CannTrust Holdings firms its position amongst Canadian cannabis leaders

CannTrust Holdings’ (CSE:TRST) emergence as a leading player in Canada’s medical cannabis market has enabled it to achieve a market capitalization north of $600mln since debuting on the Canadian Securities Exchange on August 21 of this year.

As impressive as that is, Canada’s plan to legalize recreational use of the drug, widely expected in July 2018, clearly has the potential to take the company to even greater heights.

The licensed producer acquired a 430,000 sq. ft. greenhouse in Niagara, Ontario and has completed a first phase, state-of-the-art renovation of 250,000 sq. ft. that is now in production.

The second phase of 180,000 sq. ft. will be finished by March 2018, and with 430,000 sq. ft. in production the conservative estimate for annual output is 40,000kg of cannabis.

Late 2018 should see an additional expansion of 600,000 sq. ft. on the 46-acre site to meet anticipated growth in demand from medical and recreational users.

A larger long term player…

Chief Executive Officer Eric Paul explains this will cement CannTrust’s position as one of the larger “longer term players” in the Canadian cannabis market.   As it is, the company is already firmly in the top 10.

Canada is one of a handful of countries where medical cannabis is legal, and permitting recreational use will not only fulfill an election promise by Prime Minister Justin Trudeau, but also means it will become the first major industrialized nation with a system permitting both uses.

Paul is bullish on the potential for the recreational market, pointing to projected numbers from groups, including Health Canada, which put its size above $5bln annually.

In terms of users, the medical market is estimated to reach 450,000 to 500,000 people, and the recreational market is projected to be three to five times the size of the medical market, Paul notes.

“Anyone who’s buying in now (to CannTrust) – because they are buying into a company that’s well-structured and has the physical assets to grow high quality product at the right cost structure – is going to win,” suggests Paul.

“I think cannabis will take a seat at the table along with all the other drugs that are out there and be prescribed routinely and used on a regular basis.”

Founded in 2013..

CannTrust was founded in 2013 with a view to getting a license under the Access to Cannabis for Medical Purposes Regulations (ACMPR) framework, which it accomplished early in 2014.

It started selling product in 2015 via mail based on physician’s prescriptions and now boasts a “menu” for customers of around 12 high quality products, including oils.

These can be used for symptoms ranging from pain to stress to sleeplessness and auto-immune conditions.

The company went public in August of this year, when it was producing from an indoor hydroponic facility with annual capacity for 2,500kg of cannabis.

The shift to a large new greenhouse taking advantage of natural light allows CannTrust to increase output and reduce operating costs, explains Paul.

Taking production to 1mln sq. ft. once the full expansion plan has been implemented should make CannTrust one of the top three Canadian producers.

An expanding customer base..

Paul says the CannTrust customer base has expanded 117% since May to 32,500 active patients, positioning it among the fastest growing players in the industry.

In addition, its greenhouse approach allows CannTrust to produce cannabis for some 50% less than facilities completely dependent on artificial light.  The reduction in costs from around $1.50 per gram to $0.75 can be expected to have a positive influence on margins.

The first phase greenhouse expansion has already been funded and a recent $20mln placement will pay for the second phase, as well as some ancillary improvements to supply channels.

Interestingly, Paul thinks the market that observers refer to as “recreational” is actually being mislabeled.

“We don’t believe that everyone out there is just the sort of person who wants to get high at the weekend. We’re postulating that two thirds of the recreational market is a person over 30 who’s chronically ill and self-medicating,” he says.

With revenue rising quickly, Paul expects the company to be profitable in the 2017 financial year. Analysts see the potential as well.

Analysts upbeat..

Haywood Securities recently began covering the stock with a ‘Buy’ rating and target price of $8.00.

“CannTrust reported Q3/17 growth of 35%, resulting in revenues of $6.1 million. Importantly, the company also announced that 61% of its sales were from oil products that drive higher margin sales,” said Haywood.

“We believe that CannTrust’s % of sales of oil/extract products will continue to increase, particularly as it releases new products, such as capsules it is currently working on, but other novel products that are likely to be developed through its partnership with Apotex (private).”

The broker predicts EBITDA of $5mln on revenues of $20.7mln for 2017.

Canaccord initiated coverage in October with a ‘Speculative Buy’.  “Based on the company’s low-cost production, leading growth profile, and forecast superior margins (driven by its medical strategy), we believe that CannTrust deserves to trade at a premium multiple to peers,” Canaccord stated.

The company’s performance on the CSE has proven the analysts right, with its share price recently cresting $7.50, up some 200% from its August debut.

It is quite a story, but with regulatory change on the horizon and production set to rise several fold, CannTrust looks to just be getting started.

This story was originally published at www.proactiveinvestors.com on December 5, 2017 and featured in The CSE Quarterly.

Learn more about CannTrust Holdings at http://www.canntrust.ca/ and on the CSE website at http://thecse.com/en/listings/life-sciences/canntrust-holdings-inc.

CSE Quarterly – Final Issue

The “final” edition of the CSE Quarterly is now live. It has been a great run, with inspiring stories of ingenuity, intrepidness, and excellence of companies listed on the Canadian Securities Exchange in every issue.

Thank you to the entrepreneurs for helping to make the CSE Quarterly such a success over the past several years.

Though this will be the final issue of the CSE Quarterly, there is another exciting project on the horizon that will carry the entrepreneurial torch forward.

Click to below to read the last issue.

To read previous issues of the CSE Quarterly, click the archives here.

Interview with Canadian Securities Exchange CEO Richard Carleton: Year-end Review 2017

With 2017 now officially in the record books, CEO of the Canadian Securities Exchange, Richard Carleton sat down with Peter Murray of Kiyoi Communications, to discuss the best year on record at the CSE. Included in the discussion were important developments that took place at the exchange, the evolution of the cannabis investment landscape as well as opportunities in blockchain, fintech and more that the CSE will be looking to next in 2018.

  1. Record-breaking trading volume
  2. Market participants: Proprietary traders and retail investors
  3. On tap for 2018: Cannabis, blockchain and more
  4. Growth in new listings
  5. Enabling innovation
  6. Enhanced disclosure: A better model for investors and companies
  7. Regulatory outlook for cannabis-related businesses
  8. Strength behind the bench at the CSE
  9. Hitting its stride as a full-service stock exchange

Record-breaking trading volume

PM: It has been a truly phenomenal year for the CSE in terms of growth in trading volume/value, capital raised and many other measures. This has particularly been true in the fourth quarter, with the most active issues routinely trading well over 20 million shares per day. As the exchange’s CEO, what would you point to as the highlights of 2017?  What is driving the success?

Richard Carleton, CEO of the Canadian Securities Exchange

RC: There are multiple factors working in our favour at the moment, but clearly our decision more than three years ago to welcome the original applicants for the MMPR (Marihuana for Medical Purposes Regulations) licenses in the Canadian cannabis space is one that has proven to be quite sound as far as growth and development of the exchange is concerned.These companies have caught the attention of the retail investing public in particular, although the broader investment community is beginning to support and invest in them as they mature and grow.

We have seen a tremendous increase in trading volume in the cannabis space, and it has had a knock-on effect on technology, mining and other sectors on our exchange.

Overall, it has served to dispel a number of the incorrect, but in some cases widely held, beliefs about companies listed on the Canadian Securities Exchange in terms of liquidity and challenges to completing secondary financings. Given the trading turnover and secondary financings completed by issuers in multiple industry sectors on the CSE this year, I think we have laid those concerns to rest for good.

At the end of the day, our success in 2017 was simply a case of presenting companies to the marketplace that the investment community was interested in, and the community responded accordingly.
Back to top

Market participants: Proprietary traders and retail investors

PM: Looking at just trading volume for a moment, are program traders, algorithmic trading and high-frequency traders accounting for a considerable percentage of the activity?  Some people in the markets don’t like their presence, whereas others appreciate the liquidity they bring. What is their status on the CSE?

RC: We have a pretty good idea where the trading volume is coming from, and we have seen increased participation from proprietary traders, which I would define as people who tend to pursue relatively short-term strategies such as market-making or cross market arbitrage. By and large, that activity is not driven by computers but by actual human traders pursuing these strategies in the market.

But far and away the largest percentage of participants are in fact investors and individual traders. It is human beings hitting the enter button, and doing that, generally speaking, through the facilities of one of the discount brokers in Canada.
Back to top

On tap for 2018: Cannabis, blockchain and more

PM: How do you follow up on a successful year like 2017?  What is the 2018 game plan?

RC: We certainly think the cannabis space has a way to run, and we see that in our pipeline of applicants seeking to list on the CSE. We expect to see additional companies looking for growth capital to serve a particular segment of that market, whether it be recreational cannabis in the United States, cultivation internationally, or some aspect of the therapeutic market.

And, of course, with legalization anticipated at some point in Canada during 2018, it will be interesting to see how the industry develops specifically here at home.

We are also seeing a tremendous number of companies with some component of blockchain technology in their business development mandate, many of them looking to address some inefficiency, cost or risk for people on the payment side. There are quite a few interesting applications of blockchain technology to reduce the cost and risk of the payments process both for the customer and for companies.

We have a number of blockchain companies on the exchange already, there are more coming, and based on the funds raised and the interest in existing issuers, I think we will see a continuation of the high level of trading activity witnessed in the latter part of 2017.
Back to top

Growth in new listings

PM: The CSE welcomed over 50 new issuers in 2017. What is the pipeline looking like as we begin 2018, and where are the issuers coming from in terms of sectors?

RC: The interesting thing is that even as the pace of listings reached record levels in the fourth quarter, each month we received more applications than companies listed. In other words, even though we were listing more companies than we ever had before, the pipeline was growing.

As a general observation, the companies listing now tend to be larger, more mature and better capitalized than at any other time in the history of the Canadian Securities Exchange.

I mentioned the cannabis and financial technology sectors, with a particular focus on blockchain, but a number of the more traditional sectors are also seeing investor attention. There is certainly interest in the mining space. We have seen a number of transactions funded for later-stage mining projects, often with a clear path to initiating production. Those companies do tend to be larger and are looking to raise substantial amounts of capital to complete their business programs.

It really is a situation where, with the possible exception of the oil and gas space, we are firing on all cylinders.
Back to top

Enabling innovation

PM: Cannabis is a relatively new business sector for public markets and the CSE deserves credit for providing a platform enabling a substantial number of these companies to obtain the funding needed to carry their businesses forward. We now see a similar dynamic with companies in the blockchain space. Does the CSE have a unique proposition for these companies and is the exchange itself looking at opportunities with this technology?

RC: Let me begin with the first part of the question. The CSE’s proposition is really the same for all companies looking to access the public markets. We seek to facilitate the lowest cost of public capital for these companies, principally by providing a very streamlined listings process, and then once the company is listed to provide cost certainty in the form of fixed fees, regardless of how active the company is in secondary financings, changing its business, making acquisitions and other activities.

Our promise is that those companies will be able to conclude those transactions with more disclosure to the marketplace, but with less interference and second-guessing of their business plans from the exchange as their principle regulator.

Fundamental to the DNA of the CSE is that we believe the marketplace is best suited to price the risk and benefits of management’s business decisions, and not somebody at the exchange. To ensure this is the case, we must make sure the companies are providing the best possible disclosure to the marketplace so those decisions can be made.

I think it is interesting to see how fintech, and blockchain in particular, has come to the public markets. In past years I have talked about the challenges the public markets in Canada have had in attracting technology companies. These types of companies have often elected to raise their capital from private equity and venture capital firms as opposed to seeking a public market listing.

The fintech and blockchain space seems to have taken on a different dynamic, as these companies are in fact coming into the public markets, and to be fair it is probably a result of the capabilities demonstrated by the public markets in funding the cannabis space. Entrepreneurs in the fintech and blockchain space look at the public markets and acknowledge that we were able to back the creation of an entirely new industry with significant amounts of capital at competitive costs vis-a-vis private alternatives.

As far as the CSE goes, we are very much interested in looking at the potential to apply new technologies to reduce cost and risk. We have a number of experts looking at smart contracts and in effect tokenizing a security with a view to a potential listing on the exchange. We are going to have more to say about that in the very near future and are looking carefully at the potential to adopt a number of those technologies.

I will say that our systems developers have deep experience in the space and as a result we do have some excellent partnerships already developed that will give us a real leg up if we choose to become early adopters.
Back to top

Enhanced disclosure: A better model for investors and companies

PM: One of your competitors suggested recently that the CSE’s suitability standards for officers and directors might be too lenient. What would you say to this opinion?  And what about disclosure of issuers listed on the CSE in general?

RC: To be blunt, I was confused by that statement. I have no idea what that person was referring to. The rules in place for suitability for officers and directors are essentially identical across all exchanges operating in Canada, whether it be the NEO Exchange, the CSE, the Venture Exchange or the Toronto Stock Exchange. The spokesperson from the Toronto Stock Exchange would have no idea what our policies and procedures are in administering the rules. We can, and do with some regularity, exercise our discretion to prevent individuals being involved with particular companies. I think that was not an informed opinion being voiced by the spokesperson from the TMX Group.

The CSE believes that in return for the exchange not being as involved in a company’s decisions as perhaps other exchanges are in Canada, the company must agree to adhere to higher disclosure standards.

In addition to the work we do on a company’s initial listing statement, as well as their legal obligations to provide continuous disclosure, companies are required to file monthly reports that are effectively an update to the Management’s and Discussion and Analysis from the listing statement or prospectus. Companies find that it is a helpful part of their investor relations activities, and not a burdensome extra piece of exchange regulation.

That disclosure record builds for the companies and it is easy for people to see which companies are executing against the plan they set out, and which companies are not making the progress they set for themselves in their business plan.
Back to top

Regulatory outlook for cannabis-related businesses

PM: There was a degree of controversy this year about Canadian stock exchanges listing companies that operate cannabis-related businesses in the United States. Can you comment on the CSE’s policies and how your regulatory model held up in the face of this debate?   Do you foresee policy at the CSE changing at all in 2018?

RC: The answer to the latter question is that I do not see our policies changing. We may learn things as time goes on from the legal position in the United States, but this to us was a relatively straightforward call.

The basic principle is that all companies listing on the Canadian Securities Exchange, and for that matter any exchange in Canada, must provide a positive representation that they are operating in accordance with applicable law in the jurisdictions in which they conduct business.

To that end, and particularly with companies in the cannabis space in the United States, we can and do require the company to provide a legal opinion and analysis demonstrating how it is that they are operating in accordance with the licensing regime in place in the particular state or states in which they do business.

From an investor’s perspective, clearly there are risks in investing in these companies given the uncertainties in the legal framework in the United States. That is why companies who have come to us with US exposure, either in the listing statement or in a prospectus cleared with one of the provincial regulators, must spend a lot of time explaining the legal position of the company, and what the position of the company would be assuming various changes took place. Investors need to know what the impact on the company would be if the rules changed in the US.

This was formalized by the Canadian Securities Administrators in a guidance notice a couple of months back and it’s an approach, because it’s based on disclosure, that is entirely in line with the one we’ve taken to these companies coming into the public markets.

So, again, we see that there is considerable investor interest in these opportunities, there is considerable interest from entrepreneurs based in the United States to raise growth capital from the Canadian public markets, and we expect to see more of these companies, not fewer, coming to us in the months ahead.
Back to top

Strength behind the bench at the CSE

PM: The CSE’s largest shareholder is Urbana Corporation, which holds just under half of your common equity. This is different to the other major Canadian exchange groups, which often have a wider base of shareholders. Is there a benefit to having a concentrated ownership structure and, presumably, the relative independence it provides for?

RC: I don’t know if I can speak to the benefits of having a relatively concentrated shareholding. What I can speak to is the benefit of having Urbana Corporation as our principal shareholder, and that of course is that Urbana made its name some years ago for its successful investments in the exchange space, not just in Canada but around the world.

The team there, led by Tom Caldwell, who is also our chairman, is regarded as one of the most knowledgeable there is when it comes to the business of exchanges. Tom has access to many different types of people in the industry. Whether it be senior management at other exchanges or analysts and investment bankers, they all know Tom and if we need to meet these people, the opportunity is there because of our chairman and Urbana Corporation.

I believe we are very fortunate to have an engaged, supportive and extremely knowledgeable main shareholder. We really couldn’t have wished for anything more.
Back to top

Hitting its stride as a full-service stock exchange

PM: In some respects, the CSE is fighting a two-front war with other exchanges, both in attracting exciting young companies and in retaining your maturing issuers. Do you think it makes sense for companies to leave the CSE if they qualify for a “senior” exchange?  Conversely, does the CSE still maintain its advantages as an exchange suited for early-stage companies?  Can you realistically cater to both?

RC: Branding is obviously extremely important in the exchange world, and probably more than I understood when I became CEO. There is very little difference in what we do versus the so-called senior exchanges. The access that we provide, the systems that we deploy, the rules governing the companies and so on – there is an awful lot of commonality among us.

However, some institutional investors and retail investors believe, for some reason, that these senior markets will provide higher multiples, better liquidity, more access to investors both in Canada and internationally, and a better experience for the issuer.

I think that is a very difficult proposition to support, especially on a cost-benefit basis, when somebody looks at the increased costs of being, for example, on the Toronto Stock Exchange versus the Canadian Securities Exchange. It would be difficult to justify on an objective basis in a lot of cases.

The one area that really is one of the last mountains for us to climb as an organization is the institutional investment community in Canada. Some institutions have hard-coded into their mandate the requirement that a public equity in the portfolio must be listed on one of the TMX Group exchanges, or specifically on the TSX. They don’t mention the Canadian Securities Exchange and they don’t mention the NEO Exchange.

When we hear from a company that an interested investor has said they would invest in them but for the fact they were listed on the CSE, those are barriers that we need to continue to work to knock down. That is not just perception but a genuine issue that exists.

Our challenge as an organization is to try to reduce the number of institutions with those restrictions in their investment mandates. Our goal is to provide an identical or better experience than the other exchanges, where companies are going to pay considerably more for the privilege of being listed.

One other concern is that if a company believes it is on its way to joining one of the major indices on the Toronto Stock Exchange, there is a rule that to be in the long-established national indices, those stocks have to be listed on the Toronto Stock Exchange. It is sort of like back in the day on the S&P 500 when you had to be listed on the New York Stock Exchange. And as a result, companies such as Microsoft and Apple and Cisco and Intel didn’t qualify for the S&P 500 for a number of years because they were on Nasdaq. Eventually it got to the point where S&P had to do the right thing and permit companies from exchanges other than the NYSE into the index.

Our goal is to have companies stay on the CSE and get big enough and relevant enough to the broader market that people lean on the S&P and TSX to allow them into the indices. I think we may have our first billion-dollar company relatively soon, and with that achievement we might then have investors lobbying Standard and Poor’s to change the rules.

Back to top

CSE and OTC Markets Connect with Entrepreneurs in Israel

CSE had the pleasure and honour of visiting the beautiful country of Israel from November 5th to 10th. The visit was a collaboration between CSE, OTC Markets, and OTC Israel. Also joining CSE on the trip were Bernard Pinsky of Clark Wilson LLP, and David Danziger of MNP LLP.

One of the primary goals of the visit was to connect with the Israeli business community and gain a deeper understanding of the capital markets needs of their world-class medical and technology startup ecosystem.

On the docket for this trip were meetings with local business influencers including funders, law firms, accountants, and advisors. Within just a few interactions, however, it became readily apparent that there was a high degree of alignment between the Israeli start-up ecosystem and the Canadian capital markets. The ability of the CSE to serve as a conduit for North American public venture capital was a message that resonated throughout many of the interactions during the visit.

Nowhere was this more evident than at the “Raising Capital and Taking your Company Public in North America” session which attracted a full room of technology company operators and various professional advisors. Engagement during the event was extremely encouraging and the wealth of follow-up and follow-on interest has set the stage for continued efforts to explore building bridges in the future.

However, the most encouraging insight from the trip was the demonstration of intellect and inspiration driving many of the projects that we had the pleasure of reviewing. As the Exchange for Entrepreneurs, it was clear to the CSE team that the entrepreneurial spirit and drive were thriving in Israel’s startup communities and these were also responsible for advancing many of the projects we reviewed.

Whether it was an innovative application of cannabis oils, crowdsourced intelligence and collaboration using SAAS, or surgical implants, there was no shortage of innovation on display during our short stay.

CSE looks forward to its next visit to Israel which will undoubtedly occur in the very near future. We look forward to continuing to build bridges with the “Startup Nation” and are once again appreciative of the positive response and hospitality shown during our visit.

To view more pictures and highlights from our visit, click here.

EnviroLeach Technologies set to overhaul mining sector with eco-friendly gold leaching formula

EnviroLeach Technologies (CSE:ETI) is shaking up the mining industry by offering an environmentally friendly alternative to widely used toxic methods of extracting gold from ores and electronic waste.

Many miners rely on cyanide and acid based leaching to recover precious metals from ores, concentrates and electronic waste. More than 76% of all gold is produced via hydrometallurgical extraction that utilizes cyanide.

While cyanide is an effective extraction medium due to its high gold recoveries and low cost, it is also potentially deadly to humans as well as fish, birds and other wildlife if used incorrectly.

EnviroLeach is trying to change this by producing a non-cyanide, non-acid based formula that is not only eco-friendly but actually contains food-grade additives that are fit for human consumption as nutritional supplements and medicines, including the treatment of some cancers.

Chief Executive Officer Duane Nelson says the formula is mixed with tap water so you can “effectively drink it” before the solution is chemically altered using electrical currents passing through diamond based electrodes supplied by De Beers.

“We’re really the only company that offers any type of environmentally friendly solution for the recovery of metals for both the mining and e-waste sectors,” Nelson says.

EnviroLeach has proven in recent tests that along with being better for the environment, its formula is also just as effective as cyanide leaching for ores and concentrates, and hot acid solutions for e-waste.

During seven months of extensive hydrometallurgical tests of its formula on electronic waste, the company achieved gold recoveries of over 90% in periods of less than two hours.

Electronic waste, or e-waste, includes devices such as mobile phones, TVs and computer components that are thought to contain as much as 7% of the world’s gold.

EnviroLeach found that when it tested its formula on e-waste – specifically printed circuit board assemblies (PCBA) used in electronic devices – it provided similar leach kinetics to conventional acid based extraction methods.

In contrast to current cyanide and acid based extraction, the study found the EnviroLeach reagent was safer to handle and functioned just as effectively at low temperatures and near neutral pH levels.

The formula is also cost-effective because it can be reused. “Not only does it offer an environmentally friendly solution but it offers a sustainable solution,” Nelson says.

The company has caught the attention of more than 140 mining firms, manufacturers and recyclers of electronics in more than 17 different countries.

While he wouldn’t name any names, Nelson states the group is in talks with some large clients in mining and some of the biggest manufacturers in e-waste.

“Everybody that we talk to is very excited by this technology,” he says.  “In the mining sector, there’s been such a lack of innovation.  This is the most exciting innovation since the advent of cyanide.”

EnviroLeach, spun out of Iberian Minerals in December 2016, has started construction of a 10 tonne per day e-waste processing plant with Mineworx Technologies.  It will have initial annual capacity of 2,500 tonnes of PCBAs, making it the largest and most environmentally friendly chemistry-based e-waste processing facility in North America.

The plant, which is expected to be completed by the end of Q4 2017, will handle all aspects of the e-waste recycling process, including material pre-treatment, shredding, grinding, leaching and metal extraction.

Operating costs, capital costs, development timelines and permitting procedures are expected to be much lower than those associated with a typical mining project.

EnviroLeach believes e-waste recycling will play a significant role in the coming decade as the volume of electronic products going into landfills continues to grow at a worrying rate.

“Apple, Microsoft, DELL, CISCO and others are all looking for environmentally responsible recycling alternatives for their components,” Nelson says.

The company sees a continued rise in demand for gold in electronics as the number of mines is limited, the costs are higher, and the mines are often located in challenging political and geographic locations.  Nelson says that by using the company’s formula, miners will also be able to set up shop in areas that are prohibited from using cyanide.

He also believes urban mining provides tremendous opportunity.  “Previously, the only way to get gold out of e-waste was to put it into a smelter or use hot acid solutions, which is not cost effective.  It’s not sustainable, and not healthy for the environment,” Nelson explains.

This story was originally published at www.proactiveinvestors.com on August 23, 2017 and featured in The CSE Quarterly.

Learn more about EVI Global Group Developments Corp. at https://enviroleach.com/ and on the CSE website at http://thecse.com/en/listings/mining/evi-global-group-developments-corp.

The Future Looks Extraordinary: Recap of Inaugural Extraordinary Futures Conference

Vancouver is no stranger to bold ideas. Home to the internationally renowned TED conference since 2014, another conference focused on the pursuit of big ideas has now also come to Vancouver.

The inaugural Extraordinary Future Conference (XF), launched this past September, was a joint initiative by the Canadian Securities Exchange and Cambridge House International to shine the spotlight on the robust technology scene in Western Canada and to highlight revolutionary technologies that will help to shape many facets of society in the years to come. Whether it was the latest developments in personalized medicine, the seismic shift in financial technology being caused by blockchain, or the advancements in virtual and augmented reality, there was no shortage of fascinating and engaging content for attendees to take in at this year’s show.

Held at the beautiful Vancouver Convention Centre, the first edition of the Extraordinary Future conference brought together over one thousand attendees, including investors, technology entrepreneurs, capital markets professionals as well as other stakeholders working in and supporting the innovation economy. Additionally, there were 33 guest speakers as well as 26 companies representing a variety of technology-driven sectors.

As a technology investment conference, an important objective of this event was to showcase both public and private companies and the entrepreneurs working on cutting-edge technologies. It was also especially encouraging to see the number of organizations and entrepreneurs present at the show that were located in the Lower Mainland or in Western Canada.

Highlights of the Talks

Many of the industries featured at this year’s show were either growing in popularity or beginning to hit their stride, and as such, the enthusiasm around these technologies was palpable.

That said, most of the technologies being discussed at this year’s show are still not mainstream. As such, it was incredibly valuable to have assembled thought leaders and entrepreneurs who are actively working in these areas to explain the state of their respective industries, and to highlight for attendees, where there might be opportunities for investors to engage.

Below are highlights from topics covered during panel discussions that took place at this year’s show.

Personalized Medicine

The conversation around the role of technology and how it is shaping healthcare was a fascinating one. Moderated by Dean Sutton, CEO of Victory Square Health, panelists Dr. Brendan Byrne (TELUS Health), Dr. Tom Elliott (Personalized Biomarkers), Rashid Ahmed (BioMark Diagnostics) and Norma K. Biln (Augerex) provided a variety of perspectives on how technology can deliver a more personalized and customized approach to healthcare delivery. In particular, several panelists highlighted the role that detection technology will play in recognizing health issues as well as how technology can help intervene at a much earlier stage in a disease to facilitate better outcomes.

Investing in Blockchain

One of the hottest topics of discussion at the Extraordinary Future conference this year was blockchain. As part of a broader discussion on the evolution of financial technology, blockchain has the power to radically shift the landscape of the financial ecosystem. Moderated by Blake Corbet, the Head of Technology and Healthcare Investment Banking at PI Financial, there was a capacity crowd on hand to hear from panelists Guy Halford-Thompson (BTL Group), Harry Pokrandt (Hive Blockchain Technologies), Marc van der Chijs (First Block Capital) and Alex Tapscott (NextBlock Global). It was clear from the perspectives shared by the panelists that the move to the ‘internet of value’ is still in its early days, but that momentum is strong and changes are occurring at a rapid pace.

Vancouver as a Leader in VR/AR

When it comes to the rapidly evolving world of visual content development, Vancouver stands out as an international leader. The combination of talent in the visual effects industry and entrepreneurial culture have created an exciting environment for leading edge VR/AR technology and content to be developed. The panel discussion on the future of VR/AR was moderated by Dan Burgar, President of the VR/AR Association in Vancouver and Director of Business Development at Archiact and included panelists Nancy Basi (Vancouver Economic Commission), Anne-Marie Enns (Archiact), Kevin Oke (LlamaZoo) and Ryan Peterson (Finger Food Studios). A key takeaway of this discussion was that the growth of the VR/AR technology is already taking place in the enterprise market and wider consumer adoption is on the horizon. This insight was also a takeaway from the AR/VR session hosted by Equity.Guru’s own Chris Parry who profiled several choice companies including INVRS3D Cinematic Reality, uForis VR, Ampd GameTechnologies and Ydreams Global Interactive.

Unlocking Capital to Fuel Innovation

One of the biggest challenges to overcome in becoming a leader in the innovation economy is making capital accessible to entrepreneurs. James Black, VP of Listings Development at the Canadian Securities Exchange, moderated the panel discussion on the intersection of technology and finance, which spoke to the different strategies available to early-stage technology companies that require capital to scale their growth. On the panel were Aimee Gagnon (Dojo Card), Bill McGraw (Wavefront), Jamie Brown (Canaccord Genuity) and Tom Rossiter (RESAAS) each of whom lent their own perspectives on how technology entrepreneurs can navigate the growing number of options help finance their growth.

Looking Forward to Extraordinary Future 2018

For its part, the CSE recognizes the important role that public markets can play in driving capital formation which in turn can help early-stage companies scale up and compete globally. The scope of Extraordinary Future, however, extended beyond just the public capital markets sphere, a recognition that innovation ecosystem is diverse and needs support in a number of different aspects to fully succeed.

As James Black, VP of Listings Development at the CSE stated: “The excitement and enthusiasm shown by everyone at our first Extraordinary Future conference was incredible. For all involved, it is a clear indicator that Canada can play a major role in popularizing the next wave of technological innovation. As the Exchange for Entrepreneurs, the CSE is proud to support connecting the many stakeholders required to grow Canada’s emerging wave of technology companies. I have no doubt that we can build XF into one of the premium gathering places in North American for capital and emerging technology companies as well as thoughtful discussion on the intersection of tech and finance.”

As this year’s show clearly demonstrated, bringing together a dynamic mix of industry analysts, investors, technology entrepreneurs, and a diverse selection of public and private companies working to advance the innovation economy, is fertile ground for exciting conversation, connections and catalysts.

In the leadup to next year’s conference, it will be interesting to see how many of the bold predictions and forecasts made at this year’s show unfold. One thing is for certain, however, and that is for organizations such as the CSE, the future of Canada’s innovation economy continues to look extraordinary.

Victory Square Technologies is giving tech entrepreneurs a sporting chance

Young entrepreneurs are typically long on ideas, short on business experience and lack capital resources.

Incubator fund Victory Square Technologies (CNSX:VST) is a potential answer to their prayers.

Victory Square not only invests in innovative entrepreneurs, but provides them with a network of mentors, distribution partners, education programs, access to over 80 accelerators globally, and various other resources.

“We believe tech has become commoditized, which makes distribution and acquisition so important,” says Victory Square chief executive officer Shafin Tejani.

The Canadian company might be better known to some investors as Fantasy 6 Sports, which listed on the Canadian Securities Exchange in May 2016.

Change in busines model occasioned a change of name

In June of this year it changed its name to formally reflect the switch in business model to a venture builder that creates, funds and empowers entrepreneurs predominantly focused on blockchain technology, virtual reality, artificial intelligence, personalized health, gaming and film.

“Our vision is to continue to build a profitable portfolio of technology companies by giving them access to our resources that help accelerate growth,” says Tejani.

The genesis of Victory Square goes back further than 2016, however.

In 2007, Tejani founded Victory Square Labs, and built a successful track record funding seed-stage tech companies with exceptional entrepreneurs and high growth potential.

Successes included BTL Group; Tantalus Labs; V2 Games; a Film Fund deal with Unified Pictures; and partnerships with Launch Academy, Foxwoods Casino, BC Diabetes, and others.

“Given our record of successful results, we decided to create a public portfolio to scale faster. The first company the public vehicle targeted was Fantasy 6 Sports due to its high growth potential and the fact that sports and mobile gaming is global, it transcends geography, language, culture, etc.,” Tejani explains.

The fantasy sports company was, if you like, the advance guard for the rest of the Victory Square army.

“The entrepreneurs, IP [intellectual property], experience, talent, customers and partnerships that we established in these diverse verticals laid the solid foundation for the current and future portfolio of companies in Victory Square Technologies,” Tejani says.

The management team has broad experience in depth

Key to the company’s business proposition is the management team, which has a broad range of experience that matches the company’s areas of specialization.

The team includes former executives in professional sports, entertainment, video, media and film, along with leaders in technology, immersive sports, casinos, horse racing and gaming.

Tejani has successfully launched more than 40 start-ups in 21 countries, employing hundreds of people and generating more than US$100 million in annual revenues.

He’s been there, done it, and he’s not only bought the T-shirt but probably knows the people who designed it and the creators of the technology they used to produce it.

The executive team includes seasoned entrepreneurs and FansUnite co-founders Darius Eghdami and Duncan McIntyre, a chartered accountant and lawyer respectively, who focus on corporate development and operations.

Director Howard Blank has been an executive of the gaming and entertainment sector for more than 30 years, most recently serving as vice president of Media, Entertainment and Responsible Gaming for the Great Canadian Gaming Corporation.

Fellow director Tom Mayenknecht’s career spans journalism, television, professional tennis, executive management leadership with both the Toronto Raptors and Vancouver Grizzlies of the National Basketball Association, and the start-up of what is now Rogers Arena. He’s probably not the guy to challenge to a game of tennis at the office party.

Peter Smyrniotis, another director, is described as a “technologist”, as well as an entrepreneur and commercialization and growth professional based in Vancouver.

Tejani is adding to the depth of the team as his portfolio grows and expects to announce some pedigree additions in the near term.

The team also leans heavily on thought leaders at the companies it funds, both privately and through the company. The expertise these executives bring has proven invaluable in analyzing business opportunities.

The first moves were into film funding and personalized health technologies

Since its metamorphosis into an incubator fund in June, the company has made two major moves.

The first was to acquire a 40% interest in Unified Film Fund II, an entity that will be producing three major films in 2017 and 2018.

Two of the three could garner worldwide distribution right receipts of around US$14.4 million given estimates projected by talent agency William Morris Endeavor Entertainment and other sources.

Victory Square acquired its stake in the fund by issuing five million shares at an assumed price of $0.85, so essentially the stake cost C$4.25 million.

Shortly after strengthening its presence in the film and entertainment arena, it created a new venture, Victory Square Health, to oversee companies in its portfolio working on personalized health technologies.

Victory Square Health’s initial mission will be focused on management and prevention of the modern scourge that is diabetes.

Victory Square Health will make some introductions and provide technical development capabilities to its chosen projects.

Tejani believes personalized health is the future of medicine and that the team and partnerships Victory Square Health has established will allow it to be at the forefront of the rapidly growing health tech industry. Through strategic resources and technical development capabilities, Victory Square Health will use its relationships with seasoned industry experts, including Dr Bruce McManus and Dr Pieter Cullis, institutions such as the University of British Columbia and Simon Fraser University, and organizations such as BC Diabetes with leading endocrinologist Dr Tom Elliott.

Forget Silicon Valley … British Columbia is awash with technology companies

Some might expect Tejani to be carrying out this sort of activity in California’s Silicon Valley, but in fact British Columbia is awash with technology companies.

“British Columbia is a great place to build a tech company,” Tejani asserts.

“There is exceptional talent in B.C. and Canada as well as strong government support through funding and tax credits. B.C. has become a great place to build a tech company and Victory Square is looking to fill the gap by helping to fund promising early-stage companies.”

So, there are plenty of great candidates to go under Victory Square’s microscope, and better still, they won’t be expecting California-style levels of financial backing.

“We take great pride in being based out of Canada, and British Columbia specifically. Both the federal and provincial governments have made it a goal to continue to foster innovation, which can be clearly seen by the provision of integral grants and credits,” says Tejani.

“Victory Square has fostered relationships with these bodies to utilize financial opportunities and continue innovation…we have a ton of support from the provincial government and other groups like the BCTIA and the Vancouver Economic Commission.”

Victory Square’s current market capitalisation is around C$37 million and the group is focused on building businesses with positive cash flow and exponential growth potential.

It’s always difficult placing a value on incubator funds until a sale or spin-off comes along

Which brings us to the subject of valuing Victory Square.

It is the nature of incubators that they fly below the radar for long periods, investing money for little return until they cash in, perhaps through a trade sale or stock market flotation.

It’s at that point that the value is crystallized; otherwise, analysts must make their best guess at the worth of the portfolio, based on values of similar companies.

Having said that, the company is not plowing its cash into money pits.

“We build businesses that generate positive cash flow and continue to grow,” Tejani declares.

If 2017 is earmarked as the year the company scales up, then next year should be the one where it strides toward profitability, powered by revenue from its film investments and personalized health initiatives. Tejani is motivated to find liquidity events along the way that will allow companies in the portfolio to find new funding sources and grow their investor bases.

Few can deny that tech, leisure and healthcare are markets with massive growth potential.

“Tech is exponential and our first goal is to build or acquire businesses we can continue to scale. These profitable companies provide us with the option to take them to the public markets, or exit to a larger player. For example, a healthcare company we have funded will have the potential to be acquired by bigger players in the pharmaceutical space.”

In the meantime, it is just a matter of sitting tight and trusting the skills and judgement of a team that collectively has more than 100 years of award-winning entrepreneurial experience.

This story was originally published at www.proactiveinvestors.com on August 23, 2017 and featured in The CSE Quarterly.

Learn more about Victory Square Technologies at http://www.victorysquare.com/ and on the CSE website at http://thecse.com/en/listings/technology/victory-square-technologies-inc.

Subscribe Technologies helps small businesses with some big computing challenges

SaaS tools, malware, platform integration – businesses in today’s world need to stay on top of a dizzying array of technologies, all of which develop new functionality at such a pace it makes you wonder how small enterprises can possibly keep up. Subscribe Technologies (CNSX:SAAS) is fully aware of that challenge and has an answer in the form of a cost-effective services suite that covers pretty much every digital need a small- to medium-sized firm could have.

Subscribe Technologies is headed by public markets veteran Paul Dickson, a perfect fit given his background in software development spanning some 30 years. Dickson believes that Software-as-a-Service is just getting underway and that all software programs will soon run independently of our personal computer hardware, residing and functioning in the increasingly pervasive “cloud”.

“It ties in perfectly with all of the AI (Artificial Intelligence) advancements taking place, where SAAS applications are being developed with AI in the back end that ups the ability to analyze client data,” Dickson explains. “Nobody is going to run software on their computers locally in the near future. It is all going to be in the cloud.”

Established as a company less than a year ago (December 2016), Subscribe Technologies already has a set of product offerings ranging from accounting and sales software to a security platform for analyzing websites and an alternative to the famous Dropbox filing sharing service that Dickson says comes with fewer restrictions for users.

And that concept is the key to understanding how Subscribe Technologies intends to prosper over time. The idea is not to take on Microsoft (NASDAQ:MSFT) or Amazon (NASDAQ:AMZN) on their home turf, but to offer alternative software to businesses and businesspeople who find that incumbent products don’t fit the bill for them, often because they are too restrictive. Maintaining high functionality at a reasonable cost is the other pillar of the strategy.

As reflected in the company’s name, the cost side of the equation from a customer perspective involves subscribing to use the software and paying a monthly fee. Dickson says that because the targeted customer base is small- to medium-sized entities the monthly cost starts around $10.00, thus hardly requiring a potential user to engage in a make-or-break decision from a financial commitment standpoint.

Working with the company’s chief engineer in Victoria, British Columbia, and supported by a team of software developers in India, Dickson has developed, or acquired and refined, a number of products that were made available for subscription in the past few months.

The first to hit the market was bContact.com, a CRM (Customer Relationship Management) platform featuring both accounting and sales functionality.

“bContact.com is a fully integrated SaaS platform that performs invoicing, collections, reporting, billing and other functions so customers can essentially run their entire small business from any web browser,” Dickson says. “bContact.com is really the ultimate tool for managing your entire business back-end.”

The aforementioned Dropbox alternative comes in the form of a product named FileQ.com.

“With FileQ we wanted to offer a service that had fewer restrictions, as some of the most popular file sharing systems force users to sign up in order to access certain features,” says Dickson. “FileQ allows the user to share files freely with anyone and even plays video files with its integrated media player. Instead of paying a flat fee each month, the uploader of the files pays according to how much storage they require.”

The service most recently debuted is SiteSafe.io, which helps system administrators reduce the chance of having their website infected with malicious code. “SiteSafe is something we came up with to address issues that individual websites are having, as the hacking going on is relentless these days,” states Dickson. “It is definitely good practice to scan your own website for malware, or if you host other websites then you should scan the client websites.”

Sitesafe looks for viruses, worms, trojans and other malware, liaising with a third-party database that is constantly updated to both detect and eliminate programs designed to steal information, interfere with website performance, or worse. In the spirit of keeping things affordable, SiteSafe can be accessed to monitor a site for a monthly price of between $5.95 and $19.95.

Subscribe has other product offerings available as well, and Dickson says that there are more on the way. From a valuation standpoint, the company aims over time to build a reasonable base of recurring revenue and, eventually, profit. But given the value ascribed to some software programs these days, there is also the possibility that a Subscribe product gets hot and hits it out of the park.

As the products available to date have only just been introduced, marketing efforts have thus far been modest, and Subscribe is currently formulating a full-fledged marketing program that will utilize both keyword advertising and affiliate marketing, the latter enabling customers to earn money by referring others to use Subscribe services.

“Pretty much every SaaS company now has a referral program that pays people credits or cash for helping to obtain registered users,” Dickson explains. “The cost of acquisition can be high with online ads, where you are paying and hoping that people click. These days you do some of that, but also recruit others to market your product.”

One can’t deny that Subscribe has positioned itself to go after a huge market. Forecasts for the future size of the SaaS space begin in the tens of billions of dollars and run into the hundreds of billions. To settle on a particular number would be to miss the point – business spending on SaaS is big and getting bigger, and Subscribe need only capture a small piece to make a big difference to its bottom line.

“All we are trying to do is pick up a portion of the people who don’t want to use Dropbox, Salesforce, and the like,” says Dickson. “There is a great deal of business out there, and because there are others in the space capitalizing on this opportunity as well, that’s why we are establishing Subscribe as a multi-faceted SaaS company. In the months ahead, you’ll be seeing us meet a lot of our user targets and bringing new products to market.”

This story was originally published at www.proactiveinvestors.com on August 28, 2017 and featured in The CSE Quarterly.

Learn more about Deveron UAS at http://www.subscribetech.com/ and on the CSE website at http://thecse.com/en/listings/technology/subscribe-technologies-inc.

Torino Power Solutions nears turning point with unique approach for better power grid efficiency

There are more than a few companies worldwide selling equipment to monitor the transmission lines that deliver power to our offices and homes, but none has products like Torino Power Solutions (CNSX:TPS). It should come as little surprise, then, that Torino CEO Rav Mlait speaks excitedly about the company’s outlook, fully understanding, as he does, the clever technology that makes its products so unique.

Before getting to that technology, however, a revealing story about the electricity we use every day is in order.

Power transmission is not nearly as efficient as the general public might think. From the time electricity leaves a power plant to the time it reaches its end user, it is common for somewhere between 6% and 15% of the power to be lost, and many estimates reach even higher. The losses occur for a variety of reasons.

One of these is that the company managing the transmission system needs to make sure its power lines don’t run too hot. Not only can excessive heat damage equipment along the transmission pathway, but when lines get too hot they can damage power lines that are very expensive to install and maintain.

So, how do many electrical utilities gauge the temperature of their lines to optimize the amount of power flowing through at any given time? Would you believe by referring to historical weather pattern charts and ambient temperature readings?

Despite the imprecision inherent in such an approach, Mlait confirms that the practice is common. Now, what if the utility were able to know what the temperature actually was along different sections of a long transmission system such that it did not have to underutilize its infrastructure?

That’s the issue that Torino addresses. And with over $10 million spent on R&D, plus patents in place, the time to push for widespread adoption of the company’s solution is at hand.

Torino’s “Powerline Monitoring System” is a combination of a hollow aluminum sensor placed on a power line, combined with a nearby “interrogator” that reads microwaves bouncing back from the sensor. The sensor expands and contracts according to the heat of the line, and an algorithm in the interrogator converts the signal to a temperature reading that is then relayed to the utility in real time.

“As populations grow and distributed connection resources such as wind and solar gain prominence, it is putting the existing electrical infrastructure under more strain and causing wear and tear,” Mlait explains. “Part of the solution is better data, and it all ties into the industrial Internet of Things concept whereby real-time information enables system administrators to make better decisions.”

Torino is not the only company to conclude that there must be a better solution for monitoring line temperatures, but it is the only one with a passive sensor. Mlait says that all competing line sensors require power sources, in the form either of batteries or the power lines themselves. “So, if a power line goes down, their sensors can go down with it. Ours won’t, and that is part of our competitive advantage.”

Another advantage comes in the form of economics. Torino will deploy a system, which is comprised of three sensors and one interrogator, for between US$40,000 and US$50,000, or approximately half the cost of its rivals’ installations.

“Having more data from more lines, and thus a richer data set, is a better way for utilities to manage their assets and conduct dynamic line ratings,” explains Mlait. “That is one of the reasons we priced our technology where we did, so that utilities can deploy more sensors for the same cost.”

Mlait claims that utilities can quite easily recover up-front costs within 12 months, enabling the return on investment to stack up quickly.

Consistent with the early stage of the product roll-out, Torino’s solution is being used by a single utility at present. Tri-State Generation and Distribution Association installed the system on a trial basis last year in eastern Colorado. In what can only be taken as a good sign, it added to the trial in June of 2017 by moving a second system to a more critical location in western Colorado.

“Utilities are conservative when it comes to adopting new technologies, and understandably so,” says Mlait. “They want to really examine new equipment before deploying it extensively throughout their expensive infrastructure.”

Mlait says that he and his team are in discussions with a number of utilities both in North America and overseas, and while nothing has been finalized, observers shouldn’t be too surprised if additional installations make news before long.

Another component of the marketing strategy is to potentially ally with distribution partners with reach into markets that Torino has yet to develop. “We are a relatively small company, so the idea of partnering with a large distributor is pretty significant,” Mlait says.

Word is definitely getting out because Torino has started developing new products based on feedback from potential users. The company recently initiated development of a system for distribution lines, which are the smaller power lines operating inside urban areas. Urban power lines often heat up and sag, causing a host of challenges such as power outages and clearance issues, so a robust solution in this environment would be most welcome.

The other development program announced recently involves underground sensors. Mlait says that potential clients have asked if products are possible for applications such as subways and other underground infrastructure.

“People in cities such as New York, London and Toronto know that there are significant down times associated with underground systems, largely owing to deterioration of aging lines,” says Mlait. “We have heard about the need to better monitor these cables as they continue to deteriorate and are looking to provide a solution down the road.”

With a cost/benefit ratio that makes sense and a need within a crucial industry that cannot be denied, the potential clearly exists for Torino’s sensors to gain broad acceptance. Installation of a mere 100 systems could bring in over C$5 million on the top line, and there is the possibility for ongoing revenue streams from installations as well.

“It is not too often that you see new technology in this industry. We have something that is unique and some highly respected companies have suggested to us that we might have a game-changer on our hands,” according to Mlait. “From an investment standpoint, we have an advanced product starting to make headway, but a pretty small market cap. Throw in our ability to develop new products as well and we feel very positive about our future.”

This story was originally published at www.proactiveinvestors.com on August 29, 2017 and featured in The CSE Quarterly.

Learn more about Torino Power Solutions Inc. at http://www.torinopower.com/ and on the CSE website at http://thecse.com/en/listings/technology/torino-power-solutions-inc.

Deveron UAS’s drones helping agricultural efficiency to reach new heights

Deveron UAS helps agricultural efficiency reach new heights with a data-gathering drone fleet.

New trends in technology are penetrating every conceivable part of our daily lives, and the food on our table is no exception.  What many shoppers might not know, however, is that technology is now making a difference right at the very source of our food – the farmer’s field.

The agricultural sector is experiencing a rapid digital revolution, with some farms these days run more like high-tech outdoor factories.

Right place, right time…

Deveron UAS Corp (CSE:DVR), an enterprise drone data provider targeting agriculture, would thus seem to be at the right place at the right time.

This use of drones, or for the uninitiated, unmanned aerial vehicles, is a nascent industry, yet one where the potential rewards are enormous, explains Deveron’s co-founder and Chief Executive Officer David MacMillan.  Put simply, the company’s pilots ‘fly’ farmers’ fields, mainly over mass crops like corn and soybeans, and provide follow-up analysis to help increase yields and reduce costs.

Services include thermal imaging, data analysis and drainage identification – in other words, Deveron’s technology is able to tell a farmer what is going on in his field, something that is oftentimes difficult to determine by working strictly at ground level.

Macmillan says that in discussing Deveron with potential users, the emphasis must be on explaining the advantages of this new type of analysis, rather than trying to tell people that they’ve been farming the wrong way their whole lives.

“Essentially, we’re trying to enable decision makers in agriculture to make more efficient choices,” he says.

For farmers eager to embrace the concept, Deveron is one of just a handful of entities with a permit to fly drones across Canada.  There are 15 pilots available as and when needed in eight of the country’s 10 provinces (having started in Ontario with just two).

MacMillan explains that it makes more sense for farmers to hire Deveron than to buy their own drones at great expense, particularly if field analysis is needed only a couple of times each year (as is often the case).  The fact that farmers need to make key decisions on a variety of crop planning issues every year is a strong selling point, both for farmers who might use the service, as well as to investors considering whether to back Deveron with an equity purchase.

A strong recurring revenue model…

“Our hope is to continue to show the investing public that there is a strong recurring revenue model here,” MacMillan says.  “Corn grows every year and the farmers need the data every year to make informed decisions.”

Currently, the group is targeting large agricultural operations as customers – those which might manage a million acres or more –  as well as smaller outfits.  At this point, it is all about encouraging a network to develop.

While it is still early days, Deveron is already seeing engagement expand as bigger players increasingly sell its services ‘downstream’ to their customers.  At present, there are around 30 such partnerships with big farm managers.

Recent collaborations include the retail division of GROWMARK Inc., vegetable producer Bonduelle North America and major farming services and grain retailer Thompsons Ltd.  Everyone gains in the network, explains MacMillan, as the large entities get Deveron’s services at a discount, and then in turn make some money when they sell it down the line.

“There are 400mln acres of farmland in North America so it’s a huge addressable market,” adds MacMillan.  Some 88mln of those are in Deveron’s home Canadian market.

What could that translate into in dollars and cents? At Deveron’s standard $3 an acre charge, 2-3 flights a year over 400mln acres, and an assumed adoption rate of 20-30%, that’s a potential annual market of $700mln, reckons MacMillan, and likely to increase in the future.

First mover advantage…

For now, though, revenue and earnings are less important to the group than consolidating its first mover advantage by investing and scaling up the business.

MacMillan’s background is in public venture capital and he came to research drones three or four years ago after looking to invest in new technology which could be supported by Canadian companies.  Rather than obsessing over the ‘flying robot’ concept, he was interested in how data collected by the vehicles could be used intelligently, and agriculture was a good place to start.

“Historically, network plays end up having very high IRRs (internal rates of return) for the first people in the space,” he explains.  Behind all that, the idea that by 2050, with a global population of 10bln people, the earth’s food security may be an issue if agricultural yields don’t increase only added to the drive to establish the company, he says.

Business partner and co-founder Norm Lamothe is himself a farmer and manages 500 acres of land, so is ideally placed to know what famers need and want.

If valuation is any guide, it would seem this combination has the company heading in the right direction.  From around $2mln in 2016, Deveron is now worth nearer to $8mln, and recently raised $2mln, says MacMillan.  The idea now is to continue to grow organically, scale up the business and gain credibility via more collaborations and partnerships.

Canada is the focus for the time being, but to increase the amount of drone flights possible (they can’t fly fields in the snow) developing more of a presence south of the border is appealing, says MacMillan.

There is also the possibility of news flow over the next year around further partnerships, new revenue streams, and intellectual property value related to the company’s analytics technologies.

The seeds now planted, careful nurturing of Deveron’s business has the potential to yield robust returns for shareholders in the years ahead.

This story was originally published at www.proactiveinvestors.com on August 15, 2017 and featured in The CSE Quarterly.

Learn more about Deveron UAS at http://www.deveronuas.com/ and on the CSE website at http://thecse.com/en/listings/cleantech/deveron-uas-corp.