HempFusion (TSX:CBD.U, OTCQX:CBDHF) Wellness Inc has announced a brokered private placement to raise up to US$3.0 million in aggregate gross proceeds.
Under the offering led by Research Capital Corporation as the sole agent and sole bookrunner, the company will offer up to 3,000 convertible debenture units at an issue price of US$1,000 per convertible debenture unit.
The company said it plans to allocate the net proceeds of the offering to working capital, repayment of debt and/or general corporate purposes.
Each convertible debenture unit will be comprised of US$1,000 principal amount of 10% senior secured convertible debentures of the company which will be convertible into common shares at a price of US$0.15 per common share, subject to adjustment in certain events, and maturing on a date that is three years from issue, as well as 3,333 common share purchase warrants.
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Each warrant will entitle the holder to purchase one common share at a price of US$0.20 each until the maturity date, subject to an accelerated exercise period if, at any time prior to the expiry date of the warrants, the volume-weighted average trading price of the common shares for five consecutive trading days on the Toronto Stock Exchange, or other principal exchange on which the common shares are listed, is greater than US$0.60.
Within 15 days of the occurrence of such an event, the company shall deliver a notice to the holders of warrants accelerating their expiry to the date that is 30 days following the date of such notice. Any unexercised warrants shall automatically expire at the end of the accelerated exercise period.
The company may also force the conversion of the principal amount of the then outstanding debentures at the conversion price on not more than 60 days' and not less than 30 days' notice should the daily volume-weighted average trading price of the common shares for the consecutive five trading days on the exchange, be greater than US$0.40 preceding the notice.
On and after the date that is 24 months following the date of issuance of the convertible debentures, the company shall have the right to redeem them either partially or in full in cash at 110% of the principal amount plus accrued interest.
Interest on the debentures shall be paid quarterly and computed on the basis of a 360-day year composed of twelve 30 day months. The first interest payment shall be on March 31, 2022, for the period from the closing date of the offering to March 31, 2022.
The company has granted to the agent an option, exercisable up to 48 hours prior to the closing date of the offering, to sell up to an additional 15% of convertible debenture units.
Closing of the offering is expected to occur on or about the week of March 28, 2022, and is subject to certain customary conditions including, but not limited to, the receipt of all necessary regulatory approvals and acceptance of the exchange.
All securities issued under the offering will be subject to a statutory hold period of four months plus a day from the closing date in accordance with applicable securities legislation.
The company has agreed to pay the agent, upon closing of the offering, a cash commission equal to 8.0% of the aggregate gross proceeds, subject to a reduction for certain orders on a "president's list". In addition, the company will issue such amount of broker warrants equal to 8.0% of the number of common shares issuable upon conversion of the convertible debentures exercisable for one common share at the conversion price.
The securities have not been, and will not be, registered under the United States Securities Act of 1933, as amended, or any state securities laws, and, accordingly, may not be offered or sold within the United States, or to or for the account or benefit of persons in the United States or US Persons, as such term is defined in Regulation S promulgated under the US Securities Act, unless registered under the US Securities Act and applicable state securities laws or pursuant to an exemption from such registration requirements.
HempFusion (TSX:CBD.U, OTCQX:CBDHF) Wellness is a leading health and wellness company whose family of premium consumer brands include HempFusion (TSX:CBD.U, OTCQX:CBDHF), Sagely Naturals, Apothecanna, and Probulin Probiotics, one of the fastest-growing probiotics companies in the United States according to SPINs reported data.
The HempFusion family of brands' product portfolio comprises 112 SKUs including USDA Organic Certified Tinctures, proprietary US Food & Drug Administration (FDA) Drug Listed Over-The-Counter (OTC) Topicals, probiotic supplements and skincare products, a White Label division and more. With a strong focus on research and development, HempFusion Wellness has 43 products under development.
Available from more than 18,000 US retail locations across all 50 states, HempFusion Wellness products are also available in China, Mexico, Ireland, United Kingdom, United Arab Emirates, South Korea and Canada and may be purchased online from each brand's website, The Probulin Store on Amazon.com, Alibaba's Tmall.com, the world's largest cross-border online marketplace, and a multitude of additional e-commerce sites.
Contact the author at jon.hopkins@proactiveinvestors.com