Mr. Graham Farrell reports

WAYLAND GROUP PROVIDES CORPORATE UPDATE

Wayland Group Corp. has provided a corporate update on its operational progress in Canada and internationally.

Langton production facilities

The company is now completing a third harvest at its new facility in Langton, Ont., Canada, with licences for cultivation and business-to-business sales received in April, 2018, and December, 2018, respectively. The company, in partnership with Industrial Automation Solutions (IAS New York Inc.) of Rochester, N.Y., and its partner, Rockwell Automation, has completed a proof of concept (POC) for both the facility and automation platform. The average yield from such POCs, among three different strains, is 50 grams per plant. The cultivation concept has been modified to a screen of green, where greater plant density, and thereby greater yield, is achievable per square foot at the facilities. Throughout these POCs, each cultivation period totalled 17 weeks from start to finish. These periods consist of 10 days for clones to root, five weeks for vegetation to complete and 11 weeks for the flower cycle prior to harvesting. All stages of cultivation were completed in the same rooms, demonstrating the facility's versatility to conduct every stage of cultivation in each room. As the plants, on average, produced 50 grams per plant, with 9,000 plants in 8,800-square-foot rooms, the annual production average for flowering areas is now 286 grams per square foot per year. The POCs have demonstrated that, on an annualized basis, the company's Langton facility, once fully licensed for phase 1-A through phase 1-D, will be able to produce 23,731 kilograms of dry cannabis flowers to be used in the production and sale of packaged dry flower and cannabis oil. It is expected that with further phenotyping of genetics, in addition to nutrient optimization, such yields will continue to increase.

The company is currently harvesting 8,200 plants, with product from these plants anticipated to be ready for the market no earlier than April, 2019. In addition to the current harvest, the company has planted an additional 21,700 plants and will refill the current harvested room with 8,300 plants in mid-March, 2019, in order to fill the balance of the currently licensed area. The company expects to request inspection for readiness by Health Canada of the phase 1-A area in March, 2019. As the timeline for the required amendments to such licences has ranged from 30 days to 45 days to approximately 120 days for the company's last request for an amendment, the company has updated its timing expectations for amendments to its licences. Due to this potential for significant delay, the company has made necessary changes to its internal processes.

Revenues

In Q4 2018, the company generated revenues of $1,305,033, net of discounts and returns. Full financials for the quarter will be released during the first week of April, 2019. Looking forward into 2019, the company anticipates revenues of $2.7-million in the first quarter, $6.9-million in the second quarter, $7.7-million in the third quarter and growing to $20.6-million in the fourth quarter of 2019. The company also anticipates that its revenues will increase substantially quarter over quarter as more of the facility is filled with plants and consecutive harvests are completed. The company maintains supply agreements with four Canadian provinces and a German importer of cannabis. As noted in the company's press release of Feb. 7, 2019, Wayland was awarded its second good-manufacturing-and-good-distribution-practices-certified facility from the State of Saxony in Germany. These certifications provide Wayland with the foundation to start selling product into the lucrative German and other developing European markets with drastically shorter lead times and greater margins.

Financing

Wayland has also entered into an agreement to obtain additional funds to support the expansion of the company's global footprint and finance the development of its flagship Langton facility. This agreement is with certain investment funds managed by Alpha Blue Ocean Inc., a money manager based in London, United Kingdom, with a strong record of partnering with public companies and delivering meaningful value to its shareholders.

Alpha Blue has agreed to subscribe for up to $20-million aggregate principal amount of senior unsecured convertible debentures across up to five facilities. The first facility, for $4-million principal amount of debentures, has closed. Wayland expects to draw on additional facilities in the coming weeks.

Pierre Vannineuse, founder and chief executive officer of Alpha Blue Ocean, commented: "ABO could not be prouder to have selected Wayland as a long-term investment to our portfolio. We are particularly convinced by their European endeavours to replicate their successes in Canada and capture meaningful market share, as they are first movers in the world's most exciting medical cannabis market. We will work tirelessly to provide Wayland the support they need, both financially and commercially, to capitalize on their leading position in Europe."

The debentures under each of these facilities will be non-interest bearing, have a maturity date of one year from issuance and will be convertible by Alpha Blue into common shares of Wayland until maturity at a conversion price determined based on the market price of Wayland's common shares from time to time. The debentures may also be reimbursed in cash prior to the maturity upon certain events of default, subject to a 10-per-cent premium at the option of Wayland, and at maturity (at the election of Wayland). Pursuant to its agreement with Alpha Blue, in connection with the first closing, Wayland issued 1,851,851 warrants to Alpha Blue having a three-year term and 740,740 warrants having a five-year term. Each of these warrants is exercisable for one whole common share at an exercise price of $1.35. In connection with the closing of each subsequent facility, Wayland will issue warrants to Alpha Blue having a five-year term and entitling Alpha Blue to acquire $1-million of common shares, with the number of warrants to be determined based on the market price of Wayland's common shares at the relevant time. The subscription price for each debenture under the facilities is 95 per cent of its face amount. Wayland has paid a commitment fee of 2.5 per cent of the full aggregate principal amount of the debentures and a facility fee of 2.5 per cent of the aggregate principal amount of debentures issuable under the first facility. A 2.5-per-cent facility fee for the subsequent facilities will be payable on that facility's closing date. The funds under these facilities may be used for capital expenditures and for general corporate purposes. Further information regarding the financing can be found in the subscription agreement posted on SEDAR.

This financing ensures the company has adequate financing through to cash flow from its operations, including what is received as a result of cultivation from its Langton facilities.

International spinout and strategic review

Although the previously announced exclusivity period with International Cannabis Corp. (ICC) has come to an end, the company continues to pursue a transaction with ICC. The company's previously announced strategic review continues to assess this opportunity while exploring other strategic alternatives.

About Wayland Group Corp.

Wayland is a vertically integrated cultivator and processor of cannabis. The company was founded in 2013 and is based in Burlington, Ont., Canada, and Munich, Germany, with production facilities in Langton, Ont., where it operates a cannabis cultivation, extraction, formulation and distribution business under federal licences from the government of Canada. The company also has production operations in Dresden, Saxony, Germany, Regensdorf, Switzerland, and Allesandria, Piedmont, Italy. Wayland will continue to pursue new opportunities globally, including the consummation of its previously announced transactions in the United Kingdom, Australia, Colombia and Argentina, in its effort to enhance lives through cannabis.

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