Cylix Data And Eastwest Announce Reverse Takeover Transaction Of 1264136 B.C. Ltd. By Cylix Data And Brokered Financing Led By Canaccord

PENTICTON, BC / ACCESSWIRE / April 12, 2021 / EastWest Bioscience Inc. (TSX.V:EAST) ("EastWest" or the "Company") and 2747524 Ontario Inc. o/a Cylix Data Group ("Cylix Data") are pleased to announce they have entered into a definitive business combination agreement (the "Combination Agreement") dated March 24, 2021, to complete a business combination by way of a transaction that will constitute a reverse takeover of a wholly-owned subsidiary of the Company, being 1264136 B.C. Ltd. ("SpinCo"), by Cylix Data (the "Transaction"). The Transaction is conditional on, and will be effected after, EastWest effects a strategic reorganization, whereby the Company intends to spin out its interest in SpinCo to the Company's shareholders by way of a statutory plan of arrangement (the "Spin-Out") pursuant to the Business Corporations Act (British Columbia). It is the intention of the parties that the resulting issuer from the Transaction (the "Resulting Issuer") will carry on the current business of Cylix Data. SpinCo and Cylix Data are not related and act at arm's length.

Description of Cylix Data and its Business

Cylix Data provides a single source of data to reduce risks and uncertainty in making quality decisions. Consisting of data obtained from various primary and third-party sources, the Cylix Data platform aggregates and stores a vast series of data tables interconnected through proprietary algorithms to produce a customer profile and business risk score.

Cylix Data's online portal enables customers to generate fully customizable reports consisting of one or more of:

• Company Contact Information
• Ownership Information
• Affiliated Concerns
• Payment Trends
• Aging Accounts Receivable Information
• Bank Reports with Historical Data
• Trade References with Historical Data
• Legal Items of Record & Collection Claims

Additionally, an automated and customizable API allows for third party integrations and individualized data extraction based on customer requirements.

The Spin-Out

Under the terms of the Spin-Out, current shareholders of EastWest will receive one (1) common share of SpinCo (a "SpinCo Share") for every 120 common shares of EastWest. In addition, the Company will be retaining 500,000 SpinCo Shares (the "Retained Shares") as an asset on its balance sheet, along with 1,666,667 common share purchase warrants, each exercisable at a price of $1.90 per SpinCo Share for a period of two (2) years following the Closing (as defined below). The Spin-Out will be subject to the approval of the Company's shareholders, which EastWest will be holding a shareholder meeting in the near future. The Spin-Out also requires the approval of the Supreme Court of British Columbia.

Further details of the Spin-Out will be announced as they are finalized. Further press release disclosure would include the issuance of the order as well as financial information related to the arrangement and further disclosure on the initial management of SpinCo. Shareholders are cautioned that there is no certainty that the Spin-Out will be completed on the terms currently proposed or at all.

"We are pleased to provide further value to shareholders in the form of shares of Cylix Data," says Rodney Gelineau, EastWest's CEO, "and to be adding additional assets to our balance sheet in form of Cylix Data shares, which the company can dispose of at a later date."

The Combination Agreement

Under the terms of the Combination Agreement, it is anticipated that the Transaction will be effected pursuant to a three-cornered amalgamation among Cylix Data, SpinCo and a wholly-owned subsidiary of SpinCo. Closing of the Transaction is expected to take place in the third quarter of 2021.

Pursuant to the terms of the Combination Agreement, SpinCo will effect a stock split or consolidation (the "Adjustment") of its issued and outstanding common shares ("SpinCo Shares") prior to completion of the Transaction (the "Closing"), that results in the shareholders of SpinCo, as constituted immediately prior to the Closing, holding 1,666,667 shares. which is inclusive of the Retained Shares. The SpinCo Shares upon completion of the Adjustment are referred to herein as the "Adjusted SpinCo Shares". In accordance with the terms of the Combination Agreement, it is expected that the holders of the issued and outstanding common shares in the capital of Cylix Data (the "Cylix Data Shares") will be issued one (1) Adjusted SpinCo Share in exchange for each Cylix Data Share (the "Exchange Ratio") held immediately prior to the Closing.

The Combination Agreement includes a number of conditions to the Closing, including but not limited to, the conditional approval of the Canadian Securities Exchange ("CSE"), a reconstitution of SpinCo's board of directors and management such that they are comprised of Cylix Data's nominees, a change in SpinCo's name to a name requested by Cylix Data (the "Name Change"), requisite shareholder approvals including the approval of the shareholders of Cylix Data and SpinCo, the completion of the Adjustment, the completion of the Spin-Out, approvals of all regulatory bodies having jurisdiction in connection with the Transaction, the completion of the Cylix Data Financing (as defined below), that SpinCo will have no outstanding liabilities, and other closing conditions customary to transactions of the nature of the Transaction. SpinCo intends to call an annual general and special meeting of its shareholders (the "Meeting") in due course, and its shareholders will be asked to approve the following matters, among others, at the Meeting: the reconstitution of SpinCo's board of directors, the Name Change, the Adjustment, and the Transaction or a component thereof (as may be required by the CSE). There can be no assurance that the Transaction will be completed as proposed or at all.

Upon closing of the Transaction, it is anticipated that the Resulting Issuer will pay finder's fees to 997322 Ontario Inc. and Summit Bancorp Inc. comprised of, respectively, $250,000 in cash and 250,000 units ("Finder Units"), each comprised of one Adjusted SpinCo Share and one warrant exercisable for the purchase of one Adjusted SpinCo Share at an exercise price of $1.50 for a period of three years, and 100,000 Finder Units. 99732 Ontario Inc. is the current controlling shareholder of Cylix Data, and Summit Bancorp Inc. is a corporation controlled by Paul Haber, who is anticipated to be the Chief Financial Officer of the Resulting Issuer.

SpinCo is a private company that will, following the completion of the Spin-Out, become a "reporting issuer" under the securities laws of the Provinces of British Columbia, Alberta and Saskatchewan.

Cylix Data Financing

Cylix Data will complete a brokered private placement offering (the "Cylix Data Financing") of subscription receipts ("Subscription Receipts") to be led by Canaccord Genuity Corp. (the "Agent") at a price of $1.25 per Subscription Receipt, for gross proceeds of up to $10,000,000. Pursuant to their terms, upon the conditions to conversion being met, each Subscription Receipt will be converted into one unit of Cylix Data (a "Cylix Data Unit"), with each unit being comprised of one Cylix Data Share and one common share purchase warrant of Cylix Data (a "Cylix Data Warrant") exercisable for the purchase of one Cylix Data Share at a price of $1.90 per share for a period of two years following the Closing. The Cylix Data Shares and Cylix Data Warrants will be exchanged at the Exchange Ratio for Adjusted SpinCo Shares and warrants exercisable for the purchase of Adjusted SpinCo Shares. Cylix Data will pay the Agent a cash commission equal to 7% of the aggregate gross proceeds of the Cylix Data Financing issue Agent compensation warrants equal to 7% of the Subscription Receipts sold (with each Agent compensation warrant exercisable into Cylix Data Units at a price of $1.25 per warrant for 24 months following the date the escrow release conditions are satisfied), and pay a corporate finance fee equal to 5% of the Subscription Receipts sold. The cash commission shall be reduced to 5% in respect of Cylix Data Units sold to purchasers sourced by Cylix Data. The net proceeds of the Cylix Data Financing, together with 50% of the cash commission payable to the Agent (the "Escrowed Funds"), will be placed in escrow pending completion of the Transaction and the satisfaction of the escrow release conditions of the Subscription Receipts. Upon completion thereof and the release of the net proceeds, it is currently contemplated that the net proceeds will be used for used for sales, marketing and general working capital.

The escrow release conditions are as follows and must be satisfied within 120 days following the closing date of the Cylix Data Financing:

1. written confirmation from each of Cylix Data and SpinCo that all conditions to the completion of the Transaction have been satisfied or waived, other than the release of the Escrowed Funds;
2. the Adjusted SpinCo Shares being approved for listing on CSE;
3. the receipt of all regulatory, shareholder and third-party approvals, if any, required in connection with the Transaction;
4. Cylix Data, SpinCo and the Resulting Issuer shall not be in breach or default of any of its covenants or obligations under (A) a subscription receipt agreement (the "Subscription Receipt Agreement") to be entered into on the closing date of the Cylix Data Financing, among Cylix Data, SpinCo, the Agent and a licensed Canadian trust company or other escrow agent (the "Subscription Receipt Agent"); and (B) an agency agreement (the "Agency Agreement") to be entered into on the closing date of the Cylix Data Financing, among Cylix Data, SpinCo and the Agent, except (in the case of the Agency Agreement only) for those breaches or defaults that have been waived by the Agent and all conditions set out in the Agency Agreement shall have been fulfilled, which shall all be confirmed to be true in a certificate of a senior officer of the Resulting Issuer; and
5. the delivery of an release notice to the Subscription Receipt Agent in accordance with the terms of the Subscription Receipt Agreement.

Listing Statement and Non-Offering Prospectus

In connection with the Transaction and pursuant to the requirements of the CSE, SpinCo and Cylix Data intend to file a listing statement on SpinCo's issuer profile on SEDAR (www.sedar.com), which will be created following the completion of the Spin-Out, and file a non-offering prospectus with the Ontario Securities Commission, and which will contain details regarding the Transaction, Cylix Data and SpinCo. Investors are cautioned that, except as disclosed in the listing statement and non-offering prospectus, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. There can be no assurance that the Transaction will be completed as proposed or at all.

Further Information

EastWest, SpinCo and Cylix Data will provide further details in respect of the Transaction in due course by way of press release. EastWest and SpinCo will make available all information including financial information as required by applicable regulatory authorities and will provide, in a press release to be disseminated at a later date, the required disclosure.

Investors are cautioned that any information released or received with respect to the Transaction in this news release may not be complete and should not be relied upon.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities, in any jurisdiction in which such offer, solicitation or sale would be unlawful.

About EastWest Bioscience Inc.

EastWest Bioscience is a vertically integrated wellness company with a multitude of business units and assets that allow for seed-to-sale supply chain management. We source our raw material, process, manufacture, test, brand, market, and distribute our products to our customers in Canada, the United States, and beyond. The Company owns and operates retail and manufacturing subsidiaries.

The Company's retail subsidiary is the award winning, Canadian, natural health retail franchise - the Sangster's Health Centre's - with over 40 years of legacy in the health and wellness industry. Sangster's goal is to provide natural choices through quality products and educated advice for a healthy lifestyle. Sangster's Health Centres occupies a unique position in the industry, the stores provide vast knowledge and safe natural remedies for the prevention and treatment of disease and ailments. Sangster's introduction and development of over 202 exclusively labeled products (vitamins, mineral, herbs, proteins, natural body care and organic foods) catapulted Sangster's name and product into a large number of Canadian households. From a solid base in Saskatchewan, Sangster's has become a national brand name with franchise stores located across Canada.

Orchard Vale Naturals is the Company's manufacturing arm that is certified with a Health Canada Site License and has GMP Certified NHP Manufacturing capabilities. Orchard Vale Naturals specialize in custom blends and production runs of all sizes, small to large, for top-quality products with quick turnaround times. Orchard Vale Naturals operate out of the 34,000 sq Health Canada licensed facility in Penticton, British Columbia that is owned by EastWest Bioscience and is the Head Office for all of its Canadian operations.

ON BEHALF OF THE BOARD OF DIRECTORS OF

EASTWEST BIOSCIENCE INC.

"Rodney Gelineau"

Co-Founder, Chief Executive Officer and Director

For Further Information:

EastWest Bioscience Inc. / 1264136 B.C. LTD.
Rodney Gelineau, CEO & Director
Telephone: 1-800-409-1930
Email: investors@eastwestscience.com

2747524 Ontario Inc. o/a Cylix Data Group
Ezio D'Onofrio, CEO & Director
Telephone: 905-747-2108
Email: info@cylixdata.com

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities to be issued in connection with the Transaction have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Completion of the Transaction is subject to a number of conditions, including but not limited to disinterested shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or listing application to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of EastWest or SpinCo should be considered highly speculative.

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

Cautionary Statements Regarding Forward Looking Information

This news release contains "forward-looking information" within the meaning of applicable securities laws, which may include, but is not limited to, statements with respect to the Company completing the proposed Transaction, completion of the Cylix Data Financing, completion of the Spin-Out, the listing of the Adjusted SpinCo Shares on the CSE, and associated transactions, including statements regarding the terms and conditions of the Transaction and the Cylix Data Financing, the business plans and objectives of Cylix Data and the Resulting Issuer upon completion of the Transaction and approvals of regulatory bodies. Although EastWest, SpinCo and Cylix Data believe in light of the experience of its directors and officers, current conditions and expected future developments and other factors that have been considered appropriate and that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be placed on them because EastWest, SpinCo and Cylix Data can give no assurance that they will prove to be correct. Any such forward-looking statements may be identified by words such as "expects", "anticipates", "believes", "projects", "plans" and similar expressions. Readers are cautioned not to place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the risk that a closing condition to the Transaction is not satisfied or is not satisfied on a timely basis, including, without limitation, the Company's failure to complete the Spin-Out, the failure to list the Adjusted SpinCo Shares on the CSE, the parties' ability to satisfy closing conditions and receive necessary approvals and the inability of Cylix to complete the Cylix Data Financing or upon the current terms. These statements should not be read as guarantees of future performance or results. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements. Although such statements are based on management's reasonable assumptions, there can be no assurance that the Transaction will occur or that, if the Transaction does occur, it will be completed on the terms described above. EastWest, SpinCo and Cylix Data assume no responsibility to update or revise forward-looking information to reflect new events or circumstances unless required by applicable law.

SOURCE: EastWest Bioscience Inc.