Golden Leaf Holdings
Investor Presentation
Legal Disclaimer
Golden Leaf Investor Presentation
1
Disclaimer This Presentation contains forward-looking statements and forward-looking information. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “estimates”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Golden Leaf Holdings Inc. (the “Company”) to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements and information. Examples of such statements include: (A) The intention to complete the acquisition of the business, assets and undertaking of the cannabis, edibles and extracts production facility in Oregon (the “Acquisition”);; (B) The description of the Company that assumes completion of the Acquisition;; (C) The intention to become a reporting issuer and to have its securities listed on a stock exchange;; (D) The intention to grow the business and operations of the Company;; (E) Anticipated timing for the availability of the Company’s products to market and expected sale prices;; {F) Expected growth in the number of users of medical cannabis in the State of Oregon and elsewhere in the U.S.;; (G) The number of grams of medical cannabis expected to be used by each user and (H) The expansion of the Company’s business into other states within the U.S. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this Presentation. Such forward-looking statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to: the ability of the Company to obtain necessary financing;; the ability to complete a going public transaction;; the ability to satisfy the requirements of a stock exchange;; the economy generally;; the yield from the Company’s cannabis growing operations;; consumer interest in the products of the Company;; competition;; and anticipated and unanticipated costs. These forward-looking statements should not be relied upon as representing the Company’s views as of any date subsequent to the date of this Presentation. Although the Company 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 not to be as anticipated, estimated or intended. 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, readers should not place undue reliance on forward-looking statements. The forward looking statements and information contained in this Presentation are expressly qualified in their entirety by this cautionary statement. The forward-looking statements and information included in this Presentation are made as of the date of this Presentation and the Company assumes no obligation to update such forward-looking statements to reflect new information, subsequent events or otherwise unless required by applicable securities legislation.
Presentation Contents
Agenda 1 A Large Market Opportunity Current Situation The Immediate Future
2 Our Business Model Seed-to-Store Horizontal Integration
3 The Company The Team Who We Are The Opportunity
4 Finances
Golden Leaf Investor Presentation
2
Industry Overview
Golden Leaf Investor Presentation
A Changing America Cannabis is currently legal in 23 states, with 14 more expected by 2020.
Source: ArcView Market Research, Gallup Inc.
3
Industry Overview
Golden Leaf Investor Presentation
American Support 83% think doctors should prescribe cannabis. 58% believe cannabis should be legal.
83%
58%
Source: ArcView Market Research, Gallup Inc
7
Industry Overview
Golden Leaf Investor Presentation
Federal Deregulation Indications that DOT/DOJ won’t interfere with banking relationships Eased restrictions on cannabis research Timing For Deregulation
Predicted outside limit
2015
2016
2017
Source: ArcView Market Research, Gallup Inc.
2018
2019
6
Industry Overview
Golden Leaf Investor Presentation
A Growing Marketplace 50% over the next five years US $10.8 Bn
2015
2016
2017
Source: ArcView Market Research, Gallup Inc.
2018
2019
4
The Business Model
Golden Leaf Investor Presentation
Our Business Model Cultivate & Grow
Extract
Refine
Market
Sell
1
2
3
4
5
9
The Business Model
1
Golden Leaf Investor Presentation
Cultivate & Grow Scalable Competitive Advantage Raw materials Lowest cost production Chemical-free and organic Scalable facilities Intellectual Property Innovative strains Dynamic breeding process Optimized scientific strategies Best practices
Next Step: Extract
10
The Business Model
2
Golden Leaf Investor Presentation
Extract Scalable Competitive Advantage Cutting-edge extraction methods Technical expertise High-volume production Industrial-scale technology Intellectual Property Proprietary extraction machinery
Next Step: Refine
11
The Business Model
3
Golden Leaf Investor Presentation
Refine Scalable Competitive Advantage Best-in-class process Leverage organic chemistry Comprehensive procedures Intellectual Property New refinement technology
Next Step: Market
12
The Business Model
4
Golden Leaf Investor Presentation
Market Scalable Competitive Advantage Consumer model New products Optimized brand strategy Digital excellence Consumer demand Intellectual Property Ownable consumer insights
Next Step: Sell
13
The Business Model
5
Golden Leaf Investor Presentation
Sell Scalable Competitive Advantage Consumer packaged Innovative strategy Optimized pricing Experience & relationships High-touch customer support Performance analytics Sales and merchandising pros Intellectual Property Consumer analytics database Category captaincy
Next Step: Sell
14
The Business Model
Golden Leaf Investor Presentation
15
Vertical Integration: Seed to Sale Cultivation & Growth
Extraction
Greenhouse R&D
Distribution
CO2
Medical & Recreational
Edibles
Wholesale & Retail
Strategic Partnerships • • • • • • • •
Multi-variety Reduce disease Plant genomic Quick turnaround Build portfolio Harvest cycles Plant capacity Self-sufficiency
• • • • •
More machines Improve yields Improve purchasing Shorten throughput Reduce costs
• • • •
Dispensary relationships Oil extract competence Flower is traffic generator Food merchandising strategies
The Business Model
Golden Leaf Investor Presentation
Immediate Target Markets Oregon
Washington
Nevada
2015 Market Size $145M
2015 Market Size $300M
2015 Market Size $9M
Market Potential $800M
Market Potential $1.6Bn
Market Potential $1Bn
Consumers
470,400
Consumers
836,568
Consumers
Population
3,920,000
Population
6,971,400
Population
334,812+
2,790,100*
*Plus 50,000,000 Tourists
16
The Company
Golden Leaf Investor Presentation
Golden Leaf Products Pure, Potent & Independent Laboratory Tested XRTX
CO2 Cannabis Concentrate
CO2 Cannabis Oil Vaporizer Cartridge
Proper
BHO and PHO Shatter
Edibles
CO2 Cannabis Oil Vaporizer Cartridge
17
The Company
Golden Leaf Investor Presentation
21
The Largest Cannabis Extraction Company in North America Dominant player in Oregon • $0 sales in August 2014, over $1.5 million per month in October 2015 • Leveraging proven & scalable business model across the U.S. •
The Company
Golden Leaf Investor Presentation
22
Highest quality oil, lowest possible cost • Emphasis on R&D •
Scientific division in Israel
• Lowest cost
production, highest quality oils • Proprietary strains and growing techniques • Consumer-driven brand leader • Proprietary machinery • 13 extraction machines by end of 2015 • Harvest capacity • • •
Over 6,000 lbs of cannabis flowers 5,000 lbs of trim monthly Self-sufficient
The Company
Golden Leaf Investor Presentation
23
An Industry-Leading Team Board of Directors
Rick Miller Chairman
Elijah Cohla Don Robinson Philip van den Berg Andy Hartogh Dr. Sam Pillesdorf CEO Director, Business Dev President Non-Executive Directors
Management Team
Brian Gentry CFO
Bliss Dake CMO
Moshe Bar CTO
Beau Whitney VP Government & Compliance
Tim Fitzpatrick VP Operations
Andreas Met VP Sales
Financial Information
Golden Leaf Investor Presentation
Calendar: Key Initiatives KEY INITIATIVES Extraction machine acquisition First harvest of Aurora plants Launch edibles Launch Expansion into Washington Buildout of 1-hectare greenhouse Roll-out of edibles line New brand and products Complete 1-hectare greenhouse Expansion into Nevada Market new brands and product lines First harvests from new greenhouse Acquisition of new extraction machines First harvests from new greenhouse
2015 Q4
2016 Q1 Q2 Q3 Q4
2017 Q+
25
Financial Information
Golden Leaf Investor Presentation
Revenue, Gross Profits and EBITDA Forecast Gross margins • Oil extraction increase from 45% in 2015 to 84% in 2019 • Flower to improve and remain high as price declines are offset by increased sales volumes
$ Million
Revenues, Gross Profits, EBITDA ($m)
Revenues LH
Gross Profit LH
EBITDA LH
Gross Margin RH
26
Financial Information
Golden Leaf Investor Presentation
27
Capital Expenditure Forecast $12.3 million investment in extraction equipment & build-out of Aurora campus $3.3 million spent to acquire the Aurora campus in Q3-2015
$ Million $ Million
Capex quarterly 2015-2017 ($ million)
Operations
Aurora acquisition
Financial Information
Golden Leaf Investor Presentation
Annual Forecast 20% market share Capacity of each extraction machine: • 10lb of trim per day into 1lb of oil • 10% conversion yield
$ Million
Trim processing capacity (lb)
Production output (lb)
28
Financial Information
Golden Leaf Investor Presentation
Publicly-Traded Comparable Companies Based on the (enterprise value) weighted universe of Canadian listed companies, the market capitalization range for GLH is US$137M - US$163M Valuation comparison EV/EBITDA Ticker
Price
EV $m
2015
2016
2015
$ Million
Company
EV/Sales
Source: Bloomberg, company disclosure, and analyst reports. Priced as of close on September 15, 2015.
2016
29
Financial Information
Golden Leaf Investor Presentation
Capitalization Table Capital raised in 2014: US$4.7M equity Shares in escrow: 18.9M Capital raised in 2015: US$11.1M equity Tradeable float: 44.1M US$2.2M convertible Proceeds from conversion of warrants: US$15.3M
Founders & management Other Total
13,731,333 49,270,183 63,001,516
Warrants Options Convertibles Total
31,764,115 5,595,000 2,190,000 39,599,115 102,600,631
30
Golden Leaf Investor Presentation
24
A new industry with unrivaled growth & opportunity. The opportunity is here. The company is evolving. The infrastructure is strong.
Golden Leaf Holdings: GLH.CSE
Golden Leaf Holdings Inc. c/o DSA Corporate Services Inc. 36 Toronto Street, Suite 1000 Toronto, Ontario M5C 2C5
Golden Leaf Investor Presentation
31
Investor Relations John Aird +1-416-725-6468 [email protected]
Legal Disclaimer
Golden Leaf Investor Presentation
1
Disclaimer This Presentation contains forward-looking statements and forward-looking information. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “estimates”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Golden Leaf Holdings Inc. (the “Company”) to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements and information. Examples of such statements include: (A) The intention to complete the acquisition of the business, assets and undertaking of the cannabis, edibles and extracts production facility in Oregon (the “Acquisition”);; (B) The description of the Company that assumes completion of the Acquisition;; (C) The intention to become a reporting issuer and to have its securities listed on a stock exchange;; (D) The intention to grow the business and operations of the Company;; (E) Anticipated timing for the availability of the Company’s products to market and expected sale prices;; {F) Expected growth in the number of users of medical cannabis in the State of Oregon and elsewhere in the U.S.;; (G) The number of grams of medical cannabis expected to be used by each user and (H) The expansion of the Company’s business into other states within the U.S. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this Presentation. Such forward-looking statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to: the ability of the Company to obtain necessary financing;; the ability to complete a going public transaction;; the ability to satisfy the requirements of a stock exchange;; the economy generally;; the yield from the Company’s cannabis growing operations;; consumer interest in the products of the Company;; competition;; and anticipated and unanticipated costs. These forward-looking statements should not be relied upon as representing the Company’s views as of any date subsequent to the date of this Presentation. Although the Company 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 not to be as anticipated, estimated or intended. 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, readers should not place undue reliance on forward-looking statements. The forward looking statements and information contained in this Presentation are expressly qualified in their entirety by this cautionary statement. The forward-looking statements and information included in this Presentation are made as of the date of this Presentation and the Company assumes no obligation to update such forward-looking statements to reflect new information, subsequent events or otherwise unless required by applicable securities legislation.
Presentation Contents
Agenda 1 A Large Market Opportunity Current Situation The Immediate Future
2 Our Business Model Seed-to-Store Horizontal Integration
3 The Company The Team Who We Are The Opportunity
4 Finances
Golden Leaf Investor Presentation
2
Industry Overview
Golden Leaf Investor Presentation
A Changing America Cannabis is currently legal in 23 states, with 14 more expected by 2020.
Source: ArcView Market Research, Gallup Inc.
3
Industry Overview
Golden Leaf Investor Presentation
American Support 83% think doctors should prescribe cannabis. 58% believe cannabis should be legal.
83%
58%
Source: ArcView Market Research, Gallup Inc
7
Industry Overview
Golden Leaf Investor Presentation
Federal Deregulation Indications that DOT/DOJ won’t interfere with banking relationships Eased restrictions on cannabis research Timing For Deregulation
Predicted outside limit
2015
2016
2017
Source: ArcView Market Research, Gallup Inc.
2018
2019
6
Industry Overview
Golden Leaf Investor Presentation
A Growing Marketplace 50% over the next five years US $10.8 Bn
2015
2016
2017
Source: ArcView Market Research, Gallup Inc.
2018
2019
4
The Business Model
Golden Leaf Investor Presentation
Our Business Model Cultivate & Grow
Extract
Refine
Market
Sell
1
2
3
4
5
9
The Business Model
1
Golden Leaf Investor Presentation
Cultivate & Grow Scalable Competitive Advantage Raw materials Lowest cost production Chemical-free and organic Scalable facilities Intellectual Property Innovative strains Dynamic breeding process Optimized scientific strategies Best practices
Next Step: Extract
10
The Business Model
2
Golden Leaf Investor Presentation
Extract Scalable Competitive Advantage Cutting-edge extraction methods Technical expertise High-volume production Industrial-scale technology Intellectual Property Proprietary extraction machinery
Next Step: Refine
11
The Business Model
3
Golden Leaf Investor Presentation
Refine Scalable Competitive Advantage Best-in-class process Leverage organic chemistry Comprehensive procedures Intellectual Property New refinement technology
Next Step: Market
12
The Business Model
4
Golden Leaf Investor Presentation
Market Scalable Competitive Advantage Consumer model New products Optimized brand strategy Digital excellence Consumer demand Intellectual Property Ownable consumer insights
Next Step: Sell
13
The Business Model
5
Golden Leaf Investor Presentation
Sell Scalable Competitive Advantage Consumer packaged Innovative strategy Optimized pricing Experience & relationships High-touch customer support Performance analytics Sales and merchandising pros Intellectual Property Consumer analytics database Category captaincy
Next Step: Sell
14
The Business Model
Golden Leaf Investor Presentation
15
Vertical Integration: Seed to Sale Cultivation & Growth
Extraction
Greenhouse R&D
Distribution
CO2
Medical & Recreational
Edibles
Wholesale & Retail
Strategic Partnerships • • • • • • • •
Multi-variety Reduce disease Plant genomic Quick turnaround Build portfolio Harvest cycles Plant capacity Self-sufficiency
• • • • •
More machines Improve yields Improve purchasing Shorten throughput Reduce costs
• • • •
Dispensary relationships Oil extract competence Flower is traffic generator Food merchandising strategies
The Business Model
Golden Leaf Investor Presentation
Immediate Target Markets Oregon
Washington
Nevada
2015 Market Size $145M
2015 Market Size $300M
2015 Market Size $9M
Market Potential $800M
Market Potential $1.6Bn
Market Potential $1Bn
Consumers
470,400
Consumers
836,568
Consumers
Population
3,920,000
Population
6,971,400
Population
334,812+
2,790,100*
*Plus 50,000,000 Tourists
16
The Company
Golden Leaf Investor Presentation
Golden Leaf Products Pure, Potent & Independent Laboratory Tested XRTX
CO2 Cannabis Concentrate
CO2 Cannabis Oil Vaporizer Cartridge
Proper
BHO and PHO Shatter
Edibles
CO2 Cannabis Oil Vaporizer Cartridge
17
The Company
Golden Leaf Investor Presentation
21
The Largest Cannabis Extraction Company in North America Dominant player in Oregon • $0 sales in August 2014, over $1.5 million per month in October 2015 • Leveraging proven & scalable business model across the U.S. •
The Company
Golden Leaf Investor Presentation
22
Highest quality oil, lowest possible cost • Emphasis on R&D •
Scientific division in Israel
• Lowest cost
production, highest quality oils • Proprietary strains and growing techniques • Consumer-driven brand leader • Proprietary machinery • 13 extraction machines by end of 2015 • Harvest capacity • • •
Over 6,000 lbs of cannabis flowers 5,000 lbs of trim monthly Self-sufficient
The Company
Golden Leaf Investor Presentation
23
An Industry-Leading Team Board of Directors
Rick Miller Chairman
Elijah Cohla Don Robinson Philip van den Berg Andy Hartogh Dr. Sam Pillesdorf CEO Director, Business Dev President Non-Executive Directors
Management Team
Brian Gentry CFO
Bliss Dake CMO
Moshe Bar CTO
Beau Whitney VP Government & Compliance
Tim Fitzpatrick VP Operations
Andreas Met VP Sales
Financial Information
Golden Leaf Investor Presentation
Calendar: Key Initiatives KEY INITIATIVES Extraction machine acquisition First harvest of Aurora plants Launch edibles Launch Expansion into Washington Buildout of 1-hectare greenhouse Roll-out of edibles line New brand and products Complete 1-hectare greenhouse Expansion into Nevada Market new brands and product lines First harvests from new greenhouse Acquisition of new extraction machines First harvests from new greenhouse
2015 Q4
2016 Q1 Q2 Q3 Q4
2017 Q+
25
Financial Information
Golden Leaf Investor Presentation
Revenue, Gross Profits and EBITDA Forecast Gross margins • Oil extraction increase from 45% in 2015 to 84% in 2019 • Flower to improve and remain high as price declines are offset by increased sales volumes
$ Million
Revenues, Gross Profits, EBITDA ($m)
Revenues LH
Gross Profit LH
EBITDA LH
Gross Margin RH
26
Financial Information
Golden Leaf Investor Presentation
27
Capital Expenditure Forecast $12.3 million investment in extraction equipment & build-out of Aurora campus $3.3 million spent to acquire the Aurora campus in Q3-2015
$ Million $ Million
Capex quarterly 2015-2017 ($ million)
Operations
Aurora acquisition
Financial Information
Golden Leaf Investor Presentation
Annual Forecast 20% market share Capacity of each extraction machine: • 10lb of trim per day into 1lb of oil • 10% conversion yield
$ Million
Trim processing capacity (lb)
Production output (lb)
28
Financial Information
Golden Leaf Investor Presentation
Publicly-Traded Comparable Companies Based on the (enterprise value) weighted universe of Canadian listed companies, the market capitalization range for GLH is US$137M - US$163M Valuation comparison EV/EBITDA Ticker
Price
EV $m
2015
2016
2015
$ Million
Company
EV/Sales
Source: Bloomberg, company disclosure, and analyst reports. Priced as of close on September 15, 2015.
2016
29
Financial Information
Golden Leaf Investor Presentation
Capitalization Table Capital raised in 2014: US$4.7M equity Shares in escrow: 18.9M Capital raised in 2015: US$11.1M equity Tradeable float: 44.1M US$2.2M convertible Proceeds from conversion of warrants: US$15.3M
Founders & management Other Total
13,731,333 49,270,183 63,001,516
Warrants Options Convertibles Total
31,764,115 5,595,000 2,190,000 39,599,115 102,600,631
30
Golden Leaf Investor Presentation
24
A new industry with unrivaled growth & opportunity. The opportunity is here. The company is evolving. The infrastructure is strong.
Golden Leaf Holdings: GLH.CSE
Golden Leaf Holdings Inc. c/o DSA Corporate Services Inc. 36 Toronto Street, Suite 1000 Toronto, Ontario M5C 2C5
Golden Leaf Investor Presentation
31
Investor Relations John Aird +1-416-725-6468 [email protected]
