CALGARY, Alberta, Feb. 21, 2020 (GLOBE NEWSWIRE) -- Top Strike Resources Corp. d.b.a. "Vencanna Ventures" (the "Corporation" or "Vencanna") (CSE:VENI; OTCQB: TPPRF) is pleased to announce a significant investment in Galenas, LLC ("Galenas Ohio"). The Corporation has purchased a Convertible Promissory Note ("GOH Note") with a face value of US$3.3 million for a cost of US$3.3 million (the "Purchase Price", the purchase of the GOH Note being the “Investment”). Including accrued interest, total outstanding under the GOH Note is approximately $3.8 million. The GOH Note was purchased from Medical Investor Holdings, LLC (d.b.a. Vertical Companies) ("Vertical"). The GOH Note is convertible, upon the holder's option and subject to regulatory approvals, into a thirty-five percent (35%) non-dilutive equity interest in Galenas Ohio. Interest on the GOH Note accrues at the rate of eight percent (8.0%) per annum, and the GOH Note matures on July 1, 2021. On July 22, 2019, Vencanna loaned Vertical $4.0 million for inventory expansion and general working capital purposes (the "Vertical Loan"). The Purchase Price was satisfied through the release and discharge of all amounts owing to the Corporation under the Vertical Loan, resulting in the retirement and settlement of the Vertical Loan.
David McGorman, Chief Executive Officer of Vencanna, stated: "Ohio is the seventh most populous state in the United States, and is one of the emerging medical cannabis markets with great growth potential. In 2019, medical cannabis sales were estimated to be US$56 million, and with the patient count now over 84,000 and continuing to expand, with local state sources forecasting 2020 revenues between $160 and $200 million. Galenas Ohio has the only certified organic grow in the state thereby enjoying premium pricing to an already robust pricing environment. We look forward to supporting Galenas Ohio as it expands its operations."
About Galenas Ohio
Galenas Ohio, a privately-owned medical marijuana company, is one of 32 licensed cultivators in the state of Ohio and the only organic licensed and operational cultivator in the state. Galenas Ohio is a vertical three-tier-grow, patient-focused, craft cannabis cultivator located in Akron, Ohio. The 10,0000 square foot facility won Architect Newspaper’s 2019 Best Green Building Award, describing the facility as a ”pharmaceutical-grade environment that meets highly technical specifications” providing “a better-quality product with greater yields while using 90 percent less water and 35 percent less energy than other cannabis facilities”. The facility currently has 4,000 square feet of cultivation and they are in the midst of adding another 1,500 square feet and there is potential expansion on the site beyond the current facility. The company received their Certificate of Operation last April and are already in 30 Ohio dispensaries. The Galenas Ohio leadership team is comprised of professionals from several fields including horticulture, manufacturing, law, sales and marketing, supply chain management, quality control, and product development.
Over the past year, the cannabis market has been incredibly challenging and volatile, though Vencanna has been able to weather the storm through prudent investments and cost management. The Corporation currently has $4 million in cash and also holds investments in Galenas NJ and Galenas Ohio which have a carrying value of approximately $5.4 million. Giving no upside to these investments, nor to the Corporation’s public listing, the Corporation’s share value is over $0.05. Since inception, the Corporation has collected $1 million in interest and other income plus has generated another $625 thousand in accrued interest. While the cannabis markets have been challenging, valuations are now much more attractive and there’s been a number of US operators showing quarter over quarter growth in both revenues and cash flows. Further positive developments in the US include the passing in Congress last year of the SAFE Banking Act, with nearly half the GOP caucus voting in support of the bill. In light of this, the Corporation continues to review opportunities in state compliant jurisdictions and is confident that it will successfully build shareholder value. Further, our insiders continue to support the Corporation having purchased over 5 million shares the past year, and the Corporation’s NCIB has acquired another 2.39 million shares.
Smoke Wallin, a director of Vencanna, is the Vice Chairman of Vertical. Mr. Wallin has abstained from voting at the director's meeting of Vencanna regarding the Investment.
On September 24, 2018, the Corporation announced the completion of a recapitalization financing, the appointment of a new management team and board of directors and commencement of trading on the CSE. The transactions have transitioned the Corporation from an oil and gas issuer to a merchant capital firm, rebranded as "Vencanna Ventures Inc.". The recapitalized Corporation aims to be a go-to capital provider for early-stage global cannabis initiatives with an emphasis on strong management operating in state compliant jurisdictions with barriers to entry. The Corporation looks to provide investors with a diversified, high-growth, cannabis investment strategy through strategic investments focused through-out the value chain (cultivation, processing and distribution, and including ancillary businesses).
For further information regarding this news release, please contact:
Chief Executive Officer and Director
Vice President, Originations
Top Strike Resources Corp.
Suite 310, 250 6th Ave. S.W.
Calgary, AB T2P 3H7
This news release may include forward-looking statements including opinions, assumptions, estimates, the Corporation's assessment of future plans and investment strategy, and, more particularly, the business plan of the Corporation including future global cannabis investments, the market for medical cannabis in the United States, the state of the cannabis market, the Investment in Galenas Ohio and expectations regarding Galenas Ohio's business plans, including increasing the size of its cultivation facility and the demand for its products. When used in this news release, the words "will," "anticipate," "believe," "estimate," "expect," "intent," "may," "project," "should," and similar expressions are intended to be among the statements that identify forward-looking statements. The forward-looking statements are founded on the basis of expectations and assumptions made by the Corporation, including the impact of increasing competition; timing and amount of capital expenditures; the legislative and regulatory environments of the jurisdictions where the Corporation and its investments will carry on business, have operations or plan to have operations; the ability of the Corporation to enter into contracts with companies to provide financing on acceptable terms; conditions in general economic and financial markets; the ability of the Corporation's investments to execute on their business plan; and the Corporation's ability to obtain additional financing on satisfactory terms or at all. Forward-looking statements are subject to a wide range of risks and uncertainties, and although the Corporation believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will be realized.
Any number of important factors could cause actual results to differ materially from those in the forward-looking statements including, but not limited to, changes to global cannabis laws, how the developing U.S. legal regime will impact the cannabis industry, the ability of the Corporation to implement its corporate strategy, the state of domestic and international capital markets, the ability to obtain financing, changes in general market conditions and other factors more fully described from time to time in the reports and filings made by the Corporation with securities regulatory authorities. Except as required by applicable laws, the Corporation does not undertake any obligation to publicly update or revise any forward-looking statements.
To the knowledge of Vencanna’s management, Vencanna’s investments, including Galenas Ohio, are not in any material non-compliance with applicable licensing requirements and the regulatory framework enacted by the states in which such investments operate.
Neither the Canadian Securities Exchange nor its Market Regulator (as that term is defined in the policies of the Canadian Securities Exchange) accepts responsibility for the adequacy or accuracy of this news release.