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Inner Spirit Holdings Closes Initial Public Offering, Newstrike Transaction and Auxly Private Placements and Announces Commencement of Trading on the Canadian Securities Exchange

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Inner Spirit Holdings Closes Initial Public Offering, Newstrike Transaction and Auxly Private Placements and Announces Commencement of Trading on the Canadian Securities Exchange

Canada NewsWire

CALGARY, July 31, 2018 /CNW/ - Inner Spirit Holdings Ltd. ("Inner Spirit" or "the Company"), is pleased to announce that it has closed its initial public offering (the "IPO"). The Company closed on the maximum gross proceeds under the IPO of $3,750,000 and issued 25,000,000 units of Inner Spirit (the "Units"). Each Unit consists of one common share in the capital of the Company (each, a "Common Share") and one-half of one Common Share purchase warrant (each whole Common Share purchase warrant, a "Unit Warrant"). Each Unit Warrant will entitle the holder thereof to acquire one Common Share at an exercise price of $0.30 for a period of 24 months following the closing date, subject to acceleration in certain cases (as described in the Company's prospectus). The Warrants will not be listed for trading. Leede Jones Gable ("Leede") acted as the Company's sole agent under the Offering and received a fee equal to $375,000 and 2,500,000 Agent's Options, with each Agent's Option entitling Leede to acquire one Common Share at an exercise price of $0.15 for a period of 24 months following the closing date.

Inner Spirit Holdings Ltd. (CNW Group/Inner Spirit Holdings)

The Common Shares will begin trading effective at the market open on August 1, 2018 on the Canadian Securities Exchange ("CSE") under the symbol "ISH".

Newstrike Transaction

The Company is also pleased to announce that it has completed the previously announced cross-investment with Newstrike Brands Ltd. (TSXV:HIP) ("Newstrike") (the "Newstrike Transaction"), pursuant to which both Newstrike and Inner Spirit have acquired equity interests in each other and have entered into a strategic alliance agreement for the retail distribution of Up Cannabis products, and the creation and operation of Up Cannabis-branded customer lounges or "Experiential Hubs" in Spirit Leaf stores. The store-in-store experiences will complement the existing Spirit Leaf design elements and provide education about cannabis, showcase both companies' love of music and their various community and charitable endeavours.

Newstrike made an aggregate investment in Inner Spirit valued at $2.25 million comprised of $1,125,000 in cash and 1,250,000 common shares in the capital of Newstrike (the "Newstrike Shares") at a deemed value of $0.90 per Newstrike Share. The Company also acquired 1,125,000 warrants to purchase Newstrike Shares (the "Newstrike Warrants"). The Newstrike Warrants have an exercise price of $0.99, a term of 24 months and will vest on a performance-based schedule triggered by the opening of a pre-determined number of future Spirit Leaf locations. The Newstrike Shares and Newstrike Warrants are subject to a four month hold period. The issuance of the Newstrike Shares and Newstrike Warrants remains subject to approval by the TSX Venture Exchange.

In consideration for Newstrike's investment in Inner Spirit, Inner Spirit issued to Newstrike, 15,000,000 units ("Private Placement Units") at a price of $0.15 per Private Placement Unit. Each Private Placement Unit was comprised of one Common Share and one-half of a Common Share purchase warrant ("Warrant"), exercisable at $0.30 per share for a period of two (2) years following the date of issuance. The Common Shares and Warrants issued to Newstrike are subject to a four month hold period.

Auxly Exercises Anti-Dilution Rights and Completes Private Placement

In connection with the Newstrike Transaction, Auxly Cannabis Group Inc. (TSXV:XLY) (formerly known as Cannabis Wheaton Income Corp.) ("Auxly") exercised its anti-dilution rights and acquired an additional 2,647,059 Private Placement Units of the Company at $0.15 per Private Placement Unit for proceeds of $397,058.85. In addition, Auxly completed a concurrent private placement and acquired an additional 4,411,765 Private Placement Units at $0.15 per Unit for proceeds of $661,764.75 (the foregoing transactions collectively referred to as the "Auxly Private Placements").  The Common Shares and Warrants issued to Auxly are subject to a four month hold period. Following completion of the transactions described herein, Auxly will continue to hold approximately 15% of the total issued and outstanding Common Shares as of the date hereof.

Outlook

As a result of closing of its IPO, the Newstrike Transaction and the Auxly Private Placements, Inner Spirit has raised a total of $5,933,823.60 in cash proceeds, along with acquiring the Newstrike Shares and Newstrike Warrants described above.

The Company has a strengthened balance sheet and, together with its franchisees, is now preparing to open the first wave of dispensaries under its Spirit Leaf brand in BC, Alberta and Saskatchewan upon legalization and receipt of the necessary permits. It will simultaneously continue the development of its own proprietary cannabis brands and explore other strategic investments as well as opening Spirit Leaf locations in other jurisdictions as regulations may permit.

"Our shareholders, franchise partners, future customers, and the cannabis industry in general, have all been very receptive to our initiatives. We are looking forward to continuing to collaborate with all stakeholders to support ongoing success of the Company as we move toward the end of prohibition," added Darren Bondar, President and Chief Executive Officer.

About Inner Spirit

Inner Spirit is establishing a chain of recreational cannabis dispensaries under its Spirit Leaf brand. Supporting local entrepreneurs by applying its award-winning franchise and retail models, Inner Spirit has more than 100 franchise partnerships in place for Spirit Leaf locations across BC, Alberta and Saskatchewan. Inner Spirit also intends to operate corporate dispensaries in certain jurisdictions. Developing a diverse portfolio of quality and curated lifestyle cannabis products - including Spirit Leaf's own locally sourced lines – Inner Spirit and its Spirit Leaf brand is positioned to be an iconic Canadian brand and the most trusted source for recreational cannabis. More information can be found on Inner Spirit's website at www.innerspiritholdings.com.  

Forward-looking statements

This press release contains statements and information that, to the extent that they are not historical fact, may constitute "forward-looking information" within the meaning of applicable securities legislation. Forward-looking information may include financial and other projections which involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements of Inner Spirit to be materially different from any future results expressed or implied by Inner Spirit, as well as statements regarding future plans, objectives or economic performance, or the assumption underlying any of the foregoing. In some cases, forward-looking statements can be identified by terms such as "may", "would", "could", "will", "likely", "except", "anticipate", "believe", "intend", "plan", "forecast", "project", "estimate", "outlook", or the negative thereof or other similar expressions concerning matters that are not historical facts. Examples of such statements include, but are not limited to, statements with respect to the objectives and business plans of the Company; the receipt of all regulatory and stock exchange approvals; the establishment of recreational cannabis dispensaries in BC, Alberta and Saskatchewan and such other jurisdictions as regulations may permit; the creation and operation of Up Cannabis experiential centres in Spirt Leaf stores; the intention to grow the Company's business and operations;  the legalization of cannabis for recreational use in Canada, including federal and provincial regulations pertaining thereto and the timing related thereof and the Company's intention to participate in such market, if and when legalized; the competitive conditions of the industries in which the Company operates; and laws and any amendments thereto applicable to the Company. The forward-looking information contained in this press release are made as of this date hereof, and accordingly, are subject to change after such date. Inner Spirit does not assume any obligation to update or revise and forward-looking information, whether written or oral, that may be made from time to time by the Company or on its behalf, except as require by applicable law.

NEITHER THE CANADIAN SECURITIES EXCHANGE NOR ITS REGULATION SERVICES PROVIDER HAVE REVIEWED OR ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

SOURCE Inner Spirit Holdings

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