Starting a Bulls Vs Bears thread since so far there isn’t much useful info posted and it is hidden in the IPO thread or prospectus. Considering the current market cap, the stock just listing leading and personal self-interest this is going to start off very bullish. Hopefully people will stick to facts about THC rather than ramping or repeated info news articles or general info about cannabis.
First of all because I think it is most important thing you want to buy in before a company receives licencing
"On 27 February 2017, Canndeo submitted a Research Licence Application under the Narcotic Drugs Act 1967 with the Office of Drug Control to conduct Cannabis research and enable the cultivation of cannabis. Canndeo also intends to apply for a medicinal cannabis licence and manufacturing licence to utilise the outcomes of its research program."
THC now 100% owns Canndeo in exchange for 5,000,000 fully paid ordinary shares, 2,500,000 Options and 14,000,000 Performance Shares escrowed till 2019
"THC plans to be a worldwide manufacturer and distributor of hydroponics equipment, materials and nutrients; large-scale hydroponic greenhouse design and construction; and leader in the development and delivery of medicinal cannabis."
The Company has entered a Share Purchase Agreement with the shareholders of Crystal Mountain and Dragon Vision (CMDV) to acquire all the issued Shares. In consideration for the acquisition of CMDV the Company will issue 3,000,000 fully paid ordinary shares, 1,500,000 Options and 4,000,000 Performance Shares escrowed till 2019.
CMDV has a strong sourcing and quality control team in Hong Kong, China which facilitates international sales for companies seeking to purchase directly from Chinese vendors. Additionally, the subsidiary also acts as a trading partner and sourcing agent for companies looking globally to purchase horticulture equipment in China. There is considerable potential to grow Dragon Vision and capture further competitor direct sales with a limited amount of increased resources. CMDV has been able to compete with competitors while operating with a very low overhead. CMDV are set up to quickly pivot with the changing cannabis market and growth in indoor farming.
The influx of capital from THC will be directed to provide rapid growth and allow expansion to service large scale greenhouses as further products are brought into production. Collectively, these companies have established international manufacturing, supply and distribution networks. They hold nine trademarks and two patents, and distribute over 600 products through an international sales catalogue, serving the USA, Canada, UK, Europe and Australia.
Hydroponic Greenhouses
"A&B Hydroponics is a world leader in the field of hydroponics, specializing in the design and manufacture of the finest commercial hydroponic greenhouses and growing systems available for any type of environment. A Collaboration and Profit Share Agreement has been concluded with Jim Barlow to represent THC throughout the Americas to develop large commercial hydroponic greenhouses."
A&B also has a patent on a bigger more industrial sized rotating grow system then what RGI (mkt cap $25mil) produces but hasn’t been targeted at cannabis.
“ABHI is a provider of services including design and construction of greenhouses and the provision of education and consulting. ABHI also provides products including nutrients developed, produced and/or manufactured by ABHI, the patented rotating growing system developed and manufactured by ABHI and greenhouses constructed by ABHI. ABHI will collaborate with THC with respect to the promotion, development and implementation of opportunities in North America and other jurisdictions that THC operates in. Upon THC’s admission to the Official List of the ASX, THC and ABHI will negotiate a non-exclusive collaboration, where THC will be entitled to a profit share on builds and consumables, including but not limited to: (1) Supply and sale of ABHI’s nutrients (2) The marketing of ABHI’s patented rotating growing system (3) Managing the building of greenhouses and providing education and consulting to the operators ABHI allowing THC to use ABHI’s marketing material for the promotion of the business”
Australian Indoor Farming
The Australian Hydroponic Crop Farming industry has been performing well, with revenue forecast to increase by an annualised 4.3% over the five years through 2016-17. This has been partly due to hydroponic farmers growing crops under controlled conditions with reduced water requirements, allowing them to better withstand the unfavourable weather conditions that have plagued the agricultural sector over the past five years. Hydroponic crop output has increased over the past five years. Increased capital investment has helped boost yields and overall productivity.
Industry farmers have also been increasingly investing in automation to regulate variables such as temperature and moisture to optimise the cultivation process and improve yield and quality. Increasing automation has reduced imputed wage requirements and weakened the industry’s average profit margin over the past five years.
History
Cannabis sativa is a remarkable plant, with an enormous level of variety of cannabinoids, flavonoids, terpenes and other products made possible through management of breeding. With heightened medical interest in the human endocannabinoid system, and the multitude of possibilities for a cannabis derived medicine to be developed, breeding and agriculture are likely to be central to new medicine development in a way we have never seen before.
AFI (Canndeo original company) commenced its Cannabis sativa breeding program in 1998, with the development of a range of Cannabis sativa plants for food, fibre and other uses from more than 100 parent lines. Its specialty was the quick development of functional plants to improve value of the plants while simultaneously meeting requirements for industrial use.
Plant Breeders Rights Plant Breeders Rights (PBR) confers exclusivity in plant use for commercial purposes to the registered owner, and is used in combination with other protection mechanisms (including contractual agreements on distribution and propagation) to enable commercial viability for developers of new breeds. Australia has 12 varieties of Cannabis sativa registered under its PBR program by IP Australia. Of these, AFI has 6 granted and 1 accepted PBR. This dominance of PBR for Cannabis sativa in Australia is testament both to the quality of AFI’s breeding team and its long-term investment in new and valuable varieties.
AFI IP Licence & Commercial Use Agreement The key terms of this agreement are:
(1) Grant: Exclusive, worldwide licence.
(2) Scope: to utilise, develop and commercialise the following intellectual property (“IP”) within the field of medicinal cannabis for human and veterinary application:
(A) Calavos (Australia PBR Cert. No.3856);
(B) FibreGem (Australia PBR Cert. No.3878);
(C) Kepnock (Australia PBR Cert. No. 4014);
(D) BundyGem (Australia PBR Cert. No. 3857);
(E) Farnsfleld (Australia PBR Cert. No. TBA);
(F) Tegege (Australia PBR Cert. No: 3821);
(G) Ruby (Australia PBR-Cert. No, 3820);
(H) Colorimetric THC test (as developed 30 June 2016);
(I) Parameters for nutrient monitoring of medicinal cannabis cultivation;
(J) Cultivars suitable for medicinal cannabis currently under development, (“Licensed IP”).
(3) Term: in perpetuity for the purpose of research, development and commercialisation.
(4) Exclusions: AFI does not licence the excluded field of commercialisation being insecticides and cosmetics.
(5) Royalties: one-off fixed amount of $1 for each item of IP described above
Canndeo may use the Licenced IP for development and subsequent acquiring of new IP rights, which will be owned by Canndeo.
Business Strategies
Hydroponics development strategy
The Company aims to expand globally in the horticultural industry, through internal growth of existing assets and the possible acquisition of additional value-accretive assets that will provide operational synergies. The Company’s short-term focus will be to expand its global footprint to increase its market share in key cannabis jurisdictions and to improve the profitability of existing THC businesses described above. This will involve taking advantage of synergies between the operations, where identified. The Company’s objective is to generate revenues that can be used to fund product development, expansion of the distribution network and further potential acquisitions. The North American cannabis market, which is the largest and fastest growing, will be a key focus in developing new business.
THC has developed a three-part business model based on: • Acquiring companies with lower revenues supplying proprietary products with high margin. • Acquiring companies with higher revenues supplying standard products with lower margin. • By pushing out its own products through an ever-growing distribution network, margins and penetration grow substantially. THC is vertically integrated to enable manufacture, distribution and sales of its cannabis growing equipment. The Company expects to experience significant organic growth as well as growth through acquisition in the near term. THC designs and manufactures its own equipment in Hong Kong and sells it through its own vertically integrated wholesale and retail distribution networks in UK, Europe, USA and Canada.
Medicinal cannabis strategy
The Canndeo business plan addresses the establishment of a new medicinal cannabis production and research business based in Queensland, where authorised supply through doctors will begin on 1 March 2017. Australia is anticipated to have a business estimated between $100-400m based on government statistics. Canndeo will target multiple markets with high purity cannabidiol (CBD) with potential markets including cancer, neurological, autoimmune, epilepsy and aging related disorders.
On 27 February 2017, Canndeo submitted a Research Licence Application under the Narcotic Drugs Act 1967 with the Office of Drug Control to conduct Cannabis research and enable the cultivation of cannabis. Canndeo also intends to apply for a medicinal cannabis licence and manufacturing licence to utilise the outcomes of its research program. Canndeo’s focus on high purity, high quality CBD will supply Australia and subsequently overseas markets with effective medication having no hallucinogenic properties, and therefore it is envisaged that the market for this product will grow in popularity as the mainstream medicinal cannabis product (as observed in USA).
The strategy simplifies compliance with Australian regulation and leverages leadership in extraction and refining technology from Queensland-based collaborators. Canndeo will strategically use its location in Australia as a base for future exports of pharmaceuticals based on the Cannabis plant.
Commercial exploitation of new drugs in the medicinal cannabis space are likely to rely less on traditional pharmaceutical industry patent strategies and focus more on plant breeders’ rights (PBR) and process IP protection. Canndeo is therefore well placed internationally to be a leader in new drug development, and has already attracted commercial and research partners on this basis.
Canndeo will seek to operate with key partnerships in research and product technology, and continue to build its core competency in the growth and efficient extraction of cannabinoid products. This will be primarily based on local partnerships with AFI and BioExtracts as suppliers of relevant IP and expertise, and with international medicinal cannabis companies to strategically align on a range of business functions including market development, technology co-usage and new medicine development and approval. These partnerships are expected to lead to significant growth and export opportunities in the next 3-5 years.
Product development strategy
THC plans to use its existing manufacturing capacity to develop new products that complement and expand its existing product range, developing in house intellectual property (IP) where feasible. THC will use its existing knowledge and industry contacts to identify new product development targets. The Company will focus on a range of important products in the cannabis production cycle that have clear competitive advantages, which are expected to facilitate rapid market penetration when introduced at competitive or lower prices than competing products.
Manufacturing strategy
THC’s subsidiaries have established manufacturing agreements with multiple ISO, UL and CSA certified manufacturers, allowing for low cost, high quality production of its products. These relationships also allow for efficient design and technology integration for the development of new products. The manufacturers for Dragon Vision are based in Hong Kong and a quality control team has been established to oversee the manufacturing of products. Distribution strategy THC currently has an extensive network for distributing its products, although it plans to rapidly expand its network capabilities with new acquisitions. Through new partnerships with new and existing distributors, retailers and growers, the company will look to expand this network to facilitate growth in sales of its new and existing products, and reach new markets. THC subsidiaries currently supply proprietary products to multiple wholesale distributors as well as larger chains of retail outlets. This ability to supply large chains of retailers on a direct-manufacture basis is an essential element to the distribution chain and provides a high-margin, high-volume business with an established clientele. THC also plans to expand its web presence to make ordering easier for new and existing wholesale customers, as well as facilitating direct sales to growers.
Marketing strategy
THC markets its products through its existing wholesale and retail distribution networks in the USA, Canada, UK and the EU, and globally through its existing web-based storefronts. The company’s subsidiaries are also frequent attendees at industry tradeshows and have qualified company representatives in key jurisdictions to promote its full product range. THC intends to increase its own direct-to-consumer footprint through further development of its online presence, increased online advertising and a more visible social media presence to increase awareness.
104 100 000 shares (47 mil mkt cap at 37c) 57 000 000 options and 26 500 000 performance shares but with more then half the shares and options under escrow for 2 years.
I don’t have time right now to do a better analysis of shares, options or revenue and expected profits.
(20min delay)