Rooted in People. Cultivating Change

TSX-V:ENTG • OTCQX:ETRGF • FSE:4WE

As we welcome in a new year, I’m pleased to recap some of the key highlights that made the last 12 months a standout year for the Entourage team and to preview what is coming in 2022. In addition to embarking on a corporate rebrand, we fully realized the benefits of our business transformation that resulted in four consecutive quarters of exceptional growth with expanded market share across all our channels. Our focus in 2022 will be continuing to bring premium products to market from our enhanced cultivation platform that is now primarily centred around craft cannabis production.

We already have a proven track record and the right team in place to get us there. While many of our peers reported declines in sales, stagnated growth, and major losses – we managed to hit, and in fact exceed, many of our targets. The most recent retail data shows that Entourage experienced major growth in the premium flower and pre-roll market segments in 2021, representing a 535% sales increase over prior year, with a 2.1% market share (Ref: Hifyre Data as of Dec. 31, 2021, published Jan. 2022). Our Color Cannabis brand was a top 10 performer in terms of retail growth in 2021 up 66% over prior year (Ref: Buddi Data, Jan 5, 2022). Additionally, we established operational efficiencies that resulted in our team achieving 100% production fill rates, garnering recognition from numerous provinces including Ontario, Alberta and BC. Why is this important? Being a consistent performer means increased brand penetration with retailers and consumers– retailers are stocking our products and consumers are buying more of our products rooted in quality flower. This also ultimately provides retailers and Entourage with data for top selling SKUs and new product formats. This recognition also helps us engage with new strategic partners as we look for new revenue growth opportunities to put us firmly on our path to profitability.

In fact, Entourage reported four consecutive quarters of record growth from Q4 2020 to Q3 2021 (with Q4, 2021 expected to be reported in spring 2022). In addition to finalizing the strategic acquisition of craft cultivator CannTx Life Sciences and further upgrading our cultivation platform in the process, we established key partnerships that we fully expect will further propel our business and industry forward in 2022, most notably:

Partnered with Boston Beer Company and Althea's Peak Processing to provide cannabinoid-rich input biomass to formulate, manufacture, and distribute non-alcoholic cannabis beverage products in Canada. This opens opportunities for the company to enter a new consumer vertical and reach a much wider audience of consumers seeking non-alcoholic and alternate consumption methods.

Commercial arrangement with leading Canadian retailer Fire & Flower Inc., to produce its private-label Revity CBD Softgel products.

In partnership with local Quebec producer ROSE LifeScience, extended our Color Cannabis and Saturday Cannabis portfolio of products in the province. Brands are now available for purchase via Société québécoise du cannabis (SQDC) and local retailers which is one of the fastest growing markets in Canada.

Signed a commercial agreement with Olli Brands to produce line of soft-chews available exclusively to our Starseed patients which launched in December to great acclaim.

Commercial highlights included the introduction of over 40 product SKUs for our captive medical patients via Starseed Medicinal which included new genetics, cannabis-infused balms, transdermal patches, soft chews, etc. (read more below); expansion into over 1,100 retail stores across Canada and our pre-roll, flower and vape products landing as top performers in key markets such as BC, Alberta and Ontario (see below for more).

We have an established presence in the cannabis industry, a strong experienced national sales team, and a reputation for consistently delivering award-winning brands from our Color Cannabis, Saturday Cannabis, Royal City Cannabis Co., and Starseed Medicinal product portfolios.

I want to thank our employees, customers, business partners and shareholders for their continued support and contributions to our success over the past year. Together, we have accomplished so much and with the fundamentals we’ve established, I know we’ll continue to make more progress in 2022. By introducing new genetics for high-margin products, we expect to drive further commercial growth this year as we project healthy growth in all channels.

More importantly, our most trusted partner and strategic investor recently showed it continues to support our strategic goals and shared vision by adding an additional $20 million in non-dilutive financing to our credit facility.

In short, we are making steady progress as demonstrated in our commercial success and strong revenue performance, which has strengthened our overall financial footing. I’m proud to be leading this talented team and look forward to sharing more about our continued market share expansion and how this is rapidly translating into our product lines becoming established names in the cannabis market.

On behalf of the Entourage team, here’s wishing you a healthy, prosperous and Happy New Year.

George Scorsis,
Interim CEO & Executive Chairman

We Are Entourage

Recent Financial Results & Funding

With our most recent quarterly results coming in at a total revenue of $14.9 million, Q3 represented another record quarter of growth for the Entourage team. This was achieved through our robust sales strategy, increased distribution channels, and expanded product portfolio in our retail and medical markets. In addition to strong commercial success, on December 24, 2021, we announced an amendment to our existing credit facility with our strategic partner and investor LiUNA Pension Fund (“LPF”), adding an additional $20M in non-dilutive financing.

The recent credit facility we closed with LPF continues to have the option, at the Company’s discretion, to capitalize interest in lieu of cash payments of interest, thus providing the Entourage with a strengthened liquidity position. This, coupled with our senior secured debt rates priced at market, and having recently deferred certain financial covenants, gives us the ability to support additional working capital to drive sales and pursue targeted growth initiatives.

With the recent addition of craft brand Royal City Cannabis Co. to our portfolio, we are moving ahead with offering craft cultivars, new genetics, new products such as iced-hash, as well as production of vapes, pre-roll and flower products across all our brands. We are elevating our cultivation program to align with processes at our Guelph craft cultivation site. As noted recently by our newly appointed Head of Cultivation Patrick Scanlon, tissue culture IP will be at the heart of Entourage's horticulture framework. Developing a precision agriculture approach, focusing on "Plant Empowerment," by promoting genetic integrity for the growth of prolific plants, which will result in higher potency cannabinoid and terpene rich products.

Our balanced approach is already seeing benefits with these exciting new genetics for highly sought premium flower products coming in 2022 across all our commercial channels.

We're doing something right as our products continued to be well received in 2021. Big thanks to our Commercial Team (Adult-Use Sales Team pictured here) out there as our road warriors across Canada, making sure our products are consistently listed and selling in captive markets.

Likewise, our Medical Team –committed professionals that advocate for our patients and benefits providers, ensuring our product innovations and alternate consumption methods always make their way first into our medical channels. Our priority is and always will be our medical patients who now have over 40 SKUs available on our online platform.

We are excited to see that many of our products were featured in the OCS 2021 Gift Guide including; Color Mango Haze Live Resin Cartridge, Color Mango Haze 10 Pack Pre-Rolls, Royal City RC Oz Cola Royal Goddess, and Royal City Hash (Mango Haze & Moonfire Crescent).