Dancann Pharma

The EGM

The notice of the EGM will be published through a separate press release.

On the agenda for the EGM is (i) a proposal to reduce the share capital of the Company (by transfer to a special reserve fund ("henlæggelse til særlig reserve") by way of a proportionate reduction of the nominal value of each share of the Company, (ii) a proposal to authorize the board of directors to issue new shares with pre-emptive subscription rights for the Company's existing shareholders, and (iii) a proposal to authorize the board of directors to issue new shares without pre-emptive subscription rights for the Company's existing shareholders.

The purpose of the first proposal is to reduce the nominal value of the shares of the Company below market price in order for the Company to be able to issue new shares in the Rights Issue, as currently the market price of the Company's shares are below the nominal value of the shares (and as shares cannot be issued at a price below nominal value per share under Danish law). The purpose of the second and third proposal is to authorize the board of directors to initiate and complete the Rights Issue. In respect of the third proposal (regarding an authorization to issue shares without pre-emptive subscription rights), this is intended to give the board of directors the authorization to issue new shares (as part of the Rights Issue) to a lender of the Company subscribing for shares by way of debt conversion (if relevant), but otherwise on the exact same terms (including price) as will apply to shares issued in the Rights Issue (this being a pivotal step towards elimination outstanding debt obligations).

Right Issue

It is a condition for initiating and completing the Rights Issue, that the proposals on the EGM are adopted. Provided that the proposals on the EGM are adopted, the Company intends to initiate the Rights Issue by publishing a memorandum regarding the Rights Issue around the middle of May 2024 (following expiry of a 4-week notice period ("proklama") as from registration of the capital reduction with the Danish Business Authority, which is required before completing the capital reduction).

The full and exact timetable of the Rights Issue have not yet been finally determined. The Company expects to publish this in 2-4 weeks.

The Company has secured approximately DKK 11.0 million from underwriters, of which approximately DKK 5.5 million is from a bottom-up approach, and the remaining approximately DKK 7.0 million is from a top-down approach (current lenders converting). The offering in the Rights Issue will be priced at DKK 0.01 per share. In connection with this, the Company has secured a bridge financing amounting to approximately DKK 1.5 million, which will be repaid following the completion of the Rights Issue.

Furthermore, the Company anticipates conducting a reverse split following the Rights Issue, aiming to reduce the number of shares in the market. More detailed information on this will be provided in the near future.

Memorandum

Full terms and conditions for the Rights Issue as well as other information about the Company and further information about subscription commitments will be included in the Memorandum regarding the Rights Issue that the Company is expected to publish around the middle of May 2024.

Carsten Trads, Chairman of DanCann Pharma, comments:

• "For some time, we have been exploring ways to rebuild the Company's capital. We have now reached an agreement with the Company's major stakeholders and we have identified a path forward.
• With success from the Rights Issue, this will provide the necessary capital for the Company to facilitate its plans of operational break-even by Q4-2024, and furthermore we will achieve our intentions to eliminate our existing outstanding debt to reach a debt free status, at the same time as it allows us to penetrate and develop new market shares through new product launches.
• It pleases me to announce that we are inviting all of our current shareholders to seize this opportunity for a reset, following our revised strategy. This initiative is intended to mark a fresh and new beginning for us.
• I hope everyone will take advantage of this unique opportunity," concludes Carsten Trads.

Reasons for the Rights Issue

DanCann Pharma announced a strategic pivot in the autumn last year, influenced by macroeconomic shifts and a dip in market valuation, prompting a refocus and decision to prioritise the part of the business that focuses on sourcing, importing, and distributing, particularly the regulatory aspects of the Danish market. DanCann Pharma's adjusted strategy is founded on an asset-light business plan designed for optimal capital efficiency. It reflects the commitment to a sustainable future, one that benefits both the patients and the financial well-being of the Company.

DanCann Pharma has implemented the strategy with a streamlined team, targeting breakeven during Q4-2024, while continuing its profitable distribution of existing Rx products and planning to introduce new offerings in the pipeline.

Preliminary timetable for the Rights Issue

Use of the proceeds:

DanCann Pharma is actively preparing multiple new product applications. The proceeds will provide the necessary capital for the Company, facilitating its achievement of operational break-even by Q4-2024, and the elimination of its existing outstanding debt (inclusive the convertible debt instrument).

Use of the proceeds in summary:

• Achieving a debt-free status (lenders guarantee in total 100% of their entire loan in the transaction, equal approx. DKK 7.0 million).
• Penetrate and developing new market shares (DK).
  • Progressing new product submissions (regulatory affairs).

Nordic Growth Opportunities 2

As part of the Rights Issue, the Company has reached a settlement with Nordic Growth Opportunities 2 ("NGO2"), whereby the Company and NGO2 have agreed to terminate the current agreement entered as of 13 July 2023, consisting of an outstanding amount of DKK 2.8 million, plus a termination fee of 20%, thus a total principal of DKK 3.36 million, in exchange for converting this amount (the "Conversion"), and providing a bridge loan of DKK 0.8 million towards the Rights Issue. If the conversion price of the Conversion is lower than the price of DKK 0.01 per share (offering price under the Rights Issue), a make-whole amount mechanism will allow NGO2 to convert additional notes into shares in order to compensate the difference in the number of shares to be received by NGO2.  

As part of the agreement with NGO2, it has also been agreed that NGO2 is under lock-up in terms of selling their current shareholding, as well as any further conversion thereof, until the completion of the Rights Issue.

Advisors

EK Equity AB is acting as a financial advisor to DanCann Pharma.
Mazanti-Andersen is acting as the legal adviser of DanCann Pharma.

About DanCann Pharma A/S

DanCann Pharma A/S (SS: DANCAN) was founded in 2018 and is a Danish biopharmaceutical Company powered by cannabinoids.

DanCann Pharma A/S (SS: DANCAN) is listed on the Spotlight Stock Market in Copenhagen/Stockholm.

For more information, visit: www.dancann.com

For further information, please contact:

Jeppe Krog Rasmussen, CEO

E-mail: jkr@dancann.com

Forward-looking-statement:

Some statements in this release may contain forward-looking information. All statements, other than of historical fact, that address activities, events, or developments that the Company believes, expects, or anticipates will or may occur in the future (including, without limitation, statements regarding potential acquisitions and financings) are forward-looking statements. Forward-looking statements are generally identifiable by use of the words "may", "will", "should", "continue", "expect", "anticipate", "estimate", "believe", "intend", "plan" or "project" or the negative of these words or other variations on these words or comparable terminology.

Forward-looking statements are subject to several risks and uncertainties, many of which are beyond the Company's ability to control or predict, that may cause the actual results of the Company to differ materially from those discussed in the forward-looking statements. Factors that could cause actual results or events to differ materially from current expectations include, among other things, without limitation, the inability of the Company, to obtain sufficient financing to execute the Company's business plan; competition; regulation and anticipated and unanticipated costs and delays, the success of the Company's research strategies, the applicability of the discoveries made therein, the successful and timely completion and uncertainties related to the regulatory process, the timing and outcomes of regulatory or intellectual property decisions and other risks disclosed in the Company's public disclosure record on file with the relevant securities regulatory authorities.

Although the Company has attempted to identify important factors that could cause actual results or events to differ materially from those described in forward-looking statements, there may be other factors that cause results or events not to be as anticipated, estimated or intended. Readers should not place undue reliance on forward-looking statements. The forward-looking statements included in this presentation are made as of the date of this presentation and the Company does not undertake an obligation to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise unless required by applicable securities legislation.

This disclosure contains information that DanCann Pharma 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 29-03-2024.