Gitte Henriksen, CFO CS MEDICA, comments; "The negotiation with RongShi regarding an investment and Joint Venture in China has been a long and  complicated process.  Firstly, caused by our required share price with a premium of 454%, but also the cultural difference between Denmark & China and COVID-19 have had a huge impact. But as both parties had a true interest in this agreement, we finally found a solution acceptable for both parties."

Gitte continues,

We are so happy and proud of these agreements as this new funding of 60 MDKK, is the most important agreement CS MEDICA has made, and this without any expensive financial advisors involved, meaning the total funding is received by CS MEDICA. Mr. Guo (Harry), Asian Director in CS MEDICA has been involved in the process from the very beginning and have been a great help for CS MEDICA recognizing and handling the culture difference and importance of the face-to-face meeting, when doing business with a Chinese company. This is why we decided to visit RongShi Hi-Tech Co. Ltd in March after the failed negotiation in January. Now CS MEDICA has succeeded entering into a final agreement with Inner Mongolia RongShi Hi-Tech Co., Ltd regarding a total equity investment of DKK 60M in CS MEDICA at a share price of DKK 28.13".

[image] From Left: Mr Gao(Jason), Legal owner & General Manager, Inner Mongolia RongShi Hi-Tech Co., Ltd, Gitte Lund Henriksen, CFO, CS MEDICA A/S.

Directed share issue
RongShi will invest a total of DKK 60M in CS MEDICA through a directed shares issues at a share price of DKK 28.13, representing a price premium of 454% to the DKK 5,08 closing price of 24 March 2023 and a total of 14.76% of CS MEDICA 's outstanding shares. In total RongShi will subscribe for shares with a nominal value of DKK 0.065 for a nominal amount of DKK 138,642.

The investment is divided into two tranches each of DKK 30M. This first tranche is subject to the registration and approval of 3-5 of the CANNASEN CBD products by the China National medical Products Administration.

The second tranche of the investment is subject to the CS MEDICA reaching revenues of minimum DKK 62.4M in the 12-month period following payment of the first tranche. In the event the CS MEDICA is non-compliant with the requirements for the second tranche a total of nominal DKK 138,642 of new shares will be issued to RongShi for a total consideration of DKK 30 million.

The directed share issue is subject to approval by the CS MEDICA 's general meeting.

Approval by China National medical Products Administration
CS MEDICA is in process with the registration of the CANNASEN® CBD medical device products by the China National Medical Administration. In October 2022, a Beijing company had received the registration approval from Beijing Medical Products Administration for their two products including CBD component classified Class I of Medical Device. One product is "Liquid Dressing" with the registration approval number 20200018. And another is "Medial Cold Paste" with the registration approval number 20200019. Our products such as, Psoriasis gel, Wound Gel and Nasal gel, similar with the Liquid Dressing. Our patch and Arthritics gel are similar with the Medical Cold Paste. Both products was approved as a class  1 medical device within 3 months.  CS MEDICA expect a corresponding classification and approval time. Hence, the company believe it can reach the Clause of the tranche one, within 3 months.

Mr. Gao (Jason), Legal owner and General Manager, RongShi, comments;

"CS MEDICA and RongShi have 100% confidence to receive the registration approval from China National Medical Products Administration within 3 months if classified as Class I Medical Device. If classified as Class II Medical Device, we will receive the registration approval within 12 months. Even the worst scenario is we can't receive the registration approval within 12 months from China National Medical Products Administration. Our JV will produce our brand products CANNASEN® CBD in our JV production line and apply for the registration approval from the Inner Mongolia Medical Products Administration. This will be easy to receive the registration approval because JV is a domestic company to the Inner Mongolia government and Inner Mongolia Medical Products Administration."
 

This disclosure contains information that CS MEDICA A/S is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 26-03-2023 19:09 CET.