Seed-to-sale cannabis software company MJ Freeway and MTech Acquisition Corp. (NASDAQ: MTEC) agreed to issue and sell an additional 215,475 shares of Class A common stock at $10.21 per share as part of its previously announced private placement in a deal valued at $2.2 million. The company is expected to go public within months.
According to the company statement, MTech will issue and sell an aggregate of 901,074 shares of Class A common stock for aggregate gross proceeds of approximately $9.2 million. The company said it does not expect to issue any additional shares in the private placement. The closing of the private placement is conditioned on the closing of the business combination immediately thereafter.
MTech and MJ Freeway had previously announced that they will combine and rename the company Akerna Corp. The shares of Class A Common Stock issued in the private placement will convert into shares of Pubco common stock on a one-for-one basis upon the closing.
“As an existing MJ Freeway investor, making this investment in Akerna was an easy choice considering the trend of global legalization we are seeing, especially in Asian markets. We believe Akerna is well-positioned to capitalize on this growth through their robust ERP offerings and tracking & compliance technology,” stated MJ Freeway Board Member and Khitan’s Emery Huang. “Further, we believe the value proposition with the pending merger and Nasdaq listing enhances Akerna’s financial position and opens the door to acquisition opportunities, which should drive further shareholder value.”
Cresco Capital Partners II, LLC (CCP II), an existing investor in MJ Freeway, joins previously reported Khitan Capital, LLC (Khitan) and The London Fund in the private placement. Matt Hawkins, Managing Principal at CCP II, currently invested in MJ Freeway, said, “We have high confidence in the growth of the technology sector in cannabis, the strategic direction of Akerna, and the leadership at MJ Freeway. This additional stake in Akerna reflects that confidence.”
“The significant investments of financing, expertise, and confidence from our private placement participants will be invaluable as we move into this monumental new chapter. I look forward to expanding our relationships with Mr. Huang and Mr. Shah, leveraging additional global market and tech insights for strategic growth, and I thank Mr. Hawkins for his continued support,” stated Jessica Billingsley, Co-Founder and Chief Executive Officer of MJ Freeway.
Scott Sozio, CEO of MTech, commented, “MJ Freeway has an established history of delivering technological innovation to the cannabis industry. Securing this investment provides additional capital to grow our proprietary ERP platform and further establish Akerna as a dominant force in cannabis technology.”
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