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The Daily Screed: Vodis becomes legit, Laguna up and down, new tech!
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Chris Parry Chris Parry, Stockhouse.com
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WHAT’S GOOD:

Vodis Pharmaceuticals (CSE:VP, Forum) has been a ghost for the last twelve months or so, with a Canadian medical marijuana MMPR application that has slowed to a stop and activities in the US which were more or less kept on the downlow while the firm tried to figure out how to do business in Washington state without getting arrested.

Well the veil is off, as of today, with the announcement that theirWashington facility is complete, and has been inspected and approved for business by local regulators. Their local license holder is commencing full production immediately.

The way their deal is put together, Vodis is a landlord, consultant, engineer, construction lead, team trainer and advisor, but not a licensee. In return for all of the above, they charge the license holder a series of fees that they estimate will bring them $5m a year when the facility is in full swing, which will be soon, and they’ll be ramping up facility #2 shortly using the same approved facility design.

Vodis amped up the design of the building to fit within Canada’s Health Canada standards, which are so far beyond US standards they’re almost ridiculous by comparison.

There have been other companies that have gone the US route, rather than wait for Health Canada to get around to them. Those include Chlormet, New Age Farms (CSE:NF, Forum) (which is ramping their facility up as we speak), Dev Randhawa’s Papuan Precious Metals was talking about it a year ago before tossing the game in in frustration, Affinor was another that floated the idea, back when their stock was floating and not sinking. More recently, Nutritional High moved to open an edibles production facility in Colorado. Maple Leaf Green World is mucking about in California with a stock price at historic lows.

But Vodis is the first one to make it happen. Theirs is also just the third indoor facility licensed in the state, and the first Canadian company to get rolling in the US, as well as the first publicly traded company to get in on the Washington state action.

I’m going to be honest – I didn’t give Vodis a chance of hitting this point. In fact, I’ve considered many companies trying their arm at the US diaspora as being tier II guys with limited funds that couldn’t hack it in the Canadian space. I liked the idea of going south and moving faster to revenue, but an empty dance floor is an unattractive thing.

Vodis has legitimately opened the sector up again. Respect must be given because it has been actually earned. The company will be earning revenue shortly with limited outlays and none of the Canadian market limitations on marketing, audience and potential that the big guys with MMPRs up north have to endure.

I’m told they’ve spent significant coin on legal to ensure they’re on the right side of the feds, so I don’t expect any surprising kicks to the back door or Waco sieges in the months ahead, and their team from the Canadian MMPR application remains intact, training the operator in Washington state while they wait for their next move.

Well played, boys. There’s life in the dot.bong world yet.

You can’t buy it yet, unless you’re in the pre-listing private placement, but there are a lot of people waiting for Health Space to debut on the markets. Buzz has it you’ll see it in a few weeks.

What is Health Space? IT’s SO BORING – an enterprise system and app for health inspectors that brings that industry out of the 20th century and into the connected world by allowing fast, secure, standardized ingestion of health department inspection data.

Not so boring? Revenues. These guys have some 400 health departments already on board across North America for ongoing revenue and maintenance deals. Government contracts, people. When I last talked to them a few months back, they had 20k inspections per month filing into their system. Now it’s 30k. They’re in the final negotiation stages with a couple of areas that would grow that number by another 100k.

The beauty of the deal? The data they gather is resold to third parties that have a real interest in learning what restaurants have failed their rodent inspection, or may need a new dishwasher. The data also rolls on to large chain restaurants who really want to know if a franchisee is dropping the ball.

Who else could use that data? I don’t know, maybe Yelp.. maybe Google..?

The software is currently being sold to agriculture departments across the US who have just a handful of months to put a system like Health Space in place to check big agri businesses, before government grants for doing so run out.

$2.1m annual revenue currently, but massive potential for multiple revenue streams and/or a takeover by a bigger fish. If that doesn’t come, I’d expect Health Space to take out one of its two competitors in the space, both of which are smaller and don’t have their tech/client base.

For an idea of the market: There are 4300 health inspection entities in North America. 3600 of them employ inspectors who use clipboards and pens to do their job. Madness.

It’ll be public in 2-3 weeks, likely around $0.20 with 49m shares fully diluted. A rock solid deal, and one that I hear Danny Deadlock has bought into, if you need further verification of quality.

WHAT’S MEH:

Also showing signs of life, Matica (CSE:MMJ, Forum), but not for the reasons many of you hoped. The company has come up against rough times on the weed licensing side and is now gunning hard on its graphite property, once destined for a spin-out but now showing signs of life for two reasons.

It’s within throwing distance from Tesla’s planned Gigafactory, and Tesla is currently putting contracts in place for their much ballyhooed supply needs.

Matica just announced an MOU to acquire an electric boat manufacturer in Montreal, with the idea being they’ll be using their own graphite to make the things run.

Probably a stretch at this point. But activity is activity, and the share price doubled on the news. Still a ways to go before long holders will be above water, so it’s probably smart, if you’re one of those, to hold the stock and see what happens on the Tesla front.

Full disclosure: I owned some months ago and sold close to its high. Buying back in today would bring a 75% discount to that price, but I’ll be considering it if there’s any future dips.

Sat in on a shareholder conference call for Golden Leaf, which insists it’s finally going public shortly. Regular readers may recall the Oregon extracts outfit went from 350k in revs in January to 400k in Feb, and 700k in March. They’re now around $1.2m a month, with the only bottleneck to growth being the number of extraction machines they could get a hold of.

I understand they’ve got two more coming this month and four more shortly thereafter, so revenues on this will really start ramping up in the lead-in to any public listing. Company is licensed for medical customers, but not for recreational.. yet.

All good stuff – but the call itself was a rough one, with long holders objecting to a company request for a voluntary trading hold. Clearly some of the earlier guys in the deal would like to cash out at least part of their investment now, being as they will have made a 10x on their cash. The company, however, does not want to see rampant profit-taking hindering what they see as a fast growing business that will do well on the markets with any sort of support.

I don’t think they need to worry. Those revs are bad a ss and the margins most excellent. More news as it comes to hand.

WHAT’S NEW:

Just out of a chat with execs from Beleave, a health tech company that has an MMPR application at the review stage but is really gungho on a tech being developed in conjunction with Ryerson University that is looking to develop exclusive IP on the terpene and extraction side. They also have an EPHR platform that will help doctors track the effectiveness of medicinal cannabis as a treatment, the records of which are owned by the patient. Very focused on the medical side, the research side, and the tech side of weed. Expecting to go public mid-November. Savvy CEO who has rejected several large financing offers, preferring to keep the float tight, costs down, and the risk low.

No MMPR? Won’t hurt them, as they only really need it to keep supply cheap, and could just as easily move into hemp CBDs, or source materials from other growers. The cash is in the IP. Keep an eye out.

Also on the new side, met with execs (again) from Health Space yesterday, and they’re now moving hard to their market debut in a few weeks. This deal is bad a_ss. James West over at Midas Letter has done a nice write up of the company a few months back which is worth reading. I’ve got a LOT of new info on the company that has come about in the time since, and will be writing about them shortly. Big data deal, ongoing cash money, government contracts, you can’t get near this sort of upside on most tech deals – and they’re already generating revs.

SEC SHENANIGANS:

Vancouver mover/shaker Mitch Adam is on Canadian soil after being set free by a US judge who clearly understood he was a small part – perhaps the smallest - of a stock fraud scheme in the US that they’ve taken down.

According to what I’m told by please close to the junior mining exec, he was arrested in Texas when a New York lawyer who was heavily involved in the scheme took a plea deal (and minor fine) and passed off Adam – the last man in and the only one who didn’t actually make any money - as the ringleader.

Passport problems added to Adam’s woes, as he faced a long sentence and was held in a maximum security penitentiary, alongside a death row inmate, as he awaited his day in court.

But, from what I hear, once in court the judge pointed out the obvious – that the SEC had done a deal with the leader of the scam to blame someone barely involved – and told them to get Adam out of the country and be done with this silliness.

Was he involved? No doubt. But the Mr Big behind the fraud remains untouched, and the highest ranking capture is laughing all the way to the bank, ankle bracelet and house arrest or not.

Adam now begins the long road to rebuilding his career and reputation – and his bank balance – which sucks for him but is a damn sight better than the alternative option the SEC was hoping for.

AND SO I BOUGHT SOME:

ASIBS Update: I took my profits on Patient Home Monitoring(TSXV:PHM, Forum). I really like the revenues coming into that thing, but the markets are harshing its buzz right now, next financials are a while away, institutions won’t give it love until it passes a buck once more, and I’m hearing money that left it is headed to Convalo(TSXV:CXV, Forum) going forward.

I have not bought Convalo. I have bought a little more Moseda Technologies (TSXV:MSD, Forum), which has seen some churn this week with a PP just closing, though volume remains stellar and the price is holding in an elevated position. I expect it will continue to get support from insiders and can’t imagine news isn’t coming soon. This is my biggest holding right now and it has done very nicely for me, and anyone who heeded my advice to give it a long look a month back. Bought my first at 11c, continued to buy right to 27c, where it is now.

Lifestyle Delivery Systems (CSE:LDS, Forum) continues to baffle me. Rumor has it they have equipment stuck in customs. I’d kind of like to hear it if that’s the case, because silence kills a stock and this one is dyinnnnnng unnecessarily. Still holding but eating s_hit doing so. This may be a good average down point, but management needs to show the markets they have reason to be confident.

Still holding AcuityAds (TSXV:AT, Forum), which made great revs in August but has been quiet on news since. Nothing lost. I like this company as an acquisition target and will hold for a while, ignoring the daily ups and downs (like today’s).

I don’t own any (yet) but had a good chat with the guys from Lite Access Technologies (CSE:LTE, Forum) this morning. They do air blown fibre optic micro trenching, which isn’t a new terminology the kids are using for something you do when you need to reignite the romance in your marriage, rather it’s something you do to get fibre optic pipe laid underground without having to dig a 5 kilometre trench.

Right now, when cities lay cable (again, not a sex term), they put down fat pipes that are filled with unused cable because, when the city grows and you suddenly need cable for security cameras or road sensors or online bandwidth, it costs a lot to dig up the old pipes and put down new ones.

Fun fact: It also costs a lot to lay fifteen times more fibre optic than you actually need to use.

What Lite Access does is offer a technology that allows you to leave the big pipe in place, put only the fibre optic you need down it, and when something comes up that requires more, you simply use their tech to ‘blow’ the new fibre through the existing pipe – as far as 5kms if you need to.

They recently acquired a company that will help them grow, they tell me their manufacturing facilities are ridiculously scalable, and they’re dealing in government work and large corporate work much of the time, so the bills get paid.

Also, Google is planning to roll out new fibre in massive swathes of North America over the coming years, while individual cities and municipalities are setting up their own networks. Condo developments, phone companies looking to get fibre to the door rather than rely on the old copper wires, there’s a tone of work to be had by Lite Access.

The downside? They’re small, right now, though growing. They’re licensing their tech to front end providers so they’re taking a piece of every deal rather than all of it. And the stock is a little beaten up.

Buy now? Well, I dunno. I think it’s a value deal at the current price, but looking at the chart it threatens to run a little lower. I lingered over the buy button today, but will keep my powder dry for a bit.

Thanks to IR grinder Erin Ostrom for the intro. I likey hearing good tech stories that don’t involve vaporware and the promise of one day having a product.

Bought some BlueOcean Nutrasciences (TSXV:BOC, Forum) on a tip that there might be buying this week. Hasn’t materialized yet but got me looking at the company and I like the prospects. If you’re in the omega oil space (think Naturally Splendid (TSXV:NSP, Forum), as an example), these guys are getting the stuff from shrimp. NSP says ocean-based omega isn’t sustainable, BOC says they’re focused on sustainability. Tell you what, I’m in on both sides of the pitch – omega oil is the business.

Also in the omega trenches is new boy, Laguna Blends (CSE:LAG,Forum), which opened on the markets Wednesday and jumped 23.3% to $0.37. Those gains disappeared on slim trading Thursday but the MLM-distributed, celebrity-endorsed hemp protein coffee with a 30g shot and no hurtful aftertaste is one that I think has long term potential.

The coffee is good, and people on high protein diets will REALLY enjoy getting 30g of protein from their coffee, rather than having to down a protein shake. Every promoter in town has been trying to get in on this deal, and for good reason. I think it’s going to be a monster.



In fact, “Laguna: Monster” that’s what I wrote down on my ‘ongoing stories’ notepad today.

Full disclosure: I’m consulting with them on getting their message straight, and out to you guys, so I might be a little biased and I’ll make money if the share price goes up because I bought a bunch and will keep doing so on dips – like I did today.

Other stuff I wrote down gives some insight into what’s being discussed in hushed tones on the street this week, both in the weed space and elsewhere. I figured, rather than posting it all, I’d just take a picture of my scrawlings and let you do your own sleuthing.

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--Chris Parry
http://www.twitter.com/chrisparry

FULL DISCLOSURE: Naturally Splendid, Moseda Technologies, Acuity Ads and New Age Farm are Stockhouse Publishing marketing clients. The author has disclosed in the article any company mentioned in which he owns stock, or has a commercial interest. If no such connection is mentioned, none exists.


Tags: INDUSTRIAL METALS & MINERALS TECHNOLOGY HEALTHCARE CONSUMER DEFENSIVE