Cannabis Wheaton Income Corp Financing Seen as Dilutive

Cannabis Wheaton Income Corp has seen its quarterly revenues averaged only ~$50,000 over the past three years

SmallCapPower | July 5, 2017: Cannabis Wheaton Income Corp (TSXV: CBW), the world’s first cannabis streaming company, recently (June 29, 2017) announced the successful closing of the previously disclosed (June 6th 2017) $50.0 million private placement of special warrants and convertible debenture units. The deal provides the much needed capital for the marijuana financier, which provides funding for cannabis producers in exchange for a portion of production and minority equity interests. At the same time, the deal would result in substantial dilution (~35 million additional shares) over the next two years. Post the forward split in April 2017, the Company’s outstanding shares increased from 49.73 million to 149.2 million shares, and currently stand at 150.9 million shares.

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The closing of the $50 million deal with Mackie Research Capital Corporation as the lead manager follows the scrapped $80 million financing deal announced earlier in June 2017 with investment banks and lead financing agents Eight Capital and Canaccord Genuity Corp. due to misleading reports published online to discredit the Company.

The Company raised $20 million from special warrants (20.25 million warrants @$1.00 per warrant) and $30 million from convertible debenture units (30,000 units @1,000 per unit and 6% interest). Each warrant entitles the holder to purchase one common share, at any time prior to 24 months at an exercise price of $1.50 per common share. Each convertible debenture unit will consist of 500 common share purchase warrants, with each warrant exercisable to acquire one common share at an exercise price of $1.50 per share for a period of 24 months.

Cannabis Wheaton’s quarterly revenues have averaged only ~$50,000 over the past three years. In Q1 2017, the Company did not generate any revenues and net loss reported for the quarter was $1.5 million.

Disclosure: Neither the author nor any of the principals at Small Cap Power, or their family members, own shares in any of the companies mentioned above.

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