Category Archives: CSE Issuer Stories

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.

Tower One Wireless the one North American microcap tapping int’l cellular tower build-out

Often in the investment world, a long-term business trend is easy to identify, but finding the right stock to buy to take advantage of that trend is anything but.  Fortunately, the choice is simple for microcap investors looking to hitch a ride on the rapidly expanding need for cellular network capacity by owning shares in a cellular tower company, as there is only one such stock in North America: Tower One Wireless (CNSX:TO).

Fortunately, too, the basics of the business are easy to understand.  In many regions, mobile network operators don’t own the towers to which their antennas are fixed, but rather lease space on them.  This approach essentially enables a carrier to share tower costs with other carriers serving the same area.

For a tower company, then, owing the structure that wireless carriers need today, next year and into the foreseeable future can be a stable, and lucrative, proposition.

“What makes this business interesting is that a tower costs between $50,000 and $70,000 to erect, but the monthly lease payments come in at $1,000 to $1,500, and that is just for one mobile network operator,” explains Alejandro Ochoa, Tower One Wireless Chief Executive Officer.  “We sign 10-year lease contracts, with a 10-year option, but companies in the tower sector are valued highly because in essence use of the towers is perpetual.  And if we add a second or third carrier to use the tower, there is no marginal cost to us.”

Reflecting the Colombian-born Ochoa’s 18 years of investment banking experience in Latin America, Tower One Wireless is focusing its early building efforts in Argentina and Colombia, with Argentina expected to account for about 80% of activity.

“Argentina went through some challenging times, but now the country has elected a new president and is back in business,” Ochoa says.  “There will be demand for 10,000 new towers in Argentina.”

Ochoa tells an impressive story of competing with a large pool of rivals for the Argentine business before winning a spot on a shortlist of 15 companies, and finally being among the four companies awarded the right to build towers.  “We all got awarded the same number of towers, which is 100 to begin with,” he says.

So far, the company has 20 towers up, and anticipates having the first 100 hundred built sometime around the end of 2017.  The early exercise of warrants combined with a $5mln credit line will see the company through that planned construction.

Key to understanding the risk side of the equation is that Tower One Wireless never builds a tower hoping that a carrier will need it.  “We don’t build towers on a spec basis, but rather on a build-to-suit basis,” Ochoa emphasizes.  “Every tower I build has a guaranteed tenant.  My relationship with other carriers is my chance to add a second or third carrier to that tower.”

Once a site is agreed and permitted, construction takes 60-120 days, and some 30 days later payments begin to come in from the first carrier on the tower.  It is thus an easy business to model, and Ochoa’s model suggests very good returns indeed.

“With 100 towers we should have an EBITDA margin around 72%,” Ochoa says, adding that the company won’t see everyday expenses increase as it expands its tower pool further.  “The majority of the work is outsourced, so I can move from 100 towers to 500 towers and manage it with the same 15-person team I have today.”

Ochoa describes his team of accountants and other professionals as hailing from major wireless companies and tower builders, including a legal unit entirely from telecommunications giant Telefonica.

Ochoa has some interesting comments when asked why he chose to list the company on the public markets.  “When you sit across from the wireless carriers and they ask what makes you better than your 15 competitors with many times the capital you have, it is that I am not structured to sell my towers back to American Tower (NYSE:AMT).  Every other company out there is modeled to build their towers and sell them as their natural exit.  By being public, my investors have the embedded option of getting in and out of the company as they please.”

He also talks about the dynamics of capital in South America, where among his banking achievements is leading the team that listed Facebook (NASDAQ:FB) on Colombia’s stock exchange.  Institutional investors in Colombia and other Latin American countries must observe foreign investment limits dictating that a substantial portion of any equity allocation ends up in domestic stocks.  In some cases, this means a fund has fewer than 100 issuers to choose from.

Ochoa would one day like to provide them an additional choice.

“Canada has been very proactive in Latin America and is a market where investors understand the region through mining and oil and gas involvement,” Ochoa states.  “The potential to access capital by listing in another market is also a reason we decided to go public.”

The company Ochoa mentions absorbing other networks, American Tower, is listed on the New York Stock Exchange and sports a market capitalization of some US$60bln.  In 2017, it has outperformed the S&P 500 average at a triple-digit pace.

Putting Tower One Wireless and its C$13mln market cap next to American Tower makes for a lopsided comparison to be sure, but it illustrates the potential for value expansion as the former’s tower network builds out.  It also shows that demand for towers is nothing if not healthy.

“I think looking at our company today makes sense because with the 100 towers we should finish over the next six months we’ll have positive operating cash flow,” Ochoa concludes.  “On a discounted cash flow basis, every dollar you invest in a tower is worth three dollars the day you finish building.  Our company is well-managed and the business is simple.  And we are the only publicly listed entry point into the tower market at the microcap level.”

This story was originally published at www.proactiveinvestors.com on August 31, 2017 and featured in The CSE Quarterly.

Learn more about Tower One Wireless at http://www.toweronewireless.com// and on the CSE website at http://thecse.com/en/listings/technology/tower-one-wireless-corp.

Interview with Tom Rossiter, Chief Executive Officer, RESAAS Services Inc.

In late July, Peter Murray of Kiyoi Communications sat down with Tom Rossiter, Chief Executive Officer of CSE-listed RESAAS Services Inc. (CSE:RSS) to discuss his perspective on opportunities in the real estate sector and RESAAS’s unique platform. Below is the transcript of their discussion.

Peter Murray (PM) RESAAS offers unique services to the residential real estate industry, a massive market if there ever was one.  Can you begin by walking us through what the company does at a high level, and given all the pivots that seem to take place at technology companies, has your mission changed along the way?

Tom Rossiter (TR) Our mission hasn’t changed along the way, it has evolved.  If we rewind to the beginning of RESAAS (Real Estate Software as a Service), we set out to create an online platform that aids the existing practices of the real estate industry.  We all know that real estate agents are social professionals – maybe the most social group of professionals that exist.  When you are together with them in real life it is amazing to see the knowledge sharing, the education, the tips and tricks, and the deals that get done.

We thought that should be supplemented digitally so the value of a professional circle could transcend a local market and put an agent or organization on the map not just locally but nationally, and maybe even overseas.  You can think of RESAAS as an online destination for real estate professionals to act as they do in real life.

Eventually, the networking effect kicked in, which means the bigger the network, the greater the value to those in it.  Word got out about all the great content, and data, and deals, and leads, and listings that were happening inside RESAAS amongst the agents using it.  Leading organizations with extensive footprints in terms of agent count and office locations began to catch wind of what was going on and thought, “Wow, we have this large physical presence.  What would happen if we embraced this RESAAS model to be our digital complement?”

A big part of our business now is working with these larger brands and organizations and supplying our technology and services to their networks.  We provide a white-labeled platform so they can give their agents a way to interact digitally, and ultimately do more business.

(PM) 2. What tools are you providing and what makes them unique?

(TR) The tools are really just an extension of what the agents are already doing.  Every agent either has listings or wants to find listings for buyers, so we provide an easy system for listing sharing amongst agents.

Buyer needs is a particularly important aspect.  In hot markets, there is less inventory and more demand.  Where listings are scarce we provide a buyer needs experience so that agents can signal they have a buyer and detail that buyer’s requirements.  While RESAAS works very well across buyer’s markets, seller’s markets and neutral markets, we’ve become particularly popular in seller’s markets, where there is that supply issue.  What we have been able to do is to create a new way for the industry at large to organize and visualize listings.

The way the industry works is that it can take up to five days between the time an agent signs a listing agreement and the time a property is listed on the MLS with pictures and other information.  During that period, agents might communicate the listing to others and transactions can thus occur pre-market.  And those that do are outside of the MLS.

For local organizations charged with governing their respective local real estate markets, this is a big problem because they need to know everything about the market so their database, their analytics and their comparables are accurate.

Last year in the US about 22% of properties that sold never got to the point of having an MLS listing.  And in hot markets, that can reach 40%.  To bring that back to RESAAS, we have created a way to capture listing data pre-market that is structured, organized, clear and compliant.  Agents love it because it levels the playing field.  But even more important is that our clients, the local real estate associations and boards, can finally visualize and track activity in its pre-MLS phase.

Because of varying regulations and bylaws in individual markets, RESAAS sometimes has data for days, or even weeks, before any other destination online has it.  Ours is the first platform of its kind and has been termed extremely disruptive.  We are marching out across the US and activating different markets every week.

(PM) 3. Would you say that locating senior management and most of the technology team in Canada has been the right decision for RESAAS?

(TR) We are fortunate to be based in Vancouver, which has become what I consider to be the Silicon Valley of the north.  It is a thriving destination for technology companies to base an office in or establish their headquarters.  I have been here for 10 years and watched the city transform from a technology reception standpoint such that there is now an understanding of how a company like ours needs to be supported, financed and communicated.

There is an amazing community in Vancouver amongst technology companies.  Even though companies might compete with each other, there is collaboration and innovation.  And given the variety of companies that exists here – private, public, start-up, emerging, well-established, large and small – there are so many industries serviced by them that the thought-leadership and mentorship opportunities are tremendous.

Importantly, Vancouver has a buoyant investor scene that supports and understands technology companies.  As a public technology company on the CSE, we could not be more grateful to be in such a dynamic environment.

(PM) 4. Take us inside the RESAAS strategy.  How did you develop your game plan, and what are the keys to executing effectively?

(TR) RESAAS started as a freemium platform.  We opened the gates to a network we had built and did so without putting up a paywall.  We wanted to minimize the barriers for busy professionals to use and believe in our platform.

The strategy all along was to build a critical mass of users and analyze what they did – what they talked about, what they wanted and how they used what we had created.  We didn’t put a timeline on it.  Our approach was to launch the platform and once we felt we had enough information, analytics and patterns to understand the behavior, then we’d be informed enough to build solutions that we could sell.

As a result, everything we are doing now and everything we have created is based on industry activity and demand.

Really, it is consistent execution of the game plan.  Run something for free, analyze the patterns and data, build solutions that represent what people are crying out for, then monetize it at scale to an industry in need.  We are now in the last phase of that four-pronged strategy.  By spending time up front to understand exactly what different facets of the industry require, when we build a solution and take it to market the reception is fantastic from the get-go.  We are not finding our way or having to pivot on the fly because we have gone to market with a polished solution we know is in high demand.

(PM) 5. Some technology companies become profitable early on but others achieve very high valuations with hardly any revenue at all.  What is your take on this, and where is RESAAS on the earnings versus valuation continuum?

(TR) We view RESAAS as similar to a Silicon Valley company mentality.  By that I mean that the process is to assemble a team and raise capital, build a product and run it for free, and then based on the data you subsequently monetize it.  We have chosen to do that in Canada, we have chosen to use the CSE as our vehicle to raise our capital, and we have spent time, capital and resources to build something that has longevity and scalability.  And the product is in high demand now that we are selling it.

During the early days, people got excited because when you assemble a brilliant team trying to tackle a problem in an industry as large as real estate, it is natural for people to dream big.  During the development/pre-revenue phase, people get excited and imagined the blue sky.  But when you turn on the revenue, that aspect of the business is beginning from a cold start.

What can happen is that people start to look at you from a current revenue standpoint and forget about the blue sky.  It happens to a lot of companies in Silicon Valley, too.  We are in that phase where we must push revenue growth month-after-month, quarter-after-quarter, geared around a recurring revenue model.  We know where we are going with this, we know how big the market is, we know how many customer types there are, and we have created a model that enables us to monetize a single agent multiple times.  That, combined with the intrinsic value of the data we are gathering, puts us in a strong position for robust valuation in the near term.

(PM) 6. Tell us about the technology and user base you have built to date.  What comes next?  How does it grow in new ways and monetize from here?

(TR) RESAAS attracted almost half a million agents in the first 24 months of operations.  From that we learned, through analytics and behavioral analysis, what we felt different groups in the industry needed and would buy, and we built those solutions.

We started taking our solutions to market in 2016 and are already working with some of the biggest brands in the space.  The top two global real estate franchises are RESAAS customers and run on our technology.

In 2017, we judged that the role of the free network for real estate agents had played its part.  As I’ve already mentioned, the years we spent gathering data and analyzing behavior formed the basis for the products we subsequently created.

We have thus decided to add a paywall to RESAAS, which means the free version is no longer available.  Going forward, all users will be paid for either by the brokerage they belong to, their local association, or by themselves.  It will mean a reduction in the number of users we have but the revenue per user will increase dramatically.  This is a tactical part of our strategy that we began executing this year and we are very happy with the early conversion numbers.

(PM) 7. You have raised over $30 million since debuting on the CSE in February 2011.  What types of investors back a company like RESAAS and what can you tell us about your relationship with shareholders?

(TR) RESAAS is fortunate to have an enlightened, supportive and loyal group of shareholders who have invested from our IPO in 2011 all the way up to our most recent financing.  That is a tremendous asset for our company and something we are very grateful for.  It has allowed us the time, bandwidth and resources to build the company we envisioned, to take the time to professionally execute on our vision, and to take our strategic plan to market in exactly the way we wanted.

The result is that we have come to market with a product and set of services the industry has never seen before and clients are calling out for.  The entire process has been made a lot easier by being listed on an exchange like the CSE.  It provided a tremendous amount of assets, tools, resources and connections outside the network we have within our own company.  The CSE has proven to be a fantastic capital markets partner and facilitated the timeframe we needed to build a world class technology company here in Vancouver.

(PM) 8. Looking at life in the public markets, what are some of the positives, and what has been your biggest challenge?

(TR) RESAAS has found the public markets, on balance, to be extremely advantageous for our company’s growth.  They provided a vehicle to raise a tremendous amount of capital.  They provided us an avenue through which to meet influential, informed and intelligent investors across Canada, and they furnished our company with enough capital to execute our vision.  We have been able to build a better business because of this.

Going public pre-product is somewhat unconventional in North America and definitely made us refine our communication style.  We communicate corporate updates clearly and more regularly than is perhaps the norm, to give investors insight into the direction the company is heading.

Typically, a company would be private and build something and would go to market.  They would have all the right components in terms of revenue growth and then they would IPO.  RESAAS chose to IPO early and use that time to build a product from nothing, but having spent the hours and airmiles to understand industry needs.

We were fortunate enough to have a shareholder base that believed in our vision and supported our direction.  And here we are six years after our IPO in a position where all of our early shareholders are still supporting the company.  They are extremely happy with what we’ve created, and they are over the moon with the opportunity before us.  We could not be happier or more fortunate to have such a supportive group of investors behind the company.

(PM) 9. What would you tell the next generation of growth companies about going public?

(TR) As an emerging tech company, a listing on the public markets provides a proven platform to raise capital, whilst retaining more control than perhaps the alternative of remaining private would allow.  In addition to the financial benefits that a public listing can bring there is greater awareness, credibility, investor confidence and use as a sales tool.  I have to say that the public markets have been fantastic.

(PM) 10. Finally, can you speak about the achievements investors can look forward to in the coming 12 months.  Why should people be excited about RESAAS?

(TR) Well, I would say that 2017 is RESAAS’s breakout year.  It’s the year we finally recognize the effort our company has put in over the last six years to monetize our solutions.  We already work with national brokerages and franchises.  We already work with major and progressive real estate associations and boards across North America.  And most excitingly for this year, we launch our newest solution aimed at the brokerage network, targeting over 120,000 independent brokerage firms across North America with a solution we spent more than a year building based solely on input from the people who run those brokerages.

This is the year that RESAAS becomes “SAAS-ified” and we could not be more excited about the direction the company is heading, our growth potential, and ensuring that we remain number one in this industry from a B-to-B technology standpoint.

CSE Stockpools Cannabis Investment Challenge 2017: Insights & Updates

[Updated: 8/07/17] In partnership with Stockpools, Lift Cannabis Expo, and Abattis Bioceuticals Corp. (CSE:ATT), the Canadian Securities Exchange is pleased to announce Canada’s first Cannabis Investment Challenge: a fantasy online stock trading competition focusing solely on the Canadian cannabis sector.

This exciting competition enables participants to create a fantasy portfolio based on select companies listed on the CSE that are actively involved in the cannabis industry.

Contestants will compete for weekly cash prizes based on the best performing portfolios each week and will also be able to play for the grand prize trip to Las Vegas for a marquis marijuana convention. There are up to $4,000 in cash prizes up for grabs as well as the grand prize trip, valued at $3,000.

To learn more about the Cannabis Investment Challenge, and to register for the upcoming week (Week 7), click here.

Weekly Featured Company Insights

As part of the Cannabis Investment Challenge, each of the seven featured companies were asked for their perspectives on the rapidly evolving cannabis industry in Canada.

Companies who have shared their insights include (in no particular order):

Follow along as we highlight one of the seven investment challenge’s featured companies each week and gain insight into how they see the opportunities and challenges ahead for the cannabis market.

Disclaimer: The opinions expressed below are those of the author themselves and do not necessarily reflect or represent the views of the Canadian Securities Exchange.

Week 7: Brad Moore CEO: Global Cannabis Applications Corp. (CSE: APP)

Around the world, more and more governments are either moving toward legalizing medical marijuana or decriminalizing it altogether. In fact, the global cannabis market is expected to grow at a CAGR of 37.8 percent between 2016 and 2020.

With legislation pending in more than 40 nations, analysts are forecasting legal medical cannabis will become a multi-billion- dollar -per -year industry. GCAC is poised to profit from the growing global trend in medical cannabis regulation and can begin generating revenue faster than the licensed producers trying to break into the space. Global Cannabis Applications Corporation’s (GCAC) technology solutions under the Citizen Green brand are “dedicated to the digital world of all things medicinal cannabis.”

Many potential medical cannabis users in newly regulated markets such as Germany, Australia and Canada may have limited to no experience with cannabis.

Citizen Green mobile apps, CannaLife and Prescriptti , provide a bridge to knowledge and the support of an online community for medical cannabis users. These two solutions create a massive user-driven data solution, a unique opportunity for cannabis R&D.

GCAC’s ‘Pain To Strain’ model combines advanced algorithms, artificial intelligence (AI) and real time anecdotal user feedback  to provide a highly valued user data set for licensed producers, practitioners, pharmacists and regulatory agencies.  This information is instrumental for creating safe, effective products and programs for medical cannabis users.

As such unlike the plethora of overvalued licensed producers, the revenue model for a cannabis centric technology company is not tied down by a lengthy licensing process nor the heavy costs associated with acquiring land and building facilities.  As the global consumer base of medical cannabis products grows so does the value of Global Cannabis Applications Corporation.

Week 6: Larry Bortles – Chairman of the Board, Canada House Wellness Group Inc. (CSE:CHV)

The landscape of the cannabis industry is rapidly changing and expanding, as this trend continues we see an industry consisting of a wide array of businesses that have different purposes and objectives.

Canada House places value on its overall objective that we believe should be applied across the industry, which is to not just focus on market-driven or monetary objectives but also a social responsibility regarding the reinstatement of cannabis as an alternative option to health ailments. Cannabis hasn’t been provided the opportunity to play the role it should in treatment that it did historically before experiencing disparagement and Canada House is helping in its reinstatement of being an acceptable form of treatment. We see this as a common trend within the industry. If we do this successfully we are on track to be successful in the industry ourselves and vanquish the incorrect reputation cannabis has received.

The subsidiaries of Canada House are formed for the best opportunity at success with our integrated services that have been established through a client-centered approach. Together, Marijuana for Trauma, Knalysis Technologies and Abba Medix provide a vertically-integrated platform to help our clients achieve health outcomes that were not previously attainable, an alternative from pharmaceutical cocktails. A client-centered multi-faceted approach based around the role that cannabis plays is a combination that we think the cannabis industry should embody as changes and expansion occur.

Week 5: Linda Sampson, CEO and Director, Marapharm Ventures Inc. (CSE:MDM)

Marapharm Ventures Inc. is a publicly traded company, primarily investing in the medical and recreational cannabis space, with operations based in British Columbia, Canada.

Through its wholly owned operating subsidiary Marapharm Inc., the Company has applied to Health Canada to become a licensed producer under the Access to Cannabis for Medical Purposes Regulations (ACMPR).  Marapharm’s initial facility, a proposed 22,000 sq ft state-of-the-art cultivation facility, will be constructed on an 11 acre leased site in Kelowna, British Columbia.

The Company’s growth strategy will be to build facilities or acquire licenses in the United States, determined by identifying opportunities in the market. The company has currently focused its attention on opportunities in Nevada, Washington and California. Land has been purchased and construction has begun, In the Apex Business Park in the City of North Las Vegas, Nevada. The company’s intention is to build cultivation and processing facilities in this location, which will utilize two medical and recreational cultivation licenses and one medical processing license. In Washington State, the Company has an opportunity to lease a facility to an I-502, tier 3 license holder. The licensee holds a production license for 30,000 sq ft and a processing license with unlimited potential. In California, we have commenced the purchase of two industrial properties and own a delivery service for medical cannabis.

Marapharm has also purchased and is developing an all-natural hemp oil based cosmetic line called, Maragold, which will be ready for market within a few months. The products created by Maragold will be marketed online directly to end-users and will be sold individually or by subscription.

Week 4: Benjamin Ward, CEO of Maricann Group Inc (CSE:MARI)

As the CEO of Maricann Group Inc., I have been setting the stage for our entrance into the European medical marijuana market for many years. In 2014, we identified Germany as a potential gateway into Europe and secured a facility in Dresden.

Early this year, when German parliamentarians voted unanimously to legalize cannabis based medicines and opened up an estimated 800,000 patient market, we obtained $42,500,000 in non-dilutive, debt-free financing to begin the Dresden facility expansion.

Currently, there are only a handful of Canadian producers who export marijuana, but with the country running out of legal marijuana to supply both medical and – soon – recreational users, exporting is becoming increasingly hazardous to the domestic market.

It has also became apparent that eventually countries will seek to trap the industry’s economic opportunities while alleviating downside risk for regulators in product safety and close their borders to imports. When this happens, only companies with boots on the ground will have a place in the market.

For these reasons, we have chosen not to export our products from Canada and instead produce in Europe to exclusively supply European patients.

Maricann is entering Europe equipped with a German operational team, including the former head of production and manufacturing for Bayer. The company has also carefully selected an Advisory Board of well-respected German-based medical professionals in research, healthcare and business.

We are slated to produce 40,000 kilograms of cannabis per year inside the new 150,000 square foot GMP-compliant, clean-room cultivation facility. With the potential for 820,000 square feet, we can increase production and scale capabilities in Europe’s largest market for medical cannabis.

It is our aggressive global expansion efforts paired with our market leading technological extraction and product formulation differentiation that has positioned Maricann to be leaders in the European and Canadian medical market.

Week 3: Rosy Mondin, CEO of Quadron Cannatech Corp. (CSE:QCC)

Anil Mall from Stockpools asks:   Where do you see things going with legalization and how does this impact Quadron?

Licensing:

In Canada, there already exists a diverse and well-established private sector for both medical and illicit recreational (i.e. ‘non-medical’ or ‘adult-use’) cannabis; in fact, Canada is considered by many as a world leader in cannabis production.

Through my work as Executive Director of the Cannabis Trade Alliance of Canada (CTAC), we’ve been advocating government to implement a licensing structure which grants more licenses to increase the quantity and variety of the available supply chain.  We believe a legalized cannabis licensing structure should be open to industry participants of various sizes, from craft to larger forms of industry, and regulations should implement a more responsive licensing system providing greater flexibility for businesses.  Therefore, we would like to see a move towards a system of separate licensing categories like we’ve seen in Washington, Oregon, Colorado, Nevada and California. Having various types of licensing ‘classes’ falls into line with the consultations and recommendations we made to the Task Force on Legalization last year.

Extracts:  Extracts are the fastest growing category of cannabis products. Canada’s medical cannabis industry has been focused on dried cannabis product, however demand in extracts/oils/concentrate is growing exponentially, and oil sales in Canada are already significantly outpacing dried “bud”.  According to Health Canada data, as of March 2017, oil sales comprised ~50% of total sales by Licensed Producers, and does not consider sales of oils and extracted products sold through dispensaries and the black market.

Health Canada data: bud vs oil sales

Cannabis oils, in addition to allowing for a greater variety of product, is safer than smoking, is more stable than dried material, and can be produced using standardized preparations (particularly important for consistency in dosing).

In addition to this Health Canada Licensed Producer data, if we look at the sales data coming from Washington state, concentrate sales skyrocketed to $140 million last year.  Additionally, if we look at the data that came out of the Mackie Research Focus Report earlier this year, assuming full legalization, by 2018 the Canadian demand for oils to increase by 198,000% by 2020). There’s no shortage of data and statistics. Impressive figures are also coming from growth of ancillary markets, and consulting services: In the USA, investment in the ancillary market (i.e., businesses that do not touch the cannabis plant) grew 161% in 2016 compared to 2015.

Catering to these trends is exactly where Quadron’s offerings are targeted.

The Science of Cannabis:  As cannabis use expands and more products enter the marketplace, third-party testing labs will be needed to ensure purity, potency, and consistency of products before they reach the consumer. It’s a crucial step in the supply chain process, a critical consideration for public health and underlies the whole framework for legalization which is predicated on “safe product”.  Anticipating these needs, our subsidiary Soma Labs Scientific, aims to establish scalable labs, using research, development and science to establish industry standards for the creation of standardized extracts, using our state-of-the-art extraction and formulation equipment, products and services.

Extraction and Formulation Equipment:  There is so much demand for extracted product that there are waiting lists to purchase commercial-scale machinery. Quadron is currently the only company trading on the CSE in the cannabis ancillary equipment manufacturing and supply space, giving us a great first mover advantage.

For more information on Quadron Cannatech Corp. please email QCC@kincommunications.com

Week 2: Robert Abenante, President & CEO, Abbatis Bioceuticals Corp. (CSE:ATT)

Who is Abattis?

As the cannabis industry gears up for legalization in Canada, Abattis Bioceuticals Corp. is establishing itself as the leader in providing services to licensed producers, medical and legal recreational users and large scale farmers of marijuana and hemp biomass. “We see this industry commoditizing at an incredible rate and our intent is to be the picks and shovels cornerstone to this high growth sector.” stated Robert Abenante, President & CEO of Abattis Bioceuticals. “Our mandate is to be fully integrated along the supply chain through our subsidiaries. This means we should be able to cultivate, test, extract, formulate and push value added products into the market in the quickest and most cost effective way” added Mr. Abenante.

Through its Health Canada Licensed Dealer, Northern Vine Labs the Company provides federally mandated testing of legal cannabis and derivatives as well as formulations for products using legal cannabis, derivatives and industrial hemp/cannabidiol.

The Company also has an exclusive distribution agreement with Suzhou Raybot Material Tech Corp. (“Raybot”) which allows it to sell and service proprietary extraction machines in North America and Europe. This ability gives Abattis a major competitive edge within the industry as no large scale cost effective extraction methods currently exist. Raybot’s machines provide industrial scale and cost-effective cannabinoid extraction with the potential to significantly disrupt the rapidly growing cannabis derivatives market by providing several competitive cost advantages in the extraction of CBD, THC and other derivatives from marijuana and industrial hemp.

Abattis also has a sales and marketing subsidiary, Vergence Naturals Ltd., focused on the sales and marketing of nutraceutical products. In addition to selling third party natural health products, Vergence will be the main distribution arm for the products formulated by Northern Vine with or without CBD. Vergence has established sales channels in Asia, Europe, Canada and United States.

Northern Vine, an Abattis subsidiary, is one of the few Licensed Dealers in Canada, of which only seven are cannabis specific and of which only two are publicly traded. In March 2017, High Times announced that the next billion dollar industry would be cannabis testing. With random product testing introduced by Heath Canada in April 2017 and mandatory pesticide testing for Licensed Producers mandated by Health Canada in May 2017, the Company has the best advantage of its peers to be a frontrunner for servicing the cannabis industry.

Combined with the ability to formulate products and to extract biomass, Abattis is well positioned to be a leader in the burgeoning medical and soon to be legal recreational cannabis market.

To learn more about Abattis Bioceuticals Corp., please visit www.abattis.com or www.northernvinelabs.com or feel free to contact Brook Bellian, Investor Relations at brook@abattis.com or call 604-336-0881.

FORWARD LOOKING INFORMATION

This welcome letter contains forward-looking statements. The use of any of the words “anticipate”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “should”, “believe” and similar expressions are intended to identify forward-looking statements. Forward- looking statements in this press release include statements regarding the selling and servicing of proprietary extraction machines in North America and Europe; the potential of the technology to significantly disrupt the rapidly growing cannabis derivatives market; the competitive cost advantages; the potential size of the cannabis testing market; the Company’s advantage to its peers to service and to be a leader in the medical and legal cannabis industry. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties, including that the Company will not be able to open its new lab or execute its proposed business plan in the time required or at all due to regulatory, financial or other issues. Additional risk factors are included in the Company’s Management’s Discussion and Analysis, available under the Company’s profile on www.sedar.com. The forward-looking statements are made as at the date hereof and the Company disclaims any intent or obligation to publicly update any forward-looking statements, where as a result of new information, future events or results, or otherwise, except as required by applicable securities laws.

Week 1 – Brayden Sutton, CEO of Friday Night Inc. (CSE:TGIF)

 The cannabis industry in Canada, broadly speaking, is very fatigued and taking a much-needed breather, as reflected in the share prices across the board.  Some would say that they ran too hard and too much after Trudeau’s promises.

Right now, as a result, Canadian LP’s are priced with legalization “baked-in.”  This is important to point out, in case Mr. Trudeau does face hurdles, potentially causing a delay in the passing of the legislation next year.

As prospective new patients wait for ‘legalization’ they will notice the disparity between the market caps of collective Canadian cultivators vs. lethargic patients and sales numbers. The fatigue caused by this disparity forces investors to take a closer look at the ancillary components of this sector, such as extraction and processing technologies, branding, software and IT infrastructure, security – you name it. Something else to keep in mind is that the United States could hold even greater potential than Canada in this sector.

29 American states now have some form of a medical cannabis program, with many of them also including an ‘adult-use’ or recreational program. Places like Colorado have provided us now with almost 5 years of data since they went legal, and the numbers are staggering.

The data is very compelling for other states to come on board.

So as the wave goes through the US, it’s all eyes on the next, high-per-capita-use-demographic states, such as Florida, Arizona, and in particular Nevada, with recreational sales beginning there on July 1st of this year.  With an estimated 48 million visitors a year to the “strip” in Las Vegas, it’s a highly anticipated market.

Another up and coming market is Germany, as they too roll out a federal medical program, much like the one we have here in Canada: the ACMPR.  So, it’s tulip-mania over there, much like Canada experienced in 2013 and 2016 leading to the prices we have here today.

There is tons of opportunity all around, but timing is everything. Never bank on something until it’s done, and make sure you know the current usage landscape to ensure it matches the enterprise values.

Alternate Health to gain from the growing market of medical marijuana

The waves of legalized recreational marijuana in Colorado, Washington, Canada and now California have sparked a ‘Green Rush’ in the cannabis industry, but Alternate Health (CSE:AHG) CEO Dr Jamison Feramisco reminds investors not to forget about the market potential of the medical side of the business.

“The key to leadership in medicinal cannabis is constant innovation in the scientific research that puts the patient’s needs first,” says Feramisco. “Alternate Health takes a value-added approach, investing in the clinical studies and patented technology that turns cannabinoids, like CBD, into real medicine.”

The diversified healthcare company – which has patent rights for CBD delivery systems for sublingual tablets and transdermal patches and offers education programmes, electronic medical records (EMR) software and toxicology laboratory analysis – started trading on the Canadian Securities Exchange in January. Two months later it joined the US markets on the OTC bulletin board.

Feramisco brings experience in delivering profitability, strategic mergers and acquisitions and innovation in healthcare as the co-founder and president of Texas-based Apri Health – a healthcare data analytics company, formerly known as Transfuse Solutions. Feramisco is a graduate of the University of Texas at Southwestern Medical School with a Ph.D. in Molecular Genetics and Biochemistry.

Alternate Health stands to gain from the growing market of medical marijuana.

There are about 40,000 patients with prescriptions for medical marijuana in Canada, according to Health Canada. Over the next 10 years, the number of these patients is expected to grow to more than 450,000.

The group’s Alternate Health Media division offers education programmes for training healthcare professionals and physicians in the use of cannabis to treat medical conditions.

The Cannabidiol Certification Programs have been approved by the American Medical Association (AMA) and address all facets for the use of marijuana’s two active chemicals that have medical applications – cannabinol (CBD) and tetrahydrocannabinol (THC).

CBD and THC are considered useful substances to manage pain, and are also prescribed by some physicians for conditions including glaucoma, epilepsy and anxiety.

In January, the company announced the first continuing medical education course for practitioners on the endocannabinoid system, the body’s reaction to CBDs.

The video-based course, accredited through the University of Louisville and approved by the AMA, provides an overview of the endocannabinoid system and the role it plays in the different functions of the human body.

“Doctors and medical professionals have been waiting for a proper medical education program to provide details for this emerging medicine,” says Feramisco. “This program is the culmination of many years of investigation and research, coupled with a substantial investment in production to create a quality and highly necessary education program for doctors and healthcare practitioners.”

Cannabis tablets as an alternative to traditional smoking

Alternate Health has acquired the commercial rights to patents for developing and manufacturing sublingual tablets that include CBDs and/or THC.

The sublingual tablets can be rapidly absorbed into the body in less than three minutes. The company said it recognised the need for a more efficient way to use medical cannabis than the traditional smoking and ingestion methods.

Sentar Pharmaceuticals in March granted Alternate Health an exclusive 10-year agreement for global nutraceutical license rights to its patented sublingual delivery systems to administer CBD and THC in tablet form.

The company paid Sentar 850,000 common shares for the renewable license agreement.

The California marijuana Industry is estimated to grow to $25bn per year and is set to eclipse $50bn by 2026, Alternate Health said, citing USA Today.

“Alternate Health is uniquely positioned for licensing their manufacturing pharmaceutical grade delivery systems of CBD and THC healing products in this fast-growing new marketplace,” says Feramisco.

“Alternate Health facilitates the development of organic, safe and healthy medicines through our patented delivery systems to patients around the world, and the California market represents a significant starting point for us.”

Leader in electronic medical records software

Alternate Health describes itself as a leader in software applications and processing systems to the medical industry.

Its Alternate Health Technology business includes VIP Patient, electronic medical record (EMR) software that allows doctors to register patients and document their diagnosis and generate insurance recoveries with up-to-date billing codes.

The CanaCard Patient Management System tracks patient data and prescriptions while ensuring regulatory guidelines and financial transparency. It is a complete EMR, managing controlled substances like medical marijuana with an interface between patient, doctor and licensed provider.

“Alternate Health’s proprietary EMR systems give doctors, patients and producers the tools to manage prescriptions and dosages in a safe and transparent way,” says Feramisco. “This software is a key asset in the management of Alternate’s CBD delivery systems, while providing us with valuable feedback and clinical data.”

Alternate expands its labs division

The group also has an independent clinical lab in San Antonio, Texas, under the banner of its Alternate Health Labs business, which specialises in toxicology and blood testing services.

The lab receives and assesses the blood and urine of patients from across the United States and then supplies the results to physicians so they can diagnose and treat diseases and medical conditions.

In March, the company agreed a deal to expand the business through the acquisition of a 20% stake in Clover Trail Capital, a Texas-based investment company.

Clover Trail, which owns a 40% holding in Sun Clinical Laboratories, has investments in labs that conduct toxicology and blood studies for hospitals, private insurance groups and clinics.

Feramisco said: “It is an excellent opportunity for us to grow and increase the effectiveness of Alternate Health Labs, already a leading source of revenue for us and a key part of our strategy to fundamentally advance patient care.”

This story was originally published at www.proactiveinvestors.com on May 11, 2017 and featured in The CSE Quarterly.

Learn more about Alternate Health at http://alternatehealth.ca/ and on the CSE website at http://thecse.com/en/listings/life-sciences/alternate-health-corp.

iAnthus Capital bordering on big things

The movement to legalise cannabis in a majority of US states is drawing interest from an expanding list of companies, as entrepreneurs sense opportunity in a market where growth is virtually guaranteed.

Currently, 29 US states have legalised the use of full-strength medical cannabis, with eight of those states allowing recreational use of the drug as well.

In all, 43 states allow some degree of cannabis use, meaning 93% of Americans live in a state that allows consumption.

According to the latest industry data, direct legal cannabis sales totalled US$7bln in the US in 2016 and by 2020 will reach around US$22bln.

However, although this looks like a good opportunity for businesses, the fact that cannabis is still illegal on a federal basis in the US makes it difficult for entrepreneurs to finance their operations.

This is where Canadian Securities Exchange-listed iAnthus Capital Holdings Inc (CNE:IAN, OTCQB:ITHUF) has stepped in.

“You have a strange anomaly in the US where cannabis is legal at the state level and illegal at the federal level,” says Hadley Ford, chief executive of iAnthus Capital.

“Citibank and Bank of America aren’t making any loans to cannabis operators, and the Goldman Sachs and Morgan Stanleys of the world aren’t taking anyone public.”

iAnthus, however, raises capital in Canada, where cannabis is legal for medical use at both the federal and provincial levels, and puts the cash to work in the US market.

That market is growing at a compound annual rate of over 30% so the returns on investment have the potential to be significant.

iAnthus, which has raised over C$50mln since its founding, has been putting money to work in Colorado, Vermont, New Mexico and Massachusetts, and is also in discussions pertaining to other high-growth markets.

TGS deal

In early February, iAnthus announced a strategic partnership with The Green Solution (TGS), a big player in the US cannabis industry.

TGS operates 12 dispensaries and integrated cultivation and processing facilities in the state of Colorado and has generated over US$150mln of cumulative revenue since its inception in 2010.

“The chance for us to work with TGS on strategic opportunities is very exciting,” said Ford. “TGS is a leader in cannabis and we look forward to seeing what we are able to do by working closely together.”

As part of the strategic relationship, TGS will provide iAnthus with retail expertise and advice on investments in Massachusetts, Vermont, New Mexico and Colorado.

iAnthus is providing a US$7.5mln credit facility to TGS which will be used to fund the build out of additional store locations. The facility runs for one year and carries an interest rate of 14% during the first four months, escalating to 23% thereafter.

To finance the credit facility, and also to provide cash for general corporate and working capital purposes, iAnthus closed a bought deal private placement at the end of February which raised gross proceeds of C$20mln. The deal was structured as a convertible debenture with an 8% coupon and convertible into common shares at a price of C$3.10 per share.

The stock, which also started trading on the OTCQB in early April, is currently changing hands for around US$2.00.

“If you are an investor, there are very few industries where you can pretty much have guaranteed top-line growth of 30% for the foreseeable future,” Ford points out. “There are not many ways for the public to play that opportunity. We believe iAnthus provides an easy way for investors to invest in multiple operators across high-growth states in the US.”

Ford says the group has put over US$19.1mln to work to date, and he thinks the opportunities for investors “look outstanding.”

Massachusetts interest

Aside from being excited about working with TGS in Colorado, Massachusetts is also high on Ford’s radar.

At the start of March, iAnthus said construction had begun on a state-of-the-art cannabis cultivation and processing facility for affiliate Mayflower Medicinals, Inc., a Massachusetts non-profit and cannabis dispensary licence holder.

The 36,000 square foot facility in Holliston is expected to have annual production capacity of 8,700 pounds, with the ability to supply over US$35mln of medical and retail sales. The company has spent US$2.1mln of the approximately US$10mln it will need to build out the cultivation, processing and store locations. “We have the necessary cash on our balance sheet today to complete the project,” notes Ford.

Ford calls Massachusetts the “Colorado of the East, but with less competition.” Mayflower has been awarded two of its three licences by the state, including one of the three dispensaries currently approved to open in Boston. A Boston ordinance provides that no other dispensaries can be opened within a half-mile of any dispensary currently approved by the City.

Ford believes that operations in Massachusetts should start generating revenue in the fourth quarter of this year.

Political risk limited

The election in November last year which made Donald Trump US President included referendums in a number of states on legalising cannabis in one form or another.

Even so, some people question the heightened political risks to the US cannabis industry caused by Trump’s presence in the White House.

Ford, however, plays down such fears, seeing no material change with Trump in power from the environment under President Barack Obama. “Obama could have decriminalized cannabis. He didn’t,” notes Ford.

Ford says the real issue is not one of politics, but of economics, with states like Colorado seeing a big tax boost and the cannabis industry serving as an important jobs provider.

“Nothing is going to stop the forward motion of the industry at this point,” Ford explains. “It doesn’t make sense politically, doesn’t make sense economically, and there just aren’t the federal resources available to roll back the progress that has been made in 29 states.”

iAnthus reported a small loss last year, but as it puts its capital to work it should ultimately see the business turn very cash generative. “When I look at some of the opportunities we have in the pipeline, the future looks very rosy from our perspective,” Ford concludes.

This story was originally published at www.proactiveinvestors.com on May 11, 2017 and featured in The CSE Quarterly.

Learn more about iAnthus Capital at http://www.ianthuscapital.com/ and on the CSE website at http://thecse.com/en/listings/life-sciences/ianthus-capital-holdings-inc.

Maricann looks to replicate Canada success in newly legal German cannabis market

Anyone looking for a model company in the medical cannabis sector would be well advised to consider Maricann Group Inc (CSE:MARI), as thus far it seems to have done everything right.

With a green ethos that drives both product development and corporate efficiency efforts, Maricann succeeded in becoming one of the first companies in Canada approved to cultivate and sell medical cannabis.

Not content with being an early mover in just its home market, Maricann was quick to stake its claim in another jurisdiction largely overlooked by its peers: Germany.

On the verge of turning a profit

The combination has the company predicting profitability by the second quarter of 2018. Its top line is off to a good start, with sales currently running at $450,000 per month. And having just announced a $42.5mln non-dilutive stream financing that will fully fund its German plans, Maricann is positioned to really put its foot on the accelerator.

The strategic mix of Canadian and European markets notwithstanding, Maricann chief executive officer Ben Ward sees the company’s key point of differentiation being technology for extraction and product formulation.

“We have locked up two groups with preparative chromatography expertise in cannabis and this means we have the only ability in the industry to get all the cannabinoids, terpenes and flavonoids,” says Ward. “To formulate the plant, you first have to be able to deconstruct it to make sure you get the active pharmaceutical ingredients.”

Ward explains that there are 500 terpenes – an organic compound found in numerous plant-based products – specific to the cannabis plant, and that companies looking only at cannabinoids or THC are missing much of what cannabis has to offer. “We are focusing on whole-plant medicine, which is done by extracting all of the different isolates.”

This approach to the industry reflects the direction set for the company early on by founder Dr Eric Silver. An assistant professor and clinical teacher in the Department of Family and Community Medicine at the University of Toronto, Dr Silver knew first-hand the benefits that alternative medicine employing cannabis could have on patients. The next step was to gather colleagues from the industry with capital and know-how and begin the search for a facility to purchase.

Eventually, the team settled on the Langton facility, which had been operating under the MMAR (Marihuana Medical Access Regulations) regime established in 2001.

The facility was approved under the more robust MMPR (Marihuana for Medical Purposes Regulations) in March 2014, with a license to sell product grown at the facility arriving in December of the same year.

A green ethos going hand-in-hand with the commercial imperative

A brief analysis of the facility indicates Maricann is committed both to being a custodian of its environment and running its business with an eye on costs. Langton has its own co-generation plant to help with electricity needs and there is even a natural gas well on the property to provide some of the fuel. Other efforts include equipment to capture rainwater for use in the fertigation process.

These and other efforts lead the company to believe that it is among the most competitive producers on the Canadian landscape, with per-gram costs estimated at just $1.37. That should translate into healthy margins that really make their presence known as sales continue to ramp up.

“Our revenue generating capacity right now is restricted only by our footprint of 34,000 square feet,” says Ward. “We are building a 216,000 square foot facility and that will be able to produce another 20,000 kg of dry flower starting in the first quarter of 2018.”

As far as near-term trends are concerned, Ward is in the camp of industry executives who believe smoking cannabis will give way to ingestion in other forms over time. “We think users will come to prefer extract-based products, which is the experience in more mature markets such as Colorado and California,” Ward notes. “Once people can access a product with a consistent extract in a dose they are used to, they will opt for that. We think that is when the real adoption will take place.”

Maricann is ready with its own line of gel caps, which it developed in partnership with another company, to help that trend along.

First we conquer Canada, then we take Berlin

The Canadian operations are clearly well on their way to developing serious momentum, and the plan is to create the same success in the German market.

It was only in January of this year that Germany’s lower house of parliament, the Bundestag, voted to legalize medical cannabis. The drug will be available from pharmacies to patients with a prescription, and importantly for companies serving the market it looks like it will be covered by German health insurance.

“I think we will see almost a carbon copy of the Health Canada program as far as cultivation and regulations are concerned. The difference will be in distribution,” posits Ward. “It won’t be supplied directly to patients but through major pharmaceutical companies or wholesalers, or distribution through pharmacies. Germany’s market will likely remain medical for a long time, but from an ease of access standpoint I think it will move ahead of Canada because of the German population’s propensity to seek alternative therapies.”

Ward explains that companies hoping to grow cannabis in Germany need to possess over three years of cultivation experience, a benchmark that the team at Maricann is able to meet. The company is currently preparing an initial 150,000 square feet of space in a facility that it has the option to purchase. “All we have to do is install the tables, the fertigation system and the lights and we will be operational,” says Ward. “We are moving through the licensing process there right now.”

Ward comments that the team is happy working in jurisdictions where legalization is uniform on a federal level, contrasting the environments in Canada and Germany to that in the United States, where cannabis is illegal federally but many states have passed laws to make it legal.

“Much of the rest of the world, and especially western Europe, is moving forward with legalization in some way,” observes Ward. “There is a much larger population that Canadian companies can export our experience to, and in doing so create best in class companies that compete globally. We might only be talking five or six years, but that is a lifetime of experience in the cannabis sector. I see Canadian companies moving into other markets and helping governments with regulatory issues so that their citizens can look forward to safe, reliable access to high-quality cannabis.”

This story was originally published at www.proactiveinvestors.com on May 10, 2017 and featured in The CSE Quarterly.

Learn more about Maricann Group Inc. at https://www.maricann.com/ and on the CSE website at http://thecse.com/en/listings/life-sciences/maricann-group-inc.

Namaste Technologies moves closer to buying “vaping” online business

The acquisition by Namaste Technologies Inc (CVE:N) of various assets currently owned by Haze Industries has moved a step closer.

The Canadian company, formerly known as Next Gen Metals but now focused on medical marijuana and alternative medicines, said that it has now signed an asset purchase agreement that will see it acquire a number of web site domains, a customer list of more than 150,000 individuals plus intellectual property and goodwill of VaporSeller, an e-commerce platform for the fast-growing vaporizer and accessories market.

Namaste will pay US$500,000 in cash when the deal closes, and will hand over five million shares of the company. In addition there is any earn-out clause of US$1.5mln over a three-year period that could be triggered by revenue, margin and operational controls.

Namaste anticipates closing the transaction on or about June 30, 2016, subject to the receipt of all director and regulatory approvals, including approval of the Canadian Securities Exchange if required.

Namaste also revealed it has arranged a non-brokered private placement of at least 8.5mln units but no more than 12.5mln units at C$0.12 a pop, to raise between C$1mln and C$1.5mln.

Each unit comprises one common share of Namaste plus half a warrant; each pair of warrants would entitle the owner to exchange them for a single common share upon payment of C$0.18 any time up to 24 months after the date of issue.

The net proceeds from the offering will be used to fund cash closing costs associated with the VaporSeller transaction, inventory expansion and for general working capital purposes.

“The signing of the definitive agreements for the acquisition of VaporSeller represents a significant step forward in terms of the completion of this transaction. As the first of multiple opportunities we have identified to expand through acquisition, our management team is high focused on ensuring an efficient and effective execution of this transaction as well as a seamless integration of our current platform and VaporSeller,” said Sean Dollinger, president and chief executive officer of Namaste.

This story was originally published at www.proactiveinvestors.com on June 8, 2017 and featured in The CSE Quarterly.

Learn more about Namaste Technologies Inc at http://www.namastetechnologies.com/ and on the CSE website at http://thecse.com/en/listings/diversified-industries/namaste-technologies-inc.

The Canadian Bioceutical Corporation profits from shift to US cannabis market

Technology companies often attribute their success to a strategic “pivot” that saw them de-emphasize an early business in favour of what ultimately proved to be a better idea.

The burgeoning cannabis sector now has its own example in the form of The Canadian Bioceutical Corporation (CSE:BCC), which shifted its focus to the United States after identifying cultivation opportunities it could advance much more quickly than its founding project in Canada.

Through a strategy of acquiring existing businesses and providing capital and management expertise to accelerate their growth, the company has positioned itself to be profitable early in its young life.

With its first acquisition, completed in January 2017, The Canadian Bioceutical Corporation acquired highly profitable assets in Arizona. These were only consolidated as of January 1, so their contribution to the company’s full financial year, which ended March 31, will be limited. Still, they will provide a good indication of what can be expected in coming quarters.

The Arizona assets are the first of several that chief executive officer Scott Boyes is working to bring under the company’s umbrella. The plan is to move quickly, setting up shop in states where risk is quantifiable and businesses are available at valuations that allow for multiple expansion as capacity is expanded on both the production and distribution fronts.

Unlike Canada, the US cannabis cultivation market is fragmented

“The market in the US is highly fragmented, characterized by a landscape with thousands of small producers,” explains Boyes. “This contrasts with Canada, which has a much more concentrated landscape with fewer but larger players.”

Boyes shares that the Arizona deal cost US$25mln, and was concluded at around 1.5 times revenue and 4 times cash flow, undeniably reasonable metrics for a business in the super-hot cannabis sector.

The Canadian Bioceutical Corporation gained more than just operating assets, as Boyes was eager to work with the executive who had built the Arizona business, Beth Stavola – so much so that Stavola is now president of the company’s US unit, CGX.

Purchasing the Arizona assets was an easy decision based on the results of extensive due diligence, which included an audit by a Canadian accounting firm and other assessments.

“The business checked every box,” says Boyes. “It was in a state where the regulatory authority is friendly. Also, when you obtain a license in Arizona you get seed-to-sale capability, with the right to operate a dispensary, to have one on-site cultivation, one off-site cultivation, run a full concentrates operation, and do your own packaging.”

Boyes explains that Arizona laws dictate medical cannabis operations must be owned by non-profit organizations, and therefore The Canadian Bioceutical Corporation does not cultivate or sell cannabis products itself in states with this type of legislation. Rather, the company purchased management, real estate leasing and other entities providing support to the licensed cultivation and retail operations under long-term services agreements. Because the owner of the license and facilities is a non-profit, the cash left over after operating costs flows to the service providers.

The company also holds another license that will enable it to open a third Arizona dispensary, which is currently in development. All three will operate under the Health for Life (H4L) banner and carry, among other products, the award-winning Multiple Extracts (MPX) brand Stavola established.

One final note on Arizona is that legalization for adult recreational use is off the table right now, following a November 2016 vote on Proposition 205, which proposed legalizing cannabis use for people 21 years of age and older. The “No” victory was far from overwhelming, with the vote decided by a margin of fewer than 3 percentage points.

After praising Arizona, the company is turning its focus to Massachusetts

The company’s second big acquisition of 2017 is taking place in a state where voting in November approved recreational use. In early April, The Canadian Bioceutical Corporation announced a Letter of Intent (LOI) to purchase a 51% stake in Massachusetts-based IMT LLC. The deal will take place via CGX using a services company structure similar to that employed in Arizona.

Assets include a 40,000 square foot facility zoned and licensed for cannabis cultivation and a license to open up to three medical cannabis dispensaries. Annual capacity is an impressive 2,500 kg of cannabis and 500,000 g of concentrates. The first dispensary, in the city of Fall River, will be adjacent to the cultivation facility.

The acquisition calls for a US$5.1mln cash payment to IMT LLC and a further US$2mln in capital to build the second and third dispensaries. Massachusetts could begin licensing dispensaries for recreational sales as early as January 2018, with preference given to medical-use locations already up and running.

In early May, The Canadian Bioceutical Corporation announced it is moving into a third market, as it is acquiring 100% of GreenMart of Nevada, a licensed cultivation and wholesaling business based in Las Vegas.

The growing facility is fully operational and can produce 1,600 kg of dried cannabis per year plus 85,000 g of concentrate. Total cost is US$19mln, payable half in units of the company and half as a non-interest bearing promissory note.

Boyes notes that while Nevada’s population is less than three million people, over 42 million tourists visit each year, so with voters having recently given the green light for recreational use the total market could be very large.

Completing over C$50mln in acquisitions during the first half of 2017 would be quite a feat, and a US$25mln line of credit the company secured in May will play an important role. It will also help to limit dilution; the company stated its intent in late March to raise US$20mln by issuing new shares but decided to raise less (the book was closed at US$11.2mln) because the line of credit can cover a substantial portion of near-term spending.

While Boyes says the Canadian cultivation license for its facility in Owen Sound, Ontario, is still something the company would like to obtain, the focus for now is definitely the US, where he says more acquisitions can be anticipated this year.

The company is undervalued relative to many other cannabis players in Canada

Boyes has been somewhat surprised that his company has not achieved the valuation multiples enjoyed by some other public cannabis issuers in Canada, but thinks this will correct itself over time as investors become more comfortable with businesses operating south of the border, where on a federal level the possession of cannabis remains illegal.

“There is a degree of concern about the political environment in the US, but the more you are involved down there the less you see it as a risk,” Boyes concludes. “Some states may need to tighten their regulations, but overall the industry is growing too quickly and simply creating too much employment and tax revenue. We may see some speed bumps along the way but, in my opinion, the US is a good place to be growing a business such as ours.”

This story was originally published at www.proactiveinvestors.com on May 8, 2017 and featured in The CSE Quarterly.

Learn more about Canadian Bioceutical Corporation at http://www.canadianbioceutical.com/ and on the CSE website at http://thecse.com/en/listings/diversified-industries/the-canadian-bioceutical-corporation.