investor presentation€¢ seo, e-shop, blog, and social media campaigns launched in 2017; mailing...
TRANSCRIPT
2/24TSXv: NDVAI N V E S T O R P R E S E N T A T I O N
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.
Forward Looking Statement
3/24TSXv: NDVAI N V E S T O R P R E S E N T A T I O N
Executive Summary _________________________________________ 4
Growing Demand for Medical Cannabis _______________________ 6Recreational Cannabis Market ________________________________ 7Insufficient Supply of Cannabis _______________________________ 8
Talented and Experienced Team ______________________________ 10High Quality Products _______________________________________ 11Our Corporate Identity ______________________________________ 14Customer Acquisition Strategies ______________________________ 15
London Facility _____________________________________________ 17Production Facility Pictures __________________________________ 19Path to 40+ Million Grams ____________________________________ 20
London Operating Expenses __________________________________ 22Capex/Use of Funds _________________________________________ 23Comparables _______________________________________________ 24
01 –SUMMARY
02 –INVESTING IN CANNABIS
03 –INDIVA ADVANTAGES
04 –LONDON FACILITY
05 –USE OF FUNDS AND COSTBREAKDOWN, LONDON ONTARIO
Table of Contents
4/24TSXv: NDVAI N V E S T O R P R E S E N T A T I O N
STRONG FUNDAMENTALS
• Award-winning cannabis products
• State-of-the-art GMP-standard indoor production facility
• Fully funded expansion
• Experienced Master Grower with award-winning strains and loyal 1000+ patient base.
• Experienced management team, passionate about helping people and protecting investors
NEAR TERM CATALYSTS
Sales license is expected as early as Q2 of 2018 and sales expected to start in Q4 of 2018
Sales Expansion
Fully funded expansion to 40, 000 square feet underway and to be completed in Q4 of 2018.
Processing Facility
Fully funded processing facility planned for 2019. Facility to produce INDIVA, Bhang, DeepCell and other cannabis products.
ExecutiveSummary
Q2
20
18 02 Investing inCannabis
Executive Summary
01
Investing in Cannabis
02
INDIVA Advantages
03
London Facility
04
USE OF FUNDS AND COST BREAKDOWN
05
6/24TSXv: NDVAI N V E S T O R P R E S E N T A T I O N
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 revenue by 2024.
At September 2017, there were 269,502 patients registered, which is a 14% quarter-over-quarter increase & approximately equal to Health Canada’s projection for 2022
Actual Registered PatientsHealth Canada’s Projected Registered Patients
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Re
gis
tere
d P
ati
en
ts
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
December 2017: registered patients exceeds Health Canada’s 2022 projection
POTENTIAL MARKET Source: Health Canada, Statistics Canada, Canadian Community Health Survey, medicalmarijuana.ca
Mul
tiple
Sc
lero
sis
Epile
psy
Can
cer
Low
BM
I
Seve
re P
ain
Ris
k of
D
epre
ssio
n
Mig
rain
e H
eada
ches
Inso
mni
a
Anx
iety
Art
hriti
s
Hyp
erte
nsio
n
Life
Str
ess
(Ele
vate
d)
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
11,058 physicians have authorized patient access to medicinal marijuana
269,502registered patients in total to date
11,000(approx.) new patients per month (~5% month-over-month growth)
Growing Demand for MedicalCannabis
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Consumption (Metric Tonnes) Users (Thousands)
Daily Weekly Monthly Occasionally Non-Consumers Potential Customer
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.
17%
61%
7%4%
8%
3%
ANNUAL CANNABIS USERS AND CONSUMPTION
Aged 15 and over, Canada excluding Territories, Mid-point Estimates, 2018
10
410
55
20
1100
300
1500
Once Less than once a month 1-3 Times per month At least once a week Daily
175
Source: Deloitte, PBO
Recreational Cannabis Market
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YT0
0 0
0
3
1
3
2
4
NT
AB
SK
MB QC
NL
PE
NS
NB
NU
56ON
22BC
56
Number of licences issued by province
Health Canada Market Data from Q3 2017
• Dry flowers: 6.3mm grams sold, 38.9mm grams in inventory
• Oil: 9.3mm grams sold, 11.1mm grams inventory • 269,502 registered clients at December 31, 2017• Prices range from $1.75/gram to $15/gram
Current Production
• 102 existing LPs• Current production insufficient
to meet demand• 45 Sales Licenses issued
(37 companies)
Health Canada Market Data from Q3 2017
• Supplying even the low end of the estimate of the recreational cannabis market would require the production of over 700mm grams of cannabis annually
Insufficient Supply of Cannabis
Q2
20
18 03 INDIVA Advantages
Executive Summary
01
Investing in Cannabis
02
INDIVA Advantages
03
London Facility
04
USE OF FUNDS AND COST BREAKDOWN
05
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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 COO, 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
CREATIVE––––––––––––––––––––––––––––––––––––––––––––––––––––––
Tom Borowicz Chief Brand Officer
• Over 30 years of experience in marketing, branding, print/digital advertising and design with Fortune 500 companies
PRODUCTION––––––––––––––––––––––––––––––––––––––––––––––––––––––
Pete Young Master Grower, Founder
• Grow Team: 15+ years of experience producing medicinal strains for hundreds of patients
• International recognition and multiple product awards
PROJECT MANAGEMENT––––––––––––––––––––––––––––––––––––––––––––––––––––––
Jose Laurentino Chief Technology Officer
• 20+ years in agricultural project development including indoor and greenhouse expertise
Talented & Experienced Team
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POSITIONING
At INDIVA, we believe cannabis can add to one’s general wellness and we stand for the destigmatization and normalization of cannabis for medicinal and recreational use.
INDIVA is an experienced producer of high quality cannabis products designed to contribute to the health and wellness of its clients.
Our logo symbolizes experience, strength, know-how practical knowledge, as well as a strong foundation for investment and growth. It is respectful of the cannabis movement without the clichés of cannabis counter-culture.
Our clean aesthetic and pallet strike the perfect balance between mature yet accessible, contemporary but still classic enough to be lasting, and holistic without looking like products that only belong in a health food store.
Our website and media content features contributors focused not just on cannabis, but wellness (nutrition, fitness, sleep) and culture (dining, events).
Our associations with award winning American brands that we will produce and sell in Canada and internationally with our “powered by INDIVA” logo.
Our Corporate Identity
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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
• Agreement with London Compassion Society to transfer up to 1,200 clients
MARKETING
• SEO, E-shop, blog, and social media campaigns launched in 2017; mailing list of up to 2,000 clients
• Partnerships with popular social media influencers• Packaging developed and focus group tested• Engaging events team and keynotes at cannabis,
wellness, cultural, and community events across Canada
• Featured interviews in key publications
MEDICAL AND COMMUNITY ENGAGEMENT
• Strong ties to London’s medical community • Mandate to support patient networks and societies
PROVINCIAL RETAIL STRATEGY
• Sales teams active in multiple provinces • Responding to provincial RFPs• Access to award winning US products
CustomerAcquisitionStrategies
Q2
20
18 04 London Facility
Executive Summary
01
Investing in Cannabis
02
INDIVA Advantages
03
London Facility
04
USE OF FUNDS AND COST BREAKDOWN
05
17/24TSXv: NDVAI N V E S T O R P R E S E N T A T I O N
ACMPR License
40,000 square feet- 10,000 sq. ft. retrofit complete- 8,000 sq. ft. production space- 30,000 sq. ft. expansion planned 2018- Adds 21,600 sq. ft. of production space 30 Year Lease with right of first refusal to purchase
2,500 - 3,000 kgsannual production capacity (dry flowers)
Extraction facility to be built on site
Ample Power & Water
5 Minutes from Highway 401
London Facility
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Mother Room
Oil Extraction
Drying Room
Trim Room
Packaging
Drying Room 2
Trim Room 2
Flower Room
Mother Room 2
Veg Room
Storage/Receiving
Pump
Admin/Call Center/QA
Planned Expansion(Flower Rooms)
Flower
Flower
Flower
Flower
Flower
Flower
Flower
Pack
Dry
Trim
Admin Flower
Pump
Str/Rec
Veg
Mother
Oil Extraction
Dry 2
Trim 2
Flower
Flower
Flower
Flower
Flower
Flower
Flower
Flower
Mother 2
Existing Fenceline
London Facility
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LARGE SCALE CULTIVATION
• Currently evaluating 3 large greenhouse facilities in South Western Ontario for production partnerships
• INDIVA’s criteria: newer glass houses, access to infrastructure, experienced production partner, ability to fund retrofit out of existing cash resources, measured expansion over time
INTERNATIONAL DISTRIBUTION
• Active negotiations with German distributors for large quantity multi-year supply
• Agreements with US cannabis products companies to use Canada to produce and export internationally
• Active negotiations with Polish, Costa Rican and Maltese governments for production partnerships
Domestic Expansion
International Expansion
Path to 40+ Million Grams
Q2
20
18
Executive Summary
01
Investing in Cannabis
02
INDIVA Advantages
03
London Facility
04
USE OF FUNDS AND COST BREAKDOWN
05
05 Operating & Capital Costs
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KEY 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
EMPLOYEES (ESTIMATED)
Full production: 47 Senior management (5)Accounting (3)Gardening (10)Security/IT (2)Distribution (5)Customer Service (12)Sales (3)QA (2)Marketing (5)
1. Power 2. Bulbs 3. Labour 4. Shipping 5. Packaging 6. Materials 7. Contingency
1
7
6
5
4
32
London Operating Expenses
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Building Retrofit and Equipment
• HVAC, security, fence, electrical • Production facility and equipment• HID lights, carbon filters• Video surveillance, archiving
$14.5mm
Working Capital and Contingency
• Inventory build, G&A
$18.5mm
Total $33.0mm
London Capex /Working Capital
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VALUATIONS OF CANADIAN PUBLIC COMPANIES
Market data as of April 27, 2018
Reordered by market cap (C$mm)
$5,421mm
$4,331mm
$2,055mm
$2,043mm
$1,490mm
$745mm
$732mm
$630mm
$549mm
$486mm
$405mm
$187mm
$157mm
$115mm
$63mm
Licensed producer
Canopy Growth (WEED)
Aurora Cannabis (ACB)
Medreleaf (LEAF)
Aphria (APH)
CannTrust (TRST)
Organigram (OGI)
Cronos Group (MJN)
Emerald Health (EMH)
CanniMed Therapeutics (CMED)
Supreme Pharmaceuticals (FIRE)
Hydropothecary (THCX)
WeedMD (WMD)
Delta9 (NINE)
Emblem (EMC)
INDIVA (NDVA)
Capitalization: Basic Shares Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . 81.0mm Warrants: . . . . . . . . . . . . . . . . . . . . . . . . . . .27.3mm Options: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3mm Convert: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8.9mmFully Diluted SharesOutstanding . . . . . . . . . . . . . . . . . . . . . . . 121.5mm
Balance Sheet (April 27, 2018):Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$33mmConvertible Debenture $6.7mm
INDIVA Limited