Top Strike Resources Corp. d.b.a. “Vencanna Ventures” is pleased to announce that it entered into a definitive unit exchange agreement (“Definitive Agreement“) with Cannavative Group LLC (“Cannavative“) on April 25th, 2022, pursuant to which Vencanna would acquire all of the issued and outstanding membership units of Cannavative in an all-share exchange (the “Transaction“). Vencanna will acquire all the common shares in the capital of Cannavative through the issuance of 240,000,000 Shares and the issuance of 120,000,000 Share purchase warrants (“Warrants“), each such Warrant being exercisable for one Share at an exercise price of US$0.075 for a period of 18 months following the date of issuance. Further, pursuant to the Transaction, approximately US$4.0 million of Cannavative’s debt will convert into 80,000,000 Shares and 32,000,000 Warrants, of which 16,000,000 will be exercisable for one Share at an exercise price of US$0.05 for a period of 9 months following the date of issuance and 16,000,000 will be exercisable for one Share at an exercise price of US$0.075 for a period of 18 months following the date of issuance. The remaining Cannavative debt of approximately US$2.1 million will be paid out at closing.
The Transaction is expected to constitute a “Fundamental Change” pursuant to the policies of the Canadian Securities Exchange (the “CSE“) and will be subject to the acceptance of the CSE and the approval of shareholders of Vencanna. Vencanna intends to seek approval of the Transaction by way of written resolution from shareholders holding not less than 50% plus one Share. It is anticipated that the Transaction will be completed the summer of 2022.
Management and the board of directors will be comprised of professionals from both parties, creating a dynamic, integrated team, with the full capability to execute the go-forward business plan, which includes further market penetration in the state of Nevada, acquisition opportunities both in-state and out-of-state, and applying for licenses in new markets. The Transaction is truly transformative to Vencanna, converting the company from an investment company into a U.S. based cannabis operating company.
Post Transaction, it is expected that the Company will have 536 million common shares and 209 million warrants outstanding, no debt, and over $5 million in cash. The estimated common shares outstanding assumes the Company elects its Forced Conversion Right upon a change of control, at a conversion price of US$.05, regarding its US$1.3 million Convertible Debenture issued July 3, 2020. It is anticipated that at closing of the Transaction, the board and senior management of the merged company will hold 33% of the common shares and 36% on a fully diluted basis.
David McGorman, Vencanna’s CEO, commented “It’s been our goal to convert from an investment company to a well-established cannabis operating company, and Cannavative is the transformative transaction that Vencanna has been looking for. Being one of the first companies in Nevada to be awarded both a cultivation and manufacturing license, they’ve developed deep roots in one of the most dynamic recreational states in the U.S. Their product development and talent pool will be easily exportable into new markets as cannabis reform in the U.S. continues to expand. We look forward to onboarding the Cannavative team.”
Jason Crum, Cannavative’s President and Chief Revenue Officer, commented “Cannavative is thrilled to join forces with Vencanna, a partner that brings capital to fuel our continued growth and industry expertise to expand our footprint beyond Nevada. Vencanna’s relationships, such as their recently announced opportunity in New Jersey, the newest state to initiate recreational sales, is a perfect example of how together we can exploit new frontiers. Combined, we’ll be able to push the boundaries of innovation in cannabis, with a continued focus on delivering the highest quality products to consumers.”
David McGorman, CEO & Director.
Mr. McGorman is a co-founder, and current CEO and director of Vencanna. He has over 25 years of experience in the financial industry providing M&A and corporate structuring advice to his clients, as well as leading their equity issues and debt placements. Prior to Vencanna, Mr. McGorman held senior positions at The Chase Manhattan Bank, and numerous Canadian investment banking firms including CEO of Jennings Capital Inc., and Vice-Chairman of Research Capital Corp. Mr. McGorman holds a Hon’s B.Sc. in Theoretical Physics from the University of Guelph, and an M.B.A. from the DeGroote School of Business.
Jason Crum, Chief Revenue Officer
Mr. Crum is the current President and Chief Revenue Officer of Cannavative. He has over 20 years of diversified CPG/FMCG background in alcohol sales management, including beer and wine with MillerCoors and Treasury Wine Estates, where he was directly responsible for supply, distribution, and brand building. His skill set includes developing high performing teams, maximizing strategic analytics, and streamlining efficiencies. Since joining Cannavative in 2019, Jason has been instrumental in increasing Cannavative’s Nevada dispensary penetration and sales growth. Mr. Crum is a graduate of UT Austin.
Ross Kline
Ross Kline is a co-founder of Cannavative and is currently the business’s CEO and Chairman. Prior to establishing the business in 2013, Ross was the founder & CEO of Logistics & Distribution Services, a freight brokerage and trucking business serving blue chip clients including Nestle, PetSmart and Amazon. In 2016, Logistics & Distribution Services was sold to Arcbest Company, a $1.75 billion freight and premium logistics company. Mr. Kline holds a B.S. in Logistics from Penn State University.
Jon Sharun
Mr. Sharun is the current Executive Chairman and interim CFO of Vencanna. He has over 20 diverse years of international investment, real estate, branding and business development experience. He is the founder and Managing Partner of Venexo Capital, a boutique private equity firm that has raised in excess of $100 million with investments in healthcare, hospitality and real estate. Venexo has been an early investor into the cannabis sector with over 50 international placements. Jon sits on many private, public and NFP boards, and is both a Top Forty Under 40 and a Top 100 in Finance award winner. Mr. Sharun holds an MBA, CPA, CSA, LEED AP, and ICD.D
W. Scott McGregor, Independent Director
Mr. McGregor is currently a director of Vencanna and the Managing Director at Invest Alberta Corp., a Crown corporation dedicated to attracting investment and supporting trade to the province of Alberta. He’s a seasoned corporate finance professional with over 20 years of investment banking and corporate development experience. Mr. McGregor holds a B.A. from Queens University and a M.B.A. from the Rotman School of Management.
Dr. Scott Wrye MD, Independent Director
Dr. Wrye is a private practicing physician and co-founder and director of Cannavative. Scott was an early supporter of medical cannabis, educating and working directly with many patients in northern Nevada for their legal access of medical cannabis. In addition to his community support, Scott has been instrumental in helping Cannavative develop their products and brands. Dr. Wrye is a Cosmetic, Plastic & Reconstructive Surgery Specialist based in Reno Nevada. He’s a graduate of New York State University, College of Medicine.
Cannavative will also nominate one additional independent director, acceptable to the parties, for consideration.
Cannavative is a multiple award-winning cultivator and processor in Nevada, including winning Leaflink’s Top Brand in Nevada in 2021, a gold and silver medal at the 2020 Las Vegas Cannabis Awards, the 2019 Jack Herer Cup for their vape pen, and Leafly’s Best Flower Products brand in 2018. Cannavative has been operational since 2016 (they were the first in Nevada to hold both a cultivation and processing license), and are now selling in over 85% of the state’s retail outlets. Cannavative produces a wide variety of flower and extracted products, including its award-winning infused pre-roll, the Motivator, one of Nevada’s top selling vapes, Resin8, and their high-quality flower, Cannavative Private Reserve. In addition, Cannavative has recently launched a partnership with WynkTM THC & Seltzer, through which they have the exclusive sales and distribution rights for the state of Nevada. WynkTM is the most widely distributed THC Seltzer in the US.
Cannavative operates out of a 40,000-sf facility, situated on 8.5 acres. The facility includes a 10,000 square foot state-of-the-art, pharmaceutical-grade extraction lab and kitchen. In addition, there is a 2,800 square foot high-tech light deprivation greenhouse on site, with significant ability to expand on the property.
Travel restrictions due to Covid-19 adversely effected Nevada’s tourism in 2020 and 2021. However, tourism did rebound in 2021 and that looks to be continuing in 2022. According to the Las Vegas Convention and Visitors Authority, tourism in 2021 was 69% higher than 2020, and January through February 2022 tourist numbers were 80% higher than the same period the previous year. In spite of lower-than-average tourist numbers, cannabis sales in 2021, as published by the State of Nevada Department of Taxation, exceeded $1 billion for the first time.
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”. The recapitalized Corporation aimed 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 looked to provide investors with a diversified, high-growth, cannabis investment strategy through strategic investments focused throughout the value chain (cultivation, processing and distribution, and including ancillary businesses). In addition, the Corporation worked alongside community leaders and social equity-owned organizations to develop grassroot partnership initiatives. These initiatives include the joint submission of cannabis business applications to be considered for jurisdiction compliant cannabis licenses.
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