Medicalgorithmics S.A. — M&A Activity 2022

Oct 1, 2022

Conclusion of an investment agreement regarding the acquisition of newshares in the Company for a contribution of approximately PLN 220million (PLN 44.27 per share). Complete the review of strategic options.Disclosure of delayed confidential information - commencement ofnegotiations regarding the acquisition of 49.99% of the Company's sharecapital.

Current report no .: 55/2022

Date: 10/01/2022

Legal basis: Article 17 para. 1 of MAR - confidential information

Management Board of Medicalgorithmics S.A. (_quot;Company_quot;) informs that onAugust 26, 2022, it decided to delay the disclosure of confidentialinformation to the public, in accordance with Art. 17 sec. 4 ofRegulation (EU) No 596/2014 of the European Parliament and of theCouncil of 16 April 2014 on market abuse (market abuse regulation) andrepealing Directive 2003/6/EC of the European Parliament and of theCouncil and Commission Directive 2003/124/EC, 2003/125/EC and 2004/72/EC. The subject of the delayed confidential information was thecommencement of the negotiation process of the transaction consisting inthe acquisition of newly issued shares of the Company in the numberconstituting 49.99% of the share capital of the Company by BiofundCapital Management LLC or its subsidiary.

On October 1, 2022, an investment agreement was concluded between theCompany and Biofund Capital Management LLC based in Miami (USA)(_quot;Biofund_quot;), the subject of which is the acquisition of 4,976,384 sharesof the Company in the increased share capital, i.e. 49.99% of votes atthe general meeting of the Company by Biofund (_quot;Agreement_quot;)(_quot;Transaction_quot;) for a cash contribution in the amount of PLN13,807,810.28 and a non-cash contribution in the form of 100% shares inKardiolytics Inc. based in Oklahoma (USA) (_quot;Kardiolytics_quot;). The issueprice will be PLN 44.27 per share.

In addition to making a cash contribution, Biofund undertook to providethe Company with additional financing up to the amount of PLN 13,800,000within 3 years from the date of taking up the Company's shares,depending on the justified needs of the Company and the possibility ofobtaining financing from third parties on the terms, manner and on datesagreed with the Supervisory Board.

Since 2018, Kardiolytics has been developing artificial intelligencealgorithms that autonomously analyze and provide the doctor withinformation quantifying the risk of a heart attack, select a number ofbiomarkers correlating with the occurrence of cardiovascular diseases,and present a comprehensive image of the patient's heart structures inthe form of 3D models. The models are enriched with the most importantparameters resulting from the numerical analysis of fluid mechanics,which are necessary for making a diagnosis and planning the patient'sfurther treatment path.

As a result of the Transaction, the Company will become the indirectsole owner (as the owner of 100% shares in Kardiolytics) of intellectualproperty rights to the non-invasive diagnostics of diseases and imagingof the circulatory system technology based on artificial intelligencedeveloped by Kardiolytics.

Pursuant to the Agreement, the share capital will be increased by PLN497,638.40 through the issue of 995,276 series I bearer shares,1,194,331 series J registered shares, 1,433,197 series K registeredshares and 1,353,580 series L registered shares at the issue price PLN44.27 for one share of the Company. In return for the shares acquiredunder the increased share capital of the Company, Biofund will make acash contribution in the amount of PLN 13,807,810.30 and a non-cashcontribution in the form of 1,500 shares in the share capital ofKardiolytics, representing 100% of the share capital of Kardiolytics.The value of the Biofund in-kind contribution is USD 44,890,589 and wasdetermined by the valuation prepared by BakerTilly TPA sp. z o.o. andthe statutory auditor issued an opinion on the fair value of the in-kindcontribution of Biofund.

Biofund's shares will be introduced and admitted to trading on the StockExchange under the applicable exceptions to the preparation of theprospectus. The parties assume the introduction of all Biofund actionsby the end of 2026.

The Agreement provides for the following conditions precedent: adoptinga resolution on increasing the share capital in connection with theTransaction and amending the Company's Articles of Association withregard to the obligation to obtain corporate approvals to performcertain activities in the disposal of the Company's key assets.

The agreement also provides for the obligation to obtain the consent ofBiofund and the Company to perform certain activities in the periodbefore registration in the National Court Register (_quot;KRS_quot;) of increasingthe share capital under the Transaction of the Company and Kardiolytics,respectively, related to the management of key assets or incurringliabilities.

The Investor undertook that within 24 months from the date ofregistration with the National Court Register of the share capitalincrease under the Transaction, it will vote for the election of twomembers of the Supervisory Board from among candidates proposed by theCompany's minority shareholders, other than individual shareholders, whohold shares entitling to not less than 3% and not more than 10% of votesat the General Meeting of the Company. He also declared that in theabove-mentioned period, one of the members of the Supervisory Boardelected from among the candidates proposed by such shareholders willperform a function in the Audit Committee and the Nomination andRemuneration Committee.

The agreement includes standard statements and assurances of theCompany, Biofund and Kardiolytics regarding, inter alia, corporatematters, operations, key intellectual property rights and obligations ofthe parties.

The agreement sets out the rules of liability of the Company and Biofundfor the truthfulness, reliability and completeness of statements andassurances, the upper limit of the Company's liability towards Biofundis USD 6,500,000, and the upper limit of Biofund's liability towards theCompany is USD 3,500,000. The parties are entitled to claim only thebenefits specified in the contract corresponding to the damage suffered,excluding lost profits.

The agreement was concluded for a period of 25 years with the provisothat it will be terminated on the date of the first of the followingevents: in the event of non-fulfillment of the conditions precedent,failure to perform certain corporate actions, the occurrence of asignificant negative change in relation to the parties to theTransaction, a negative result of due diligence, failure to document theproduction capacity of at least 10,000 _quot;pocketEKG_quot; devices and failureto provide the DRAI or 2 software test by the Company ) the not holdingof any shares in the Company by Biofund or entities indicated in theAgreement.

The conversion rate for the conversion of Biofund's liabilities towardsthe Company contained in the Agreement, which were expressed in USdollars, was set on the day of the commencement of negotiations andamounts to USD 1.00 / PLN 4.60.

The contract is governed by Polish law.

The Management Board decided to make the Transaction due to, inter alia,on the following circumstances: 1) in the opinion of the ManagementBoard of the Company, as a result of the Transaction, an entity withexperience and competences, including in (i) developing algorithms forthe automatic analysis of computed tomography images of the heart andcirculatory system and ECG signals (ii) non-invasive diagnostics ofdiseases and imaging of the circulatory system (iii) with anorganizational structure competent in the design, development andcertification of medical devices, which will allow to develop newproducts on the cardiological diagnostics market offering, among otherslong-term monitoring of the heart rate in patients with suspecteddisease, advanced outpatient diagnostics and in-hospital diagnostics; 2)in the opinion of the Management Board of the Company, thanks to thedistribution network held through business partners, it will be possibleto commercialize new cardiology solutions on the most important markets.

In addition, with reference to the current report No. 31/2021 andsubsequent ones regarding the review of the Company's strategic options,the Management Board of the Company announces that it has made adecision to terminate the review, due to the consideration of allscenarios of possible financing of the further operations of theCompany's capital group. The Transaction scenario selected as part ofthe strategic options, is the best from the perspective of thedevelopment of the Company's capital group.