Kane Biotech Inc.

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Kean Biotech's third quarter 2020 earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference call will be open to questions. If you have a question, please press star, then 1 on your touchtone phone. If you would like to withdraw your question, please press the hash key. This conference is being recorded today, November 30th, 2020. I'd like to turn the conference call over to Ray Dupley, Chief Financial Officer for Kean Biotech. Please go ahead, sir.

Thank you. Good afternoon and welcome everyone to Kean Biotech's quarterly earnings conference call. We're delighted to have you join us on the call today. This call will cover Kean's financial and operating results for the third quarter ended September 30th, 2020. along with a discussion of some of our recent highlights and goals for the remainder of 2020 and beyond. Following our prepared remarks, we will open up the conference call to a question and answer session. Our call today will be led by CAEN's Chief Executive Officer, Mark Edwards. But before we begin our formal remarks, I would like to remind everyone that some of the statements on this conference call contain certain forward-looking information and statements within the meaning of securities law which may not be based on historical fact, including, without limitation, statements containing the words believe, should, may, plan, will, estimate, predict, continue, anticipates, potential, intends, expects, or other similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results events or developments to be materially different from any future results, events, or developments expressed or implied by such forward-looking statements. Such factors include, among others, the company's stage of development, lack of product revenues, additional capital requirements, risks associated with the completion of clinical trials and obtaining regulatory approval to market the company's products, the ability to protect its intellectual property, independence upon collaborative partners. These factors should be considered carefully, and readers are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements are made as of the date hereof, and the company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future results, events, or developments. With that, I will now discuss our third quarter 2020 financial highlights. To streamline things, all the numbers I will mention are rounded and are therefore approximate. The following figures are all in Canadian dollars. Revenue from product sales in the three months ended September 30th, 2020 was just under $287,000, an increase of 48% compared to just over $194,000 in the three months ended September 30th, 2019. This is due to higher online sales and a larger customer base in the current period. Gross profit for the third quarter of 2020 was just over $129,000, an increase of 11% compared to just over $116,000 for the quarter ended September 30th, 2019. The increase in gross profit is primarily related to higher product revenues. Total operating expenses for the quarter ended September 30th, 2020 were just over $1,247,000, an increase of 37% compared to just over $912,000 for the same period in 2019. The increase in expenses is mostly related to legal costs associated with the Animal Care Agreement, which was finalized during this period. Loss from operations and finance costs for the third quarter of 2020 was just under $1,031,000, an increase of 25% compared to a loss of just under $822,000 for the quarter ended September 30, 2019. At September 30, 2020, The company had cash of just over $1,272,000. The company recently announced that it had entered into a one-year credit agreement with Pivot Financial Inc. for a non-revolving term loan in the aggregate amount of $1,480,000. The credit facility will be used by Kane Biotech for funding research and development relating to eligible government reimbursable expenditures expenses related to stem animal health, and general working capital purposes. I'd now like to turn the call over to Mark to discuss our recent highlights, as well as our ongoing business and operational objectives. Mark?

Thank you, Ray. I'd like to begin by thanking our employees, our strategic and research partners for all their hard work during a global pandemic and going above and beyond. Secondly, I'd like to thank our supportive shareholders, particularly those who were able to make it on the call today. My view of Q3 2020 is that this was a pivotal period in the history of Kean Biotech as we executed a major step in our commercialization strategy late in the third quarter. I want to take a quick minute to give an update on our strategy and why we believe it's the right direction for Kean and really just a quick blurb on really to take this back to basics. So Really, at the base, Kane is a company that develops products that prevent and disperse microbial biofilm. And really, bacteria can be found in either a planktonic, which is free-floating state, or in a biofilm. In a biofilm, bacteria can thrive in very hostile environments and survive attacks by host immune systems, antimicrobials, antibiotics. Whether you have bacteria trying to attach to a server, where you have bacteria trying to touch the surface, you have biofilm. Because these biofilms are market or industry agnostic, and our technologies have applications against biofilms in general and not applications necessarily in each specific market, our technologies have potential applications in a wide variety of markets. Now, we do recognize that we can't be all things to all people, So we've decided to create industry-specific commercialization vehicles. The objective of the commercialization vehicles is to significantly accelerate the commercialization of our technologies by creating a business in collaboration with a strategic partner who's a market leader in their respective industry. They will not only provide market access. The strategic partner will not only provide market access but capital as well to help grow the business. and that allows us to bring in a dedicated leadership team. We announced in September, now the first step towards creating those commercialization vehicles, we announced in September that Kane would enter into a joint venture with UK-based Animal Care Group to create STEM Animal Care. As part of the deal, the Animal Care Group invested $5 million for a one-third equity stake in STEM and the right to commercialize their products in the veterinary channel outside of the Americas. This opens us up to the European market and creates a new royalty stream for cane, building on our great partnership with Decker Veterinary Products. Following on from that exciting announcement, we are truly fortunate that Kevin Cole accepted the role of President and CEO of STEM. Kevin is well known within the animal care market and is the right person to drive this business forward. With that said, I'm pleased to introduce Kevin Cole on our call today. Kevin?