Unless otherwise stated all amounts are in USD
A leading international Cannabis Investment Company
Canaccord Conference
1
May 2019
Canaccord Conference May 2019 Unless otherwise stated all amounts - - PowerPoint PPT Presentation
A leading international Cannabis Investment Company Canaccord Conference May 2019 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
Unless otherwise stated all amounts are in USD
A leading international Cannabis Investment Company
Canaccord Conference
1
May 2019
Unless otherwise stated all amounts are in USD
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
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
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.
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Unless otherwise stated all amounts are in USD
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▪ Captor Capital Corp. (“Captor”) is a vertically integrated cannabis investment company listed on the Canadian Securities Exchange, OTC USA, and the Frankfurt Stock Exchange. ▪ Our primary investment strategy is to
industry verticals
markets- e.g. Michigan
and eventually internationally
as hemp based CBD ▪ Our goal is to build a valuable and sustainable portfolio of leading cannabis companies and provide a robust return to
Unless otherwise stated all amounts are in USD
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Cultivation Manufacturing/Distribution Retail Investments across all industry verticals
Bricks & Mortar Delivery California California Michigan Washington Washington
Unless otherwise stated all amounts are in USD
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Jan 2018 – Agreed to acquire I-5 and its two MedMen branded stores Mar 2018 – Completed closing of MedMen equity investment Aug 2018 – Signed LOI to acquire Chai Cannabis Co dispensary Sep 2018 – Completed the Mellow Extracts Acquisition Sept 2018 – Completed acquisition
Cannabis Co dispensary Nov 2018 – Signed LOI to acquire Santa Barbara dispensary Dec 2018 – Acquired Higher Level
dispensary Feb 2019 – Sold Medmen branded dispensaries for $31mm Feb 2019 – Branded all retail stores as Chai Cannabis Mar 2019 – Signed LOI to acquire Type 7 manufacturing plant Apr 2019 – Signed LOI to acquire Michigan retail, cultivation and manufacturing assets
2018 Today
▪ Cash & cash equivalents of c.+$50mm ▪ Unlevered balance sheet ▪ Investments across all verticals ▪ Solid operating base in California ▪ Achieved MSO status in high value market of Michigan
Unless otherwise stated all amounts are in USD 6
Company Licence(s) LOI Definitive Agreement Regulatory Approval Closed California Mellow Extracts ▪ Manufacturing ▪ Distribution ✓ ✓ ✓ ✓ Chai Santa Cruz ▪ Retail ▪ Delivery ▪ Distribution (Pending) ✓ ✓ ✓ ✓ Chai Castroville ▪ Retail ▪ Delivery ✓ ✓ ✓ ✓ Type 7 Extraction Facility ▪ Manufacturing ✓ In Process Monterey County ▪ Retail ▪ Delivery ✓ In Process Goleta Santa Barbara ▪ Retail (Pending) ▪ Delivery (Pending) ✓ In Process Michigan Green Buddha and Other Michigan Assets ▪ Retail ▪ Manufacturing ▪ Cultivation ✓ In Process Washington Fine Detail Greenway ▪ Cultivation ✓ ✓ ✓ ✓ Cascadia Gardens ▪ Cultivation ✓ ✓ ✓ ✓ Mainstem N/A ✓ ✓ N/A ✓
Summary of Our Portfolio – Status of M&A
All annual licence applications have been submitted and are on schedule
Unless otherwise stated all amounts are in USD 7
▪ Joint venture
▪ 20 cannabis retail licenses ▪ 8 cultivation licenses
▪ 2 processing licenses ▪ Bringing together Captor Capital’s strengths in the cannabis and capital markets with Green Buddha’s team’s expertise in the cannabis and retail tobacco store industries
Green Buddha – Under LOI
Michigan Asset Hub
Unless otherwise stated all amounts are in USD
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▪ California Led
▪ Industry Growth for Foreseeable Future
Source: Marijuana Business Daily 2018
▪ Multi-State Operator’s (“MSO”) Rewarded
Unless otherwise stated all amounts are in USD
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Competition ▪ Black Market ▪ Uncontrolled licencing can lead to substantial competition and impact profitability (size to survive) ▪ CBD market Regulation ▪ Highly fluid, incomplete, contradictory, time consuming……….and expensive! ▪ 280E tax ▪ Limited “Green Zones” creates hidden costs (e.g. higher than market property leases) ▪ Lack of viable banking and finance ▪ Construction and other regulatory permitting slow and cumbersome Interconnected Infrastructure ▪ Despite industry growth many operations taking longer to get up and running – holds back the macro industry ▪ Supply Chain Pricing Pressure
Delivery Service ▪ Historically marijuana is a delivery culture ▪ Current delivery services expensive for retailers ▪ Puts stress on brick and mortar retail owners who don’t develop delivery strategy ▪ Impact on brick and mortar valuations unknown
Unless otherwise stated all amounts are in USD
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California Market ▪ Complete northern “California Retail Cluster”
▪ Create our own branded products via our Type 7 and Type 6 facilities ▪ Licence our brands to new markets ▪ Expand our retail footprint in the south via acquisition of revenue producing stores ▪ Potentially invest into cultivation for bio-mass to secure supply chain Michigan Market ▪ Complete the acquisition and integrate into Group ▪ Seek additional acquisitions to expand retail portfolio ▪ Standardise the Green Buddha Retail stores ▪ Initiate Green Buddha delivery service ▪ Licence California Brands for the local market ▪ Implement the cultivation facility with leading genetics and team ▪ Develop manufacturing and vertically integrate the operations Global Market ▪ Identify new States in the USA to enter with large population
▪ Seek to acquire CBD companies that are synergistic ▪ Consider consolidation options that enhance market size ▪ Examine international options
Unless otherwise stated all amounts are in USD
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100,000,000 150,000,000 200,000,000 250,000,000 2019 2020
Total Revenue in US$ California Michigan
20,000,000 30,000,000 40,000,000 50,000,000 60,000,000 2019 2020
Total EBITDA in US$ California Michigan
47% 53% 34% 66% 56% 44% 41% 59% Captor Expects Significant Revenue Growth Equating to $89.6mm and $206mm in 2019 and 2020, Respectively1 Attractive EBITDA Results on an Unlevered Balance Sheet
1-Assumes completion of all transactions under LOI by August 2019; and assumes completion of currently owned manufacturing operations by 30 June 2019
Unless otherwise stated all amounts are in USD
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A Peer Group Comparison Indicates Substantial Undervaluation of Captor
Cannabis Comps Apr 2019 Consensus '19E Consensus '20E Consensus '19E Consensus '20E 52-Week 52-Week FD Mkt. FD EV / EV / EV / EV / Rev EBITDA Company Last Price High Low
EV ($M) Rev EBITDA Rev EBITDA Rev EBITDA Rev EBITDA Growth Margin Canopy $14,440 $14,650 21.9x 141.9x 12.9x 44.8x $669 $103 $1,133 $327 69% 49% Aurora $8,950 $9,030 14.4x 121.8x 6.6x 22.7x $626 $74 $1,359 $397 117% 63% Cronos $5,994 $5,959 51.7x 173.3x 24.2x 67.2x $115 $34 $246 $89 114% 77% Tilray $5,460 $5,400 37.7x 379.1x 16.9x 138.6x $143 $14 $319 $39 123% 27% Curaleaf $4,070 $420 1.4x 3.6x 0.7x 1.7x $311 $116 $586 $245 89% 79% Green Thumb $2,990 $2,230 10.6x 24.8x 2.7x 7.7x $211 $90 $833 $290 296% 138% Aphria $2,410 $2,500 6.7x 31.1x 3.5x 11.9x $371 $80 $716 $210 93% 57% Trulieve $1,666 $1,590 7.4x 16.6x 5.5x 12.2x $216 $96 $292 $131 35% 60% MedMen $1,380 $483 1.4x
0.7x 26.2x $337 ($66) $707 $18 110% 5% Hexo $1,333 $1,339 8.8x 48.3x 4.7x 16.9x $152 $28 $286 $79 88% 52% OrganiGram $1,003 $936 5.8x 14.6x 3.5x 9.4x $161 $64 $271 $99 68% 62% Green Organic $841 $882 2.9x 12.4x 1.5x 3.4x $300 $71 $600 $259 100% 86% CannTrust $783 $804 4.4x 24.9x 2.7x 14.8x $185 $32 $301 $54 63% 29% iAnthus $769 $415 2.3x 14.6x 1.2x 4.6x $182 $28 $338 $90 85% 50% Village Farms $664 $771 4.0x 26.1x 3.8x 18.3x $193 $30 $204 $42 6% 22% CannaRoyalty $563 $520 3.4x 25.6x 1.9x 10.2x $155 $20 $269 $51 74% 33% Supreme $425 $449 4.2x 15.5x 2.6x 7.4x $107 $29 $176 $61 65% 57% Flowr $383 $383 19.8x 56.3x 2.8x 8.3x $19 $7 $138 $46 615% 238% Liberty Health $233 $243 3.3x 18.6x 1.7x 5.4x $75 $13 $146 $45 96% 60% Cannex $233 $323 20.0x
nm $10 nm
nm WeedMD $217 $184 2.9x 10.4x 1.4x 4.4x $64 $18 $132 $42 107% 66% Captor $41 $81 0.9x 3.5x 0.4x 1.4x $90 $23 $206 $59 129% 66% Emblem $185 $185 2.5x 16.7x 1.3x 5.1x $75 $11 $142 $36 88% 48% Average 10.4x 53.3x 5.9x 20.1x $208 $42 $409 $123 113% 65% High 51.7x 379.1x 31.7x 138.6x $669 $116 $1,359 $397 615% 238% Low 0.9x (7.3x) 0.4x 1.4x $16 ($66) $10 $18
5% Median 4.4x 21.7x 2.7x 9.8x $161 $29 $286 $70 89% 59% $1B+ EV 19.9x 117.1x 9.6x 40.2x $315 $57 $648 $183 113% 61% Sub-$1B Mkt Cap 5.9x 19.9x 4.3x 10.2x $125 $29 $226 $74 112% 68% '20E Rev Growth >75% 11.2x 60.5x 4.7x 21.7x $205 $36 $450 $130 1.5x 0.7x '20E Rev Growth <75% 8.9x 37.9x 8.1x 16.7x $213 $53 $332 $109 0.4x 0.4x
Unless otherwise stated all amounts are in USD
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Unless otherwise stated all amounts are in USD Jeffrey Berkowitz US Legal Counsel
and tax law for more than 35 years. He has extensive experience in a wide variety of transactions in many industries, with particular emphasis on structuring complex transactions, including entity organization, financing, mergers and acquisitions, real estate and US-Canada cross-border transactions. Since 2013, Mr Berkowitz has been actively involved with the rapidly-growing cannabis industry, assisting clients in obtaining financing, securing licenses and acquiring cultivation facilities and established dispensaries. Earlier in his career, Mr. Berkowitz practiced as a Certified Public Accountant. Wayne Lipschitz COO of wholly owned subsidiary
provides outsourced back office accounting and CFO services to the restaurant and retail industries since January 2012. Mr. Lipschitz also served as the outsourced President and/or CFO for several restaurant concepts. Prior to this Mr. Lipschitz held various CFO and controller positions with private, public and private equity backed companies such as Spectrum Clubs, Inc. (Spectrum Athletic Clubs), Grill Concepts. Inc. (Grill on the Alley and Daily Grill), San Manual Band of Mission Indians (San Manual Casino and other economic developments), International Coffee & Tea, LLC (Coffee Bean & Tea Leaf), The Cheesecake Factory Incorporated (The Cheesecake Factory), and Wolfgang Puck Food Company, L.P. (Wolfgang Puck Cafes and frozen foods). In addition, Mr. Lipschitz is a CPA and has worked for a national CPA firm, Laventhol &
Accounting from California State University, Northridge.
Management Team
A balanced and diverse team with extensive experience in cannabis and M&A
14 John Zorbas President and Director
proven track record in the metals exploration and development industry and the investment
in various facets of business including
and structured finance. Mr. Zorbas has been with the Company since June 2008. He also serves as URU Metals Ltd (Captor Capital investment) Chief Executive Officer since 2 June 2014. He was appointed Chairman of Management Resource Solutions PLC in April
Productions Group Inc a company focused in media and retail investments., as well as Director of both ZorCorp Capital Holdings and Starline Capital Holdings Infrastructure Fund. He 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. Shawn Groshans Head of Business Development Mr Shawn Groshans has approximately 20 years in merchant banking and corporate finance with experience in private equity investing, advising companies on mergers and acquisitions, capital raising, business development, and restructuring. Subsequent to his experience in banking he took a role as Head of Business Development for a global intelligence and cyber-security firm, in addition to his involvement in entrepreneurial ventures which includes the cannabis industry.
Director for Tower Financial and he has previously worked for Salamanca Group, Richmond Park Partners, S-RM and PwC.
Unless otherwise stated all amounts are in USD Gavin Davidson Head of Communications Mr Davidson has more than 20 years
Masters in Strategic Communication from the University of Central Lancashire in the UK. Currently Mr. Davidson leverages his extensive and diverse communications experience in driving Captor Capital‘s media and investor relations services. With proven success in senior agency and client side roles, he was previously Vice President of Communications for Asian Coast Development, a Canadian company building a $4 billion integrated resort complex on the white sand beaches
Matt Longo Director of Manufacturing & Cultivation
industry and has extensive agricultural and supply chain
and held various operational roles at Anheuser-Busch Distribution.
Prop 215 compliant businesses in California and navigated the complex and multi-layered regulatory
and operated two cultivation facilities with a total of 20,000 square feet and employed roughly 100 employees. Prior to his role with Captor he owned and operated a dispensary and was involved in three other cannabis- related business ventures across the United States, including a 70-acre hemp production farm in Franklin, TN and a 22,000 acre licensed hemp farm in Madisonville, Kentucky. Both farms are licensed by the Department
protocols as a hemp producer. Joshua Lechner Purchasing & Inventory Manager
passionate activist within the cannabis industry for over a decade. As the purchasing Supervisor for Captor, he has been with Chai since 2012, and has an extensive network in the California cannabis industry. Furthermore, he has a diverse
planting, cloning, and growing, to harvesting, processing & manufacturing, and retail dispensary management. Prior to his Purchasing Manager role
Cruz dispensary guiding it to a multi- million dollar operating brand. Oliver Summers Director of Retail Dispensaries
Angeles Medical Cannabis advocate since 2005, speaking and promoting cannabis numerous times on the behalf of patients. He has owned and
since 2006 and is an experienced grower of boutique cannabis strains.
and moderator of the Greater Los Angeles Collective Alliance (GLACA), a member of Americans For Safe Access (ASA), Marijuana Policy Project (MPP), Patients Advocacy Network (PAN). He is also a former member of the South Robertson Neighborhood Council, Pico Neighborhood Council, Melrose West Neighborhood Council and UFCW Local 770. 15
Operations Team
A balanced and diverse team with extensive experience in cannabis and M&A
Unless otherwise stated all amounts are in USD
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Captor Capital Corporation
4 King Street West, Suite 401, Toronto, ON M5H 1B6, Canada John Zorbas johnz@captorcapital.com