The Program has been created to encourage the early exercise of only those outstanding warrants with an exercise price between $0.50 and $0.80 and an expiry date between December 19, 2019 and February 15, 2022 in order to become more reflective of the current share price.
“We are excited that CB2 Insights now has a clear cost structure that gives us full line of sight to hit profitability in Q1 2020,” said Prad Sekar, CEO of CB2 Insights. “The proceeds that will be raised from this program will allow us to manage through the seasonal pressures of our clinical operations while we continue expanding and accelerating the growth of our research and data business units.”
Under the Program, the Company is offering an inducement to each Warrant holder that exercises their warrants prior to December 26, 2019. If all the Warrants subject to the Program are exercised during the Early Exercise Period, CB2 expects to receive gross proceeds of approximately $1.06 million on or before December 26, 2019 and will issue up to approximately 11,819,291 common shares.
A small number of Warrants, representing less than 10% of the total number of Warrants eligible for participation in the Program, are held by insiders of the Company. Participation by any such insiders in the Program may constitute a related party transaction pursuant to Multilateral Instrument 61-101 – Special Transactions (“MI 61-101”). The Company is exempt from the formal valuation requirement pursuant to subsections 5.5(a) and (b) of MI 61-101, and from the minority approval requirement pursuant to subsection 5.7(1)(a) of MI 61-101. Pursuant to the policies of the Canadian Securities Exchange, a maximum of 10% of the Warrants subject to the Program will be allocated pro rata among the insiders of the Company holding existing Warrants.
The transaction is subject to the receipt of all final regulatory approvals including those from the Canadian Securities Exchange. Any warrants that are not exercised before the end of the Early Exercise Period will remain outstanding and will be exercisable for CB2’s Common Share on the same terms applicable to such Warrants as they existed prior to the Program and will no longer be eligible to the reduced exercise price of the Warrants.