Audacious Expands California Footprint with Retail Acquisition and EAZE Distribution Partnership

CEO Terry Booth is proud to announce: Australis Capital Inc., operating as AUDACIOUS (CSE: AUSA) (OTC: AUSAF) (“AUSA” or the “Company”) today announced the Company entered into a binding terms sheet on September 14, 2021 to acquire 100% of the issued and outstanding shares of BW Macaw Group, Inc. (“Herbs”). Herbs has entered into a distribution agreement with EAZE, California’s largest legal cannabis delivery and distribution company. Additionally, the Company has two contract manufacturers lined up to commence production of the Company’s products in California. In addition to the retail license that is part of the contemplated transaction, Herbs’ business license also includes the ability to cultivate, manufacture (production of derivatives and edibles) and distribute cannabis products.

Completion Subject to Approval – Transaction Terms

Completion of the transaction is subject to the Companies entering into a definitive agreement, as well as receipt of all appropriate San Jose municipal and State approvals, including the customary security clearances. AUDACIOUS looks forward to working with the San Jose municipal authorities to obtain the final approvals required towards the completion of this transaction.

The consideration for the transaction is US$5 million, payable in stock, with the deemed value calculated using a 10-day volume weighted average price (VWAP). Upon completion of the transaction, therefore, the Company will issue a total of approximately 22.6 million shares.

This is an arm’s length transaction. The Company will not be taking on any long-term debt. No finder’s fee is to be paid in relation to the transaction.

Strategic Rationale

  • Expands AUDACIOUS’s footprint in California following the launch of its LOOS brand
  • Herbs’ license, in addition to retail, includes the ability to cultivate, manufacture (edibles and derivatives production) and distribute cannabis products
  • One of only 16 dispensaries1 in San Jose, California’s 3rd largest city with over 1 million people and the 10th largest city in the U.S.2
  • Distribution agreement with EAZE significantly expands market reach throughout all of California, as well as accelerates revenue generation and brand development
  • Retail footprint enables direct access to end customers
  • Contract manufacturing agreements reduce capital requirements while accelerating launch of AUDACIOUS brands in new jurisdictions
  • Creates a platform for further expansion in California
  • Compelling valuation

Dispensary

The Herbs dispensary is located in San Jose. Daytime population within a ten-mile radius from the dispensary is 1.7 million people3, equating to just below one dispensary per 100,000 people. This compares favorably to the state’s average at around two4. The dispensary is located in a high-density traffic area at the intersection of three major freeways, further benefiting by being located adjacent to Costco, driving significant traffic to the location. AUDACIOUS intends to rebrand the dispensary and transform it into a platform for further growth in the state.

EAZE

EAZE is the largest legal delivery service in California and Michigan, with over 800,000 registered customers and over 7 million deliveries completed5. Through the agreement, Eaze partners with Herbs to provide delivery services in the San Jose area. As part of the agreement, Eaze will carry 20 of SKUs on its San Jose menu, while carrying 15 SKUs on its California-wide delivery platform.

AUDACIOUS Products Now Available in California

In addition to building up general multi-brand inventory for its dispensary, manufacture of the Company’s value line of Provisions disposable vapes, as well as its 2oz, 100mg THC LOOS shots, which will be carried both by the dispensary and on the Eaze menu. The Company anticipates the 1g cartridges to be available to the market this month.

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