Zenabis Global Inc (TSX: ZENA) (“Zenabis” or the “Company“) is pleased to announce that, further to its press release dated November 28, 2019 with respect to the completion of the Company’s rights offering (the “Rights Offering“) on November 27, 2019 (the “Closing Date“), the Company has issued 139,086,624 common shares of the Company (“Common Shares“) at a price of $0.15 per Common Share for gross proceeds of $20,862,993.60. As of the Closing Date and after taking into account the Rights Offering, the Company has a total of 347,716,561 Common Shares issued and outstanding.

A total of 117,538,929 Common Shares were issued pursuant to the basic subscription privilege of the Rights Offering. Of these, to the knowledge of Zenabis after reasonable inquiry, 41,907,477 Common Shares were issued to insiders of Zenabis and 75,631,452 Common Shares were issued to all other persons. A total of 21,547,695 Common Shares were issued pursuant to the additional subscription privilege of the Rights Offering. Of these, to the knowledge of Zenabis after reasonable inquiry, no Common Shares were issued to insiders of Zenabis and 21,547,695 Common Shares were issued to all other persons.

To the knowledge of Zenabis after reasonably inquiry, no persons became an insider of Zenabis from the distribution under the Rights Offering.

As the Rights Offering was over-subscribed, no Common Shares were issued under any stand-by commitment.

The net proceeds of the Rights Offering will be used for making additional capital investments in the Zenabis Langley facility beyond those already incurred and for general working capital.

Adjustments to Outstanding Convertible Securities and Warrants

As a result of the Rights Offering, the following adjustments and amendments to the Company’s outstanding convertible securities and warrants have occurred.

1. Unsecured Convertible Debentures

The Company currently has outstanding unsecured convertible debentures (the “Unsecured Convertible Debentures“) in the aggregate principal amount of $15 million originally issued on March 27, 2019 and maturing on September 27, 2021, previously convertible into Common Shares at a price of $3.62 per Common Share.

Pursuant to the Unsecured Convertible Debentures, the conversion price of the Unsecured Convertible Debentures is adjusted from $3.62 to $2.6087 effective immediately upon the closing of the Rights Offering. As a result of the adjustment to the conversion price of the Unsecured Convertible Debenture, an additional 1,606,344 Common Shares are issuable upon the full conversion of the Unsecured Convertible Debentures.

2. Convertible Debenture Unit Warrants

The Company currently has outstanding 825,000 unlisted warrants (the “Convertible Debenture Unit Warrants“), each exercisable to purchase one (1) Common Share at a price of $3.62 per Common Share at any time on or prior to September 27, 2021. The Convertible Debenture Unit Warrants were issued on March 27, 2019 to the holders of the Unsecured Convertible Debentures. As a result of the Rights Offering, the exercise price of the Convertible Debenture Unit Warrants is adjusted from $3.62 to $2.6788 per Common Share.

3. Secured Convertible Notes

The Company currently has outstanding secured convertible notes (the “Secured Convertible Notes“) in the aggregate principal amount of approximately $17.4 million, which were amended and restated in August 2019, and are convertible into Common Shares at a price of $1.54635 per Common Share.

As a result of the Rights Offering, the conversion price of the Secured Convertible Notes is adjusted from $1.54635 to $1.17.  As a result of the adjustment to the conversion price of the Secured Convertible Notes, an additional 3,620,520 Common Shares are issuable upon the full conversion of the Secured Convertible Notes.

4. Unsecured Convertible Notes

The Company currently has outstanding unsecured convertible notes (the “Unsecured Convertible Notes“) in the aggregate principal amount of approximately $11.9 million, which were originally issued on October 17, 2018 and maturing on October 17, 2020, and convertible into Common Shares at a price of $2.52 per Common Share. The Company has adjusted the conversion price of the Unsecured Convertible Notes from $2.52 to $1.9067 per Common Share. As a result of the adjustment to the conversion price of the Unsecured Convertible Notes, an additional 1,511,780 Common Shares are issuable upon the full conversion of the Unsecured Convertible Notes.

5. Listed Warrants

The Company currently has outstanding 12,777,777 listed warrants (the “Listed Warrants“), each exercisable to purchase one (1) Common Share at a price of $2.75 per Common Share on or prior to April 17, 2022. In accordance with the warrant indenture governing the Listed Warrants (the “Warrant Indenture“), as a result of the Rights Offering, the exchange rate of the Listed Warrants, being the number of Common Shares a holder is entitled to acquire upon the exercise of one (1) Listed Warrant, is adjusted from one Common Share per Listed Warrant, to 1.3888 Common Shares per Listed Warrant.

Further, the exercise price of the Listed Warrants is adjusted to $2.75 payable per 1.3888 Common Shares. As a result of the foregoing adjustments, an additional 4,967,999 Common Shares are issuable upon the exercise of all the Listed Warrants. The Company has entered into a supplemental warrant indenture with Computershare Trust Company of Canada, as warrant agent under the Warrant Indenture, to reflect such adjustments.

These adjustments and amendments discussed above are summarized in the table below.

6. Stock Options

The terms of the Company’s omnibus incentive plan do not result in any adjustment to the exercise price or other terms of outstanding stock options.