Adastra to sell three subsidiaries for $4-million

Mr. Jonathan Edwards reports ADASTRA HOLDINGS ENTERS INTO AGREEMENTS TO SELL SUBSIDIARIES Adastra Holdings Ltd. has entered into agreements to sell all of the issued and outstanding shares of its wholly owned subsidiaries, Adastra Labs Holdings (2019) Ltd., 1178562 B.C. Ltd. and Adastra Brands Inc. The aggregate consideration for all transactions is $4-million, including $495,000 for the sale of Adastra Labs payable by way of a 12 per cent interest-bearing promissory note, $3.5-million for the sale of 1178562 satisfied by the purchaser's assumption of the existing mortgage debt on the Langley, B.C., property owned by 1178562 and $5,000 in cash for the sale of Adastra Brands. In connection with the share purchase agreements, 1178562 and the company's wholly owned subsidiary, Adastra Labs, agreed to enter into a lease agreement pursuant to which 1178562 will lease 13,000 square feet of warehouse and office space located at the property to Adastra Labs in consideration for $35,000 per month. Additionally, Adastra Brands and the company agreed to enter into an intellectual property licensing agreement pursuant to which Adastra Brands will license certain trademarks to the company for nominal consideration. The sale of the company's subsidiaries aligns with the company's strategy to strengthen its balance sheet, reduce debt and streamline operations. Through the related leaseback and intellectual property licensing agreements entered into in connection with the transactions, the company is in a position to continue to operate from its existing facility and retain the right to use its established brands and trademarks. The transactions are expected to be completed shortly and remain subject to customary closing conditions. About Adastra Holdings Ltd. Adastra has become one of Canada's leaders in the supply and manufacturing of ethnobotanical and cannabis products for lawful adult use. It serves medical markets and engages in forward-looking therapeutic applications. With cannabis concentrate products sold through retailers at more than 2,000 locations across Canada, Adastra has established the Phyto Extractions and Endgame Extracts brands. As a Health Canada licensed facility, it specializes in extraction, distillation and manufacturing of a range of cannabis-derived products. Adastra partners with health care professionals and practitioners within the regulated environment to create products suitable for the medical cannabis market, with the ultimate aim of addressing the needs of patients. We seek Safe Harbor.