Mr. Andriyko Herchak reports
FINCANNA ADVANCES FINAL TRANCHE OF US$875,000 TO PORTFOLIO COMPANY QVI INC., A MULTI BRAND CANNABIS MANUFACTURER IN SONOMA COUNTY, CALIFORNIA
Fincanna Capital Corp. has advanced a third and final tranche of $875,000 (U.S.) further to its royalty agreement with QVI Inc., a cannabis-infused product manufacturer located in Sonoma county, California.
Fincanna delivered this final tranche, thereby completing its obligation to provide a total of $3-million (U.S.). The company is satisfied that the provision of this capital will support QVI in completing the remaining requirements to commence manufacturing and is in the best interest of Fincanna shareholders. Fincanna has also agreed to provide QVI a working capital bridge loan of up to $300,000 (U.S.) to ensure a seamless transition from start-up to full production. The bridge loan will have a six-month term, bearing an interest rate of 12 per cent per year, to be advanced upon commencement of production.
In consideration of the above, and as a result of certain amendments to the royalty agreement, QVI has agreed to provide Fincanna with additional compensation in the form of a supplemental payment. Under the royalty agreement, Fincanna will continue to receive its previously agreed tiered corporate royalty, adjusted based on revenues, ranging from 15 per cent to 6 per cent of QVI's total revenues, with the top royalty rate of 15 per cent on the first $20-million (U.S.) of annual sales until cumulative royalties to Fincanna of $10-million (U.S.) are achieved. The supplemental payment, when coupled with the royalty, will now ensure Fincanna receives a minimum of 35 per cent of the annual after-tax net income from QVI. The supplemental payment will accrue annually and be paid out upon certain triggering events, including: a change of control; an initial public offering; or certain other specified events of QVI.
QVI is near completion on the buildout of its 8,300-square-foot manufacturing facility, known as the Galley, in Santa Rosa, Calif. QVI expects to receive its occupancy permit from the City of Santa Rosa upon completion of certain remaining construction items, which will be followed closely by receipt of its manufacturing licence from the California Department of Public Health, Office of Manufactured Cannabis Safety. QVI expects to move into full commercial operation immediately thereafter.
QVI continues to experience strong demand for its services and projects its first 12-month revenue, once in production, to meet or exceed $10-million (U.S.). Run-rate revenue is expected to increase substantially as operations and marketing efforts utilizing the founders' wide network of industry participants are activated.
With manufacturing imminent, QVI has hired Cheriene Griffith as its director of operations to run all production, procurement, maintenance and quality assurance functions of the business, as well as to oversee strategic planning to scale growth.
Ms. Griffith, who is a U.S. Navy veteran, has worked in the food industry for over a decade, specializing in regulatory food safety and quality assurance. Previously, she entered the cannabis industry as vice-president of production at CannaCraft, a seed-to-shelf cannabis producer and distributor in Santa Rosa, Calif. Additionally, her experience in beverages, baking and dairy aligns directly with the production requirements of the Galley. Ms. Griffith graduated with a bachelor of science degree from the United States Naval Academy in Annapolis, Md., and received an executive master of business administration degree from Sonoma State University.
Ms. Griffith also serves on the North Bay Food Industry Group (FIG) board as operations subcommittee chair, helping food companies collaborate on common industry challenges. She is a member of Leadership Santa Rosa -- Class 32, serves on the board of the San Francisco chapter of the United States Naval Academy Alumni Association. Ms. Griffith has been awarded the woman in business award from North Bay Business Journal and was recognized with a 40 under 40 award in 2018.
"As the Galley approaches production, we've seen sizable escalating demand for its manufacturing services, which will benefit both QVI and Fincanna shareholders," commented Andriyko Herchak, chief executive officer of Fincanna Capital. "We continue to be very impressed with the QVI team, as they have worked through delays caused mostly by regulatory issues largely out of their control. We are all very excited to experience the transition from construction to commercial production in the very near future and look forward to future announcements on QVI's progress."
About Fincanna Capital Corp.
Fincanna Capital is a royalty company that provides growth capital to rapidly emerging private companies operating in the licensed U.S. cannabis industry. The company earns its revenue from royalties paid by its investee companies that are calculated based on a percentage of their total revenues.
Fincanna's scalable royalty model provides an attractive alternative or complement to debt or equity financing for its investee companies. Fincanna is focused on delivering high-impact returns to its shareholders by way of a strategically diversified investment portfolio.
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