Capital Raising & Corporate Update

Melodiol Global Health Limited (ASX:ME1) (‘Melodiol’ or ‘the Company’) is pleased to advise it has received firm commitments to raise approximately $1m (before costs) through the issue of approximately 200,000,000 new fully paid ordinary shares (‘Shares’) at an issue price of $0.005 per Share (the ‘Placement’). The Company has also agreed with creditors to convert $724,206 of amounts outstanding to equity, via the issuance of 157,339,296 Shares at an issue price of $0.005 per Share, with the Shares having a dollar value of $786,696, on the same terms as the Placement (‘Debt Conversions').

Highlights:

• Firm commitments received to issue 200,000,000 Shares at an issue price of $0.005 per Share to raise $1m (before costs)
• Raise follows ~$7.5m in unaudited revenue achieved across the Melodiol Group in Q3 FY23 – a 265% increase on the PCP (Q3 FY22: $2.05m), and a 58% rise on last quarter (Q2 FY23: $4.74m)
• Debt to equity conversions agreed for the issue of an additional 157,339,296 Shares at an issue price of $0.005 per Share, with the Shares having a dollar value of $786,696, on the same terms as the Placement
• Q3 FY23 revenue growth takes total FY23 unaudited net revenue to date to $14.54m – new funding to underpin ongoing growth trajectory
• Corporate updates on the Extension of Secured Notes, SBC Convertible Note Facility and the Panacea Transaction, resulting in total T1 and T2 SBC Facilities being 79% repaid

Subject to shareholder approval, Placement participants and Debt Conversion participants will receive two free attaching Options for every one new Share issued under the Placement or Debt Conversion. The Options will be exercisable at $0.01 with a five year expiry (on the same terms as the Bonus Option Offer announced on 23 October 2023) (‘ME1OE Options’). The Company will seek to quote the attaching Options, subject to meeting ASX listing requirements.

Placement Shares will be issued under the Company’s existing placement capacity, pursuant to ASX Listing Rule 7.1A. The issue price of the new Shares represents a 19.48% discount to the 15-day volume weighted average price (‘VWAP’) of $0.00621. The Debt Conversion Shares will be issued under the Company’s existing placement capacity, pursuant to ASX Listing Rule 7.1.

The Company notes that core subsidiaries, Mernova Medicinal Inc., and HealthHouse Australia have both demonstrated strong operating results during FY23 with each achieving at least one instance cash flow positive quarter during the year. With these encouraging results, the Company has taken active steps to refocus its efforts and resources into these higher performing business units, whilst exploring opportunities to undertake a strategic divestment of assets. Whilst it does so, it is likely that further capital will be required in the near term with the Company considering additional sources of capital, including but not limited to, other debt funding that has been previously announced and can be drawn down on, further capital raising activities, divestment of non-core assets, and possible accretive divestment of core assets.

Management commentary:

CEO and Managing Director, Mr William Lay said: “I would like to take this opportunity to thank investors for their support of the Placement. This new capital comes at a critical juncture as the Company continues to drive strong operating results at Mernova and HHI, while also pursuing strategies to restructure debt and divest some of the Company’s lower revenue generating divisions to meet the group's profitability goals.”

Lead Manager:

EverBlu Capital Corporate Pty Ltd (“EverBlu”) acted as lead manager to the Placement and Debt Conversion, as well as assisting with the negotiations with SBC Global and Panacea. EverBlu will earn a 6% cash fee on the gross cash amount raised and converted under the Placement, to be satisfied by the issue of Shares at an issue price of $0.005, together with one free attaching ME1OE Option for each Share issued, each subject to shareholder approval. Subject to shareholder approval, EverBlu will also receive 120,000,000 Shares, and 714,678,592 ME1OE Options (being the same number as issued to Placement and Debt Conversion participants), if feasible. If the issue of these Options is not feasible, the Company has agreed to work with EverBlu on a best efforts basis to come to an alternate arrangement. Where shareholder approval is not received, the cash equivalent of fees will be payable.

Other Corporate Updates

Extension of Secured Notes

The Company has reached an in-principle agreement with the majority of the remaining Secured Note lenders (refer to ASX announcements dated: 1 November 2022, and 19 May 2023) to extend the maturity and repayment date of the Secured Notes from 30 September 2023 to 30 November 2023. In return for agreeing to the extension, the lenders have been issued 100 million Shares at a deemed issue price of

$0.005 per Share, under the Company's ASX Listing Rule 7.1 placement capacity. Subject to shareholder approval, the lenders will also receive 100 million free attaching options on the same terms as the Bonus Options. The Company has also agreed in good faith to work with the Secured Note lenders to reach an agreement by 30 November 2023 to create a pathway for full repayment of the Secured Notes.

The Company has agreed to issue Briant Nominees Pty Ltd and CPS Capital Group Pty Ltd an aggregate of 20,000,000 Shares, as a fee for facilitating the extension negotiations. These Shares will be issued imminently out of the Company’s ASX Listing Rule 7.1 Placement Capacity.

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