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LOS ANGELES, Sept. 10, 2020 (GLOBE NEWSWIRE) — Ventura Cannabis and Wellness Corp. (CSE:VCAN) (“Ventura Cannabis”, “VCAN”, or the “Company”) is pleased to announce that final pricing has now been determined for the Company’s sale of Cathedral Asset Holding Corporation (“CAHC” or “Cathedral”) to Vibe Bioscience (CSE:VIBE) (“Buyer”) described in its press release of August 30, 2020. Closing of the sale of CAHC remains subject to the completion of a routine inventory inspection and the closing is anticipated to take place on September 15, 2020.SummaryOn August 30 and 31, 2020, Ventura announced it had sold its cannabis assets for a total of $2,222,400 exchangeable for common shares in the Buyer in two tranches: (1) $333,360, and (2) $1,889,040 with a provision in the Purchase Agreements that provides a mechanism for a premium pricing adjustment based on certain conditions.The conditions have now increased the price for the first tranche from $333,360 to $401,369 or an increase of 20.4%. This consideration is in addition to 800,000 share purchase warrants each exercisable for one common share of Buyer at a price of $.60 per common share for a period of 12 months.The second tranche, announced August 31 2020, which has been reported to be $1,889,040, has the identical mechanism as the first tranche for re-pricing and warrants. The closing of the second tranche is subject to approval by the Company’s shareholders, which will be sought at a special meeting scheduled for October 23, 2020. The consideration amount for the first tranche is locked in as of September 10, 2020 and $401,369 of shares in the Buyer will be issued to Ventura shareholders. Subject to the shareholder vote, the second tranche will close and, once finalized, all shares in Buyer will be distributed to shareholders as a dividend.“I am pleased we got a premium on our assets,” said Chris Heath, CEO of Ventura. “If the mechanism for pricing remains the same, during the next  30-day Value Weighted Average Price (VWAP) period for the second tranche, we would see our cannabis assets sold for over 7 cents a share, plus two million total warrants.I look forward to the shareholder vote. I have spoken with several large shareholders with over 15.1% of our outstanding shares and they are enthusiastic about the premium we have received so far.Vibe is in a much stronger position than we are, with scale in the California marketplace. With nearly ten times the revenues, twice the cash and a plan for revenue growth, they are a much better currency for our shareholders to hold than where Ventura was just a few months ago: we were a small loss-making cannabis operator with the overhang of heavy contingent liabilities from operating an addiction rehab business that treated thousands of addicts and employed hundreds of former addicts.Now, with a successful shareholder vote, we exchange this for common stock in Vibe which has no reported contingent liability issues. Our alternative to this transaction is liquidation which will provide shareholders with much less value.”Update on Rehab Entity Proceeds from DivestmentHistoryOn April 18, 2019 shareholders approved that Ventura divest the addiction rehabilitation services business (“Rehab Business”) and invest in the cannabis sector.On October 10, 2019 Ventura announced that it was accelerating the disposition of the Rehab Business assets and expected to collect less than previously expected. At the time it was disclosed that the industry for addiction rehabilitation services has struggled, with many bankruptcies in the past number of years, making it increasingly difficult to realize a premium for the assets.On January 30, 2020 the quarterly financial statements in note 7, as well as in the accompanying news release, Ventura disclosed management had become aware of potential contingent liabilities as a result of divesting the Rehab Business, making the publicly listed entity unsuitable for acquisition or re-investment.On June 30, 2020, Ventura posted quarterly financial statements for the quarter ending May 31, 2020 with the following figures that described the financial impact of the divestment:In both reported FY2018 and FY2019 audited financial results, the Rehab Business lost money and the balance sheet had eroded due to a challenging market as pricing collapsed and costs increased. Most of the subsidiaries ceased operations at the end of 2019, however additional expenses continued. The management was tasked with the typical and standard process of disposing of a business no longer generating revenues, yet with reported long-term liabilities. In the reported quarter ending May 30, 2020, Ventura provisioned $396,000 for an allowance of doubtful accounts and for the quarter ending August 30, 2020, Ventura has provisioned an additional $500,000 for an allowance of doubtful accounts, further reducing the Company’s Accounts Receivables.Management either (1) sold, (2) liquidated or (3) collected assets to offset these reported liabilities. In every case, the Rehab Business, when it was launched over 7 years ago, was built envisioning a long-term business. Therefore, obligations were made and reported on all Financial Statements that were lengthy in time. Property was purchased and re-purposed to house addicts and provide treatment, all of which made for a challenge in quick sale or liquidation.Update on Real Estate holdings for the quarter ending August 31, 2020Los Angeles In-Patient Real EstateThe subsidiary holding the in-patient centers in Los Angeles, California, has reduced, settled or eliminated all of its long term contracts, leases, disputes and commitments, including, but not limited to, long term lease obligations, vendor contracts and employment disputes.It sold the real estate, located in the center of Los Angeles, California to a provider of addiction rehabilitation services for more than the mortgage (and fees associated with selling the property).  This amount of net cash has been added to the balance sheet of the cannabis asset.Corona In-Patient Real EstateThe subsidiary holding the in-patient centers in Corona, California, has reduced, settled or eliminated most of its long term contracts, leases, disputes and commitments, including, but not limited to, long term lease obligations, vendor contracts and employment disputes.The real estate, located far away from any urban center and re-purposed to treat and house addicts, was put on the market for sale for several months. The only offer was for less than the mortgage on the properties. The adjoining properties must be sold “as one” under the terms of the mortgage. The properties are residential properties that are not easily configurable into one large property by a potential buyer and therefore are difficult to sell in the current environment.Until late in 2019, this subsidiary collected 20% of all bills collected and US$25,000 per month for rent. When the business shuddered, there was a cost of US$15,000 to maintain the mortgage and no rent or revenues to cover costs. Management has been advised that the value of the homes as structured cannot be sold in excess of the mortgage amount at this time, therefore the management decided to stop paying the US$15,000 per month on the mortgage and the homes have started the foreclosure process. The mortgage was not secured by the parent corporation and is non-recourse to the parent.Reported Potential Contingent LiabilitiesPotential contingent liabilities make the parent entity, listed on the CSE, unsuitable for acquisition or re-investment. The Rehab business treated thousands of addicts and employed hundreds more as part of the treatment protocol. As reported on January 30, 2020: It is uncertain currently to determine the outcome of these potential claims and demands or our potential liability, if any.“We have seen many of our rehab business competitors become insolvent over the past few years and this year we are seeing our cannabis industry competitors face the same fate,” continued Mr. Heath. “While our share price during that time didn’t increase, I am proud that we are able to deliver a potential for that outcome by owning Vibe shares.It has been a long and challenging undertaking divesting the rehab businesses, however I am happy to say we are finally at the end,” continued Mr. Heath. “The Company, from its inception and until it pivoted into cannabis, organized and operated itself to achieve long-term growth and sustainability. Selling loss-making entities is very difficult, especially in the COVID-19 environment. As is collecting from payors that know we ceased operations. None of this was easy, but we were able to get $1.3 million in cash to invest in the cannabis side of our business.”As with any loss-making business that is either sold, wound down or liquidated, assets are generally hard to collect or realize and liabilities and expenses tend to have longevity and, unless negotiated, continue.  As the economy suffered starting in March from COVID-19, the events of 2020 have compounded the challenge to optimizing asset collections while reducing liabilities. Management believes that it is close to finalizing the divestment and continues to believe, as reported in last quarter’s financial statements, that $1.3 million in net assets will be contributed to the cannabis asset.For more information contact:Ventura Cannabis and Wellness Corp.
Chris Heath
(424) 372-1123
Certain statements contained in this presentation constitute “forward-looking information” as such term is defined in applicable Canadian securities legislation. The words “may”, “would”, “could”, “should”, “potential”, “will”, “seek”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect”, “confident” and similar expressions as they relate to the Company. Such statements reflect the Company’s current views and intentions with respect to future events, and current information available to the Company, and are subject to certain risks, uncertainties, and assumptions. The forward-looking information included are made as of September 10, 2020, and the Company undertakes no obligation to publicly update or revise any forward-looking information, other than as required by applicable law. VCAN holds or is acquiring marijuana assets in the United States. Previously disclosed acquisitions are still subject to closing. Marijuana is legal in each state VCAN is looking to operate, however marijuana remains illegal under US federal law, and the approach to enforcement of US federal law against marijuana is subject to change. Shareholders and investors need to be aware that adverse enforcement actions could affect their investments and that VCAN’s ability to access private and public capital could be affected and or could not be available to support continuing operations.