Mr. Andriyko Herchak reports
FINCANNA PORTFOLIO COMPANY CTI PROVIDES POSITIVE OPERATIONAL UPDATE
Fincanna Capital Corp. has provided an operational update for its portfolio company, Cultivation Technologies Inc. (CTI), conducting business as Coachella Manufacturing (CM), an award-winning cannabis extractor and manufacturer.
As reported by the California Bureau of Cannabis Control on Thursday, March 19, 2020, governor Gavin Newsom issued a stay-at-home order to slow the spread of COVID-19. Additionally, the order identified certain services deemed to be essential, including food, prescriptions and cannabis. Accordingly, CTI as a properly licensed cannabis business is authorized to continue its normal extraction and manufacturing operations at its 5,200-square-foot state-of-the-art facility, launched in March of this year.
CTI has advised that, since commencing operations approximately one month ago, it has completed numerous production runs and is shipping finished products to all customers as scheduled with all equipment performing efficiently and to specification. CTI also advises that demand remains strong from existing customers and that they continue to onboard new customers.
CTI further reports that its facility and all staff are fully compliant with all governmental directives and guidelines relating to COVID-19 and will continue to do so. Additionally, it advise that it has not had to change any of its facilities production processes but is taking extra health precautions as directed.
Since the COVID-19 outbreak, demand for cannabis products has remained strong across the state. A recent survey by New Frontier Data confirmed this growing demand nationally, reporting that 2 per cent of consumers reported an increase in their personal consumption as a response to COVID-19.
Hank Casillas, chief operating officer and a director of CTI and former division vice-president of multibillion-dollar health care enterprise CVS Health, stated: "Although we continue to monitor the impact of COVID-19 on our business and our industry, we are encouraged by reports from our customers and their customers that demand remains strong for cannabis products in California. It has been my experience that products like alcohol, health and beauty supplies grow during recessionary times. We are excited that cannabis is being recognized as an essential service and we are proud to continue our focus on delivering high-quality and cost-effective products to the marketplace."
Andriyko Herchak, chief executive officer of Fincanna Capital, added: "We join with the millions of voices around the world in our gratitude to those frontline health care providers leading the battle against the COVID-19 epidemic. As we collectively search for a path forward, we are encouraged as the state of California identified cannabis as an essential service. This action is a powerful catalyst in stimulating economic growth across the entire cannabis supply chain. We are also encouraged that the CTI team is fully operational and continues to experience increasing demand from existing and new customers. Additionally, we wish to advise that Fincanna has a strong cash position of approximately $3-million that will allow us to meet our obligations as our investee companies generate cash flow, providing us with sustainable long-term royalty income."
To date, Fincanna has fully financed its royalty investment commitment to CTI, including a previously announced bridge loan of $250,000 (U.S.) to provide working capital as CTI ramps up its Palm Desert operations. The new facility is expected to have an estimated annual capacity of approximately $35-million (U.S.). Fincanna earns a royalty of 10 per cent of CTI's top line revenues, with 5 per cent paid in cash and 5 per cent deferred.
CTI is strategically located in the state of California, which is expected to post a record $3.1-billion (U.S.) in licensed cannabis sales for 2019, solidifying its status as the largest legal cannabis market in the world. Legal sales are up approximately 23 per cent from an approximate $2.5-billion (U.S.) in 2018, the first year of licensed cannabis sales in California, according to recent analysis by sales tracking firms Arcview Market Research and BDS Analytics.
Bob Kamm, for personal reasons, has resigned from Fincanna's board of directors, effective today. Fincanna's management and board thank Mr. Kamm for all of his contributions and wish him the very best.
About Fincanna Capital Corp.
Fincanna is a royalty company that provides growth capital to rapidly emerging private companies operating in the licensed United States 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.
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