07:46:57 EDT Thu 28 Mar 2024
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LGC Capital Ltd
Symbol LG
Shares Issued 416,158,982
Close 2018-12-27 C$ 0.075
Market Cap C$ 31,211,924
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LGC Capital provides year-end review

2018-12-27 09:33 ET - News Release

Mr. John McMullen reports

LGC CAPITAL PROVIDES 2018 YEAR IN REVIEW AND GOALS FOR 2019

This year has seen a lot of positive developments in the cannabis industry and LGC Capital Ltd. has been at the forefront of some very important milestones for the industry, particularly overseas. The management team at LGC has prepared this letter for its shareholders to give an update on the milestones that the company has achieved in 2018, as well as operational updates on its investments and what is planned for 2019. LGC has grown rapidly in the global arena and will continue to seek investments in new and exciting frontiers from growing, processing, and sales and distribution of a broad range of legal cannabis products.

Overview of 2018

At the outset of 2018, the goal for LGC was to lay the groundwork for a system of interconnected cannabis companies in the legal global cannabis market in a diverse country spread. To achieve this, LGC secured and announced a number of investments into various cannabis operators, which span the supply chain from production, processing, distribution and retail. In addition to the new investments announced, a major goal of LGC was to continue to strengthen its cannabis investments which had been announced in 2017.

Over the course of this year, LGC officially closed three investments into cannabis operations, with full regulatory approval from the TSX Venture Exchange, these being Tricho-Med in Quebec, Canada, Global Canna Labs in Jamaica and Viridi Unit in Switzerland. In 2018, the company also announced two new strategic investments with fast-growing cannabis operations in Italy, which are Evolution Bnk and EasyJoint. Closing of these transactions is still subject to regulatory approval from the TSX-V and the company is working closely with the TSX-V to close these transactions. This year, LGC has also seen major operational updates from Little Green Pharma in Australia, its investment from 2017.

Where LGC stands today through its partners (assuming pending transactions under review by the TSX-V are approved), LGC has now interests in over 450,000 square feet of planted cannabis in Jamaica, Switzerland, Italy and Australia, with that number expected to increase to over 2.1 million square feet by 2021, as its portfolio companies execute their expansion plans, in addition to the anticipated licensing of Tricho-Med's operations in Quebec, Canada.

The company's partners currently sell cannabis products in over 1,000 points of sale across Switzerland and Italy under the One Premium Cannabis and EasyJoint brands, as well as medical cannabis oils in Australia under the Little Green Pharma brand. LGC's partners' branded products are available in a variety of formats, including dry cannabis flower, tinctures, oils, cosmetics, seeds and beverages.

Below is a summary of the company's investment and operational updates that it has achieved in 2018.

Investment updates:

  • January, 2018: Finalized investment into Quebec-based, premium indoor cannabis producer Tricho-Med, with $4-million debt at 10-per-cent interest for four years, convertible into 49-per-cent equity plus 5-per-cent royalty on sales, once Tricho-Med receives its cultivation licence;
  • January, 2018: Announced investment into the largest Jamaican Tier 3 licensed producer, Global Canna Labs, with $2.5-million secured debt at 7 per cent for four years, convertible into 30-per-cent equity. LGC also invested $2-million in stock in exchange for 5-per-cent royalty on Global Canna Labs' sales;
  • February, 2018: Increased stake in Australian cannabis producer Little Green Pharma from 11.91 per cent to 14.99 per cent;
  • March, 2018: Announced investment in Italian cannabis light producer Evolution Bnk, with three million euros in secured debt at 10 per cent for four years, convertible into 49-per-cent equity of Evolution Bnk. The transaction is still pending regulatory approval from the TSX-V;
  • June, 2018: Received conditional approval from the TSX-V for the investment into Global Canna Labs;
  • August, 2018: Formally closed the transaction with Global Canna Labs;
  • August, 2018: Announced investment into vertically integrated Swiss cannabis producer Viridi Unit, with three million Swiss francs in LGC stock for 30-per-cent equity in Viridi plus 5-per-cent royalty;
  • October, 2018: Submitted definitive documentation to the TSX-V regarding the investment in Viridi;
  • November, 2018: Announced investment in the largest cannabis light distributor and retail brand in Italy, EasyJoint SRL, where LGC would acquire 47 per cent of EasyJoint in a combination of cash and stock for 4,788,000 euros. The transaction is still pending regulatory approval from the TSX-V;
  • December, 2018: Received final approval from the TSX-V for the investment in Viridi and officially closed the transaction.

Operational updates:

  • April, 2018: Little Green Pharma achieved the significant milestone of its first harvest of medical cannabis as a result of its first planting in December, 2017.
  • April, 2018: Construction began at Tricho-Med in Brownsburg, Que., for its initial 34,000-square-foot, state-of-the-art, multilevel indoor cannabis production facility. The strategic location has some of the lowest of electricity in Canada, at just under four cents per kilowatt hour, giving Tricho-Med a natural cost advantage over indoor production facilities in Canada. Tricho-Med also secured 20 acres of adjacent land for further expansion of a second building, that will add another 475,000 square feet of canopy space to Tricho-Med's growing.
  • May, 2018: Little Green Pharma received a two-year extension on its medical cannabis licence from the Office of Drug Control.
  • July, 2018: Global Canna Labs formally received Tier 3 licence from the Jamaican Cannabis Licensing Agency. The licence allows the company to cultivate up to 200,000 organic medical cannabis plants at its 270,000-square-foot facility within its 6.23-acre site in Montego Bay, Jamaica.
  • August, 2018: Little Green Pharma harvested its second crop and processed it in its Perth manufacturing facility.
  • August, 2018: Little Green Pharma became the first company permitted by Australia's Therapeutic Goods Administration to sell Australian-grown medical cannabis products. This represented a great achievement for Little Green Pharma, as all of its Australian competitors are only permitted to sell imported products or to do research and development only with their medical cannabis.
  • August, 2018: Evolution Bnk planted its first mother cannabis plants at its 20,000-square-foot indoor production facility in Pavia, Italy, located 40 kilometres south of Milan, utilizing specific combinations of lighting and nutrients for each EU-compliant (European) strain that it produces in order to maximize yield and reduce growing time.
  • August, 2018: Evolution Bnk neared completion of the construction of its 70,000-square-foot greenhouse for cannabis production in Sanremo, Italy.
  • October, 2018: Little Green Pharma's products were accepted into the New South Wales statewide clinical trial for advanced cancer, while simultaneously, LGP commenced negotiations with German parties for exporting Australian products.
  • October, 2018: Viridi harvested 20,000 of its high-CBD (cannabidiol), low-THC (tetrahydrocannabinol) cannabis plants to be used as input products in Viridi's lines of dry buds, prerolls, oils and cosmetics. This harvest yielded approximately 2,700 kilograms of cannabis, with approximately 14.70-per-cent CBD and 0.58-per-cent THC, keeping it compliant with Swiss federal regulations.
  • December, 2018: Viridi's One Premium Cannabis dry buds, One 5 prerolls and One Premium oils are available in over 500 points of sale across Switzerland. Viridi uses a proprietary breeding system for its high-quality, high-CBD strains and seeds that comply with the Swiss regulations of less-than-1-per-cent THC and European Union regulations of less-than-0.2-per-cent THC.
  • December, 2018: Global Canna Labs had since planted over 16,000 cannabis plants in both its greenhouse and outdoor components and is expected to yield approximately 14,000 kilograms of dry cannabis in 2019.
  • December, 2018: Construction of Tricho-Med is nearing completion with the exterior and much of the interior completed, along with installation of electrical and heating and cooling systems being complete. Final touches to the security systems are being installed this month, making submission for the final evidence package to Health Canada ready in the first quarter of 2019. All production materials and operation flow designs are built to be in full compliance with EU-GMP (European good manufacturing practice) standards, which will give Tricho-Med access to the lucrative global medical cannabis market.
  • December, 2018: EasyJoint opened 11 flagship stores across Italy, in Rome, Milan, Piacenza, Rovato, Viadana, Bassano del Grappa, Crotone, Pantelleria and Parma, with an additional two stores under discussion. In addition to the 11 flagship stores, EasyJoint's branded CBD products are available in 450 retail points of sale across Italy. EasyJoint is in late-stage negotiations with 12 additional franchisees for expansion in 2019.
  • December, 2018: Global Canna Labs successfully completed its first harvest of two of its strains (Wedding Cake with over 24-per-cent THC and Jack Hammer with 5-per-cent THC and 6-per-cent CBD) with independent lab tested results.
  • December, 2018: Negotiations to cross pollinate LGC brands are under way, as selling EasyJoint products in Viridi's channels, as well as Viridi's products in EasyJoint's channels, are under way. EasyJoint is also evaluating exporting its store concept to other jurisdictions which allow cannabis retail.

"During 2018, LGC strengthened its team with industry professionals from the cannabis and international tobacco sectors. These individuals are advancing our corporate goal of creating a solid footprint for our global operations," stated John McMullen, chief executive officer of LGC. "The aggressive investment strategy adopted by LGC in 2018 has positioned LGC as a recognized global leader and, as such, we are now being approached by numerous potential strategic partners wanting to align with us. We believe that this coming year will see our investee companies announce many supply agreements, expand their growing operations, and ultimately accelerate revenue and profits. We also envisage a number of investee companies getting listed on various stock exchanges. I wish all of you a safe and enjoyable holiday."

                                       SUMMARY OF LGC'S INVESTMENT PORTFOLIO

Company               Location                                             Description                 LGC ownership

Global Canna Labs      Montego                                     Over 270,000 square    30-per-cent equity through
                           Bay,                     feet of cultivation in Montego Bay.        convertible debt plus 
                       Jamaica                       Global Canna Labs' licence allows         5-per-cent royalty on
                                                       for unlimited expansion through                     net sales.
                                                    multiple site locations in Jamaica.
Tricho-Med            Montreal,                   Premium low-cost producer of medical    49-per-cent equity through
                        Que.                            cannabis products. Trico-Med's         convertible debt plus 
                                            facility will be one of the first enclosed,           5-per-cent royalty
                                                     multilevel GMP cannabis producers                  on net sales.
                                      in Quebec, with the lowest input costs in Canada.
Evolution Bnk          Sanremo,           Evolution Bnk is high-tech cannabis producer,   49-per-cent equity through
                         Italy       with indoor production facilities in Pavia, Italy,  convertible debt plus 5-per-
                                    as well as greenhouse production in Sanremo, Italy.    cent royalty on net sales.
Viridi Unit             Geneva,        Viridi Unit is a vertically integrated cannabis            30-per-cent equity 
                   Switzerland   company, with over 100,000 square feet of cultivation       plus 5-per-cent royalty
                                      and selling in over 80 shops in the fast-growing                  on net sales.
                                       legal cannabis market in Switzerland and the EU.
EasyJoint                Parma,             EasyJoint is the undisputed Italian market         47 per cent of common
                         Italy            leader with approximately 85 per cent of the                        equity.
                                       distribution of the legal weed industry and has
                                              established itself as a well-known brand.
Little Green Pharma      Perth,              Little Green Pharma is the first and only     15-per-cent common equity.
                     Australia           Australian licensed cannabis producer that is
                                   permitted to grow and sell Australian-grown medical
                                                                     cannabis products.

We seek Safe Harbor.

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