Crescita Therapeutics Announces Amended Loan Agreement with Knight Therapeutics

On September 1, 2016, the Company acquired 100% of the equity of INTEGA Skin Sciences Inc. (INTEGA), a private company located in Laval, Quebec that develops, manufactures, sells and markets science-based quality non-prescription skincare products. Concurrent with the Company's acquisition of INTEGA, the Company assumed approximately $6.8 million (currently $6.6 million of principal outstanding) of an INTEGA loan from Knight, which was secured by a letter of credit issued by a Canadian chartered bank on the Company's behalf. The letter of credit was secured by cash held in the Company's account with the bank.

Under the terms of the amended loan agreement, Crescita will immediately repay $2.5 million of the loan (reducing the principal amount to $4.1 million) and Knight has agreed to release the letter of credit in exchange for a general security interest over all of Crescita's assets. As a result, the Company now has access to an additional $6.0 million of its cash (after the repayment described above) - that was previously restricted under the terms of the letter of credit - to fund its operations. The loan continues to bear interest at 9% per annum and matures on January 22, 2022. The loan can be repaid by the Company at any time prior to December 31, 2018 without interest or penalty. The loan does not contain any financial covenants. Under the amended loan, Crescita has agreed to make additional repayments such that the principal amount of the loan is reduced to $2.5 million by December 31, 2018.

The terms and conditions of the amended loan are set forth in an Amended and Restated Loan Agreement between Crescita and Knight, a copy of which will be filed under the Company's profile at www.sedar.com. The summary of the amended loan above is qualified by reference to the specific terms of the loan agreement.

The Company also announced that funds associated with Bloom Burton & Co. (Bloom Burton) have agreed to invest $1.0 million in the Company in exchange for a convertible debenture that will bear interest at 9% (payable in cash) and will be convertible into common shares at the option of the holder at an initial conversion price of $1.00 per share (subject to customary adjustments). The convertible debenture matures on June 30, 2022, unless converted earlier in accordance with its terms. Commencing after the second anniversary of the issue date, the Company has the option to force conversion if the closing price of its common shares exceeds 150% of the conversion price on 20 trading days in any 30 day period. The proceeds of the convertible debenture financing are expected to be used to repay indebtedness and for general corporate purposes. Completion of this convertible debenture financing is subject to certain customary conditions and, as such, there can be no assurance that this financing will be completed. If all of the conditions to the financing are satisfied, it is expected that the convertible debenture financing will close during the third quarter.

The Company issued 396,000 common share purchase warrants to Knight, 216,000 of which are exercisable at a price of $0.75 per share and the other 180,000 of which are exercisable at a price of $1.00 per share, in each case for a period of six years. Concurrent with the issuance of those warrants, Knight surrendered the 293,163 common share purchase warrants it previously held. Subject to closing of the convertible debenture financing, the Company has agreed to issue to the Bloom Burton funds, an aggregate of 100,000 common share purchase warrants which are exercisable at a price of $0.75 per share.

Finally, the Company has entered into an agreement with certain parties to the INTEGA purchase agreement (who represent a majority in interest of the former INTEGA shareholders) pursuant to which those parties have agreed with the Company that none of them will be entitled to any further payments from Crescita under the INTEGA purchase agreement. The Company and the other parties to the INTEGA purchase agreement have agreed to defer the date for final payment of the purchase price for the INTEGA acquisition until at least September 10, 2017, while discussions are ongoing to reach a similar agreement.

"We are very excited about the strong continued support of Knight and Bloom Burton. These transactions provide us with significant additional liquidity and flexibility and position Crescita to continue to grow into a successful skin science company," said Serge Verreault, Cresicita's President.