TransCanna Closes Asset Transfer Transaction, Provides Update On CTO

TransCanna Holdings Inc. (OTCPK:TCNAF) (CSE:TCAN) (FSE:TH8) has closed the asset transfer transactions approved by special resolution of the TransCanna shareholders on April 28, 2023.

In connection with, among other things, the transactions, the parties to the deed in lieu of foreclosure agreement by and among Pelorus Fund REIT, LLC (the "lender"), Dalvi, LLC, Lyfted Farms, Inc. the company and James R. Blink, solely in his individual capacity (together with the company, the "guarantor parties") dated February 13, 2023 (the "existing loan parties"), entered into an omnibus amendment, limited conditional waiver and joinder agreement dated as of August 18, 2023 (the "amendment agreement") together with PMG Dalvi LLC, a Delaware limited liability company, PMG Lyfted Farms, LLC, a Delaware limited liability company (together with PMG Dalvi, the "joining borrowers" and collectively with Dalvi and Lyfted Farms, the "borrowers").

The existing loan parties and lender had entered into the loan agreement, effective as of July 29, 2022, by and among the lender, Dalvi, Lyfted Farms and the guarantor parties, whereby the lender had provided a term loan to the borrower in the original principal amount of $15.8 million. In accordance with the terms and provisions of the loan agreement, the original loan amount, together with all other obligations were secured by a first-priority security interest and lien on the collateral. The existing loan parties and lender entered into the deed in lieu following the occurrence and continuation of events of default under the loan agreement.

Under the amendment agreement, in connection with the the lender having designated the joining borrowers as its designees to take all right, title and interest in the collateral and, in consideration of Dalvi, Lyfted Farms and TransCanna executing and delivering the conveyance documents transferring title to the collateral to the joining borrowers, and effective at closing of the transactions:

• The joining borrowers were joined as borrowers under the loan agreement and accompanying agreements;

• The lender made all monetary obligations non-recourse to Dalvi and Lyfted Farms;

• The lender conditionally waived all existing defaults and events of default, in each case subject to the terms and conditions of the amendment agreement. As of closing, the total unpaid principal plus unpaid accrued interest is equal to $21.1 million.

The company, through its wholly-owned cannabis license holding subsidiary Lyfted Farms, has entered into a management services agreement with PMG Lyfted Farms, whereby PMG Lyfted Farms has agreed, among other things, to manage and operate on behalf of Lyfted Farms all aspects of any commercial cannabis activities, until such time as the parties agree to terminate the MSA.

Cease Trade Order Update

The company is still under a cease trade order by the British Columbia Securities Commission under National Instrument 51-102 Continuous Disclosure Obligations as a result of not filing its audited annual financial statements, for the year ended November 30, 2022 by the requisite filing deadline. The company expects that all filings may occur towards the end of September.

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