PharmaCielo Ltd. Announces Closing of Previously Announced $8 Million Private Placement Financing

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TORONTO, April 15, 2020 /CNW/ - PharmaCielo Ltd. ("PharmaCielo" or the "Company") (TSXV: PCLO, OTCQX: PCLOF) announced today that it has closed its previously announced "best efforts" private placement financing of 12,428,002 special warrants of the Company (the "SpecialWarrants") (inclusive of the Broker Special Warrants (as defined herein)) at $0.65 (the "Offering Price") per Special Warrant for aggregate gross proceeds of approximately $8 million (the "Offering"). The Offering was conducted by a syndicate of agents led by Cormark Securities Inc., Stifel GMP and Echelon Wealth Partners Inc. (collectively, the "Agents").

"Against a backdrop of very challenging capital markets, we are very pleased to have successfully closed this nominal equity offering, in which both management team and board members participated. This round of funding provides PharmaCielo with added flexibility to ramp-up processing and extraction output over the next several months to fulfill volumes required under existing and future sales agreements as we diligently continue sales efforts," said David Attard, CEO of PharmaCielo. "Currently, while the Colombian government's measures to fight COVID-19 are in place, our team is focused on continuing cultivation and harvest activities. This, coupled with the ability to resume commercial extraction activities, ensure that PharmaCielo is ready to deliver medicinal-quality oils and isolates at scale. While the world continues to grapple with the impact of COVID-19, and we do our part in this fight, our sights are also set on the day after when economies begin to return to normal with the demand for medicinal grade extracts that follow."

Each Special Warrant entitles the holder thereof to receive one common share (each, a "Common Share") of the Company on exercise thereof. Each Special Warrant will be automatically exercised on the earlier of: (i) the fifth business day after the Prospectus Qualification (as defined below) (the "Qualification Date"); and (ii) at 4:59 p.m. (EDT) on the date which is four months and a day following the date of closing.

The net proceeds of the Offering shall be used to support the anticipated processing capacity expansion, commence ramping up the Company's contract growing operations, working capital and general corporate purposes.

The closing of the Offering is subject to regulatory approval including that of the TSX Venture Exchange (the "TSXV").

Additional Information Regarding the Offering

The Company has agreed to use commercially reasonable efforts to obtain a receipt for a final short form prospectus qualifying the distribution of the underlying Common Shares to be issued upon exercise of the Special Warrants (the "Prospectus Qualification") on or before 5:00 p.m. (EDT) on May 15, 2020 (the "Qualification Deadline"). If the Qualification Date does not occur before the Qualification Deadline, each holder of Special Warrants shall be entitled to receive, without payment of additional consideration, 1.1 Common Shares upon exercise of each Special Warrant.

In consideration for their services, the Agents received a cash commission of $123,637.74, a portion of which was satisfied by the issuance of an aggregate of 181,812 Special Warrants at the Offering Price (the "Broker Special Warrants") and an aggregate of 190,212 broker warrants (the "Broker Warrants"). Each Broker Warrant is exercisable to purchase one Common Share at the Offering Price for two years from the date hereof.

The Company paid a finder's fee of 7%, in a combination of cash and securities of the Company, in consideration for certain placements in connection with subscriptions from certain subscribers introduced by finder's at arm's length to the Company.

In satisfaction of a condition of the Offering, certain members of senior management and the Board of the Company have entered into lock-up agreements for a period of 120 days from the date of closing prohibiting their disposition of securities of the Company subject to certain exceptions.

Subject to Prospectus Qualification, the Special Warrants and the Common Shares issuable thereunder are subject to a hold period in Canada expiring four months and one day from the date of closing. The Special Warrants and the Common Shares issuable thereunder have not been, nor will they be, registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") and such securities may not be offered or sold within the United States, or to or for the account or benefit of U.S. persons, absent registration under U.S. federal and state securities laws or an applicable exemption from such U.S. registration requirements. This press release does not constitute an offer of Special Warrants or Common Shares for sale, nor a solicitation for offers to buy such securities.

The Offering constituted a related party transaction within the meaning of Multilateral Instrument 61-101 ("MI 61-101") as insiders of the Company subscribed for an aggregate of 600,973 Special Warrants. The Company is relying on the exemptions from the valuation and minority shareholder approval requirements of MI 61-101 contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101, as the fair market value of the participation in the Offering by insiders does not exceed 25% of the market capitalization of the Company, as determined in accordance with MI 61-101. The participants in the Offering and the extent of such participation were not finalized until shortly prior to the completion of the Offering. Accordingly, it was not possible to publicly disclose details of the nature and extent of related party participation in the Offering pursuant to a material change report filed at least 21 days prior to the completion of the Offering.

Share for Debt Settlement

PharmaCielo also announced that it has settled a total of $54,681.38 of debt owed to two former consultants of the Company, through the issuance of an aggregate amount of 74,906 common shares of the Company (the "Debt Shares") at a deemed price of $0.73 per Debt Share (the "Debt Settlement"). All the Debt Shares issued in connection with the Debt Settlement are subject to a statutory hold period of four months plus a day from the date of issuance, in accordance with applicable securities legislation. Closing of the Debt Settlement is subject to a number of conditions, including approval from the TSXV.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

About PharmaCielo

PharmaCielo Ltd. (TSXV: PCLO, OTCQX: PCLOF) is a global company, headquartered in Canada, with a focus on ethical and sustainable processing and supplying of all natural, medicinal-grade cannabis oil extracts and related products to large channel distributors. PharmaCielo's principal (and wholly owned) subsidiary is PharmaCielo Colombia Holdings S.A.S., headquartered at its nursery and propagation centre located in Rionegro, Colombia.

The boards of directors and executive teams of both PharmaCielo and PharmaCielo Colombia Holdings are comprised of a diversely talented group of international business executives and specialists with relevant and varied expertise. PharmaCielo recognized the significant role that Colombia's ideal location will play in building a sustainable business in the medical cannabis industry, and the Company, together with its directors and executives, is executing on a business plan focused on supplying the international marketplace.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of applicable securities laws, such as statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Use of words such as "may", "will", "expect", "believe", "intends", "likely", or other words of similar effect may indicate a "forward looking" statement. These statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including those described in the Company's publicly filed documents (available on SEDAR at www.sedar.com). Forward looking statements in this press release include those relating to the global economic response to the effects of the COVID-19 pandemic, resuming commercial extraction, processing and delivery activities, the timing of the automatic exercise of the Special Warrants, obtaining a receipt for a final short form prospectus, that holders of Special Warrants may be entitled to receive, without payment of additional consideration, 1.1 Common Shares per Special Warrant in certain circumstances and the approval of the Offering and the Debt Settlement by the TSXV. Forward-looking information is subject to a variety of risks and uncertainties and other factors that could cause plans, estimates and actual results to vary materially from those projected in such forward-looking information. Factors that could cause the forward-looking statements in this news release to change or to be inaccurate include, but are not limited to, that necessary regulatory approvals including the approval of the TSXV may not be obtained in relation to the Offering and the Debt Settlement, that the market for the Company's products may be subject to volatility, that there may be less than anticipated demand for the Company's products, risks associated with the Company operating in Colombia, risks associated with global economic instability relating to COVID 19 and the potential for it to disrupt global markets as well as the other risks and uncertainties applicable to cannabis producing companies.

Given these risks and uncertainties, investors should not place undue reliance on forward looking statements as a prediction of actual results. All forward looking statements in this press release are qualified by these cautionary statements. These statements are made as of the date of this news release and, except as required by applicable law, the Company undertakes no obligation to publicly update or revise any forward looking statement, whether as a result of new information, future events or otherwise. Additionally, the Company undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of the Company, its financial or operating results or its securities.

SOURCE PharmaCielo Ltd.

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