CannAmerica Brands Corp. provide an update on its binding letter of intent (LOI) to create a joint venture with Invictus MD Stategies Corp. and CBDistribution Company Ltd. (CBDC) that was previously announced on January 7, 2019 with the intention of acquiring hemp biomass for extraction into CBD isolate using purpose-built facilities for large scale CBD extraction.

The Joint Venture has entered into a binding LOI with Z3 Sciences, LLC ("Z3") to purchase 80% of the membership interests of Z3 for aggregate consideration, including performance incentives, of USD 42.25 million. Z3 is expected to provide the Joint Venture with existing extraction contracts from extracting Hemp biomass into CBD isolate. The current wholesale cost for CBD Isolate is in the range of USD 5,000 to USD 7,000 per kilogram.

Z3 existing extraction contracts range from USD 20 to USD 30 per input pound of hemp biomass plus USD 1 to USD 2 per finished gram of CBD isolate. The current facility has the capacity to process up to 50,000 lbs of hemp biomass per month with a yield of approximately 2,500 kg's of CBD isolate per month. The existing management team at Z3 consists of experienced operators that are expected to continue to operate the extraction facilities in Colorado where Z3 currently resides.

The Z3 team includes: Jacob Tupper, Co-Founder and Chairman, specializes in structuring contracts and creating large scale CBD deals to open expansion opportunities; Ben Metzker, Co-Founder, has founded multiple companies ranging from digital marketing, software, consulting and most recently manufacturing and production of CBD from hemp. He has helped companies and people to grow their personal and professional brands resulting in over USD 100 million in increased revenue and profits; Winston Cook, CEO, is an experienced C-level executive with a demonstrated history of working in the marketing and advertising industry with digital strategy, search engine optimization, customer acquisition, advertising, and sales; and Chris Mansfield, COO, has over 15 years of experience in all operations of the information technology solutions, systems integration, and professional services industries. Subject to Board approval, stock exchange approval and completion of satisfactory due diligence, the Joint Venture and Z3 intend to enter into a definitive purchase agreement on or before March 17, 2019.

Consideration for the acquisition consists of: Common shares of CANA having an aggregate value of USD 3.75 million; Common shares of Invictus having an aggregate value of USD 3.75 million; USD 5 million in cash payable over a period of 240 days from the closing date; and USD 1.5 million in cash for Z3 to purchase equipment and use for working capital purposes. The consideration also includes performance incentives subject to Z3 achieving gross revenue targets throughout 2020 that consist of: Common shares of CANA having an aggregate value of USD 1.25 million and common shares of Invictus having an aggregate value of USD 1.25 million if Z3 achieves gross revenue of USD 10 million for the four months ended April 30, 2020; Common shares of CANA having an aggregate value of USD 1.25 million and common shares of Invictus having an aggregate value of USD 1.25 million if Z3 achieves gross revenue of USD 10 million for the four months ended August 31, 2020; Common shares of CANA having an aggregate value of USD 1.25 million and common shares of Invictus having an aggregate value of USD 1.25 million if Z3 achieves gross revenue of USD 10 million for the four months ended December 31, 2020; A total of USD1.75 million in cash to be paid to the shareholders in equal proportions on January 2021 and June 2021; common shares of the Company having an aggregate value of USD 1 million; and common shares of Invictus having an aggregate value of USD 1 million if Z3 achieves each of the above listed gross revenue goals, totaling minimum of USD 30 million for the 12 months ended December 31, 2020; USD 8.5 million in cash and USD 4.25 million in shares of CANA and USD 4.25 million in shares of Invictus to be paid to the shareholders in 2021 if Z3 achieves USD 80 million in the 12 months ended December 31, 2020.