NEX Exchange, a NEX Group business, operates a regulated stock exchange in the U.K., with a particular focus on entrepreneurial and growth-stage companies.
Patrick Birley, Chief Executive of NEX Exchange said: “We are delighted to welcome Auxico Resources as our first dual quoted stock with the Canadian Securities Exchange. We have long admired the approach of the CSE and hope that by working together we can offer dual quoted companies greater access to a wide range of investors.”
With this new listing milestone, the CSE continues to grow its international reach. Several securities listed on the CSE also trade on markets in Europe (Frankfurt Exchange) and in the U.S. (OTC Markets).
Richard Carleton, CEO of the CSE, said of the announcement: “We congratulate the team at Auxico Resources for taking advantage of the fast-track procedure we have developed with our colleagues at the NEX Exchange. The listing will open new opportunities for capital raising and secondary market liquidity in the U.K. for Auxico. We hope that Auxico will be the first of many CSE issuers to join the NEX Exchange.”
According to the NEX Exchange’s fast-tracking admissions process, companies already admitted to CSE are eligible to use their accelerated admissions process to join the NEX Exchange Growth Market.
The access granted to CSE-listed firms to this streamlined process is a further recognition of the CSE as a qualified market with international stature and puts the CSE in strong company with some the largest and well-known stock exchanges across the world who also have qualified for access to the NEX Exchange’s fast-track admission process.
Hear from the CSE’s Senior VP of Market Development, Rob Cook, explain more about how companies from outside of Canada are also choosing to list on the CSE in the video clip below.
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 past summer, the Canadian Securities Exchange, in partnership with Stockpools, Lift Cannabis Expo, and Abattis Bioceuticals Corp. (CSE:ATT), successfully ran the first-ever CSE Stockpools Cannabis Investment Challenge.
This 11-week fantasy stock trading competition attracted over 1,000 participants from across North America and beyond who were each vying for the chance to win weekly cash prizes as well as the chance to win the grand prize, valued at $3,000.
The challenge helped investors understand more about the pool of companies in the competition; specifically, all of the companies that investors could choose from are CSE-listed companies involved in the cannabis sector. In total, there were 45 companies that investors could choose from in order to put together their fantasy portfolio.
In addition to some colourful usernames, weekly winners of the competition (listed below) posted some impressive gains, with the range of returns spanning from 0.28% in week 6 to 15.12% in week 4. The grand prize winner, John Terry from Rhode Island (USA), won the final three-week stretch with a gain of 13.21%.
As part of the competition, select CSE-listed companies also shared their unique insights and experiences on the shifting landscape facing public cannabis companies. Included below is a list of companies that shared their perspectives on the cannabis markets:
Rob Abanante, CEO of Abattis Bioceuticals Corp. (CSE:ATT), a lead sponsor of the challenge, shared his thoughts on challenge’s performance and had a few kind words to say about working with the CSE and Stockpools:
“We at Abattis Bioceuticals Inc. would like to first thank all of the participants in the CSE Cannabis Investment Challenge, as well as Lift Cannabis Expo, the Canadian Securities Exchange, and of course the other featured companies; I hope you all enjoyed participating as much as we did. After this success, we are looking forward to working with Stockpools and the CSE again on future contests. There is so much to learn about this diverse and volatile industry that is changing rapidly. We wish to continue educating new investors through Stockpools’ unique platform and invite them to our website for more information. Thanks again everyone!”
This competition not only helped to highlight the cannabis sector, it also provided investors with a risk-free opportunity to learn more about investing online as well as about the diversity of companies in the cannabis space and the Canadian Securities Exchange. “Our partnership brought together a select group of CSE-listed companies in the Cannabis space,” explains Anil Mall, CEO of Stockpools, “and gave our global audience a unique opportunity to hone their trading skills on Stockpools’ risk-free educational platform.”
The focus of the CSE Stockpools Investment Challenge was to provide an educational opportunity as well as engage retail investors in the cannabis space, an objective the CSE is confident was met. “The initiative ended as a huge success in August with more participants than expected across the globe,” said Anna Serin, Director of Listings Development and challenge organizer. “The Canadian Securities exchange continues to work to engage the investment community in the small cap space, always striving to build more engaged and liquid markets for the benefit of its issuers.”
Thank you to our sponsors and to everyone who participated in the CSE Stockpools Investment Challenge. Congratulations to the following weekly winners:
Week 1 – michelrbrunet (1.58%) – Quebec, Canada
Week 2 – Krab – (4.26%) – Delta, BC
Week 3 – dancep (6.02%) – Ontario, Canada
Week 4 – arod (15.12%) – Ontario, Canada
Week 5 – Beausoleil (5.64%) – Quebec, Canada
Week 6 – Excelsior (0.28%) – Tennessee, US
Week 7 – chriscam(9.01%) – Has not sent in claim form yet
Week 8 – Tiekam (11.71%) – Kitchner, ON
Week 9-11 (Grand Finale) – Jt420money (13.21%) – Rhode Island, USA
Earlier this week, Peter Murray of Kiyoi Communications sat down with John Fowler, President and CEO of Supreme Pharmaceuticals (CSE:SL) to discuss his perspective on the commercialization of cannabis, how the landscape has shifted in the past several years and how choosing to list with the Canadian Securities Exchange enabled Supreme Pharmaceuticals to move quickly in this rapidly evolving space. Below is the transcript of the interview.
Ten years ago you were assisting medical cannabis patients with legal issues and now you are President and CEO of a company worth over $250 million helping patients in a more relaxed regulatory setting. How has the environment changed and when did you realize what a major business opportunity the cannabis sector would present?
It is impossible in this day and age not to have some understanding of the scale of illegal trade in cannabis. It is something I don’t participate in myself, but the point is that the business opportunity in cannabis, assuming a reasonable environment governing use for medical purposes, and ultimately for recreational purposes, has always been clear.
Regulated medical cannabis use became legal in Canada in 2001, so there was that setting from a patient rights perspective – a patient could legally access cannabis. But from a business perspective it wasn’t there. When Prime Minister Harper created what has now become the ACMPR (Access to Cannabis for Medical Purposes Regulations) – basically, highly regulated cannabis cultivation – I sensed the perfect business opportunity had arrived. This was an opportunity few are fortunate enough to have, the chance to create a business doing something you are passionate about. For me that was the combination of operating in a complex regulatory environment while working with the cannabis plant.
The best way to note the change is that when we founded this business in 2013 we expected it could take even up to 10 years post-licensing to complete the greenhouse project, and now we are looking to get it done in 24 months or less.
How has Supreme been able to develop into one of the industry’s leaders so quickly?
Our biggest advantage is that our team is committed to the cannabis space. Even though we have only been at this for three or four years, most of the team and executives who work with me have been thinking about this for much longer. What that has allowed us to do is move quickly to define our business, to recognize where we feel it is best to invest in core competencies, and for us that’s cultivation, and how to market a very transparent story.
When you are really focused and passionate about doing something well, which for Supreme is taking craft cannabis and developing it on a massive scale – in a nutshell, showing that “big pot” doesn’t have to be “bad pot” – that resonates with the market, whether it is the capital market, the general public or the consumer market. This has been our guiding vision, the goal of being a top cultivator and developing the competency of scaled cultivation that has allowed us to gain a favourable market position.
Supreme has always highlighted its role as a cannabis producer. Do you expect to extend the brand across different verticals in the future?
A lot depends on how the market unfolds. We are very clear at Supreme that we don’t have a crystal ball. Rather, we build competencies in a way that sets the company up for maximum flexibility.
I believe when you have a unique market opportunity like this, where the macro outlook is generally very positive – recreational legalization is coming and new international markets are opening – but the minutia at the planning level is still uncertain, you have to build in flexibility. We felt that by investing in the building of core competency at scaled cultivation and developing management systems to support that, we were building a business in the most moded part of the industry. Cultivation has the highest costs in terms of barriers to entry, Health Canada approval is a multi-year process, and it is hard to find transferable skills.
After that we can leverage our success in cultivation into whatever aspect comes next. In terms of what makes most sense at the time, it could be international, it could be products, it could be extracts – it really depends on what our market data tells us when we are looking to make our next step.
Supreme is based, and has its operations, in Canada but are there opportunities in the United States that the company could be attracted to?
The US is a fantastic market that is moving quickly. At the end of the day, cannabis remains federally illegal in the United States, so we are not looking at the US actively in terms of making large capital investments. That said, we take a lot of guidance from markets like California in terms of cultivation best practices, industry trends and product iteration.
How do you see the industry evolving going forward and what should be the main areas of focus from the standpoint of companies and investors?
As the cannabis market matures and grows, we should anticipate many more players coming into the space. I believe what that is going to mean is that companies have to specialize. I don’t think there is one aspect of the industry that is right for all companies. A company should have a core competency where they do something with the ambition of being the best in the world at it.
For us, that is cultivation. In the future we may expand that, but our goal is to develop a leadership position in cultivation. Any entrant into the space is going to have to figure out the aspects of the industry that they do better than anyone else in the world and focus their energies on that. And I think investors should be looking at that type of commitment to excellence from companies they are investing in.
Supreme is one of a handful of companies to successfully navigate the licensing process in Canada, raise the required capital and begin production. What does it take to get a production operation started and what advice would you have for potential entrants to the sector?
Getting a production license in Canada is quite challenging. It is a long and detailed process. We submitted our application to the Federal Government in autumn of 2013 and we were licensed in spring of 2016. For those looking to do it, I would say to make sure you have a clear plan, that you work with good partners and advisors, and that your project is correct and licensable. And more importantly that you have a business at the end of it. Some people think of a license as the finish line, when actually it is the starting line.
More generally, the cannabis industry offers opportunity beyond just cultivation. Entrepreneurs looking to get into the space need to think about themselves, their team, and think about what core competency they can develop so that they do something better than everybody else. That is their competitive advantage and that is how they will have a market.
If you look at conglomerates in other industries, they are generally grown in that fashion, where the company started with one great business, generated profitability, and that was leveraged into buying other great businesses or extending to other verticals. But it always comes down to that premise where you need to find something that you do better than absolutely everybody else that you can make the heart and soul of your business.
How are the evolving regulatory landscapes in Canada and the US presenting challenges and opportunities?
Challenge and opportunity are really two sides of the same coin. Regulatory requirements shape the business, but finding ways to operate efficiently within those regulations and ways to gain an advantage through those regulations is the opportunity for companies.
As an example, we saw a cannabis bill put to parliament this month. There are a lot of regulations and challenges in there, but for companies that navigate that well there is a lot of opportunity. At Supreme, we are spending time digging through that, assessing our business model, assessing what business models we think the future will allow, and finding the opportunity that comes out of those regulatory challenges.
With the experience of being an early license recipient, how important is first-mover advantage in this business?
We believe it is important to be early to market, but you don’t always need to be first. Many great companies in other sectors were not the first movers in their space. Business is a marathon, and it’s important not to be a quarter-horse in a mile race.
You need to be in there at the right time. The best business plan only works at the right point in time and under the right market conditions. For us, we saw an opportunity to leverage our competitive advantage in cultivation, to leverage the core competencies we were building as a group, and then we brought in team members to cultivation with the singular focus of producing some of the best quality cannabis in Canada.
The best way to market cannabis is not through the fanciest logo or best packaging, although that is important. At a high level, you have to remember that billions of dollars of cannabis is transacted per year with no brand name, in bags with no branding, based on “who’s got the good stuff.” At Supreme, we feel we are growing the good product and that is going to be the heart of our brand going forward.
When branding and advertising are restricted, your product must speak for the brand. We work every day to ensure our product speaks loudly.
It is almost three years to the day that Supreme listed on the CSE and began to focus on the cannabis industry. During those years, the company has grown its market capitalization to over $250 million. How would you characterize Supreme’s experience with the CSE?
Our experience on the CSE has been fantastic. First of all, it is debatable whether Supreme would even exist without the CSE, because the CSE allowed listing based on a clear, bona fide business plan to get into the cannabis space prior to us having a license. For the bulk of those three years we were an applicant entity.
In addition, the CSE was very entrepreneurial with its ability to work with Supreme so I could meet the objectives of the company and raise capital as we needed and work on growing our market, and that was invaluable. And doing it while being easy on our bottom line, for an early-stage company that at times was thinly capitalized.
As for where we are today, we have been able to do a lot of things we were told we couldn’t do on the CSE. We have been able to raise large amounts of capital. We raised $70 million last year. We were able to do a $55 million bought deal as a private placement on the CSE. And we were able to grow our market capitalization to over a quarter of a billion dollars while listed on the CSE.
I’d like to think we will be remembered for breaking through a number of barriers and bringing some investors to the CSE who perhaps had not looked at the exchange before. We’ll never forget the seminal role that the CSE played for Supreme and the ability it gave us to develop our business and get where we needed to go.
Throw in an experienced management team and you’ve got what many would see as the complete package.
With its two assets and strong mining team, Winston Gold Mining, which raised C$545,000 when it listed on the CSE last March, appears to tick all of these boxes.
While it is still in the early stages of developing its Gold Ridge property in Arizona and its namesake Winston project in Montana, the company holds historic data (particularly on the latter) which suggests both projects have more than a fighting chance of success.
Winston is located near Helena, Montana – an area with a rich mining history dating back to the 19th century.
The district is reported to have produced 100,000 ounces of gold from only 150,000 tonnes of ore back in its heyday at an impressive average grade of 22.8 grams per tonne (g/t). A quick look at the records will tell you that the Custer mine – which lies within the Winston property – was a major contributor to that figure.
Similarly, the Gold Ridge project near Willcox in Arizona yielded some good grades in the past, too.
“It was acquired from some people we know very well. It’s also a historic mine, but not quite as prolific as the Winston claims,” explains the company’s chief executive Murray Nye.
The Gold Prince deposit on the project was mined sporadically between 1932 and 1996 and produced 22,000 ounces of the precious metal from multiple veins, averaging almost 12 g/t.
The low price of gold back in the eighties forced the previous owners to move out of the property, but Nye’s interest was piqued by what was left behind.
“What we liked about that was that it had a lot of development done already. They had set up two drill stations underground and we went down and checked it out and they were both in good shape,” he explains.
“Both the drill stations were ready to go and drill below the level they were mining, so we thought there was a pretty good opportunity to start some bulk sampling or test-mining there on a near-term basis.”
This is exactly what Nye and his team look for when assessing potential projects.
“We’re after properties that we believe can get to a development or bulk sampling stage as quickly as possible because the investors who we’ve aligned ourselves with are looking for that kind of opportunity and we think we’ve found a couple of assets that fit those criteria.”
Given that it only acquired Gold Ridge at the back end of last year, not much additional work has been carried out at the property. The company’s primary focus has been on its flagship Winston property.
“We think it has more opportunities in terms of tonnage,” says Nye.
The project had around 630 holes drilled down to around 100 metres or so as the previous owners tried to assess the potential for an open pit operation. They estimated it could be host to around 500,000 ounces of gold, potentially more.
“That’s not 43-101 compliant but it certainly gives us an indication that there are some pretty good gold values in the property and many of them were very high grade,” says Nye.
The CEO and his partner Mike Gunsinger think the real potential of the Winston project lies in the untested geology further below ground.
“Our thinking is – and three geologists have also told me this – that this project is better suited to underground mining. What we’re doing now is drilling underneath where the old workings are.”
Recent results would seem to back up this theory. In January Winston appeared to locate a “high-grade gold vein which could be amenable to underground test-mining.”
Drilling along the Edna-West vein, as it has now been called, yielded grades of 8 g/t up to 44 g/t.
The bonus of these high grades is that it would make the project relatively low-cost.
But it’s not just the grades that make Winston such an exciting project; the fact that the infrastructure is already in place is also a plus-point.
“There’s a major highway within a half-mile of the property and there’s a major power line running right through the middle of it,” says Nye.
“The elevation is also low by Montana standards so Winston would lend itself to year-round operations.”
The plan is to carry on drilling here for another few months and then go underground, with a view to getting into production within two years.
“If we were to start something [underground] eight months from now, you’d be doing the development which would probably take another eight months,” explains Nye.
“Depending on how long the vein is and what you’re mining it would at least take you another eight months to develop that into a shrinkage stope operation.
“So within a couple of years – maybe a year and a half – you’d be in a production scenario if everything went to plan.”
“Our goal is to develop underground access and gradually ramp up to a 300 tonne per day test-mining stage. If all goes according to plan we believe we could achieve this for about CDN $10 million. Of course the ultimate number of ounces produced will depend on the average grade recovered.”
That’s not a lot in mining terms, but it is a tough ask for a fledgling business. But that there is where the experience and connections come in.
Winston is the second mining company Nye has headed over the past decade, and before that he was involved in financing projects, while Gunsinger has over 50 years of mining experience to draw upon.
So they know mining money people and are also pretty well up on the laws and regulations, especially in Montana.
“Operationally we’ve got a very experienced mining team and management is key in this. We’re very familiar with the state, the regulations there and we have very good relations with regulatory bodies,” says Nye.
The one thing Nye can’t control is the price of gold, although things are starting to look up here too.
“The gold market, in my opinion, is a place to have a serious look right now – it bottomed out but now seems to be back on an uptick,” the Winston CEO says.
Is this another box ticked for Winston Gold Mining? Very possibly.
Canadian marijuana stocks have been some of the best performing investments of 2016, as the Liberal Government that came to power toward the end of last year made legalization of the drug one of its planks during the federal election.
It is unclear, however, precisely what form legalization will take from the perspective of producers, as there is sure to be regulation and oversight when it comes to growing and distribution. Investment in a would-be producer is somewhat of a binary play — if a company obtains approval to produce under the current or any new regulatory regime, it has the potential to generate revenue and show investors that its management team can run a profitable business. If for whatever reason it does not get a green light to produce, then it’s back to the drawing board.
True Leaf Medicine International (CSE:MJ) was an early entrant in the space, being the 48th company to submit a production application to Health Canada. But while highly confident that its application will eventually receive the government’s endorsement, the company has aggressively developed a related business whose early success has caught the attention of investors and removes some of the concern about ongoing sustainability. If Health Canada grants True Leaf approval to produce marijuana within the next year or so, it will essentially come as a very large bonus.
Harnessing the spending habits of millennials when it comes to both their own health and that of their animal friends, True Leaf established a new division in autumn of 2015 to develop and market nutritional supplements for pets that contain hemp and other ingredients targeting specific health conditions. According to Chief Executive Officer Darcy Bomford, True Leaf sees annual sales in the True Leaf Pet division potentially reaching close to $30 million in five years’ time.
“We know we can sell pet products today and there are no legal issues. We have a great product line and that is our focus,” explains Bomford. “We count zero revenue on the True Leaf Medicine side in our model, so any value attributed as we move through the various stages of Health Canada’s approvals process just improves our prospects.”
Bomford knows of what he speaks when it comes to pet products, having spent some 25 years of his career to date in the manufacture and marketing of natural products for the industry. His previous company was purchased in 2012, which freed him up to work with True Leaf, and further to consider the pet food space once the non-compete clause in the transaction agreement had expired.
“A lot of people don’t realize how big the pet food industry is until they get a dog – once you go to the pet food aisle or a specialty retailer, that is when you sense its massive size,” says Bomford. “Our product line is geared toward the millennial and baby boomer generations, which tend to appreciate natural ingredients and the value of nutritional balance.”
Being in a big industry is great, but it typically means there is lots of competition. Fortunately for True Leaf, their products have clear points of differentiation.
True Hemp Chews come in three different formulations: Hip + Joint, Calming and Health.
“Hip + Joint is for inflammation in older dogs, Calming is for anxious dogs, and Health incorporates antioxidants for general wellness support,” says Bomford. “Each formula has a hemp seed or hemp seed oil base, and then we add other ingredients. Hip + Joint has natural sources of glucosamine from green lip mussel, and it also contains turmeric root, which is known to have anti-inflammatory properties. With Calming we use an amino acid from green tea call L-theanine, plus calming herbs such as chamomile and lemon balm. Health support has DHA, a form of Omega-3 from algae, and pomegranate.”
True Leaf has gotten True Hemp Chews onto the shelves of approximately 500 retail outlets in North America so far. Next steps involve building out the line with new products and increasing the store count. Bomford sees the line extensions leading to larger order sizes from both distributors and individual stores. “We have an oil product that you pour on your pet’s food every day, and a stick format that covers the chewing function,” says Bomford. “Down the road we are looking at launching a veterinary line with higher inclusions of the active ingredients and a functional chew for cats that addresses joint health.”
Moving quickly to make the most of its early-mover advantage, True Leaf introduced True Hemp Chews to the European market in May of this year and is now featured in the well-established Pets Corner chain of stores in the UK. Expansion into continental Europe is on tap for 2017.
True Leaf developed its products with assistance from a graduate student at Cornell University, and given his background Bomford knows how to take the formulations, brand them properly and build the business. “We use the co-pack model to avoid becoming capital intensive,” explain Bomford. “With my previous contacts I know basically all of the manufacturers worldwide, so we leverage other companies’ manufacturing capacity and focus our efforts on the brand. This is a necessary model for international expansion because we can have products made to order locally. We just provide the packaging and then are able to warehouse nearby and serve that geographic market.”
Balance in nutrition and balance in business. It is a combination that investors so far seem to be liking, and the philosophy has enabled Bomford to attract a balanced management team as well, with deep experience in everything from marketing to finance and quality control. Even former British Columbia Premier Mike Harcourt is on board – quite literally, as Chairman.
“I think in general, the marijuana producers that have legs at this stage of the industry’s development are those with alternative revenue streams. That is what our pet supplement division provides us and we are happy with our progress there so far,” Bomford concludes. “True Leaf has a very good chance to develop its Medicine division as a supplier of medical marijuana, but you have to put yourself in a position to weather the storm that is the approvals process. I believe we have set our company up well to do that.”
Fantasy 6 Sports (CSE:FYS) is a challenge to figure out at first because it is so cutting-edge you can’t think of any obvious comparisons to help put its business into context. A fascinating array of concepts to be sure, but how do you wrap your head around it?
Best start with the broader theme and work your way down to the individual businesses, then consider how they fit together. By the way, we are talking about a company simultaneously shaping fields such as Virtual Reality, Artificial Intelligence, Augmented Reality, Blockchain and Big Data – only 5 of the 10 technology trends forecast to define the world’s digital landscape in 2017.
At its most basic, Fantasy 6 leverages its capabilities in these technology segments to help brands take their consumer engagement to the next level. “It doesn’t matter what type of industry you look at, data is driving decisions,” explains Ray Walia, Fantasy 6’s Chief Operating Officer and a 20-year veteran of the technology scene. “We are collecting data, we can anonymize it and it can drive decisions for other brands and corporations.”
Sounds like any number of Big Data companies who passively collect data and try to re-sell it with some analytical bells and whistles to entities who need insight into their target customers, right?
Here is where Fantasy 6 is different – this company generates its own data by interacting with a specific consumer base valuable to existing and potential clients. Because it collects data this way, its database is unique and proprietary. And it focuses on a very large and multi-faceted business sector that provides new opportunities for data collection and analysis every day – sports.
A good starting point in exploring the product side is FansUnite, a platform Fantasy 6 acquired earlier this year and is in the process of turbocharging from both the user appeal and business potential perspectives.
True to its name, FansUnite is a place where sports fans who like to bet on games come together to discuss strategies and try to develop an edge, or simply just learn more. “The idea is we are building a community around sports betting and sports predictions that adds a layer of direct fan engagement,” says Walia.
FansUnite gives members a free virtual currency so that they can place bets without putting actual money on the line. It’s the perfect risk-free way to keep score and it gives you bragging rights if you’re good. More importantly for the platform, it separates the skilled from the newcomers and inspires serious discussions around strategy and upcoming opportunities. And for those who operate in the real-money betting world, FansUnite is a universe rich in sports and odds aficionados who can help give them an edge. Think you know better than everyone else what is going to happen in tonight’s game? Well, put your virtual money where your mouth is.
The proprietary data side is well illustrated by shifting popularity among sports, and even the emergence of new competitive pastimes. “The most popular sport in North America for betting is the NFL, worldwide by far it is soccer, but the fastest growing one is e-sports,” says Walia. “The emergence of e-sports has caught a lot of people off guard. Having a site like FansUnite collecting all this data, you cut through the noise and the hype and people are actually seeing that there is active engagement worldwide.” By the way, e-sports is video gamers competing in organized competitions with games such as Counterstrike, League of Legends and other titles you may know. And don’t harrumph – these competitions fill stadiums with spectators.
Mobile games and Virtual Reality (VR)/Augmented Reality (AR) games are additional arrows in the Fantasy 6 quiver, the first commercial release being Football Fantasy Coach. As you might have already guessed, Football Fantasy Coach requires the player to analyze a virtual game scenario and call plays. As with fantasy sports, your choices are based on real players, with the game providing performance statistics that change in real time as actual games are being played. “It is a bridge of technology into the real world that directly engages the fan,” explains Walia. And it is one more way for Fantasy 6 to collect data for analysis alongside other sources to draw conclusions for client brands.
It is not all just about online experiences, mind you. Some of the “immersive” work that Fantasy 6 does requires actual fan participation, such as when the team built a “dynamic 360 virtual arena” for one of the largest companies in Canada recently that enabled visitors to have their pictures taken and receive an image on their mobile phones that looked as if they were standing at centre ice in Toronto’s Air Canada Centre. Not quite the same as lining up to the right of Auston Matthews, but still pretty cool.
“We maintain the right focus by keeping balance among these three verticals,” says Walia. “Each has synergies with the others but they all have different skills required to execute. The games division is going on its own with good partners and intellectual property, the data division is collecting data and it is a different audience that they appeal to. And then the immersive side is more corporate relationships.”
And who does Walia think would be willing to pay the big dollars for high-quality sports data? “In context, our data is all around sports odds and so those who can benefit include any entity in gaming, casinos or sports books for a start. They will value the data one way, and then a sportswear company would have its own different use.”
Fantasy 6 is well-funded to move forward with its plan, having received a convertible note facility in the amount of $10 million from fund Victory Square, which Walia, with partner and Fantasy 6 Chief Executive Officer Shafin Tejani, oversee.
And unlike a lot of technology companies for which revenue always seems to be a “tomorrow” concept, Walia has made sure that sustainability is part of the corporate ethos. “The convertible note is designed to show that we have the wherewithal to execute, but a lot of the ideas we pursue are intended to generate revenue and be self-sustaining. That is one of the reasons why we are able to tackle all three of our verticals at the same time. They leverage each other but drive revenue on their own and the teams sustain themselves.”
The next six to nine months will see data continue to build, the games division debut new titles in different genres, and a big push on the immersive experiences side, with the lead role in a $1.5 million fan experience project for the BC Sports Hall of Fame in Vancouver a part of the effort.
“We are putting ourselves in position to be a strong player in VR/AR and mobile games as well as sports data driven by artificial intelligence, which will be the long tail,” says Walia. “There will be huge value and opportunity around that. And we know that Virtual Reality is attracting attention and we can connect brands with this and other technologies to help them reach important objectives.”
For Canada’s remote communities the reality of receiving packages from automated delivery drones is a lot closer than many might think.
Commercial deliveries are set to begin at some point in late 2017 with Toronto-listed Drone Delivery Canada (CSE:FLT) taking to the air.
Ontario-based DDC will be among the first ever commercial operations once it secures final approvals from Transport Canada in the second half of next year.
Chief Executive Officer Tony Di Benedetto sees rural Canada as an ideal proving ground for its scalable drone-based business model.
He points out there are over 1,800 isolated communities strewn over a sparsely populated landscape. It is not only a sizable market opportunity for DDC, but it also represents an opportunity for the Canadian authorities to better connect areas that are otherwise off the grid.
For investors, meanwhile, DDC presents a low-priced option on what is predicted to be a very substantial technology industry.
Broker Macquarie estimates the size of the entire private drone industry (which could include agricultural applications, infrastructure inspection, surveillance and surveying as well as parcel delivery) will expand ten-fold to around US$60 billion by 2020.
As an early mover DDC is not as recognisable as the likes of Amazon or Ratuken – customer-facing online retailers that have both been working on drones.
But when DDC’s technology is deployed in late 2017 it will be established as a revenue generating pioneer.
There are two elements to DDC’s technology. A proprietary operating system – which will route, track and manage fleets of delivery drones – is perhaps the most significant element; the company’s intellectual property.
The Company has also, by necessity, developed its own drones, though Di Benedetto says that as more advanced third-party drones become available the company will be open to using those.
“We’ve had to develop our own prototypes to commence flying, because they simply don’t exist, you can’t go on the market and go buy delivery drones, they’re not there,” he says.
“Eventually, over time I’m sure people are going to create delivery drones and we’re not locked in to the ‘airframe’ design.
“Our logic is transportable. So if a better airframe emerges in six months we can essentially take our logic and transpose it and now we have a different vehicle for our fleet.
“It is no different than a traditional courier today – they have trucks and cars, and they switch between brands, sizes and specs.”
DDC’s drones can presently carry between 7lbs and 10lbs at a time over a 200km operating range.
They have been tested and, subject to regulatory approval, are ready to go.
Progress toward initial delivery operations through late 2017 will be the key catalyst for investors in the coming months as DDC works to prove the commercial concept.
It recently secured licences to test the technology, and is now awaiting full flight status from Transport Canada, anticipated in third or fourth quarter.
Scalability will be key
The scale of early operations will be driven by the sentiments of two key stakeholders, the Canadian regulator and the initial appetite of customers.
“We will slowly ramp ourselves up, it is about taking proper steps at first,” Di Benedetto explains.
“We’re working with a variety of different clients; we have quite a big roster of clients that we’re engaged with.
“Our clients are large organisations with substantial locations and requirements. We’re not delivering for ‘Joel’s pizza shop’ … they [our clients] are very large corporate and government organisations.”
As the delivery system is proven and confidence builds the company expects it will be able to scale up quickly with drones embedded into its clients’ existing operations.
The drones will be deployed on location for DDC’s clients, which reduces the need for ‘bricks-and-mortar’ type capital spending and as such Di Benedetto says it is “very, very scalable”.
“It is an incredibly elastic model,” he adds.
“It is a high-earning, recurring revenue business. The business operationally produces a lot of cash.”
“Clients would contract us for ‘x’ amount of deliveries per month, and it is a recurring revenue stream from then on. There’s a setup charge and integration fees to get the technology enabled in the client’s environment.
“Once it is installed and integrated we then oversee the operation of the fleet. We are essentially ground control for the client.”
Once it is sufficiently large in terms of client orders, DDC will have the option to contract third-party manufacturing for the drones. This would be another important milestone in the development process.
It is quite clear that DDC is presented with a very significant market opportunity.
It is an early mover with a disruptive technology that could transform the transport and logistics business.
The big question, however, is how quickly and effectively the small-cap company can seize the initial opportunity?
There’s still a long road for it to navigate, and it all starts with final regulatory approval.
Investors will want to watch out for progress towards this pivotal regulatory milestone, as well as any commentary from the company on its commercial tie-ups and contracts.
The CSE is proud to present the latest edition of the CSE Quarterly.
The Canadian Securities Exchange is proud to present our tenth edition of the CSE Quarterly.
The impact of technology and innovation is all around us. As the CSE continues to grow to well over 300 listings, technology and innovation have become bigger components to our story, both behind the scenes and our listings board.
This issue of the CSE Quarterly highlights the stories of several listed issuers who are using technology in creative an innovative ways to advance their respective businesses and industries.
The companies profiled in this issue include:
Carl Data Solutions Inc. (CSE:CRL)
ParcelPal Technology Inc. (CSE:PKG)
FanDom Sports Media Corp. (CSE:FDM)
Hello Pal International Inc. (CSE:HP)
Bitrush Corp. (CSE:BRH)
Peak Positioning Technologies Inc. (CSE:PKK)
In addition, to these stories of innovation, the latest message from the Canadian Securities Exchange CEO, Richard Carleton, has updates on how the CSE is leveraging technology and innovation to improve the performance of the Exchange for Entrepreneurs.
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