IM Cannabis prices US$1.31M share sale as Nasdaq confirms compliance
A 51 per cent stake in a Polish drone company remains a non-binding proposal, while the registered share sale is expected to close Sept. 24.
Theo Marchetti
Nasdaq closed a minimum bid price deficiency for a medical cannabis issuer on Sept. 23 after its bid met the US$1 threshold for 18 consecutive business days. IM Cannabis Corp. NASDAQIMCC priced 655,000 new shares at US$2 apiece the same day, a registered direct offering worth about US$1.31 million before expenses.
The company separately signed a non-binding letter of intent to buy 51 per cent of privately held Polish firm Space Defense Innovations LLC, which IM Cannabis describes as a tactical drone reseller. Only confidentiality, exclusivity and governing law terms are binding; no purchase is assured.
At 10:54 a.m. EDT Wednesday, the NASDAQIMCC quote showed shares down at US$3.01 and displayed 619,000 shares outstanding. The proposed 655,000-share sale exceeds that displayed base, while its US$2 issue price was less than half Tuesday's close. That market snapshot preceded the after-close Nasdaq announcement.
IM Cannabis expects the share sale to close on or about Sept. 24. The company said the net proceeds are for working capital and general corporate purposes, which may include evaluating business opportunities; it did not allocate them specifically to the Polish proposal.
Nasdaq Bid Case Closed After Consolidation
Nasdaq Listing Rule 5550(a)(2) sets a US$1 minimum bid price. IM Cannabis said its closing bid stayed at or above that level from Aug. 27 through Sept. 22, and Nasdaq now considers that deficiency closed. The company's press release list shows it began trading on a 30-to-one consolidated basis on Aug. 27; the exchange's latest determination addresses the bid price rule alone.
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The offering release says one or more purchasers may be related parties under Canada's MI 61-101. IM Cannabis intends to rely on financial hardship exemptions from formal valuation and minority approval if that occurs, citing directors' determinations that the company is in serious financial difficulty and the offering is designed to improve its finances.
Polish Purchase Still Needs Definitive Terms
The letter of intent calls for IM Cannabis shares and/or pre-funded warrants, capped so no target shareholder would own more than 19.99 per cent of the issuer. It also specifies a 24-month seller loan at 9 per cent annual interest, with warrants covering the loan principal. IM Cannabis would receive a five-year option to buy the remaining stake and provide an on-demand line of credit of up to €2.3 million at closing.
"There can be no assurance that the parties will enter into definitive agreements or that the proposed transaction will be completed," IM Cannabis said in its Sept. 23 letter-of-intent release.
The parties aim to sign definitive documents within 60 days. Closing would still depend on due diligence, corporate and government approvals and the transfer of certain commercial agreements.
The next dated step is the expected Sept. 24 financing close, which will determine whether the 655,000 new shares enter IM Cannabis's capital base.
