HEXO Corp. (NYSE: HEXO) has entered into a definitive agreement with institutional investors for the purchase and sale of 14,970,062 common shares at an offering price of $1.67 per share for gross proceeds of $25 million. Hexo said it plans to use the proceeds from the offering for working capital and other general corporate purposes, including funding its research and development programs. It is expected to close the offering by December 30.

The stock plunged by over 16% in early trading to lately sell at $1.64. Prior to the announcement, the stock closed at $1.96. HEXO has also agreed to issue to the investor’s common share purchase warrants to purchase 7,485,032 common shares of the Company. The warrants will have a five-year term and an exercise price of $2.45 per share.

Hexo has had a pretty difficult couple of months as 2019 closed down. The company reported last month that the net revenue in the first quarter decreased sequentially to $14.5 million versus $15.4 million in the fourth quarter of 2019.

The net loss for the quarter was an eye-popping $62.4 million. The company attributed the increase in loss to “The larger magnitude of the company’s operations, the expanding scale production and sales in the period, and an impairment loss.” Operating expenses increased from $22 million in the first quarter of 2019 to $35.1 million for the first quarter of 2020.

In addition to the declining sales, Hexo disclosed on November 15, 2019, that there was a licensing issue in Block B of its Niagara facility, inventory from Block B was quarantined and held back from sales. The inventory was kept on the books and although destruction was a possible outcome, Hexo has said it has reassessed any risks related to such inventory and concluded that it is cleared for sale and will not be subject to destruction. Block B is now fully Licensed by Health Canada.

Securities lawyers smelling blood have begun looking for investors wanting to sue the company.