Corporate Presentation - January 4, 2021 - Zenabis
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Corporate Presentation
January 4, 2021
TSX: ZENA
Disclaimers
IMPORTANT: YOU MUST READ THE FOLLOWING BEFORE CONTINUING. The information contained in this document has been prepared by Zenabis Global Inc. (“Zenabis” or the “Company”). The information
contained in this document (a) is provided as at the date hereof and is accurate only as of the date of this presentation or the date indicated and is subject to change without notice, (b) does not purport to contain all the
information that may be necessary or desirable to fully and accurately evaluate an investment in the Company, including important disclosures relating to the terms of an investment and risk factors associated with an
investment in the Company and (c) is not to be considered as a recommendation by the Company that any person make an investment in the Company.
This presentation, and the information contained herein, is not for release, distribution or publication into or in the United States or any other jurisdiction where applicable laws prohibit its release, distribution or publication.
This presentation (“Presentation”) is being issued by the Company for information purposes only. It is information in a summary form and does not purport to be complete. It is not intended to be relied upon as advice to
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This Presentation is not a prospectus, offering memorandum or an advertisement and is being provided for information purposes only and does not constitute or form part of, and should not be construed as, an offer or
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and must be read in conjunction with, the preliminary prospectus supplement dated September 18, 2020 (the “Prospectus Supplement”) to the Company’s final short form base shelf prospectus dated April 9, 2019 (the
“Shelf Prospectus”) and the Company’s annual information form dated March 30, 2020.
Certain information contained herein includes market and industry data that has been obtained from or is based upon estimates derived from third party sources, including industry publications, reports and websites. Third
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION: This document includes information, statements, beliefs and opinions which are forward-looking, and which reflect current estimates,
expectations and projections about future events, including, but not limited to the intended conversion, expansion and optimization of the Company’s facilities, the anticipated production capacity of the Company, the receipt
of required licenses to operate, our harvest forecast, and other statements that contain words such as "believe," "expect," "project," "should," "seek," "anticipate," "will," "intend," "positioned," "risk," "plan," "may," "estimate"
or, in each case, their negative and words of similar meaning. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially
from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. These
factors and risks include, but are not limited to, those described in the Shelf Prospectus and the Prospectus Supplement, copies of which are available on SEDAR at www.sedar.com, and could cause actual events or
results to differ materially from those projected in any forward-looking statements. Forward-looking information contained in this Presentation is based on our current estimates, expectations and projections, which we
believe are reasonable as of the current date. Such forward-looking information is provided for the purpose of providing information about management's current expectations and plans relating to the future. Investors are
cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions and/or management's good-faith belief with respect to future events and are subject to known or
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information available as of the date of this document and the Company disclaims any intention or obligation to update or revise any forward-looking information contained in this document, whether as a result of new
information, future events or otherwise, unless required by applicable law. The forward-looking information included in this Presentation is expressly qualified in its entirety by this cautionary statement.
Historical statements contained in this document regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. In this regard, certain financial information
contained herein has been extracted from, or based upon, information available in the public domain and/or provided by the Company. In particular historical results of the Company should not be taken as a representation
that such trends will be replicated in the future. No statement in this document is intended to be nor may be construed as a profit forecast.
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1
CORPORATE HIGHLIGHTS
Three Sequential Quarters of Positive Adjusted EBITDA
Low Cash Costs of Cultivation Given Scale ($0.76/g)1
111,200 kg of Licensed Cultivation Capacity
Across Three Facilities
Highly Recognizable Brands
Ongoing Shipments to Nine Provinces,
Three Territories, and Three International Destinations
Total Debt Reduced by ~$76m (54%) in 2020
61% Quarter-over-Quarter Cannabis Net Revenue Growth in Q3 2020
2
Note: 1) Page 13 of Zenabis Q3 2020 MD&A dated November 13, 2020.
COMPANY SNAPSHOT
Zenabis Global Inc. is a significant Canadian cultivator
of medical and adult-use recreational cannabis. As of
December 2020, Zenabis divested its propagation
TSX: ZENA business to become a pure-play cannabis cultivator.
2019-2020 2021+
Cannabis Operations In December 2020, ▪ Significant Canadian Licensed Producer with a licensed annual
Zenabis divested its production capacity of 111,200 kg
wholly-owned
propagation subsidiary in ▪ Operates three state-of-the-art facilities dedicated to cannabis
order to focus on the cultivation and processing
core cannabis business,
reduce debt, and
̶ Zenabis Atholville: One of the largest indoor facilities in
increase available Canada with a licensed capacity of 46,300 kg
liquidity.
̶ Zenabis Langley: Large scale closed greenhouse facility
with a licensed capacity of 64,100 kg
̶ Zenabis Stellarton: Fulfillment, processing and cannabis
derivative products manufacturing centre
▪ European commercial processing and import/export joint
venture, ZenPharm, received its first commercial shipment
from Atholville in December of 2020, Zenabis’ first commercial
Divested December 2020 European Union export
3
2020 PROGRESS
Zenabis made substantial operational and financial progress in 2020, positioning the company well for 2021
Debt Reduction ▪ 2020 Actions: Zenabis reduced total debt by approximately $76m, or 54% (see slide 19)
▪ 2021 Impact: Zenabis’ cash interest payments have decreased significantly, improving financial
flexibility for 2021 and beyond
Debt Extension ▪ 2020 Actions: Zenabis deferred principal payments for all remaining obligations until 2022 or later,
except for $11.7m of debt maturing in 2021 (see slide 19)
▪ 2021 Impact: Extensions will enable Zenabis to improve its cash position in the short-term and re-
invest cash flows into operating activities
Cost Cutting ▪ 2020 Actions: Zenabis underwent a significant operational rationalization in the first half of 2020,
resulting in positive Adjusted EBITDA for three consecutive quarters (see slide 17)
▪ 2021 Impact: Zenabis’ lowered cost base places it in a good position to continue to improve
profitability throughout 2021
Operational ▪ 2020 Actions: Zenabis substantially increased the volume of cannabis products shipped to customers
and diversified its revenue channels, resulting in large increases in cannabis revenue (see slide 17)
Achievements
▪ 2021 Impact: Zenabis is well-positioned continue revenue growth in 2021 through existing and new
revenue channels
▪ 2020 Actions: Zenabis successfully launched its 510-thread vaporizer line and large-format flower
Product Launches products; Zenabis also made progress in research and development processes for new products (see
slides 9 and 10)
▪ 2021 Impact: Zenabis will continue to optimize its product portfolio through new formats and product
lines
4
BEVO DIVESTITURE OVERVIEW
Transaction Overview
▪ Commitment to Core Business. The disposition of the propagation business will enable Zenabis to focus on its core
business of producing and selling cannabis and value-add cannabis products
▪ Continuity of Zenabis Langley. Zenabis can continue to operate its cannabis facility in Langley, British Columbia; the
facility will continue to be owned by Bevo and leased to Zenabis
▪ Improved Financial Position. Zenabis will receive cash proceeds, rent concessions, and rebates, which will improve the
Rationale company’s liquidity position and overall financial capacity by $24.7m
▪ Significant Reduction in Debt Obligations. Zenabis reduced its total debt obligations by approximately $42.5m.
Combined with the partial repayment of the secured debentures (in connection with the sale of Zenabis Delta), total debt
outstanding has been reduced to approximately $65.1m (see slide 19), with an additional $10.0m made available to
repay other existing obligations
▪ Total enterprise value of approximately $67.2m, consisting of:
̶ $24.7m in cash and rental rebates; and
Consideration ̶ $42.5m in assumed debt
▪ This enterprise value implies an EV/EBITDA ratio of 9.5x
The divestiture of Bevo allows Zenabis to focus on its core
Cannabis business while significantly strengthening its balance sheet
5
OUR FACILITIES
Zenabis' unique mix of facilities combines indoor and closed-greenhouse cultivation at scale with dedicated processing,
fulfilment, and value-add manufacturing centres
2. Zenabis Langley1
Langley, British Columbia
1. Zenabis Atholville 3. Zenabis Stellarton
Atholville, New Brunswick Stellarton, Nova Scotia
▪ 435,600 sq. ft. greenhouse
▪ Licensed capacity: 64,100 kg
▪ Licensed for cultivation and
processing
▪ Zenabis Langley is leased from
Bevo (see slide 5)
▪ 380,000 sq. ft. indoor facility ▪ 255,000 sq. ft. indoor facility
▪ Licensed capacity: 46,300 kg ▪ Licensed capacity: 800 kg
▪ Licensed for cultivation, ▪ Licensed for cultivation and
processing, and sales processing.
▪ EU GMP approval received May ▪ Received sales license in May
2020 2020, which allows for the sale
of dried/fresh cannabis and
other 2.0 products to authorized
retailers
1 3
2
6
Notes: 1) The greenhouse to the right of the Zenabis Langley photo is not part of Zenabis Langley. Only the greenhouse at the forefront of the image is the leased Zenabis Langley facility.
PRODUCTION FOOTPRINT
Zenabis Atholville Zenabis Langley Zenabis Stellarton
Atholville, NB Langley, BC Stellarton, NS
Parcel Size 871,000 sq. ft. N/A 547,000 sq. ft.
Total Facility Space 380,000 sq. ft. 435,600 sq. ft. (leased) 255,000 sq. ft.
Current Licensed Capacity 46,300 kg 64,100 kg 800 kg
Expected Capacity under
46,300 kg 64,100 kg 800 kg
Existing Capital Program
Design Capacity 46,300 kg 96,100 kg1 800 kg
(if facilities fully built out and converted)
Extraction Design Capacity2
(if facilities fully built out and converted 45,000 kg N/A N/A
as planned)
Cultivation Cost $0.76/gram3 TBD4 Not relevant
EU GMP Cannabis Cultivation5 + Cannabis Cultivation5 +
Utilization Extraction
Cannabis Cultivation6
Manufacturing6
Cultivation Format
G H
Indoor Indoor
7
Notes: 1) If all facilities are built out and converted. Additional details on facility conversion, including additional assumptions are outlined in the Zenabis Global Inc. Final Base Shelf Prospectus dated April 10, 2019 and filed on SEDAR. 2) Extraction estimates are annual,
based on 20 days a month, based on kilograms of input material, and include two additional extractors located in Atholville that have not yet commenced operations. 3) Average cost per gram as of Q3 2020. 4) Zenabis Langley production cost estimates subject to calculation
following full-year of operations given impact of seasonality. 5) Includes the packaging of cannabis product. 6) Manufacturing of value-add products.
RECREATIONAL BRANDS
Nature’s Inspiration Remember to Re-Üp
Namaste exists to make it easy for people to return to their Re-up exists to democratize laughter. A brand that doesn’t
true nature. Natural, approachable, simple and intelligently take itself too seriously and embraces the fun, lighthearted
designed cannabis products for the contemporary cannabis side of cannabis. The perfect balance of price and quality that
user looking for life balance and well being puts a smile on the experienced cannabis user’s face.
Pricing Segment: Core Pricing Segment: Value
Available/Planned Formats: Flower, Pre-rolls, Edibles, Available Formats: Flower, Pre-rolls, Vapes.
Vapes, Oral Sprays.
8
CANNABIS 2.0 PORTFOLIO
2.0 Products
PAX Vaporizing Cartridges ▪ Zenabis has five types of PAX Era Pods
▪ Zenabis is one of five Licensed Producers to launch PAX Era Pods (vaporizing cartridges) for PAX Labs Inc.’s high-
tech oil vaporizers
̶ PAX Era Pods are dependable, leak-resistant and clog-free, and are designed for use in PAX Era vaporizer
devices
̶ PAX Era Pods are currently listed in eight Provinces
510 Vaporizing Cartridges ▪ In July 2020, Zenabis launched its new line of Re-Up 510-thread vaporizing cartridges
▪ Re-Up 510-thread cartridges are currently listed in seven provinces
Gummies ▪ Commercial roll-out of edibles will commence with gummies
▪ The initial product line will include three types of gummies; these products have been listed in various provinces
▪ Sale of gummies is expected to commence in Q2 2021
9PRODUCT PORTFOLIO
Current Products
Dried Flower Pre-Rolls PAX Vaporizing Cartridges 510 Vaporizing Cartridges
Oils Tinctures and Sprays Softgel Capsules
Future Products Under Consideration for Near-Term Launch
Edibles Gummies Hash
10DOMESTIC PARTNERSHIPS AND DISTRIBUTION CHANNELS
Zenabis has developed a diverse set of partnerships and relationships with provinces1, distributors, pharmacies and First Nations.
Supply agreement Supply agreement
primarily for oil for medical cannabis
products
Yukon Liquor
Corporation
(“YLC”) Northwest Nunavut Liquor &
Territories Liquor Cannabis
Supply Arrangement
and Cannabis Commission
Commission (“NULC”)2
(“NTLCC”) Supply
Supply Arrangement Arrangement
Songhees First
Société
Nation Alberta Gaming,
Investor québécoise du
Liquor & cannabis
Cannabis (“SQDC”) PEI Cannabis
BC Liquor (“AGLC”) Management
Supply Arrangement
Distribution Supply Agreement Manitoba Liquor Corporation
Branch and Lotteries Supply Arrangement
(“BCLDB”) Saskatchewan (“MBLL”)
Supply Arrangement Wholesale Supply Ontario Cannabis
Distributor Arrangement Retail Corporation Listuguj Mi’gmaq
Investment Supply (“OCS”) Government
Arrangement Supply Investor
Agreement Nova Scotia Liquor
Corporation
Alcohol New (“NSLC”)
Brunswick Liquor Supply Arrangement
(“ANBL”)
Supply Agreement Millbrook First
Nation
Opportunities NB Investor
Investor
11
Note: 1) Supply arrangements do not contain purchase commitments or otherwise obligate the purchaser to buy a minimum volume of products from Zenabis. 2) Zenabis is an approved wholesaler to Nunavut; however, Nunavut is
currently finalizing its retail licensing process and Zenabis expects to start selling to the province in Q1 2021.GROWING INTERNATIONAL DISTRIBUTION
Germany Malta Israel Australia
Zenabis, through ZenPharm (see
Zenabis has received conditional Zenabis ships cannabis to two Zenabis ships packaged, medical
Malta) has entered into a binding
approval to develop a production and counterparties in Israel, with cannabis under a binding three-year
supply agreement to commence
processing facility in Malta through anticipated combined volume of supply agreement with an Australian
shipments to Germany through Malta
its joint venture, ZenPharm. greater than 1,000kg per month on pharmaceutical company
upon receipt of ZenPharm’s final
Revenue is expected in Q1 2021 an ongoing basis, subject to export
license
subject to ZenPharm’s receipt of its permit receipt in any given month
final license
12ZENPHARM
Zenabis has obtained EU GMP approval from its Malta-based European partner, ZenPharm Limited. Through this joint venture, Zenabis can
now supply the European medical market. Zenabis completed its first commercial sale to ZenPharm in December 2020.
Europe
Zenabis’ EU GMP approval enables the
supply of bulk dried medicinal cannabis
flower to the European market through
ZenPharm
Atholville, New Brunswick, Canada Birzebbuga, Malta
Indoor Cultivation Facility Manufacturing Facility
13RECENT DEVELOPMENTS
Zenabis has significantly increased shipments domestically and internationally, diversified its product offerings, and delivered positive
Adjusted EBITDA throughout 2020.
Corporate Updates
EU GMP Approval and Term
• Granted GACP quality certification by the CUMCS, which is a requirement for
Sheet for Medicinal Cannabis
some export jurisdictions
to German Market
• ZenPharm successfully completed its EU GMP audit and is expecting formal
• Received EU GMP approval
EU GMP certification in early 2021
for the Atholville facility Appointment of Permanent • Re Up 510-thread vaporizer line is listed in seven provinces
• Executed a binding term sheet Chief Executive Officer • Completed initial export shipment of packaged medicinal cannabis to Australia
with Farmako GmbH to its • Announced appointment of in August with additional shipments ongoing
subsidiary company, Shai Altman as permanent • Appointed Echelon Capital Markets as financial advisors with goal of obtaining
ZenPharm Chief Executive Officer, new financing to repay existing senior secured debentures
• Expected to supply a effective September 1, 2020
minimum of 500 kg of EU • Mr. Altman has over 20 years
GMP compliant bulk cannabis of CPG leadership experience
per year for a term of three and was previously President Sale of Delta Facility
years of McCain Foods, Canada • Completed sale of Delta facility for $6.65m on
December 30, 2020
May-20 Jun-20 Jul-20 Aug-20 Sept-20 Oct-20 Nov-20 Dec-20
September Public Offering of Units Disposition of Bevo Farms Ltd.
Extension and Partial Conversion of Secured • Announced closing of previously • Entered into a rental rebate,
Convertible Notes announced overnight marketed liability contribution and share
• Maturity extended from June 30th, 2020 to offering of units for aggregate gross purchase agreement with
March 31st, 2021 proceeds of~$7.6m at a price of Langley Propagation and
• Immediate conversion of 22.88% of the $0.085/unit Floral Company Ltd.
outstanding notes at a price of $0.10232 • Each unit contained one common • $42.5m in debt reduction, plus
• ~$2.6m reduction to the remaining principal share and one common share deferred consideration of
amount of the notes purchase warrant $24.7m, including cash and
rental rebates
June Public Offering of Units Conversion of Remainder of Secured Convertible
• Closed public offering of units for total Notes
Amendments to Senior Secured
gross proceeds of $23.6m at a price of • Announced conversion of remaining convertible
Debenture
$0.13/unit
• Principal amount increased from notes (excluding one tranche) at a price of $0.04794
• Proceeds were used for repayment of per common share
$50.0m to $60.75m
debt, a senior debt extension fee, and • The conversion agreement provides for the issuance
• Maturity extended from June 30th, 2020
general working capital
to March 31st, 2025 of 16,104,403 warrants at a price of $0.06768
14MANAGEMENT
Shai Altman Eric Rasmussen
Chief Executive Officer Chief Financial Officer
▪ Over 20 years of leadership in the consumer packaged ▪ Extensive senior management experience in publicly-listed
goods industry, with 11 years of focused experience in the companies, both in North America and Europe
Canadian market ▪ Strong corporate and operations finance, internal audit,
▪ Formerly the President of McCain Foods, Canada, where M&A, and strategic investment experience over a 20-year
he led the business through a significant turnaround that leadership career within Shawcor
reversed a decade of topline sales declines ▪ Strategic consultant for Canadian large- and mid-size
▪ Prior to McCain Foods, was the President of Wrigley clients, advising on corporate strategic and financial
Canada, where he led the business through a growth planning, post-merger integration
phase that resulted in market leadership
Alan Mayo Robert Maxwell
Chief Quality & Compliance Officer Vice President, Sales & Marketing
▪ Over 19 years of extensive experience in regulatory ▪ 30-year career in the Canadian and international biotech,
compliance, with a focus on the application of quality medical device and consumer packaged goods sectors as
assurance in operations and logistics management in the executive and entrepreneur
manufacturing and drug development sectors ▪ Formerly the President and CEO of the Kolab Project, a
▪ Previously, he has worked across global business units to successful Health Canada licenced cultivator, processor
lead the comprehensive implementation of GMP processes and cannabis brand
and policies, including his most recent role at ▪ Has conceived, launched and directed product
GlaxoSmithKline development and branded or private label initiatives for
retailers such as CVS Health, Walgreen’s, Target and
Shopper’s Drug Mart, in addition to health and beauty
brands Estee Lauder, Mary Kay and Charlotte Tilbury
Beauty
15BOARD OF DIRECTORS
Daniel Burns Monty Sikka Shai Altman
Chair Co-Founder and Director Chief Executive Officer and Director
▪ A lawyer, accountant and ▪ Co-founder of Zenabis ▪ Over 20 years of leadership in the
entrepreneur ▪ As President of the Monark Group, consumer packaged goods
▪ Experienced corporate director in the has grown the business into a multi- industry, with 11 years of focused
financial services, insurance and million-dollar, multi-faceted experience in the Canadian
mining sectors corporation market
▪ Has served as chair of a number of ▪ Has extensive experience in e- ▪ Formerly the President of McCain
significant organizations in Canada commerce, marketing and finance Foods, Canada, where he led the
and the United States as well as sectors business through a significant
chaired the audit committees of turnaround that reversed a
significant public and private decade of topline sales declines
institutions
Natascha Kiernan Vincent Quan Jim Shone
Independent Director Independent Director Independent Director
▪ Experienced international finance ▪ Currently the Vice President of ▪ Currently the Founder and
and M&A attorney who has held Finance for the Richberry Group of Managing Director at Shone
senior positions at several prominent Companies, part of the executive Capital Partners, a corporate
international law firms management team that oversees financial advisory firm that
▪ As counsel at Skadden, represented over 1,100 acres of Ocean Spray provides advisory services to small
Fortune 500 companies, financial cranberry bogs and medium-sized enterprises
institutions, and governments in ▪ Previously, he oversaw a team of ▪ Previously, he was the CFO at The
complex corporate finance and M&A lending professionals in Farm Green Organic Dutchman Holdings
transactions totaling >$100bn in Credit Canada and managed a Ltd., a TSX-listed organic cannabis
value portfolio >$1bn company
16FINANCIAL PROGRESS
Zenabis has made significant financial progress over the past seven quarters. The operational rationalization in early 2020 has resulted in
three consecutive quarters of positive adjusted EBITDA and notable improvements in operating cash flow.
Financial Progress – Past Seven Quarters1
($m)
25.0
20.0 19.0
15.0 12.6
11.8
10.6
10.0
7.3 7.1
4.1
5.0 3.4 3.5
2.3 2.3
0.2
-
(2.1)
(5.0)
(6.4) (6.3) (7.0)
(10.0) (9.2)
(10.4)
(12.7) (12.4)
(15.0)
(15.9)
(20.0)
Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020
Cannabis Net Revenue Adjusted EBITDA Cash from Operations (before changes in NWC)
17
Note: 1) NWC refers to net working capital.SELECTED FINANCIAL INFORMATION
Selected Financial Metrics
Cash as of December 31 2020 $4.8m
Debt as of December 31 2020 $65.1m1
Market Capitalization $42.0m2
Enterprise Value $102.3m2
Financial Results Q3 2020
Gross Revenue3 $28.5m
Net Revenue3 $23.7m
Net Loss3,4 ($17.0m)
Adjusted EBITDA5 $3.5m
Balance Sheet
Total Assets6 $296.2m
Total Non-Current Liabilities $110.6m
Property, Plant and Equipment $191.7m
Shares and Ownership Summary Q3 2020
Common Shares Outstanding 729,839,2737
Fully-Diluted Shares Outstanding 1,178,637,8367
18
Notes: 1) Debt is based on the amounts listed on slide 28. 2) Market capitalization and enterprise value are calculated as of December 31, 2020 as calculated on slide 29. 3) For the three months ended September 30, 2020. 4) Includes a $2.1m loss on
embedded derivative asset and a $3.4m loss on the revaluation of a royalty liability. Both are non-cash. 5) Calculation of adjusted EBITDA is shown on slide 30. 6) Tangible assets of $294.9m as of September 30, 2020. 7) As at September 30, 2020.RECENT CAPITAL STRUCTURE CHANGES
Zenabis has implemented many deleveraging initiatives since June 2020, which have resulted in total debt reductions of $58.7m.
Principal
Principal Principal Debt Changes due Principal
Principal Outstanding at
Debt Outstanding at Payments / to Bevo Outstanding at Interest Rate
Payments September 30,
June 30, 2020 Conversions Divestiture January 4, 2021
2020
Bevo Term Debt
BMO Financing $43.3m ($0.8m) $42.5m - ($42.5m) - Floating
Long-term Cannabis Debt (>2 years to maturity)
Secured Debentures $51.4m1 - $51.4m1 - - $51.4m 14.0%
RDC Mortgage $2.0m - $2.0m - - $2.0m 6.0%
Near-term Cannabis Debt (ONGOING CASH INTEREST PAYMENTS
The below table outlines Zenabis’ ongoing cash interest payments as of January 4, 2021.
Principal Outstanding at
Debt Interest Rate Quarterly Interest Payment
January 4, 2021
Secured Debentures $51.4m 14.0% $1.80m
RDC Mortgage $2.0m 6.0% $0.03m
Unsecured Convertible Debentures $3.8m 6.0% $0.06m
Secured Convertible Note $0.2m 11.0% $0.01m
Unsecured Convertible Note $7.7m 6.0% $0.12m
Total $65.1m $2.01m
20COMPARABLE PRODUCTION AND REVENUE MULTIPLES1
Current Licensed Annual Production Capacity
Metrics CRON VFF ACB SNDL APHA OGI TGOD VIVO FIRE AH ZENA
Enterprise Value2 ($m) 1,734 819 2,320 652 2,561 483 151 45 133 162 102
Current Capacity (kg) 40,150 37,500 150,000 60,000 255,000 89,000 32,000 14,500 50,000 128,500 111,200
EV/Current Capacity ($m/tonne) 43.2 21.8 15.5 10.9 10.0 5.4 4.7 3.1 2.7 1.3 0.9
60.0
40.0
20.0
0.9
-
Last Three Months Production3
Metrics TLRY FLWR OGI HEXO EMH ZENA
Enterprise Value2 ($m) 2,103 160 483 480 64 102
Last Three Months Production (kg)
8,903 1,305 11,737 17,462 2,459 12,083
EV/Last Three Months Production
($m/tonne) 236.2 122.3 41.1 27.5 25.9 8.5
300.0
200.0
100.0
8.5
-
Quarter End Net Revenue
Metrics CRON WEED SNDL ACB TLRY TGOD OGI APHA HEXO FIRE ZENA
Enterprise Value2 ($m) 1,734 11,565 652 2,320 2,103 151 483 2,561 480 133 101
Net Revenue ($m) 14.8 135.3 12.9 67.8 63.0 4.9 20.4 145.7 29.4 11.9 19.0
EV/Net Revenue ($m/$m) 117.1 85.5 50.7 34.2 33.4 30.9 23.7 17.6 16.3 11.2 5.3
200.0
100.0
5.3
-
21
Notes: 1) All financial metrics obtained as of January 3, 2021. Zenabis’ enterprise value is per the calculation on slide 29. 2) Enterprise value as of December 31, 2020. 3) Amount of cannabis produced on a dried flower equivalent basis as disclosed in the most recent
financial reports.TSX: ZENA Contact Us invest@zenabis.com www.zenabis.com
Appendix A – Facilities
ZENABIS ATHOLVILLE
Zenabis Atholville is Zenabis’ largest indoor facility. This facility is expected to produce 46,300kg of dried cannabis equivalent per year
operating at a steady state.
Facility Details Description
Location Atholville, New Brunswick
Type and Size 380k sq. ft. indoor cannabis
Status Fully operational
Remaining Conversion Cost Nil
Design Capacity 46,300kg1
Extraction Design Capacity 45,000kg2
Cultivation, processing, medical sales,
Current Licenses recreational sales, oil sales, domestic
and international bulk sales
Pending Licenses N/A
Capacity Milestones1 ▪ Current (full buildout) – 46,300kg
Summary
▪ One of the largest indoor growing facilities in Canada, Zenabis Atholville is
Zenabis’ flagship indoor facility
▪ Zenabis Atholville is currently operating at design capacity (46,300kg
capacity)
▪ Zenabis has worked closely with the Government of New Brunswick, which
invested $4.0m in Zenabis, to construct Zenabis Atholville
▪ Zenabis Atholville is a major employer in New Brunswick
‒ It currently employs approximately 362 workers
▪ In May 2020, Zenabis Atholville received its EU GMP approval
▪ Atholville’s current extraction machine has now reached steady-state
production and is processing approximately 1,000 kg of biomass per month.
Two additional extraction machines have been added to the facility
24
Notes: 1) As outlined in Zenabis’ Annual Information Form dated March 30, 2020. 3) Extraction estimates are annual, based on 20 days a month and based on kilograms of input material, including operations commencement of two extraction machines
onsite.ZENABIS LANGLEY
Zenabis Langley is one of the largest greenhouses in Canada with advanced propagation technology. The facility is expected to produce
96,100kg1 of dried cannabis equivalent per year upon full buildout and operates at a steady state.
Facility Details Description
Location Langley, British Columbia
Type and Size 435,600 sq. ft. greenhouse cannabis
Status Partially operational/conversion ongoing
Remaining Conversion Cost $Nil (for current market demand)
Design Capacity 96,100kg1
Extraction Design Capacity N/A
Cultivation, processing, domestic bulk
Current Licenses
sales
Pending Licenses N/A
▪ Currently Licensed – 64,100kg3
Capacity Milestones
▪ Full buildout – 96,100kg1
Summary
▪ Initial cannabis conversion activities have been completed for the first 10
acres of greenhouse
‒ Construction and licensing of Part 1 and Part 2A and the first portion of
2B have been completed (64,100kg capacity)
▪ Zenabis Langley’s cannabis conversion is based on a closed greenhouse
design, where standard greenhouse venting does not occur
‒ Zenabis believes this will produce a higher quality, more consistent
crop; mitigate the impact on the surrounding community; and better
control pests and contaminants from entering the greenhouse
▪ As of January 2021, Zenabis Langley is leased from Bevo Farms
25
Notes: 1) The design capacity of the 450,000 sq. ft. to be initially converted is 96,100kg per annum. Additional details on facility conversion are outlined in Zenabis’ Annual Information Form dated March 30, 2020 and filed on SEDAR. 2) 450,000 sq. ft. of
Bevo’s existing greenhouses is expected to be initially converted to cannabis production space. The remainder is expected to continue to be used for Bevo’s propagation business, and may be converted into cannabis cultivation space on an as needed
basis. 3) Actual Capacity versus design capacity or licensed capacity will be assessed following upcoming harvests. Due to seasonality, actual capacity versus design capacity may differ. November harvest indicated significantly lower actual capacity.ZENABIS STELLARTON
Zenabis Stellarton is a licensed indoor facility located in Stellarton, Nova Scotia. The facility is intended to be utilized primarily as a
processing, packaging and fulfillment centre as well as a manufacturing facility for value-add products.
Facility Details Description
Location Stellarton, Nova Scotia
Type and Size 255k sq. ft. indoor cannabis
Status Partially operational
Remaining Conversion Cost N/A
Design Capacity1 800kg
Extraction Design Capacity N/A
Cultivation, processing, medical sales,
Current Licenses recreational sales, oil sales, domestic
bulk sales
Pending Licenses N/A
Capacity Milestones1 ▪ Current – 800kg
Summary
▪ Zenabis Stellarton is Zenabis’ second largest indoor facility situated on a
547,000 sq. ft. parcel of land
▪ The first phase of construction at Zenabis Stellarton is complete and the
initial operational area was licensed in early March 2019
▪ The addition of sales activities to Stellarton’s license, which already
included cultivation and processing activities, will enable the Company to
now execute its strategy to optimize operations and improve service to our
provincial and territorial retail customers by making Zenabis Stellarton our
center of excellence for 2.0 products, Namaste and Re-Up pre-rolls and
retail and medical order fulfilment.
26
Note: 1) Additional details on the facility are outlined in the Zenabis’ Annual Information Form dated March 30, 2020 and filed on SEDAR.Appendix B – Financial Information
DEBT OUTSTANDING
Debt Summary
Principal Amount
Facility Description
at January 4, 2021
▪ Unsecured convertible debentures with interest rate of 6.0%
Unsecured Convertible ▪ Convertible into Zenabis shares at $2.6087 per share
$3.8m
Debentures ▪ 825,000 warrants with exercise price of $2.68
▪ Matures on September 27, 2021
▪ $2.0m mortgage on Zenabis Atholville with interest rate of 6.0%
RDC Mortgage $2.0m
▪ Matures on August 31, 2027
▪ Senior secured financing with interest at a rate 14.0%
▪ 2,593,283 warrants have been issued at an exercise price of $4.02 upon $20.8m being drawn
(50% warrant coverage)
▪ 6,009,615 warrants have been issued at an exercise price of $2.08 upon the amendment and
extension of the facility (50% warrant coverage)
Secured Debentures $51.4m
▪ 902,514 warrants were issued at an exercise price of $1.39 upon the amendment and advance of
the second $25.0m tranche (5% warrant coverage)
▪ 71,255,522 warrants were issued at an exercise price of $0.07017 upon the extension (10%
warrant coverage)
▪ Matures on March 31, 2025
▪ Subordinated financing with interest rate of 11.0%
▪ The remaining outstanding principal amount may be converted into Zenabis common shares at
$1.17 per share (7,490,798 additional Zenabis shares)
▪ 20,129,338 warrants were issued at an exercise price of $0.20 upon the conversion on January 16
Secured Convertible Note $0.2m
▪ 1,373,712 warrants have been issued at an exercise price of $1.82 upon the extension and
subordination of the notes
▪ 16,104,403 warrants were issued at an exercise price of ~$0.068 upon conversion in October 2020
▪ Matures on March 31, 2021
▪ Subordinated financing with interest rate of 6.0%
Unsecured Convertible
$7.7m ▪ May be converted into Zenabis common shares at ~$1.9067 per share
Note
▪ Matures on June 30, 2021
Total $65.1m
28CAPITALIZATION
The following outlines the capitalization of Zenabis.
Capitalization Enterprise Value
Fully Diluted Shares Outstanding Value Enterprise Value Calculation Value
Basic Shares Outstanding1 799,983,791 Basic Shares Outstanding 799,983,791
Plus: Deferred Stock Units 1,125,000 Times: Zenabis Share Price2 $0.0525
Plus: Restricted Stock Units 19,803,018 Equals: Market Capitalization $42.0m
Plus: Options 27,182,883 Add: Debt3 $65.1m
Plus: Warrants 400,887,574 Less: Cash4 ($4.8m)
Plus: Conversion Options at $1.17 3,287,179 Equals: Enterprise Value $102.3m
Plus: Conversion Options at $1.91 4,783,823
Equals: Fully-Diluted Shares Outstanding 1,257,053,268
29
Notes: 1) As of December 31, 2020. Does not include options that are in the money but have not yet vested. 2) As of market close December 31, 2020. 3) Debt includes all non-convertible financing and out-of-the-money convertible financing based on the
amounts listed on slide 28. 4) Cash balance of $4.8m as outlined in the Zenabis Global Inc. Financial Statements as at September 30, 2020. The negative value indicates a subtracted value, rather than a negative cash balance.ADJUSTED EBITDA CALCULATION
The following outlines the calculation to arrive at adjusted EBITDA.
Adjusted EBITDA Calculation Q3 20201 Q2 20202 Q1 20203 Q4 20194
Net Loss (16,975,019) (15,781,932) (7,702,835) (98,714,311)
Plus: Realized Fair Value Amounts Included in Inventory Sold 19,114,863 19,252,057 12,923,860 18,014,038
Less: Unrealized Gain on Changes in Fair Value of Biological Assets (13,947,009) (24,222,690) (19,219,636) (21,432,091)
Plus: Depreciation and Amortization 911,015 1,490,680 2,050,093 2,090,304
Plus: Impairment of Assets Held for Sale 1,571,026 Nil Nil Nil
Plus: Restructuring Cost Nil 483,890 1,058,452 Nil
Plus: ZenPharm Pre-Commercialization Costs 306,118 362,188 Nil Nil
Plus: Impairment of Inventory 250,314 508,759 Nil 874,734
Plus: Write-off of Materials and Supplies Inventory 1,851,536 Nil Nil Nil
Plus: Impairment of Property, Plant and Equipment Nil Nil Nil 27,841,265
Plus: Impairment of Intangible Assets and Goodwill Nil Nil Nil 61,480,249
Plus: Share-Based Compensation 1,226,986 1,012,898 341,858 5,995,345
Plus: Loss on Revaluation of Embedded Derivative Asset 2,070,193 94,256 Nil Nil
Plus (Less): Loss (Gain) on Revaluation of Embedded Derivative Liability Nil Nil Nil (22,993)
Plus: Interest Expense 5,850,396 8,009,676 6,306,284 (335,248)
Plus: Other Expense (799,303) 167,745 298,907 122,880
Plus (Less): Loss (Gain) on Sale of Assets 504,658 (482,067) (9,185) (55,417)
Plus (Less): Finance and Investment Expense (Income) (9,695) (7,095) (6,544) 316,621
Plus : Loss due to Event 2,330 20,167 25,567 982,560
Less: Insurance Proceeds (445,268) (25,000) Nil (520,526)
Plus: Loss on Deconsolidation of Subsidiary Nil Nil 668,562 Nil
Less: Government Subsidies (1,963,465) (3,319,621) (713,373) Nil
Plus: Loss on Early Conversion of Debt Nil 4,331,680 5,624,803 Nil
Plus (Less): Income Tax Expense (Recovery) 359,642 1,102,590 654,987 (126,856)
Plus: Loss on Modification and Extinguishment of Debt Nil 10,653,156 Nil Nil
Plus: Loss on Remeasurement of Royalty Liability 3,440,868 Nil Nil Nil
Plus (Less): Deferred Income Tax Expense (Recovery) 103,391 (214,083) 42,155 (6,944,120)
Equals: Adjusted EBITDA 3,463,577 3,437,254 2,343,955 (10,433,566)
▪ Management believes adjusted EBITDA is a useful metric to assess the company’s operating performance before the impact of non-cash items and acquisition related activities.
30
Notes: 1) For the three months ended September 30, 2020. 2) For the three months ended June 30, 2020 3) For the three months ended March 31, 2020 3) For the three months ended March 31, 2020. 4) For the three months ended December 31, 2019.You can also read
