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Second Cup reports 2Q results and details of strategic initiatives for growth

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MISSISSAUGA, ON, Canada – The Second Cup Ltd. (“Second Cup” or the “Company”) (TSX: SCU) today reported financial results for the second quarter ended June 29, 2019. EBITDA, after adjusting for non-recurring items, was $617,000 in the quarter compared with $559,000 last year. Net Loss was $134,000 or $0.01 per share after adjusting for non-recurring items and the non-cash loss due to a reduction in value of the National Access Cannabis (NAC) warrants offset by the amortized income related to the NAC alliance.

Efforts to protect Second Cup brand standards resulted in more corporate cafés than originally planned, negatively impacting the quarter. The Company is focused on delivering an elevated experience across the network and franchising corporate locations to strong operators who can best deliver on the desired brand experience.

Steven Pelton, who assumed the role of President & CEO of Second Cup in June, said, “The insights I have gained over the past two months have confirmed my belief in the growth potential of our business. My focus is to build shareholder value through three key strategies that are already underway – strategic acquisitions, further pursuit of retail cannabis opportunities and accelerating Second Cup’s brand growth primarily through development in non-traditional channels.”

The Company has previously disclosed that it is pursuing strategic initiatives to enhance shareholder value. With a healthy balance sheet and capital to invest, Second Cup is actively engaged in potential acquisitions of coffee and food brands that are strategically and culturally aligned with the Second Cup business.

Second Cup has taken a more active role in the process of procuring the license to operate cannabis retail stores in two of its locations in Calgary. Concurrently, the Company will more aggressively pursue new retail cannabis opportunities in future rounds of licensing in the Ontario region where the brand has its largest footprint.

Expanding the network is key to Second Cup’s growth and non-traditional locations have historically been some of the strongest performers including education, healthcare, and transportation centres. Second Cup’s position as the largest Canadian-owned, national specialty coffee brand makes it particularly attractive to these institutions.

Market tests in new non-traditional venues are underway and greater focus will be placed on expanding this channel.

Effective August 1, 2019, Melinda Lee will be assisting management with strategic acquisitions under a consulting arrangement and as a result is stepping down as Audit Committee Chairman and committee member. Also effective August 1, 2019, Paul W. Phelan has resigned from the Board of Directors. Simultaneously, Stephen Kelley has succeeded Mr. Phelan as a member of the Board and has assumed the role of Chairman of the Audit Committee.