Mr. Jeffrey Stevens reports

PSYCHED WELLNESS AND GOTHAM GREEN PARTNERS TO CLOSE FINAL TRANCHE OF US$2.5M FOR A TOTAL OF US$7.5M RAISED AND PARTNER WITH STRATEGIC ADVISORS TO BUILD CONSUMER PACKAGED GOODS DERIVED FROM AME-1

Psyched Wellness Ltd. has entered into a master service agreement with Zerkalo LLC, a New York partnership, pursuant to which the company has engaged Zerkalo to develop product development, marketing, distribution and supply chain set-up for a product derived from AME-1, in accordance with the terms and conditions of the master service agreement and accompanying statement of work (SOW) for a period of the greater of: (x) 30 months; and (y) the time required to complete any services still outstanding pursuant to the transaction documents at the end of the 30-month period.

"Closing the last tranche of the financing with Gotham Green Partners and securing Zerkalo's investment and partnership to build out our consumer packaged goods (CPG) brand representing a transformational moment for Psyched Wellness and its shareholders," said Jeffrey Stevens, chief executive officer of the company. "As the founders of Harmless Harvest, Justin and Douglas have an incredible track record of building brands and creating value for its investors, and we are thrilled to have them lead this next chapter for Psyched Wellness," added Mr. Stevens.

"Douglas and Justin's shared alignment with our company's vision and enthusiasm for the potential of AME-1 as a leading-edge CPG product is invaluable. With their wealth of experience and creativity, we are thrilled to collaborate in bringing Amanita products to the mass market," said David Shisel, chief operating officer of the company.

"Over the past years, we have been on the lookout for a truly disruptive ingredient that can demonstrate value in tangibly improving the quality of modern life. While a broad variety of novel fungi and plants have made their way into the food and beverage aisles in the past few years, few have delivered on the promise and surging demand for wellness you can actually feel. Amanita gives us a whole new product design vocabulary that shows great promise and mass appeal. We're thrilled to join these pioneers and establish a truly needed product for the health-conscious consumer," said Justin Guilbert.

"Fifteen years ago, Justin and I nurtured the dream of an integrated supply chain that values conservation, sustainability and the complexity of biotopes. With Psyched Wellness's Amanita, we finally have a non-timber-forest product to champion and scale to meaningful environmental impact. Better for you should be better for the planet. This opportunity is one of the rare models that can deliver a blueprint for better food systems," added Douglas Riboud.

Mr. Guilbert and Mr. Riboud have been collaborating on developing and delivering radically innovative consumer products for the past 15 years. As founders, they are best known for creating Harmless Harvest -- the plant-based juggernaut famed for its iconic coconut water. They have been involved in numerous projects, from beauty to seafood, with a core mission to successfully establish purpose or conscious capitalism as the next iteration for a modern construct of consumerism.

Transaction details

Pursuant to the terms and conditions of the transaction documents, the company will allocate a budget $2.25-million in cash toward Zerkalo, payable in 10 quarterly instalments of $225,000 to achieve the milestones outlined in the SOW and issue to Zerkalo an aggregate of 35,066,632 advisory warrants within 10 days of signing the transaction documents. These milestones include, but are not limited to, the creation of a brand/brand identity, product development/formulation, packaging conception and execution, development of marketing material, sales support and merchandising asset development, review and selection of co-packer partners and strategy, oversight of pilot and production runs, go-to-market/sales and distribution (channel selection, positioning analysis, soft launch with core audience, channel support execution, field sales support strategy and activation, promotional strategy, negotiation, and execution), and project management and finance.

Each advisory warrant will entitle Zerkalo to acquire one common share in the capital of the company at a price of 10 cents per common share at any time for a period of 60 months from the date of issuance, subject to certain vesting conditions. Subject to the transaction documents not being terminated prior to the applicable vesting date, 23,377,755 advisory warrants shall vest in quarterly instalments over the span of 10 quarters and the remaining 11,688,877 advisory warrants shall vest only upon the completion of the product launch.

The advisory warrants and the common shares underlying their exercise will be subject to: (i) a four-month-and-one-day hold period from the date of issuance; and (ii) applicable legends as required pursuant to the U.S. Securities Act.

Private placement update

Further to the company's press releases dated May 30, 2023, June 12, 2023, Sept. 1, 2023, Sept. 5, 2023, and Jan. 17, 2024, notwithstanding the fact that Gotham's (as defined in the June 12, 2024, release) exclusivity elapsed on Nov. 8, 2023, the company and Gotham are continuing to work toward closing tranche 2B (as defined in the Sept. 1, 2023, release).

Pursuant to the terms and conditions of the amended and restated investor rights agreement (as defined in the Sept. 1, 2023, release), upon satisfaction and/or waiver of the tranche 2B closing conditions (as defined in the Sept. 1, 2023, release) and receipt of a closing notice, the parties will close a final tranche of the offering for gross proceeds of $2.5-million (U.S.). Each unit will be sold at a price of seven cents per unit and will consist of one common share and one warrant. Each warrant will entitle the holder thereof to acquire one additional share at a price of 10 cents per additional share at any time for a period of 60 months from the date of issuance, exercisable on a cashless basis, subject to acceleration and compliance with the policies of the CSE, as further outlined in the May 30, 2023, release.

All securities issuable under tranche 2B will be subject to: (i) a four-month-and-one-day hold period from the date of issuance; and (ii) applicable legends as required pursuant to the U.S. Securities Act. The company intends to use the net proceeds from the offering for working capital and general corporate purposes.

Upon closing of tranche 2B and during the remainder of the nomination period (as defined in the Sept. 1, 2023, release), Gotham shall be entitled to designate the third nominee (as defined in the Sept. 1, 2023, release), replacing one existing member of the board (who shall not be the first nominee or second nominee (each as defined in the Sept. 1, 2023, release)), bringing the total board representation of Gotham to three members, and maintaining the board size at seven, provided that no more than three board members, at any time, will be employees or partners of the investors (as defined in the June 12, 2023, release) or their affiliates.

Gotham has no obligation to acquire any units under tranche 2B. The units issuable in connection with tranche 2B shall be issued to the investors within five business days following the satisfaction and/or waiver of the tranche 2B closing conditions, subject to the terms and conditions of the amended and restated investor rights agreement.

The investors in tranche 2B will enter into lock-up agreements with the company to refrain from selling any units acquired in tranche 2B (and any securities underlying such units acquired in tranche 2B) for a period of 12 months following closing of tranche 2B.

About Psyched Wellness Ltd.

Psyched Wellness is a Canadian-based health supplement company dedicated to the distribution of mushroom-derived products and associated consumer packaged goods. The company's objective is to create premium mushroom-derived products that have the potential to become a leading North American brand in the emerging functional food category. The company is in the process of developing a line of Amanita muscaria derived, water-based extracts, teas and capsules designed to help with three health objectives: promote stress relief, promote relaxation and assist with restful sleeping.

We seek Safe Harbor.