real Leaf medication international Ltd. (TRLFF) CEO Darcy Bomford on this autumn 2018 outcomes - revenue name Transcript

actual Leaf medicine overseas Ltd. (OTCQB:TRLFF) this autumn 2018 revenue conference call July eleven, 2018 5:00 PM ET

Executives

Tirth Patel - VP, IR at Edison Advisors

Kevin Bottomley - Director and Head of corporate Communications

Darcy Bomford - CEO

Tenzin Khangsar - EVP, strategy & growth

Analysts

Operator

Greetings and welcome to the genuine Leaf Fiscal year 2018 Annual profits convention call.

at the present, all participants are in a pay attention-only mode. a query-and-answer session will comply with the formal presentation. [Operator Instructions] As a reminder, this convention is being recorded.

i'd now like to turn the convention over to your host, Kevin Bottomley, Director and Head of corporate Communications. Please go forward.

Kevin Bottomley

thanks and welcome all and sundry to this afternoon's annual income convention name protecting proper Leaf's fiscal and operating consequences for the fiscal year ending March 31, 2018 together with a dialogue of our golden milestones for the remainder of the calendar 12 months and past. Following our organized remarks, we will host a Q&A session answering all the questions that have been submitted during the last week and half. Our name nowadays, could be led by means of our Chief government Officer, Darcy Bomford.

but earlier than we begin our formal remarks, i might like to remind everybody that some statements on this convention name may well be regarded ahead-searching statements in the that means of part 27A of the Securities Act of 1933 as amended and area 21E of the Securities exchange Act of 1934 as amended that concern matters, contain hazards and uncertainties that might cause exact consequences to differ materially from these predicted or projected within the forward-looking statements. words reminiscent of expects, anticipates, intends, plans, goals, goals, believes, seeks, estimates, optimizing abilities, purpose, suggests and expressions determine ahead-looking statements. This convention call includes forward-looking statements in the presentation and administration may additionally make further ahead-searching statements based on your questions. Such written and oral disclosures are made pursuant to the safe harbor provision of the private Securities Liti gation Reform Act of 1995 and true Leaf hereby claims such secure harbor protection for all ahead-looking statements.

actual Leaf believes that the expectations mirrored in such ahead-looking statements are based upon cost-efficient assumptions, youngsters true Leaf's actual consequences and performance and cost of its securities may differ materially from those set forth in the forward-searching statements to the impact of many components summarized in the chance ingredient component of proper Leaf's providing round kind 1A and led protection and alternate commission and Canadian Securities Regulatory Authorities and different discussions of chance elements contained in authentic Leaf's periodic filings or supplements to the providing round. genuine Leaf's providing round form 1A will also be found at www.trueleaf.com/pages/investor. ahead-looking statements talk simplest as of the date they are made. proper Leaf undertakes no obligation to update or revise the sort of tips for any rationale after the date of this presentation except required via law.

i would now like to flip the call over to the Founder and CEO of true Leaf, Mr. Darcy Bomford for more in-depth dialogue on the previous yr and future method. Darcy?

Darcy Bomford

Thanks Kevin. I consider you had a tougher job there than I do. thanks very a good deal. So thanks, Kevin and a big thanks to each person on the call who has taken hobby in actual Leaf at this very entertaining time in our adventure.

In latest presentation, we are going to talk a little bit about our heritage and provides an outline of our progress in every division, after which i'll provide an replace on our building, our crew, after which with some talk on our future milestones. At that factor, i could hand off the discussion to our executive VP, Tenzin Khangsar who will go over the monetary studies -- effects for this year.

it be no twist of fate that here is our first conference name. authentic Leaf was headquartered in 2013, and we spent a substantial period of time going throughout the application manner with health Canada, but the previous 12 months and half has been very transformational for us.

I make an apology to individuals who have heard this already, but i may delivery with a bit history of myself and the business. previous to proper Leaf, my historical past turned into over 30 years adventure in the pet business; and as founder of Dartford, making natural pet products with three factories throughout Canada and the U.S. I identified the capabilities of hemp then, hemp, the different cannabis and identified that early in my profession, but i used to be unable to capitalize on that except I entered the hashish enterprise now with authentic Leaf.

I exited Dartford in 2012 and that i had a one year non-competed at the moment, and that i noticed a chance in Canada's new medicinal cannabis regulations that have been introduced on the time. In 2013, I formed a small private company known as proper Leaf and utilized to DEA licensed producer below the new laws, which were called the MMPR at the time.

We ended up being number forty eight in Canada to practice, so we were one of the crucial very early applicants in Canada. And we ended up in the queue for a few years really while working through the approval procedure. besides the fact that children, in my adventure within the pet industry came in easy, and we made a pivot into the hemp for pets market in 2015, while awaiting a license popularity of medicinal hashish.

That strategy proved to be key to our survival as we carved a niche in that business as a cannabis for pets enterprise. Now that division is generating large revenues and we're truly an out chief in the Canadian hashish scene.

That being pointed out, we've got additionally been quietly working hard on our medicinal hashish license approval and moved via large milestones during the last yr and a half. now we have handed security, protection with health Canada. We've launched a a success crowdfunding campaign, and we bought our forty acre web page in Lumby BC, and commenced construction of our state-of-the-paintings cannabis cultivation facility.

Now, i'll give you a little little bit of an overview on each and every enterprise division, and that i'll birth with true Leaf Pet. So proper Leaf Pet, as i mentioned previous, actual Leaf Pet is focused on an trade that i'm deeply well-known with certainly top class pet meals and treats that's with a totally consumable, high-volume part of the pet business.

We fashioned genuine Leaf Pet in 2015, and while we have been expecting a license approval on the medicinal side, we launched an preliminary product line of hemp seed primarily based supplements geared toward dogs into the Canadian market later that 12 months within the fall of 2015.

In 2016, we secured a bigger contract manufacturer for our product line within the U.S., and we installation a distribution core in Missouri and launched a rebranded line into the U.S. market that might also, in may additionally of 2016. it's somewhat busy yr for us in 2016. So together with that, we also enlisted a sales team in Europe, secured a contract manufacturer in Germany and launched a line of dietary supplements to the eu market at the Interzoo change reveal in Nürnberg in may 2016.

universal, we've had super success with alignment [ph]. Our real Hemp company is the first hemp-based mostly pet product line to be marketed globally. we have a line of dog chews, dental sticks and complement, complement oils, and they're now offered in additional than 1800 shops and e-commerce companies across North the usa, Northern, central, and Southern Europe, and also into New Zealand.

we're neatly on our method to be constructing a global company in the top rate natural pet class, and this class is in fact reasonably sizzling as well, not as hot as hashish, however is growing to be and attracting massive multiples. The pet care industry globally is $one hundred ten billion, so a lot of people might also not recognize how gigantic that market is, nevertheless it is substantial. in the U.S. by myself, pet food revenue account for $30 billion a year, and we are originally targeting the supplement and practical treat market which is round $1.6 billion a yr, but we have come a protracted means due to the fact launching our items in 2016.

normal we're seeing outstanding growth in the pet market as the humanization of pets continues to trade the behaviors and selections that pet house owners make. people see their pets as an extension of the family unit, and in flip equal high-quality, transparency, and brands they can have confidence. The consumer's determination-making today is extra concentrated on making match, as opposed to grownup selections for themselves and their pets.

The opinions in the pet business are accomplishing new highs as considered with the aid of contemporary acquisitions of popular brands like Blue Buffalo and Rachael Ray in the U.S., and we're seeing now multiples of over six instances earnings and 25 instances EBITDA, and that they're surroundings new records as the house continues to heat up.

Our approach on the usual business, in particular now for the pet division, is that branding is really key to our success, and with the recent approval of the cannabis Act in Canada, we respect that competition will develop into fierce and definitely ensuing in the proverbial race to the bottom, and key to being successful during this sort of competitive market is a unique manufacturer with a message and marketing plan that resonates with our goal patrons, and we've taken a step to make certain this a part of our approach is a success by way of enlisting a exact branding company to get the job completed, and we've picked file artistic out of Vancouver BC, Canada.

You can also now not be aware of dossier, however you've probably seen one of the crucial brands that they've labored with, and they definitely created the Mike's difficult Lemonade manufacturer a number of years ago which is now 1000000000-dollar company, and they've additionally managed other a hit brands like Vega plant-primarily based protein, The Little Potato enterprise, and a few different assets owned by Constellation manufacturers, and every person's doubtless heard of Constellation manufacturers, they just bought a huge piece of canopy there recently.

dossier has already commenced the work on our product line. they're taking off analysis. They've finished a number of markups and we should be able to exceptional-tune or re-launch the brand later this yr.

Carolina is performing very well, and we're very chuffed with the style the product is working with older dogs which have hip and joint complications. Our calming product is via far the greatest seller, and we continue to receive wonderful feedback on the manufacturer message, packaging, and average formulations.

And one thing i am specially happy with is our tagline and the cause of being which now we have name Return The Love, this of course represents the unconditional love that we receive so free for our pets. We like to feel that consumers who suppose the identical means and return like to their pets by means of giving them a product from true Leaf.

As a company, our goal is to win the hearts and minds of our patrons and earn that have confidence and one of the crucial most fulfilling books I've ever examine on branding is referred to as, delivery With Why by way of Simon Sinek and it explains that one of the crucial crucial questions a manufacturer has to answer is why the buyer should buy your product and it be our belief that here is our why. Why does a client by way of a real Leaf product to come back the love to their pet. So we're relatively happy with that tagline. it be in fact resonating with our purchasers.

Let's chat a bit bit now about our other division, authentic Leaf medication and its operational in Lumby BC. The give of the items in medicinal hashish line and to fuel the skills market demand for amazing craft-grown hashish, the business has began construction of its boom facility known as the authentic Leaf Campus at 40-acre web site owned by using the company in Lumby BC.

so as I defined previous, we begun the application process method returned in 2013 and we ended up in the queue, but we've reached a few milestones and proceeded previous safety final yr and we're now within the place to begin the constructing and we raised decent amount of capital closing year to do that.

the first part of the undertaking contains a 9,000 rectangular foot two-story constructing for the creation, packaging and storage of medicinal cannabis, plus house for workplace, creation workforce, safety, future oil extraction and a bit bit to laboratory, but as soon as accomplished the initial transforming into will begin and the ultimate 60,000 square foot growing to be could be built out.

Their work is commenced all over this 12 months. Now this deal turned into already ahead of time and preassembled on-web page. The constructing permit was accredited on may additionally 30 this year and the challenge has proceeding nicely. This steel structure is now comprehensive and the constructing envelope is taking shape and i inspire you to follow our progress through the time-lapse photos that we publish on our web page a week and you'll see some wonderful photograph there displaying the development of the building.

We expect the primary part of the 9,000 square foot central hub to be commissioned and working by way of October this year and followed sometime early in the subsequent yr via the 16,000 square foot starting to be. once part one reaches means, we are expecting it to supply someplace around 1500 kilograms of dried product per yr.

Our website is gigantic. As we mentioned prior, we have 40 acres. we've a lot of room to develop sooner or later. preliminary plans for part 2 will include a larger hybrid greenhouse design that we're reviewing at this time and this may bring our total production to over 10,000 kilograms per 12 months.

or not it's also vital to word that true Leaf seeks to develop into an important company in Lumby and Lumby is a small city of 1700 and has been hardly hit by means of companies that have closed down over the closing few years. It essentially was a logging community and that trade has been hit hard.

The venture is anticipated to employ about 150 people all the way through the construction after which as soon as we're operational, around 20 to 30 full-time and part-time body of workers. The native village office and the mayor have been extraordinarily supportive of our software. they are striking individuals. They love what we're doing and we thank them once again for believing in our crew and the long-time period vision that they and then ourselves have for the community.

Very essential part of any a hit business i am sure you agree is the team and over the past year, we've got assembled a robust leadership crew to deliver proper Leaf forward and that i'll just go into a bit bit extra aspect on probably the most key positions now we have created and the work that they've been involved with.

earlier this yr in January, we assembled a medical Advisory Board made up of scientific -- scientific and clinical measures [ph] made up of completed physicians with wide journey utilising medicinal hashish and their follow.

This Board is chaired through our lengthy-standing Director and Chief Scientific Officer Dr. Chris Spooner. Dr. Spooner is a natural private medical professional who operates his personal health center right here out of Vernon known as Paradigm Naturopathic hospital and Chris was able to convey Dr. Carolyn McCallum and Dr. Zayneb [ph] Mohammad Ali to our Advisory Board and we're completely extremely joyful to have them working with us.

Dr. McCallum is from Vancouver BC and she's introduced substantially with reference to medicinal hashish worldwide. She additionally has extensive scientific working towards within the field of medicinal cannabis and has developed cannabinoid medicine plans for greater than 2,000 sufferers.

Dr. Muhammad Ali is a urologist and researcher with a special activity in uro-oncology and pelvic flooring dysfunction. His medicinal cannabis observe is concentrated on cures for pain regarding chronic pelvic pain, musculoskeletal skeletal trauma and cancer.

Now as i mentioned previous, we're overjoyed to have them working with genuine Leaf and as key stakeholders, they are going to additionally assist us create strategic partners -- partnerships with the medical neighborhood, supply training and outreach to physicians and policymakers and establish alternatives for research.

In April this yr, i'm speakme about branding, we introduced the appointment of Don Chisholm, Founding partner of dossier creative. Don and his group began work in April and as i discussed prior, they've completed a ton of labor within the house. I see them as probably the most premier branding corporations on earth. They created billion-dollar brands and that they're once more bringing a aggressive aspect to everything we do and make sure the messaging is ultimate.

also in April, we introduced the appointment and contract of Hill Knowlton. Hill Knowlton is based at [indiscernible] and they are Canada's correct rated executive family members company. they may be working at once with us in health Canada to be sure we comfortable the appropriate executive approvals inside an more and more complex regulatory and social and political environment for the cannabis industry.

We're getting quicker reaction instances there now and they're actually is an asset to have Hill and Knowlton working with us and more recently we just introduced Sylvain Toutant as our new Director for real Leaf. he's going to be appointed right here in a different week or so. We simply introduced him I believe yesterday. completely overjoyed to have Sylvain working with us. He changed into formerly the CEO of David's Tea and that i'm sure everyone is aware of that company. It has many retail areas all over North the us. INT, he led that enterprise for a number of years. He additionally led a extremely a hit IPO on NASDAQ for David's Tea one of the crucial a hit and oversubscribed ever and he was also President of Keurig Canada and President of the Québec Liquor Board, which is a Raynaud's SAQ. So we're delighted to have Sylvain working with us and we seem to be forward to bringing more individuals to our crew.

lately I needed to ship an email to everyone working for who're involved with our enterprise and there's essentially 30 people on that list. we now have many tasks in the works and many tasks ahead of us and we have an exquisite crew working for us each in Vernon, Ontario BC and Vancouver in Europe and the U.S.

Our head workplace in Vernon, it be a each 5 hours from Vancouver and this is where the hours of the operation for real Leaf Pet and genuine Leaf Med. we've 12 people working right here. In Vancouver, we've eight people working. We even have 4 americans working in U.S. and in our imperative Distribution middle in Missouri and in Europe we have a full crew of six individuals advertising and dealing on branding out of Germany, Luxembourg, France and the U.okay. So we now have all of them up.

there's 30 people on our team. so you can see, we have been very busy. we are also very satisfied to efficaciously close the Reg A+ equity financing in January and we closed on $14 million and so we were very hard to get throughout the appropriate people on the true Leaf bus and we're very pleased with the team that now we have assembled and chuffed to claim that we should be saying extra key appointments to the crew for the following weeks.

we have also made an effort to ramp up our communications method and vastly extra bulletins on an everyday basis this yr. so you'll be hearing a lot more from us as we move forward over the summer into the autumn.

Key upcoming milestones for our company and we now have come a protracted means during the past year and we nonetheless have a little bit of work ahead of us to hold the momentum going, however we now have 5 leading business targets for the subsequent three hundred and sixty five days.

Our number one key milestone is to continue to build international market share for our genuine Leaf Pet products, at ease new consumers, launch new products in the herbal pet product market by the use of distribution channels for principally pet, direct to keep and direct to purchaser online revenue. as a way to shorten up, really construct the genuine Leaf Pet company, it's our #1 center of attention presently to generate greater revenue.

quantity two, we need to secure our capital markets advisors and finished an extra capital raise without doubt later this year in order to finance the goal of the company's marketing strategy. we now have some colossal plans to grow the enterprise over the following couple of months and basically over the next 5 years and that mounted capital and we're very satisfied with the development now we have made with the skills parking capital markets advisors.

quantity three we, of course we wish to get hold of approval to develop and promote medicinal hashish beneath the ACMPR by using mid-subsequent 12 months and as now we have already commenced the marketing and sale of the business's medicinal cannabis product to patients throughout Canada. obviously because of that, we have to build out the business's 25,000 rectangular foot medicinal cannabis facility referred to as the real Leaf Campus in Lumby so as to comply with all these requirements.

quantity five is also to explore potential joint ventures or strategic acquisitions within the pet fitness and well being and possibly medicinal cannabis house, a key milestones over the following couple of months.

i am assured as we continue to execute on these key milestones and benefit momentum; true Leaf may be recognized as a diamond in the tough and stand aside from the hashish crowd. I believe here's key to attracting more shareholders to true Leaf and in the end to expanding the proportion fee of our business.

We could be focusing greater capital on communications over the next few months with the intention to tell our story to a much wider viewers. These activities have been bolstered by way of the ongoing work of our media members of the family team at leap forward Communications and our long island-based mostly investor members of the family businesses -- firm, Edison Advisors.

in terms of our Investor and Media members of the family initiatives, Investor family members or IR is a vital part of our enterprise and we want to increase the movement of communique with our shareholders. This conference name is a good start, however we're additionally implementing other new IR initiatives over the following few weeks.

you are going to note, now we have currently updated our web page and will also be including a brand new Investor family members portal in the traders tab on our site. this could make less demanding to access financial heritage, previous and future investor conferences, webcasts etcetera. So we welcome your enter. Please try it out. it will be ready subsequent week.

As i mentioned past, actual Leaf made heritage past this year as the first Canadian business to efficiently finished an SEC authorised Reg A+ equity crowd funding financing in the U.S. we are the first Canadian enterprise to do this in the U.S. We had been capable of appeal to many new eyes to our enterprise including retail traders, institutions and household offices.

Our long-established target changed into $10 million and really we began I believe $3 million, raised it to $5 million and finally landed on intention of $10 million and we had been oversubscribed and had such large interest that we have been able to raise $14 million for the company, which is completely outstanding.

we'd like to thank all of our shareholders once again that agree with in our company and knowing with us as we flow through into the longer term. we now have also finished a very good job attracting earned media. Of route the earned media is what you desire. You don't have to purchase a media if here's no longer essential, however we have had some big hitters like Bloomberg, Canadian Press, [indiscernible] IR Radio and other cannabis and pet-connected publications who've achieved a phenomenal job of increasing our attain. So we're very happy with the clicking we're getting and i consider we're going to get a lot more as we flow through and execute greater milestones in the close future.

i'll now flip the name over to Tenzin Khangsar, our government vice chairman of method and growth and he will evaluate the financials. Then I seem ahead to addressing some greater questions on the conclusion of this call.

Thanks a whole lot. Over to you Tenzin.

Tenzin Khangsar

thanks, Darcy. So universal we're happy to report checklist sales in the company's historical past 1.four million Canadian for fiscal year 2018. definitely strong balance sheet is as a result of the a major money position, increase in our stock and working capital to assist our accelerated earnings.

We even have our investment in our land and the development of true Leaf Campus as Darcy mentioned. So the enterprise's total asset price grew from $770,000 in 2017 to $sixteen million in 2018. salary for the yr ended March 31, 2018 elevated to nearly 300%, 280% from $368,000 for a similar length in the old fiscal 12 months. So all the enterprise's revenues from inception to this point are from the sale of its hempseed primarily based nutrition for pets. So in general in North the united states and in Europe.

The profits boom become primarily fueled by using genuine Leaf increasing its industrial attain and through the authentic Leaf Pet division into new territories each in-shop as Darcy mentioned across North the united states and Europe and online. so that proper Hemp the dog shoes, dental sticks and supplement oils at the moment are bought in additional than 1800 shops worldwide, including extremely good marketers like PetSmart Canada, Pets corner UK and on-line on Amazon.

So the boom in our fiscal 2018 earnings created efficiencies as neatly. So in selected our delivery prices, we see some advancements in our shipping costs it is contributed to the growth in our gross profit to 44% for the 12 months ended March 31 and that's an growth from 32% for the old fiscal yr of 2017.

Our financial place and liquidity had been amazing at March 31, 2018. Proceeds from the issuance of our share capital through two private placements along with the SEC grievance law A+ fairness crowdfunding and the Canadian Sidecar in addition to other various warranted inventory options were exercised all over the year, extended our ending money place to $10,653,000.

in order of March 31, 2018, the enterprise had working capital of $10,868,000 and we motivate listeners to examine the administration and discussion and evaluation that we've posted and we currently filed for also helping to understand more in-depth breakdown of our financials.

So we will now get to begin the query-and-answer. i will be able to turn the call to Tirth Patel from our IR group at Edison Advisors in new york. Tirth?

question-and-reply Session

Q - Tirth Patel

thank you, Tenzin. during the last two weeks, lots of our shareholders and abilities traders have submitted questions for Q&A, and management may be answering all of them now in this name. So we are going to delivery with the primary investor question.

What consequences on revenue and revenue are you anticipating within the initial years following the completion of your cultivation facility? Will you be ready for sale upon legalization?

Darcy Bomford

or not it's Darcy once again. As i discussed previous, enjoyable electricity of proper Leaf's company model is that we are currently getting revenues and will proceed to develop our revenues unbiased of receiving regulatory approvals from governments in Canada or another nation and through our true Leaf Pet division.

So we're already generating earnings. At this existing time, we wouldn't have to look ahead to any approvals and it is important that shareholders recognise that and it does stays aside from the cannabis crowd.

the first phase of our go-to market method is based on selling these felony hemp-seed products for pets, and these products are legally compliant in all jurisdictions. They don't CBD or THC or require any other regulatory approvals.

As lots of you're aware, legalization in Canada was announced in the dataset as October 17, 2018, and we're anticipating our genuine Leaf campus to be wholly commissioned and in a position for inspection from fitness Canada at that time.

as soon as inspected in previous, we can move into the becoming section, then the ultimate license to promote approval, which we've got heard that technique can take some time. So we have now been telling the markets that we predict to be authorised to promote product through the summer of 2019. in order that offers you a little bit of a timeline from where we are at at the moment.

And unfortunately, health Canada doesn't provide you with approval until you really conclude the constructions, have every little thing in location, and security in a position, and until you develop two different cultivars on the identical time and then have an inspection from them. So we predict to be producing salary someday mid next yr, and naturally that will turn up sooner if health Canada works quicker.

it be complicated to assert what is going on to take place. we have heard that they are hiring more individuals to have the evaluation process move sooner. So with our good fortune, we may have it carried out by way of spring of next yr and we will be promoting product then.

as soon as we're authorized to sell, that facility will produce somewhere around 1500 kilograms of product, and at $eight.80 a gram that is variety of the metric that we utilized in our marketing strategy, that might produce about $13.2 million in profits.

after which internally we can be watching what the market does and gauging the demand and additionally finalizing prices and construction for section 2, and section 2 calls for like i discussed past a hybrid greenhouse mannequin someplace round 60,000 rectangular ft that would produce a different 8500 kilograms a 12 months giving us a total of 10,000 kilos of creation a 12 months by which at that same costs of round $88 million in revenue.

So, concurrent to all of this going on, of direction we're working with our branding and medical groups and doing client research on both their pet items and our medicinal hashish products, and this analysis will make certain that genuine Leaf has a a hit product launch and be neatly located in particular for medicinal cannabis side when we are expecting to have approval next year.

Tirth Patel

thank you, Darcy. The second question comes from an extra investor, do you foresee any most important capital raises or charges within the near future?

Darcy Bomford

Yeah, definitely with any public business elevating money is an everyday prevalence. true Leaf will should do another capital carry sooner or later and in our personal inner discussion, we see the market heating up over the summer, main up unless the October 17 rules approval.

And we have now at the moment engaged, talked to a couple of exact funding banks in Canada. So we're leaders within the house, and these banks absolutely appreciate our unique story, our company mannequin, and the incontrovertible fact that we're generating salary, which now not lots of cannabis businesses can say right now.

one of the most bigger guys like cover and Aurora of course have their license and they're producing some income. I don't feel any of them are making money, but we have been generating income now for over two years, and we're having more and more success every day.

when it comes to funding financial institution companion, we hope to have one formally signed sometime this summer time or possibly one or extra. So, I suppose it might be even more advantageous, and we hope to make an announcement later this month or early in August.

also on the grounds that our financing in January where we closed on $14 million, we've completed a few non-deal road suggests in Canada and the U.S. and actually touring round Canada, Toronto, Vancouver. we've got been into big apple and a few other predominant facilities just talking about the company and are letting abilities investors understand what we're about and that we may be attempting to find our capital quickly.

So we've got had a ravishing response and we now have considered one of the vital largest institutional money anywhere on the planet. a lot of them actually have now not invested within the cannabis space. they're simply sitting on the sidelines and waiting, so we predict to have some pretty big hobby as soon as we pull the trigger.

a different thing that makes us pleasing is our hashish for pets focal point. we now have been very cognizant of the reality of retaining our enterprise absolutely compliant and prison on each side of the border. that is why we don't promote pet items with CBD at the moment, so we're promoting a hemp seed-based product within the U.S., which is completely criminal in every state.

nearly, we use the equal hemp products you could purchase in any entire meals within the U.S., and naturally in Canada we're absolutely felony with our LP application and we can be criminal in the eyes of federal government. So our company could be listed on NASDAQ or NYSE if we determined to do so. we're already trying to that and we now have that as our feasible approach in the future.

an additional factor that traders and banks are telling us is that there are lots of cannabis companies however few are precise cannabis businesses. They appreciate that proper Leaf is a true enterprise. we've true products, true revenues and we've actual distributors in shops that you can cellphone and check with about our products, it really is all tied to the exciting story.

it be a really bold, but useful increase plan. So we're very chuffed with our economic place and we had over $60 million within the financial institution currently. Proceeds from our crowd funding and we are in a pretty good place in increase company as we flow forward.

Tirth Patel

wonderful. The next query is what will the advertising strategy involve for promoting your inventory of recreational marijuana? Will this be strictly offered domestically in Canada and the way do you plan to compete with the different main players in the industry you simply spoke of?

Darcy Bomford

Yeah we're a little different. We're not average cannabis boom enterprise in Canada. Our method for actual Leaf is to turn into a world plant-based or plant ahead concentrated well being company for americans and pets. So we're now not really siloing ourselves as simply an additional Canada's brand or product line. we will be concentrated on herbal wellbeing alternate options, which of direction is very vital to modern consumer.

I consider we see the leisure market is going to be very sizzling. There goes to be lots of people coming to the desk and might be it may force costs down fairly right away. So we can simply stand through and notice what occurs, but our center of attention definitely isn't on being the greatest grower in Canada or having absolutely the most cost-effective construction costs.

We're greater focused on excessive-conclusion medicinal hashish and/or craft hashish charges. So we do see a possible participation within the wreck market, but basically simply be a wholesale provide contracts and we have talked to a couple standard avid gamers within the industry and we hope to secure some thing over the following few months.

we are working towards our certification with health Canada and revenue of leisure marijuana will start and be only limited to Canada simplest. So our pet items most likely are -- we are able to promote them anywhere in the world, but medicinal hashish or leisure cannabis is solely constrained to Canada.

We're additionally excited to peer that real Leaf has some actual activity from one of the crucial larger hashish corporations to resell our pet products alongside their cannabis choices. So proper Leaf is viewed as being a logical hashish for pets option in Canada and we have now already initiated some discussions with a number of companies. So we now have some super hobby there.

Tirth Patel

this is tremendous. thanks, Darcy. next question comes from an additional investor. Do you are expecting the flood of provide and competition within the trade to dramatically lower your pricing energy within the close future?

Darcy Bomford

Yeah it's an excellent question and as i mentioned previous, we're not concentrated on being the biggest hashish producer or the lowest construction charge. There are companies which are spending tons of of thousands and thousands of dollars making an attempt to seize that consideration and attain that goal and we don't wish to be ever consider it will simply come to be being a race to the bottom.

basically real Leaf has carved a spot as a number one global hashish for pets company and we've some respectable margins. presently as Tenzin outlined, we now have a 44% in gross income margin.

we're focused on a minimum of 50 and we hope to peer subsequent 12 months we are very shut and our breakeven degree is not a whole lot of millions of dollars in sales like some of those higher agencies. or not it's surprisingly smaller and we hope to have reached a breakeven degree over the next few years, likely two or three years.

competition, if you talk practically competition universal or our competitors in the pet category, is there is a major amount there but lots of the competition we see is in the gray area and they are selling products that should not have full regulatory approval and our view is that because the rules are extra crystallized in Canada and specially after October of this yr, the government will beginning cracking down on some these organizations which are knowingly working within the gray enviornment.

So in Canada for instance we expect a lot of their dispensaries will close and they're going to need to reapply to have authorized -- sale of permitted product in Canada. now we have also constructed a fair quantity of IP around our formulas, around our packaging.

Of route, we're one of the crucial very early ones to market. we have relationships that I've had for pretty much three years. We're in a fine place to keep transforming into our pet business.

On the human aspect of our company, we're concentrated on presenting excessive exceptional craft from product to medicinal cannabis sufferers are additionally shoppers. in order I stated before, we're extra concentrated on exceptional. I think $8.80 a gram is doubtless the floor for that sort of product. we have seen $10, $12 and $15 a gram at present for awesome craft grown cannabis.

and i would additionally want to say that we're very pleased with our growth crew, individuals that we now have working for us as they're on the without doubt precise of their game there. We're 50 years of becoming experience and from every indication, proper Leaf should be turning out to be a few of their best craft hashish, medicinal hashish in Canada, this is just across the corner. thank you, Tirth.

Tirth Patel

exquisite. That segue on to our next question. the place do you expect the business to be in three, five or 10 years?

Darcy Bomford

Three, five, 10 years is like an eternity in present day world. genuine Leaf nowadays as we outlined past, real Leaf Pet exceptionally has or not it's conclusion products for pets in more than 1,800 stores in North the us and Europe and a huge a part of our business plan is tremendously expanding that product line, including extra formulations, adding more plant-primarily based products.

As I noted previous, or not it's not -- it would not must be notably focused on hashish. We get different very interesting, innovative plant-based mostly energetic constituents and usually we -- larger agencies which are doing someplace around $100 million in sales are in likely 10,000 retailers or greater and that is the reason our three to five-yr plan is to be someplace $50 million to $a hundred million in sales.

or not it's a broad difference there, but I think we will quite simply reach the bare minimal of $50 million of sales if every little thing goes as planned. We also see the upward push of e-commerce and are looking to couple the global off-line brick-and-mortar earnings with the natural pet stores, combining with e-commerce, which as everybody knows e-commerce and direct to customer is getting more and more journey as individuals stream from retail to the on-line journey. however we definitely are looking to construct our brand with partners in each areas and we see in particular pet as our companions to grow the company.

On the human facet of our company, we proceed to work with our branding team and we could be launching some more cannabinoid-primarily based therapeutics and we see authentic Leaf as providing natural alternatives to baby boomers and to [indiscernible] that are trying to find extra natural items that compete and substitute one of the most dangerous pharmaceutical therapy products in the market.

We definitely see a massive possibility to enhance cannabinoid-based items with therapeutic remedies for example for sleep, for ache, for headaches, for hip and joint ache, that form of component. So why would you want to opt for doubtlessly hazardous pharmaceutical when you might seize a product from authentic Leaf that the equal effect with absolutely zero aspect effects. So it is definitely our goal to drag a brand of products that work extra naturally with much less facet outcomes.

Tirth Patel

fantastic. And now the 2d ultimate question we have is what's the estimate of the annual earnings as soon as Canada starts selling to the market?

Darcy Bomford

On that side of the enterprise if we preserve our current salary increase, the pet division may still be ecocnomic in about two to three years and our long-term plan for the enterprise is to have valuation someplace round 10 instances EBITDA and up during this somewhere across the $500 million mark. So in case you appear at the hashish industry now, there's many market caps or opinions which are $1 billion, $2 billion, $three billion, $6 billion, $7 billion.

So we are environment a aim of someplace round $0.5 billion to a $1 billion market cap. With our present business plan, I consider it is attainable, specifically if we now have precise profits generated with the aid of our pet division with a pleasant suit multiples, the general gross income margins and revenue growth.

And if we are able to do the identical with the medicinal facet, I believe it could be handy to peer this form of $0.5 billion contrast for our business in 5 to 10 years, which might be someplace around the 10 times cost of the place we are today.

Tirth Patel

astounding. Our final question that became submitted over electronic mail is does your enterprise plan to do any promoting of your products and can you stroll us via that?

Darcy Bomford

Yeah as all and sundry knows and can have heard with leisure cannabis sales in Canada there's a extremely restrictive advertising guidelines and laws for what which you can do with cannabis manufacturers, peculiarly that you may -- definitely you can't truly do the rest. which you could simplest have a very plain equipment with one small logo and a very small quantity of textual content and the relaxation of the package face has to be warning labels simply as you see in cigarette packaging.

The knowledge we now have of course with our pet division is we're absolutely open to do any sort of advertising and advertising we want and we're nevertheless constructing a world hashish manufacturer. I in reality suppose that offers authentic Leaf a different position and units us as an outlier within the business. We can be capable of promote our cannabis product and construct our brand outdoor of the existing leisure hashish guidelines.

So we do have a very strong advertising plan and we may be spending a significant volume of our budget on R&D, developing new products and on advertising. So we predict that to really outgrow our sales and brand over the next five years.

Tirth Patel

exquisite, thank you, Darcy. That concludes our remaining query that turned into submitted over e mail. besides the fact that children, I simply wish to remind all listeners that we always inspire you to publish extra questions at any time to irtrueleaf.com or data@trueleaf.com or trueleaf@edisongroup.com.

Darcy, i will turn it again to you for closing statements.

Darcy Bomford

high-quality. thanks very a lot Tirth. Yeah, i want to thank all and sundry for becoming a member of us today for proper Leaf's first fiscal yearend assessment. It certainly won't be our last. We really recognize your activity in true Leaf, your endurance for our enterprise as we flow ahead and we look ahead to speaking to you again within the near future and we now have some awesome plans for actual Leaf.

You could be seeing many greater bulletins over the following few months and we truly hope to have all of our present shoulders and a lot of new ones being companions in our boom. So thank you again and we are going to talk to you all quickly. Have a very good day. Bye, bye now.

Operator

This concludes today's conference. You may also disconnect your strains at the moment. thanks for your participation.