Pharmachal Health Group Pty Ltd entered into a term sheet to acquire Kalon Acquisition Corp. (TSXV:KAC.P) in a reverse merger transaction on September 29, 2023. Pharmachal Health Group Pty Ltd entered into a definitive share exchange agreement to acquire Kalon Acquisition Corp. for CAD 20.2 million in a reverse merger transaction on December 20, 2023. Each Pharmachal shareholder will receive, in exchange for each Pharmachal share it holds, 1.71422 common shares in the capital of Kalon at a deemed issuance price of CAD 0.18893 per share, resulting in the issuance of 106,722,000 Kalon common shares, prior to giving effect to a share consolidation of Kalon's common shares. At Closing, and prior to giving effect to the Concurrent Financing and the Consolidation, it is expected that an aggregate of 117,502,000 Kalon common shares (the "Resulting Issuer Shares") will be issued and outstanding (on a non-diluted basis), existing Kalon shareholders will hold approximately 10% of the Resulting Issuer Shares, and the former shareholders of Pharmachal will hold the remaining 90% interest (on a partially diluted basis). Upon completion of the Proposed Transaction, it is anticipated that Kalon will have changed its name to "Pharmachal Health Group Ltd." or such other name as Pharmachal may determine (the "Resulting Issuer"). The Proposed Transaction, if completed, will constitute Kalon's Qualifying Transaction. Upon completion of the Proposed Transaction, the Resulting Issuer will carry on the business of Pharmachal and intends to list as a Tier 2 life sciences issuer on the TSX-V. It is currently anticipated that management and the board of directors of the Resulting Issuer will consist of Charles Fridlender, Chief Executive Officer and Director; Tim Dean, Chief Financial Officer, Chief Operating Officer and Director; Andrew Mendelawitz, VP Corporate and Investor Relations and Director; Peter Shaerf, Chairman and Director; Aishwarya Paliwal, Director; Jonathan Lotz, Director and David Moore, Corporate Secretary.

The completion of the Proposed Transaction is subject to the satisfaction of various conditions as are standard for a transaction of this nature, including but not limited to the negotiation and execution of the Definitive Agreement; completion of satisfactory technical, legal and general due diligence by the parties; the receipt of shareholder approval for the Proposed Transaction to the extent required by applicable law and policies of the TSX-V; the receipt of conditional approval from the TSX-V for the Proposed Transaction; the listing of the Resulting Issuer Shares upon completion of the Proposed Transaction; the receipt of all necessary third party consents; the completion of the Consolidation; and the completion of a private placement by Kalon for gross proceeds of at least CAD 2.5 million.

Jonathan Lotz of Lotz & Company acted as counsel to Pharmachal. Sam Cole of Cassels Brock & Blackwell LLP acted as counsel to Kalon. TSX Trust Company acted as transfer agent to Kalon.