THIS NEWS RELEASE IS INTENDED FOR
DISTRIBUTION IN CANADA ONLY AND IS
NOT INTENDED FOR DISTRIBUTION TO UNITED
STATES NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES
TORONTO and GLIL YAM,
Israel, Oct. 4, 2024 /PRNewswire/ -- IM Cannabis Corp.
("IM Cannabis" or the "Company") (NASDAQ: IMCC) (CSE:
IMCC), a leading medical cannabis company with operations in
Israel and Germany, is pleased to announce that it
intends to undertake a non-brokered private placement offering of
up to US$1,613,000 through the sale
of approximately 625,000 units (each, an "Unit") at a price
per Unit (the "Offering Price") calculated on the basis of
the deemed price per common shares in the capital of the Company
(each, a "Share") equal to the 10-day volume weighted
average price of the Shares on Canadian Securities Exchange (the
"Exchange") ending on the trading day preceding October 3, 2024.
Each Unit will be comprised of one Share and one Share purchase
warrant (each, a "Warrant"). Each Warrant shall entitle the
holder thereof to acquire one additional Share (each, a "Warrant
Share) at a price equal to a 50% premium to the Offering Price
(the "Warrant Exercise Price") at any time prior to
5:00 p.m. (Toronto time) on second anniversary of the
closing date. The Offering, which is expected to close in one or
more tranches, will be led by the Company's management team,
including Oren Shuster, Chief
Executive Officer and Chairman of the board of directors (the
"Board") and Shmulik Arbel a
director of the Company (together, the
"Insiders").
All securities issued under the Offering will be subject to a
hold period of four months and one day from the closing date under
applicable Canadian securities laws, in addition to such other
restrictions as may apply under applicable securities laws of
jurisdictions outside Canada.
The Company intends to use the proceeds from the Offering for
the repayment of a loan to A.D.I. CAR ALARMS & STEREO SYSTEMS
Ltd. provided to the Company's subsidiary IMC Holdings Ltd. on
October 11, 2022.
The closing of the Offering is expected to occur by November 11, 2024.
Loan Bonus
Since October 2022, the Company
has borrowed from various groups more than US$8,000,000 (together, the "Loans"). As
required by the lenders, Mr. Shuster has personally guaranteed the
Loans. The independent members of the Board commissioned a
valuation to determine the value of Mr. Shuster's personal
guarantees, which ascribes the benefit to the Company to be
approximately US$560,000 (the
"Benefit"). The Company and Mr. Shuster intend to enter into
a settlement agreement to settle the amount of the Benefit in
Shares (a "Settlement Share") or a pre-funded Share purchase
warrant (a "Pre-Funded Warrant"), at the Offering Price.
Each Pre-Funded Warrant will entitle the holder to purchase one
Settlement Share for a price of $0.00001, upon receipt of shareholder approval to
allow Mr. Shuster to become a control person (as defined in the
policies of the Exchange). All securities issued in consideration
for the Benefit will be subject to a hold period of four months and
one day from the closing date under applicable Canadian securities
laws, in addition to such other restrictions as may apply under
applicable securities laws of jurisdictions outside Canada.
This news release does not constitute an offer to sell or a
solicitation of an offer to sell any of the securities to, or for
the account or benefit of, persons in the
United States or U.S. persons. The securities 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 to, or for the account or benefit of, persons in
the United States or to U.S.
Persons unless registered under the U.S. Securities Act and
applicable state securities laws or an exemption from such
registration is available.
Options and Warrants Cancellation
Effective today, the Company has cancelled an aggregate of
32,305 options ("Options") to purchase Shares, which were
previously granted to Board members, officers, employees, advisors
and consultants of the Company (each a "Participant").
Management reviewed the Company's outstanding Options and
determined that certain Options granted to such Participants, at
exercise prices ranging from $6.60 to
$600 per Share, no longer represented
a realistic incentive to motivate such Participants.
Effective today, the Company has cancelled an aggregate of
142,784 Share purchase warrants (the "Subject
Warrants") to purchase Shares, which were previously granted
to Mr. Shuster. Management reviewed the Company's outstanding
warrants and determined that the Subject Warrants at an exercise
price of US$9.00 per Share, no longer
represented a realistic incentive to motivate Mr. Shuster.
Option Grants
The Company has also approved the grant of 32,305 Options to
certain eligible persons of the Company, at an exercise price of
greater of: (i) the Warrant Exercise Price; and (ii) US$2.24 per Share, with an expiry date of two
years from the date of issuance (the "Option Grants"). The
Options Grants vest as follows: one third vest immediately, one
third vests on the six-month anniversary and the final one third
vests on the twelve-month anniversary. All securities issued under
the Option Grants are subject to a statutory hold period of four
months plus one day from the date of issuance, in accordance with
the polices of the Exchange.
Related Party Transactions
The Company expects that each of Mr. Shuster and Mr. Arbel will
be related parties as defined in Multilateral Instrument 61-101
- Protection of Minority Security Holders in Special
Transactions ("MI 61-101") as Mr. Shuster and Mr.
Arbel will be participating in the Offering, Mr. Shuster will be
settling the Benefit. The Company expects that any such resulting
related party transaction will be exempt from the formal valuation
requirement and minority shareholder approval requirements of MI
61-101 based on the exemptions under sections 5.5(a) and 5.7(1)(a)
of MI 61-101 as the fair market value of the Units being purchased
and securities issued to settle the Benefit will not exceed 25% of
the Company's market capitalization. The Company expects that the
closing of the Offering and the settlement of the Benefit will
occur within 21 days of this announcement and that it will not file
a material change report in respect of the related party
transaction at least 21 days before the closing date. The Company
deems this circumstance reasonable and necessary in order to
complete the Offering and settlement of the Benefit in an
expeditious manner.
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 subsidiaries, 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
center, and logistical hubs in Israel that enable the safe delivery and
quality control of IMC 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. The securities to be
offered pursuant to the Offering 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 United States state securities laws, and may
not be offered or sold in the United
States or to, or for the account or benefit of, United States persons absent registration or
any applicable exemption from the registration requirements of the
U.S. Securities Act and applicable United
States state securities laws. This news release shall not
constitute an offer to sell or the solicitation of an offer to buy
securities in the United States,
nor shall there be any sale of these securities in any jurisdiction
in which such offer, solicitation or sale would be unlawful.
Company Contact:
Anna Taranko, Director Investor
& Public Relations
IM Cannabis Corp.
+49 157 80554338
a.taranko@imcannabis.de
Oren Shuster, CEO
IM Cannabis Corp.
+972-77-3603504
info@imcannabis.com
Disclaimer for Forward-Looking Information
Forward-Looking Information and Cautionary Statements
This press release contains forward-looking information or
forward-looking statements under applicable Canadian and
United States 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 relating to: the Offering, including the Company's
intention to undertake the Offering, the expected terms, the
anticipated closing date and closing of the Offering in one
tranche, the participation of the Company's management team, the
stated intended use of proceeds; the Benefit, including the
intention to enter into a settlement agreement with Mr. Shuster to
settle the amount of the Benefit in Shares or Pre-Funded Warrant
and the closing thereof; and the Company's plans to issue Option
Grants to certain eligible persons.
Forward-looking statements are based on assumptions that may
prove to be incorrect, including but not limited to: the Company's
ability to focus and resources to achieve sustainable and
profitable growth in its highest value markets; the Company's
ability to mitigate the impact of the Israel-Hamas war on the
Company; the Company's ability to take advantage of the
legalization of medicinal cannabis in Germany; the Company's ability to carry out
its stated goals, scope, and nature of operations in Germany, Israel, and other jurisdictions the Company
may operate; the Company has the ability to carry out the Offering
as stated; the Company has the ability to settle the Benefit as
stated; and the Company has the ability to issue Option Grants to
certain eligible persons as stated. The above lists of
forward-looking statements and assumptions are 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: 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 Company's ability to continue to meet the listing
requirements of the Canadian Securities Exchange and the NASDAQ
Capital Market; any unexpected failure to maintain in good standing
or renew its licenses; the ability of the Company and its
subsidiaries (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;
risks surrounding war, conflict and civil unrest in Eastern Europe and the Middle East, including the impact of the
Israel-Hamas war on the Company, its operations and the medical
cannabis industry in Israel; risks
associated with the Company focusing on the Israel and Germany markets; the inability of the Company
to achieve sustainable profitability and/or increase shareholder
value; the inability of the Company to actively manage costs and/or
improve margins; the inability of the company to grow and/or
maintain sales; the inability of the Company to meet its goals
and/or strategic plans; the inability of the Company to reduce
costs and/or maintain revenues; the Company's inability to take
advantage of the legalization of medicinal cannabis in Germany; the Company's inability to carry out
the Offering as stated; Company's inability to settle the Benefit
as stated; and the Company's inability to issue Option Grants to
certain eligible persons as stated. Please see the other risks,
uncertainties and factors set out under the heading "Risk Factors"
in the Company's annual report dated March
28, 2024, which is available on the Company's issuer profile
on SEDAR+ at www.sedarplus.ca and Edgar at www.sec.gov/edgar. 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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