IM Cannabis raises $250,000 through convertible note financing, issuing over 2 million warrants as it supports operations in Israel and Germany.

Medical cannabis company IM Cannabis Corp. has completed a $250,000 convertible note financing through a private placement with an institutional investor, providing the company with additional capital for general corporate purposes.

The Nasdaq-listed cannabis company, which operates in the medical cannabis markets of Israel and Germany, announced the financing as it continues to develop its international medical cannabis business.

$250,000 Convertible Note Financing

IM Cannabis Corp. (NASDAQ: IMCC) issued the convertible note with a 10% original issue discount.

The note carries an annual interest rate of 8%. In the event of a default, the interest rate may increase to 14%.

According to the company, the note will not be repaid in cash. Instead, the obligation will be satisfied through the issuance of IM Cannabis common shares when the investor converts the note.

How the Conversion Price Works

The conversion price is structured to be the lower of:

• $0.122 per common share, or
• 90% of the lowest daily volume-weighted average price (VWAP) recorded during the 20 consecutive trading days before the conversion date.

A minimum conversion price, or floor price, of $0.02436 per share has also been established.

The financing agreement includes a 4.99% beneficial ownership limitation, restricting how much of the company the investor may beneficially own following conversions.

More Than 2 Million Warrants Issued

As part of the transaction, IM Cannabis also issued warrants allowing the investor to purchase up to 2,052,545 common shares.

The warrants have an exercise price of C$0.17 per share and are exercisable immediately.

They are scheduled to expire on August 7, 2031, giving the investor a five-year window to exercise them subject to the terms of the agreement.

Where Will IM Cannabis Use the Money?

IM Cannabis said the net proceeds from the financing are expected to be used for general corporate purposes.

The company has also agreed to reserve enough common shares to cover potential conversions of the note and exercises of the associated warrants.

Additionally, IM Cannabis intends to file a resale registration statement on Form F-3 with the U.S. Securities and Exchange Commission covering shares that may be issued through the transaction.

Four-Month Holding Period Applies

The securities issued under the private placement are subject to a holding period of four months and one day from their respective issuance dates.

The private placement was completed under an exemption from registration pursuant to Section 4(a)(2) of the U.S. Securities Act of 1933.

IM Cannabis Focuses on Israel and Germany

IM Cannabis operates an international medical cannabis platform focused primarily on Israel and Germany.

Its businesses import and distribute cannabis products for medical patients and the healthcare market.

In Germany, the company operates through Adjupharm GmbH, which distributes medical cannabis products to pharmacies serving patients.

Germany has become an increasingly important market for international medical cannabis companies, making the country's pharmacy distribution network a significant part of IM Cannabis' European strategy.

What the Financing Means for IM Cannabis

Convertible financing can provide smaller public cannabis companies with access to capital without requiring immediate cash repayment. However, conversion of the note into shares and future exercise of the warrants could increase the number of IM Cannabis shares outstanding.

For investors following the global cannabis industry, the transaction is another example of cannabis companies using alternative financing structures as they seek capital to support operations and expansion in regulated medical markets.

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Source: Investing.com / IM Cannabis Corp. company announcement

Reference: Investing.com Company News