CS MEDICA

Q&As from the CEO
I want to reflect on our recent achievements and outline structural enhancements based on the EGM resolution. I'll detail how we aim to build resilience to secure future growth and increase shareholder value.

It may be a lengthy summary, but based on the questions and pitches we receive, it's essential to provide complete insight into our plans and intentions for business growth.
 

1. REFINED COMPANY STRUCTURE

We've streamlined our group structure to enhance operational efficiency, meet new EU Medical Device Regulation requirements, and align with our strategic objectives. CS MEDICA oversees four key subsidiaries, each specializing in different aspects of our business. This structure ensures comprehensive control over the entire value chain while leveraging the strengths of each subsidiary.

Strategic Intentions:

• Control Over the Value Chain
• Resource Optimization
• Revenue Diversification
• De-Risking

The CS MEDICA Group: As a MedTech pioneer specializing in cannabinoid-based treatments for pain management, autoimmune, and stress-related disorders, we focus on delivering patient-centric self-care. Our products range from innovative R&D to registered over-the-counter substance-based medical devices and dermaceuticals. Our flagship CANNASEN® brand exemplifies our commitment to safe, high-quality treatments for both human and veterinary health globally.

CS MEDICA A/S – Holding Company and Group Parent:

• Location: Copenhagen, Denmark
• IP Management: Owns all intellectual property rights related to the group's product portfolio, including global patents and trademarks.
• Licensing of IP Rights: Licenses IP rights at both product and geographical levels, charging a percentage-based license fee tied to quarterly sales. Agreements exist with subsidiaries CANNORDIC and CANNORDIC India, and JV Rongshi China.
• Shared Services: Provides centralized support functions like operation, marketing, and IPRs. The income stream is based on IP licensing and CMaaS (Compliance and Marketing as a Service).

The CS MEDICA Group structure ensures high quality, regulatory compliance, and optimal resource utilization, fostering growth and market expansion. Centralizing IP rights within CS MEDICA allows for strategic licensing opportunities, enhancing operational flexibility and long-term growth potential.
 

2. OPERATIONAL OPTIMIZATION

The Letter of Intent (LOI) with GP Europe Holding B.V. marks the beginning of a transformative partnership. This collaboration represents vertical integration aligned with our strategic goal of controlling the entire value chain—from hemp cultivation and cannabis isolate production to product manufacturing and sales.

Key Benefits:

• Innovation and Development: Joint R&D initiatives will accelerate the development of cutting-edge, CBD-infused medical devices.
• Market Expansion: Integrating our products into GP Holding's distribution network will enhance brand visibility and facilitate access to new markets.
• Operational Efficiency: Optimized production capabilities and supply chain will reduce costs and lead times, enhancing financial robustness.
• Expanded Product Offerings: Diversifying the portfolio to match broader consumer preferences and emerging market trends.

Next Steps:

• Due Diligence and Detailed Planning
• Finalizing Partnership Terms
   

3. FUNDING, SHAREHOLDER OPPORTUNITIES, AND STOCK SPIN-OFF DETAILS

CS MEDICA Group can secure funding through share issuance in the parent company or an IPO in CANNORDIC a/s. This spin-off can reposition CS MEDICA by redefining CANNORDIC's equity story based on market insights and strategic reflections.

Funding Opportunities:

1. Share Issuance in CS MEDICA A/S: Raises capital for the parent company for strategic investments, R&D, or operational expansion.
2. CANNORDIC Share Sales (IPO): Provides liquidity to CS MEDICA without diluting its shareholders but reduces its ownership stake in CANNORDIC. Proceeds can be reinvested into other strategic areas or enhance the parent company's balance sheet.

Shareholder Opportunities:

• CS MEDICA Shares: Provide exposure to the entire group's operations, diversified revenue streams, and strategic flexibility.
• CANNORDIC A/S Shares: Direct exposure to the medical devices and skincare market and the growing cannabis sector.

Next Steps for CS MEDICA and Shareholders:

• EGM on June 28, 2024, for final approval of the CANNORDIC spin-off and IPO.
• CS MEDICA expects to sell approximately 20-25% of the shares in CANNORDIC, with part of the sale occurring pre-IPO. 
• Await the IPO announcement for direct investment in CANNORDIC.
• No further actions are required if the current strategy is to continue.