HempFusion, Inc., a U.S. Hemp-Based CBD Company, Closes US$36,000,000 Financing

DENVER, CO, Aug. 14, 2019 /CNW/ – PRESS RELEASE – HempFusion, Inc., a U.S. hemp-based cannabidiol (CBD) company with over 30 product SKU’s distributed to over 3,400 retailers, has announced the closing of brokered and non-brokered private placements of a total of 28,800,000 units of the company at a price of US$1.25 per unit for gross proceeds of US$36,000,000. The brokered portion of the offering consisted of the sale of 26,227,650 units for aggregate gross proceeds of US$32,784,563 and was completed by a syndicate of agents led by Canaccord Genuity Corp. and including Haywood Securities Inc. and PI Financial Corp. Due to demand, the offering was upsized from US$20,000,000 to US$36,000,000.

The offering brings the total amount raised this year by HempFusion to US$42,000,000. Together with funds on hand, the company expects to use the net proceeds of the offering to:

• Provide capital to rapidly scale operations;
• Expand national and international distribution beyond 3,400 retailers;
• Significantly revamp the company’s e-commerce platform;
• Launch 20-plus new products expected by the end of 2019;
• Accelerate M&A activity;
• Increase brand awareness and marketing initiatives;
• Drive sales across all channels including retail, big box and national convenience chains; and
• Advance research & development initiatives.

Each unit consists of one common share and one-half of one common share purchase warrant. Each warrant entitles the holder thereof to acquire one common share of the company at an exercise price of US$7.00 per warrant share, subject to adjustment in certain events, including in instances here the issue price (or deemed issue price) of any equity securities of the company issued in connection with a going-public transaction is less than US $7.00 per share.

The warrants are exercisable until the earlier of (i) 36 months from the date the common shares are listed on a recognized stock exchange and (ii) Feb. 28, 2023. The company will use its commercially reasonable efforts to list the warrants on the exchange following any listing of the common shares.

The common shares comprising part of the Units are subject to a contractual escrow period ending six months after the listing date. The warrant shares are subject to a contractual escrow period ending eighteen months after the listing date.

In consideration for the services rendered by the agents under the brokered private placement, the agents were issued an aggregate of 1,751,318 units of the company. Each broker unit consists of one common share and one-half of one common share purchase warrant of the company. Each broker unit warrant is exercisable to acquire one common share of the company on the same terms of the warrants issued pursuant to the offering. In addition, the company paid Canaccord Genuity Corp. a corporate finance fee of US$75,000 in cash and an additional fee of US$100,000 in units of the company for services rendered in connection with the brokered private placement. Each corporate finance unit consists of one common share and one-half of one common share purchase warrant of the company. Each corporate finance unit warrants is exercisable to acquire one common share of the company on the same terms as the warrants issued pursuant to the offering.

“HempFusion’s partnership with RADD Capital provides the company with the ability to access significant capital allowing us to rapidly expand our business and operations,” stated Ian deQueiroz, co-founder and CEO of HempFusion. “The closing of this US$36,000,000 financing is a pivotal moment in our company’s history and a testament to our team’s ability to execute on our business plan. This capital will be deployed across all divisions and will be a major catalyst in establishing HempFusion as a global leader in premium hemp-based CBD products.”

“HempFusion’s mission is to provide consumers with a best-in-class customer experience, quality products that work, and peace of mind,” commented Jason Mitchell, N.D, co-founder and president of HempFusion. “With the close of this financing, we can continue expanding operations, provide a more robust and comprehensive product education platform and continue expanding our sales and marketing initiatives to reach more consumers globally than ever before.”

The common shares, warrants, warrant shares, broker unit shares, broker unit warrants, broker warrant shares, corporate finance shares, corporate finance unit warrants and corporate finance warrant shares issued pursuant to the offering have not been and will not be registered under the U.S. Securities Act of 1933, as amended or any state securities laws of the United States. Accordingly, the securities of the company may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons unless registered under the U.S. Securities Act and applicable state securities laws or pursuant to an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws. This news release does not constitute an offer to sell or a solicitation of any offer to buy any of the securities of the company.

The securities issued pursuant to the offering are “restricted securities” as defined under Rule 144(a)(3) of the U.S. Securities Act and contain the appropriate restrictive legends as required under the U.S. Securities Act. In addition, the Securities are subject to a statutory hold period in Canada of four months and one day after the later of (i) the distribution date of the Securities, and (ii) the date the company becomes a reporting issuer in any province or territory of Canada.