Announcement PDF THE CALMER CO INTERNATIONAL LIMITED ACN 169 441 874 ENTITLEMENT ISSUE PROSPECTUS For a pro-rata non-renounceable entitlement issue of three (3) fully paid ordinary shares in the capital of the Company (Share) for every eight (8) Shares held by eligible shareholders at an issue price of $0.003 per Share to raise up to approximately $534,125 (together with one (1) free attaching option (Option) for every three (3) Shares issued, exercisable at $0.006 per Option on or before 30 June 2026) (the Offer). The Offer is partially underwritten. Refer to Section 1.7 for details regarding the underwriting and Section 6.4.2 for summaries of the terms of the Underwriting Agreements. IMPORTANT NOTICE This document is important and should be read in its entirety. If, after reading this Prospectus you have any questions about the Securities being offered under this Prospectus or any other matter, then you should consult your professional advisers without delay. The Securities offered by this Prospectus should be considered as highly speculative. IMPORTANT NOTICE This Prospectus is dated 28 June 2023 and was lodged with the ASIC on that date. The ASIC, ASX and their respective officers take no responsibility for the contents of this Prospectus or the merits of the investment to which this Prospectus relates. No Securities may be issued on the basis of this Prospectus later than 13 months after the date of this Prospectus. No person is authorised to give information or to make any representation in connection with this Prospectus, which is not contained in this Prospectus. Any information or representation not so contained may not be relied on as having been authorised by the Company in connection with this Prospectus. It is important that investors read this Prospectus in its entirety and seek professional advice where necessary. The Securities offered by this Prospectus should be considered as highly speculative. Applications for Securities offered pursuant to this Prospectus can only be made by an original Entitlement and Acceptance Form or Shortfall Application Form. This Prospectus is a transaction specific prospectus for an offer of continuously quoted securities (as defined in the Corporations Act) and has been prepared in accordance with section 713 of the Corporations Act. It does not contain the same level of disclosure as an initial public offering prospectus and is only required to contain information in relation to the effect of the issue of securities on a company and the rights attaching to the securities. It is not necessary to include general information in relation to all of the assets and liabilities, financial position, profits and losses or prospects of the issuing company. Representations contained in this Prospectus are made taking into account that the Company is a disclosing entity for the purposes of the Corporations Act and certain matters are publicly available information or may reasonably be expected to be known to investors and professional advisers whom prospective investors may consult. No Investment Advice The information contained in this Prospectus is not financial product advice or investment advice and does not take into account your financial or investment objectives, 4600-05/3215162_20 financial situation or particular needs (including financial or taxation issues). You should seek professional advice from your accountant, financial adviser, stockbroker, lawyer or other professional adviser before deciding to subscribe for Securities under this Prospectus to determine whether it meets your objectives, financial situation and needs. Forward-looking statements This Prospectus contains forwardlooking statements which are identified by words such as ‘may’, ‘could’, ‘believes’, ‘estimates’, ‘targets’, ‘expects’, or ‘intends’ and other similar words that involve risks and uncertainties. These statements are based on an assessment of present economic and operating conditions, and on a number of assumptions regarding future events and actions that, as at the date of this Prospectus, are expected to take place. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of the Company, the Directors and the Company’s management. The Company cannot and does not give any assurance that the results, performance or achievements expressed or implied by the forwardlooking statements contained in this Prospectus will actually occur and investors are cautioned not to place undue reliance on these forwardlooking statements. The Company has no intention to update or revise forward-looking statements, or to publish prospective financial information in the future, regardless of whether new information, future events or any other factors affect the information contained in this Prospectus, except where required by law. These forward-looking statements are subject to various risk factors that could cause the Company’s actual results to differ materially from the results expressed or anticipated in these statements. These risk factors are set out in Section 5. Overseas shareholders This Offer does not, and is not intended to, constitute an offer in any place or jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer or to issue this Prospectus. It is not practicable for the Company to comply with the securities laws of overseas jurisdictions having regard to the number of overseas Shareholders, the number and value of Shares these Shareholders would be offered and the cost of complying with regulatory requirements in each relevant jurisdiction. Accordingly, the Offer is not being extended and Securities will not be issued to Shareholders with a registered address which is outside Australia or New Zealand. For further information on overseas Shareholders please refer to Section 2.10. Continuous disclosure obligations The Company is a “disclosing entity” (as defined in section 111AC of the Corporations Act) for the purposes of section 713 of the Corporations Act and, as such, is subject to regular reporting and disclosure obligations. Specifically, like all listed companies, the Company is required to continuously disclose any information it has to the market which a reasonable person would expect to have a material effect on the price or the value of the Securities. This Prospectus is intended to be read in conjunction with the publicly available information in relation to the Company which has been notified to ASX and does not include all of the information that would be included in a prospectus for an initial public offering of securities in an entity that is not already listed on a stock exchange. Investors should therefore have regard to the other publicly available information in relation to the Company before making a decision whether or not to invest. Having taken such precautions and having made such enquires as are reasonable, the Company believes that it has complied with the general and specific requirements of ASX as applicable from time to time throughout the three months before the issue of this Prospectus which required the Company to notify ASX of information about specified events or matters as they arise for the purpose of ASX making that information available to the stock market conducted by ASX. Please refer to Section 6.2 for further details. Target Market Determination In accordance with the design and distribution obligations under the Corporations Act, the Company has 1 determined the target market for the offer of Options issued under this Prospectus. The Company and the Lead Manager will only distribute this Prospectus to those investors who fall within the target market determination (TMD) as set out on the Company’s website (www.thecalmerco.com). By making an application under the Offer, you warrant that you have read and understood the TMD and that you fall within the target market set out in the TMD. Electronic Prospectus A copy of this Prospectus can be downloaded from the website of the Company at www.thecalmerco.com. If you are accessing the electronic version of this Prospectus for the purpose of making an investment in the Company, you must be an Australian or New Zealand resident and must only access this Prospectus from within Australia or New Zealand. The Corporations Act prohibits any person passing onto another person an Application Form unless it is attached to a hard copy of this Prospectus or it accompanies the complete and unaltered version of this Prospectus. You may obtain a hard copy of this Prospectus free of charge by contacting the Company by phone on +61 429 210 031 during office hours or by emailing the Company at investors@thecalmerco.com. The Company reserves the right not to accept an Application Form from a person if it has reason to believe that when that person was given access to the electronic Application Form, it was not provided together with the electronic Prospectus and any relevant supplementary or replacement prospectus or any of those documents were incomplete or altered. Company Website No documents or other information available on the Company’s website is incorporated into this Prospectus by reference. Financial forecasts The Directors have considered the matters set out in ASIC Regulatory Guide 170 and believe that they do not have a reasonable basis to forecast future earnings on the basis that the operations of the Company are inherently uncertain. Accordingly, any forecast or projection information would contain such a broad range of potential outcomes and possibilities that it is not possible to prepare a reliable best estimate forecast or projection. 4600-05/3215162_20 Clearing House Electronic SubRegister System (CHESS) and Issuer Sponsorship The Company will apply to participate in CHESS, for those investors who have, or wish to have, a sponsoring stockbroker. Investors who do not wish to participate through CHESS will be issuer sponsored by the Company. Electronic sub-registers mean that the Company will not be issuing certificates to investors. Instead, investors will be provided with statements (similar to a bank account statement) that set out the number of Securities issued to them under this Prospectus. The notice will also advise holders of their Holder Identification Number or Security Holder Reference Number and explain, for future reference, the sale and purchase procedures under CHESS and issuer sponsorship. Electronic sub-registers also mean ownership of securities can be transferred without having to rely upon paper documentation. Further monthly statements will be provided to holders if there have been any changes in their security holding in the Company during the preceding month. the relevant contact number set out in this Prospectus. Collection, maintenance and disclosure of certain personal information is governed by legislation including the Privacy Act 1988 (as amended), the Corporations Act and certain rules such as the ASX Settlement Operating Rules. You should note that if you do not provide the information required on the application for Securities, the Company may not be able to accept or process your application. Enquiries If you are in any doubt as to how to deal with any of the matters raised in this Prospectus, you should consult with your broker or legal, financial or other professional adviser without delay. Should you have any questions about the Offers or how to accept the Offer please call the Company Secretary on +61 429 210 031. Definitions and Time Unless the contrary intention appears or the context otherwise requires, words and phrases contained in this Prospectus have the same meaning and interpretation as given in the Corporations Act and capitalised terms have the meaning given in the Glossary in Section 8. All references to time in this Prospectus are references to Australian Western Standard Time. Privacy statement If you complete an Application Form, you will be providing personal information to the Company. The Company collects, holds and will use that information to assess your application, service your needs as a Shareholder and to facilitate distribution payments and corporate communications to you as a Shareholder. The information may also be used from time to time and disclosed to persons inspecting the register, including bidders for your securities in the context of takeovers, regulatory bodies including the Australian Taxation Office, authorised securities brokers, print service providers, mail houses and the share registry. You can access, correct and update the personal information that we hold about you. If you wish to do so, please contact the share registry at 2 CORPORATE DIRECTORY Directors Share Registry* James Dack Chairman Automic Share Registry Level 2, 267 St Georges Terrace Perth WA 6000 1300 288 664 (Local) +61 2 9698 5414 (International) Zane Yoshida Executive Director Anthony Noble Managing Director Legal Advisers Griffon Emose Non-Executive Director James Tonkin Non-Executive Director Company Secretary Steinepreis Paganin Lawyers and Consultants Level 4, The Read Buildings 16 Milligan Street PERTH WA 6000 Jay Stephenson Registered Office Lead Manager 96 Victoria Street West End QLD 4101 Novus Capital Limited Level 20, 68 Pitt Street Sydney NSW 2000 Telephone: + 61 429 210 031 Email: investors@thecalmerco.com Website: www.thecalmerco.com/ Auditor Hall Chadwick Qld Level 4, 240 Queen Street Brisbane Qld 4000 *This entity is included for information purposes only. It has not been involved in the preparation of this Prospectus and has not consented to being named in this Prospectus. 4600-05/3215162_20 3 TABLE OF CONTENTS 1. KEY OFFER INFORMATION........................................................................................ 5 2. DETAILS OF THE OFFER ............................................................................................ 14 3. PURPOSE AND EFFECT OF THE OFFER ..................................................................... 21 4. RIGHTS AND LIABILITIES ATTACHING TO SECURITIES ............................................. 26 5. RISK FACTORS ........................................................................................................ 30 6. ADDITIONAL INFORMATION .................................................................................. 39 7. DIRECTORS’ AUTHORISATION ................................................................................ 55 8. GLOSSARY .............................................................................................................. 56 4600-05/3215162_20 4 1. KEY OFFER INFORMATION 1.1 Timetable Lodgement of Prospectus with the ASIC Wednesday, 28 June 2023 Lodgement of Prospectus and Appendix 3B with ASX (premarket open) Wednesday, 28 June 2023 Ex date Monday, 3 July 2023 Record Date for determining Entitlements Tuesday, 4 July 2023 Offer opening date, Prospectus sent out to Shareholders and Company announces this has been completed Last day to extend the Closing Date Closing Date as at 5:00pm* Friday, 7 July 2023 Tuesday, 18 July 2023 Friday, 21 July 2023 Securities quoted on a deferred settlement basis Monday, 24 July 2023 ASX, Lead Manager and Underwriters notified of under subscriptions Tuesday, 25 July 2023 Underwriters subscribe for Shortfall under terms of Underwriting Agreements (if required) Wednesday, 26 July 2023 Issue date and lodgement of Appendix 2A with ASX applying for quotation of the Securities Wednesday, 26 July 2023 Quotation of Securities issued under the Offer* Thursday, 27 July 2023 *The Directors may extend the Closing Date by giving at least 3 Business Days’ notice to ASX prior to the Closing Date. Accordingly, the date the Securities are expected to commence trading on ASX may vary. 1.2 Key statistics of the Offer Shares Full Subscription Offer Price per Share Entitlement Ratio (based on existing Shares) $0.003 3:8 Shares currently on issue1 474,777,593 Shares to be issued under the Offer²,³ 178,041,597 Gross proceeds of the issue of Shares $534,125 Shares on issue post-Offer 652,819,190 Lead Manager Shares to be issued under the Lead Manager Offer (subject to Shareholder approval at the General Meeting) 10,000,000 Shares to be issued following the General Meeting and subject to receipt of Shareholder Approval 130,000,001 Shares on issue post-Offer and General Meeting 792,819,191 Shares proposed to be issued under the Firm Commitment Letters and related party Underwriting Agreements (subject to Shareholder approval)5 4600-05/3215162_20 5,341,250 5 Full Subscription Total Shares on issue 798,160,441 Notes: 1. The Shares currently on issue comprise 444,777,593 Shares and includes 30,000,000 Shares which are subject to escrow as follows: (i) 10,000,000 Shares which are escrowed until 9 February 2024 at an issue price of $0.02 per Share; (ii) 10,000,000 Shares which are escrowed until 9 August 2024 at an issue price of $0.02 per Share; and (iii) 10,000,000 Shares which are escrowed until 9 February 2025 at an issue price of $0.02 per Share. Refer to Section 1.4 for further details regarding the Shares subject to escrow. 2. Assuming the Full Subscription of $534,125 is achieved under the Offer. 3. Refer to Section 4.1 for the terms of the Shares. 4. As announced on 19 May 2023, the Company held a General Meeting on 22 June 2023 (General Meeting) whereby it received Shareholder approval for the issue of the Shares set out in 4(i) – 4(iii) below. Refer to the Company’s Notice of General Meeting dated 19 May 2023 for further information and the Results of Meeting dated 22 June 2023. (i) 116,666,667 Placement Shares: as announced on 19 April 2023, the Company raised $500,000 (before costs) by way of a placement of 166,666,667 Shares at an issue price of $0.003 per Share (Placement Shares) to sophisticated and professional investors (Placement). (ii) 20,000,000 to Novus Capital comprising the Placement success fee Shares and the Offer success fee Shares to Novus Capital. Refer to Section 6.4.1 for further information on the fees payable to Novus Capital in respect of the Offer. (iii) 3,333,334 Shares to directors James Tonkin and Griffon Emose, in aggregate, in lieu of Director Fees. All of these Shares in paragraph 4(i) – (iii) will be issued after the Record Date. 5. This is the maximum number of Shares to be issued for fees under the Firm Commitments and Underwriting Agreements. Refer to Section 1.8 for further details on the Firm Commitments and Section 1.7 for further information regarding the Underwriting Agreements. Options Full Subscription1 Offer Price per New Option nil Option Entitlement Ratio (based on Shares subscribed for) 1:3 Options currently on issue 19,575,200 New Options to be issued under the Offer² 59,347,199 Gross proceeds of the issue of New Options nil Options on issue post-Offer 78,922,399 Lead Manager Options to be issued under the Lead Manager Offer (subject to Shareholder approval at the General Meeting)³ 3,333,333 4600-05/3215162_20 6 Full Subscription1 Options to be issued following the General Meeting and subject to receipt of Shareholder Approval³ 123,888,889 Options on issue post-Offer and General Meeting 206,144,621 Options proposed to be issued under the Firm Commitment Letters and related party Underwriting Agreements (subject to Shareholder approval)4 16,023,750 Options proposed to be issued to Novus Capital (subject to Shareholder approval) 5 Total Options on issue 2,401,250 224,569,621 Notes: 1.3 1. Assuming the Full Subscription of $534,125 is achieved under the Offer. 2. Refer to Section 4.2 for the terms of the New Options. 3. As noted above, at the General Meeting, the Company received Shareholder approval for the issue the following Options: (i) 55,555,556 free-attaching Options in connection with the Placement. (ii) 65,000,000 broker Options to be issued to Novus Capital as part consideration for the services provided by Novus Capital to manage the Placement. These Options will be issued on the same terms as the New Options. Refer to Section 4.2 for the terms of the New Options. (iii) 6,666,666 Options to Novus Capital comprising the Placement success fee Options and the Offer success fee Options. Refer to Section 6.4.1 for further information on the fees payable to Novus Capital in respect of the Offer. These Options will be issued on the same terms as the New Options. Refer to Section 4.2 for the terms of the New Options. 4. This is the maximum number of Options proposed to be issued for fees under the Firm Commitments and Underwriting Agreements. Refer to Section 1.8 for further details on the Firm Commitments and Section 1.7 for further information regarding the Underwriting Agreements. 5. Refer to Section 6.4.1 for further information on the fees payable to Novus Capital. These Options will only be issued on the Shortfall placed by Novus Capital. Key Risk Factors Prospective investors should be aware that subscribing for Securities involves a number of risks and an investment in the Company should be considered as highly speculative. The future performance of the Company and the value of the Securities may be influenced by a range of factors, many of which are largely beyond the control of the Company and the Directors. The key risks associated with the Company’s business, the industry in which it operates and general risks applicable to all investments in listed securities and financial markets generally are set out in Section 5. The predominant risks relating to the Company and the Offer are summarised below: Risk Description Potential for dilution In addition to potential control impacts set out in Section 1.9, Shareholders should note that if they do not participate in the Offer, their holdings are likely to be diluted by approximately 4600-05/3215162_20 7 Risk Description 27.27% (as compared to their holdings and number of Shares on issue as at the date of this Prospectus). No immediate dilution will occur as a result of the issue of New Options under this Prospectus. However subsequent exercise of any or all of the New Options will result in dilution. Assuming all New Options offered pursuant to this Prospectus are issued and exercised into Shares, Shareholders who do not participate in the Offer, are likely to be diluted by an aggregate of approximately 27.27% (as compared to their holdings and number of Shares on issue as at the date of the Prospectus). It is not possible to predict what the value of the Company, a Share or an Option will be following the completion of the Offer being implemented and the Directors do not make any representation as to such matters. The last trading price of Shares on ASX prior to the Prospectus being lodged of $0.003 is not a reliable indicator as to the potential trading price of Shares after implementation of the Offer. Control risk James Dack is currently the largest Shareholder of the Company and has a relevant interest in the Company of 6.32%. Assuming Mr Dack takes up his full Entitlement, fulfils his underwriting obligations under the Underwriting Agreements, and no other Shareholders accept their entitlements, James Dack’s voting power in the Company could be as high as 9.11%. Ian Leete, Helen Leete and Mial Enterprises Pty Limited (Mial Enterprises) are substantial shareholders of the Company and have a relevant interest of 5.97%. Assuming the parties take up their full Entitlement and no other Shareholders accept their entitlements, Ian Leete, Helen Leete and Mial Enterprises’ aggregate voting power in the Company could be as high as 8.03%. Ace Property Holdings Pty Ltd (Ace Property) is a substantial Shareholder of the Company with a 5.48% a relevant interest. Assuming Ace Property takes up its full Entitlement and no other Shareholders accept their entitlements, its voting power in the Company could be as high as 7.38%. James Dack, Ian Leete and Ace Property’s significant interests in the capital of the Company means that they are in a position to potentially influence the financial decisions of the Company, and their interests may not align with those of all other Shareholders. Natural disasters 4600-05/3215162_20 Fiji is vulnerable to natural disasters, as underlined by Tropical Cyclone Winston in early 2016. Natural disasters are capable of causing severe damage to South Pacific Elixirs Pty Limited (SPE Fiji) Farms and its third-party farmer operations. The Company plans to diversify part of its third-party farmer supply to a wider geographic area within Fiji and the Pacific. 8 Risk Description Additional requirements for capital The Company’s capital requirements depend on numerous factors. Depending on the Company’s ability to generate income from its operations, the Company may require further financing in addition to amounts raised under the Offer. Any additional equity financing will dilute shareholdings, and debt financing, if available, may involve restrictions on financing and operating activities. If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations. There is however no guarantee that the Company will be able to secure any additional funding or be able to secure funding on terms favourable to the Company. Going Concern The Company’s Annual Financial Report for the year ending 30 June 2022 and the Company’s interim financial report for the half year ended 31 December 2022 (together, Financial Report) include a note on the financial condition of the Company and the possible existence of a material uncertainty about the Company’s ability to continue as a going concern. Notwithstanding the ‘going concern’ qualification included in the Financial Report, the Directors believe that upon the successful completion of the Offer, the Company will have sufficient funds to adequately meet the Company’s current exploration commitments and short-term working capital requirements. However, it is highly likely that further funding will be required to meet the medium to long-term working capital costs of the Company. In the event that the Offer is not completed successfully there is significant uncertainty as to whether the Company can continue as a going concern which is likely to have a material adverse effect on the Company’s activities. Threat of kava substitutes Political risk 4600-05/3215162_20 Naturally, to the extent that other natural substitutes for kava are identified, the kava market potential could be compromised. While this is a global issue largely outside the Company’s control, the Company still makes an effort to influence this process through: (a) actively promoting and educating the public on kava’s benefits and efficacy, in each market the Company sells in; (b) an emphasis on product innovation to continuously develop new and value-added products for introduction to the market; and (c) the acquisition of Danodan Hempworks LLC (USA) and the associated patents for extraction of CBD rich liquid dispersible extracts from industrial hemp. Fiji has a history of political instability which has the potential to threaten the Calmer Co International Limited Group’s local production. Although the Calmer Co International Limited Group’s board and management assess the political risk for its operations throughout Fiji, as well as those of its partners, as low, the Calmer Co International Limited Group nevertheless 9 Risk Description has implemented or will implement several strategies to mitigate this, including: 1.4 (a) the development of a close working relationship with the relevant authorities whilst always maintaining a neutral stance politically; and (b) maintenance of close ties and a mutually beneficial relationship with the wider community. Directors’ Interests in Securities The relevant interest of each of the Directors in the Securities of the Company as at the date of this Prospectus, together with their respective Entitlement, is set out in the table below: Director Shares Options Performance Rights Share Entitlement New Option Entitlement $ James Dack 30,000,000¹ Nil Nil 11,250,000 3,750,000 $33,750 Zane Yoshida 16,946,683² Nil Nil 6,355,006 2,118,335 $19,065 Anthony Noble 1,996,078³ Nil Nil 748,529 249,510 $2,246 Griffon Emose Nil Nil Nil Nil Nil Nil James Tonkin5 1,469,507 Nil Nil 551,0656 183,688l6 Nil 6 Notes: 1. Comprising 10,000,000 Shares issued under the Company’s Incentive Plan (Incentive Plan) subject to escrow for a period of 12 months from the date of issue, 10,000,000 Shares issued under the Incentive Plan subject to escrow for a period of 18 months from the date of issue and 10,000,000 Shares issued under the Incentive Plan subject to escrow for a period of 24 months from the date of issue, all at an issue price of $0.02 per Share. 2. Comprising 2,551,959 Shares held directly by Zane Yoshida and 14,394,724 Shares held indirectly through Yoshida Holdings Pte Ltd of which Mr Yoshida is a director. 3. Held indirectly through Tanano Pty Ltd <The Noble Family A/C> of which Dr Noble is a director. 4. As noted in Section 1.2 above, the Company received Shareholder approval at the General Meeting for the issue of 1,666,667 Shares to Griffon Emose in lieu of director fees. These Shares will not be issued before the Record Date. 5. As noted in Section 1.2 above, the Company received Shareholder approval at the General Meeting for the issue of 1,666,667 Shares to James Tonkin in lieu of director fees. These Shares will not be issued before the Record Date. 6. James Tonkin is a resident of the United States of America and is therefore not eligible to participate in the Offer. Ref