F-1/A: BYND Cannasoft Enterprises Inc. Files Amendment No. 2 to Form F-1, Announces Public Offering of Units and Pre-Funded Units

BYND Cannasoft Enterprises Inc. announces a public offering of 50,035,740 Units and Pre-funded Units to raise capital for patent registrations, prototype production, sales & marketing of the EZ-G device, working capital, the permanent waiver of certain rights and obligations of an investor and general corporate purposes.

Summary

• BYND Cannasoft Enterprises Inc. is undertaking a public offering in the United States, offering 50,035,740 units, each consisting of one common share, one Series A Warrant, and two Series B Warrants.
• The assumed public offering price is $0.1399 per Unit, based on the closing price of the Common Shares on the Nasdaq Capital Market on March 7, 2024.
• The company is also offering pre-funded units to purchasers whose acquisition of Units would result in beneficial ownership exceeding 4.99% of the outstanding Common Shares.
• Each Pre-funded Unit consists of one pre-funded warrant to purchase one Common Share, one Series A Warrant, and two Series B Warrants, with the purchase price per Pre-funded Unit being the price per Unit minus $0.0001.
• The Series A Warrants are immediately exercisable and expire 30 months from the issuance date, while the Series B Warrants are immediately exercisable and expire five years from the issuance date.
• The company has granted the underwriter an option, exercisable for 45 days, to purchase up to an additional 7,505,361 Common Shares and/or Pre-funded Warrants Units, 7,505,361 Series A Warrants, and 15,010,722 Series B Warrants.
• The company intends to use the net proceeds from this offering and the cash exercise of the Warrants to use for patent registrations, prototype production, sales & marketing of the EZ-G device, working capital, the permanent waiver of certain rights and obligations of an investor and general corporate purposes.
• The company has commenced the process for the voluntary delisting from the CSE and expect the delisting to become effective within the next 30 days.

Sentiment

Score: 4

Explanation: The document contains both positive and negative aspects. The company is raising capital, but it is also facing challenges such as the war in Israel, potential delisting from Nasdaq, and dependence on a single client. The overall sentiment is slightly negative due to the risks and uncertainties.

Positives

• The capital raise will provide funds for patent registrations, prototype production, sales & marketing of the EZ-G device, working capital, the permanent waiver of certain rights and obligations of an investor and general corporate purposes.
• The offering includes warrants, which could provide additional capital to the company if exercised.
• The underwriter's over-allotment option provides flexibility to increase the offering size.

Negatives

• The company has commenced the process for the voluntary delisting from the CSE and expect the delisting to become effective within the next 30 days.
• The company has been notified by The Nasdaq Stock Market LLC of our failure to comply with certain continued listing requirements and, if we are unable to regain compliance with all applicable continued listing requirements and standards of Nasdaq, our Common Stock could be delisted from Nasdaq.

Risks

• The company's executive offices and research and development facilities as well as most of our officers, directors and employees, are located in Israel.
• Following the October 7, 2023, Hamas terrorist attack, Israel has been at war with Hamas. A prolonged war could result in disruptions in our operations.
• On January 5, 2024, we were notified by the Nasdaq that the Company no longer meets the $1minimum bid price per share requirement.
• Although we have at least 180 days to regain compliance, if we fail to do so, our Common Shares may be subject to delisting from the Nasdaq.
• The Company has received comments from the British Columbia Securities Commission (BCSC) relating to the Companys previously filed continuous disclosure documents.
• As a result, the Company is shown as being in default on the BCSCs Reporting Issuers List pending resolution of the issues raised by the BCSC. Failure to satisfactorily respond to the BCSCs comments may result in a cease trade order.
• BYND Israel is dependent on a single client for the majority of its current revenues and any changes to that relationship could have a significant impact on current revenues.
• Defects or disruptions affecting the New CRM Platform or the New Cannabis CRM Platform services could diminish demand for these services and subject BYND Israel to substantial liability.
• Interruptions or delays in service from BYND Israels third-party data center hosting facilities could impair the delivery of its services and harm its business.
• We may in the future be sued by third parties for alleged infringement of their proprietary rights.
• The market for our technology delivery model and enterprise cloud computing application services is immature and volatile, and if it develops more slowly than we expect, our business could be harmed.
• Our efforts to expand our Benefits CRM Software business to our New CRM Platform, which is cloud-based and our efforts to develop and service the cannabis market with our New Cannabis CRM Platform may not succeed and may reduce our revenue growth rate.
• Any failure to protect our intellectual property rights could impair our ability to protect our proprietary technology and our brand.
• The contactless business license expired on February 5, 2024 and its extension by an additional year is contingent on the MCUs approval.
• We have never generated any revenue from product sales and this part of our business may never be profitable.
• Our EZ-G Device may contain errors or defects, which could result in damage to our reputation, lost revenues, diverted development resources and increased service costs, warranty claims and litigation.
• The complex nature of the EZ-G Device increases the likelihood that our products will contain defects.
• Our EZ-G Device contains potentially controlled substances, the use of which may generate public controversy.
• All of our material operations are located in Israel and, therefore, our business and operations may be adversely affected by political, economic and military conditions in Israel.
• Strikes and work stoppages in Israel and the obligations of our personnel to perform military service may prevent us from continuing our research, development, growing and marketing activities.
• Service of process upon and enforcing a Canadian or U.S. judgment against us and our current executive officers and directors, or asserting Canadian or U.S. securities law claims in Israel, may be difficult.
• The market price of our Common Shares may be volatile, which could result in substantial losses for investors.
• There are risks associated with the potential dilution of our Common Shares.
• The conditions to the Israeli Tax Pre-Ruling could influence decisions of the Companys directors and officers.
• The Companys directors and officers control a large percentage of the Companys issued and outstanding Common Shares and as a result, may have the ability to control or influence matters affecting the Company and its business.
• Cannabis remains illegal under U.S. federal law, and enforcement of cannabis laws could change.
• If securities or industry analysts do not publish research or publish inaccurate or unfavourable research about us or our business, our trading price and volume could decline.
• We rely on our management and need additional key personnel to grow our business, and the loss of key employees or inability to hire key personnel could harm our business.
• Our senior management team has limited experience managing a public company, and regulatory compliance may divert its attention from the day-to-day management of our business and will increase our expenses.
• We may become subject to liability arising from any fraudulent or illegal activity by our employees, contractors and consultants.

Future Outlook

The company expects to generate revenues from the New CRM Platform shortly and from the New Cannabis CRM Platform in Q1 2024. The company also expects to generate revenues from the sale of cannabis or cannabis infused products in Q2 2024.

Management Comments

• The Company intends to pursue the final registration of the patents and establish a marketing and sales system for the EZ-G device.
• The Company is dependent on the performance of third party Cannabis growers or the development and growing of the medical cannabis products the company intends to sell and broker and as a result, the Company may suffer delays or fail to achieve expected result.

Industry Context

The document indicates the company is operating in the CRM software, medical cannabis, and femtech industries. The company is attempting to leverage its expertise in CRM software to create a platform for the medical cannabis industry. The company is also developing a new device for the femtech industry.

Comparison to Industry Standards

• The document mentions competitors in the CRM software market such as SAP, Oracle, Salesforce.com, Microsoft, and Eshbel Technologies.
• The document states that the company believes its Benefit CRM Software provides a more flexible and effective solution when compared to their CRM products.
• The document states that the company has not yet found any platform, service or software that offers or will offer a value proposition similar to that of its New Cannabis CRM Platform.
• The document states that the company has not yet found any medical or recreational device that offers or will offer a value proposition similar to that of its EZ-G device.

Related Party Transactions

• On September 22, 2022, the Company completed its acquisition of Zigi Carmel Initiatives & Investments Ltd., an Israeli company, in consideration for the issuance to Carmel Zigdon, its sole shareholder, of 7,920,000 Common Shares at a deemed price per share of $4.735 and US $100,000 to cover his legal expenses.
• As part of the closing of the acquisition, Mr. Zigdon was appointed as a director of the Company.
• During the year ended December 31, 2022, the Company paid management and consulting fees in the amount of $1,349,084 to its Officers and Directors.
• For the same period in 2021 the Company paid management and consulting fees in the amount of $612,395 to its Officers
• As at December 31, 2022, $1,002 was owed from shareholders of the Company (2021 $4,094).
• Amounts owed were recorded in amounts receivable are non-interest bearing and unsecured.
• As at December 31, 2022, $37,094 was owed to directors of the Company (2021 $1,322).
• Amounts due were recorded in accounts payable are non-interest bearing and unsecured.
• On March 29, 2021, the Company granted 780,000 stock options to Harold Wolkin and Roman Brenner, independent directors, Dan Rothberg, its former corporate secretary and to Gabi Kabazo, its CFO and Corporate Secretary, which options are exercisable for 5 years, at an exercise price of $0.82 per share,
• On June 29, 2021, the Company granted 240,000 stock options to Stefania Szabo, an independent director, which options are exercisable for 5 years, at an exercise price of $1.22 per share,
• On October 26, 2021, the Company granted 115,000 stock options to Gabi Kabazo, its CFO, which options are exercisable for 5 years, at an exercise price of $2.65 per share,
• On June 14, 2022, the Company granted 10,000 stock options to Mr. Niv Shirazi, an independent director, which options are exercisable for 5 years, at an exercise price of $6.20 per share.
• On April 27, 2023, the Company granted 10,000 stock options to Mr. Niv Shirazi, an independent director, which options are exercisable for 5 years, at an exercise price of $3.82 per share.
• On August 8, 2023, the Company granted 100,000 stock options to Harold Wolkin, Stefania Szabo and Niv Shirazi, independent directors, which options are exercisable for 5 years, at an exercise price of $1.93 per share.
• On January 2024, the Company cancelled 565,000 stock options to Harold Wolkin, Stefania Szabo and Niv Shirazi, independent directors, Gabi Kabazo, its CFO and Director.

Stakeholder Impact

• Shareholders may experience dilution due to the issuance of new shares and warrants.
• The company's ability to execute its business plan and generate revenue will impact shareholder value.
• Employees may be affected by the company's financial performance and ability to retain key personnel.
• Customers may be impacted by the company's ability to develop and support its products and services.
• Suppliers and creditors may be affected by the company's ability to meet its financial obligations.

Next Steps

• The company needs to regain compliance with Nasdaq listing requirements.
• The company intends to apply for an extension of the contactless business license.
• The company needs to test the protype and commence manufacture of the EZ-G device.
• The company needs to raise additional funds to construct the Cannabis Farm and Indoor Cannabis Growing Facility.

Key Dates

Keywords

public offering, units, pre-funded units, warrants, common shares, BYND Cannasoft, capital raise, EZ-G device, CRM software, medical cannabis, Israel