Ann: Production commenced to support 6000 Australian Patients, page-11

“expanded commercial cultivation permit”

This is for Bundy facility to produce commercial products for 3000 patients, and use imports for the rest of 3000 patients. So nothing to do with Southport or Eden farm?

“Supply will be direct to pharmacies, clinics and hospitals”

To me, this is both good and bad. The good is cutting the middle man to get better margin on the final products. The bad is that this is a direct sale model, which will be labour intensive and requires extensive expertise in supply chain and other areas. Not sure we have this already. It also means no off-take or bulk purchasing, and slow to grow the revenue. Not so good as we are very cash-constrained.

According to a report, each patient for pain management pays about $350 a month for MC in Aus. Our price meant to be significantly cheaper, let's say a discount of 40%, $210 a month. Supply of 6000 patients is $15m per annual in final revenue. Assume THC gets 70% of 15m in revenue under the direct supply model(pharmacies need to make money as well), this is about $10m per annual in revenue. Not too bad for the initial run without Eden farm and other potential things. Of course, we don’t know the profit margin of our products.

Happy for anyone to correct me on the assumptions.

What does this do to our SP? Probably nothing… We won’t see anything until Q3 report in Oct 2020 the earliest, assuming we can start the supply in Q2 as promised.