Shareholder Presentation August 2018 - A vertically integrated cannabis company providing recreational and medical marijuana based products ...
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A vertically integrated cannabis company providing recreational and medical marijuana based products through our leading retail stores Shareholder Presentation August 2018 Unless otherwise stated all amounts are in USD 1
Disclaimer This presentation (together with any supplements and any other information that may be furnished to prospective investors by Captor Capital Corp contains “forward-looking statements” or “forward-looking information” within the meaning of applicable securities laws (collectively, “forward-looking information”). Forward-looking information is generally identifiable by the use of the words “believes”, “may”, “plans”, “will”, “anticipates”, “intends”, “budgets”, “could”, “estimates”, “expects”, “forecasts”, “projects” and similar expressions, and the negative of such expressions. Forward-looking information in this presentation includes, but is not limited to, statements concerning economic trends, the size of the market, the timing and scope of Captor Capital Corp capital expenditures, the anticipated use of proceeds, financial forecasts, and the proposed ownership allocation. Captor Capital Corp has based this forward-looking information on factors and assumptions about future events and financial trends that it believes may affect it’s financial condition, results of operations, business strategy and financial needs, including the ability of Captor Capital Corp to generate cash flow from operations and obtain necessary financing on acceptable terms, general economic, financial market, regulatory and political conditions in which Captor Capital Corp operates, consumer interest in Captor Capital Corp products, competition, anticipated costs, government regulation of Captor Capital Corp activities and products and in areas of taxation and environmental protection, the timely receipt of any required regulatory approvals, and Captor Capital Corp ability to obtain qualified staff, equipment and services in a timely and cost efficient manner. While Captor Capital Corp considers these assumptions to be reasonable, these assumptions are inherently subject to significant uncertainties and contingencies. Additionally, there are known and unknown risk factors which could cause Captor Capital Corp actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information contained herein. Known risk factors include, among others, regulatory risks, the lack of a public market for the securities of Captor Capital Corp, the limited operating history and financial track record of Captor Capital Corp and the uncertainty as to revenues, reliance on key personnel, product liability, unfavourable publicity, management of growth and the difficulty in forecasting. Unless otherwise stated all amounts are in USD 2
Table of Contents § About Captor § Our Strategy § Cannabis market § Our Pipeline § Our Performance § Our Team Unless otherwise stated all amounts are in USD 3
About Captor Capital Corp • Captor Capital Corp. (“Captor”) is a vertically integrated cannabis company providing recreational and medical marijuana based products to consumers via its leading brands and dispensary locations. • Listed on the Canadian Securities Exchange, the OTC USA, and the Frankfurt Stock Exchange, Captor owns and operates advanced growing facilities which produce consistent high quality contaminant free marijuana for its customers, as well as other high demand cannabis based goods for consumption. • Through ownership of top brands and high value dispensary locations, Captor’s revenue is expected to exceed a run rate of $45 million, without considering future acquisitions. • Furthermore, Captor seeks to capitalize upon the combination of its intellectual property and extensive network of industry relationships to provide its customers with a wide variety of products, and a best in class experience. Unless otherwise stated all amounts are in USD 4
The Captor Strategy • To efficiently engage Captor’s well defined and deep pipeline of cultivation and dispensary targets, acquire them at favourable prices, and unlock the intrinsic value of these companies through Acquire operational enhancements. Profitable Operations at Favourable • The primary strategic focus of Captor is to acquire profitable, established cannabis focused Pricing companies that require capital to scale. Expand Geographies • Target investments will be top quality operations with experienced management and defined Identify and Product Synergies business plans. Offerings Robust & • Acquisitions will be selected based off of synergy, possibly with current existing brands, locations, and operations. Consistent Shareholder • Upon acquisition the investments will be integrated and supported to enhance operations and Return profitability. Expand Integrate Team and Ops and • Expand team of experienced operators to support organic growth. Intellectual Achieve Property Synergies • Initial geographic focus will be on California and Nevada as these are high growth markets, with large populations and direct synergies. Deploy Capital to • Captor will continue to expand its geographic footprint as the industry evolves legally within the Scale USA, and potentially internationally, depending on the regulatory framework. • The management team at Captor believe that having a controlled scaling with a primary focus on profitability will lead to a consistent and robust shareholder return. Unless otherwise stated all amounts are in USD 5
The Current Cannabis Market Source: Marijuana Business Factbook 2017 Marijuana Legalization Status Medical marijuana broadly legalized Marijuana legalized for recreational use No broad laws legalizing marijuana Source: www.governing.com Unless otherwise stated all amounts are in USD 7
California Cannabis Market Formalizing the informal market alone is a $24 billion opportunity* California's population is more than 3x larger than Colorado and Washington State combined. Microbusiness Tes4ng Delivery 3% 1% Percentage of total sales 3% 2019 Estimate Retailer $6 Billion 7% Legal Dispensary 9% Cul4vator 49% Distributor 12% $24 Billion Black Market Manufacturer 16% California marijuana licenses by activity *2016 cannabis report from the Cowen Group Source: University of California Agricultural Issues Center Unless otherwise stated all amounts are in USD 8
California Cannabis Licensing Reviewing the data in the Cannabiz Media Licensing Database reveals some interesting facts about California marijuana licenses that help to paint the picture of how the state’s marijuana marketplace is developing. Here are some key facts: • There are 1,780 license holders in total in California. • 13 companies account for 10% of the licenses statewide. • The company with the most licenses is Central Coast Farmer’s Market Management, LLC with 106. That’s 3% of all licenses in the state. • Many license holders seem to be acquiring multiple cultivation licenses. • Just under 900 companies have secured the 1,732 cultivation licenses. • 15 jurisdictions account for half of all licenses o Oakland, Los Angeles, Sacramento, San Francisco, Carpinteria, Salinas, Buellton, Eureka, San Jose, Arcata, Santa Barbara, Cathedral City, Desert Hot Springs, Lynwood, and Santa Rosa. • 1 jurisdiction accounts for nearly 1 in 10 licenses in the state – Oakland (282 licenses). • Three jurisdictions account for nearly 20% of licenses in the state o Oakland (282 licenses), Los Angeles (203 licenses), and Sacramento (139 licenses). Unless otherwise stated all amounts are in USD 9
California Opportunity • Lots of independent stores doing well, but few retail brands being established across the state. • Customers are loyal to dispensaries that provide exceptional user experience. The Opportunity: By License Numbers RETAIL • Establish a network of retail dispensaries offering quality products, superior Cul4vators 1,732 49% service and expertise. Manufacturers 564 16% • Hub and spoke model supplying acquired retailers with high quality I-5 grown Distributors 417 12% products. Dispensaries 316 9% • Provide capital and management, economies of scale to targeted acquisition. LOGISTICS Retailers 258 7% • Consolidate growers, processors, retailers. Delivery 112 3% • Mandatory testing will remove many products from marketplace. Microbusinesses 96 3% • Establish a broad regional brand for consistent and quality product. Tes4ng 23 1% BRANDING • Customers will pay a premium for a high quality, consistent product. Unless otherwise stated all amounts are in USD 10
Our Pipeline Unless otherwise stated all amounts are in USD 11
Deal Timeline – Platform for Growth Company LOI Defini0ve Regulatory Closed Agreement Approval Mellow Extracts Pending California MedMen (Santa Ana) N/A MedMen N/A (W. Hollywood) Chai Cannabis Castroville Fine Detail Greenway Par4al Washington Cascadia Gardens Par4al Mainstem N/A Unless otherwise stated all amounts are in USD 12
MedMen (Santa Ana Dispensary) • 8,148 sq. ft. facility centrally located in Santa Ana, CA. • Repeat patients already make up over 50% of transactions, looking to level out over 80%. o Only city in Orange County to allow dispensaries. o Orange County has over 3,000,000 inhabitants. • MedMen dispensary patients spending $85.23 on average, on par with West Hollywood store, and $20 more than • Sales in first weekend of California recreational competitors. legalization were up 400% from historical weekend average. • Sales during January to March 2018 was approximately $1.2 million. Unless otherwise stated all amounts are in USD 13
MedMen (West Hollywood Dispensary) • 2,010 sq. ft. facility centrally located in West Hollywood (WeHo), CA. o Local population base of 39,000. o Represents approx. 10% of LA cannabis market. • Recreational marijuana license allowance for marijuana sales and small on-site cultivation. • Market information (WeHo): o Estimated medical market value (2025): US$6 million. o Estimated adult-use market value (2025): US$60 million. • Sales during January to March 2018 was approximately $6 million. • Sales in first weekend of California recreational legalization were up 500% from historical weekend average. • MedMen dispensary patients spending ~$85 on average, $20 more than competitors. o Repeat patients already make up over 80% of visits. Unless otherwise stated all amounts are in USD 14
Capitola Healing Association Inc. (Chai) • Revenue for the last 3 years was c.US$9 million and was purchased for US$6.1 million. • Chai is focused on being an elite high grade low cost medical dispensary. • Only sells lab tested and 100% indoor grown product. • Consistently rated top 5 dispensaries in Santa Cruz. • Chai is developing what will be one of Santa Cruz largest glassware show room, focusing on: o Unique designs and specialty blown pieces for connoisseurs, and o Largely discounted standard pieces. Unless otherwise stated all amounts are in USD 15
Marina Caregivers Coop Inc. • Operating for over 10 years serving Marina Del Rey, CA • Focused on patient education to help individuals make informed choices about cannabis • Customer support unlike any other dispensary - Peer support groups - Marijuana 101 classes - Cultivation classes - Free chair massage days • In 2017 sales of over $5,000,000 USD with net income of over $2,900,000 USD (50.8% net income margin) - 2018 sales tracking to beat previous year • From 2016 to march 2018 assets grew 8x balanced by an increase in equity from net income Unless otherwise stated all amounts are in USD 16
Higher Level of Care • Offer to acquire 100% equity under LOI. o Asking price of $2,875,000. • Due diligence request in progress. • Serving multiple towns in California due to location o Castroville o Moss Landing o Prunedale o Elkhorn o Watsonville • Primarily Flower Sales but with a wide assortment of edibles, concentrates, vapes, tinctures, etc. • Averaging $450,000 in sales per month in 2017. Unless otherwise stated all amounts are in USD 17
Mellow Extracts Lab • Secured location in Costa Mesa, conditional use permit granted, operations starting now. • Permit also includes distribution license, increasing EBITDA when distribution starts. • USD $400,000 per month in orders. o Joint Ventures with Big Foot Products & Aeroinhaler pending. • Concentrates and Extracts highest margin sector in industry at 45%+ net. • Mellow Lab CEO served on several state committees in the legalization process. Unless otherwise stated all amounts are in USD 18
3863 Hannegan Road, Bellingham • Investment: USD $285,000 + buildout Costs. • Approved for capsule manufacturing. • Captor Capital Corp. to own all LCB approved assets & IP. • New product line rolling out Q2 2018. • Tier 2 license - 10,000 sq. ft. of canopy allowed, ~2,020 sq. ft. current utilization after expansion, first harvest in November 2017. o Estimated 86,260g of dry weight harvested (before trimmings and loss) for sale in November 2017 at a minimum of $3.30 per gram. Unless otherwise stated all amounts are in USD 19
5373 Guide Meridian, Bellingham • Investment: USD $650,000 cash + buildout costs. • Current location has potential to expand to nearly full 10,000 sq. ft. • Captor Capital Corp. to own 100% of LCB approved assets & IP. • Q2 2018 revenues expected to be approximately USD $240k per month, ~31% EBITDA margin. • Tier 2 license 10,000 sq. ft. capacity ~5,200 sq. ft. current utilization. Monthly sales from ~5,200 sq. ft. of grow space Unless otherwise stated all amounts are in USD 20
Main Stem Goods and Services • Investment: USD $550,000 for 9.9%. • Joint venture with Scotts Miracle Grow. • “Amazon” of the cannabis industry (“picks and • Stand alone IPO expected in 2018. shovels”). • No cannabis licensing needed, ability to do • Online procurement of supplies to all levels of business in all 50 states. cannabis industry. • Main Stem CEO is also Sr. VP of the Washington State Cannabis Alliance. 5+ Million 600+ 400+ Packaging Units Sold Business Customers Unique SKU’s Unless otherwise stated all amounts are in USD 21
Our Performance Unless otherwise stated all amounts are in USD 22
Projected Revenue & Profits Captor Subsidiary Income Proforma by Quarter 1,60,00,000 1,40,00,000 1,20,00,000 1,00,00,000 80,00,000 60,00,000 40,00,000 20,00,000 0 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Gross Subsidiary Revenue Subsidiary EBITDA Unless otherwise stated all amounts are in USD 23
Stock Comparative Valuation Multiples Captor Stock is materially undervalue based on cannabis trading mul4ples Enterprise Value / LTM Sales Captor Golden Leaf Kush BoYles MPX Bio Organigram MedReleaf Supreme CannaRoyalty Aphria Canopy iAnthus Hydrothecary Marapharm Cronos MedMen Emerald Health 0x 50x 100x 150x 200x 250x 300x 350x 400x 450x Note: All data as of 30 May 2018 – Captor assuming no debt. Captor market valua4on based on es4mated stock price of CAD$0.30 and 786.9M shares outstanding. Unless otherwise stated all amounts are in USD 24
Our Team Unless otherwise stated all amounts are in USD 25
Management Team A balanced and diverse team with extensive experience in cannabis and M&A John Zorbas Shawn Groshans President and Director Head of Business Development Mr. John Zorbas is an entrepreneur with a proven track record in the metals exploration Mr Shawn Groshans has approximately 20 years in merchant banking and corporate and development industry and the investment banking. He has held senior advisory finance with experience in private equity investing, advising companies on mergers and positions in various facets of business including operations, marketing, sales, strategic acquisitions, capital raising, business development, and restructuring. Subsequent to planning and structured finance. Mr. Zorbas has been with the Company since June his experience in banking he took a role as Head of Business Development for a global 2008. He also serves as URU Metals Ltd (Captor Capital investment) Chief Executive intelligence and cyber-security firm, in addition to his involvement in entrepreneurial Officer since 2 June 2014. He was appointed Chairman of Management Resource ventures which includes the cannabis industry. Solutions PLC in April 2017. He also served as the President of MGM Productions Group Inc a company focused in media and retail investments., as well as Director of Mr. Groshans serves as a Non-Executive Director for Tower Financial and he has both ZorCorp Capital Holdings and Starline Capital Holdings Infrastructure Fund. He previously worked for Salamanca Group, Richmond Park Partners, S-RM and PwC. served as the Chief Executive Officer and a Director of Monchhichi PLC (former: Mercom Capital PLC) until 23 December 2016. Mr. Zorbas also served as a Director of Stratton Capital Corp. until 20 October 2016. He is a founding shareholder of Asian Coast Development Ltd. Mr. Zorbas holds an Honors Bachelors in Economics from the University of Toronto. Unless otherwise stated all amounts are in USD 26
Management Team A balanced and diverse team with extensive experience in cannabis and M&A John MacPhail Oliver Summers Matt Longo Founder and CEO of I-5 Holdings Ltd (Subsidiary of Captor) Director of Retail Dispensaries Director of Manufacturing & Cultivation Mr. John MacPhail is most recently the founder and Mr. Oliver Summers has been a Los Angeles Medical Mr. Matt Longo has over 15 years operating experience CEO of Captor Capital Corp. and sits on the board of Cannabis advocate since 2005, speaking and in the cannabis industry and has extensive agricultural Mainstem Goods & Services. promoting cannabis numerous times on the behalf of and supply chain knowledge. Additionally he has years patients. He has owned and operated three of experience in general agriculture, and held various I-5 Holdings Ltd. is a Canadian cannabis company dispensaries in LA since 2006 and is an experienced operational roles at Anheuser-Busch Distribution. focused on the USA sector. The company owns two grower of boutique cannabis strains. dispensaries in California, partnered with two cultivators Mr. Longo has guided the set-up of Prop 215 compliant in Washington state, created growth in a goods and Mr. Summers is an original member and moderator of businesses in California and navigated the complex and services procurement company, and assisted in the the Greater Los Angeles Collective Alliance (GLACA), multi-layered regulatory environments. Mr. Longo has opening of a laboratory in California. Mr. MacPhail was a member of Americans For Safe Access (ASA), owned and operated two cultivation facilities with a total one of the first individuals to recognize the tighter Marijuana Policy Project (MPP), Patients Advocacy of 20,000 square feet and employed roughly 100 restrictions on retail/dispensary licenses in California Network (PAN). He is also a former member of the employees. Prior to his role with Captor he owned and and created a strategy going forwards for I-5 to leverage South Robertson Neighborhood Council, Pico operated a dispensary and was involved in three other that restriction into a more profitable and defensible Neighborhood Council, Melrose West Neighborhood cannabis-related business ventures across the United position for the company. Council and UFCW Local 770. States, including a 70-acre hemp production farm in Franklin, TN and a 22,000 acre licensed hemp farm in Prior to his involvement in the US cannabis space he Madisonville, Kentucky. Both farms are licensed by the was Investment Banker he has assisted companies to Department of Agriculture and subject to stringent raise funds and advised management on corporate protocols as a hemp producer. strategy. Unless otherwise stated all amounts are in USD 27
Non- Executive Board Members Henry Kloepper Kyle Appleby Alexander Dementev Director Director Director Mr. Kloepper is a former Chief Executive Officer of Mr. Appleby is a member of the Chartered Public Mr. Dementev is an independent geophysics researcher. Frontier Lithium Inc. and has worked in investment Accountants of Canada and Ontario, and President He provides technological solutions and services to banking and structured finance throughout a 30 year and Chief Executive of CFO Advantage Inc., a companies in various industries including manufacturing, career. He has a rounded knowledge of the capital company that provides CFO, and other financial distribution and mining. Mr. Dementev holds equivalent markets, strategic growth and investments. In the past, accounting and compliance services to companies in of Master Degree in Applied Physics from Rostov State Mr. Kloepper has worked in executive positions with JP various industries including junior mining, University and Post Graduated Degree in Analytical Morgan, Citibank, Bank of America, and North American manufacturing and distribution. Mr. Appleby is Chemistry from the Institute of Analytical Chemistry and Trust in Canada, the US and Europe. Currently, Mr. currently CFO of a number of reporting issuers in Geo-Chemistry (both in Russian Federation). Mr. Kloepper is a director of a number of public companies Canada. Mr. Appleby lives in Toronto, Canada. Dementev is currently the Chief Technology Officer for listed in Canada and the U.S., which are involved in Klimov Design Bureau, leading several international consumer finance, merchant banking, manufacturing hydrocarbons conversion projects. Mr. Dementev lives in and distribution. His responsibilities range from lead Toronto, Canada. independent director to chairing audit/compensation committees. Notable directorships include: Award Capital (Spot Coffee - food and beverage), National Construction, Mogul Energy (Oil and Gas), DealNet Capital (Consumer finance/merchant banking), Gilla Inc. (E cigarette manufacturer/distribution), Sofit Mobile (App. and technology incubator), and Pacific Software Inc. (Metal Fabrication). Unless otherwise stated all amounts are in USD 28
Captor Capital Corporation THANK YOU 4 King Street West, Suite 401, Toronto, ON M5H 1B6, Canada John Zorbas johnz@captorcapital.com Unless otherwise stated all amounts are in USD 30
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