Transforming Green to Gold Spring 2017 | quadroncapital.ca | CSE: - - PowerPoint PPT Presentation

Ancillary Equipment, Products and Services for the Cannabis Industry

Transforming Green to Gold

Spring 2017 | quadroncapital.ca | CSE: QCC

FORWARD-LOOKING STATEMENTS

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This presentation contains “forward-looking information” within the meaning of applicable Canadian securities laws and “forward looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 (collectively, “Forward Looking Statements”). All statements, other than statements of historical fact, that address activities, events or developments that the Company believes, expects or anticipates will, may, could or might occur in the future are Forward-Looking Statements. The words “expect,” “anticipate,” “estimate,” “may,” “could,” “might,” “will,” “would,” “should,” “intend,” “believe,” “target,” “budget,” “plan,” “strategy,” “goals,” “objectives,” “projection” or the negative of any of these words and similar expressions are intended to identify Forward-Looking Statements, although these words may not be present in all Forward-Looking Statements. Forward-Looking Statements are subject to a number of risks and uncertainties that may cause the actual events or results to differ materially from those discussed in the Forward-Looking Statements, and even if events or results discussed in the Forward-Looking Statements are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on, theCompany. Factors that could cause actual results or events to differ materially from current expectations include, among other things: risks related to the costs required to meet the Company’s obligations related to regulatory compliance; risks related to the extensive control and regulations inherent in the industry in which the Company operates; risks related to governmental regulations, including those relating to taxes and other levies; risks related to the nature of the Company as an early stage business and a business involving an agricultural product and a regulated consumer product; risks related to building brand awareness in a new industry and market; risks related to the retention of senior management and key employees of the Company; risks relating to restrictions on sales and marketing activities imposed by Health Canada, various medical associations and other governmental or quasi-governmental bodies; risks relating to incurring operating losses and maintaining profitability; risks relating to competition in the industry within which the Company operates; risks inherent in the agricultural business; risks relating to energy costs; risks relating to the Company’s exposure to product liability claims, regulatory action and litigation; risks relating to recall or return of the Company’s products; and risks relating to insurance coverage. This list is not exhaustive of the factors that may affect the Company’s Forward-Looking Statements. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the Forward-Looking Statements. The Company’s Forward-Looking Statements are based on beliefs, expectations, and opinions of management on the date the statements are made and the Company does not assume any obligation to update Forward Looking Statements whether as a result of new information, future events or otherwise, or if circumstances or management’s beliefs, expectations or opinions change, except as required by law. A number of important facts could cause actual results to differ materially from those indicated by the Forward- Looking Statements, including, but not limited to, the risks described herein. For the reasons set forth above, investors should not place undue reliance on Forward-Looking Statements. The Company undertakes no obligation to update its Forward-looking Statements to reflect events or circumstances after the date of this presentation or to reflect the occurrence of unanticipated events other than as required by law. Accordingly, readers should not place undue reliance on Forward-Looking Statements. Financial amounts in Canadian Dollars, unless otherwise specified.

Summary

• Quadron provides automated extraction and processing solutions to growers

and processors, granting growers efficient access to the high margin cannabis

• ils market - via lease arrangements, rentals and sales.
• ~40,000 MMAR licensed growers in Canada (22,000 in BC). Industry is

predominantly small scale and growers lack the capital and knowledge to purchase extraction and processing equipment – large opportunity.

• Ancillary products generate additional revenue and provide growers a whole

market solution for the sale of their cannabis oils.

• High margins on both equipment leasing & ancillary product sales.
• Advanced proprietary technology – high yield, faster processing time, lower

cost of operation.

• Recent acquisition of Cybernetic Control Systems Inc. to increase automated

experience for commercial production.

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The Extraction Problem

• Traditional extraction equipment is: expensive, not automated, energy

inefficient, labour intensive and inaccessible due to market demand.

• Un-extracted cannabis (flowers/buds) sell for lower prices than oil based

delivery products.

• As policy changes, more regulation is coming to licensed growers which

will force them to graduate, evolve or exit.

QCC’s Solution

• Provide growers with turn key solutions for extraction through equipment

leasing & laboratory services.

• Design, source and distribute ancillary products (vaporizer pens, cartridges,

inhalers, etc) to growers for their extracted oils.

• Latest CO2 extractor is providing 3-4 times faster processing times than

traditional units = higher total output.

Quadron Capital | Transforming Green to Gold | quadroncapital.ca | CSE: QCC 4

“Oil products could be the future of cannabis. We believe that as the market continues to grow and mature, consumer preferences will begin to lean towards oil-based products (a trend we are already seeing in many US markets). In our view, LPs with a strong oil strategy (which requires a separate license from Health Canada) will be better positioned in the market and likely able to obtain higher margins compared to sales of traditional bud.”

*Canaccord Genuity, November 2016

Where QCC Stands

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Growers Oils

Quadron supplies extraction equipment to growers and receives a fee on the run- time of the equipment. Quadron designs, sources and distributes ancillary products (vaporizer pens, cartridges, inhalers, etc) to licensed growers for their extracted oils.

Packaging/Delivery Devices Extraction

The Industry and Market

• Cannabis oil consumption in Canada is expected to grow from 284 litres in 2015 to

562,613 litres by 2020 (198,000% growth) vs. dried marijuana consumption of 6,388 kg in 2015 to 110,034 kg in 2020 (1,600% growth) - Mackie Research 2016

Anticipated Domestic Client Base

~40,000 MMAR licenced growers across Canada with ~22,000 in BC:

• 59% of designated-personal production licences are in BC (individuals who grow and

produce for others)

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Full Legalization in 2018 CY2015E

Dec 31/2015

CY2016E

Dec 31/2016

CY2017E

Dec 31/2017

CY2018E

Dec 31/2018

CY2019E

Dec 31/2019

CY2020E

Dec 31/2020

Dried Marijuana (C$, ‘M) $48 $93 $185 $431 $784 $1,113 Extracts/oil (C$, ‘M) $1 $33 $132 $755 $1,367 $1,687 Total Market Size (C$, ‘M) $49 $126 $316 $1,186 $2,151 $2,800 % Change 160% 150% 275% 81% 30%

Market size of marijuana from CY2015 to CY2020 assuming full legalization

*Mackie Research, 2016

Performance and Growing Profitability

Financial Metrics Q4 - 2016 (3 mths ended Apr 2016) Q1 - 2017 (3 mths ended Jul 2016) Q2 - 2017 (3 mths ended Oct 2016) Q3 - 2017 (3 mths ended Jan 2017) 9 months Revenue $ 159,823 $ 223,450 $ 429,180 $ 986,430 $ 1,639,060 Gross Profit $ 42,512 $ 131,902 $ 294,887 $ 15,294 $ 442,083 Gross Profit Margin 27% 59% 69% 2% 27%

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$- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 Q4 - 2016 (3 mths ended Apr 2016) Q1 - 2017 (3 mths ended Jul 2016) Q2 - 2017 (3 mths ended Oct 2016) Q3 - 2017 (3 mths ended Jan 2017) Gross Profit Revenue

Cybernetic Control Systems Inc.

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• Quadron acquired Cybernetic in March 2017. Cybernetic has a

proven track record of designing, fabricating and supplying custom and standard machines bringing automation to the process manufacturing and industrial sectors

• Provides Quadron with automation expertise to design and

manufacture the Soma Labs Scientific line of cannabis extraction and processing equipment:

• Machines for CO2 extraction
• Odor Elimination System (OES)
• LED lighting systems
• Nutrient Mixing and Sensing Systems
• Enormous potential to take Cybernetic’s automation experience

and apply it to create efficiencies, consistencies and improve ROI for authorized industry participants

Equipment Leasing

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Quadron anticipates: ▪ Sales of its new commercial CO2 extraction units to third parties by Q3 2018 ▪ Two operating lease agreements projected to commence April 2017 ▪ Selling a minimum of 2 machines per quarter starting in Q2 2018 Quadron will enter joint venture and operating lease arrangements with industry participants involved in cannabis processing and extraction to operate Quadron extraction systems: ▪ These arrangements provide Quadron with a continual source of know-how and feedback, critical for the

• ngoing development and refinement of

the design, manufacture and operation of Quadron’s Scientific extraction equipment. Quadron is currently developing a proprietary mobile extraction unit, capable of performing extraction services directly on a client’s property.

9

Share Structure

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QCC Share Structure Issues & Outstanding 47,849,500 Warrants

@ 0.20

• Exp. Aug 2018

9,911,000

• Exp. Feb 2018

183,750 Options 3,750,000 Preferred Shares 8,150,000 Total (Fully Diluted) 69,844,250 Insider Ownership (3-year Escrow) 13,100,000

• Completed $1.7MM at $0.20 per common share in February 2017.

Rosy Mondin - Director, President & CEO

• Over 16 years of business, entrepreneurial and legal experience specializing in corporate law and

regulatory affairs – held executive positions as General Counsel for companies involved in regulatory undertakings and in the securitization of real estate.

• Co-founder and Executive Director of the Cannabis Trade Alliance of Canada (CTAC), an industry

association and advocacy group representing the adult-use cannabis industry.

• Advisory Board Member with the Canadian Association of Medical Dispensaries (CAMCD).
• Practicing lawyer & member of the BC Law Society; B.A (SFU, Deans List); LL.B (U of

Windsor).

Kieran Forristal – President of Soma Labs and Greenmantle

• Over 20 years capital market experience in Asia - working on the capital market trading floors in

top ten international Investment banks. At BNP Paribas, Bank of America and Union Bank of Switzerland he rose to titles of Executive Director and Senior Vice President of Operations.

• Focused on complex & structured derivative process control, management, efficient operational

growth & regulatory governance of those products and systems.

• B.A (Economics, SFU) & completion of the Canadian Securities Course.

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Doug McFaul - Director, Chair of the Board of Directors

• Over 23 years experience in the financial services & capital markets industries.
• Extensive experience with public company operations including in-depth understanding of

regulatory requirements, financial statements, raising capital, & shareholder relations.

• BBA (Business Admin specialized in Finance), completion of Canadian Securities Course.

Management

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Management

Robert Chisholm - Chief Financial Officer

• Over 30 years of experience in finance and administration.
• Currently CFO of Emprise Capital Corp., a Vancouver based merchant bank.
• Professional accountant holding a designation from the Certified Management Accountants
• f Canada.
• Serves as CFO and director for a number of public companies.

Jeff Durno - Director, Quadron Capital Corporation.

• Partner at Cassels Brock & Blackwell LLP in the Securities Group where his practice focuses primarily
• n securities and corporate finance matters. Mr. Durno was called to the Bar of Ontario in 1993

and British Columbia in 1994.

• Provides strategic advice to clients - from start-ups to emerging and established businesses –

in structuring and negotiating complex commercial transactions and financial restructurings.

• Active in the public market for more than two decades, Mr. Durno acts for issuers, investment

dealers and investment advisors across a range of industries including technology, manufacturing, and natural resources.

Scott Ackerman - Director, Quadron Capital Corporation.

• President and CEO of Emprise Capital Corp., a Vancouver based merchant banking company

providing management, restructuring, accounting and financial services to public companies.

• Over 25 years of experience in the financial services & capital markets industries having held senior

executive roles in various capacities from Investor Relations to Executive Management.

• Extensive experience with public company operations and serves as a director and senior officer
• f a number of publicly traded and private ‘start-up’ venture companies.
• Graduated from the British Columbia Institute of Technology with a diploma in Marketing in 1987.

Shane Lander - Founder, Soma Labs Scientific Inc.

• 30 years of business experience as an innovator and successful entrepreneur.
• President of Odorchem Manufacturing Corporation, with specific expertise in the manufacturing
• f Cannabis Odor suppression for 20 years.
• 15 years experience working with supercritical CO2
• Over 25 years experience in mechanical design and systems automation
• Co-founder & principal shareholder of Algeacan Bioteck Inc. - completing its R&D process of the rapid

growth & harvest of the microalgae Astaxanthin

Management (cont’d)

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Peter Hausmanis - Lead Chemist

• BASc (UBC) &10 years hands-on experience in chemical & biological engineering.
• Focused on reducing the environmental impact of pollutants (pollution prevention) through

clean water systems, and developing new technologies in the waste to energy (green energy) sector.

• 3 years as lead chemist for Odorchem, refocusing his skills on management, quality control, &

product redevelopment/reverse engineering.

Michael MacDonald – Founder, Cybernetic Control System

• Over 25 years experience successfully growing technology companies to profitability.
• Extensive experience in automation and machine development, utilizing a combined

education in electronics engineering, chemistry and business.

• Helped form a technology company, TDS Controls & Automation, which he grew and later sold

successfully.

• Co-founder of Cybernetic Control Systems with Shane Lander; a technology company focused
• n bio-products, agricultural innovations and pharmaceuticals/nutraceuticals.
• Mike holds an degree as an A.Sc.T. of Electronics Engineering from BCIT.

Quadron Capital Corp. Rosy Mondin Director, President & CEO rosy@quadroncapital.ca Quadron Capital Corp. 1600 - 609 Granville St. Vancouver, BC | V7Y 1C3 1 (604) 346-8118 www.quadroncapital.ca Investor Relations Caleb Jeffries Investor Relations Representative QCC@kincommunications.com Kin Communications Suite 100 – 736 Granville St. Vancouver, BC | V6Z 1G3 1 (604) 684-6730 www.kincommunications.com

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