Xylitol Canada Inc. Announces Closing of Acquisition of Nektar Naturals Holdings, Inc., Closing of Second Tranche of Financing and Appointment of New Director to the Board

Toronto, Ontario--(Newsfile Corp. - March 17, 2017) - Xylitol Canada Inc. (TSXV: XYL) ("Xylitol" or the "Corporation") is pleased to announce that it has closed its acquisition of Nektar Naturals Holdings, Inc. ("Nektar") as previously announced by press release on February 2, 2017 (the "Acquisition"). Pursuant to a share purchase agreement (the "Share Purchase Agreement") entered into among the shareholders of Nektar and the Corporation, the Corporation acquired all of the issued and outstanding equity shares of Nektar in exchange for the issuance of 4,799,167 common shares of Xylitol (the "Purchase Price Shares"). Pursuant to the terms of the Share Purchase Agreement, Xylitol has agreed to service certain debt obligations in the aggregate principal amount of approximately US$598,000. The Corporation has also entered into an escrow agreement with the holders of the Purchase Price Shares and pursuant thereto 803,400 Purchase Price Shares have been deposited in escrow pending the outcome of certain debt obligations and a working capital adjustment post-closing.

"Our transaction with Nektar is a key milestone for Xylitol as we focus on product innovation to become a leading provider of natural sweetener products in the marketplace. Nektar brings key contributors to Xylitol including national sales accounts such as Walmart and a seasoned team of principals including founder Jeremy B. Edelman and key shareholders," said Steven Haasz, Chief Executive Officer of Xylitol.

"We are beyond excited to be merging with Xylitol.  With our shared resources and complimentary product portfolios, we are on a trajectory toward amazing things. I take great pride in the people and their hard work that have made Nektar Naturals what it is today.  We now turn our sights toward the future as we build a globally recognized brand of natural sweeteners," said Jeremy B. Edelman.

Xylitol is also pleased to announce that it has closed a second tranche of its previously announced non-brokered private placement offering today resulting in the issuance by the Corporation of 2,808,333 common shares (the "Common Shares") at a subscription price of $0.12 per share (post-Consolidation) for aggregate gross proceeds of CAD $337,000 (the "Offering"). The Common Shares issued pursuant to the Offering are subject to a four month hold period expiring July 17, 2017. The second tranche of the Offering was primarily subscribed for by a vendor in the Acquisition. In aggregate, between the first and second tranche of its non-brokered private placement, the Corporation has raised $2,087,000 in equity.

The Corporation intends to use the proceeds for general and working capital purposes.

A director of the Corporation subscribed for $40,000 worth of common shares in the Offering. Participation by a director in the Offering is considered to be a "related party transaction" as defined in Multilateral Instrument 61-101 — Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Offering is exempt from the formal valuation and minority shareholder approval requirements of Multilateral Instrument 61-101, as neither the fair market value of the securities being issued to insiders, nor the consideration being paid by such insiders, exceeds 25% of the Corporation's market capitalization.

Xylitol is also pleased to welcome Julie Reid to its board of directors. Mrs. Reid has worked with the Corporation since 2004 and has focused on its sales and marketing efforts. The Board is looking forward to Mrs. Reid's continued contributions. Mrs. Reid's appointment remains subject to the approval of the TSX Venture Exchange.

In addition, the board of directors of Xylitol has approved a grant of an aggregate of 1,717,392 options (the "Options") and 1,145,833 restricted share units (the "RSUs") to certain directors and officers of the Corporation. 1,111,254 of the Options shall vest immediately, and 606,138 options shall vest as to 33% on each of the first, second, and third anniversaries of the grant date. Each Option shall be exercisable for one common shares of the Corporation at an exercise price of $0.12 per share. The RSUs shall vest immediately and have a deemed issuance price of $0.12 per share.

About Xylitol Canada Inc.

Xylitol Canada is a consumer packaged goods business focused on an assortment of natural sweetener based products including xylitol, coconut palm sugar and honey.. The Corporation operates a 30,000 square foot facility in Colorado where it produces and packages a full catalog of natural sweetener products, most notably its natural sweetener alternatives. Xylitol Canada services major retail customers such as Loblaws, Whole Foods, Costco, Trader Joe's, Sprouts and distributors including UNFI and KeHE.

For more information about Xylitol please contact:

Steven Haasz
CEO and a director of Xylitol Canada Inc.
416.288.1019
shaasz@xylitolcanada.com

Neither TSX Venture Exchange Inc. nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.