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Cannabis On Demand
Eaze is an online retailer and technology platform that helps provide legal access to cannabis through safe and convenient delivery
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Eaze is the largest direct-to-consumer cannabis retailer in California
1. See Definitions in Appendix2. Arcview Market Research - U.S. Cannabis Market Size Database; Estimated U.S. national addressable market for 20193. Based off total taxes collected from legal cannabis sales in California
5M+ 650k+ $85$190M+
~$13B $125M+ 8.5% 70%
Deliveries Completed Customers Served 2020 Transaction Value Average Transaction Value
Total Addressable Market(2) 2020 Revenues of California’s Total Cannabis Transaction Volume Processed(3)
Total California Population Serviced in
Active Territories
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$176M
Eaze had strong core growth metrics in 2019
4
$133M 298k2.0MGross Transaction Value Gross Merchandise Value New Customer Deliveries
78%
Return Customer Deliveries
71% 71% 68%
Poor liquidity/cash & mis-aligned retail partners
Inconsistent supply chain & control of brand
No direct access to consumer payments
Inconsistent customer experience/affinity
Eaze is transitioning from a marketplace to a vertical operator
AS A MARKETPLACE VERTICAL RETAILER
Positive working capital & reduced cost
House brands, optimization to maximize profit
Ownership of networks & last-mile distribution
Consistent experience with faster ETAs
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Two steps: depot consolidation and white-label products
Depot Consolidation White Label Products
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Eaze will control 82% of network by Q2 & 95% by the end of the year
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Gross Merchandise Value v. % Controlled by Eaze
Bay Area Los Angeles
Eaze tracking ahead of forecasted timeline with 29% owned GTV
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Actual Results through March 15, 2020 of Owned GTV v. Partner
GMV and revenue converge as Eaze consolidates the depot network
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White label products will be 40% of the sales volume by year end
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Within 21 days Circles represents 25% of all vapes & 50% in its price band
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Gross Merchandise Value v. % Controlled by Eaze
25% OF ALL VAPES 50%+ OF VAPES <$20
Spike thanks to aggressive month-long promo campaign
Spike thanks to aggressive month-long promo campaign
Extended growth outpacing the category fueled by consistent promo campaign
Extended growth outpacing the category fueled by consistent promo campaign
Circles was 25% of Vape Sales - tracking above prior brand launches
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Circles
In-house brands increase margins by 15%
MARGIN IMPACT COST WHOLESALE RETAIL MARGIN
House Brand $7.50 $12.00 $30.00 75.00%
3rd Party $12.00 $30.00 60.00%
HOUSE BRAND MARKUPCapturing Additional Value through Private Label
Opportunity
Category Share % 2019 GMV15% Gross Margin Saving (40% menu penetration)
Flower / Prerolls 40% $53 MM $3.2 MM
Vaporizers 40% $53 MM $3.2 MM
Edibles 13% $17 MM $1.0 MM
Concentrates 2% $3 MM $0.2 MM
Tinctures / Topicals / Capsules / Other
5% $7 MM $0.4 MM
Total 100% $133 MM $8.0 MM13
ROLL OUT STRATEGYFocusing on Highest Volume Categories
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25%+ contribution margin with ability to improve cost per delivery
Historic low of $11.51
San Francisco depot is now fully ramped up and profitable each month
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Eaze is profitable at ~225,000 deliveries per month
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Control the Depot Network
Expand In-House Brands
2020 December Run Rate
Achieve Profitability
Target
Revenue
Gross Margin
EBITDA
• $185 MM
$89 MM
$6 MM
Having built California’s largest retail channel, Eaze is now focused on achieving profitability in 2020
Verticalizing yields a profitable business with a ~$185M December run rate
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Vertical Eaze Financial Model
Vertical Eaze will ramp EBITDA significantly and be positive by Q4 2020
Pro-Forma Model of Vertical Eaze
2020 2020 December Run Rate 2021 Annual
Revenue $128MM $185MM $262 MM
Gross Profit $58MM $89MM $133 MM
Gross Margin 45% 48% 51%
Operating Expenses $74MM $84MM $101 MM
EBITDA ($14MM) $6MM $33 MM
EBITDA Margin N.M. 4% 13%
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Valuation Comparables - profitable operators command a substantial premium
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Eaze 2020EDecember 2020
Run Rate FY2021Green Thumb
Industries Trulieve
GMV $138,799,000 $176,311,000 $249,260,000 n/a n/a
Revenue $128,461,000 $184,778,000 $261,610,000 $161,402,261 $209,071,893
Gross Profit $58,370,000 $89,301,000 $133,220,000 $80,810,481 $101,944,320
Gross Margin % 45.44% 48.33% 50.92% 50.07% 48.76%
EBITDA -$14,379,000 $6,447,000 $33,103,000 $32,085,141 $66,756,653
EBITDA Margin % -11.19% 3.49% 12.65% 19.88% 31.93%
Est. Enterprise Value $100,000,000 $461,945,000 $654,025,000 $1,869,950,841 $1,171,920,243
EV / Revenue 0.78 2.5 2.5 11.59 5.61
EV / EBITDA n/a 71.65 19.76 58.28 17.56
Vertical Eaze will ramp EBITDA significantly and be positive by Q4 202020
Eaze Monthly P&L - January to December 2020 Key Metrics
Jan-2020E Feb-2020E Mar-2020E Apr-2020E May-2020E Jun-2020E Jul-2020E Aug-2020E Sep-2020E Oct-2020E Nov-2020E Dec-2020E 2020Gross Transaction Value $12,137,701 $11,239,354 $12,132,874 $13,182,799 $14,389,001 $15,781,187 $16,724,350 $17,551,894 $18,294,764 $18,964,943 $19,571,543 $20,122,194 $190,092,604Deliveries 143,502 132,881 143,445 155,858 170,119 186,578 197,729 207,513 216,296 224,219 231,391 237,901 2,247,432# of Depots Controlled 2 2 3 5 7 9 10 10 10 10 10 10% of Network Controlled 0.60% 3.90% 20.90% 39.90% 67.40% 82.20% 94.70% 95.20% 95.20% 95.20% 95.20% 94.70%% of GMV House Brands – 0.50% 5.40% 10.00% 15.00% 20.00% 25.00% 30.00% 32.50% 35.00% 37.50% 40.00%New Customers Acquired 23,474 27,341 20,000 28,571 35,714 42,857 42,857 42,857 42,857 42,857 42,857 42,857 435,099
Gross Merchandise Value $8,862,554 $8,206,611 $8,859,030 $9,625,652 $10,506,381 $11,522,910 $12,211,576 $12,815,822 $13,358,242 $13,847,585 $14,290,505 $14,692,572 $138,799,440Plus: Delivery & Service Fees $717,510 $664,405 $717,225 $779,290 $850,594 $932,892 $988,646 $1,037,566 $1,081,480 $1,121,097 $1,156,955 $1,189,507 $11,237,167Plus: Brand Revenue $886,255 $820,661 $885,903 $2,592,819Less: 3rd Party Depot Take of GMV -$5,460,333 -$4,891,207 -$4,343,292 -$3,585,720 -$2,120,802 -$1,269,388 -$399,796 -$380,676 -$397,091 -$412,440 -$423,600 -$483,884 -$24,168,229Net Revenue $5,005,987 $4,800,470 $6,118,866 $6,819,222 $9,236,173 $11,186,414 $12,800,426 $13,472,712 $14,042,631 $14,556,242 $15,023,860 $15,398,195 $128,461,198% Growth -15.00% -7.00% 8.00% 9.00% 9.00% 10.00% 6.00% 5.00% 4.00% 4.00% 3.00% 3.00%
Gross Profit $2,280,928 $2,275,256 $2,805,375 $2,758,699 $3,828,923 $4,777,011 $5,629,357 $6,119,333 $6,479,965 $6,822,481 $7,150,469 $7,441,745 $58,369,542% Gross Margin 45.56% 47.40% 45.85% 40.45% 41.46% 42.70% 43.98% 45.42% 46.14% 46.87% 47.59% 48.33% 45.44%% Product Margin 47.75% 50.51% 51.29% 61.48% 62.23% 62.99% 63.74% 64.50% 64.87% 65.25% 65.62% 66.00%
Depot-Level Operating Income $2,010,620 $2,004,948 $2,399,913 $2,082,929 $2,882,845 $3,560,625 $4,277,817 $4,767,793 $5,128,425 $5,470,941 $5,798,929 $6,090,205 $46,475,990% Depot-Level Operating Income 40.16% 41.77% 39.22% 30.54% 31.21% 31.83% 33.42% 35.39% 36.52% 37.58% 38.60% 39.55% 36.18%
(-) Corporate Expenses -$4,482,380 -$4,360,057 -$4,407,126 -$4,762,433 -$5,075,972 -$5,399,308 -$5,448,991 -$5,492,584 -$5,531,716 -$5,567,020 -$5,598,974 -$5,627,980 -$61,754,541Operating Income -$2,471,759 -$2,355,110 -$2,007,213 -$2,679,504 -$2,193,126 -$1,838,683 -$1,171,175 -$724,792 -$403,292 -$96,078 $199,955 $462,225 -$15,278,552% Operating Income -49.38% -49.06% -32.80% -39.29% -23.74% -16.44% -9.15% -5.38% -2.87% -0.66% 1.33% 3.00% -11.89%
Net Profit -$2,471,759 -$2,380,038 -$2,121,054 -$2,745,502 -$2,444,392 -$2,247,856 -$1,736,472 -$1,385,370 -$1,132,769 -$891,318 -$658,581 -$452,413 -$20,667,524% Net Income -49.38% -49.58% -34.66% -40.26% -26.47% -20.09% -13.57% -10.28% -8.07% -6.12% -4.38% -2.94% -16.09%
EBITDA -$2,396,759 -$2,280,110 -$1,932,213 -$2,604,504 -$2,118,126 -$1,763,683 -$1,096,175 -$649,792 -$328,292 -$21,078 $274,955 $537,225 -$14,378,552% EBITDA -47.88% -47.50% -31.58% -38.19% -22.93% -15.77% -8.56% -4.82% -2.34% -0.14% 1.83% 3.49% -11.19%
Series D Terms - $40M Round with $20M Closed
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Size ● Up to $40M ($23.4M closed through March 2020)
Valuation
Warrant Coverage
● Price per share of $1.3672 per share, based on a pre-money valuation of $100M
● 100% warrant coverage at $1.3672 per share
Investor Rights ● 1x pari-passu liquidation preference, and rights, privileges and preferences similar to other series of existing preferred stock
Sources and Uses of Capital
Sources Uses / Category Amount
$40M Series D Financing Eaze Working Capital $30M
Depot Acquisition Working Capital $5M
Brand Portfolio Development & Manufacturing $5M
Total Uses $40M
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Proforma Capitalization with $23.4M Closed in Series D ($1.37/share)
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Cap Table Shares Series D Remaining Pending Acquisition Proforma
Preferred
Preferred Series A Stock 8,709,633 - - 8,709,633
Preferred Series B Stock 31,782,689 - - 31,782,689
Preferred Series C Stock 44,869,343 - - 44,869,343
Preferred Series D Stock 17,115,272 12,141,603 - 29,256,875
Preferred Shares 102,476,937 12,141,603 - 114,618,540
Common
Common Shares 2,420,966 - 6,660,000 9,080,966
Total Issued & Outstanding 104,897,903 12,141,603 6,660,000 123,699,506
Warrants
Warrants 67,511,976 12,141,603 3,330,000 82,983,579
Options
2015 Stock Option Plan 9,411,689 - - 9,411,689
2020 Stock Option Plan - 24,010,530 - 24,010,530
Fully-Diluted 181,821,568 48,293,736 9,990,000 240,105,304
APPENDIX
Team Member Title Experience
Ro Choy Chief Executive Officer Former CEO of BitTorrent and Business Leader at Ebay
Megan Miller Chief Operating Officer Former Vice President of Loggly, Docusign
Andrea Lobato Chief Legal OfficerFormer Dir. of Compliance at Lyft and
Dir. of Legal at Judicata
Nick Fasano Chief Revenue Officer Former VP of Sales at Localytics, Axceler, and Rapid7
John Curtis Chief Financial Officer Former CFO of Pacific Gateway Concessions, Leadership at Syniverse
David Mack SVP, Comms & Public Policy Former Sr. Director of Public Affairs at Lyft
Cory Azzalino SVP, Finance Former Restructuring CEO at DYME, Investor at Prudential Capital
Akshay Vyas VP, TechnologyFormer Vice President of Engineering at Quid, Head of UI Engineering at
Docker
Management Team
25
Eaze is the only delivery platform with POS and last-mile logistics solutions built
in-house.
COMPETITOR BUSINESS MODEL OWNS CANNABIS LICENSES KEY CAPABILITIES CA POPULATION
COVERAGEOTHER STATE
PRESENCE
Listing service & advertising platform
NoAd hosting, POS,
inventory management
80%+
AZ, OR, MI, NV, CO, FL, OH, MA, MT, MD, plus several others
for non-delivery
In-house delivery service
Retail, distribution Digital advertising 56% NV
Listing service, POS system, distributor
Distribution (NV only)POS, sourcing
support24% NV
Listing service & POS system
NoPOS, inventory management,
compliance support10% None
Key Competitors
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Launch of Old Pal to Compete with the Black Market
Curate Menu to Catalyze Growth Based on Market Maturity & Profile
Proactive Menu Shift Towards Vapes Based on Emerging Trends
Launch of LEUNE to Capture Emerging Customer Segments
Maximize Lift from Promos by Measuring Price Elasticity
Optimize Customer Communications to Drive Retention & Resurrection
Relevant Case Studies
● Consumer surveys indicated loss of wallet share to black market
● Old Pal launches in May 2018 via collaboration with suppliers
● Today Old Pal is #1 Flower brand on Eaze
● Historically, flower has been king
● Late 2017 sales indicated a broad shift of preferences towards vaporizers
● Eaze’s Menu Team adjusted menu assortment proactively to capture emerging vape demand
● Eaze observed that menu breadth had a different impact on fill rate & revenue lift depending on market maturity
● Menu breadth has a larger impact on operational efficiency at small scale
● Eaze implements tiers for menu structure based on market maturity
● New product was needed to capture rising demand in female segment
● However, dominant segment remains male, so product needed broad appeal
● LEUNE launches in Nov. 2018 via collaboration with suppliers
● Today, LEUNE is #3 All-in-One on Eaze
● Promo data showed that higher discounts didn’t necessarily result in higher lift
● Eaze Analytics dove into effect of historical price changes on demand
● Promo lift has increased substantially and continues to improve
● Data shows that cannabis consumers react differently to conventional customer lifecycle management practices
● Eaze built proprietary CLM tools tailored to customer segments
● Significant drop in unsubscribe rates & rise in engagement
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Eaze and its partners have leveraged data to win CA
We Can Leverage Eaze’s Data to Create Leading Brands Nationwide
DATA
CATEGORY MARKET TRENDS
OPERATIONAL EFFICIENCY DATA
DEMOGRAPHICS/CONSUMPTION
BEHAVIOR
• Category, Sub-category, SKU• Market, Zip Code, Region• Strain, brand, product type
• Age, Gender, Demographic Data
• Price elasticity, Brand penetration, Brand Propensity
• Market-leading inventory management software curated over 5 years
• Best training practices for brand managers, product rollout, drivers
Establishing the Optimal Strategy/Product Market Fit
• Leverage entirely customizable data trends over the past 5 years to inform virtually any product expansion/state expansion decision
• Entirely Informed Brand Launch Decision in the most bifurcated market
• Completely customizable by inputs
Result: Eaze has leveraged 5 years of actionable data in “king-making” CA-wide brands such as Old Pal 28
CU
MU
LATI
VE
DE
LIV
ER
IES
(In M
illio
ns)
1
4
3
2
FIRST DELIVERY IN SFJULY 2014
PROP. 64 PASSEDNOV 2016
The Adult Use of Marijuana Act legalized cannabis in California
1M DELIVERIESMAY 2017
CA TRANSITIONED TO ADULT USE
JAN 2018Adult use marijuana sales became legal in California
on Jan. 1, 2018
Eaze completed first adult use delivery
2M DELIVERIESFEB 2018
EAZE WELLNESS LAUNCHED
NOV 2018
Eaze launched CBD delivery in
47 states
3M DELIVERIESDEC 2018
LAUNCHED DELIVERY IN
OREGONMAR 2019
4M DELIVERIESJUNE 2019
LAUNCHED DELIVERY IN SAN DIEGO
FEB 2015
LAUNCHED DELIVERY IN
SAN JOSEMAR 2017
LAUNCHED DELIVERY IN LA
FEB 2018
LAUNCHED DELIVERY IN
SF PENINSULAJAN 2016
5
5M DELIVERIESDec 2019
Eaze has delivered the highest growth rate of any CA retailer since 2017
29
QA
U (Q
uart
erly
Act
ive
Use
rs)
* Source: Marijuana Business FactbookU
S C
anna
bis
Mar
ket
Fore
cast
*30
Eaze has scaled its active user base faster than the rapidly growing overall cannabis market
TAM: 780k
TAM: 439k
TAM: 4,245k
TAM: 621k
TAM: 666k
TAM: 1,332k
TAM: 1,253TAM: 2,133k
TAM: 1,969k
TAM: 901k
TAM: 751k
NJ
MA
#1 Cannabis player in California
8+ New States CY20-21
8% Marketshare
$7B CA Market Size CY22
Eaze will leverage its market-lead in CA in expanding to new states
$20B TAM CY22
TAM: 290k
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Eaze will focus on high-margin exclusive partnerships outside of CA
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Eaze’s Competitive Advantages
Brand Name StoryCurrent
ValuationLaunch Date
#1 Value Brand in CA
$120 MM May 2018
#1 Flower Brand in CA
$60 MM May 2017
#1 Minority Owned Brand
$30 MM Nov 2018
Key Partners• Eaze has pursued a white-label strategy in
the past and has key relationships across the value chain
5 Years of Data
State-wide Distribution
• Eaze has an established channel to distribute to 87% of California’s total population
Lifecycle Marketing
• Eaze is well-versed in targeting users with lifecycle marketing campaigns to drive retention/growth
• Eaze has 5 years of empirical data to inform brand/product/targeting strategies
Brands Launched Exclusively on Eaze
Proven track record of launching/rapidly growing largest CA brands
