TORONTO, May 27, 2021 — Auxly Cannabis Group Inc. (TSX – XLY) (OTCQX: CBWTF) (“Auxly” or the “Company“), a leading consumer packaged goods company in the cannabis products market, announced today that it has entered into a definitive agreement with Myconic Capital Corp. (NEO: MEDI) (“Myconic”), an investment issuer with a diversified portfolio focused on emerging companies, pursuant to which Myconic will acquire all of the issued and outstanding shares of KGK Science Inc. (“KGK”) (the “Transaction”) for up to $16.5 million in value comprised of:

• $12.5 million purchase price from Myconic in the form of:
  • $1.5 million in cash payable on the closing date of the Transaction;
  • $1.0 million in cash payable six months after the closing date of the Transaction; and
  • $10.0 million in common shares in the capital of Myconic (“Myconic Shares”) at a price per Myconic Share of $1.55 (being 6,451,612 Myconic Shares) all to be issued on the closing date of the Transaction, with equal tranches becoming freely tradeable on the four, six, nine and 12 month anniversaries of the closing date of the Transaction;

• $1.5 million milestone payment, payable in cash or Myconic Shares, at the option of Myconic, if KGK achieves gross revenues of $8 million in any 12-month period during the two years following the closing date of the Transaction; and
• $2.5 million credit against future KGK services, reflected in a 10-year service agreement between Auxly and KGK.

The Transaction is expected to close on or around the week of June 7, 2021 and is subject to customary closing conditions and regulatory approvals, including the approval of the NEO Exchange.

“This agreement with Myconic is a win-win for Auxly and its shareholders in both the short and long-term, as the additional capital can be deployed into our core business and accelerates Auxly’s path to profitability, while continuing our long-standing relationship with KGK to leverage their deep clinical expertise as we continue to bring innovative cannabis products to market that meet our consumer promise of quality, safety and efficacy,” said Hugo Alves, CEO, Auxly. “KGK is an outstanding CRO that knows how to unlock value in emerging industries through clinical work and will be an excellent fit with the team at Myconic.”

“This is an exciting day for KGK as we look to bring our years of experience as a leading CRO into the field of psychedelics research, which holds great promise for helping people overcome a wide range of illnesses,” said Najla Guthrie, President & CEO, KGK. “We’ve gained invaluable insight from our partnership with Auxly and look forward to continuing our relationship and helping them bring safe and effective cannabis products to market.”

“The investment that Myconic is making to acquire KGK is very exciting and I look forward to welcoming the KGK team and their valuable expertise to our company,” said Robert Meister, Chief Executive Officer of Myconic. “On behalf of the Board of Directors, I would like to commend Auxly on their professionalism and transparency throughout the Transaction thus far and look forward to our companies working together for many years into the future, long after the closing date,” added Mr. Meister.

With the sale of KGK, Auxly gains additional liquidity to support the Company’s ongoing commercial operations as it continues to expand its product offering in Canada and execute on its business strategy.

ON BEHALF OF THE BOARD
“Hugo Alves” CEO

About Myconic Capital Corp. (CSE: MEDI)

Myconic Capital Corp is an investment issuer with a diversified portfolio that is focused on emerging companies active in the high-tech, real estate, cannabis, mining and health and wellness sectors.

About Auxly Cannabis Group Inc. (TSX: XLY)

Learn more at www.auxly.com and stay up to date at Twitter: @AuxlyGroup; Instagram: @auxlygroup; Facebook: @auxlygroup; LinkedIn: company/auxlygroup/.

Investor Relations:

For investor enquiries please contact our Investor Relations Team: 
Email: IR@35.183.62.152
Phone: 1.833.695.2414

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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. 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 receipt of the necessary regulatory approval for the Transaction and the timing of such approval; the timing and proposed completion of the Transaction; the Company’s execution of its product development and commercialization strategy; consumer preferences; political change, future legislative and regulatory developments involving cannabis and cannabis products; and competition and other risks affecting the Company in particular and the cannabis industry generally.

A number of factors could cause actual results to differ materially from a conclusion, forecast or projection contained in the forward-looking information in this release including, but not limited to, whether: the Transaction can be completed on the anticipated terms and timeline; and general economic, financial market, regulatory and political conditions in which the Company operates will remain the same. Additional risk factors are disclosed in the annual information form of the Company for the financial year ended December 31, 2020 dated April 23, 2021.

New factors emerge from time to time, and it is not possible for management to predict all of those factors or to assess in advance the impact of each such factor on Auxly’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking information. The forward-looking information in this release is based on information currently available and what management believes are reasonable assumptions. Forward-looking information speaks only to such assumptions as of the date of this release. In addition, this release may contain forward-looking information attributed to third party industry sources, the accuracy of which has not been verified by Auxly. The purpose of forward-looking information is to provide the reader with a description of management’s expectations, and such forward-looking information may not be appropriate for any other purpose. Readers should not place undue reliance on forward-looking information contained in this release. 

The forward-looking information contained in this release is expressly qualified by the foregoing cautionary statements and is made as of the date of this release. Except as may be required by applicable securities laws, Auxly does not undertake any obligation to publicly update or revise any forward-looking information to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise. 

Neither Toronto Stock Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Toronto Stock Exchange) accepts responsibility for the adequacy or accuracy of this release.