Thanks for reminding me, I'm not that active on this forum.
I had a call with the Jérémy St-Pierre, responsible for investor relations at the company. These are the notes I took from the call (not in a particular order of importance):
This is translated from a communication I sent to several people in Dutch, so sometimes extra context is added as some of the target audience aren't that familiar with the company.
1. With the first license contract, they receive $850k per machine. Note that they do not sell the machine, Cryomass remains the owner, and the license fee is for the use of the machine. In addition, Cryomass also receives 50% of the net revenue from the machine (Revenue - Operating costs (1 to 2 personnel & cost of liquid nitrogen)).
2. The $850k is not a fixed price. This may be higher if the partner wants exclusivity in a certain region. This may be lower if it is commercially interesting for Cryomass. RedTape (partner taking the first license) received a discount as they are the first partner. The price can also vary depending on the type of plant for which it is applied. For crops with higher margins, higher prices can be charged.
3. Production of systems is not done by themselves, but by a partner company. The production process itself is not so complicated, so they are not dependent on one partner. They are looking for diversification in this to be able to produce faster and be less dependent on one company. The cost price of 1 installation was estimated to be around $500k. So the current license fee is enough to finance machines up front without Cryomass having to take on debt or dilute their shares.
4. They have patents in the USA/Canada until 2039 for their concept/process. So even if it is easy to replicate, no one can use it without their approval. Patent applications in other relevant countries have been filed/are in the process of approval.
5. The first system is available at their partner in California and also serves as a showcase model/proof of concept for the market. There is interest not only from the cannabis/hemp industry but also from other crops (such as hops for beer brewing). They have received many requests to see their machine and partnership requests. There is no immediate need to set up a sales team as there is a lot of "organic" interest.
6. They are making a few adjustments (fine-tuning) to their current machine concept. They are of course learning as they go from practice. The estimate was that the second, adjusted machine could be delivered by May. From then on, they would be able to deliver more and more quickly. The bulk of the hemp/cannabis harvest season is in September, (cr)optober, November. By then, they want to have delivered 4 machines already.
7. The expectation is that royalty revenues will be many times greater than the upfront license fees. The exact estimate could not be given (not publicly disclosed), but it strongly depends on a good partner (who ensures uptime of their machine). Next quarter reporting will provide more clarity on this. Q1 report may be a catalyst for share price (10-k was released end of March last year).
8. Keep in mind that the USA is a growing market that currently has around $5.5 billion in wholesale revenue (in which they are active). 50% of the market is for the plant, 50% for the trichomes/active ingredients. That is still a market of $2.75 billion. Only for the USA, only for Hemp.
9. They have no competition in their technology (shielded by patents). Other technologies try to separate based on water, which has considerably higher costs and cannot process as large quantities as CryoMass.
10. They are already considering on developing new machines before and after the Cryo process. For example, making sure the machine can easily be taken to the field. The faster the plant is frozen, the more valuable trichomes remain intact. They are also looking at separators that will freeze less biomass (without trichomes).
11. They are considering an uplisting to a larger stock exchange. This will not happen/be announced before the fall of 2023 at the earliest. First, they want to show a few quarters of revenue + revenue growth and let the share price grow organically.
12. So far, they have never engaged in marketing, and it was not really necessary. To sell their product, they will not do this for the time being because they are receiving a lot of interest from their target sector and even beyond. They have many requests for partnerships, which limits sales/marketing costs. However, they will start to generate more publicity around the stock. Within a month or two, there will be more frequent updates on their progress, as well as the company's participation in conferences or maybe even an investor day. The exact format is not yet known, but it is clear that they will focus extra attention on this. It is still flying under the radar, but maybe not for much longer.
13. Shareholders: the largest is CRYM Co-Invest LP (11%). This is a fund set up by investment professionals from the real estate world in Vancouver who are connected through CEO (Christian Noel). The second-largest shareholder is CryoCann USA Corporation (4.9%), which is the vehicle of the inventors of the cryo technology. These are engineering profiles who used their resources to initially develop the technology. They needed more resources & commercial skills bring the commercialization in motion. By setting up Cryomass, a collaboration was established in which the product could be further developed and commercialization could be accelerated. Matt Armstrong, one of the inventors & shareholders of CryoCann USA corporation, is still the Director of Innovation today. The third-largest shareholder is the CEO himself (4.52%).
14. $251k in stocks were bought by insiders in January (by CEO, CFO & head of legal)
15. The CEO's interest is the same as that of the shareholder. He owns 4.5% of the shares and continues to buy more. The largest shareholder are his finance/real estate friends from Vancouver.
