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Take the bull by the horns. Bacchus Law Corporation is a boutique corporate and securities law firm known for helping fast-growing private and public companies finance, create and develop their businesses with speed and efficiency. Our expertise in corporate finance and securities law allows us to effectively advise emerging companies from start-up to going public in Canada through to becoming major players in their fields. We won’t let the bull throw you.

Securities Law contacts at Bacchus: Penny Green 604 632 1280

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Innovation. Efficiency. Speed.

THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 4


Contents CSE | Quarterly Issue No. 4 - 2015 Publisher Fusion Publishing Media Inc. #317 – 1489 Marine Dr. West Vancouver, BC Canada V7T 1B8 1.888.925.0313 (Toll Free) Group Publisher Terry Tremaine Group Editor Connie Ekelund Production Manager Christie Smith Issue Editor James Black Free Digital Subscription Published by Fusion Publishing Media Inc. on behalf of Canadian Securities Exchange. To receive your complimentary subscription, please visit and complete the contact form.


CEO’s Message

Feature Story 7 PUDO focus on “last mile” set to make missed parcel deliveries a thing of the past by Giles Gwinnett Company Profile 10 Just what the doctor ordered: H-Source marketplace network system lowers costs and saves the environment by John Harrington 13 Global Gardens’ Veggemo beverage targets fast-growing dairy alternative space with fresh approach by Peter Murray 17

Golden Leaf shows way for public marijuana companies with strategy timed to perfection by Peter Murray


RIWI online survey platform quietly transforms art of opinion gathering by Jonathan Jones


VirtualArmor leveraging experience, top talent as demand for network security takes off by Peter Murray | @CSE_News Cover Photo: PIXSOUL MEDIA INC. | 5

THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 4

CEO’s Message 2015 has been a busy and exciting year for everyone at the Canadian Securities Exchange. While it’s hard to believe we’ll soon be counting down to 2016, this year-end edition of the CSE Quarterly is a great opportunity to share with our readers the stories of innovation and accomplishment from firms listed on the CSE as well as by the CSE itself. Read on to find out about highlights from yet another exceptional year at the Exchange for Entrepreneurs, the interesting partnerships we’ve built and to get a sneak peek at what we have in store for the New Year.


2015 has been another strong year at the CSE. As of the end of November, 64 securities have listed on the Exchange for Entrepreneurs in 2015, taking the number of listed securities to 314. This marks the second consecutive year in which the CSE has experienced double-digit percentage growth in listings. Notwithstanding challenges on the financing side for many early stage companies, deal flow has remained healthy in 2015. This past year we’ve seen well over 230 financings close with nearly $150M raised, keeping pace with our performance over the same period last year. Finally, we continue to see trading volumes strengthen as more investors take an interest in the companies listed on CSE. On a year-to-date basis, we’ve had close to 2.3B shares traded which is slightly ahead of the record pace set last year.


This year has also been another great year for building out partnerships and enhancing our profile as a world-leading marketplace for innovative small to medium sized public firms. This past summer, for example, we were actively involved in the International Economic Forum of the Americas sessions in both Miami and Toronto where we were able to engage with thought leaders to discuss emerging trends and issues confronting global markets in the near and medium term.

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Our CSE Day events continue to grow in popularity and reach. This past September marked the first time we held our CSE Day in New York City at the OTC Markets Group offices. Like our events in Toronto and Vancouver, CSE Day New York was an overwhelming success with a number of our listed issuers learning more about key channels and partners for raising capital in the US. Finally, I travelled to Taiwan last week to sign a memorandum of understanding between the CSE and the Taiwan-based Taipei Exchange (TPEx). This agreement has given our two firms a framework to promote greater cooperation and interaction on strategically important topics. We have already had interest from CSE- and TPEx-listed companies in securing a listing on the counterpart exchange. Like our roadshow in Europe last year, we believe that cultivating strategic relationships with partners across borders enables the CSE listed issuers to benefit from exposure to a wider pool of investors with an interest in emerging companies. And, as the three CSE-listed firms profiled in this issue of the CSE Quarterly indicate, as a result of these partnerships the CSE is increasingly becoming a platform for public firms to access North American markets.


Looking forward to 2016, we hope to achieve even greater success by continuing to lower the cost of capital raising in Canada. I’m excited to announce that we are actively working to improve our technological infrastructure to enhance the trading experience on the CSE marketplace. In addition, we are actively upgrading and enhancing our website to better suit the needs of our user base. Of course, we will continue to provide support and development opportunities to our listed issuers with CSE Days taking place in the spring of 2016. On behalf of everyone here at the Canadian Securities Exchange, I would like to extend a special thanks to our supporters for another exceptional year and wish our readers all the best for the upcoming holiday season. We look forward to sharing even more stories of great accomplishments, innovation and entrepreneurship in 2016.

feature story

THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 4

PUDO focus on “last mile” set to make missed parcel deliveries a thing of the past by Giles Gwinnett


e’ve all been there... You’re waiting for an important parcel, which arrives on Friday when you’re out and an impersonal note says it will be ready for collection at a depot miles away — but not until Monday, when you’ll be at work again. The benefits of online shopping in the fast-paced world we now live in are clear, but my goodness there are some logistical headaches too. Working to plug these holes in the North American system are entrepreneur Frank Coccia and his team at start-up PUDO (CSE:PDO), which is disrupting the whole way retailers, couriers and consumers behave — and so far it seems to be doing a fantastic job.

Coccia has spent many years honing what he believes is the best “last mile” delivery solution and the vision is to create a network as big as Canada Post made up of thousands of so-called PUDO PointTM locations. “We’re truly a unique, courier neutral system. It’s a win-win for everyone,” he tells me. “Everyone has had an issue with the Post Office or courier parcel at some point in their lives,” he says, adding that simplifying the system has been his main aim. And it’s a worthwhile system to get a handle on. Last year, 80% of Canadians and Americans made an online purchase and in 2015, it is forecasted North Americans will spend over US$376 billion online.

The benefits of online shopping in the fastpaced world we now live in are clear, but my goodness there are some logistical headaches too. | 7

THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 4

So how does it work? Well, with PUDO, the missed delivery becomes a thing of the past as you can have your parcel delivered to the nearest PUDO PointTM location — a convenience store or gas station, often open 24/7. So you can pick up your package where you want, when you want — not bad considering how vast and unpopulated parts of Canada and the U.S. are. Establishing such a PUDO PointTM location is as easy as it comes and the upfront costs are minimal at US$200 per point, since the small business just requires a scanner and tablet and some basic training. The small store also benefits from extra foot traffic when people come to collect their parcels and they also get a fee for every shipment they hold for pick up.

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Coccia says PUDO has ‘levelled the playing field’ across the whole delivery ecosystem. For the consumer, the advantage is obvious, but the courier firms also benefit as they have a known “landing space” to deliver to (rather than traipsing around making extra journeys when a parcel doesn’t get through, thereby saving costs). The online retailers benefit from reduced transportation costs and higher customer satisfaction. The notion of being what Coccia calls “courier agnostic” is at the heart of the PUDO model and what makes it different from every other system, including those in the U.K., such as Collect Plus, though that firm’s model has been a success.

THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 4

When he started developing the concept in Canada, initially in supermarkets, Coccia says he “loved” the Collect Plus model, which has over 5,000 convenience store points, so he drew on it and improved it. However Collect Plus owns a courier service so isn’t a “true last mile” Frank Coccia service. “The U.K. model doesn’t really give the opportunities of becoming an enabler for a retailer and becoming really as disruptive as the system has become for PUDO,” he said. “The last thing we (PUDO) want to do is become the courier and have the problem of getting stuff from the warehouse to the PUDO PointTM location – that is not our business,” he explains. “Rather than worrying about reducing costs for the couriers, we’ve partnered with the courier’s customer (ie; the retailer). By giving the retailer a business-to-business address rather than a business-to-consumer address, it automatically reduces their costs for distribution of product. It allows small to medium sized retailers to now be in a position to offer free shipping because they lowered their delivery cost and have a reliable landing spot for the product.” Joining PUDO as an individual customer couldn’t be easier. You sign up for a free membership on the website and enter a PUDO PointTM location instead of your home address when you buy from biggies like retailers like Amazon, Walmart and eBay or other retailers. The firm is targeting 33,000 individual PUDO members by May 2016 (PUDO’s year-end) and 1.5 million by May 2018. So PUDO is a great idea but to maximize its business potential and longevity, it must grow the network, which it has been working hard at since it was founded in 2013. Coccia says the situation has been a little “chicken and egg” as “you can’t get retailers onboard without a network and you can’t have the network without retailers.” But there’s no doubt the company is moving in the right direction.

It now has 5,000 convenience stores signed up in North America, 2,200 of which are in Canada and it’s growing all the time. We are working aggressively to onboard and train our PUDO PointTM locations. The target is to have between 3,500 and 4,000 locations in Canada and 15,000 in the U.S., says Coccia. Though he won’t be drawn on revenue projections, Coccia says the potential is “massive” as obviously the network continues to grow and PUDO’s share of last mile delivery grows alongside. Revenues come from all angles, including an annual fee from the PUDO PointTM location, from couriers per shipment and from consumers check-out on its retailer affiliate program to name just a few. There is also the big opportunity from the ‘direct sell’ industry, where people are selling from their own home, notes Coccia. There are 19 million people doing that in North America in what is a US$23 billion industry. “PUDO has become a very valuable proposition for them,” he says. The company expects to ramp-up considerably in the run-up to Christmas — a key time — and expects 1,200 to 1,500 parcels a day in Canada during the festive period — from 6,000 to 8,000 parcels a month now. PUDO is also cleverly disrupting the “returns” business, because  statistically between 5% and 20% of any online retailer’s products are returned to them, causing headaches for all parties and additional costs for the retailer. “We’re guaranteeing up to a 30% discount to retailers that use PUDO PointTM locations to have their products returned, regardless of who their courier is,” says Coccia. So the potential for PUDO, which went public in 2015, is vast. Indeed recently it was selected as one of Canada’s top 20 most innovative public technology companies from hundreds of small and midcaps by the Canadian Innovation Exchange. Make no mistake about it, this is one firm that could really deliver… n

Originally published on December 3, 2015 | 9

company profile

THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 4

Just what the doctor ordered: H-Source marketplace network system lowers costs and saves the environment by John Harrington


-Source (CSE-HSI) is a company operating a Cloud-based virtual marketplace that is going to save hospitals and surgery centers a whole lot of money. The company was founded in 2013 by president Murray Walden, whose background is in medical device sales. As H-Source Chief Executive John Kupice tells it, as Walden used to go around the different hospitals “the people would say ‘Hey, Dr So-and-so has left the hospital, we have these products; could you see if the next hospital might want it them?’” And that’s how the idea for H-Source was born. Its mission is to maximise efficiencies in the medical supply chain, boost operating margins and support sustainability. Initially, the operation was run as a kind of Craigslist classified advertising service, with a monthly subscription fee.  “He [Walden] had about a million dollars in inventory, and charged $200 a month,” explained Kupice. “It was all very altruistic.” 10 |

Intrigued and enthused by the idea, Kupice came on board about a year after the company was founded, and suggested changing to a transactionbased model, formulating a business plan and raising some money to grow the business. With his background at Ernst & Young, Kupice was able to provide know-how on what he calls “accounting knowledge, management reporting, integrating different data silos and so on.” Kupice says he feels confident that H-Source can bring sustainability, cost-cutting and communication to the medical community through its online marketplace. Since the company floated on the Canadian Securities Exchange in October, the size of the team has grown to 14, as it beefs up its sales force and support staff. What the team has built is an electronic marketplace that allows medical institutions to sell surplus items to another healthcare organization that wants and needs them.

THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 4

Additionally, the H-Source platform includes features allowing hospitals or ambulatory surgery centres to form custom groups to privately transact assets with each other. It’s a multiple win scenario. The selling party gets some dollars for idle or overstocked products that would otherwise be discarded. The buyer gets equipment and supplies it needs at a discounted rate. Mother Nature gets a breather, as the landfill requirement goes down. Lastly, but not least, H-Source makes some money as the middle-man, earning its commission on the sale. What’s not to like? This may all seem somewhat akin to the eBay model, albeit focused on medical supplies. But do you think hospitals, medical authorities and surgical centers are going to buy second-user supplies from some random unknown source on eBay? You can — quite literally — bet your life they will not. The medical organizations want a trusted supplier, and H-Source provides that.

You don’t have to take my word for it; you can take the word of numerous state hospital associations that have endorsed it. Passing the due diligence of those associations is an exhaustive process, but worth it, as the rubber stamp opens up sales opportunities to H-Source. At present there are more than 30 hospitals trading on the platform, with more coming on board. Kupice reckons the company needs around 110– 120 hospitals to hit the break-even point and it is targeting having 150-200 hospitals on the platform a year from now. So, this is not some ‘pie in the sky’ or ‘jam tomorrow’ Internet company that is more interested in growing numbers than making profits. Sure, the company is interested in grabbing as many users as quickly as it can, but Kupice points out that for every dollar of revenue the company takes in, around 45 cents drops to the bottom line, so profitability is just around the corner. That sort of margin is sure to attract the attention of potential competitors, but H-Source has first mover advantage.

John Kupice and Murray Walden | 11

THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 4

“One of the reasons we went public was to do what I call land grab, to get as many clients as we could as soon as we could, and get critical mass and become the standard,” Kupice disclosed. The company raised C$3million when it floated its shares at 15 cents a share. “The other thing [that sets the company apart] is our technology has been written from the ground up for hospitals, to fit in with the way they do business,” Kupice said. It’s a platform that has been tested in the real world, initially using the “freemium” model in which users get a basic version of the service for nothing, and then pay extra for snazzy features. And it’s a robust system, capable of handling a large volume of transactions and providing back-end support for hospital staff. The H-Source CEO reckons it would take 9-12 months of development for another company to create what H-Source has now, during which time H-Source would be establishing itself as the gold standard in a field it founded, and improving its platform. “We need to go get 150–200 hospitals over the next year, and we’ll be in very good shape.” There is little doubt that this is an idea whose time has come.

Kupice estimates that hospitals in the US are throwing away more than US$4 billion a year on overstock they cannot use. That is money medical institutions can ill afford to lose. According to Moody’s Investor Services, which looked at the 2013 audited financial accounts of 48 not-for-profit hospitals in its coverage universe, costs rose 4.6% year-on-year in 2013 while profits only advanced 4.1%. Using the H-Source platform might not eliminate all waste, but it should cut out plenty – enough to pay for the service many times over. The bigger the hospital, the bigger the scope for efficiency savings, but one of the key selling points of the service is that organizations of all sizes can use it. So, there’s no need for a massive information technology department to support it, because the service is available to anyone that can use a web browser. The Cloud-based model means the platform is a very scalable one, which bodes well for H-Source’s ambitious growth plans. “We’re in this to transform waste in healthcare. We can reduce costs, take waste and turn it into dollars, in a socially responsible, sustainable fashion,” Kupice concludes. n

It’s a platform that has been tested in the real world...users get a basic version for nothing, and then pay extra for snazzy features.

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company profile

THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 4

Global Gardens’ Veggemo beverage targets fast-growing dairy alternative space with fresh approach by Peter Murray


ith typical acerbic wit, the late columnist Mike Royko once offered his readers a simple rule for eating healthily: “If you enjoy it, you can’t have it; if you don’t like it, you can eat all you want.” That was a little over three decades ago, when there was probably some element of truth to Royko’s tongue-in-cheek guideline. Today, however, the list of products that not only are tasty but also good for you is long and growing. Global Gardens Group (CSE:VGM) made that list a little longer on November 5 when it released a product line aimed squarely at the highly popular almond and soy milks that many healthconscious adults view as a refrigerator staple.

Veggemo is a vegetable based dairy alternative that tastes delicious and feels so much like milk, according to the company, that even devoted milk drinkers will be hard-pressed not to give it serious consideration. Factor in the absence of bad stuff like trans fats and cholesterol and one begins to understand why the Global Gardens management team so deeply believes it has a winning combination on its hands. That combination might never have come together were it not for a fateful meeting four years ago between now President and CEO Rob Harrison and VP Marketing Wade Bayne. Harrison had traveled to Vancouver from Ontario to see an early version of the product at an incubator group founded by executives from Lululemon.

If you enjoy it, you can’t have it; if you don’t like it, you can eat all you want. | 13

THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 4

Bayne had been invited to the office that day as well, and the two experienced consumer goods executives quickly found themselves on the same page. “We both perceived a huge opportunity,” says Harrison. Bayne, whose background includes executive positions at names like Molson Coors and Procter & Gamble, explains that being in the right business at the right time is everything. “In an industry that is enjoying great growth, even an average company can do well, whereas in an industry that is flat or declining, a strong company will struggle,” he says. “So, before you choose where you want to be, find an industry that has strong growth driven by factors that are sustainable.” Harrison, who has advised the likes of Heinz, Nabisco and Nestle, claims that the dairy alternative beverage category is growing at double-digits per quarter, which compares to 1-2% growth for consumer goods overall in Canada. And then there is dairy itself. “You see dairy milk declining on a per capita basis for the last 25 years and people migrating to our category,” explains Harrison. “As marketers, you see exponential growth, a new category, great margins and strong demand from consumers. And we believe this shift is going to continue.” Harrison says the alternative dairy industry is now valued at over $2 billion in North America. In the four years since Harrison and Bayne met at the incubator, countless versions of the beverage have been created, a number of which were taken out for testing with large groups of consumers. The main tests took place in two waves.

The first led to the conclusion that protein was breaking too strongly through the flavor matrix, thus causing consumers in the trials to report a slightly bitter taste. “Protein doesn’t taste good,” says Bayne, “so you have to mask it and we spent three months getting that right.” The next wave of testers liked the taste but said they President / CEO Rob Harrison would prefer the product to possess a little more body, “so we dialed up the texture to replicate a 1% or 2% milk,” says Bayne. One might wonder how a vegetable-based drink manages its slightly off-white colour. Bayne credits ingredients such as potatoes, organic potato starch, tapioca and a white-yellow pea sourced from Belgium for the milk-like hue. “It is not VP Marketing an artificial colour,” he points Wade Bayne out emphatically, adding that genetically modified, or GMO, ingredients are similarly banned from the Veggemo recipe. With the product perfected, the fourth quarter of 2015 was chosen for the start of an aggressive yet prudent rollout. “There are two things you measure in this business, and the first is distribution,” explains Harrison.

In the four years since Harrison and Bayne met at the incubator, countless versions of the beverage have been created, a number of which were taken out for testing with large groups of consumers.

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THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 4

“We had set out to be in 450 stores at the end of the first quarter of 2016 and it appears the number is going to be closer to 800.” Six months from the beginning of product rollout the goal is to be in approximately 1,800 stores across Canada, including those run by several of the leading chains. The rollout continues in further stages to include chilled Veggemo (the first phase involves shelf-stable product, which is packaged in an environment such that the beverage remains fresh on the shelf for up to 14 months) and the addition of stores in the United States. Looking a bit further out, Harrison says the company has its eye on the global marketplace, as North America accounts for only 18% of dairy alternative beverage sales volume worldwide. There are many attractive markets for Global Gardens to consider, he says, both for sheer size and, in some cases, high levels of lactose intolerance within the population.

A product can be fantastic, but if people don’t try it they will never know. Harrison and Bayne have already considered the appeal factor from multiple angles and have a game plan to ensure that consumers across the country find the product if not one way, then another. This, of course, drives the second metric Harrison was hinting at: sales per point of distribution, or how many units you are selling at each store. Key to this is the brand and its character, which Bayne describes as “lighthearted, approachable and playful.” A naturopath in Colorado that Harrison and Bayne refer to as a “guru” asserted that many healthy food choices brand in such a way as to appeal to hard-core health food consumers. Because of this, however, they effectively alienate a large percentage of “average” consumers not drawn to a product branded in that fashion. | 15

THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 4

The packages for Veggemo’s three flavours — original, unsweetened and vanilla — are each different but share a common visual theme characterized by happy animals in fantasy-like nature settings. To say they stand out sitting amid rows of competitor’s containers, almost all featuring a white beverage splashing into a glass or cereal bowl, is an understatement. Then there is in-store product demonstration, which begins this month. “We will be doing product tastings at about 1,000 stores so that shoppers can come and try Veggemo before they make a purchasing decision,” says Bayne. Prices for Veggemo, which at first will be offered only in the 946ml size, will differ from region to region and by retailer, but the company’s suggested retail price is $3.49. This is in the middle of the category and at a level that leaves a very

When the company went out to raise capital in the second quarter of this year, its target was $2.5 million. It ended up with $4.3 million.

nice margin both for the retailer and for Global Gardens. And the company’s margin can be expected to climb in later years as economies of scale and other efficiencies take root. Research indicates that a consumer making a health and wellness purchase decision tends to be less price sensitive than an average consumer, and because Veggemo is so innovative it is essentially creating a new segment of non-dairy beverages.

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Indeed, at the recent Grocery Innovations Canada show, Veggemo was chosen as one of the 10 most innovative products, which is quite an accomplishment given that there were some 300 products at the show. While one eye will always be on profit, Harrison understands that execution of the business plan is the most important thing as the company begins to establish the brand. “The gross margin is great and the selling price is great, but it is really about the management team, the category growth and how we have positioned this product,” he explains. “We have a point of differentiation that is researchbased and are selling an everyday consumer good resistant to recession.” Investors seem to share Harrison’s belief. When the company went out to raise capital in the second quarter of this year, its target was $2.5 million. It ended up with $4.3 million. A commitment to running lean and mean should help to make those funds stretch a long way. A team of just five people has brought the company to its current state, with an aversion to owning fixed assets serving to keep costs mostly on the variable side of the ledger. “We are a company that fits the times,” says Harrison. “Who wants to own fixed assets and a factory with lots of people when there are groups whose business it is to do that?” Going onto shelves in the likes of Walmart, SaveOn-Foods, IGA Market Place, Calgary Coop, Metro Quebec, Thrifty Foods and London Drugs there is bound to be at least one retailer close to most people in Canada carrying Veggemo no later than April. Try it. You might like it. And if you do…you can have as much as you want. n

company profile

THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 4

Golden Leaf shows way for public marijuana companies with strategy timed to perfection by Peter Murray


he rush of junior public companies into the marijuana space over the past couple of years has been fast and furious as laws regulating the drug’s use changed in Canada and some US states. Despite the best of intentions, many of these companies have not fared well, though in fairness regulatory hang-ups undermined momentum for those focused on operating in Canada. Golden Leaf Holdings (CSE:GLH) chose a decidedly different path by positioning itself to take advantage of regulatory change in states on the US west coast. It turned out to be a shrewd move, as the company has gone from strength to strength literally since day one.

Golden Leaf was established in May 2014 and in the one and a half years since has succeeded in growing sales to over $1 million per month. Oregon has proven to be the perfect jurisdiction for its operations, with the company having been able to legally sell its refined marijuana oil products to medical marijuana users since inception. Recreational use was legalized in Oregon on October 1 of this year, but the only products that can be purchased through approved dispensaries at the moment are dried leaves and buds. Golden Leaf CEO Don Robinson anticipates that the second half of 2016 will bring permission for dispensaries to sell oils and edibles to recreational users, a move that would expand the market for Golden Leaf’s products by leaps and bounds. | 17


All Golden Leaf products are based on the extraction and refining of oil from marijuana plants. The oil is sold in a variety of delivery systems, including vaporizers and edible products, the latter slated for introduction late in the current quarter or early in 2016. “Our business model is built around the lowest cost production of the highest quality oils, based on competitive advantage, economies of scale and intellectual property,” explains Robinson. “We think we have a different approach to the industry than other companies.”

Robinson explains the company has been able to sell all of the product it makes...

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Well-funded (the company raised a total of USD $17 million in two financing rounds prior to going public on October 14 of this year) and with a strong team, Golden Leaf has proven its ability to move quickly when opportunities present themselves. “We believe we are the biggest extractor in all of North America CEO Don Robinson — we don’t know anyone bigger,” says Robinson in describing the company’s market position. “Our growth has been explosive, from $150,000 in revenue in September 2014 to over $1 million in April 2015. We have added equipment in the last month, and by the end of this year will have doubled our output capacity and be at a monthly run rate of $2.5 million.” Robinson explains that the company has been able to sell all of the product it makes, and that further capacity will be needed once refined products become legal for sale to recreational users. So far, Golden Leaf’s sales have come entirely from the medical use market in Oregon. Right next door to Oregon, of course, is Washington State, where the market is twice the size of Oregon’s. “When you put Washington and Oregon together, you are looking at a combined market of $2.5 billion, and almost 1.4 million consumers,” says Robinson. Keeping up with demand will require significant capital spending. “Capex for us,” explains Robinson, “is all about acquiring more machines. Each machine is close to $300,000 dollars with a two-month payback. We had three machines and added two over the summer, and by the end of the year will have 11. With each extractor you need support and auxiliary equipment because you extract with one machine and refine with another. That is the bulk of our capital spending.”


company profile

THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 4

THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 4

Funds have also been utilized to enable production of marijuana itself. “We are attempting to grow all of the feedstock for our extraction process and the reason we want to be self-reliant on feedstock is we believe it is important to be organic. You also get a better quality of feedstock if you do it yourself as opposed to buying it on the open market, where it is inconsistent.” That claim was borne out in a November 18 press release from the company giving quality control through in-house production part of the credit for extraction yields reaching 14%, up 50% from the year to date average to the highest level ever experienced by the company. From a structural perspective, part of that credit belongs to a Golden Leaf subsidiary in Israel called Green Point Science, which conducts research and development work. “Everything that happens in Israel with cannabis is best practice,” explains Robinson. ”They have been experimenting with cannabis since the early 1970s and we are adopting their best practice in growing, breeding and greenhouse operations. In a perfect world, we would have our own strain optimised for extraction that would grow faster, with less light, less water and more disease resistance, and therefore be organic.” Golden Leaf has grown at breakneck speed so far and with recreational use of oils in Oregon seemingly on the horizon, demand looks like something the company may never have to worry about. Still, it is hardly a bad thing that ongoing regulatory change in other parts of the country, and even nationally, will likely to add to its demand prospects. “Four states and Washington DC are legal medically and recreationally, the states being Alaska, Colorado, Washington, and Oregon,” says Robinson. “In addition, 23 states are in some form of decriminalization.” Then there is the national front. “The Obama administration took a big step earlier this summer and now allows research into medical marijuana,” Robinson explains. “Up to now it has been illegal so claims as to the efficacy of marijuana from a medical standpoint are all anecdotal. Once medical studies start coming in that prove efficacy in a formal way, you will see a sea change.”

Getting back to the principle of positioning for change before it happens, Robinson points to the strength of his team and says that when it comes to management, “we have invested ahead.” It is all about striking the right balance, mixing team members with years of experience in various aspects of the marijuana industry with executives from outside the space who bring branding and other valuable skills. “This is going to be a very big business and we believe it requires the best of big business practice applied to cannabis,” says Robinson. “It is that marriage of talent plus ready access to capital that will enable us to continue taking advantage of opportunities as they come our way.” n

Dabs | 19

THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 4

RIWI online survey platform quietly transforms art of opinion gathering by Jonathan Jones


IWI (CSE:RIW) is being mentioned in the same breath as tech giant Google for the way it is revolutionising survey data and in particular the method by which RIWI’s citizen and market intelligence is collected. Yet rather surprisingly Neil Seeman, Chief Executive and founder of the company, is keen to play down the analogy. The two models are different, though they share one common feature — their surveys are short. RIWI uses patented algorithms to detect when a person has entered an incorrect or non-existent website name into the address bar. It then sends them to a registered domain containing one of its short, easy to complete surveys. 20 |

While Google asks users to take short surveys in their entirety on niche media properties, RIWI’s random survey exposure sites globally can also take long, 150 question surveys, condense them, and dispatch them all over the world. Then it pieces the collected information together to get a completed survey. “We deliberately ensure that the suite of domains in any given country is randomised and representative of the broad Internet user population,” says Seeman. Part of the firm’s business model is that there is no researcher bias, no contact with the participant, and no personal data recorded. This means that new participants constantly get “RIWI’ed” — with approximately 80% of RIWI-sourced survey takers globally not having completed a survey of any kind in the past week.

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And while the firm admits it does not fully know why people choose to complete their surveys — RIWI data show some users answer out of curiosity; others answer to have their voice heard — a growing number of us are seemingly willing to spend a few minutes answering the questions. “There have been several hundred million people exposed to RIWI questions since 2009,” according to Seeman. RIWI conducts these surveys for clients including the World Bank and a group of Fortune 500 companies, and will reach the 100 million surveys landmark by the end of this year. The rich seam of information mined for customers in the private, non-profit and government sectors, allows these organisations to test ideas about what’s hot and what’s not all over the world.

There have been several hundred million people exposed to RIWI questions since 2009.

Put simply, if you want to know if teens in all cities of China are following the same fashion trends as their counterparts in the US, RIWI can tell you. One of its most significant and impressive accomplishments to date was the in-depth voter read-out it collected in the run-up to the recent Turkish election. While in-market pollsters were predicting a hung parliament, RIWI produced evidence that there was increasing support for the ruling Justice and Development Party (AKP) and Republican People’s Party (CHP). This was reflected in the results, burnishing RIWI’s reputation as a quality, reliable data collector.

It has also completed surveys for Procter & Gamble, helping it understand how changing economic conditions affect the affordability of goods in India, the Middle East and Africa and how people are adopting online purchasing in the region. “Global companies understand that they need to make really impor- CEO/Founder Neil Seeman tant decisions based on factual circumstances of the crowds, not just what highly opinionated people are saying on social media sites,” explains Seeman. Until now, the most efficient way to compile this data has been through panels, surveys offering prizes or to reward participants for time filling out a form. But RIWI’s business model means respondents are coming to them randomly rather than for payouts or incentive programmes. From a financial perspective, this means the profit margins are “very high”, according to the chief executive. “Our business model means we do not advertise to recruit survey takers so a number of costs are kept lower, enabling our margins to be greater than our competitors,” says Seeman. “Our upfront costs are extremely minimal.” In a global market where a completed survey costs an estimated average of US$3, keeping costs low is imperative. “However, this is general and in some markets the price is much higher and some it is much lower,” the RIWI CEO says of the costs other businesses incur. The company prefers to offer multi-survey discounts in order to help build long-term relationships, making RIWI “an incredibly costeffective solution” for global multinational companies. Some clients are looking for complete surveys while others only need partial results, given to them in stages. Similarly, pricing can change based on a number of factors, including the amount of data collected and difficulty obtaining it. | 21

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The ‘incidence rate’ is also important in determining price. In simple terms this refers to how easy or difficult it is to find a relevant survey participant. So, for example, if the survey is about smoking in Canada, and 25% of the population smoke, the odds are quite high of finding a relevant participant. But if it requires a more of a “needle in a haystack” approach, prices will be higher. At conservative estimates, 25 million surveys are due to deliver partial data this year, with around 10% of these having being completed in their entirety. 22 |

And next year, Seeman expects the number of surveys delivered to “vastly exceed” the figures quoted above. Additionally, the firm is moving towards a more tracking-based model. This simply means publishing a survey that remains active 24/7, charting responses over a period of time. So it might be available 24 hours a day in 229 countries, allowing the group to constantly analyse and update data. RIWI is streets ahead of the competition, having launched this active model in 2007 and winning peerreviewed validations and patent approval in 2011. It means that even the cashed up major market research firms will have to sprint hard to catch up with this sort of innovation. “We have proven that we can do these global trackers which are very high value and are cost efficient,” he says, “something the company is looking to build on aggressively in the future.” RIWI listed on the Canadian Securities Exchange on August 27, with only 14.8 million shares in issue. Any investors looking to join the company in its future might need to contact RIWI directly. “We did not need the cash,” Seeman explains.  “It was a natural consequence for us and allows us to be able to scale and grow very quickly. Our ambition is enormous and we are in the interest of growing this into an extraordinary company.” Perhaps this is another thing it shares in common with Google. n

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VirtualArmor leveraging experience, top talent as demand for network security takes off by Peter Murray


ew themes in business news have more consistently made high profile headlines over the past few years than breaches of network security at large organizations. Target, eBay, and even such technology leaders as Sony, are among numerous wellknown entities to have suffered at the hands of individuals or teams bent on infiltrating their computer networks and making off with sensitive data. Perhaps the most concerning thing is that we never hear about the vast majority of intrusions, either because the victims do not make them public, or because they are unaware that anything is even taking place.

The one thing we can be sure of is that the world of network security is changing at an everaccelerating pace, with the result being that many organizations don’t even know what they don’t know. If ever there was a situation necessitating expert, third-party support, this is it. That being the case, it is hardly surprising that Colorado-based VirtualArmor International Inc. (CSE:VAI), which made its debut on the Canadian Securities Exchange on November 24, is seeing demand for its skill set rise at a furious pace.

...the world of network security is changing at an everaccelerating pace... | 23

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Established in 2001, VirtualArmor started out by helping clients manage networks that were already in use but needed changes to enhance security. “What we began to realize is that customers were getting the products they purchased up and running, but they really didn’t have clear insight Founder and Chairman into what that network Chris Blisard of technology was doing and how to manage that network of technology to make it the best solution it could be,” explains Chris Blisard, VirtualArmor’s founder and chairman. It didn’t take long for the company to conclude that the best way to help clients was to be involved right from the start so it could head off problems before they got the chance to take root. VirtualArmor will still help new clients with existing systems if that is the support they need. But what it would rather do is help a client design a system, sell them the hardware, set it up for them and then oversee operation of the system so that it not only serves core business needs, but does so in an environment of absolute security from day one. “There is a whole portfolio of technologies out there that when used in concert create this beautiful architecture that really becomes the guardian of your network, and that is how we define what we do — we become the guardian of your network,” says Blisard. Being in the security business, Blisard is discreet when discussing the specifics of work VirtualArmor conducts on behalf of clients. He offers the example of a multinational company, which goes unnamed, that has been a customer for over 10 years to illustrate the depth of his team’s involvement. “We became part of the client’s internal organization,” says Blisard. “We attend their weekly meetings to discuss challenges and changes in network protocols, we deploy and maintain all of their perimeter security, we report 24/7/365 on any anomalies, and we help them to find and design the security protocol for their network. 24 |

“For a company like that, which is managing a tremendous number of environments that are global and that are attack points for someone who might want to get information, we become the guardian for them and become an integral part of their organization and are outsourced as part of that team.” Being “on” all the time is easier when you have personnel in more than one time zone. VirtualArmor relies on its long-established office just outside of London to be there for clients when the team in the US is enjoying some wellearned rest. Blisard explains that far from burdening VirtualArmor with extra expense, the UK office actually increases the company’s profit margin, so complementary is it to the team in the US both in terms of technical capability and cost-efficiency. “The talent we have working for us in the UK is top-tier,” says Blisard. “The gentleman who runs the office, Andrew Douthwaite, has been with us for over eight years and is an important member of our senior management team.” On the topic of margins, VirtualArmor is generating cash flow from operations, before changes in operating assets and liabilities, and has maintained the prudence to grow only so fast as internally generated cash could support. Sales for the nine months ended September 30, 2015 were US$4.9 million, with operating cash flow, before changes in operating assets and liabilities, of 8% of revenues. The comparative period revenues were US$3.6 million. However, with opportunities for new business looking so plentiful that Blisard refers to them as “never-ending,” management concluded that now was the right time to seek capital externally, as doing so would enable faster growth without unduly pressuring the existing business to support it. After many a long discussion as to which path was best, the decision was made to list the company on a stock exchange. “We decided that if we could find the right venue to take the company public, that is the choice we would make,” says Blisard. “Our team feels that security is something that everyone is concerned about today and is going to be concerned about forever. We felt that by going public, because of the importance of what we were doing, and the types of investors out there today who understand technology, we were going to be a really wonderful fit.”

THE CANADIAN SECURITIES EXCHANGE – The Exchange for Entrepreneurs | Quarterly Issue No. 4

It is often a good time for a successful business to turn to the public markets just as it’s expecting significant growth that can drive strong returns. Investors should be happy to know that while putting every bit as much effort into traditional services as it always has, the company recently launched a new service to take advantage of the explosive growth in demand for centralized data storage and management, or what more commonly is referred to these days as the cloud. The name of the service is CloudCastr and it delivers to organizations a custom-built cloud featuring best-in-class security and network management from its first day of operation. “CloudCastr was born out of multiple discussions with customers about how best they could move to the cloud,” says Blisard. “There are many large cloud providers out there that you can load your files onto but a lot of organizations are trying to understand what it actually means when they do that, and what degree of exposure they have.” “CloudCastr allows us to understand what the customer’s requirement is, how much of their infrastructure they are trying to move onto the cloud, and what their expectation is of what it is going to give them. We work together to determine what their security requirements are and then we build them a customized cloud environment.” VirtualArmor integrates its security and managed services platform with the new cloud so that the client has a full solution — from concept all the way through to maintenance once the cloud is in use. “Today, our managed service business is growing rapidly and that’s because you are seeing this massive movement toward outsourcing cyber security,” says Blisard in discussing the various segments that make up total sales. “Our cloud service will become another revenue stream that we are not seeing now, but that we feel will grow dramatically in the upcoming calendar year. And then our hardware sales and professional services are more or less equal contributors.”

With every solution we have, we are extremely in depth...

Also shaping the organization going forward will be new offices. There is expected to be at least one established in Europe, largely to grow sales, but perhaps first one in Canada, with both Vancouver and Toronto in the running owing to their ability to serve as regional hubs. Growth through acquisition is also on the table. “We will look at acquisitions of companies we believe will get us to a place faster than we can organically, whether it is because of their intellectual property, their products, or their revenue,” says Blisard. “We don’t want to define and build a discipline if we believe that in the long run it would be less expensive and we would get there more quickly if we could make an acquisition.” When asked what sets VirtualArmor apart from the competition, Blisard is clear and concise in his answer. “With every solution we have, we are extremely in depth and believe we are considered subject-matter experts in that solution. We have a great track record supporting, managing and maintaining for our customers, some of whom have been with us for over 10 years. We look at giving our customer the ability to see what’s going on in their network and to respond to an attack before it happens. That is what Chief Information Officers are looking for today. They’re looking for companies that are not only responding, but actually pursuing. And that is what we do.” n | 25

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The CSE Quarterly, Quarter 4, 2015  

Featured: PUDO - Delivery solutions for consumers. Reports on: H-Source, Global Gardens, Golden Leaf, RIWI, Virtual Armour.

The CSE Quarterly, Quarter 4, 2015  

Featured: PUDO - Delivery solutions for consumers. Reports on: H-Source, Global Gardens, Golden Leaf, RIWI, Virtual Armour.