/NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S.
WIRE SERVICES/
VANCOUVER, July 5, 2018 /CNW/ -
From: Robert Galarza, CEO,
BLOCKSTRAIN TECHNOLOGY CORP. (the "Company" or
"BLOCKStrain") (TSXV: DNAX.V)
Dear Shareholders:
On June 30, 2018, our company
completed the first full quarter of operations since the closing of
a $10.5 million dollar private
placement, and entry into the public markets on May 23, 2018. Therefore, on behalf of the
management of BLOCKStrain, I would like to take a moment to issue
the first detailed management report to our early investors and
shareholders.
First of all, we would like to express our sincere appreciation
and gratitude to our early investors for supporting BLOCKStrain as
our team works tirelessly to develop a unique and proprietary
enterprise software platform, and engages in continuous efforts to
grow our business in the global marketplace.
It's been an eventful six months since we first engaged with our
investor group to finance our operations and growth, and thereafter
taking the company public. Although a number of significant
developments have taken place since that time—including the
recreational legalization of cannabis in Canada under Bill C-45—we would like to take
this time to brief you on some of the more important material
events for BLOCKStrain that have occurred over the past three
months and why we believe they matter to our business.
Material Events
One of the most significant events in the development of our
company occurred on May 29, 2018 when
BLOCKStrain formally welcomed WeedMD Inc. to its platform, making
it an early adopter of blockchain-enabled software within the
cannabis industry. Working alongside the management and cultivation
team at WeedMD—including industry veteran and Design, Cultivation
and Production partner of WeedMD Derek Pedro—BLOCKStrain has been
able to identify and develop systems that automate administrative
functions within a Licensed Producer's facility and reduce the "red
tape" associated with their business. We have been able to
customize our platform to fit the real world needs of the industry,
all while providing a functional data archival system designed to
support transparency and product integrity. Furthermore, our
work with WeedMD allowed us to see what type of tools it is
currently using, and then focusing on solutions for its problem
areas, especially relating to production batch reporting and
product testing.
The importance of this strategic relationship should not be
underestimated. Not only does WeedMD provide BLOCKStrain with a
lead customer and investor, but also an invaluable development
partner. The talented BLOCKStrain developers are designing software
hand in hand with a highly respected Licensed Producer cultivation
team. In other words, we are making real tools for real growers.
Moreover, the investment by WeedMD into BLOCKStrain also
illustrates a mutual interest between the two companies, as our
platform is designed to be an invaluable tool in the global
genetics business of WeedMD.
WeedMD, as evidenced by its recent acquisition by Tokyo Smoke's
parent company Hiku Brands Company, Ltd., could now be considered
amongst one the leading cannabis companies in Canada.
https://web.tmxmoney.com/article.php?newsid=7949494070308572&qm_symbol=DNAX
Having such an experienced and well-respected partner in the early
days of our development has been, and will continue to be
invaluable to BLOCKStrain's development.
Equally important was the decision by WeedMD founder and
Chairman Michael Kraft to join the
BLOCKStrain Board of Directors. Mr. Kraft is an extremely talented
and experienced leader in the Canadian business community with a
wealth of knowledge about capital markets, sales and marketing, and
of course the developing cannabis industry. This guidance and
leadership speaks volumes about the core strategy of the
BLOCKStrain business—to support a transparent and legal supply
chain for cannabis with a focus on product integrity.
On June 5, 2018, BLOCKStrain
announced an agreement with cannabis industry technology leader
Abattis Bioceuticals Corp. to integrate BLOCKStrain's technology
into their products and service offerings. Our company is very
excited to work with a life sciences and biotechnology company that
aggregates, integrates, and invests in cannabis technologies and
biotechnology services. As discussed in our prior release, Abattis
has successfully developed and licensed natural health products,
medicines, extractions, and ingredients for the biologics,
nutraceutical, bioceutical, and cosmetic markets, and most recently
announced a definitive agreement with XLABS Therapeutics to launch
a new cannabis laboratory in Belleville,
Ontario, designed to service Ontario's growing cannabis sector.
https://abattis.com/2018/06/28/abattis-enters-into-definitive-agreement-to-launch-new-cannabis-lab-in-ontario/
The management of BLOCKStrain is very excited to see how our
platform can help maximize this development by bringing our core
technology into the labs themselves.
In the same week, on June 7, 2018,
BLOCKStrain was happy to announce that cannabis industry pioneer
Derek Pedro agreed to join our
company's Advisory Board.
Mr. Pedro was a co-founder and Master Grower at Maricann Group
Inc., an early Licensed Producer under the Access to Cannabis for
Medical Purposes Regulations (ACMPR), and as mentioned is currently
the Design, Cultivation and Production Partner at WeedMD Inc.,
where he designed and supervised construction of that company's
production facility in Ontario.
Mr. Pedro's experience in the legal Canadian cannabis industry
extends back to 2003 when he first cultivated cannabis for medical
patients under the Medical Marihuana Access Regulations.
In 2009 he started Medical Marihuana Alliance and Resources
Inc., a co-operative business with 14 locations, designed to
provide low-cost medical cannabis to patients with lower incomes.
Mr. Pedro later built the first 'hybridized' cannabis greenhouse in
Canada, allowing growers to
produce high quality cannabis in a modified greenhouse setting.
As Canada shifted to the new
model of cannabis production under the Access to Cannabis for
Medical Purposes Regulation (ACMPR), Mr. Pedro again played a
pivotal role by bringing 54 live strains and 25,550 seeds into the
legal cannabis system. Today, many of those strains form a major
part of Canada's genetic seed bank
for cannabis. Mr. Pedro is also heavily involved in research and
development as one of Canada's
premier breeders of new cannabis strains, including Pedro's Wine
Gums, the most popular strain currently sold by WeedMD. Derek's
expertise and guidance in the development of the BLOCKStrain
platform is paramount.
Two weeks later, on June 19,
BLOCKStrain announced that National Green Biomed, a cannabis
company based in the Fraser Valley of British Columbia, is also adopting BLOCKStrain
technology as it builds out its cannabis production facility. This
is particularly exciting as it will give BLOCKStrain the ability to
work with the management of NG Biomed as a late stage applicant
under the ACMPR throughout the early development stages of their
facility.
https://web.tmxmoney.com/article.php?newsid=7132335109644940&qm_symbol=DNAX
On June 21, our company had the
honor and privilege of being invited to ring the opening bell at
the Toronto Stock Exchange and I had the opportunity to discuss
some key parts of our business with the market.
https://www.tsx.com/listings/tsx-and-tsxv-issuer-resources/the-view-from-the-c-suite
Please know that our team is working hard to develop further
business development opportunities, and we are receiving a great
deal of interest from the legal cannabis community in Canada and abroad.
Software Development
As the management team continues to work on business
development, our team of designers and developers led by CTO
Tommy Stephenson has been working
around the clock to finalize the market-ready version of our core
BLOCKStrain technology platform.
As mentioned previously, BLOCKStrain has developed the first
integrated software platform that utilizes blockchain to register
and track intellectual property for the cannabis industry.
BLOCKStrain brings value in three key areas:
For Governments: Accuracy, Transparency,
Accountability:
BLOCKStrain helps governments regulate and
legalize a substance that, until recently was monopolized by the
black markets. The ecosystem delivers needed transparency to
growers, retailers, regulators, and consumers who have struggled to
find realistic solutions to these logistical challenges.
For Producers: Branding and IP
Empowerment
Cannabis is a complex product with over 400
properties that can change, strain to strain: seed, fiber,
cannabinoid content, regional or cultivation environments, growth
characteristics, flavor and terpine profiles. BLOCKStrain
technology allows growers to release their varieties into the
public domain without fear of losing their ownership claim or
rights to be paid for their intellectual property (IP).
For Consumers: Confidence, Security,
Trust
Today, consumers are largely unaware of how cannabis
will affect their bodies. Moreover, as an agricultural product, the
microbial or chemical makeup of the product can have a detrimental
effect on the body and therefore on consumer confidence.
BLOCKStrain's data and certification system gives consumers the
information they need to make informed decisions about the products
they choose.
As strain protection and genetic identification become major
issues for growers and breeders, this new technology allows them to
identify and secure rights to their valuable intellectual property
(IP). With BLOCKStrain, Licensed Producers under the ACMPR, as well
as Micro-cultivators transitioning into the new legal ecosystem,
can genetically verify their product and place that identification
on the blockchain for immutability. We then track that genetic
identity throughout the entire supply chain with each step being
further validated and protected on the chain. Each registered
product is given a unique QR-code that links up to all of the
testing data of the product, as well as full visibility of where
that product traveled throughout the chain of custody. Customers
can verify that they are buying a safe and legal product and
producers have a validated record of ownership.
The BLOCKStrain platform also helps Licensed Producers manage
the process of meeting regulatory requirements by streamlining the
administrative process of genetic and mandatory quality-control
testing for legal cannabis, cutting the administrative time and
expense in half. BLOCKStrain's proprietary, immutable,
cryptographically-secure blockchain enabled technology establishes
a global 'single source of truth' for cannabis strains, their
ownership, potency and chemical makeup.
At this stage, our development team is working with the WeedMD
team to finalize the software so that it fully meets the needs of
Canadian Licensed Producers. We estimate the software will be ready
for full deployment in just a few short weeks, after which the
Company can look forward to growing its customer base and
generating revenue.
Further, our company is also working to finalize the license
agreement of the IgnitePro software suite owned by Spark Digital
Technologies, which is designed to give full supply chain
visibility and global tracking of cannabis products in real time.
When completed, we believe the combined BLOCKStrain solution will
redefine the 'Track and Trace' terminology.
Financial Sustainability
Our company is in a very good financial position as we move
forward to full commercialization of our software. BLOCKStrain
raised $10.5 million to date, and the
Company has sufficient capital to complete the development and
commercialization of our software products. Under our current
business model, the Company does not need to raise any more funds
until well after BLOCKStrain is already generating revenue.
We would like to address one issue that has raised concerns for
our investors, which is the sharp decline in our share price over
the past 54 to 60 days. Some investors have contacted us with
concerns that this decline in share price might be due to an
adverse material event that had not been reported. We can assure
you that this is not the case. Our company is in a solid financial
position and we are working to surpass all the benchmarks we set
forth earlier this year. BLOCKStrain has only been in the public
markets for a little over six weeks and we're just getting
started.
Summary
We would again like to thank our investors for believing in
BLOCKStrain, and for supporting our company in the early stages of
development. Our focus is to build a business that will benefit all
of our shareholders, and particularly those who took a chance on us
in the early days. We believe we are on that path. Meeting the
objectives in our business plan would make BLOCKStrain the world's
largest repository of data on the cannabis industry, making the
Company very valuable to the thousands of cannabis companies that
are even now growing in Canada and
around the globe. We hope that this Management Report will at a
minimum provide you with some background facts and transparency on
our operations and successes as we proceed down the path toward
full commercialization.
On Behalf of the Board of Directors,
Robert Galarza, CEO
Disclaimer for Forward-Looking Information
Certain statements in this Management Report are forward-looking
statements, which reflect the expectations of management regarding
BLOCKStrain's future business plans. Forward-looking statements
consist of statements that are not purely historical, including any
statements regarding beliefs, plans, expectations or intentions
regarding the future. Forward looking statements in this Management
Report include statements relating to the expected benefits of, and
impact on, WeedMD's, NG Biomed's and Abattis' respective
businesses as a result of the use of BLOCKStrain's technology; the
importance of the strategic relationship with WeedMD in connection
with the development of BLOCKStrain and its business; the impact of
Derek Pedro's expertise and guidance
on the development of the BLOCKStrain platform; the expected
benefits of, and impact on, the cannabis industry as a result of
BLOCKStrain's technology; that BLOCKStrain's software will be ready
for full deployment in just a few short weeks, after which
BLOCKStrain can look forward to growing its customer base and
generating revenue; that BLOCKStrain will finalize the license
agreement of the IgnitePro software suite owned by Spark Digital
Technologies and when completed, that the combined BLOCKStrain
solution will redefine the 'Track and Trace' terminology; and other
statements regarding the business of BLOCKStrain. Such
statements are subject to risks and uncertainties that may cause
actual results, performance or developments to differ materially
from those contained in the statements, including that:
BLOCKStrain's platform may not operate as expected; WeedMD, NG
Biomed and Abattis may not derive the expected benefits from
use of the BLOCKStrain platform; legislative changes may occur that
negatively impact BLOCKStrain's business; BLOCKStrain's inability
to manage growth; the adverse effect of competitors on
BLOCKStrain's operation, strategies and profitability; and other
factors beyond BLOCKStrain's control. No assurance can be given
that any of the events anticipated by the forward looking
statements will occur or, if they do occur, what benefits the
Company will obtain from them. Readers are urged to consider these
factors carefully in evaluating the forward-looking statements
contained in this Management Report and are cautioned not to place
undue reliance on such forward looking statements, which are
qualified in their entirety by these cautionary statements. These
forward looking statements are made as of the date hereof and the
Company disclaims any intent or obligation to update publicly any
forward-looking statements, whether as a result of new information,
future events or results or otherwise, except as required by
applicable securities laws.
SOURCE BLOCKStrain Technology Corp.