CSE Issuer Stories, Magazine

Permex Petroleum: Positioned for growth in the world’s hottest oil and gas region

As we close in on the final month of 2018, global oil prices have gone topsy-turvy, with predictions of $100 oil just a few weeks ago giving way to concern that the recent 25%+ drop to below $55 per barrel (for benchmark West Texas Intermediate) could grow even steeper.

In an environment with this level of volatility, junior oil and gas companies need quality assets, good financial structure and adequate funding, not to mention a reasonable degree of managerial flexibility.

These characteristics sum up Permex Petroleum’s (CSE:OIL) approach to operating successfully in today’s oil market.

Originally founded in 2013 and then restructured into a corporation in 2017 by President and Chief Executive Officer Mehran Ehsan, Permex operates primarily in the Permian Basin of Texas, which Ehsan calls one of the best environments in the oil and gas industry. The properties, projects and formations in this area are so popular that a new word has been added to industry vocabulary: ‘Permania.’

All the excitement is justified, mind you, as Ehsan explains in compelling fashion.

“Even when a downcycle occurs, the Permian continues to move forward,” says Ehsan. “The region produces over 3.3 million barrels per day, which represents over 30% of all production in the United States. Looking at reserves, proven reserves in the United States sit around 38 billion barrels, and over 10 billion of that is in the Permian.”

Even more important, according to Ehsan, is rig count, as this is a measure of investment dollars going into a region. “There are 475 rigs in the Permian, which is more than 40% of US rigs,” says Ehsan, adding that this number also represents around 20% of all oil rigs operating worldwide.

One of the oldest adages in the stock market is to buy low and sell high, and Ehsan utilizes a similar approach to execute the Permex business plan. The company adds assets to its portfolio in times of general industry distress, thus enabling it to buy properties at a discount.

Importantly, Permex only buys properties that are in production or can be brought online at Permex’s timeline and discretion.  Ehsan only considers properties that the company can produce from on day one from active wells, and potentially drill later with an exceedingly high probability of success.

“The timing of our acquisitions has been key,” Ehsan adds. “We acquired assets during a downcycle at an average cost of US$2,000 per acre, and now properties in our area go for anywhere from US$17,000 per acre to US$25,000.”

Permex is careful to only operate in regions where producing formations tend to provide some of the highest historic success ratios, low production costs, extensive infrastructure to get end-product to market, and, importantly, a regulatory regime that favours the industry instead of throwing red tape at it. West Texas and South East New Mexico tick all those boxes.

In fact, one of the formations that Permex wells produce from, the San Andres, has a breakeven cost of US$29 per barrel.

“We have eight properties in West Texas and Southeast New Mexico,” Ehsan says. “Out of those eight, six qualify for water flood EOR (enhanced oil recovery) techniques.  To date, our focus has not been to devote too much to capital expenditures. We wanted to purchase assets at a discount during an industry downcycle which caused duress for a lot of operators. Every dollar spent on Capex would have been a dollar we could have used to buy assets at a discount from such operators.”

In the last two quarters, Permex has begun to bring shut-in wells online and use water floods to pressurize reservoirs to enhance production. And the next stage of Ehsan’s strategy really enables Permex to scale its top line.

“Drilling wells in general will give us scale, however we have access to some of the best formations to drill horizontally which can provide remarkable daily production and payouts of under 10 months,” says Ehsan. “Offset operators such as Ring Energy are doing so all around our properties. We anticipate starting our horizontal drilling programs in H1 2019, which can rapidly give scale to the company.”

That timeline is prudent, as overall production in the Permian has increased to the extent that there are bottlenecks in the pipelines that transport oil to market, and the result is that producers are having to accept a discount to the standard WTI price, although it is nowhere near the discount Canadian producers are exposed to right now.

Again, this is where location comes into play, as adding pipeline capacity in Texas is much easier than it is in most other jurisdictions. Ehsan says there are four expansion projects in the works, one of which should come online in the first quarter of 2019. The added capacity should begin to shrink the price differential immediately, and eventually eliminate it altogether. This would put smiles on the faces of companies big and small, and it’s worth noting who some of the big ones operating side-by-side with Permex are.

Occidental Petroleum has a major presence in the Permian, as new chief executive officer Vicki Hollub has shifted operations from a Middle East focus to one more on domestic production, such as in the Permian. Occidental is actually a working interest partner with Permex on one of its properties. Other offset operators to Permex include large-cap oil giants such as Devon, Hess, Apache and Conoco Phillips.

Asked for some closing thoughts, Ehsan points to general investor malaise when it comes to oil and gas stocks yet sees it as an opportunity to apply some ‘Permexian’ thinking. “If you take into account our sector as a whole in the US and Canada right now, almost every company is undervalued,” Ehsan concludes. “Usually, oil and gas stocks follow the oil price, but in recent times when oil has risen, the stocks haven’t followed suit. You could say this is a great time to look at investment in the oil and gas sector, as it is ripe for the picking.”

This story was originally published at proactiveinvestors.com on January 15, 2019 and featured in the Public Entrepreneur magazine.

Learn more about Permex Petroleum at http://www.permexpetroleum.com/. 

CSE Issuer Stories, Magazine

Cannvas MedTech: Knowledge is king in the cannabis world too, says chief of Cannvas MedTech

“We really want to be the Google of cannabis data,” is how Chief Executive Officer Shawn Moniz sums up the mission of Cannvas MedTech (CSE:MTEC), a Toronto-based startup that specializes in educating the public about marijuana.

Having watched from the sidelines as Canadian companies sprung up to offer marijuana and its associated hardware, such as vaporizers, Moniz chose the less-travelled road of education when he launched his own cannabis company.

“The benefit of being a digital reference library of cannabis is that we can go into any country and people can learn about the different uses and a safe way of using cannabis if they so choose,” he says. “We are not dependent on any type of legislation or political maneuvering because it’s education, and education has no borders.”

Cannvas MedTech went public in July on the Canadian Securities Exchange as well as the Frankfurt Stock Exchange.

“We wanted to carve a little niche for us,” Moniz says. “We found there were a whole bunch of people growing … and on the other side, everyone was getting into devices, vaporizers and oil vaporizers. But we thought we don’t really want to go into those two spaces.”

Moniz decided instead to offer straight talk about cannabis after spending five years building platforms for big pharmaceutical companies like Pfizer, AstraZeneca and Bayer – which tended to put patients first in discussions about drugs.

He was concerned that the information being disseminated about cannabis reflected the interests of the licensed producers funding it. “We saw very biased information,” he says. “There was a need that no one was willing to plug.”

“So, I said hey, why don’t we just do what I did in the digital pharma space and bring that patient-centric approach to the cannabis industry,” he adds.

At the core of Cannvas MedTech’s business is its website Cannvas.Me, which provides online cannabis courses for free. Cannvas.Me offers the chance to read about cannabis’ medical applications in materials put out by physicians along with an online cannabis course, marijuana product reviews and a cannabis strain matcher that determines which variety is suitable for a specific ailment. The goal is to reach 100,000 users of the platform by the year’s close.

As more marijuana buyers explore Cannvas MedTech’s web site, they will provide data that will power the analytical side of Cannvas’s business, which has the lofty goal of providing the equivalent of census data for the cannabis industry.

Indeed, layered just below its education platform is Cannvas Data, which uses algorithms to pull apart the research on cannabis trends and find new data that might be of use.  Via its connections to other cannabis companies, academics, doctors, and governments as well as its own web site, Cannvas management is set to ramp up its data collection around the world.

As Cannvas MedTech’s business takes off, the idea is that its data will become more tailored to the marketing needs of cannabis companies and the research needs of governments, physicians and academics. Its management will be able to tell, for example, how the consumer tastes of a 25-year-old construction worker in Ontario compare to his or her counterpart in Australia. They might also be able to determine the extent to which patients at military bases are taking cannabis to address their cases of post-traumatic stress disorder.

“People educating themselves about cannabis is where we win. There’s a lack of awareness and a lack of education and the data is key to that,” notes Moniz.  

Partnerships are pivotal to the company’s ability to gather information. In one of its most prominent tie-ups to date, the company recently signed a revenue sharing agreement for Cannvas.me with the Vancouver-based e-commerce platform Namaste Technologies, which runs medical cannabis patient portal Namaste MD that has a reach extending to 20 countries and boasts a database of 1.5 million users.

Namaste has developed the country’s first cannabis telemedicine app, available on iPhone and Android devices, which allows patients to connect to doctors or nurse practitioners for consultations within minutes.

“The data is really going to set us apart within the industry. The Cannvas.me platform on a global basis will collect all of that data and feed it back into the industry,” reports Moniz.

Cannvas Connect, meanwhile, is the third branch of the business as it offers a secured network to allow for the sharing of Cannvas’s data with, say, Health Canada or the company’s other partners in academic and medical circles.

“Cannvas Data and Cannvas Connect, that’s where we have partnerships with academics and research facilities and we’re trying to do partnerships with the government in Canada,” points out Moniz. “We have analysts here providing insights and trends within the community and global markets.”

While 80% of the business is focused on Canada, the remainder is global and Moniz reports that Cannvas is already reaching out to clinics in Australia and Germany to introduce its software so Australians and Germans can have information on medical cannabis at the doctor’s office. Its management also recently travelled to Hong Kong and Japan and hosted presentations there. “In most parts of Asia, you can’t buy cannabis or legally obtain it,” says Moniz. “But playing on that education format opens up a lot of doors for us.”

The company’s goal is to have software in at least 100 clinics within the next year.

Keen to remain independent from the clutch of licensed marijuana producers who control the industry, Moniz and his management team opted to take Cannvas public instead of approaching companies for money. “We wanted to remain non-biased so the only way to do that is to make sure we got funding agnostic of any licensed producer,” he says.

Since its launch last September, Cannvas has built up a staff of 19 with offices in Vancouver and Toronto. As Cannvas widens its global reach by introducing its software in clinics around the world, it aims to become the international authority on the cannabis sector. Information will drive the company forward, along with the industry itself, Moniz believes.

“From a marketing perspective, it’s very important for the cannabis sector to know who their market is,” says Moniz. “Right now, everyone is just blasting out the same message to everyone whether you’re a medicinal or a recreational user. It’s one message fits all.”

This story was originally published at www.proactiveinvestors.com on August 31, 2018 and featured in The Public Entrepreneur magazine.

Learn more about Cannvas MedTech at https://www.cannvasmedtech.com/ and on the CSE website at https://thecse.com/en/listings/life-sciences/cannvas-medtech-inc.

CSE Issuer Stories, Magazine

One World Lithium: Explosive demand for energy storage stokes future for One World Lithium

Energy storage sounds very much like a prosaic industry, but it is poised for a boom.  One World Lithium (CSE:OWLI) hopes to be part of the explosive growth.

Tim Brock, a consultant to One World Lithium, or OWL, believes that a junior company with an eye on eventual production must strive to be a low-cost producer with a long-term supply contract.  “One World Lithium has the potential to do this,” he said.

OWL has reason to be excited, given the particulars of its Salar del Diablo property in the State of California Baja Norte, Mexico.  The project covers a large closed basin that provides a compelling exploration setting for the presence of lithium in brines. The Salar del Diablo project has the potential to be a low-cost producer, one reason being that it sits about 35km from San Felipe, a cost-efficient regional service center with a deep-water port that could ship lithium carbonate to customers in Asia and the rest of the world, Brock explained.

One World Lithium has an option to acquire up to a 90% interest from the New Energy Discovery Group.  The company currently has a 60% working interest and on completion of the initial drilling program will have earned an additional 20% working interest with an option to purchase an additional 10% on receipt of a bankable feasibility study.

OWL expects to have an OTCQB listing in September as well as to be interlisted on the Frankfurt Exchange.

Lithium has multiple industrial applications, including lithium-ion batteries, heat-resistant glass and ceramics, lithium grease lubricants, plus as an additive for iron, steel and aluminum.  All told, this creates demand greater than current world supply.

Demand for lithium-ion batteries for electric cars, storage, and mobile devices by manufacturers in Asia, Europe and North America, has mixed with supply trends to drive lithium prices significantly higher.

The price of lithium is up 870% since 2005, and 177% in the last year alone.

In addition, countries are beginning to set dates after which all vehicles sold must be non-internal combustion.

Brock believes several trends will influence the energy storage industry through 2025.

Demand for lithium carbonate will more than double to 600,000 tonnes by 2025 from 270,000 tonnes in 2018.  Meanwhile, supply should rise to between 500,000 and 700,000 tonnes in 2025, compared with about 200,000 tonnes at present.

Lithium supplies currently dominated by Albemarle Corp., SQM and FMC Corp. “may be challenged as more independent production of lithium comes on line,” Brock notes. 

All of this is keeping the energy storage industry on the boil. 

The Salar Property is slated for drill-testing in late October 2018.  Plans call for 4,000m of drilling at 11 drill site locations to intersect possible lithium bearing aquifers. The pre-drilling results from geochemical, geophysical and geological work defined over 60 sq. km of potential lithium in brine aquifers (formations). The Salar is approximately 8,000 feet deep, which gives the potential for stacking of more than one aquifer going to depth.

There are five geological conditions that must be present in order to successfully explore for a lithium-in-brine deposit.  These are a closed basin, meaning that no fluids can escape; presence of hot springs; a volcanic source of lithium; faults to transport the lithium to the Salar; and a regional heat source.  The Salar del Diablo meets all of these necessary conditions. As a comparison, these conditions are also present at the Salar de Atacama, which is a similar size to the Salar del Diablo.

OWL has been in discussions with potential buyers as well as offers to joint venture future exploration but elected to drill the property on its own.

The market is watching in anticipation as the Salar del Diablo project is one of the largest lithium-in-brine prospects to be drilled in 2018.

This story was originally published at www.proactiveinvestors.com on August 29, 2018 and featured in The Public Entrepreneur magazine.

Learn more about One World Lithium. at https://oneworldlithium.com/ and on the CSE website at https://thecse.com/en/listings/mining/one-world-lithium-inc.

CSE Issuer Stories, Magazine

Pacific Rim Cobalt: Cobalt and nickel covered with one prized Indonesian asset

Cobalt and nickel covered with one prized Indonesian asset

Energy storage is a technology crucial to our future, and for good reason. Affordable storage is “the missing link” between intermittent renewable power, such as solar and wind, and 24/7 reliability, according to McKinsey and Company.

Ranjeet Sundher, Chief Executive Officer of Pacific Rim Cobalt (CNSX:BOLT; OTCMKTS:PCRCF), which is developing a cobalt asset in Indonesia, says a major form of energy storage includes lithium-ion batteries, and one of the metals they rely on heavily is cobalt.

“Global demand for renewable power is fueling a massive shift from traditional energy supply chain economics, and the most widely used power source for portable applications is cobalt-reliant lithium-ion batteries,” said Sundher.

“Pacific Rim leverages the global shift to renewable energy and the electric vehicle revolution by capitalizing on two elements: cobalt and nickel. Cobalt and nickel are both essential to lithium-ion batteries.”

The mining industry veteran says lithium-ion batteries can be used to smooth the flow of power. They can be integrated into electricity systems so that if a main source of power fails, it provides a backup, improving reliability.

Despite Tesla Chief Executive Elon Musk tweeting in July that he wants cobalt out of his next-generation batteries, cutting the base metal can create safety and performance issues. For now, the supremacy of cobalt in the growing electric car market is unassailable.

“Cobalt is necessary for any lithium-ion battery with a high energy density. Essentially, any high-performance battery requires cobalt. As most of these batteries are for vehicles and phones, performance is a necessity. Therefore, you cannot get rid of cobalt,” said Sundher.

Sundher, who previously founded Indogold Exploration, a Jakarta-based mining service firm, is creating a carpe diem moment for Pacific Rim Cobalt by developing a cobalt and nickel asset in Indonesia. The Cyclops Cobalt-Nickel Project, recently renamed for its proximity to the Cyclops mountain range, is situated on the north coast of Papua Province. The project covers 5,000 hectares with nine prospects, five of them drill-tested with known cobalt-nickel mineralization.

Nearly 66% of the world’s cobalt comes from the Democratic Republic of the Congo, a country torn by a long-running civil war. This turmoil means that mining cobalt is often dangerous and subject to supply disruptions that can result in spiraling prices. Some companies call the cobalt mined in the Congo the “blood diamond of batteries” owing to harsh mining conditions and use of child labour.

In contrast, Pacific Rim Cobalt’s Cyclops Project has excellent logistics and infrastructure. Located 15 kilometres from the Sentani Airport, the project’s tidewater location offers strategic access to China, the largest battery metals market in the world.

“We have a solid growth story in the right place,” said Sundher. “We are developing our flagship cobalt asset in Indonesia. We were fortunate to pick an asset that already had a tremendous amount of work done on it – making it much easier to leverage. There have been over 850 drill holes done on our property, which allows us to talk to potential offtake partners much earlier than we normally would.”

The Canadian company has a production permit, environmental permit and sealed road access 12 months of the year to the project. “This means we can work on development without any seasonal delays,” said Sundher.  “We are currently beginning to drill 150 holes totaling 5,000 metres on our Cyclops Project and aim to make our historic estimate of 37 million metric tons at 0.11% cobalt compliant.”

The goal of the program is to establish a maiden compliant resource on the project as well as to identify target locations for extraction of mini bulk samples required for metallurgical and process testing.

With a historic estimate of 37 million metric tons grading 0.11% cobalt and 1.31% nickel at a 0.8% nickel cut-off grade, Cyclops contains significant cobalt and nickel mineralization as well as excellent infrastructure for year-round development activities.

Sundher makes clear that China is a focus of the company’s strategy for eventual supply.  “A key factor and strength of our development going forward is our proximity to China. Indonesia faces China. China is a big investor into Indonesia and they are a big consumer of cobalt,” said Sundher.

Indeed, China’s fast-growing battery industry accounts for 80% of cobalt usage. Beijing is locking down supply chains and gobbling up as much cobalt as it can.

Pacific Rim Cobalt has signed a preliminary offtake agreement with Beijing Easpring Material Technology Co. to purchase nickel sulphate and cobalt sulphate from the Cyclops project for five years from the start of commercial production. 

“This is a major milestone for us. Beijing Easpring supplies five of the world’s top six battery manufacturers. They are incredibly sophisticated and dedicated to the electric revolution. Our business model is China-facing,” said Sundher.

It’s no secret that global battery makers have been searching for ways to reduce cobalt in their batteries to cut costs.  Next year, China’s largest lithium-ion battery maker, Contemporary Amperex Technology Ltd., plans to begin producing next-generation nickel-rich batteries, called NCM 811, which are cheaper to make and have longer lifespans.

Pacific Rim Cobalt is positioned to roll with these changes in battery composition, though, as it has both cobalt and nickel in its arsenal.

“The NCM 811 chemistry does reduce the amount of cobalt, but it replaces it with nickel. We are a cobalt and nickel company, so the switch does not affect us as much as other companies,” said Sundher.

“Our preliminary offtake partner, Beijing Easpring, is one of the leaders of 811 chemistry, and it is not anticipated to be the leading battery chemistry for a number of years,” said Sundher.

“It’s Day 1 in our company and I firmly believe that any investor who is interested in cobalt and understands the cobalt supply chain should have a close look at what we are doing.”

This story was originally published at www.proactiveinvestors.com on September 10, 2018 and featured in The Public Entrepreneur magazine.

Learn more about Pacific Rim Cobalt at https://pacificrimcobalt.com/ and on the CSE website at https://thecse.com/en/listings/mining/pacific-rim-cobalt-corp.

CSE Issuer Stories, Magazine

CellCube Energy Storage Systems: Smoothing the path between renewable energy and its end-user

Smoothing the path between renewable energy and its end-user

The path toward clean energy has proved to be a bumpy one. Misconceptions about the viability and reliability of renewable energy sources have sometimes hindered progress.

CellCube Energy Storage Systems Inc. (CSE:CUBE; OTCQB CECBF; Frankfurt 01X) has heard all the questions and concerns. How does solar power work when the sun goes down? How do you utilize wind power on a not-so-breezy day? The company has found that the missing link between clean, renewable energy and intermittency is in energy storage.

Despite the confusion about just how clean energy works, CellCube Chief Executive Officer Mike Neylan believes that a societal transition from fossil fuels to cleaner or renewable sources is well underway.

“The fundamental need for large-scale energy storage is driven by the increased integration of renewable energy into the electricity grid,” says Neylan.

Neylan, with over 20 years of corporate experience under his belt, has a blend of energy know-how and the financial experience to back it up. Formerly, he was a private equity portfolio manager with alternative investment manager Sprott Inc. and oversaw an investment fund focused on physical power trading when he was the chief operating officer of Aquilon Power Corp.

Renewable energy generation has been increasing, spurred on by the rapid growth in solar and wind power generation, according to a study by the International Renewable Energy Agency.

Solar power generation has increased by 31% compared with 2015 while wind power generation is up by 16%, as per the study.  A total of US$19 billion worth of public investment was put into renewables in 2016. According to Bloomberg New Energy Finance research, storage markets are estimated to reach 40GW by 2030 and are expected to spend over $100 billion in the ramp-up phase over the same period.

“Climate change is driving decarbonization and the increase of renewable sources powering the electricity grid,” says Neylan. “Consumers are looking for cleaner sources of energy with the same duration and reliability that they’re accustomed to having. Clean energy sources backed up by a long duration energy storage system fit the bill.”

Most commodities have always been able to be stored, like water in a reservoir or grain in a silo. Until relatively recently, there was little technical capacity for storing grid-scale electricity except through pumped hydro projects – which are expensive and have geographical constraints. Production would have to always meet demand to avoid waste and ensure a reliable and balanced grid.

CellCube stores energy by way of a vanadium redox flow battery, a brainchild of NASA in the 1970s.

Named after Vanadis, the Norse goddess of beauty, vanadium is a silvery, ductile metal known for its brilliant colors and for making steel stronger. Vanadium salts are non-flammable and non-explosive, increasing safety and battery life.

CellCube’s vanadium redox flow batteries provide 100% useable energy without impacting product life – there is no capacity degradation. The energy storage system comes as a containerized solution with scalable multi-unit modules that can provide grid-scale rated power and between four to eight hours of energy storage.

A battery’s cycle starts when the battery is fully charged and ends once it has been discharged, or all the stored energy has been used up, and then it’s recharged again.

Unlike other technologies on the market, CellCube’s energy storage system doesn’t suffer from cycling dependency and has a much longer lifespan – lasting more than 20,000 cycles. The battery is ideal for long-term renewable energy projects with a lifespan matching that of conventional power generation assets at 30+ years.

If there is ever a service interruption, CellCube receives an alert so that they can respond promptly and keep the energy flowing while reducing the cost of wasted energy. The battery can be looked after around-the-clock or be monitored remotely.

In the past, electricity storage was limited to small electrical-chemical batteries like lead acid or nickel-cadmium batteries. Lithium-ion batteries grew in popularity but were better suited for short-term storage. Vanadium batteries are better equipped for large-scale stationary energy storage, according to CellCube.

The Toronto-based company has original units that have been operating for nearly 10 years, or 11,000 battery cycles. In total, there are 130 installations in 24 countries, including units in the Kalahari Desert in Southern Africa and famously frigid Siberia.

Its adaptiveness to weather extremes also sets the battery apart from the competition.

While some parts of the world look toward clean energy, other parts are still in the dark. CellCube has the capacity to bring electrification to future generations in rural areas.

Excess renewable energy can be stored and then fed into a microgrid, or an electricity grid separate from the mainframe grid. A diesel generator, less expensive than gasoline but a nonrenewable form of energy, can be used to charge the CellCube, but a shift to clean energy may lead to more autonomy for distant communities.

“If you dovetail it with solar or wind, then you have a cheap, clean, renewable source of energy driving the power but used in conjunction with storage, you have a much more efficient system completely independent from the grid,” says Neylan. “So, it allows communities that are isolated in any particular way to really assume control for their own power generation systems and to do so on an economic basis and on a clean basis.”

CellCube is looking to pave the rough road to renewable energy by providing consumers in all locations and climates with cleaner energy they can depend on to power their lives in rain or shine.

This story was originally published at www.proactiveinvestors.com on August 31, 2018 and featured in The Public Entrepreneur magazine.

Learn more about CellCube Energy Storage Systems. at https://www.cellcubeenergystorage.com/ and on the CSE website at https://thecse.com/en/listings/mining/cellcube-energy-storage-systems-inc.

CSE Issuer Stories, Magazine

Gianni Kovacevic: One-on-one with the realistic environmentalist

Sharp. Focused. Radical. Three words that describe Gianni Kovacevic.

He’s also passionate about the energy industry in a way that is unparalleled. In 2016, he published My Electrician Drives a Porsche and drove across the U.S. to promote it on the world’s first zero-emission book tour.

Public Entrepreneur recently sat down with him to chat about the energy industry and his latest venture, CopperBank Resources Corp. (CSE:CBK), a company that is engaged in the acquisition and development of mineral properties.

Who is Gianni Kovacevic and what drives you to be so passionate about the energy industry?

I’m an investor. Within that, I’m a curious investor, and I want to look at investing in the future and all that it entails. I’ve been captivated by the energy space. Effectively, I look at it like technology now. It’s moving forward at a faster pace than most people will appreciate and recognize.

I’m Croatian. My brother and I have been fascinated by the scientist Nikola Tesla, a Serbian born in Croatia, who invented the modern way in which we create and transfer electricity. That spawned our studies – we both went to BCIT and took electrical studies and I’ve followed it like a Harlequin Romance ever since.

What it taught us was that fairytales at the time are now becoming commercially viable when it comes to the electrification of transportation, solar power, wind power and the integration of that. It will be led by the consumer, in my opinion.

What is the future of batteries, and related to that, and how does that shape the future for companies in the battery metals sub-sector?

When it comes to understanding energy, there are three silos: 1. The generation, or creation, of energy, so the creation of electrical energy. 2. The movement of energy. There are three ways to move energy from point A to point B, you can do it with a pipeline, with a ship or a railroad or you can do it with electrical cables. 3. The utilization of energy and that’s where we can look at batteries.

The lithium-ion battery has gotten a lot of press. It’s good for devices, tools, transportation. When you get to the larger, commercial-scale batteries, you’re talking about vanadium-redox or iron-salt batteries. They’re huge – the size of a building – with very simple and abundant ingredients.

So what’s the glue of every system I just went through? Copper. Electricity demands copper.

You are executive chairman of CopperBank.  Tell us about that company and what excites you about its future.

CopperBank is a unique company. It’s a company built by investors, for investors. We appreciate that the future of energy will be copper. We look at investing in junior mining as the highest of high-risk industries.

Our strategy is to acquire projects that have had a significant amount of capital already invested. When the copper price is low, they are un-economic, when the copper price rises, there’s optionality. Our portfolio has growth, optionality and development potential. We can enhance the value – even in a lower-priced copper environment – to offer investors not just the optionality play, but also accretive growth.

We specifically like copper because as a commodity, it will have strong CAGR demand growth. Unlike the oil and gas industry, copper mining has a window where in the next three to four years we have no major copper mines coming online. That’s big news.

You label yourself a realistic environmentalist. What does that mean?

It’s recognizing that about two billion people in the world don’t live like we do. Eventually, they will have access to running water and electricity. There’s nothing that can prevent that. It’s how we do it in the most proactive way possible. All of these things will be led by the consumer. As much as you want to adjust or pivot the behaviour of people, you can’t do this.

What impact will technology have on emerging markets, and particularly on commodities in emerging markets?

You have to look at the per capita usage of commodities. We currently have 7.5 billion people in the world and we’re probably going to climb to about 9 billion. As these developing nations become more developed, the trend is (and we’ve seen this many times) that birth rates fall. So eventually we will go into decline, but that’s an issue for 2050 and beyond. When you look at the per capita consumption of commodities in the next 10, 20, 30 years that’s where I think – as an investor – there are going to be winners and there are going to be losers.

As we pivot to a low-carbon society, things like thermal coal and crude oil will no longer be growth businesses. We’ll see other commodities become the blue ribbon champions – things like copper because it will continue to grow. We will pivot. That amplitude will increase.

What commodity investment opportunities can you not ignore today?

What Tesla has done with its supercharger network. Effectively, they have disrupted the entire incumbent energy system. You can now drive an electric car anywhere in the developed world, due to their super charger network, and it only took Tesla about three years to achieve that.  Think of the gravity of what they have developed in a very short time.  Royal Dutch Shell by comparison, is a $300 billion company that sells 6 million barrels of oil every day through their 44,000 forecourts. Shell is an energy distribution business and good part of their market cap is attributed to selling transportation fuels. That is no longer a growth business.

What have I missed? What else should we have talked about?

The consumer. The consumer will eventually guide the way. The gentrification, urbanization and behaviour of the millennial generation is profoundly different than the generations before. Where is the largest millennial population in the world? It’s in China. There are 415 million millennials and over 100 million have graduated from university. Those educated, urban Chinese want no part of factory jobs anymore. The European/American millennial is saying they don’t want to live in the suburbs of cities anymore. They are more than happy to live in the gentrified area of Kansas City in a condo, and they don’t have a car nor do they want one — they don’t even have a drivers licence, so they are never going to be the customer of Big Auto or Big Oil.

So if one aggregates any 100 of these people. Many don’t have a drivers licence, and if they do it’s for something like a car sharing service like Car2Go. They don’t want ownership, they want access. Or, they will use a service like Uber. So how does this reverberate into what we’re talking about? If we aggregate 30 or 40 of these young people, they require one car, car-sharing, or an uber driver.

When you look at the consumer, guess what? They all used to buy a car. No longer. These types of consumers, that count in the hundreds of millions, are never going to be the future customer of VW, GM or Toyota. If the Big 3 automakers each sell around 10 million cars a year, I will suggest to you that in the future, their car sales will stop climbing. And I believe car sales in general will actually start to fall. Additionally, a good portion of those cars become more fuel efficient and for professional drivers increasingly so they will buy electric. It’s all about cost, not price – the total cost of ownership, not to mention the governmental pressures that are forcing industry to provide zero emission transportation.

We’ll see technology companies getting in the game: Tesla, Apple, Dyson, you name it. There’s a cool factor, green factor, price factor. It’s going to disrupt the whole business model. It’s all been turned on its head. And then you look at one other thing.

I also think it’s always important to think about the Ernest Hemingway quote when you think about car companies: “How’d you go bankrupt? Two ways. Gradually, then suddenly.”

This story was originally published at www.proactiveinvestors.com on September 8, 2018 and featured in The Public Entrepreneur magazine.

Learn more about Copperbank Resources Corp. at http://copperbankcorp.com and on the CSE website at https://thecse.com/en/listings/mining/copperbank-resources-corp.

CSE Issuer Stories, Magazine

The World According to Victory Square: Global tech making a difference on multiple fronts

Technology is changing the lives of every living thing on our planet and at a speed difficult to grasp.  Then there is the question of direction – where is the tech world taking us, and to what end?

To begin understanding these issues, it helps to have insight from someone who lives and breathes technology, but at the same time is not so consumed by it that they lose touch with everyday realities.  Someone driven by the outcome of their efforts for human beings, rather than the pursuit of technology for its own sake.

Shafin Diamond Tejani, CEO of Victory Square Technologies (CSE:VST), is firmly in the former group.  With a vision for his company built around clear opinions on future trends, he speaks sincerely about both increasing shareholder value and the positive influence he and his team can have on local communities…and those not so local.  At the end of the day, Tejani believes the benefits are there for all of us to share.

Public Entrepreneur visited Victory Square headquarters in Vancouver recently for an in-depth discussion of Tejani’s philosophies and thoughts on where technology is headed.  Investors and entrepreneurs alike could learn much from one of the city’s leading lights in technology investing and helping entrepreneurs realize their business and personal goals.

Victory Square invests in companies that are shaping the future, and that means you have some precise views on where technology, and the world in general, is going.  Can you share that outlook with us?  What are you focused on and what do you see for the future that some people might not?

Human nature is very predictable, and history is very cyclical.  If you look at the past few decades you see very clear patterns.  Our focus recently has been on new emerging technologies, which are disrupting established technology and creating completely new industries.  We are seeing things like decentralization, artificial intelligence, Internet of Things, and virtual and augmented reality being the next big movements.

I started my first company during the early dotcom boom of the mid-1990s.  The Internet and the Web democratized access to information and connected people from all over the world.  We have seen that impact every walk of our lives on a global scale, and it accelerated further with the explosion of mobile phones and smartphones.  We can now say that humankind is almost entirely connected.

Humans generally want to do the same things.  On the Internet they want to access information, purchase things, play games and watch movies.  They also use social media to connect and communicate with one another.  But for the last 25 years, most of these activities have taken place on centralized servers.  Facebook allows you and I to communicate but it’s a centralized platform.  We input the information, but they own that input, and they monetize it to third-party advertisers without us getting a cut of the money.

The impact of global platforms like Google, Twitter, and Facebook leads to problems ranging from the threat of government-ordered censorship to more subtle, algorithmic biases in the curation of material that users consume. These platforms which host and inform our connected public perspectives are unelected, unaccountable, and often difficult to oversee or audit.

We are now living through a new movement to create technologies and services to address these issues. Decentralized technologies that are open source, enabling peer-to-peer interactions in lieu of mediated centralized platforms are the remedy to our current global landscape.

In a centralized system, everything is kept in the same place and can be hacked.  In a decentralized network there may still be a Facebook that can create the network, but we all own our own information and we all participate and benefit from how successful that network becomes.  People will want to do the same things, but the underlying architecture is going to be different.

From an innovation standpoint, Victory Square focuses on things we know.  We like verticals that are commercial and virtually recession-proof.  Sports betting is a good example.

Let’s vector in a little closer.  How do you choose companies to invest in based on your broader view for the future of the world?

Given that we begin by focusing on verticals we know well, the next thing we do is identify a large customer with a pain point.  Then we look at some 80 accelerators we have relationships with around the world to see what problems talented people are trying to solve.  We can bring teams to Canada to evaluate them if they are overseas.  The evaluation will take place over anywhere from three to six months, and by bringing entrepreneurs to Canada there are a number of programs we can take advantage of that help to mitigate our risk.

We focus on verticals that we have a strong track record and experience in, identify a large customer in that vertical, look wide globally to find the best talent, bring it to Canada to give it all of the advantages of being based in Canada, and then we are able to evaluate the tech and the team as they validate with that large customer we have brought them to.

Tech has been commoditized, so it’s your ability to have an operator who can execute efficiently.  Execution becomes the real key.  We look for strong teams and leaders who have built a product that customers are willing to pay for.  And given that commoditization, you need differentiating factors – someone who can speak well and articulate what they are really doing, and then there is that work ethic and hustle that we also look for in an operator.

Give us an example of an investment and the impact it stands to have on the future.

There are 19 companies in our portfolio doing exceptional things.  One of those is FansUnite, which was founded by an accountant and a lawyer who are very passionate about sports betting.  We acquired the company about 18 months ago for $2 million, worked with them to build a unique product, and they just oversubscribed a financing of $4.45 million at a pre-money valuation of $13 million.  FansUnite is aiming to go public in early 2019.

In the sports betting industry, all bettors are generally betting against the house.  You are trusting the house to manage the lines appropriately, trusting them to put the player funds in escrow, and then to pay you out accordingly when the time comes.  Paying exorbitant fees and trusting a centralized third party with your funds was what led to FansUnite incorporating blockchain into their business.

A main pain point is that the house is using a third party to process payments, which means they must charge a fee, and it can be as high as 10%.  That means if you bet $100, only $90 is actually going into the pool, so you have to win 54% of the time just to break even.  They realized that decentralization and blockchain could address this and built their own protocol and currency. FansUnite will become one of the first companies to build the infrastructure that allows any operator to build a blockchain based sports betting application on the protocol.  FansUnite is building the first decentralized application which will be a low-margin sportsbook, taking the fees per bet down to an industry low 1% margin for the book.  There are many other efficiency benefits as FansUnite aims to change the landscape of the sports betting industry.

Your company materials suggest giving back to the community is important to Victory Square.  How does investing in things that make the world a better place fit into the structure of a capitalist enterprise?

My family is from East Africa, and in the early 1970s there was a military coup and we ended up in Canada.  We basically won the lottery by landing in Canada, where we had access to good education, stable government, safety and security.  The advantage we had in Canada and the thankfulness is tied into a responsibility I have always felt, and it has trickled down to our portfolio companies in the form of something we call TKM: Time, Knowledge and Money.

There are some in our team who might not have financial resources to give, but they have time and knowledge.  A graphic designer might donate design services to a philanthropic organization in need of that skill.  Lawyers or accountants can provide legal advice or business planning for charities.

Our focus at Victory Square is on vulnerable children and making sure they have the basics, which means access to nutritious food, education, safe environments, love and support.  We found that not only do we have the time and capacity to do it as a capitalist enterprise, but if often benefits us because it aligns us with the interests of other socially minded entrepreneurs.  There is no negative impact – it is only positive.

There is no typical day for you, but how about a typical week or month?  Give us a look inside the world of a manager at the top of an investment organization.  What are your biggest challenges and how do you keep on top of all the moving parts?

I am fortunate to have an amazing team and we divide and conquer.  If we take September as an example, we are hosting a conference in London called the World Blockchain Forum, where investors, thought leaders and emerging tech companies from all over the world will be gathering, including some of our own.  We’ll be connecting with investors and accessing deal flow in the UK.

Right after that we head to Asia, where we have some portfolio companies.  We will be stopping in China, Hong Kong, South Korea, Japan, and then we end in Singapore.

Thankfully, Asia is a day ahead because we come straight back to Vancouver for conferences, one of which is Cambridge House’s Extraordinary Future, which we sponsor and are actively involved in, and then the AR/VR Global Summit.  At the end of September, we are in Malta for the Malta Blockchain Summit.

Portfolio companies are global, events we host and speak at are global, our talent pool and investors are global, so we are spread out.  And alongside all of that, we are managing our portfolio companies and day to day responsibilities, so we have to ensure we have a really organized team, but also a really deep and hard-working team so we can successfully execute on everything.

And there are also lots of activities we run on the philanthropic side – educational programs, food drives, golf tournaments, galas and other events.  That initiative is important to us and we have a team that makes sure we devote appropriate time.

Victory Square must have a shareholder group a little different than that of the average public company.  Can you discuss the type of investor that backs you?

We attract a wide variety because we are in many different verticals.  We have exposure to artificial intelligence and machine learning, to VR/AR and blockchain, as well as mobile games and film.  They fall into three categories: institutional investors who have a longer vision, retail investors who don’t fully understand the sector but want exposure, and then there is a big group of investors who support our portfolio companies from the global crypto community.  Given that tech is borderless, we are seeing investor interest from all over the world.

If you could convey just one lesson to a talented, budding entrepreneur, what would you tell them?

There are lots of things I think are key, but forced to make a shortlist, I’d offer an analogy.  If we needed to go to Florida we could get in a car and start driving, but we might not have enough food or money or gas.  We might eventually make it to Florida, but it would not be the most efficient way.

A well considered plan is one of the biggest things.  You need a roadmap for where you want to go.  But you also have to realize that the direction you initially started out on might not work, so you have to be flexible and adjust.  The entrepreneurial journey does not always look like a hockey-stick curve.  It can be very volatile, and having that plan enables you to be better prepared to face the challenges and difficult periods and be persistent and determined to get past it, rather than become frazzled and quitting early.

You also need the right attributes, such as strong work ethic, leadership skills, passion and determination.  If you put enough smart people together with a good idea or opportunity, you are going to figure it out.

This story was originally published at www.proactiveinvestors.com on September 19, 2018 and featured in The Public Entrepreneur magazine.

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

CSE Issuer Stories

Interview with Mehran Ehsan, President & CEO, Permex Petroleum Corporation

Earlier this month, Peter Murray of Kiyoi Communications, sat down with President and CEO of Permex Petroleum Corp. (CSE:OIL), Mehran Ehsan, to discuss the dynamics of the oil markets; how Permex has navigated growing in a challenging environment and where he sees Permex’s opportunities to continued growth.

Peter Murray (PM)  We’re going to discuss a range of topics, including the state of North American oil markets and how to make money in the current environment.  But let’s begin by having you explain who Permex Petroleum is and the company’s strategy for making the most of opportunities in your industry.  What makes Permex different?

Mehran Ehsan (ME) Permex Petroleum is a uniquely positioned junior oil and gas company with assets and operations across the Permian Basin of West Texas, and the Delaware sub-basin of southeast New Mexico.  We own and operate on state, federal and private land.

The unique value proposition that Permex offers is a reflection of three main factors.

Number one is the timing of our acquisitions.  The company began acquiring assets in one of the worst cycles in history.  During the downturn of the past three years Permex picked up a hawkish position by targeting companies with quite a bit of leverage.  Typically, we were purchasing assets at 10 cents to 20 cents on the dollar.

The second aspect that makes us unique is geography and geology.  As for location, we are in the Permian, and the Permian is the most superior basin in the world.  Most of the investment made by the oil industry during the downcycle was in the Permian, and Permex has been in the Permian since we began.  From a geology standpoint, the best-producing formations in the Permian Basin are the Bone Springs, the Wolfcamps, and the San Andres.  Having these formations within your reservoir is key to succeeding in this region.  Permex has all three of these within its various properties.

The final thing that makes Permex unique, and ahead of our competition in the junior space, is our structure.  Every entrepreneur and CEO thinks they have a good structure, and they quite well might.  With ours, we have 35 million shares outstanding, we have absolutely no debt, and I think we are truly undervalued given where we’re headed.

(PM) How did you develop your insight and strategy for the company?  Was it a single member of the team who had this vision, or was it more of a group decision?

(ME) The board and executive team have over 240 years of combined experience in the oil and gas sector.  Some of us have been through multiple cycles and we’ve seen big peaks and valleys.  And with each valley we’ve witnessed devastation within the industry, but on the flipside is opportunity.  However, these opportunities do not come every year.  They only come every eight years or every 10 years.  For Permex, the timing has been excellent to take advantage of market conditions.  Everyone in the company sees it.

(PM) Can you give us an example of a deal that you’ve done and how it reflects that approach of trying to take advantage of conditions within the industry?

(ME) Let’s look at our most recent acquisition.  We took an approximately 48% working interest in the ODC and Taylor unit in Gaines County, West Texas.  The other main partner on the field is Occidental Petroleum.  What we ended up paying for this asset was about US$1.9 million.  The field is already in production.

To illustrate the value we were able to add, you essentially divide the price paid for the total field by the amount of production you get, and this yields a number called “per flowing barrel.”  We ended up paying $11,000 to $15,000 per flowing barrel.  To put that in context, the market right now is around $45,000.

Currently in our area, you see acreage going anywhere from $500 to as high as $10,000 per acre, yet we paid $500 to $700 per acre.  That is another testament to us entering the market during a downcycle and buying it at a discount.

(PM) That seems an obvious strategy – buy low and sell high.  Why don’t lots of other entities do what Permex does?

(ME) Actually, I think quite a few companies do use a similar approach.  You don’t have to look far for a good example.  Ring Energy started in 2002 and has just grown and grown.  In the last downturn it expanded substantially by taking advantage of the cycle.

The main reason we don’t see this happening all the time is that it is not simply a matter of buying low and selling high – there is more to it.  You can buy low in the wrong environment and the wrong location and it doesn’t matter if the market comes back up because you won’t benefit from it.

To give you an example, in the Canadian environment right now there is too much regulation, too much red tape, and taxes are too high.

(PM) Can you give us some insight into the different regional oil markets in North America?  What would be your Top 3 jurisdictions and are there some areas or types of plays you would avoid?

(ME) First of all, we don’t do anything offshore.  Looking at opportunities onshore, we are quite biased toward the Permian Basin, and I’ll give you valid reasons why we think that way.  Out of 22 billion barrels of proven reserves in the United States, 9.8 billion belong to the Permian Basin, or over 44%.  Looking at US production, 3.2 million barrels a day is produced in the Permian, compared to 10 million to 11 million in the entire US.  That means that around 30% of production in the United States comes from the Permian, which is just a portion of West Texas.

Looking at the number of rigs now actively drilling, which indicates where investment is going, in the Permian it’s 471 rigs, which represents over 42% of rigs in the US, and over 22% of global rigs.  That is why the Permian is our top choice.  This is the gem of the United States, if not North America.  There is nothing comparable to it.  In fact, the Ghawar Field in Saudi Arabia would be the first comparison that comes to mind, and some believe this is a better field even than that.

The next one we would look at is the Scoop/Stack play of Oklahoma.  There has been some development there, some horizontal drilling within those formations and basins and they are quite lucrative.

And lastly, we would consider the Bakken.  The Bakken has become more efficient, although the grade of oil is a little different.  It is not as high a grade, so refining can be an issue at times.  That would be an area we would review.

Unfortunately, there is no Canadian play in our Top 3, and the reason is geopolitics, red tape, and not enough infrastructure to take your product to market.  As a result, junior companies cannot compete with juniors operating in the Permian.  The only ones in Canada that will continue to be successful are mid-caps and large-caps which monopolize this market and take advantage of what the government puts out there to block juniors.

Canada has abundant reserves in the ground and we would love to tap into them to benefit the Canadian economy as well as Permex and our shareholders.  But until some of the governmental agencies change and we begin to see some federal and provincial agreements, we won’t be willing to move into the domestic market.  As a junior we just cannot get involved, unfortunately, because at the end of the day it is the bottom line that matters for shareholders.

(PM) What is the medium- to long-term outlook for Permex?  And how large can the company ultimately become?

(ME) Our focus right now is on developing our fields.  Scaling up production, in other words.

The second goal will be continuing to build reserves by adding landholdings and leaseholds.  In the medium term, we believe the company can reach a market capitalization far higher than where we currently stand with an appropriate injection of capital into various sectors within our development plays.

The long-term goal is for Permex to rank among midsize producers, or perhaps even alongside the big boys.  There are many companies that six or seven years ago started on the same path and followed the same formation, and they are now reaching that $800-900 million market cap.  Ultimately, either a large-cap takes us out, or we become one ourselves.

(PM) You mentioned earlier the depth of experience on the Permex team.  Are there any new lessons you have learned since Permex was established?

(ME) One of the main things I would point out is what we think is the Achilles heel for many oil companies, which is not having the ability to be flexible during a downcycle.  Many companies fail not because their operations are bad or they are too leveraged, but because they cannot quickly adapt to a lower-price environment.  Being fluid and flexible is the key to surviving in this industry.  In our opinion, you need to have a lean company and a low burn rate to be able to weather some of these storms, and if you don’t then there are real issues.

(PM) Do you have any advice for entrepreneurs who are looking at the oil market – or any type of business for that matter – and trying to determine the best way to move forward on an opportunity that they have perceived?

(ME) I consider myself a contrarian, so I do not have a herd mentality whatsoever and I believe that if an entrepreneur wants to get into any sector they have to have a unique value proposition and showcase why their project and their company is ahead of the curve.  This is particularly true in the oil industry, as our deliverables are much closer at hand than in many other businesses.  Oil companies really need to be on top of their game in terms of defining and demonstrating a unique value proposition.

CSE Issuer Stories, Magazine

Canntab Therapeutics: Merging medical cannabis with pharmaceutical expertise

The cannabis market is full of potential and creativity, with companies introducing new and innovative products every day. Dispensaries have gone way beyond smokable marijuana, offering customers everything from cannabis-infused edibles like beer and chocolate to personal care products like lotion and eye creams.

But the cannabis market isn’t all fun and games. Canntab Therapeutics Ltd. (CSE:PILL) is looking to fill a need in the pharmaceutical space.

Based in Ontario, the company was founded by pharmaceutical industry professionals. Chief Executive Officer Jeff Renwick was the former CEO of Orbus Pharma Inc., a generic drug developer and manufacturer. Prior to that, he was at Indukern Chemie AG, a Swiss pharmaceutical company.

Although once a private company, Canntab merged with Telferscot Resources on April 20, 2017 — a date synonymous with marijuana. Exactly one year later, the company went public on the unofficial pot holiday.

The company is presumably the first to offer medical marijuana in pill form.

The technology behind the pill was licensed from a predecessor firm. Since then, Canntab has filed seven patents for its two products. Approval from Health Canada to proceed with third-party clinical trials is in the works.

When a patient smokes marijuana or eats cannabis-infused edibles, it can be difficult to measure exactly how much of the medicinal elements are being delivered.

Chief Financial Officer Richard Goldstein also points to the potential danger of cannabis products being created by those without a pharmaceutical background, without GMP, or “Good Manufacturing Practices,” in place.

“A lot of it is being made in home kitchens and home basements. They’re not being made in the GMP environment. And yet, the marketplace continues to eat this stuff up. It’s quite scary at a level,” says Goldstein. He recalled a story where the tablets were so poorly pressed that they weren’t able to be dissolved in a patient’s system before exiting.

In contrast, the company’s extended-release tablets offer a consistent, stable dose each time and aren’t susceptible to spoiling and converting into other cannabinoid elements when exposed to certain environments like an oil-filled gel capsule would be.

“In true pharma, the only time you use a capsule to deliver medication is when you can’t have a tablet for that medication. If you can have a tablet, that is always the first choice,” says Renwick.

The tablets are intended to treat a variety of disorders, including Post-Traumatic Stress Disorder and arthritis. They can also act as a pain management and appetite loss drug for patients undergoing cancer treatments.

The pill delivery mechanism may also be the first step in reducing the stigma of marijuana by removing the smoking aspect.

Renwick recently had a conversation with a landlord who was spending hours in court after tenants complained about neighbors smoking marijuana, some of whom were using it for legal, medicinal purposes. The pill can be a smokeless alternative in areas where smoking isn’t allowed.

Canntab believes the pill alternative will also appeal to senior citizens who take multiple pills per day, especially in assisted living facilities where smoking may not be allowed.

“They’re not going to smoke. They’re not going to eat gummy bears, but they’ll take a pill if it makes them sleep better,” says Renwick.

The company does have a sleeping pill in the works, although clinical trials will still need to be performed.

And a future product line may include cannabis tablets intended to specifically treat sleep and social anxiety disorders.

While the legal landscape is always evolving from place to place, the company has come to agreements to expand outside of Canada.

Canntab is working on import and export permits, with agreements already in place to send tablets to Australia and Germany. Deals with Poland, Spain, and Greece are also being discussed.

Moving into the U.S. market is challenging. Recreational marijuana use is already legal in nine states, including California, Washington, Oregon and Nevada. Medicinal marijuana is legal in a total of 29 states, including those West Coast states as well as East Coast states like New York and Delaware. But on the federal level, cannabis is still illegal.

“Ultimately, we want to get something going in the US, preferably in California,” says Renwick.

The company has said it has a “soft plan” to get there by perhaps 2019. A lawyer is looking into licensing in California on its behalf.

A 2017 Gallup poll found that 64% of Americans support the legalization of marijuana.

Looking to the future, Canntab’s CFO is confident that the company is in good financial shape.

Goldstein notes that the company’s immediate cash needs have been fulfilled after going public.

“The good news is that we have lots of money to do what we want to do in the short term and then as opportunities present themselves, we’ll seek capital if necessary,” says Goldstein.

This story was featured in The Public Entrepreneur magazine.

Learn more about Canntab Therapeutics Limited at http://canntab.ca/ and on the CSE website at http://thecse.com/en/listings/life-sciences/canntab-therapeutics-limited.

CSE Issuer Stories, Magazine

Cannex Capital Holdings: Funding and expertise to help young cannabis businesses realize their potential

With hundreds of cannabis companies popping up over the past few years, it is perhaps unsurprising to see some consolidation in what, right now, is a very hot sector.

Cannabis – or weed or pot or whatever you want to call it – was, for a long time, looked down upon by many members of society who thought of it as a drug for slackers and spotty teenagers.

That image has certainly started to change as an increasing bank of research suggests cannabis – or more specifically the stuff in it – has a number of positive uses, including as a treatment for things like stress and chronic pain.

Lots of companies have emerged to try to get a piece of this lucrative pie – some analysts think it will be worth US$180 billion within just a few decades – which has created a very fragmented market made up of small firms which don’t always have the experience or the resources to thrive.

That’s where Cannex Capital Group (CSE:CNNX) comes in. The company joined the Canadian Securities Exchange in March, raising US$48 million from investors, including some “blue-chip institutions”, in the process.

Cannex accelerates business growth for small, revenue-generating companies by acquiring them and giving them the support, both financially and managerially, to grow into sustainable, large-scale businesses.

“There are lots of companies in the cannabis sector that are just starting off and many of them are going to fail because they don’t know how to operate a business at scale,” says Chief Executive Officer Anthony Dutton.

“We’ve already proven that we know how to do that, we’ve been successful at that which means we’re going to be successful at it going forward.”

The ‘we’ Dutton refers to is himself and his two main operating partners from Washington State; Cannex Chief Operating Officer and Director Leo Gontmakher and Director Jerry Derevyanny, who is also Cannex’s Executive Vice President of Corporate Development.

Having worked in the corporate finance business for the better part of 25 years, Dutton brings solid financial experience to the operation, but as he openly admits, wherever he has been he has always had a solid operating team – in this case Gontmakher and Derevyanny.

The duo formed the top brass at BrightLeaf, a cannabis holding company which was acquired by Cannex for US$36 million as part of Cannex’s initial public offering in March and is the firm’s foundation asset.

BrightLeaf’s strategic operating tenant is Northwest Cannabis Solutions – the biggest grower and processor of cannabis in Washington State.

If the structure sounds a little weird, don’t be alarmed. As Dutton explains: “The reason we’ve done it this way is for licensing requirements. There’s nothing nefarious, it’s just the way the deal had to be structured to follow Washington law to the letter.”

NWCS has a couple of manufacturing facilities where it grows “premium” cannabis, some of which it uses for its own derivative products (more on those later) and the rest it sells on to retailers under the ‘Private Reserve,’ ‘Legends,’ and ‘Funky Monkey’ brand names.

While NWCS is the largest cultivator in Washington, it also purchases significant quantities of trim and full flower cannabis from third-party growers, which, along with some of its own trim, it extracts and processes into two types of extract: tetrahydrocannabinol (THC), which is the active substance to create the “high” feeling of marijuana, and cannabidiol (CBD) distillate.

“We [then] refine it and infuse it into what are called derivative products – so everything from creams to vape pens to chocolates to candies,” says Dutton.

That’s the main arm of NWCS’s operations: extracting the oils from the plant and then using it to create a range of infused products.

NWCS has a host of brands including Magic Kitchen (edibles) and Evergreen (vaping cartridges), in addition to its aforementioned cannabis flower labels.

“We’re very focused on quality, so we have to focus on brand; brands are very important,” said Dutton.

“There’s a reason why people buy Coca-Cola and not some generic cola. Ultimately in the cannabis business, brands are going to be the dominant element of value and we want to make sure we own, manufacture, and distribute some of the best brands.”

It is perhaps no surprise, then, that the second company to join the Cannex stable – Jetty Extracts, which was acquired in April for US$22.5 million – is also home to some popular brands in California that have a loyal following.

Like BrightLeaf, Jetty, which specializes in extracts and vaping products, also boasts a strong management team who aren’t newbies to this nascent industry. As Dutton highlights, “that’s the kind of leadership we’re interested in.”

Jetty is significant because it takes Cannex into the Californian market – comfortably the biggest in the US. By 2020, it is estimated that the state will be raking in more than US$1 billion a year in cannabis taxes alone.

That isn’t enough to satisfy the ambitious Dutton though, who has grand plans to take Cannex across the United States and around the globe in the not-too-distant future.

“We’re already in two states and by the end of this year I want to be in two more US states and one foreign country,” he proclaims.

“Within five years I’d like to be in every legal US state, I’d like to be a coast-to-coast consumer-branded company and I’d like to be in three to five international jurisdictions.”

Acquisitions in the booming cannabis industry are unlikely to come cheap, but Dutton isn’t too concerned about this for now. Cannex has US$15 million in the bank and is already cash-generative, so he says there is no need to raise money in the immediate future.

He is acutely aware that at some point, though, he will have to go back to the markets to fund the kind of rapid growth he wants, but he doesn’t expect it will be a challenge to find people willing to back him with their cash.

“The thing that has really impressed upon me in the past couple of months is that investors now want to invest in this sector. They don’t want to start investing in a company that might start generating revenue next year [though], they want a company that’s doing it now. So, for that reason, we’re getting a huge amount of interest.”

This story was featured in The Public Entrepreneur magazine.

Learn more about Cannex Capital Holdings Inc.at http://www.cannexcapital.com/ and on the CSE website at http://thecse.com/en/listings/life-sciences/cannex-capital-holdings-inc.