Crop upset with operational failures of investments
2019-10-11 09:01 MT - News Release
Mr. Michael Yorke reports
CROP SEEKING CHANGES TO UNDER-PERFORMING U.S. LLCS
Crop Infrastructure Corp. will undertake major management actions to remedy recent operational failures from its investments and implement improved reporting protocols throughout its structure, including its investments.
Crop is focused on the acquisition and ownership of a passive interest in specialized cannabis-related properties owned by various U.S. limited liability companies. The Company deploys investment capital in an effort to maximize growth of income-producing U.S. state licensed cannabis producers and processors. To date, Crop's investments have resulted in a substantial equity position in six US LLCs operating in California, Nevada, Oklahoma and Washington.
Crop management is taking remedial action with several U.S. LLC partners after very disappointing performances. Accordingly, management intends to work with its other cooperative stakeholders and partners to take immediate action to overhaul management of its non-productive investments. Additionally, management will renegotiate operating agreements to adopt additional reporting, internal controls and audit rights of the partners.
Michael Yorke, CEO stated, "We believe Crop and our shareholders deserve better representation after these very disappointing performances to protect and enhance our U.S. business interests and we are committed to making appropriate changes to facilitate the growth of these investments."
The company has decided to sell its deposit on its extraction equipment that was ordered for its hemp operations. The company is in discussions with multiple toll processors and has spoken with the CBD isolate offtake buyer to work on fulfilling its first month commitments dependant on harvest outputs from the remaining pivots.
Crop also announced today that it has received a notice dated Oct. 7, 2019 from the collateral agent for the holders of certain secured convertible debentures issued by the Company on Feb. 8, 2019 and on June 11, 2019. The notice stated that the Company had not paid interest on the principal amount of the debentures due and payable to the debenture holders on September 30, 2019.
If unremedied by October 22, 2019, the collateral agent has stated that the failure by the Company to pay the outstanding interest will constitute an event of default pursuant to the terms of the debentures. The Company is making efforts to raise the capital required to pay the outstanding interest and the collateral agent is supportive of the Company's efforts to replace the management teams of its under-performing U.S. LLCs. For more information regarding the debentures, see the Company's news releases dated February 26, 2019 and June 14, 2019.
In addition, the Company also announces that Elite Ventures Group, LLC ("Elite"), a Nevada limited liability company in which it owns a 49% membership interest, with option to increase its ownership to 84%, has received a service of process notification dated October 9, 2019, from mortgagor that it is currently in default of its mortgage on its Nevada THC property. The Company is making efforts to raise the capital required to pay the outstanding mortgage payments.
The Company currently has promissory notes against the assets of each of the U.S. LLCs and has demanded their repayment and is calling all of the notes on its assets to secure the Company's U.S. LLC investments.
About Crop
The Company is focused on owning a portfolio of cannabis branding, CBD and real estate assets through its wholly and partially-owned subsidiaries. Crop's portfolio of projects includes cultivation properties in California, two in Washington State, a 1,000-acre Nevada cannabis farm, 2,115 acres of Hemp CBD farms, and a growing portfolio of share equity in various companies within the cannabis space. Crop has developed a portfolio of assets including Canna Drink, a cannabis infused functional beverage line and 16 cannabis brands.
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