Our royalty investment forms part of a whole capital solution for our investee companies. We provide capital investment for a percentage of future revenues or profits and currently have invested in the following four companies.
Due to refocused business strategy by Cultivation Technologies Inc. (“CTI”), FinCanna and CTI have agreed to a restructured agreement whereby FinCanna is to receive the following as repayment of CTI’s outstanding secured loan: approximately US$3.9 million cash from the sale of CTI’s property in Coachella, expected to close in February 2019; and an overriding royalty equivalent to 3.44% of the consolidated topline revenue of CTI in perpetuity. CTI’s is refocusing towards extraction, manufacturing, and brand development and plans to retrofit its 5,200 sq ft, building site in Palm Desert, California as a permanent extraction and premium manufacturing facility to replace its Interim Extraction Facility in Coachella. FinCanna earns a 50% profit sharing interest in the Interim Extraction facility until it relocates to Palm Desert, which is expected to occur by June 2019.
Green Compliance offers a state-of-the-art enterprise compliance and point-of-sale software solution (“ezGreen”) for licensed medical cannabis dispensaries and cultivators. Their target market consists of 33 states in the U.S. which have legalized medical cannabis. Upon completion of funding, FinCanna earns a perpetual royalty equal to 10% of consolidated gross revenues of ezGreen, subject to certain buy-back options.
Refined Resin Technologies
Refined Resin Technologies, based in Oakland California, is a cannabinoid research and refinery company that will provide B2B and B2C products and services to licensed dispensaries and distributors in the medical cannabis supply chain. Upon completion of funding, FinCanna will earn a perpetual royalty ranging from 16% to 7% of Refined Resin’s consolidated annual revenues, subject to certain buy-back options, with an effective royalty rate of 11.75% on the first US$160 million of Refined Resin’s consolidated annual revenues.
QVI, Inc. is a cannabis infused product manufacturer located in Sonoma, California and operating as “The Galley”. QVI is currently refitting its 8,300 square foot facility with dedicated spaces for a large-scale commercial kitchen for baked goods, chocolate products and a hard candy and gummy line. The facility will also have a designated area for contract manufacturing for additional products. Upon completion of funding, FinCanna will earn a perpetual royalty ranging from 15% to 6% of QVI’s annual revenues, subject to certain buy-back options.