Shareholder Presentation August 2018 - A vertically integrated cannabis company providing recreational and medical marijuana based products ...
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A vertically integrated cannabis company providing recreational and
medical marijuana based products through our leading retail stores
Shareholder Presentation
August 2018
Unless otherwise stated all amounts are in USD
1
Disclaimer
This presentation (together with any supplements and any other information that may be furnished to prospective investors by Captor Capital
Corp contains “forward-looking statements” or “forward-looking information” within the meaning of applicable securities laws (collectively,
“forward-looking information”). Forward-looking information is generally identifiable by the use of the words “believes”, “may”, “plans”, “will”,
“anticipates”, “intends”, “budgets”, “could”, “estimates”, “expects”, “forecasts”, “projects” and similar expressions, and the negative of such
expressions. Forward-looking information in this presentation includes, but is not limited to, statements concerning economic trends, the size of
the market, the timing and scope of Captor Capital Corp capital expenditures, the anticipated use of proceeds, financial forecasts, and the
proposed ownership allocation.
Captor Capital Corp has based this forward-looking information on factors and assumptions about future events and financial trends that it
believes may affect it’s financial condition, results of operations, business strategy and financial needs, including the ability of Captor Capital
Corp to generate cash flow from operations and obtain necessary financing on acceptable terms, general economic, financial market, regulatory
and political conditions in which Captor Capital Corp operates, consumer interest in Captor Capital Corp products, competition, anticipated costs,
government regulation of Captor Capital Corp activities and products and in areas of taxation and environmental protection, the timely receipt of
any required regulatory approvals, and Captor Capital Corp ability to obtain qualified staff, equipment and services in a timely and cost efficient
manner. While Captor Capital Corp considers these assumptions to be reasonable, these assumptions are inherently subject to significant
uncertainties and contingencies. Additionally, there are known and unknown risk factors which could cause Captor Capital Corp actual results,
performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the
forward-looking information contained herein. Known risk factors include, among others, regulatory risks, the lack of a public market for the
securities of Captor Capital Corp, the limited operating history and financial track record of Captor Capital Corp and the uncertainty as to
revenues, reliance on key personnel, product liability, unfavourable publicity, management of growth and the difficulty in forecasting.
Unless otherwise stated all amounts are in USD
2
Table of Contents
§ About Captor
§ Our Strategy
§ Cannabis market
§ Our Pipeline
§ Our Performance
§ Our Team
Unless otherwise stated all amounts are in USD
3
About Captor Capital Corp
• Captor Capital Corp. (“Captor”) is a vertically integrated cannabis company
providing recreational and medical marijuana based products to consumers via
its leading brands and dispensary locations.
• Listed on the Canadian Securities Exchange, the OTC USA, and the Frankfurt
Stock Exchange, Captor owns and operates advanced growing facilities which
produce consistent high quality contaminant free marijuana for its customers, as
well as other high demand cannabis based goods for consumption.
• Through ownership of top brands and high value dispensary locations, Captor’s
revenue is expected to exceed a run rate of $45 million, without considering
future acquisitions.
• Furthermore, Captor seeks to capitalize upon the combination of its intellectual
property and extensive network of industry relationships to provide its customers
with a wide variety of products, and a best in class experience.
Unless otherwise stated all amounts are in USD
4
The Captor Strategy
• To efficiently engage Captor’s well defined and deep pipeline of cultivation and dispensary targets,
acquire them at favourable prices, and unlock the intrinsic value of these companies through
Acquire operational enhancements.
Profitable
Operations at
Favourable • The primary strategic focus of Captor is to acquire profitable, established cannabis focused
Pricing companies that require capital to scale.
Expand
Geographies
• Target investments will be top quality operations with experienced management and defined
Identify
and Product Synergies business plans.
Offerings
Robust & • Acquisitions will be selected based off of synergy, possibly with current existing brands, locations,
and operations.
Consistent
Shareholder • Upon acquisition the investments will be integrated and supported to enhance operations and
Return profitability.
Expand Integrate
Team and Ops and • Expand team of experienced operators to support organic growth.
Intellectual Achieve
Property Synergies
• Initial geographic focus will be on California and Nevada as these are high growth markets, with
large populations and direct synergies.
Deploy
Capital to
• Captor will continue to expand its geographic footprint as the industry evolves legally within the
Scale
USA, and potentially internationally, depending on the regulatory framework.
• The management team at Captor believe that having a controlled scaling with a primary focus on
profitability will lead to a consistent and robust shareholder return.
Unless otherwise stated all amounts are in USD
5
Market
Unless otherwise stated all amounts are in USD
6
The Current Cannabis Market
Source: Marijuana Business Factbook 2017
Marijuana Legalization Status
Medical marijuana broadly legalized
Marijuana legalized for recreational use
No broad laws legalizing marijuana
Source: www.governing.com
Unless otherwise stated all amounts are in USD
7
California Cannabis Market
Formalizing the informal market alone is a $24 billion opportunity*
California's population is more than 3x larger than
Colorado and Washington State combined.
Microbusiness Tes4ng
Delivery 3% 1% Percentage of total sales
3%
2019 Estimate
Retailer $6 Billion
7% Legal
Dispensary
9%
Cul4vator
49%
Distributor
12%
$24 Billion
Black Market
Manufacturer
16%
California marijuana licenses by activity *2016 cannabis report from the Cowen Group Source: University of California
Agricultural Issues Center
Unless otherwise stated all amounts are in USD
8
California Cannabis Licensing
Reviewing the data in the Cannabiz Media Licensing Database reveals some interesting
facts about California marijuana licenses that help to paint the picture of how the state’s
marijuana marketplace is developing. Here are some key facts:
• There are 1,780 license holders in total in California.
• 13 companies account for 10% of the licenses statewide.
• The company with the most licenses is Central Coast Farmer’s Market Management, LLC with 106.
That’s 3% of all licenses in the state.
• Many license holders seem to be acquiring multiple cultivation licenses.
• Just under 900 companies have secured the 1,732 cultivation licenses.
• 15 jurisdictions account for half of all licenses
o Oakland, Los Angeles, Sacramento, San Francisco, Carpinteria, Salinas, Buellton, Eureka, San
Jose, Arcata, Santa Barbara, Cathedral City, Desert Hot Springs, Lynwood, and Santa Rosa.
• 1 jurisdiction accounts for nearly 1 in 10 licenses in the state – Oakland (282 licenses).
• Three jurisdictions account for nearly 20% of licenses in the state
o Oakland (282 licenses), Los Angeles (203 licenses), and Sacramento (139 licenses).
Unless otherwise stated all amounts are in USD
9
California Opportunity
• Lots of independent stores doing well, but few retail brands being established
across the state.
• Customers are loyal to dispensaries that provide exceptional user experience.
The Opportunity: By License Numbers RETAIL
• Establish a network of retail dispensaries offering quality products, superior
Cul4vators 1,732 49% service and expertise.
Manufacturers 564 16%
• Hub and spoke model supplying acquired retailers with high quality I-5 grown
Distributors 417 12% products.
Dispensaries 316 9% • Provide capital and management, economies of scale to targeted acquisition.
LOGISTICS
Retailers 258 7% • Consolidate growers, processors, retailers.
Delivery 112 3%
• Mandatory testing will remove many products from marketplace.
Microbusinesses 96 3%
• Establish a broad regional brand for consistent and quality product.
Tes4ng 23 1%
BRANDING • Customers will pay a premium for a high quality, consistent product.
Unless otherwise stated all amounts are in USD
10Our Pipeline
Unless otherwise stated all amounts are in USD
11Deal Timeline – Platform for Growth
Company LOI Defini0ve Regulatory Closed
Agreement Approval
Mellow Extracts ✓ ✓ ✓ Pending
California MedMen (Santa Ana) ✓ ✓ N/A ✓
MedMen ✓ ✓ N/A ✓
(W. Hollywood)
Chai Cannabis ✓ ✓
Castroville ✓
Fine Detail Greenway ✓ ✓ ✓ Par4al
Washington
Cascadia Gardens ✓ ✓ ✓ Par4al
Mainstem ✓ ✓ N/A ✓
Unless otherwise stated all amounts are in USD
12MedMen (Santa Ana Dispensary)
• 8,148 sq. ft. facility centrally located in Santa Ana, CA. • Repeat patients already make up over 50% of transactions,
looking to level out over 80%.
o Only city in Orange County to allow dispensaries.
o Orange County has over 3,000,000 inhabitants. • MedMen dispensary patients spending $85.23 on average, on
par with West Hollywood store, and $20 more than
• Sales in first weekend of California recreational competitors.
legalization were up 400% from historical weekend
average.
• Sales during January to March 2018 was
approximately $1.2 million.
Unless otherwise stated all amounts are in USD
13MedMen (West Hollywood Dispensary)
• 2,010 sq. ft. facility centrally located in West Hollywood
(WeHo), CA.
o Local population base of 39,000.
o Represents approx. 10% of LA cannabis market.
• Recreational marijuana license allowance for marijuana
sales and small on-site cultivation.
• Market information (WeHo):
o Estimated medical market value (2025): US$6 million.
o Estimated adult-use market value (2025): US$60
million.
• Sales during January to March 2018 was approximately $6
million.
• Sales in first weekend of California recreational legalization
were up 500% from historical weekend average.
• MedMen dispensary patients spending ~$85 on average,
$20 more than competitors.
o Repeat patients already make up over 80% of visits.
Unless otherwise stated all amounts are in USD
14Capitola Healing Association Inc. (Chai)
• Revenue for the last 3 years was c.US$9 million and was
purchased for US$6.1 million.
• Chai is focused on being an elite high grade low cost
medical dispensary.
• Only sells lab tested and 100% indoor grown product.
• Consistently rated top 5 dispensaries in Santa Cruz.
• Chai is developing what will be one of Santa Cruz largest
glassware show room, focusing on:
o Unique designs and specialty blown pieces for
connoisseurs, and
o Largely discounted standard pieces.
Unless otherwise stated all amounts are in USD
15Marina Caregivers Coop Inc.
• Operating for over 10 years serving Marina Del Rey, CA
• Focused on patient education to help individuals make
informed choices about cannabis
• Customer support unlike any other dispensary
- Peer support groups
- Marijuana 101 classes
- Cultivation classes
- Free chair massage days
• In 2017 sales of over $5,000,000 USD with net income of
over $2,900,000 USD (50.8% net income margin)
- 2018 sales tracking to beat previous year
• From 2016 to march 2018 assets grew 8x balanced by an
increase in equity from net income
Unless otherwise stated all amounts are in USD
16Higher Level of Care
• Offer to acquire 100% equity under LOI.
o Asking price of $2,875,000.
• Due diligence request in progress.
• Serving multiple towns in California due to location
o Castroville
o Moss Landing
o Prunedale
o Elkhorn
o Watsonville
• Primarily Flower Sales but with a wide assortment of
edibles, concentrates, vapes, tinctures, etc.
• Averaging $450,000 in sales per month in 2017.
Unless otherwise stated all amounts are in USD
17Mellow Extracts Lab
• Secured location in Costa Mesa, conditional use permit granted,
operations starting now.
• Permit also includes distribution license, increasing EBITDA
when distribution starts.
• USD $400,000 per month in orders.
o Joint Ventures with Big Foot Products & Aeroinhaler pending.
• Concentrates and Extracts highest margin sector in industry at
45%+ net.
• Mellow Lab CEO served on several state committees in the
legalization process.
Unless otherwise stated all amounts are in USD
183863 Hannegan Road, Bellingham
• Investment: USD $285,000 + buildout Costs. • Approved for capsule manufacturing.
• Captor Capital Corp. to own all LCB approved assets & IP. • New product line rolling out Q2 2018.
• Tier 2 license - 10,000 sq. ft. of canopy allowed, ~2,020 sq. ft. current
utilization after expansion, first harvest in November 2017.
o Estimated 86,260g of dry weight harvested (before trimmings and
loss) for sale in November 2017 at a minimum of $3.30 per gram.
Unless otherwise stated all amounts are in USD
195373 Guide Meridian, Bellingham
• Investment: USD $650,000 cash + buildout costs. • Current location has potential to expand to nearly full 10,000 sq. ft.
• Captor Capital Corp. to own 100% of LCB approved assets & IP. • Q2 2018 revenues expected to be approximately USD $240k per
month, ~31% EBITDA margin.
• Tier 2 license 10,000 sq. ft. capacity ~5,200 sq. ft. current utilization.
Monthly sales
from ~5,200 sq. ft.
of grow space
Unless otherwise stated all amounts are in USD
20Main Stem Goods and Services
• Investment: USD $550,000 for 9.9%. • Stand alone IPO expected in 2018.
• “Amazon” of the cannabis industry (“picks and • No cannabis licensing needed, ability to do
shovels”). business in all 50 states.
• Online procurement of supplies to all levels of
cannabis industry.
• Main Stem CEO is also Sr. VP of the Washington
State Cannabis Alliance.
5+ Million 600+ 400+
Packaging Units Sold Business Customers Unique SKU’s
Unless otherwise stated all amounts are in USD
21Our Performance
Unless otherwise stated all amounts are in USD
22Projected Revenue & Profits
Captor Subsidiary Income Proforma by Quarter
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0
Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019
Gross Subsidiary Revenue Subsidiary EBITDA
Unless otherwise stated all amounts are in USD
23Stock Comparative Valuation Multiples
Captor Stock is materially undervalue based on cannabis trading mul4ples
Enterprise Value / LTM Sales
Captor
Golden Leaf
Kush BoYles
MPX Bio
Organigram
MedReleaf
Supreme
CannaRoyalty
Aphria
Canopy
iAnthus
Hydrothecary
Marapharm
Cronos
MedMen
Emerald Health
0x 50x 100x 150x 200x 250x 300x 350x 400x 450x
Note: All data as of 30 May 2018 – Captor assuming no debt. Captor market valua4on based on es4mated stock price of CAD$0.30 and 786.9M shares outstanding.
Unless otherwise stated all amounts are in USD
24Our Team
Unless otherwise stated all amounts are in USD
25Management Team
A balanced and diverse team with extensive experience in cannabis and M&A
John Zorbas Shawn Groshans
President and Director Head of Business Development
Mr. John Zorbas is an entrepreneur with a proven track record in the metals exploration Mr Shawn Groshans has approximately 20 years in merchant banking and corporate
and development industry and the investment banking. He has held senior advisory finance with experience in private equity investing, advising companies on mergers and
positions in various facets of business including operations, marketing, sales, strategic acquisitions, capital raising, business development, and restructuring. Subsequent to
planning and structured finance. Mr. Zorbas has been with the Company since June his experience in banking he took a role as Head of Business Development for a global
2008. He also serves as URU Metals Ltd (Captor Capital investment) Chief Executive intelligence and cyber-security firm, in addition to his involvement in entrepreneurial
Officer since 2 June 2014. He was appointed Chairman of Management Resource ventures which includes the cannabis industry.
Solutions PLC in April 2017. He also served as the President of MGM Productions
Group Inc a company focused in media and retail investments., as well as Director of Mr. Groshans serves as a Non-Executive Director for Tower Financial and he has
both ZorCorp Capital Holdings and Starline Capital Holdings Infrastructure Fund. He previously worked for Salamanca Group, Richmond Park Partners, S-RM and PwC.
served as the Chief Executive Officer and a Director of Monchhichi PLC (former:
Mercom Capital PLC) until 23 December 2016. Mr. Zorbas also served as a Director of
Stratton Capital Corp. until 20 October 2016. He is a founding shareholder of Asian
Coast Development Ltd. Mr. Zorbas holds an Honors Bachelors in Economics from the
University of Toronto.
Unless otherwise stated all amounts are in USD
26Management Team
A balanced and diverse team with extensive experience in cannabis and M&A
John MacPhail Oliver Summers Matt Longo
Founder and CEO of I-5 Holdings Ltd (Subsidiary of Captor) Director of Retail Dispensaries Director of Manufacturing & Cultivation
Mr. John MacPhail is most recently the founder and Mr. Oliver Summers has been a Los Angeles Medical Mr. Matt Longo has over 15 years operating experience
CEO of Captor Capital Corp. Cannabis advocate since 2005, speaking and in the cannabis industry and has extensive agricultural
promoting cannabis numerous times on the behalf of and supply chain knowledge. Additionally he has years
I-5 Holdings Ltd. is a Canadian cannabis company patients. He has owned and operated three of experience in general agriculture, and held various
focused on the USA sector. The company owns two dispensaries in LA since 2006 and is an experienced operational roles at Anheuser-Busch Distribution.
dispensaries in California, partnered with two cultivators grower of boutique cannabis strains.
in Washington state, created growth in a goods and Mr. Longo has guided the set-up of Prop 215 compliant
services procurement company, and assisted in the Mr. Summers is an original member and moderator of businesses in California and navigated the complex and
opening of a laboratory in California. Mr. MacPhail was the Greater Los Angeles Collective Alliance (GLACA), multi-layered regulatory environments. Mr. Longo has
one of the first individuals to recognize the tighter a member of Americans For Safe Access (ASA), owned and operated two cultivation facilities with a total
restrictions on retail/dispensary licenses in California Marijuana Policy Project (MPP), Patients Advocacy of 20,000 square feet and employed roughly 100
and created a strategy going forwards for I-5 to leverage Network (PAN). He is also a former member of the employees. Prior to his role with Captor he owned and
that restriction into a more profitable and defensible South Robertson Neighborhood Council, Pico operated a dispensary and was involved in three other
position for the company. Neighborhood Council, Melrose West Neighborhood cannabis-related business ventures across the United
Council and UFCW Local 770. States, including a 70-acre hemp production farm in
Prior to his involvement in the US cannabis space he Franklin, TN and a 22,000 acre licensed hemp farm in
was Investment Banker he has assisted companies to Madisonville, Kentucky. Both farms are licensed by the
raise funds and advised management on corporate Department of Agriculture and subject to stringent
strategy. protocols as a hemp producer.
Unless otherwise stated all amounts are in USD
27Non- Executive Board Members
Henry Kloepper Kyle Appleby Alexander Dementev
Director Director Director
Mr. Kloepper is a former Chief Executive Officer of Mr. Appleby is a member of the Chartered Public Mr. Dementev is an independent geophysics researcher.
Frontier Lithium Inc. and has worked in investment Accountants of Canada and Ontario, and President He provides technological solutions and services to
banking and structured finance throughout a 30 year and Chief Executive of CFO Advantage Inc., a companies in various industries including manufacturing,
career. He has a rounded knowledge of the capital company that provides CFO, and other financial distribution and mining. Mr. Dementev holds equivalent
markets, strategic growth and investments. In the past, accounting and compliance services to companies in of Master Degree in Applied Physics from Rostov State
Mr. Kloepper has worked in executive positions with JP various industries including junior mining, University and Post Graduated Degree in Analytical
Morgan, Citibank, Bank of America, and North American manufacturing and distribution. Mr. Appleby is Chemistry from the Institute of Analytical Chemistry and
Trust in Canada, the US and Europe. Currently, Mr. currently CFO of a number of reporting issuers in Geo-Chemistry (both in Russian Federation). Mr.
Kloepper is a director of a number of public companies Canada. Mr. Appleby lives in Toronto, Canada. Dementev is currently the Chief Technology Officer for
listed in Canada and the U.S., which are involved in Klimov Design Bureau, leading several international
consumer finance, merchant banking, manufacturing hydrocarbons conversion projects. Mr. Dementev lives in
and distribution. His responsibilities range from lead Toronto, Canada.
independent director to chairing audit/compensation
committees. Notable directorships include: Award
Capital (Spot Coffee - food and beverage), National
Construction, Mogul Energy (Oil and Gas), DealNet
Capital (Consumer finance/merchant banking), Gilla Inc.
(E cigarette manufacturer/distribution), Sofit Mobile
(App. and technology incubator), and Pacific Software
Inc. (Metal Fabrication).
Unless otherwise stated all amounts are in USD
28Captor Capital Corporation
THANK YOU
4 King Street West, Suite 401,
Toronto, ON M5H 1B6, Canada
John Zorbas
johnz@captorcapital.com
Unless otherwise stated all amounts are in USD
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