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Avicanna Inc
Symbol AVCN
Shares Issued 41,271,574
Close 2021-06-11 C$ 1.08
Recent Sedar Documents

Avicanna's failure-to-file CTO partially revoked

2021-08-03 17:59 ET - News Release

An anonymous director reports

AVICANNA ANNOUNCES PARTIAL REVOCATION OF CEASE TRADE ORDER AND PROPOSED FINANCING

The Ontario Securities Commission has issued an order dated July 30, 2021, partially revoking the failure-to-file cease trade order issued against the company on June 11, 2021, for failing to file certain outstanding continuous disclosure documents within the time frames prescribed by applicable securities laws.

The partial revocation order permits the company to conduct a financing on a private placement basis. The FFCTO continues to apply in all other respects.

Pursuant to the terms of the proposed financing, one or more investors may advance between $1-million and $2-million in favour of the company in the form of a secured debenture, each of which will have an original issue discount of approximately 15 per cent. It is anticipated that the debentures will have a term of 14 months plus one day from the date of issuance thereof and will accrue interest at a rate of 5 per cent per annum, subject to an increase to 18 per cent per annum upon the occurrence of certain events of default. The company will be expected to repay the face value of the debentures in 12 equal monthly instalments beginning on the two-month anniversary of the issuance date thereof, with a right of prepayment in full, subject to the payment of interest that would have accrued had the debentures remained outstanding for the full 14-month term. The debentures are expected to be secured against the assets of the company of sufficient value.

In connection with the debentures, the company will issue such number of common share purchase warrants of the company, representing 100-per-cent warrant coverage for the financed amount, each warrant of which will be transferable and entitle the holder to acquire one common share of the company for a period of 36 months. The exercise price of the warrants is proposed to be 125 per cent of the five-day volume-weighted average trading price of the common shares on the Toronto Stock Exchange for a period of five trading days following: (i) the full revocation of the FFCTO; (ii) satisfaction of all additional conditions set by the TSX; and (iii) resumption of trading of the common shares on the TSX, subject to an upward adjustment in the event that such exercise price would otherwise result in the investors holding warrants exercisable for such number of common shares representing more than 25 per cent of the number of common shares outstanding, on a non-diluted basis, as at such date. The number of warrants to be issued by the company shall be the financed amount divided by the exercise price.

By way of example only: (i) in the event that the financed amount is $2-million, being the maximum amount anticipated to be raised under the proposed financing, and the five-day VWAP is $1.07, being the five-day VWAP of the common shares on the TSX immediately prior to the issuance of the FFCTO, the investor(s) will be issued such number of warrants as are exercisable for 1,492,537 common shares, representing 3.62 per cent of the outstanding common shares, on a pretransaction and non-diluted basis, which warrants shall have an exercise price of $1.34 per share; and (ii) in the event that the financed amount is $1-million, being the minimum amount anticipated to be raised under the proposed financing, and the five-day VWAP is $1.07, being the five-day VWAP of the common shares on the TSX immediately prior to the issuance of the FFCTO, the investor(s) will be issued such number of warrants as are exercisable for 746,268 common shares, representing 1.81 per cent of the outstanding common shares, on a pretransaction and non-diluted basis, which warrants shall have an exercise price of $1.34 per share.

The terms of the proposed financing have been negotiated on an arm's-length basis. No insider of the company will be participating in the proposed financing. The terms of the proposed financing provide that no investor shall, pursuant thereto, become the beneficial owner of more than 9.99 per cent of the common shares of the company. Accordingly, the proposed financing is not expected to materially affect control of the company.

The proposed financing is intended to improve the company's financial situation during the period that the FFCTO remains in effect. The company intends to use the proceeds of the proposed financing to: (i) pay fees to its current and former auditors, accountants and other service providers, as well as audit, accounting, legal and filing fees to be incurred in preparing and filing all outstanding documents; (ii) fulfill its operational and contractual commitments; and (iii) satisfy its operating expenses to ensure the continuity of the company's business during such time. The company reasonably believes that the proceeds from the proposed financing will be sufficient to bring its continuous disclosure obligations up to date, pay all related outstanding fees, and provide it with sufficient working capital to meet its obligations and continue its business during such period.

The company anticipates filing all of the documents and bringing its continuous disclosure record up to date on or before Sept. 10, 2021.

Prior to completion of the proposed financing, each investor will receive a copy of the FFCTO and the partial revocation order, and will be required to provide a signed and dated acknowledgment to the company that all of the company's securities, including the common shares issued in the proposed financing, will remain subject to the FFCTO until such order is fully revoked, and that the granting of the partial revocation order by the OSC does not guarantee the issuance of a full revocation order in the future.

The proposed financing is subject to the approval of the TSX. The company has applied to the TSX for approval in connection with the proposed financing. There can be no assurances that the proposed financing will be completed on the terms set out herein, or at all, or that the proceeds of the proposed financing will be sufficient for the purposes of the company.

About Avicanna Inc.

Avicanna is a diversified and vertically integrated Canadian biopharmaceutical company focused on the research, development and commercialization of plant-derived cannabinoid-based products for the global consumer, medical and pharmaceutical market segments.

Avicanna is an established leader in cannabinoid research and development, which it primarily conducts at its R&D headquarters in the Johnson & Johnson Innovation Centre, JLABS at Toronto, Canada, and in collaboration with leading Canadian academic and medical institutions. In addition to its developing pharmaceutical pipeline, Avicanna has a team of experts which has developed and commercialized several industry-leading product lines, including:

  • RHO Phyto: an advanced line of medical cannabis products containing varying ratios of cannabidiol and tetrahydrocannabinol currently available nationwide across Canada in medical channels in partnership with Medical Cannabis by Shoppers, a subsidiary of Shoppers Drug Mart, and in adult use channels through provincial retailers; RHO Phyto is the first medical formulary of advanced cannabis 2.0 products, containing oils, sprays, capsules, creams and gels, all developed with scientific rigour, manufactured under GMP (good manufacturing practice) standards and supported by preclinical data;
  • Pura H&W: an advanced and clinically tested line of functional CBD consumer derma-cosmetic products currently available nationwide across Canada in medical channels in partnership with Medical Cannabis by Shoppers, a subsidiary of Shoppers Drug Mart, in adult use channels through provincial retailers in Canada and nationwide across Colombia.

With continuing clinical studies on its derma-cosmetic (Pura H&W), medical cannabis (RHO Phyto) and a pipeline of pharmaceutical products, Avicanna is dedicated to researching the important role that cannabinoids play in an increasingly wider scope of products has been at the core of the company's vision since its inception. Furthermore, Avicanna's commitment to education is demonstrated through its annual medical symposium, the Avicanna Academy educational platform, and the My Canabis Clinic patient program through its subsidiary company.

Avicanna manages its own supply chain including cultivation and extraction through its two majority-owned subsidiaries, Sativa Nativa SAS and Santa Marta Golden Hemp SAS, both located in Santa Marta, Colombia. Through these sustainable, economical and industrial-scale subsidiaries, Avicanna cultivates, processes and commercializes a range of cannabis and hemp cultivars dominant in cannabidiol, cannabigerol, tetrahydrocannabinol and other cannabinoids for use as active pharmaceutical ingredients. Avicanna's Avesta Genetica program specializes in the development and optimization of rare cultivars for commercial production along with feminized seeds for global export. In June, 2020, Avicanna made history with a shipment of hemp seeds to the United States by completing the first ever export of hemp seeds from Colombia.

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