March 2019 Investor Presentation - High Tide Inc. · Raj Grover Founder, President & Chief...
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Investor Presentation March 2019 Vertically - Integrated Cannabis Enterprise Celebrating 10 Years of Business in 2019 Downstream Growth Initiatives
Transcript of March 2019 Investor Presentation - High Tide Inc. · Raj Grover Founder, President & Chief...
Investor PresentationMarch 2019
Vertically-Integrated Cannabis Enterprise
Celebrating 10 Years of Business in 2019
Downstream Growth Initiatives
DISCLAIMERFORWARD-LOOKING STATEMENTS
This presentation is strictly confidential and must not be copied, distributed, circulated or disseminated without the express written consent of High Tide Inc. (the “Company”). This
presentation does not constitute an “offering memorandum” as such term is defined under Canadian securities legislation and confers no statutory, contractual or other similar rights
of rescission or other action or remedy to any recipient under securities legislation in Canada, the United States or other jurisdiction for misrepresentation or otherwise. No securities
are being offered for sale hereunder. This document does not provide full disclosure of all material facts relating to the securities offered. Readers must conduct their own analysis
and review of the Company and of the information contained in this presentation and must contact their own professional advisors.
This presentation contains “forward-looking information”. Forward-looking information includes, without limitation, statements regarding macroeconomic factors, future demand and
supply dynamics for cannabis, production and development forecasts and timelines, estimates as to the demand for cannabis and cannabis paraphernalia, future cannabis prices,
solutions to past problems, valuations, capital and operating expenditures, ability to obtain financing, future currency exchange rates, government regulation of cannabis, and
environmental risks. Similarly, forward-looking information also includes economic analysis of the business of the Company and the results thereof, including, without limitation, cash
flow projections, estimated capital and operating costs, and all economic analysis derived from such estimates and forecasts. In general, forward-looking information can be identified
by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “projects”, “forecasts”, “budget”, “estimates”, “schedule”, “intends”, or variations of such
words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. The forward-looking information is based
upon factors and assumptions the Company believes is reasonable based on information currently available to them. Forward-looking information is subject to known and unknown
risks, uncertainties and other factors that may cause the actual results, level of activity, performance of the Company to differ from forward-looking information. There can be no
assurance that such information 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 information. The Company does not undertake to update any forward-looking information, except as required under applicable
securities laws.
Financial outlook and future‐oriented financial information contained in this presentation about prospective financial performance, financial position or cash flows is based on
assumptions about future events, including economic conditions and proposed courses of action, based on management’s assessment of the relevant information currently available.
In particular, this presentation contains revenues, gross margins and earnings before interest, taxes, depreciation and amortization for 2018 and 2019. These projections contain
forward‐looking statements and are based on a number of material assumptions and factors set out above. These projections may also be considered to contain future oriented
financial information or a financial outlook. The actual results of the Company’s operations for any period will likely vary from the amounts set forth in these projections, and such
variations may be material. See the above for a discussion of the factors that could cause actual results to vary. The future oriented financial information and financial outlooks
contained in this presentation have been approved by management as of March 4, 2019. Readers are cautioned that any such financial outlook and future‐oriented financial
information contained herein should not be used for purposes other than those for which it is disclosed herein.
These materials may contain inaccuracies or typographical errors. The Company shall not be responsible for any errors or omissions contained in these materials and do not
guarantee the accuracy, completeness or timeliness of the information contained herein.
See a description of the readers’ rights under “Statutory Rights of Action for Damages or Rescission” at the end of this presentation.
Introduction
CS
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ITI Company Snapshot
41 March 11, 2019. 2 Over the last three months. 3 As at March 8, 2018 4 2018 audited year-end financials.
Exchange & Ticker: CSE:HITI / Frankfurt:2LY
Share Price1: $0.46
Average Daily Volume2: 315,449
Share Outstanding (basic): 197 million
Market Capitalization: $86 million
Total Employees3: 125
Revenue4 $8.7 million
Gross Margin4 $3.1 million
Total Assets4 $25.9 million
High Tide is a vertically
integrated, Alberta-based,
downstream cannabis
corporation focused on:
• Manufacturing and
wholesale distribution of
smoking accessories and
cannabis lifestyle products
• Developing the largest
Cannabis retail network in
Canada
10 Years of Operations; 6 Vertically-Integrated Businesses
5
WHOLESALE RETAIL
Canada’s premiere distributor and
manufacturer of
cannabis accessories
4,300 SKUS with 75%
of our catalog designed
and manufactured to
maximize margins
27,000 sq ft facility in
Calgary, Alberta
Exclusive global manufacturers and
distributers of licensed
smoking accessories
In partnership with
celebrity brands like
including but not
limited to Snoop
Dogg, Cheech &
Chong’s Up in
Smoke, Trailer Park
Boys, Guns N’ Roses
and Sublime
Positioned to become one of
Canada’s largest cannabis retail
networks, launched in 2018
Establishing new locations and
retrofitting existing stores for top-tier
speed to market; 10 current locations
Being deployed selectively to
leverage existing real estate
partnerships
Establishing a recognized and
successful brand of independent retail
stores across Alberta and Ontario
One of the largest chains of cannabis accessory stores in Canada
12 locations supplied directly by RGR
(8 franchises and 4 corporate stores)
Headquartered in Amsterdam,
Grasscity.com is the world’s premier
online store for smoking accessories and
cannabis lifestyle products
One of the most searched and visited smoking
accessories e-retailers, with approximately 5.8
million site visits annually
Bricks & Mortar Online
Established in all Downstream Markets
Management Team
6
Raj GroverFounder, President & Chief Executive Officer
Mr. Grover is the founder of High Tide and its
subsidiary companies of RGR Canada,
Smoker’s Corner and Canna Cabana, while
also being the co-founder of High Tide’s
newest subsidiary, Famous Brandz. Raj
started Smoker’s Corner in 2009 and RGR
Canada in 2011 and has been operating as
a pioneer in the cannabis accessories
industry ever since.
Currently, he is a national franchisor and
entrepreneur with 17 years of experience in
building and selling successful companies.
Mr. Grover leads the industry in
manufacturing capabilities and has built the
largest network of comparable retail stores
in Canada.
In his personal time, Raj is passionate about
supporting children’s charities that benefit
the underprivileged and those struggling
with health issues and other life challenges.
Nick Kuzyk, MBA
Chief Strategy Officer & SVP Capital Markets
Mr. Kuzyk joined High Tide in April of 2018
and brings over 15 years of experience in
investor relations, mergers and acquisitions
and business development. From early-
stage ventures to large cap corporations,
Nick has developed a balanced expertise
comprised of both qualitative and
quantitative aspects rooted in strategic
communications and financial analysis.
Mr. Kuzyk holds both an HBA and MBA
from the Richard Ivey School of Business
(Ivey) at Western University, is the
Treasurer of the Alberta chapter of the
Canadian Investor Relations Institute
(CIRI) and has also completed the
CIRI/Ivey Strategic Management of
Investor Relations Program.
In his personal life, Mr. Kuzyk spends time
volunteering in the community for the
benefit of causes about which he is
passionate.
Andy PalalasChief Revenue Officer
Mr. Palalas is responsible for developing
distribution channels, sourcing new market
opportunities and overseeing the revenue portfolio
of High Tide. Andy is a business growth and sales
professional with a decade of experience in
implementing sales programs for established
corporations and start-ups alike.
With extensive experience in the loyalty
marketing sector, a track record of explosive
growth in franchise sales and operations, and a
holistic mastery of ground-level business
development through to overarching marketing
strategy, Andy has most recently taken Famous
Brandz from inception to one of the leading
manufacturers of smoking accessories
internationally.
A relentless new business hunter and relationship
builder, Andy is determined to fulfill High Tide’s
vision of becoming the largest vertically integrated
cannabis enterprise in the world.
Matt Dexter, MBA, CPA, CMA
Chief Financial Officer
Mr. Dexter is a Senior Finance Professional with
more than 10 years of experience working with
CGAAP; USGAAP; IFRS and Private Enterprise
in accounting, reporting, planning and analytical
capacities.
From 2012 until 2018, Mr. Dexter was the
Associate Vice President of Financial Planning &
Analysis at a large Canadian retailer of industrial
and casual apparel. He has significant
experience in short- and long-term financial
planning and budgeting. Mr. Dexter has also
developed an expertise in corporate financial
reporting, financial analysis and providing
support to senior-level decision makers. Foreign
currency strategies, business development and
change management have also been areas of
focus in his career.
Prior to the aforementioned role, Mr. Dexter
gained experience in the airline, utilities and
shipbuilding industries. Educated in Atlantic
Canada, he moved to Calgary in 2011.
Alex MackayChief Operating Officer
Mr. Mackay joined High Tide in February 2019
after a 21-year career at Shaw
Communications, one of Canada’s largest
telecommunications firms. Known as an
adaptable leader with a track record of driving
breakthrough results, Alex has extensive
operational experience including roles as
Senior Director of Contact Centers and Retail
Operations, National Director of Field Support
Operations and National Sales Director.
Key milestones include the achievement of
industry-leading customer satisfaction scores,
proven increases to incremental sales and
revenues and the creation and implementation
of a suite of new Standard Operational
Practices adopted across a +10K employee
organization.
Mr. Mackay’s achievements have been
grounded in exceptional people practices,
including targeted acquisition of top talent and
building high-performing teams. Raised in
Victoria BC, Mr. Mackay completed his degree
at the University of Victoria and moved with his
family to Calgary in 2012.
Board of Directors
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Raj GroverExecutive Chairman
Mr. Grover is the founder of High Tide and its
subsidiary companies of RGR Canada,
Smoker’s Corner and Canna Cabana, while
also being the co-founder of High Tide’s
newest subsidiary, Famous Brandz. Raj
started Smoker’s Corner in 2009 and RGR
Canada in 2011 and has been operating as a
pioneer in the cannabis accessories industry
ever since.
Currently, he is a national franchisor and
entrepreneur with 17 years of experience in
building and selling successful companies.
Mr. Grover leads the industry in
manufacturing capabilities and has built the
largest network of comparable retail stores in
Canada.
In his personal time, Raj is passionate about
supporting children’s charities that benefit the
underprivileged and those struggling with
health issues and other life challenges
Arthur KwanCEO, CannaIncome Fund
CannaIncome Fund is a private investment
company focused on the cannabis and
cannabis-related sectors. Its aim is to provide
yield and capital appreciation upside, via
valuation arbitrage opportunities primarily
between private and public markets.
Mr. Kwan has over 18 years of investment
banking, capital markets, and private equity
experience, most recently as the Managing
Director of Investment Banking for Paradigm
Capital. Prior thereto, he has held
increasingly senior investment banking
positions with Scotia Capital, Peters & Co.,
and PI Financial. Mr. Kwan has led the
origination, negotiation, and execution of
many investment banking mandates,
including private placements, initial public
offerings, short-form prospectus offerings,
mergers, acquisitions, and divestitures, with
an aggregate transaction value of over $1
billion.
Nader BenAissaExternal Legal Counsel
Mr. Ben Aissa is a lawyer at Hooey and
Company Lawyers in Calgary, Alberta.
He specializes in commercial law with a
wide range of experience in corporate
governance, equity financing, and
mergers and acquisitions. Keeping a
close eye on cannabis law, he is
preparing company infrastructure for the
upcoming change in cannabis
legislation.
In 2013, Nader received his Doctor of
Law (JD) from the University of British
Columbia. Mr. Ben Aissa was called to
the Bar and admitted as a Member of
the Law Society of Alberta in 2015.
Paul RosenMP, Breakwater Venture Capital
Mr. Rosen is a noted career entrepreneur
and management consultant. Over the last 5
years he has become one of Canada’s most
active investors in the emerging cannabis
industry. Mr. Rosen was a co-founder of
PharmaCan Capital Corporation, a publicly-
traded merchant bank focused on Canada’s
medical marijuana industry. He served as
President and CEO of PharmaCan Capital
for three years, completing his tenure in May
2016.
Mr. Rosen also sits on the Board of iAnthus
Capital Holdings ( IAN.C), a publicly-traded
investment bank invested in several medical
marijuana licenses across the United States.
In 1999, Mr. Rosen founded Skypad
International and currently serves as CEO
and Chairman.
Paul is a member of the Law Society of
Upper Canada, and practiced constitutional
law in Canada for several years. Paul
received a B.A. in Economics from Western
University in 1985 and an LL.B. from the
University of Toronto in 1988.
Mr. Kaushal is a managing director in the Deals
practice of PwC Canada’s Corporate Finance
group. Nitin has more than 25 years experience
in the financial investing, life sciences,
consumer health care, health care services and
medical device industries. In addition, he has a
strong involvement with PwC’s
Pharmaceuticals and Life Sciences team to
bridge the financial and scientific areas.
Nitin’s past experience includes board of
directorships with pharmaceutical and health
care companies. He has also held senior roles
in investment banking, venture capital and
consulting firms. Brendan Wood International
ranked Nitin as the Top Health care Investment
Banker in 2008/2009.
Mr. Kaushal has performed over 40 merger,
acquisition, strategic advisory, and licensing
assignments. He was an advisor to two of the
top five global pharma companies and M&A
advisor on one of the top licensing deals in
Canadian health care history. Nitin is a regular
speaker at conferences and is a past educator
at the University of Toronto.
Nitin KaushalManaging Director, PwC Canada
Advisors
8
Alan FriedmanPresident, Rivonia Capital
Anthony Durkacz EVP, First Republic Capital Corporation
Mr. Durkacz, prior to his current role, was
President of Capital Ideas Investor Relations from
January to December 2013. Before that, he was
CFO of Snipp Interactive Inc. from January 2011
to January 2013. He was instrumental in the
financing and public listing of the mobile
marketing company with operations in Canada,
the USA, Mexico and India. From 2006 to 2009,
he served as COO and CFO of MKU Canada Inc.
and engaged in mergers and acquisitions around
the globe, and from 2002 to 2006 served as CFO
of Astris Energi Inc., a dual-listed public company
in the US and Canada which was acquired by an
international conglomerate.
Mr. Durkacz began his career at TD Securities on
the capital markets trading floor. He holds an
Honours Bachelor of Business Administration
from Brock University with a major in both
Accounting and Finance.
Mr. Friedman has been the President and Chief
Executive Officer of Rivonia Capital Inc., a
Canadian corporation providing market
structuring, capital planning and administrative
management services to private and public
resource companies, since September 2006. Mr.
Friedman has also been Executive Vice-President
and a director of Adira Energy Ltd. since August
2009 and Executive Vice-President and a director
of Eco (Atlantic) Oil & Gas Ltd. since December
2011. Mr. Friedman is also a director of Aim1
Ventures Inc. and Tova Ventures II Inc., Capital
Pool Corporations listed on the TSX-V.
Mr. Friedman is an attorney and has played an
integral role in the acquisition of various assets,
financings and go-public transactions onto the
Toronto Stock Exchange. He was a co-founder
and previous director of Auryx Gold Corp., a
Toronto Stock Exchange-listed Namibian gold
exploration company, before it was sold to
B2Gold Corp. for approximately $160 million in
2011.
Shimmy PosenPartner, Garfinkle Biderman LLP
Mr. Posen joined Garfinkle Biderman as an associate
in 2012. He practices in the firm’s corporate
commercial and securities groups, with an emphasis
on corporate finance and mergers and acquisitions.
Shimmy’s transactional experience includes domestic
and cross-border public and private corporate finance
transactions representing both public and private
companies, agents and underwriters as well as
mergers and acquisitions in a variety of industries. He
also advises public companies on general corporate
and securities law matters including stock exchange
listings, continuous disclosure obligations and other
regulatory compliance issues.
Prior to joining Garfinkle Biderman, Shimmy
completed his articling term with a prestigious
national law firm in downtown Toronto, where he
gained experience in a number of practice areas,
including corporate, securities, mining and tax law.
Aleem KanjiVP Government Relations, Sutherland Corp.
Mr. Kanji is a strategic leader in government
relations, public policy and communications
disciplines. Prior to joining Sutherland, he was
Manager of Government Affairs and Stakeholder
Relations with Toronto Pearson International
Airport. He led high profile, complex and politically
sensitive regulatory, legislative and policy files
while effectively managing relationships with
numerous individual stakeholders and groups.
Mr. Kanji has worked in government for the
Province of Ontario and City of Kitchener as well
as the private sector for Pricewaterhouse
Coopers LLP. He has also led policy and public
affairs for the Toronto Region Board of Trade,
Canada’s largest local Chamber of Commerce.
Aleem serves as a founding member, appointed
by Toronto City Council, on the Board of Directors
for Invest Toronto Inc., Toronto’s economic
development agency. He also lectures at York
University and the University of Waterloo on
Economic Development.
SE
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Milestone Timeline
Growth to 3 Smoker’s Corner
Locations
2009 2012 20182015
Founded
Founded
Co-founded
Growth to 7 Smoker’s Corner
Locations
Welcomed to the
Canadian Franchise
Association
Growth to 19 Smoker’s Corner
Locations
Founded
Acquired
remaining 50% of
Co-founded
Founded;
10 Current Locations
Listed as HITI on
Dec. 17, 2018
Acquired
1st franchised Smoker’s Corner
location
9
10
Vision
Grow organically and through acquisition to become
a valuable, retail-focused, vertically-integrated
enterprise with global operations
GoalsShort-term
Continue constructing and opening more retail cannabis stores
Convert LOIs into fully-executed projects
Establish a retail presence in all applicable Canadian provinces
Hire talented people to help lead, operate and grow the
organization
Foster positive relationships with governments at all levels and
local communities
Long-term
Build great brands through responsible customer relationships
Play a key role in shaping a world-leading Canadian cannabis
industry
Deliver shareholders an industry-leading ROI and earn
premium multiples as a public company through strategic
stewardship, disciplined capital allocation and strong
governance
Corporate Strategy
11
High quality retail focus – corporate and franchise
Loyal customers via strong brands, responsible retail
and excellent service
Margin capture through vertical integration
Optimized operations – manufacturing and distribution
Consumer trends and product manufacturing
Customer education
Peer monitoring
Industry evolution
Government regulations
Organic initiatives and internal projects
Asset acquisitions
Corporate transactionsAccretive Growth
Continuous R&D
Differentiated
Leadership
Wholesale Segment
RGR Canada
13
Distribution network
extends from our
27,000 sq ft facility in
Calgary, AB
National >4,300 SKUSExclusive 10 Years
Manufacturing contracts
with industry leading
factories in China, the
United States and the
European Union
Experience in the design
and branding of cannabis
accessories that sell
Extensive product catalog
with 75% manufactured in-
house
RGR Canada
14
Selection of Proprietary Brands
Atomic Dopezilla Evolution
Puff Puff Pass Vodka Zoom Zoom
LIC
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1515
16
17
A lifestyle accessory line for convenience, gas station and
specialty retailers featuring licensed and proprietary smoking
products (Trailer Park Boys and Cheech & Chong’s Up In Smoke)
LAUNCHED APRIL 2018
AD & EDITORIAL FEATURE TO 27,000 TARGET STORES
DISTRIBUTING TO UP TO 2,000 STORES
FAMOUS X
Retail Segment
Smoker’s Corner
19
Smoking Accessories & Cannabis Lifestyle Products
12 Current Locations Turn-key Model Existing Revenue
8 franchises
4 corporate stores
7 previous locations being converted
to Canna Cabana stores
CFA-approved
franchise program
enables rapid
deployment in key
markets
Average location
generates $380k/year
Top location generates
$850k/year
20
12 existing locations
TODAYOne of Canada’s
Largest
Counter-Culture
Chains
Scalable Franchise Model
2 new locations opening in early 2019
20
Smoker’s Corner10 Years of Retail Expertise
Existing Relationships:• Over 170,000 annual retail customer
interactions
• Dozens of direct and indirect
communities
• 12 municipalities across AB, BC & NS
• Landlords and commercial real estate
brokers
Operating Costs:• Staffing levels, wages and sales
incentives
• Retail leases and insurance
• Vertically-integrated infrastructure
enables cost management
Inventory Management:• Initial orders and new store
requirements
• Lead times for ongoing replenishment
• New product development and
optimization of SKUs
• Most innovative and high-quality
merchandise in the industry
Franchises:• Master franchise agreement and other
key agreements
• Back-office administration (Accounting,
IT, Marketing, etc.)
• Training and support
21
Large U.S.
Customer Base
90% of orders from customers in
the U.S.
Order fulfilment in Europe and
North America in 2019
Large opportunity to add new
customers and products
Forums & Social
Media34 million unique users in
Grasscity Forums since
inception
640,000 current forum members
75 million page views per year
265,000 followers on Facebook,
Instagram and YouTube
22
World’s top accessory
e-retailer
20-year history as online store
5.8 million site visits per year
0.6 million customers in database
65,000 orders per year
80,000 newsletter readers
34,000 certified online reviews
Grasscity
23
“World’s Best Online Head Shop”
He
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: g
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Strategic Rationale for Acquisition
24
Manufacturing• Design & Production
• Brand Licensing
Distribution• Optimized Logistics;
ship from North America
to local customers
• Multiple Warehouses
Retail• Established Online
• SEO & Social MediaAccess to Europe for
High Tide’s wholesale
segment
Margin expansion
through vertical
integration
Sale of similar products
to similar customers
The Rising Tide of Cannabis
25
Retail Cannabis Market Size
1. DELOITTE: Recreational Marijuana I Insight & Opportunities
LICENSED PRODUCTION RETAILWHOLESALE
~ $5 Billion
The biggest opportunity in
Canadian cannabis is downstream
Prepared. Positioned.
Ready to Capitalize.
Multi-billion
market in
Canadian
cannabis
consumption1
Canna Cabana
26
Positioned to Become Canada’s Largest Retail Cannabis Network
Approachable - Sophisticated - Playful
Canna Cabana
27
From Concept to Execution
Canna Cabana
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Canada’s One-Stop Cannabis Shop
Built on data from existing
customer base
Centralized logistics
management
Premier customer service
Accessories for medical &
recreational use
Now open in private jurisdictions;
targeting location size of 1,500-2,500 sq. ft.
Connected to over 25,000 Canadians
through social media
Industry-leading employee training program enables a complete customer experience
OPEN
Canna Cabana
29
Projected Expansion 2018 - 2020
FIRST & FASTEST TO MARKETProjected
Expansion
2018-2020
• Priority stakeholder in key municipalities across Canada
• Some existing stores being retrofitted to expedite readiness, subject to zoning
• New stores currently under construction; leases being secured in multiple provinces
As at
March
2019
Current
Stores
Open
Provincial
Licence
Applications
Development
Permits Leases
Target
Number of
Stores
AB 10 36 36 36 37
BC 0 0 0 2 8
SK 0 1 Wholesale* 0 1 2
ON 0 0 0 20 75
Total 10 37 36 59 122
*Application submitted by a High Tide wholly-owned subsidiary named Kush West Distribution Inc.
29
Canna Cabana
30
Ten Stores Now Open in Alberta
Lethbridge
Whitecourt
Grande
Prairie
Beaumont
Calgary
Edmonton
Kush Bar
31
Our Next Retail Cannabis Concept: Modern - Open - Relaxed
32
Future Concept
Corporate Information
CS
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ITI Recent Initiatives
34
FACILITY
EXPANSION
SHARES
SecuringRetail Leases
Pin-pointing locationsacross Canada
High TideWent Public
CSE:HITI
December 17, 2018
Opened
January 2019
27,000 Square FootDistribution Centre
35
December 19, 2018
High Tide Closes its Previously Announced
Acquisition of Grasscity
December 14, 2018
High Tide to Commence Trading on the CSE
under “HITI” Stock Symbol on December
17th
January 9, 2019
High Tide featured at AltaCorp Institutional
Investor Conference, Lift & Co. Expo and
Benzinga Cannabis Capital Conference
December 13, 2018
High Tide Receives $10 Million Investment
from Aurora Cannabis as Part of First
Tranche of Convertible Debenture Offering
Recent Company News
January 24, 2019
High Tide Announces the Opening of its Sixth
and Seventh Canna Cabana Stores
January 30, 2019
High Tide to Acquire Two Cannabis Retail
Locations in Saskatchewan
February 4, 2019
High Tide Announces Expansion into Ontario
with Cannabis Retail Lottery Winner
February 12, 2019
Selected to Assist a Second Winner of the
Ontario Cannabis Retail Lottery
January 7, 2019
High Tide Announces the Opening of its Fifth
Canna Cabana Store
February 27, 2019
High Tide Announces the Opening of its
Tenth Canna Cabana Store
March 5, 2019
High Tide Announces Both Cannabis Retail
Store Lottery Counterparts in Ontario
Proceeding to Eligibility Phase of Review
March 4, 2019
High Tide Announces 2018 Year End
Financial Results
CS
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ITI 2018 Audited Financials1
For the Year Ended October 31
Summary Income Statement Revenue
Revenue $8,748,766
Gross Margin 3,109,689
Net Loss for the Year ($4,532,551)
Summary Balance
Sheet
As at October 31,
2018
As at October 31,
2018
Cash & Equivalents $8,198,164 Current Liabilities $2,589,770
Accounts Receivable 855,221 Non-Current Liabilities 17,313
Inventory 3,463,076 Long-Term Debt -
Non-Current Assets 8,412,907 Total Equity 23,315,411
Total Assets $25,922,494 Total Debt & Equity $25,922,494
361. The financial information presented herein is as of October 31, 2018 and does not reflect the current financial performance or account balances of the Company.
CS
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ITI Equity Capitalization Table
37
“2LY” LISTED ON THE
Share Capitalization TableCommon Shares - Issued and Outstanding 196,888,846
Common Shares to be issued on exercise of
Warrants underlying the Special Warrants
18,364,236
Common Shares to be issued on exercise of Prior-
Issued Warrants
1,194,590
Common Shares to be issued on exercise of
outstanding Broker Warrants
2,387,350
Common Shares to be issued on exercise of
Warrants underlying the Broker Warrants
1,193,675
Common Shares to be issued on exercise of
outstanding Prior-Issued Warrants
670,680
Options 9,262,500
Fully-Diluted Shares Outstanding 229,961,877
As at
February 28, 2019
CS
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ITI
COMPANY RETAIL STORE BRAND
PRIMARY
STOCK
SYMBOL
RETAIL EXPERIENCE
(Brick & Mortar)
RETAIL EXPERIENCE
(Online)
WHOLESALE
EXPERIENCE
LICENSED
PRODUCTION
Market Cap
(MM)
as at 11/03/19
Revenue
(MM)
(TTM)
Market
Cap /
Revenue
Choom
HoldingsChoom
CSE:
CHOOX X X
Acquired LP
applicants in BC
and SK
$125 $nil n/a
Fire &
FlowerFire & Flower
TSXV:
FAF
Cannabis retail since
2018
Some accessories;
online cannabis sales in
SKX X $154 ~$10 ~15.4x
Inner Spirit
Holdings SpiritleafCSE: ISH
Franchises; watches
and fashion accessoriesX X X $50 $3.2 15.6x
National
Access
Cannabis
MetaTSXV:
META
Cannabis retail since
2018
Medical consultation
and deliveryX X $158 $5.7 27.7x
Solo
GrowthYSS
TSXV:
SOLO:X X X X $34 $nil n/a
WestleafPrairie
Records
TSXV: WL Cannabis retail since
2019X X
Indoor cultivation
facility under
construction
$358 $nil n/a
AVERAGE: $145 $6.3 23.1x
High Tide
Canna
Cabana,
KushBar
CSE:
HITI
Smoking accessories
since 2009; cannabis
retail since 2018
Grasscity has ~20
years of experience
as the premier e-
retailer of smoking
accessories
9 years of
proprietary and
licensed
cannabis
accessories
X $86 $8.7 9.9x
Canadian Retail Cannabis Landscape
CS
E:H
ITI Growth by Acquisition
39
Goal of growing the retail and distribution business by acquisition domestically as well
as in the US, EU and elsewhere, as appropriate, through various segments:
Thousands of existing customer relationships
Over 300 vendors in a current database
Industry partnerships also yield transaction opportunities
Currently assessing several accretive acquisitions in the manufacturing, wholesale
and retail sectors across Canada
CS
E:H
ITI
CV
Strategic Partners
40
Retail Build-Outs:
Technology:
Finance:
Government Relations:
Legal: Notable Investors:
Auditor:
Security:
Why Invest?
41
Compelling Investment Opportunity in Downstream Cannabis Leader
OUT IN FRONTAhead of the industry on leasing,
municipal outreach and number of
eligible locations.
READY
TOP OF MIND
A loyal, built-in audience
across Canada and nearly a
decade of retail presence.
STOCKEDA manufacturer, distributor and retailers’
perspective on the hottest cannabis
adjacent goods. Ready and available
at the highest margins possible.
NOT GUESSINGA proven success model,
ready for retail cannabis.
Franchise infrastructure backed
by financing for the fastest
deployment in the country.
(403) 265-4207
High Tide Inc.
11127 15th St. NE, Units #111-113
Calgary, AB T3K 2M4
HighTideInc.com
1.888.9.420.420
Raj Grover
Founder, President, CEO & Chairman
Nick Kuzyk, MBA
Chief Strategy Officer & SVP Capital Markets
42
APPENDIX
44
STATUTORY RIGHTS OF ACTION FOR DAMAGES OR RESCISSION
Securities legislation in certain of the provinces of Canada provides purchasers with rights of rescission or damages, or both, where an offering memorandum or any amendment to it contains a misrepresentation. In the event that this presentation is
deemed to be an offering memorandum by a securities commission, then the purchaser will be able to avail himself or herself of the rights below, which are in addition to and do not derogate from any other right that the purchaser may have at law. In
addition, if a misrepresentation is contained in a record incorporated by reference in, or is deemed to be incorporated into, an offering memorandum, the misrepresentation is deemed to be contained in the offering memorandum. In the event that this
presentation is deemed to be an offering memorandum by a securities commission, these remedies must be commenced by the purchaser within the time limits prescribed and are subject to the defences contained in the applicable
securities legislation. Purchasers should refer to the applicable provisions of the securities legislation of their province for the particulars of these rights and defences or consult with a legal adviser.
The following summary is subject to the express provisions of the relevant securities legislation and the rules, regulations, and instruments applicable in Manitoba, Saskatchewan, Ontario, New Brunswick, Nova Scotia, Prince Edward Island and
Newfoundland and Labrador which may contain other limitations and statutory defences on which High Tide Inc. and any other applicable parties may rely. These remedies, or notice with respect to these remedies, must be exercised or delivered, as
the case may be, by the purchaser within the time limits prescribed by applicable securities legislation. Purchasers should refer to the applicable provisions of the securities legislation of their province for the particulars of these rights or consult with a
legal advisor.
For the purposes of the following, "Misrepresentation" means:
(a) an untrue statement of a material fact;
(b) an omission to state a material fact that is required to be stated; or
(c) an omission to state a material fact that is necessary to be stated in order for any statement not to be misleading or false in light of the circumstances in which it was made.
Manitoba Purchasers
If an offering memorandum contains a Misrepresentation, a purchaser who purchases a security offered by the offering memorandum is deemed to have relied on the representation if it was a Misrepresentation at the time of purchase and has:
(a) right of action for damages against,
(i) the issuer;
(ii) every director of the issuer at the date of the offering memorandum; and
(iii) every person or company who signed the offering memorandum; or
(b) right of rescission against the issuer,
and if the purchaser chooses to exercise a right of rescission against the issuer, the purchaser has no right of action for damages.
No person or company is liable for a Misrepresentation contained in an offering memorandum if the person or company proves that the purchaser had knowledge of the Misrepresentation, and no person or company other than the issuer is liable for a
Misrepresentation contained in an offering memorandum if:
(a) the person or company proves that,
(i) the offering memorandum was sent to the purchaser without the person's or company's knowledge or consent; and
(ii) after becoming aware that it was sent, the person or company promptly gave reasonable notice to the issuer that it was sent without the person's or company's knowledge and consent;
(b) the person or company proves that, after becoming aware of the Misrepresentation, the person or company withdrew the person's or company's consent to the offering memorandum and gave reasonable notice to the issuer of the withdrawal and
the reason for it;
(c) with respect to any part of the offering memorandum purporting to be made on the authority of an expert or to be a copy of, or an extract from, an expert's report, opinion, or statement, the person or company proves that the person or company
did not have any reasonable grounds to believe and did not believe that,
(i) there had been a Misrepresentation; or
(ii) the relevant part of the offering memorandum;
(A) did not fairly represent the expert's report, opinion, or statement, or
(B) was not a fair copy of, or an extract from, the expert's report, opinion, or statement; or
(d) with respect to any part of the offering memorandum not purporting to be made on an expert's authority and not purporting to be a copy of, or an extract from, an expert's report, opinion, or statement, unless the person or company,
(i) did not conduct an investigation sufficient to provide reasonable grounds for a belief that there had been no Misrepresentation; or
(ii) believed there had been a Misrepresentation. The right of action is subject to the following limitations,
(A) the amount recoverable shall not exceed the price at which the securities were offered under the offering memorandum; and
(B) in an action for damages, the defendant is not liable for all or any part of the damages that the defendant proves do not represent the depreciation in value of the security as a result of the Misrepresentation.
No action may be commenced to enforce a right of action:
(a) in the case of an action for rescission, more than 180 days after the day of the transaction that gave rise to the cause of action; or
(b) in any other case, more than,
(i) 180 days after the day that the plaintiff first had knowledge of the facts giving rise to the cause of action; or
(ii) two years after the day of the transaction that gave rise to the cause of action, whichever occurs earlier.
The rights of action described above are in addition to and do not derogate from any other right the purchaser may have at law.
45
STATUTORY RIGHTS OF ACTION FOR DAMAGES OR RESCISSION (cont.)
Ontario Purchasers
OSC Rule 45-501 provides that where an offering memorandum is delivered to a purchaser to whom securities are distributed in reliance on the "accredited investor" prospectus exemption in Section 2.3 of NI 45-106, the right of action in Section 130.1
of the Ontario Securities Act is applicable unless the purchaser is:
(a) a Canadian financial institution, meaning either:
(i) an association governed by the Cooperative Credit Associations Act (Canada) or a central cooperative credit society for which an order has been made under section 473(1) of that Act; or
(ii) a bank, loan corporation, trust company, trust corporation, insurance company, treasury branch, credit union, caisse populaire, financial services corporation, or league that, in each case, is authorized by an enactment of Canada or a
province or territory of Canada to carry on business in Canada or a province or territory in Canada;
(b) a Schedule III bank, meaning an authorized foreign bank named in Schedule III of the Bank Act (Canada);
(c) the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada); or
(d) a subsidiary of any person referred to in paragraphs (a), (b) or (c), if the person owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by the directors of the subsidiary.
Section 130.1 of the Ontario Securities Act provides that where an offering memorandum that contains a Misrepresentation, as defined in the Ontario Securities Act, is delivered in connection with a trade made in reliance upon the "accredited investor"
prospectus exemption in Section 2.3 of NI 45-106, a purchaser who purchases a security offered by the offering memorandum will have, without regard to whether the purchaser relied on the Misrepresentation, a statutory right of action against the
issuer and a selling security holder on whose behalf the distribution was made for damages or for rescission. If the purchaser elects to exercise the right of rescission, the purchaser will have no right of action for damages. No such action shall be
commenced more than, in the case of an action for rescission, 180 days after the date of the transaction that gave rise to the cause of action, or, in the case of any action other than an action for rescission, the earlier of: (i) 180 days after the purchaser
first had knowledge of the facts giving rise to the cause of action, or (ii) three years after the date of the transaction that gave rise to the cause of action.
The Ontario Securities Act provides a number of limitations and defences to such actions, including the following:
(a) the defendant is not liable if it proves that the purchaser purchased the securities with knowledge of the Misrepresentation;
(b) in an action for damages, the defendant shall not be liable for all or any portion of the damages that the issuer proves do not represent the depreciation in value of the securities as a result of the Misrepresentation relied upon; and
(c) in no case shall the amount recoverable exceed the price at which the securities were offered.
New Brunswick Purchasers
Section 2.1 of New Brunswick Securities Commission Rule 45-802 provides that the rights of action referred to in Section 150 of the Securities Act (New Brunswick) (the "New Brunswick Act") apply to information relating to an offering memorandum
that is provided to a purchaser in securities in connection with a distribution made in reliance on the "accredited investor" prospectus exemption in Section 2.3 of NI 45-106. The New Brunswick Act provides such purchasers with a statutory right of
action against the issuer of the securities and a selling security holder on whose behalf a distribution is made for rescission or damages in the event that the offering memorandum or any amendment to it contains a Misrepresentation, as defined in the
New Brunswick Act.
The New Brunswick Act provides that, subject to certain limitations, where an offering memorandum is provided to a purchaser of the securities contains a Misrepresentation, a purchaser who purchases the securities shall be deemed to have relied on
the Misrepresentation if it was a Misrepresentation at the time of purchase. Such purchaser has a right of action for damages against the issuer and a selling security holder on whose behalf the distribution was made, or may elect to exercise a right of
rescission against the seller of the securities. If the purchaser elects to exercise the right of rescission, the purchaser will have no right of action for damages. No such action shall be commenced more than, in the case of an action for rescission, 180
days after the date of the transaction that gave rise to the cause of action or, in the case of any action, other than an action for rescission, the earlier of (i) one year after the plaintiff first had knowledge of the facts giving rise to the cause of action, and
(ii) six years after the date of the transaction that gave rise to the cause of action.
The New Brunswick Act provides a number of limitations and defences to such actions, including the following:
(a) the defendant is not liable if it proves that the purchaser purchased the securities with knowledge of the Misrepresentation;
(b) in an action for damages, the defendant shall not be liable for all or any portion of the damages that it proves do not represent the depreciation in value of the securities as a result of the Misrepresentation relied upon; and
(c) in no case shall the amount recoverable exceed the price at which the securities were offered.
Nova Scotia Purchasers
The right of action for rescission or damages described herein is conferred by Section 138 of the Securities Act (Nova Scotia) (the "Nova Scotia Act"). The Nova Scotia Act provides that in the event that an offering memorandum or any amendment
thereto, or any advertising or sales literature (as defined in the Nova Scotia Act) contains a Misrepresentation, as defined in the Nova Scotia Act, a purchaser to whom the offering memorandum has been delivered and who purchases the securities
referred to in it is deemed to have relied upon such Misrepresentation if it was a Misrepresentation at the time of purchase.
Such purchaser has a statutory right of action for damages against the seller (which includes the issuer) and, subject to certain additional defences, the directors of the seller at the date of the offering memorandum and every person who signed the
offering memorandum or, alternatively, while still an owner of the securities purchased by the purchaser, may elect instead to exercise a statutory right of rescission against the seller in which case the purchaser shall have no right of action for
damages against the seller or the directors of the seller or against any person who signed the offering memorandum. No such action shall be commenced to enforce the right of action for rescission or damages more than 120 days after the date
payment was made for the securities (or after the date on which initial payment was made for the securities where payments subsequent to the initial payment are made pursuant to a contractual commitment assumed prior to, or concurrently with, the
initial payment).
The Nova Scotia Act provides a number of limitations and defences, including the following:
(a) A person or company is not liable if it proves that the purchaser purchased the securities with knowledge of the Misrepresentation;
(b) in the case of an action for damages, a person or company is not liable for all or any portion of the damages that it proves do not represent the depreciation in value of the securities as a result of the Misrepresentation relied upon; and
(c) in no case will the amount recoverable in any action exceed the price at which the securities were offered to the purchaser.
46
STATUTORY RIGHTS OF ACTION FOR DAMAGES OR RESCISSION (cont.)
In addition, a person or company, other than the issuer, will not be liable if that person or company proves that:
(a) the offering memorandum or any amendment to the offering memorandum was sent or delivered to the purchaser without the person's or company's knowledge or consent and that, on becoming aware of its delivery, the person or company gave
reasonable general notice that it was delivered without the person's or company's knowledge or consent;
(b) after delivery of the offering memorandum or any amendment to the offering memorandum and before the purchase of the securities by the purchaser, on becoming aware of any Misrepresentation in the offering memorandum or any amendment
to the offering memorandum, the person or company withdrew the person's or company's consent to the offering memorandum or any amendment to the offering memorandum, and gave reasonable general notice of the withdrawal and the
reason for it; or
(c) with respect to any part of the offering memorandum or any amendment to the offering memorandum purporting (i) to be made on the authority of an expert, or (ii) to be a copy of, or an extract from, a report, an opinion or a statement of an
expert, the person or company had no reasonable grounds to believe and did not believe that (A) there had been a Misrepresentation, or (B) the relevant part of the offering memorandum or any amendment to the offering memorandum did not
fairly represent the report, opinion or statement of the expert, or was not a fair copy of, or an extract from, the report, opinion or statement of the expert.
Furthermore, no person or company, other than the issuer, is liable with respect to any part of the offering memorandum or any amendment to the offering memorandum not purporting (i) to be made on the authority of an expert or (ii) to be a copy of,
or an extract from, a report, opinion or statement of an expert, unless the person or company (A) failed to conduct a reasonable investigation to provide reasonable grounds for a belief that there had been no Misrepresentation or (B) believed that there
had been a Misrepresentation.
If a Misrepresentation is contained in a record incorporated by reference into, or deemed incorporated by reference into, the offering memorandum or amendment to the offering memorandum, the Misrepresentation is deemed to be contained in the
offering memorandum or amendment to the offering memorandum.
The rights of action described above are in addition to, and without derogation from, any right or remedy available at law to the purchaser and are intended to correspond to the provisions of the relevant securities laws and are subject to the limitations
and defences contained in those laws.
Saskatchewan Purchasers
The right of action for rescission or damages described herein is conferred by Section 138 of The Securities Act, 1988 (Saskatchewan) (the "Saskatchewan Act"). The Saskatchewan Act provides, in the relevant part, that in the event that an offering
memorandum, together with any amendments thereto contains a Misrepresentation (as defined in the Saskatchewan Act), a purchaser who purchases securities covered by the offering memorandum has, without regard to whether the purchaser relied
on the Misrepresentation, a statutory right for rescission against the issuer or has a right of action for damages against:
(a) the issuer;
(b) every promoter and director of the issuer, as the case may be, at the time the offering memorandum or any amendment thereto was sent or delivered;
(c) every person or company whose consent has been filed with respect to the offering, but only with respect to reports, opinions or statements that have been made by them; and
(d) every person or company that sells securities on behalf of the issuer under the offering memorandum or amendment to the offering memorandum.
If such purchaser elects to exercise a statutory right of rescission against the issuer, it shall have no right of action for damages against that person or company. No such action for rescission or damages shall be commenced more than, in the case of a
right of rescission, 180 days after the date of the transaction that gave rise to the cause of action or, in the case of any action, other than an action for rescission, such action shall be commenced before the earlier of (i) one year after the purchaser first
had knowledge of the facts giving rise to the cause of action and (ii) six years after the date of the transaction that gave rise to the cause of action.
The Saskatchewan Act provides a number of limitations and defenses, including the following:
(a) no person or company will be liable if the person or company proves that the purchaser purchased the securities with knowledge of the Misrepresentation;
(b) in the case of an action for damages, no person or company will be liable for all or any portion of the damages that it proves do not represent the depreciation in value of the securities as a result of the Misrepresentation; and
(c) in no case will the amount recoverable in any action exceed the price at which the securities were offered to the purchaser.
The liability of all persons or companies referred to above is joint and several with respect to the same cause of action. A defendant who is found liable to pay a sum in damages may recover a contribution, in whole or in part, from a person or company
who is jointly and severally liable to make the same payment in the same cause of action unless, in all the circumstances of the case, the court is satisfied that it would not be just and equitable.
In addition, no person or company, other than the issuer, will be liable if the person or company proves that:
(a) the offering memorandum or any amendment thereto was sent or delivered without the person's or company's knowledge or consent and that, on becoming aware of it being sent or delivered, that person or company gave reasonable general
notice that it was so sent or delivered; or
(b) with respect to any part of the offering memorandum or any amendment thereto purporting to be made on the authority of an expert, or purporting to be a copy of, or an extract from, a report, an opinion or a statement of an expert, that person or
company had no reasonable grounds to believe and did not believe that there had been a Misrepresentation, the part of the offering memorandum or any amendment thereto did not fairly represent the report, opinion or statement of the expert,
or was not a fair copy of, or an extract from, the report, opinion or statement of the expert.
Similar rights of action for damages and rescission are provided in Section 138.1 of the Saskatchewan Act in respect of a Misrepresentation in advertising and sales literature disseminated in connection with an offering of securities.
Section 138.2 of the Saskatchewan Act also provides that where an individual makes a verbal statement to a prospective purchaser that contains a Misrepresentation relating to the note purchased and the verbal statement is made either before or
contemporaneously with the purchase of the note, the purchaser has, without regard to whether the purchaser relied on the Misrepresentation, a right of action for damages against the individual who made the verbal statement.
Section 141(1) of the Saskatchewan Act provides a purchaser with the right to void the purchase agreement and to recover all money and other consideration paid by the purchaser for the securities if the securities are sold in contravention of such Act,
the regulations to such Act or a decision of the Financial and Consumer Affairs Authority of Saskatchewan.
Section 141(2) of the Saskatchewan Act also provides a right of action for rescission or damages to a purchaser of securities to whom an offering memorandum or any amendment thereto was not sent or delivered prior to or at the same time as the
purchaser enters into an agreement to purchase the securities, as required by Section 80.1 of the Saskatchewan Act.
47
STATUTORY RIGHTS OF ACTION FOR DAMAGES OR RESCISSION (cont.)
The Saskatchewan Act also provides a purchaser who has received an amended offering memorandum delivered in accordance with subsection 80.1(3) of such Act has a right to withdraw from the agreement to purchase the securities by delivering a
notice to the person or company that is selling the securities, indicating the purchaser's intention not to be bound by the purchase agreement, provided such notice is delivered by the purchaser within 2 business days of receiving the amended offering
memorandum.
The rights of action described above are in addition to, and without derogation from, any right or remedy available at law to the purchaser and are intended to correspond to the provisions of the relevant securities laws and are subject to the limitations
and defenses contained in those laws.
Prince Edward Island Purchasers
The right of action for rescission or damages described herein is conferred by Section 112 of the Securities Act (Prince Edward Island) (the "PEI Act"). Section 112 provides, that in the event that an offering memorandum contains a Misrepresentation,
a purchaser who purchased the securities during the period of distribution, without regard to whether the purchaser relied upon such Misrepresentation, has a statutory right of action for damages against the issuer, the selling security holder on whose
behalf the distribution is made, every director of the issuer at the date of the offering memorandum, and every person who signed the offering memorandum. Alternatively, the purchaser while still the owner of the securities may elect to exercise a
statutory right of action for rescission against the issuer, or the selling security holder on whose behalf the distribution is made. Misrepresentation means an untrue statement of material fact, or an omission to state a material fact that is required to be
stated by the PEI Act, or an omission to state a material fact that needs to be stated so that a statement is not false or misleading in light of the circumstances in which it is made. Statutory rights of action for rescission or damages by a purchaser are
subject to the following limitations:
(a) no action will be commenced to enforce the right of action for rescission by a purchaser, resident in Prince Edward Island, later than 180 days after the date of the transaction that gave rise to the cause of action;
(b) in the case of any action other than an action for rescission;
(i) 180 days after the purchaser first had knowledge of the facts given rise to the cause of action; or
(ii) three years after the date of the transaction giving rise to the cause of action or whichever period expires first;
(c) no person will be liable if the person proves that the purchaser purchased the security with knowledge of the Misrepresentation;
(d) no person other than the issuer and selling securityholder will be liable if the person proves that:
(i) the offering memorandum was sent to the purchaser without the person's knowledge or consent and that, on becoming aware of it being sent, the person had promptly given reasonable notice to the issuer that it had been sent without the
knowledge and consent of the person;
(ii) the person, on becoming aware of the Misrepresentation in the offering memorandum, had withdrawn the person's consent to the offering memorandum and had given reasonable notice to the issuer of the withdrawal and the reason for it;
or
(iii) with respect to any part of the offering memorandum purporting to be made on the authority of an expert or purporting to be a copy of, or an extract from, a report, statement or opinion of an expert, the person had no reasonable grounds to
believe, and did not believe that;
(A) there had been a Misrepresentation; or
(B) the relevant part of the offering memorandum
(1) did not fairly represent the report, statement or opinion of the expert, or
(2) was not a fair copy of, or an extract from, the report, statement, or opinion of the expert.
If the purchaser elects to exercise a right of action for rescission, the purchaser will have no right of action for damages.
In no case will the amount recoverable in any action exceed the price at which the securities were offered to the purchaser.
In an action for damages, the defendant will not be liable for any damages that the defendant proves do not represent the depreciation in value of the securities as a result of the Misrepresentation.
Newfoundland and Labrador Purchasers
The right of action for rescission or damages described herein is conferred by Section 130.1 of the Securities Act (Newfoundland and Labrador) (the "NL Act"). The NL Act provides, in the relevant part, that if an offering memorandum contains a
Misrepresentation when a person or company purchases a security offered by the offering memorandum, the purchaser has, without regard to whether the purchaser relied on the Misrepresentation, a right of action for damages or rescission.
Such purchaser has a statutory right of action for damages against the issuer, every director of the issuer at the date of the offering memorandum and every person who signed the offering memorandum. Alternatively, the purchaser has a right of
action for rescission against the issuer, in which case the purchaser shall have no right of action for damages against the persons described above. No such action may be commenced to enforce the right of action for rescission or damages more than
(i) 180 days after the day of the transaction that gave rise to the cause of action, in the case of an action for rescission, or (ii) the earlier of (A) 180 days after the plaintiff first had knowledge of the facts giving rise to the cause of action, or (B) three
years after the day of the transaction giving rise to the cause of action, in any other case.
The NL Act provides a number of limitations and defences, including the following:
(a) no person or company is liable if the person or company proves that the purchaser had knowledge of the Misrepresentation;
(b) in the case of an action for damages, the defendant is not liable for any damages that the defendant proves do not represent the depreciation in value of the security resulting from the Misrepresentation; and
(c) the amount recoverable in respect of such action shall not exceed the price at which the securities were offered under the offering memorandum.
48
STATUTORY RIGHTS OF ACTION FOR DAMAGES OR RESCISSION (cont.)
In addition, a person or company, other than the issuer, is not liable if the person or company proves that:
(a) the offering memorandum was sent to the purchaser without the person's or company's knowledge or consent, and that, upon becoming aware if its being sent, the person or company had promptly given reasonable notice to the issuer that it had
been sent without the knowledge and consent of the person or company;
(b) the person or company, upon becoming aware of the Misrepresentation in the offering memorandum, withdrew the person's or company's consent to the offering memorandum and gave reasonable notice to the issuer of the withdrawal and the
reason for it;
(c) with respect to any part of the offering memorandum purporting to be made on the authority of an expert or purporting to be a copy of, or an extract from, a report, statement or opinion of an expert, the person or company had no reasonable
grounds to believe and did not believe that (i) there had been a Misrepresentation, or (ii) the relevant part of the offering memorandum (A) did not fairly represent the report, statement or opinion of the expert, or (B) was not a fair copy of, or an
extract from, the report, statement or opinion of the expert; or
(d) with respect to any part of the offering memorandum not purporting to be made on the authority of an expert and not purporting to be a copy of, an extract from, a report, opinion or statement of an expert, unless the person or company (i) did not
conduct an investigation sufficient to provide reasonable grounds for a belief that there had been no Misrepresentation, or (ii) believed there had been a Misrepresentation.
Purchasers in Other Provinces
In the event that this presentation is deemed to be an offering memorandum by a securities commission, then purchasers in provinces other than Manitoba, Ontario, New Brunswick, Nova Scotia, Saskatchewan, Prince Edward Island and
Newfoundland & Labrador are hereby granted contractual rights of rescission equivalent to those rights described above for purchasers of securities in the Province of Ontario.
