With exposure in two of the hottest sectors in Canada—cannabis and blockchain—perhaps no other early-stage public company has dual-exposure quite like BLOK Technologies. It is potentially a match made in heaven.
This match was officially cemented in January 2018, when the company acquired a 100% interest in Greenstream, a blockchain-enabled supply chain management platform for the legalized Cannabis industry. The platform under development is all-encompassing, addressing payment, compliance, data integrity, infrastructure and data insight endpoints. Furthermore, Greenstream is the only consortium blockchain network in the Canadian Cannabis ecosystem. This makes BLOK Technologies a first-in pioneer in the space.
Why is that important? Because a highly-regulated, specialized supply chain like cannabis distribution would see a tremendous utility from migrating to the blockchain. Not only is cannabis highly controlled, hundreds of strains abound which make classification complexities a reality. I suspect the first company to produce a scalable, intuitive network to keep track of the avalanche of data will see substantial investment interest.
The news gets even better when you consider that product roll-out is close at-hand. BLOK Technology’s current timetable has the minimum viable product (MVP) released next month, with full initial roll-out by July 2018. This isn’t some pie-in-the-sky concept which will bleed R&D expenditures before something finallycomes to market several years down the line. The future is literally next month.
Financial expectations for the Greenstream platform are rather prolific. BLOK Technologies is projecting $100M in top line revenues by Year 3 (with healthy profit margins). Should these ambitious target be reached, those no telling what the underlying share price can do. The company is only valued around $10 million currently, so not much of Greenstream’s enterprise value has been unlocked. At least, not relative to expectations.
Of course, that could change quickly if the Greenstream platform receives positive reviews next month. One can imagine the brewing takeover potential of a software enterprise which provides competing cannabis producers a significant advantage over the competition. Even in solidarity, strong revenue growth and high demand could provide the impetus for strong investor interest going forward.
For now, it appears investors have taken a wait-and-see approach before committing further investment dollars. BLOK Technology is scuffling around 5-month lows, having retraced much of the 3,000% move it saw in mid-autumn 2017.
Other Irons In The Fire
BLOK Technologies is certainly not a one-trick pony. The company’s business strategy calls for investment and development in emerging technologies in the blockchain sector. By design, the company acts as an early-stage incubator, by funding, supporting, consulting and implementing strategies to make their intellectual properties succeed.
Their blockchain investments aren’t limited to marijuana either. BLOK Technologies is actively engaging domains in the distributed ledger technology (DLT) space which offer sound ROI/ROC opportunities for investors. This includes such sectors as banking and payments (a multi-billion markets, as we’ve noted before), supply chain management, Legal and Insurance, and many more.
From time to time, BLOK Technologies may pursue conventional business opportunities which offer strategic value.
For instance, on March 1 the company entered into a non-binding letter of intent to acquire a 100% interest in SimpleBlock Payment Systems, an existing mobile banking and payment software platform. The acquisition gives BLOK Technologies both a segue into the banking sector, and an effective technological solution for the unbanked masses.
Estimates from a 2015 Federal Deposit Insurance Corporation survey indicate how significant this market segment is. A full 7.0 percent of households in the United States were unbanked, representing approximately 9.0 million households. An additional 19.9 percent of U.S. households (24.5 million) were underbanked, meaning that the household had a checking or savings account but also obtained financial products and services outside of the banking system.
It is expected the SimpleBlock source code will be able to fully integrate with existing blockchain applications to form a more robust system. It may also expand the potential client base beyond the underbanked.
While BLOK Technologies can certainly be considered speculative, we believe it’s a company worth further investigation. The Greenstream property is an exciting value-add proposition for the cannabis industry, and roll-out is just around the corner. The company projects this market is worth some $22.6B per year in Canada, making the disruptive potential of their intellectual property quite enticing.