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Hemostemix Inc (2)
Symbol HEM
Shares Issued 56,276,894
Close 2021-06-11 C$ 0.26
Recent Sedar Documents

Hemostemix closes debenture, continues Aspire lawsuit

2021-06-11 09:58 ET - News Release

Mr. Thomas Smeenk reports

HEMOSTEMIX ANNOUNCES THE CLOSING OF A $2,500,000 CONVERTIBLE DEBENTURE

Hemostemix Inc. has closed its previously announced $2.5-million convertible debenture order from a director of the company for debenture units priced at $1,000 per unit as detailed herein.

Clinical trial update

Hemostemix has obtained a new copy of its clinical trial data base from a former service provider that originally activated the clinical trial and that managed the database for approximately the first two years of the clinical trial. The company's data management firm is now integrating the data of the subjects treated in South Africa. Hemostemix's contractors are proceeding well with the completion of key tasks of the closeout of the clinical trial, including completion of the database management plan, drafting of the statistical analysis plan, completing database entry, query management and database validation through source document verifications.

Litigation update

In the action pending in Florida State Court, with the appeal still pending challenging personal jurisdiction over Hemostemix in Florida, Hemostemix and Aspire are engaging in discovery, including issuing notices for the depositions of key employees and officers. Dates for the depositions are being negotiated. Hemostemix intends to depose Aspire's witnesses in July, 2021, after the parties have exchanged documents. Hemostemix continues to aggressively defend against Aspire's claims, which are without merit.

In the action pending in Delaware Federal Court, on June 1, 2021, Hemostemix, the plaintiff, moved to dismiss Aspire's counterclaims. The parties are to begin discovery, including document collection and production, and are negotiating a confidentiality agreement to govern the exchange of documents by each party. Hemostemix will continue to aggressively prosecute its claims against Accudata and Aspire.

Terms of the debenture offering

The debenture offering is a $2.5-million five-year unsecured non-transferable convertible debenture, with conversion at the option of Hemostemix, and consists of 2,500 debenture units at a price of $1,000 per debenture unit. Each debenture unit consists of a $1,000 principal amount debenture and 2,500 debenture warrants. The debentures mature five years from the closing date and 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 policies of the TSX Venture Exchange at the time of such conversion) but not less than the conversion price of the debenture. Each debenture warrant entitles 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 as follows. 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.

The net proceeds of the debenture offering will be used to finance litigation expenses of Hemostemix. The $2.5-million will be used as follows: (i) up to $600,000 will be immediately available to Hemostemix as reimbursement for past litigation expenses; and (ii) 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. The debenture units and any common shares resulting from conversion of the debentures or the exercise of debenture warrants will be subject to a hold period, if applicable, until Oct. 11, 2021. The loan will have the following key features: (i) a term of two years; (ii) payable on demand, in whole or in part, on 30 days of notice; (iii) interest at 8 per cent per annum to be paid monthly; (iv) prepayable, in whole or in part, without penalty; (v) immediately puttable, in whole or in part, for cash to cover coming litigation expenses, at face value, to an entity controlled by the director; and (vi) 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 debenture offering

The subscription by the director of the company of the $2.5-million of debenture units in the debenture offering constitutes 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. No special committee was established in connection with the debenture offering. The board of directors of the company has approved the debenture offering and no materially contrary view or abstention was expressed or made by any director in relation to the debenture offering (other than the abstention of the director as required pursuant to the Business Corporations Act (Alberta)). The material change report to be filed in relation to the debenture offering will not be not filed at least 21 days prior to the completion of the debenture offering as contemplated by MI 61-101. The company believes that this shorter period is reasonable and necessary in the circumstances as the completion of the debenture offering occurred shortly before the issuance of this news release and the filing of such material change report.

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 500 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 limbs 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.

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