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Earnings Call Transcript--->>>Indiva Limited (NDVAF) CEO Niel Marotta

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Earnings Call Transcript--->>>Indiva Limited (NDVAF) CEO Niel Marotta on Q1 2021 Results - Earnings Call Transcript

Jun. 01, 2021 6:45 PM ETIndiva Limited (NDVAF)

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Indiva Limited (OTCQX:NDVAF) Q1 2021 Earnings Conference Call June 1, 2021 2:00 PM ET

Company Participants

Neil Lock - IR, Lock Consulting

Niel Marotta - President and CEO

Conference Call Participants

Neil Lock

Welcome everyone. Thanks for joining us. I hope you're having a great Tuesday. It is my pleasure to welcome Niel Marotta, President and CEO on Indiva. Niel, it's all yours.

Niel Marotta

Thanks Neil. Thanks for the introduction. I'm Niel Marotta, I'm the President and CEO of Indiva Limited. Thanks for joining us today and taking time out of your busy days. We're doing this in the middle of the day for a change, I think to accommodate everybody across all the time zones. So, this time works, I always appreciate feedback.

I'm going to launch right into it, I'll try not to -- going on 30 or 40 minutes, I'll try to keep it to a tight 15 minutes or so on the presentation, maybe a little longer, we've added some slides and then we'll open it up to Q&A, which is always fun for everybody I hope.

So, this is first slide that you see here, this shows a variety of our products, we reported our Q1 financial results today and the real takeaway there 89% of our revenue is from edible products. And so you can see Wana, Wana Quick, and Bhang Chocolate, along with some Ruby Sugar, which we have not launched yet on the title page. I'm going to go and review this forward-looking statements.

So, a quick overview, we are the number one edible company in Canada. We started -- we have 48% market share as at April according to Hifyre data that's across the entire edible category. We're very happy with that. The numbers continue to trend higher in Q2 and I'll break down some of that more specifically, we'll get into it. We're nine provinces in two territories, including the medical channel where we sell through medical cannabis by shoppers, whilst can markdown with medics.

And right now our current market cap is around $60 million. So, well below our peers. And I'll discuss that a little bit later on some of the slides that I have.

Cash balance at the end of the quarter were $7 million, our long-term debt is $14 million, none of which is due for another three years or so. And the convertible debentures make up $3 million of that and they are all well into money being priced at $0.20 and $0.25.

Here's a few pictures from our facility. We're in London, Ontario 40,000 square foot facility that we own, it's fully built and fully licensed. This is where we make all the gummies, the chocolates, the pruvals, and the capsules.

This is a little summary of the last few quarters. So, you can see on the revenue side, we did dip a little bit versus Q4, we got into that on the conference call, but short story is number one, very difficult comp, we had a big sell in in Q4 of new products we've want to seasonality-wise December is always a little stronger than January and February. And then of course biggest impact that we felt was the lockdown of the stores in Ontario, this makes a big a big difference.

We expect growth to -- sequential growth to resume in Q2, we made that public in our press release letter call and we would expect record revenue in Q2 based on the purchase orders that we've received. In terms of the gross margins. I see we've got a question here already about what do we expect our margins to be?

We're not going to give you an absolute margin guidance number, I think somewhere around double this would be great. Maybe even a little bit better. I'm going to talk -- I might as well do it now, but I think we've gotten into the distillate costs on our call, and I think it is worth unpacking. So in Q1, our gross margin was 19%, that's definitely better than 12 at Q4, but not good enough, in our opinion.

But our distantly costs are still quite elevated. So, average cost per milligram of distillate was about $0.05 in Q4. That dropped to $0.035 to $0.04 cents in Q1. Current COGS in Q2 would be going through in about a $0.015 and spot prices for distillate today are under a $0.01. So, what does that all mean?

In Q1, we sold 30 million milligrams and so if you were to duck to deduct say $0.03 or a little bit over $0.03 per milligram to get to where pricing is today, that would have added roughly a $1 million of profit to our EBITDA and we would have been EBITDA positive.

So, we reported minus $0.5 million, a loss of $0.5 million on the EBITDA line and had we got into the cheaper distillate sooner than I think we -- the bath would say all things being equal, we would have been even positive. So, this this has a big impact.

It will benefit Q2 and Q3. Just to give you some idea, I mean, we reported $6.2 million of net revenue and had we saved a $1 million of display costs in the quarter would have added, again, apples-to-apples, all things being equal would have added about 15 points to our gross margin, we would have been in the low to mid 30s. With still room to improve. So, I hope that answers the margin question, that's more detail than we've ever given. And I hope it doesn't hurt our pricing.

This, this is a look here at Canadian store growth. I mean, obviously, we've seen this isn't the growth in the number of stores, but we're at about 1,800 plus stores now. Ontario is over 700 stores and on track to be over 1,000 by the summer. So, let's hope that we open up soon and people can actually go in those stores.

With respect to Edibles directly, when we look at mature markets, the Edible category is typically sort of 15% to 20% of the total pie, sometimes a little bit lower, sometimes a little bit higher, depending on the market and season. So, in Canada and we'll get into these numbers shortly, but we think the Edible category itself has a lot of growth left ahead of it.

People need to remember, remember that Edibles weren't even illegal until December of 2019 and really didn't start getting into the market until January 2020. So, the entire Canadian edibles market is not even a year and a half old. We began shipping Bhang Chocolate in February of 2020 and we began shipping Wana Gummies, which is the number one edible in the country with over a third of the total category, not just the gummy category, it's more than half the gummy category. But when you look at Edibles, it's about 36% of the total. And we only began selling those in September. So, we've come a long way pretty quickly.

And just to back up real fast here to our revenue chart. This is why you see that jump in Q4 and Q1 that reflects launching gummies in late September and so we got the real full benefit in Q4.

I'm going to take you through a little bit of a walk on the Canadian market and what it all means to Indiva. So, right now we're at about $300 million a month in terms of the total market size, $3.6 billion annualize that continues to grow. And you can see that in the chart here.

And then on Edible sales, we hit about $13 million in the month of April. These are retail numbers from Hifyre. And so this next slide here that we've added shows how the category itself has grown. And what I point out is two things. One, it's always nice to see charts that go from the bottom left to the top right.

Secondly, there's a bit of an acceleration in the chart in September, because that's when we launched Wana Gummies. So, I would say we're contributing a good amount of this growth, I don't have the number off the top of my head of how much incremental growth in a category was driven by Wana and by Indiva, but a good a good part of it for sure.

This is the number that in U.S. markets is closer to 15%. So, I mean, I don't think it's unreasonable to expect this category to double in terms of its relative size or in size relative to the total pie. In fact, it probably should triple or more and that's going to be driven by new product introduction and innovation and education, all of which we plan to keep investing.

Inside the Edible category, this is really a breakdown. So, Gummies and Chocolates make up 95% of the category itself and what you can tell I think from this chart is the chocolate market is not expanding dramatically, it's really being driven by sales in Gummies and in terms of absolute dollars. So, we're the -- as you said, the category leader and the subcategory leader with over half the gummy market nationally. So, we're very proud of that.

Those of you that think that the Edible category is a small category, I guess 4% might sound small of a pie that's growing as quickly as it is. But again, I think we've -- you've heard me make the case for why we think the category will grow, but more importantly, having that category captaincy that we do have that's been powerful enough for us to be the 12th ranked LP in the country according to Hifyre data. That's for April.

And again, this is also against companies that sell product into Quebec, where we are not yet able to sell Edibles through the recreational channel. If you were to exclude Quebec from the data, our rank would rise to 10th. So, little odd thinking about our market cap and the success we've had and how well our products are liked by our customers, and the great feedback we get from the stores and the bud tenders, the provincial wholesalers. And you look at some of the names, some of which have been acquired in the last six months that are ahead of us on this list and it's a little bit puzzling.

I mean, looking down the list, I mean Ruby Cannabis just acquired for $935 million, I believe and $925 million I think, and Supreme 7ACRES was acquired not too long ago by Canopy for over $400 million. So, if you were to look at their respective market share, let's say on a per market share point basis, which is a bit of a goofy analysis, but, you'd probably -- it would work out to about 150 million of market cap per share of market share -- per point market share.

If given were attributed that kind of valuation, we'd be, probably a $3 stock at this point $2 or $3 stock, I'll call it 2% to 2.5% of the overall market, not just not just edibles, but the overall market. That kind of number would be a 300 million plus market cap, not 60 million. I can answer more questions about that, if that wasn't clear.

This actually shows our improvement. We chose January 20, because that is when edibles became legal. And that is our core business with close to 90% of our revenue coming from edibles. And you can see, according to Hifyre, we've gone from 23rd in the country to 12th.

And in on the OCS, side of things, OCS data, we've gone from 30th to 9th, and very happy that we've cracked the top 10 in terms of again, this is overall market share across all categories. Obviously, our sales are driven primarily by edibles, but this is against all categories.

On more slide here again, this is -- this is our market share. So you can see the edible share on the left at 48% there's the orange bars, and then our overall market share. I think that's around 2.2% as of April. And you can see the big increases we've had in the overall market share. I mean, we were well under 1% market share before we launched Wana. And so it's had a very positive and powerful impact on our company.

And this is the subcategory share, so the black line is Gummies, the orange line is chocolate. You can see the sharing Chocolate has been essentially flat. But our sharing Gummies is going up dramatically and still rising. So we're very pleased with that.

Back to Indiva specifically, I joke all the time I did a presentation in Vancouver before the pandemic started about a year and a half ago. And we had one lonely checkmark on this slide in the top left corner selling pre-rolls Ontario and now you can see we've dramatically expanded the breadth of our offering across the country as well as the depth of the product lineup. And you know, once again, obviously the Chocolate the one that Gummies they want to quick, I've had a huge, huge impact.

I'll let you look at this team on your own and happy to answer questions about it. But everybody in this team now is very, very familiar with the Cannabis industry. Most of these good folks here worked in the CPG industries elsewhere and brought that great knowledge to Cannabis. And we've got a great team, very happy to work with them every day.

These are our brands, so you all probably know Bhang and Wana, Artisan Batch is dedicated to craft cannabis. We can talk a little bit about that and we'll be launching our line of infused sugar salts and sweet tarts shortly.

On top of the page, we do use the corporate brand and even on some of our products namely a bit of Flower and Pre-rolls and Capsules, which sell well in Ontario. Artisan Batch, as I mentioned briefly, this is a brand dedicated to high premium, high quality craft cannabis, high potency, strong terpene profile usually typically over 3%, and so we were constantly looking to partner with more micro cultivators and bring the best flower product to market across the country. We're up to 10 SKUs now with Wana, you can see them there including the three Wana Quick SKUs that launched unfortunately in the -- in the middle of another lockdown in Ontario.

And so tough to quantify, but I'll tell you that that sales of Wana Quick are going better in the West where stores stayed open versus Ontario where they were closed, and I think that relates to helping educate customers about the differences between the products and Wana Quick is a fast onset product with a slightly higher price point, and I'm very hopeful that once the store is open again more customers become aware of the product and also aware of the different features and benefits and we hope that will drive sales in Wana Quick in Ontario.

We're up to seven Chocolate SKUs through Bhang. And the last two were that we've just launched on the bottom, the Caramel Mocha and the Cookies & Cream. The Cookies & Cream is sold very, very well. I would say probably ahead of our expectations, in the Mocha side of things, I would say, meeting expectations very well.

And then at the bottom there, you've got some more products that -- that will be launching in the second half of the year, there will be sugar, which is infused Cannabis Sugar, Sapphire, Infused Salt, and the Jewels that you see in the middle will probably launch those first.

And those are very much like a sweet tart or rocket it, it takes the Ruby Sugar, and it's pressed into a tablet with powderized fruit. And so it's an interesting product and very different from anything that's on the market currently. We're always looking for new partnerships. And I would say to everybody, please stay tuned.

I won't bore you with slide here, going through our corporate history since going public at the end of 2017. But what I would say is, since we did get our license to sell edibles, a little over a year ago, we said January -- end of January 2020. Obviously, the business is accelerated a lot. In many ways it's a completely different company. And so I would encourage you to look closely at the changes between 2019 and 2020, and even into 2021.

Question-and-Answer Session

A - Niel Marotta

First one was about margins. What do we anticipate for the rest of the year? I'm not really comfortable giving you an exact number. I think that's where the kind of environment where anything could happen. So I think it's difficult to say, but I would point back to, let's say, the mathematical guidance on the impact of distillate, and so certainly we expect to get to north of 30%, just based on those cost savings. The question is, how quickly do we get there?

When we get there in Q2, or Q3, that sort of being north of 30%. I guess you'll just have to stay tuned. But I'd like to think we could get to 40% gross margins, between the savings and distillate and some other improvements in efficiencies. But, certainly the big change, and the faster change will come from lower a distillate costs sort of filtering through.

Next question, here. I think this is kind of on the same line of things here that the mathematically packed to the distillate. Basically, the question boils down to would we have been EBITDA positive if just flip were costed at $0.15?

The answer is yes. Yes, we were.

With me here, next question. Okay. Question is regarding Sundial question is how did they $22 million investment from Sundial benefiting Indiva and how is the cash use?

Well, I think it certainly improved our balance sheet. I mean, at the end of Q4, we had about 300,000 of cash left and at the end of Q1 on the balance sheet anyway, and at the end of Q1 we had over 7 million. So certainly provided, let's say a lower risk balance sheet for our shareholders and provided more financial strength and better working capital. How are the funds used? I would say 60% plus were used to refinance all of our debt short term and long term. And so now we've got cheaper debt, less onerous and with a three year due date its interest only. So that was a big benefit.

And the balance is still with us, or went out the door and fees is, you know, probably all aware of -- that fees doesn't mean the management fees means to outside players. Didn't even retire all its debt, we did not retire all our debt, we refinanced our debt with a Sundial deal. So we -- still do have 11 million of long term debt plus 3 million a convertible debt. As I mentioned, that's all in the money. And the 11 million loan from Sundial, this is interest only.

Do I have an EBITDA positive timeline? Well, I mean, I could give you a date and maybe I'd be right maybe I'd be wrong. I think what we've done is probably more powerful I’m giving you the math on what the impact would have been had we had lower distillate costs in the quarter.

It's a process from buying the distillate, having a raw materials, putting it into finished goods, and finished goods going through the supply chain out the door, and obviously hitting a shelf and then someone buying it.

And so we've gone from $0.05 to $0.035 to $0.04. We think we'll be substantially lower in Q2, probably somewhere between $0.015 and $0.02. So you can kind of do the math and tell me when you think we're going to be EBITDA positive.

Next question. when you look at edible sales slide, as progressed over the last months, help us understand how much of that is online in-store? How do you expect to be able lock down and drive store sales?

Thanks, David. Look, online is a pretty small part of the business. So in a province like Alberta, it's maybe only 2% of all the sales in terms of people ordering right from provincial wholesaler. In Ontario, it's about 10%. So 90% of all the transactions happen in-store. During the pandemic and during the lockdowns that might typically rise to about 15%. So it's -- let's say, that the small majority is of all sales are happening online.

So that I mean, look, I mean, I think that ties into the second part of the question, once the lockdown ends, I absolutely expect people to go back to stores and I would expect the percentage of online sales to drop accordingly. And I think it will grow the whole pie. I mean, this might sound odd to folks that are cannabis enthusiasts, but there's a lot of people that still don't want to buy cannabis with a credit card. They want to go to a store, and they want to pay cash and leave with their product. So I think that combined with hopefully, just a sense of relief, and people are socializing again outside of their home, whether it's concerts or movies or restaurants, I think that will help drive growth.

And then the last piece is education. So when people go to a store and speak with a budtender, and edibles is a bit of a different category, right? I mean, people have sort of -- I think on balance people have worse, I would say, worse stories about edibles that they've heard secondhand, and other cannabis products, maybe with the exception of some of the stuff that was happening with vapes a year or two ago, but that seems to have corrected itself.

So education is important. People don't know how many milligrams to take. They want to have some guidance on what to take and what to expect. And that's very, very tough to do, if not impossible to do online. And we can read as much as you want. But nothing replaces speaking with another human being that has experienced with edibles and can help guide somebody. So we're very bullish on the impact once doors are open again, and hopefully they stay open.

Next question was about previous revenue guidance of $30 million to $35 million for the year?

Yes, I mean, I think we try and stay away from giving specific numbers. But look, we did a little over $6 million of net revenue in Q1. If all we did was annualized that number, we'd be at $25 million versus $15 million in 2020. And certainly, we expect and we've actually put in our press release that we expect record revenue in Q2, meaning, we would be above the $7 million in net revenue that we reported in Q4. So I have no problems with that range. But I think we're going to sort of stay away from giving specific numerical guidance.

Next question, what factors are bringing the cost of distillate down? And will there be further fluctuations in the price in the future?

It's basically just too much supply. There's -- and we started from a very, very high price point. So I mean, if you look at mature markets, probably somewhere between half a penny and a $0.01 a milligram is the right range, probably closer to half a penny. We're not quite there yet in Canada, although, we're getting close.

And really, there's -- the best analogy I can give you is, think of it like a toll booth where you don't have to use that road and you don't have to go to that toll booth. So there's a number of extractors in the country, public and private that have started up operations in the last three or four years or five years. That list is still growing.

There's a lot of biomass in the country. There's probably too much supply and far too much supply of low potency flower, which is ideal for extraction. So too much supply of flower means that the extractors can buy cheaper and then ultimately, we're getting -- they're seeing price pressure, and we're benefiting from this price pressure and price competition. Most of these extractors that again in my analogy of the toll booth, the reason you would choose toll booth A over B, it's just because of price. Once you get down to a very pure distillate really is commodity like and it's not exactly a completely a commodity, but very close to it. And so when you bet too much supply, prices come down.

In the future I don't expect huge amount of fluctuation, I don't think anything's going to slow down, let's say, all the grow operations in Canada, I don't think -- I would find it highly doubtful that there's some kind of newfound discipline on the supply chain in Canada. So I would expect still to see a good amount of supply distillate in prices, well, under a $0.01 for the foreseeable future. That's on a per milligram basis.

Next question is bubble hash is going to be the only hash that we’ll be selling?

This is a good question. We're starting with that. We're about to ship some product to Quebec. And so keep your eyes peeled for that if you're in Quebec. It's a two gram of brick of bubble hash that we've processed and we're sending off to Quebec.

I think we're -- in the background, we're speaking with different processors about products they can offer, and looking at that category and the different subcategories within extracts to see where we can be competitive and what makes sense and what's missing.

So the best answer I can give you really is stay tuned. But certainly, that's an interesting area. When you look at mature markets, flower tends to be sort of between 40% and 60% of the total, and then vapes are kind of 10% to 15% along with edibles and pre-rolls and these are broad numbers because they do fluctuate. But concentrates is a growing and interesting part of the pie. So we're taking a look.

Next question is on edibles, being number one for edibles, are there regulatory or other changes that you'd like to see or lobby for?

Good question. I think, certainly, there's a section of our customer base that is very vocal that they need -- well, they want to call it cheaper edibles, but I think what they really mean is more potent edibles. So maybe more bang for your buck, no pun intended.

So look, certainly, we're pushing for that. We'll see how it goes. I would not be surprised if at some point you are, or were allowed to make and consumers allowed to buy edibles that have more than 10 milligrams per package. It is a little bit strange that we sell a 30 count capsules that contain over 200 milligrams in that bottle, but when it comes to gummies, you can't have more than 10 milligrams in a package. So, maybe that relates to consumer behavior, and people are more likely to eat multiple gummies rather than take five or 10 capsules. But edibles are never the cheapest way to consume cannabis in any market.

The flip side of that is that I've got lots of customers that tell me regularly that 5 milligrams is too much for them. So I think it proves, again, everybody's different. And when regulations change to allow us to add more potency, we'll absolutely do it. But I don't think that the all, I should say, all the existing SKUs that have been in market for less than a year will go away.

Look, I think $8 is a fantastic price point for our gummies. And I think the market share speaks for itself, I don't see any reason to change that. And in the event that potency goes up, we'll have another SKU that that represents that.

Sorry, I'm just making my way through these questions here.

Next one, interest on our side are Sundial is to operationalize their investment, they recently bought a large retailer at west and growing capabilities, curious whether this has been discussed to a better in store in Indiva place even on the cost side?

Anything that's currently being discussed, I'm not at liberty to mention or talk about here. But what I will say is that the investment itself really didn't come with any contractual obligations. But we're very pleased having Sundial as our largest shareholder. Again, there's nothing contractual in place as a result of them acquiring or announcing the acquisition at least have of Inner Spirit, which all lead I think it's 85 or 86 Spiritleaf stores in the country. But we're very pleased to see that.

I think it's great imagery for Indiva shareholders if our biggest investor is also the largest retailer in the country. So I guess stay tuned. And we have more to add on that, we'll let everybody know.

Has Quebec shown any interest in allowing edibles in the future?

Probably the short answer is no. I certainly haven't seen any correspondence where they said we want to have edibles. But I should back up. It's not that all edibles are strictly forbidden. Quebec is just made -- I mean for instance, beverages which are not exactly an edible, it is a beverage. But beverages are allowed in Quebec.

But the chocolates and the gummies that we make, the provincial government feels that those are too appealing to children. Obviously, my opinion is different, but I don't set the rules. So, we're hopeful that we'll be able to innovate and bring an edible product of some kind to Quebec. But I just can't tell you what that's going to change.

It's unfortunate because when we look at the edible category, it's -- in that earlier slide, it's getting close to 4.5%, 4% or 4.5% of the total. But if you back out Quebec, it would be more like 5.5% of the total. So I mean, that gives you some idea of how much incremental revenue we would be doing on a monthly basis, if Quebec were actually part of the pie. And certainly, we're hopeful that at some point, if there's no real data showing that children are being harmed or young people are not ending up in a hospital or having a bad impact from edibles, say think there'd be some logic. And hopefully, we'll be able to sell edibles there shortly.

Next question, are we manufacturing flower products for Legend?

No, that is a separate brand altogether. That has nothing to do with us.

Do you think the Sundial position would deter other strategic buyers from takeover offers?

I don't know. I don't know if that's necessarily the case. I mean, their ownership is at 18%. They would absolutely have a say one way or the other. I think realistically, if anybody were to knock on our door and provide us an offer that we would take to the board, because that's our job. Obviously, they would more than likely -- the suitor would more than likely want somehow locked up if that were to happen. So I don't know that it necessarily deters anyone. I mean, maybe if they had a 40% interest or 51% interest, it would. Yeah, I mean, my short answer is no, I don't think it would deter anybody.

How would the supply chain or how would the supply chain cope with new demand for products in Canada?

Yeah. I mean, we've got plenty of capacity. Right now our annual capacity is close to 13 million units of edibles. And going full circle to talk again, about the Sundial investment, we have some plans to increase the automation that we use at the facility, certainly won't result in any headcount reduction, might mean that people are working in different areas, rather than let's say packaging, et cetera.

But we think with a very reasonable investment, with a one year payback or less, we can more than double our capacity and increase our fill rate and also, what's the best way to describe this, increase our fill rate at -- without any errors. It's inevitable, you'll have a little bit of human error, when you're putting 1000s and 1000s of packages out the door every day, we're getting pretty darn close to producing and selling a million units a month.

So -- yeah, look, I mean, I think the investment that we'll do in our capacity will be very helpful, but I'm not worried at all that that we won't be able to keep up. The capacity that I'm describing, really is without pushing overtime or 24/7, this is really based on a five day workweek. So we've got plenty of room to fill the market.

Next question, when COVID comes to an end, and every runs to their cottages and camps. Sounds great. Will Indiva be able to keep up with increased demand?

Yeah. Again, absolutely, there's no, I don't see any risk that demand will outstrip our ability to supply. I guess that would be the best kind of problem to have, but I don't anticipate any issues there.

Okay. One more. Not asking for guidance, but what do you see as a potential market share ceiling? I keep expecting your market share to tick down as the market keeps grow with now almost 50% nationwide? How long do you think you can sustain that?

Well, the risk of Santa Monica Brad [ph] obviously we can't go above 100. I don't know is the honest answer. I -- to be honest, if we ticked up a little bit further from here and then stabilize these levels, I don't think anybody would complain. I don't think it was ever expectation that we would get to 60% or 70% market share and edibles. We will take it if we get there that would be wonderful. But look, I mean, we haven't seen anything yet that has slowed our market share down. We've saw -- we've seen a lot of new entrants into the category at price points above us, at price points below us. And we keep growing our share overall. And we keep growing our share in the gummy space.

Our chocolate share has been relatively flat. But I think that's partly because the chocolate market itself has been pretty flat. Maybe there's even a case to be made that all the new gummies out there have taken perhaps some of the incremental demand away from other subcategories and move them into gummies. But look, I don't see any reason why our share can't keep expanding. But we're also aware that when you have the number one position, you have a bit of a target on your back. And I think a lot of people are looking at the category and trying to enter it.

Our relationships are getting stronger with the provincial wholesalers in many ways. And as I said, our ranking in Ontario overall for April was nice, it's not say it will always stay there, it will fluctuate from month to month as the market changes and evolves. But we're in a very good spot where we might have a small market cap, and we might not have multiple facilities in multiple countries. That's pretty much by design. And we're very happy with the impact our products have had in the Canadian cannabis market.

A few more coming in here. Neil, you can stop me when we run out of time. I'll just keep going. Okay. Most of Indiva's competitors are trading large exchanges still looking up list. And what's the timeframe?

Yeah. Look, I think the short answer is yes, we are still looking to up list and hesitate to give you a timeframe, potentially this year, but maybe next. I think we just need to assess what the impact will be on our internal resources. It's probably worth noting, I mean, it's all public that we had a management cease trade order, because we're not in a position to file our financials by April 30. I think all the reasons for that have been well disclosed at one point I'd packing them again.

But uplisting to the TSX would shorten our reporting requirements to 90 days for your end and 45 days for the quarter. That's appealing just to be in the same reporting cycle as our peers for the most part. But we want to make sure that both internally and externally, we have all the resources in place to meet those deadlines. We don't want to go through the uncertainty that recall, sort of surrounded that MCTO again.

Question about our contracts transferable, if we merged with another LP or taken over?

Yeah. The short answer is they do survive any acquisitions.

Do you think the Always Available are meaningful positive to demand?

I think so. It's tough to quantify though. For those that are not aware Always Available. We have six SKUs listed as Always Available, three, gummies and three, chocolates. This is with the OCS this designation and this sort of special category. There are about 75 different products listed as Always Available 125 SKUs last I checked.

The reason for that is that let's say flour comes into 3.5 gram jars, 7 gram jars, 28 gram that would be one product in my mind that 3 SKUs. So we have six of the 125 SKUs. And they're six individual products. So I guess in a way, six of the 75 products are from Indiva, which is really great. Always Available essentially means that you can always get them. And whether you're a store or customer, they'll always be listed on the website.

So, I think, is it meaningful?

Yes.

But can we quantify it?

Not yet. I'm not sure that we know what the incremental demand was for those products. And again, I think the cross current of having store closures and lockdowns during COVID doesn't help. It's just very tough to discern what the trends are, when you've got stores that are open and closed. And I mean in Toronto, it feels like the stores been closed for six months. So maybe we'll have better data on that by your end.

Neil Lock

I think that's it, Niel, I think that's it. It was a great amount of questions and love the new slides. Like to get into more details. After the event, I'm going to look at those slides again. And I think that's it for the presentations. Did you want to add anything at this point?

Niel Marotta

No, I mean, look, I think we're constantly trying to provide a little bit extra disclosure to help people understand the story where it's frustrated with where our market cap sits, is anybody else on this call I assure you and we're just going to get back to working keep executing on the plan. We have got lots of growth baked in the cake with the bell publicly disclosed. We were expecting record revenue for Q2 and our gross margins to improve, so we'll just go and get back to work and make sure that happens.

Neil Lock

Well look forward to see you in the result over the next couple of months. Thanks for the presentation and everything was fantastic, and thank you again everybody for joining us, we will see you in a few months.

Niel Marotta

Okay. Thanks everyone. Feel free to reach out.

Neil Lock

Thank you.

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