Invictus

Building A Top-Tier Canadian Cannabis Company

This profile is part of a paid investor education campaign.*

Overview

Invictus (TSXV:GENE, OTC:IVITF) is a cannabis company which represents a platform of licensed producers (LPs), under the Access to Cannabis for Medical Purposes Regulations (ACMPR), dedicated to providing high-quality, regulated medical cannabis for medical and recreational use. Its growers are supported by over 250 acres of buildable property with full access to our team of industry-leading horticulturists, biochemists and project managers.

Invictus’ business model includes two verticals:

  • Cannabis cultivation in Canada
  • Cannabis fertilizer and nutrients

In December 2017 the company conducted an exercise of issued warrants and options that collectively granted them $26 million.

Invictus controls 250 acres of cultivation space that stretches from Alberta to Ontario—one of the largest land packages in Canada for building cultivation facilities.

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 167,754 Canadians have registered to purchase medical cannabis from LPs as of March 31, 2017. That figure is nearly 60 percent higher than the end of September 2016.

The Government of Canada under Liberal leader Justin Trudeau is targeting 2018 as the official start to a legalized recreational cannabis market. Deloitte’s report, titled “Recreational Marijuana: Insights and Opportunities”, estimates Canadian recreational cannabis could reach retail sales of $6 billion by 2021. The Parliamentary Budget Office estimates that satisfying the recreational cannabis market will require 655,000 kilograms of marijuana production annually, which is far more than the current capacity of existing ACMPR Licensed Producers.

Large Production Platform for Growing Cannabis Market

Acreage Farms LP in Alberta

Invictus’ latest addition to its cannabis production portfolio is its wholly-owned Acreage Farms Ltd., a licensed producer under Health Canada’s ACMPR and is scheduled for its sales license inspection in March 2018 located in West-Central Alberta. The operation will benefit from the province’s low energy and water costs.

Acreage Farms’ 6,600 and 33,000 square foot state-of-the-art production facilities sit on a 150-acre property, with a production rate of 3,700 kilograms per year. The facility will also host onsite storage capabilities for its product.

Planning further growth on the 150-acre property, the company has already planned a further three phases of work (3-5) that will increase the facility by another 320,000 square feet and increase production by 46,300 by September 2019. Phase 3 is fully funded and expected to be completed by end of September 2018.

invictus-acreage

As part of its production strategies, the company has also recently acquired 23 new cannabis strains, which will allow for increased production variety as the recreational market draws nearer.

Acreage Pharms also plans to produce extracted or oil based products. Cannabis-based oil products is one of the fasted growing sectors in the industry and is expected to reach $2.1 billion by 2020, according to Hemp Business Journal.

AB Laboratories

Invictus holds a 50-percent interest in both AB Laboratories, a licensed producer under the ACMPR and has its sales license. The company operates a 15,600-square foot facility located in Hamilton, Ontario. AB Labs has achieved full production capacity at 900 kilograms per annum with a net contribution to Invictus of 450 kilograms. Phase 2 for AB Labs is the development of a 40,000-square-foot production facility which is fully funded and expected to be completed by June 2018. This new facility will add a further net 2,230 kilograms to Invictus’ yearly production.

AB Ventures

Invictus holds a 33.33-percent interest AB Ventures a newly incorporated company formed to apply for a second licensed expansion facility under ACMPR through its common ownership with AB Laboratories. In May 2017 the company closed its 100-acre land acquisition in Hamilton. The company has since submitted its license and development permit applications for Phase 1 construction.

Phase 1 will see the build of a 21,000-square-foot facility, with a net annual production rate of 857 kilograms for Invictus. This phase of construction is fully funded, subject to the anticipated permitting. The second phase of work on the AB Ventures property will be the development of an 84,000-square-foot production facility offering a net of 3,427 kilograms per year, subject to permitting.

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 acquired an 82.5 percent interest in Future Harvest in February 2015.

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 shareholders for a total of approximately $1 million.

The growing 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 nine months ending March 31, 2017, Future Harvest generated $1.787 million in revenue with a gross margin of $907,864, representing a 50.8 gross margin compared to the same period in the prior year.

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 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.

Company Highlights

  • Focused on two main verticals within the burgeoning Canadian cannabis sector:
    • Cannabis Cultivation with LPs under the ACMPR
      • AB Labs currently has its sales license
      • Acreage Pharms has its sales license inspection scheduled for March 2018
    • Fertilizer and Nutrients through Future Harvest Development Ltd
  • Production profile forecasted to reach 68,300 kg total capacity by 2019—positioning Invictus to become one of Canada’s top-tier licensed producers.
  • Revenue generation with AB Labs
  • 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.
  • Recently completed $26 million financing.
  • Included in the Horizon Medical Marijuana Life Sciences ETF (TSX:HMMJ)—the first ETF to offer direct exposure to North American-listed cannabis stocks.

Management

George Kveton — CEO and Director

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.

Dan Kriznic CPA/CA — Founder and Director 

Dan Kriznic founded Invictus in June 2014 with a vision to create a Canadian Licensed Producer of Cannabis to meet the significant legal demand. He has been responsible for incubating companies in a variety of industry 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. 
Prior to this, he was a Senior Manager at Deloitte where he served in leadership roles in its Assurance and Advisory group, advising public and privately held companies for a period of 10 years.

Paul Sparkes — Chairman of the Board and Director

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, Mr. 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.

Trevor Dixon — Director

Trevor Dixon founded Acreage Pharms Ltd in 2013 and with his sister Brenda Dixon, Chief Science Officer, submitted a successful ACMPR application. Prior to that, he extensively studied service businesses, which led to him founding a company that specialized in unique, high quality, bathroom renovations where he developed a franchise system, and within a decade was serving customers in more than 50 cities across Canada. His philosophy of customer value, quality, and excellent service has been carried over into the design and operational strategy of Acreage Pharms Ltd. and Invictus. Dixon brings these values into his role at Invictus.

Aaron Bowden, CPA/CA — 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.

Josef Hocher — Director

Josef W. Hocher was a founder of Buried Hill Energy, an international oil and gas company, where he acted as co-chief executive in creating, developing and implementing the organization’s strategic direction. He continues to serve as the Senior Independent Director and is also either a Chair or a member of various committees. Joe also founded Hitic Energy Ltd., and was a partner at Osler, Hoskin & Harcourt LLP. Hocher currently serves as Chairman of Orthoshop Geomatics Ltd., a geomatics services company; holds the position of Chief Commercial Officer at Field Upgrading Limited and Western Hydrogen Limited and since 2016, has been a Partner at Cassels, Brock & Blackwell LLP.

Dylan Easterbrook, CPA/CA — CFO

Dylan Easterbrook is a seasoned accounting and financial professional, who most recently was controller of a publicly traded global fibre optic connectivity solution provider. Prior to that role he was with Ernst & Young, one of the largest professional services firms in the world and one of the Big Four accounting firms, where he led audit engagements for both public and privately held companies from a variety of industries, including the emerging markets.

Easterbrook is a Canadian Chartered Professional Accountant (CPA, CA), and also holds a Bachelor of Science in Life Sciences degree from the University of British Columbia.

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 Vice President, Marketing and CMO of a growth-oriented organization that was Canada’s largest private, for profit, Education Company and was responsible for the aggressive growth of seven brands and over four years grew revenue ten-fold. He has extensive experience in developing marketing strategies, multi-brand development, product management, communications, creative and content development, and leveraging digital marketing across multiple platforms and technologies including web, mobile and social.

Natasha Collins, CPA/CA — Director of Finance

Natasha Collins is a Chartered Professional Accountant with over 10 years of work experience in financial management and accounting.  Prior to joining the Invictus team, she held management positions at Deloitte, a global professional service firm and Mr. Lube Canada, one of Canada’s largest oil change franchisors. In these roles, she gained valuable leadership experience and well-rounded financial skillset, including auditing, reporting, planning and analysis. She holds a bachelors degree in accounting from British Columbia Institute of Technology and received her CA designation in 2010.

Kevin Smith— VP Recreational Sales

As former Director of Sales at Heineken Canada, Kevin developed the commercial strategy for Heineken in Western Canada, led the execution of the sales organization’s annual plan, developed relations with key customers in both private and government channels and managed the distributor relationship with Molson Coors. In his role as Vice President Recreational Sales, Kevin will be responsible for building out a team of professionals to maintain strong working relationships with liquor boards and establish a presence in retail stores across the country. With agreements already secured in British ColumbiaAlberta, and Saskatchewan, Kevin will oversee Invictus’ initial launch in Western Canada and future development, including working in partnership with GTEC Holdings Ltd. (“GTEC”) (TSXV: GTEC) to unveil multiple retail stores in the coming weeks and months. Kevin brings to Invictus 16 years of experience in both beverage alcohol and government sectors with a specialized focus on the retail channel.  In addition to his work with Heineken, Kevin has had increasingly senior roles, including Provincial Sales Manager for SABMiller Canada, Regional Sales Manager at the British Columbia Lottery Corporation, and started his career working with key customers at AB InBev.

Sarah Hardy— VP Medical Sales

As a former executive at top tier companies, such as Mondalez, American Express, and Indivior, Sarah brings a proven track record of driving bottom line growth, building new markets, and optimizing profit across diverse industry base. In her role as Vice President Medical Sales, Sarah will be responsible for the development and implementation of the Company’s strategic patient acquisition program directed at establishing relationships with and educating medical clinics, medical doctors and patients, and winning market share for medical cannabis sales. Sarah will drive patient registration and sales targets. Sarah brings over 15 years of experience across various sectors including CPG, Financial Services, Healthcare and Professional Services. Sarah completed her Bachelor of Commerce degree at UBC and holds her Executive MBA from the Ivey Business School at the University of Western Ontario.


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