Merger FAQ

On Monday, Dec. 3, 2018, LiveWell Canada and Vitality CBD Natural Health Products announced a transformative merger to create a global life sciences company, and one of the first fully integrated hemp and cannabis CBD companies. The press release can be found on the website, but here are some FAQs you may find useful:

Q. What will be the company’s new name?

We have some ideas that we are working on, but we are not quite ready to announce that just yet. But it will reflect our transformation to a global life sciences company.

Q. Will it be a Canadian or U.S. company?

It will be a Canadian company with Canadian and U.S. subsidiaries. For now, our head office is in Ottawa. We will have subsidiaries in Gatineau and Litchfield, Quebec, Windsor, Ontario (when we close the acquisition of Acenzia by the end of the year), Eureka, Montana, and Las Cruces, New Mexico.

 Q. What is the focus of the company going forward?

We will be a life sciences company focused on health and wellness with consumer products and brands that meet functional outcomes. The “inputs” into those products are cannabis and hemp, with a particular emphasis on CBD from industrial hemp. At the same time, we are also leveraging the immediate and immense requirement for supply chain development with bulk and wholesale inputs/sales.

Q. So, would you call it a cannabis company or a hemp company?

We are a life sciences company that uses cannabis and hemp as inputs into our products

Q. What are some of the key markets being targeted?

We plan to target global consumer health markets, but initially we will be focused on the U.S. and Canada. We see Europe as the next biggest market with opportunities for sales and partnerships. Brazil is also important because it represents about 60% of South America’s population.

Q. What is the timeline for products?

Wholesale hemp CBD products – Isolate, Distillate and gel caps – are being produced and sold now. More finished products for consumer use are planned for Q1 2019, with next-generation natural health products utilizing cannabinoids anticipated to launch starting in the second half of 2019.

Q. Can the company legally sell CBD-from-hemp?

Yes, we can legally cultivate hemp, process it and sell it, as per the Montana Farm Act, and soon, industrial hemp should be legalized federally. On Nov. 29, the U.S. Senate and House Agriculture Committee Chairmen jointly announced an agreement in principle that would legalize hemp under the U.S. 2018 Farm Bill. The anticipated passage of the final Farm Bill is expected to dramatically impact the demand for hemp products in the United States — and possibly beyond, therefore positioning us to capitalize on this opportunity. Although hemp cultivation, processing and sales are currently legal in the U.S. under the Agricultural Act of 2014 if conducted pursuant to a state Department of Agricultural pilot program, the passage of the 2018 Farm Bill would essentially grant industrial hemp the same unrestricted legal status federally as any other agricultural commodity.

Q What is the difference between CBD from hemp and CBD from cannabis?

CBD is CBD whether it comes from hemp or cannabis – it is the same molecule. CBD from hemp is more economical and generally faces fewer legal restrictions worldwide. Whether or not CBD faces restrictions usually depends on what is going into it—hemp or cannabis – and the level of THC content.

Q. Where will research be conducted? And what kind of research is being done?

Our research will be conducted in multiple locations over time including the Acenzia facility near Windsor, when that acquisition is complete. We will also be partnering with academic institutions and other strategic partners over time.  We have a team of researchers and scientists who are looking at everything CBD-related, from the market to product formulations to what’s real and what’s not. LiveWell’s researchers, for example, have just completed a major seven-month study looking at all the research that is out there, so we are ahead of the game. We also have Acenzia’s patented research and manufacturing expertise to leverage. And we have done considerable work on extraction technologies, working with Loyalist College, and we will be expanding our research partnerships, to be announced.

Q. Where will products be manufactured?

Eureka, Montana, Ottawa, Ontario, Windsor Ontario, and via other strategic partnerships over time.

Q. What does all this mean for LiveWell’s previous assets, such as Artiva, near Ottawa. Will it still be growing cannabis? Switch to hemp?

Artiva will grow cannabis

Q. Who are your major hemp competitors?

There are a number of competitors in the hemp business, especially in the United States. However, no one else to our knowledge has the supply scale, the production capacity, the research and manufacturing engine, and the sales and marketing expertise. We believe we are the first fully integrated global CBD life sciences company.

Q. How does the expansion into the U.S. impact your partnership with Canopy & Canopy Rivers?

From our perspective, it does not change the nature of how we work with Canopy day-to-day on Canadian operations.

Q. What about Litchfield in Quebec? How does this merger affect that project?

We are continuing to have positive and ongoing discussions with the new government of Quebec with regards to our Litchfield project, and this merger does not change that.

Q. Any guidance on revenue for 2019?

The CBD market is a rapidly emerging market, and there are various estimates of the size and scope of the market. What we can say with some degree of certainty is that we anticipate we will be producing 1,500 – 36,000 kilograms per month of CBD isolate by the second half of 2019. The current wholesale value of CBD isolate is approximately US$6,500/kg to US$10,000/kg pending quality and volume.

Q. Why is our stock halted and when will it resume trading?

As the merger will result in a reverse takeover by Vitality, a new listing application for the new Merger Co (resulting issuer) is now required to be submitted and approved by the CSE.  Further, to ensure our shareholders and prospective investors have relevant financial information on the proposed merger, we are required to distribute audited consolidated financial statements of Vitality in addition to the Circular for the Special Meeting to approve the merger.    Therefore, trading of our common stock will only resume once the CSE has approved the listing of the new Merger Co and the Circular (with audited consolidated financial statements of Vitality) delivered to LiveWell shareholders.  We anticipate this will be completed in April 2019.

This document contains “forward-looking information” within the meaning of applicable securities laws in Canada, including statements about LiveWell Canada’s business and corporate strategy, product utility, development and performance, regulatory matters, manufacturing plans and intellectual property plans and the expected development of LiveWell Canada’s business, trials, products, projects and partnerships. Particularly, information regarding our expectations of future results, performance, achievements, prospects or opportunities is forward-looking information. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “continue”, “plans” or variations of such words. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. For this purpose, any statement that is not a statement of historical fact should be considered forward-looking information.