Auxly Closes $5 Million Inventory Loan

TORONTO – Auxly Cannabis Group Inc. (TSX: XLY) (OTCQB: CBWTF), a consumer packaged goods player in the cannabis sector, announced it has fully repaid its $5 million inventory loan to GrassHopper Capital Inc. This repayment, executed with existing cash reserves, is projected to yield annual interest expense savings of approximately $900,000.

The move reflects a strategic shift towards financial discipline and a strengthening balance sheet. Analysts note this development signals enhanced operational efficiency and improved cash flow management at Auxly. The company’s ability to retire this debt underscores the growing profitability within its operations, driven by expanding revenue streams and a controlled cost structure.

“We are extremely thankful for GrassHopper’s financial support and partnership over the past two years. Our business is growing profitably and is now in the position to strategically allocate capital. Our revenue is growing and our stable cost base is providing operating leverage to our profitability which is translating to free cash flow. We will continue to evaluate capital allocation decisions prioritizing organic growth investments and strengthening our balance sheet. In this case, solidifying our balance sheet and reducing interest expense was an obvious choice for deploying our excess cash,” stated Hugo Alves, Chief Executive Officer of Auxly.

The repayment allows Auxly greater flexibility in capital allocation, potentially freeing up resources for further investments in organic growth initiatives. This is particularly essential in the competitive cannabis market where innovation and market penetration are crucial for long-term success.

About Auxly Cannabis Group Inc.

Auxly is a Canadian consumer packaged goods company in the cannabis products market, headquartered in Toronto. It strives to help consumers live happier lives through quality cannabis products that they trust and love.

Auxly’s vision is to be a branded cannabis products leader, delivering consumer value in quality, safety and efficacy.

Learn more at www.auxly.com and stay up to date at Twitter: @AuxlyGroup; Instagram: @auxlygroup; Facebook: @auxlygroup; LinkedIn: company/auxlygroup/.

Notice Regarding Forward Looking Information:

This news release contains “forward‐looking information” as defined under Canadian securities law. These statements often include words such as “plan,” “continue,” “expect,” “project,” and other similar terms, conveying predictions about future events or conditions. Such information should be regarded only as a prediction. Several assumptions were used in making the projections included here. Forward‐looking information includes, but is not limited to: the proposed operation of Auxly, its subsidiaries and partners; the intention to grow the business, operations and existing and potential activities of Auxly; the Company’s execution of its innovative product development, commercialization strategy and expansion plans; the Company’s intention to introduce innovative new cannabis products to the market and the timing thereof; the Company’s plans for future capital allocation; the Company’s plans to improve or strengthen its balance sheet; the Company’s plans for future investments; the expectation, timing and quantum of future revenues; the relevance of Auxly’s subsidiaries’ current and proposed products with provincial purchasers and consumers; consumer preferences; political change; competition and other risks affecting the Company in particular and the cannabis industry generally.

A number of factors could cause actual results to differ materially from any conclusion, forecast, or projection contained in this release, including, but not limited to, whether: the Company will be able to execute on its business strategy or achieve its goals; Auxly’s subsidiaries are able to maintain the necessary governmental and regulatory authorizations to conduct business; the Company’s subsidiaries maintain all necessary governmental and regulatory permits and approvals for the operation of their facilities and the development of cannabis products; the Company will be able to successfully launch new product formats and enter into new markets; there is acceptance and demand for current and future Company products by consumers and provincial purchasers; the Company will be able to increase and maintain revenues; risks relating to the overall macroeconomic environment, which may impact customer spending, the Company’s costs and margins, including tariffs (and related retaliatory measures), the levels of inflation, and interest rates; and general economic, financial market, legislative, regulatory, competitive and political conditions in which the Company and its subsidiaries and partners operate will remain the same. Additional risk factors are disclosed in the annual information form of the Company for the financial year ended December 31, 2024 dated March 20, 2025.

New factors emerge from time to time, and it is not possible for management to predict all of those factors or to assess in advance the impact of each such factor on the Company’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward‐looking information. The forward‐looking information in this release is based on information currently available and what management believes are reasonable assumptions. Forward‐ looking information speaks only to such assumptions as of the date of this release. In addition, this release may contain forward‐looking information attributed to third party industry sources, the accuracy of which has not been verified by the Company. The forward‐looking information is being provided for the purposes of assisting the reader in understanding the Company’s financial performance, financial position and cash flows as at and for periods ended on certain dates and to present information about management’s current expectations and plans relating to the future, and the reader is cautioned that such forward‐ looking information may not be appropriate for any other purpose. Readers should not place undue reliance on forward‐looking information contained in this release.

The forward‐looking information contained in this release is expressly qualified by the foregoing cautionary statements and is made as of the date of this release. Except as may be required by applicable securities laws, the Company does not undertake any obligation to publicly update or revise any forward‐ looking information to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.

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