LANGLEY, BC / MARCH 29, 2021

ADASTRA LABS ANNOUNCES PHYTO EXTRACTIONS™ ACQUISITION UPDATE; FINANCING; AND CORPORATE RE-BRANDING & CONSOLIDATION

Adastra Labs Inc. is proceeding with steps toward closing on the acquisition of a 51-per-cent controlling interest in Phyto Extractions Brands including a right of first refusal for the company to acquire the remaining 49-per-cent interest. In conjunction with the acquisition and recently obtained Health Canada sales licence addendum, the company is conducting an equity unit offering for working capital and to expand the sales and marketing of Phyto Extractions brands.

Acquisition update

Adastra Labs and Phyto Extractions have received and signed off on an independent fairness opinion regarding the share consideration along with fair market values of $61.5-million and $56.45-million (51 per cent) for the respective companies. The parties are also continuing under their agreed exclusivity and freeze period until closing of the definitive acquisition agreement that is also subject to any required securities exchange approvals.

Financing

The company’s planned equity unit offering will consist of one common share and one whole warrant priced at $1.10 per unit to raise working capital for expanded growth of business operations, Phyto Extraction product offerings (over 16 new stock-keeping units) (pending closing of the acquisition), marketing and sales throughout Canada. Each warrant will have an exercise price of $1.75 per share with two-year expiry, which would accelerate in the event the company’s common shares trade at or above $2 per share for more than 50 trading days. The financing will be a private placement on an exempt basis to qualified investors, mainly accredited investors. The private placement offering will be on a good efforts basis. The company will commence the private placement after this news release, subject to compliance with applicable law including Canadian Securities Exchange policies, and will close the financing in one or more tranches. Interested parties can contact the company for more information, and should consult their own independent financial and legal advisers with respect of their interest and potential investment into the company.

Update on rebranding and restructuring; consolidation

As previously disclosed in the company’s press release of March 16, 2021, the company has been considering undergoing corporate rebranding and restructuring prior to closing of the Phyto Extractions acquisition. As a step toward the acquisition, the company has reserved to complete its name change to Phyto Extractions Inc. and will provide its new Cusip/ISIN numbers in a separate press release. In the event that the acquisition does not complete, the company has permission to use its new name and may continue operations under the new name. The company also intends to effect a consolidation of its common shares by consolidating each three current common shares to one postconsolidation common share. The company is concurrently applying for new Cusip/ISIN numbers with respect of the proposed consolidation. The rebranding and consolidation are subject to applicable laws including any exchange policies and conditions.

About Adastra Adastra Labs Inc.

Adastra Labs is an agricultural-scale cannabis extraction, distillation and product manufacturer located in Langley, B.C., at its co-located Health Canada licensed standard processing (extraction, no cultivation), sales (extracts, topicals and edibles) and analytical testing laboratory (Chemia Analytics) facilities. Chemia Analytics is a wholly owned subsidiary of the company. Adastra Labs also has an research and development licence amendment pending Health Canada approval.

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