Today, Rockstone initiates coverage on Redfund Capital Corp., a Vancouver-based merchant bank focused on medical cannabis, hemp and CBD. The company began trading on the CSE under the symbol “LOAN“ on August 14, 2018.
Designed by bankers and entrepreneurs, Redfund provides alternative debt financing facilities to help growing companies build their valuation without giving away equity prematurely in their growth cycle. This business model benefits not only the shareholders of the financed company but also Redfund‘s shareholders providing them an exposure to fast-growing companies and markets otherwise unavailable.
Today, Redfund provided an update on its first international financing with Biominerales Pharma Corp. (“BMP“), a first mover and trailblazer of medical cannabis in Columbia. Redfund and BMP signed a 2 year convertible secured promissory note in August for up to $3 million USD at an annual interest rate of 14%. Thus, Redfund‘s shareholders may benefit from interest payments of up to $840,000 USD, whereas the debt may be converted into equity at Redfund’s discretion at any time during the term. Redfund has also a right of first refusal to provide financing to BMP upon the same business terms as are being offered to BMP by any other funders.
On top, BMP afforded Redfund stock warrants in its common stock equivalent to 20% of the amount of the Note based upon their current valuation as of the effective date which is stipulated to be $10 million USD, thus providing Redfund shareholders with a potentially significant stake in BMP.
Click above or here to watch Redfund‘s CEO, Meris Kott, interviewed by CSE TV.
Columbia has optimal conditions for growing hemp and cannabis. Overall costs are estimated to be 65-90% below the costs of Canadian licenced producers. Thanks to liberal prescribing regulations and up to 700,000 medical cannabis patients, Columbia represents a sizeable market opportunity with a potential market worth $750 million USD.
The Canadian investment bank Canaccord, which is also actively financing cannabis projects in Columbia, recently noted that the market in Latin America is “on the cusp of exponential growth“, following a recent wave of medical cannabis legalizations.
The timing for Redfund to engage with one of Columbia‘s leading medical cannabis companies appears perfect in order to capitalize on the vast growth potential of this sector with an early-mover advantage.
Moreover, BMP already has the trifecta licenses in Colombia allowing them to grow, process and export CBD oil beyond South America to the global marketplace. As the production of CBD is a costly endeavour in North America, BMP‘s extensive in-country farming operations plus a state-of-the-art GMP processing facility in Bogota (coming online in 2019) make BMP the perfect supplier, partner and distributor for Canadian LPS and global partnerships. BMP’s headquarters and lab facility are located in Bogata and it has a wide range of operations countrywide.
In Corinto, the base cannabis farm features both greenhouse and outside growing operations totalling almost 2 million sq. ft. of outdoor and 15,000 sq. ft. of greenhouse, producing high volumes of organic medicinal cannabis.
In Tulua, BMP has another farm for growing industrial hemp for CBD. The first phase in Tulua is projected to yield 1.2-1.4 million pounds of biomass per year.
In Mondomo, BMP is completing a lab where the chief agronomist will execute a process of DNA testing and growing in-vitro to create a super strain of seeds and plants with the highest quality plants free of disease.
BMP is planning to open a series of mobile labs in addition to medical clinics to act as treatment and dispensary distribution centers. This will be executed as an extension of BMPs medical partner Carlos Rios’ private Clinica Santuario, who is also a member of the BMP Advisory Board.
BMP‘s CEO, Adriana Rios Garcia, commented today:
“Last week we were granted our Medicinal Cannabis licensure for the national Colombian market. This is a great accomplishment and it will allow us to expand via well known strategic partnerships in cannabis medicine benefiting the Colombian population.“
In August, she said:
“As we continue to build one of the only Colombian vertically integrated supply chain and processing services in the Medicinal Cannabis and CBD industry, we are very excited to partner with Redfund. Their long-term support in helping us execute our overall strategy will excellerate our mission to develop best in class products and services and deliver on our social strategy to create jobs and assist local Colombian farmers. Having the financial backing of Redfund will bring further validation to our global model.“
Redfund‘s CEO, Meris Kott, commented today:
“Biomerales Pharma has become the #1 trailblazer in Colombia medical cannabis. With only a few weeks remaining before their expected approval to start government certification for 25 different cannabis medicinal genetics, they have possibly outperformed every cannabis company in Colombia with their low cost budget, experienced and well known Colombian management team and comprehensive medical platform. Redfund will continue to support BMP and looks forward to helping them become the #1 medical cannabis company in South America.“
In August, she said:
“We have been working with Adriana and her team for many months and today marks a major success for both our companies. Felicidades! Biominerales is a leader today in Colombia and will be one of the first to harvest a crop and place Colombia on the global Medicinal Cannabis and CBD stage. I am very proud to be partnering with one of the few women in cannabis in Colombia. Redfund will continue to finance BMP and help the company realize their complete business plan.“
BMP is one of the first Colombian companies authorized to legally market medical cannabis in Colombia, throughout South America and worldwide. BMP was established in 2014 by a group of Canadian and Colombian entrepreneurs. The company began as the only biodiesel refinery in Colombia using cooking and vegetable oils, with the capacity to produce biodiesel meeting international ISCC standards. The BMP team recognized the opportunity in early 2015 when medicinal cannabis was decriminalized and expanded on their existing operations. In 2017, BMP was one of the first companies granted “global” extraction and exportation licenses for medicinal cannabis oils.
Click above or here to watch Redfund‘s CEO, Meris Kott, interviewed by Proactive Investors.
On August 28, Redfund announced to have completed a first investment in Biolog Inc., a California based cannabis infusion technology company.
The companies signed a 2 year term convertible secured promissory note of $800,000 USD at an annual interest rate of 14%, of which the first tranche of $200,000 has already been tendered to Biolog. The Note may be converted at Redfund’s discretion at any time during the term and the company has a right of first refusal to provide financing to Biolog upon the same business terms as are being offered to Biolog by any other funders.
Biolog afforded Redfund stock warrants of its common stock equivalent to 20% of the amount of the Note based upon their current valuation as of the effective date which is stipulated to be $10 million USD. Additional rounds of funding from Redfund will further enhance Biolog’s product portfolio, product line expansion and distribution.
Biolog is in the fast growing market for cannabidiol (CBD) edibles and beverages. The funds will be utilized to launch a series of patented products that will allow both ordinary consumers and culinary professionals to easily and accurately infuse virtually any food or beverage with cannabinoids.
The Biolog products are powered by Lexaria Bioscience Corp.‘s (CSE:LXX) DehydraTECHTM technology, under an exclusive license agreement announced earlier this year by Lexaria. The products are unique to the industry in that precise dosing can easily be accomplished to produce edibles and beverages that offer improvements in bioavailability of up to 500%, while also reducing onset times for psychoactive effects to as fast as 15 to 20 minutes. Additionally, due to a taste masking technique, foods and beverages infused with Biolog products taste like the food or beverage, not cannabis.
Biolog‘s CEO, Bruce Bauer, commented:
“Our analysis in selecting a financing partner extended well beyond simple access to capital. We rated industry expertise and the ability to assist us in developing strategic partnerships as our two main criteria. Redfund Capital was the clear choice for Biolog for these reasons. All of us at Biolog are very pleased to have Redfund as our partner in growth.”
Redfund‘s CEO, Meris Kott, commented:
“We are investing based on the exceptionally strong intellectual property portfolio owned by the company. As the medical cannabis and CBD business sectors mature, we believe differentiating factors and barriers to entry, such as the trade secrets and patents will become ever more important. Biolog brings to the market an already exceptional IP position, which we believe will be further strengthened over the coming year.“
Last week, on September 20, Redfund announced to have partnered with the US-based cannabis fertilizer leader Plant Life Company and that Redfund is now its Canadian resident agent.
Plant Life is dedicated to offering professional cannabis growers a superior line of fertilizers formulated to create a strong holistic growing environment, with a philosophical and authentic mindset towards plant health, a truly preventative approach, verses curative, resulting in better yields and better value.
It manufactures both liquid and dry water-soluble fertilizers designed to enhance each phase of a plant’s growth cycle, maximize growers’ yields and increase potency. The products are produced and fully loaded with superior macro, secondary and micronutrient ingredients to ensure optimum nutrient availability and reduced waste.
Plant Life recognizes the artistry that growers bring to the table. The quality supplements were designed to give them the tools to boost their yields from root augmentation through final stages of the flower. These proven supplemental products work in tandem with the baseline fertilizers to boost the plant’s potential throughout its life. Plant Life provides cultivators an unparalleled level of nutrient expertise with over 160 years of combined experience in the fertilizer industry.
The Doggett family name has been synonymous as the leader in fertilizers since the 1920s and partnering with David Ellerstein who has developed an impressive 30 year track record of taking innovative niche business concepts and transforming them into viable, muli-million dollar revenue generating realities is a win-win for Plant Life. The collaborative resources and breadth of practical knowledge has allowed Plant Life to develop an unparalleled line of nutrients targeted to the burgeoning greenhouse market and other B2B enterprises. It is undeniably creating a new benchmark for which all to be measured.
Redfund‘s CEO, Meris Kott, commented:
“Plant Life has an impressive customer base of cannabis growers in California and their clientele is increasing daily. We have noticed mainstream companies like Miracle Gro entering the marketplace in Canada with strategic partnerships. Healthy plants are imperative for every profitable crop cycle, but it is the first to market players who will lead the way in this sector. Revenue producing Plant Life will continue to be a leader in cannabis fertilizers. We are excited to assist David footprint Plant Life into the Canadian market and build his global brand.“
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Management & Advisory Team
Meris Kott (CEO & Director)
Meris has been in international Investment Banking and Financial Consultancy with a focus on targeting companies for investment and acquisition purposes for large multinational corporations. She has continued providing global bridges for public companies for 25 years and believes all companies should create global footprints. In 1990, she founded Polaris Partners that financed in excess of $500 million USD. Presently, she is a managing partner at Ludgate Hill Partners in Vancouver. Meris has an economics degree from McGill University.
Ryan Cheung (CFO)
Ryan is the founder and managing partner of MCPA Services Inc., chartered professional accountants in Vancouver. He serves as a director and/or officer or consultant for public and private companies providing financial reporting, taxation and strategic guidance.
Eugene Hodgson (Director)
Eugene is an accomplished Senior Executive, as Vice President Western Region with Corpfinance International, a boutique investment bank specializing in debt and equity financing for 11 years. He is also a financial and public policy/government affairs advisor having worked in the public sector with both the BC and NWT Governments. He served on the Board of Directors of various companies including Grandfield Pacific Corp., Arimex Resources Inc., Sea Breeze Power Corp., Silvermex Resources Inc., Chair of Pacific Cascade Minerals Inc. and Director of Timmins Gold Corp. He graduated from the University of Calgary with a BA in Political Science.
Mark Ireton (Independent Director)
Mark is a banker by profession with over 30 years of experience in all areas of commercial mid-market lending. He is versed in both public and private transactions and divestitures in a variety of sectors that include wholesale distribution, manufacturing, aviation, transportation, construction, excavation, post production and oil service.
Amanda de Freitas (Director)
Amanda is a Toronto based regulatory compliance executive and lobbyist and specializes in Canadian cannabis legislation. She is the CEO of Cannaceutical Canada Ltd., a management consulting firm that focuses on global medical cannabis supply transactions and deal development. Amanda is also President and founder of CannabiZ Solutions, a firm that’s primary focus is on domestic medical and adult use cannabis businesses, helping assist them with their regulatory compliance, licensing, corporate and product development strategies. She is a frequent panelist and speaker at Canadian Medical Cannabis conferences. Meris Kott commented on Amanda‘s appointment in early September:
“Amanda has become a trailblazer in the Canadian cannabis sector. She has ushered many startups in the Cannabis space from simple visions to legalization and strong revenues. She continues to be the female voice to many women in Canada who are quietly becoming global players in the cannabis sector. On behalf of our entire board, it is our pleasure to welcome another “Woman of Weed” to the capital markets and Redfund.”
Duke Rodriguez (Medical Advisor)
Duke is the Founder and CEO of Ultra Health, a turnkey solutions provider for the specialty medical cannabis industry. He also serves as CFO, COO and Director of Lovelace Inc., a major healthcare HMO based in the Southwest, as well as the Cabinet Secretary of the State of New Mexico’s largest executive branch agency. He is also the President and COO of Diagnoste Inc., a NYSE pharmacy benefit management company. He is also the Founder and President of HearUSA Inc., national chain of hear care and hear ware centers.
Alex D. Goumeniouk (Medical Advisor)
Alex (MD, FRCP(C), FAPA) has spent 17 years in university and postgraduate medical training, earning 5 degrees. He has served both as a Professor of Pharmacology and as a clinical psychiatrist for 25 years. He has lectured for the Canadian Pain Society on drugs of abuse including the role of THC and its derivatives in ameliorating certain symptom complexes.
Company Details
Redfund Capital Corp.
#702 - 595 Howe Street
Vancouver, BC, V6C 2E5 Canada
Phone: +1 604 484 8989
Email: info@redfundcapital.com
www.redfundcapital.com
Shares Issued & Outstanding: 41,443,632
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Canadian Symbol (CSE): LOAN
Current Price: $0.32 CAD (09/21/2018)
Market Capitalization: $13 Million CAD
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German Symbol / WKN (Frankfurt): O3X4 / A2N4AA
Current Price: €0.161 EUR (09/24/2018)
Market Capitalization: €7 Million EUR
Disclaimer: This report contains forward-looking information or forward-looking statements (collectively "forward-looking information") within the meaning of applicable securities laws. Forward-looking information is typically identified by words such as: "believe", "expect", "anticipate", "intend", "estimate", "potentially" and similar expressions, or are those, which, by their nature, refer to future events. Rockstone Research, Redfund Capital Corp. and Zimtu Capital Corp. caution investors that any forward-looking information provided herein is not a guarantee of future results or performance, and that actual results may differ materially from those in forward-looking information as a result of various factors. The reader is referred to the Redfund Capital Corp.´s public filings for a more complete discussion of such risk factors and their potential effects which may be accessed through the Redfund Capital Corp.´s profile on SEDAR at www.sedar.com. Please read the full disclaimer within the full research report as a PDF (here) as fundamental risks and conflicts of interest exist. The author, Stephan Bogner, holds a long position in Redfund Capital Corp. and Zimtu Capital Corp., and is being paid a monthly retainer from Zimtu Capital Corp., which company also holds a long position in Redfund Capital Corp. Note that neither Redfund Capital Corp. nor Zimtu Capital Corp. have reviewed all of the content prior to publication and may not agree with statememts made herein.