BioHarvest Sciences Inc. (CNVCF) Q3 Shareholder Presentation Call Transcript

BioHarvest Sciences Inc. (OTCQB:CNVCF) Q3 Shareholder Presentation Call Transcript December 13, 2023 2:30 PM ET

Company Participants

Justin Meiklem – IR

Ilan Sobel – CEO

Justin Meiklem

So thank you everybody who’s joined us already midday, we have several hundred people registered for today’s session, which is fantastic. Today, this is going to be the Q4 shareholder update. We’re going to be discussing our recently released Q3 financials. And Ilan is going to be going into some detail on major corporate initiatives. We had some exciting news, official news this morning. I’m Justin Meiklem. Today’s event is going to be hosted by CEO, Ilan Sobel.

Ilan Sobel

Sobel.

Justin Meiklem

Sobel. I stress it every time. Good evening, Ilan.

Ilan Sobel

Good evening, Justin, and hello to everyone.

Justin Meiklem

Yeah, thank you for joining us, everyone. So, some housekeeping. This is going to be recorded, so it usually takes a couple of hours after the session. I will circulate it to everybody. It will be available on BioHarvest social media and on the website. There will be a live question-and-answer session at the end. So we’re getting questions already. You can submit them at any time. They will be anonymous. So you type them in. You’ll see me consolidating questions throughout the event and Ilan will probably present for maybe 60 minutes and then we’ll have an extended Q&A afterwards. Hopefully we can get every question answered. If we don’t answer your question today, I will get an answer for you within the next 24-48 hours.

Ilan Sobel

And of course we also have coffee with Ilan on Wednesday at 11:30 in the morning, 9:30 Israel time, that people can also combine if they want to have a live roundtable discussion. We’re still doing that every Wednesday night. So just recollect that slot as well.

Justin Meiklem

Absolutely. So let’s get rolling. It is 33 minutes past the hour. I would be very happy to pass this over to VINIA super user and our CEO, Ilan Sobel.

Ilan Sobel

Thank you, Justin. And good evening, everybody. I’m just going to go to my share screen. Let’s hope we can get this right today, Justin. I know we’ve been practicing this. How’s that look, Justin? All right, fantastic. So I’m actually really excited for tonight’s discussion with our shareholder partners, because we’re getting close to the end of the year and wow, it’s been an amazing year. And I’m super proud of what we as a company have achieved. And I’m looking forward to diving a little bit deeper into the performance of the business and helping to give you a little bit more of a peek under the tent on what’s coming up in the next few months. So obviously just inquire that you kindly just take a read through the forward-looking statements. You obviously can read much faster than I can talk. So let’s commence.

We’re going to go through our normal agenda. We’ll go through the Q3 performance update. I’ll delve deeper to help you comprehend the financial performance of the business. And then, obviously what we’re super focused on, and we have a very clear model and roadmap on how we’re going to get there is related to, the major actions that we take strategically and operationally in order to proceed the business to scale and that breakeven point and beyond. And that’s becoming closer and closer. I can start to see that breakeven light in front of me as we start to really scale the business and just deliver consistent performance. And then we’ll have time, as Justin said, for Q&As.

So I think it’s important to recognize and to savor that the business has amazing demand momentum. We’ve hitting, you’ll see record on record months and you’re building a solid loyal subscription base towards our core product. And as a result of that scaling, and as a result of the business becoming more mature, the implementation of systems as well, we’re able to start to really see the delivery of improved financial performance across the critical metrics that we need to be delivering day in and day out. Overall it was a very strong quarter for us. We saw growth for the business more than doubling in Q3, $3.24 million. And that was a really good build versus the previous quarter and versus obviously last year.

When we look at the US, the US business nearly tripled in size and just demonstrating the pace of growth and the scaling that we’re doing in the US is just massive. And that’s obviously happening in line with the capacity build that we’re driving here from a manufacturing perspective. And we’re seeing with that revenue base, literally a subscription based growth, which is very, very similar, which is super exciting because this is subscription, this is recurring revenue, these are loyal customers and are just compounds and compounds as we start to really relish the benefits of that recurring revenue. And we’re a very, very unique business as you’ll see a little bit later where on our vinia.com business we have literally 93% of our business is subscription which is very very healthy.

Just looking at Israel, Israel it’s now becoming a smaller — much much smaller part of our business but it is important for us because it’s the maturity of the business here. We’ve been able to continue to grow Israel also with much better marketing efficiency. We’ve been much more efficient in our cost of acquisition, and we’ve been able to bring down that significantly over time. What we saw in the quarter, when you look at the quarter, on a currency neutral basis, we actually declined 2.8%. But what drove that was literally the prioritization of all of our stock towards the US to our subscribers in the US. And for the last two weeks of September, we were not able to ship out orders. So all of those orders, admire the last 10 days of September, had to get pushed into literally the first day in October. And if we would have actually delivered those orders in September as we would normally do, we would have literally grown 6% for the quarter.

Importantly, and this is a number that as a management team, myself and Ilana on the operational side, our COO, was super focused on basically the gross profit metrics of the business. We can see a significant boost, 18% Q3 ‘22, Q3 ‘23, we’re up to 45%. This is starting to look respectable. We have some way to go in order to really get to that 60% gross profit level quickly in 2024. But you can see the pace of growth here as we looked at basically the metrics, Q1, Q2, and Q3 2023 here going from 40% to 45% just in the quarter, driven by a number of different initiatives. As I said earlier, the business and the quality of the growth is very, very important. We have 93% of our business is in subscription. That’s recurring revenue on vinia.com. And you can see admire the evolution and how we started that literally 95% of our subs today are greater than three months or more. So they’re three months or more subs. We used to have a lot of one month subs. We’ve moved people from one month into three months and we gradually moved them up into six month and 12 month subs. So again, it’s very, very healthy. When we sit and we talk to bankers or we’re talking to analysts now and we show them the health of the business, now literally people are admire blown away when they actually look at the quality of our subscription base. And that really at the end of the day is underpinned by our superior science and our superior efficacy and the fact that our product, VINIA, just delivers what we say it’s going to deliver. And that’s why we have such a strong subscription and loyal customer base.

Again, that’s reflected in the number of reviews. You can kind of see here the trajectory of reviews from April 2022 all the way through to now. We’re at over 3,300 reviews, 4.8 out of 5 verified rating. And this really is what frankly, a key factor, what keeps me going. When you look at it, it’s roughly now 15 to 20 reviews a day that I have the pleasure of reading. Every single review comes past my inbox, whether it’s from Amazon or whether it’s from our vinia.com customers. We learn so much from what customers tell us. And obviously it gives the team enormous strength to be able to see how we’re just dramatically changing people’s lives. And in fact, every single day I post on my leadership WhatsApp what I see as the most inspiring customer review. And it really gives us a huge motivation when you’ve had some tough days, you need a little bit of energy. There’s nothing admire seeing an amazing review on how you’ve changed somebody’s life to give you the energy to get up again tomorrow and just to drive hard to ensure that we’re delivering on our supply chain requirements, the gross profit requirements and delivering the revenue numbers that we need to deliver.

So we talked about guidance that we’ve given for Q4. And you can see we upped the game significantly, significantly in Q4 as we started to ramp up our supply chain and manufacturing. And when you actually, and those of you, I’ve said this before, that if you do ever come to this part of the world, you’re very welcome to come and see our factory. But when you walk into this factory, it’s just admire, wow, it’s just rows and rows of purple bioreactors and the factory’s full. And Ilana and the team really are starting to ramp things up as we start to get things moving for next year. And you can see, just by taking the midpoint of the range for Q4, if we take $4.35 million and obviously we’re very, very focused on trying to hit the midpoint to upper part of the range. That’s a 34% growth quarter-on-quarter. Right. And that’s significant, right. After having a significant growth in Q3 versus Q2, and then again in Q4 versus Q3, you can see us really ramping it up and we’ll continue to do that as we proceed into the first quarter of next year, second quarter with the marketing programs, with the new product initiatives, and obviously us having really the ability to supply these kind of numbers, given the ramp up that we’re doing right now. And then obviously that focus on EBITDA breakeven is a massive target, massive, massive target right in front of my nose, right, that we’re focused on. And as I said, I’m starting to see the light there. I’m starting to taste it, starting to smell it, if you can say that. As we start to see the performance metrics boost and we have a very clear roadmap on how we’re going to get there as well. Every team member knows what they need to do in order to get there and we’re going to have one huge celebration please God when we get there. Right Justin?

Okay. So I want to now just spend a little bit of time, we talked about profitability, we as a company and I don’t think you see this level of transparency from other companies out there, but this is the model that we live by as we look to execute the need to relentlessly drive the path to profitability as it relates to what we need to do from a revenue management side, driving the top line of the business, and then obviously from a cost management side. And each of these are critical buckets that different people in our organization own and have accountability for. And as always, I admire to use this model to guide our discussion. So you’ll see me, this is the third time I’ve used this model to guide the conversations with our investor partners, because you guys should all comprehend what to expect in each of these areas from us and comprehend the model. This is how we live and breathe our operationalization of the strategy that we’re implementing. So let’s first look at what are we doing on the revenue management side as we look to really continue to scale the business. But importantly, doing that at a lower cost of acquisition, so we need to drive marketing optimization.

Encouragingly, our cost of acquisition continued to refuse in this quarter in Q3. And that’s critical for us because if we can acquire more customers at a lower cost of acquisition and continue to preserve and reduce our churn rates, this is when you get significant leverage in the P&L. And I’m really, really proud of the work that Jared and the team have done in this area to continue to get our levels of acquisition. Again, when we talk about this and we do converse this in a forum with key people, we have, I believe, one of the lowest cost of acquisitions in the industry. And that’s because, again, we have the marketing product market fit in the right way. And we have basically the right programs and the ability to execute on those programs efficiently. But we’re relentlessly driving this cost of acquisition down every single day. And by the way, these are all VINIA customers that have recently sent us videos as part of their review.

One of the things that we love is organic growth. And what does organic growth mean? Organic growth means when you get customers because people are talking about the brand. People are talking about what VINIA is doing to their lives. People that are living with you are seeing a change in your behavior, seeing a change in your physical energy, your mental alertness and they start to really at the end of the day become jealous and start to say, look I see an amazing change in my husband or my wife. That change is coming from VINIA. I need to be on that, I need to be on that product. And we see this, it’s contagious. VINIA is contagious in each household. And we started to see the orders per household growing significantly. And we also know that the orders per family are growing significantly as people want their parents to be on the product. In some cases, people want their in-laws to be on the product. In fact, my father-in-law is on the product and he and literally doesn’t miss a day with his VINIA. And this is all really important because we’re acquiring customers basically organically.

And in fact, what we did and we started to see a step up in this organic growth is on one of our landing pages, we have the family value pack. We call it the double 90 day subscription that you can see here. It’s a basically, it gets you $10 off. It’s $189 and it’s a double subscription. And we started to see significant movement into this pack. This is really, really healthy growth. And then, we start to see that coming through in the reviews. Okay. You can see this review over here. We are starting our fifth month. We get many reviews which says my husband and I, my wife and I have been on VINIA and it’s just amazing to see the ability of how we can change the quality of life for people as it relates to their relationships, as it relates to the activities that they do throughout the day. And this is something that we’re continuing to drive through our marketing, through our email campaigns around basically bringing your partners on board, bringing your family on board, because this will continue to reduce our cost of acquisition.

So now let’s look at channel scaling, which is so important as we broaden the channels that we’re selling VINIA. And obviously the big one for us that we’re focusing here is on Amazon. So Amazon for us, this has been an amazing quarter for Amazon. We did something which I think has worked really, really well. Initially on Amazon, we just had the 30 pack. And then as we transitioned the rest of the business to the 90 pack on vinia.com, this is the 90 bottle, instead of stopping the 60 pack, we decided to say, you know what, let’s give this as an exclusive pack for Amazon. So we have what we call pack price differentiation between the Amazon channel and vinia.com. And we’ve seen an amazing pick up on this pack. We priced it at $88.95 and that’s roughly $1.48 per count, slightly better value versus our $49.95, $1.60 per count 30 pack. And we’ve started to see right now, in fact, the last few weeks, from a mixed perspective, it’s admire 50-50, which is really, really encouraging. And that, in addition to continued good reviews, we’ve moved up, we grew the business 64% in units, 54% in revenue. And that’s nearly $0.5 million of revenue in a quarter. And I think importantly, look how much we spent on ads in Q3 and Amazon, literally 10%, 10% spent in order to get this revenue, which is an amazing return on investment. And then look at our subscriber numbers. Subscriber numbers literally more than tripling, right? 235 to 709. Amazing, amazing results. And that’s just, again, showing you how people are realizing how good our product is, high level of satisfaction. So they might as well go on to subscription on Amazon for a 5% or 10% discount, depending on what they pick. So really strong results in Q3 and we’ve literally got out of the blocks really, really strong in Q4 on Amazon as well.

Justin, if I get too close to the line, you know, you let me know, okay?

Justin Meiklem

Well, I know, because we had some exciting news today, I’m waiting for it.

Ilan Sobel

So, talk about getting out of the blocks fast in Q4. We had, if you recollect, record month in August, where we talked about $1 million in revenue just in the US. And as I admire to say, one SKU. Okay. We had a great September and frankly, October and November have been record months. Okay, that’s why you see the step change in the guidance that we’ve given for fourth quarter $4.2 million to $4.5 million. And we had a lot of really good marketing activities, some of them organic that we just happened that weren’t planned for. And again, when your product is out there and people are talking about it organically, and all of a sudden somebody calls you and says, Ilan, I heard your product on the Joe Rogan show, the number one podcast in the world, number one podcast in what I think 11 million listeners and not only in the Joe Rogan show did they talk about VINIA, but they actually showed our product. We had, I think, about 12 seconds of fame in a two-hour podcast, but it just built significant, significant organic credibility for the brand. And we definitely saw some very, very positive results from this. And again, it just gave us massive credibility to be able to leverage this into other opportunities.

And then talking about December, earlier this month, seems admire yesterday, I was in the US, had a crazy one week in the US, doing a lot of product development that I’m going to talk about in a second, but culminating at the end with an appearance on the Mike Huckabee show. And I hope all of you have had the chance to review the show and to see our seven minutes that we had with Mike, with the governor as we affectionately call him. And we had a very close friend and partner, Rick Hale, also on the show. And Rick shared his encounter and his family’s encounter. Rick’s another perfect example of the organic growth. Rick is on the product, his wife is on the product, his daughter in New York is on the product, all obviously leveraging VINIA for its blood flow benefits in different ways. And Huckabee show, again, delivered a massive ROI for the business. I’m going to show you, hopefully I’ll get this right. You can just see on the right hand side, this is my Shopify screen. Then this is the screen and for a few minutes and when you see flashes, it means sales. Okay? So you can see, you know, literally once we once we saw, lunched the show started, you can see flashes, the amount of people that are on the site. And these are all people that are converting and purchasing the product. We had literally post- Huckabee three crazy days. And then there’s a very long tail because the show gets repeated, it gets syndicated, people watch it on video on demand and this really has allowed us to have a great start to December, which will really allow us to deliver strongly the end of the year numbers.

In addition, talking about Amazon, we got so close to being number one resveratrol product in the entire United States of America. So close. I was watching this literally admire a little kid in a candy store checking every five minutes where we were at on the rankings. But as disappointed as I was that we didn’t get to number one and we will and we will be there consistently in the future, it’s important to comprehend that we got to number two and look at our pricing. Right. We are the most premium brand in the resveratrol segment. And there’s about, I think there’s about 400, 500 products in this area. We’re the most premium brand. And we got to number two. It shows you that Americans value quality. They value the credibility, the science, the efficacy behind our product. And this is a massive, massive validation for the power of our botanical synthesis platform technology that we can literally launch a product and get to this kind of Amazon acceptance in such a short period of time. And yes, we’ve been able to keep the Amazon supply chain going. It’s been tight because the numbers that we were doing on Amazon and have been doing consistently have been crazy. And kudos to the supply chain team for making sure we stay in supply on Amazon because you don’t want to run out of supply in Amazon because you get punished.

So really exciting, great results, great start to the month. And this has been a very, very important subscription builder for December. But honestly, these are just admire, big admire sparks. But we haven’t even dipped our toes into the ocean given the magnitude of the opportunity in the US. At the end of the day, the revenue pools that we’re going after, just with VINIA as it relates to improving physical energy, mental alertness, cardiovascular health. It’s a $9 billion revenue pool. So there’s so much for us to go after in this space. And it’s important because it just means that we should be proud of the achievements, but we can’t get complacent. Right. The bar is super high of where we can go as a company with our botanical synthesis technology. And as we start to look at how we apply their technology to products admire VINIA red grape cell, our olive cell products and beyond.

So now let’s talk about how we’re going to start to, in addition to growing massively our core capsule business, we have some significant opportunities for product scaling because up until now, we’re delivering these, I would say, strong leadership performance, but with one SKU. We’re literally a one SKU company up until a few days ago. And once you start to add the product scaling, you bring so much leverage into the business as it relates to driving incremental revenue all the way through to driving marketing efficiency. And you bring optionality into the business, which is very important. So let’s talk about what we’re doing from a product scaling perspective and how we leverage our VINIA Inside strategy, which now really the market is understanding the power of the VINIA Inside strategy and we’re really seeing this significantly from a consumer perspective, from a retail and trade perspective, and from a partnership perspective. And that’s leveraging our superior science, superior taste, and superior efficacy strategy. So the product scaling strategy takes us from one SKU to 10 SKUs very quickly. We just went from pretty much admire one SKU to a five SKU company overnight with coffee, right? And from one category to five categories to disrupt. So we’ve articulated this with three major, I call these carrier systems. These are carriers, delivery mechanisms for high-performing functional nutraceutical products. And there’s no better place for us to start, which is hot beverages and coffee, because frankly, America runs on coffee, right? Average American has three cups of coffee a day. So the sweet spot of having that coffee with our VINIA, at the critical occasion, day part in the morning, to start the day is a massive opportunity for us. And that’s why we’ve prioritized and focused on this first.

And then we start to proceed out to other delivery mechanisms admire protein bars in the snack bar area and then hydration. That’s just a monster, monster of a delivery mechanism that also complements the hot beverage strategy. So I’m going to spend some time now going through each of these key areas. So we launched coffee on, on Mike Huckabee show and I made a commitment to our shareholder partners. We would deliver coffee before Christmas. Well, we delivered it on December 2nd. And that’s about delivering our commitments on time in full. OTIF is the key metric. That’s a metric that we use internally to hold ourselves accountable. So we delivered it on time in full. We had a great start with the Huckabee show. We also did this whilst reskinning our entire website. So if you go to vinia.com right now and you can see I’m just doing a recording of the site. You come in, you learn about VINIA, you pick your VINIA, you’re able to learn about the powder and what the powder does to you and then you basically pick. You pick, do I want it in a capsule? Do I want it in a coffee regular? Or do I want it in decaf? And the team, Eves and the team, they did a fantastic job in getting this new website out there. It looks premium. The look and feel is so good. And we’ve received a lot of compliments about this. So, then you go in and you pick coffee and you can see we have a very unique site, whether it’s regular coffee or decaf coffee because the propositions are slightly different based on the consumer need. And I’m going to go through this in a sec, but you can see it again, look and feel is really premium, premium, premium look and feel. And again, because at the end of the day, we’re selling a premium proposition because of our magnitude to change people’s lives.

Certifications, whether we’re Swiss water certified, Swiss water process certified or keto certified, they’re certifications. None of this friendly stuff drives me crazy when you see companies saying keto friendly. Just go through the certification process, pay the money, go through the certification process and make sure that you really are keto certified right. And so you’ll see everything that we’ve done is doing it the right way, the way a premium brand who really values their customers should be doing it.

So you can see here, we’ve started to get the language right behind the brand, talk about the power of coffee and the power of our of our vinaigrette coming together. Packaging looks strong. I have here a pack. You can see just the size, it’s premium packaging. The box looks good. Really, really happy with the look and the feel on Yale did a fantastic job in this area together with our partners at Joe’s Garage Coffee. We’re talking about in the case of decaf, very, very unique proposition where we’re delivering you the physical energy and the mental alertness without the jitters, without the crash, through the power of blood flow, which VINIA is delivering. And as we know, in each of our capsules, we have the same amount of Piceid Resveratrol as in one bottle of red wine, 1,000 red grapes, and obviously one capsule of VINIA supplement. Just again, visualizing the visual language. We’re going to see some great work coming up where we start to build the marketing assets, showing the beauty of the VINIA and 100% of Rebecca coffee coming together.

And then obviously in the case of decaf, we made a really, really important choice to partner with the Swiss water process and to have the chemical free decaffeination, which is so important because consumers deserve to know and they deserve a choice given the fact that today more than 90% of the coffee out there utilizes chemical in the extraction of the caffeine. That was a no-no for us. And we’ve obviously gone with very premium coffee utilizing the Swiss water process. And we’re super, super excited to be partnering with them. We did quantitative taste tests. So we talked to the consumer, guaranteeing the consumer that this product, VINIA Superfood Coffee tastes better than the market leaders out there. And these are amazing scores from a preference perspective. They’re amazing scores as you associate to replacing your actual coffee brand. And I’m going to share with you a quick video, which was literally just shared with me tonight, which was taken in Texas, where literally we were giving people some blind taste testing, initially tasting the product, and just getting some of their verbatim. So relish this. I certainly enjoyed it. And it really validates the strength of our blind quantitative taste testing that we did in California.

[Video Presentation]

Certainly enjoyed it, when I got it this evening. But yeah, we’re giving a 90 day money back assure. And that was a conscious choice that we made as a management team, really just demonstrating the confidence that we have in this product. We know the efficacy of VINIA. We’ve seen that now with tens of thousands of customers and we’re reaching, we don’t give away our final numbers, but they’re growing. Those tens of thousands are growing significantly. So we see the benefits of the VINIA and then we went out and we literally built layer by layer just this is my [Technical Difficulty] and working together with our partners, we built two amazing cups of coffee, one being the decaf, where it’s just this full body taste that you feel admire there’s no compromise that you’re drinking decaf and then the regular version literally being strong on the on the back note being very well balanced and so why not give a money back assure? We give it on our capsules, right? Why not give it on our coffee? And show me another coffee brand out there. Nestle is not giving me a 90 day money back assure on their product. Right. But we’ve decided to do this and it just reinforces our confidence that we have a unique winning proposition here.

So far, the results have been amazing. Literally, this is from 3.5 minutes of TV. We’ve had more than a thousand orders, a large proportion of that is subscription. The mix is really, really interesting. So just to give you some perspective, in the US market, it’s about 12% decaf, 88% regular. But we’re showing literally three times the industry average, why? Because we have a winning product. Because we’re using the Swiss water process. Because we’ve got VINIA Inside, right? And we have a money back assure. So you’re literally — it’s a massive opportunity and one share of the decaf pot market, literally will demand us to build multiple plants, just to give you an understanding of the magnitude of the opportunity. And then regular is significant as well. We have a unique proposition with regular, with the 12 hours Piceid Resveratrol, so you get your caffeine kick and then our Piceid Resveratrol keeps you going through the day. And then initially we thought we would sell more 30s because of the pricing of the absolute price point of a 30 versus a 60. But look at this, 80% of the mix in 60s. And so obviously we got the right price pack mix, giving more value on the 60s because we want people to buy 60s. But again, it just shows people’s confidence. And again, they have the money back guaranteed to preserve them. So very, very encouraging start.

There have been questions raised by people and this is regarding is it expensive at $1.67 per pot. Well I’m actually living deja vu here because when we launched VINIA at $49.99 for 30 days in VINIA capsule, I got the same questions from investor partners, from people in the ecosystem and we comprehend that we have a unique proposition, a unique proposition that delivers functional benefits that no other company can deliver. And we have to reinforce our unique functionality and all the other benefits with a premium price proposition. So I feel really good where we are from a pricing perspective, but it’s also important that we frame the pricing in the right way. And this is work that we’re doing now as we start to refine our messaging. And we’ve got some great input from some shareholder partners. Thank you, Peter. You’re going to see something in the next chart. This is the power of all of us building this company together. And you’re going to see us action shareholder feedback. Literally, when I got this email from Peter, you’ll see the next chart was action, literally within 15 minutes we were actioning this. But it all goes back to the framing and the importance to convey that you’re getting the benefits of one capsule of VINIA where if you look at our core package, $99 for 90, it’s $1.10 per capsule. And at $1.67, which is the price point for the 60 pack, you’re paying an extra $0.57 for a best in class premium coffee. Now, if you went on Amazon today, you’ll see coffee from $0.50 to $1.25 in the Keurig world. So it’s actually pretty good value when you think about it.

And importantly, and this is what Peter drove really hard into my email box. I think it was last night. He kind of said, in fact, the average American drinks three cups of coffee per day. We need to just make sure and they need to make sure that VINIA is their first cup of coffee of the day. And you know what? Once this happens and they get VINIA in their system, based on our clinical trials, we know that they may not need another cup because they’ll have that physical energy and mental alertness that is coming from our unique active ingredients and they will not need to be taking as many coffees every day. But at least make sure your first coffee is a VINIA cup of coffee. And if you want to drink other coffees during the day, relish your other coffees, but make sure your first coffee is a VINIA cup of coffee. So we’re going to start to drive this in the messaging. You’ll start to see this on the website. We actioned a meeting this afternoon on this. In 48 hours, you’ll see some of these changes on our website to really start to kind of frame the pricing and the value proposition for consumers.

Okay, what’s next for our beverage strategy, specifically our hot beverage strategy? Well, when you look at the US market and we’ve done a lot of research here, Keurig is the biggest. Keurig is the market leader. But boy, Nespresso have caught up significantly in the last three, four years. And roughly the market today, it’s a $6 billion market, of which $1.5 billion is on the Nespresso side of the business. And you can see this on the CNBC recent report. And if you look just on Google, interest between Keurig and Nespresso, you can see how Nespresso is really starting to get up there and battle neck to neck versus Keurig. Today, there is no Nespresso functional coffee. It’s just too hard, too hard to put for admire companies admire VitaCup to pack in all their vitamins and all the other stuff that they put into this little tiny 5 gram a pod versus a 10 to 11 gram pot in Keurig, there’s just no space, can’t do it, can’t do it with the pressure system.

Well, shell the partners, we are really close to cracking the holy grail here and to be able to have VINIA in an Nespresso compatible pod. We’ve actually been working on this for some time, and it’s going to be a game changer because we’ll be the only — once we crack this and we’re getting damn close, we’ll be the only player out there that is bringing functionality to this delivery mechanism. And that’s going to certainly open some interesting conversations with consumers and a broader ecosystem. And this is something that we’re working on for the next innovation to continue the momentum in hot coffee. It’ll be more in the in the lungo size which is basically 110 mils. This is actually showing 150 but it’s around about 110 mil is the lungo and the machines today are all programmed for basically espresso and lungo. This is how the machines are programmed today. So we’ll be basically focusing on the lungo side in order to deliver the functionality that we need to deliver. Benefits of one capsule of VINIA in each Nespresso compatible pod. So watch out for that. It’s a big focus for Dr. Yochi and Dr. Malkit and the team from an R&D perspective.

And again, we need to kind of flank the hot coffee strategy with green tea and black tea, which are very, very important categories. The green tea being more focused on physical energy and mental alertness, but also removing cellular waste and toxins, right, which is the broader detox space, which is and you look at the size of the green tea pod market, you have some brands there that are doing between $600,000 and $800,000 a month. Thank you very much. I’d admire a piece of that. And we’re going after it. Similarly on the black tea. So really excited with the strategy that we’re deploying on the hot beverage side. And this hot beverage strategy has the ability for us to create a billion dollar business. Bringing functionality, unique functionality, VINIA Inside, olive cells inside, pomegranate cells inside, you can visualize what the portfolio will look admire. Regular coffee, decaf coffee, green tea, black tea, red tea, and all this functionality, you can see the matrix. We execute that right through direct-to-consumer channels. It’s a business that’s going to sell hundreds of millions, has the potential to sell hundreds of millions of dollars, and it’s a monster of a business in itself.

Now let’s look at the other massive delivery mechanisms, talking about the recovery market in the snack bar market around protein bars. So here I spent some time with our partner. We have a great partner in LA that we’re working with here. This is some pictures from their factory. Beautiful. These are some sample bars that are going through the lines. We’re working now on optimizing. We have 15 grams of protein in a 70 gram bar. We’ve been doing some really good optimization work on the chocolate layer, as well as adding fiber bean derived protein, which has a much creamier and softer texture versus pea protein. And you can see the kind of claims that we’re going after, around the fact that the dilation of arteries and an boost in blood flow is able to boost the delivery of key nutrients and oxygen to muscles to inspire physical activity, but also to eliminate key cellular waste products to inspire muscle health and recovery. Okay, so this is the space that we’re going. We’re working now with this facility to be NSF sport certified and this is one of the factors that will impact our timing but we’re looking for a Q2 timing to get our chocolate bars and protein bars and peanut protein bars out.

Now I want to talk about hydration. And I know I’ve expressed a lot of excitement around our hot beverage strategy. I believe that the protein bar space is a very important play for us. We know that our athletes need the protein and it’s — VINIA and protein go perfectly well together. But the hydration space really, you look at the size of the prize and the competition in this area. This is where I really believe we can change what is on the sidelines and in the hands of every NFL, NBA, NCAA high school athlete by bringing superior science, superior efficacy, and amazing, amazing tasting product to the athletes of the USA. And I’m very passionate about this because in a previous life, I fought the Powerade, Gatorade battle when I ran Powerade in the US from 2011 to 2014. So I know the space really well. And it’s a space that I believe is waiting for real science to come in. And that’s just been a lot of hard work from us to crack the perfect formulation here for athletes. And we’ve made amazing progress, myself, Dr. Brian, and AJ, our VP of Marketing, we worked with what I would call the best product developers in Atlanta. Yes, all [xcode] (ph) people, the gentleman that’s partnering with us from a company called Bevnology was the head of R&D for Africa and Europe at The Coca-Cola Company, one of the best product developers, if not the best I’ve ever worked with, Louise. And we’ve spent up until now about 200 hours in R&D to crack this product. And the size of the prize is massive. You’ve got Liquid I.V. owned by Unilever. It’s a billion dollar brand. A billion dollar brand with 68% sugar. This is a demonstration of the challenges that health and wellness challenge that America faces. You’ve got Gatorade also, higher sugar levels than the regular product, right? And then you’ve got LMNT. This is about $500 million, $600 hundred million brand, very high levels of sodium. So there’s a space for us to play here with our partners, from a taste perspective and a performance perspective.

And we’ve been working on the perfect building blocks to go after this opportunity in the US. And obviously, it starts with VINIA, equivalent to 400 milligrams of VINIA. We built a proprietary electrolyte system. So we have sodium that’s all derived, sea salt, derived from pristine Irish coastal waters. Our potassium is actual coconut water powder. This is real stuff. And then we have 85 milligrams of magnesium. It’s marine-based magnesium. We spent the time I was in Atlanta optimizing and cracking a proprietary advanced sweetener delivery system, which for reasons around patents, I’m not going to go into the detail, but it allows us to get an amazing taste delivery, but also providing a low glycemic index, which is so important because we don’t want any quick spikes in sugar for athletes. And then we’ve also included amino acids into the mix because it’s so important to drive faster electrolyte absorption into the bloodstream.

In addition, we have another layer we’re working on, which is a power layer where we’re adding hydrogen into the product. And we can produce up to 5 milligrams of hydrogen by mixing a certain type of magnesium with the water. And this acts as an antioxidant that neutralizes the impact of oxidants that build up during exercise. So we’re putting our money where our mouth is. And in January we commence a big clinical trial. It’ll be done in an institution, a top educational institution in Scandinavia. We will contrast our solutions to leading competitor across key parameters. The key outcomes are all about performance and recovery in sports. This is the most critical benefit that athletes are looking for. And we’re going to be focusing on a number of critical biomarkers. And Dr. Brian is heavily involved in this with a number of amazing academics on the university side. And we’re going to be focusing on brain oxygenation, time to exhaustion, muscle recovery, reduction of inflammation, and how we leverage antioxidative enzymes from an overall recovery and performance perspective in addition to doing a lot of work on electrolyte pharmacokinetic studies to comprehend the absorption and actual lifespan in the body. This is going to be probably a four to five month research. We’re going to be doing the research across multiple football teams in a certain market. Each football team will get a different product. And it’s a major bet for us. It’s a major bet because if we get the results that we believe we can get, wow, this is going to modify the hydration electrolyte industry in the US and eventually globally. And that’s because of VINIA Inside and leveraging superior efficacy, superior taste and the broadening science from VINIA plus a lot of other R&D related to hydration and beverages. So we’ll keep you updated on this. But it’s super exciting. And literally I spent with the team, in the two days, I drank so many different types of formulations, the taste, the flavors are amazing. The combination of VINIA plus the flavor systems, plus the sweetness system literally I know how good it was because that night I literally I think I went to the bathroom admire 15 times because I drank so much on the different samples but we really nailed, we really nailed a number of critical flavors. We will do the actual trial using grape. Obviously, grape makes it’s our core flavor, but we’ll be branching out into other amazing flavors which appeal to the different aspects of the American palette.

Okay. Justin, I’ve gone for an hour. Holy. Okay. I’m sorry. I’ll keep on going. I’ll proceed quickly now. Hopefully people are enjoying it because we’ve done a lot of work and I’m sorry I didn’t achieve how long this was going. I really apologize. Look a lot of people ask about olives, right. Here you go, olives. Here this is beautiful. Olive cells, dried olive cells. I am officially taking the product. It’s about 400 milligrams here. Okay, this is the olive product. I’m just gonna mix it into some water now. The team have developed a product, actually smells really good as well, with super high level of verbascoside. Verbascoside, I hope I spelled it right. Justin, if it’s not, you can fix it later. But super high levels of verbascoside, glycoside. Verbascoside is the, literally one of the most potent anti-inflammatory polyphenols. Go look it up on Google. You’ll see what verbascoside is being used for. But in our world, in a supplement space at least, it’s liver health, joint health, cholesterol health, and Dr. Brian, Dr. Yochi, Michal, our VP of Regulatory Affairs, we’re focused now on the regulatory path. We’re focused on preclinical trials and clinical trials because we don’t bring products to market without the science and the efficacy to back up strong claims.

The playbook can look very, very similar versus what we’ve done on VINIA because all the delivery mechanisms make sense and there’s actually a lot of other creativity we can do with combinations as well. So we’re super excited for this. This is slated for the back end of next year. We’re working fast so if we can — if we are able to bring it up we’ll bring it up but we’ve got a lot to get through the queue of products to come out of this machine, this product development and execution machine grounded in basically our Cell Inside, VINIA Inside, Olive Cell Inside strategy. We have a queue and obviously we’ll work through that queue based on our available capacity. And I’m going to talk a little bit later about how we’re working really hard now to take capacity to the next level, given what we are experiencing now from a demand perspective of where we think we’ll be in the next four to six months. And what you’ve started to see now is the power of our botanical synthesis platform technology, how we can progress an array and portfolio of product lines that go after massive categories, massive categories, nutrition, nutraceuticals. We’ve talked before about pharmaceuticals and you’ll start to hear more from us in this area early next year. It’s not for this conference call. And you’ll see something really interesting here called cosmeceuticals. People are probably asking what is a cosmeceutical? Cosmeceutical is a cosmetic product that works, not just to make you feel good. It’s products that work. And we have some amazing opportunities in this space that I’m going to talk about most likely at the next shareholder update. But our technology has massive application. The botanical synthesis platform technology that we’ve developed has massive application across each of these significant, significant billion dollars, multi-billion dollar categories. And super exciting to see how we evolve our product lines to enter into each of these areas with the disruption that I believe we can.

Okay, now let’s look at major actions we’re taking to proceed to scale and profitability. This is when we start to look at cost management. It’s not all about driving top line. It’s also about driving bottom line. And we’re super focused on that. Manufacturing scaling. There was a question that was asked about where are we on capacity right now? We’re about 75%, shortly hitting 80%. We’ve ramped up massively in the month of December. admire I said, I wish I could show you a camera of our plants and you could see how many bioreactors there are and it’s all done in an orderly fashion. It looks beautiful, really. For me, it’s emotional. It’s beauty to the eye. I took our major shareholder there a couple of weeks ago and she was just admire, wow. Really, it’s admire being in a matrix movie. We are in addition, we are starting this month, increasing the size of our bioreactors by 22%. We’ve done all the development work here. It was successful. And this is really, really important. It’s coming at a critical time as we start to scale up to confront what we believe are the upfront demand levels. So this is a big win and kudos to Ilana, Zaki and the team for all the work they’re doing in this space. And literally as bioreactors are being harvested, they go to their station and they’re being fitted with systems which are 22% bigger than the system that they were utilizing for three weeks before. So really really exciting to see.

Drying, our drying equipment, the main dryer is ready. A lot of the other equipment we need pre-drying is here. Just given the circumstances we’re dealing with in Israel, it’s been slower to execute because obviously it’s been challenging for people to come into Israel right now. But we’re really unfortunate. We’ve built as a contingency strategy, and it was important for us to have this contingency, an amazing group of drying partners around us. So we don’t have any issues around drying capacity right now. We had another partner come on board, which has given massive capacity for us. And importantly as well, because we’re now getting stronger as a result of the amount of product that we’re bringing into their factories every single week to dry. So Ilana has done an amazing job negotiating that pricing down. And so this again, it’s really important to drive that gross profit number. And it’s taken obviously a little bit of pressure off us. Ultimately, we want to get this done as soon as possible. We’ve got to fly engineers into this country. And that’s obviously something I can’t promise when it’s going to get done because it’s conducive on the geopolitical environment that we’re dealing with. But obviously, we’re looking to try and do this as soon as possible. And please God, there’ll be peace in our country and we can get on with things and we’re going to be able to commercialize all of this equipment.

Other COGS management, the 90 bottle. And thank you. Many of our customers are telling us how much they love this bottle. This bottle not only saves us a huge amount of money and drives to gross profit margin, and we’ll see some of this. We should see some of this entering into the fourth quarter gross profit numbers. But it’s interesting when you comprehend some of the implications. We would get probably maybe 20 or 30 calls from customers saying to us, oh, I’ve got two bottles of 30. Right? Or you gave me the wrong bottles. Then we’d have to answer the call and we say, Mr. Customer, please look at your bottle. On the one bottle, it says a 30. The other one, it says a 60. Oh, I didn’t see it. I thought it was a 30. No more. People see 90, 1 bottle, much simpler. It takes a load off our customer success team. It wasn’t efficient. So in addition to the operational savings, there are other savings, and that’s going to add gross profit margin. And then kudos to the marketing team, we moved from a box that costs a lot more money to I think a much better looking box that literally reduces the price significantly. You can see how beautifully the bottle fits into the box. We’ve got messaging on both sides of the box and I’m going to show a quick video in the next chart. So you can see how efficient this is at our third party logistic partners. Literally they take the bottle, they put it in the box, we have a flyer that goes in to educate consumers, close the box, put a sticker on, Put the label on top and we’re off. We’re off to the races. There’s no need to put the box into another envelope that saves literally $0.40, $0.50. It’s money. It’s money. It’s gross profit and we’re looking at literally every single point in the value chain we’re looking at.

And then lastly, we’re now implementing a new ERP system to drive optimization across the value chain using top technology. This is going to boost our optimization process, give us much better data, drives much better costing accuracy, boost all of our documentation, traceability, which is so important, make it much faster, and improve our working capital management as a result of ability to better procure and scheme around all aspects of the business, including inventory management. All of this is obviously in addition to the benefits of scale that’s coming in from a demand perspective, all of these initiatives are helping us boost the gross profit margin, ultimately with the marketing efficiency gains to get this business to break even. As I said, I’m going to celebrate the team in a major way. Justin will figure out something unorthodox to do, but within the swim lanes. There’s a big celebration I’ve been waiting for and can start to see it in the next, I’ve been waiting a long time for this when I came on board as an investor, pretty much this time, four years ago. And I hope you feel the sense of excitement. I hope you feel the sense of conviction, the sense of belief that the actions that we’re taking anchored in our amazing platform technology, botanical synthesis platform technology anchored in the science that underpins it with great best in class marketing with mature, level of maturity in the systems that we’re putting in place in the organization that was on the road to that aspiration of building a multi-billion dollar profitable biotech company. And I’m looking forward to 2024. You’re going to see in 2024 some new dimensions of this amazing company, which I’m not allowed to talk about. And I’m looking forward to kind of share with you how we’re expanding the thinking to really start to scale the power of this technology to the next level. And on that note, Justin, I’m happy to say that we’ve kept 98% of our shareholder partners and I’m done.

Justin Meiklem

Yes and it is a work day. So I know people are drifting in and out. People ask why I smile, today I’m smiling because Ilan said that he was going to keep the presentation shorter than usual. And Ilan after all of that there was no coffee mug.

Ilan Sobel

Justin just for you, all of our shareholder partners. This is a mandate that I made Justin do for this launch. With everything else he’s been doing, we have a limited edition commemorative mug for all of our shareholder partners. And by the way, Peter should get a free one for his great advice that he sent through the other few hours ago. But if you go onto our Shopify site on vinia.com, you use the code partner at checkout, you’ll get a 10% discount and you’ll get this amazing VINIA shareholder partner mug delivered to your home before the end of the year. And please order your VINIA coffee, order your mugs, because I have a bet going with Justin. I said we would order, we would have more than 200 shareholder partners ordering mugs. And the numbers are there, are getting there, but they’re not there yet. So please go after that opportunity. Over to you, Justin.

Question-and-Answer Session

A – Justin Meiklem

We had over 200 on the call today. So thank you everybody. And also make sure if you have any questions, if you’ve got questions about the VINIA offer or the coffee, justin@bioharvest.com and I’ll help you out right away. A lot of questions, Ilan. The first one that came in, and I think you covered a fantastic job, talked a lot about production, but just to reiterate, the first question we got, you said we’re probably 80%, how close are you to the 20 ton capacity is the first part and then what are the plans to boost production, how quickly can we scale production, people are seeing the — with the new products coming on and just a lot of different questions about how you make sure that you’re going to match supply with demand.

Ilan Sobel

So we’re, as I said, we’re about 75% in December and Ilana is going to ramp that up in the first quarter. By the end of the first quarter, I think we’ll be touching 90%. What this means, Justin, is that we have now aggressively commissioned a explore for more capacity so that end of ‘24, early ‘25, we’re ready to ramp it up again because I think we’ll be really hitting the edges as we proceed into third and fourth quarter of next year, especially if any of these products that we’ve kind of talked about today are not even home runs, but get to second base, right? Just given the size of the market. If they’re a home run, we’re in deep trouble. But we’ll figure out how to find capacity. But the focus is very quickly now, and I’m spending a lot of my time with Ilana looking at sites very close by to where we are right now. That’s a good time for this. But also importantly, we’ve started a massive explore to start to build a monster of a facility in the US. And in fact, in January, I will be going with one of our partners on our advisory board, together with one of our partners, very, very strong partners in the evangelical world, we’ll be hitting a number of key states, states admire Arkansas, Texas, North Carolina, South Carolina, New Jersey, looking and speaking with key stakeholders and governments, looking for the best partnership model for us to build a monster of a US facility because we believe we’re on the track that we need we’re going to need to do it. There are multiple drivers of that. Some of them we talked about it today, some of it is for other meetings in the future. But we’ve got to start now because we’ve got to start thinking two years out. So that’s going to be a major goal for first quarter. I’ll be on the road a lot in addition to a lot of the work we’re going to be doing from an investor relations perspective, you and I together. That’s pretty exciting. We’re seeing already amazing interest. Given the understanding of people in government, of the power of our technology and what our technology can do, it does from a sustainability and climate challenge perspective. I’m starting to see some very strong engagement from chiefs of staff of certain key people high up in power in certain parts of the US. And obviously, we’re looking for the best bundle. The best bundle means basically different incentives to be in a certain state, but also access to markets, access to the best people. And yeah, it’s exciting to be thinking about this.

Justin Meiklem

Bill Missouri just offered to build a scheme for us. Hey, Matt. Okay, great answer. Thank you. What’s the scheme for Canada?

Ilan Sobel

So, we’re working obviously in Canada we’ve got the license and I’m not sure our shareholder partners comprehend what an achievement that was because Health Canada is probably — is amazingly professional. They do so much diligence on the science of the companies. When you go in for regulation, you’ve got to prepare a dossier this thick. And we were very successful to get five very significant claims related to our technology and obviously in the area of cardiovascular health, which is going to be a big differentiation driver in the marketplace. Now that we’ve got that under our belt, the next step is a site license, which is pretty easy to do. And that site license is more just around having a license, we’ll produce the product in the US, it goes to a site in Canada, that site in Canada has to be licensed. And it actually is the same site as your 3PL logistics partner. And so we’ve got a partner, we’re just closing the commercial agreement with them and then we can apply for the site license. And then frankly, Canada will go into the queue. And that queue is just a queue from a supply perspective. So we’ll see where coffees are at. We’ll see where some of the other new products are and we’ll have to sequence and prioritize. It could be Q2, it could be Q3. We’ll have to see how things go. But importantly, we’ll be ready. We’ll be ready by basically May to go into Canada. But I don’t want to make commitments because it’s going to be subject to supply chain availability. At the end of the day, there’s only so much we can produce in our existing facility. We’re doing what we can to enhance the space that we have, but we’re going to have to kind of sequence things and it’ll be an iterative process based on the performance in the market.

Justin Meiklem

Thank you. You spoke about supply chain. There’s a couple of questions. And I think especially if you’re a new follower, can you explain to people how our admire co-packaging, other VINIA shipping with new products, how it works? You did a tour of the US with different partners and potential partners, how we actually create the products and put VINIA into products.

Ilan Sobel

So obviously for us, what we’ve been doing right here in Israel, we’re growing the cells, we dry the cells, we do the mixes, and we’ve been pretty much for the last two months. It’s admire grow, dry, mix, fly. And we air freight to our co-packing partners. And then you have the conversion into capsules and bottles. And then we proceed, we have a great 3PL partner, Shipcom. Tom and the team do an amazing job there. They really, I feel admire they’re part of our company. They have two sites in Indianapolis as well as in LA and that helps us again reduce our cost of delivery in America. You have 10 zones and zone 1 is much cheaper than zone 10. So if you’re shipping, say for example, from Indianapolis into say LA, it’s probably 7 — it’s admire a 7 zone and you’re paying a much higher fee. So obviously having a site in California and then having another site in Indianapolis, we’re able to really keep our shipping costs lower. And as you saw in that package, the orders come through Shopify, they literally build, they take a box, they take the bottle, they put it in, it gets a label and off it goes on. Now it’s DHL, we’re utilizing DHL, we’ve got a better deal with DHL, but that’s the go to market with great partners.

Justin Meiklem

And then maybe just explain using coffee as a new example, how does coffee go from roasting to somebody’s home?

Ilan Sobel

So yeah, you’ll actually — there’ll be a docu series on this coming up shortly. I was in Seattle as part of my trip at Joe’s Garage Coffee and we kind of filmed the whole process. It’s really beautifully done. And basically we ship our powder again to Seattle and we have a specific coffee bean, a specific roasting profile. They basically start the process of the roasting and then it goes through a mixing process, the actual ground coffee. It’s roasted ground and then the coffee is actually mixed in a large mixer, industrial mixer. And then it goes into basically downstream taps into the actual pods. Here you go. This is one of the VINIA regular. This is the superfood coffee pod. This is a decaf pod. They go to these pod machines. And I’ve got some videos from when I was there. We can send something out on the next emails or we’ll send out the link to the docuseries which is probably going to be launched in about seven or eight days. We’re going to launch another 30-minute program on TBN, which will have at least 15 minutes on the coffee process where you’ll see that whole process literally from start to finish. And then we basically ship from Seattle right now to LA and LA and out. In fact, today, Justin, we’re shipping, we promised the 14th, anybody — we promised to ship on the 14th. We’re shipping one day early. Today, all of our coffee orders are going out. So again, OTIF, on time in full. We delivered on that. So we can tick the box for those people in my management team that were accountable. And that’s the process. And we’ll proceed shortly product again to Illinois so we can reduce the shipping costs. But this time we just shipped out of California to get people their coffee before Christmas.

Justin Meiklem

You mentioned the record months, October, November, based on results. How confident are you in Q4 guidance?

Ilan Sobel

I feel really good about it. We’re 12 days into December. We’ve got October, November behind us. We’ve got quality momentum. When I say quality momentum, it’s stable momentum. All of you shareholder partners, you can go into Amazon, you can get a sense of what my numbers are on Amazon based on my ranking. I think now I’m admire 8 or 9, anywhere in the top 15. It’s a meaningful Amazon business. And basically our core vineyard business is doing great. We have really good momentum going into, and this is a time where supplements in December normally have a softer month, but we’re bucking the trend.

Justin Meiklem

Yeah, that flows perfectly to the next one. Somebody asked if there will be a Christmas VINIA sale admire there was this time last year?

Ilan Sobel

So the answer is no. And we made some tough decisions. You talk about breakeven, you talk about managing gross profits, you talk about managing a brand. So in fact, this year we had no Black Friday discounts. We said, no, we were not going to do Black Friday discounts for new customers. We did offer some Black Friday discounts to get lapsed customers, select few customers that had stopped purchasing VINIA. Many of those we know, we have one out of three people that leave VINIA, leaves VINIA because they don’t have enough money. It’s really sad. The amount of people that come in through the customer success team, literally, it’s very, very humbling, saying — telling us what VINIA has done for them and just the fact that they just can’t afford it. Obviously, we try and be as flexible as possible. We’re not a charity, but we show a lot of compassion and we try and be as flexible as possible. But we had admire a comeback and we offered a certain program to bring people back and that was fairly successful. But yeah, we did no discounting. So, you had brands over that period for admire two weeks. Normally it starts two weeks before and goes for a week after. So three weeks in November, they were discounting 30%, 50%. No, VINIA was stable price. You’ll see stable prices moving into December as well. And in fact, I think there’s some parts of our business we can take up price that we’re looking at as we look at optimizing the revenue management. We should always be looking at areas to take up price where we feel there’s going to be an inelastic effect.

Justin Meiklem

I think we’re getting there but please a few last questions please submit your questions. A couple quick ones. If you were invited, let’s be clear, would you appear on Joe Rogan?

Ilan Sobel

Absolutely. I would love to get on the Joe Rogan show myself. I would relish talking to him about many topics. It was a great honor for VINIA to appear there in a cameo appearance. We were caught off guard. I got a phone call from somebody telling me and I’m admire, are you kidding me? And it’s admire, this is organic. This is the power of organic growth. And it’s nice when things admire this happen and thank God we had the supply chain geared up for it.

Justin Meiklem

Excellent. Yeah, good. You talk about the difference between organic and paid. Questions about VINIA spokespeople. Do you have discussions about engaging admire famous athletes to be official page spokespeople for VINIA?

Ilan Sobel

So I’ll just think about how I answer this carefully. We have many very, very famous people, famous public figures that are taking VINIA. In these cases, we’re under NDA, so I’m not able to actually say that person X is taking VINIA because they’re taking vina as part of specific medical treatment systems that they are utilizing with certain integrative medicine specialists out there. But it is super meaningful and makes me and a couple of them, but you can’t say anything, proud that we have some really important public figures that making a difference to the communities around them, good people that are taking VINIA. As it relates to athletes, we continue to do the grassroots work, which is very, very important. What’s important for us now is that we’ve learned a lot from this grassroots work. A lot of this work has kind of gone in to help us comprehend the dosage as far as what we do with VINIA Pro, the usage occasions. All of this is really important to get the right product market fit. And that’s why I’m so excited about where we’re going on a hydration strategy and the way we’ll do the dosage. In fact, the dosage recommendation is you take one in the morning, right? So you have a sachet in the morning and then you have a sachet during or and or after sports. So that’s how we’ll do the dosage for our athletes. We also have the VINIA Pro capsules, which is a double dosage that we’re working on. So, the grassroots stuff has really helped educate a much sharper strategy for the athletes. And once we have this clinical, literally I’ll be getting my briefcase, as will you, and AJ, our VP of marketing, that’s driving me hard on this. I kind of say affectionately that I work for AJ because he’s admire, I need this for NCAA teams. I need this for NFL. And I’m going to be there with my briefcase, sitting with the top coaches in the US and some of the biggest universities, LSU or the major sporting institutions and showing them, please go out on clinical trials, the impact, the effect that this product is having and really start to convert every sports field sideline, sideline by sideline. There’s a brand there that looks kind of orange. We all know who they are. We need to proceed that sideline colors to these colors with superior science, superior efficacy and superior taste. And I really think we have something special in our hands. We just got to do the work, got to do the work. Nothing’s easy, but we have the building blocks for something really special.

Justin Meiklem

Excellent, we’re at 90 minutes. I’ve got lots of questions here about sweeteners, et cetera. Please email me directly, I’ll get your answer, justin@ bioharvest.com. Can I give you three quick ones or three great questions? Yeah, sure. One, Matt asked how close you are to the final tranche. Is there still room available in the financing that was announced?

Ilan Sobel

Okay, good. I’m happy you asked that. We’re really close. We have up until the 22nd of December. There are a few final people at the table for basically, we were in the final tranche. We had another admire $1.3 million where we’re easily raised half of that and we’ll see what happens in the next few days. We’ll close with whatever we want. 22nd December is the final timeline and then we need to proceed on. But yeah, if people are still interested and they qualify as validated investors, they should accomplish out to you. But they’ve got to proceed pretty quickly because obviously we want to try and close this. But there’s still a window if there are people out there that are interested in this convertible loan. Justin, you can share the terms. It’s amazing terms, specifically given the momentum that the company has. But accomplish out to Justin, justin@bioharvest.com. accomplish out to me, ilan@bioharvest.com. Copy Justin when you accomplish out to me please and we’ll get back to you as soon as possible if this is something that you’re interested in.

Justin Meiklem

Excellent. Two more questions. I know how much the team appreciates the well wishes. Thank you so much for everybody. Lots of congratulatory comments coming in. A good question is, maybe comment on how you make decisions on the marketing mix. If TBN is very effective as a television, are people going to see VINIA on other channels? Other media?

Ilan Sobel

It’s a great question. So, TBN for us is a great partnership. We’ve really found a sweet spot in the partnership. We know how to, and the way I articulated with my partners in TBN, it’s about driving first. We’ve got to drive ratings. We’ve got to progress amazing content because at the end of the day, TBN is a TV station and they demand eyeballs and they care so much about their ratings and they care so much about bringing their customers fantastic content. And so far, we’ve been, we and what we’ve done with them, we’ve been able to do great work and deliver strong ratings. Because traditionally when you do these kinds of programs, your ratings will drop 30%, 40% because people are admire, oh, what’s that? But given how interested people are in the science, in the fact that we’re from Israel and the technology and how we’re changing people’s lives, we’re delivering great ratings. And when you deliver great ratings, you can deliver great revenue. All right. It goes in that order. And we’re doing some amazing work. I saw some work admire that. That work that we just saw now was one of our partners in TBN, Angelique, she’s amazing. She went out on the streets where she lives and just the blind taste testing. And we just have people that are so committed to our bring about. And we’re going to start to see some great work coming out. It’s — TBN is growing as a network. You have 80 million evangelical Christians. It’s a third of the US, it’s big. And by no means have we, have we basically started to see, diminishing returns, not at all. If anything, it’s getting stronger and stronger because we’re understanding the audience better and better. However, we can’t be a one trick pony and we’ve got to dimensionalize. And today we’re advertising on other networks. It’s surgical to get the right ROI. You’ll see our ads selectively on major networks admire Fox and other networks. And what’s exciting and talk about organic is there’s a lot of organic stuff that’s happening outside. And also we’re starting to get approached by some other really interesting health and wellness channels, health or wellness driven stations to be part of their narrative. And that’s because we as a company, given our botanical synthesis technology, we have a really interesting leadership narrative. And that’s helping us drive a lot of sales in an organic way, because a lot of that is non-paid media, which is the best and the most efficient.

Justin Meiklem

Thank you, everybody. So I can ask you one more fantastic question, which I haven’t been asked before. And then maybe you could just give your parting remarks. This is a great question. If the supply had not been constrained last quarter, what do you think Israel sales and US sales could have looked admire?

Ilan Sobel

It would have looked more admire this quarter. We’re about a quarter behind. If you look at everything, if you look at what we had committed in the beginning of the year, we’re a quarter behind. Right. And I think, there are very few small, medium cap, whatever you want to call us, companies that actually give guidance out there. Most of the time the CEOs are admire in bunker mode half the time. We’ve been, that was a conscious decision that you and I, Justin, made right in the beginning where we said we’re driving a movement of change. We were bringing shareholder partners and we’re doing something collectively. We’re building a community, we’re building a team and we’re going to change the world together. So, I put my neck out there. We gave guidance, right? We made some good decisions, I think, around third quarter, where we didn’t want to push, we could have pushed more out, but it meant actually, because we had to do so much in reconfiguring our manufacturing as a result of new machines coming in, we didn’t want to risk, it’s a biological plant. You have a closed system. You can’t admire open your system in and just bring all these machines. When we bring machines in, we create bubbles because we want to make sure we keep the integrity of the systems. So we decided to do it slower, which meant that it was going to delay us a quarter. Also, we decided, in early third quarter, given the nature of the market and access to cash, we needed to be really conservative in preserving our cash. And basically, we’re going to focus on driving revenue maximization and gross profit. And I think those were the right decisions. So all in all, it’s probably one quarter difference, but it’s meant that we have the right building blocks. This is really important. We have much safer, please God, safer, more predictable building blocks going into 2024. So, again, tough decisions, but the right decisions. And I think frankly, those kind of decisions is what shareholder partners, all of you out there, you expect me and the leadership team and the board to be making those tough decisions and making the right decisions. And I think we did the right thing. We were responsible as we looked at how we were scaling the business and the capacity in a way that was sustainable and didn’t put any risk or minimize the risk that we’re putting into the business, so that we didn’t disrupt the functioning of a biological plant.

Justin Meiklem

Yeah, I just thank you so much for the preserve. Please take us away, Ilan. That’s our 90 minutes.

Ilan Sobel

There’s a few comments I think is very important and appropriate for me to make at this juncture before I close. I just want to firstly thank from the bottom of my heart and I’m speaking on behalf of all of our Israeli employees of just the tremendous preserve that we’ve received from our shareholder partners, where the genuineness and the worry was not about the business performance, but was about the safety of our employees, and just genuine care and a vote of understanding and conviction around what we’re dealing with here in Israel. And I can’t tell you how many emails we got, some phone calls, and WhatsApp messages, and all of you know who you are. But, our world has changed drastically since October the 7th. And having the preserve that we’ve had from our shareholder partners, as well as our customers, our customer success team has been inundated with calls from customers sharing their preserve for the nation of Israel. And I just wanted to thank everybody for just the real concern and sense of love and care that you’ve conveyed to us and it’s meant a lot to everybody. So thank you. On the business side, I hope you’ve enjoyed today’s discussion. Today pretty much marks four years that I’ve been involved in this business, four years since I invested in this business. I think I need to look at when I did the bank transfers. I think it was admire December the 19th I transferred the money. So close to four years, December 19th, 2019. Right. So exactly four years ago. And I’m just — at the time I didn’t achieve I’d have the most amazing journey of my life professionally and in some respects personally to have the opportunity of leading the ship with this amazing technology that we hold in our hands, this botanical synthesis technology. And it’s just been an amazing journey. And I’m so proud of what we as a team with our shareholder partners have achieved and the quality capabilities that we’ve built, which I believe are going to just stand us so strongly to build this company into a force of change for the world. And I can’t tell you, as you sit around the Christmas table or now with Hanukkah ending, at the end of Hanukkah, but as you sit in this festive time and kind of contemplate, I’m certainly very, very proud that I have this opportunity of a lifetime to direct this team with just such wonderful people that I’m surrounded with, whether it’s with Dr. Zaki, my partner, who’s been an amazing Chairman and partner in driving the business and our leadership team and all our employees and all our shareholder partners and just feel super lucky and privileged to have this opportunity in my life. And it’s something that at this time of the year, we need to appreciate these things. And I hope after you’ve seen this presentation, that you have that same sense of appreciation and conviction as we collectively go on this journey and make 2024 a year to recollect for BioHarvest, for all of us, based on our contribution, and for the — I’ll say this, maybe hundreds of thousands of customers that we’re going to be impacting, positively impacting, driving transformational human utility value, driving a transformational positive change in their health and wellness as we go into 2024. So thank you and I wish you all Merry Christmas, happy Hanukkah and compliments for the seasons. And may we have a year ahead of us, that most importantly is a year filled with peace. Because all of us here, we just want peace. We want this challenge — these challenges that we deal with on our borders to end and for our children to live in peace. And over to all of you, may you have peace and health and happiness in the year ahead and thank you.

Justin Meiklem

Merry Christmas. Thank you, Ilan. Bye, everyone.

Ilan Sobel

Thank you. Good night.