Mr. Francois Roberge reports

LSL PHARMA GROUP ANNOUNCES CLOSING OF FIRST TRANCHE OF CONVERTIBLE DEBENTURES OFFERING

Further to LSL Pharma Group Inc.'s press release of Sept. 21, 2023, the company has closed the first tranche of its brokered private placement through the issuance of 229,300 unsecured convertible debentures at a price of $10 per debenture for gross proceeds of $2,293,000 out of a maximum of $5-million (assuming the full exercise of the agent's option to increase the size of the offering by up to $1.0-million). The net proceeds of the offering will be used for working capital, capital expenditures and for general corporate purposes.

The offering was led by iA Capital Markets as sole agent and sole bookrunner. In connection with the first tranche of the offering, the company paid to the agent a cash commission of $160,510 and issued 229,300 broker warrants. The broker warrants are exercisable to acquire one Class A share of the company at a price of 70 cents for a period of 24 months from the date of issuance. The company and the agent are dealing at arm's length.

All securities issued pursuant to the offering are subject to the applicable statutory hold period of four months and one day from Nov. 1, 2023. The offering is subject to the final approval of the TSX Venture Exchange.

The company has received conditional approval to list the debentures on the TSX-V after the expiry of each applicable hold period. The debentures are expected to trade under the symbol LSL.DB. The listing of the debentures is subject to final approval by the TSX-V at the time of listing and the company fulfilling the requirements as outlined in Policy 2.8 of the TSX-V's policies.

Each debenture will, at the option of the holder, be convertible in its entirety into Class A shares of the capital stock of the company at any time prior to the close of business on the earlier of: (i) the last business day immediately preceding the maturity date, and (ii) the date fixed for redemption, at a conversion price of 70 cents per Class A share, subject to adjustment in certain events.

The debentures will, subject to any prior conversion or redemption, mature on Oct. 31, 2028, and are payable on the maturity date in cash. The outstanding principal amount will bear interest at the rate of 11.00 per cent (the base rate) per year, payable in cash semi-annually on the last day of April and October of each year with the first interest payment to be paid on Oct. 31, 2024 (first interest payment date). Interest will accrue from the initial closing date up to the first interest payment date at the base rate, compounding semi-annually on the last day of April and October of each year (the interest period).

The annual interest rate will be recalculated twice every year on April 30 and Oct. 31 of each year, starting April 30, 2025 (each an interest rate review date) until the maturity date, and shall be equal to the base rate less 100 basis points (1.0 per cent) for each business objective (as defined herein) achieved (the amended base rate). Upon achievement of a business objective, the amended base rate will be effective as of the following interest payment date of the debentures (after April 30, 2025) until the next interest payment date thereafter if business objective three (as defined herein) is achieved or until the maturity date if a business objective one or two(as defined herein) is achieved.

Business objectives:

1. The obtention by the company of Food and Drug Administration approval for its Steri-Med plant (one-time business objective);
2. The completion by the company of the acquisition of a business which: 1) complements the company's existing product offering and/or creates synergies with the company's existing business operations and 2) generated a minimum of $5.0-million in revenue during the last-12-month period preceding the acquisition (one-time business objective);
3. The company generates a minimum of $30-million of revenue with a 20-per-cent EBITDA (earnings before interest, taxes, depreciation and amortization) margin during the fiscal period preceding the interest rate review date (annual business objective). With respect to (3), the company's financial performance and revenue shall be calculated based on its audited financial statements and the company's EBITDA margin shall be calculated as EBITDA (not adjusted EBITDA), as calculated in its audited financial statements, divided by its revenue (the "business objective three", and the "business objective one or two" means the business objective other than business objective three).

If, at any time following the date that is 24 months from the initial closing date, for the preceding 20 consecutive trading days (i) the daily volume weighted average trading price of the Class A shares on the TSX-V is greater than 175 per cent of the conversion price; and (ii) the average daily volume of the Class A shares traded on the TSX-V is no less than the number obtained when dividing the number of shares issued upon conversion of the total amount of debentures outstanding by 20, the company will have the option to convert all of the principal amount outstanding of the debentures at the conversion price with at least 30 days of prior written notice.

About LSL Pharma Group Inc.

LSL Pharma Group is a Canadian integrated pharmaceutical company specializing in the development, manufacturing and distribution of high-quality natural health products and dietary supplements in solid dosage forms, as well as high-quality sterile ophthalmic pharmaceutical products.

We seek Safe Harbor.