TORONTO and GLIL YAM, Israel — IM Cannabis Corp. (the “Company” or “IMC”) (NASDAQ: IMCC) (CSE: IMCC), an international medical cannabis company, is pleased to announce a non-brokered private placement of a minimum of 400,000 units and a maximum of 2,960,000 units of the Company (each a “Unit”) at a price of US$1.25 per Unit for aggregate gross proceeds of a minimum of US$500,000 and a maximum of US$3,700,000, which will be offered for sale to purchasers resident in Canada (except Quebec) and/or other qualifying jurisdictions pursuant to the listed issuer financing exemption under Part 5A of National Instrument 45-106 – Prospectus Exemptions (the “Listed Issuer Financing Exemption Offering” or “LIFE Offering”). Each Unit consists of one common share of the Company (each a “Common Share”) and one Common Share purchase warrant (each a “Warrant”). Each Warrant entitles its holder to purchase one additional Common Share at an exercise price of US$1.50 for a period of 36 months from the date of issue. The Listed Issuer Financing Exemption Offering will be led by Marc Lustig, Executive Chairman of the Company. The Listed Issuer Financing Exemption Offering is expected to be completed in multiple closings, with the first closing expected to occur on or about January 16, 2023 and the final closing to occur no later than March 2, 2023. The securities issued pursuant to the Listed Issuer Financing Exemption Offering will not be subject to any statutory hold period in accordance with applicable Canadian securities laws.
There is an offering document related to the Listed Issuer Financing Exemption Offering that can be accessed under the Company’s profile at www.sedar.com and on the Company’s website at www.imcannabis.com. Prospective investors should read this offering document before making an investment decision.
Concurrent with the Listed Issuer Financing Exemption Offering, IMC is selling, on a non-brokered private placement basis, an additional 2,000,000 Units on the same terms and at the same price for additional aggregate gross proceeds of US$2,500,000 (the “Concurrent Offering”). The Concurrent Offering will be led by Company insiders, including Oren Shuster, Chief Executive Officer and Director of the Company. The securities issued pursuant to the Concurrent Offering will be subject to a statutory hold period of four months and one day in accordance with applicable Canadian securities laws. Closing of the Concurrent Offering is expected to occur on or about January 16, 2023. The aggregate gross proceeds from the Listed Issuer Financing Exemption Offering and the Concurrent Offering shall be up to US$5,500,000
The Company intends to use the net proceeds from each of the Listed Issuer Financing Exemption Offering and the Concurrent Offering for general working capital purposes. Completion of the Listed Issuer Financing Exemption Offering is not conditional upon the completion of the Concurrent Offering or vice versa.
As a result of the expected participation by insiders of the Company, each of the Listed Issuer Financing Exemption Offering and the Concurrent Offering may be considered a “related party transaction” pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The Company expects that both the Listed Issuer Financing Exemption Offering and the Concurrent Offering will be exempt from the requirements to obtain a formal valuation and minority shareholder approval, respectively, because the fair market value of the Insiders’ participation in each case will be below 25% of the Company’s market capitalization for the purposes of Sections 5.5(a) and 5.7(1)(a) of MI 61-101.
None of the securities have been registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities laws. Accordingly, the Units may not be offered or sold within the United States, its territories or possessions, any state of the United States or the District of Columbia (collectively, the “United States”) or to, or for the account or benefit of, U.S. persons (as such term is defined in Regulation S under the U.S. Securities Act) unless registered under the U.S. Securities Act and all applicable state securities laws or an exemption from such registration requirements is available. This press release does not constitute an offer to sell or a solicitation of an offer to buy any Units within the United States or to, or for the account or benefit of, U.S. persons.
Update on Trichome Financial Corp. Insolvency Proceedings
On January 9, 2023, the Ontario Superior Court of Justice issued an order in respect of a motion brought by Trichome Financial Corp. (“Trichome”) and certain of its wholly-owned subsidiaries (collectively with Trichome, the “Trichome Group”) to approve, among other things: the sale and investment solicitation process (the “SISP”) in respect of the business and assets of the Trichome Group; and a stalking horse share purchase agreement (the “Stalking Horse Purchase Agreement”) between the Trichome Group and L5 Capital Inc. (the “Purchaser”) dated December 12, 2022, solely for the purposes of acting as the stalking horse bid in the SISP (the “Stalking Horse Bid”). The SISP establishes a process to solicit interest for the sale of any or all of the Trichome Group’s businesses and assets.
At the conclusion of the SISP, and pursuant to its terms, if the Stalking Horse Bid is selected as the successful bid, the Trichome Group will seek an approval and vesting order (an “AVO”) from the Court authorizing the Trichome Group to proceed with the transaction contemplated under the Stalking Horse Purchase Agreement. Pursuant to the Stalking Horse Purchase Agreement, the Purchaser will acquire all of the issued and outstanding shares in the capital of Trichome JWC Acquisition Corp. (“TJAC”), MYM Nutraceuticals Inc. (“MYM”), and their respective subsidiaries, Trichome Retail Corp., MYM International Brands Inc. (“MYMB”) and Highland Grow Inc. (collectively, the “Purchased Entities”). The consideration payable under the Stalking Horse Purchase Agreement is approximately C$6,300,000 and includes a base cash purchase price of C$5,000,000 and certain deferred consideration payable pursuant to secured limited recourse promissory notes.
The Stalking Horse Purchase Agreement contemplates a reverse purchase transaction where the Purchaser will acquire, pursuant to the AVO, the Purchased Entities and their respective assets, free and clear of any and all claims and liabilities (collectively, the “Excluded Claims and Liabilities”) other than those specifically assumed pursuant to the Stalking Horse Purchase Agreement. Pursuant to the Stalking Horse Purchase Agreement and the AVO, the Excluded Claims and Liabilities are expected to be transferred to residual entities to be incorporated by Trichome, TJAC, MYM and MYMB, as applicable.
The Stalking Horse Purchase Agreement constitutes a related party transaction as the Purchaser is an entity controlled by Marc Lustig, who is a director of Trichome and the Executive Chairman of the board of directors of the Company. The Company expects to rely on Sections 5.5(f) and 5.7(1)(d) of MI 61-101 for exemptions from the requirements to obtain a formal valuation and minority shareholder approval, respectively, because the transaction will be completed as part of the CCAA proceedings pursuant to an order of the Court, provided that the Court is advised of the requirements under MI 61-101, and the court does not require compliance with Section 5.4 of MI 61-101.
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 commenced exiting 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. (“Focus Medical”), 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 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 and its wholly-owned subsidiaries TJAC and MYM, 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’s Canadian operation continues to export premium and ultra-premium medical cannabis to Israel. The Company is exiting operations in Canada and considers these operations discontinued. For more information, please visit http://www.imcannabis.com.
