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TORONTO and GLIL
YAM, Israel, Feb. 28,
2024 /CNW/ -- IM Cannabis Corp. (CSE: IMCC)
(NASDAQ: IMCC) (the "Company" or "IMC"), a leading
medical cannabis company with operations in Israel and Germany, is pleased to announce that it has
entered into a non-binding term sheet dated February 13, 2024, as amended (the "Term
Sheet"), and a Loan Agreement (as defined below) with Holding
Company (as defined below), with Israel-based Kadimastem Ltd a clinical cell
therapy public company traded on the Tel Aviv Stock Exchange under
the symbol (TASE: KDST) ("Kadimastem"), whereby the parties
will complete a business combination that will constitute a reverse
merger into the Company by Kadimastem (the "Proposed
Transaction").
We have been looking for a way to deliver maximum
value for our shareholders in the current situation and believe
that a reverse merger with Kadimastem will provide this," said
Oren Shuster, CEO of IMC. "With its
focus on clinical stage cell therapy, and an FDA approval for a
Phase IIa clinical trial, we believe that Kadimastem has tremendous
potential."
"Kadimastem's strategic decision to pursue a
NASDAQ listing underscores our commitment to maximizing the
potential of our diabetes and ALS product candidates," said
Ronen Twito, Kadimastem's Executive
Chairman of the Board. "This move positions us closer to our target
markets in the US, leverages our recent FDA approvals to initiate a
Phase IIa multi-site clinical trial in the US for our ALS product
candidate and the joint development of a diabetes product with our
Florida-based partner, a
multi-billion dollar market. We strongly believe this comprehensive
strategy will create significant value to the company's
shareholders".
The Proposed Transaction
The Proposed Transaction will be effected by way
of a plan of arrangement involving a newly created wholly-owned
subsidiary of IMC and Kadimastem (the "Arrangement").
The resulting issuer that will exist upon completion of the
Proposed Transaction (the "Resulting Issuer") will change
its business from medical cannabis to biotechnology and, at the
closing of the Proposed Transactions (the
"Closing"), Kadimastem shareholders will hold 88% of the
common shares of the Resulting Issuer (the "Resulting Issuer
Shares") and the shareholders of the Company will hold 12% of
the Resulting Issuer Share. Parties may agree, in the Definitive
Agreement, on a different structure of equity in lieu of the
warrants (as described below) with a similar result. The Proposed
Transaction is an arm's length transaction.
Prior to Closing, IMC's existing medical cannabis
operation and other current activities in Israel and Germany (the "Legacy Business") will be
restructured (the "Spin-Out") as a contingent value right
(the "CVR"). The CVR will entitle the holders thereof to
receive net cash, equity, or other net value upon the sale of the
Legacy Business following the Closing, subject to the terms of the
Loan Agreement.
To facilitate the sale of the Legacy Business, a
special committee of IMC's Board of Directors was formed, which
will oversee the potential sale in collaboration with legal and
financial advisors.
The Legacy Business will be made available for
potential sale to a third party for a period of up to 12 months
from Closing (the "Record Date"). After the Record Date, any
remaining Legacy Business in the CVR will be offered for sale
through a tender process, subject to the terms of the best offer.
The proceeds from the sale of the Legacy Business will be utilized
to settle debts and distribute the remaining balance, if any, to
CVR holders.
As a condition of Closing, Kadimastem will have
approximately $5 million in gross
funds, at Closing including capital raised concurrently with the
completion of the Proposed Transaction from existing shareholders
and additional investors.
In addition to the foregoing, subject to
compliance with applicable law, the Company shall grant
shareholders of the Company as of Closing, with warrant(s) equal
their pro rata portion, of 2% of the Resulting Issuer's issued and
outstanding common share capital (the "IMC Shares") prior to
the Closing Date (in the aggregate), with an exercise price per
share equal to the 10 day volume-weighted average price of the
Resulting Issuer's shares calculated on the NASDAQ Capital Market
("Nasdaq"), ending 2 trading days prior to Closing, the
warrants will be for a period of 24 months following Closing.
Description of Kadimastem and its
Business
Kadimastem is a clinical stage cell therapy
company, Kadimastem's recently reported receipt of FDA approval for
a Phase IIa multi-site clinical trial in the US for the treatment
of ALS, and the joint development agreement signed with iTolerance
Inc., a Florida based company with
a product in the field of diabetes which recently have a successful
joint INTERCT meeting with the FDA.
Exchange of Securities
In accordance with the terms of the Proposed
Transaction, the holders of the issued and outstanding shares in
the capital of Kadimastem (the "Kadimastem Shares") will be
issued such number of IMC Shares in exchange for every one (1)
Kadimastem Share held immediately prior to the completion of the
Proposed Transaction that reflects the ratio outlined above (the
"Exchange Ratio"). Outstanding convertible securities of
Kadimastem (the "Kadimastem Convertible Securities") will be
treated through customary mechanics as shall be determined in the
definitive agreement, which may include, the assumption of the
Kadimastem Convertible Securities by IMC subject to customary
adjustments to reflect the Exchange Ratio and exercise price.
Loan Agreement
Pursuant to the terms of the Term Sheet, a loan
agreement dated February 28, 2024
(the "Loan Agreement") was entered between IMC Holdings Ltd.
a wholly-owned subsidiary of IMC (the "Holding Company") and
Kadimastem. Pursuant to the Loan Agreement, Kadimastem will provide
a loan of up to US$650,000 to the
Holding Company, funded in two installments: US$300,000 upon signing the Loan Agreement and
US$350,000 upon the execution of the
definitive agreement regarding the Proposed Transaction (the
"Loan").
The Loan accrues interest at a rate of 9.00% per
annum, compounding annually and is secured by the following
collaterals and guarantees: (a) 10% of the proceeds derived from
any operation sale under the CVR ("Charged Rights"), limited to the
outstanding Loan Amount and expenses according to the Loan
Agreement, accordingly Holding Company may, at its sole discretion,
to record a second-ranked fixed charge over the Charged Rights or,
alternatively, in case the existing pledges over the Charged Rights
at the date of signing this Loan Agreement are subsequently
discharged or removed, then the Borrower shall promptly record a
first-ranking fixed charge over the Charged Assets with all
applicable public records; provided that Holding Company shall not
impose any new lien, mortgage, charge or pledge over the Charged
Rights that did not exist on the date hereof, or any other liens,
subject to customary exclusions; (b) the Holding Company shall use
its best efforts to record a first-ranking fixed charge over the
assets of its subsidiary, A.R Yarok Pharm Ltd, in due course when
applicable and as deemed appropriate; and (c) a personal guarantee
by Mr. Oren Shuster, IMC's CEO.
IMC Shareholder Meeting
Prior to the completion of the Proposed
Transaction, IMC will call a meeting of its shareholders for the
purpose of approving, among other matters:
- approve the Proposed Transaction;
- approve the Spin-Out;
- a change of name of the Company as directed by Kadimastem
and acceptable to the applicable regulatory authorities effective
upon Closing; and
- reconstitution of the Company's board of directors.
Management of the Resulting Issuer
Upon closing of the Proposed Transaction, all of
IMC's current directors and executive officers will resign and the
board of directors of the Resulting Issuer will, subject to the
approval of governing regulatory bodies, consist of nominees of
Kadimastem. All of the executive officers shall be replaced by
nominees of Kadimastem, all in a manner that complies with the
requirements of governing regulatory bodies and applicable
securities and corporate laws.
Details of insiders and proposed directors and
officers of the Resulting Issuer will be disclosed in a further
news release.
Closing Conditions
The completion of the Proposed Transaction is
subject to a number of conditions, including but not limited to the
following:
- the execution of a definitive agreement;
- completion of mutually satisfactory due diligence;
- completion of the Share Consolidation; and
- receipt of all required regulatory, corporate and third party
approvals, including approvals by governing regulatory bodies, the
shareholders of IMC and Kadimastem, applicable Israeli
governmental authorities, and the fulfilment of all applicable
regulatory requirements and conditions necessary to complete the
Proposed Transaction.
The parties are committed to seeking a successful
completion of the Proposed Transaction as soon as practicable, but
there can be no absolute certainty that the Proposed Transaction
will take place.
Further information
Further details about the Proposed Transaction
and the Resulting Issuer will be provided in a comprehensive news
release when the parties enter into the definitive agreement.
Investors are cautioned that any information
released or received with respect to the Proposed Transaction in
this press release may not be complete and should not be relied
upon. Trading in the common shares of the Company should be
considered highly speculative.
The securities to be issued in connection
with the Proposed Transaction have not been and will
not be registered under the United States Securities Act of 1933,
as amended (the "U.S. Securities Act") or any state securities laws
and may not be offered or sold within the
United States or to U.S. Persons (as defined in Regulation S
promulgated under the U.S. Securities Act) unless registered under
the U.S. Securities Act and applicable state securities laws or an
exemption from such registration is available.
Completion of the Proposed
Transaction is subject to a number of conditions, including
but not limited to, Canadian Securities Exchange ("CSE") and NASDAQ
acceptance and if applicable, disinterested shareholder approval.
Where applicable, the Proposed Transaction cannot
close until the required shareholder approval is obtained. There
can be no assurance that the Proposed Transaction
will be completed as proposed or at all.
Investors are cautioned that, except as
disclosed in the management information circular or filing
statement to be prepared in connection with the Proposed
Transaction, any information released or received with respect to
the Proposed Transaction may not be accurate or
complete and should not be relied upon
About IM Cannabis Corp.
IMC (Nasdaq: IMCC) (CSE: IMCC) is an
international cannabis company that provides premium cannabis
products to medical patients in Israel and Germany, two of the largest medical cannabis
markets. The Company has recently exited operations in Canada to pivot its focus and resources to
achieve sustainable and profitable growth in its highest value
markets, Israel and Germany. The Company leverages a transnational
ecosystem powered by a unique data-driven approach and a globally
sourced product supply chain. With an unwavering commitment to
responsible growth and compliance with the strictest regulatory
environments, the Company strives to amplify its commercial and
brand power to become a global high-quality cannabis player.
The IMC ecosystem operates in Israel through its commercial relationship
with Focus Medical Herbs Ltd., which imports and distributes
cannabis to medical patients, leveraging years of proprietary data
and patient insights. The Company also operates medical cannabis
retail pharmacies, online platforms, distribution centers, and
logistical hubs in Israel that
enable the safe delivery and quality control of IMC's products
throughout the entire value chain. In Germany, the IMC ecosystem operates through
Adjupharm GmbH, where it distributes cannabis to pharmacies for
medical cannabis patients. Until recently, the Company also
actively operated in Canada
through Trichome Financial Corp and its wholly owned subsidiaries,
where it cultivated, processed, packaged, and sold premium and
ultra-premium cannabis at its own facilities under the WAGNERS and
Highland Grow brands for the adult-use market in Canada. The Company has exited operations in
Canada and considers these
operations discontinued.
About Kadimastem Ltd.
Kadimastem is a clinical stage cell therapy
company, developing "off-the-shelf", allogeneic, proprietary cell
products based on its technology platform for the expansion and
differentiation of Human Embryonic Stem Cells (hESCs) into
functional cells. AstroRx®, Kadimastem 's lead product, is an
astrocyte cell therapy in clinical development for the treatment
for ALS and in pre-clinical studies for other neurodegenerative
indications.
IsletRx is Kadimastem 's treatment for
diabetes. IsletRx is comprised of functional pancreatic islet cells
producing and releasing insulin and glucagon, intended to treat and
potentially cure patients with insulin-dependent
diabetes. Kadimastem was founded by Professor Michel Revel, CSO of Kadimastem and
Professor Emeritus of Molecular Genetics at the Weizmann Institute
of Science. Professor Revel received the Israel Prize for the
invention and development of Rebif®, a multiple sclerosis
blockbuster drug sold worldwide. Kadimastem is traded on the Tel
Aviv Stock Exchange (TASE: KDST).
For more information, please contact:
IM Cannabis Corp.
Anna Taranko, Director Investor
& Public Relations
IM Cannabis Corp.
+49 157 80554338
a.taranko@imcannabis.de
Oren Shuster, Chief Executive
Officer
IM Cannabis Corp.
info@imcannabis.com
Disclaimer for Forward-Looking
Statements
This press release contains forward-looking
information or forward-looking statements under applicable Canadian
and U.S. securities laws (collectively, "forward-looking
statements"). All information that addresses activities or
developments that we expect to occur in the future are
forward-looking statements. Forward-looking statements are often,
but not always, identified by the use of words such as "seek",
"anticipate", "believe", "plan", "estimate", "expect", "likely" and
"intend" and statements that an event or result "may", "will",
"should", "could" or "might" occur or be achieved and other similar
expressions. Forward-looking statements are based on the estimates
and opinions of management on the date the statements are made. In
the press release, such forward-looking statements include, but are
not limited to, statements regarding: the parties' ability to
complete the Proposed Transaction; the expected terms of the
Proposed Transaction, the number of securities of the Company that
may be issued in connection with the Proposed Transaction, the
ownership ratio of the Resulting Issuer post-closing, the Loan and
Spin-Out, the ability of the Company and Kadimastem to receive the
requisite approvals of all regulatory bodies having jurisdiction in
connection with the Proposed Transaction; and the ability of the
Resulting Issuer to fulfill the listing requirements of the CSE and
Nasdaq;
Forward-looking information in this news release
are based on certain assumptions and expected future events,
namely: the Company's ability to continue as a going concern;
continued approval of the Company's activities by the relevant
governmental and/or regulatory authorities; the continued growth of
the Company; the Company's ability to finance the completion of the
Proposed Transaction; and the ability of the Resulting Issuer to
fulfil the listing requirements of the CSE and Nasdaq
These statements involve known and unknown risks,
uncertainties and other factors, which may cause actual results,
performance or achievements to differ materially from those
expressed or implied by such statements, including but not limited
to: the potential inability of the Company to continue as a going
concern; risks associated with potential governmental and/or
regulatory action with respect to the Company's and/or Kadimastem's
operations; the Company's inability to complete the Proposed
Transaction; the inability of the Company and the Target to receive
the requisite approvals of all regulatory bodies having
jurisdiction in connection with the Proposed Transaction; and the
risks associated with the Resulting Issuer's ability to meet CSE
and Nasdaq listing requirements.
Readers are cautioned that the foregoing list is
not exhaustive. Since forward-looking statements address future
events and conditions, by their very nature they involve inherent
risks and uncertainties. Actual results may differ materially from
those currently anticipated or implied by such forward looking
statements due to a number of factors and risks. These include: any
failure of the Company to maintain "de facto" control over Focus
Medical in accordance with IFRS 10; the failure of the Company to
comply with applicable regulatory requirements in a highly
regulated industry; unexpected changes in governmental policies and
regulations in the jurisdictions in which the Company operates; the
effect of the reform on the Company; the Company's ability to
continue to meet the listing requirements of the CSE and NASDAQ;
any unexpected failure to maintain in good standing or renew its
licenses; the ability of the Company and Focus Medical
(collectively, the "Group") to deliver on their sales commitments
or growth objectives; the reliance of the Group on third-party
supply agreements to provide sufficient quantities of medical
cannabis to fulfil the Group's obligations; the Group's possible
exposure to liability, the perceived level of risk related thereto,
and the anticipated results of any litigation or other similar
disputes or legal proceedings involving the Group; the impact of
increasing competition; any lack of merger and acquisition
opportunities; adverse market conditions; the inherent uncertainty
of production quantities, qualities and cost estimates and the
potential for unexpected costs and expenses; risks of product
liability and other safety-related liability from the usage of the
Group's cannabis products; supply chain constraints; reliance on
key personnel; the risk of defaulting on existing debt and war,
conflict and civil unrest in Eastern
Europe and the Middle
East.
Any forward-looking statement included in this
press release is made as of the date of this press release and is
based on the beliefs, estimates, expectations and opinions of
management on the date such forward-looking information is
made.
The Company does not undertake any obligation to
update forward-looking statements except as required by applicable
securities laws. Investors should not place undue reliance on
forward-looking statements. Forward-looking statements contained in
this press release are expressly qualified by this cautionary
statement.
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SOURCE IM Cannabis Corp.