Gilla Closes Acquisition of E-Liquid Manufacturer

DAYTONA BEACH, FLORIDA--(Marketwired - July 1, 2015) - Gilla Inc. ("Gilla" or the "Company") (OTCQB:GLLA) is pleased to announce that, further to its news release announcing the signing of a letter of intent on June 9, 2015, the Company has formally closed its acquisition of all of the issued and outstanding shares of E Liquid Wholesale, Inc. ("E Liquid Wholesale"), a Florida based e-liquid manufacturer (the "Acquisition") for $1.125 million (the "Purchase Price").

The Company paid to the vendors $225,000 in cash and issued three tranches of promissory notes, each having a face value of $300,000 and due 4, 9 and 18 months from the closing date. The promissory notes are non-interest bearing, and at the option of the vendors, up to one third of each tranche of promissory notes can be repaid in common stock of the Company, calculated using the five day weighted average closing market price of the Company prior to the maturity of the promissory notes.

The cash portion of the Purchase Price was financed through a secured promissory note for CDN$300,000 (the "Secured Note") issued to an existing institutional investor of the Company. The Secured Note is due January 1^st, 2016 and accrues interest at 10% per annum. The institutional investor also received 500,000 common share purchase warrants of the Company exercisable at $0.15 per share for a period of 12 months.

Key Transaction Highlights

• The acquisition provides Gilla with its own United States based e-liquid manufacturing platform.
• The scalability of the manufacturing facility provides Gilla with a key asset in its continued strategy to consolidate the highly fragmented e-liquid industry.
• Attractive transaction structure that has been financed through deferred payments and debt in order to mitigate short-term dilution to shareholders.
• An accretive acquisition based on a valuation multiple of approximately 3.2x 2014 EBITDA on revenues of approximately $2.5 million.

Mr. Yaron Elkayam, founder, shareholder and President of E Liquid Wholesale will remain in his role as President. No other shareholders, directors or officers of E Liquid Wholesale will remain with the business.