Bright news for Redfund Capital Corp (CSE:LOAN) today after it announced Monday it has completed its first investment in Biolog Inc., a cannabis infusion technology company, based in Silicon Valley and Los Angeles, California.
Biolog has developed a patented system to infuse food and beverages with cannabis, which provides enhanced bioavailability — the amount of a substance that becomes available — and reduced onset times.
Redfund is a medical cannabis merchant bank that provides an alternative source of capital through loans to bridge finance and help medical cannabis-focused companies build valuation, and grow their businesses without diluting equity prematurely.
"Our analysis in selecting a financing partner extended well beyond simple access to capital. We rated industry expertise and the ability to assist us in developing strategic partnerships as our two main criteria. Redfund Capital was the clear choice for Biolog for these reasons. All of us at Biolog are very pleased to have Redfund as our partner in growth," said Bruce Bauer, CEO of Biolog.
The Biolog technology is protected by multiple patents and trade secrets, including a patent portfolio licensed from Lexaria, enabling consumers and processors to precisely dose almost any food or beverage with either cannabidiol (CBD), tetrahydrocannabinol (THC) or any combination of these or other cannabinoids. The company said CBD edibles manufactured with Biolog's technology could offer improvements in bioavailability of up to 500%, while also reducing onset times for psychoactive effects from tetrahydrocannabinol (THC) to as fast as 15 to 20 minutes.
"We are investing based on the exceptionally strong intellectual property portfolio owned by the company. As the medical cannabis and CBD business sectors mature, we believe differentiating factors and barriers to entry, such as the trade secrets and patents will become ever more important. Biolog brings to the market an already exceptional IP position, which we believe will be further strengthened over the coming year," Redfund chief executive officer, Meris Kott.
Redfund and Biolog signed a 2-year term convertible secured promissory note on August 21, 2018 of US$800,000 at an annual interest rate of 14%, of which the first tranche of $200,000 has already been tendered to Biolog. The note may be converted at Redfund's discretion at any time during the term and the company has a right of first refusal to provide financing to Biolog upon the same business terms as are being offered to Biolog by any other funders.
Biolog afforded Redfund stock warrants of its common stock equivalent to twenty percent (20%) of the amount of the note based upon their current valuation as of the effective date which is stipulated to be US$10,000,000.00.
Additional rounds of funding from the company could further enhance Biolog's product portfolio, product line expansion and distribution.