VEXT SCIENCE
PROFITABLE PRODUCER OF MEDICAL AND CONSUMER CANNABIS OTCQX: VEXTF | CSE: VEXT www.vextscience.com
VEXT SCIENCE PROFITABLE PRODUCER OF MEDICAL AND CONSUMER CANNABIS - - PowerPoint PPT Presentation
VEXT SCIENCE PROFITABLE PRODUCER OF MEDICAL AND CONSUMER CANNABIS OTCQX: VEXTF | CSE: VEXT www.vextscience.com DISCLAIMER FORWARD LOOKING STATEMENTS This presentation contains forward looking statement that relate to the Companys current
PROFITABLE PRODUCER OF MEDICAL AND CONSUMER CANNABIS OTCQX: VEXTF | CSE: VEXT www.vextscience.com
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This presentation contains forward looking statement that relate to the Company’s current expec- tations and views of future events and should be read together with more detailed information and fjnancial data and statements. The Presentation does not contain all the information you should con- sider before purchasing securities of the Company. In some cases, these forward- looking statement can be identifjed by words or phrases such as “may”, “might”, “will”, “expect”, ”anticipate”, ”estimate”, “intend”, “plan”, “indicate”, “seek”, “believe”, “predict” or “likely”. Or negative of these terms, or other similar expressions intended to identify forward-looking statements. The Company has based these forward-looking statements on its current expectations and projections about future events and fj- nancial trends that it believes might affect its fjnancial condition, results of operations, business strat- egy and fjnancial needs. These forward-looking statements include, among other, things, statements relating to: the Company’s expectations regarding its revenue, expenses and operations; The Com- pany’s expectations regarding timing of the completion of the construction and related construc- tion costs; the Company’s anticipated cash needs and its needs for additional fjnancing; the Com- pany’s intention and ability to grow the business and its operations: including its ability to complete business development and integrate multi-state operations: the Company’s expectations regarding harvesting of products and precut sales prices; expectations with respect to future production costs and capacity; expectations regarding our growth rates and growth plans and strategies; expectations with respect to the approval of the Company’s cannabis license holders; expectations with respect to the future growth of its medical and recreational cannabis services with license holders, and any commentary related to the legalization of adult-use, recreational cannabis and the timing related to such legalization, the Company’s expected business objectives for the next twelve months. For- ward-looking statements are based on certain assumptions and analyses made by the Company considering the experience and perception of historical trends, current conditions and expected fu- ture developments and other factors it believes are appropriate and are subject to risks and uncer-DISCLAIMER
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Vext is executing a strategy to enter new markets rapidly with limited capital risk by leveraging operational expertise and brand strength
Monetizing manufacturing and distribution expertise with targeted partnerships in new markets Partnerships in 7 states with revenue streams an- ticipated to begin in 2020 Based in Phoenix, AZ with 130 employees Market leader in Arizona, third largest U.S. cannabis market Building a pipeline of future acquisitions with lower execution risk Listed CSE (May 2019) VEXT; OTCQX: VEXTF
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Makes Scalable Growth Challenging Vext’s footprint is expanding despite the market’s complexity.
Complicated U.S. market with local legalization measures makes traditional operational scale diffjcult National legislation to address a myriad of legal and financial hurdles stalled in Washington D.C.
Regulation creates market fragmentation and growth challenges
states, many struggle to be profjtable and grow
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The Marijuana Index™ One-year price chart of 31 U.S. public cannabis companies
With a focus on profjtable growth Vext’s business models avoids the primary issues impacting many cannabis stocks
Source: North American Marijuana Index tracks the leading stocks operating in the legal cannabis industry in the United States and Canada. Companies must meet minimum trading requirements to be included on indices. To be included companies have a minimum market capitalization of $200 million and daily trading volume of $2 million. All dollars in $USD. Chart as of April 9, 2020 market closing prices.Approximately 2/3rds of the U.S. population live in states with some form of legalized marijuana High growth, local-market focus, and highly fragmented Majority of local dispensaries and growers lack expertise to vertically integrate and create scale Most industry investment has been for geographic expansion and top line growth “Green-fjeld” investments with insuffjcient cash for operations has compressed valuations
1 2 3 4 5
62.5% 21% 16%
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Track Record of Growth and Profjtability Continues with Outlook
Delivering Consistent Financial Performance
Net income positive since 2016 Consistent EBITDA margin of 20%+ Executing a growth model that scales
2020 EBT Contributions
Management Agreements Investments & Service Agreements Joint Ventures1 2 3
$8 $14 $18 $22 $38
$1 $4 $4 $3 $8 $3 $6 $6 $4 $10 $0 $5 $10 $15 $20 $25 $30 $35 $40
2016 A 2017 A 2018 A 2019 A 2020 E
Revenue EBT EBITDA
State Cultivation Processing and/
Retail Products Vapen Brand THC Marijuana CBD Cannabinoids Vext Relationship
Arizona HQ (2) X X X X X Management Agreements Kentucky X X Joint Venture Hawaii X Investment Nevada X X Service Agreement Oklahoma X X X Joint Venture California X X X Joint Venture Ohio X X X Investment Massachusetts X X X Joint Venture
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Arizona cannabis market is the 3rd largest in the U.S.
Established Phoenix presence
and purity
in 80%+ of operating dispensaries
extraction and manufacturing
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Drive Growth and Margin
GROWTH
Competitive Advantages
MARGIN
Competitive Advantages
Product quality Brand strength Distribution capabilities Manufacturing processes Established supply chain Effjcient marketing spend Working capital GROWTH DRIVERS
Expanding our proven brand for all product lines into new markets
MARGIN DRIVERS
Driving scale with lower costs entering new markets, lower customer acquisition costs, and lower working capital required for operations in new markets
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Full line of THC and CBD products
Solicit and implement feedback from customer base Credentialed team with backgrounds in University level research and industry experience Use quality inputs from controlled cultivation of
Maintain consistent purity and quality through stringent operations and quality-controlled manufacturing Diversifjed product line
introductions and delivery methods
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Built on Commitment to Wellness
Second Largest Social Media Following And Exceeds The Next 10 Brands Combined
pure, highest quality products
leading performers who promote Vapen to their fans
media followings with over 60K on Instagram and 15K on Facebook
demographic segments
and joint venture partnerships
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Broad Arizona market distribution through retail and wholesale channel Arizona recreational use vote in 2020 potentially expands core market Carried in most licensed Arizona dispensaries Ventures in seven new states all processing and selling Vapen branded products.
01 03 02 04
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In Extraction Processes and Science-based Manufacturing
STRONG
Core expertise of leadership team in manufacturing, distribution and product development Ongoing investment in equipment, processes and human capital to drive effjciency and quality Established manufacturing processes to ensure consistency and quality Scientifjcally credentialled lab staff at PhD levels in
Platform for JV partnership growth providing crucial expertise in:
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Key to future growth
Vext is leveraging cannabis operational expertise into low-risk growth in new markets to add revenue streams and cash fmow through joint venture partnerships targeting operators with:
Full product lines in THC and CBD with established brands Proven supply chain and reliable sourcing Innovative processes and delivery methods focused
Distribution capabilities
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Strategically with joint venture partnerships, management agreements, and investments No long-term liabilities from “greenfjeld” spend to build and own new operations
Targeting operations that can rapidly contribute net income and cash flow
Capital requirement for ongoing seven state expansion of approximately USD$5.5 million, with working capital need of ~USD$4.0 million that is fully funded
leveraging existing supply chains
Creates pipeline of future acquisitions and partnerships
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Operational in Seven States
Legal Legal for medical use Voting in 2020 Vext HQ Vext JV Location Targeting 9 total joint venture, management service agreements, and investments closed and operational by the end of CY2020 Tracking to add 2 – 3 new markets in 2020 to come online in 2021
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MAR APR MAY SEPT OCT FEB APR MAY JUN OCT 2019 2020
San Diego Build Out San Diego LOI Arkansas LOI Oklahoma LOI Ohio LOI Mass. LOI Hawaii LOI Las Vegas Building Begins Hawaii Lab Build Out Oklahoma Production Begins San Diego Production Begins Kentucky LOI OK, AK, KY Building Begins Kentucky Production Began Ohio Processing Begins Las Vegas Production Begins
Begins
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With new distribution
Current Sales Breakdown by Product*
Increasing Vapen branded products as a percentage of revenue.
Future Sales Breakdown by Product**
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Reinvesting Cash to Fund Growth
USES OF CASH SOURCES OF CASH APPLYING ROI
START-UP PHASE
announced
WORKING CAPITAL COSTS
permitting
distribution OPERATIONAL PHASE
revenue and net income booked on Vext Science P&L
positive
balance sheet FUTURE USE OF CAPITAL
BENEFITS OF VEXT MODEL
ments
Risk to maximize return
Revenue and EBITDA Forecast (USD$)
17% EBITDA margin 26% EBITDA margin
$22.0 $38.0 $3.7 $10.0 2019 2020E
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Vext Target Metrics:
2020 Growth Drivers:
Organic, low teens growth from Arizona business in 2020 with estimated mid-twenty percent growth through expanded recreational use in 2021 Leverage organic growth with JV partnerships and acquisitions Long-term EBITDA margin in a range
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TRACK RECORD
Proven operational capabilities in cannabis industry
ACCELERATING TOPLINE GROWTH AND EARNINGS MARGIN
Ventures coming online and contributing in 2020 to revenue and higher EBITDA
MULTI-YEAR STRATEGY
Expand to 11+ states and internationally operations by 2022
PROFITABLE PRODUCER OF MEDICAL AND CONSUMER CANNABIS APPENDIX Supplemental Financial Information www.vextscience.com
December 31, 2019 December 31, 2018 REVENUES Management fees $ 4,638,000 $4,800,000 Professional services 6,458,297 6,652,534 Product sales 9,949,209 5,342,956 Equipment leasing 1,019,403 1,000,779 Property leasing 257,659 680,000 22,322,568 18,476,269 COST OF SALES Cost of goods sold 6,607,533 3,726,520 Salaries and wages and contractors 5,545,340 4,890,750 Property and equipment leasing, utilities, and property taxes 103,948 204,045 Amortization 697,899 480,603 (12,954,720) (9,301,918) Gross Profit 9,367,848 9,174,351 Gross Margin 42% 50% Operational expenses (5,699,619) (4,294,357) Net income after taxes 2,793,324 3,748,562 EBITDA 3,737,623 4,981,182 23 | VEXT SCIENCE
December 31, 2019 December 31, 2018 All fjgures above are audited except for EBITDA
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ISSUED AND OUTSTANDING
Commons shares o/s 22,616,226 24.8% Class A super voting shares post conversation (owned by the Executive Chairman) 60,574,700 66.5% Class A super voting shares post conversation 7,872,400 8.6% Total issued and o/s voting shares 91,063,326 100%
OTHER SECURITIES
Special advisory warrants & other warrants 1,980,210 Stock options 2,066,334 Fully diluted 95,109,870
*Each Class A super voting share is convertible into 100 common shares
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THAI NGUYEN | EXECUTIVE CHAIRMAN/FOUNDER
Brands (Vapen Clear, Vapen Extracts, Vapen Kitchens, & Vapen CBD). Mr. Nguyen formed Vext Science to service Herbal Wellness Center. In 2013, he developed the Vapen Brand to be sold retail and wholesale to the other Arizona dispensaries. Mr. Nguyen has been involved with entrepreneurial ventures in real estate and High Performance Automotive over the past 18 years. He is a visionary leader in the cannabis industry focusing on trends, relationships and a strong culture
ERIC OFFENBERGER | CHIEF EXECUTIVE OFFICER/COO
manufacturing industries. Eric has worked in both large public companies and pri- vate organizations that have been market leaders. As President and COO of a Steel Service Center he oversaw six divisions with annual revenue of over$350 million. Mr. Offenberger has a proven track record growing sales, improving inventory turnover and driving operational effjciencies. He has been involved in green fjeld startups as well as major capital development and installation of ERP applications. Mr. Offenberger holds a bachelors degree in accountancy and CPA certifjcation.
DENISE LOK | CHIEF FINANCIAL OFFICER BRIAN CAMERON| CORPORATE SECRETARY
Commerce degree in Accounting and Transportation Logistics from the University of British Columbia. Ms. Lok brings a broad background of public company experience. Previously, she was an auditor with PricewaterhouseCoopers.
fjnance consultancy with offjces in Canada and the United States, providing
the British Columbia Securities Commission and the Vancouver Stock Exchange.
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DIRECTOR OF RESEARCH & DEVELOPMENT
MICHAEL SETH
DIRECTOR OF EXTRACTION AND LABS
ANTHONY “TONY” GUTIERREZ
DIRECTOR OF CULTIVATION AND AGRICULTURE Stephen holds a Ph.D. in Chemistry with vast expe- rience in the research and development of several classes of inorganic and organic materials. He has strong problem-solving skills, applying theoretical and experimental technical knowledge to elucidate mo- lecular structures and interactions in complex chem- ical systems. Stephen is an excellent team worker, having developed several long-lasting collaborations across multiple interdisciplinary teams exemplifjed by extensive publications about a wide array of technolo-
tation skills developed by extensive participation in scientifjc conferences as well as teaching experience at ASU. Mike has been involved with Vapen Extraction and Labs from day one. He was instrumental with devel-
quality and consistency within the product lines. Mike graduated from Arizona State University, with a bachelor’s degree in biochemistry. Mike is currently working on a doctorate degree in Chemistry at Arizo- na State University. Tony has assisted Vext in our growth of cultivation ca- pabilities and evaluating cultivation opportunities in new states and with new partnerships. In addition to his education and experience in cannabis, Tony has an extensive construction background that has allowed Vapen to increase our canopy space effjciently. Tony holds a bachelor’s degree in Plant Science from Arizona State University and is currently in the docto- rial program at Arizona State University.
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THOMAS SCOTT PIERCE | DIRECTOR OF RETAIL OPERATIONS
Scott Pierce is a Washington, D.C. Native who began his work in the cannabis industry in the late 1980’s, where he volunteered for NORML and attended many events supporting cannabis legalization. He was taught the many benefjts of this amazing plant, by some of the Pioneers of the Cannabis Industry...Jack Herer, Steve DeAngelo and Ed Rosenthal. Scott has an extensive background in Sales, Manage- ment, Hospitality, the Food/Beverage Industry and Customer Service. He is also an accomplished actor/entertainer/event planner that ran an award winning, non-profjt theater/art gallery for 8 years in Downtown Phoenix called Artists Theater Project. Scott applied his many skills to build one of the most successful Medical Marijuana Dispensaries in Phoenix, AZ.
BRIAN OFFENBERGER | DIRECTOR OF SALES AND MARKETING
Brian Offenberger is responsible for sales and marketing for all Vext Science ventures. Brian has a proven executive management track record and experience driving sales growth in a variety of industries. Prior to joining Vext Science, Brian was Chief Executive Offjcer of Right On – No Bull Marketing with responsibility for all aspects
marketing pros ranked #3 in the world for online marketing information. Previously, he served as Western Regional Director for Siemens, leading the division to record sales and profjts. Brian holds professional certifjcations in online marketing, search marketing, website analytics, paid search advertising, conversion optimization and email marketing.
DAVID ROZEN | DIRECTOR OF STRATEGIC DEVELOPMENT COREY BARNES | CULINARY DIRECTOR
David brings an entrepreneurial background to Vext Science. David is responsible for identifying new market and partnership opportunities. Prior to joining Vext full time, David had successfully obtained cannabis licenses in two states. David’s hands on experience with the licensing and construction aspects for new opera- tions, has helped Vext and our partners avoid numerous pitfalls in executing our growth strategy. Corey has been involved in the start up and development of products using cannabis for 7+ years. Corey has been involved in starting brands prior to joining
product offering of Vapen and earning multiple industry award recognition for product quality.
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THAI NGUYEN | EXECUTIVE CHAIRMAN ERIC OFFENBERGER | CEO
and private companies in the areas of investor relations, arranging fjnancings and corporate transactions. Since 2007 he has been Chairman at Baron Global Finan- cial Canada Ltd., a subsidiary of the Hong Kong Stock Exchange Member Firm VBG Group. The fjrm provides merchant banking services in the areas of fjnancing, transaction planning, corporate transactions, public listings and ongoing public company management.
currently serves as a board member for MLB UMPSCARE. Ms. Williams background in managing, growing and improving retail operations will be benefjcial to VEXT as the Company expands its distribution and dispensary business in new markets.
SCOTT HILL ESQ.
psychological assessment and evaluation. Bachelors degree in Psychology at How- ard University in Washington, DC and a Masters and Doctoral degree in Clinical Psy- chology, Arizona School of Professional Psychology. Independently licensed in the state of Arizona for 5+ years. Focusing on Compensation and Pension Examinations for veterans, Consultative Examinations for the AZ Department of Disability Deter- mination, and psychological evaluations for the AZ Department of Child Safety.
development (R&D) to the Vext advisory board as a leading pharmaceutical R&D in both academic and industrial laboratories for over 20 years, and a professor of chemistry, biochemistry and physics at Arizona State University (ASU). Along with Dr. Yarger’s ex- tensive R&D and publications in pharmaceuticals, he also has signifjcant active research projects in the areas of biophysical chemistry, nanomaterials and biopolymers, with
partner with Sirvent and Hill. He continued his education in Physics and Law at ASU, culminating in a juris doctorate in 1999. Scott values helping others protect their in- vestments and assets, as evidenced by his law practice’s focus on patent law and estate
uct prompted him to join WealthCounsel, a collaborative network of more than 1,000 law fjrms nationwide, in 2006.
THANK YOU
e: investors@vextscience.com www.vextscience.com