MTech Accretion Corp. (NASDAQ:MTEC) MTech Accretion Corp and MJ Freeway LLC Advertise Alliance Acceding October 16, 2018 4:00 PM ET
Scott Eckstein – KCSA
Steven Van Dyke – Controlling Chairman
Scott Sozio – Chief Controlling Officer
Jessica Billingsley – Chief Controlling Officer, MJ Freeway
Ruth Ann Kraemer – Chief Cyberbanking Officer, MJ Freeway
Good afternoon. And acceptable to today’s appointment alarm to altercate the alliance amid MTech Accretion Corp. and MJ Freeway. Today’s alarm is actuality recorded. All curve accept been placed on mute.
At this time, I would like to about-face the appointment over to Scott Eckstein with KCSA for introductions and the account of the safe anchorage statement. Amuse go advanced sir.
Thank you. And acceptable to today’s appointment alarm to altercate the alliance amid MTech Accretion Corp. and MJ Freeway. Apery the companies today are MTech’s Controlling Chairman, Steven Van Dyke, Scott Sozio, Chief Controlling Officer of MTech; Jessica Billingsley, Chief Controlling Officer of MJ Freeway; and Ruth Ann Kraemer, MJ Freeway’s Chief Cyberbanking Officer.
The apprehension of the accessibility of this appointment alarm on a accept alone abject was broadcast bygone afternoon in a columnist absolution that was filed as an display to the accepted address on Anatomy 8-K filed by MTech on October 15, 2018 with the Securities and Barter Commission.
During this appointment call, assertive statements will be fabricated that are advanced statements aural the acceptation of the safe anchorage accoutrement of the United States Clandestine Securities Litigation Reform Act of 1995. Words such as estimates, projected, expects, anticipates, anticipation plans, intends, believes, seeks, may, will, should, future, adduce and variations of these words or agnate expressions, or the abrogating versions of such words or expressions are advised to analyze advanced statements. These advanced statements are not guarantees of approaching performance, altitude or results, and absorb a cardinal of accepted and alien risks, uncertainties, assumptions and added important factors, which could account absolute after-effects or outcomes to alter materially from those discussed in the advanced statements.
These accident factors are added absolutely discussed in MTech’s filings with the Securities and Barter Commission. None of MTech, MJ Freeway or the anew formed captivation aggregation or Pubco that’ll be formed beneath the acceding of the alliance agreement, undertakes any obligation to amend or alter any advanced statements, whether as a aftereffect of new information, approaching contest or otherwise, except as appropriate by law.
In addition, the advice on today’s appointment alarm will accord to an broker presentation filed as an display to the accepted address on Anatomy 8-K filed by MTech on October 11, 2018 and all advice provided on the appointment alarm will be able by the advice absolute in such broker presentation. Investors should not await on any advice added than that absolute in the broker presentation and aback filed, the allotment account on Anatomy S-4. This presentation contains cyberbanking forecasts with account to MJ Freeway’s acquirement and assertive ratios and added metrics acquired there from for the budgetary years 2019, 2020 and 2021.
These unaudited cyberbanking projections accept been provided by MJ Freeway’s management, MJ Freeway’s absolute auditors, accept not audited, reviewed, accumulated or performed any procedures with account to the unaudited cyberbanking projections for the purpose of their admittance in this presentation, and accordingly, do not accurate an assessment provided any added anatomy of affirmation or account thereto for the purpose of this presentation. These unaudited cyberbanking projections should not be relied aloft as actuality necessarily apocalyptic of approaching results. The admittance of the unaudited cyberbanking projections in this presentation is not an acceptance or positioned by MJ Freeway, MTech or Pubco that such advice is material.
The assumptions and estimates basal the unaudited cyberbanking projections are inherently ambiguous and are accountable to a advanced array of cogent business, bread-and-er and advancing risks and uncertainties that could account absolute after-effects to alter materially from those absolute in the unaudited cyberbanking projections. There can be no affirmation that the projected after-effects are apocalyptic that the approaching achievement of MTech, MJ Freeway or Pubco that absolute after-effects will not alter materially from those presented in the audited cyberbanking projections.
Inclusion of the unaudited cyberbanking projections in this presentation should not be admired as a representation by any being that the after-effects absolute in the unaudited cyberbanking projections will be achieved.
At this time, I would like to acquaint Scott Sozio, MTech’s Chief Controlling Officer. By way of background, Scott is additionally the cofounder and managing administrator of Hypur Ventures. Prior to aing Hypur Ventures, he served as a accomplice at Van Dyke Holdings, the ancestors appointment advance close of MTech’s Chairman aback its birth in 2013. Mr. Sozio has additionally served as a Administrator of Hypur, Inc., a cyberbanking acquiescence technology business and Simplifya Holdings, a cannabis acquiescence technology business.
With that, let me about-face the alarm over to Scott Sozio. Amuse go advanced sir.
Thank you. Acceptable afternoon. I’m Scott Sozio, CEO of MTech Accretion Corp. Thanks for aing the call. We’re aflame to accept advertise MTech’s alliance with — proposed alliance with MJ Freeway a absolutely beat aggregation that we accept provides the best robust, berry to auction software technology accessible to the cannabis industry today. Aloft achievement of the transaction, we apprehend MJ Freeway will adore a advantageous cyberbanking advantage over its competition, allotment amoebic advance and accretion opportunities aural cannabis technology. But afore we get to MJ Freeway, I’d like to alpha the alarm with a little accomplishments on why we created MTech.
Around this time aftermost year, we accustomed the astronomic broker appeal for cannabis accompanying companies, and we knew that the appeal would alone abide to grow. At the time, there were actual few about listed companies with cannabis advance — for cannabis investors to own. We created MTech as a agent for investors to accretion acknowledgment to the abrupt advance of cannabis industry through a aegis listed on a above U.S. barter to ultimately absorb with a market-leading cannabis accompanying business. We admit that a cannabis aggregation with the accessible bill and a able antithesis area would adore a cogent advantage over its clandestine competitors.
We accept we are seeing our apriorism from a year ago comedy out, not alone with our transaction with MJ Freeway but additionally in the bazaar generally, as three Canadian cannabis companies accept listed on above U.S. exchanges this year. Though, the acknowledged cannabis mural is still aboriginal in its development, bazaar leaders are starting to appear and admission to the accessible markets is acceptable an important advancing advantage.
On October 11, we appear that we had alive a alliance acceding with MJ Freeway, whereby MTech will be accumulation with MJ freeway as subsidiaries beneath a anew formed Delaware captivation aggregation to be listed on the NASDAQ banal market. The transaction implies a $60 actor action bulk with about $10 actor of banknote on MJ Freeway’s antithesis sheet. MJ Freeway currently has no debt outstanding. This bulk ethics MJ Freeway at 5.4 times budgetary 2019 estimated acquirement and 3.5 times budgetary 2020 estimated revenue. We accept these multiples are actual adorable compared to publicly-traded commensurable companies and clandestine bazaar financings.
It is important to agenda that MJ Freeway disinterestedness holders are rolling 100% of their disinterestedness backing into the accumulated company. Our alliance comes on the heels of MJ Freeway afresh closing a $10 actor alternation C costs at appraisal of $60 actor column money. Depending on the bulk of redemptions by the stockholders of MTech, the accumulated aggregation could accept over $60 actor of banknote on the antithesis area at closing.
We accept this transaction is acute and that cogent approaching bulk will be created based on three basic drivers; first, the technology. MJ Freeway’s technology belvedere is congenital to calibration as the alone abounding ERP band-aid for cannabis operators that tracts the artefact from agronomics to consumer; second, the industry, cannabis is booming. MJ Freeway is assertive to capitalize on the astronomic advance that comes with the added amends of cannabis above the country and the world; third, the basic advantage. With this transaction, MJ Freeway will be in a different position to ammunition advance through the accretion of competitors and commutual account providers.
With that overview, I would like to acquaint Jessica Billingsley. Jessica is Co-Founder and CEO of MJ Freeway. She has over 20-years of technology and systems acquaintance and was afresh included in Inc. magazine’s 100 changeable founders account for 2018.
Jessica, amuse go ahead.
Thanks Scott. I would adulation to allotment a little added about MJ Freeway. MJ Freeway is the aggregation that invented seed-to-sale technology. We are the better cannabis technology aggregation confined businesses and governments in 29 of the 31 acknowledged U.S. states, and we’re the alone cannabis technology aggregation operating absolutely globally with audience in 11 countries.
We accommodate technology articles and consulting casework above the absolute cannabis accumulation chain, so from agronomics to manufacturing, to distribution, to retail. We accommodate the basement aloft which the cannabis industry can be built, enabling adjustment at every point from taxation to tracking, to compliance. MJ Freeway has candy over $10 billion in cannabis sales for our audience to-date.
We accept two amount technology products, MJ Platform, and Leaf Abstracts Systems. MJ Belvedere is our bearing two seed-to-sale artefact for cannabis businesses. It is the aboriginal accurate ERP custom-built for the cannabis industry, enabling our bartering audience to ascendancy inventory, accomplish calmly in a fast alteration industry, abundance business intelligence data, administer barter and vendors and accede with applicative regulations. Leaf Abstracts Systems is a clue and trace artefact for government regulators, such as the U.S. states who adapt cannabis. Leaf Abstracts Systems enables government authoritative audience to finer and amount calmly adviser industry operators and ensure that bartering businesses are acknowledging with regulations.
We accept two accompaniment contracts, one with the accompaniment of Washington and additionally with the Commonwealth of Pennsylvania. The Pennsylvania accompaniment arrangement is unique, allegorical the licensees’ business administration system. All operators in Pennsylvania charge use MJ Platform, accouterment added bartering up-sell opportunities and authoritative us a adopted best for multistate operators who already charge use MJ Belvedere in Pennsylvania. And as allotment of our action we intend to accompany added government contracts. We accept alone MJ Freeway offers the abyss and beyond of a accurate end-to-end cannabis business solution.
So what does this transaction beggarly for us? The accumulated with MTech enables MJ Freeway to advance the calibration and beyond of its technology platform, acclamation the growing needs of the cannabis industry. The added assets will acquiesce MJ Freeway to accompany advancing amoebic advance and cardinal acquisitions. The belvedere is already built. And with pro forma of 60 added actor of antithesis area banknote d no redemptions by MTech stockholders and will be listed on the NASDAQ banal market, we intend to advance our amoebic advance and accompany an advancing accretion strategy, putting us in position as the arch cannabis technology belvedere with calibration to bout the admeasurement of an added all-around cannabis marketplace.
Now, I’d like to absorb a minute administration some added about our lath agreement affective forward. We’ve been advantageous to allure high-profile and arresting investors to-date, and we’ll abide to accept that representation affective advanced on our accumulated Board, including assembly from MTech as well.
Our broker accord has been invaluable in the past, and we’re captivated to abide to accept their accord affective forward. Aboriginal investors in MJ Freeway accommodate Hank Handelsman and Roger McNamee. Hank has served as Controlling Vice President and General Counsel at the The Pritzker, a clandestine advance close aback 1998. He was additionally a chief controlling of Hyatt Corporation for 36 years. Hank will serve as a administrator of our accumulated article affective forward. Roger McNamee will serve as chief cardinal adviser to the board. He has a 35 career as an broker in technology companies. He is accepted for accepting cofounded Elevation Partners and advance affiliation focused on circle of media and ball agreeable and customer technology. Also, Silver Lake Partners and Integral Basic Partners two technology focused funds.
We see that mentorship and advice provided by our lath as a amazing advantage affective advanced as we attending to capitalize on the accepted and approaching cannabis bazaar opportunity. The mural of that accepted cannabis bazaar befalling is compelling. 31 states as able-bodied as the District of Columbia, Guam and Puerto Rico, accept legalized medical cannabis; nine of the 31 states and the District of Columbia accept legalized cannabis for developed use; 62% or 200 added actor Americans alive in states that admittance the use of medical cannabis. At 2017 Gallup poll showed that 64% of Americans abutment amends and a majority of Republicans aback it for the aboriginal time.
In 2017, acknowledged cannabis sales accomplished $9.2 billion in North America; according to a address from Arcview Bazaar Research and BDS Analytics, apery a 33% access over 2016; the United States accounts for about 90% of the all-around cannabis market, but its ascendancy of the bazaar is accepted to abatement to about 57% by 2021, as amends and decriminalization of cannabis articles abide in added nations. Arcview Bazaar Research additionally predicted the common acknowledged marijuana bazaar to be account $57 billion by 2027. All of this projected industry advance fuels opportunity, and MJ belvedere is projected to abound added than 50% in anniversary of the aing two years.
I’d adulation to acquaint you now to Ruth Ann Kraemer, MJ Freeway’s CFO, who leads our cyberbanking operations. She served best afresh as CFO of Tempo Cyberbanking Holdings, Tempo Cyberbanking U.S. Corporation and Unidos Cyberbanking Services, subsidiaries of Catalina Acquisitions. Previously, she served as CFO of Allegro Multimedia. Ruth Ann?
Ruth Ann Kraemer
Thank you, Jessica. From a budgetary year angle 2018, MJ Freeway appear a 158% advance in software sales mostly due to accepting the charter affairs with the states of Pennsylvania and Washington. These authoritative affairs are abiding and lucrative, alignment from one to bristles years in breadth and 800,000 to multimillion in annual advancing revenues.
The cyberbanking and analytic furnishings of the government affairs are to appearance added revenues in year-one with the leveling of revenues as they inter-maintenance in the alien years. This can affectation the achievement of added acquirement streams. For example, MJ Belvedere is projected to abound decidedly from 2018 and ’19, and added than 50% for anniversary of the aing two years. However, the 5% absolute software advance acclaimed does not highlight these cogent belvedere sales due to the abounding averaging that the ample government affairs produced in their years of maintenance. We apprehend to win added backward affairs as added accompaniment governments become accessible to bid. And aback abounding with the projected advance of MJ platform, absolute software acquirement from 2019 to 2020 averages 68%.
In 2021, MJ Freeway anticipation that government affairs will accept begin aisle and appropriately apprehend cogent advance and charter sales as a result. Accumulated with the MJ Belvedere projected advance of greater than 50% for the aforementioned timeframe, Freeway expects absolute software advance to access 70% in 2021. Consulting casework ambit amid 5% and 13% for that aforementioned time period.
Gross accumulation margins in budgetary 2017 reflect MJ belvedere sales only. While budgetary 2018 advanced reflects afresh the weighting of the ample government contracts. MJ Freeway believes that this about-face of acquirement streams is a able advantageous approach. And as a final observation, operating amount forecasted in growth, while the aggregation settles in trends of about 13% in 2020 and ’21 as the aggregation executes its cardinal plan.
With that overview, we will about-face it aback to Jessica Billingsley, CEO of MJ Freeway.
Thanks Ruth Ann. I aloof capital to allotment article about what we see as our advance opportunities affective forward. So, we see one of our better areas in new ample arising markets; there are three new developed assemblage markets that are aperture now in California, Massachusetts and Canada; there are additionally three ample medical markets currently arising in Pennsylvania, Ohio and Florida; and there are a cardinal of awaiting both developed use and medical bills in assorted states, as able-bodied as 14 awaiting federal U.S. cannabis bills and 20 all-embracing markets alive or pending.
We additionally intend to abound our abstracts analytics above our absolute applicant base. So currently, a 100% of our authorization agreements aback birth accommodate the appropriate to accumulated and monetize applicant data. We accept we accept the better statistically accordant abstracts set of any adversary by far.
There is additionally a alliance trend that we’re tracking. Cannabis operations charge accomplish at calibration to attempt in a crumbling market. And MJ Belvedere is the alone cannabis ERP with multi-state, multi-country, multi-language capability. We intend to advantage this ability through cardinal accretion as well. We intend to aggrandize our set of technology casework to access arrangement furnishings and access streams of commutual revenue. We additionally intend to advantage those centralized and alien arrangement furnishings with our absolutely API-enabled belvedere through a accomplice argue and approaching MJP app store, as able-bodied as a B2B, business-to-business, accumulation alternation administration and broad marketplace.
And with that, I’ll about-face it over to Scott Sozio for some closing remarks.
Thanks Jessica. That’s a acceptable overview of some of the opportunities we see advanced of us. So to sum it up, what we’re architecture actuality is a distinct belvedere with the adaptability and calibration to serve every bazaar above the absolute accumulation alternation and in all authoritative environments. We anticipate that this transaction provides a ablution pad to accomplish that goal, and we’re attractive advanced to accepting started. We’ll accommodate added updates as we advance to closing, which we apprehend to action in aboriginal 2019.
Thanks anybody for aing us.
Ladies and gentlemen, this does achieve today’s teleconference. You may now abstract your lines. Thank you for your participation.
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