Our Experience is Growing

Transcription

1 1 / 30 Our Experience is Growing investor Q3 presentation

2 2 / 30 Forward Looking Statement The information contained herein, together with any amendments or supplements and any other information that may be furnished by the company, includes forward-looking information. Such information is based on assumptions as to future events that are inherently uncertain and subjective. The company makes no representation or warranty as to the attainability of such assumptions, including the completion of a financing or as to whether future results will occur as projected. It must be recognized that the projections of the company s future performance are necessarily subject to a high degree of uncertainty, that actual results can be expected to vary from the results projected and that such variances may be material and adverse. Prospective investors are expected to conduct their own investigation with regard to the company and its prospects. This presentation does not constitute an offer to sell or a solicitation of an offer to buy any security.

3 3 / 30 Table of Contents Executive Summary investing in cannabis Executive Summary 5 Application Process for Becoming a Licensed Producer 6 Growing Demand for Medical Cannabis 8 Recreational Cannabis Market 9 Insufficient Supply of Cannabis 10 Indiva advantages Talented and Experienced Team 12 Our High Quality Products 13 Our Unique Positioning 14 Our Corporate Identity 15 Customer Acquisition Strategies 16 london facility Production Facility 18 Production Facility Layout 19 Production Facility Pictures 20 Timeline to Production and Sales 23 Domestic and International Growth: The Path to 40 Million Grams 24 production AND financial projections Production 26 Operating Expenses 27 Capex/Use of Funds 28 INDIVA Corporation 29

4 4 / 30 executive summary

5 5 / 30 Executive Summary $ 65%+ margin product, recurring revenue Market demand growing exponentially with introduction of $7 Billion recreational market Financial Projections, London Facility $25.0 $20.0 INDIVA received its Cultivation License July 14, 2017 by July 2018 Insufficient supply Experienced grower with award $15.0 $10.0 $5.0 winning strains and loyal, installed 1,000+ patient base $ Experienced management Revenue EBITDA Net Income team, passionate about helping people and protecting investors Construction Complete Cultivation License received July 14, 2017 Sales License expected early 2018

6 6 / 30 Application Process for Becoming a Licensed Producer Preliminary Screening Enhanced Screening Security Clearance Review Pre-License Inspection Cultivation License Sales License Canadian laws permit licensed INDIVA has requested the pre-license producers to produce and sell cannabis inspection which focuses on the security and cannabis oil to clients (currently features of the facility. INDIVA s security only) for medical purposes consultant has successfully guided other applicants through pre-license inspections Onerous health, safety, security and and has reviewed and approved INDIVA s record keeping requirements = long, security features difficult and expensive process = strong barrier to entry Pre-license inspection requested May 11th and expected Q If an applicant satisfies all the requirements, Health Canada must License received July 14, 2017 issue the license Sale License post 2 successful harvest INDIVA s John McCluskey has extensive (expected Q1 2018) experience working with Health Canada for both pharmaceutical companies and licensed producer applicants Regulated Industry = Barrier to Entry = Opportunity for INDIVA

7 7 / 30 investing in cannabis

8 8 / 30 Growing Demand for Medical Cannabis 7,000 physicians have authorized patient access to medicinal marijuana 167,000 registered patients in total to date 10,000 (approx.) new patients per month (~8% month-over-month growth) Growth rate of medicinal cannabis users is higher than expected Health Canada projected 450,000 patients will be using cannabis at $1.3 billion annual value by 2024 Q there were 167,000 patients registered, which is a 30% quarter-over-quarter increase and approximately equal to Health Canada s projection for 2020 Registered Patients 450, , , , , , , ,000 50,000 Health Canada s Projected Registered Patients Potential Market 6,000,000 5,000,000 4,000,000 By the end of 2016, the level has already reached Health Canada s 2020 projection Actual Registered Patients ,000,000 2,000,000 1,000,000 Multiple Sclerosis Epilepsy Cancer Low BMI Severe Pain Risk of Depression Migraine Headaches Insomnia Anxiety Arthritis Hypertension Life Stress (Elevated) Source: Health Canada, Statistics Canada, Canadian Community Health Survey, medicalmarijuana.ca

9 9 / 30 Recreational Cannabis Market Size and Makeup of the Canadian Recreational Market According to the Deloitte Survey, the size of the Canadian recreational cannabis market could be as much as $8.7 billion per year, or similar to the size of the Canadian spirit market. Annual Cannabis Users and Consumption Aged 15 and Over, Canada excluding Territories, Mid-point Estimates, 2018 Metric Tons Thousands 450 1, , , , , Once Less Than Once a Month 1-3 Times per Month At Least Once a Week Daily 0 Consumption (LHS) Users (RHS) Source: Deloitte, PBO

10 10 / 30 Insufficient Supply of Cannabis Number of licences issued by province Current Production 52 existing LPs Current production < 40mm grams/year Health Canada Market Data from Q mm grams sold, 18.1 mm grams in inventory 167,754 registered clients at March 31, 2017 Prices range from $1.75/gram to $15/gram YT 0 NT 0 NU 0 NL 0 D. Deloitte Survey and PBO Report Supplying even the low end of the estimate of the recreational cannabis market would require the production of over 700mm of cannabis annually BC 10 AB 2 SK 2 MB 2 ON 26 QC 1 PE 1 NB 1 NS 0 Source: Health Canada; *Assumes 1 gram/day/patient

11 11 / 30 indiva advantages

12 12 / 30 Talented and Experienced Team Finance & Corporate Development Niel Marotta President & CEO, Director, Founder Managed over $1 Billion across several industries Involved in capital raises and M&A transactions exceeding $1 Billion Legal & BUSINESS DEVELOPMENT Koby Smutylo General Counsel, Director, Founder Koby is a seasoned lawyer and has acted as counsel to private and public companies Helped finance and license an ACMPR LP Finance Jennifer Welsh Chief Financial Officer Managed a global finance team for eight years as Corporate Controller of a TSX listed company Former consultant for a publicly traded LP developing their annual budget program and internal reporting as well as supporting their transition to a new ERP system Sales and Distribution Max Marion Director, Founder Founded and led growth of consumer health product company from inception to $8mm of annual revenue Creative Tom Borowicz Marketing & Branding Marcin Mazur Rusak Copy Writing, Digital Marketing Over 30 years of combined experience in marketing, branding, print/digital advertising and design with Fortune 500 companies Regulatory & QA John McCluskey Vice President of Regulatory Affairs & Quality Assurance 15+ years of Quality Assurance experience Acted as a consultant on over 30 ACMPR applications Production and Patient Care Grow Team: 15+ years of experience producing medicinal strains for hundreds of patients International recognition and multiple product awards Quality Assurance & Science Daniel Zavitz PHD Over 30 years experience in research, lab compliance and QA Security David Hyde Security Consultant Leading expert in ACMPR security compliance

13 13 / 30 Our High Quality Products INDIVA s strains were developed over several decades of working compassionately with individuals in need. Our grow team is led by a master grower that is recognized in Canada and internationally as a leader in the field of cannabis cultivation. High-quality medical and recreational cannabis products

14 14 / 30 Indiva Is Inclusive Our Unique Positioning INDIVA will capture the market at the intersection of medical and recreational cannabis markets. Medicinal Cannabis RECREATIONAL Cannabis Indiva Is Experience Our master grower has mastered cannabis cultivation over decades of experience and experimentation with different growing techniques. His expertise is held up to strict standards enforced by John McCluskey, a Quality Assurance expert with 20+ years of experience in the pharmaceutical industry. MMAR Regulatory System ACMPR Regulatory System The INDIVA facility is a manifestation of both industries.

15 15 / 30 Our Corporate Identity The drop represents Cannabis Oil The V symbol embodies INDIVA s core vision of promoting a peaceful, healthy and happy lifestyle and it stands for the victory of cannabis legalization. At the same time the leaves represent dry flowers IND are the first three letters of the word Indica IVA are the last three letters of the word Sativa The word INDIVA is a combination of Indica and Sativa, two types of cannabis. The third type is Hybrid which is derived, like our logo, from elements of both, Indica and Sativa.

16 16 / 30 Customer Acquisition Strategies Compassion Community Relations Established relations with prominent and experienced members of the compassion community We will offer familiar strains and an overall respectful and familiar patient experience Medical Community Outreach & Education Developed with help from a professional medicinal cannabis liaison trained to educate doctors regarding medicinal cannabis and by compassion society staff with years of experience with real patients Launching in 2018 and bringing medical professionals the information they need to make informed decisions about medicinal cannabis and how it fits into patient treatments Marketing Website is in development: to be launched along with our blog and social media campaigns in 2017 Packaging developed and focus group tested Social media platform in development Innovative PR campaign to build awareness

17 17 / 30 LONDON facility

18 18 / 30 Production Facility 30 Year Lease with right of first refusal 5 Minutes from Highway 401 Approved by local fire, police and municipal authorities Ample Power & Water - 10,000 sq. ft. retrofit complete - 8,000 sq. ft. production space - 25,000 sq. ft. expansion planned 2017/ Adds 21,000 sq. ft. grow space

19 19 / 30 Production Facility Layout Packaging Drying Trimming Flower Room Mother Room Veg Room Storage/Receiving Pump Admin Pack Dry Pump Str/Rec Veg Mother Flower Admin / Call Center / QA Trim Planned Expansion

20 20 / 30 Production Facility Pictures

21 21 / 30 Production Facility Pictures

22 22 / 30 Production Facility Pictures

23 23 / 30 Timeline to Production and Sales Cultivation License granted July 14, 2017 Full ACMPR license granted after two harvests successfully tested September, 2013 Application submitted 2015 Entered review stage Q Construction completion Q License to cultivate, production 2018 Full ACMPR license, Sales

24 24 / 30 Domestic and International Growth: The Path to 40 Million Grams Domestic Expansion Potential: London: future sites identified for large scale operation Eastern Ontario: 7 acre site identified in Cornwall ($2mm funding available from owner); 18 acre site identified in the township of Nation with support from local authorities Corporate Development International expansion: INDIVA has signed a cannabis supply agreement with a Swiss manufacturer; potential platform for international distribution in Europe and South America Retail distribution: INDIVA has established relationships with large retail pharmacy and health food chains Licensing: INDIVA has initiated discussions with American edible marijuana product brands

25 25 / 30 production + financial projections, London Ontario

26 26 / 30 Production Projected (dry flowers only) (Post-Expansion) Revenue: $22.5mm Gross Margin: $15.9mm EBITDA: $12.5mm Net Income: $8.7mm Patient Base: ~8000 Annual Production and Total Lights in Flower Rooms 3,000,000 1,200 2,500,000 1,000 2,000, ,500, ,000, , Annual revenue per light $18,200/year Grams Lights 2,270 grams /per year/ per light Average revenue per gram: $8 Annual gross margin per light $14,200/year Average Cash Cost per gram: $ $2.00 Inventory and Patient Growth 1,400,000 1,200,000 1,000,000 9,000 8,000 7,000 6, , , , ,000 5,000 4,000 2,000 1, Inventory (grams) Patients

27 27 / 30 Key Expenses: Operating Expenses Cash costs: Power, light bulbs, labour, packaging, shipping, soil & nutrients, composting, QA testing and contingency (20%) G&A: Management, accounting staff/admin, customer service/call center, security, distribution team Rent, insurance & security Software Power Bulbs Labour Shipping Packaging Materials Contingency Employees (Estimated) Full production: 35 Senior management (4) Accounting (2) Gardening (10) Security/IT (2) Distribution (5) Customer Service (7) Sales (3) QA (2)

28 28 / 30 Capex/Use of Funds Building Retrofit and Equipment HVAC, security, fence, electrical Production facility and equipment HID lights, carbon filters Video surveillance, archiving $10.8mm Working Capital and Contingency Inventory build, G&A $4.2mm Total Proceeds $15mm

29 29 / 30 Valuations of Canadian Public Companies INDIVA Corporation Licensed Producer Canopy Growth (WEED) Market Cap (C$mm) $1,356mm Aurora Cannabis (ACB) $813mm Shares Outstanding* 9,537 Fully Diluted Shares Outstanding 11,835 (includes shares and interest from convertible debentures and management options) Pro-Forma Basic ShareS Outstanding 16,218 Pro-Forma fully diluted ShareS Outstanding 17,518 Aphria (APH) Medreleaf (OGI) Organigram (OGI) CanniMed Therapeutics (CMED) Supreme Pharmaceuticals (FIRE) Emblem (EMC) Emerald Health (EMH) Hydropothecary (THCX) $772mm $740mm $241mm $211mm $202mm $134mm $114mm $90mm Indiva $30mm *Pre 4,000:1 split Market data as of July 17, 2017

30 30 / 30 Thank you for your consideration