Sativa Wellness - Business Update

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Sativa Wellness Group Inc.
("Sativa" or "Sativa Wellness" the "Company" or the "Group")

26 January 2021 

Business Update

2020 Highlights

·    Completed the reverse takeover of StillCanna Inc. (the "StillCanna Acquisition") in the third quarter of the calendar year, creating a vertically integrated European seed to consumer cannabidiol ("CBD") company. The StillCanna Acquisition added a CBD manufacturing facility in Poland to the Company's asset base and increased the Company's cash on the balance sheet by C$4.3 million as of the date of closing.

·    Successfully integrated the operating systems, control environment and governance framework of StillCanna Inc. with Sativa Group PLC's operating systems, control environment and governance framework to create Sativa Wellness Group Inc.

·    While the ongoing COVID pandemic affected sales and forced closure of our retail stores and the CBD production facility in Poland, the Company adjusted by:

o  Reducing staffing levels and cutting costs across the business;

o  Utilising the UK production facility to produce hand sanitiser under the Goodbody brand and white label products for restaurants and businesses; and

o  Utilised the Company's retail premises in Bath and Bristol to offer COVID testing services.

·    Upgraded and launched to market Goodbody Botanicals and Goodbody Wellness product ranges, including the new online site goodbodystore.com.

·    In the second quarter, the Company launched the UK FSA Novel foods accreditation process in order to achieve compliance by March 31, 2021.

·    Launched the new corporate website sativawellnessgroup.com in the third quarter.

·    Awarded provisional ISO 17025 accreditation for PhytoVista laboratories in the third quarter.

·    In the fourth quarter, the Company restarted the CBD extraction plant in Poland producing high quality CBD isolate and distillate.

·    Diversified the wellness range of products to include COVID testing in the fourth quarter.

·    In the fourth quarter, the Company developed a fully integrated consumer marketing plan that supports and aligns with the trade activity, and refined our route to market strategy to drive sales.

·    The Company's third quarter sales increased to C$826,363.

·    Achieved record sales in the fourth quarter, an increase of 68% (un-audited) on Q3 results, achieving a record year in 2020, despite declines in sales in the first two quarters due to the impact of COVID 19.  

2021 Action Plan

·    Achieve UK FSA Novel Foods accreditation deadline on or before March 31, 2021. The Company's dossier is ready for submission for core CBD isolate and distillate plus a full range of Goodbody and white label products.

·    Drive Goodbody brand CBD wellness sales growth in the UK and launch in Europe.

o  Commence online sales on goodbodystore.com.

o  Launch goodbodystore.eu in Europe. A major EU regulation change has provided significant opportunities for CBD sales in multiple countries. The European FSA has re-launched the Novel Foods accreditation process which is in alignment with the UK regulations.

o  Expand product range focusing on lower price point products and adding additional cosmetic products to deliver increased consumer and trade sales.

·    Complete the simplification of the Company's corporate structure to reduce overhead costs.

·    Expand COVID testing services to other parts of the UK. In January, the Company partnered with local pharmacies in Southampton and Cardiff utilising the Sativa systems.

·    Achieve positive free cash flow from all operating businesses in the UK and Poland.

·    Explore and pilot, other wellness and testing service opportunities.

·    Drive sales growth of bulk CBD isolate and distillate to pharma, cosmetic and CBD companies across the UK and Europe, from production output from the Company's plant in Poland.

·    Grow white label (private label) sales of the Company's product lines in the UK and Europe, utilising the Company's CBD isolate and distillate and the Company's production facilities. The Company expects a number of competitors to be unable to achieve Novel Foods accreditation, to our competitive advantage.

Although the world is still in the grip of the global COVID pandemic, the Company has held steadfast in our commitment to building a long-term growth company in the European CBD and wellness space. Our commitment to producing and distributing the highest quality and compliant products and services to the market also remains. The Company will continue to explore opportunities to develop its CBD and wellness products and services, as illustrated by the decision to offer COVID testing services.

All the best for a safe, healthy and prosperous 2021.

Kind regards

Henry Lees-Buckley

The Directors of the Company accept responsibility for the contents of this announcement.

On behalf of the Board of Directors,