Auxly Announces Completion of Inverell S.A. Acquisition

VANCOUVER, British Columbia, Jan. 09, 2019 (GLOBE NEWSWIRE) -- Auxly Cannabis Group Inc. (XLY.V) (CBWTF) (the "Company") is pleased to announce that, further to its previous releases, it has completed the acquisition of 80% of the outstanding common shares (the “Transaction”) of Inverell S.A. (“Inverell”).

The Transaction positions the Company as a leader in the global CBD economy with a highly efficient, low-cost source of cannabinoids for international distribution, including through the Company's strategic partnership with ICC International Cannabis Corporation Inc. (CSE:WRLD) which provides the Company with access to 16 markets through a network of 35,000 pharmacies. Importantly, the low cost, high purity CBD produced by Inverell gives the Company a long-term and stable supply of CBD to support the research, development and manufacturing of cannabis-derived products at Dosecann Inc., the Company's wholly-owned Licensed Processor facility located in Prince Edward Island, Canada.

Under the terms of the Transaction, the shareholders of Inverell received aggregate consideration of approximately USD$15,000,000, payable as follows:

• USD$2,000,000 in cash paid on closing;
• USD$3,562,500, which was paid via the issuance on closing of 1,927,343 common shares of the Company at a price of CDN$2.28⁽¹⁾; and
• USD$9,437,500, which will be paid via the issuance of 5,105,769 common shares of the Company at a price per share of CDN$2.28⁽¹⁾ per share, to be held in escrow pending the achievement of certain milestones following closing, including the successful registration of Inverell’s cannabis genetics and the successful exportation of CBD products.

⁽¹⁾At the USD/CAD exchange rate of $1.2335

Hugo Alves, President and Director of Auxly Cannabis Group, commented: “We are incredibly pleased with progress that Inverell has made on the cultivation of its 2019 crop of CBD-rich hemp and on the broader development of the business as a stand-alone entity in the Auxly platform. In a very short period, Inverell has exceeded its 2018 planting target of 150 hectares of hemp plants and has made significant strides forward on the development of its world-class extraction facility located in the Parque de las Ciencias. We continue to believe that the low cost and high volume access to CBD molecules, through our ownership in Inverell, positions Auxly to be a leader in the global value-added cannabinoid-based product markets.”

ON BEHALF OF THE AUXLY BOARD

"Chuck Rifici" – Chairman & CEO

About Auxly Cannabis Group Inc. (XLY.V) (CBWTF)

Auxly is a vertically integrated cannabis company with diverse operations across Canada and Uruguay. The company was formed with the primary intent of providing financing solutions to cannabis licence applicants, and has evolved into a platform spanning the entire cannabis value chain. Auxly’s management believes that a vertically integrated model, adapted for the cannabis space, allows for substantive control over its operations through increased operational flexibility, economic resiliency and improved product margin dynamics in an effort to create long term shareholder value. Auxly currently operates three distinct, yet synergistic, segments:

• Upstream – Auxly’s diverse cannabis cultivation platform across its streaming partners, joint ventures and wholly-owned subsidiaries;

• Midstream – Auxly’s processing and development platform focused on the development of proprietary cannabis-derived products and related intellectual property to address consumer needs through its wholly-owned subsidiary, Dosecann; and

• Downstream – Auxly’s medical, recreational and international distribution platform.

Investor Relations:

For more information about investing in Auxly Cannabis Group Inc., please visit: http://www.auxly.com or contact our Investor Relations Team:
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Notice Regarding Forward Looking Information:

This news release contains certain "forward-looking information" within the meaning of applicable Canadian securities law. Forward-looking information is frequently characterized by words such as "plan", "continue", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed" and other similar words, or information that certain events or conditions "may" or "will" occur. This information is only a prediction. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking information throughout this news release. Forward-looking information includes, but is not limited to: the Company's ability to obtain all requisite regulatory approvals for the production and export of cannabinoid products from Uruguay and/or import of such products to other federally legal jurisdictions, political changes in Canada, Uruguay and internationally, future legislative and regulatory developments involving cannabis in Canada, Uruguay and internationally, the Company’s ability to secure distribution channels in international jurisdictions, competition and other risks affecting the Company in particular and the cannabis industry generally.