Corporate Presentation August 30, 2020 TSX: ZENA Disclaimers - - PowerPoint PPT Presentation

corporate presentation
SMART_READER_LITE
LIVE PREVIEW

Corporate Presentation August 30, 2020 TSX: ZENA Disclaimers - - PowerPoint PPT Presentation

Corporate Presentation August 30, 2020 TSX: ZENA Disclaimers IMPORTANT: YOU MUST READ THE FOLLOWING BEFORE CONTINUING . The information contained in this document has been prepared by Zenabis Global Inc. ( Zenabis or the Company) .


slide-1
SLIDE 1

Corporate Presentation

August 30, 2020

TSX: ZENA

slide-2
SLIDE 2

1

Disclaimers

IMPORTANT: YOU MUST READ THE FOLLOWING BEFORE CONTINUING. The information contained in this document has been prepared by Zenabis Global Inc. (“Zenabis” or the “Company”). The information contained in this document (a) is provided as at the date hereof and is accurate only as of the date of this presentation or the date indicated and is subject to change without notice, (b) does not purport to contain all the information that may be necessary or desirable to fully and accurately evaluate an investment in the Company, including important disclosures relating to the terms of an investment and risk factors associated with an investment in the Company and (c) is not to be considered as a recommendation by the Company that any person make an investment in the Company. This presentation, and the information contained herein, is not for release, distribution or publication into or in the United States or any other jurisdiction where applicable laws prohibit its release, distribution or publication. This presentation (“Presentation”) is being issued by the Company for information purposes only. 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. Reliance on this Presentation for the purpose of engaging in any investment activity may expose an individual to significant risk of losing all of the property or other assets invested. This Presentation is not a prospectus, offering memorandum or an advertisement and is being provided for information purposes only and does not constitute or form part of, and should not be construed as, an offer or invitation to sell or any solicitation of any offer to purchase or subscribe for any securities in Canada, the United States or any other jurisdiction. Neither this Presentation, nor any part of it, nor anything contained or referred to in it, nor the fact of its distribution, should form the basis of or be relied on in connection with or act as an inducement in relation to a decision to purchase or subscribe for or enter into any contract or make any other commitment whatsoever in relation to any securities of the Company. Recipients of this Presentation who are considering acquiring securities of the Company 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 entire body of publicly disclosed information regarding the Company. This Presentation is qualified in its entirety by reference to, and must be read in conjunction with, the preliminary prospectus supplement (the “Prospectus Supplement”) to the Company’s final short form base shelf prospectus dated April 9, 2019 (the “Shelf Prospectus”) and the Company’s Shelf Prospectus. Certain information contained herein includes market and industry data that has been obtained from or is based upon estimates derived from third party sources, including industry publications, reports and websites. Third party sources generally state that the information contained therein has been obtained from sources believed to be reliable, but there is no assurance or guarantee as to the accuracy or completeness of included data. Although the data is believed to be reliable, neither the Company nor its agents have independently verified the accuracy, currency or completeness of any of the information from third party sources referred to in this presentation or ascertained from the underlying economic assumptions relied upon by such sources. The Company and its agents hereby disclaim any responsibility or liability whatsoever in respect of any third party sources of market and industry data or information. This Presentation has not been independently verified and the information contained within may be subject to updating, revision, verification and further amendment. While the information contained herein has been prepared in good faith, except as otherwise provided for herein, neither the Company, its directors, officers, shareholders, agents, employees or advisors give, has given or has authority to give, any representations or warranties (express or implied) as to, or in relation to, the accuracy, reliability or completeness of the information in this Presentation, or any revision thereof, or of any other written or

  • ral information made or to be made available to any interested party or its advisers and liability therefore is expressly disclaimed for any loss howsoever arising, directly or indirectly, from any use of such information or
  • pinions or otherwise arising in connection therewith. Except as may be required by applicable law, in furnishing this Presentation, the Company does not undertake or agree to any obligation to provide the recipient with

access to any additional information or to update this Presentation or to correct any inaccuracies or omissions. Information contained in this Presentation is the property of the Company and it is made available strictly for the purposes referred to above. CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION: This document includes information, statements, beliefs and opinions which are forward-looking, and which reflect current estimates, expectations and projections about future events, including, but not limited to the intended conversion, expansion and optimization of the Company’s facilities, the anticipated production capacity of the Company, the receipt

  • f required licenses to operate, our harvest forecast, and other statements that contain words such as "believe," "expect," "project," "should," "seek," "anticipate," "will," "intend," "positioned," "risk," "plan," "may," "estimate"
  • r, in each case, their negative and words of similar meaning. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially

from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. These factors and risks include, but are not limited to, those described in the Shelf Prospectus and the Prospectus Supplement, copies of which are available on SEDAR at www.sedar.com, and could cause actual events or results to differ materially from those projected in any forward-looking statements. Forward-looking information contained in this Presentation is based on our current estimates, expectations and projections, which we believe are reasonable as of the current date. Such forward-looking information is provided for the purpose of providing information about management's current expectations and plans relating to the future. Investors are cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions and/or management's good-faith belief with respect to future events and are subject to known or unknown risks, uncertainties, assumptions and other unpredictable factors, many of which are beyond the Company’s control. You should not place undue reliance on forward-looking statements, which are based on the information available as of the date of this document and the Company disclaims any intention or obligation to update or revise any forward-looking information contained in this document, whether as a result of new information, future events or otherwise, unless required by applicable law. The forward-looking information included in this Presentation is expressly qualified in its entirety by this cautionary statement. Historical statements contained in this document regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. In this regard, certain financial information contained herein has been extracted from, or based upon, information available in the public domain and/or provided by the Company. In particular historical results of the Company should not be taken as a representation that such trends will be replicated in the future. No statement in this document is intended to be nor may be construed as a profit forecast. ELECTRONIC DISTRIBUTION: This document may have been sent to you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic

  • transmission. You are responsible for protecting against viruses and other destructive items. Your receipt of this document by electronic transmission is at your own risk and it is your responsibility to take precautions to

ensure that it is free from viruses and other items of a destructive nature. As a consequence of the above, neither the Company nor any director, officer, employee or agent of any of them or any affiliate of any such person accepts any liability or responsibility whatsoever in respect of any difference between the document distributed to you in electronic format and the hard copy version that is available to you.

slide-3
SLIDE 3

2

CORPORATE HIGHLIGHTS Propagation Business with ~$34m of Annual Revenue as of Q2 2020 Two Sequential Quarters of Positive Adjusted EBITDA Low Cash Costs of Cultivation Given Scale ($0.70/g)1 111,200 kg of Licensed Cultivation Capacity Across Three Facilities Highly Recognizable Brands Ongoing Shipments to Nine Provinces, Three Territories, and Three International Destinations Cannabis Shipments of >4,700 kg Through First Two Months

  • f Q3 2020, up 20% Over Q2 2020 Total Shipments

Note: 1) Page 13 of Zenabis Q2 2020 MD&A dated August 14, 2020.

slide-4
SLIDE 4

3

COMPANY SNAPSHOT

Note: 1) FY means the fiscal year ended June 30 of Bevo Agro Inc.

Zenabis Global Inc. is a significant Canadian cultivator

  • f medical and adult-use recreational cannabis, and a

propagator and cultivator of floral and vegetable products.

▪ Founded in 1985 ▪ Wholly-owned subsidiary of Zenabis Global Inc. ▪ Successful 30+ year growing history in British Columbia, Canada, specialized in the propagation of hundreds of unique non-cannabis crops at an industrial scale ▪ ~$34m of annual revenue as of Q2 2020 ▪ Over 2,000,000 sq ft. of operating space at three facilities: ̶ Zenabis Pitt Meadows ̶ Zenabis Aldergrove ̶ Zenabis Langley ▪ Significant Canadian Licensed Producer with a licensed annual production capacity of 111,200 kg ▪ Operates three state-of-the-art facilities dedicated to cannabis cultivation and processing ̶ Zenabis Atholville: One of the largest indoor facilities in Canada with a licensed capacity of 46,300 kg ̶ Zenabis Langley: Large scale closed greenhouse facility with a licensed capacity of 64,100 kg ̶ Zenabis Stellarton: Fulfillment, processing and cannabis derivative products manufacturing centre

TSX: ZENA

Combined Adjusted EBITDA of ~$5.4m across both segments for the first two quarters of 2020

slide-5
SLIDE 5

1 4 2 3

4

OUR FACILITIES

Notes: 1) The greenhouse to the right of the Zenabis Langley photo is not part of Zenabis Langley.

  • 2. Zenabis Langley1

Langley, British Columbia

▪ 2,100,000 sq. ft. greenhouse ▪ Licensed capacity: 64,100 kg ▪ Licensed for cultivation and processing ▪ Also used for propagation and floral business

  • 3. Zenabis Stellarton

Stellarton, Nova Scotia

▪ 255,000 sq. ft. indoor facility ▪ Licensed capacity: 800 kg ▪ Licensed for cultivation and processing. ▪ Received sales license in May 2020, which allows for the sale

  • f dried/fresh cannabis and
  • ther 2.0 products to authorized

retailers ▪ 380,000 sq. ft. indoor facility ▪ Licensed capacity: 46,300 kg ▪ Licensed for cultivation, processing, and sales ▪ EU GMP approval as of May 2020

  • 1. Zenabis Atholville

Atholville, New Brunswick

▪ 25,000 sq. ft. indoor facility ▪ Licensed for cultivation, processing, and sales ▪ Currently for sale

  • 4. Zenabis Delta

Delta, British Columbia

Zenabis' unique mix of facilities combines indoor and closed-greenhouse cultivation at scale with dedicated processing, fulfilment, and value-add manufacturing centres

▪ 218,000 sq. ft. greenhouse ▪ Used for non-cannabis propagation business ▪ Licensed for industrial hemp cultivation

Zenabis Pitt Meadows

Pitt Meadows, British Columbia

▪ 453,000 sq. ft. greenhouse ▪ Used for non-cannabis propagation business ▪ Licensed for industrial hemp cultivation

Zenabis Aldergrove

Aldergrove, British Columbia

slide-6
SLIDE 6

Zenabis Atholville

Atholville, NB

Zenabis Langley

Langley, BC

Zenabis Stellarton

Stellarton, NS

Zenabis Delta

Delta, BC

Zenabis Pitt Meadows

Pitt Meadows, BC

Zenabis Aldergrove

Aldergrove, BC

Parcel Size

871,000 sq. ft. 4,279,000 sq. ft. 547,000 sq. ft. 51,000 sq. ft. 871,000 sq. ft. 2,180,000 sq. ft.

Total Facility Space

380,000 sq. ft. 2,100,000 sq. ft.1 255,000 sq. ft. 25,000 sq. ft. 218,000 sq. ft. 453,000 sq. ft.

Current Licensed Capacity

46,300 kg 64,100 kg 800 kg N/A N/A N/A

Expected Capacity under Existing Capital Program

46,300 kg 64,100 kg 800 kg N/A N/A N/A

Design Capacity

(if facilities fully built out and converted as planned) 46,300 kg 96,100 kg 2 800 kg N/A N/A N/A

Extraction Design Capacity3

(if facilities fully built out and converted as planned) 15,000 kg N/A N/A N/A N/A N/A

Cultivation Cost

$0.70/gram4 TBD5 Not relevant N/A N/A N/A

Utilization

EU GMP Cannabis Cultivation7 + Extraction Cannabis Cultivation7 + Hemp + Propagation Cannabis Cultivation7 + Manufacturing8 Listed for Sale Propagation + Floral + Hemp Propagation + Floral + Hemp

Cultivation Format

5

PRODUCTION FOOTPRINT

G H Indoor Indoor Indoor

8.8m sq. ft. (2.4m sq. ft. available for hemp cultivation)

Total Available Land

0.7m / 2.8m / 3.5m sq. ft.

Total Max Development Indoor / GH / Total

Current Licensed Capacity: 111,200 kg Total Potential: 143,200 kg

Capacity

Notes: 1) Includes facility space under glass only; excludes additional warehouse space. 450,000 sq. ft. of Bevo’s existing greenhouses is expected to be initially converted to cannabis production space. The remainder is expected to continue to be used for Bevo’s propagation business, and may be converted into cannabis cultivation space on an as needed basis. 2) If all facilities are built out and converted as planned. Additional details on facility conversion, including additional assumptions are outlined in the Zenabis Global Inc. Final Base Shelf Prospectus dated April 10, 2019 and filed on SEDAR. 3) Extraction estimates are annual, based on 20 days a month and based on kilograms of input material. 4) Year to date average cost per gram as of December 31, 2019. 5) Zenabis Langley is currently in ramp-up phase of production and further license amendments from Health Canada are pending. 6) Estimated cost per gram. 7) Includes the packaging of cannabis product. 8) Manufacturing of value-add products.

G H Outdoor G H Outdoor

slide-7
SLIDE 7

6

BRANDS

Existing Brands

Type: Medical brand Sales Channels: Online / Pharmacy Current Products: Dried cannabis, gel capsules, and oil sprays Near-Term Products: Oils Future Products: Food products, hemp products Type: Premium, craft recreational brand Sales Channels: Online and retail Current Products: N/A Near-Term Products: Dried cannabis Type: Value recreational brand Sales Channels: Online and retail Current Products: Pre-rolls, dried cannabis, and 510 vape cartridges Near-Term Products: Hash Future Products: TBD Type: Core recreational brand Sales Channels: Online and retail Current Products: Dried cannabis, pre-rolls, PAX vape cartrdiges, oil sprays, and soft gels Near-Term Products: Soft chews and chocolates

slide-8
SLIDE 8

7

CANNABIS 2.0 PORTFOLIO

Cannabis-infused Beverages1 ▪

Zenabis entered into a definitive agreement with HYTN Beverages Inc. to produce a line of cannabis-infused beverages ▪ Initial products. 355 ml sparkling water with 10 mg ofTHC, with flavours to include Blood Orange, Lemongrass Ginger, Rosewater Lemonade, and WatermelonMint ▪ Shipments expected to commence in Q4 2020 ▪ Currently listed in nine Provinces and one Territory

PAX Vaporizing Cartridges

▪ Zenabis has five types of PAX Era Pods ▪ Zenabis is one of five Licensed Producers to launch PAX Era Pods (vaporizing cartridges) for PAX Labs Inc.’s high- tech oil vaporizers ̶ PAX Era Pods are dependable, leak-resistant and clog-free, and are designed for use in PAX Era vaporizer devices ̶ PAX Era Pods are currently listed in eight Provinces

Note: 1) Final products may differ.

2.0 Products 510 Vaporizing Cartridges

▪ In July 2020, Zenabis launched its new line of Re-Up 510-thread vaporizing cartridges ▪ Re-Up 510-thread cartridges are currently listed in five provinces, and listings are anticipated in three additional provinces in September 2020

Soft Chews and Chocolates

▪ Zenabis is currently preparing to launch two edible product lines: soft chews and chocolates ▪ Initial products will included three types of soft chews and two types of chocolates; these products have been listed in various provinces ▪ Sale of soft chews and chocolates is expected to commence in early Q4 2020

slide-9
SLIDE 9

8

PRODUCT PORTFOLIO

Current Products

Softgel Capsules Oils

Future Products for Near-Term Launch

Dried Flower Tinctures and Sprays Pre-Rolls Kombucha Edibles Flavoured and Sparkling Water PAX Vaporizing Cartridges Soft Chews Hash 510 Vaporizing Cartridges

slide-10
SLIDE 10

9

DOMESTIC PARTNERSHIPS AND DISTRIBUTION CHANNELS

Zenabis has developed a diverse set of partnerships and relationships with provinces1, distributors, pharmacies and First Nations.

Supply Arrangement BC Liquor Distribution Branch (“BCLDB”) Supply Agreement Alberta Gaming, Liquor & Cannabis (“AGLC”) Supply Arrangement Saskatchewan Wholesale Distributor Supply Arrangement Manitoba Liquor and Lotteries (“MBLL”) Supply agreement primarily for oil Supply agreement for medical cannabis products Supply Arrangement Yukon Liquor Corporation (“YLC”) Supply Arrangement Société québécoise du cannabis (“SQDC”) Supply Agreement Alcohol New Brunswick Liquor (“ANBL”) Supply Arrangement Nova Scotia Liquor Corporation (“NSLC”) Supply Arrangement PEI Cannabis Management Corporation Investment Investor Investor Opportunities NB Investor Investor Songhees First Nation Listuguj Mi’gmaq Government Millbrook First Nation

Note: 1) Supply arrangements do not contain purchase commitments or otherwise obligate the purchaser to buy a minimum volume of products from Zenabis. 2) Zenabis is an approved wholesaler to Nunavut; however, Nunavut is currently finalizing its retail licensing process and Zenabis expects to start selling to the province in October.

Ontario Cannabis Retail Corporation (“OCS”) Supply Agreement Northwest Territories Liquor and Cannabis Commission (“NTLCC”) Supply Arrangement

Expect first shipments Oct 2020

Nunavut Liquor & Cannabis Commission (“NULC”)2 Supply Arrangement

slide-11
SLIDE 11

10

GROWING INTERNATIONAL DISTRIBUTION

Germany

Zenabis, through ZenPharm (see Malta) has entered into a binding supply agreement to commence shipments to Germany through Malta in Q4 2020

Malta

Zenabis has received conditional approval to develop a production and processing facility in Malta, with inspection scheduled for September 2020, through its joint venture ZenPharm

Israel

Zenabis has two ongoing arrangement with counterparties in Israel, with anticipated combined volume of greater than 1,000kg per month on an ongoing basis, subject to export permit receipt in any given month

Australia

Zenabis has entered into a binding three-year supply agreement with an Australian pharmaceutical company to provide medical cannabis for sale in Australia

slide-12
SLIDE 12

11

ZENPHARM

Atholville, New Brunswick, Canada Birzebbuga, Malta

Indoor Cultivation Facility Manufacturing Facility

Europe

Zenabis receiving its EU GMP approval is a significant milestone as it will enable the company to supply bulk dried medicinal cannabis flower to the European market through ZenPharm

Zenabis has obtained EU GMP approval from its Malta-based European partner, ZenPharm Limited. Through this joint venture, Zenabis can now supply the European medical market. Zenabis anticipates that the ZenPharm facility in Malta will undergo its GMP and security inspections in September 2020.

slide-13
SLIDE 13

Extension and Partial Conversion of Secured Convertible Notes

  • Maturity extended from June 30th, 2020 to

March 31st, 2021

  • Immediate conversion of 22.88% of the
  • utstanding notes at a price of $0.10232
  • ~$2.6m reduction to the remaining principal

amount of the notes Appointment of Permanent Chief Executive Officer

  • Announced appointment of Shai Altman as

permanent Chief Executive Officer, effective September 1, 2020

  • Mr. Altman has over 20 years of CPG

leadership experience and was previously President of McCain Foods, Canada Corporate Updates

  • Shipped more than 4,700kg in the first quarter of Q3 2020, up 20% over the Q2 2020 total
  • Entered a one-year supply agreement with Canveda to provide 300-1,000kg of cannabis flower per quarter
  • August and September international shipments of GPP cannabis are expected to be greater than 1,000kg

subject to export permit receipt

  • Completed first shipment of new Re-Up 510-thread vaporizer product line in July 2020
  • Commenced first shipments of non-strain specific Re-Up Indica and Re-Up sativa 28g formats in July 2020
  • Received sales license amendment receipt for the Stellarton facility, which allows for the sale of dried/fresh

cannabis and other 2.0 products to authorized retailers

12

RECENT DEVELOPMENTS

Zenabis has significantly increased shipments domestically and internationally, diversified its product offerings, and delivered positive Adjusted EBITDA throughout 2020.

EU GMP Approval and Sales License Amendment

  • Received EU GMP

approval for the Atholville facility, with commercial export to the EU expected in Q3’20 Medicinal Cannabis to the German Market

  • Assigned a binding term

sheet with Farmako GmbH to its subsidiary company, ZenPharm

  • Expected to supply a

minimum of 500 kg of EU GMP compliant bulk cannabis per year for a term

  • f three years
  • Shipments to Farmako

expected to begin in Q3’20 Amendments to Senior Secured Debenture

  • Principal amount increased from $50.0m to

$60.75m

  • Maturity extended from June 30th, 2020 to

March 31st, 2025 Corporate Restructuring Initiatives

  • Reduction of overall workforce by

22% and expected quarterly cash cost savings of ~$2.0m

  • Delta facility put up for sale

Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 First Production Run for PAX Labs Inc.

  • One of five exclusive LPs selected to

produce PAX Era pods

  • Executed first production run of vape

cartridges, with initial provincial shipment on Feb 5 Q1’20 Financial Results

  • Net cannabis revenues of $12.6m

(+18.5% q-o-q)

  • First EBITDA positive quarter;

Q1’20 adjusted EBITDA of $2.3m vs. ($10.4m) in the prev. quarter Public Offering of Units

  • Closed public offering of units

for total gross proceeds of $23.6m at a price of $0.13/unit

  • Proceeds were used for

repayment of debt, a senior debt extension fee, and general working capital Q2’20 Financial Results

  • Consolidated net revenue of

$27.4m (+37.7% q-o-q)

  • Second EBITDA positive

quarter; Adjusted EBITDA of $3.1m vs. $2.3m in the prev. quarter

slide-14
SLIDE 14

13

MANAGEMENT

Eric Rasmussen Chief Financial Officer Shai Altman Chief Executive Officer Leo Benne Chief Growing Officer ▪ Over 20 years of leadership in the consumer packaged goods industry, with 11 years of focused experience in the Canadian market ▪ Formerly the President of McCain Foods, Canada, where he led the business through a significant turnaround that reversed a decade of topline sales declines ▪ Prior to McCain Foods, was the President of Wrigley Canada, where he led the business through a growth phase that resulted in market leadership ▪ Extensive senior management experience in publicly-listed companies, both in North America and Europe ▪ Strong corporate and operations finance, internal audit, M&A, and strategic investment experience over a 20-year leadership career within Shawcor ▪ Strategic consultant for Canadian large- and mid-size clients, advising on corporate strategic and financial planning, post-merger integration ▪ Formerly Vice President and Director of Bevo ▪ Gained advanced knowledge of modern horticultural methods at Rijks Middelbare Tuinbouwschool in Holland ▪ Provided oversight and management at Bevo in the propagation and floral business for nearly 30 years ▪ Experience in the application of computer technology to the production of plants Olen Vanderleeden Senior Vice President, Commercial ▪ Leads all commercial activities at Zenabis ▪ 20 years of experience leading sales, marketing, and operational functions ▪ Management, business development, and sales background in multiple industries, including technology, software and CPG

slide-15
SLIDE 15

14

Daniel Burns Chair

▪ A lawyer, accountant and entrepreneur ▪ Experienced corporate director in the financial services, insurance and mining sectors ▪ Has served as chair of a number of significant organizations in Canada and the United States as well as chaired the audit committees of significant public and private institutions Andrew Grieve

Independent Director

▪ Departing as of 17 September 2020 Monty Sikka Co-Founder and Director ▪ Co-founder of Zenabis ▪ As President of the Monark Group, has grown the business into a multi- million-dollar, multi-faceted corporation ▪ Has extensive experience in e- commerce, marketing and finance sectors Leo Benne Chief Growing Officer and Director ▪ Formerly Vice President and Director

  • f Bevo

▪ Gained advanced knowledge of modern horticultural methods at Rijks Middelbare Tuinbouwschool in Holland ▪ Provided oversight and management at Bevo in the propagation and floral business for nearly 30 years ▪ Experienced international finance and M&A attorney who has held senior positions at several prominent international law firms ▪ As counsel at Skadden, represented Fortune 500 companies, financial institutions, and governments in complex corporate finance and M&A transactions totaling >$100bn in value Natascha Kiernan Independent Director

BOARD OF DIRECTORS

▪ Currently the Vice President of Finance for the Richberry Group of Companies, part of the executive management team that oversees

  • ver 1,100 acres of Ocean Spray

cranberry bogs ▪ Previously, he oversaw a team of lending professionals in Farm Credit Canada and managed a portfolio >$1bn Vincent Quan

Independent Director

slide-16
SLIDE 16

15

SELECTED FINANCIAL INFORMATION

Notes: 1) Debt is based on the amounts listed on slide 28. Cash balance of $6.7m as outlined in the Zenabis Global Inc. Financial Statements as at June 30, 2020. 2) Market capitalization and enterprise value are calculated on a fully-diluted, in-the-money basis as of June 30, 2020 as calculated on slide 27. 3) For the three months ended June 30, 2020. 4) Includes a $10.7m loss on modification and extinguishment of debt that is non-cash. 5) Calculation of adjusted EBITDA is shown on slide 30. 6) Tangible assets of $303.8m as of June 30, 2020. 7) As at June 30, 2020.

Selected Financial Metrics Q2 2020 Cash $6.7m1 Debt $123.8m1 Market Capitalization $68.1m2 Enterprise Value $185.2m2 Financial Results Q2 2020 Gross Revenue3 $30.3m Net Revenue3 $27.4m Net Loss3,4 ($15.8m) Adjusted EBITDA5 $3.1m Balance Sheet Total Assets6 $303.8m Total Non-Current Liabilities $107.2m Property, Plant and Equipment $194.1m Shares and Ownership Summary Q2 2020 Common Shares Outstanding 619,511,5167 Fully-Diluted Shares Outstanding 953,582,9337

slide-17
SLIDE 17

16

POST-OFFERING CAPITAL STRUCTURE

Zenabis used the proceeds of the equity offering to pay down $16.9m in debt across multiple tranches. Through this deleveraging, Zenabis reduced its financial risk by decreasing near-term debt repayments and reducing its total interest

  • expense. Zenabis’ post-offering capital structure is outlined below.

Notes: 1) The amendment fee on the secured debentures was re-allocated between tranches at the end of Q2 2020, resulting in an increase in principal outstanding on the secured debentures due in 2020 and a decrease in principal

  • utstanding on the secured debentures due in 2025 . 2) Zenabis’ market capitalization is calculated is as of August 14, as calculated on slide 27.

Debt Principal Outstanding at June 10, 2020 Debt Paid Down In Offering Principal Outstanding at June 30, 2020 Interest Rate Bevo Term Debt BMO Financing $44.6m

  • $43.3m

Floating Long-term Cannabis Debt (>2 years) Secured Debentures $53.8m ($1.9m) $51.4m1 14.0% RDC Mortgage $2.0m

  • $2.0m

6.0% Near-term Debt (<2 years) New Secured Debentures $7.0m

  • $7.5m1

14.0% Unsecured Convertible Debentures $15.0m ($7.3m) $7.7m 6.0% Secured Convertible Note $8.8m ($6.3m) $2.5m 11.0% Unsecured Convertible Note $10.8m ($1.4m) $9.4m 6.0% Total Near-Term Debt (<2 years) $41.6m ($15.0m) $27.1m Total $141.9m ($16.9m) $123.8m Market Capitalization1 $68.1m $68.1m Debt to Market Capitalization 2.08x 1.82x

slide-18
SLIDE 18

17

ONGOING CASH INTEREST PAYMENTS

The below table outlines Zenabis’ ongoing cash interest payments following the June 2020 debt prepayments.

Notes: 1) The debt related to the propagation business is floating at a rate of prime + 0.75%. The calculated quarterly interest payment assumes the prime rate is equal to 2.45% 2) ~$9.1m of cash-pay interest; remainder payment-in- kind.

Debt Principal Outstanding at June 30, 2020 Interest Rate Quarterly Interest Payment Bevo Term Debt – Self Sustaining BMO Financing $43.3m Floating $346k1 Cannabis Debt Secured Debentures $51.4m 14.0% $1,800k RDC Mortgage $2.0m 6.0% $30k New Secured Debentures $7.5m 14.0% $261k Unsecured Convertible Debentures $7.7m 6.0% $115k Secured Convertible Note $2.5m 11.0% $68k Unsecured Convertible Note2 $9.4m 6.0% $137k Total (Cannabis Only) $27.1m $2.41m Total $123.8m $2.76m

slide-19
SLIDE 19

18

COMPARABLE PRODUCTION MULTIPLES – CANNABIS AND PROPAGATION1

Source: Capital IQ, press releases. Notes: 1) All financial metrics obtained as of August 14, 2020. Zenabis’ enterprise value is per the calculation on slide 27. 2) Enterprise value as of August 14, 2020. 3) Amount of cannabis produced on a dried flower equivalent basis as disclosed in the most recent financial reports.

Current Licensed Annual Production Capacity Last Three Months Production3 Quarter End Net Revenue

Metrics Enterprise Value2 ($m) Current Capacity (kg) EV/Current Capacity ($m/tonne) Metrics Enterprise Value2 ($m) Last Three Months Production (kg) EV/Last Three Months Production ($m/tonne) Metrics Enterprise Value2 ($m) Net Revenue ($m) EV/Net Revenue ($m/$m) 1.7

  • 20.0

40.0 CRON ACB VFF APHA TGOD VIVO OGI FIRE SNDL ZENA AH 1,109 1,947 465 1,626 181 80 416 182 185 185 186 40,150 150,000 37,500 255,000 32,000 14,500 89,000 50,000 60,000 111,200 128,500 27.6 13.0 12.4 6.4 5.6 5.5 4.7 3.6 3.1 1.7 1.4 WEED TLRY FLWR EMH OGI ACB APHA SNDL HEXO ZENA 7,974 1,628 95 57 416 1,947 1,626 185 419 185 22,990 6,781 490 422 6,830 36,207 52,243 6,012 19,130 12,640 346.8 240.1 193.1 134.4 60.8 53.8 31.1 30.8 21.9 14.7 14.7

  • 100.0

200.0 300.0 400.0 CRON WEED TGOD ACB TLRY OGI HEXO FIRE APHA SNDL ZENA 1,109 7,974 181 1,947 1,628 416 419 182 1,626 185 185 13.5 110.4 4.422 75.5 63.1 18.0 22.1 9.7 152.2 20.2 27.4 82.3 72.2 40.9 25.8 25.8 23.1 19.0 18.7 10.7 9.2 6.8 6.8

  • 50.0

100.0

slide-20
SLIDE 20

19

COMPARABLE PRODUCTION MULTIPLES – CANNABIS ONLY1

Current Licensed Annual Production Capacity Last Three Months Production3 Quarter End Net Revenue

Metrics Enterprise Value2 ($m) Current Capacity (kg) EV/Current Capacity ($m/tonne) Metrics Enterprise Value2 ($m) Last Three Months Production (kg) EV/Last Three Months Production ($m/tonne) Metrics Enterprise Value2 ($m) Net Revenue ($m) EV/Net Revenue ($m/$m) WEED TLRY FLWR EMH OGI ACB APHA SNDL HEXO ZENA 7,974 1,628 95 57 416 1,947 1,626 185 419 110 22,990 6,781 490 422 6,830 36,207 52,243 6,012 19,130 12,640 346.8 240.1 193.1 134.4 60.8 53.8 31.1 30.8 21.9 8.7

Source: Capital IQ, press releases. Notes: 1) All financial metrics obtained as of August 14, 2020. Zenabis’ enterprise value is per the calculation on slide 27 and excludes the enterprise value of the propagation segment, which management assumes to be $75m. 2) Enterprise value as of August 14, 2020. 3) Amount of cannabis produced on a dried flower equivalent basis as disclosed in the most recent financial reports.4) For Zenabis, this is the net revenue of solely the cannabis segment.

CRON ACB VFF APHA TGOD VIVO OGI FIRE SNDL AH ZENA 1,109 1,947 465 1,626 181 80 416 182 185 186 110 40,150 150,000 37,500 255,000 32,000 14,500 89,000 50,000 60,000 128,500 111,200 27.6 13.0 12.4 6.4 5.6 5.5 4.7 3.6 3.1 1.4 1.0 1.0

  • 20.0

40.0 8.7

  • 100.0

200.0 300.0 400.0 CRON WEED TGOD ACB TLRY OGI HEXO FIRE APHA ZENA SNDL 1,109 7,974 181 1,947 1,628 416 419 182 1,626 110 185 13.5 110.4 4.422 75.5 63.1 18.021 22.1 9.7 152.2 11.8 20.2 82.3 72.2 40.9 25.8 25.8 23.1 19.0 18.7 10.7 9.3 9.2 9.3

  • 50.0

100.0

slide-21
SLIDE 21

Contact Us

invest@zenabis.com www.zenabis.com

TSX: ZENA

slide-22
SLIDE 22

Appendix A – Facilities

slide-23
SLIDE 23

22

ZENABIS ATHOLVILLE

Zenabis Atholville is Zenabis’ largest indoor facility. This facility is expected to produce 46,300kg of dried cannabis equivalent per year

  • perating at a steady state.

Facility Details Description Location Atholville, New Brunswick Type and Size 380k sq. ft. indoor cannabis Status Fully operational Remaining Conversion Cost Nil1 Design Capacity 46,300kg2 Extraction Design Capacity 15,000kg3 Current Licenses Cultivation, processing, medical sales, recreational sales, oil sales, domestic and international bulk sales Pending Licenses N/A Capacity Milestones1 ▪ Current (full buildout) – 46,300kg Summary ▪ One of the largest indoor growing facilities in Canada, Zenabis Atholville is Zenabis’ flagship indoor facility ▪ Zenabis Atholville is currently operating at design capacity (46,300kg capacity) ▪ Zenabis has worked closely with the Government of New Brunswick, which invested $4.0m in Zenabis, to construct Zenabis Atholville ▪ Zenabis Atholville is a major employer in New Brunswick ‒ It currently employs approximately 362 workers ▪ In May 2020, Zenabis Atholville received its EU GMP approval ▪ Atholville’s current extraction machine has now reached steady-state production and is processing approximately 1,000 kg of biomass per month. Two additional extraction machines have been added to the facility

Notes: 1) Estimated expenditures as of December 31, 2019. 2) Subsequent to the upward revision by 35% from the 34,300kg design capacity originally disclosed as outlined in the Zenabis press release dated August 14, 2019. 3) Extraction estimates are annual, based on 20 days a month and based on kilograms of input material.

slide-24
SLIDE 24

23

ZENABIS LANGLEY

Zenabis Langley is one of the largest greenhouses in Canada with advanced propagation technology. The facility is expected to produce 96,100kg1 of dried cannabis equivalent per year upon full buildout and operates at a steady state.

Facility Details Description Location Langley, British Columbia Type and Size 2.1m sq. ft.2 greenhouse cannabis Status Partially operational/conversion ongoing (for the first 10 acres) Remaining Conversion Cost $Nil (for current market demand)3 Design Capacity 96,100kg1 Extraction Design Capacity N/A Current Licenses Cultivation, processing, domestic bulk sales Pending Licenses N/A Capacity Milestones ▪ Currently Licensed – 64,100kg4 ▪ Full buildout – 96,100kg1 Summary ▪ Initial cannabis conversion activities have commenced for the first 10 acres

  • f greenhouse and is expected to be complete in 2020

‒ Construction and licensing of Part 1 and Part 2A and the first portion of 2B have been completed (64,100kg capacity), and construction of rooms in Part 2B is substantially complete ▪ Zenabis Langley’s cannabis conversion is based on a closed greenhouse design, where standard greenhouse venting does not occur ‒ Zenabis believes this will produce a higher quality, more consistent crop; mitigate the impact on the surrounding community; and better control pests and contaminants from entering the greenhouse ▪ The remaining 38 acres at Zenabis Langley may be converted to cannabis cultivation on an as needed basis ‒ This portion of greenhouse will continue to be used for Zenabis’ propagation business until conversion commences

Notes: 1) The design capacity of the 450,000 sq. ft. to be initially converted is 96,100kg per annum. Additional details on facilityconversion, including additional assumptions are outlined in the Zenabis Global Inc. Final Base Shelf Prospectus dated April 10, 2019 and filed on SEDAR. 2) 450,000 sq. ft. of Bevo’s existing greenhouses is expected to be initially converted to cannabis production space. The remainder is expected to continue to be used for Bevo’s propagation business, and may be converted into cannabis cultivation space on an as needed basis. 3) Estimated expenditures as of September 30, 2019. 4) Actual Capacity versus design capacity or licensed capacity will be assessed following upcoming harvests. Due to seasonality, actual capacity versus design capacity may differ. November harvest indicated significantly lower actual capacity.

slide-25
SLIDE 25

24

ZENABIS STELLARTON

Zenabis Stellarton is a licensed indoor facility located in Stellarton, Nova Scotia. The facility is intended to be utilized primarily as a processing, packaging and fulfillment centre as well as a manufacturing facility for value-add products.

Facility Details Description Location Stellarton, Nova Scotia Type and Size 255k sq. ft. indoor cannabis Status Partially operational Remaining Conversion Cost N/A Design Capacity 800kg1 Extraction Design Capacity N/A Current Licenses Cultivation, processing, medical sales, recreational sales, oil sales, domestic bulk sales Pending Licenses N/A Capacity Milestones1 ▪ Current – 800kg Summary ▪ Zenabis Stellarton is Zenabis’ second largest indoor facility situated on a 547,000 sq. ft. parcel of land ▪ The first phase of construction at Zenabis Stellarton is complete and the initial operational area was licensed in early March 2019 ▪ The addition of sales activities to Stellarton’s license, which already included cultivation and processing activities, will enable the Company to now execute its strategy to optimize operations and improve service to our provincial and territorial retail customers by making Zenabis Stellarton our center of excellence for 2.0 products, Namaste and Re-Up pre-rolls and retail and medical order fulfilment.

Note: 1) If all facilities are fully built out and converted as planned as outlined in the Zenabis MD&A for the three months ended September 30, 2019. Additional details on facility conversion, including additional assumptions are outlined in the Zenabis Global Inc. Final Base Shelf Prospectus dated April 10, 2019 and filed on SEDAR.

slide-26
SLIDE 26

25

ZENABIS DELTA

Zenabis Delta is an indoor facility located in the Greater Vancouver Area. This facility is currently in the process of being sold.

Facility Details Description Location Delta, British Columbia Type and Size 25k sq. ft. Indoor cannabis Status Listed for sale Remaining Conversion Cost N/A Design Capacity N/A Extraction Design Capacity N/A Current Licenses Cultivation, processing, medical sales, recreational sales Pending Licenses Analytical testing Summary ▪ Zenabis is currently in the process of selling its Delta facility ▪ The facility has a limited licensed capacity of 100 kilograms that was deemed non-core ▪ Zenabis recently relocated two additional extraction machines from Zenabis Delta to Zenabis Atholville

slide-27
SLIDE 27

Appendix B – Financial Information

slide-28
SLIDE 28

27

CAPITALIZATION

The following outlines the capitalization of Zenabis.

Fully Diluted Shares Outstanding1 Value Basic Shares Outstanding 619,511,526 Plus: Deferred Stock Units 2,725,000 Plus: Restricted Stock Units 750,000 Plus: Options 11,637,,450 Plus: Warrants 305,441,360 Plus: Conversion Options at $1.17 2,104,966 Plus: Conversion Options at $1.91 4,783,823 Plus: Conversion Options at $2.68 2,872,928 Plus: Conversion Options at 5-day volume weighted trading price 3,755,880 Equals: Fully-Diluted Shares Outstanding 953,582,933

Capitalization Enterprise Value

Enterprise Value Calculation Value Basic Shares Outstanding 619,511,526 Plus: ITM Options1 Nil Plus: ITM Conversion Shares1 Nil Equals: Fully-Diluted, ITM Shares Outstanding 619,511,526 Times: Zenabis Share Price2 $0.11 Equals: Fully-Diluted Market Capitalization $68.1m Add: Debt3 $123.8m Less: Cash4 ($6.7m) Equals: Enterprise Value $185.2m

Notes: 1) As of June 30, 2020. 2) As of market close August 14, 2020. 3) Debt includes all non-convertible financing and out-of-the-money convertible financing based on the amounts listed on slide 28. 4) Cash balance of $6.7m as outlined in the Zenabis Global Inc. Financial Statements as at June 30, 2020. The negative value indicates a subtracted value, rather than a negative cash balance.

slide-29
SLIDE 29

28

DEBT OUTSTANDING

Facility Principal Amount June 30, 2020 Description Unsecured Convertible Debentures $7.7m ▪ Unsecured convertible debentures with interest rate of 6.0% ▪ Convertible into Zenabis shares at $2.6087 per share ▪ 825,000 warrants with exercise price of $2.68 ▪ Matures on September 27, 2021 BMO Financing $43.3m ▪ $46.7m term credit facility, with interest payable quarterly at a rate of prime + applicable margin based on grid pricing; ▪ Matures on January 21, 2022 RDC Mortgage $2.0m ▪ $2.0m mortgage on Zenabis Atholville with interest rate of 6.0% ▪ Matures on August 31, 2027 Secured Debentures $51.4m ▪ Senior secured financing with interest at a rate 14.0% ▪ 2,593,283 warrants have been issued at an exercise price of $4.02 upon $20.8m being drawn (50% warrant coverage) ▪ 6,009,615 warrants have been issued at an exercise price of $2.08 upon the amendment and extension of the facility (50% warrant coverage) ▪ 902,514 warrants were issued at an exercise price of $1.39 upon the amendment and advance of the second $25.0m tranche (5% warrant coverage) ▪ 71,255,522 warrants were issued at an exercise price of $0.07017 upon the extension (10% warrant coverage) ▪ Matures on March 31, 2025 New Secured Debentures $7.5m ▪ Senior secured financing with interest at a rate 14.0% ▪ Matures on December 31, 2020 Secured Convertible Note $2.5m ▪ Subordinated financing with interest rate of 11.0% ▪ The remaining outstanding principal amount may be converted into Zenabis common shares at $1.17 per share (7,490,798 additional Zenabis shares) ▪ 20,129,338 warrants were issued at an exercise price of $0.20 upon the conversion on January 16 ▪ 1,373,712 warrants have been issued at an exercise price of $1.82 upon the extension and subordination of the notes ▪ Matures on March 31, 2021 Unsecured Convertible Note $9.4m ▪ Subordinated financing with interest rate of 6.0% ▪ May be converted into Zenabis common shares at ~$1.9067 per share (6,248,203 additional Zenabis shares) ▪ $9.1m matures on October 17, 2020, with the remainder maturing in June 2022 Total $123.8m

Debt Summary

slide-30
SLIDE 30

Appendix C – Other Information

slide-31
SLIDE 31

Adjusted EBITDA Calculation Q2 20201 Q1 20202 Q4 20193 Q3 20194 Net Loss (15,781,932) (7,702,835) (98,714,311) (5,831,279) Plus: Realized Fair Value Amounts Included in Inventory Sold 19,252,057 12,923,860 18,014,038 6,760,956 Less: Unrealized Gain on Changes in Fair Value of Biological Assets (24,222,690) (19,219,636) (21,432,091) (19,712,364) Plus: Depreciation and Amortization 1,490,680 2,050,093 2,090,304 2,726,639 Plus: Restructuring Cost 483,890 1,058,452 Nil Nil Plus: Impairment of Inventory 508,759 Nil 874,734 Nil Plus: Impairment of Property, Plant and Equipment Nil Nil 27,841,265 Nil Plus: Impairment of Intangible Assets and Goodwill Nil Nil 61,480,249 Nil Plus: Share-Based Compensation 1,012,898 341,858 5,995,345 2,004,544 Plus: Loss on Revaluation of Embedded Derivative Asset 94,256 Nil Nil Nil Plus (Less): Loss (Gain) on Revaluation of Embedded Derivative Liability Nil Nil (22,993) (497,789) Plus: Interest Expense 8,009,676 6,306,284 (335,248) 4,689,124 Plus: Other Expense 167,745 298,907 122,880 (61,994) Plus (Less): Loss (Gain) on Sale of Assets (482,067) (9,185) (55,417) 21,675 Plus (Less): Finance and Investment Expense (Income) (7,095) (6,544) 316,621 173,986 Plus : Loss due to Event 20,167 25,567 982,560 1,186,692 Less: Insurance Proceeds (25,000) Nil (520,526) (492,995) Plus: Loss on Deconsolidation of Subsidiary Nil 668,562 Nil Nil Less: Government Subsidies (3,319,621) (713,373) Nil Nil Plus: Loss on Early Conversion of Debt 4,331,680 5,624,803 Nil Nil Plus (Less): Income Tax Expense (Recovery) 1,102,590 654,987 (126,856) 342,758 Plus: Loss on Modification and Extinguishment of Debt 10,653,156 Nil Nil Nil Plus (Less): Deferred Income Tax Expense (Recovery) (214,083) 42,155 (6,944,120) (511,145) Equals: Adjusted EBITDA 3,075,066 2,343,955 (10,433,566) (9,201,192)

30

ADJUSTED EBITDA CALCULATION

The following outlines the calculation to arrive at adjusted EBITDA.

▪ Management believes adjusted EBITDA is a useful metric to assess the company’s operating performance before the impact of non-cash items and acquisition related activities.

Notes: 1) For the three months ended June 30, 2020 2) For the three months ended March 31, 2020 3) For the three months ended December 31, 2019 2) For the three months ended September 30, 2019. 4) For the three months ended June 30, 2019.