strategic growth plans. Notable increases include salaries and benefits, legal and professional fees primarily related to one-time strategic setup costs, and insurance and licensing fees.
• Comprehensive net loss of $1.8 million compared to a net comprehensive income of $0.4 million in the prior year interim period. Comprehensive net loss $1.8 million includes a $0.4 million loss from store-level operations and a $1.3 million loss from corporate activities.
• Excluding one-time professional fees, store-level net income for this quarter was $0.3 million with $1.0 million in corporate costs attributed to the Company's cannabis line of business and $0.3 million in corporate costs attributed to the Company's new pharmacy line of business. The Company expects that corporate costs will continue to proportionately shift as the Company reallocates resources to establishing its pharmacy network.
• A total $1.6 million revaluation of derivative liabilities, recorded as non-cash accounting gains, related to outstanding share purchase warrants that include a cashless exercise feature.
• A $1.3 million loss on extinguishment of loan payable recorded as a non-cash accounting loss related to the FirePower loan amendment executed on April 30, 2022.
• EBITDA⁽¹⁾ of negative $0.6 million compared to positive EBITDA of $0.8 million in the prior year interim period.
• Adjusted EBITDA⁽¹⁾ decreased to $0.05 million from $0.8 million in the prior year interim period. After the reversal of interest and depreciation and amortization, the significant one-time drivers of Adjusted EBITDA⁽¹⁾ are $0.5 million in strategic set up costs, a $1.6 million non-cash gain on revaluation of derivative liabilities related to outstanding warrants that include a cashless exercise feature, and a $1.3 million non-cash accounting loss on extinguishment of loan payable on the FirePower loan payable.
  
  Of the $0.05 million in Adjusted EBITDA⁽¹⁾, $1.2 million is attributable to recurring retail cannabis line of business results offset by $0.8 million of corporate costs attributable to the cannabis business and an additional $0.3 million of corporate costs incurred as part of the emerging infrastructure for the pharmacy line of business.

Updated Retail Store Targets  

Retail Cannabis

Currently, the Company has 31 corporate stores across Ontario and regularly assesses the performance of each. During the first quarter, the Company performed an analysis of impairment of its property and equipment based on the historical performance of each of its retail stores. At April 30, 2022, management assessed that there were indicators of impairment at two of its retail store locations as the economic performance of these locations were worse than expected. The Company will continue to assess the performance of each of its stores and is planning have a cannabis store portfolio in the range of 25 to 35 corporate stores by the end of its fiscal year ending January 31, 2023, compared to the initial target of 59 total corporate stores by December 31, 2022⁽²⁾.

The Company is also targeting  a total of 5 to 15 franchise and/or licensed stores by fiscal year end, compared to the 20 total franchise stores initially anticipated by December 31, 2022⁽²⁾.

ShinyBud does not currently expect to develop new greenfield locations until the macro competitive factors in Ontario's retail cannabis industry stabilize. Management will continue to assess potential tuck-in acquisition opportunities on a case-by-case basis.

Going forward, the key areas of focus for the Company's cannabis line of business will include steadily enhancing EBITDA⁽¹⁾, tailoring competitive positioning within each community where it operates, and optimizing network capital and real estate utilization.

Retail Pharmacy

In May, the Company announced it is broadening its retail growth strategy with a focus on health and wellness with a goal to differentiate itself from other cannabis retailers. This retail extension stems from a deep understanding of what the Company's customers are looking for as it relates to their health and wellness needs. The Company believes that the convergence of cannabis, health and wellness, pharmacies and medical care services is where the growth potential lies for ShinyBud, and that adding pharmacies to its corporate portfolio will strengthen its business model. To carry out its health and wellness strategy, the Company has established mīhī Health & Wellness and is targeting to acquire between 5 to 10 retail pharmacies in Ontario by the end of its fiscal year ending January 31, 2023. The development of new greenfield pharmacy locations is not anticipated, unless existing corporate lease obligations within the Company's cannabis portfolio demonstrate strong potential for a pharmacy as the best use of a retail space.

Key areas of focus for the Company's pharmacy line of business will include steadily enhancing EBITDA⁽¹⁾ through scale and leveraging pharmacy retail experience upon acquisition of each new location, building brand presence, and optimal competitive positioning within each community where it operates.

To better reflect its broader strategy, the Company is proposing to change its corporate name to "Shiny Health & Wellness Corp.", subject to receipt of regulatory approvals (including of the TSX Venture Exchange).

Consolidated Financial Statements

For further information, refer to ShinyBud's interim condensed consolidated financial statements and related management's discussion & analysis for the three months ended April 30, 2022 and 2021, which are available on the Company's investor relations website at investors.shinybud.com and on SEDAR under the Company's issuer profile at www.sedar.com.

Conference Call & Webcast

Management is hosting a live conference call and audio webcast to review highlights and host a question-and-answer session for the three months ended April 30, 2022 as follows:

Date & Time:    Thursday, June 30, 2022 at 8:30 a.m. ET

Telephone:       Toll-free + 1-833-950-0062
                          Local or International [phone]
                          Please allow a few minutes to be connected to the conference call.

Access Code: 691731

Webcast:         Accessible on ShinyBud's website at investors.shinybud.com/Q12023

Note:               The slide presentation will be available for download at investors.shinybud.com.

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.

Endnotes
(1)	The Company defines EBITDA and Adjusted EBITDA as per the table below. EBITDA and Adjusted EBITDA are non-IFRS financial measures that do not have standardized meanings prescribed under the Company's generally accepted accounting principles (GAAP), being International Financial Reporting Standards (IFRS), and may not be comparable to similar measures disclosed by other issuers.  The Company defines EBITDA and Adjusted EBITDA as per the table below. Management calculates "EBITDA" for a financial period as the Company's income (loss) for the period, as determined in accordance with IFRS, before accretion and interest, tax, and depreciation and amortization, and calculates "Adjusted EBITDA" for a financial period as the EBITDA for the period after adjusting to remove transaction and acquisition costs, impairment, loss on settlement of loan, listing expense, gain on  revaluation of derivative liability, gain on change in fair value, and share-based compensation.
	Management uses EBITDA and Adjusted EBITDA to assess the Company's ability to generate cash from operations, and the Company believes them to be useful measures for this purpose.  They are, however, supplementary information only and should not be relied upon for comparative or investment purposes. Readers must not consider non-IFRS measures in isolation or as a substitute for analysis of the Company's financial results as reported under IFRS.  EBITDA and Adjusted EBITDA are not, and must not be construed as alternatives to, net income (loss) or cash flow from operating activities as determined under IFRS.
	The following table reconciles net (loss) income for the periods indicated to EBITDA and Adjusted EBITDA, respectively:

	Three-month period ended April 30,
	2022	2021
	($)	($)
Net (loss) income	(1,758,475)	363,774
Income tax (recovery) expense	-	98,000
Finance costs	403,596	92,615
Depreciation & amortization	786,568	235,130
EBITDA	(568,311)	789,519
One-time strategic costs	509,342	-
Revaluation gain on derivative liability	(1,596,532)	-
(Gain) loss on change in fair value	(136,221)	-
Impairment	484,706
Loss on extinguishment of loan payable	1,267,726
Share-Based compensation	85,635	-
Adjusted EBITDA	46,345	789,519

	Notes to table above:
	Cash outflow for the lease liabilities during the quarter ended on April 30, 2022 were $459,451.
	Cash outflow for the lease liabilities during the quarter ended on April 30, 2021 were $152,823.
(2)	As initially reported in the Company's filing statement filed January 19, 2022 on SEDAR under the Company's issuer profile at www.sedar.com.

About ShinyBud 

ShinyBud Corp. is on a mission to help people Never settle, Live fully. The Company recently broadened its retail growth strategy beyond adult-use cannabis by establishing mīhī Health & Wellness, a new line of business focused on building a network of community pharmacies across Ontario. Striving to provide a more diverse and accessible cannabis experience for adult consumers, ShinyBud Cannabis Co. is one of Ontario's largest cannabis retailers by store count. The Company's board and management team hold extensive retail operating experience, a key competitive differentiator in leading its growth strategy. ShinyBud trades on the TSX Venture Exchange (TSXV) under the ticker symbol SNYB. For more information, please visit investors.shinybud.com.

Cautionary Statement Regarding Forward-Looking Information 

This news release contains statements ("forward looking statements") that constitute forward-looking information within the meaning of applicable Canadian securities laws.  Forward looking statements relate to future performance, events, outcomes or circumstances or are otherwise prospective in nature, are based upon internal assumptions, opinions, estimates, plans, beliefs and expectations about future conditions, developments and courses of action.  They are inherently uncertain as they depend on the accuracy of such assumptions, opinions, estimates, plans, beliefs and expectations, which cannot be assured, and are subject to known and unknown risks and uncertainties that will cause actual results to differ from those indicated, suggested or anticipated in the forward looking statements.  The differences may be material and adverse to the Company.

All statements other than statements of current or historical fact constitute forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "believe", "expect", "intend", "seek", "plan", "aim", "budget", "forecast", "target", "estimate", "objective", "propose", "predict", "potential", "project", "continue", "pursue", "may", "will", "might", "should", "could" or similar words suggesting future outcomes or events or statements regarding an outlook.

Without limiting the foregoing, this news release contains forward-looking statements pertaining to: ShinyBud's growth strategy and potential in respect of both its retail cannabis business and expansion into the pharmacy sector; and proposed name change to "Shiny Health & Wellness Corp.".

Forward-looking statements, and the underlying assumptions, opinions, estimates, plans, beliefs and expectations on which they are based, are inherently uncertain as they depend on future conditions, developments and courses of action that may or not occur or come to be.  There can be no assurance that the underlying assumptions, opinions, estimates, plans, beliefs and expectations will prove to be correct and, accordingly, no assurance that the future performance, events, outcomes or circumstances expressed or implied in the forward-looking statements herein will occur or be realized.  Actual results will differ, and the differences may be material and adverse to the Company.

In addition to the other factors and assumptions that may be identified herein, material factors and assumptions used to develop the forward-looking statements contained in this news release include, among other things, assumptions, opinions, estimates, plans, beliefs and expectations regarding: the effectiveness of our retail cannabis and pharmacy strategy; our ability to identify and consummate accretive acquisitions, expand our store network within budgeted costs and timelines, drive same-store sales growth, improve margins and generate new revenue streams; our ability to obtain additional licenses, authorizations and regulatory approvals (including any required approvals of the TSX Venture Exchange) as and when required to fit our growth and business plan; the size of the cannabis retail market and estimated portion currently unserved, and the migration of customers from the illicit market to legal market; our ability to capture additional market share; our ability to attract franchisees to the ShinyBud brand and model, and the terms of franchise arrangements; the number, type and locations of new stores; the applicability and relevance of our experience in existing centers and locations to new centers and locations; our ability to influence our customer purchase decisions; our ability to maintain, enhance, and grow our appeal within our addressable market, and to customize products and inventory for the market that resonate with our target customer base; our ability to source product that is key to our menu offerings; our ability to leverage our landlord network and build a flexible lease portfolio; our ability to manage costs and drive operating efficiencies; our ability to retain key management and non-management personnel, and to hire, train and motivate staff; the availability of capital, and our ability to obtain any required external financing on acceptable terms; our competitive strengths and the impact of competition; the accuracy of our financial models; trends in the retail cannabis and pharmacy sectors; the regulatory framework applicable to the retail cannabis and pharmacy industries in Canada, and the direction of any changes in that framework and underlying laws; and general economic, political and social conditions affecting the retail cannabis and pharmacy businesses.

Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that will cause actual results to differ from those indicated, suggested or anticipated in the forward-looking statements, and the differences may be material.  Readers must therefore exercise caution and not rely on forward-looking statements, which rest on assumptions, opinions, estimates, plans, beliefs and expectations as of the date made that may change, and are in any event not a guarantee of future performance or a promise of any future outcomes.  We believe such risks, uncertainties and other factors to include, without limitation, the following: risks associated with the retail cannabis and pharmacy industries generally; adverse changes in the general economic or market conditions, and to customer spending in the centers where we operate; unforeseen obstacles that prevent, delay or otherwise compromise the execution of our growth plan; inability to obtain additional licenses and authorizations (and other needed regulatory approvals) as and when required to fit our growth and business plan; ineffectively managing our growth; failure to secure desirable store locations; inability to secure leasehold premises for new stores on acceptable terms, risks associated with leasing retail space; adverse changes to the regulatory framework applicable to the retail cannabis industry in Canada, or to other laws and regulations affecting our business (including taxes); unanticipated diminishment of the Shiny Bud brand or any trademark protections; negative publicity for us or our business; marketing strategies that are less successful than expected; our highly competitive industry and the relative size and resources of some of our competitors; being unable to successfully open and operate new stores; profitability erosion from unexpected cost increases; slower profitability of new stores; failure to identify, recruit and contract with a sufficient number of qualified franchise partners; lack of access to capital to fund expansion, or more costly financing terms than expected; a data security breach that results in improper use or disclosure of confidential customer or employee information; risks associated with industry consolidation; loss of key management or other key personnel, or unexpected difficulty in attracting, training and/or motivating staff as necessary to execute our business plan; unexpected challenges in growing sales or connecting with our customer base; inability to meet other financial targets; any material claims made against us, which could result in litigation; insolvency risks with parties with whom we do business; increased expenses of being a public company; the forward-looking statements contained in this presentation proving to be inaccurate and incorrect despite there being a reasonable basis therefor at the time they were made; and such other risks, uncertainties and other factors as may be discussed or set out from time-to-time in ShinyBud's public disclosure documents (including, without limitation, those risks identified in the Company's management's discussion and analysis filed by the Company with applicable securities regulatory authorities in Canada and available at www.sedar.com).

The foregoing lists of material assumptions and risks, uncertainties and other factors are not exhaustive.

The forward-looking statements contained herein in this speak only as of the date of this news release. The Company disclaims any intention, obligation or undertaking to update or revise any forward looking statements, whether as a result of new information, future events or otherwise, or to explain any difference between actual results and those indicated, suggested or anticipated in any forward looking statements, except as may be required under applicable securities laws.

All forward-looking statements contained in this news release and in any related reports or disclosures filed or issued by the Company, or made by the Company's directors, officers and other persons authorized to speak on its behalf regarding the subject matter hereof, are expressly qualified by this cautionary statement.

SOURCE ShinyBud Corp.

Kevin Reed, Chairman & CEO, P: [phone] | E: [email protected]; Caterina De Rosa, Senior Director, IR & Corporate Communications, P: 1-888-833-1260 | E: [email protected]