LiveWire Ergogenics Reveals 9-Month Update in Letter to Shareholders

Dear Fellow Shareholders,

Typically, we would not release another shareholder letter at this time of year, but we felt it crucial to keep you informed on some of the rapid developments over the last nine months. This letter summarizes our continuing efforts and achievements to develop Estrella Ranch in Paso Robles into California's premier cannabis cultivation and destination facility. We have made considerable progress in realizing our vision to create the world's first "Estate Grown Weedery" to cultivate the highest quality organic-style cannabis products on Estrella Ranch. We especially thank our Estrella team for their unwavering dedication to our cause and the loyal shareholders that have supported us on our journey; you are the reason we are here today.

During the initial pilot project on Estrella Ranch, Estrella River Farms cultivated the most beautiful sun-grown cannabis plants, proved the viability of our team's organic style and tractor-less farming process, and delivered the initial harvest to our distribution and manufacturing partner. They confirmed that the product was of exceptionally high quality, and the THC content has created an exceptional oil for use in its widely recognized vape products. A portion of this initial harvest is being developed into the "Estrella Weedery" brand of value-added specialty products for marketing through our new distribution partners, Kushagram and Green Eagle. Both companies have well-established distribution and delivery services throughout California, with a central warehouse located in Los Angeles. We will begin focused branding and marketing campaigns as soon as the product is ready for sale.

Before we get into the company details, a quick word about the general financial market conditions. We live in times of heightened economic volatility, mainly caused by supply chain imbalances, a relic of the two-year pandemic, causing a high inflation rate that has risen to 8% in 2022. Accordingly, most pieces of financial assets have declined from their 2021 highs. The S&P is down more than 14%, and the NASDAQ is down 22%. Many large cannabis stocks, especially many highly hyped and severely overextended SPACs have declined, several more than 50%. While this has created concern in financial circles, this might also represent a unique opportunity for investors to increase their position in reasonably priced cannabis stocks. 

As we have discussed in recent releases, the past several months have been especially trying times for the entire cannabis industry. This was caused by decreasing flower prices, complex and expensive regulations, high taxation, and continuing illicit sales that still make up the larger portion of all cannabis sales. As of this writing, the conditions have not yet improved for many small operators and farmers but may be most troublesome for the large and overextended companies. An increasing number of cultivators have abandoned or are not renewing their licenses, overextended retailers and distributors shut down, and "For Sale" signs are going up on manufacturing facilities throughout the State. At least three National cannabis companies have either departed California, are planning to reduce the size of their operations significantly, or shut down altogether. Based on a reasonable cost structure and low overhead, companies with wide moats may be positioned to outperform those peer organizations that occasionally report significant revenues but consistently produce underwhelming earnings or large losses. We believe that with our approach to producing value-added and high-quality specialty products instead of mass production and reckless expansion, we have built such a moat that will allow us to generate increasing revenues and reasonable profits.

While, on the surface, the current turmoil could be considered troubling for the entire industry, we recognize and welcome this trend as a healthy cleaning process and see tremendous opportunity in these turbulent times. Right from the start, we have built our business with a strong focus on exceptional value-added specialty products that can generate higher margins and address an increasing customer demand. Running an operation with a focused product and brand development and low overhead allows us to adjust dynamically to fast-changing market conditions and makes us less vulnerable to lower flower prices. This contrasts clearly with some of the overextended companies in the industry. While we are also somewhat hampered by the current over-taxation in California, we expect this to change soon. We have always believed that to be successful in the cannabis industry, you cannot take shortcuts or overextend yourself financially in unrealistic ways. You have to run an economically viable operation, not unduly burdened by substantial amounts of debt or unrealistic amounts of investment.

As with any new industry sector, the cannabis industry has been going through an unprecedented and unsustainable growth (investment) phase and is now leveling out, with drastically decreased share prices, especially for the large SPACs and MSOs. This should lead to a financially healthier and more sustainable business. We have the staying power to work through these challenging times. We see the rules and regulations coming into sync with the market conditions and improving to the degree that will make California a very profitable market for us; it still is the largest consumer market in the US. We have established our beautiful Estrella Ranch in the middle of this substantial market.

According to Data Bridge, the North American cannabis market is expected to grow to $528.2 Billion by 2028. The Pew Research Center found that 91% of U.S. adults are on board with marijuana legalization, with California being the leading producer and consumer. The U.S. legal cannabis market alone is predicted to more than double by 2025, reaching $41.5 billion in sales and producing a 21% compound annual growth rate ("CAGR"). Forty-four (44%) Americans now live in states with access to legal recreational cannabis. This is an explicit confirmation that cannabis is here to stay and that the market will continue to expand with continuing legalization, reduced taxation, and diminishing illicit sales.

Right from the beginning, we have built our business model of owning, managing, licensing, and white-labeling cannabis properties and value-added cannabis products on the realistic business principle of operating with the lowest possible overhead while still having enough resources to reach our goals. While this may have caused a somewhat slower growth process, we believe that our caution and focus on sustainable economic principles will prove to be a prudent approach. This will eventually produce the revenues, profits, and return on investment that would be expected from a successful company. 

We have carefully and methodically built an economically run and sustainable business with enormous room for expansion on the large Estrella Ranch property as needed or justified by market demand, creating the basis for expanding revenue and, most importantly, profits. Even with limited start-up revenue, we have already delivered a second profitable quarter in 2022. We believe the success of a cannabis company cannot (and should not) be measured in revenue alone while continuing to lose hundreds of millions of dollars. A solid Profit & Loss statement and a strong balance sheet are the crucial basis for any public company; cannabis companies are no exception. To support this, we have closed out our Reg A Circular Offering, which we expect to impact our share price positively. 

Now to the good (even better) part. We have completed the State licensing process and are now permitted to expand Estrella Rach to an easily manageable three acres with our current operating structure sharing resources between Estrella Ranch and our subsidiary Makana Ola in Humboldt, California. We will continue to expand our operations aggressively yet cautiously to the maximum capacity allowed at Estrella Ranch. Makana Ola has already reached max capacity and will contribute to our revenue during Q3 and Q4 of 2022. We believe the increasing number of customers demanding high-quality handcrafted and sun-grown specialty products supports our narrowly focused, organic style "Estate Grown Weedery" business model at both locations. We will continue to implement our unique vision carefully, following our strict financial discipline of operating with low overhead and diminishing debt burden without sacrificing justifiable expansion or the quality of our product.

Over the next two years, while cautiously exploring the many opportunities to acquire still valuable but folding cannabis companies and locations, we expect to substantially increase revenues and profits based on our existing business model. We will strive to reach the total production capacity as quickly as possible and take advantage of the inevitable balancing of the price imparity between illicit and legal sales in the industry. This balancing effect will stabilize market prices, make cannabis stocks more appealing again, and we expect to produce solid and sustainable ROIs for our shareholders for years to come."

It is going to be California Cannabis on the Shelves of all the Dispensaries across the Country

2022 Milestones (First Half)

• Successfully passed three inspections by the County and the State
• Received renewal of annual State License for initial acreage on Estrella Ranch
• Received nine new permits for two additional acres on Estrella Ranch for a canopy over 130,000 sqft.
• Create "Estrella Weedery" value-added specialty products
• Signed agreement to distribute "Estrella Weedery" branded products with large home delivery companies Kushagram and Green Eagle for California.

Goals for Q3 and Q4 2022

• Prepare for harvest during November/December
• Launch nationwide "Estate Grown Weedery" Branding campaigns
• Complete initial plans for 22,000 sqft. of indoor cultivation on Estrella Ranch utilizing existing building
• Enter licensing agreements with third-party private label products
• Evaluate and potentially execute additional acquisitions

Summary

At the same time, we are carefully exploring the plentiful acquisition opportunities currently presented to us that would complement our business model and follow our strict sun-grown and "quality-versus-quantity" rule – "Grow by the Pound and sell by the Gram." Following is a short outline of the current Livewire and its affiliate and subsidiary companies' achievements and the strategic focus and goals for the remaining part of 2022 and the year 2023:

• Received nine new cultivation permits from the Department of Cannabis Control
• Continuing to expand the cultivation area to three acres already on Estrella Ranch
• Complete all buildouts for expanded acreage, including new improved hoop houses and water conservation
• Expanding cultivation area to over 130,000 sqft. of canopy
• Implement the "Grow by the Pound and sell by the Gram" strategy
• Partnered with established manufacturers and distributors to achieve maximum value for our product
• Maximize leasing, licensing, and consulting fees
• Explore new acquisition opportunities that fit the business plan

Final Word

Undoubtedly, the challenging market conditions during the last year, caused by high cultivation taxes and an oversupply of low-quality products, much of it from the illicit market, caused prices to decline and curtailed the financial performance of many legally operating cannabis companies. These market conditions have only confirmed our model of strictly complying with all laws, rules, and regulations and running a lean operation with low overhead and a manageable debt burden. Our focus is cultivating the best sun-grown cannabis in the State and preparing for Nationwide distribution once Federal legalization finally can get over the political hurdles in Washington D.C.

During the last year, we have seen the share prices of many SPACs and MSOs rise to spectacular heights, only to crash down caused by radically changing market conditions and the failure of these companies to meet the overhyped expectations of investors. This will weed out the overextended operators and has created the ideal launching pad for our Company.

Best Regards,

Bill Hodson

Chairman and CEO

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