Auxly Corporate Overview

Transcription

1 Auxly Corporate Overview 2018 Financial and Operational Highlights

2 Legal Disclaimer The information provided herein is not intended to provide financial, tax, legal or accounting advice. The contents hereof do not constitute an offer to sell or a solicitation of an offer to buy securities of the (the Company ) or represent an intention to induce any person to make an investment in the Company or to assist any person in the making of an investment decision. Information provided on this website is for information purposes only and shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state in the United States of America in which such offer, solicitation or sale would be unlawful. This Presentation includes market share, industry and other statistical information that the Company has obtained from independent industry publications, government publications, market research reports and other published independent sources. Such publications and reports generally state that the information contained therein has been obtained from sources believed to be reliable. Although the Company believes these publications and reports to be reliable, it has not independently verified any of the data or other statistical information contained therein, nor has it ascertained or validated the underlying economic or other assumptions relied upon by these sources. The Company has no intention and undertakes no obligation to update or revise any such information or data, whether as a result of new information, future events or otherwise, except as, and to the extent required by applicable securities laws. Forward-looking Information This corporate document contains forward-looking statements and forward-looking information (collectively, forward-looking information ) within the meaning of applicable securities legislation. Thereafter, all references should be to forward-looking information ). This corporate document may use words such as may, would, could, will, likely, except, anticipate, believe, intend, plan, forecast, project, estimate, outlook, and other similar expressions to identify forward-looking statements. In addition, the Company s assessment of, and targets for, future cultivation, production timelines, average margin on streaming transactions, investment returns on streaming transactions, average selling prices, cost of goods sold, operating expenses and adjusted EBITDA are considered forward-looking statements. Actual results, performance or achievement could differ materially from that expressed in, or implied by, any forward-looking statements in this corporate document, and, accordingly, investors should not place undue reliance on any such forward-looking statements. Forward-looking information involves significant risks, assumptions, uncertainties and other factors that may cause actual future results or anticipated events to differ materially from those expressed or implied in any forward-looking statements and accordingly, should not be read as guarantees of future performance or results. Forward-looking information involves risks and uncertainties including, but not limited to, the Company s anticipated business strategies, anticipated trends in the Company s business and anticipated market share, that could cause actual results or events to differ materially from those expressed or implied by the forward-looking information, general business, economic and competitive uncertainties, regulatory risks including risks related to the cannabis market in the United States and Canada, market risks, dict all of such factors and to assess in advance the impact of each such factor on the Company s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Forward-looking information contained in this Presentation is based on the Company s current estimates, expectations and projections, which the Company believes are reasonable as of the current date. The Company can give no assurance that these estimates, expectations and projections will prove to have been correct. Historical statements should not be taken as a representation that such trends will be replicated in the future. No statement in this Presentation is intended to be nor may be construed as a profit forecast. Use of Non-IFRS Measures This Presentation refers to Adjusted EBITDA because certain investors may use this information to assess the Company s performance and also determine the Company s ability to generate cash flow. This data is furnished to provide additional information and are non-if- RS measures and do not have any standardized meaning prescribed by IFRS. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of the Company s financial information reported under IFRS.

3 OUR VISION FROM THE OUTSET: To become the first and foremost streaming enterprise in the cannabis industry. As our business platform began to take shape, new opportunities forged new relationships, and those relationships are now the foundation atop which our company is built. Today, our vision remains unchanged while our ambition has indeed grown. We will continue to strengthen our platform, provide value for our partners and bolster the industry through ingenuity and innovation. Here, we believe tremendous results require grand ambition, honest collaboration and relentless effort.

4 KEY HIGHLIGHTS AND MILESTONES IN 2018: Auxly continues to execute on its vertically integrated strategy. Key Financial and Operational Highlights Posititioned Auxly as a vertically integrated cannabis company with wholly-owned assets at each segment of the value-chain 5 wholly owned subsidiaries and 13 streaming partners** Auxly strategically organized into three segments of the industry value-chain: Upstream, Midstream and Downstream Significant working capital balance of $303M, inclusive of a $115M bought deal financing led by BMO Capital Markets Fully Funded capacity of 160,000kg per annum by 2021 Expanded Internationally with the acquisition of Inverell S.A. ** The Inverell acquisition remains subject to final regulatory approvals in Uruguay

5 KEY HIGHLIGHTS AND MILESTONES IN 2018: Auxly continues to execute on its vertically integrated strategy. January 2018 Auxly raises $100M through convertible debenture financing. January 2018 Auxly finalizes investment and partnership with Inner Spirit for retail distribution. March 2018 Auxly finalizes stream with FSD Pharma to develop 620,000 sq ft former Kraft facility May 2018 Auxly acquires Robinson s Cannabis, a premium cannabis cultivator based in Nova Scotia May 2018 Auxly announces $115 million bought deal financing led by BMO Capital Markets July/August 2018 Kolab receives ACMPR Sales License Dosecann receives License Dealer August 2018 Auxly enters strategic partnership with Delta 9 Cannabis January 2018 February 2018 April 2018 May 2018 June 2018 August 2018 Auxly expands internationally through Inverell acquisition in Uruguay.** Auxly announces strategic JV with leading greenhouse operator Peter Quiring to develop and operate 1.4M sq. ft operation in Leamington, ON Auxly acquires Dosecann, Canada s largest License Dealer facility in PEI as cornerstone Midstream asset Auxly announces exclusive license for the Dixie Brands portfolio in Canada and Mexico Auxly awarded recreational retail store in Lloydminster, Saskatchewan Auxly acquires KGK Science, Canada s leading NHP Contract Research Organization

6 FINANCIAL HIGHLIGHTS: Select summary of quarterly results PERIOD ENDED (000s) Cash and Cash Equivalents Total Current Assets Investments in Streaming Partners and Subsidiaries Total Assets Long Term Convertible Debt Shareholder Equity JUNE 30TH, 2018 $295,803 $310,326 $178,912 $478,866 $91,201 $357,828 DECEMBER 31ST, 2017 $33,454 $35,521 $58,229 $92,579 $17,738 $62,793 THREE MONTHS ENDED (000s) Income Total Expenses Other Items Total Comprehensive Profit or Loss JUNE 30TH, 2018 $282 $11,161 -$1,180 -$14,216 JUNE 30TH, $1,599 -$24 -$1,583 SIX MONTHS ENDED (000s) Net cash used in operating activities Net cash used in investing activities Net cash from financing activities JUNE 30TH, $16,560 -$23,135 $302,044 JUNE 30TH, $2,980 -$2,450 -$51,519

7 HOW WE VIEW OUR BUSINESS UPSTREAM Streaming Partners 14 Partners MIDSTREAM Dosecann: Value Add and IP Extraction, Processing, Brands/Licensing, R&D, Manufacturing DOWNSTREAM Distribution and Sales Medical Market, Provincial Retail, Pharmacies, Convenience Stores, International Domestic International

8 MODEL FOR GROWTH: This is simple to articulate as it should be. Auxly is creating a world-class platform by forming partnerships with best-in-class cultivators, product innovators and developers, researchers and marketers. We provide our partners with ongoing cornerstone support in cultivation, regulatory, construction, retail, branding and financing to help them realize their full potential. Wholly Owned Subsidiaries Upstream Inverell* Kolab Project Robinson s Cannabis Midstream Dosecann KGK Science (acquired subsequent to quarter end) Downstream Kolab Retail Store in Lloydminster, SK Medical Sales through Kolab *Auxly owns 80% of Inverell S.A., This transaction remains subject to final regulatory approvals in Uruguay Streaming Partners Upstream Beleave CannTx Sundial Green Relief Cannoe FSD Pharma Lotus Groupe IDP Delta 9 Cannabis Abcann SGSC Pontiac Group Curative Cannabis Level 10 Joint Ventures Upstream Peter Quiring - GreenhouseCo

9 DOWNSTREAM: Current Distribution Channels Medical Kolab Project: Auxly has a wholly owned licensed facility in Carleton Place, Ontario. Auxly will be able to leverage our existing licence to access the medical cannabis regime and distribute cannabis products directly to patients across Canada. Other Provincial Retailers Inner Spirit: Strategic alliance to supply up to 50% of their annual inventory requirements across their potential 95 franchise locations. Delta 9 Cannabis: strategic supply agreement. National Access Cannabis (NAC): Strategic supply agreements. Pharmacies National chain of independent pharmacies: Exclusive distribution alliance to develop and implement medical cannabis distribution and retail sale opportunities at all of the pharmacy group s 40 locations across Canada. Wholly Owned Retail Outlets Kolab Project: Obtained permit to operate a cannabis retail store in Lloyminster, Saskatchewan. International Inverell (80% owned) provides a large-scale, low-cost supply of CBD product in Uruguay to supply international markets.

10 2018 OBJECTIVES Upstream Continue to acquire cultivation capacity by developing facilities in Canada and internationally Build a diverse cultivation platform comprised of wholly-owned assets, stream partnerships, joint venture partnerships and commercial offtake arrangements Developing a robust supply pipeline is the cornerstone of the Auxly platform, providing the Company a secure and diverse source of cannabis thereby allowing it to participate in the entire cannabis value chain Midstream Add value to the cannabis produced in the upstream business segment through the application of intellectual property Continuously evaluate a broad range of applicable intellectual property including extraction and purification methodologies, trademark and know-how licensing, patent acquisition and technology and product licensing Develop our own cannabis-derived products and related intellectual property Downstream Continue to focus on the development of high value medical and non-medical channels We have made strategic decisions on which distribution channels to prioritize based on its production ramp-up, choosing to focus on higher margin medical channels and those non-medical channels that are owned by Auxly or where Auxly holds an equity interest in the retailer

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