Marley company raises financing for medical cannabis
Start-up company Sto-ny Hill Corporation, led by Damian Marley, has raised US$750,000 (J$96 million) to finance its sale of cannabis products.
That's according to the company's first set of financials since its reorganisation, released late February. Stony Hill began as a furniture business.
Marley will lead the restructured operation as president and CEO, with a team of eight employees based in Los Angeles, California in the United States. Marley holds the most shares in the company at 21 per cent. Jamaican born Damian, 38, is a Grammy-winning reggae/dancehall star known for songs like Set up Shop. He's also the youngest offspring of reggae legend Bob Marley.
Stony Hill Corp plans to set up a global medical cannabis platform and brand, invest in various segments in the medical mari-juana industry, and create franchise-like alliances to sell its products, according to the financials filed with US regulator, the Securities and Exchange Commission.
The company, still in its infancy, generated revenues of US$17,500 and a net loss of US$444,000 over nine months ending December 2016.
But more interesting than the numbers is the path by which Marley and the other executives took to assume the control of a furniture company, which they renamed and repurposed. Specifically, last October, an entity called Stony Hill Ventures formed in March 2016 acquired the shares of First Furnitures incorporated in 2014.
Following the share exchange, the furniture company was renamed Stony Hill Corporation. On completion of the share exchange, Marley became president and CEO, the sole member of the board, and holder of 3.15 million shares, or 21.2 per cent of the outstanding common stock. Damian's manager, Dan Dalton, became the treasurer and holder of 2.25 million shares, or 15.1 per cent, and investment banker John Brady became the company secretary and holder of two million shares, or 13.4 per cent of the stock.
"The share exchange between our company and Stony Hill Ventures was treated as a reverse acquisition for financial statement reporting purposes, with Stony Hill Ventures deemed the accounting acquirer and Stony Hill Corp deemed the accounting acquire," said Stony Hill Corp. "Accordingly, Stony Hill Ventures' assets, liabilities and results of operations became the historical financial statements of our company. Further, no step-up in basis or intangible assets or goodwill was recorded in this transaction," stated the company.
Under the terms of the share exchange, Stony Hill Ventures paid US$325,000 and First Fixtures (Stony Hill Corporation) assumed of roughly US$51,400 of liabilities, which was recorded as a cost of the reverse merger.
The revenues generated during the quarter ending December related to marketing agreement whereby the company agreed to license the name 'Stony Hill' to Mile High Medical Cannabis LLC, along with mutually agreed upon marketing and special appearances by certain members of the company in exchange for an ongoing monthly fee. The licence is exclusive to the State of Colorado and is for an initial term of 180 days, stated the financials.
Also last November, the com-pany purchased nearly US$50,000 worth of preference shares for less than a 5 per cent investment in Cannabi-Tech Limited, an Israel incorporated entity. Cannabi provides lab-grade equipment to test the potency of cannabis plants. The share purchase was done as a portfolio investment.
"As the company does not have the ability to exercise significant influence over Cannabi, the company recorded the investment at cost and will recognise dividends, if any, when received, and will recognise gains or loss upon either selling the securities or recognise a loss prior to selling the securities if there is evidence that the fair market value of the investment has declined to below the recorded historical cost," said Stony Hill Corp.
In January of this year, Stony Hill issued 10,000 ordinary shares in a private placement, which raised US$10,000. It followed another private placement back in August 2016 when the company issued 740,000 shares to raise US$740,000.