Adastra Holdings Enters into Agreements to Sell Subsidiaries

Rhea-AI Summary

Adastra Holdings (OTC: XTXXF) announced agreements dated October 8, 2025 to sell three wholly owned subsidiaries for an aggregate consideration of $4,000,000. The consideration includes a $495,000 12% interest-bearing promissory note for Adastra Labs, $3,500,000 satisfied by purchaser assumption of the existing mortgage on 1178562's Langley, BC property, and $5,000 cash for Adastra Brands.

Related agreements include a leaseback: 1178562 will lease 13,000 sq ft to Adastra Labs Inc. for $35,000 per month, and an intellectual property license from Adastra Brands to the company for nominal consideration. The company said the transactions aim to strengthen the balance sheet, reduce debt, and streamline operations; closing remains subject to customary conditions.

Positive

• Aggregate proceeds of $4,000,000
• Mortgage assumption of $3,500,000 removes lender obligation
• Leaseback secures continued use of 13,000 sq ft facility

Negative

• $495,000 promissory note bears 12% interest
• New lease creates $35,000 monthly cash outflow
• Completion remains subject to customary closing conditions

Langley, British Columbia--(Newsfile Corp. - October 8, 2025) - Adastra Holdings Ltd. (CSE: XTRX) (FSE: D2E0) (the "Company") announces that it has entered into agreements to sell all of the issued and outstanding shares of its wholly-owned subsidiaries, Adastra Labs Holdings (2019) Ltd. ("Adastra Labs"), 1178562 B.C. Ltd. ("1178562"), and Adastra Brands Inc. ("Adastra Brands").

The aggregate consideration for all transactions is $4,000,000, including $495,000 for the sale of Adastra Labs payable by way of a 12% interest-bearing promissory note, $3,500,000 for the sale of 1178562 satisfied by the purchaser's assumption of the existing mortgage debt on the Langley, BC based property owned by 1178562 (the "Property"), and $5,000 cash for the sale of Adastra Brands.

In connection with the share purchase agreements, 1178562 and the Company's wholly owned subsidiary, Adastra Labs Inc., agreed to enter into a lease agreement pursuant to which 1178562 will lease 13,000 square feet of warehouse and office space located at the Property to Adastra Labs Inc. in consideration for $35,000 per month. Additionally, Adastra Brands and the Company agreed to enter to into an intellectual property licensing agreement pursuant to which Adastra Brands will license certain trademarks to the Company for nominal consideration.

The sale of the Company's subsidiaries aligns with the Company's strategy to strengthen its balance sheet, reduce debt, and streamline operations. Through the related leaseback and intellectual property licensing agreements entered into in connection with the transactions, the Company is in a position to continue to operate from its existing facility and retain the right to use its established brands and trademarks.

The transactions are expected to be completed shortly and remain subject to customary closing conditions.

About Adastra Holdings Ltd.

Adastra has become one of Canada's leaders in the supply and manufacturing of ethnobotanical and cannabis products for lawful adult-use. It serves medical markets and engages in forward-looking therapeutic applications. With cannabis concentrate products sold through retailers at more than 2,000 locations across Canada, Adastra's Phyto Extractions and Endgame Extracts brands are now well established with a growing distribution presence. As a Health Canada licensed facility, it specializes in extraction, distillation and manufacturing of a range of cannabis-derived products. Adastra partners with healthcare professionals and practitioners within the regulated environment to create products suitable for the medical cannabis market, with the ultimate aim of addressing the needs of patients. For more information, visit: www.adastraholdings.ca.

For additional information, please contact:
Jonathan Edwards, CFO
(778) 715-5011
info@adastraholdings.ca

This press release contains statements that may constitute "forward-looking statements" within the meaning of applicable securities legislation. Forward-looking statements are typically identified by words such as "expected," "anticipated," "will," or similar expressions. Forward-looking statements in this press release include but are not limited to the Company or its subsidiaries entering into a lease agreement and intellectual property licensing agreement, the Company strengthening its balance sheet, reducing debt, and streamlining operations, the Company continuing to operate from its existing facility and retaining the right to use its established brands and trademarks, the transactions completing shortly. These forward-looking statements are made as of the date of this press release. Such forward-looking statements reflect current estimates, beliefs and assumptions, which are based on management's perception of current conditions and expected future developments, as well as other factors management believes are appropriate in the circumstances. Although the Company believes the forward-looking statements in this press release are reasonable, it can give no assurance that the expectations and assumptions in such statements will prove to be correct. The Company cautions investors that any forward-looking statements by the Company are not guarantees of future results or performance, and are subject to risks, uncertainties, assumptions and other factors which could cause events or outcomes to differ materially from those expressed or implied by such forward-looking statements. Such factors include, among others, the ability to satisfy customary closing conditions and obtain any necessary regulatory approvals. Readers are cautioned not to place undue reliance on any forward-looking statements, which reflect management's expectations only as of the date of this press release. The Company disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

The Canadian Securities Exchange has not reviewed this press release and does not accept responsibility for the adequacy or accuracy of this news release.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/269777

FAQ

What subsidiaries did Adastra Holdings (XTXXF) agree to sell on October 8, 2025?

Adastra agreed to sell Adastra Labs Holdings (2019) Ltd., 1178562 B.C. Ltd., and Adastra Brands Inc.

How much is Adastra Holdings (XTXXF) receiving for the subsidiary sales?

The aggregate consideration is $4,000,000 in combined cash, mortgage assumption, and a promissory note.

What are the payment details for the Adastra Labs sale under XTXXF?

Adastra Labs is being sold for $495,000 payable by a 12% interest-bearing promissory note.

How is the $3,500,000 portion of the XTXXF transactions being satisfied?

The $3,500,000 is satisfied by the purchaser's assumption of the existing mortgage on the Langley, BC property.

Will Adastra (XTXXF) continue operating at the Langley facility after the sales?

Yes. 1178562 will lease 13,000 sq ft to Adastra Labs Inc. for $35,000 per month, allowing continued operation.

What happens to Adastra's trademarks after the sale under XTXXF?

Adastra Brands will license certain trademarks to the company for nominal consideration, preserving rights to use established brands.

Are the subsidiary sale transactions for XTXXF final?

The transactions are expected to complete shortly but remain subject to customary closing conditions.