good natured Products Inc. Announces Acquisition of Illinois-based Ex-Tech Plastics Inc.

May 5, 2021 — (Vancouver, BC) good natured Products Inc. (the “Company” or “good natured^®”) (TSX-V: GDNP), a North American leader in earth-friendly plant-based products, today announced that, through wholly owned subsidiaries, it has entered into definitive agreements (the “Definitive Agreements”) to acquire all of the operating assets of Ex-Tech Plastics Inc. (“Ex-Tech”), a manufacturer of high quality, rigid plastic sheets, and real estate assets owned by a related company ETP Inc. for cash consideration of approximately $14.1 million USD (the “Acquisition”).

Founded in 1982, Ex-Tech is located 90 minutes from Chicago in Richmond, Illinois and produces a variety of plastic sheet and film products, including extruded roll stock sheet for thermoformed packaging. Ex-Tech operates seven different extrusion lines in a dedicated 75,000 square foot facility on 9.5 acres of land. Ex-Tech’s 105 customers serve a diverse set of end markets, including retail, food, and medical packaging. Customers are primarily located in the midwestern and southwestern United States.

“We are extremely pleased to build on our long-standing partnership with Ex-Tech that dates back well before March 2016 when we acquired Ex-Tech’s bioplastic division,” said Paul Antoniadis, CEO of good natured®. “The combined entity positions us as one of North America’s leading commercial sheet extruders, serving over 200 thermoforming packaging companies across North America. This acquisition firmly secures the Company’s market positioning within our industrial roll stock market segment, while setting the stage for future expansion in production and manufacturing capabilities.”

Paul Antoniadis, CEO of good natured® continued, “This acquisition will significantly add scale to our operations and follows the acquisition of IPF in December 2020. Ex-Tech’s FY2020 revenues were $25.8 million USD or approximately $33 million CAD, and when added with IPF’s trailing twelve month revenue of $17.1 million CAD and with our fiscal 2020 revenue of $16.7 million CAD, the Ex-Tech acquisition will nearly again double the revenue of good natured®. We expect to access cost synergies in terms of eliminating our existing outsourcing agreement and from our additional scale of operations. The Ex-Tech Acquisition represents good natured® third acquisition in the last 12-months and demonstrates our team’s capability in executing on our acquisition growth strategy.”

“We have witnessed firsthand, over the past several years, the tremendous growth we’ve achieved with good natured® and also benefited as material owners of good natured®,” said Emily Pichon, Chair and majority owner of Ex-Tech. “We believe now is the perfect time for the two companies to fully integrate. Given the significant growing demand for environmentally responsible materials and the greater scale and influence we can achieve together, combining forces creates tremendous value in our industry, as well as for all of us as owners. Our family believes in the strategy and business model of good natured® and intends to hold our approximately 5 million shares in good natured®.”

Key Highlights of the Acquisition:

• Ex-Tech generated revenue of approximately $25.8 million USD and net income of approximately $1.5 million USD in the calendar year ended December 2020 (or “FY2020”)
• Ex-Tech generated unaudited variable gross margin rate of approximately 30% and gross margin rate of approximately 21% in FY2020
• Adds 105 business-to-business (“B2B”) customers, growing the Company’s B2B segment to a total of approximately 600 customers
• Adds between $11.0 and $13.0 million USD (unaudited) of total assets to the Company’s balance sheet
• Ex-Tech delivered FY2020 EBITDA2> of approximately $2.6 million USD
• The current management team operating Ex-Tech will be joining the good natured® team
• Highly strategic and synergistic acquisition that is expected to be immediately accretive to shareholders on an adjusted EBITDA basis
• Expected to provide synergies of approximately $1.0 to $1.2 million USD in the twelve months following the close of the acquisition
• $3.25 million USD in net working capital acquired at closing
• Includes real estate with a current appraised value of approximately $4.25 million USD, resulting in a net price for the business and operating assets of $9.87 million USD
• The Company will begin accounting for 100% revenue and financial results from the acquired Ex-Tech business concurrent with closing which is expected later in May 2021

Key Strategic Highlights:

• Capacity to produce compostable (“PLA”) and plant-based PET (“Bio-PET”) roll stock to support organic growth and conversion of existing and future petroleum-based acquisition targets
• Significant potential for capacity and / or manufacturing capability expansion, with available land to add a 40,000 square feet facility and infrastructure at the existing facility in place to support additional extrusion and or thermoforming production lines, along with warehousing
• Minor customer overlap between Ex-Tech and Integrated Packaging Films that was acquired in December 2020, with the potential to open additional cross-selling opportunities
• Centrally located just 90 minutes outside of Chicago in Richmond, Illinois along major shipping corridors to provide easy access across much of the United States
• Ex-Tech’s facility includes 42 million pounds of annual production capacity on an annual basis and growth potential to approximately 60 million pounds with the addition of one standard high speed extrusion production line for which there is space and infrastructure available
• Opportunity to divest books of business that are not compatible for material transition to plant-based materials to support re-investment

Financing Details

The Company anticipates arranging the following financing to complete the Acquisition and related integration costs:

• $5.0 million USD term loan from a Canadian financial institution
• $2.8 million USD mortgage with a US regional bank to support the acquisition of the real estate at Ex-Tech
• $6.3 million USD in cash from the Company’s treasury

The financing above may be put in place prior to, or following the closing of the Acquisition. The Company may complete the Acquisition with cash from treasury if circumstances warrant. The Acquisition is subject to customary closing conditions, including TSX Venture Exchange approval.

Term Loan

The Company is in the process of negotiating a $5.0 million USD term loan from an independent Canadian financial institution at competitive market terms.

Debt Financing Facilities from US Regional Bank

The Company is in discussions with a US regional bank to provide a $2.9 million USD mortgage to support the real estate at Ex-Tech. The financing is subject to negotiating and settling final documentation with the bank.

Further Details on the Acquisition

The Acquisition is an arms’ length transaction. The Definitive Agreement was signed on May 4, 2021 and includes an outside date for closing of June 30, 2021 (the “Outside Date”), subject to extension by mutual consent of the parties.

Acquisition Conference Call

To provide more details on the Acquisition and related financings, the Company is pleased to host a conference call with Paul Antoniadis, Executive Chair & CEO, and Don Holmstrom, Executive Vice President of Corporate Development, Strategic Partnerships and Capital Planning, on May 5, 2021 at 12:00 PM Eastern / 9:00 AM Pacific time.

Date: May 5, 2021

Time: 12:00 PM EST / 9:00 AM PST

Toll-Free: 1-833-900-2239 International: +1 (236) 712-2470

Conference ID: 3051738

Participants are asked to dial in 10 minutes prior to the start of the call.

A replay of the call will be available approximately two hours after its completion through to May 19, 2021. The replay will be available by dialing 1-800-585-8367 or +1 (416) 621-4642.

The good natured® corporate profile can be found at: investor.goodnaturedproducts.com

About good natured Products Inc.

good natured® is passionately pursuing its goal of becoming North America’s leading earth-friendly product company by offering the broadest assortment of eco-friendly options made from plants instead of petroleum. We’re all about making it easy and affordable for business owners and consumers to switch to better everyday products® made from renewable materials and free from chemicals of concern.

Part of the sustainable consumer goods market, good natured® offers over 385 products and services through wholesale and retail channels, including our own e-commerce stores. From plant-based home organization products to compostable food containers, bioplastic industrial supplies and medical packaging, we’re focused on delivering a great customer experience to make more plant-based products readily accessible to more people as the path to deliver meaningful environmental and social impact.

For more information: goodnaturedproducts.com

On behalf of the Company:
Paul Antoniadis – Executive Chair & CEO
Contact: 1-604-566-8466

Investor Contact:
Spencer Churchill
Investor Relations
1-877-286-0617 ext. 113
invest@goodnaturedproducts.com

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibilities for the adequacy or accuracy of this release.

Non-IFRS financial measures

We have included in this press release certain non-IFRS measures that are used to evaluate the performance of Ex-Tech, including adjusted EBITDA. As non-IFRS measures generally do not have a standardized meaning, they may not be comparable to similar measures presented by other issuers. Adjusted EBITDA does not have a generally accepted industry definition.

Cautionary Statement Regarding Forward-Looking Information

This press release contains “forward-looking statements” within the meaning of applicable securities laws. Forward-looking statements can be identified by words such as: ”anticipate,” “intend,” “plan,” “budget,” “believe,” “project,” “estimate,” “expect,” “scheduled,” “forecast,” “strategy,” “future,” “likely,” “may,” “to be,” “could,”, “would,” “should,” “will” and similar references to future periods or the negative or comparable terminology, as well as terms usually used in the future and the conditional. Examples of forward-looking statements include, among others, the expected closing of the Acquisition, the availability of debt and equity financing for the Acquisition, statements regarding the Acquisition, and the projected impact of completion of the Acquisition on the Company’s business, financial conditions and results.

By their nature, forward-looking statements involve known and unknown risks, uncertainties, changes in circumstances and other factors that are difficult to predict and many of which are outside of the Company’s control which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on the Company’s current beliefs, expectations and assumptions regarding the future of its business, future plans and strategies, projections, anticipated events and trends, general market conditions, the economy and other future conditions. The Company’s actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause actual results and financial conditions to differ materially from those indicated in the forward-looking statements include, among others:

• The risk that the closing conditions for completion of the Acquisition are not satisfied, including due to lack of financing.
• Risks relating to general economic, market and business conditions.
• Unforeseen delays in the timelines for any of the transactions or events described in this press release.

The Company considers its assumptions to be reasonable based on currently available information, but cautions the reader that Its assumptions regarding future events, many of which are beyond the control of the Company, may ultimately prove to be incorrect since they are subject to risks and uncertainties that affect the Company and its businesses. When relying on the Company’s forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company has assumed that the material factors referred to above will not cause such forward-looking statements and information to differ materially from actual results or events. However, there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.

Other than as required under securities laws, the Company does not undertake to update this information at any particular time.

Forward-looking statements contained in this news release are based on the Company’s current estimates, expectations and projections regarding, among other things, sales volume and pricing which it believes are reasonable as of the current date. The reader should not place undue importance on forward-looking statements and should not rely upon these statements as of any other date. All forward-looking statements contained in this news release are expressly qualified in their entirety by this cautionary statement.

Variable gross margin is a non-IFRS measure and represents gross margin excluding fixed production costs such as depreciation, repairs and maintenance, utilities and similar overhead items”

2> EBITDA is a non- IFRS financial measure and does not have any standardized meaning prescribed by IFRS-IASB. See ‘Non- IFRS financial measures’ in this news release.