BLACKFALDS, ALBERTA--(Marketwired - July 11, 2017) -
NOT FOR DISSEMINATION TO U.S. WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Hemostemix Inc. ("Hemostemix" or the "Company") (TSX
VENTURE:HEM) is pleased to announce that it has entered into an agreement with PI Financial Corp. (the "Agent")
pursuant to which the Agent has been appointed as the exclusive agent and sole bookrunner and exclusive soliciting dealer for and
on behalf of the Company on a commercially reasonable best efforts agency basis with respect to the offering substantially as
originally announced by the Company in April of 2017. The proposed offerings, as now amended (the "Offering")
are of subscription receipts of the Company (the "Subscription Receipts") at a price of CDN$0.05 per
Subscription Receipt, to raise gross proceeds of a minimum of CDN$5,000,000 (100,000,000 Subscription Receipts) (the
"Minimum Offering") up to a maximum of CDN$8,000,000 (160,000,000 Subscription Receipts) (the "Maximum
Offering"). In addition, PI shall have an option (the "Agents Option") to increase the size of the
Offering by up to 12.5% of the number of Subscription Receipts sold under the Offering, which Agents Option is exercisable for a
period of up to 48 hours prior to the closing of the Offering. The Offering will be comprised of: (i) a private placement (the
"Private Placement Offering"); and (ii) a concurrent rights offering, pursuant to the prospectus exemption set
forth in Section 2.1 of National Instrument 45-106 - Prospectus Exemptions (the "Rights Offering").
Rights Offering
The Company today confirmed the details of the Rights Offering, namely that it will be offering rights (each a
"Right") to holders of its common shares at the close of business on the record date of July 18, 2017 (the
"Record Date"), on the basis of one Right for every one and one-half (1.5) common shares held (the
"Rights Offering"). Each Right will entitle the holder to subscribe for one subscription receipt (each a
"Subscription Receipt") upon payment of the subscription price of CAD$0.05 per Subscription Receipt. Upon the
completion of the escrow release conditions (as described below), the Subscription Receipts will automatically be converted into
units ("Units") consisting of one common share in the capital of Hemostemix (each a "Common
Share") and one-half of one transferable warrant (each whole warrant, a "Warrant"). Each Warrant
entitles the holder thereof to purchase one Common Share (a "Warrant Share") at price of CAD$0.20 for a period
of 2 years from the Release Date, with an accelerated exercise provision attached to each Warrant commencing on the day following
(x) the conversion of the applicable Subscription Receipts into Units and (y) the expiry of any applicable hold period on the
underlying Common Share, stating that if, for ten consecutive trading days, the closing price of the listed shares of the Company
exceeds CDN $1.00, then the Company may elect to accelerate the expiry date by providing the Warrant holders, 30 days notice by
way of a press release of the accelerated expiry date.
There are currently 74,583,119 Common Shares issued and outstanding. If all of the 49,722,119 Rights issued under
the Rights Offering are validly exercised by the shareholders, the Rights Offering will raise gross proceeds of approximately
CAD$2.48 million.
The Rights will expire at 3:00 p.m. (Calgary Time) on August 8, 2017 (the "Expiry Time"), after
which time unexercised Rights will be void and of no value. Shareholders who fully exercise their Rights will be entitled to
subscribe for additional Subscription Receipts, if available as a result of any unexercised Rights prior to the Expiry Time,
subject to certain limitations as set out in the Company's Rights Offering circular (the "Rights Offering
Circular"). The Company expects to close the Rights Offering on or about August 8, 2017.
Details of the Rights Offering will be set out in the Rights Offering notice (the "Rights Offering
Notice") and Rights Offering Circular which will be available under Hemostemix's profile at www.SEDAR.com shortly after the Record Date. The Rights Offering Notice and accompanying Rights
certificate will be mailed to each registered eligible shareholder as at the Record Date. Registered shareholders who wish to
exercise their Rights must forward the completed Rights certificate, together with the applicable subscription funds, to the
Company's rights agent, Computershare Investor Services, Inc. ("Computershare"), on or before the Expiry Time.
Shareholders who own their Common Shares through an intermediary, such as a bank, trust company, securities dealer or broker,
will receive materials and instructions from their intermediary.
The Rights Offering will be conducted in jurisdictions of Canada only. However, certain holders of Common Shares in
jurisdictions outside of Canada may be able to participate in the Rights Offering where they can establish that the transaction
is exempt under applicable legislation. If you are a holder of Common Shares and reside outside of Canada please see the Rights
Offering Notice and Rights Offering Circular to determine your eligibility and the process and timing requirements to receive
and, or, exercise your Rights. The Company requests any U.S. shareholder or other ineligible holder interested in exercising
their Rights to contact the Company at their earliest convenience.
Funds raised through the Rights Offering will be used to pay for general and administrative (G&A) expenses as
well as the Company's multicenter, phase 2 clinical trial for patients with critical limb ischemia (the "Phase 2
Trial").
As described in part above, the Rights Offering is part of a broader financial plan for the Company (collectively,
the "Financings") comprised of: (i) a CAD$4,400,000 secured credit transaction (the "Secured Credit
Transaction"), (ii) the Rights Offering, (iii) a private placement of Subscription Receipts (the "Private
Placement Offering"); and (iv) a series of shares for debt transactions with certain of the Company's creditors to issue
Common Shares to such creditors in full satisfaction of trade payables and other debts payable (the "Shares for Debt
Transactions"). The Financings, are expected to generate proceeds of up to CAD$12,400,000, without accounting for the
Agent's Option. If the Agent's Option were to be fully exercised, that would provide for additional gross proceeds of
CAD$1,000,000 and the generation of overall proceeds pursuant to the Financings of CAD$13,400,000.
There is no minimum amount of Subscription Receipts which may be issued in connection with the Rights Offering,
however the Rights Offering is subject to the Minimum Offering (CAD$5,000,000) for the Offering (i.e. the Rights Offering
together with the Private Placement Offering). The Offering (of which, the Rights Offering is a part), is also subject to the
Maximum Offering (CAD$8,000,000), subject to the possible exercise of the Agent's Option, pursuant to which the Agent may
increase the size of the Offering by up to 12.5% of the number of Subscription Receipts sold under the Offering.
The Minimum Offering of CAD$5,000,000 represents a CAD$1,000,000 increase from what was contemplated by the
announcement of the Company made on April 10, 2017 in relation to the Secured Credit Transaction and has been based on
negotiations between the Company, Wood Capital Ltd. ("Wood Capital"), the lender under the Secured Credit
Transaction, and the Agent. This was based in part on the Financings being established to be sufficient to provide the Company
with at least 12 months of working capital based on its current budget expectations and the ability to proceed to deliver interim
analysis results for its Phase 2 Trial. It was in connection with making these adjustments that it was also determined that the
exercise price of the Warrants would be reduced to CAD$0.20 from the CAD$0.25 announced by the Company on April 10, 2017.
It is expected that the remainder of the Offering not filled based on the Rights Offering (whether fully subscribed
for or not) is expected to be filled based on the Private Placement Offering. If the Company does not raise the Minimum Offering,
the Company will not close on any exercise of Rights for Subscription Receipts.
The Subscription Receipts issued under the Rights Offering and the Private Placement Offering will be issued
pursuant to, and will be governed by, the terms of one or more subscription receipt agreement (the "Subscription Receipt
Agreement") to be entered into between the Company and Computershare Trust Company of Canada, as escrow agent, or other
escrow agent, acceptable to the Company and the Agent (the "Escrow Agent"). The gross proceeds of the Offering
(the "Escrowed Funds"), will be held in escrow on behalf of the subscribers by the Escrow Agent and invested in
short term investment grade debt obligations as agreed to by the Company and the Agent. Each Subscription Receipt will entitle
the holder thereof to receive one Unit, without payment of additional consideration or further action on the part of the holder,
upon delivery by the Corporation and the Agent to the Escrow Agent, on or prior to 3:00 p.m. (Calgary time, or 5:00 p.m. Toronto
time) on August 15, 2017 or such other date as mutually agreed between the Agent and the Company (the "Escrow
Deadline"), of a joint notice (the "Release Notice"), confirming that:
(1) the conditions precedent to the closing of the Secured Credit Transaction and the Shares for Debt Transactions have been
satisfied or waived to an extent satisfactory to the Company and the Agent; and
(2) any necessary shareholder, regulatory and other approvals have been obtained or the requirement for such approvals have
been waived by the Agent.
and in addition to the Release Notice having been delivered:
(3) the Agent is fully satisfied in their sole discretion with the results of their due diligence investigations.
(collectively, the "Release Conditions")
Upon delivery of the Release Notice, each holder of a Subscription Receipt will be deemed to have exercised such
Subscription Receipt to acquire one Unit (without any further action on the part of the holder, all in the manner as set forth in
the Subscription Receipt Agreement.
If the Release Conditions are not satisfied on or before the Escrow Deadline, then the Escrowed Funds shall be used
to repurchase the Subscription Receipts issued pursuant to the Offering from the purchasers on a pro rata basis (including any
interest thereon) on August 15, 2017 (the "Termination Date"). To the extent that the Escrowed Funds are not
sufficient to purchase all of the Subscription Receipts, the Company has agreed to contribute such amounts as are necessary to
satisfy any shortfall.
Private Placement
The Company today confirmed the details of the Private Placement Offering, namely that it will be offering
Subscription Receipts at a price of CDN$0.05 per Subscription Receipt, to raise gross proceeds of a minimum of CDN$5,000,000
(100,000,000 Subscription Receipts, the Minimum Offering) up to a maximum of CDN$8,000,000 (160,000,000 Subscription Receipts,
the Maximum Offering). In addition, the Agent will have an option (the Agents Option) to increase the size of the Offering by up
to 12.5% of the number of Subscription Receipts sold under the Offering, which Agents Option is exercisable for a period of up to
48 hours prior to the closing of the Offering. The Offering will be comprised of: (i) the Private Placement Offering; and (ii)
the concurrent Rights Offering. As previously noted, it is expected that the remainder of the Offering not filled based on the
Rights Offering (whether fully subscribed for or not) is expected to be filled based on the Private Placement Offering.
Each Subscription Receipt issued pursuant to the Private Placement Offering will be exercisable into a Unit upon
the Release Conditions being satisfied, as previously described. The Subscription Receipts will be non-transferable.
If the Release Conditions are not met by August 15, 2017 or such date as mutually agreed between the Agent and the
Company,· the Company will repurchase the Subscription Receipts issued pursuant to the Offering (including the Private Placement
Offering from the purchasers on a pro rata basis (including any interest thereon).
The Subscription Receipts to be issued pursuant to the Private Placement Offering will be offered by way of (1)
private placement pursuant to exemptions from prospectus requirements to residents of the Provinces of British Columbia, Alberta,
Ontario and such other Canadian jurisdictions as may be agreed to by the Company and the Agent. The Subscription Receipts may
also be offered in jurisdictions other than the noted Canadian jurisdictions in which the Agent or their affiliates qualify to so
offer in accordance with applicable laws and regulations and in accordance with available exemptions from prospectus or
registration requirements.
The Company expects to close the Private Placement Offering on or about August 15, 2017.
Agency Agreement and Soliciting Dealer Agreement
Without restricting the generality of the foregoing, PI will act as the exclusive soliciting dealer for the Rights
Offering and as agent for the Private Placement Offering on a commercially reasonable efforts basis. PI will be entitled to
appoint a syndicate consisting of other investment dealers acceptable to the Company (PI and such other investment dealers being
collectively referred to in this Agreement as the "Agent"). PI will also be entitled to appoint a selling group and/or soliciting
dealer group subject to the prior approval of the Company, as appropriate to ensure a broad distribution of the Subscription
Receipts. Without limiting the generality of the provisions provided for herein in relation to the President's List (defined
herein), PI will not unreasonably withhold, condition or delay the inclusion of other investment dealers as part of a syndicate,
selling group and/or soliciting dealer group, whether introduced to PI by the Company or otherwise.
At or before any closing date of the Offering, the Company and the Agent shall enter into: (i) an agency agreement
with respect to the Private Placement Offering (the "Agency Agreement"); and (ii) a soliciting dealer agreement
with respect to the Rights Offering (the "Soliciting Dealer Agreement"), the forms of which shall be mutually
satisfactory to the Company and the Agent. The Agency Agreement and the Soliciting Dealer Agreement will include the terms and
conditions provided herein, and industry standard covenants, representations and warranties, and provisions regarding legal
opinions, indemnification, contribution, termination clauses and other relevant matters as the Agent and the Company may so
determine. The Soliciting Dealer Agreement and the Agency Agreement will also contain customary "disaster-out", "market-out",
"material adverse change-out", "due diligence-out" and "regulatory proceedings out" provisions.
Pursuant to the Agency Agreement and the Soliciting Dealer Agreement, the Company will pay a cash commission of
7.5% of the gross proceeds from the Private Placement Offering and 5% of the Rights Offering, other than any Subscription
Receipts sold to subscribers listed on the president's list of the Company (the "President's List") for which
the Company will pay a 3% cash commission. All cash commissions are to be paid upon the Release Conditions being satisfied (the
"Release Date"). In addition, the Company will pay the Agent a corporate finance fee of up to $30,000 + $1,500
GST for a total of $31,500. Whether or not the Offering is completed, the Company will pay all reasonable costs and expenses
related to the Offering.
Upon the Release Date, the Company will also issue to the Agent warrants (the "Agent's Warrants")
equal in number to: (a) 7.5% of the aggregate number of Units underlying the Subscription Receipts sold under the Private
Placement Offering, other than any Subscription Receipts sold to subscribers listed on the President's List, (b) 3% of the
aggregate number of Units underlying the Subscription Receipts sold under the Private Placement Offering sold to subscribers that
are listed on the President's List, and (c) 5% of the aggregate number of Units underlying the Subscription Receipts sold under
the Rights Offering, each of which will each entitle the Agent to purchase, at an exercise price equal to $0.05, one unit (each
an "Agent's Unit") consisting of one Common Share (each an "Agent's Share") and one-half of one
warrant (each whole warrant an "Agent's Unit Warrant"). Each Agent's Unit Warrant shall be exercisable into one
additional Common Share for two years from the Release Date at an exercise price of $0.20 per Common Share, with an accelerated
exercise provision attached to each Agent's Unit Warrant commencing on the day following (x) the conversion of the applicable
Agent's Unit and (y) the expiry of any applicable hold period on the underlying Common Share, stating that if, for ten
consecutive trading days, the closing price of the listed shares of the Issuer exceeds CDN $1.00, then the Company may elect to
accelerate the expiry date by providing the Agent's Unit Warrant holders, 30 days notice by way of a press release of the
accelerated expiry date. The Agent's Warrants may be exercised at any time and from time to time for a period of three years
following the Release Date.
Secured Credit Financing
As first announced on April 10, 2017, an agreement has been reached with Wood Capital, a Barbados-based private
equity investment firm, on a non-brokered senior secured debt financing of CAD$4,400,000 (the "Loan") in one or
more tranches (the Secured Credit Transaction). The Secured Credit Transaction consists of four possible tranches of financing
being advanced in four rounds of (i) CDN$1,000,000 (the "Bridge Financing Advance"); (ii) CDN$2,400,000 (the
"Bridge Refinancing Advance"); (iii) up to CDN$4,400,000 less amounts advanced in rounds (i) and (ii) (the
"Additional Bridge Financing Advance"); and (iv) up to CDN$4,400,000 less amounts advanced in rounds (i), (ii)
and (iii) (the "Convertible Debt Financing Advance"). Funds advanced in rounds (i) through (iii) are to be
advanced as secured non-convertible debt. Round (iv) is to be advanced as convertible debt. Upon all necessary shareholder and
regulatory approvals having been obtained in respect of the conversion privileges for the Secured Credit Financing, and the
Minimum Offering being achieved the entirety of the Loan will be automatically converted into units on the terms substantially as
first announced on April 10, 2017 (the "Secured Credit Units"), each to consist of one Common Share and one-half
of one warrant (each whole warrant, a "Secured Credit Warrant"), provided that what was described then as a
forced exercise provision being associated with the Secured Credit Warrants, has been adjusted to be an accelerated exercise
provision attached to each Secured Credit Warrant to substantially match the accelerated exercise provisions attached to each of
the Warrants and Agent's Unit Warrants described above.
As announced by the Company on June 30, 2017, at the Annual and Special Meeting of shareholders of the Company (the
"Meeting") held on June 29, 2017, shareholders overwhelmingly approved the Secured Credit Financing.
ABOUT HEMOSTEMIX INC.
Hemostemix is a public clinical-stage biotechnology company that develops and commercializes innovative
blood-derived cell therapies for medical conditions not adequately addressed by current treatments. It is the first
clinical-stage biotech company to test a stem-cell therapy in an international, multicenter, phase 2 clinical trial for patients
with critical limb ischemia (CLI), a severe form of peripheral artery disease (PAD) caused by reduced blood flow to the legs. The
phase 2 trial targets a participant's diseased tissue with proprietary cells grown from his or her blood that can support the
formation of new blood vessels.
Hemostemix Inc. is traded on the TSX Venture Exchange under the trading symbol HEM. To find
out more visit hemostemix.com or email office@hemostemix.com.
Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined under the
policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
The securities offered pursuant to the Rights Offering have not been registered under the U.S.
Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable
exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an
offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be
unlawful.
Forward-Looking Statements
This release may contain forward-looking statements. Forward-looking statements are statements that are not
historical facts and are generally, but not always, identified by the words "expects," "plans," "anticipates," "believes,"
"intends," "estimates," "projects," "potential," and similar expressions, or that events or conditions "will," "would," "may,"
"could," or "should" occur. Although Hemostemix believes the expectations expressed in such forward-looking statements are based
on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from
those in forward-looking statements. Forward- looking statements are based on the beliefs, estimates, and opinions of Hemostemix
management on the date such statements were made. By their nature forward-looking statements are subject to known and unknown
risks, uncertainties, and other factors which may cause actual results, events or developments to be materially different from
any future results, events or developments expressed or implied by such forward-looking statements. Such factors include, but are
not limited to, the Company's stage of development, long-term capital requirements and future ability to fund operations, future
developments in the Company's markets and the markets in which it expects to compete, risks associated with its strategic
alliances and the impact of entering new markets on the Company's operations. Each factor should be considered carefully and
readers are cautioned not to place undue reliance on such forward-looking statements. Hemostemix expressly disclaims any
intention or obligation to update or revise any forward- looking statements whether as a result of new information, future
events, or otherwise.