OCTOBER 2019
OCTOBER 2019 DISCLAIMER. The information contained in this - - PowerPoint PPT Presentation
OCTOBER 2019 DISCLAIMER. The information contained in this - - PowerPoint PPT Presentation
OCTOBER 2019 DISCLAIMER. The information contained in this presentation (the Presentation) is being provided for informational and discussion purposes only. The information set forth herein does not purport to be complete or all information
The information contained in this presentation (the “Presentation”) is being provided for informational and discussion purposes only. The information set forth herein does not purport to be complete or all information that a recipient would deem relevant in analyzing Bhang Inc. (together with its affiliates, the “Company”). This presentation is not, and under no circumstances is to be construed as, a prospectus, offering memorandum, or advertisement or a public offering of securities. Offers to sell, or the solicitations of offers to buy, any security can only be made through official offering documents that contain important information about risks, fees and expenses. Investors should conduct their own due diligence, not rely on the assumptions or estimates displayed in this presentation, and are encouraged to consult with a financial advisor, attorney, accountant, and any other professional that can help understand and assess the risks associated with any investment opportunity. The Company does not make any representation or warranty express or implied as to the accuracy, completeness or correctness of the information contained herein and no reliance should be placed thereon. It is not the intention to provide a complete or comprehensive analysis of the Company’s financial or business prospects. The information contained in these materials should be considered in the context of the circumstances prevailing at the time and has not been, and will not be, updated to reflect material developments which may occur after the date these materials were prepared. This presentation contains information obtained from third parties, including but not limited to market data. The Company believes such information to be accurate but has not independently verified such information. To the extent such information obtained from third party sources, there is a risk that the assumptions made and conclusions drawn by the Company based on such representations are not accurate. This document and the information available herein are not intended to provide you with any financial, accounting, tax, or legal advice. All figures unless stated otherwise are in $USD. FORWARD-LOOKING STATEMENTS Certain information contained in this presentation constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws, which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “target,” “project,” “estimate,” “intend,” “outlook”, “continue” or “believe,” or the negatives thereof or other variations thereon or comparable terminology. Forward-looking statements include, but are not limited to, the growth in the cannabis market, the size of revenue of the cannabis market, the Company’s future revenues, the construction of the Company’s facilities, the ability of the Company to obtain financing for the development of its projects, the Company’s business plan and access to future funding and projects, the ability of the Company to repay its loans, the Company’s financial forecasts, plans for expansion of the Company’s business, statements about potential market developments and trends, demand for the Company’s products and services and other statements that are not historical facts. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant legal, business, economic and competitive uncertainties and contingencies. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual financial results, performance or achievements to be materially different from the estimated future results, performance or achievements expressed or implied by those forward-looking statements and the forward-looking statements are not guarantees of future performance. Such risks and uncertainties include but are not limited to, the fact that the Company is an early stage company with limited operating history and resources, execution of the Company’s business plan requires raising additional capital, the cannabis market is highly regulated and those regulations and enforcement priorities of governmental authorities may change, the cannabis market is highly competitive, technical advances in the industry as well as changing political and economic conditions present within the industry will impact the success of the Company, as well as other risks as provided in the Company’s Listing Statement dated July 9, 2019 as filed under the Company’s profile on www.sedar.com. Except as required by law, we disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, events or otherwise. No forward-looking statement or projections can be guaranteed. Accordingly, you should not place undue reliance on any forward-looking statements or information.
2
DISCLAIMER.
CANNABIS-RELATED PRACTICES OR ACTIVITIES ARE ILLEGAL UNDER U.S. FEDERAL LAWS The concepts of “medical cannabis” and “recreational cannabis” do not exist under U.S. federal law. The U.S. Federal Controlled Substances Act classifies “marihuana” as a Schedule I drug. Accordingly, cannabis-related practices or activities, including without limitation, the manufacture, importation, possession, use or distribution of cannabis are illegal under U.S. federal law. Strict compliance with state laws with respect to cannabis will neither absolve the Company of liability under U.S. federal law, nor will it provide a defense to any federal proceeding which may be brought against the Company. Any such proceedings brought against the Company may adversely affect the Company’s operations and financial performance. The disclosure required under Canadian Securities Administrators Staff Notice 51-352 (Revised) – Issuers with U.S. Marijuana-Related Activities can be found in the Company’s Listing Statement dated July 9, 2019 as filed under the Company’s profile on www.sedar.com. CAUTIONARY NOTE TO UNITED STATES INVESTORS The securities of the Company described herein have not been and will not be registered under any United States federal or state securities law and may not be offered and sold in the United States, except that securities may be offered and sold to an investor that is an “accredited investor” as defined in Regulation D of Securities Act of 1933, as amended (the “U.S. Securities Act”), of the United States of America or to “qualified institutional buyers” as defined in Rule 144A under the U.S. Securities Act. Prospective investors will be required to represent, among other things, that they qualify as an “accredited investor” or “qualified institutional buyer” and are familiar with and understand the terms of the offering and have all requisite authority to make such investment. If the securities of the Company are sold in the United States such securities will be “restricted securities” within the meaning of Rule 144 under the U.S. Securities Act. The securities may be resold, pledged or otherwise transferred only pursuant to an effective registration statement under the U.S. Securities Act or pursuant to an applicable exemption from the registration requirements of the U.S. Securities Act. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY, INCLUDING THE MERITS AND RISKS INVOLVED. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES OR ANY CANADIAN PROVINCIAL SECURITIES REGULATOR PASSED ON THE ACCURACY OR ADEQUACY OF THIS PRESENTATION. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
DISCLAIMER (CONT’D.)
3
1500+ 100+ 9
Growing our competitive advantage through exceptional product performance, innovative packaging and brand loyalty Driven by our pursuit of bold flavors.
$30M
Ye a r C P G O p e r a t i n g H i s t o r y S t o r e s S e l l i n g A c r o s s G l o b e P r o d u c t s A c r o s s B r a n d P o r t f o l i o P r o d u c t s s o l d i n 2 0 1 8 2 Serving Both Cannabis and Hemp Markets Over 30 Awards Including the World’s Best Edible Cannabis Chocolate Bar3 Product Sales in 9+ Countries Across N.A., & Europe Through Licensees and Bhang’s own Distribution Network
(1) 8 active brands with 8 brands scheduled for roll-out in 2019 (2) Based on the total $US dollar amount of products sold by the licensee partner at the retail price (3) The Bhang chocolate bar is considered one of the most-awarded cannabis chocolate bars in the world
AWARD-WINNING CANNABIS CPG
4
- First national and global cannabis brand
- Founded in 2010 by award-winning trailblazer in cannabis industry
- Bhang is one of the most-recognized CPG brands in cannabis
- Existing brand serves as foundation for vertical expansion program, including THC, Hemp-derived CBD,
and Terpene-infused products as Bhang’s product quality, leadership and longevity will continue to drive trust in the marketplace
- Expansive portfolio of trend-setting products and intellectual property assets, combined with a well
established distribution and licensing network will enable Bhang to capture significant market share across multiple target demographics
- Top tier partnerships with Trulieve, Origin House, Indiva in the U.S. and Canada
- Experienced management team lead by master chocolatier, multinational alcoholic beverage and 2nd
generation cannabis executives
- Unique business model with multiple revenue stream opportunities
Bhang’s innovative product portfolio, global distribution channels, and strong management team positions the Company to become the first global cannabis powerhouse
INVESTMENT HIGHLIGHTS
5
First to bring proven CPG strategies to cannabis market.
CPG Business Approach
Forerunner in FDA compliant packaging for non-cannabis products.
Compliant Packaging
Pioneered full product liability insurance.
Full Liability Protection
Started testing every batch 8 years prior to it being a requirement.
Lab Testing
Pioneered standardized, consistent dosing and responsible dosing practices.
Standardized Dosing
Championed fair pricing model for high-efficacy CBD products to people in need.
Consumer-Friendly Production Being First Matters – Bhang has laid the groundwork for operational success and has been a trusted choice of consumers for 9 years
STRONG HISTORY OF INNOVATION AND TRUST
6
Quality management and cannabis system implementation design expert. Served on advisory panels to Association of Public Health Laboratories and Centers for Disease Control and Prevention. Vice Chairman ASTM Committee D37 on cannabis. Cannabis Trailblazer. Brand
- Architect. High Times Top
100 in Cannabis recipient. Proven track record in innovative product & brand design from over two decades with major retailers. Founding member of the National Cannabis Industry Association and a European certified Chef de Cuisine and Master Chocolatier. Rare second-generation cannabis executive with decades of experience in global operations, deal structuring and negotiation as a former real-estate executive. Voted one of the High Times Most Influential Women in Cannabis. Fluent in German and English, responsible for European RTM & global operational roll-out across market sectors. Award-winning brand marketer who held a VP level leadership position at Treasury Wine Estates. Proven track record of success growing global brands across multiple demographics and geographies. Responsible for Bhang’s global brand strategy, brand positioning, innovation and expansion.
LEADERSHIP TEAM
7
Jeremy Applen Chief Science and Procedures Officer Scott J. Van Rixel Founder, Chairman & CEO Jamie Pearson COO Samantha Collins CMO
Subject to state-by-state regulations and many international markets
By offering four product verticals: THC, Hemp-derived CBD, Terpene, and CBD Brokerage, Bhang will offer products across markets and value-chains in North America and Europe.
Recreational and medical value-added products
Product Type Products Product Market
Medical & wellness-focused, value-added products Chocolate, Pre-rolls, Vapes, Flower CBD Isolate, Chocolate, Hemp Cigarettes, Gum, Vapes, E- liquid, Lip Balms, Beet Juice, Tinctures, Capsules, Gummies Subject to state-by-state regulations and many international markets Cannabis-inspired products designed for the mass market Pure CBD isolate, full- spectrum hemp oil and raw hemp products sold to businesses in large quantities E-liquid, Terpene Enhanced Hemp Cigarettes
THC Products Hemp-Derived CBD Products Terpene Products CBD Brokerage
Lawful throughout the world to sell in all major retailers Dedicated supply of CBD isolate ranging from below .03% to THC N/D, full- spectrum hemp oil Limited to states and countries with recreational
- r medical cannabis laws
Beverages, Mints, Gummies Beverages, Topicals, Coffee Products Chocolate, Beverages
Coming Soon
PRODUCT VERTICALS
8
Option to expand brokerage quantities to capitalize on significant CBD demand
License Wholesale Direct to Consumer CBD Brokerage
Derivative Product THC Hemp-derived CBD Terpene Hemp-derived CBD Terpene Hemp CBD Isolate Form Factor Chocolate Pre-rolls Vapes Flower CBD Isolate Chocolate Hemp Cigarettes Vapes & E-liquid Gum Capsules Tinctures Gummies CBD Isolate Chocolate Hemp Cigarettes Vapes & E-liquid Gum Capsules Tinctures Gummies Pure CBD Isolate F/S Hemp Oil Raw Hemp Products Gross Margin Range 6% Royalty + Licensing Fee 50% 75% 10%
18-month plan in place to significantly lower COGS, secure pricing premiums and achieve superior margins
BUSINESS MODEL
9
- Launched terpene-based products line (cannabinoid and THC free) to introduce Bhang brands in non-
cannabis legalized jurisdictions
- Launching CBD topical products to capitalize on wellness, beauty and grooming markets
- CBD brokerage vertical to capitalize on long-standing relationships and rapidly-growing demand
- Dedicated product innovation and development team based in Florida
- Extensive intellectual property including 200+ trademarks, domains and patents
- Proven track record of building brands and successfully launching new products
- Challenging market dynamics with innovative new offerings that address modern trends
- Utilizing consumer insights and macro trend data to create compelling brands
- Robust product pipeline ready to be launched in the next 12 months
Product Development
- Creating partnerships with companies that share approach to delivering exceptional sensory experiences
- THC licensing agreements with Origin House, Indiva and Trulieve among private partners to expand
throughout United States and Canada
- Signed individual CBD distribution agreements with distributors into Spain, France, Italy, Belgium,
Germany, Luxembourg and the U.K. with additional agreements to be signed over the next 12 months
- Well-established infrastructure to support new markets
- Bhang has an aggressive growth by acquisition plan, pursuing a number of accretive acquisitions
- Recent acquisition of Red Ace Organics positions Bhang to become a leader in the health and wellness
beverage market with distribution to 1,400 more stores including Whole Foods, Sprouts Market and Amazon
PATHWAY TO GROWTH
10
Distribution Expansion New Business Verticals Strategic Acquisitions
BRAND SPOTLIGHT
11
BRAND PORTFOLIO
Anchored by our 8X cannabis cup winning gourmet chocolate bars.
12
Over the last 9 years, we have dedicated key resources to learn more about our customers and identify future customers to create compelling brands that capture the breadth of this rapidly evolving market.
CAPITALIZING ON THE MOST PROFITABLE GROWTH TRENDS
13
Global Market Cannabis & CBD Performance Athletics / High Involved Health Nicotine Cessation / E-Liquid Grooming / Beauty Demographic Millennial 21-35 65% Male 35% Female Millennial/Xennial 25-50 70% Male 30% Female Smokers 18+ 60% Male 40% Female Millennial/Xennial 30-50 50% Male / Female Market Size by 2025 in $USD(1) Bhang Brand Bhang, Bhang CBD Red Ace Mota, ERB, 1914 Terpzilla Charlie Bravo Delta / Ohana
(1) Source: Global Cannabis & CBD – Grand View Research, Inc, Brightfield Group Performance Athletics – Grand View Research, Inc, Male Grooming – IMARC Group Female Cosmetics/Beauty – Orbis Research Nicotine Cessation / E-Liquid – Grand View Research, Inc.
<2018 >2019 2019
Medical & Recreational Asia Pacific
California
(2013)
Michigan
(2015)
Illinois
(2016)
Florida Canada2
Mass Market
All 50 States
Europe
Spain, France, Italy, Germany, Belgium, Luxembourg & and the U.K. South Korea
(negotiations in progress)
Medical & Recreational
Ohio Puerto Rico Nevada Mexico
(negotiations in progress)
Arizona
(negotiations in progress)
EXPANDING INTO NEW MARKETS
EXPANDING INTO NEW MARKETS
14
(1) Hemp-Derived CBD Products and Terpene Product Verticals are expected to be sold initially; other Verticals to be sold in the future as the respective countries’ legislations evolve (2) Canada joint venture with Indiva completed in Q3 2018 – sales pending legislation
Since 2010, Bhang has led the industry in product quality, testing and consumer satisfaction
CREATING PRODUCTS THAT PEOPLE LOVE
15
- Manufacturing and distribution contracted to licensees paying
royalties and licensing fees
- Targeted to medical, wellness and adult-use markets
- Regulated on a state-by-state, country-by-country basis
- High-quality, high-value line with independent lab testing
- Innovative product design and messaging
- One of the most awarded cannabis product lines in the world
Chocolate, Pre-rolls, E-liquid and Flower
THC PRODUCTS
17
CBD Isolate, Chocolate, Hemp Cigarettes, Gum, Vapes, E-liquid, Lip Balms, Tinctures, Capsules, Beet Juice and Gummies
- Controlled manufacturing, through
co-manufacturing, in-house manufacturing
- Network of global distribution partners alongside
Bhang’s own channels
HEMP-DERIVED CBD PRODUCTS
18
CBD BRAND SPOTLIGHT (COMING SOON)
19
Hemp Cigarettes, E-liquid
- Started production in Q4 2018
- First mass-distributed cannabis brand
- First “cannabis-inspired” and “cannabis-derived” terpene product line
with the flavors of cannabis but without the THC
- Controlled manufacturing, through co-manufacturing, in-house
manufacturing, and distribution channels
- Targeted to the mass market (Drugstores, Big Box Retailers)
- Initial product roll-out includes e-liquid & infused hemp cigarettes
TERPENE PRODUCTS
20
- Bhang has signed a supply
agreement with a 1,000,000+
- sq. ft. Kentucky hemp farm to
secure supply of high-quality hemp and CBD isolate for Bhang’s CBD product line
- Secures supply at attractive
prices
- Excess supply of hemp and
CBD isolate to be sold at profit to market players
WE GROW WITH THE BEST
- First harvest in Q4 2018
21
- Florida distribution and manufacturing
agreement with state’s largest dispensary network
- Medical cannabis market is projected to
hit $1.7 Billion3 across 200,000+ medical patients
- Agreement covers Bhang chocolate with
- ption to extend product line via
Trulieve’s 37 Florida dispensaries (Targeting 44 by Q4 2019)
- California distribution and
manufacturing agreement in world's largest cannabis market
- Expected to reach $11 Billion2
- Agreement covers Bhang edibles +
vape product lines
- Partnership provides infrastructure to
support all California revenue generation efforts
California
Medical/Recreational
(1) Cresco Labs (CSE: CL) is finalizing its acquisition of Origin House. Contract carries through under Cresco Labs (2) Cowen Group estimate for 2030 (3) Arcview Market Research/BDS Analytics estimate for 2022
CSE: OH1 CSE: TRUL
U.S. THC DISTRIBUTION PARTNERS
23
Florida
Medical
Population / Medical Patients Licensee Coverage Medical Cannabis Market Size1 Distribution Agreement Medical THC
Nevada 3M / 43M Annual Tourists Medical/Rec
$800M
Exclusive distribution and manufacturing agreement for medical Bhang THC- infused products Chocolate Bars Oral Sprays Flower Cones Pre-rolls Vape Products Michigan 9.9M / 300K+ Medical
$750M
New Mexico 2.1M / 70K+ Medical
$372M
Illinois 12.7M / 60K+ Medical
$400M
Ohio 11.7M / 25K+ Medical
$274M
U.S. THC DISTRIBUTION PARTNERS (CONT’D.)
24
(1) The Arcview Group Market Estimate for 2022
U.S. CBD DISTRIBUTION
25
Online
- Bhangcbd.com launched in April, 2019
- Distribution to U.S. states where CBD is legal
- Anticipate e-commerce sites selling our CBD
products to become a large revenue and EBITDA source Brick and Mortar
- Partnering with Mr. Checkout to distribute across US
national and independent retailers including national grocery and health stores, vitamin retail outlets and pharmacies
- Targeting 2000+ brick and mortar locations selling
CBD products by Q4 2019
66% 34%
CBD COVERAGE FUTURE OPPORTUNITY
- Exclusive distribution
agreement with local partner for Bhang CBD products throughout Puerto Rico and surrounding islands
- 50/50 joint venture with Indiva
(CSE:NDVA) and Bhang for Canadian and select worldwide distribution
- Canadian-based manufacturing
for Bhang product lines (chocolates, gums and oral sprays, isolates, vapes and accessories)
- Infrastructure to support
revenue generation efforts in $10 Billion Canadian market1
Europe Canada / Worldwide Puerto Rico
THC/CBD CBD CBD
- Distribution agreements for Bhang
CBD products across Europe
- Partners have distribution rights into:
Spain, France, Italy, Belgium, Germany, Luxembourg & and the U.K.
(1) Eight Capital Estimate for 2024 (May 2018)
GLOBAL DISTRIBUTION PARTNERS
26
CELEBRITY PARTNERSHIPS
27
Cypress Hill Bhang
Partnership with Grammy - nominated and renowned hip-hop group Cypress Hill Packaging for pre-rolls & flower designed to appeal to cannabis enthusiast, hip-hop & Latin markets Products are distributed under CHB – Cypress Hill Bhang brand Partnership has exposure to over 6.6 million Cypress Hill + Bhang followers on Social Media platforms
BEVERAGE ACQUISITION
Leading Beet Wellness Company
- As announced on September 9, 2019,
Bhang has acquired Red Ace Organics to distribute “un-BEET-able” organic CBD & beet based wellness products
- Positioned to become a leader in health
and wellness beverage market
- Increases distribution by 1,400+ stores
across the US including Whole Foods Markets and Amazon online
- Plans to launch Red Ace-branded line of
CBD/Terpene-style beverages and products, including functional sparkling beverages
28
CAPITAL STRUCTURE
Share Class # Of Shares
Subordinate Voting Shares (Listed) 49,112,627 Multiple Voting Shares (Unlisted) 56,634.128 Total Shares Outstanding1 105,746,755 Escrowed Shares2 48,439,840 Shares Reserved For Issuance3 7,482,096
1 Multiple voting shares are convertible at 1:1000 subordinate voting common shares 2 Assuming conversion of all multiple voting shares 3 Subordinate voting shares reserved for issuance under options, warrants and convertible notes
- Debt-free
- Completed C$5.6M financing – 2019
- Use of Proceeds:
- Brand and product development
- Product inventory
- Acquisitions
- Official CSE List Date – July 11, 2019
- Stock Symbol – CSE: BHNG / OTCQX: BHNGF
29
CSE: BHNG / OTCQX: BHNGF BhangNation.com
#LiveLifeWithABhang
Financial strategy and management consulting expert Holds numerous CFO positions - CO2 GRO, Caracara Silver, DelphX Capital Award-winning second- generation cannabis executive with 20+ years
- perational experience
High Times most influential women in cannabis recipient Accomplished writer & speaker Member of advisory board
- f Liberty Leaf (CSE: LIB)
and The Jack Herer Group Lawyer for 30+ years with two decades of global transactional experience CEO of Mexico Petroleum Company Chief Creative + Brand
- Architect. 25+ years with
major retailers High Times Top 100 in cannabis recipient Founding member National Cannabis Industry Association & a European certified Chef de Cuisine and Master Chocolatier Trusted legal advisor with experience advising
- n U.S.-Canada cross-
border capital markets, M&A and corporate and securities transactions and regulatory compliance
BOARD OF DIRECTORS
32
Scott J. Van Rixel Chairman Daniel D. Nauth Director Jamie Pearson Director Will Waggoner Director Stephen M. Gledhill, CPA, CMA Director
Launched first chocolate bar at International Cannabis and Hemp Expo in San Francisco Won 1st place for best edible at the SF Medical Cup
2010 2011
Extended award- winning product line to include new sprays,
- ils and vapes
Expanded licensee and producer network to New Mexico Opened head office in Miami Won 1st place for best edible at the LA High Times Cannabis Cup
2012 2013
Expanded licensee and producer network to Arizona and California Initiated vape program Won 1st place for best edible at the Denver High Times Cannabis Cup
2014 2015 2016 2017 Q1 & Q2 2018
Won 1st place for best edible (Cherries & Cream) at the San Francisco Medical Cannabis Cup Expanded licensee and producer network to New York and Michigan Won 1st place for best edible at the Jamaica & LA High Times World Cup Expanded licensee and producer network to Illinois Announced collaboration with Cypress Hill Won 1st place for best CBD, packaging, vape cartridge and infused edible products at 805 Cannabud Cup & Jack Herer Cup Won 1st place Essie Award for best extraction company and best cannabis edible at Best of the Burque Completed internal reorganization with renewed focus on executive recruitment, market research and new product development Announced partnership with CannaRoyalty (Origin House) in California Expanded network to Canada through JV with Indiva and to Florida through Trulieve licensing agreement Won 1st place for best edible, cannabis products and manufacturing at multiple competitions
Q3 & Q4 2018
Launched terpene products to select retailers Launched Cypress Hill partnership & product line
Strong momentum to achieve our aggressive growth strategy
2019
Premiered 10+ different products including Hemp cigarettes Scott Van Rixel and Jamie Pearson named to High Times' Most Influential People in Cannabis Won 1st place for best edible at Best of the Burque Won 1st place for best edible at Weedcon Completed Joint Venture w/ Oceana Coffee Extended CBD distribution to Puerto Rico and throughout Europe Acquired Red Ace Organics
OPERATIONAL SUCCESS
33