TGOD THE GREEN ORGANIC DUTCHMAN SEPTEMBER, Life

Transcription

1 TGOD THE GREEN ORGANIC DUTCHMAN SEPTEMBER, 2017 MAKING Life BETTER

2 Disclaimer Forward-Looking Statement This documentation is a presentation (the Presentation ) of general background information about The Green Organic Dutchman Holdings Ltd., ( TGODH ) activities current as of August 31, It is information in a summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice, when deciding if an investment is appropriate. This Presentation does not constitute or form part of any offer for sale or solicitation of any offer to buy or subscribe for securities nor shall it or any part of it form the basis of or be relied on in connection with, or act as any inducement to enter into, any contract or commitment whatsoever. An offer can only be made by the offering memorandum and the appropriate exemption documents being provided to prospective purchasers. Recipients of this Presentation who are considering acquiring securities of TGODH are reminded that any such purchase or subscription must not be made on the basis of the information contained in this Presentation but are referred to the offering memorandum. The information contained in this Presentation is derived solely from management of TGODH and otherwise publicly available information concerning TGODH and does not purport to be all-inclusive or to contain all the information that an investor may desire to have in evaluating whether or not to make an investment in TGODH. Prospective investors should read the offering memorandum before considering an investment in TGODH. No representation or warranty, express or implied, is made or given by or on behalf of TGODH or any of its affiliates, directors, officers or employees as to the accuracy, completeness or fairness of the information or opinions contained in this Presentation and no responsibility or liability is accepted by any person for such information or opinions. No person has been authorized to give any information or make any representations other than those contained in this Presentation and, if given and/or made, such information or representations must not be relied upon as having been so authorized. The only representations and warranties made by TGODH would be those in the offering memorandum and definitive subscription agreement. The information and opinions contained in this Presentation are provided as at the date of this Presentation. The contents of this Presentation are not to be construed as legal, financial or tax advice. Each prospective investor should contact his, her or its own legal adviser, independent financial adviser or tax adviser for legal, financial or tax advice. Certain statements in this Presentation may constitute forward-looking information, including future-oriented financial information and financial outlooks, within the meaning of applicable securities laws. Forward-looking information may relate to TGODH s future outlook and anticipated events or results and may include statements regarding TGODH s financial results, future financial position, expected growth of cash flows, business strategy, budgets, projected costs, projected capital expenditures, taxes, plans, objectives, potential synergies, industry trends and growth opportunities. Often but not always, forward-looking information can be identified by the use of words such as anticipate, believe, expect, project, estimate, likely, intend, should, could, may, might, target, plan and other similar expressions or variations (including negative variations) of such words and phrases. Forward-looking information contained in this Presentation is based on certain assumptions regarding expected growth, results of operations, performance, industry trends and growth opportunities. While management considers these assumptions to be reasonable, based on information available, they may prove to be incorrect. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of TGODH to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These risks, uncertainties and other factors include, but are not limited to risks associated with general economic conditions; adverse industry events; marketing costs; loss of markets; future legislative and regulatory developments involving medical cannabis; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the medical cannabis industry in Canada generally, income tax and regulatory matters; the ability of TGODH to implement its business strategies including expansion plans; competition; crop failure; currency and interest rate fluctuations, and the other risks discussed under the heading Risk Factors in TGODH s Subscription. The foregoing factors are not intended to be exhaustive. Although TGODH has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forwardlooking statements contained herein are made as of the date hereof and TGODH and its directors, officers and employees disclaim any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, you should not place undue reliance on forward-looking statements due to the inherent uncertainty therein. All forward-looking information is expressly qualified in its entirety by this cautionary statement. Forward-looking information and other information contained herein concerning management s general expectations concerning the medical cannabis industry are based on estimates prepared by management using data from publicly available industry sources as well as from market research and industry analysis and on assumptions based on data and knowledge of this industry which management believes to be reasonable. However, this data is inherently imprecise, although generally indicative of relative market positions, market shares and performance characteristics. While management is not aware of any misstatements regarding any industry data or comparables presented herein, industry data and comparables are subject to change based on various factors. This information has not been verified by the issuer or agent. This Presentation may not be reproduced, further distributed or published in whole or in part by any other person. Neither this Presentation nor any copy of it may be taken or transmitted into or distributed in any other jurisdiction which prohibits the same except in compliance with applicable laws. Any failure to comply with this restriction may constitute a violation of applicable securities law. Recipients are required to inform themselves of, and comply with, all such restrictions or prohibitions and TGODH does not accept liability to any person in relation thereto. A purchaser of securities of Green Organic Dutchman may enjoy statutory rights of action for damages or rescission in the event that the foregoing Presentation contains a misrepresentation, provided that the remedies for damages or rescission are exercised by the purchaser within the time limits prescribed by the applicable provisions of the securities legislation of the purchaser s province or territory. Purchasers should refer to such applicable securities legislation for the complete text of these rights or consult with a legal adviser. 1

3 Investment Highlights On our way to becoming the largest organic cannabis company in the world 970,000 sq. ft. expansion underway, which will allow TGOD to produce 116,000 KG annually expected to come online, along with recreational cannabis in 2018 TGOD will be positioned as one of the highest quality & lowest cost producers in Canada by leveraging innovative technology and low cost power solutions Industry Leading Alliance Partners project expansion leads include Eaton, Ledcor Group, and Hamilton Utilities Corp. Organic Products & Processes 100% non-irradiated high quality organic cannabis grown in living soil products that are free from pesticides, herbicides, synthetic nutrients and command a premium price Proven management team with vast experience in executive and operational experience specific to consumer packaged goods, consumer products, cannabis and finance industries One of largest land packages under a single ACMPR licence in Canada Providing future cannabis Agri-park style development, opportunities for joint ventures, licensing and distribution partners Financial team that funded and brought to market; Organigram Inc. & Emblem Corp., with significant ability to raise capital, having raised over $100 million dollars for cannabis companies in the past 12 months alone 2

4 Canadian Cannabis Industry Overview 1 Canadian Cannabis companies are becoming global leaders 2 Canada is at the forefront of the cannabis industry. Canada is the first G20 country to have recreational cannabis on the agenda, scheduled for July Canada is becoming a hub for cannabis investors. Over $1.3BN has been raised by Canadian cannabis companies to date. There are 58 Licensed Producers to service a population of 36,000,000 and only two organic producers. TGOD Locations Number of licenses as of September 5, Quebec and Ontario encompass 22M of the 36M Canadian population. Ontario has 32 Licensed Producers, Quebec has 1.

5 Supply & Demand 1400 Canadian Cannabis Supply & Demand Forecasts: Funded & Highly Probable Capacity vs. Demand(2)(3) The Canadian cannabis market currently has a massive supply demand gap. Kilograms (000s) Supplying even the low-end estimate of the recreational market would require producing over 600,000 kg of cannabis annually. (1) In the last quarter measured by Health Canada, Canadian LP s produced 5,836 kg, or just under 24,000 kg annualized. 0 FY2018 FY2019 FY2020 FY2021 Demand PBO Estimate Demand PBO High Estimate Funded & Highly Probable Capacity (1)Source: Deloitte Report Recreational Marijuana Insights & opportunities (2)Source: Parliamentary Budget Officer Report Legalized Cannabis: Fiscal Considerations (3)Source: Company Presentations, Press Releases and Marketing Materials (4) Bloomberg 23June2017 Article: Canada Ponders an Unusual Drug Problem: a Shortage of Marijuana 4

6 Why Organic Cannabis Over 55% of Canadian consumers purchase organic products on a weekly basis and over 80% of these increased or maintained their organic purchases in the last year. (4) Cannabis is medicine. Patients & consumers do not want to ingest pesticides, irradiated product, or synthetic fertilizers Pesticides when heated (smoked) are more toxic because they bypass the consumers metabolism in the digestive tract Cannabinoids are concentrated during oil extraction, this is equally true for pesticides (5) ORGANIC PREMIUM 28%* (1) Organic cannabis demands a significant premium to non-organic products(1) Organic trends are growing around the world, not just in the cannabis sector Out of 58 Licensed Producers in Canada, there are only two producing organic product ORGANIC AVERAGE $11.65 PER GRAM (2) INDUSTRY AVERAGE $9.09 PER GRAM (3) (1) Calculated based off average organic gram - average non organic gram / average non organic gram (2) CannStandard *ACMPR dried cannabis listing summary 08/17/2017 (3) Pricing of ABCann & Whistler Medical from CannStandard (4) Source: Canada Organic Trade Association The State of Organics: Federal-Provincial-Territorial Performance Report 2017 (5) Source: LA Times Cannabis Concentrates Have a Problem With Pesticides 02/27/

7 Strategic Locations Our properties have been strategically located in Ontario & Quebec for several key reasons These two provinces represent almost 2/3 of the Canadian population ON / QC Combined: 22,000,000 pop. 6 This allows us to reduce costs via shorter shipping distances and simplified logistics ONT QUE 5 We can provide high levels of customer satisfaction with same day or next day delivery Quebec has the cheapest commercial and residential power 2 rates in all of Canada (See link here for more information) Tourism Advantage: Six US bordering states represent 57 million potential recreational cannabis tourism visitors. TGOD is well positioned to capitalize on the recreational market with respect to cannabis tourism Bordering States Combined: 57,000,00 pop. 6

8 Ontario: Expansion - Fully Funded 150,000 sq. ft. 14,000 kg Phase One Expansion Expansion of 123,000 sq. ft. hybrid greenhouse adding ~11,000 kg of additional annual capacity ENERGY ROOM RAINWATER RESERVOIR WASTE MANAGEMENT Expansion of an additional 20,000 sq. ft. enclosed facility adding ~2,000 kg of additional annual capacity Setting the standard as an ultra low cost producer HST BUILDING 2 Hamilton Utility Corp. enables us to reduce our cost from $0.13 per kwh to less that $0.05 per kwh net cost SUPPORT AREA Path to 14,000 kg Indoor Indoor Hybrid Total 1,000KG 2,000KG 11,000KG 14,000KG BUILDING 1 Indoor Facility Indoor Facility Hybrid Greenhouse Phase 1 7,000 sq. ft. 20,000 sq. ft. 123,000 sq. ft. 150,000 sq. ft. Used as a Beta test for phase 1 expansion MOTHER PLANT PROPAGATION VEGETATIVE FLOWERING Used as specialty grow and formulations 7 Grows high quality organic cannabis $112 million in revenue at $8.00 a gram

9 Quebec Expansion - Funding 820,000 sq. ft. 102,000 kg Phase One Expansion Newly secured 75-acre property near Montreal, QC This new property has a planned expansion of 820,000 sq. ft. and 102,000 kg of organic cannabis production The first phase will consist of 220,000 sq. ft. and 22,000 kg This property is serviced with industrial gas lines, sewage, unlimited access to high-quality raw water, roads & highways, close to a major city, and most importantly within 1 km of a substation that can provide as much as 50 mega-watts of power Our power cost in Quebec will be ~ $0.04 per kwh, helping to make us the lowest cost producer in the country The local municipality has been very supportive in working with us, indicating permitting can be complete as early as Q4 17, and construction beginning immediately thereafter 8

10 Combined Buildout Capacity Growing to 970,000 sq. ft. 116,000 kg production 14,000 36,000 62, ,000 kg kg kg kg Hamilton: Phase 1 Quebec: Phase 1 Quebec: Phase 2 Quebec: Phase 3 Size Capacity Funding Status Schedule 150,000 sq. ft. 14,000 kg Fully Funded Complete Mid ,000sq. ft. 22,000 kg Funding underway Complete End ,000 sq. ft. 26,000 kg Funding at IPO Planned 350,000 sq. ft. 54,000 kg Funding 1 st half 2018 Planned 9

11 Low Cost, High Quality Producer Leveraging innovative and low cost power solutions 1 HUC 1 Alliance partnership with Eaton, the second largest power management company in the world 2 Micro-Grid infrastructure to include 6 MW Combined Heat & Power Co-Generation facility with CO2 generation 3 3 Hamilton Utility Corp s alliance partnership enables us to reduce our cost from $0.13 per kwh to less than $0.05 per kwh. 4 Quebec is home to the lowest power rates in Canada. With Government incentives power costs can be as low as $0.04 per kwh. This will strengthen TGOD s position as a future low-cost producer 10

12 Strategic Alliance Partnerships De-Risking Power and Construction PREFERRED COSTING SOLUTIONS ACCELERATED PRODUCTION SCHEDULE SCALABLE PROJECT TEAM No distribution mark ups on equipment Maximum price agreement Scalable operational and project plans Advanced design build processes Access to local and national resources Past successes - Costco Ancaster 500,000 sq. ft day Construction Schedule - Successfully completed by Ledcor INTERNATIONAL PROJECT EXPERIENCE POWER AND ENERGY OPTIMIZATION PROJECT MANAGEMENT BENEFITS Global + national companies countries Over 150,000 employed by our partners combined Energy-efficient solutions that help customers effectively manage electrical, hydraulic and mechanical power more efficiently Best in class project team Project assurances On schedule on budget Advance project management reporting to TGOD Management 11

13 Power Optimization 1 Eaton is a global power management company with approximately 95,000 employees, and customers in more than 175 countries, providing energy-efficient solutions that help customers effectively manage electrical, hydraulic and mechanical power more efficiently. Eaton has one of the largest and most experienced teams of power system engineers in the industry, providing comprehensive portfolio of services tailored for every stage of a power system s life cycle. Eaton s electrical business is a global leader with expertise in power distribution and circuit protection, positioned through its global solutions to answer today s most critical electrical power management challenges. EATON TO PROVIDE INNOVATIVE AND COST EFFECTIVE POWER SOLUTIONS 12

14 Construction Management 2 Ledcor is the 2nd largest multidisciplinary construction company in Canada with over 6,000 employees Specializing in project and construction management, pre-construction services, design-build, and general contracting Active in the construction of all types of buildings, but a pioneer in the Green Building industry WE COULDN T BE MORE PROUD OF OUR TEAM TO HAVE PUT TOGETHER SUCH AN INCREDIBLE GROUP OF PARTNERS SAYS JEFF PAIKIN, CHAIRMAN OF THE BOARD 13

15 Greenhouse Design Larssen Greenhouse, the firm responsible for the 800,000 sq. ft. Aurora Sky facility at the Edmonton Airport Professional engineers with 25+ years experience specializing in the technical design & building of the most modern and sophisticated greenhouses in the industry Has led design-build of 15+ Cannabis facilities in multiple jurisdictions Full planning/engineering, Pre-Projects, Budgeting/Financial Planning, Production Plans, Education, Infrastructure/Logistics, Drafting, Construction, Heating/Irrigation, Technical Calculations. LARSSEN TO PROVIDE STATE OF THE ART HYBRID GREENHOUSE SOLUTIONS 14

16 Oil Extraction Cannabis Oils are gaining market share at an immense pace, and by Q1 17 accounted for 49% of all kg sold under the ACMPR, up from only 27% in Q This trend should continue as patients and consumers increasingly look for inconspicuous and healthier ways to consume cannabis. Canadian ACMPR Market Trends: Flower vs. Oil Sales(1) TGOD has ordered a purpose-built extraction laboratory with estimated commissioning in Q4 17 This unit is a commercial-scale CO2 extraction unit capable of processing up to 12,000 kg of raw material per year and producing approximately $170M worth of Organic Cannabis Oils Pricing realized on THC Cannabinoid content is 97% higher on Oils at $1.01 for every 10 mg THC(2) vs. Dried Flower at only $0.515 for every 10 mg THC(3) contained % Total ACMPR Market 80% 70% 60% 50% 40% 30% 20% 10% 0% Q2'16 Q3'16 Q4'16 Q1'17 Raw Cannabis Oil provides significant downstream manufacturing opportunities into several potential recreational market verticals including edibles, beverages, topicals and concentrates. Flower % Total kg Sold Oil % Total kg Sold 15 (1)Source: Canada.ca - Health Canada, Licenced Producers, Market Data (2)Source: Lift.co Article ACMPR Cannabis Oil Price Scan, Mar 19, 2017 (3)Source: Lift.co Article Dried Cannabis Price Scan, Mar 17, 2017

17 Management Team ROB ANDERSON DIRECTOR & CEO 22+ years experience in Capital Markets and financing incl. 12 years with a leading Canadian brokerage firm. $100,000,000 raised for Cannabis companies over the past 12 months, including $47 million for Emblem Corp. (EMC) 1 2 CSABA REIDER PRESIDENT 35+ years executive experience in the Consumer Packaged Goods industry including VP at Cott Corporation, where he controlled a $1 billion dollar spend, and President & CEO at both SunPac Foods & Xyience Inc. Additionally, Csaba served on the Board of Food & Beverage conglomerate Associated Brands AMY STEPHENSON, CFA, CPA, CMA CFO 20+ years experience in Capital Markets & M&A including extensive work in the Cannabis space as CFO of both Aurora Cannabis and Bedrocan, and as Controller of Canopy Growth Corp. 3 JIM SHONE, MBA, CFA EVP, OPERATIONS 4 Over 20+ years in financial services industry, including 12 years commercial banking experience (BDC for 7 years). 16

18 BRETT ALLAN EVP 10+ years of investment and corporate finance experience. Previously Dir. Capital Markets with Organigram and recently BOD member of Saber Capital, which became Emblem Corp. DAVID PERRON, MSC VP, GROWING OPERATIONS 15+ years experience in Greenhouse Production including 3 years as Lead Agrologist & Head Grower under ACMPR/MMPR and 5 years at McGill Greenhouse & Horticulture Research Centre MARC CERNOVITCH EVP, PROJECT OPERATIONS 20+ years of investment and corporate finance experience, providing capital markets advisory services to companies across both public & private sectors AMER CHEEMA, PHD CANDIDATE HEAD GROWER M.Sc Agriculture in Post Harvest Biology. 20+ years in greenhouse vegetable production & management in high-tech commercial greenhouses. Won Premier Awards for high production and best quality of greenhouse produce 17

19 Directors JEFF PAIKIN CHAIRMAN IAN WILMS DIRECTOR DAVE DOHERTY DIRECTOR MARC BERTRAND DIRECTOR Mr. Paikin is the president and founder of New Horizon Development Group and in 2013 was named RBC Distinguished Citizen of the Year for Hamilton Former president of the Hamilton Halton Home Builders Association, former board member of Ontario Home Builders Association and the Canadian Home Builders Association Jeff is a member of the Hamilton Tiger Cats advisory board and the Hamilton Bulldogs Community Foundation board Current Chair of the Hillfield Strathallan College Capital Campaign 25 years of global, business experience leading successful entrepreneurial and corporate ventures Former executive with IBM for 14 years - led and managed sales and operational teams across North and South America. Certified Client Executive from the Harvard Business School and a graduate of McMaster University Chairman of the Calgary Police Commission in 2005 and elected President of the Canadian Association of Police Boards in years of investment and finance experience assisting with financing s, identifying acquisition targets, developing strategic plans and, supporting operations Previously a Director of Saber Capital (Emblem Corp.) & Inform Exploration (Organigram Inc.) Prior to launching successful cannabis companies to the public Dave was an investment advisor with Canaccord Genuity, Canada s largest independent full service dealer Degree from SFU - major in finance Served 10 years with the Canadian Military as an Officer LT (N) in the Naval Reserve 18 Seasoned Consumer Products executive with three decades of success in brand building, strategic licensing, international markets and manufacturing Previously President & CEO of the Mega Bloks brand, which was sold to Mattel in 2014 for over $500 million dollars Developed strategic license agreements with many of the world s most iconic entertainment franchises including Disney, Nickelodeon and Marvel

20 Project Team HAROLD RUCKPAUL POWER MANAGEMENT ENERGY OPTIMIZATION, NEW TECHNOLOGIES JUSTIN FRASER OWNERS REPRESENTATIVE LABOUR RELATIONS, CONFLICT RESOLUTION BRIAN AST, MBA, CFA PROJECT MANAGER CONTRACT & COST CONTROL Director, Strategic Alliance Programs for Eaton Corporations Specializes in Electrical Engineering Services & Systems (EESS), Electrical Sector 31 years of technical, operational and sales management experience with developing and implementing power systems solutions to primary market segments on a global scale Chairman & Chief Executive Officer of the Trades Labour Group since 1999 Has grown company from startup to nearly $50M in annual sales Strong team building ability including the ability to select and implement strategic relationships for optimal business performance Over a dozen commercial transactions completed Honeywell Building Solutions - Director, Public & Private Partnerships Extensive Public Private Partnership experience in both public and private sector Responsible for bid management, project and partner selection Led RFQ development, worked with Port Mann Highway 1, British Columbia - $2.5B+ 19

21 Investment Summary Aggressive and expedited expansion underway One the lowest cost, highest quality producers in Canada Industry Leading Alliance Partners Organic Products & Processes 100% non-irradiated high quality organic cannabis grown in living soil Proven management team One of largest land packages under a single ACMPR licence in Canada Financial team that funded and brought to market two previous LP s 20

22 Capital Structure Shareholder Ownership Cash, Options, Warrants, Debt Shareholder # of Shares % of Shares Cash ~$36,000,000 Green Organic Founders(1) 11,500, % Options Outstanding 7,525,000 Paikin-Wilms Founder Group(1) 24,750, % Warrants Outstanding 26,379,950 ($2.15) Management Team(2) 21,450, % Debt NIL Retail Investors(2) Total 64,197, ,897,222 (1) Subject to 6-month hold from trade date, and then 36-month trickle-out (2) All financing shares have 6-month hold from trade date 52.7% 100% Available line of credit is for $5,000,000, bearing interest at Alterna s prime lending rate plus 150 basis points TGOD HAS ~2,400 SHAREHOLDERS AS OF AUGUST

23 TGOD 1 (905) INVEST@TGOD.CA MAKING Life BETTER