Repayment of Loan
FinCanna has a secured loan to CTI of US$8 million. Due to re-focused business strategy by CTI, FinCanna and CTI have agreed to a restructured agreement:
FinCanna is to receive approximately US$3.9 million as repayment of CTI’s outstanding secured loan;
FinCanna is to receive an overriding royalty equivalent to 3.44% of the consolidated topline revenue of CTI in perpetuity; and,
- FinCanna will no longer need to provide additional financing to earn the 3.44% royalty in perpetuity on any of CTI’s projects, as the 3.44% overriding royalty covers all of CTI’s future projects, including the planned Palm Desert Facility
Note: The royalty in perpetuity of 3.44% is based on expected cash payments to FinCanna of US$3.9 million. The royalty rate would alter based on actual cash payments to FinCanna under a predetermined formula.
CTI’s Planned Palm Desert Facility
CTI’s refocused business strategy towards extraction, manufacturing, and brand development, instead of large-scale indoor cultivation, is a result of changing market conditions and prioritizing ROI. As a result, CTI intends to retrofit its 5,200 sq ft, building site in Palm Desert, California as a permanent extraction and premium manufacturing facility for various established premium brands such as its own Coachella Premium and for others. This planned facility would replace the existing Interim Extraction Facility in Coachella.