Zelira Therapeutics : and Health House execute Scheme Implementation Deed

ASX

ANNOUNCEMENT

19 April 2022

Zelira and Health House execute scheme implementation deed

Key Highlights

Following the execution of a binding terms sheet in February, Zelira has entered into a scheme implementation deed with Health House International Limited to acquire 100% of the interests in Health House International Limited.

Creates a company with strong product and distribution capabilities.

Zelira's research team and Health House's European based Kalapa Clinic will provide an opportunity to materially improve the speed at which the combined company's proprietary cannabinoid-based formulations and products can obtain clinical validation, while improving the cost of such clinical trials

Post-merger it is anticipated, Zelira's revenue profile will be accelerated, margins will increase from the sale of Zelira's products in markets that Health House is currently active, and cashflow breakeven will be brought forward.

Zelira Therapeutics Ltd (ASX:ZLD, OTCQB:ZLDAF), a global leader in the research and development of clinically validated cannabinoid medicines, is pleased to announce that further to its announcement on 24 February 2022 that it had entered into a binding terms sheet with Health House International Limited (ASX: HHI) ('Health House'), the parties have now executed a binding scheme implementation deed pursuant to which Zelira proposes to acquire 100% of Health House via a scheme of arrangement (Transaction and Scheme).

Zelira believes that the addition of the Health House business will create an organisation with strong medicinal cannabis product and distribution capabilities.

As set out in the announcement on 24 February 2022, the acquisition will see Health House parties hold 19.45% of the expanded Zelira. In addition, and as announced on 24 February 2022, Zelira has already provided Health House with a $1.5 million working capital facility to assist it with its working capital needs.

Following Zelira shareholders approving the consolidation of the Company's capital at a meeting on 12 April 2022, all consideration shares issued will be on a post-consolidation basis.

Transaction rationale

This transaction would result in Zelira paying Health House shareholders a Scheme Consideration of 2,311,045 of the enhanced Zelira shareholding, representing 19.45% of the company and would result in a total value to Health House shareholders that is a 20% premium to the market capitalization of Health House as of April 18, 2022.

About Health House

Health House is an international distributor of medicinal cannabis and holds a number of strategic licenses to store, distribute, import, export and wholesale controlled drugs. Health House is well positioned with early mover advantage in the UK and European medicinal cannabis markets.

Health House also has supply agreements in place with several pharmaceutical grade Good Manufacturing Practice (GMP) certified manufacturers and producers of high-quality medicinal cannabis products. It holds, the EU GMP licence issued by the German authorities under the framework of the European Commission (one of the word's leading regulatory authorities for the production and manufacturing of pharmaceutical grade medicinal products).

Additionally, Health House owns a medicinal cannabis consultancy in the EU, with online services available in six languages. Which, in addition to patient consultancy activities, provides educational training to health care professionals, and is currently undertaking a non-interventional observational study in Germany considering the effect on quality of life of patients and the safety and tolerability of cannabis medication.

Zelira Therapeutics Founder & Chairman Osagie Imasogie said:

"The proposed acquisition of Health House will provide Zelira with control of direct access to highly regulated European and other markets for its products. In addition, the successful conclusion of this transaction will improve the margin to Zelira from products that will be directly sold in the markets in which Health House is currently active. This transaction will also provide Zelira with direct access to GMP manufacturing facilities in Europe that will further improve margins for our products and provide stronger control of our product life cycle. "We are also pleased that this transaction will provide Zelira with control of direct access to high quality international standard clinical trial capabilities for our proprietary cannabinoid-based products. This will materially improve the speed at which our unique proprietary products can obtain clinical validation, while improving the cost of such clinical trials. We look forward to welcoming Health House shareholders as important members of our mutually enhanced Zelira."

Zelira Therapeutics Global Managing Director & CEO Oludare Odumosu said:

"The proposed acquisition of Health House will maximise Zelira's unique capability to develop new clinically validated products that can be marketed and distributed on a global basis. Post-merger it is anticipated, Zelira's revenue profile will be accelerated, margins will increase from the sale of Zelira's products in markets that Health House is currently active, and cashflow breakeven will be brought forward."

Customary terms

The Scheme is not subject to finance and is subject only to conditions and provisions customary for transactions of this type, including exclusivity arrangements (with relevant fiduciary carve outs) and provisions for payment of a break fee to Zelira of $100,000 in certain circumstances, no material adverse change, court approval, FIRB approval (if required) and the requisite shareholder approvals. A copy of the scheme implementation deed (excluding certain schedules) is attached.

Facility Deed

To assist Health House with its short-term working capital requirements, Zelira has agreed to provide a $1.5 million short-term loan facility to Health House on the following terms:

• • the maximum amount of the facility is $1.5 million and may be drawn down in a single drawdown or in a series of drawdowns.

• • The facility may only be used for Health House's short-term working capital requirements.

• • The facility is unsecured.

• • The facility is repayable on the earlier of:

  • • the date that Zelira and Health House agree after Health House becomes a wholly-owned subsidiary of Zelira as a result of the Scheme;

  • • the date that is 2 months after the date the parties' current confidentiality deed between the parties is terminated or expires without the SID being executed;

  • • the date that is 2 months after the date the SID is terminated; and

  • • the date that is 2 months after the Scheme is implemented.

Related party disclosure

Zelira notes that two of its Directors, Harry Karelis and Tim Slate, are shareholders in Health House, holding approximately 6.38% and 0.67% of total shares on issue respectively. In addition, Mr Karelis holds approximately 1.5% of the total number of Health House performance shares on issue. Given these interests, Zelira established a transaction committee comprising the non-conflicted directors of Zelira to assess and negotiate the transaction. As such, neither Mr Karelis or Mr Slate were involved in the assessment or recommendation of the transaction to the Zelira Board. In addition, neither

Mr Karelis or Mr Slate individually or together control and are not directors of Health House International Ltd.

H&P Advisory Limited (Hannam & Partners) is acting as Zelira' financial advisor for the proposed acquisition and Steinepreis Paganin is acting as legal advisor.

This announcement has been approved and authorised for release by the board of Zelira Therapeutics Limited.

For further information please contact

Company

Dr Oludare Odumosu Managing Director & CEO[phone] Ronn Bechler

Executive Chairman, Market Eye[phone]

About Zelira Therapeutics

Australia

USA

Level 3, 101 St Georges Terrace Perth WA 6000, AUSTRALIA[phone]

Fax: [phone]

5110 Campus Drive, Suite 150 Plymouth Meeting, PA 19462 United States Of America[phone]

ACN 103 782 378

About Zelirawww.zeliratx.com

Zelira Therapeutics Ltd (ASX:ZLD, OTCQB:ZLDAF) is a leading global biopharmaceutical company manufacturing and marketing cannabinoid-based medicines. Zelira owns a portfolio of proprietary revenue generating products and a pipeline of candidates undergoing clinical development that are positioned to access the world's largest and fastest growing markets. The Company is focused on developing and clinically validating branded cannabinoid-based medicines for the treatment of a variety of medical conditions in its Rx business, including insomnia, autism and chronic non-cancer pain.

The Company has two proprietary formulations under the HOPE® brand that are generating revenues in Australia, Pennsylvania, Louisiana and Washington D.C. with other states in the US expected to follow. Zelira is also generating revenue in Australia from its proprietary and patented Zenivol® - a leading cannabinoid-based medicine for treatment of chronic insomnia. Zenivol® has successfully completed the first Phase 1b/2a clinical trial for chronic insomnia where it was found to be a safe and effective treatment. This clinical trial is published in the prestigious journal 'Sleep'. In 2020, Zelira partnered with SprinJene®Natural to develop and commercialise natural and organic oral care products under the SprinjeneCBD brand, as part of Zelira's OTC business. The SprinjeneCBD toothpaste product is the first of several scientifically formulated, hemp-derived, oral care products containing cannabinoids and based on the proprietary and patented technology of Blackseed oil and Zinc.

The Company conducts its work in partnership with world-leading researchers and organizations which since inception includes Curtin University in Perth, Western Australia; the Telethon Kids Institute in Perth; the University of Western Australia, in Perth; St. Vincent's Hospital in Melbourne, Australia; and the Children's Hospital of Philadelphia (CHOP) in the United States.