Had a most excellent chat with Roger Forde, the President and CEO of Cannigistics, a subsidiary and now main focus of Calyx Bioventures (
TSX:V.CYX,
Stock Forum) yesterday. The Calyx vision is that Cannigistics would be the software provider that would tie every marijuana producer's systems together.
At least that was the story three months ago. I'll admit: Didn't believe a word at the time. There's a couple of companies looking to enter the weedco systems integration market, a couple more that sell software aimed at specific parts of the seed-to-sale cycle, and then there's the whole ecommerce end of things.
Well it turns out Calyx is on fire right now, and they’re actually seemingly delivering on their promise and will announce their first contract shortly, with a mid-range MMPR applicant out of BC commiting to partner up.
Roger Forde is a serial tech startup dude, a CEO who codes, a telecommunications mover/shaker who is running an ultra-tight team with minimal cash burn and a lot of experience. Their mission? Take every LP facility out there and get its various pieces of security, software and infrastructure to talk to one another, in a way that the LP can access easily and quickly, to help them stay in compliance and make Health Canada’s tasks a lot easier.
For example: Let’s say Your MMPR candidate has spent a million or so on high tech cameras and swipe card readers to ensure they know who is coming and going at the vault. But if said swipe card produces a long log file, held off-site by another company, how exactly is the site manager going to be able to see that Franky Four Fingers has been in the vault eight times today? And how hard will it be to access the camera feed at the times Franky was inside? And when Health Canada sends out an inspector to look at the records, are they going to be able to look through it all at a laptop, or will they be presented with reams of paper and have to sit in a back room for two days going through it all?
And let’s not even get into call centre set-up, which is something most LPs don’t even think about until the MMPR is granted. Cannigistics connects call centre software to home base, and much more.
Compliance is a big deal. One false move and your license is suspended and/or a crop heads for the incinerator (what’s up, Whistler). So a company that is seeking to standardize and organize background data to help companies keep it at their fingertips, and identify problems as they arise, is worthy of consideration.
What I like about the Cannigistics business model is, once a customer is using them to streamline systems and keep systems working together happily, how do you ever ditch them? And they’re looking to do deals that bring in revenue over the long term, in maintenance fees and upgrades, rather than up-front quarterly financials bait.
A few companies in the dot.bong world have opted to write all their own software, some several times. I know of one LP that had written an entire system of their own but, when their developer left for another company, had to redo the entire thing so their next developer could actually get the job done. What happens if that guy also moves on?
Cannigistics isn’t looking to replace platforms like Quantum 9, Biotrack, Sharepoint and Documentum – rather, it’s looking to provide the tools to make them better, to get the data in them out in the open and to make it easier for the left hand to know what the right hand is doing. A lot of LPs don't know they need that kind of help yet. But an awful lot of companies will make the realization they do.. the hard way.
Let’s be clear: Calyx Bioventures was a gigantic bowl of whoopsy when it was focused on turning prairie crops into jet fuel. Mistake number one: Getting into business with Business Development Canada, which hasn’t met a good idea yet that it couldn’t beat into a bureaucratic mess like a horde of orcs handed the company bank accounts. Millions were raised and millions disintegrated. Lessons learned, say the CYX brass.
And credit where it’s due: When Calyx’s biofuel play started to unravel, they not only pivoted strongly into acquiring Cannigistics, they also stopped the bleeding by refusing to throw good money after bad, and today they still hold a 25% share of the biofuel venture, as well as significant IP coming from that play – and none of that is costing it anything.
If BDC and its new venture partner decide to go large on Agrisoma (the biofuel project), Calyx gets a free ride on whatever happens next. And if BDC abandons ship, big shrug – those losses are already baked into the share price, and then some.
But in Cannigistics, it has one really important asset, and that’s Forde.
I learned after my conversation with Forde that, in actual fact, he doesn’t need the money from Cannigistics, and is pushing his earnings into a local charity. He’s made plenty out of the communications sector and various companies he’s started and exited from and, for this one, it’s all about personal passion.
That he keeps that to himself, and had to squeezed out of other people, is noteworthy.
That he’s a virgin on the public markets is also worth noting, both in that it might cause issues going forward (Forde loves to talk about his project and has to be reined in on occasion when he gives up too much info), and in that it’s a breath of fresh air to talk to someone who just wants to build a great company and has no games to play and can talk about his area of expertise until he's blue in the face.
Vancouver shell-forger to the stars Keir Reynolds was involved in the Cannigistics play early, and that’s who first talked to me about the project. Back then, it was all about “we’re going to do this” and “we think we can do that.” Keir is a great champion of the companies he's involved with, but the early pitch lacked depth.
With Forde now at the wheel, it’s “when I go to see an LP and look at how they’re running their operations, I see new bottlenecks every time that I come back to the office and get to fixing, and the suite of tools gets better.”
Like a portrait painting, clearly Cannigistics will never get to the point where it’s actually finished. There’s always going to be something Forde thinks can be faster, more feature-loaded, more profitable for the end user.
The crappy thing about mining is, no matter how hard a guy works and how smart he is, you’re always at the mercy of luck to a certain extent. The great thing about software is, if you’re smart and enthused and driven, you can make it happen simply by banging out code and keeping a tight eye on the end product.
I can’t invest in Calyx because I’m exposed to insider info now. But I will say, talking to Forde made me want to do so. It’s a bargain at today’s 4c price (already a double from the 2c level back at Christmas time) and the markets will be slow to catch up for the next quarter or so. It’s a gimme.
And just so we’re clear, the reason we had the chat was Calyx is a Stockhouse Publishing marketing client, so that gets them facetime other companies don’t get. Do your own due diligence and I think you’ll find, like I did, that there’s something worth following.
In other news:
Early medical marijuana industry front runner Abattis Bioceuticals (
CSE:C.ATT,
Stock Forum) has announced CEO Mike Withrow will
be stepping aside from the CEO role to focus on international business, according to a company news release Tuesday morning.
Withrow will move to the position of International Business Advisor where he says he has identified opportunities in “legal jurisdictions that are strategic to Abattis.” Worthy of note: An Australian company hit the exchanges there this week with a business plan to get into medical marijuana, even though MMJ isn't legal there yet. The international scene is heating up.
Abattis, which has been mired in a legal fight with Affinor Growers (
CSE:C.AFI,
Stock Forum) and others over technology IP and the alleged luring of staff from Abattis’ Washington State-based lab to an Affinor-backed lab, has seen its stock linger between $0.15 and $0.20 since November, down from as much as $2.46 back in the April 2014 MMJ hay-day.
Stock dropped to $0.135 on the news, down 15.6% on the day.
Abattis boasts eight verticals in its group of companies, but has struggled for months to get its story out and demonstrate how those verticals will work together, or even if they can. Investors were hurt when Affinor President Nick Brusatore split from the company, dumping a sizable shareholding on his way out the door, and the bruises from that episode linger today.
The company will appoint a new CEO shortly, according to the release.
Brusatore is now active in GeoNovus (
CSE:C.GNM,
Stock Forum), which he’s looking to turn into a
media empire of sorts.
Geo’s former Uruguay operators are in discussions with various Canadian-based companies to take over the lab facilities down there. I’ve heard rumblings that several companies have expressed at least an initial interest, from Bedrocan down to new players Satica Sciences/Alberta Green. The operation down there costs next to nothing, and has far less restrictions than North American research due to local marijuana law deregulation, but central to making use of the Uruguay set-up will be a strong CEO who can reign in some research focus.
Affinor stock is getting shelled of late, now down to $0.135, a 20.3% drop on the day.
AFI was over a buck in June 2014, $0.43 in November, and $0.26 in early January, so it’s basically halved every few months of the last six. Time to harvest some strawberries.
T-Bird Pharmaceuticals (
TSX:V.TPI,
Stock Forum) was also active on the executive recruitment scene this past week, announcing that it had
appointed Dr. Bin Huang as CEO last week, replacing the affable Robert Gagnon who will stick around as a consultant, and
appointing CPA Sandy Pratt as CFO Tuesday.
Pratt was Director of Finance at Angiotech through startup to $300m in revenues, and helped that company grow to45 companies strong, while Dr. Huang has extensive pharma and public markets experience.
Interesting to note in both press releases the deliberate and consistent use of the phrase “commercialization” – T-Bird has lagged behind other LPs in getting product to market, while former CEO Gagnon maintained the future direction of the company was to receive insurance company/health care system acceptance of its product to that it could sell directly to institutional groups.
I’m unsure if ‘commercialization’ means a shift to traditional end user distribution or a continued but higher level focus on hospitals, but clearly the board wants to get a wriggle on.
I’m led to believe T-Bird is anticipating a return to the ‘grow and sell’ MMPR list soon after being briefly ‘demoted’ during a municipal zoning issue that has since been corrected.
One thing worth noting: The moves make T-Bird the most female-friendly executive outfit in the weed space by a long way.
FULL DISCLOSURE: T-Bird is a Stockhouse Publishing marketing client.
Yesterday I mentioned that Matica Enterprises (
CSE:C.MMJ,
Stock Forum) was getting favourable analyst coverage from Jacob Securities. Today I’ve learned Jacob will be raising a million in financing for the company in the coming weeks, to lock down its half share of its pre-license MMJ facility.
Jacob was part of the team that took Tweed public, so raising a mill will be a piece of cake, and further demonstration that the Toronto powerbrokers like the C.MMJ business model a lot.
Chlormet Technologies (
CSE:C.PUF,
Stock Forum) has done nothing for months. I’m told they will have some info for me soon. In other news, I’ve been hearing that for two months.
Creative Edge Nutrition (
OTO:FITX,
Stock Forum), which is a pump and dump and will never receive a Health Canada license, ever… dropped below 1c for the first time today. That’s still a 10x multiple on what they cost when Bill Chaaban and his fellow insiders paid themselves in billions of shares when the shell was set up, so they’ll likely still be dumping.
Meanwhile, like Japanese soldiers hiding in caves refusing to admit that the war is over, some clueless investors are STILL holding true to their belief that it’s all just a conspiracy led by MP Libby Davies, Tilray, Supreme, me, the Globe and Mail, the town of Lakeshore, and basically anyone else who has ever said “your CEO should really stick to one signature..”
UPDATE:
New article about Creative Edge Nutrition has just been published on the Globe and Mail website, this one regarding Bill Chaaban's admission that he invented an employee that he then fraudulently quoted in a press release. The company has subsequently been fired by a Toronto PR firm, the second comms company to fire FITX in the last month after a New York firm ditched them when it learned press releases were being pumped out in their name without their knowledge.
The story is well worth reading, but the following paragraphs are instant classics:
Until now, the company has not owned up to the identity of Isak Weber. However, when the Globe asked the company’s CEO, Bill Chaaban, on Tuesday if Mr. Weber was real, Mr. Chaaban sent an e-mailed response saying, “Isak Weber is a nom-de-plume” for an employee. He compared the situation to when CEOs have speeches written by others. “There are also many corporations that adopt an identity,” Mr. Chaaban said, listing off “Ronald McDonald,” “Mr. Clean” and “Mr. Goodwrench“ as examples.
It is not clear why the company feels it needs a “nom-de-plume” for its employees, nor why the mascot explanation was given. In the case of McDonald’s Corp., for example, the hamburger chain doesn’t use Ronald McDonald to speak on behalf of the CEO on important matters involving press releases issued to the stock market.
A chance meeting with the Wildflower (
CSE:C.SUN,
Stock Forum) gang last night drew some interesting information, and not just on their own company. CFO Steven Pearce says he knows that Satori Resources Tartan Lake gold property well and that, "It's a legitimate play."
"That's a nice piece of property," he says. "Do they have the ability to take it back to production? I don't know. But whoever does will need to know how to operate on a small manageable scale, and not everyone can. If they're not working on it now, they should be."
Wildflower recently received
a letter from the Mayor of Parksville BC, where their facility #3 is going to be located, confirming the company has full city support and will have use of the property rent-free until they have their MMPR. The Regional District of Nanaimo, which had previously got in the way of facility #2 at Nanoose Bay, had to sign off on the deal as a minority stakeholder in the property, and did so in the knowledge that they may still be sued by Wildflower for hurting the earlier deal.
Also worth noting: The new Mayor of Parksville was on the RDN board that hampered that previous deal.
I asked William MacLean, CEO of the company, if the lawsuit was imminent. "Still calculating damages," he said. I asked if those damages were high, and a raised eyebrow was all he'd give me.
Wildflower is a Stockhouse Publishing marketing client, because they know what's up.
Also, we talked to Pearce a bunch at Cambridge House.
Here's the video.
--Chris Parry
https://www.twitter.com/chrisparry