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, NV, March 12, 2021 – 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

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

Contact:

Marc Lakmaaker
T: +1.647.289.6640
Marc.lakmaaker@ausa-corp.com

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.

[1] Source: https://potguide.com/blog/article/why-are-nevada-cannabis-prices-so-high/ and https://mjbizdaily.com/wholesale-marijuana-prices-for-flower-dip-in-nevada/