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Heritage Cannabis Enters into Note and Warrant Purchase Agreement with Merida Capital
Rhea-AI Impact
(Moderate)
Rhea-AI Sentiment
(Neutral)
Tags
Rhea-AI Summary
Heritage Cannabis Holdings Corp. (CSE: CANN, OTCQX: HERTF) has finalized a Note and Warrant Purchase Agreement with Merida Capital Partners, securing USD$1.5 million to enter the Missouri market. The agreement includes a USD$660,000 promissory note maturing on October 18, 2023, at a 15% interest rate, payable in common shares. The conversion price for shares will be CAD$0.07 or the higher closing price before issuance. Additionally, 696,942 shares were issued as a commitment fee, valuing USD$31,250. All securities remain under a four-month hold.
Positive
Secured USD$1.5 million funding for expansion into Missouri.
Promissory note has a relatively high interest rate of 15% but allows for flexible payment in shares.
Issuance of shares as a commitment fee reflects strong backing from Merida Capital Partners.
Negative
High interest rate of 15% on the promissory note may lead to increased financial burden.
Funding primarily in shares could dilute existing shareholder equity.
TORONTO--(BUSINESS WIRE)--
Heritage Cannabis Holdings Corp. (CSE: CANN) (OTCQX: HERTF) (“Heritage” or the “Company”), today announced that further to its press release of September 13, 2021 regarding its term sheet with Merida Capital Partners III LP (“Merida Fund III”) and Merida Capital Partners IV LP (“Merida Fund IV”) to fund the Company’s entry into the state of Missouri, it has entered into a Note and Warrant Purchase Agreement, dated October 18, 2021, pursuant to which Merida Fund III and Merida Fund IV have loaned the Company an aggregate amount of USD$1,500,000.
On closing, the Company issued a promissory note to Merida Fund III (the "Note") for a principal amount of USD$660,000 (the "Principal Amount"), set to mature on October 18, 2023. The Note has an interest rate of 15%, which shall be paid in common shares of the Company (the “Common Shares” and such shares issuable as interest payment, the “Interest Shares”). The price of these shares will be the greater of (i) 90% of the volume weighted average price per Common Share as reported on the Canadian Securities Exchange (the "CSE") for the 5 consecutive trading days preceding such issuance, and (ii) the minimum price per Common Share permitted pursuant to applicable securities laws and CSE regulations. The Principal Amount may be repaid in Common Shares (the "Conversion Shares") at a conversion price equal to the greater of: (i) the closing market price of the Common Shares on the CSE on the trading day prior to the earlier of dissemination of a news release disclosing the issuance of the Conversion Shares or the posting of notice by the Company to the CSE website of the proposed issuance of Conversion Shares, and (ii) CAD$0.07. The Company also issued warrants to each of Merida Fund III and Merida Fund IV equal to 50% of the aggregate number of Conversion Shares that would be received upon conversion of 100% of the aggregate amount of principal outstanding under the Note.
The Company has also issued 696,942 shares to each of Merida Fund III and Merida Fund IV as a commitment fee for this transaction, representing USD$31,250 divided by 90% of the volume weighted average price per Common Share as reported on the Canadian Securities Exchange for the 30 consecutive trading days preceding such issuance (the “Commitment Fee”). The shares issued in connection with the Commitment Fee were issued at a price of CAD$0.0556 per share.
All securities referenced in this press release, specifically, the Interest Shares, the Conversion Shares, and the Commitment Fee, are subject to a standard four-month hold under applicable securities laws.
About Heritage Cannabis Holdings Corp.
Heritage is a leading cannabis company offering innovative products to both the medical and recreational legal cannabis markets in Canada and the U.S., operating under two licensed manufacturing facilities in Canada. The company has an extensive portfolio of high-quality cannabis products under the brands Purefarma, Pura Vida, RAD, Premium 5, feelgood., CB4 and ArthroCBD.
ON BEHALF OF THE BOARD OF DIRECTORS OF HERITAGE CANNABIS HOLDINGS CORP.
“David Schwede”
David Schwede CEO
The Canadian Securities Exchange does not accept responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements
This press release contains certain “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only the Company’s beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company’s control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or may contain statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “will continue”, “will occur” or “will be achieved”. The forward-looking information contained herein may include, but is not limited to, assumptions related to cash flow and capital resources, and expectations related to the supply and manufacturing agreements, the intended expansion of the Company, and partnerships and Joint Venture Partnerships.
By identifying such information and statements in this manner, the Company is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such information and statements.
An investment in securities of the Company is speculative and subject to several risks including, without limitation, the risks discussed under the heading “Risks and Uncertainties” in the Company’s annual management discussion and analysis for the year ended October 31, 2020 and dated February 26, 2021. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in the forward-looking information and forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended.
In connection with the forward-looking information and forward-looking statements contained in this press release, the Company has made certain assumptions. Although the Company believes that the assumptions and factors used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements. The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and the Company does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws. All subsequent written and oral forward-looking information and statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by this notice.
What is the significance of Heritage Cannabis's agreement with Merida Capital Partners?
The agreement secures USD$1.5 million in funding for Heritage Cannabis to expand into the Missouri market, indicating growth ambitions.
What are the terms of the promissory note issued by Heritage Cannabis?
Heritage Cannabis issued a USD$660,000 promissory note with a 15% interest rate, maturing on October 18, 2023.
How will Heritage Cannabis pay interest on the promissory note?
Interest on the promissory note is to be paid in common shares of the company, adjusted by market conditions.
What type of shares were issued as a commitment fee in the agreement?
696,942 shares were issued to each of Merida Fund III and Merida Fund IV as a commitment fee.
What is the potential impact of this agreement on HERTF stock?
The agreement may positively influence HERTF stock by providing funds for expansion, but the dilution of shares could negatively affect existing shareholders.
