05:52:18 EDT Thu 28 Mar 2024
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or Name
USA
CA



Chemistree Technology Inc
Symbol CHM
Shares Issued 28,652,976
Close 2018-05-31 C$ 0.41
Market Cap C$ 11,747,720
Recent Sedar Documents

Chemistree increases private placement to $4.55-million

2018-07-10 12:44 ET - News Release

Mr. Karl Kottmeier reports

CHEMISTREE INCREASES PRIVATE PLACEMENT FINANCING A SECOND TIME

Chemistree Technology Inc. has, for the second time, increased the size of its non-brokered private placement. Chemistree now plans to increase the size of the placement via the issuance of up to an aggregate of 13 million units at a price of 35 cents per unit for gross proceeds of up to $4.55-million. Each unit will comprise one common share and one common share purchase warrant. Each warrant will entitle the holder to acquire one additional common share at 50 cents each for a period of 24 months after closing of the private placement. The warrants are subject to an acceleration provision, whereby if the closing market price of the common shares of the company on the Canadian Securities Exchange is greater than 60 cents per common share for a period of 10 consecutive trading days, then the company may deliver a notice to the holders of warrants notifying the holders that the warrants must be exercised within 30 calendar days from the date of the acceleration notice. Otherwise, the warrants will expire at 4 p.m. PT on the 30th calendar day after the date of the acceleration notice.

The company plans to close the second and final tranche of the placement tomorrow (July 11, 2018).

The net proceeds of the private placement will be added to general working capital. Closing of the private placement is subject to receipt of all necessary approvals and definitive subscriptions. All units, common shares and warrants issued under the private placement will be subject to a four-month hold period from the closing date (in accordance with applicable Canadian securities laws).

Washington acquisition

Further to the definitive asset purchase agreement announced on June 1, 2018, the company has completed (through its wholly owned subsidiary, Chemistree Washington Ltd.) the purchase of a suite of Washington-based assets used in cannabis cultivation, production, distribution and branding.

Chemistree Washington entered into a definitive asset purchase agreement with Elite Holdings Inc. with respect to the Washington acquisition. Pursuant to the Washington acquisition agreement, Chemistree Washington acquired certain assets, including, but not limited to, all inventory, leases, software, furniture, systems, equipment and lighting from the Washington vendor. The acquisition does not include any receivables, payables, warranties, employee or tax liabilities of the Washington vendor.

Investor relations arrangements

Chemistree is also pleased to announce that it has entered into consulting agreements with Contact Financial Corp. and Adelaide Capital Markets Inc. to provide investor relations and communication services. The company has selected the investor relations firms as experienced arm's-length firms that specialize in small-cap growth companies and will generate value by sharing Chemistree's compelling story to wealth managers, brokers, institutions, analysts and portfolio managers, as well as retail and high-net-worth clients globally. Contact Financial, headed by Kirk Gamley, is based in Vancouver, B.C., and Adelaide Capital Markets, headed by Deborah Honig and Jackie Kelly, is based in Toronto, Ont.

In addition to the contracted compensation, subject to exchange approval, Chemistree has agreed to grant Contact Financial and Adelaide Capital Markets options to acquire 150,000 and 100,000 common shares, respectively, in the capital of the company at a price of 41 cents per share. The options vest quarterly over 12 months and have a five-year term.

Other than 1.4 million common shares and 200,000 warrants held (both directly and indirectly) by Contact Financial, none of Contact Financial, Adelaide Capital Markets or their respective owners have any interest, directly or indirectly, in the company or its securities, or any right or intent to acquire such an interest (other than the aforementioned stock option grants).

Option grant

Pursuant to the company's stock option plan, the company has granted options to purchase 250,000 common shares at 41 cents per share to certain eligible officers and consultants. The options expire in five years.

The company wishes to inform shareholders that there are significant legal restrictions and regulations that govern the cannabis industry in both Canada and the United States.

Cannabis-related practices or activities are illegal under U.S. federal laws

The concepts of medical cannabis and recreational cannabis do not exist under U.S. federal law. The Federal Controlled Substances Act classifies marijuana as a Schedule 1 drug. Under U.S. federal law, a Schedule 1 drug or substance has a high potential for abuse, no accepted medical use in the U.S. and a lack of safety for the use of the drug under medical supervision. As such, cannabis-related practices or activities, including, but without limitation to, the manufacture, importation, possession, use or distribution of cannabis are illegal under U.S. federal law. Strict compliance with state laws with respect to cannabis will neither absolve the company of liability under U.S. federal law, nor will it provide a defence to any federal proceeding which may be brought against the company. Enforcement of U.S. federal laws will be a significant risk to the business of the company following the completion of the acquisitions and any such proceedings brought against the company may adversely affect the company's operations (as well as financial performance).

Further information regarding the legal status of cannabis-related activities and associated risk factors, including, but not limited to, risk of enforcement actions, risks that third party service providers, such as banking or financial institutions, cease providing services to the company and the risk that company may not be able to distribute profits, if any, from U.S. operations up to the company, will be included in the Form 2A listing statement to be filed with the CSE.

We seek Safe Harbor.

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