Kadimastem Ltd (TASE:KDST) entered into a non-binding term sheet to acquire IM Cannabis Corp. (CNSX:IMCC) in reverse merger transaction on February 13, 2024. The Proposed Transaction, the holders of the issued and outstanding shares in the capital of Kadimastem (the "Kadimastem Shares") will be issued such number of IMC Shares in exchange for every one (1) Kadimastem Share held immediately prior to the completion of the Proposed Transaction that reflects the ratio outlined above (the "Exchange Ratio").

Outstanding convertible securities of Kadimastem (the "Kadimastem Convertible Securities") will be treated through customary mechanics as shall be determined in the definitive agreement, which may include, the assumption of the Kadimastem Convertible Securities by IMC subject to customary adjustments to reflect the Exchange Ratio and exercise price. The Proposed Transaction will be effected by way of a plan of arrangement involving a newly created wholly-owned subsidiary of IMC and Kadimastem (the "Arrangement"). The resulting issuer that will exist upon completion of the Proposed Transaction (the "Resulting Issuer") will change its business from medical cannabis to biotechnology and, at the closing of the Proposed Transactions (the "Closing"), Kadimastem shareholders will hold 88% of the common shares of the Resulting Issuer (the "Resulting Issuer Shares") and the shareholders of the Company will hold 12% of the Resulting Issuer Share.

The Proposed Transaction is an arm's length transaction. Prior to Closing, IMC's existing medical cannabis operation and other current activities in Israel and Germany (the "Legacy Business") will be restructured (the "Spin-Out") as a contingent value right (the "CVR"). The CVR will entitle the holders thereof to receive net cash, equity, or other net value upon the sale of the Legacy Business following the Closing, subject to the terms of the Loan Agreement.

To facilitate the sale of the Legacy Business, a special committee of IMC's Board of Directors was formed, which will oversee the potential sale in collaboration with legal and financial advisors. Prior to the completion of the Proposed Transaction, IMC will call a meeting of its shareholders for the purpose of approving the Proposed Transaction, approve the Spin-Out, a change of name of the Company as directed by Kadimastem and acceptable to the applicable regulatory authorities effective upon Closing and reconstitution of the Company's board of directors. The completion of the Proposed Transaction is subject to a number of conditions i.e., the execution of a definitive agreement, completion of mutually satisfactory due diligence, completion of the Share Consolidation and receipt of all required regulatory, corporate and third party approvals, including approvals by governing regulatory bodies, the shareholders of IMC and Kadimastem, applicable Israeli governmental authorities, and the fulfilment of all applicable regulatory requirements and conditions necessary to complete the Proposed Transaction.