corporate presentation...corporate presentation august 30, 2020 tsx: zena. 1 disclaimers ......
TRANSCRIPT
Corporate PresentationAugust 30, 2020
TSX: ZENA
1
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
investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. Reliance on this Presentation for the purpose of engaging in any investment
activity may expose an individual to significant risk of losing all of the property or other assets invested.
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
invitation to sell or any solicitation of any offer to purchase or subscribe for any securities in Canada, the United States or any other jurisdiction. Neither this Presentation, nor any part of it, nor anything contained or referred
to in it, nor the fact of its distribution, should form the basis of or be relied on in connection with or act as an inducement in relation to a decision to purchase or subscribe for or enter into any contract or make any other
commitment whatsoever in relation to any securities of the Company. Recipients of this Presentation who are considering acquiring securities of the Company are reminded that any such purchase or subscription must not
be made on the basis of the information contained in this Presentation but are referred to the entire body of publicly disclosed information regarding the Company. This Presentation is qualified in its entirety by reference to,
and must be read in conjunction with, the preliminary prospectus supplement (the “Prospectus Supplement”) to the Company’s final short form base shelf prospectus dated April 9, 2019 (the “Shelf Prospectus”) and the
Company’s Shelf Prospectus.
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
party sources generally state that the information contained therein has been obtained from sources believed to be reliable, but there is no assurance or guarantee as to the accuracy or completeness of included data.
Although the data is believed to be reliable, neither the Company nor its agents have independently verified the accuracy, currency or completeness of any of the information from third party sources referred to in this
presentation or ascertained from the underlying economic assumptions relied upon by such sources. The Company and its agents hereby disclaim any responsibility or liability whatsoever in respect of any third party
sources of market and industry data or information. This Presentation has not been independently verified and the information contained within may be subject to updating, revision, verification and further amendment. While
the information contained herein has been prepared in good faith, except as otherwise provided for herein, neither the Company, its directors, officers, shareholders, agents, employees or advisors give, has given or has
authority to give, any representations or warranties (express or implied) as to, or in relation to, the accuracy, reliability or completeness of the information in this Presentation, or any revision thereof, or of any other written or
oral information made or to be made available to any interested party or its advisers and liability therefore is expressly disclaimed for any loss howsoever arising, directly or indirectly, from any use of such information or
opinions or otherwise arising in connection therewith. Except as may be required by applicable law, in furnishing this Presentation, the Company does not undertake or agree to any obligation to provide the recipient with
access to any additional information or to update this Presentation or to correct any inaccuracies or omissions. Information contained in this Presentation is the property of the Company and it is made available strictly for the
purposes referred to above.
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
unknown risks, uncertainties, assumptions and other unpredictable factors, many of which are beyond the Company’s control. You should not place undue reliance on forward-looking statements, which are based on the
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.
ELECTRONIC DISTRIBUTION: This document may have been sent to you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic
transmission. You are responsible for protecting against viruses and other destructive items. Your receipt of this document by electronic transmission is at your own risk and it is your responsibility to take precautions to
ensure that it is free from viruses and other items of a destructive nature. As a consequence of the above, neither the Company nor any director, officer, employee or agent of any of them or any affiliate of any such person
accepts any liability or responsibility whatsoever in respect of any difference between the document distributed to you in electronic format and the hard copy version that is available to you.
2
CORPORATE HIGHLIGHTS
Propagation Business with ~$34m of Annual Revenue as of Q2 2020
Two Sequential Quarters of Positive Adjusted EBITDA
Low Cash Costs of Cultivation Given Scale ($0.70/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
Cannabis Shipments of >4,700 kg Through First Two Months
of Q3 2020, up 20% Over Q2 2020 Total Shipments
Note: 1) Page 13 of Zenabis Q2 2020 MD&A dated August 14, 2020.
3
COMPANY SNAPSHOT
Note: 1) FY means the fiscal year ended June 30 of Bevo Agro Inc.
Zenabis Global Inc. is a significant Canadian cultivator
of medical and adult-use recreational cannabis, and a
propagator and cultivator of floral and vegetable
products.
▪ Founded in 1985
▪ Wholly-owned subsidiary of Zenabis Global Inc.
▪ Successful 30+ year growing history in British Columbia,
Canada, specialized in the propagation of hundreds of unique
non-cannabis crops at an industrial scale
▪ ~$34m of annual revenue as of Q2 2020
▪ Over 2,000,000 sq ft. of operating space at three facilities:
Zenabis Pitt Meadows
Zenabis Aldergrove
Zenabis Langley
▪ Significant Canadian Licensed Producer with a licensed annual
production capacity of 111,200 kg
▪ Operates three state-of-the-art facilities dedicated to cannabis
cultivation and processing
Zenabis Atholville: One of the largest indoor facilities in
Canada with a licensed capacity of 46,300 kg
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
TSX: ZENA
Combined Adjusted EBITDA of ~$5.4m across both segments for the first two quarters of 2020
142
3
4
OUR FACILITIES
Notes: 1) The greenhouse to the right of the Zenabis Langley photo is not part of Zenabis Langley.
2. Zenabis Langley1
Langley, British Columbia
▪ 2,100,000 sq. ft. greenhouse
▪ Licensed capacity: 64,100 kg
▪ Licensed for cultivation and
processing
▪ Also used for propagation and
floral business
3. Zenabis StellartonStellarton, Nova Scotia
▪ 255,000 sq. ft. indoor facility
▪ Licensed capacity: 800 kg
▪ Licensed for cultivation and
processing.
▪ Received sales license in May
2020, which allows for the sale
of dried/fresh cannabis and
other 2.0 products to authorized
retailers
▪ 380,000 sq. ft. indoor facility
▪ Licensed capacity: 46,300 kg
▪ Licensed for cultivation,
processing, and sales
▪ EU GMP approval as of May 2020
1. Zenabis AtholvilleAtholville, New Brunswick
▪ 25,000 sq. ft. indoor facility
▪ Licensed for cultivation,
processing, and sales
▪ Currently for sale
4. Zenabis DeltaDelta, British Columbia
Zenabis' unique mix of facilities combines indoor and closed-greenhouse cultivation at scale with dedicated processing,
fulfilment, and value-add manufacturing centres
▪ 218,000 sq. ft. greenhouse
▪ Used for non-cannabis
propagation business
▪ Licensed for industrial hemp
cultivation
Zenabis Pitt MeadowsPitt Meadows, British Columbia
▪ 453,000 sq. ft. greenhouse
▪ Used for non-cannabis
propagation business
▪ Licensed for industrial hemp
cultivation
Zenabis AldergroveAldergrove, British Columbia
Zenabis
AtholvilleAtholville, NB
Zenabis
LangleyLangley, BC
Zenabis
StellartonStellarton, NS
Zenabis
DeltaDelta, BC
Zenabis Pitt
MeadowsPitt Meadows, BC
Zenabis
AldergroveAldergrove, BC
Parcel Size 871,000 sq. ft. 4,279,000 sq. ft. 547,000 sq. ft. 51,000 sq. ft. 871,000 sq. ft. 2,180,000 sq. ft.
Total Facility Space 380,000 sq. ft. 2,100,000 sq. ft.1 255,000 sq. ft. 25,000 sq. ft. 218,000 sq. ft. 453,000 sq. ft.
Current Licensed Capacity 46,300 kg 64,100 kg 800 kg N/A N/A N/A
Expected Capacity under
Existing Capital Program46,300 kg 64,100 kg 800 kg N/A N/A N/A
Design Capacity(if facilities fully built out and
converted as planned)
46,300 kg 96,100 kg 2 800 kg N/A N/A N/A
Extraction Design Capacity3
(if facilities fully built out and
converted as planned)
15,000 kg N/A N/A N/A N/A N/A
Cultivation Cost $0.70/gram4 TBD5 Not relevant N/A N/A N/A
Utilization
EU GMP
Cannabis
Cultivation7 +
Extraction
Cannabis
Cultivation7 +
Hemp +
Propagation
Cannabis
Cultivation7 +
Manufacturing8
Listed for SalePropagation +
Floral + Hemp
Propagation +
Floral + Hemp
Cultivation Format
5
PRODUCTION FOOTPRINT
G HIndoor Indoor Indoor
8.8m sq. ft.
(2.4m sq. ft. available for hemp
cultivation)
Total Available Land
0.7m / 2.8m / 3.5m sq. ft.
Total Max Development
Indoor / GH / Total Current Licensed Capacity:
111,200 kg
Total Potential: 143,200 kg
Capacity
Notes: 1) Includes facility space under glass only; excludes additional warehouse space. 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. 2) If all facilities are bu ilt out and converted as planned. 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. 3) Extraction estimates are annual, based on 20 days a month and based on kilograms of input material. 4) Year to date average cost per gram as of December 31, 2019. 5) Zenabis Langley is currently in
ramp-up phase of production and further license amendments from Health Canada are pending. 6) Estimated cost per gram. 7) Includes the packaging of cannabis product. 8) Manufacturing of value-add products.
G H Outdoor G H Outdoor
6
BRANDS
Existing Brands
Type: Medical brand
Sales Channels: Online / Pharmacy
Current Products: Dried cannabis, gel capsules, and oil sprays
Near-Term Products: Oils
Future Products: Food products,
hemp products
Type: Premium, craft recreational
brand
Sales Channels: Online and retail
Current Products: N/A
Near-Term Products: Dried cannabis
Type: Value recreational brand
Sales Channels: Online and retail
Current Products: Pre-rolls, dried
cannabis, and 510 vape cartridges
Near-Term Products: Hash
Future Products: TBD
Type: Core recreational brand
Sales Channels: Online and retail
Current Products: Dried cannabis,
pre-rolls, PAX vape cartrdiges, oil
sprays, and soft gels
Near-Term Products: Soft chews and
chocolates
7
CANNABIS 2.0 PORTFOLIO
Cannabis-infused Beverages1 ▪ Zenabis entered into a definitive agreement with HYTN Beverages Inc. to produce a line of cannabis-infused
beverages
▪ Initial products. 355 ml sparkling water with 10 mg ofTHC, with flavours to include Blood Orange, Lemongrass
Ginger, Rosewater Lemonade, and WatermelonMint
▪ Shipments expected to commence in Q4 2020
▪ Currently listed in nine Provinces and one Territory
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
Note: 1) Final products may differ.
2.0 Products
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 five provinces, and listings are anticipated in three additional
provinces in September 2020
Soft Chews and Chocolates▪ Zenabis is currently preparing to launch two edible product lines: soft chews and chocolates
▪ Initial products will included three types of soft chews and two types of chocolates; these products have been listed in
various provinces
▪ Sale of soft chews and chocolates is expected to commence in early Q4 2020
8
PRODUCT PORTFOLIO
Current Products
Softgel CapsulesOils
Future Products for Near-Term Launch
Dried Flower
Tinctures and Sprays
Pre-Rolls
KombuchaEdibles Flavoured and Sparkling Water
PAX Vaporizing Cartridges
Soft Chews Hash
510 Vaporizing Cartridges
9
DOMESTIC PARTNERSHIPS AND DISTRIBUTION CHANNELS
Zenabis has developed a diverse set of partnerships and relationships with provinces1, distributors, pharmacies and First Nations.
Supply Arrangement
BC Liquor
Distribution
Branch
(“BCLDB”)
Supply Agreement
Alberta Gaming,
Liquor &
Cannabis
(“AGLC”)
Supply
Arrangement
Saskatchewan
Wholesale
Distributor
Supply
Arrangement
Manitoba Liquor
and Lotteries
(“MBLL”)
Supply agreement
primarily for oil
Supply agreement
for medical cannabis
products
Supply Arrangement
Yukon Liquor
Corporation
(“YLC”)
Supply Arrangement
Société
québécoise du
cannabis
(“SQDC”)
Supply Agreement
Alcohol New
Brunswick Liquor
(“ANBL”)Supply Arrangement
Nova Scotia Liquor
Corporation
(“NSLC”)
Supply Arrangement
PEI Cannabis
Management
Corporation
Investment
Investor
InvestorOpportunities NB Investor
Investor
Songhees First
Nation
Listuguj Mi’gmaq
Government
Millbrook First
Nation
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 October.
Ontario Cannabis
Retail Corporation
(“OCS”)
Supply
Agreement
Northwest
Territories Liquor
and Cannabis
Commission
(“NTLCC”)
Supply ArrangementExpect first
shipments
Oct 2020
Nunavut Liquor &
Cannabis
Commission
(“NULC”)2
Supply
Arrangement
10
GROWING INTERNATIONAL DISTRIBUTION
Germany
Zenabis, through ZenPharm (see
Malta) has entered into a binding
supply agreement to commence
shipments to Germany through Malta
in Q4 2020
Malta
Zenabis has received conditional
approval to develop a production and
processing facility in Malta, with
inspection scheduled for September
2020, through its joint venture
ZenPharm
Israel
Zenabis has two ongoing
arrangement with counterparties in
Israel, with anticipated combined
volume of greater than 1,000kg per
month on an ongoing basis, subject
to export permit receipt in any given
month
Australia
Zenabis has entered into a binding
three-year supply agreement with an
Australian pharmaceutical company
to provide medical cannabis for sale
in Australia
11
ZENPHARM
Atholville, New Brunswick, Canada Birzebbuga, Malta
Indoor Cultivation Facility Manufacturing Facility
Europe
Zenabis receiving its EU GMP approval
is a significant milestone as it will
enable the company to supply bulk
dried medicinal cannabis flower to the
European market through ZenPharm
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 anticipates that the ZenPharm facility in Malta will undergo its GMP and security
inspections in September 2020.
Extension and Partial Conversion of Secured
Convertible Notes
• Maturity extended from June 30th, 2020 to
March 31st, 2021
• Immediate conversion of 22.88% of the
outstanding notes at a price of $0.10232
• ~$2.6m reduction to the remaining principal
amount of the notes
Appointment of Permanent Chief Executive
Officer
• Announced appointment of Shai Altman as
permanent Chief Executive Officer,
effective September 1, 2020
• Mr. Altman has over 20 years of CPG
leadership experience and was previously
President of McCain Foods, Canada
Corporate Updates
• Shipped more than 4,700kg in the first quarter of Q3 2020, up 20% over the Q2 2020 total
• Entered a one-year supply agreement with Canveda to provide 300-1,000kg of cannabis flower per quarter
• August and September international shipments of GPP cannabis are expected to be greater than 1,000kg
subject to export permit receipt
• Completed first shipment of new Re-Up 510-thread vaporizer product line in July 2020
• Commenced first shipments of non-strain specific Re-Up Indica and Re-Up sativa 28g formats in July 2020
• Received sales license amendment receipt for the Stellarton facility, which allows for the sale of dried/fresh
cannabis and other 2.0 products to authorized retailers12
RECENT DEVELOPMENTS
Zenabis has significantly increased shipments domestically and internationally, diversified its product offerings, and delivered positive
Adjusted EBITDA throughout 2020.
EU GMP Approval and
Sales License Amendment
• Received EU GMP
approval for the Atholville
facility, with commercial
export to the EU
expected in Q3’20
Medicinal Cannabis to the
German Market
• Assigned a binding term
sheet with Farmako GmbH
to its subsidiary company,
ZenPharm
• Expected to supply a
minimum of 500 kg of EU
GMP compliant bulk
cannabis per year for a term
of three years
• Shipments to Farmako
expected to begin in Q3’20
Amendments to Senior Secured Debenture
• Principal amount increased from $50.0m to
$60.75m
• Maturity extended from June 30th, 2020 to
March 31st, 2025
Corporate Restructuring Initiatives
• Reduction of overall workforce by
22% and expected quarterly cash
cost savings of ~$2.0m
• Delta facility put up for sale
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20
First Production Run for PAX Labs Inc.
• One of five exclusive LPs selected to
produce PAX Era pods
• Executed first production run of vape
cartridges, with initial provincial
shipment on Feb 5
Q1’20 Financial Results
• Net cannabis revenues of $12.6m
(+18.5% q-o-q)
• First EBITDA positive quarter;
Q1’20 adjusted EBITDA of $2.3m vs.
($10.4m) in the prev. quarter
Public Offering of Units
• Closed public offering of units
for total gross proceeds of
$23.6m at a price of $0.13/unit
• Proceeds were used for
repayment of debt, a senior debt
extension fee, and general
working capital
Q2’20 Financial Results
• Consolidated net revenue of
$27.4m (+37.7% q-o-q)
• Second EBITDA positive
quarter; Adjusted EBITDA of
$3.1m vs. $2.3m in the prev.
quarter
13
MANAGEMENT
Eric Rasmussen
Chief Financial Officer
Shai Altman
Chief Executive Officer
Leo Benne
Chief Growing Officer
▪ Over 20 years of leadership in the consumer
packaged goods industry, with 11 years of
focused experience in the Canadian market
▪ Formerly the President of McCain Foods,
Canada, where he led the business through a
significant turnaround that reversed a decade of
topline sales declines
▪ Prior to McCain Foods, was the President of
Wrigley Canada, where he led the business
through a growth phase that resulted in market
leadership
▪ Extensive senior management experience in
publicly-listed companies, both in North
America and Europe
▪ Strong corporate and operations finance,
internal audit, M&A, and strategic investment
experience over a 20-year leadership career
within Shawcor
▪ Strategic consultant for Canadian large- and
mid-size clients, advising on corporate strategic
and financial planning, post-merger integration
▪ Formerly Vice President and Director of Bevo
▪ Gained advanced knowledge of modern
horticultural methods at Rijks Middelbare
Tuinbouwschool in Holland
▪ Provided oversight and management at Bevo in
the propagation and floral business for nearly
30 years
▪ Experience in the application of computer
technology to the production of plants
Olen Vanderleeden
Senior Vice President, Commercial
▪ Leads all commercial activities at Zenabis
▪ 20 years of experience leading sales,
marketing, and operational functions
▪ Management, business development, and sales
background in multiple industries, including
technology, software and CPG
14
Daniel Burns
Chair
▪ A lawyer, accountant and
entrepreneur
▪ Experienced corporate director in the
financial services, insurance and
mining sectors
▪ Has served as chair of a number of
significant organizations in Canada
and the United States as well as
chaired the audit committees of
significant public and private
institutions
Andrew Grieve
Independent Director
▪ Departing as of 17 September 2020
Monty Sikka
Co-Founder and Director
▪ Co-founder of Zenabis
▪ As President of the Monark Group,
has grown the business into a multi-
million-dollar, multi-faceted
corporation
▪ Has extensive experience in e-
commerce, marketing and finance
sectors
Leo Benne
Chief Growing Officer and Director
▪ Formerly Vice President and Director
of Bevo
▪ Gained advanced knowledge of
modern horticultural methods at Rijks
Middelbare Tuinbouwschool in
Holland
▪ Provided oversight and management
at Bevo in the propagation and floral
business for nearly 30 years
▪ Experienced international finance
and M&A attorney who has held
senior positions at several prominent
international law firms
▪ As counsel at Skadden, represented
Fortune 500 companies, financial
institutions, and governments in
complex corporate finance and M&A
transactions totaling >$100bn in
value
Natascha Kiernan
Independent Director
BOARD OF DIRECTORS
▪ Currently the Vice President of
Finance for the Richberry Group of
Companies, part of the executive
management team that oversees
over 1,100 acres of Ocean Spray
cranberry bogs
▪ Previously, he oversaw a team of
lending professionals in Farm
Credit Canada and managed a
portfolio >$1bn
Vincent Quan
Independent Director
15
SELECTED FINANCIAL INFORMATION
Notes: 1) Debt is based on the amounts listed on slide 28. Cash balance of $6.7m as outlined in the Zenabis Global Inc. Financial Statements as at June 30, 2020. 2) Market capitalization and enterprise value are calculated on a fully-diluted, in-the-money
basis as of June 30, 2020 as calculated on slide 27. 3) For the three months ended June 30, 2020. 4) Includes a $10.7m loss on modification and extinguishment of debt that is non-cash. 5) Calculation of adjusted EBITDA is shown on slide 30. 6) Tangible
assets of $303.8m as of June 30, 2020. 7) As at June 30, 2020.
Selected Financial Metrics Q2 2020
Cash $6.7m1
Debt $123.8m1
Market Capitalization $68.1m2
Enterprise Value $185.2m2
Financial Results Q2 2020
Gross Revenue3 $30.3m
Net Revenue3 $27.4m
Net Loss3,4 ($15.8m)
Adjusted EBITDA5 $3.1m
Balance Sheet
Total Assets6 $303.8m
Total Non-Current Liabilities $107.2m
Property, Plant and Equipment $194.1m
Shares and Ownership Summary Q2 2020
Common Shares Outstanding 619,511,5167
Fully-Diluted Shares Outstanding 953,582,9337
16
POST-OFFERING CAPITAL STRUCTURE
Zenabis used the proceeds of the equity offering to pay down $16.9m in debt across multiple tranches. Through this
deleveraging, Zenabis reduced its financial risk by decreasing near-term debt repayments and reducing its total interest
expense. Zenabis’ post-offering capital structure is outlined below.
Notes: 1) The amendment fee on the secured debentures was re-allocated between tranches at the end of Q2 2020, resulting in an increase in principal outstanding on the secured debentures due in 2020 and a decrease in principal
outstanding on the secured debentures due in 2025 . 2) Zenabis’ market capitalization is calculated is as of August 14, as calculated on slide 27.
DebtPrincipal Outstanding at
June 10, 2020
Debt Paid Down
In Offering
Principal Outstanding at June
30, 2020Interest Rate
Bevo Term Debt
BMO Financing $44.6m - $43.3m Floating
Long-term Cannabis Debt (>2 years)
Secured Debentures $53.8m ($1.9m) $51.4m1 14.0%
RDC Mortgage $2.0m - $2.0m 6.0%
Near-term Debt (<2 years)
New Secured Debentures $7.0m - $7.5m1 14.0%
Unsecured Convertible Debentures $15.0m ($7.3m) $7.7m 6.0%
Secured Convertible Note $8.8m ($6.3m) $2.5m 11.0%
Unsecured Convertible Note $10.8m ($1.4m) $9.4m 6.0%
Total Near-Term Debt (<2 years) $41.6m ($15.0m) $27.1m
Total $141.9m ($16.9m) $123.8m
Market Capitalization1 $68.1m $68.1m
Debt to Market Capitalization 2.08x 1.82x
17
ONGOING CASH INTEREST PAYMENTS
The below table outlines Zenabis’ ongoing cash interest payments following the June 2020 debt prepayments.
Notes: 1) The debt related to the propagation business is floating at a rate of prime + 0.75%. The calculated quarterly interest payment assumes the prime rate is equal to 2.45% 2) ~$9.1m of cash-pay interest; remainder payment-in-
kind.
DebtPrincipal Outstanding at June 30,
2020Interest Rate Quarterly Interest Payment
Bevo Term Debt – Self Sustaining
BMO Financing $43.3m Floating $346k1
Cannabis Debt
Secured Debentures $51.4m 14.0% $1,800k
RDC Mortgage $2.0m 6.0% $30k
New Secured Debentures $7.5m 14.0% $261k
Unsecured Convertible Debentures $7.7m 6.0% $115k
Secured Convertible Note $2.5m 11.0% $68k
Unsecured Convertible Note2 $9.4m 6.0% $137k
Total (Cannabis Only) $27.1m $2.41m
Total $123.8m $2.76m
18
COMPARABLE PRODUCTION MULTIPLES – CANNABIS AND PROPAGATION1
Source: Capital IQ, press releases. Notes: 1) All financial metrics obtained as of August 14, 2020. Zenabis’ enterprise value is per the calculation on slide 27. 2) Enterprise value as of August 14, 2020. 3) Amount of cannabis produced on a dried flower equivalent basis as
disclosed in the most recent financial reports.
Current Licensed Annual Production Capacity
Last Three Months Production3
Quarter End Net Revenue
Metrics
Enterprise Value2 ($m)
Current Capacity (kg)
EV/Current Capacity ($m/tonne)
Metrics
Enterprise Value2 ($m)
Last Three Months Production (kg)
EV/Last Three Months Production
($m/tonne)
Metrics
Enterprise Value2 ($m)
Net Revenue ($m)
EV/Net Revenue ($m/$m)
1.7
-
20.0
40.0
CRON ACB VFF APHA TGOD VIVO OGI FIRE SNDL ZENA AH
1,109 1,947 465 1,626 181 80 416 182 185 185 186
40,150 150,000 37,500 255,000 32,000 14,500 89,000 50,000 60,000 111,200 128,500
27.6 13.0 12.4 6.4 5.6 5.5 4.7 3.6 3.1 1.7 1.4
WEED TLRY FLWR EMH OGI ACB APHA SNDL HEXO ZENA
7,974 1,628 95 57 416 1,947 1,626 185 419 185
22,990 6,781 490 422 6,830 36,207 52,243 6,012 19,130 12,640
346.8 240.1 193.1 134.4 60.8 53.8 31.1 30.8 21.9 14.7
14.7
-
100.0
200.0
300.0
400.0
CRON WEED TGOD ACB TLRY OGI HEXO FIRE APHA SNDL ZENA
1,109 7,974 181 1,947 1,628 416 419 182 1,626 185 185
13.5 110.4 4.422 75.5 63.1 18.0 22.1 9.7 152.2 20.2 27.4
82.3 72.2 40.9 25.8 25.8 23.1 19.0 18.7 10.7 9.2 6.8
6.8
-
50.0
100.0
19
COMPARABLE PRODUCTION MULTIPLES – CANNABIS ONLY1
Current Licensed Annual Production Capacity
Last Three Months Production3
Quarter End Net Revenue
Metrics
Enterprise Value2 ($m)
Current Capacity (kg)
EV/Current Capacity ($m/tonne)
Metrics
Enterprise Value2 ($m)
Last Three Months Production (kg)
EV/Last Three Months Production
($m/tonne)
Metrics
Enterprise Value2 ($m)
Net Revenue ($m)
EV/Net Revenue ($m/$m)
WEED TLRY FLWR EMH OGI ACB APHA SNDL HEXO ZENA
7,974 1,628 95 57 416 1,947 1,626 185 419 110
22,990 6,781 490 422 6,830 36,207 52,243 6,012 19,130 12,640
346.8 240.1 193.1 134.4 60.8 53.8 31.1 30.8 21.9 8.7
Source: Capital IQ, press releases. Notes: 1) All financial metrics obtained as of August 14, 2020. Zenabis’ enterprise value is per the calculation on slide 27 and excludes the enterprise value of the propagation segment, which management assumes to be $75m. 2)
Enterprise value as of August 14, 2020. 3) Amount of cannabis produced on a dried flower equivalent basis as disclosed in the most recent financial reports.4) For Zenabis, this is the net revenue of solely the cannabis segment.
CRON ACB VFF APHA TGOD VIVO OGI FIRE SNDL AH ZENA
1,109 1,947 465 1,626 181 80 416 182 185 186 110
40,150 150,000 37,500 255,000 32,000 14,500 89,000 50,000 60,000 128,500 111,200
27.6 13.0 12.4 6.4 5.6 5.5 4.7 3.6 3.1 1.4 1.0
1.0-
20.0
40.0
8.7-
100.0
200.0
300.0
400.0
CRON WEED TGOD ACB TLRY OGI HEXO FIRE APHA ZENA SNDL
1,109 7,974 181 1,947 1,628 416 419 182 1,626 110 185
13.5 110.4 4.422 75.5 63.1 18.021 22.1 9.7 152.2 11.8 20.2
82.3 72.2 40.9 25.8 25.8 23.1 19.0 18.7 10.7 9.3 9.2
9.3
-
50.0
100.0
Appendix A – Facilities
22
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 Nil1
Design Capacity 46,300kg2
Extraction Design Capacity 15,000kg3
Current Licenses
Cultivation, processing, medical sales,
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
Notes: 1) Estimated expenditures as of December 31, 2019. 2) Subsequent to the upward revision by 35% from the 34,300kg design capacity originally disclosed as outlined in the Zenabis press release dated August 14, 2019. 3) Extraction estimates
are annual, based on 20 days a month and based on kilograms of input material.
23
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 2.1m sq. ft.2 greenhouse cannabis
StatusPartially operational/conversion ongoing
(for the first 10 acres)
Remaining Conversion Cost $Nil (for current market demand)3
Design Capacity 96,100kg1
Extraction Design Capacity N/A
Current LicensesCultivation, processing, domestic bulk
sales
Pending Licenses N/A
Capacity Milestones▪ Currently Licensed – 64,100kg4
▪ Full buildout – 96,100kg1
Summary
▪ Initial cannabis conversion activities have commenced for the first 10 acres
of greenhouse and is expected to be complete in 2020
‒ Construction and licensing of Part 1 and Part 2A and the first portion of
2B have been completed (64,100kg capacity), and construction of
rooms in Part 2B is substantially complete
▪ 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
▪ The remaining 38 acres at Zenabis Langley may be converted to cannabis
cultivation on an as needed basis
‒ This portion of greenhouse will continue to be used for Zenabis’
propagation business until conversion commences
Notes: 1) The design capacity of the 450,000 sq. ft. to be initially converted is 96,100kg per annum. Additional details on facilityconversion, including additional assumptions are outlined in the Zenabis Global Inc. Final Base Shelf Prospectus dated April
10, 2019 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) Estimated expenditures as of September 30, 2019. 4) 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.
24
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 Capacity 800kg1
Extraction Design Capacity N/A
Current Licenses
Cultivation, processing, medical sales,
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.
Note: 1) If all facilities are fully built out and converted as planned as outlined in the Zenabis MD&A for the three months ended September 30, 2019. 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.
25
ZENABIS DELTA
Zenabis Delta is an indoor facility located in the Greater Vancouver Area. This facility is currently in the process of being sold.
Facility Details Description
Location Delta, British Columbia
Type and Size 25k sq. ft. Indoor cannabis
Status Listed for sale
Remaining Conversion Cost N/A
Design Capacity N/A
Extraction Design Capacity N/A
Current LicensesCultivation, processing, medical sales,
recreational sales
Pending Licenses Analytical testing
Summary
▪ Zenabis is currently in the process of selling its Delta facility
▪ The facility has a limited licensed capacity of 100 kilograms that was
deemed non-core
▪ Zenabis recently relocated two additional extraction machines from Zenabis
Delta to Zenabis Atholville
Appendix B – Financial Information
27
CAPITALIZATION
The following outlines the capitalization of Zenabis.
Fully Diluted Shares Outstanding1 Value
Basic Shares Outstanding 619,511,526
Plus: Deferred Stock Units 2,725,000
Plus: Restricted Stock Units 750,000
Plus: Options 11,637,,450
Plus: Warrants 305,441,360
Plus: Conversion Options at $1.17 2,104,966
Plus: Conversion Options at $1.91 4,783,823
Plus: Conversion Options at $2.68 2,872,928
Plus: Conversion Options at 5-day volume weighted
trading price3,755,880
Equals: Fully-Diluted Shares Outstanding 953,582,933
Capitalization Enterprise Value
Enterprise Value Calculation Value
Basic Shares Outstanding 619,511,526
Plus: ITM Options1 Nil
Plus: ITM Conversion Shares1 Nil
Equals: Fully-Diluted, ITM Shares Outstanding 619,511,526
Times: Zenabis Share Price2 $0.11
Equals: Fully-Diluted Market Capitalization $68.1m
Add: Debt3 $123.8m
Less: Cash4 ($6.7m)
Equals: Enterprise Value $185.2m
Notes: 1) As of June 30, 2020. 2) As of market close August 14, 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 $6.7m as outlined in the Zenabis
Global Inc. Financial Statements as at June 30, 2020. The negative value indicates a subtracted value, rather than a negative cash balance.
28
DEBT OUTSTANDING
Facility Principal Amount
June 30, 2020Description
Unsecured Convertible
Debentures$7.7m
▪ Unsecured convertible debentures with interest rate of 6.0%
▪ Convertible into Zenabis shares at $2.6087 per share
▪ 825,000 warrants with exercise price of $2.68
▪ Matures on September 27, 2021
BMO Financing $43.3m
▪ $46.7m term credit facility, with interest payable quarterly at a rate of prime + applicable margin
based on grid pricing;
▪ Matures on January 21, 2022
RDC Mortgage $2.0m▪ $2.0m mortgage on Zenabis Atholville with interest rate of 6.0%
▪ Matures on August 31, 2027
Secured Debentures $51.4m
▪ 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)
▪ 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
New Secured Debentures $7.5m▪ Senior secured financing with interest at a rate 14.0%
▪ Matures on December 31, 2020
Secured Convertible Note $2.5m
▪ 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
▪ 1,373,712 warrants have been issued at an exercise price of $1.82 upon the extension and
subordination of the notes
▪ Matures on March 31, 2021
Unsecured Convertible
Note$9.4m
▪ Subordinated financing with interest rate of 6.0%
▪ May be converted into Zenabis common shares at ~$1.9067 per share (6,248,203 additional
Zenabis shares)
▪ $9.1m matures on October 17, 2020, with the remainder maturing in June 2022
Total $123.8m
Debt Summary
Appendix C – Other Information
Adjusted EBITDA Calculation Q2 20201 Q1 20202 Q4 20193 Q3 20194
Net Loss (15,781,932) (7,702,835) (98,714,311) (5,831,279)
Plus: Realized Fair Value Amounts Included in Inventory Sold 19,252,057 12,923,860 18,014,038 6,760,956
Less: Unrealized Gain on Changes in Fair Value of Biological Assets (24,222,690) (19,219,636) (21,432,091) (19,712,364)
Plus: Depreciation and Amortization 1,490,680 2,050,093 2,090,304 2,726,639
Plus: Restructuring Cost 483,890 1,058,452 Nil Nil
Plus: Impairment of Inventory 508,759 Nil 874,734 Nil
Plus: Impairment of Property, Plant and Equipment Nil Nil 27,841,265 Nil
Plus: Impairment of Intangible Assets and Goodwill Nil Nil 61,480,249 Nil
Plus: Share-Based Compensation 1,012,898 341,858 5,995,345 2,004,544
Plus: Loss on Revaluation of Embedded Derivative Asset 94,256 Nil Nil Nil
Plus (Less): Loss (Gain) on Revaluation of Embedded Derivative Liability Nil Nil (22,993) (497,789)
Plus: Interest Expense 8,009,676 6,306,284 (335,248) 4,689,124
Plus: Other Expense 167,745 298,907 122,880 (61,994)
Plus (Less): Loss (Gain) on Sale of Assets (482,067) (9,185) (55,417) 21,675
Plus (Less): Finance and Investment Expense (Income) (7,095) (6,544) 316,621 173,986
Plus : Loss due to Event 20,167 25,567 982,560 1,186,692
Less: Insurance Proceeds (25,000) Nil (520,526) (492,995)
Plus: Loss on Deconsolidation of Subsidiary Nil 668,562 Nil Nil
Less: Government Subsidies (3,319,621) (713,373) Nil Nil
Plus: Loss on Early Conversion of Debt 4,331,680 5,624,803 Nil Nil
Plus (Less): Income Tax Expense (Recovery) 1,102,590 654,987 (126,856) 342,758
Plus: Loss on Modification and Extinguishment of Debt 10,653,156 Nil Nil Nil
Plus (Less): Deferred Income Tax Expense (Recovery) (214,083) 42,155 (6,944,120) (511,145)
Equals: Adjusted EBITDA 3,075,066 2,343,955 (10,433,566) (9,201,192)
30
ADJUSTED EBITDA CALCULATION
The following outlines the calculation to arrive at adjusted EBITDA.
▪ 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.
Notes: 1) For the three months ended June 30, 2020 2) For the three months ended March 31, 2020 3) For the three months ended December 31, 2019 2) For the three months ended September 30, 2019. 4) For the three months ended June 30, 2019.