Mr. Eric Offenberger reports

VEXT SIGNS AGREEMENT TO ACQUIRE TWO ADDITIONAL OHIO RETAIL LOCATIONS AND ANNOUNCES CONCURRENT PRIVATE PLACEMENT - GIVES THE COMPANY A SCALABLE FOOTPRINT IN A LARGE GROWTH MARKET

Vext Science Inc. has executed a letter of intent (LOI) with the members (the sellers) of Big Perm's Dispensary Ohio LLC to acquire two cannabis dispensaries located in Ohio owned by Big Perm, as well as all licences and assets related to the business of the dispensaries, for aggregate consideration of approximately $9.8-million, subject to adjustment in certain circumstances.

The company also announced a non-brokered private placement of common shares of the company to raise up to $10-million. Vext anticipates that one institutional shareholder, as well as certain members of the company's senior management team and board of directors, will participate for over 60 per cent of the offering. Unless otherwise noted, all currency references used in this news release are in U.S. currency.

Management commentary

Eric Offenberger, chief executive officer of Vext, commented: "The addition of two dispensaries to our growing vertical footprint in Ohio represents a critical step toward achieving scale and ensuring long-term returns on capital in this attractive growth market. The overall market environment, particularly from an equity perspective, remains challenging, but now is the right time for Vext to build a platform that will generate growing profitability and cash flow. We appreciate the support of our long-term shareholder base and insiders who have stepped up to support what I am confident will lead to significant value creation."

Mr. Offenberger continued: "Vext has a proven track record of operating profitably in the limited-licence Arizona market and we were early to understand that fully integrated operations, and matching long-term cultivation with owned retail demand, is the route to capturing sustained margins and value. Upon closing this transaction, along with the previously announced Appalachian Pharm acquisition, Vext will be positioned for success in the limited-licence Ohio market through four strategically located dispensaries, bringing us closer to the state cap of five locations."

Terms of the Ohio expansion transaction

Under the terms of the LOI, in consideration for the acquired assets, Vext is anticipated to pay cash consideration equal to $9.8-million, subject to adjustments in certain circumstances.

In addition, Vext has agreed to finance approximately $3.4-million of construction costs related to the dispensaries, which are payable upon closing of the Ohio expansion transaction.

The Ohio expansion transaction remains subject to a number of customary conditions, including, without limitation: the satisfactory completion of due diligence, the receipt of any required regulatory and third party approvals, as well as the negotiation of definitive transaction documents. There can be no guarantees that the Ohio expansion transaction will be completed as contemplated or at all.

The company is at arm's length from Big Perm and each of the sellers. The company currently expects that a definitive agreement with respect to the Ohio expansion transaction will be executed prior to the end of October, 2023, and that closing of the Ohio expansion transaction will occur in 2024.

About the Ohio market

The Ohio medical cannabis market continues to grow with a 15-per-cent increase in number of patients and 82-per-cent increase in number of operating dispensaries over the past 12 months.

Concurrent private placement

Pursuant to the offering, the company will offer up to 58,823,529 common shares at a price of 17 cents per common share for aggregate gross proceeds of up to $10-million. The offering is subject to an overallotment option, allowing the company to increase the number of common shares sold by up to 8,823,529 additional common shares for additional proceeds of up to $1.5-million. The company may pay finders' fees to eligible arm's-length third parties in connection with the overallotment option.

Proceeds from the offering, including the overallotment option (if any), are expected to be used to finance part of the purchase price for the Ohio Expansion transaction and certain other obligations of the company in connection with the Ohio expansion transaction. Closing of the offering is expected to occur as soon as practicable, subject to certain customary conditions precedent.

The securities issued pursuant to the offering, including the overallotment option (if any), will be subject to resale restrictions, including a hold period of four months and one day pursuant to applicable Canadian securities laws and further restrictions which will be set forth in the shareholders agreement (as defined below).

In connection with the offering, the company intends to enter into a shareholders agreement with certain management shareholders and other subscribers under the offering, pursuant to which the company and the subject shareholders will agree to a number of rights and restrictions applicable to the company and the subject shareholders, including, without limitation, the following: (i) an agreement to vote their shares of Vext in favour of the election of the chief executive officer of the company and a nominee of Sopica Special Opportunities Fund Ltd. (SSOFL) to the board of directors of the company; (ii) the grant of a right of refusal to the other subject shareholders for the transfer of any shares of Vext held by the subject shareholders; (iii) an agreement, in certain circumstances, to vote their shares of Vext in favour of any sale of the company proposed by SSOFL; and (iv) certain matters which must be approved by the board of directors of the company (including the SSOFL nominee), including, without limitation: (a) a liquidation of the company; (b) the issuance of additional securities of the company; (c) the incurrence of certain additional debt; (d) certain related party transactions; and (e) amendments to executive compensation arrangements. In connection with the shareholders agreement, the company expects that the SSOFL nominee will be appointed to the board of directors of the company on, or as soon as practicable after, closing of the offering. The shareholders agreement, when signed, will constitute applicable shareholder approval, in respect of the offering and the shareholders agreement, for the purposes of the requirements of the Canadian Securities Exchange, as the subject shareholders hold greater than 50 per cent of the outstanding votes associated with shares of the company.

Certain insiders of the company, including SSOFL, are expected to acquire securities under the offering. Each of the offering insiders may be considered a related party as such term is defined in Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions. Accordingly, the offering may be a related party transaction as defined in MI 61-101. The company anticipates relying on the exemption from the formal valuation requirement at Section 5.5(a) of MI 61-101 and the exemption from minority approval requirement at Section 5.7(1)(a) of MI 61-101, in respect of participation by the offering insiders in the offering, as neither the fair market value of the securities to be acquired by the offering insiders nor the consideration for such securities is anticipated to exceed 25 per cent of the company's market capitalization.

Update on APP acquisition

As previously announced, the company has received the approval of the Ohio Department of Commerce for the ownership transfer of Appalachian Pharm Processing LLC (APP), an Ohio limited liability company, together with its subsidiaries and affiliated companies, for a total consideration of approximately $12.5-million, with $11-million paid in cash or promissory notes and $1.5-million through the issuance of common shares. The company is working with APP to satisfy the remaining conditions of closing and currently expects that closing of the Ohio acquisition will occur imminently, subject to the terms of the definitive purchase agreements. For further details about the terms of the APP acquisition, see the company's news releases dated Dec. 15, 2022, and Aug. 23, 2023. As a result of closing of the Ohio acquisition, Vext will also obtain the right to acquire ownership of a cannabis dispensary in Columbus, Ohio. The company has applied to the Ohio Board of Pharmacy for an ownership transfer of such dispensary and expects to receive approval this year and to close promptly after receipt of regulatory approval.

Advisers

Eight Capital acted as financial adviser, McMillan LLP and Bianchi & Brandt acted as legal counsel, and LodeRock Advisors provided capital markets communication services to Vext.

About Vext Science Inc.

Vext Science is a United States-based cannabis operator with vertical operations in Arizona and Ohio. Vext's expertise spans from cultivation through to retail operations in its key markets. Based out of Arizona, Vext owns and operates state-of-the-art cultivation facilities, fully built-out manufacturing facilities, as well as dispensaries in both Arizona and Ohio. The company manufactures Vapen, one of the leading tetrahydrocannabinol concentrates, edibles and distillate cartridge brands in Arizona. Its selection of award-winning products are created with Vext's in-house, high-quality flower and distributed across Arizona and Ohio, as well as through Vext's partnerships in other states. Vext's leadership team brings a proven record of building and operating profitable multistate operations, with the company having operated profitably since 2016. The company's primary focus is to continue growing in its core states of Arizona and Ohio, bringing together cutting-edge science, manufacturing and marketing to provide a reliable and valuable customer experience while generating shareholder value.

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