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Item 1.01.
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Entry into a Material Definitive Agreement.
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On September 24, 2018,
Cannabics Pharmaceuticals Inc. (the “Company”) entered into a securities purchase agreement (the "Purchase Agreement")
with certain institutional and accredited investors (the “Investors”) relating to the offering and sale of an aggregate
of 10,000,000 shares (the "Purchased Shares") of the Company’s common stock, par value $0.0001 per share (the “Common
Stock”), and warrants (the “Warrants” and together with the Purchased Shares and the shares of Common Stock underlying
the Warrants, the “Securities”) to purchase up to an aggregate of 5,000,000 shares of the Company’s Common Stock,
at a combined price of $0.75 per Purchased Share and Warrant, for aggregate gross proceeds to the Company of $7,500,000 (the “Offering”).
The Warrants are immediately exercisable for a period of five years from the date of issuance, have an exercise price of $1.00
per share, provide for cashless exercise in the event there is no effective registration statement covering the shares of Common
Stock issuable upon exercise of the Warrants, contain customary anti-dilution adjustments, and the exercise price of the Warrants
is subject to adjustment in the event that the Company issues certain securities at any time while the Warrants are outstanding
at an effective price below the exercise price.
The Securities were
offered and sold pursuant to a prospectus, dated April 21, 2017, and a prospectus supplement, dated September 24, 2018, in connection
with a takedown from the Company's effective shelf registration statement on Form S-3, File No. 333-216845. The Offering closed
on September 26, 2018.
The Company intends
to use the net proceeds from the sale of the Securities for working capital purposes and capital expenditures. The Company and
its officers and directors have agreed, subject to limited exceptions, for a period of 90 days not to sell or otherwise dispose
of Common Stock or its equivalents. The Company has granted to the Investors a twelve month participation right in future financing
transactions up to an aggregate of 50% of such future financings.
The foregoing is a summary description of
certain terms of the Purchase Agreement and Warrants. For a full description of all terms of the Purchase Agreement and Warrants,
please refer to the form of the Purchase Agreement and Warrant, each of which is filed herewith as Exhibit 10.1 and 4.1, respectively,
to this Current Report on Form 8-K and is incorporated herein by reference. All readers are encouraged to read the entire text
of the Purchase Agreement and Warrant. A copy of the opinion of relating to the validity of the securities issued in the Offering
is filed herewith as Exhibit 5.1.
The Company also entered into a placement
agent agreement with A.G.P./Alliance Global Partners (“A.G.P.”), dated September 24, 2018 (the “Placement Agent
Agreement”), pursuant to which A.G.P. agreed to serve as exclusive placement agent for the issuance and sale of the shares
of Common Stock and Warrants. The Company has agreed to pay A.G.P. an aggregate fee equal to 7% of the gross proceeds received
by the Company from the sale of the Purchased Shares and Warrants in the Offering. Pursuant to the Placement Agent Agreement, the
Company also agreed to pay to A.G.P. a fee equal to 7% of the cash proceeds received by the Company upon exercise of the Warrants
for cash and to grant to A.G.P., or its designees, warrants to purchase up to 5% of the aggregate number of Purchased Shares and
shares of Common Stock underlying the Warrants sold in the Offering (each a “Placement Agent Warrant”), for an aggregate
of 750,000 shares of Common Stock. The Company also agreed to reimburse A.G.P. for legal fees and other out-of-pocket expenses
of up to $60,000. The Placement Agent Agreement has indemnity and other customary provisions for transactions of this nature. The
Placement Agent Warrants have substantially the same terms as the Warrants, except that the Placement Agent Warrants will have
an exercise price equal to $0.9375 per share of Common Stock and will be exercisable for a period of three years commencing six
months from the closing date of the Offering. The Placement Agent Warrants, and the shares of Common Stock issuable upon exercise
thereof, will be issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933,
as amended, as transactions not involving a public offering and in reliance on similar exemptions under applicable state laws.
The foregoing is a summary description of
certain terms of the Placement Agent Agreement and Placement Agent Warrants. For a full description of all terms of the Placement
Agent Agreement and Placement Agent Warrants, please refer to the form of the Placement Agent Agreement and Placement Agent Warrant,
each of which is filed herewith as Exhibit 10.2 and 4.2, respectively, to this Current Report on Form 8-K and is incorporated herein
by reference. All readers are encouraged to read the entire text of the Placement Agent Agreement and Placement Agent Warrant.