Amalgamation Presentation - January 2019 - Viridium Pacific Group Ltd.
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Amalgamation Presentation January 2019
DISCLAIMER
The information contained in this presentation is provided by Viridium Pacific Group Ltd. (“Viridium” or “VIR”), a company formed under the Canada
Business Corporations Act, for informational purposes only and does not constitute an offer to issue or arrange to issue, or the solicitation of an offer to
issue, securities of Viridium or other related financial products. The information contained in this presentation does not purport to be all-inclusive or
contain all information that readers may require. Prospective investors of Viridium are encouraged to conduct their own analysis and review of Viridium
and of the information contained in this presentation. Without limitation, prospective investors should read the entire record of publicly filed documents
relating to Viridium, consider the advice of their financial, legal, accounting, tax and other professional advisors and such other factors they consider
appropriate in investigating and analyzing Viridium. The presentation has been prepared without taking into account the investment objectives, financial
situation or particular needs of any particular reader. An investor should rely only on the information provided by Viridium and is not entitled to rely on
parts of that information to the exclusion of others. Viridium has not authorized anyone to provide investors with additional or different information, and
any such information, including statements in media articles about Viridium, should not be relied upon.
This presentation does not constitute an offer of shares for sale in the United States or to any person that is, or is acting for the account or benefit of, any
U.S. person as defined in Regulation S under the United States Securities Act of 1933 (as amended the “Securities Act”), or in any other jurisdiction in
which such an offer would be illegal. Viridium’s shares have not been and will not be registered under the Securities Act.
An investment in the securities of Viridium is speculative and involves a high degree of risk that should be considered by potential investors. Viridium’s
business is subject to the risks normally encountered in cannabis industry and certain other risks that are associated with Viridium’s stage of development.
An investment in Viridium’s securities is suitable only for those investors who are willing to risk a loss of some or all of their investment and who can afford
to lose some or all of their investment.
For disclosure on the forward-looking statements, please refer to page thirteen (13) of this presentation.
2
PROPOSED AMALGAMATION WITH EFX LABORATORIES INC.
Detailed Transaction Overview
• On January 7th, 2019, Viridium Pacific Group Ltd. (“Viridium” or “VIR”), announced that it had entered into an amalgamation agreement
with EFX Laboratories Inc. (“EFX”). Pursuant to the agreement Viridium will acquire all issued and outstanding Class A common shares of
EFX for consideration comprised of one common share of VIR for each 2.57 outstanding EFX shares (the “Amalgamation”).
• Upon completion of the Amalgamation, shareholders of EFX will receive approximately 48,172,257 Viridium shares, representing
approximately 49.4% of the total outstanding Viridium shares.
• Current Viridium shareholders will retain 49,320,375 Viridium shares, representing approximately 50.6% of the outstanding
Viridium shares.
• Upon completion of the Amalgamation, all Viridium shares to be issued as part of the Amalgamation will be listed on the TSX Venture
Exchange under the symbol TSXV: VIR.
• The Amalgamation is expected to constitute an arm’s length “reviewable transaction” as defined by the TSX Venture Exchange.
• The completion of the Amalgamation is subject to a number of conditions, including but not limited to, approval of the Amalgamation
by EFX shareholders and TSX Venture Exchange approval.
• The Amalgamation is expected to close in February 2019.
• Upon completion of the Amalgamation the VIR shares received by EFX shareholders will be free trading.
• Upon completion of the Amalgamation the pro forma company will have no debt and more than C$10.0MM of cash on hand.
• The pro forma company will have industry leading governance with a proven track record of creating shareholder value.
• Due to the capital injection from the Amalgamation, Viridium has withdrawn its proposed private placement financing announced on
October 14th, 2018.
“The EFX acquisition positions Viridium well to take advantage of the evolving cannabis industry.” - Jay Garnett, CEO Viridium
3
BENEFITS OF THE AMALGAMATION
The Amalgamation Rapidly Accelerates & Integrates A Highly Complimentary Business Model
• The Amalgamation generates a strong value proposition to both Viridium and EFX shareholders. The Amalgamation is consistent with Viridium’s stated goal of producing a strong portfolio of
cannabis brands and products for the Canadian medical, adult-use, wellness, and export markets. With 50.6% and 49.4% of the pro forma company held by Virdium and EFX shareholders
respectively, the Amalgamation will be able to generate realized synergies and is a true merger of equals.
Licensed Producer
• Experion Biotechnologies Inc. (“Experion”) is a Health Canada Licensed Producer (“LP”) and is currently selling to the wholesale, medical and adult-use Canadian cannabis market, out of
its fully licensed 8,300 square foot facility.
• Experion is in the final stages of receiving it cannabinoid oil sales license.
Fully Funded Business Model For Turn Key Expansion
• The pro forma company will be a vertically integrated producer with all licenses required to execute the go-forward strategy in the medical and adult-use markets, as well as the soon to
be legalized wellness market.
• The Amalgamation provides a larger, fully funded company with less risk than each standalone company, and increased liquidity for shareholders from both companies.
Industry Leading Management Team And Proven Board Of Directors
• The go-forward management team will bring a wealth of proven private and public markets value creation experience, regulatory, and cannabis industry expertise to the pro forma
company.
Strong Balance Sheet & Cash Flow Generation
• The pro forma company will have no debt and more than C$10.0MM cash on hand.
• The pro forma company will continue to generate cash flows from cannabis sales, and will add additional cash flows through the sale of two-piece pills and other value-added products
upon legalization, which is expected in October 2019.
Sponsor Of Intellectual Property Portfolio
• Trade secrets and synergistic patent pending IP.
• Sponsor of one of the first Phase II & III clinical research studies for post operative pain reduction and the most advanced clinical drug studies in Canada.
Access To Consumer Markets
• The pro forma company will have significant access to consumer markets through its ongoing partnerships with Kanabé Goods Co. (“Kanabé”) and Broken Coast Cannabis Ltd. (“Broken
Coast”) as well as through its strategic alliances with governments and industry peers.
Provides Both Parties A Go-forward Strategy That Should Create A Long-term Sustainable Growth Company
• EFX and VIR shareholders will continue to participate in the value creating initiatives that were in place before the Amalgamation.
Acceleration of Business Timeline
• The Amalgamation is expected to accelerate the completion of Viridium’s and EFX’s business initiatives by 24-36 months.
The Amalgamation will provide a long-term sustainable growth company focused on the “3rd wave” of investment, which includes cannabis biotech applications in the retail consumer product
market. - Jay Garnett, CEO Viridium
4GO FORWARD GROWTH
Vertical Integration With Horizontal Diversification
Viridium is a consumer wellness and biotech
innovation company based in BC, and the parent • The pro forma company has the cultivation
company of operating subsidiaries involved in capacity to either ensure a dedicated source of
horticultural production (Experion),property supply for its own value added products or to
development (Fish Trap Ventures Ltd.), and human sell to other LP’s or the public.
resource management (Stave Lake Services Ltd.)
• The pro forma company has the license to
process and store oil and has the oil extraction
Licensed Producer equipment and all associated standard operating
procedures written for the extraction
Experion is a Standard Cultivator and Processor equipment.
under the Cannabis Act. • The pro forma company has the ability to sell
seeds to other LP’s.
Adult–Use & Medical Adult-Use Brands & Genetics Access & Medical Products International Opportunities
Distribution Products Clinical Research
Citizen
Stash
• BC Liquor Distribution • Kanabé • EFX is sponsoring a Health Canada • Two-piece, full spectrum, gelatin • On December 27th, 2018, VIR signed
• Signed MOU with BC Control • Recognized over-the-counter submission of one of the first branded capsules manufactured by an agreement with INOPHA GmbH
Board to supply non-medical adult-use wellness brand focused cannabis based Phase II & Phase III EFX for Broken Coast. (“INOPHA”), to enter the tender
adult-use products throughout on non-intoxicating formulations clinical trials measuring cannabis as • Multiple formulations and dosages process within Germany and acquire
BC. for new and emerging users. a viable post-operative treatment. include: a license to cultivate medical
• Saskatchewan Liquor & Gaming • Broad product offering including The cannabis oil being used for • THC Capsules; cannabis and to import and develop
Authority and Ontario Cannabis formulations ranging from research is formulated specific for a cultivation facility in Germany.
the clinical/ethics study submission • CBD Capsules;
Store Partnerships creams, tinctures, sprays, and • VIR has previously worked with
using supercritical extracted • 1:1 Capsules; INOPHA to apply for a license on
• Currently in negotiations with salves for pain management,
nausea and sleep issues. cannabis diluted in MCT oil. • Capsules are available in 5.0mg December 11th, 2018 to cultivate
Saskatchewan and Ontario based Expected to commence in the first and 10.0mg dosages. medical cannabis as required by the
distributors for non-medical • Citizen Stash half of 2019.
adult-use products. • EFX/Broken Coast manufactured German Federal Institute for Drugs
• Viridium’s first adult-use cannabis • The pro forma company has an and Medical Devices.
capsules are to be utilized for the
• Broken Coast Cannabis Ltd. brand. strategic partnership with the British Phase II & III clinical trials. • If the tender application is
• Strategic on-going partnership • Citizen Stash was created to Columbia Institute of Technology • The pro forma company now has the successful, VIR will exchange IP and
between Broken Coast and EFX. appeal to those seeking a (“BCIT”) to source seeds and new opportunity to increase production consulting services to become an
premium best-in-class adult-use strain types from all over the world. of the two-piece capsule. equity partner in the licensed joint
cannabis product. venture.
Tier One Team + Best In Class Industry Assets + Pristine Balance Sheet = Poised For Success
5PRO FORMA MANAGEMENT & DIRECTORS
Management
• Jay founded Seattle’s Best Coffee Canada in 1993 and expanded it across the country until it was acquired by Starbucks in 2007.
Jay Garnett • He was the Executive Chairman and CEO of Steaz (a brand of organic green tea beverages). He focused on restructuring, rebranding, and positioning the brand for eventual sale.
CEO & President • Jay was an early investor in Spud.ca and one of four partners who purchased the company out of near bankruptcy in 2010.
• Jay most recently founded the online liquor platform, NewDistrict.ca, which he built and ran as CEO alongside Icon Fine Wine which he founded in 2004 and sold in 2017.
• Over 20 years of relevant business experience, with 5 years in executive or directorship roles with Cannabis companies where he built/commissioned and financed multiple cannabis
Jarrett Malnarick operations throughout North America.
COO & SVP • Mr. Malnarick has excellent experience with start-up companies including effective team building, focused business plans, presenting financial opportunities, strategic budgeting,
managing regulated products, commercialization, and sales.
Winnie Wong, CA • Over 20 years of finance experience, with prior CFO roles for various public companies listed on the TSXV.
CFO & Corporate Secretary • Previous audit experience with Deloitte & Touche.
Scott Mayer • Over 20 years of experience in pharmaceutical operations roles, inclusive of design and commissioning processes.
VP Operations • Additional greenhouse agriculture and cosmetics experience.
Jessica Eadie • Quality Assurance Manager under the Access to Cannabis for Medical Purposes Regulations (“ACMPR”). Championed over a dozen Health Canada inspections under the ACMPR.
Quality Assurance Manager • Over 10 years of Quality Assurance experience in food processing, pharmaceuticals and processing. Designed and implemented regulated quality systems.
Directors
Director • Existing Director from Viridium.
Director • Existing Director from Viridium.
Director • Existing Director from Viridium.
Director • Existing Director from EFX.
Director • Existing Director from EFX.
Director • Independent Director to be selected by Viridium and acceptable to EFX, acting reasonably.
Director • Independent Director to be selected by Viridium and acceptable to EFX, acting reasonably.
All former EFX employees with the exception of Mike Kohut (CEO of EFX) will remain employed with the pro forma entity to continue to oversee the research, operations and vale added products initiatives
that were in place within EFX prior to the amalgamation. The board of directors may change at the next annual general shareholders meeting for the pro forma company.
6PRO FORMA & HISTORICAL STOCK PRICE PERFORMANCE
Stock Data TSXV: VIR
Share Price(1) (C$/share) $0.52
52 Week Low/High (C$/share) $0.50 - $1.64
Avg. Daily Vol. (3 Month) ('000s) 33.1
VIR C/S Outstanding (Pro Forma) (MM's) 49.3
EFX C/S Outstanding (Pro Forma) (MM's) 48.2
(2) (MM's) 7.1
Options/Warrants (Pro Forma)
Fully Diluted Shares Outstanding (Pro Forma) (MM's) 104.6
Fully Diluted Market Cap (C$MM) $54.4
(1) Share price as of market close on January 2019. 4th,
(2) VIR makes no representations or assurances of the future trading price of VIR shares.
VIR Share Price Performance(3)
540 October 10th, 2017; Viridium April 25th, 2018: Viridium $2.00
March 16th, 2018: Viridium July 16th, 2018: Viridium has October 15th, 2018: Viridium January 7th, 2019: Viridium
shares begin trading post acquires 25 new cannabis
announces changes to been selected as a supplier appoints Jay Garnett as new & EFX Amalgamation press
RTO of Morro Bay Resources strains, and announces first $1.80
management & board. with the BCIT. CEO & President. release.
Ltd. successful harvest.
450
$1.60
Share Trading Volume (000's)
$1.40
360
Share Price (C$/Share)
$1.20
270 $1.00
$0.80
180
$0.60
October 1st, 2018: Viridium $0.40
90 December 12th, 2018: Letter
has completed its first sale of
of Intent is signed by
dried medical cannabis to a
Viridium and EFX. $0.20
BC LP.
0 $0.00
Oct 2017 Nov 2017 Dec 2017 Jan 2018 Feb 2018 Mar 2018 Apr 2018 May 2018 Jun 2018 Jul 2018 Aug 2018 Sep 2018 Oct 2018 Nov 2018 Dec 2018 Jan 2019
(3) Share price as of market close on January 4th, 2019. Volume Share Price
7VIRIDIUM PACIFIC GROUP LTD. COMPANY OVERVIEW
Company Overview
• Viridium is a publicly listed holding company based in Vancouver, BC (TSXV: VIR), directly invested in the Canadian cannabis industry.
• Experion, the wholly-owned subsidiary of VIR , is a licensed Strain Cultivator and Processor under the Cannabis Act.
• The principal activity of Experion is the production, possession, sale and shipping of adult-use and medical cannabis as regulated by the Cannabis Act, with its
headquarters located in Mission, British Columbia.
• Viridium received its cultivation license from Health Canada in August 2017, and has completed the Health Canada licensing process for its sales license, received
August 18th, 2018.
• Viridium (via Experion) will produce, process, package, and distribute cannabis products across Canada pursuant to the new cannabis regulations, including adult-use
sales which began on October 17th, 2018.
• In September 2018, Viridium (via Experion) completed its first sale of dried medical cannabis to one of the largest LP’s in Canada, Tilray Inc. (NASDAQ: TLRY), with
follow on sales with Emerald Health Therapeutics Inc. in October 2018. Recreation product launch within BC and Saskatchewan by February 2019.
• Viridium has the strategy and vision to build a leading, integrated cannabis company through the construction of highly efficient, purpose built facilities that allow
Viridium to produce significant volumes of the highest quality cannabis and cannabis products at a low cost.
Current Facility Proposed Greenhouse Facility Expansion
• State-of-the-art, indoor, purpose-built facility located on 10 acres outside • Potential greenhouse expansion site located on the same property as
Mission, BC. Viridium’s current facility in Mission, BC.
• Dedicated ~2,200 square foot production space utilizing growth enhancing • The proposed facility will add expanded cultivation capabilities on 2 acres
lights. (87,120 square feet) of purpose built greenhouse.
• Currently adding an additional 1,000 square foot cultivation room. • Projected annual production of 8,100 kg per year.
• The Mission facility has the ability to produce 50.0 kg of cannabis a
month.
Proposed Expansion
Current
Facility
8EFX LABORATORIES INC. COMPANY OVERVIEW
Company Overview
• EFX is a privately held Canadian biotech company located in Calgary, Alberta focused on bringing medical cannabis applications and treatments in convenient, dose-controlled
capsules for doctors and patients. EFX has developed several proprietary formulations for pain control as well as, a suite of added value cosmetic goods.
• EFX is focused on educating consumers with research-based content via the website and social channels. The brand concept is to build loyalty with the client through mimicking the
relationship with a trusted healthcare provider.
Products
• EFX currently contract manufactures two-piece medical cannabis pills for Broken Coast at Broken Coasts facility located on Vancouver Island. Concurrently, EFX is an ACMPR pre-
applicant.
• Key products of EFX include a two-piece pill for post-operative pain control actively being prepared for a Phase III clinical trial and over 50 tested formulas and products ranging from
creams, tinctures, sprays and oils. EFX’s product line will include house-brand Kanabé which will be launching for the adult-use market in 2019.
Brands
• On August 17th, 2018, EFX acquired Kanabé. This acquisition created a uniquely positioned vertically integrated company that will combine EFX’s medical biotech expertise and
leverage Kanabé’s house hold name to bring adult-use products to market. Kanabé is an adult-use, over-the-counter health and wellness brand fitting into the caregiver brand
archetype, ingraining the brand into daily actions and rituals for comfort and solutions to acute problems.
• Kanabé products are developed to target and soothe various aliments by combining cannabinoids, terpenes and aromatherapy. These formulations use high purity cannabis
solventless extracts. The result is the highest quality product experience possible, making it free of cannabis scent and discreet to use.
• Under the EFX brand, EFX manufactures two-piece capsules for Broken Coast’s medical clients, as well as for a cannabis based clinical trial.
Clinical Study
• EFX is sponsoring a Health Canada submission of one of the first cannabis based Phase I & Phase III Clinical studies measuring cannabis as a viable post-operative treatment. The
cannabis oil being used for research is formulated specific for the clinical/ethics study submission using supercritical extracted cannabis diluted in MCT oil. The study will include a
safety pilot and a Phase III submission to Health Canada. The Ethics application is estimated to be submitted late 2018 and will not obtain full Health Canada review until 2019. EFX is
focused on using the ultimate in extractions, formulations and delivery for maximum positive effect.
Product Overview
Medical Products Adult-Use 2018 Value Add Products Adult-Use 2019 Value Add Products
• Two-piece, full spectrum, gelatin branded capsules • Product line includes sublingual sprays, body oils, • These products will be available upon legalization in
manufactured by EFX for Broken Coast. tinctures, all of which are legal today and can be October 2019.
• Available in multiple formulations and dosages, including: developed immediately due to the Amalgamation. • These products represent the majority of Kanabé’s
• THC, CBD and 1:1 capsules, in 5.0mg and 10.0mg • Two-piece capsules are production ready and can be formulations.
dosages. directed to the adult-use market upon an amendment of • Product line will include healing salves, body butters,
Experion licenses for encapsulated oil. bath soaks and scrubs.
9MARKET OVERVIEW
Canada Is At The Forefront Of The Rapidly Changing Global Cannabis Market
• The global demand for adult-use and medical cannabis is expected to exceed C$6.0BN by 2021. The growth is underpinned by ~3.8MM adult-use users. Viridium
estimates the market in North America to surpass 4.0MM kg annually, with an additional 4.0MM kg of demand coming from European consumers.
Health Canada Licensed Producers(1)
Market Size
• 142 LP licenses issued by Health Canada.
• 68 of those licenses have been approved for sale.
Licensed to Sell and Cultivate
• 36 licenses are held by publicly traded companies.
• 74 LP’s have not received approval to sell; with 64 of those LP’s not publicly
traded.
Approval from Health Canada
• Viridium has received approval from Health Canada for their cultivation and sales
license.
• Viridium is positioned amongst some of the largest publicly traded LP’s in Canada.
Number of Licensed Producers(2)
publicly Traded Non-publicly Traded
Licensed to Produce
31
1
BC 9
4
AB 2
74 NL
SK
MB 12
ON PEI 2
QC NB
NS
3
4
(2) Health Canada. (1) Health Canada.
Note: Not all companies shown.
10SUMMARY OF KEY BENEFITS
Shareholders of the Pro Forma Entity
The Amalgamation provides both parties a go-forward strategy that will create a long term sustainable growth company.
Fully integrated business model, creating margin capture across the value chain.
Industry leading management team and proven board of directors.
Viridium will be one of the lowest cost producers, and at the forefront of research studies.
Fully funded business model for immediate turn key expansion.
Ability to capture attention from investors based on the “3rd wave” of investment.
Strategic Alliances – Partnerships with universities, governments and industry players.
Strong balance sheet – No debt and more than C$10.0MM cash on hand to execute its business plan.
Intellectual Property Portfolio – Trade secrets and synergistic patent pending IP.
Viridium will be a market leading fully integrated business with cultivation, production, and distribution of flower, oils and consumer products.
11CONTACT INFORMATION
For More Information Please Contact The Following:
For inquiries regarding Viridium Pacific Group Ltd: For inquiries regarding EFX Laboratories Inc.:
Jarrett Malnarick Mike Kohut
jarrett@viridiumpacific.com mkohut@efxlabs.ca
12FORWARD LOOKING STATEMENT
This presentation contains forward-looking statements and forward-looking information within the meaning of applicable securities laws (collectively,
“forward-looking statements”). The use of any of the words “expect”, “anticipate”, “continue”, “estimate”, “objective”, “ongoing”, “may”, “will”,
“project”, “should”, “believe”, “plans”, “intends” and similar expressions are intended to identify forward-looking statements. More particularly and
without limitation, this presentation contains forward-looking statements concerning Viridium’s and EFX’s stated business goals, the strategic rationale for
and expected benefits of the Amalgamation, the terms of the Amalgamation, the completion of the Amalgamation and the timing thereof, Viridium’s and
EFX’s business growth plans and other business initiatives and the timing thereof, attributes of Viridium post-Amalgamation, including but to limited to its
business growth plans, the composition of its management team and board, its capitalization, balance sheet, cash flow generation potential, access to
consumer markets, ability to maintain and forge new alliances with governments and industry peers, and product lines, the receipt of a cannabinoid
license by Experion, the completion of the Phase III cannabis based clinical research study and the timing thereof and the receipt of related Health Canada
approvals, the addition of an additional cultivation room and resulting annual production rate, Viridium becoming an equity partner in a joint venture
partner with INOPHA, the expansion of Viridium’s greenhouse facility, the timing thereof and the resulting annual production rate and general industry
data. The forward-looking statements are based on certain key expectations and assumptions made by Viridium, including, among other things, the
satisfaction of all closing conditions in all material respects and on a timely basis in accordance with the terms of the Amalgamation Agreement and the
success of Viridium’s and EFX’s operations as a combined entity, including expectations regarding growth of the Canadian cannabis industry and estimated
annual revenue potential. Although Viridium believes that the expectations and assumptions on which such forward-looking statements are based are
reasonable, undue reliance should not be placed on the forward-looking statements because Viridium can give no assurance that they will prove to be
correct. By their nature, forward-looking statements are subject to various risks and uncertainties, which could cause the actual results and expectations to
differ materially from the anticipated results or expectations expressed. These risks and uncertainties, include, but are not limited to, the failure to
complete the Amalgamation in all material respects in accordance with the Amalgamation Agreement or at all, unforeseen delays in completing the
Amalgamation, and unforeseen difficulties or delays in integrating the assets of EFX into Viridium’s operations, Viridium’s future growth and development,
the proposed plans of any of Viridium’s equity holdings as well as those risk factors identified in Viridium’s disclosure documents under Viridium’s name.
Readers are cautioned not to place undue reliance on the forward-looking statements, which are given as of the date hereof, and to not use such forward-
looking statements for anything other than their intended purpose. Viridium undertakes no obligation to update publicly or revise any forward-looking
statements, whether as a result of new information, future events or otherwise, except as required by law.
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