Accretive Transaction Adds High-Margin Revenues and Award-Winning Brands

Foundational Asset in AUSA’s Multi-State Footprint

Acquisition Agreement Includes Resolution of Litigation by Unwinding Original Transaction

LAS VEGAS

,

March 12, 2021

/PRNewswire/ – Australis Capital Inc. (CSE: AUSA) (OTC: AUSAF) (“AUSA” or the “Company”) today announced that, further to the Company’s press release of

January 5, 2021

, AUSA has entered into a definitive agreement on

March 11, 2021

with, among others, Green Therapeutics LLC (“GT”) and the holders of the issued and outstanding membership interests of GT concerning the acquisition of GT.

The transaction will be completed in two parts, the first being the acquisition of a subsidiary of GT (the “Subsidiary”) containing a number of unregulated assets including the GT brands and certain ancillary agreements including brand licensing and management agreements. Subsequently, subject to regulatory approval, the Company will complete the acquisition of GT itself (the “Subsequent Closing”). In conjunction with, and as a condition to the completion of the acquisition of the Subsidiary (the “Initial Closing”), the parties have agreed to settle a previously announced legal dispute which will be formally discharged contemporaneously with the Initial Closing, expected later this month.

Green Therapeutics

GT is an award-winning,

Nevada

-based cannabis company with a strong brand portfolio of high-end dried flower and designer/luxury derivative products. GT was co-founded by former MedMen President Dr.

Duke Fu

and is led by a strong team of medical professionals and pharmaceutical manufacturing experts. GT’s team has a strong execution track record with several company exits and an acquisition by a Fortune 500 corporation.

Transaction Highlights

• 
  Accretive:
  
  The transaction, when completed, will be immediately accretive to AUSA results. While
  
  Nevada
  
  state regulations require prior approval of any transfer of an interest in a cannabis establishment or license, the timing of which the Company has no control over, AUSA anticipates recognizing high-margin revenue through aforementioned brand licensing and management agreements. Further revenue acceleration is expected upon the full transfer of the interest in the
  
  Nevada
  
  licenses.
• 
  Foundation for MSO expansion
  
  : GT, through its products, brands and multi state operations is anticipated to be a foundational element in AUSA’s expansion strategy aimed at scaling up its footprint across multiple U.S. jurisdictions.
• 
  Cultivation & manufacturing
  
  : With the proposed acquisition comes an 8,000 sqft cultivation and manufacturing facility, as well as a management and brand licensing agreement with an entity in
  
  Oklahoma
  
  owned by Dr.
  
  Duke Fu
  
  and licensed for extraction and processing, and a brand licensing agreement with an entity in
  
  Missouri
  
  owned in part by Dr.
  
  Duke Fu
  
  , which is completing a process to obtain a license for extraction and processing. The Company will also have the right to acquire an interest in the
  
  Oklahoma
  
  entity when permitted at law. Once the license is granted for the
  
  Missouri
  
  entity, the Company will work with Duke to secure an equity interest subject to regulatory approval.
• 
  Award winning brands & genetics
  
  :
• The GT product portfolio has won multiple highly coveted industry awards, including the High Times Cup, Patient Choice and the Jack Herer Cup.
• GT currently produces three brands:
• GT Flowers: high-end flowers
• Tsunami
  
  ^TM
  
  : a collection of hydrocarbon extraction-based luxury products, such as live resins
• Provisions
  
  ^TM
  
  : a line of distillate-based designer products, such as accurate dosing oral spray.
• High-end genetics with multiple +30% THC, High THC-V, and CBG cultivars, achieving premium pricing.
• 
  ALPS Synergies:
  
  Through the Company’s acquisition of ALPS, GT will be, management believes, in a position to scale up its brands across multiple jurisdictions by virtue of novel streaming agreements with ALPS customers.
• 
  Multi-State assets:
  
  It is anticipated that drop-ship cultivation, extraction and manufacturing capabilities will allow for capital-light expansion in
  
  Oklahoma
  
  and
  
  Missouri
  
  as well as in other markets into which AUSA intends to expand.
• 
  High-velocity sell-through:
  
• The quality and popularity of GT products has resulted in strong market penetration with GT brands currently being carried by 52% of
  
  Nevada
  
  dispensaries.
• All that is produced is sold; revenue growth is capacity limited, not demand constrained. By expanding the GT supply chain in
  
  Nevada
  
  as well as multiple other jurisdictions, AUSA anticipates further accelerating profitable growth.
• 
  Pharma-grade operations:
  
  GT’s operations team with a deep background in the production of GMP certified, pharmaceutical-grade products, has successfully launched innovative product offerings with appeal across a broad range of consumer segments.
• 
  Attractive home market
  
  : GT has an established footprint in
  
  Nevada
  
  , a market with a regulatory framework that is highly favorable for operators in the cannabis industry.
• Capped licensing regime reduces competitive pressure.
• 
  Nevada
  
  boasts some of the highest wholesale prices for cannabis in
  
  North America
  
  (USD
  
  $5.33
  
  –
  
  $7.91
  
  / gram
  
  ¹
  
  ).
• 
  Nevada
  
  attracts over 45 million visitors annually (pre-COVID-19).
• Public company/international ownership permitted.
• No restrictions on number of verticals.
• 
  Innovation
  
  : Laboratory, pharmaceutical and manufacturing expertise focused on innovative R&D with short-time-to-market commercial applications, such as novel extraction methods, accurate dosing forms and custom compounding.
• 
  Accelerating growth
  
  :
• 
  Nevada
  
  :
• GT currently holds a provisional dispensary license in South Lake Tahoe (
  
  Douglas County
  
  ), the location of world class ski resorts and multiple casinos with a large and captive audience.
• 
  Missouri
  
  :
• 
  Missouri
  
  has capped the number of cannabis licenses, making these very valuable in a state with approximately 6.2 million people. The Company is assisting Duke in an effort to operationalize a medical cannabis processing and extraction facility in the state, where the license grant is subject to final inspection. The 8,727 sq ft manufacturing facility is largely complete with minimal additional investment required. The Company is pursuing an agreement to launch the Company’s brands in
  
  Missouri
  
  .
• GT is also in advanced discussions with a number of high-end, commercially successful out-of-state brands to serve as their white label producer for entry into the
  
  Missouri
  
  market.
• 
  Oklahoma
  
  :
• Manufacturing license expected to be operationalized in late 2021.
• GT is negotiating the acquisition of a 23-acre plot of land in
  
  Clark County, Nevada
  
  , for development into a multi-company cannabis campus in
  
  Las Vegas
  
  .
• 
  Attractive valuation
  
  : The proposed transaction has been structured such that the selling principals are very closely aligned with the future success of AUSA, with an attractive initial valuation that leaves considerable upside based on current assets, operations and future initiatives.
• 
  Balance sheet strengthening through reversal of the original transaction
  
  : the closing of the proposed land sale related to the unwinding of the original transaction is anticipated to strengthen the Company’s cash position by close to
  
  $2 million
  
  .

Commentary

“Entering this definitive agreement to acquire GT marks another kept promise to our shareholders,” said

Terry Booth

, CEO. “With its award-winning brands, excellent operational team and assets across three states currently, combined with the leverage ALPS brings to secure novel streaming agreements, we are positioned exceptionally well to execute on our expansion strategy and develop AUSA into a top-tier MSO. The structure of the transaction aligns the GT principals with the AUSA shareholders’ interests, and we look forward to communicating with our shareholders frequently on our progress as we execute.”

Duke Fu

, co-founder of GT and AUSA COO, added, “Executing on the transaction with AUSA brings us the network, capacity and capital markets access to fuel our growth across the nation. We are working on a number of exciting growth initiatives that we expect to execute on following closing of the transaction. I look forward to working with Terry and the team in building AUSA into the company it was always meant to be.”

Transaction Terms

The Company will pay to the holders of the GT membership interests between

C$8 million

and

C$10 million

for 100% of the outstanding membership interests of both GT and the Subsidiary. The consideration will be paid as set out below.

The Indemnity Holdback and the Contingent Payments may be paid in either cash, the issuance of Buyer Units, or both, at the election of the Company, with any Buyer Units so issued at a deemed price per Buyer Unit equal to the greater of (i) the VWAP of the common shares of the Company on the CSE for the 10 trading days immediately prior to the payment date of such payment; and (ii)

$0.14625

.

At the Initial Closing, GT and its affiliates will formally dismiss their legal action against AUSA with prejudice, and will return for cancellation all AUSA stock issued to them in

May 2019

, being 11,417,376 AUSA shares. In addition, AUSA will return all of the assets it purchased from GT in

May 2019

, and the GT Members will retain certain redundant licenses not required by AUSA including a non-operational grow and processing licenses. Furthermore, land in

North Las Vegas

purchased from an affiliate company of GT (”

Meridian

“) will be sold and the proceeds will be divided between Meridian and AUSA whereby USD

$2.93 million

will be paid to Meridian, USD

$1.02 million

will be paid to AUSA, and any remaining proceeds will be split 55% for AUSA and 45% for Meridian. AUSA anticipates total proceeds from this land transaction to be approximately

$2.0 million

.

Completion of the transaction is subject to customary closing conditions including execution of final closing documents. The Subsequent Closing is subject to applicable

Nevada State

regulatory approval. If such conditions are not satisfied it is possible that the proposed transactions will not be completed on the terms set forth herein or at all. The parties anticipate completing the Initial Closing within the next 30 days.

This transaction was negotiated by the independent Special Committee formed by the board of the Company to settle outstanding litigation with GT.

As Dr. Fu is the Chief Operating Officer of AUSA as well as a principal of GT the transaction with GT constitutes a “related party transaction” under Multilateral Instrument 61-101 (“MI 61-101”). The Company will rely on exemptions from the formal valuation and minority approval requirements of MI 61-101, in respect of the Proposed Acquisition set forth in Section 5.5(b) (Issuer Not Listed on Specified Markets) and Section 5.7(a) (Fair Market Value Not More Than 25% of Market Capitalization) of MI 61-101, respectively.

About Australis Capital Inc.

AUSA is implementing a capital light growth strategy towards establishing a highly competitive and profitable MSO in the U.S. and global cannabis markets. AUSA’s business lines and assets include a 51% ownership interest in ALPS with an option to acquire the remaining 49%, as investments in Cocoon, Body and Mind Inc., Quality Green, land assets in

Washington

, and a joint venture partnership with 3 Rivers Biotech. AUSA is currently working towards the closing of a transaction whereby it will acquire Green Therapeutics LLC, an award-winning MSO with operations in

Nevada

and is taking steps to operationalize related assets in

Oklahoma

and

Missouri

.

The acquisition of GT is contingent on approval by the

State of Nevada’s

Cannabis Control Board and subsequent local approval by Clark County Department of Business License. The timing of Nevada Cannabis Compliance Board review and approval is beyond the control of the Company.

The Company’s common shares trade on the CSE under the symbol “AUSA” and on the OTCQB under the symbol “AUSAF”.

”


Terry Booth


”

________________________________


Terry Booth


Chief Executive Officer

Forward-Looking Statement

This press release contains “forward-looking information” within the meaning of applicable securities legislation. All statements, other than statements of historical fact, included herein is forward-looking information. Generally, forward-looking information may be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “proposed”, “is expected”, “budgets”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases, or by the use of words or phrases which state that certain actions, events or results may, could, would, or might occur or be achieved. In particular, this press release contains forward-looking information in relation to: the timing and ability to close the proposed transaction; the anticipated development of the GT business and its ability to grow revenues; the proposed transaction being immediately accretive to the Company’s financial position; the ability of the Company to scale up the GT assets across multiple jurisdictions; the ability for the Company to be able to execute on its plans for expansion in

Oklahoma

,

Missouri

and other markets; the impact of the changes to U.S. federal and state developments with respect to the cannabis industry and the opportunities this may present for the Company; and the Company’s current liquidity. This forward-looking information reflects the Company’s current beliefs and is based on information currently available to the Company and on assumptions the Company believes are reasonable. These assumptions include, but are not limited to: the ability of the Company to successfully satisfy the conditions to closing the proposed transaction; the ability of the Company to successfully execute on its plans for the Company and GT; legal changes relating to the cannabis industry proceeding as anticipated; and the Company’s continued response and ability to navigate the COVID-19 pandemic being consistent with, or better than, its ability and response to date.

Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information. Such risks and other factors may include, but are not limited to: general business, economic,


competitive, political and social uncertainties; general capital market conditions and market prices for securities; the actual results of the Company’s future operations; competition; changes in legislation affecting the Company; the timing and availability of external financing on acceptable terms; lack of qualified, skilled labour or loss of key individuals; risks related to the COVID-19 pandemic including various recommendations, orders and measures of governmental authorities to try to limit the pandemic, including travel restrictions, border closures, non-essential business closures, service disruptions, quarantines, self-isolations, shelters-in-place and social distancing, disruptions to markets, economic activity, financing, supply chains and sales channels, and a deterioration of general economic conditions including a possible national or global recession; and a deterioration of financial markets that could limit the Company’s ability to obtain external financing.

A description of additional risk factors that may cause actual results to differ materially from forward-looking information can be found in the Company’s disclosure documents on the SEDAR website at

www.sedar.com

. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking information. Readers are cautioned that the foregoing list of factors is not exhaustive. Readers are further cautioned not to place undue reliance on forward-looking information as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated.

Forward-looking information contained in this press release is expressly qualified by this cautionary statement. The forward-looking information contained in this press release represents the expectations of the Company as of the date of this press release and, accordingly, are subject to change after such date. However, the Company expressly disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities law.

The CSE has neither approved nor disapproved the contents of this news release. Neither the CSE nor its Regulation Services Provider (as that term is defined in the policies of the CSE) accept responsibility for the adequacy or accuracy of this release.

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SOURCE Australis Capital Inc.