SIMPLY SOLVENTLESS ANNOUNCES CLOSING OF HIGHLY ACCRETIVE DELTA 9 BIO-TECH ACQUISITION, DELTA 9 BIO-TECH NAME CHANGE TO HUMBLE GROW CO., AND OFFICER APPOINTMENT

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CALGARY, AB, Feb. 28, 2025 /CNW/ - Simply Solventless Concentrates Ltd. (TSXV: HASH) (OTC: SSCLCF) ("SSC") is pleased to announce that it has closed the previously announced acquisition of all the outstanding shares of Delta 9 Bio-Tech Inc. ("Bio-Tech") from Delta 9 Cannabis Inc. ("Delta 9") through a share purchase agreement ("SPA") (the "Acquisition"). SSC is also pleased to announce that it has changed Bio-Tech's corporate name to Humble Grow Co. ("Humble").

Jeff Swainson, President and CEO of SSC stated: "The closing of the Bio-Tech Acquisition and subsequent rebranding to Humble Grow Co. marks a significant milestone for SSC, and we thank all parties involved. SSC has world class processing capabilities in prerolls, vapes, and concentrates, and we now own a lean, profitable, complimentary cultivation asset that produces high-quality, internationally exportable flower for among the lowest per gram indoor cultivation costs in Canada. The operational integration of Bio-Tech is largely complete, and looking forward, we will focus on expanding Humble revenue while we continue to execute our highly impactful business plan focused on organic revenue growth and opportunistic acquisitions."

About Bio-Tech (Rebranded to Humble Grow Co.)

Bio-Tech operates a 98,000 square foot GACP certified cannabis cultivation facility in Winnipeg, Manitoba (the "Facility"), with an annual cultivation capacity of approximately 8,000-9,000kg of dried cannabis flower and trim. Bio-Tech services the recreational dried flower markets in Ontario, Alberta, Manitoba, Saskatchewan, British Columbia, and the Maritimes, and the business-to-business wholesale market in Canada and internationally.

Details of the Acquisition

Pursuant to the order of the King's Bench of Alberta (the "Court") issued July 15, 2024 (as amended and restated from time to time), Delta 9 and Bio-Tech, among other entities, collectively, commenced proceedings under the Companies' Creditors Arrangement Act (the "CCAA"). On July 24, 2024, Bio-Tech entered a court granted sale and investment solicitation process for the business and/or assets of Bio-Tech. On January 29, 2025, the Court approved the reverse vesting order (the "Order") providing for the Acquisition.

SSC acquired all the issued and outstanding shares of Bio-Tech for cash consideration of $3,000,000 ($nil net of approximately $3.0 million of working capital received, including $2.5 million of inventory and WIP and $0.5 million of accounts receivable), pursuant to the SPA and the Order. A cash deposit of $0.75 million was paid on January 2, 2025 with the balance of $2.25 million paid on closing of the Acquisition. In connection with the Acquisition, SSC entered into a lease agreement on closing in respect of the Bio-Tech facility with an arms-length party for a 10-year term with renewal options.

Valuation Metrics of Acquisition

• Adjusted EBITDA Multiple: 1.2x estimated annual adjusted EBITDA (0.0x excluding net working capital received) when using post integration EBITDA estimated to be $2,500,000/year. Adjusted EBITDA is a non-IFRS measure, please see "Non-IFRS Financial Measures" below.

Key Benefits and Synergies

Key benefits and synergies of the Acquisition are as follows:

• Vertically integrating upstream with cultivation was a core SSC strategic mandate for the following reasons:
  • In the opinion of SSC, the supply demand dynamic is balancing in the Canadian wholesale cannabis marketplace, making it more difficult to procure the inputs that SSC requires. The Acquisition secures a supply of high-quality flower and trim for use in SSC's prerolls and in the manufacturing of concentrates and hash;
  • SSC's demand for dried flower has increased substantially due to the acquisition of leading preroll manufacturer ANC Inc. ("ANC") in the fourth quarter of 2024; and
  • SSC desires to participate in the dried flower product category which holds a 40% market share in Canada (according to Headset data).
• Low Cultivation Costs: Upon capture of anticipated synergies, it is expected that the all-in cash cost of cultivation will be approximately $0.50-$0.70 per gram, among the lowest for indoor cannabis cultivation in Canada.
• No Liabilities: Pursuant to the Order, Bio-Tech has no liabilities upon closing of the Acquisition.
• Tax Pools: Bio-Tech has approximately $60 million of accrued non-capital loss tax pools which may be available to reduce future taxable income by up to $12 million at an effective tax rate of 20%.
• International Exposure: The Facility is GACP certified, allowing for the export of dried flower to international markets, which currently attracts higher selling prices.
• Prerolling: Bio-Tech sells regular and infused prerolls in numerous markets. SSC's subsidiary ANC will bring this manufacturing in-house, maximizing efficiency and cost savings.
• Vapes: Bio-Tech sells vape cartridges in numerous markets utilizing outsourced vape manufacturing. SSC will bring this vape manufacturing in-house to its Massive Hash Factory Ltd. facility, reducing production costs.
• Inventory Velocity: Bio-Tech sells several products that SSC currently manufactures, including hash, which will help maximize inventory turnover.
• Facility Cost Savings: SSC will be able to rationalize the activities performed at its various facilities, reducing fixed operating costs by approximately $750,000 annually once rationalized (prior to the estimated post integration adjusted EBITDA figure of $2,500,000).
• Cost Synergies: Rationalization of Bio-Tech corporate costs, including public company compliance and governance, accounting, IT, and HR will result in substantial cost savings.

Bio-Tech Financial Figures and Preliminary Proforma

Bio-Tech financial figures and preliminary projected proforma are as follows:

• Bio-Tech Production: Bio-Tech is currently producing approximately 8,000-9,000kg per year of high-quality cannabis. It is believed that production can be increased to 15,000-18,000kg per year with approximately $4.0 million of capital investment, which is not planned at this time.
• Bio-Tech Revenue: Bio-Tech is expected to generate approximately $12.0 million of annualized gross revenue (adding approximately $0.11 per outstanding common share), which would represent an increase of approximately 20-25% from current SSC levels. It is believed that the current average selling price per gram of $1.11/g can be increased through international export and through other initiatives.
• Bio-Tech Adjusted EBITDA: After capturing synergies, Bio-Tech is expected to generate approximately $2.5 million of annualized adjusted EBITDA (adding approximately $0.02 per outstanding common share), which would represent an increase of approximately 20-25% from current SSC levels.

SSC believes that Bio-Tech will immediately contribute meaningfully to further expanded revenue and adjusted EBITDA.

SSC will provide Q1 2025 guidance, which will reflect approximately one month of Bio-Tech sales, in the coming weeks. 

Bio-Tech Name Change to Humble Grow Co.

The corporate name of Bio-Tech has been changed to Humble Grow Co.

Appointment of James Clarke as Vice President, Corporate Services of SSC

SSC is pleased to announce that it has appointed James Clarke to the position of Vice President, Corporate Services. James currently serves as Chief Operating Officer of ANC, a wholly owned subsidiary of SSC. James is a detail-oriented professional with a strong passion for electronics and technology. James developed a diverse skill set and a wealth of knowledge over 14 years in the oilfield industry, and over five years in cannabis. As a founder of ANC, James demonstrated exceptional leadership and versatility by successfully completing all necessary tasks to get the company up and running. Known for a meticulous approach and a love for innovation, James consistently delivers high-quality work and is always eager to explore new technologies to solve complex problems.

Option Grant

SSC has granted 2,715,000 stock options to directors, officers, and employees of SSC and Bio-Tech (now Humble) at an exercise price of $0.63. The options vest as to 1/3 on the grant date, 1/3 on the first anniversary of the grant date and 1/3 on the second anniversary of the grant date and expire after five years.

SSC does not have plans to issue DSUs, PSUs or RSUs under its equity incentive plan for 2025.

About Simply Solventless Concentrates Ltd.

SSC is a public company incorporated under the Business Corporations Act (Alberta). SSC's mission is to provide pure, potent, terpene-rich ready to consume cannabis products to discerning cannabis consumers.

For more information regarding SSC, please see www.simplysolventless.ca.

Third-Party Information

All third-party information contained herein, including information regarding Bio-Tech which has been provided by management of Bio-Tech, has not been independently verified by SSC. While SSC believes such information to be reliable, SSC makes no representation or warranty as to the accuracy of such information.

Notice on Forward Looking Information

This press release contains forward-looking statements and forward-looking information (collectively, "forward-looking statements") within the meaning of applicable securities laws. Any statements that are contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as "may", "should", "anticipate", "will", "estimates", "believes", "intends", "expects", "projected", "approximately" and similar expressions which are intended to identify forward-looking statements. More particularly and without limitation, this press release contains forward looking statements concerning the benefits of the Acquisition, financial projections and synergies of the Acquisition, tax pools of Bio-Tech, SSC's focus on expanding Humble's revenue, the ability to expand the Facility's production with capital investment, SSC's plans to not issue DSUs, PSUs and RSUs in 2025, capitalizing on SSC's business plan and SSC's results of operations and performance. SSC cautions that all forward-looking statements are inherently uncertain, and that actual performance may be affected by a number of material risks, factors, assumptions and expectations, many of which are beyond the control of SSC, including expectations and assumptions concerning SSC, the ability to realize expected revenue and cost synergies of the Acquisition on the timelines expected, the risk that the businesses will not be integrated successfully, the ability to maintain relationships with customers, employees and suppliers, the timing and market acceptance of products, competition in SSC's markets, SSC's reliance on customers, fluctuations in interest rates, SSC's ability to maintain good relations with its customers, employees and other stakeholders, changes in law or regulations, SSC's ability to protect its intellectual property, as well as other risks and uncertainties, including those described in SSC's filings available on SEDAR+ at www.sedarplus.ca. The reader is cautioned that assumptions used in the preparation of any forward-looking statements may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted as a result of numerous known and unknown risks, uncertainties and other factors, many of which are beyond the control of SSC. The reader is cautioned not to place undue reliance on any forward-looking statements. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

The forward-looking statements contained in this press release are made as of the date of this press release, and SSC does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by securities law.

Future Oriented Financial Information

This press release contains future-oriented financial information and financial outlook information (collectively, "FOFI") about adjusted EBITDA, gross revenue and operating costs of SSC and/or Humble, which are subject to the same assumptions, risk factors, limitations and qualifications as set forth in the above paragraphs. FOFI contained in this document was approved by management as of the date of this document and was provided for the purpose of providing further information about SSC's future business operations. SSC and its management believe that FOFI has been prepared on a reasonable basis, reflecting management's best estimates and judgments, and represent, to the best of management's knowledge and opinion, SSC's expected course of action. However, because this information is highly subjective, it should not be relied on as necessarily indicative of future results. SSC disclaims any intention or obligation to update or revise any FOFI contained in this document, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law. Readers are cautioned that the FOFI contained in this document should not be used for purposes other than for which it is disclosed herein. Differences in the timing of capital expenditures or revenues and variances in production estimates can have a significant impact on the key performance measures included in SSC's guidance. SSC's actual results may differ materially from these estimates.

Non-IFRS Financial Measures

This press release includes references to "adjusted EBITDA" which is not defined under International Financial Reporting Standards (IFRS). The intent of this non-IFRS measure is to provide additional useful information to investors and analysts. The non-IFRS measure does not have standardized meanings prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other entities. As such, the non-IFRS measure should not be considered in isolation or used as a substitute for measures of performance prepared in accordance with IFRS.

Adjusted EBITDA is calculated as income before interest, taxes, depreciation and amortization expenses. Adjusted EBITDA is considered as a useful measure by management of SSC to understand profitability excluding the effects of capital structure, taxation and depreciation, but may not be appropriate for other purposes. Adjusted EBITDA is not defined under IFRS and therefore should not be considered an alternative to, or more meaningful than, income (loss) and comprehensive income (loss).

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction.

Neither 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.

SOURCE Simply Solventless Concentrates Ltd.

Simply Solventless Concentrates Ltd., Jeff Swainson, President and CEO, Phone: [phone], Email: [email protected]