Sunniva Inc. (CSE: SNN) (OTCQB: SNNVF) has been 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 and 1167025 B.C. Ltd. said it intends to vigorously defend this action. “The allegations in the notice of claim contain factual inaccuracies and the Company believes the claim is without merit,” said Dr. Anthony Holler, CEO of Sunniva Inc.
1167025 B.C. Ltd. owns the Sunniva Canada Campus, which includes construction assets for a planned 759,000 square-foot greenhouse located on an approximately 114-acre property in Okanagan Falls, British Columbia.
According to the company’s November 26 finance statement, it said that in June 2018, 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 mortgage is repayable on October 31, 2019 and has an interest rate of 5% per annum. This balance has been reclassified to Liabilities associated with assets held-for-sale (note 7). The Company has repaid $400,000 as at September 30, 2019 but is currently in default on the remaining balance. The Company has been in communication with the lender and does not anticipate any remedial action to be taken prior to closing the SMI Transaction.” (GMR added the italics.)
California Notice of Default
Separately, in the company’s lastest MD&A dated November 26, 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. In addition, the Company received a notice of default from a promissory note holder for not applying a certain portion of the note proceeds to agreed-upon outstanding amounts. The Company is currently consulting with its legal counsel and intends to defend its position. The ramifications of these notices are uncertain at this time. 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.”
The company is in a state of turmoil as the C-suite has emptied out in recent days. Just a couple of weeks ago, CFO Dave Lyle resigned for personal reasons and then David Weinmann was appointed interim CFO. In addition to that, Michael Barker who was on the board of directors also resigned.
One week later, President Kevin Wilkerson said he would resign. Wilkerson also resigned from his position as President and Chief Executive Officer of Sun CA Holdings effective December 2. The company said the resignation was for personal reasons and a replacement has not been named.
The stock fell another 13% to lately trade at 23 cents. The 52-week high was $4.30.