IM Cannabis seeks SEC registration for resale of up to 2.8M shares
The Oct. 8 preliminary Form F-3 covers note conversions and warrants; selling holders would receive proceeds from resales.
Theo Marchetti
The U.S. Securities and Exchange Commission accepted a preliminary resale registration statement on Thursday for up to 2,799,276 common shares. IM Cannabis Corp. NASDAQIMCC filed Form F-3 to seek resale registration for up to 2,799,276 shares tied to convertible notes, creditor settlements and warrants.
The preliminary prospectus reports 1,647,494 IM Cannabis common shares outstanding as of Oct. 7. The 2,799,276-share resale maximum equals about 170 per cent of that count. This compares potential resale supply with an existing share count; actual dilution depends on note conversions and warrant exercises, some of which would change the denominator. The ceiling includes 38,624 creditor shares already issued, so it cannot be read as a single block of new shares entering the market.
Selling holders would receive proceeds from their resales, while IM Cannabis could receive exercise-price cash if holders pay to exercise warrants, according to the Oct. 8 prospectus. The document checks the box for delayed or continuous sales under Rule 415. Registration would allow sales from time to time after effectiveness, subject to each holder's decision and the terms of the underlying securities. Filing the statement does not itself require every covered share to be sold.
According to Google Finance's NASDAQIMCC quote, IM Cannabis shares closed at US$1.72, down 9.47 per cent on Nasdaq at 4:00:01 p.m. EDT on Oct. 8. The SEC accepted the filing at 4:06 p.m. EDT, after that close. The closing price therefore does not measure a reaction to this registration statement. Friday's regular session will be the first full Nasdaq session after the filing was accepted.
Registration Covers Existing And Contingent Shares
Three notes issued in July, August and September account for up to 1,038,923 covered conversion shares, including accrued interest, the Oct. 8 prospectus says. Warrants issued with those notes cover another 195,719 shares. Debt settlement agreements dated Oct. 7 account for up to 1,226,927 note-conversion shares and 243,245 shares underlying accompanying warrants.
A separate creditor agreement dated Sept. 16 contributes 38,624 shares already issued and another 55,838 shares underlying pre-funded warrants, according to the same filing. Those categories sum to the 2,799,276-share resale maximum, which includes existing shares as well as shares contingent on conversions or exercises. For the October settlement notes, the filing models US$490,770 of principal and accrued interest against a US$0.40 conversion floor.
Read more: Trulieve Cannabis Corp repays US$65M Florida mortgage before maturity
Share Sales Await Effectiveness
“The selling shareholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective,” the preliminary prospectus says.
The Form F-3 is registered as SEC file 333-299370 and was accepted on Oct. 8. The next regulatory step is effectiveness of the registration statement, which would permit selling shareholders to begin resales under its prospectus; the preliminary filing gives no effective date.
