Company Announcements

TSXV: ESBL

VANCOUVER, BC , June 24, 2025 /CNW/ - Eshbal Functional Food Inc. (TSXV: ESBL) ("Eshbal" or the "Company"), a developer of gluten-free and health-focused food products, is pleased to announce key developments supporting its North American expansion strategy: the planned commercial launch of its U.S. produced gluten-free pita bread, and the asset acquisition of Swonder Bread, an Israeli-based bakery specializing in sprouted gluten-free sourdough products.

Gluten-Free Market Snapshot: North America Leading Global Demand

The global gluten-free products market was valued at approximately USD 7.75 billion in 2024 and is projected to reach over USD 13.67 billion by 2030, growing at a CAGR of 10.0%.¹North America continues to lead globally, accounting for 35.1% of total market revenue in 2024 and is expected to grow at a 9.3% CAGR through 2030.²

Within the category, baked goods are the dominant product segment, representing more than 31.5% of global gluten-free product sales in 2023, with further growth expected at a CAGR of 11.7% from 2032 to 2033.³ In North America, bakery products were also the largest and fastest-growing segment in 2024, led by increased consumer demand for alternatives that meet both health and lifestyle criteria.⁴

These trends are driven by increased awareness of celiac disease, gluten sensitivity, and broader lifestyle preferences. A growing number of consumers are seeking bakery products that replicate the taste and texture of traditional options, while also aligning with plant-based, clean-label, or reduced-carb dietary goals.⁵

Planned Launch of Locally Manufactured Flagship Gluten-Free Pita Bread in North America

Eshbal is preparing to locally manufacture its gluten-free Pita Bread in the North American market. The upcoming launch marks the first time the Pita Bread will be manufactured and distributed locally in the United States. For more than a decade, the Pita Bread has been produced and exported from Israel to a California-based restaurant group, which has provided consistent and positive feedback. Eshbal views this long-standing relationship as a strong indicator of product-market fit and future commercial potential.

The Pita Bread formulation is entirely plant-based and gluten-free, and was developed in alignment with publicly available ingredient standards used by leading health-focused retailers, to avoid substances commonly listed as non-compliant.⁶

The initial rollout of U.S. manufactured Pita Bread will be in frozen format to meet distributor requirements and ensure product integrity. In parallel, Eshbal is advancing development of an ambient, shelf-stable version that has, in testing, demonstrated several months of room-temperature shelf life. The Company believes this future format could enhance accessibility for retailers by reducing reliance on freezer space and streamlining logistics.

Acquisition of Swonder Bread: Expanding into Sprouted Sourdough

On June 15^th , Eshbal has completed the acquisition of the operations of Swonder Bread, an Israeli bakery specializing in sprouted-grain sourdough and vegan breads. The acquisition includes all core assets — including proprietary recipes, trademarks, client base, production equipment, and inventory.

Swonder's products are gluten-free, plant-based, and free from artificial additives. They are produced using a natural fermentation process combined with sprouted grains—a method known to enhance digestibility and nutritional value. These capabilities expand Eshbal's position in the clean-label and gut-health product space.

As consideration, Eshbal will pay approximately CAD $150,000 over three years for the acquired assets based on a Swonder product's revenue performance formula. The transaction is not considered material to Eshbal in terms of size, cost, or operational impact. It is an arm's length transaction, and no finder's fees were paid. To support a smooth transition, the founder of Swonder has agreed to sign a consulting agreement with Eshbal, which has a 36-month term, providing expert guidance on sourdough production, process integration, client onboarding, and marketing. The consulting agreement was signed on June 15^th.

Eshbal believes that Swonder's product line can be scaled with relative ease in the Israeli market given existing infrastructure and brand awareness. More importantly, the acquired IP and formulations are expected to serve as a foundation for potential future offerings in North America.

"From day one, M&A has been a key part of our strategy—and this transaction represents one of the many steps we intend to take," said Tomer Bar Meir, CEO of Eshbal. "Swonder Bread brings unique and hard-to-develop know-how that fits perfectly with our long-term goals. We see immediate opportunities to grow this business in Israel, and we believe the underlying technology offers exciting potential for future product development in North America as well"

About Eshbal Functional Food

Eshbal Functional Food Inc. is a developer and manufacturer of health-focused food and nutraceutical products. With extensive experience in food innovation, the company leverages proprietary R&D and specialized production technologies to deliver Gluten-Free, Vegan, Low-Carb, Sugar-Free, and supplement-based solutions across a range of categories — from baked goods and spreads to protein blends, cereals, and dietary supplements.

Eshbal caters to a diverse mix of industrial, foodservice, and retail clients in Israel and abroad, and is now actively scaling its presence across the North American market. This expansion follows the successful completion of a reverse takeover (RTO) with Hakken Capital Corp., through which Eshbal became a publicly listed company on the TSX Venture Exchange as of April 14, 2025.

Eshbal is committed to making a meaningful impact on personal wellness — offering better choices for those seeking nutritious, innovative, and accessible food solutions. The Company's mission is to help people lead healthier lives by rethinking everyday food through science, purpose, and passion.

To learn more, visit: https://EshbalFoods.com

Disclaimers: Neither the TSX Venture Exchange Inc., nor its Regulation Servicer provider accepts responsibility for the adequacy or accuracy of this release.

This press release contains "forward-looking statements" within the meaning of the securities laws. Words such as "expects,""anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions or variations of such words are intended to identify forward-looking statements. Forward-looking statementsare not historical facts, and are based upon management's current expectations, beliefs and projections, many of which, by their nature, are inherently uncertain. Such expectations, beliefs and projections are expressed in good faith. However, there can be no assurance that management's expectations, beliefs and projections will be achieved, and actual results may differ materially from what is expressed in or indicated by the forward-looking statements. Forward- looking statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the forward-looking statements. For a more detailed description of the risks and uncertainties affecting the Company, reference is made to the Company's reports filed from time to time at sedarplus.ca. Forward-looking statements speak only as of the date the statements are made. The Company assumes no obligation to update forward- looking statements to reflect actual results, subsequent events or circumstances, changes in assumptions or changes in other factors affecting forward-looking information except to the extent required by applicable securities laws. If the Company does update one or more forward-looking statements, no inference should be drawn that the Company will make additional updates with respect thereto or with respect to other forward-looking statements. References and links to websites have been provided as a convenience, and the information contained on such websites is not incorporated by reference into this press release. The Company is not responsible for the contents of third-party websites.

This press release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities described herein in the United States or elsewhere. These securities have not been, and will not be, registered in the United States Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States or to U.S. persons unless registered or exempt therefrom.