Cannabis company – LEEF Brands, Inc. (CSE:LEEF) (OTC:LEEEF) announced a 10-for-1 share consolidation of its common shares and a proposed private placement to raise up to CA$2.5 million ($1.8 million).

"This share consolidation and concurrent financing will improve our capital structure and provide the company with the necessary resources to accelerate our growth plans," stated Micah Anderson, CEO of LEEF Brands. "We believe these initiatives will attract a broader investor base, enhance liquidity, and help unlock shareholder value as we continue to expand our presence as a large-scale producer of cannabis concentrates."

Share Consolidation Details

The company's issued and outstanding common shares will be consolidated based on ten pre-consolidation shares for one post-consolidation share. The consolidation aims to improve the company's capital structure, increase its attractiveness to institutional investors, and provide a more stable trading platform.

Upon completion of the consolidation, LEEF will have approximately 162,762,651 common shares issued and outstanding, subject to rounding adjustments. The consolidation will take effect Nov. 18, 2024 with trading expected to begin on a consolidated basis on the Canadian Securities Exchange and OTCQB on Nov. 18th, 2024.

Read Also: Beyond Beer, Tilray’s $1.67 Billion Market Play: Is This Cannabis Giant Still A Smart Buy?

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Private Placement Financing

Concurrent with the consolidation, LEEF Brands is undertaking a private placement to raise gross proceeds of up to CA$2.5 million through the issuance of up to 10 million units. Each unit will be priced at $0.25 (post-consolidation) and will consist of one common share and one common share purchase warrant.

Each Warrant will entitle the holder to purchase one additional share of the company at a price of $0.40 (post-consolidation) for a period of two years. The warrants will include an acceleration clause, whereby, at the company's election, the warrants may be called for redemption if the company's common shares trade at or above CA$0.60 for 10 consecutive business days.

Proceeds from the financing will be used to drive growth, with a focus on completing the farm and pursuing new market opportunities.

Closing of the financing remains subject to CSE approval and other customary conditions.

Price Action

LEEF Brand shares closed Tuesday's market session 0.56% higher at 0.0180 per share.

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Decibel Cannabis Company Inc. (TSXV:DB) (OTCQB:DBCCF) confirmed Monday it has closed the acquisition of AgMedica Bioscience Ltd. The acquisition, arranged through an agreement with Callisto Capital Corp. on October 28, 2024, was made in exchange for a $6.3 million unsecured convertible debenture.

Under the agreement, the convertible debenture can be converted into Decibel's shares once the company obtains final approval from the TSX Venture Exchange for the acquisition and if necessary approval from disinterested shareholders. If shareholder approval is required, it will be sought at Decibel's upcoming annual and special meeting on December 10, 2024.

"I am excited to announce the acquisition of AgMedica," stated CEO Benjamin Sze. “An euGMP certification is an international standard that Decibel has been contemplating for quite some time, this acquisition accelerates that timeline. The AgMedica facility becomes the cornerstone of our international strategy as it allows us to extend our products and brand to the rest of the world. Furthermore, this marks the first step of Decibel's new strategy as we execute on profitable growth opportunities enhanced by synergistic and accretive transactions"

Read Also: Decibel Reports 400% Dried Flower Market Growth And Expansion To UK, Australia, Israel And Germany

Transaction Highlights

Decibel acquired AgMedica from Callisto through an agreement where Callisto transferred its rights in a previous deal involving Atlas Global Brands and AgMedica, part of Atlas’s restructuring process. This acquisition was in exchange for a convertible debenture, which could allow Callisto to become a major shareholder if converted into Decibel’s common shares at $0.055 per share.

If approval for Callisto’s potential control isn't granted, the debenture will no longer be convertible, will accrue interest at 15% annually, and Decibel must repay it by April 28, 2025. To support the conversion, Decibel's directors, officers, and certain shareholders, who collectively own 20% of shares, have agreed to vote in favor of this at the upcoming meeting.

Decibel projects that AgMedica could contribute $30 million of net revenue and $4 million of EBITDA in 2025, totaling an anticipated $130 million of net revenue and $25 million of adjusted EBITDA in 2025 on a pro-forma basis.

The company estimates a ~1.6x EBITDA multiple paid based on management's 2025 projections prior to further optimization and automation initiatives.

The transaction is expected to materially expand Decibel's international footprint with EU GMP certification that enables export of flower and a variety of extract products, with proven sales to 7 different countries including Australia, Denmark, Germany, Israel, Norway, Spain, and the United Kingdom.

Adds EU GMP and IMC-GAP certified annual flower production of 5.1 metric tonnes per annum, when combined with Decibel's GACP facility, expands total tonnes per year of exportable flower to more than 12.

In connection with the transaction, Decibel also acquired GreenSeal Nursery Ltd., a licensed nursery that holds and maintains certain cannabis genetics.

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Q3 2024 Guidance

Decibel provided guidance on its expected Q3 2024 financial results:

• Net revenue is expected to be between $23 to $25 million;
• Adjusted EBITDA is expected to be between $4 to $6 million.

Private Placement

In connection with the transaction, the company intends to complete a non-brokered private placement financing of common shares for gross proceeds of between $3 million to $3.5 million, or such other amount as may determined by the company. The terms of the offering will be determined in the context of the market, which terms will be announced by the company in a subsequent news release.

Price Action

Decibel shares closed Monday market session 1.96% lower at $0.035 per share.

Read Next:

• Decibel’s $10M Strategy: How It Could Enhance Your Canadian Cannabis Portfolio

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