Creso Pharma Limited (ASX:CPH, FRA:1X8) (‘Creso Pharma’ or ‘the Company’) is pleased to advise that it has secured firm commitments from institutional, professional and sophisticated investors to raise $2.5m million (before costs) through the issue of 204,918,033 new fully paid ordinary shares (“Shares”) at an issue price of $0.0122 per Share (the “Placement”). As well, the Company has converted a number of current liabilities to equity, agreed to repay convertible notes to Obsidian Global GP, LLC (“Obsidian”) and agreed in principle to extend its existing Secured Notes with investors.

Highlights:

• Firm commitments to raise $2.5m through the issue of 204,918,033 new fully paid ordinary shares at $0.0122
• Initiative well supported by new and existing institutional, sophisticated and professional investors
• Funds to be deployed to extinguish and repay existing debt, progression of the Company’s phase II clinical trial, product development and regulatory initiatives
• New funding follows completion of Health House International Limited (ASX: HHI) and comes at a pivotal growth phase
• Additional capital to unlock revenue growing opportunities - combined CPH revenue and HHI cash receipts as a proxy for revenue takes unaudited pro forma revenue to over $33m on a last quarter annualised basis
• Agreements secured with existing debtors for equity conversion – streamlines Creso Pharma’s balance sheet further
• Repayment of Convertible Service Agreement with Obsidian Global GP, LLC to streamline balance sheet

Funds raised from the Placement include commitments from Mr Adam Blumenthal for a total of $900,000, which will be subject to shareholder approval.. The remaining Placement Shares will be issued under the Company’s placement capacity pursuant to ASX Listing Rule 7.1A.

Participants in the Placement will also be issued one free attached listed CPHOD option which has an exercise price of $0.08 and is valid until 31 January 2027 (“Placement Option”). The Placement Options will be subject to shareholder approval and will be issued within four months of completion of the Placement.

The issue price under the Placement represents a 23.75% discount to the last closing price of $0.016 and a 24.69% discount to the 15 day VWAP, being $0.0162.

Debt to equity conversions:

To strengthen its balance sheet, the Company has also entered into agreements with existing debtors to convert certain current liabilities of $368,333 into new equity via the issuance of $481,666 of stock at a deemed issue price of $0.0122 (being 36,748,607 Shares), which includes an issue of 36,748,607 Options on the same terms as the Placement, which are subject to shareholder approval.

The Company will also, subject to shareholder approval issue 2,732,213 Shares and 2,732,213 Options to Director Mr. Bruce Linton, in lieu of Directors Fees with a total value of $33,333.

Repayment of Obsidian Convertible Services Agreement (“CSA”):

Creso Pharma advises that it has agreed to repay its CSA with Obsidian (refer ASX announcement: 1 November 2022 for details of the CSA). Both parties have agreed to settle the outstanding CSA balance of 260,850 convertible notes which have a Face Value equal to US$1.15m via the issuance of 55,655,738

Shares based on a price of A$0.0122 per Share. Upon the issuance of the Shares, the remaining 260,850 Notes will be retired, leaving a balance of 0 Notes being owed to Obsidian.

Following the issue of the Shares, the CSA will terminate and both the Company and Obsidian will discharge each other from all obligations, claims, demands and liabilities arising under or in connection with the CSA. All shares issued to Obsidian will be issued under the Company’s placement capacity pursuant to ASX Listing Rule 7.1.

Extension of Secured Notes:

Further to the repayment of convertible notes to Obsidian, the Company has reached in principle agreement with the majority of the existing lenders to extend the maturity date and repayment date (“Due Dates") of the Secured Notes (refer to ASX announcement: 1 November 2022 for details of the Secured Notes). In return for agreeing to the extension, it is proposed that the Due Dates are extended to 30 September 2023 and that the existing investors be issued Shares (together with one listed CPHOD option which has an exercise price of $0.08 and is valid until 31 January 2027) valued at 35% of the face value of the convertible loan notes held by each lender at a deemed issue price of $0.0122. The Company has also agreed in good faith to work with the holders of the Secured Noteholders to reach a solution where a minimum of 75% of the balance could be repaid in shares. As a result of this agreement, the Company will issue 66,557,377 shares to existing lenders who are non-related parties under the Company’s placement capacity pursuant to ASX Listing Rule 7.1. Additionally, subject to shareholder approval, 14,344,262 shares will be issued to Mr. Adam Blumenthal which represents his pro rata participation in the Secured Notes. Additionally, subject to shareholder approval, 80,901,639 listed options will be issued to the existing lenders in the Secured Note.

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