CROWD-SOURCED FUNDING OFFER DOCUMENT - ONMARKET
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CROWD-SOURCED FUNDING
OFFER DOCUMENT
16 November 2020
Offer of fully paid ordinary shares in Cannatrek Limited at $0.35
per share to raise a maximum of $2,500,000
This crowd-sourced funding (CSF) offer document relates to the Offer of fully paid ordinary shares in Cannatrek Limited.
This Offer is made under the CSF regime in Part 6D.3A of the Corporations Act 2001 (Corporations Act).
ISSUER
Cannatrek Limited ACN 056 175 369
INTERMEDIARY
On-Market Bookbuilds Pty Ltd AFSL 421 535
The Challenge
The Australian medicinal cannabis market has
experienced rapid growth, but is constrained by
high access cost, imported products and inefficient
supply chains.
The Cannatrek Mission
At Cannatrek we are committed to providing high-
quality, affordable, 100% Australian grown medicinal
cannabis products to Australian patients by working
across the entire product lifecycle.
“From seed to patient”
• Stable Genetics
• Scaled, low-cost cultivation
• Extraction and manufacturing
• High quality product range
• Patient access channels
• Local and global partnerships
CONTENTS CROWD-SOURCED FUNDING
OFFER DOCUMENT
1. RISK WARNING 1 2.12 Capital structure 33
2. INFORMATION ABOUT THE COMPANY 2 2.13 Historical Financials 35
2.1 Letter from the CEO 3 2.14 Risks facing the business 37
2.2 Investment Highlights 4 3. INFORMATION ABOUT THE OFFER 38
2.3 Testimonials 5 3.1 Terms of the Offer 39
2.4 Company details 6 3.2 Rights associated with the shares 40
2.5 Introduction 7 4. INFORMATION ABOUT INVESTOR RIGHTS 41
2.6 Investor rewards 8 4.1 Cooling-off rights 42
2.7 The Medicinal Cannabis Market 9 4.2 Disposal of shares 42
2.8 Key differentiating factors 12 4.3 Communicating with you as an investor 42
2.9 Key assets 21 4.4 Public company corporate governance 42
2.10 Funding and valuation 22 4.5 Communication facility for the Offer 43
2.11 Directors, Management and Advisors 24 GLOSSARY 44
1. RISK WARNING
Crowd-sourced funding is risky. Issuers using this facility include new or rapidly growing
ventures. Investment in these types of ventures is speculative and carries high risks. You may
lose your entire investment, and you should be in a position to bear this risk without undue
hardship. Even if the company is successful, the value of your investment and any return on the
investment could be reduced if the company issues more shares. Your investment is unlikely to
be liquid. This means you are unlikely to be able to sell your shares quickly or at all if you need
the money or decide that this investment is not right for you. Even though you have remedies
for misleading statements in the offer document or misconduct by the company, you may have
difficulty recovering your money. There are rules for handling your money. However, if your
money is handled inappropriately or the person operating the platform on which this offer is
published becomes insolvent, you may have difficulty recovering your money. Ask questions,
read all information given carefully, and seek independent financial advice before committing
yourself to any investment.
1
2. INFORMATION ABOUT
THE COMPANY
2
Section 2: INFORMATION ABOUT THE COMPANY
2.1 Letter from the CEO
Dear Investor,
On behalf of the Cannatrek Board, it is my pleasure to invite you to read this document and to offer As a first-mover, Cannatrek’s “seed to patient” business model has led to the production of our
you the opportunity to become a shareholder in Cannatrek Limited. first Australian grown pharmaceutical formulations ready for local distribution and export. This
is an exciting achievement for Cannatrek growing from seed all the way through to providing
Cannatrek’s mission is to be a leading vertically-integrated medicinal cannabis player in the patients with wholly Australian made products. Our first export agreements with leading players
Australian market by serving customers and creating shareholder value “from seed to patient”. in international markets also represent an important step for Cannatrek and a precursor to further
We aim to achieve this by providing high-quality, affordable, 100% Australian grown medicinal significant export orders.
cannabis to Australian patients and to high-margin international markets.
We welcome the opportunity to invite you to join our journey on this exciting new phase of our
We are fortunate to be one of the early leaders in the Australian medical cannabis industry, having development as we scale up and deploy a range of exciting new digital healthcare assets across
the full suite of licences and permits, allowing us to research, cultivate, manufacture, sell, import the sector, and as we rapidly increase market share across all revenue verticals.
and export medicinal cannabis products. Our operational and fully permitted 3,200m2 cultivation
facility in Queensland is one of the largest in Australia, with approved plans for a significantly Before deciding whether to invest, please understand the risks facing the business, detailed in
larger 160,000m2 facility in Victoria. section 2.14
We have an established sales distribution channels, having sold over 20,000 units to over 3,000 On behalf of the Board, I look forward to welcoming you as a Shareholder and to be part of the
patients across Australia. This will be enhanced with our soon to be launched digital healthcare Cannatrek family and journey.
platform that will deliver streamlined access to a potential market of over 1 million or more eligible
Australian patients. Sincerely
Tommy Huppert,
CEO, Cannatrek Limited
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2.2 Investment Highlights
Market leading position
• One of the first companies in Australia to be issued with, and commercialise the full suite of medicinal cannabis licences
• Clearly defined “direct-to-patient” strategy to focus on cultivation of high-grade products, avoiding commoditisation of medicinal cannabis production
From seed to • Fully integrated medicinal cannabis business model across all aspects of the value chain – “From seed to patient”
patient model • Focused on production of high-grade medicinal cannabis products, at the lowest production cost, for export to high-margin countries and to local markets
• One of Australia’s largest operational and fully permitted 3,200m2 research and production greenhouse facilities located in Queensland with TGA approved product
release to the local market
Significant production • Annual production capacity of up to 5 tonnes, with potential annual revenue in excess of $20 million
capacity • 160,000m2 high-tech glasshouse facility under planned phased development near Shepparton, Victoria, has received Major Project Status (MPS) from Federal
Government
• This facility will produce an expected 160-200 tonne p.a. with potential annual revenue of $500 million or more
Established patient access
• With established patient access channels, as at 31 October 2020, Cannatrek had sold over 20,000 units to over 3,000 patients via almost 150 prescribing doctors and
over 350 pharmacies.
channels
• Digital healthcare hub via www.cannatrek.com will provide access and information to doctors, pharmacists and patients.
Offtake agreements in place
• Large-scale domestic and international offtake agreements in place with reputable parties underpinning development plans
• Local manufacturing agreements in place with Australian licenced operators for the extraction of oil from the raw biomass harvested
• Revenue of $1.4 million in FY20 and $2.3 million over 12 months (LTM) to 31 October 2020 – significant uplift expected with full production at Queensland facility,
Strong revenue position and growth in patient access
• Strong focus on minimising operating costs and expenditure, whilst maximising digital technology integration during rapid project deployment
Strong management and • Guided by an experienced board and management team with expertise across all aspects of the medicinal cannabis value chain
board • Successfully raised over $17 million to date fully funding current operations
Cannatrek prides itself on providing ongoing value to its current and future shareholders. As part of the planned equity crowdfunding offer, Cannatrek will look to include a range of investor benefits,
including discounted product and services. See page 8 for more details.
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2.3 Testimonials
“Cannatrek truly has the patient’s “The current depression Australia “Just as an update on my
health as a foremost priority. is going through, associated mother... she had a follow up scan
Medicines are affordable and with COVID-19, should lead to a a few days ago and her tumours
good quality.” major push for development of are shrinking at an unprecedented
new manufacturing of (medicinal rate thanks to your oils.
cannabis) products for global
…This is after only 2 months
export. Yours is just such a product.”
of chemo. She has been using
a regimen consisting of all the
Cannatrek oils and as well as
making her free from symptoms I
feel they have had significant anti-
tumour effects.”
DR JOHN TEH PROF DAVID PENINGINTON AC CANNATREK PATIENT
PlantMed – Cannatrek clinic partner June 2020
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Section 2: INFORMATION ABOUT THE COMPANY OFFER DOCUMENT
2.4 Company details
This offer of shares is made by Cannatrek Limited ACN 056 175 369 (the Company). The Company was incorporated in Victoria on 4 June 1992 and
converted to a public company on 21 November 2017.
Company details
Company Name Cannatrek Limited ACN 056 175 369
Offer Type Crowd-sourced Funding
Offer Date 16 November 2020 - 15 December 2020
Fully paid ordinary shares issued at $0.35 per share to raise a maximum of
Offer Details
$2,500,000
Mertons Corporate Services Pty Ltd
Registered office and principal place of business
Level 7, 330 Collins Street, MELBOURNE VIC 3000
Tommy Huppert – Founder, Executive Director and CEO
Phillip Ross – Non-executive Chairman/Director
Directors
Scott Hunter - Non-executive Director
Dr Susan Pond AM – Non-executive Director
On-Market Bookbuilds Pty Ltd ABN 31 140 632 024
Intermediary
AFSL 421 535, trading as OnMarket (‘OnMarket’, or ‘the intermediary’)
Registry Boardroom Pty Ltd
Company website www.cannatrek.com
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2.5 Introduction
2.5.1. Vision
Cannatrek’s aim is to be a leading vertically integrated medicinal cannabis player in the Australian
market, serving customers and creating shareholder value “from seed to patient”.
2.5.2. Overview With economies of scale, Cannatrek’s aim is to be the lowest-cost producer of high-quality
medicinal cannabis that will be available to consumers in Australia and overseas, via a vertically
Cannatrek Limited is an Australian-based medicinal cannabis company, developing production, integrated “seed to patient” business model.
manufacturing and distribution assets across Australia. The Company is uniquely placed in the
high-growth global medicinal cannabis industry, with a strong asset base, granted licenses and Cannatrek’s digital healthcare platform is being developed to manage and deliver access to
permits, revenues, and an outstanding team. Cannatrek was one of the first companies in Australia a potential market of up to 1 million Australian patients, over 100,000 doctors and over 5,000
to be issued the full suite of medicinal cannabis licences. pharmacies. The continued development of Cannatrek’s website and new digital platform will
streamline the entire doctor/patient journey via telehealth, compassionate access support services
Growing and production have commenced at its fully permitted 3,200m2 facility in Queensland. and an e-commerce platform.
Its annual production capability of 3 to 5 tonnes – represents potential revenues of $20 million or
more. An additional 160,000m2 glasshouse facility near the regional town of Shepparton, Victoria is As at 31 October 2020, the company has prescribed to over 3,000 patients and sold over 20,000
“shovel-ready” to commence phased construction. Once built, this will increase annual production units. This has created access to almost 150 doctors and over 350 pharmacists.
capability to over 160 tonnes (estimated value $500 million or more). This is a fully licenced facility
With revenues of $1.4 million in FY2020 increasing to $2.3 million over the 12 months to 31 October
and already has full Development Approval (DA).
2020 from the sale of imported products, Cannatrek is now well placed to continue this growth with
Cannatrek’s vision has always focussed on complete vertical integration, allowing the company full production at the Queensland facility, signed distribution and supply agreements with leading
to control the entire product journey “from seed to patient”. This business model enables: domestic and international medicinal cannabis players, and its soon to be launched, market
leading digital patient access platform.
• superior quality control;
Cannatrek has successfully raised over $17 million to date, via private placements from High
• greater market insight into prospective demand for new product development;
Net Worth (HNW) and sophisticated investors, fully funding its current operations and validating
• more stable supply chains and predictable inventory; the business model. The company plans to list via an IPO on ASX in the next 24 months, market
• projected lower production and distribution cost; and conditions permitting.
• more stable enterprise – not relying on external partners for market success.
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2.6 Investor rewards
By investing in Cannatrek, not only are you supporting our scaled growth as the global cannabis industry expands, but also
participating in the immediate health benefits of medicinal cannabis via our Shareholder Rewards Program.
At Cannatrek, we understand there are economic bottlenecks in the current healthcare system, such as limited subsidisation of
medicinal cannabis products via the PBS as well as limited health insurance rebates on products and services. We believe this will
change one day, but today we need to help our patients have affordable access.
One of the our important values, that also explains the DNA of Team Cannatrek, is “giving back”. To support this, we want to
provide real benefits to patients who sign up as shareholders. It seems only natural that our continued success, which is propelled
by patient growth, should enable shared benefits to our most important partners – the patients whom we wish to provide
continued care (and product/service discounts) during their healthcare journey.
To achieve this, we are offering product and service benefits to shareholders who are patients or have a loved one who is eligible.
With a minimum investment of $2,000 we are offering the following benefits:
• FREE 1x Cannatrek Access • 10% off all Cannatrek branded • FREE 1x UrbanLeaf Vape (value
Consult (Market value $90-$180)* products purchased via $149) – delivered with an approved
Cannatrek Plus** Cannatrek flower script
* The Cannatrek Access Consult is transferable to family or friends and subject to TGA approval/eligibility
** Valid until 30 June 2022. Discount is not applicable to already discounted products, third party products and multiple discounts not available
Cannatrek is building a social enterprise based on sound business fundamentals that provides excellent value to stakeholders
and its growing customer base of Australian patients.
We thank all our supporters and shareholders for sharing our story and successes with family, friends and communities across
Australia, with an aim to support the important initiative of putting our patients first.
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2.7 The Medicinal Cannabis Market
The use of cannabis for medicinal purposes is believed to stretch back over thousands of years,
and it was widely used as a medicine during the 19th and early 20th centuries. Since the early
20th century, cultivation, manufacture, sale and possession of cannabis has been increasingly
controlled and restricted both internationally and nationally, and the sale and possession of
cannabis has been illegal since the mid-20th century in most jurisdictions.
However, since the 1990s, the use of cannabis for medicinal purposes has become increasingly
accepted. A growing number of countries have authorised medical use of cannabis, and now
provide legal mechanisms by which patients may access cannabis products for approved medical
indications.
Medicinal cannabis can contain a variety of cannabis compounds known as Cannabinoids.
Cannabinoids mimic chemicals produced in our brain, that research shows may regulate our
immune systems. Cannabis medicine represents a new frontier of scientific research that may
improve the lives of those suffering chronic illness. When used as a whole plant, or in extract form,
cannabinoids may be used to treat various forms of human illness. Cannabinoids work particularly
well in auto-immune diseases such as diabetes, fibromyalgia, rheumatoid arthritis, Parkinson’s,
multiple sclerosis, Alzheimer’s and dementia.
The psychoactive drug in cannabis, known as Tetrahydrocannabinol or THC, may be particularly
useful in treating neurological disorders, psychiatric disorders, epilepsy and chronic pain. A non-
psychoactive drug found in certain strains of cannabis, known as Cannabidiol or CBD, works
exclusively on the immune system, and may deliver great benefits in the prevention and treatment
of many chronic diseases.
Further information on medicinal cannabis treating these conditions can be obtained from the TGA
website (https://www.tga.gov.au/medicinal-cannabis-guidancedocuments).
Source: https://papaandbarkley.zendesk.com/hc/en-us/articles/
360011546711-The-Human-Endocannabinoid-System
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2.7.1. Global Market Opportunity This growth has largely been driven by growth in Canada and several states in the USA where
recreational consumption has been legalised, and other countries like Australia, UK and Germany
The global legal cannabis market has grown significantly in recent years following legalisation for where it has been legalised it for medicinal use.
both recreational and medicinal use. From a predominately “illicit market” product in 2010, the
global legal cannabis market is forecast to be worth US$103.9 billion by 2024, with the international Canada is the most established market in the world for medicinal cannabis with over 10 years
medicinal cannabis market worth a potential US$62.7 billion by the same year.1 of legalised use. During this time the Canadian patient count has grown rapidly to achieve over
300,000 registered medicinal cannabis patients by mid-2020.2
FORECAST GLOBAL LEGAL CANNABIS MARKET SIZE, 2024 (US$)
Recreational use in markets such as Canada is placing pressure on supply of medicinal cannabis.
Consequently, there is a need for high-quality products with known components, cultivated at
large scale for consistent, reliable supply in many markets.
2.7.2. Australian Market Opportunity
EUROPE
NORTH AMERICA Australia is considered an ideal supply source for medicinal cannabis as it is well regulated and has
AND CANADA 39.1B ASIA
consistent growing conditions. The Government recognises global supplies of medicinal cannabis
37.9B 12.5B are relatively scarce and expensive and that opportunities for import and export of medicinal
cannabis products exist.
AFRICA
LATAM AND Legislation came into effect on 30 October 2016 to allow legal cultivation, production and
THE CARINNEAN
2.6B OCEANIA
manufacturing of medicinal cannabis products in Australia regulated by the Office of Drug Control
9.1B 2.7B (ODC) and the Therapeutic Goods Administration (TGA). State and Territory Governments legislate
the manufacture, wholesale, supply and patient access to medicinal cannabis.
TOTAL
103.9B
Source: https://prohibitionpartners.com/2019/11/07/key-insights-from-the-global-cannabis-report/
1 https://prohibitionpartners.com/2019/11/07/key-insights-from-the-global-cannabis-report/
2 https://www.canada.ca/en/health-canada/services/drugs-medication/cannabis/research-data/medical-purpose.html
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The most commonly cited metric for the growth in the Australian medicinal cannabis market is the number of approvals under the AUSTRALIAN MEDICINAL CANNABIS MARKET - REVENUE
Special Access Scheme (SAS) where a patient can be prescribed medication by a medical practitioner, and then approved by the
TGA (SAS-B). From a standing start in 2018, there have now been in excess of 73,500 SAS-B approval, up from up from 20,500
in October 2019. The number of active patients has grown from 10,000 at the end of 2019 to an expected 30,000 at the end of 2020,
representing a 300% growth.3 150M+
TOTAL TGA SAS-B APPROVALS
95M+
30M+
Source: Company generated from TGA website – https://www.tga.gov.au/medicinal-cannabis-role-tga
2019 2020 2021
This growth in SAS-B approval numbers is reflected in strong market revenue growth that is forecast by Freshleaf Analytics (Estimate) (Estimate)
to increase from $30m in sales in 2019 to $150m+ in 2021 – a 5x increase.4
Source: Freshleaf Analytics
3 Freshleaf Analytics – Australian Medicinal Cannabis Market – Patient, Product and Pricing Analysis Q3 2020 - September 2020
4 Freshleaf Analytics – Australian Medicinal Cannabis Market – Patient, Product and Pricing Analysis Q3 2020 - September 2020
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2.8 Key differentiating factors 2.8.1. Track record of success
As one of the first companies in Australia to be issued with, and commercialise, the full suite of
medicinal cannabis licences, Cannatrek has established and maintained its leadership position
There is a growing number of players in the Australian and international medicinal cannabis
in the Australian market. This leadership position is evident with the company developing one of
market. Despite the increasing competitive dynamics that exist in the industry, Cannatrek believes
the largest fully permitted and operational cultivation facilities in the country, having prescribed
it is well positioned to be one of the dominant players in the market.
over 3,000 patients and sold over 20,000 units as at 31 October 2020, and creating one of the most
This will be achieved through the following differentiating factors: recognisable brand names in the market.
• Track record of success in sales growth of imported product over last two (2) years This growth in product sales has been reflected in strong revenue growth for Cannatrek since mid-
2019, with quarterly revenues increasing from $68,000 in the quarter ending 30 September 2019,
• Vertically integrated “seed to patient” model
to $811,000 in sales for the quarter ending 30 September 2020. This represents an increase of
• Aiming to have low cost production of medicinal cannabis through owned local facilities
almost 1,100% year on year. Revenue for the four months to 31 October 2020, has been $1.1 million,
• Diverse, high quality product range representing an annualised revenue run rate of over $3.4 million per annum.
• Comprehensive doctor and patient access platform
QUARTERLY SALES REVENUE
• Partnerships with leading domestic and international players across the value chain
• Strong links to industry, research and academic partners facilitating market leading clinical
trial and studies
• Sound revenue model with significant growth potential
As patient numbers continue to increase, as well as product sales, in conjunction with the full
commercialisation of the Queensland cultivation facility, Cannatrek’s revenue is expected to
continue to grow strongly.
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Key Achievements and Timeline
2015 October 2016 May 2017 July 2018
Australia’s 2nd Cannabis March 2018 Full suite of MC licences issued
Cannatrek Limited 2016 Narcotic Drugs
Research licence Closed Seed Round of $5.0M to Cannatrek in an historic
founded by Tommy Huppert Amendment Act is passed
issued to Cannatrek Australian first
August 2019 September 2019 October 2019 January 2020
October 2018 Secured Distribution Agreement
Received Development Received permit to commence Received permits to cultivate
Secured $6.4 million from with RYAH Medtech, world’s first
Approval (DA) from the research operations from facility commercial harvests
Canadian Licensed Producer “smart vape”
Greater Shepparton City Council in Brisbane, Queensland at the Brisbane facility
for herbal cannabis
February 2020 March 2020 April 2020 May 2020 June 2020
Secured Distribution agreement Secured exclusive supply Secured supply
Received Major Project Status Secured supply agreement
with iX Biopharma for world’s of herbal cannabis with Astral and manufacturing agreement
(MPS) from Federal Government with leading German distributer
first “wafer” cannabis product Health (UK) with THC Global
June 2020 August 2020 October 2020 October 2020 November 2020
Received TGO 93 Achieved sales of over 20,000 Completed $5.7 million
First commercial crop produced Released first products
on first harvest from facility units to over 3,000 patients via wholesale raise
at Queensland cultivation facility from local production
in Brisbane, Queensland 150 prescribing doctors at $0.30 per share
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2.8.2. Vertical integrated “seed to patient” business model
Cannatrek’s long-term business model involves a vertically integrated solution through establishing and developing facilities, resources and collaborative arrangements for the purpose of enabling the
Company to build proficiencies in plant genetics and breeding, cultivation, extraction, manufacturing and supply. This vertically integrated solution has been termed “seed to patient”.
Genetics Scaled low cost cultivation Extraction Wholesale Exchange Brand
GENETICS CULTIVATION MANUFACTURING COMPLIANCE BRAND & MARKETPLACE
• World class plant genetics • Operational 3,200m2 grow • Manufacturing agreements • “Seed to patient” secure IT • B2B model through retail
and tissue culture lab facility in Queensland with Australia downstream platform pharmacy groups
partners
• Able to produce 100,000 • 160,000m2 glasshouse • Source genetics to • Digital healthcare platform
plant clones per year shovel ready in Victoria. • Derivatives and patented consumer traceability for entire doctor/patient
formulations in future journey
• R&D centre for proprietary • Target lowest cost • Pesticide free production
strains production
• GACP accredited • Cannatrek to be a trusted
brand in cannabis
• Crop and field diversity
• GMP ready for 100% ecosystem
management vertical integration
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2.8.3. Lowest cost production / high quality product
Cannatrek is focussed on the domestic cultivation of the highest quality medicinal cannabis crops.
The intention is to focus on higher value strains with high THC, high CBD and variations of the two
where we have a clear differentiation in terms of quality, consistency and scale.
The first stage of this has been achieved though the development of the cultivation and research
facility in South-East Queensland. This facility is fully-permitted and operational and is one of the
largest of its types in Australia. It has an annual production capacity of up to 5 tonnes per annum,
with potential revenue in excess of $20 million per annum. The first full scale harvest, completed
in mid-2020, has just received TGO 93 (government approval for product release). The second and
third commercial harvests are currently being completed.
The company has now achieved Good Agricultural Collection Practices (GACP) and is well
progressed to achieving Good Manufacturing Practice (GMP) certification which will allow export to Cannatrek intends to establish a second commercial production site, which will be based on
overseas markets, in particular Europe. 178 acres of land purchased near Shepparton (Shepparton Project) in July 2018. Local council
Development Approval (DA) has been received to commence construction of the facility on a staged
basis (zoned for intensive agriculture, no special permissions are required outside of the normal DA
process for any horticulture development on the property).
The facility is expected to ultimately include 160,000m2 of growing area under a giant high-tech
glasshouse. The Shepparton Project will provide Cannatrek with perpetual harvest capabilities.
When fully completed, annual production is expected to be 160 to 200 tonnes, and potential
revenue in excess of $500 million per annum (based on predicted gate price of $3 per gram), which
would make Cannatrek one of the world’s largest producers of medicinal cannabis.
In January 2020 Cannatrek received Major Project Status (MPS) from the Federal Government in
relation to the facility in Shepparton. This status will prioritise any pending and future medicinal
cannabis licenses/permits.
It is expected that construction of phase 1 of the Shepparton facility will begin in 2021, subject to
funding, and will be supported by a range of secured domestic and international offtake agreements.
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2.8.4. Cannatrek products
Cannatrek holds one the largest and most diverse inventories of medicinal cannabis products in As our cultivation operations come online, we will start to remove our reliance on imported
Australia today. The products include dried herbal cannabis, oil tinctures, wafers, vape cartridges product. To support the growth of locally cultivation, Cannatrek has secured a number of
and other full-spectrum raw products required by compound pharmacies to prepare individual downstream partners, who are able to extract biomass into finished products for Cannatrek’s novel
medical formulations. drug formulations. These supply pathways provide Cannatrek with flexibility of manufacturing
partners and world class GMP (Good Manufacturing Process) classification for product release
As the domestic market continues to mature with exponential growth, being one of the fastest in and export. These local extraction and manufacturing agreements are with leading players in the
the world today, Cannatrek has been fortunate to have secured excellent import supply partners medicinal cannabis market, including THC Global Ltd, iX Biopharma Ltd and others, who are listed
during the “construction” phase of the Australian industry. These supply partners include on Cannatrek’s licences.
Clever Leaves (Columbia), Organigram (Canada) and others. This has allowed the Company to
commercialise its import and distribution licences as a first-mover, providing patients with over
20,000 products sold. It has also enabled the Company to build an excellent network of over 150
prescribing doctors and disposed through a network across national pharmacy chains.
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2.8.5. Patient access platform To further enhance its leadership position, Cannatrek has incorporated a wholly-owned subsidiary,
Cannatrek Digital Pty Ltd which will shortly launch a number of industry building healthcare assets
A key success factor for Cannatrek is to have successful digital platforms to access patients, doctors including:
and pharmacists. Although there have been over to 72,000 approvals via the Special Access Scheme
to purchase medicinal cannabis products, Cannatrek believe this is the tip of the iceberg of the • CannatrekACCESS – an online booking service, providing users with easy access to doctors
specialising in medicinal cannabis and an online referral service for telehealth consults and
total market potential.
e-scripts
As one the leading providers of medicinal cannabis product in the Australian market, as at 31 • CannarekPLUS – a fully integrated IT platform that manages and processes approvals/e-
October 2020, Cannatrek had sold over 20,000 units and prescribed over 3,000 patients. This has scripts/payments/delivery and secures health data in one place securely
created access to approximately 150 prescribing doctors and over 350 pharmacists. • CannatrekONE – a patient monitoring app that provides valuable data for patients and
doctors to collaborate, to record and evaluate the best healthcare journey
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A key focus of the platform is to provide doctors and patients with reliable “real world data” and
information. This will help doctors determine what product is best prescribed to a patient based
on their condition, indicators, sex, age, as well as provide information on what patients can expect
to see in terms of effects, improvement and any possible side-effects.
Patients are able to research the potential of medicinal cannabis, find information specific to their
condition and indicators and have transparency on what their treatment is going to cost. They will
also be able to find doctors who can advise them about the potential of medicinal cannabis as a
Doctors treatment. Patients will also have an easy way to provide a record of their experience back to their
prescriber for follow up and monitoring purposes.
The Cannatrek Plus platform is in final stages of development and will be rolled out nationally
over the coming months to develop trusted support networks for the supply of quality medicinal
cannabis products for GPs and participating pharmacists.
Patients
Pharmacists
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2.8.6. Partnerships and agreements
Cannatrek has a clear intention to achieve its success through collaboration with domestic and international players that can provide expertise and support across the medicinal cannabis value chain.
These agreements include research and development, technology and hardware, product supply and offtake supply agreements.
Cannatrek is also one of a few global companies approved by governments and international treaties that can export product globally and execute offtake supply trades. A summary of some of these key
agreements is detailed below.
LOCAL
• Local distribution agreement with iX Biopharma for world’s first wafer cannabis product
• Local contract grower agreements in place that support a doubling of production capacity to over 8 tonne p/a in 2021.
SUPPLY
• Distribution agreement with RYAH MedTech for the world’s first “smart vape” for herbal cannabis
IMPORT • Import Supply Agreements with leading international cannabis cultivators including Organigram (TSX:OGI), Clever Leaves
(Columbia) and others
LOCAL • Local supply agreements with a range of domestic medicinal cannabis clinics and distribution businesses
including ASX listed entities
SALES • Export supply agreement (exclusive) of herbal cannabis with leading UK distributor, Astral Health (LYPHE Group)
IMPORT • Export supply agreement with a leading German medicinal cannabis distributor
• Numerous Letters of Intent (LOIs) and Memorandums of Undestanding (MOUs) with global distributors which will be
converted to formal agreements in the near-future
DOWNSTREAM
PARTNERS
LOCAL • Local supply and manufacturing agreement with THC Global Group and iX Biopharma
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2.8.7. Industry relationships, clinical studies and trials 2.8.8. Revenue model
As an active participant in the rapidly growing Australian medicinal cannabis industry, Cannatrek Cannatrek’s revenue model is focussed on achieving profitable vertical integration and to lower
has developed a range of industry relationships and partnerships with key players in the sector. the cost of medical cannabis to the end customer to make it more affordable and accessable. The
These partnerships have evolved into a number of planned clinical studies and trials that are being Company believes that this can be achieved by removing the reliance on more expensive imported
prepared with some of Australia’s leading hospitals, universities and research institutes. products in favour of our locally produced product.
These trials are focussing on mental health issues such as behavioural disorders in children,
schizophrenia and post-traumatic stress disorder (PTSD) which are becoming more prevalent The Company’s operational cultivation facility in Queensland, is already achieving this goal with its
in today’s society. second and third commercial harvests underway, with expected annual revenues in excess of $20
million.
Clinical studies and trials that Cannatrek is planning to undertake include a clinical trial with NICM
Health Research Institute to evaluate clinical analysis of therapeutic effects of THC and CBD on Cannatrek has a number of revenue channels being established that will initially focus on
anxiety and PTSD. expanding its high-margin B2C and B2B streams and by growing export offtake agreements, that
will support our growth and expansion. Further, Cannatrek Digital, as it builds market share will be
The Company is also in discussions with a range of local and international institutions and research able to commercialise its footprint via novel revenue streams such as telehealth revenue, medical
bodies to undertake further clinical trial and studies, including an MOU with Latrobe University for analytic revenue from the mass “real world data” being collected under its unique digital platform.
agronomic research into plant growth and genetic excellence to support drug development.
Cannatrek is also an active participant in a number of industry associations and regional groups.
These include membership with The Australian Medicinal Cannabis Association (AMCA) and
the Committee for Greater Shepparton.
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A summary of the key revenue streams is detailed below.
The Australian market is on track for a fivefold increase since
Revenue Streams 2019, to $150M per annum in 2021 and Cannatrek’s goal is a
B2C – Direct to Sale of products directly to patients via the Cannatrek Plus patient access minimum 20% market share.
Customers platform
B2B – Direct to Sale of product directly to pharmacists who disperse the product
Pharmacists to customers
2.9 Key assets
Sale to licenced operators who may white label the product to on-sell to
B2W – Local and patients. Wholesale products are generally sold at a discount to retail
export wholesale prices
customers 2.9.1. Physical property
With export partners, Offtake Supply Agreements are generally set with
agreed pricing mechanism per mg active content The Company owns a number of key assets and properties that contribute to the ongoing business.
These include:
The digital health eco-system via the Cannatrek Plus platform facilitates
Digital Healthcare the sale of products direct to patients, and provides direct contact with
Queensland cultivation facility
doctors, pharmacists and patients
• Leasehold improvements at Queensland facility (10-year registered lease – commenced
Over the counter (OTC) sales of medical accessories such as vaporizers 29/4/19, expiry 28/4/24 with 1 x 5-year option)
OTC – Urbanleaf
under the UrbanLeaf brand via www.urbanleaf.com.au
• Greenhouse construction (four (4) greenhouses – 3,200m2), concrete, plumbing and electrical
works
Cannatrek’s primary goal is to achieve “seed to profit” as soon as possible. Achieving this target • Plant and equipment at Queensland facility – including laboratory equipment, lighting,
would make Cannatrek one of the few medicinal cannabis companies in the world to achieve benches, irrigation system, security system, etc
standalone profitability. With an exceptional growth phase behind the company, significant
inventory of medicinal cannabis products available today and local production in perpetual Shepparton facility
harvest phase, Cannatrek is well positioned to reach its aim of profitability in the short term and
possibly in the current financial year, FY2021. • 178 hectares of land 100% owned near Shepparton - purchased June 2018
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Section 2: INFORMATION ABOUT THE COMPANY OFFER DOCUMENT
2.9.2. Licences 2.10 Funding and valuation
Cannatrek is one of the few companies in Australia with the full suite of medicinal cannabis licences
and permits across the value chain, including cultivation, research, manufacturing, sale and supply,
Cannatrek has a strong track record of successful funding rounds and for creating shareholder
import and export. The combination of these licences allows Cannatrek to effectively execute its
value. Having raised over $17 million in three previous funding rounds from a range of
“seed to patient” vertically integrated busines model.
sophisticated and wholesale investors, the Company has shown an ability to generate strong
These licences include: investor interest and to effectively and efficiently deploy the capital that has been raised.
• Cultivation – Medicinal Cannabis Licence and Medicinal Cannabis Permit issued by the This Crowd-Sourced Funding offer is being undertaken on a pre-money valuation of $64 million,
Department of Health and a price of $0.35 per share. If the full $2,500,000 is raised, this would give the Company a post-
money valuation of $66 million.
• Research – Cannabis Research Licences and Permits issued by the Department of Health
• Manufacture – Manufacturer Licence issued by the Department of Health This valuation is based on a $0.05 per share premium to the last successful raise of $5.7 million
• Supply – Licences to sell or supply wholesale medicinal cannabis issued by Victorian and and reflects the significant progress the Company has made over the last 12 months. This progress
Queensland State Governments includes value inflection milestones, including, but not limited to, strong revenue growth from
• Import – Licence to import seeds and inventory issued by the Department of Agriculture and the sale of medical cannabis products, the significant near-term revenue being generated from
Department of Health commercial harvests at the Queensland cultivation facility, the traction the Cannatrek brand has
• Export – Licences to export inventory issued by the Department of Health made in the consumer and patient market, and the international and domestic offtake supply
agreements that have been signed.
2.9.3. Intellectual Property
The current Offer is being made in conjunction with a $10-15 million debt and/or convertible notes
Cannatrek has a range of registered and pending trademark applications associated with its offer that is being made to wholesale investors and professional debt funders, with the funds raised
products and business lines. to be applied toward the development of phase 1 of the Shepparton Project cultivation facility.
Future capital requirements will be focussed on the development of phase 2 of the Shepparton
project, continued roll-out of the digital health platform and marketing. It is expected that this
total funding requirement of $30-50 million will be raised in 2021-2022 from a combination of
funding sources including internal cash flows generated from cultivation and sales activities,
equity private placements, the issuance of additional debt funding and government grants.
The company will also consider an Initial Public Offering (IPO) on ASX in the next 24 months,
market conditions permitting.
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Section 2: INFORMATION ABOUT THE COMPANY OFFER DOCUMENT
COMPLETED FUNDING CURRENT FUNDING FUTURE FUNDING
SHARE PRICE Convertible
$0.10 $0.20 $0.30 note/ and or $0.35 TBD
debt facility
September 2019 to October 2020 to November 2020 to
DATE March 2018 October 2018 2021-2022
October 2020 December 2020 December 2020
Equity/IPO,
debt funding,
ROUND Seed Round A Round Wholesale Round Debt Round Equity Crowdfunding
grants (subject to
market conditions)
RAISE SIZE $5.0 million $6.4 million $5.7 million $10-15 million Up to $2.5 million $30-$50 million
PRE-MONEY
$8 million $26 million $49 million NA $64 million TBD
VALUATION
POST MONEY $66 million
$13 million $32 million $54 million NA TBD
VALUATION (at full subscription)
Phase 2 Shepparton
Sales/marketing Patient Acquisition
Queensland facility CAPEX for phase 1 of Digital health platform
USE OF FUNDS Seed Funding
& working capital
Inventory IT platform
Shepparton Project
Digital Health Platform
Drug development
Working capital Working capital
Working Capital
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Section 2: INFORMATION ABOUT THE COMPANY OFFER DOCUMENT
2.11 Directors, Management and Advisors
2.11.1. Organisational structure
Cannatrek currently has 15 full time employees, 2 full-time contractors and 3 non-executive directors. There are also around 16 casual employees that assist in harvesting as required at the Queensland
Facility. In addition to the employees, the Company also has a panel of highly experienced scientific and medical advisors.
NON-EXECUTIVE FOUNDER
BOARD NON-EXECUTIVE DIRECTOR NON-EXECUTIVE DIRECTOR COMPANY SECRETARY
CHAIRMAN/DIRECTOR & EXECUTIVE DIRECTOR
OF DIRECTORS Scott Hunter Dr Susan Pond AM Mark Licciardo
Phillip Ross Tommy Huppert
CFO FOUNDER EXEC ASSISTANT /
EXECUTIVE TEAM & CORPORATE ADVISOR & EXECUTIVE DIRECTOR OFFICE MANAGER
Brett Schwarz Tommy Huppert Analyn Sanchez
HEAD OF GLOBAL HEAD OF RESEARCH HEAD OF QUALITY
HEAD OF MEDICAL ACCESS SITE MANAGER
BUSINESS HEADS BUSINESS DEVELOPMENT & DEVELOPMENT AND COMPLIANCE
Craig Thompson Gary Parsons
Andrew Rosen Emily Rigby Jayde Foster
MEDICAL ACCESS
LEAD GROWER
CONSULTANT QUEENSLAND
Sam Dunlop
Karen Miller
Professor David
ADVISORY PANEL Dr John Teh Dr Tamara Nation
Penington AC
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As detailed in the organisational structure, Tommy Huppert is the CEO of Cannatrek and has a
number key reporting lines that each report into him.
Brett Schwarz, Chief Financial Officer, has responsibility for managing the financial affairs of the
Company, as well as leading capital raising initiatives.
Analyn Sanchez, Executive Assistant to the CEO and Office Manager, has lead role in special
projects across the organisation assisting the executive team with supporting finance, quality,
sales, human resources and office management.
Emily Rigby, Head of Research & Development, leads the R&D activities of the company from the
facility in Queensland, including liaison with the Office of Drug Control (ODC), being part of the TGA.
Craig Thompson, Medical Access Lead, has primary responsibility for the development and
management of the Patient Access Platform and the relationships with distribution partners
and prescribing doctors. Karen Miller reports to Mr Thompson and supports the Patient Access
initiatives in the Queensland market.
Andrew Rosen, Head of Global Business Development, is responsible for managing relationships
with international partners for the supply and export of medicinal cannabis products and is a
member of our clinical research and drug development teams.
Gary Parsons, Site Manager, has primary responsibility for the Queensland cultivation facility and
oversees the day to day management and cultivation activities. Sam Dunlop supports Mr Parsons in
this role as Lead Grower.
Jayde Foster, Head of Regulatory & Supply Chain, is responsible for managing Quality &
Compliance activities across the entire organisation, including local and export product release to
market.
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2.11.2. Directors
PHILLIP ROSS TOMMY HUPPERT SCOTT HUNTER
Non-Executive Chairman/Director Founder & Executive Director Non Executive Director
A former commercial lawyer and founder of a national retail Tommy graduated from Monash University with an Economics Scott has led national sales and marketing teams for 35 years.
franchise, Phillip provides corporate governance, retail and degree majoring in Accounting/Finance. After a stint as a tax As founders of Pine‐O‐Clean, the Hunter family bring a wealth of
general commercial experience to the Cannatrek Board. accountant, Tommy ventured into the start-up world as a experience in building great Australian brands and businesses.
international CEO building 30 years of business acumen in new
Phillip was the Managing Director of fabric and craft retailer and emerging industries. Scott has been a Founding Director of 2 successful start up
Lincraft for twenty two years up until 2005 when it was sold. Companies in Big H Chemicals and most recently Hunter
Since that time Phillip has pursued and focussed on his He founded Cannatrek, as a medicinal cannabis health Industrials - a current Market leader in their field of Sustainable
commercial and property interests. economist, visiting Israel, Canada and the USA. During this cleaning products, and Workplace Chemical safety and
phase he established its corporate governance and compliance compliance programs .
structure, and project managed the enormous task of obtaining
all necessary licenses to conduct business in the Australian Scott has many years’ experience in developing key
Medicinal Cannabis industry. This was all achieved “in‐house”. relationships, innovating, differentiating product offerings,
and growing markets.
Tommy has drawn together an impressive international network
of strategic alliances, and co‐ordinates the inputs of his team of
experts as the Cannatrek strategic lead.
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DR SUSAN POND AM MARK LICCIARDO
Non-Executive Director Corporate Secretary
Dr Pond has a strong medical, scientific and commercial background. She has held executive Mark Licciardo is the founder and Managing Director of Mertons Corporate Services. Mark has
positions in the biotechnology and pharmaceutical industry, including as Managing Director of extensive experience working with Boards of high profile ASX listed companies in the areas of
Johnson & Johnson Research Pty Limited between 2003 and 2009. Most recently, Dr Pond was corporate governance, accounting & finance and company secretarial practice.
Director of the University of Sydney Nano Institute until 2018.
His expertise is in developing and guiding effective governance and he is considered a leader in this
Dr Pond has held many independent chair and director positions including as chair of AusBiotech sector. His 40 year corporate career has encompassed executive roles in banking and finance, funds
Limited, director of the Australian Nuclear Science and Technology Organisation (ANSTO) and the management, investment and infrastructure development.
Australian Academy of Technological Sciences and Engineering (ATSE), and Board member
of Commercialisation Australia and Innovation Australia. Mark is a Non-executive Director of various public, ASX listed and private companies, a former
Chairman of the Governance Institute of Australia Victorian division, LCI Melbourne and Melbourne
Dr Pond current sits on the boards of ASX listed companies Biotron Limited (ASX: BIT) and Vectus Fringe Festival and a former company secretary of Top 50 ASX listed companies Transurban Group
Biosystems (ASX: VBS). (ASX: TCL) and Australian Foundation Investment Company Limited (ASX:AFI).
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Section 2: INFORMATION ABOUT THE COMPANY OFFER DOCUMENT
2.11.3. Executive Team and Business Heads
TOMMY HUPPERT BRETT SCHWARZ ANALYN (LENG) SANCHEZ
Founder & Executive Director CFO & Corporate Advisor Executive Assistant to the CEO / Office Manager
Tommy is a start‐up entrepreneur, medicinal cannabis health Brett has 30 years’ experience in enabling businesses to Leng has over 18 years professional experience in industry,
economist and a seasoned international CEO with 30 years of optimize their operations, creating value and growing holding numerous roles in the corporate environment. She
business acumen in new industries. He founded Cannatrek, sustainable profits. worked at PETNET Inc - a Remittance and Financial Technology
established its corporate governance and compliance structure, Company in Manila - holding various key positions for nearly
Brett started his career as a chartered accountant with Arthur
and project managed the enormous task of obtaining all 16 years. She led a key revenue group, instrumental in the
Andersen, primarily in audit/assurance and business consulting,
necessary licenses to conduct business in the Australian acquisition of new businesses, development of systems
before co‐founding Bluechiip Limited (ASX: BCT), a high-tech
Medicinal Cannabis industry. and digital platforms, and has extensive contribution in the
company with a novel tracking and sensing technology. This
company’s ISO certification to name a few. Leng left post as
Tommy has drawn together an impressive international network included managing the capital raising program where he was
Assistant Vice President for Added Value Products before
of strategic alliances, and co‐ordinates the inputs of his team of actively involved in raising equity including listing on the ASX via
moving to Australia. She joined Cannatrek in June 2019.
experts as the Cannatrek strategic lead. an IPO in 2011, as well as securing government grants and tax
concessions. Prior to commencing with Cannatrek in May 2019, Leng has a Bachelor of Science – BS, Business Administration,
Brett had consulting CEO roles with two well-established family Major in Computer Application.
businesses.
Brett has extensive expertise in capital raising in both public and
private markets, investor relations, reporting and compliance,
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Section 2: INFORMATION ABOUT THE COMPANY OFFER DOCUMENT
EMILY RIGBY CRAIG THOMPSON JAYDE FOSTER
Head of Research and Development Head of Medical Access Head of Quality and Compliance
Emily has significant commercial and research experience in Craig manages all components of medical access from supply Jayde has over 20 years’ experience in a variety of Scientific/
propagating and cultivating native and exotic plants, medicinal through PR, collateral development, campaign development, Technical roles including Quality Assurance, Quality Control,
cannabis, protected cropping, post-harvest technology, B2B, B2C, process implementation, compliance and Sterility Assurance, Food, Industrial and Medical Microbiology,
biosecurity, export market access, project management, communications + chief problem solver. Environmental monitoring of controlled environments, and
experimental design and data analysis, literature analysis, Geotechnical measurement. He also has 10 years experience
Craig has a diverse background with three degrees ranging in
teaching and communication. in Quality Management roles overseeing all aspects of Quality
topics from psychology, sociology, physiology, biochemistry,
Assurance and Quality Control in the Pharmaceutical industry
Emily previously taught scientific research methods at the molecular biology, wine making and horticulture. This diversity
specializing in contamination and infection control solutions.
University of the Sunshine Coast for 9 years and is President has expressed itself through a career involving business creation,
of the Australian Society of Horticultural Science, Director of brand development, pharmaceutical sales and wine making.
Protected Cropping Australia (PCA) and 2016 Nuffield Australia Craig started his professional career as a pharmaceuticals sales
Farming Scholar. representative for Boehringer Ingelheim, before spending a
number of years in the wine making industry, before coming
Emily holds a Bachelor of Science (Hons) and is Director of back to be a business planning and development manager for
Research Programs for the Australian Institute for Medical Innovation Biocare and then a Business Development Consultant
Cannabis (AIMC). for Xerion Limited in the pharmaceutical industry. Prior to
joining Cannatrek, Craig was involved in Business Planning and
Development for Glenorie Hydroponics.
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