Mr. Jeff Ciachurski reports

CAPTIVA VERDE WELLNESS TO ACQUIRE A PROFESSIONAL SPORTS TEAM

Captiva Verde Wellness Corp. has signed a binding letter of intent dated effective July 18, 2023, with respect to the proposed acquisition of a professional sports franchise.

Summary of the transaction

The transaction, which is an arm's-length transaction, is expected to close in the coming several weeks and the details of the team and vendor will be released. As consideration for the 100 per cent of equity interest of, as well as assignments of the vendors' shareholder loans, Captiva will: (i) issue 60 million common shares of Captiva; and (ii) pay $1.5-million (U.S.) cash, all on the closing of the transaction. The consideration shares will be issued at a deemed price to be determined at closing, subject to compliance with the policies of the Canadian Securities Exchange (the CSE). Following completion of the transaction, it is anticipated that the current shareholders of the vendor will hold approximately 17 per cent of Captiva's common shares on a non-dilutive basis. The consideration is subject to a postclosing working capital adjustment provision. Under this provision, the parties will adjust the purchase price to offset any increase or decrease of the net working capital as of the closing date.

Jeff Ciachurski, chief executive officer of Captiva, states: "We are deeply honoured and committed to enter into an agreement to acquire a professional sports team as an addition to our infrastructure health and wellness platform. The problem has long been the general public has always had difficulty investing into fast-growing new sport franchises, yet the success of a public company owning a sports franchise is well documented, all having enterprise value buildups through the democratization of investing into a sports franchise public company. This adds several years of additional growth for the Captiva Wellness shareholders."

About the transaction

Captiva does not expect the transaction to constitute a fundamental change or change of business under the policies of the CSE.

The letter of intent sets out certain terms and conditions pursuant to which the transaction will be completed. The transaction remains subject to certain closing conditions including, without limitation: (a) the completion of customary due diligence; (b) the negotiation and execution of a definitive agreement; (c) the closing of private placement (as hereinafter defined); and (d) the receipt of all required regulatory and third party approvals. There can be no guarantees that the transaction will be completed as contemplated or at all.

All consideration shares issued in the transaction will be issued under prospectus exemptions pursuant to National Instrument 45-106 -- Prospectus Exemptions of the Canadian Securities Administrators. Captiva expects to issue the consideration shares under Section 2.11 of NI 45-106 and provided that certain statutory conditions are satisfied, such shares are not expected to be subject to any resale restrictions under applicable Canadian securities laws.

In connection with the closing of the transaction, Captiva expects to appoint a nominee of the vendor to its board of directors and to adopt an equity compensation plan with a restricted share unit component.

There is no finder's fee payable in connection with the transaction.

Update on private placement

Further to the company's news release dated April 28, 2023, the company expects to close its private placement in the near term. As disclosed in the private placement news release, the net proceeds of the private placement are expected to be used for general working capital purposes and as a reserve for possible future acquisitions, including the transaction.

The private placement is a unit offering. Each unit is priced at 3.2 cents per unit. Each unit will consist of one common share of the company and one common share purchase warrant, with each warrant entitling the holder thereof to acquire one common share at a price of five cents for a period of five years following the closing of the private placement.

The company will increase the size of the private placement from 80 million units to 90 million units for gross proceeds of $2.88-million.

We seek Safe Harbor.