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3yrs ago Cannabis greenmarketreport Views: 379

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Sunniva Inc. (OTCQB:SNNVF) said that it has received notice from the British Columbia Securities Commission that the company has been placed on the default issuers list as a result of its failure to file its annual audited financial statements and accompanying management’s discussion and analysis, and related CEO and CFO certifications, as required by National Instrument 52-109, for the financial year ended December 31, 2019 prior to the filing deadline on June 15, 2020.

Failure to correct the above-noted deficiencies may result in further action including the issuance of a Cease Trade Order. Sunniva said that it has prepared its annual financial statements and plans to engage its auditors and begin the audit of the annual statements following confirmation of the waiver of conditions with respect to the sale of its property at Okanagan Falls, British Columbia, announced on June 8, 2020.

The waiver of conditions for the OK Falls Transaction is expected on July 2, 2020.  Sunniva said it is unable to estimate when the Annual Filings will be completed and filed.

Road To Ruin

Last year, Sunniva delivered revenue of C$14 million for the quarter that ended in March. The company had big plans for 2019 and its California operation. The company estimated that its 2019 revenue in California through CP Logistics would be $72–$78 million (USD $55–$60 million), with an estimated gross margin of 40-50%. Then Sunniva‘s net losses for 2018 rose to $29.0 million versus last year’s $17.5 as expenses ballooned due to the company’s US operations, which led to an increase in the number of employees.  The most significant increase in costs was related to personnel costs, rent, and insurance of US operations.

Sunniva’s CFO bailed out in November 2019 as the company began selling off assets. It was working with CannaPharmaRx regarding the sale of Sunniva Medical Inc. to CannaPharmaRx and believe that the deal would be completed. Next, the company’s President resigned and short interest rose as shareholders got very nervous over the C-suite jumping ship. The company also decided to focus its efforts in California, not Canada.

“In Canada, we continue to expand our Natural Health Services operations with new leadership from Dr. Mark Kimmins. We have suspended operations on our Okanagan Falls property (the “Sunniva Canada Campus”) as we focus efforts on US operations, and we continue to review strategic initiatives in respect of our Canadian assets.” Sunniva also found itself running into debt problems.

The company was named in a lawsuit, along with its wholly-owned subsidiary, 1167025 B.C. Ltd., co in connection with loans made by Matrix Venture Capital Management Inc. to Sunniva on August 28, 2019, and October 11, 2019, respectively, in the aggregate amount of $7 million. The remedies sought by the Plaintiff include a mortgage over Sunniva’s Okanagan Falls property to secure payments of the amounts of the Loans owed by Sunniva to the Plaintiff. Sunniva, through its subsidiary 116, entered into a $3.4 million mortgage to finance the purchase of land for the greenhouse facility in Okanagan Falls, British Columbia.  The Company has repaid $400,000 as at September 30, 2019 but is currently in default on the remaining balance.

The company also ran into problems with its California real estate. Sunniva said that on November 25, 2019, it received a 30-day notice of termination and a notice of default from SPCL “for items related to payment of outstanding balances and failure to meet certain conditions of the Build to Suit Lease. “As a result of these notices, the timing of receipt of the Company’s certificate of occupancy for the Sunniva California Campus cannot be estimated at this time.”

Sunniva began 2020 closing Full-Scale Distributors, LLC. “The closing of FSD is a necessary step that will eliminate the cash outlay required to operate that business,” said Dr. Anthony Holler, Chairman & CEO of Sunniva Inc. “We continue to focus on the preservation of our available funds to allow us to actively defend Sunniva’s rights under the previously disclosed dispute related to the Build to Suit Lease of the Cathedral City Glasshouse.”

CP Logistics Update

CP Logistics, which was supposed to deliver millions in revenue?  A few days ago, Sunniva said that CP Logistics, LLC  has agreed to a reversal of transaction agreement with respect to the April 29, 2019 Membership Interest Purchase Agreement whereby CPL acquired an 80% membership interest in each of 420 Distribution, LLC and Coachella Distillation from Group Two Investments and assumed two subleases at the commercial property in Coachella, CA.

CPL has ceased operations at the Distribution Facility and will relinquish the 80% membership interests acquired from each of 420 and Coachella and have the original purchase price returned. The Subleases will revert back to Group Two and CPL will have its name removed from the provisional distribution license and the provisional type “P” manufacturing license with the California Bureau of Cannabis Control and the California Department of Public Health, respectively.

Sunniva Is Running Out Of Options on Green Market Report.


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