SYDNEY, AUSTRALIA: Creso Pharma Limited has entered into an asset purchase agreement to acquire the ImpACTIVE through a newly incorporated Creso subsidiary, Creso ImpACTIVE Ltd.

This allows Creso Pharma to significantly strengthen its North American footprint and leading range of CBD products.

Under the Agreement, Creso Pharma will acquire the ImpACTIVE Assets for C$200,000 payable in Creso Shares, valued at A$0.11 per Creso Share. The Creso Shares will be issued pursuant to Creso’s Listing Rule 7.1 placement capacity.

The Agreement also includes the issue of 6 million Performance Shares, subject to shareholder and ASX approval. Out of these 6 million Performance Shares, 3 million Performance Shares will convert into Creso Shares upon Creso ImpACTIVE generating C$20 million in audited gross sales revenue within 36 months and the remaining 3 million Performance Shares will convert into Creso Shares through Creso ImpACTIVE generating C$40 million in audited gross sales revenue within 60 months.

With effect from closing, ImpACTIVE’s co-founders Brett Ayers and Kevin Tansey will enter into employment agreements with Creso ImpACTIVE Ltd.
As part of their remuneration package, Creso will issue Brett Ayers and Kevin Tansey 500,000 options each that will be exercisable at the exercise price of $0.1375 within 3 years from the issue of the Options.

The Options will be subject to retention conditions so that the Options will vest in equal parts over the three years following the issuance of such Options. These Options will be issued pursuant to Creso’s Listing Rule 7.1 placement capacity.

Creso has conducted its due diligence on the ImpACTIVE Assets which included obtaining legal opinions from both US and Australian legal advisers on the legality of ImpACTIVE’s business
operations.

The Agreement is subject to standard conditions for an agreement of this nature including the entry into the Employment Agreements with Brett Ayers and Kevin Tansey.

Creso Pharma intends to hold a general meeting in December 2021 to approve the issue of the Performance Shares.

ImpACTIVE is a Canadian life sciences company founded in 2019 by current and former high-profile athletes seeking to provide alternative treatment routes to the athletic community.
The group has developed a range of CBD products, designed to reduce muscle and joint inflammation without the use of heavy narcotics or prescription pharmaceuticals.

The products contain less than 0.3% THC on a dry weight basis, significantly reducing international regulatory hurdles. Several well-known brand ambassadors promote its products, which are gaining traction amongst consumers in North America.

ImpACTIVE co-founder and CEO Mr Brett Ayers said: “We are very excited to join the Creso Pharma group of companies. Creso has an established global footprint, existing sales channels and operations which will give us the framework to potentially significantly scale our own business to meet the revenue targets set. With the help of the Board and management team, we are very confident that we can achieve this sales growth, as well as pursue other international expansion opportunities.

We have a number of opportunities that are expected to materialise in the near term.

Executive VP of North America, Mr Will Lay said: “This acquisition marks the first phase of Creso Pharma’s efforts to enter into the US and I am excited to be working with ImpACTIVE to integrate them into the group.

We have instituted aggressive sales targets, which is expected to lead to an increase in Creso Pharma’s top line and increased its market share across North America.

“This acquisition follows a significant legal and regulatory review which can now be relied upon to advance other CBD related acquisitions in the US; we are currently assessing multiple value accretive US M&A opportunities that will be based on a similar structure. Our model of acquisitions with high growth potential will be a key factor in the Company’s US growth trajectory and I look forward to updating shareholders on further developments.”

Non-executive Chairman Mr Adam Blumenthal added: “This Agreement is a major development for the Company. The Agreement is at a low cost to Creso Pharma, with significant potential upside based on the performance of ImpACTIVE management.

“We expect that ImpACTIVE’s range of innovative products and brand ambassadors which will provide Creso Pharma with direct access to an emerging subsection of the global CBD market.

The group also has established relationships with major US retail groups, which is expected to provide leverage for Creso Pharma as it seeks to grow sales of its own hemp based CBD products.

“Further, this Agreement highlights the Company’s ongoing commitment to entering the US market ahead of its proposed dual listing. We look forward to working with ImpACTIVE’s team to scale up sales and progress cross selling opportunities, which is anticipated to be to the benefit of our shareholders.”