CANNAINVESTOR Magazine May / June 2017 - Page 93

Q: What are competitive advantages and barriers to entry?

HelloMD: The competitive advantages are that we have a unique platform that is already scaling and will continue to scale. We have one of the largest patient communities in America and its growing very quickly and will accelerate further. Its an ecosystem of medical professionals and retailers and brand ambassadors as well as patients. It’s a true ecosystem that crosses the entire industry. In terms of barriers to entry, it’s a strong network effects – the more traction we get the more difficult it is for a competitor to compete with us and at some point it’s going to become impossible to displace because you cannot take on a whole ecosystem. We already have competitors who are copying features of ours – mostly on the doctor patient side – not on the retailers; but it would be difficult to scale to our level and it would be difficult to displace the network all at once.

Q: What happened in December – there was a small drop? Seasonality?

HelloMD: There is a lot of vacation dates – when there are vacation days doctors are off. That’s what happened in December.

Q: What are your steady state gross margins?

HelloMD: Around 56% is what we have on our end.

Q: What is the interest rate?

HelloMD: We’ve had two high interest loans – one is Kabbage and the other is Dealstruck where we refinanced Kabbage and got a better deal with Dealstruck.

Q: What is the high legal expense?

HelloMD: I think this is a one off related to licensing – it wasn’t material.

The Q&A with the Founder is based on due diligence activities conducted by SI Securities, LLC. The verbal and/or written responses transcribed above may have been modified to address grammatical, typographical, or factual errors, or by special request of the company to protect confidential information.

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