CSE: CALI OTCQB: FNNZF Slide...QVI, Inc. is a cannabis infused product manufacturer located in...

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LD MICRO VIRTUAL CONFERENCE PRESENTATION March 13, 2019 CSE: CALI OTCQB: FNNZF

Transcript of CSE: CALI OTCQB: FNNZF Slide...QVI, Inc. is a cannabis infused product manufacturer located in...

Page 1: CSE: CALI OTCQB: FNNZF Slide...QVI, Inc. is a cannabis infused product manufacturer located in Sonoma, California and operating as “The Galley”. QVI is currently refitting its

L D M I C R O V I R T U A L C O N F E R E N C E P R E S E N TAT I O N

M a r c h 1 3 , 2 0 1 9

C S E : C A L IOTC Q B : F N N Z F

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D i sc la ime rCautionary Note Regarding Forward-Looking Information

These materials include forward-looking statements. Such statements are based on our current beliefs and expectations and are inherently subject to significant business,economic and competitive uncertainties and contingencies, many of which are beyond our control.

Forward-looking statements regarding Cultivation Technologies Inc. (“CTI”) which are subject to such uncertainties and contingencies include, but are not limited to the statementsrelating to the size, operating capacities and success of operations at CTI’s Interim Extraction and Manufacturing Facility at Coachella, CTI’s ability to finance, develop and operateits planned projects including its planned permanent extraction and premium manufacturing facility in Palm Desert and FinCanna’s ability to generate revenues therefrom, CTI’sbusiness plan and access to future funding and projects, the ability of CTI to pay FinCanna interest, royalties, profit sharing or repayment of loans. In addition, forward-lookingstatements relating to CTI’s business are based on assumptions regarding the construction, completion and operations of CTI’s proposed projects, while CTI is allowed to operateon an interim basis with its existing permits and that CTI obtains state licenses to operate on a permanent basis.

Forward-looking statements regarding Green Compliance Inc. (“GCI”) which are subject to uncertainties and contingencies beyond our control include, but are not limited to thestatements relating to its future level of sales, the total addressable market size and its anticipated growth, GCI’s ability to obtain financing for the development of its business, andits ability to pay FinCanna royalties.

Forward-looking statements regarding Refined Resin Technologies Inc. (“Refined Resin”) which are subject to uncertainties and contingencies beyond our control include, but arenot limited to the statements relating to the effectiveness of Refined Resin’s products or services, the ability of Refined Resin to commence and expand operations and the timingthereof, the success of its white-labeling and other marketing plans, its ability to obtain financing for the development of its business and as its ability to pay FinCanna royalties.

Forward-looking statements QVI, Inc. (“QVI”) which are subject to uncertainties and contingencies beyond our control include, but are not limited to the statements relating to theeffectiveness of QVI’s products or services, the ability of QVI to commence and expand operations and the timing thereof, the success of sales and other marketing plans, its abilityto obtain financing for the development of its business and as its ability to pay FinCanna royalties.

Forward-looking statements respecting growth in the Cannabis market, the size of revenue of the Cannabis market in California, FinCanna’s future revenues, the ability of FinCannato raise financing to invest in additional projects, FinCanna’s financial forecasts, plans for expansion of FinCanna Capital Corp’s business, statements about potential marketdevelopments and trends, demand for FinCanna Capital Corp products and services, and other statements that are not historical facts are also subject to a significant uncertainty.

When used in this document, the words such as "could," “plan," "estimate," "expect," "intend," "may," "potential," "should," and similar expressions are forward-looking statements.Forward-looking statements speak only as of the date on which they are made and FinCanna Capital Corp disclaims any intention or obligation to update or revise any suchstatements.

Although FinCanna Capital Corp believes that the expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties andno assurance can be given that actual results will be consistent with these forward-looking statements. Such risks and uncertainties include but are not limited to, the fact thatFinCanna and the companies in which it may invest are early stage companies with limited operating history and resources, execution of FinCanna’s business plan requires raisingadditional capital, the Cannabis market is highly regulated and those regulations and enforcement priorities of governmental authorities may change, the Cannabis market is highlycompetitive, technical advances in the industry as well as changing political and economic conditions present within the industry will impact the success of FinCanna and thecompanies in which it invests . Actual results could differ materially from the statements reflected in the forward-looking information. Recipients of this information are cautionednot to place undue reliance on these forward-looking statements.

For further information about FinCanna’s business and the associated risks, refer to the discussion under “Risk Factors” in FinCanna’s Annual Information Form andManagement’s discussion and analysis available on our profile at www.sedar.com.

This document and the information available herein are not intended to provide you with any financial, accounting, tax or legal advice.

Disclaimer: This presentation does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation to buy any security of FinCanna or any other third party regardless of whether such security is referenced herein.

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A bo u t F i nCa nna Ca p i t a l Co rp .

About Us

FinCanna is a royalty company that provides growth capital to rapidly emerging private companies operating in the licensed U.S cannabis industry. The Company earns its revenue

from royalties paid by its investee companies that are calculated based on a percentage their total revenues.

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Royalty Model

FinCanna’s scalable royalty model provides an attractive alternative or complement to debt or equity financing for its investee companies. FinCanna is focused on delivering high-impact

returns to its shareholders by way of a strategically diversified investment portfolio.

Mission Statement

Our mission is to combine extensive investment expertise, and industry experience in providing growth capital to rapidly emerging private companies operating in the licensed U.S.

licensed medical cannabis industry with a focus on California.

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U.S. Focused with Emphasis on California

Royalty Model is Very Attractive for Operators and FinCanna

Diversified Investment Portfolio over Multiple Sectors

Timing of FinCanna’s Growth Trajectory

Early Entrant in U.S. with Extensive Network for New Projects

Invest in Private Companies Not Available to Individual Investors

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SOURCES:

[1] https://www.forbes.com/sites/thomaspellechia/2018/06/26/in-2017-beyond-u-s-enjoys-the-highest-legal-cannabis-market-share-worldwide[2] https://cannabusinessplans.com/california-cannabis-market/ [3] https://www.forbes.com/sites/andrewdepietro/2018/05/04/how-much-money-states-make-cannabis-sales[4] https://www.visualcapitalist.com/green-rush-cannabis-legalization-will-impact-california/

• California is the largest cannabis market in North America, representing ~$2.75 billion in sales.[3]

• The North America legal cannabis market grew by 37% in 2017, with a total worth of $9.5 billion. The U.S. accounted for $8.5 billion, followed by Canada with $0.6 billion. [1]

• California not only has the largest state economy in the U.S., it is also fifth largest economy in the world. With cannabis sales projected to total US$7.7 billion by 2022, [2] California is recognized as a global leader of the cannabis market.

• The state licensed cannabis market in the U.S. is expected to reach over $24 billion by 2025, indicating an overall CAGR of 16%. [4]

U.S . & Ca l i fo r n ia

6 0 %27 %

1 3 %

W O R L D W I D EL E G A L C A N N A B I S S A L E S 2 0 1 7 ( 1 )

R E S T O F U . S .

C A L I F O R N I A

C A N A D A

R E S T O F W O R L D

60%

6%

29%

4%

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Roya l t y F ina nc ing

► FinCanna’s primary objective is to form part of a “whole capital” solution for businesses in the licensed medical cannabis sector by providing capital investment for a percentage of the future revenues. It seeks to invest in best-in-class businesses by aligning the business and financial interests of existing owners and operators with those of FinCanna.

► The FinCanna Capital Solution seeks to deliver efficient long-term capital under a royalty arrangement to facilitate the growth or other specific objectives of its investees. It also endeavors to provide funds in a timely way to ensure the business opportunity is optimized.

► FinCanna’s royalty financing offering is an alternative or complement to debt and equity financing. It provides the advantageof allowing investees to maintain financial flexibility and control of their business as opposed to entering into arrangements that may include restrictive debt structures or giving up an ownership stake.

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FinCanna Royalty Financing Benefits to Business Owners

Non Dilutive – Allows owners to preserve their equity

Attractive Cost of Capital – Can be significantly lower than issuing equity

Flexible – Less restrictive than debt, tailored to the needs of the businesses

Long-term Partnership - No exit required, economic interests aligned

Tax Efficient – Royalty payments are made before tax

Autonomy – Board seat may not be required

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F inCa nna ’s Inve s t me nt Po r t fo l i o S u mma r y

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Green Compliance offers a state-of-the-art enterprise compliance and point-of-sale software solution (“ezGreen”) for licensed medical cannabis dispensaries and cultivators. Their target market consists of 33 states in the U.S. which have legalized medical cannabis. Upon completion of funding, FinCanna earns a perpetual royalty equal to 10% of consolidated gross revenues of ezGreen, subject to certain buy-back options.

Refined Resin Technologies, based in Oakland California, is a cannabinoid research and refinery company that will provide B2B and B2C products and services to licensed dispensaries and distributors in the medical cannabis supply chain. Upon completion of funding, FinCanna will earn a perpetual royalty ranging from 16% to 7% of Refined Resin’s consolidated annual revenues, subject to certain buy-back options, with an effective royalty rate of 11.75% on the first US$160 million of Refined Resin’s consolidated annual revenues.

Due to refocused business strategy by Cultivation Technologies Inc. (“CTI”), FinCanna and CTI have agreed to a restructured agreement whereby FinCanna has received US$3.9 million from the sale of CTI’s property in Coachella and will receive an overriding royalty equivalent to 3.44% of the consolidated topline revenue of CTI in perpetuity. CTI is focusing its business on extraction, manufacturing, and brand development and plans to retrofit its 5,200 sq ft, building site in Palm Desert, California as a permanent extraction and premium manufacturing facility to replace its Interim Extraction Facility in Coachella. FinCanna earns a 50% profit sharing interest in the Interim Extraction facility until it relocates to Palm Desert, which is expected to occur by June 2019.

Refined Resin Technologies

Our royalty investment forms part of a whole capital solution for our investee companies. We provide capital investment for a percentage of future revenues or profits and currently have invested in the following four companies.

QVI, Inc. is a cannabis infused product manufacturer located in Sonoma, California and operating as “The Galley”. QVI is currently refitting its 8,300 square foot facility with dedicated spaces for a large-scale commercial kitchen for baked goods, chocolate products and a hard candy and gummy line. The facility will also have a designated area for contract manufacturing for additional products. Upon completion of funding, FinCanna will earn a perpetual royalty ranging from 15% to 6% of QVI’s annual revenues, subject to certain buy-back options.

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Roya l t y P ipe l ine

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Business Type

Funding Amount (US$)

Structure Anticipated Funding

Proj. 3 year Avg Annual Revenue

(US$) (2019 – 2021)

Potential Annual

Royalty to FinCanna

(US$)

Initial Royalty

Payment (est.)

Hydroponics & Horticultural Supply

$3M

Royalty on Revenue + Preferred Shares

First half of 2019 $23M $2.1M Immediate

Cultivation & Branded Products

$3 - 5M Royalty on Revenue

First half of 2019 $20M $2.5M Immediate

Consumer Products $1 – $3M Royalty on

RevenueSecond half of 2019 $32M $2.24M Immediate

FinCanna has an extensive network with access to rapidly emerging, high-impact, private companies for our pipeline of royalty opportunities. We are in the process of advancing negotiations on several royalty acquisitions. Some of theses opportunities are as follows:

The foregoing acquisitions are at the negotiation stage and there is no guarantee that negotiations will will result in binding commitment.

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Mr. Kamm has over 25 years experience operating & advising businesses from large Fortune 500 corporations to venture capital backed companies. Mr. Kamm is currently a principle and the Entrepreneur in Residence at Sandy Hill Venture Capital.

John Campbell, CPA, CA, MBA, CFA | ADVISOR TO THE BOARDMr. Campbell co-founded CWC Capital, a regional investment banking firm that raised in excess of $750M in capital. Mr. Campbell serves as a director of a number of private & public companies, and currently serves as Chairman & CFO of TriView Capital, one of Canada’s largest Exempt Market Dealers.

F IN CA N N A L EA D ERS HIP T EA M

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Mr. Herchak has over 20 years of executive leadership experience with publicly traded companies. He was the former CFO of an international sales and marketing company generating US$1.4B in annual sales and the former CFO of a mineral exploration company that raised C$100M and was sold for C$650M cash. Mr. Herchak brings extensive experience of financial raises, growing companies, managing and deploying capital.

Mr. Scott brings over 20 years experience in corporate finance, including merchant & commercial banking with a major Canadian bank. He has served on the management teams and boards of a number of Canadian publicly traded companies.

Andriyko Herchak, CPA, CA | CEO, DIRECTOR

Mr. Reid is a globally recognized corporate & political strategist based in Washington, D.C & London. He is a partner at Mercury, a high-stakes public strategy firm representing the world’s most successful companies, leading advocacy groups, governments, political parties, NGOs, & prominent public & political figures. His media contributions as an expert in political & business marketing including; CNN, CNBC, MSNBC, NYT & USA Today.

Robert Scott, CPA, CA, CFA | CFO

Morris L. Reid | DIRECTOR

Robert Kamm, MBA | DIRECTOR

Gaynell Rogers | ADVISOR TO THE BOARDMs. Rogers is a senior consultant to Harborside as well as Head of Media Relations. She was a former Senior Publicist for Lucasfilm Ltd., head of Feature Film Publicity for Pixar. & secured the creation of the first cannabis mini series TV show “Weed Wars” on The Discovery Channel. Sourced multiple features for her clients in Fortune, NYT, and other major U.S. and international outlets. She has worked in the cannabis industry since 2009.

Miguel Motta | ADVISOR TO THE BOARDMr. Motta is CTI’s President & CEO. He has previously led global strategy for US$1 billion portfolio of agricultural products as an executive for a world leading agricultural, Fortune 150 company.

Rosy Mondin | ADVISOR TO THE BOARDMs. Mondin served as strategic advisor for several companies involved in the processing, distribution, and safe use of medical cannabis. Ms. Mondin is CEO & Director of Quadron Cannatech, which focuses on extraction and processing solutions. Ms. Mondin is also the co-Founder and Executive Director of the Cannabis Trade Alliance of Canada (CTAC) and Special Advisor to the Canadian Association of Medical Cannabis Dispensaries (CAMCD).

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S ha r e S t r u c t u r e

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CA L I

F NNZF

F I N C A N N A C A P I T A L C O R P .

Shares Issued & Outstanding: 98,689,734

Warrants1 61,255,471

Options2 6,450,000

Shares Issuable upon Conversion of Debenture3

22,500,000

Total Shares (Fully Diluted) 188,895,205

Data accurate as of February 08, 2018

1 Warrants$0.30 – 14,705,666 – Expiry Dec 2019$0.75 – 7,544,233 – Expiry Dec 2019$0.20 – 485,333 – Expiry Jan 2020$1.05 – 2,551,675 – Expiry Apr 2020$0.45 – 24,093,564 – Expiry Jul 2020$0.30 – 22,500,000 – Expiry Jan-Feb 2021

2Options3,100,000 @ $0.303,350,000 @ $0.50

3Convertible Debentures$4,500,000 @ $0.20 – Maturity Jan-Feb 2021

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U.S. Focused with Emphasis on California

Royalty Model is Very Attractive for Operators and FinCanna

Diversified Investment Portfolio over Multiple Sectors

Timing of FinCanna’s Growth Trajectory

Early Entrant in U.S. with Extensive Network for New Projects

Invest in Private Companies Not Available to Individual Investors

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[email protected]

Investor RelationsKin [email protected]

Co n t a c t

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