SEPTEMBER 2020 TSX: VLNS OTCQX:VLNCF THEVALENSCOMPANY.COM
NOTICE TO RECIPIENT This presentation (the “Presentation”) of The Valens Company Inc. (the “Company,” “The Valens Company” or “Valens”) is an overview only and does not contain all the information that a prospective investor may require to make investment decisions. This Presentation is for information purposes only and does not constitute an offer to sell or a solicitation to buy any securities of the Company. In making an investment decision, investors must rely on their own examination of the Company, including the merits and risks involved. FORWARD-LOOKING STATEMENTS 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 or 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 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 risks, uncertainties and other factors which may cause the actual results, performance or achievements of 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 financial forecast of the Company; (B) the intention to grow the business and operations of the Company; (C) anticipated timing for the availability of the Company’s products to market and expected sale prices; (D)expected growth in the number of users of medical and recreational marijuana anticipated; and (E)the expansion of the Company’s business into other revenue streams. 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: expectations regarding the ability of the Company to raise capital and grow through acquisitions; growth strategy, joint venture, other commercial opportunities and the ability of the Company to carry out its stated work program; and expected sources and uses of capital. 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. 2 T S X : V L N S | O T C Q X : V L N C F A W A R D E D T O P E X T R A C T I O N C O M P A N Y
CAUTIONARY NOTE REGARDING FUTURE-ORIENTED FINANCIAL INFORMATION To the extent any forward-looking statement in this Presentation constitutes “future -oriented financial information” or “financial outlooks” within the meaning of applicable Canadian securities laws, such information is being provided to demonstrate the anticipated market penetration and the reader is cautioned that this information may not be appropriate for any other purpose and the reader should not place undue reliance on such future-oriented financial information and financial outlooks. Future-oriented financial information and financial outlooks, as with forward-looking statements generally, are, without limitation, based on the assumptions and subject to risks as set out above under the heading “Forward -Looking Statements” . The Company’s actual financial position and results of operations may differ materially from management’s current expectations and, as a result, the Company’s revenue and expenses may differ materially from the revenue and expenses profiles provided in this presentation. Such information is presented for illustrative purposes only and may not be an indication of the Company’s actual financial position or results of operations. THIRD-PARTY INFORMATION This Presentation includes market and industry data which was obtained from various publicly available sources and other sources believed by the Company to be true. Although the Company believes it to be reliable, the Company has not independently verified any of the data from third-party sources referred to in this presentation, or analyzed or verified the underlying reports relied upon or referred to by such sources, or ascertained the underlying assumptions relied upon by such sources. The Company does not make any representation as to the accuracy of such information. USE OF NON-GAAP MEASURES Adjusted EBITDA is a non-GAAP measure used by management that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. Management defines adjusted EBITDA as loss and comprehensive loss from operations, as reported, before interest, tax, depreciation and amortization, and adjusted for removing share- based payments, unrealized gains and losses from short term investments and other one-time and non-cash items including impairment losses. Management believes adjusted EBITDA is a useful financial metric to assess its operating performance on an adjusted basis as described above. A description of these financial measures, including a reconciliation of such measures, to the extent possible, against the most directly comparable IFRS measure, can be found on page 11 of the management’s discussion and analysis of the Company for the three and sixmonths period ended May 31, 2020. 3 T S X : V L N S | O T C Q X : V L N C F A W A R D E D T O P E X T R A C T I O N C O M P A N Y
OUR MISSION IS TO BRING THE BENEFITS OF CANNABIS TO THE WORLD. RECENT ANNOUNCEMENTS • Launch of vape cartridges, CBD oil and hydrocarbon-derived crumble under agreement with Verse Cannabis • Granted Health Canada research licence to conduct human administration trials for sensory and taste evaluation of products 4 T S X : V L N S | O T C Q X : V L N C F
BEST POSITIONED TODAY, ACCELERATING INTO TOMORROW EXTRACTION AND NEXT GENERATION PRODUCT CAPABILITIES DRIVE OUR ADVANTAGE BECOMING A GLOBAL ONE-STOP SHOP PREPARING FOR THE GROWING MARKET Providing a full suite of manufacturing Increasing and improving custom manufacturing capabilities with the ultimate ability to distribute capabilities to keep up with expected oil-based products globally to adapt to evolving consumer product demand and customer demand BUILDING REPUTATION OPERATING WITH GLOBAL STANDARDS Gaining more partnerships and establishing Readying our business model for exportation to ourselves as the trusted partner of choice by high value international markets various leading international brands and Consumer Packaged Goods (CPG) companies PROVIDING UNIQUE, CUSTOMIZED OFFERINGS Further developing our unique, IP-based product technology platform offering customized manufacturing services 5 T S X : V L N S | O T C Q X : V L N C F A W A R D E D T O P E X T R A C T I O N C O M P A N Y
OUR BELIEF THE MARKET WILL BE DOMINATED BY OIL-BASED PRODUCTS 25% 35% 65% 49% 51% 75% FUTURE* 2019 2017 OTHER PRE-ROLLS CONCENTRATES 9% 6% 9% OIL-BASED EDIBLES 11% PRODUCTS Source: Cowen and FLOWER Company, cannabis 42% equity research report FLOWER- BASED dated February 24, 2020 PRODUCTS (US Market Share). *Valens’ forward -looking 23% prediction in the short- VAPE PENS term based on market research 6 T S X : V L N S | O T C Q X : V L N C F A W A R D E D T O P E X T R A C T I O N C O M P A N Y
THE VALENS ADVANTAGE LEADING THE CANADIAN CANNABIS 2.0 MARKET WITH A FULL SUITE OF MANUFACTURING CAPABILITIES CAPSULES TINCTURES VAPES BEVERAGES CONCENTRATES TOPICALS EDIBLES COMING SOON *Sourced from company presentations, websites and news releases. As at July 9, 2020. 7 A W A R D E D T O P E X T R A C T I O N C O M P A N Y T S X : V L N S | O T C Q X : V L N C F
GROWING RETAIL MARKET INCREASED OPPORTUNITY FOR 2.0-FOCUSED COMPANIES LIKE THE VALENS COMPANY Flower-based and Oil-based Product Sales in AB, BC Canadian Annualized Retail Sales (C$,B) and ON (C$,M) $3.00B $120M Post 2.0 $2.45B* $2.50B $100M Pre 2.0 $2.00B $80M $1.50B $60M $1.00B $40M $0.63B $0.50B $20M $0.00B $0M Oct-18 Feb-19 Jun-19 Oct-19 Feb-20 Jun-20 Aug-19 Oct-19 Dec-19 Feb-20 Apr-20 Jun-20 Flower-based Products Oil-based Products 9 +1K $2.45B* Product Segments Retail Stores Annualized Revenue Source: Statistics Canada, Headset *Annualized sales based on daily retail sales data in June from Statistics Canada. 8 T S X : V L N S | O T C Q X : V L N C F A W A R D E D T O P E X T R A C T I O N C O M P A N Y
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