The Hempshire Group Secures $539K Via Note Financing, Approves Incentive Plans And Incentive Awards

The Hempshire Group, Inc. HMPSF announced the completion of a note financing with certain insiders and other private investors of the company to raise CA$733,500, ($539,000) which is supported by secured, non-convertible promissory notes of the company issued to the lenders. Proceeds from the note financing will be used for marketing efforts, working capital requirements and other general corporate purposes. In addition, the company announced the approval of incentive plans, incentive awards and shares for services arrangements.

Note Financing

The notes bear interest at a rate of 12.0% per annum and mature on April 26, 2024, with principal and interest payable on the maturity date. The notes rank equally and are secured by the company's now and after-acquired Mountain Smokes inventory.

In connection with the note financing, an aggregate of 14.67 million non-transferrable bonus warrants are issuable to the lenders. Each warrant will be exercisable for one share at a price of $0.05, or on a "cashless" basis in accordance with the policies of the TSXV, for a period of one year from the issuance date. As certain lenders are insiders of the company, the note financing constitutes a "related party transaction" within the meaning of Multilateral Instrument 61-101 - Protection of minority security holders in special transactions.

Approval of Incentive Plans and Incentive Awards

The board of directors of the company approved a stock option plan and share award incentive plan. The option plan allows the company to issue aggregate stock options of up to 10% of the issued and outstanding shares of the company, on a non-diluted basis, and the award plan allows the company to issue share awards in the form of restricted share units and performance share units of up to an aggregate 8.1 million shares being issuable under the award plan. The option plan and award plan remain subject to ratification by the shareholders of the company at its next annual general meeting.

On April 26, 2023, the company issued a total of 2 million options under the option plan, with an exercise price of $0.13 to officers and directors of the company. The company also granted 5.65 million share awards in the form of RSUs to officers, directors, employees and consultants of the company effective February 3, 2023, which shall vest one year from the grant date.

Share Issuances

Prior to listing the Shares on the TSXV in August 2022, the company entered into agreements with certain executives to issue, as partial consideration for services rendered by such executives, as an inducement, securities of Hempshire. Pursuant to the shares for services agreements, the company agreed to issue Hempshire securities to former president and CEO, Martin Marion, and to current CFO, William (Bill) Hahn.

In accordance with the terms of the shares for services agreements, the company shall issue 1.25 million shares and 1.25 million options to Marion, and 250,000 shares to Hahn subject to and immediately following receipt of TSXV approval. Pursuant to the shares for services agreements, Hahn is entitled to receive an additional 500,000 Shares on June 24, 2023 and, if the shares trade above $0.48 for at least ten consecutive trading days prior to June 24, 2023, Marion is entitled to an additional 500,000 shares and 500,000 options. Marion's options under the shares for services agreements will be exercisable at a price of $0.48 and will expire four years from the date of issuance of such options.

Photo: Courtesy of CNW Group/Hempshire Group

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