HempFusion Wellness Inc. (TSX:CBD.U) (OTCQB:CBDHF) (FWB:8OO) (“HempFusion” or the “Company”), a leading health and wellness Company offering premium probiotic supplements and products containing CBD, announces a brokered private placement offering (the “Offering”) led by Research Capital Corporation as the sole agent and sole bookrunner (the “Agent”) for up to US$3.0 million in aggregate gross proceeds.

Under the Offering, the Company will offer up to 3,000 convertible debenture units (the “Convertible Debenture Units’) at the issue price of US$1,000 per Convertible Debenture Unit for gross proceeds of up to US$3.0 million. Each Convertible Debenture Unit will be comprised of: (i) US$1,000 principal amount of 10% senior secured convertible debentures of the Company ( the “Convertible Debentures”) which will be convertible into common shares of the Company (each a “Common Share”) at a conversion price of US$0.15 per Common Share, subject to adjustment in certain events (the “Conversion Price”) and maturing on the date that is three (3) years from the date the Convertible Debenture Units are issued (the “Maturity Date”); and (ii) 3,333 common share purchase warrants of the Company (the “Warrants”).

Each Warrant will entitle the holder thereof to purchase one Common Share at a price of US$0.20 per Common Share until the Maturity Date. Provided that if, at any time prior to the expiry date of the Warrants, the volume weighted average trading price of the Common Shares for five (5) consecutive trading days on the Toronto Stock Exchange (the “Exchange”), or other principal exchange on which the Common Shares are listed, is greater than US$0.60, the Company may, within 15 days of the occurrence of such event, deliver a notice to the holders of Warrants accelerating the expiry date of the Warrants to the date that is 30 days following the date of such notice (the “Accelerated Exercise Period”). Any unexercised Warrants shall automatically expire at the end of the Accelerated Exercise Period.

The Company may force the conversion of the principal amount of the then outstanding Convertible Debentures at the Conversion Price on not more than 60 days’ and not less than 30 days’ notice should the daily volume weighted average trading price of the Common Shares for the consecutive five (5) trading days on the Exchange, or other principal exchange on which the Common Shares are listed, be greater than US$0.40 preceding the notice.

On and after the date that is 24 months after the date of issuance of the Convertible Debentures, the Company shall have the right to redeem the Convertible Debentures either partially or in full in cash at 110% of the principal amount of the Convertible Debenture plus accrued interest.

The Convertible Debentures shall bear interest at a rate of 10.0% per annum from the date of issue, payable quarterly in arrears in cash or Common Shares at the discretion of the Company. Interest shall be computed on the basis of a 360-day year composed of twelve 30-day months. The first interest payment shall be on March 31, 2022 for the period from the closing date of the Offering to March 31, 2022.

The Convertible Debentures will be a direct obligation of the Company and will be secured against the assets of the Company pursuant to a general security agreement granted in favour of the holders of all of the Convertible Debentures issued pursuant to the Offering and which may be registered in any jurisdiction in which the Company has assets. The Convertible Debentures will be senior unsecured obligations of the Company and shall rank pari passu in right of payment of principal and interest with all other Convertible Debentures issued under the Offering and all previously existing and future unsecured indebtedness of the Company.

The Company plans to allocate the net proceeds of the Offering to working capital, repayment of debt and/or general corporate purposes. The Company has granted to the Agent an option (the “Agent’s Option”), exercisable up to 48 hours prior to the closing date of the Offering, to sell up to an additional 15% of Convertible Debenture Units.

Closing of the Offering is expected to occur on or about the week of March 28, 2022 (the “Closing Date”) and is subject to certain customary conditions including, but not limited to, the receipt of all necessary regulatory approvals and acceptance of the Exchange. All securities issued pursuant to the Offering will be subject to a statutory hold period of four months plus a day from the date of Closing Date in accordance with applicable securities legislation.

The Company has agreed to pay the Agent, upon closing of the Offering, a cash commission equal to 8.0% of the aggregate gross proceeds of the Offering (including in respect of any exercise of the Agent’s Option), subject to a reduction for certain orders on a “president’s list”. In addition, the Company will issue such amount of broker warrants equal to 8.0% of the number of Common Shares issuable upon conversion of the Convertible Debentures (based on the Conversion Price) exercisable for one common share at the Conversion Price.

Insiders and related parties of the Company may acquire Convertible Debenture Units under the Offering. Such participation may be considered to be "related party transactions" within the meaning of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Company intends to rely on the exemptions from the formal valuation and minority shareholder approval requirements of MI 61-101 in respect of related party participation in the Offering as neither the fair market value (as determined under MI 61-101) of the subject matter of, nor the fair market value of the consideration for the Offering, insofar as it involves interested parties, is expected to exceed 25% of the Company's market capitalization. In the event of participation of any director of the Company, such director shall disclose such participation and shall abstain from voting on the approval by the board of directors of the Company. The Company will not file a material change report 21 days prior to the Closing Date because details will not be settled until shortly prior to the Closing Date and the Company intends to complete the Offering as soon as commercially possible.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities described in this news release in the United States. Such securities have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws, and, accordingly, may not be offered or sold within the United States, or to or for the account or benefit of persons in the United States or "U.S. Persons", as such term is defined in Regulation S promulgated under the U.S. Securities Act, unless registered under the U.S. Securities Act and applicable state securities laws or pursuant to an exemption from such registration requirements.

About HempFusion Wellness Inc.

One of a select few hemp-derived CBD companies that are today fully prepared to meet or exceed expected global guidance, HempFusion Wellness Inc. is a leading health and wellness company whose family of premium consumer brands include HempFusion™, Sagely Naturals™, Apothecanna™, and Probulin Probiotics™, one of the fastest-growing probiotics companies in the United States according to SPINs reported data.

Among the handful of CBD companies who have achieved Self-Affirmed GRAS status, the HempFusion family of brands’ product portfolio comprises 112 SKUs including USDA Organic Certified Tinctures, proprietary FDA Drug Listed Over-The-Counter (OTC) Topicals, probiotic supplements and skin care products, a White Label division and more. With a strong focus on research and development, HempFusion Wellness has 43 products under development.

Available from more than 18,000 US retail locations across all 50 states, HempFusion Wellness products are also available in China, Mexico, Ireland, United Kingdom, United Arab Emirates, South Korea and Canada and may be purchased online from each brand’s website, The Probulin Store on Amazon.com, Alibaba’s Tmall.com, the world’s largest cross-border online marketplace, and a multitude of additional e-commerce sites.

For more information, visit www.hempfusion.com.
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FORWARD-LOOKING STATEMENTS

This news release contains forward-looking statements and forward-looking information within the meaning of Canadian securities legislation (collectively, “forward-looking statements“) that relate to HempFusion’s current expectations and views of future events. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as “will likely result”, “are expected to”, “expects”, “will continue”, “is anticipated”, “anticipates”, “believes”, “estimated”, “intends”, “plans”, “forecast”, “projection”, “strategy”, “objective” and “outlook”) are not historical facts and may be forward-looking statements and may involve estimates, assumptions and uncertainties which could cause actual results or outcomes to differ materially from those expressed in such forward-looking statements. No assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon. These statements speak only as of the date of this news release. In particular and without limitation, this news release contains forward-looking statements relating to the closing of the Private Placement and the use of proceeds from the Private Placement and the Company’s other plans, focus and objectives.

Forward-looking statements are based on a number of assumptions and are subject to a number of risks and uncertainties, many of which are beyond HempFusion’s control, which could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, the closing of the Offering, the use of proceeds of the Offering, the ability of the Company to obtain regulatory approval with respect to the Offering, the impact and progression of the COVID-19 pandemic and other factors set forth under “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in the annual information form of the Company dated March 31, 2021, and available under the Company’s profile on SEDAR at www.sedar.com. HempFusion undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law. New factors emerge from time to time, and it is not possible for HempFusion to predict all of them or assess the impact of each such factor or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Any forward-looking statements contained in this news release are expressly qualified in their entirety by this cautionary statement.

Neither the TSX nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this release.