Buddy Technologies Limited provide an update on a major retail partner and the launch of presales for the first new LIFX product released in 2022. Best Buy Vendor Partner Agreement: Every year, the Company completes an annual business and contract review with Best Buy U.S., whereby all aspects of the relationship between the two businesses are reviewed and considered for the coming year. The Company advised that having just completed this review, Best Buy and Buddy have agreed to enter into a new vendor program agreement ("VPA") for 2022, with several adjustments to better address the changing retail environment in 2022, and with the intention to further grow sales across the U.S. The new VPA reduces hard-dollar spend (minimum committed spend, which is predominantly the cost of "renting" shelf space in stores) by 45% in 2022, in line with an increasing customer focus on online purchasing (bestbuy.com) and curbside pickup.

This reduction in spend frees up a balance of funds which can now be re-allocated towards strategic marketing and promotion efforts to grow sales. Furthermore, Best Buy has agreed to provide a doubling of guaranteed ad placements (10 per year, vs. 5 per year previously) on bestbuy.com and in large- scale email distributions.

No other material terms have changed from prior VPAs, and as with prior VPAs, there is no minimum required amount of product to be sold. Negotiation of the new VPA was conducted as the Company saw steady and improving increases on sell-through rates at Best Buy since the start of the calendar year. For context, year over year unit sell-through across all products has grown month on month, averaging 30% up for January and 88% in February 2022 (over the corresponding periods in 2021).

This reflects a gentle strengthening of the retail environment for smart home products post- pandemic closures, as well as an improved inventory position and more favourable pricing (which, given the Company's investments in reducing its supply chain costs, has resulted in improved margins year over year). At this stage, no further retail agreements have been renegotiated. A key component of the Company's efforts to increase margins, grow revenue and reach new customers outside of the traditional consumer electronics retail channels, is the new LIFX Downlight.

Further to prior guidance (refer to the ASX announcement dated 31 January 2022), the Company is delighted to announce the launch of its first new product for 2022 - the LIFX Downlight U.S. LIFX has not previously sold a downlight fixture in the U.S. (most downlights in the North American market are "can lights" into which a BR30 bulb is fitted), but with the evolution of the market and customer demand shifts, there has never been a better time to introduce such a product to the American market. Since downlights are rarely purchased individually, LIFX Downlight will be sold in 2-packs and will be competitively priced. LIFX Downlight is brighter, less expensive and has better colour rendering index ("CRI" - a measure of a light to reveal the colours of objects it illuminates) than its closest competitor from the market leader, and is eagerly anticipated by the Company's retail partners in the U.S. LIFX Downlight will ship with support for both 5" and 6" downlight cavities, making it ideal for retrofit and renovation applications.

Like all LIFX lights, it integrates natively with LIFX Switch, supports all popular voice assistants, works using Wi-Fi and doesn't require a hub, and can be self-installed in minutes. LIFX Downlight has passed all regulatory certifications and is expected to ship in third quarter of 2022, with retail assortment to follow. Best Buy is expected to be the retail launch partner for LIFX Downlight in the U.S. market, however, following retail launch by Best Buy, LIFX Downlight will be made available to, and is expected to be sold in, all major North American retail channels.

While the LIFX 100mm Colour Downlight has been a top seller in the Australian/NZ market, a new mid-tier downlight product - a local version of this U.S. LIFX Downlight - is expected to launch next quarter.