An anonymous director reports

ZENABIS ANNOUNCES DETAILS OF COMPLETED OVER-SUBSCRIBED RIGHTS OFFERING

Further to the press release dated Nov. 28, 2019, with respect to the completion of Zenabis Global Inc.'s rights offering on Nov. 27, 2019, the company has issued 139,086,624 common shares of the company at a price of 15 cents per common share for gross proceeds of $20,862,993.60. As of the closing date and after taking into account the rights offering, the company has a total of 347,716,561 common shares issued and outstanding.

A total of 117,538,929 common shares were issued pursuant to the basic subscription privilege of the rights offering. Of these, to the knowledge of Zenabis after reasonable inquiry, 41,907,477 common shares were issued to insiders of Zenabis, and 75,631,452 common shares were issued to all other persons. A total of 21,547,695 common shares were issued pursuant to the additional subscription privilege of the rights offering. Of these, to the knowledge of Zenabis after reasonable inquiry, no common shares were issued to insiders of Zenabis, and 21,547,695 common shares were issued to all other persons.

To the knowledge of Zenabis after reasonably inquiry, no persons became an insider of Zenabis from the distribution under the rights offering.

As the rights offering was oversubscribed, no common shares were issued under any standby commitment.

The net proceeds of the rights offering will be used for making additional capital investments in the Zenabis Langley facility beyond those already incurred and for general working capital.

Adjustments to outstanding convertible securities and warrants

As a result of the rights offering, the following adjustments and amendments to the company's outstanding convertible securities and warrants have occurred.

1. Unsecured convertible debentures

The company currently has outstanding unsecured convertible debentures in the aggregate principal amount of $15-million originally issued on March 27, 2019, and maturing on Sept. 27, 2021, previously convertible into common shares at a price of $3.62 per common share.

Pursuant to the unsecured convertible debentures, the conversion price of the unsecured convertible debentures is adjusted from $3.62 to $2.6087, effective immediately, upon the closing of the rights offering. As a result of the adjustment to the conversion price of the unsecured convertible debenture, an additional 1,606,344 common shares are issuable upon the full conversion of the unsecured convertible debentures.

2. Convertible debenture unit warrants

The company currently has outstanding 825,000 unlisted warrants, each exercisable to purchase one common share at a price of $3.62 per common share at any time on or prior to Sept. 27, 2021. The convertible debenture unit warrants were issued on March 27, 2019, to the holders of the unsecured convertible debentures. As a result of the rights offering, the exercise price of the convertible debenture unit warrants is adjusted from $3.62 to $2.6788 per common share.

3. Secured convertible notes

The company currently has outstanding secured convertible notes in the aggregate principal amount of approximately $17.4-million, which were amended and restated in August, 2019, and are convertible into common shares at a price of $1.54635 per common share.

As a result of the rights offering, the conversion price of the secured convertible notes is adjusted from $1.54635 to $1.17. As a result of the adjustment to the conversion price of the secured convertible notes, an additional 3,620,520 common shares are issuable upon the full conversion of the secured convertible notes.

4. Unsecured convertible notes

The company currently has outstanding unsecured convertible notes in the aggregate principal amount of approximately $11.9-million, which were originally issued on Oct. 17, 2018, and maturing on Oct. 17, 2020, and convertible into common shares at a price of $2.52 per common share. The company has adjusted the conversion price of the unsecured convertible notes from $2.52 to $1.9067 per common share. As a result of the adjustment to the conversion price of the unsecured convertible notes, an additional 1,511,780 common shares are issuable upon the full conversion of the unsecured convertible notes.

5. Listed warrants

The company currently has outstanding 12,777,777 listed warrants, each exercisable to purchase one common share at a price of $2.75 per common share on or prior to April 17, 2022. In accordance with the warrant indenture governing the listed warrants, as a result of the rights offering, the exchange rate of the listed warrants, being the number of common shares a holder is entitled to acquire upon the exercise of one listed warrant, is adjusted from one common share per listed warrant to 1.3888 common shares per listed warrant.

Further, the exercise price of the listed warrants is adjusted to $2.75 payable per 1.3888 common shares. As a result of the foregoing adjustments, an additional 4,967,999 common shares are issuable upon the exercise of all the listed warrants. The company has entered into a supplemental warrant indenture with Computershare Trust Company of Canada, as warrant agent under the warrant indenture, to reflect such adjustments.

6. Stock options

The terms of the company's omnibus incentive plan do not result in any adjustment to the exercise price or other terms of outstanding stock options.

About Zenabis Global Inc.

Zenabis is a significant Canadian licensed cultivator of medical and recreational cannabis, and a propagator and cultivator of floral and vegetable products. Zenabis employs staff coast to coast, across facilities in Atholville, N.B.; Delta, Aldergrove, Pitt Meadows and Langley, B.C.; and Stellarton, N.S. Zenabis currently has 57,000 kilograms of licensed annual production capacity across four licensed facilities. Zenabis has 3.5 million square feet of total facility space dedicated to a mix of cannabis production and cultivation and its propagation and floral business.

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