Cannara Biotech, Inc. · TSX:LOVE
Cannara Biotech — Q1 2023 Earnings Presentation
44 slides from Cannara Biotech's earnings presentation, Jan 20, 2023
Slide 1: Premium-Grade Cannabis at Scale
TSXV: LOVE | OTCQB: LOVFF | FRA: 8CB PREMIUM-GRADE CANNABIS AT SCALE INVESTOR DECK Q1 FISCAL 2023 (AS OF NOVEMBER 30, 2022)
Slide 2: General Disclaimer
GENERAL DISCLAIMER This corporate presentation dated January 20, 2023 (the “Presentation”) has been prepared by management of Cannara Biotech Inc. (the “Company” or “Cannara”) and is based on public information. This Presentation does not constitute an offer to sell to any person, or a general offer
Slide 3: Forward-Looking Statement
FORWARD-LOOKING STATEMENT This presentation contains “forward-looking information” within the meaning of Canadian securities legislation. This information and these statements, referred to herein as “forward-looking statements” are made as of the date of this presentation or as of the date of the ef
Slide 4: Executive Summary
EXECUTIVE SUMMARY si — , 4
Slide 5: Corporate Overview
CORPORATE OVERVIEW We are a vertically integrated Canadian Licensed Producer of premium-grade cannabis and cannabis-derivative products • Canada’s third largest producer based on square footage. Two mega facilities based in Quebec, Canada spanning over 1.6 million square feet. • Currently serving co
Slide 6: Key Investor Considerations
KEY INVESTOR CONSIDERATIONS Well Capitalized, Fast-Growing Business Strategic Brand Portfolio • Cannabis revenues generated of $8.4M in Q1 2023. • Three flagship in-house brands. • Increased our production capacity with the activation of the 7th of 24 • Brand partnership with Exotic Genetix. growing
Slide 7: Corporate Milestones
CORPORATE MILESTONES MARCH 2018 JULY 2018 JULY 2018 FEBRUARY JANUARY 2020 2019 FEBRUARY 2021 APRIL 2021 JUNE 2021 $ TSXV IDEA FACILITY CAPITAL CULTIVATION SQDC RETAIL LAUNCH TSXV LISTING VALLEYFIELD March 2018, idea is Potential 625,000 sf Launches 170,000 sq Retail debut of its ACQUISITION Cannara
Slide 8: Corporate Milestones (Continued)
CORPORATE MILESTONES (CONTINUED) NOVEMBER 2022 DECEMBER 2022 DECEMBER 2022 FEBRUARY JANUARY JANUARY 2020 2023 2019 7TH VALLEYFIELD ZONE IINTERNATIONAL EARNED 3 AWARDS CULTIVATION NEW LEASE ACTIVATED CERTIFICATION FOR ITS BRANDS Signed an Launches 11 year 17,000 sq Farnham Facility Cannara was receiv
Slide 9: Operations
OPERATIONS
Slide 10: Farnham Facility
FARNHAM FACILITY FARNHAM, QUEBEC LEASED 150,000 sq. ft. 625,000 sq. ft. facility provides 170,000 sq. ft. of LEASED cannabis operation. 294,000 sq. ft. PHASE 1 Fully automated with biomonitoring sensors in every 170,000 sq. ft. grow room to ensure optimal conditions and 3,500 Kg increased plant yiel
Slide 11: Valleyfield Facility
VALLEYFIELD FACILITY SALABERRY-DE-VALLEYFIELD, QUEBEC Acquired in June 2021, the Facility occupies 1,033,506 sq. ft. on 3,000,000 sq. ft. of land. One of the largest indoor cannabis cultivation facilities in Canada and the largest in Quebec. Provides ability to expand output capacity to 125,000 kg o
Slide 12: Valleyfield Facility
VALLEYFIELD FACILITY SALABERRY-DE-VALLEYFIELD, QUEBEC PHASE 1 24 INDEPENDENT GROWING ZONES MEASURING 25,000 SQ.FT EACH 1,033,506 sq. ft. facility The completely automated facility is equipped with cutting edge technology including: : • 578,022 sq. ft. Main cultivation facility LED LIGHTING - FULLY B
Slide 13: The Principals of Our Success
THE PRINCIPALS OF OUR SUCCESS QUALITY ACCESSIBILITY BRAND CULTURE Premium “AAAA” cannabis Disruptive low pricing Grassroot brand culture Hang dried, slow cured Aligned with legacy market Transparency At scale Ideal for your everyday consumers Consumers become ambassadors Q1 FY 2023 | 13
Slide 14: Premium-Grade Cannabis at Scale
PREMIUM-GRADE CANNABIS AT SCALE Delivering a premium quality product is at the heart of our ethos, resulting in high cannabinoid content and rich flavourful cannabis. Our cannabis employs methods used in the most sophisticated markets in the world such as California; cultivated from: RARE GENETICS H
Slide 15: Accessibility
ACCESSIBILITY
Slide 16: Production Assets
PRODUCTION ASSETS COMPETITIVE LANDSCAPE CANADIAN PRODUCERS CANNARA’S ESTIMATED PRODUCTION ASSET SQUARE FOOTAGE QUARTERLY PRODUCTION CAPACITY IN KG 16,000 kg Village Farms 2,200,000 sf Aphria/Tilray 2,150,000 sf 14,000 kg Cannara 1,650,000 sf Canopy Growth 1,514,000 sf 12,000 kg HEXO 1,300,000 sf 10,
Slide 17: Why Quebec
WHY QUEBEC AVERAGE ELECTRICITY RATES BY PROVINCE IN CENTS PER KW HOUR 11.3¢/kWh 10.7¢/kWh 9.7¢/kWh 8.9¢/kWh Quebec has the lowest electricity rates in 4.2¢/kWh 5.5¢/kWh 7.8¢/kWh Canada (QC: 4.2¢/kWh vs. ONT: 11.3¢/kWh). QC MB BC SK AB NS ON Quebec has the highest barriers of entry 755 150 345 114 re
Slide 18: Cannara Pricing Strategy
CANNARA PRICING STRATEGY CANNARA PRICING STRATEGY QUEBEC MARKET OVERVIEW PRICE - QUALITY MATRIX $19.30 /3.5G QUALITY AA OTHER BRANDS SKIMMING PREMIUM HIGH CANOPY GHOST DROPS BEST VALUE HEXO COOKIES ORGANIGRAM QWEST $25.60 /3.5G RUBICON (SIMPLY BARE) QUALITY AAAA CANNARA PRICE LOW COST PENETRATION $4
Slide 19: Our Value and Brands
OUR VALUE AND BRAN DS 2 $e cs
Slide 20: Our Unique Value Proposition
OUR UNIQUE VALUE PROPOSITION Cannara is giving consumers what they want—premium quality at accessible, value- based pricing fit for frequent cannabis consumers and new entrants alike. Our “AAAA” quality cannabis and disruptive low pricing have resulted in high demand for our products. In addition to
Slide 21: Portfolio of Brands
PORTFOLIO OF BRANDS Our portfolio consists of three flagship brands with distinctive identity and purpose, each filling a white space in Canada’s current cannabis market without compromising quality. All three brands offer premium-grade cannabis, hang-dried and slow-cured to preserve the flower’s na
Slide 22: Tribal
TRIBAL BRAND STORY Tribal delivers uncompromised premium-grade cannabis to consumers who have a deep relationship with cannabis. From pheno-hunting rare genetics to unfolding each strain’s lineage and flavor profiles, Tribal is a journey not a destination. POSITIONING Tribal appeals to those who hav
Slide 23: Nugz
NUGZ BRAND STORY Nugz is a cult-worthy movement committed to abundance, quality and value. Nugz offers a disruptive product line designed for long-time consumers who have a sharp sense for product quality on the lookout for better value. POSITIONING Nugz is a brand created for frequent cannabis user
Slide 24: Orchid CBD
ORCHID CBD BRAND STORY Orchid CBD is a wellness brand dedicated to providing rare strains of CBD-dominant, terpene-rich, trichome covered, oversized dried flowers that deliver softer, blissful experiences without compromising quality and flavors. POSITIONING Orchid CBD is a CBD-dominant brand of can
Slide 25: Exclusive US Brand Partnership in Canada
EXCLUSIVE US BRAND PARTNERSHIP IN CANADA 50-Time US Award-Winning Seed Breeder EXOTIC GENETIX is partnering with CANNARA In addition to three flagship brands, Cannara has an exclusive license to use, market, sell and distribute Exotic Genetix branded products throughout Canada. In addition, Exotic G
Slide 26: Growth Strategy
GROWTH STRATEGY
Slide 27: 2023 Looking Ahead
2023 LOOKING AHEAD 1. RESPOND TO MARKET DEMAND BY INCREASING PRODUCTION CAPACITIES During Q1 2023, the 7th growing zone was activated. Cannara has set as 2023 annual objective to active 3 more of its 25,000 square foot cultivation zones in its Valleyfield facility, for a total of 9 growing zones or
Slide 28: 1. Increase Cannabis Supply
1. INCREASE CANNABIS SUPPLY CANNABIS PRODUCTION & REVENUE GROWTH TRAJECTORY AS VALLEYFIELD PRODUCTION SCALES UP CANNABIS NET REVENUE IN $ MILLIONS AND KG SOLD CANNABIS PRODUCTION (TRIMMED BUDS) IN KG 7000 kg $12M $9.7 6000 kg 2,755 KG $10M $8.4 $8.2 2,270 KG 5000 kg 2,350 KG $8M 4 , 7 0 0 KG $5.8 40
Slide 29: 2-3. New Product Offering
2-3. NEW PRODUCT OFFERING Q1 FY23 Q1 FY23 2 NEW GENETICS FOR FY 2023 4 NEW LIVE RESIN FSE SKUs 4 NEW LIVE RESIN VAPE SKUs GELATO MINT CUBAN LINX TERPLE POWER SHERB GALACTIC RUNTZ TRIPLE BURGER KIND AWARD BRAND OF THE YEAR INDICA SATIVA HYBRID INDICA INDICA INDICA KIND AWARD TERPENE PROFILE OF THE YE
Slide 30: 4. Increase Market Share
4. INCREASE MARKET SHARE MARKET EXPANSION STRATEGY Cannara has created lean and profitable operations proven to produce premium cannabis at scale and at competitive prices. With ability to produce up to 125,000 kg of premium cannabis at full scale, Cannara will expand its products offering across al
Slide 31: 5. Continued Positive EBITDA
5. CONTINUED POSITIVE EBITDA With its 7th consecutive quarterly Adjusted EBITDA, Cannara expects to continue to report positive quarterly Adjusted EBITDA throughout FY 2023 and beyond QUARTERLY ADJUSTED EBITDA $3,000,000 $2,500,000 Valleyfield Facility start-up cost and $2,000,000 redesign of 6 of 2
Slide 32: Financials
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Slide 33: Selected Financial Highlights
SELECTED FINANCIAL HIGHLIGHTS Q1 2023 FINANCIAL OUTLOOK TRAILING TWELVE MONTH CUMULATIVE REVENUES Cash $6.8M $ 38 000 000 Current assets $38.4M Current debt $11.3M Working capital 1 $27.1M $ 32 000 000 Total assets $125.4M Net assets $67.3M $ 25 000 000 Quarterly revenue $10.3M 2 Overall Gross margi
Slide 34: Total Net Revenues by Quarter
TOTAL NET REVENUES BY QUARTER TOTAL NET REVENUES ANALYSIS BY QUARTER IN $ MILLIONS $12M - TOTAL NET REVENUE - GROSS MARGIN 1 $12 $10.1 $10,3 $10M $8M $7.4 $7.2 $7M $6.6 $6.5 $6M $4.8 $5M $4.0 $4M $3,7 $3,5 $3.4 $3,0 $3M $2.6 $2M $1M $0M 49% 53% 46% 36% 37% 40% 39% Q3 Q4 Q1 Q2 Q3 Q4 Q1 2021 2021 2022
Slide 35: Q1 2023 Detailed Highlights
Q1 2023 DETAILED HIGHLIGHTS FOOTNOTES 1 Gross revenue included revenue from sale of goods, net of ex cise taxes, services revenue and lease revenues. 2 Gross profit before fair value adjustments % is determined as Gross profit before fair value adjustments divided by Total revenues. 3 Gross profit i
Slide 36: Quarterly Detailed Highlights
QUARTERLY DETAILED HIGHLIGHTS 1 Adjusted EBITDA and free cash flow are non-GAAP financial performance measures. A reconciliation of theses measures is presented in the MD&A av ailable on www.sedar.com. 2 Gross profit before fair v alue adjustments % is determined as Gross profit before fair v alue a
Slide 37: Notable Achievements Q1 2023 and Subsequent to Quarter
NOTABLE ACHIEVEMENTS Q1 2023 AND SUBSEQUENT TO QUARTER HIGHLIGHTS SEPT – NOV 2022 Launch of 14 new SKUS across Quebec and Ontario, including notable genetics and formats ✓ 2 new genetics launched: Galactic Rntz and Triple Burger ✓ 2 live resin SKUs launched : G Mint Live Resin vape, Cuban Linx Live
Slide 38: Leadership Team
LEADERSHIP TEAM
Slide 39: Executive Leadership Team
EXECUTIVE LEADERSHIP TEAM ZOHAR KRIVOROT NICHOLAS SOSIAK AVI KRIVOROT CHAIRMAN & CEO CFO CTO Zohar is an entrepreneur who has launched Nicholas is a CPA with an entrepreneurial spirit Av i has been in the information technology several successful businesses. He has founded, and passion for the Canna
Slide 40: Executive Management Team
EXECUTIVE MANAGEMENT TEAM ISSAM BEN MOUSSA NOEMI FOLLAIN ANTHONY MANOUK VP PRODUCTION & EXPERIMENTATION VP FINANCE GM & VP COMPLIANCE Issam is an engineer in Agronomy & Noemi is a Chartered Professional Anthony is an accomplished business biotechnology and has a PhD in plant Accountant and hav e 8 y
Slide 41: Executive Management Team Continued
EXECUTIVE MANAGEMENT TEAM CONTINUED BRIAN SHERMAN SCOTT CARROLL VP LEGAL AFFAIRS FRANCE LANDRY VP HUMAN RESOURCES VP MARKETING & SALES Brian brings industry experience having France joins the Cannara team with ov er Scott joins the Cannara team with serv ed as a senior member of the legal 17 years o
Slide 42: Board of Directors
BOARD OF DIRECTORS ZOHAR KRIVOROT MARY DUROCHER CHAIRMAN & CEO DIRECTOR Mary has been involved in the cannabis industry since the Zohar is an entrepreneur who has launched several infancy of the Marihuana for Medical Purposes successful businesses. He has founded, advised and Regulations introductio
Slide 43: Positioned for National Success
IN SUMMARY Well capitalized, fast-growing business with an Operating with strong margins and with a established history of execution. focus on positive EBITDA, free cash flow and organic growth through capital reinvestment Offering customers the highest value products at disruptive low prices. State
Slide 44: Thank You
TSXV: LOVE | OTCQB: LOVFF | FRA: 8CB THANK YOU www.cannara.ca investors.cannara.ca www.instagram.com/cannarabiotech www.facebook.com/cannarabiotech CANNARA HEADQUARTERS FARNHAM FACILITY VALLEYFIELD FACILITY 333 Decarie blv d, Suite 200 1144 Boulev ard Magenta E 1175 Boulev ard Gérard-Cadieux Saint-L