Gabriella's Kitchen Secures Foothold in California Cannabis Market with Acquisition of The Oil Plant and Associated Cannabis Licences

/THIS PRESS RELEASE IS NOT FOR PUBLICATION OR DISSEMINATION IN THE UNITED STATES. FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF UNITED STATES SECURITIES LAW/

CALGARY, Sept. 13, 2018 /CNW/ - Gabriella's Kitchen Inc. ("GK" or the "Company") (CSE : GABY), a market-leading cannabis wellness company, is pleased to announce that it has entered into a definitive agreement to acquire The Oil Plant, Inc. ("TOP") and its associated cannabis licenses (the "Transaction"). Also included in the Transaction is TOP's line of health and wellness products which includes a line of topicals, tinctures, and concentrates all marketed under the Aunt Zelda'stm brand. The Transaction, expected to close on October 1^st, is structured such that TOP shareholders will receive GK shares as consideration for their holdings on an earn-out basis. Based on TOP's current management forecasts and projections for 2019, TOP is expected to generate over US$10 million in revenue next year. If TOP meets or exceeds this revenue target GK will issue TOP's shareholders US$2.1 million in common shares of GK at the prevailing market price, calculated quarterly on revenue realized in that quarter. If TOP fails to meet these revenue targets consideration is adjusted accordingly. After incorporating the impact of the Transaction, GK is pleased to increase its revenue guidance for 2019 to CN$35 million.

On completion of the Transaction, GK will have secured a Type-6 non-volatile manufacturing license and a cannabis extraction and infusion facility in the State of California. This Transaction augments GK's existing distribution and manufacturing infrastructure and gives it a strong foundation from which to build its cannabis business in the US. This Transaction will transform GK into one of the only publicly listed, pure play, cannabis wellness companies.

TOP, founded by cannabis pioneer, Mara Gordon, is a leading cannabis extractor and infused product manufacturer located in Northern California. TOP uses a proprietary extraction methodology that allows it to cost effectively extract high grade oil extract from all parts of the cannabis plant, including the stem, leaves and less appealing parts of the plant that are often discarded.

TOP holds a license to access an extensive database of formulations, dosing and associated health attributes to create proprietary and white label products that offer a wide range of health benefits with varying levels of THC and CBD. After completion of the Transaction, Mara Gordon will join GK as the Chief Research Officer.

GK is revolutionizing the health and wellness industry by empowering consumers to take control of their health and wellbeing -- through food and lifestyle -- by offering consumers a spectrum of precise dosages and concentrations that target the specific demands of all cannabis consumers. With a substantial product catalogue, existing mainstream retail infrastructure, and immense forecasted consumer demand, GK is positioned to become the category-leading cannabis wellness brand across the United States and Canada.

About Gabriella's Kitchen

Gabriella's Kitchen (GK) is a pure-play cannabis wellness company. With its existing infrastructure of major retailers and an extensive broker and distribution network, GK is positioned to service mainstream grocery with CBD infused products, and licensed cannabis retailers with CBD and THC infused products throughout Canada and the United States. The Company's non-infused products are currently available in more than 3,400 major retail stores across the U.S. and Canada.

Italian sisters Margot and Gabriella co-founded Gabriella's Kitchen to bring high quality, delicious, healthy superfoods to the market. The desire to create the all-encompassing wellness company came after Gabriella received a dire cancer diagnosis which spurred the sisters to prolong Gabriella's life through a holistic approach to health. Recognizing that healthy and functional superfoods should be enjoyed by everyone, GK has created a diverse range of products that cater to a variety of dietary and health concerns. Although Gabriella ultimately passed away from the illness, she lived exponentially longer than doctors predicted. Her memory and passion lives on through GK's mission: to empower people to live healthy lives without compromise.

Disclaimer and Forward-Looking Information

The Canadian Securities Exchange does not accept responsibility for the adequacy or accuracy of this release.

Certain information set forth in this news release may contain forward-looking statements that involve substantial known and unknown risks and uncertainties, certain of which are beyond the control of Gabriella's Kitchen Inc. Forward-looking statements are frequently characterized by words such as "plan", "continue", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur. These statements are only predictions. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Forward-looking statements include, but are not limited to, the anticipated availability of the Company's Infused Products. The Company assumes no obligation to update forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Upon successful completion of the Transaction, TOP will become a wholly owned subsidiary of GK. TOP owns cannabis license in California. Cannabis is legal in the State of California however cannabis remains illegal under United States ("U.S.") federal laws. The U.S. Department of Justice issued guidance in 2013 indicating that it will focus on certain enforcement priorities, outside of which it will generally not enforce federal prohibitions on cannabis in U.S. states that have authorized this conduct so long as the U.S. state has implemented a strong and effective regulatory program. This federal guidance is subject to change, rescission or alteration by other federal government policy pronouncements at any time.
TOP's business is conducted in a manner consistent with the State law of California and is in compliance with regulatory and licensing requirements applicable in the State of California. However, the readers should be aware that change in federal guidance on enforcement actions could adversely affect TOP's ability to access private and public capital required in order to support continuing operations and its ability to operate in the U.S.

GK has provided in this press release financial information that has not been prepared in accordance with GAAP, in particular, non-GAAP revenue forecast for TOP for 2019 and non-GAAP pro-forma revenue forecast for GK for 2019. Non-GAAP revenue forecasts are based on management estimates and projections and contain number of assumptions and expectations. GK uses these non-GAAP financial measures internally in analyzing its future financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating GK's ongoing operational performance. GK believes that these non-GAAP financial measures reflect the GK's ongoing business in a manner that allows for meaningful period-to-period comparison and analysis of trends in its business. In addition, GK believes that the use of these non-GAAP financial measures provides additional information for investors to use in evaluating ongoing operating results and trends and in comparing its financial results from period-to-period with other companies in GK's industry that present similar non-GAAP financial measures to investors. However, these non-GAAP financial measures may not be completely comparable to similarly titled measures of other companies due to differences in the exact method of calculation between companies. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures.

SOURCE Gabriella's Kitchen