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Invictus MD (TSXV:IMH) is focused on becoming a leading cannabis company. The company’s growth strategy centered on acquiring late-stage ACMPR applicants and now on licensed producers (LPs) to expand its production profile. Invictus MD has the necessary management and financial expertise to assist licensed producers with implementing successful business strategies and deploying capital to support sustained growth.
Invictus MD’s business model includes two verticals:
- Cannabis cultivation in Canada
- Cannabis fertilizer and nutrients
Since its public listing in December 2014, Invictus MD has acquired and sold three assets for a combined ROI of 277 percent. In December 2016, Invictus MD paid out a dividend to shareholders representing $0.07 per share and totaling approximately $1 million.
In 2017, Invictus MD plans to significantly build out its production profile through expansion of its individual production assets. “From day one, Invictus MD has viewed acquiring and developing production capacity under the ACMPR as a key driver to increasing shareholder value,” said Dan Kriznic, Chairman and CEO of Invictus MD.
Successful Realized Return on Investment
To date, Invictus MD has acquired and sold the following assets:
Market Insights: Existing LPs will Struggle to Match Demand
The market for legal Canadian-grown medical cannabis is growing exponentially due to expanding legislation. In the nearly four years since the federal government began the commercial-access program, approximately 130,000 Canadians have registered to purchase medical cannabis from LPs as of December 31, 2016, reports The Canadian Press. That figure is 32 percent higher than the end of September 2016 and up 1,544 percent from mid-2014.
Canadian Prime Minister Justin Trudeau is set to table legislation to legalize recreational marijuana in Parliament in the spring of 2017. Deloitte’s recent report, titled “Recreational Marijuana: Insights and Opportunities”, estimates Canadian recreational cannabis could reach retail sales of $6 billion by 2021. Deloitte also projects that satisfying the recreational cannabis market will require 600,000 kilograms of marijuana production annually, which is far more than the current capacity of existing LPs under the ACMPR.
Building and Expanding Production Profile
100-percent Acquisition of Late-Stage Applicant
Invictus MD’s latest addition to its cannabis production portfolio is a late-stage applicant under Health Canada’s Access to Cannabis for Medical Purposes Regulations. The applicant successfully completed the Pre-license inspection in January, 2017 and is expected to soon receive its license to cultivate.
The acquisition includes a 150-acre property with 60,000 square feet of secured perimeter for the current purpose-built production facility. Plans have been submitted for additional buildings on the property as part of phase II, including a 30,000-square foot state-of-the-art production facility with the option to add an additional 20,000 square foot second floor is expected to have a production capacity of up to 25,000 kilograms per year. Future phase III expansion plans include up to 3 million square feet of buildable property, which will have a footprint larger than 60 football fields.
Following licensing approval, Invictus MD will begin expansion plans in keeping with its goal to establish itself as a leader in the Canadian cannabis industry.
AB Laboratories and AB Ventures: Planned production expansion in Ontario
Invictus MD holds a 33.33-percent interest in both AB Laboratories and AB Ventures. AB Laboratories is a licensed producer under the ACMPR. The company operates a 16,000-square foot facility located in Hamilton, Ontario and is expected to receive its sales license in Q2 2017.
AB Ventures, a newly incorporated company formed to apply for a second licensed expansion facility under ACMPR through its common ownership with AB Laboratories. The company has recently acquired a 100-acre property in Hamilton, which is scheduled to close on May 1, 2017. The plan is to build five production facilities totaling 100,000-square feet anticipated for completion by the end of 2019. The combined production capacity of both AB Labs and AB Ventures is projected to exceed 25,000 kilograms by 2020.
PlanC BioPharma: Expansion potential in B.C.
A late-stage applicant under the ACMPR, PlanC BioPharm’s application to Health Canada includes a proposed initial 30,000 square foot facility located on 5 acres near Salmo, British Columbia. The cultivation license is anticipated by the end of 2017, and the company also has the option to purchase an additional 49-acre property for expansion. Total production capacity is expected to reach 20,000 kilograms by 2020. Invictus MD has the option to acquire 100-percent of PlanC, following an $8 million raise for the acquisition of land and construction of the initial facility.
Future Harvest: Supplying Fertilizer to Growers and Revenue to Shareholders
Future Harvest has manufactured and distributed fertilizers, metering and monitoring equipment for the hydroponic and indoor growing industry for more than 20 years. The company has designed more than 40 proprietary products and its product lines—including Nutradip, Plantlife Products and Future Harvest Plastics—are available across North America, the UK and Europe. Invictus MD acquired an 82.5 percent interest in Future Harvest in February 2015.
The growing medical cannabis market has driven demand for commercial hydroponic nutrients and equipment and Future Harvest is winning a distinct share of this market. In 2016, the company hit record sales with a growth marker of 50 percent year over year. For the seven months ending January 31, 2017, Future Harvest generated $1.423 million in revenue.
The sale of the Sunblaster lighting line for $4.8 million in cash translated into a $0.07/ share dividend in December 2016 to Invictus MD shareholders for a total of approximately $1 million.
Future Harvest is actively working to further pursue emerging market opportunities in 2017 and beyond.
- Fully-automated bottling line has increased overall production efficiency by 400 percent, allowing the company to meet increasing demand from emerging markets.
- R&D partnerships with universities including UBC Kelowna for the development of innovative nutrient formulations.
- Several new products ready to launch in early 2017 including water-soluble nutrient tablets produced using the company’s patent-pending pill press; and the new Plantlife Garden & Greens product line for distribution through large sales channels.
- Focused on two main verticals within the burgeoning Canadian cannabis sector:
- Cannabis Cultivation with LPs under the ACMPR
- Fertilizer and Nutrients through Future Harvest Development Ltd.
- Production profile forecasted to reach 70,000 kg by 2020—positioning Invictus MD to become one of Canada’s top-tier licensed producers.
- Revenue generation with Future Harvest.
- Since December 2014, has acquired and sold three assets for a combined ROI of 277 percent.
- $1 million paid out in dividends to shareholders in December 2016.
- Potential 2017 Catalysts:
- Listing on TSXV
- AB Labs commencing cultivation
- Closing of $20 million financing
- Cultivation licenses for both AB Ventures and newly acquired late-stage applicant.
Dan Kriznic CPA/CA, Chairman and CEO
Dan Kriznic founded Invictus MD in June 2014 with a vision to create a Canadian Cannabis company to meet the significant legal demand. He has been responsible for incubating companies in a variety of industries including Cannabis, Education, Real Estate, Lithium and Senior Care Facilities. Through his strategic direction and execution these companies have grown from nominal to over $750 million in enterprise value.
Phillip Hague, Chief Science Officer and Horticulturist
Phillip Hague has built and managed over 1,000,000 square feet of licensed cultivation space in the United States. Most recently he has been in charge of a facility in New York with a 320,000 square foot facility and is currently active in a 120,000 square foot facility in Chicago, Illinois. He has been featured on 60 minutes and National Geographic as a leading figure in the cannabis industry.
Larry Heinzlmeir, MBA, VP Marketing and Communications
Larry Heinzlmeir brings over twenty-five years of executive level experience in sales and marketing with several of the largest publicly traded companies in the for-profit higher education sector, namely DeVry and EDMC, that had a combined market cap in excess of $7B. He was previously Vice President of Marketing and CMO of a privately held, growth-oriented organization, where he managed an annual marketing budget in excess of $24 million and achieved an eight-fold increase in revenue.
Aaron Bowden, Director
Aaron Bowden specializes in taxation and currently manages all areas of taxation for a large Canadian public company with over 12,000 employees and $4 billion in sales. Prior to this Bowden worked at Deloitte advising clients on assurance and tax matters and has been involved in various forms of financing, mergers, acquisitions, and divestitures.
Paul Sparkes, Advisory Board
Paul Sparkes sits on several public and private boards in Canada, the US and Europe, including Thunderbird Entertainment, Bluedrop Performance Learning, Inc., and is a former board member of the Liquor Control Board of Ontario (LCBO). Prior to joining Bell Globemedia in 2001 as Group Vice-President, Public Affairs, Sparkes held senior positions in public service, with the Governments of Canada, and Newfoundland and Labrador. As Executive Vice Chair, Director and co-founder of Difference Capital Financial, a TSX-listed specialty finance company that invested in media, technology, health care and US real estate, he helped raise over $200 million for investment purposes in under a year.
George Kveton, Advisory Board
George Kveton is co-founding Partner of LOGSCALE Venture Partners, a boutique venture capital firm operating out of Switzerland focused on early stage and growth equity investments in disruptive health technologies including pharma, biotech, life science, personalized medicine, diagnostics and e-health. Before entering the venture capital world, he spent over two decades leading M&A for Fortune 500s, most recently as Vice President at Japan Tobacco International. He is a graduate of Queen’s University in Canada, and executive programs at UC Berkeley Haas School of Business and Harvard Business School.