Auxly Cannabis Group Inc. (OTCQX: CBWTF) has raised $15 million with a deal in which ATB Capital Markets Inc. and Cantor Fitzgerald Canada Corporation, as co-lead underwriters and joint book-runners, together with a syndicate of underwriters will buy 40,550,000 Units of the Company at a price per unit of $0.37. The stock was lately selling at $0.33. The offering is expected to occur on or about February 10, 2021.
Auxly said each Unit shall be made up of one common share of the company and one-half of one Common Share purchase warrant of the Company. Each Warrant shall entitle the holder thereof to purchase one Common Share at an exercise price of $0.46 at any time up to 36 months from the closing of the Offering. The company said it has granted the Underwriters an option to increase the size of the Offering by up to an aggregate number of Units, and/or the components thereof, equal to 15% of the total number of Units issued under the Offering, such Underwriters’ Option being exercisable at any time and from time to time up to 30 days following the closing of the Offering.
The net proceeds will be used for working capital and general corporate purposes.
A Need For Cash
In November, Auxly reported $13.57 million in cash and cash equivalents for the three month period leading up to September 30th. This is 69% less than what was reported as of December 31st, 2019. Last year’s cash equivalents totaled $44.13 million. Auxly’s claimed at the time it had $381,598 in total assets and $112,358 in debt. Auxly reported a decrease in selling, general, and administrative expenses – dropping down to approximately $11.36 million from roughly $16.59 million during the same time last year. So there seemed to be a cash crunch happening.
Also in November, Auxly reported total net revenue of $13.4 million for the three months that ended on September 30th. Before excise taxes and research contacts, this figure is $15.2 million. Their reported net revenue represents an 85% increase from the previous quarter and a 732% increase from the same period last year. Last year’s total revenue clocked out at roughly $1.6 million, representing an approximately $11 million dollar difference.