Mr. Thomas Smeenk reports
HEMOSTEMIX REPRICES AND AMENDS THE TERMS OF ITS UNIT OFFERING AND DEBENTURE OFFERING
Hemostemix Inc., further to its April 9, 2021, news release announcing its unit offering, has increased the aggregate gross proceeds of its unit offering to $1.05-million, reduced the unit price to 35 cents per unit, and reduced the exercise price of the warrants to 40 cents per common share. In addition, further to its April 9, 2021, news release announcing its debenture offering, Hemostemix has decreased the conversion price of its debenture offering to 40 cents per common share and increased the amount of common share purchase warrants granted as part of the debenture units to 2,500 debenture warrants per each debenture unit. The exercise price of the debenture warrants issued as part of the debenture units remains at 55 cents per common share. The remainder of the terms of the offerings announced on April 9, 2021, remain the same. The full details of the amended offerings are set forth herein.
Non-brokered private placement for $1.05-million
Hemostemix has arranged a non-brokered private placement of units for gross proceeds of up to $1.05-million, subject to TSX Venture Exchange approval. The unit offering consists of the issuance of an aggregate of up to three million units at a price of 35 cents per unit. Each unit consists of one common share in the capital of the company and one transferrable common share purchase warrant, with each warrant entitling the holder to acquire one common share at a price of 40 cents per common share for a period of 24 months from the closing of the unit offering, subject to the accelerated expiry provision described herein. If on any 10 consecutive trading days occurring after four months and one day has elapsed following the closing date of the unit offering the weighted-average trading price of the common shares as quoted on the exchange is greater than 48 cents per common share, the company may provide notice in writing to the holders of the warrants by issuance of a news release that the expiry date of the warrants will be accelerated to the 30th day after the date on which the company issues such news release. The gross proceeds from the unit offering are expected to pay finder's fees payable in connection with the closing ($84,000), clinical trial costs accounts payable ($400,000) and general working capital ($566,000). There is no minimum aggregate subscription amount for the unit offering. The company may pay finder's fees to eligible finders of up to 8 per cent cash and 8 per cent finder warrants. Each finder's warrant may be exercised to acquire a unit of the unit offering.
The unit offering will be completed pursuant to certain exemptions from the prospectus requirements under applicable securities laws. Subject to acceptance by the company, in addition to other available exemptions for the unit offering, the unit offering is open to all existing shareholders of the company in reliance upon the prospectus exemption described in Alberta Securities Commission Rule 45-516 -- Prospectus Exemptions For Retail Investors And Existing Security Holders and set forth in the various corresponding blanket orders and rules in certain jurisdictions of Canada, subject to the terms and conditions therein. The aggregate acquisition cost to a subscriber under the existing shareholder exemption cannot exceed $15,000 unless that subscriber has obtained advice from a registered investment dealer regarding the suitability of the investment. The company has fixed April 8, 2021, as the record date for the purpose of determining existing shareholders of the company who are entitled to participate in the unit offering pursuant to the existing shareholder exemption. Subscribers purchasing units under the existing shareholder exemption will need to represent in writing that they meet certain requirements of the existing shareholder exemption, including that on or before the record date, they became a shareholder of the company and that they continue to be a shareholder of the company. In accordance with the requirements of the existing shareholder exemption and investment dealer exemption, the company confirms there is no material fact or material change related to the company that has not been generally disclosed.
Unsecured convertible debenture (convertible at the option of Hemostemix) for $3-million
Hemostemix is also proceeding with a non-brokered private placement of up to a maximum of $3-million principal amount unsecured convertible five-year debentures, with conversion at the option of Hemostemix, subject to exchange approval. The debenture offering consists of an aggregate of up to 3,000 debenture units at a price of $1,000 per debenture unit. The company has a $2.5-million lead order for the debenture units from a company director. Each debenture unit consists of a $1,000 principal amount debenture as described herein and 2,500 debenture warrants, with each debenture warrant entitling the holder to acquire one common share at a price of 55 cents per common share for a period of 24 months from the closing of the debenture offering, subject to the accelerated expiry provision described herein. If on any 10 consecutive trading days occurring after four months and one day has elapsed following the closing date of the debenture offering the weighted-average trading price of the common shares as quoted on the exchange is greater than 66 cents per common share, the company may provide notice in writing to the holders of the debenture warrants by issuance of a news release that the expiry date of the debenture warrants will be accelerated to the 30th day after the date on which the company issues such news release.
Each debenture will consist of $1,000 principal amount of unsecured, non-transferable debentures. The debentures will mature five years from the closing date and will bear interest at a rate of 6 per cent per annum, payable quarterly in arrears in cash or common shares at the option of the company. The principal amount of the debentures may be convertible, only at the option of the company (and not at the option of the holder), into common shares of the company at a price of 40 cents per common share. At the election of the company, any accrued and unpaid interest may be converted into common shares of the company at a conversion price equal to the market price (as such term is defined in the polices of the exchange at the time of such conversion) but not less than the conversion price of the debenture.
The net proceeds of the debenture offering will be used to finance litigation expenses of Hemostemix. The first $2.5-million will be used as follows: up to $600,000 will be immediately available to Hemostemix as reimbursement for past litigation expenses and, until required by the company for litigation expenses, $1.5-million (U.S.) (approximately $1.9-million) will be invested in a demand loan to an arm's-length U.S. company. The balance of the debenture offering will be available for past or potential future litigation expenses. Any amounts raised in excess of $2.5-million will be immediately available to Hemostemix as reimbursement for past litigation expenses. The loan will have the following key features:
- Term of two years;
- Payable on demand, in whole or in part, on 30 days notice;
- Interest at 8 per cent per annum to be paid monthly;
- Prepayable, in whole or in part, without penalty;
- Immediately puttable, in whole or in part, for cash to cover upcoming litigation expenses, at face value, to an entity controlled by the director;
- Immediately assignable in whole or in part, at face value, to the director as payment against such director's investment in the debenture offering.
Other information in respect of the unit offering and debenture offering
The closings of the unit offering and the debenture offering are subject to a number of conditions, including receipt of all necessary corporate and regulatory approvals, including exchange acceptance. As such, there is no assurance that the company will complete the offerings as described herein or at all. It is anticipated that the offerings will be completed pursuant to certain exemptions from the prospectus requirement under applicable securities laws. The offerings may be closed in one or more tranches. All of the units and debenture units issued pursuant to the offerings, and any securities into which they may be exchanged or converted, are subject to resale restrictions imposed by applicable law or regulation, including a statutory hold period expiring four months and a day from the closing dates of the offerings. It is neither anticipated that any new insiders will be created, nor that any change of control will occur, as a result of the offerings. Any participation by insiders of the company in the offerings will be on the same terms as arm's-length investors. Depending on market conditions, the gross proceeds of the offerings could be increased or decreased.
The participation of the director or any other directors or officers of the company in the offerings will constitute a related party transaction within the meaning of Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions and the policies of the exchange. For such participation, the company will be relying upon exemptions from the formal valuation and minority shareholder approval requirements pursuant to sections 5.5(b) and 5.7(1)(a), respectively, of MI 61-101 on the basis that the company is not listed on a specified stock exchange and, that at the time the offerings are agreed to, neither the fair market value of the subject matter of, nor the fair market value of the consideration for, the transaction insofar as it involves an interested party (within the meaning of MI 61-101) in the offerings, will exceed 25 per cent of the company's market capitalization calculated in accordance with MI 61-101.
About Hemostemix Inc.
Hemostemix is a publicly traded autologous stem cell therapy company. A winner of the World Economic Forum Technology Pioneer Award, the company developed and is commercializing its lead product ACP-01 for the treatment of CLI (critical limb ischemia), PAD (peripheral artery disease), angina, ischemic cardiomyopathy, dilated cardiomyopathy and other conditions of ischemia. ACP-01 has been used to treat over 300 patients, and it is the subject of a randomized, placebo-controlled, double-blind trial of its safety and efficacy in patients with advanced critical limb ischemia who have exhausted all other options to save their limb from amputation.
On Oct. 21, 2019, the company announced the results from its phase II CLI trial abstract entitled "Autologous Stem Cell Treatment for CLI Patients with No Revascularization Options: An Update of the Hemostemix ACP-01 Trial With 4.5 Year Followup," which noted healing of ulcers and resolution of ischemic rest pain occurred in 83 per cent of patients, with outcomes maintained for up to 4.5 years.
The company owns 91 patents across five patent families titled: regulating stem cells; in vitro techniques for use with stem cells; production from blood of cells of neural lineage; and automated cell therapy.
We seek Safe Harbor.
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