CS MEDICA and RongShi fail to reach a signed agreement and terminates negotiations
CS MEDICA A/S (“CS MEDICA” or the “Company”) terminates negotiations with Inner Mongolia Rong Shi Hi-Tech Co.(“RongShi”), Ltd as the companies fail to reach acceptable terms.
Since September 25th, 2022, the two parties have been negotiating terms for a joint venture investment contract. However, CS MEDICA has decided not to commit to the contract nor deliver on all requested documentation.
This means the parties cannot meet on the final terms and will not move forward on the intended joint venture.
Jørgen Flemming, chairman of CS MEDICA states:
“Through the whole process, we have experienced nothing but a genuine willingness from both parties to reach common ground for a meaningful and mutually beneficial co-operation. In that perspective, we are sorry that we were not able reach an agreement.
However, reviewing the final terms outlined in the contract proposal and based on external advice during the process, we will not convert the LOI to a signed investment contract. We are convinced that this decision is the best solution for the company and its shareholders. Especially as it gives us better terms regarding legislation rights and our ability to expand to other regions.”
Gitte Henriksen, CFO and co-founder comments:
“We have been engaged in due diligence and the investment process for five months with Rongshi and the legal support to ensure the best terms for CS MEDICA’s ability to expand into the Asian market together with a close local partner. We fully respect Rongshi’s wishes and demands throughout these negotiations. Unfortunately, when reviewing the final conditions attached to the investment and especially the level of knowledge sharing expected of us, we do not believe the deal would favor the company going forward.
We still believe in the basic idea of having a local partner and factory in one of our largest markets. However, based on multiple learnings from this process we will approach the Asian markets, including China, with own legal registrations and ‘boots on the ground. It is crucial for our success at the Asian market to find a partner, with roots in the pharmaceutical or MedTech industry. Hence we have also shut down the negotiations with Heilongjiang FuYu ShengKun Textile Industry Co. previously announced the August 25th, 2022.”
Based on the new situation and learnings from last year, CS MEDICA will revise the budget for 2022/23. We believe in maintaining the growth rate from 2021/22, where we increased revenue from 3,6 million to 10,6 million DKK. Therefore, we will adjust the budget for 2022/2023 based on new presumptions, and we will, as a minimum, double the revenue again in 2022/2023.
Additionally, without the Chinese investment, CS MEDICA has activated plans for improved liquidity for the company.
Gitte Henriksen:
“As a MedTech working mainly within the stages III to V, we need to have a more stable liquidity to secure our expected growth rates. Especially since the lead time from signed contracts to paid invoices are longer than expected due to local medico registration and production processes. We have therefore onboarded Svea Finans A/S as a financial company group to support us on our daily operations.”
CS MEDICA receives a loan from the main shareholders at 3,5 million DKK and is concurrently looking for additional funding and investors, aided by a new financial advisor, to ensure the company´s ability to utilize its competitive advantage in the market.
This disclosure contains information that CS MEDICA 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 18-01-2023 15:01 CET.
For more information about CS MEDICA, please contact:
Gitte Lund Henriksen, CFO
Phone: + (45) 2774 2280
Email: glh@cs-medica.com
Website: https://www.cs-medica.com/
CS MEDICA A/S is a Danish-based MedTech company committed to improving people's lives with products that make a difference. We combine science, nature, and passion to deliver innovative alternatives with high efficacy and bioavailability to patients. From autoimmune to stress therapies, we aim to transform healthcare with more effective treatments.
We research, develop, manufacture, commercialize and brand over-the-counter (OTC) products under pharmaceutical legislation. Currently, 21 products with cannabidiol aimed at autoimmune and stress-related diseases have been developed. The first products reached Danish stores in 2020, and now 9 products are available on the European market at more than 500 points of sale. Another 12 products will be launched before the end of 2024, with 11 patent-pending products. The product line surpasses competing products on the market by being located at the intersection of natural products, science, and cannabinoid technology while being registered under pharmaceutical legislation.
CS MEDICA was recognized earlier this year as a company of Europe's top 10 MedTech companies at European Lifestars Awards as the company both Research & Develop, Manufacture, Distribute and Brand life-supporting medical technologies.
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