biome grow - 6ota:gr investor presentation ......2019/10/11 · presentation and was provided by...

BIOME GROW INC.

CSE:BIO | OTCQB:BIOIF | 6OTA:GR

INVESTOR PRESENTATIONOctober 2019

FORWARD-LOOKING STATEMENTSCertain information contained herein has been prepared by third-party sources and has not been independentlyaudited or verified by Biome Grow.

These forward-looking statements and forward-looking information speak only as of the date on which they aremade, and Biome Grow, or any of their subsidiaries undertakes no obligation to update or revise any forward-looking statements and forward-looking information whether as a result of new information, future events orotherwise, unless required by applicable law. These forward-looking statements and forward-looking information aresubject to risks and uncertainties that may cause actual results to differ materially from those contained in theforward-looking statements and forward-looking information. The forward-looking statements or forward-lookinginformation contained herein is expressly qualified by this cautionary statement.

Future Oriented Financial Information and Financial OutlookTo the extent any forward-looking information in this presentation constitutes future-oriented financial information orfinancial outlook, within the meaning of applicable securities laws (collectively, “FOFI”), such information is beingprovided to demonstrate the potential of the Company and readers are cautioned that this information may not beappropriate for any other purpose. The FOFI is subject to the same assumptions, risk factors, limitations, andqualifications as set forth in the above paragraphs, in addition to assumptions with respect to the prices to be paidfor the Company's products, the costs and expenditures to be incurred by the Company and the costs associatedwith production and related projects. FOFI contained in this presentation was made as of the date of thispresentation and was provided by management for the purpose of providing further information about BiomeGrow's future business operations. The Company believes that the FOFI has been prepared on a reasonable basis,reflecting management's best estimates and judgments. However, because this information is highly subjective andsubject to numerous risks including the risks discussed herein and above, it should not be relied on as necessarilyindicative of future results. The actual results of operations of the Company and the resulting financial results mayvary from the amounts set forth herein, and such variations may be material. Biome Grow disclaims any intention orobligation to update or revise any FOFI contained in this presentation, whether as a result of new information, futureevents or otherwise, except as required by applicable securities law. Investors are cautioned that the FOFIcontained in this presentation should not be used for purposes other than for which it is disclosed herein.

This presentation contains forward‐looking statements and forward‐looking information within the meaning ofapplicable securities laws. These statements relate to future events or future performance. All statements other thanstatements of historical fact may be forward‐looking statements or information. Forward‐looking statements andinformation are often, but not always, identified by the use of words such as "appear", "seek", "anticipate", "plan","continue", "estimate", "approximate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend","could", "might", "should", "believe", "would" and similar expressions. More particularly and without limitation, thispresentation contains forward‐looking statements and information concerning Biome Grow Inc.’s (“Biome Grow” orthe “Company”) future retail licences in Newfoundland & Labrador; the opening of stores in 2019; the future launchof international ventures and partnerships and Rec 2.0 products; the estimated growth and the value of the globalcannabis market; the creation of competitive job opportunities; the cannabis supply created pursuant to futuresupply agreements; the target size and planned expansion of the facilities to be developed; the Company’s plans forextraction and its expectations with respect to the resulting products and the general expected growth of thebusiness and the timelines associated therewith.

Forward-looking statements and forward-looking information is based on a number of factors and assumptionswhich have been used to develop such statements and information but which may prove to be incorrect. Althoughthe Company believes that the expectations reflected in such forward-looking statements and forward-lookinginformation are reasonable, undue reliance should not be placed on forward-looking statements and forward-looking information because Biome Grow can give no assurance that such statements or expectations will prove tobe correct. In addition to other factors and assumptions which may be identified herein, assumptions have beenmade regarding, and are implicit in, among other things, the ability to obtain any and all required regulatory licences,permits, or approvals and to obtain such licences, permits or approvals on a timely and cost efficient basis;expectations with respect to changing legislation and timing associated with such changes; the ability to openstores in 2019; the willingness of third parties to continue to pursue international ventures and partnerships; generalmarket outlook including increased competition and consolidation; the ability of Biome Grow to obtain and maintainqualified staff, equipment and services in a timely and cost efficient manner to develop its business; expectationswith respect to energy and water costs; the ability of Biome Grow to obtain financing on acceptable terms; BiomeGrow's future capital spending and operating costs; Biome Grow's ability to generate sufficient cash flow to meetits working capital requirements; general economic conditions; and the ability of Biome Grow to successfully marketits products and services.

Forward-looking statements and forward-looking information is based on management's current expectations andis subject to a number of risks and uncertainties which could cause actual results to differ materially from thoseanticipated by Biome Grow and described in the forward-looking statements and forward-looking information. Thematerial risk factors affecting Biome Grow and its business are similar to those of other companies engaged in thecannabis business and include, but are not limited to, the failure to obtain or delays in obtaining the requiredregulatory licences, permits, or approvals; changes to legislation; changes in cannabis research or the generalpublic’s perception of cannabis; competition in the cannabis market; crop failure; labour disputes or increases inlabour and/or construction costs; rising energy costs; an inability to access financing as needed; and a generaleconomic downturn.


Innovate globally, cultivate locally.

Biome Grow Inc. (“Biome”) is designed and structured to survive and prosper in a rapidly changing environment. Accordingly, we have many unique attributes:

• Vertical integration from production through distribution to retail• Long-term (up to 20 years) supply and economic agreements

with end customers including provincial governments• Commission-sharing arrangements allowing us to recoup capital

investments made to provide employment opportunities• Flow-through supply deals with other licensed growers to

leverage distribution channels, improve supply, and diversify product offerings

• Expertise in regulatory reform combined with deal experience in foreign jurisdictions, allowing us to gain first-mover advantage in new global markets

• A global focus, looking beyond Canada’s borders for long-term sustainable business models

This structure and approach allows Biome to leverage its assets to a significant degree while reducing risk. We believe that this increases the odds of long-term prosperity as the cannabis business evolves and brings new global competitive pressures to domestic producers.


COMPANY SNAPSHOT

Vertically integrated conscious cannabis company with international aspirations

Three cultivation facilities – one fully licensed and producing in Nova Scotia and two under construction in Ontario and Newfoundland & Labrador

Five retail licences in Newfoundland & Labrador: stores will open in 2019

Multi-year economic agreement with Newfoundland & Labrador will allow Biome to recover up to $52MM of the $62MM of capital expenditures used to build out operations

Developing products and strategies to address Rec 2.0

Exploring international opportunities to grow and/or distribute products abroad


BRANDS AND PARTNERS


International Ventures & Partnerships

Launching in 2020

EXTERNAL SUPPLIERS

Licensed Producers –Wholesale

Product

Rec. 2.0 Component Suppliers

Extraction Partners

Rec 2.0 ProductsLaunching in 2020

STRATEGIC FOCUS ON THE MOST PROFITABLE LINKS IN THE SUPPLY CHAIN

• Economic agreement with the Government of Newfoundland & Labrador allows Biome to recover $52 million of its $62 million investment in the province

• Off-take agreements with other licensed producers fill our distribution channels but only require nominal additional investment in infrastructure


Cultivation ExtractionFinished Goods

Distribution

Branding

Off-take Agreements

Retail Consumer

BUILDING FINANCIAL MOMENTUM


Q1, 2019 Q2, 2019 YTD 2019 Q/Q Chg

Revenue 340,574$ 1,347,019$ 1,687,593$ 295.5%

Gross Profit 204,423$ 594,042$ 798,465$ 190.6%

Gross Margin 60.0% 44.1% 47.3% -15.9%

Quantity Sold (kg)

Internally Cultivated 50 60 110 20.0%

Wholesale Flow-Through 0 112 112 n/a

Total 50 172 222 244.0%

Internal Cultivation Cost per Gram $2.72 $2.31 $2.50 -15.1%

Average Selling Price per Gram $6.80 $7.86 $7.38 15.6%

Internal Cultivation Margin 60.0% 70.6% 66.2% 10.6%

Impressive sequential growth in first two quarters of operation

In the second quarter, 2019, revenue roughly quadrupled and gross profit almost tripled from the previous quarter, on 3.4x sales volume.

Consolidated gross margin fell due to the addition of wholesale/flow-through revenue, which generates lower margins.

Internal cultivation costs fell by 15.1% and average selling price rose by 15.6%, resulting in a 10.6-percentage point margin improvement on internally cultivated product.

Highland Grow, our main operating subsidiary, was net profitable for the quarter.

$0.0

$0.2

$0.4

$0.6

$0.8

$1.0

$1.2

$1.4

$1.6

Q1 Q2

Mill

ions

2019 Revenue & Gross Profit

Internal Cultivation Wholesale Flow-Through Gross Profit

RETAIL DISTRIBUTION

Biome is one of the few Licensed Producers to have secured retail licences at this early stage of Canada’s recreational market, with 5 licences in Newfoundland & Labrador.

Our 20-year economic agreement with the Newfoundland and Labrador Liquor Corporation allows us to achieve increased retail margins via a rebate on NLC commissions.

Currently distributing product through more than 20 retail outlets in Atlantic Canada.


Shares Issued

110.57 Million

Warrants

1.58 Million

Options

0.40 Million

Insiders

48.5%

Third Parties

51.5%

0

20

40

60

80

100

120

Securities Affiliation

Mill

ion

s o

f S

hare

s

Biome Capitalization Summary, October 11, 2019

CAPITAL STRUCTURE

Biome’s capital structure has a strong insider ownership base that is fully invested in the future of the company.


Fully Diluted Shares 112,546,018

Issued & Outstanding 110,569,302

Warrants 1,576,716

Options 400,000

Total Debt $1,250,000

Short-Term Debt (Unsecured) $1,250,000

BIOME STRATEGIC ADVANTAGES

VERTICAL INTEGRATION

Biome is a truly integrated cannabis company with licensed production,

distribution, and licences for retail facilities. This allows for a greater degree of overall

control of the product through all stages as well as enhanced margins.

CAPITAL EFFICIENCY

Biome leverages its capital investments by securing favourable long-term supply

contracts, negotiating commission-sharing agreements in return for job creation, filling distribution capacity with throughput deals

from other licensed producers, and minimizing dilution in sourcing capital.

INTERNATIONAL & PRODUCT DIVERSIFICATION

Biome is exploring opportunities both at home and abroad designed to generate

long-term shareholder value. These include both product and geographic diversification

in select niches.

EXPERIENCED TEAM

Biome’s senior management team were some of the first in this space, raising

capital for some of the largest cannabis companies in the world. They also have deep deal experience in highly regulated

industries and target jurisdictions.


The potential global cannabis market is estimated at US$344bn, of which the legal market will reach US$146bn by 2025, dwarfing the US$5bn legal Canadian market.

BIOME is actively developing markets on several continents, with populations totalling 4 billion people and total GDP over US$11 trillion.

BIOME’s global reach and regulatory expertise combine to offer support to jurisdictions considering a range of cannabinoid solutions.

Our conscious cannabis philosophy mandates that we target underserved areas both in Canada and globally, seeking to provide social benefits to the markets we serve through health initiatives, job creation, and educational programs.

CONSCIOUS INTERNATIONAL DEVELOPMENT

CanadaPopulation: 37 millionGDP: US$1.8 trillion

AfricaPopulation: 1.3 billionGDP: US$2.5 trillion

South AsiaPopulation: 1.9 billionGDP: US$3.7 trillion

Southeast AsiaPopulation: 660 millionGDP: US$3.1 trillion


Sources:Cannabis market size: New Frontier Data, Grand View Research, BDS AnalyticsRegional populations & GDP: International Monetary Fund

APPENDICES

Additional Information

200+ licences under the Cannabis Act, but over 65% of the licences reside in two provinces (ON & BC).

Approx. 50% of Canadians live in provinces with limited local production.

BIOME is uniquely positioned to take advantage of these regional opportunities.

Source: Government of Canada – Licensed cultivators, processors and sellers of cannabis under the Cannabis Act

WIDE VARIANCE IN REGIONAL OPPORTUNITIES

Ontario

103

BC

52

Alberta

26

Quebec

17

Nova Scotia

9

Saskatchewan

9

NB

6

PEI

3NL

2Manitoba

1

Cannabis Act Licences by Province

(Oct. 1, 2019)

Newfoundland and Labrador are home to Back Home. BIOME signed a comprehensive agreement that includes the following:

● Recovery of up to $52 million of capital expenditures over 10 years via government commission rebates

● Creating 80 competitive local jobs● Initial supply agreement with the provincial government will

supply at least 24,000 kg of dried cannabis over the first three years.

● Licensed to operate 5 retail stores on the island

Back Home is in the late stages of a Cannabis Act licence application.

Location: St. George’s, Newfoundland

Current Size: 18,000 sq. ft.

Current Status: Environmental Assessment Approved

Target Size: 168,000 sq. ft.

Total Land: 20 acres, expandable to 200 acres


Highland is BIOME’s first licensed producer under Canada's Cannabis Act. Highland completed the first cannabis shipment to the Nova Scotia Liquor Commission at the beginning of 2019.

Location: Antigonish, Nova Scotia

Current Size: 6,500 sq.ft. indoor

Current Status: Active grow and distribution facility

Planned Expansion: 6,000 sq.ft. indoor



Great Lakes Cannabis is Biome’s Ontario cultivation and distribution facility in the late stages of a Cannabis Act license.

Location: Norwich, Ontario

Current Size: 12,000 sq.ft. indoor

Current Status: Under Construction

Planned Expansion: 4,500 sq.ft. indoor



Red Sands Craft Cannabis Co. is BIOME’s entrant into the field of advanced extraction. The facility will employ the latest in advanced extraction techniques, creating a range of products from high-end artisanal recreational products to precise medical and recreational extracts.

This facility allows for value-added production and represents another aspect of BIOME’s unique ecosystem.

Location: Prince Edward Island

Proposed Size: 10,000 sq. ft


LEADERSHIP TEAM / QUALITY GOVERNANCE

Mark LievonenDirector

Mark Lievonen led a distinguished career in the pharmaceutical sector, including a lengthy period as the CEO of Sanofi Pasteur Canada. Recently retired, Mark is recognized for building a billion-dollar biotech enterprise, including a vital manufacturing and R&D hub. Amongst numerous honours, Mark was appointed to the Order of Canada for his community service and business leadership.

Khurram MalikCEO & Director

Khurram Malik is an authority on the global cannabis sector and has played a part in the emergence of many of Canada’s best-known cannabis brands as a partner at Jacob Capital Management.

Khurram regularly appears at conferences and on various media channels.

Steven PoirierDirector

Steven Poirier is a brand and category expert with a distinguished career in the beverage alcohol sector, including an 11-year period as President of the distinct regional brand Moosehead Breweries. Steven is sought after for his expertise by numerous clients in the sector.

Brett JamesDirector

Brett James combines decades of experience as an advisor to clients with the knowledge that comes from having worked in the political realm and the experiences of building a successful business. As a principal of Sussex Strategy, Brett has offered practical advice and assistance to a diverse array of clients across many sectors.

LEADERSHIP TEAM / QUALITY GOVERNANCE

Michael WienerDirector

Michael Wiener is the CEO of 35 Oak Holdings, where he oversees a portfolio of businesses and investments spanning the real estate, manufacturing, storage, energy, mining, and horticulture industries. He currently sits on the boards of Arch Companies, Accurcast, and the Toronto chapter of Young PresidentsOrganization.

Khurram Malik

President and CEO

[email protected]

+1 (416) 875-8395

Scott Cuthbertson

VP, Investor Relations

[email protected]

+1 (647) 462-8797

THANK YOU

BIOME GROW INC.THE CONSCIOUS CANNABIS

COMPANY


biome grow - 6ota:gr investor presentation ......2019/10/11 · presentation and was provided by...

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