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cgocorp.com 1 CSE : CGOC March 2019 CORPORATE PRESENTATION Delivering Long-term Success in Cannabis Investing

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Page 1: Delivering long-term success in cannabis investingcgocorp.com/.../03/...Presentation-MARCH2019-FINAL.pdf · CORPORATE PRESENTATION Delivering Long-term Success in Cannabis Investing

cgocorp.com 1

CSE : CGOC

March 2019

CORPORATE PRESENTATION

Delivering Long-term Success

in Cannabis Investing

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cgocorp.com 2

Disclaimer

The presented materials and accompanying oral presentation may constitute “forward-looking information” within the meaning of Canadian securities laws and are based on expectations,

estimates and projections as of the date of this presentation. Forward-looking statements include, without limitation, statements with respect to:

a) the completion of the Offering and receipt of all regulatory approvals in connection therewith;

b) the use of the net proceeds of the Offering;

c) the availability of investment opportunities;

d) the performance of the Corporation’s business and operations;

e) applicable laws, regulations and any amendments thereof including, but not limited to, the legalization of cannabis and the timing thereto;

f) the competitive and business strategies of the Corporation;

g) statements related to the effect and consequences of certain regulatory initiatives;

h) the expected growth of the cannabis sector;

i) the competitive conditions of the industry;

j) the Corporation’s investments in the U.S. and consequences of those investments under U.S. federal law; and

k) the anticipated changes to laws regarding the recreational use of cannabis and the business impacts on the Corporation

Forward-looking statements are necessarily based upon management’s perceptions of historical trends, current conditions and expected future developments, as well as a number of

specific factors and assumptions that, while considered reasonable by management as of the date on which the statements are made in this presentation, are inherently subject to significant

business, economic and competitive uncertainties and contingencies which could result in the forward-looking statements ultimately being incorrect. In addition to the various factors and

assumptions set forth in this presentation, the material factors and assumptions used to develop the forward-looking information include, but are not limited to: general economic, financial

market, regulatory and political conditions in which the Corporation operates will continue to improve; the Corporation will be able to compete in the industry; the Corporation will be able to

make investments on suitable terms; issuers in the Portfolio will be able to meet their objectives and financial estimates and that the risk factors noted below, collectively, do not have a

material impact on the Corporation.

By its nature, forward-looking information is subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be

accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. Known and unknown risk factors, many of which are beyond the control of the Corporation could cause actual results to differ

materially from the forward-looking information in this presentation. Such factors, without limitation, include the following, which are discussed in greater detail in the “Risk Factors” section of the Prospectus: there is no assurance that the Corporation

will be able to achieve its investment objectives; risks relating to the Portfolio issuers; risks relating to medical cannabis; risks relating to risk and timing of legalization of recreational cannabis; regulatory risks; risks relating to the performance of the

Portfolio issuers; risks relating to the licensing process; no current market for Common Shares or Warrants; risks relating to recent and future global financial developments; industry concentration risks; risks associated with investment in illiquid and

private securities; risk factors related to U.S. cannabis legislation; changes to the cannabis laws; United States anti-money laundering laws and regulations; investments in U.S. cannabis sector; short selling; use of the Prime Broker to hold assets;

sensitivity to interest rates; reliance on the Manager and Investment Manager; conflicts of interest; risks related to dilution; loss of investment; risks relating to currency exposure; risks relating to foreign market exposure; lack of operating history; risks

related to the exchange option; and tax risks. These risk factors are not intended to represent a complete list of the factors that could affect the Corporation and investors are cautioned to consider these and other factors, uncertainties and potential

events carefully and not to put undue reliance on forward-looking statements.

There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Forward-looking statements are provided for the purpose of

providing information about management’s expectations and plans relating to the future. The Corporation disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or

otherwise, or to explain any material difference between subsequent actual events and such forward-looking statements, except to the extent required by applicable law.

Terms undefined herein have the meanings ascribed to them in the Prospectus. An investor should rely only on the information contained in the Prospectus. This presentation is qualified in its entirety by reference to, and must be read in conjunction

with, the detailed information appearing in the Prospectus. Neither the Corporation nor the Agent has authorized anyone to provide investors with different or additional information. The Corporation is not offering, or soliciting offers to acquire, the

securities in any jurisdiction in which the offer is not permitted. For purchasers outside Canada, neither the Corporation nor the Agent have done anything that would permit the offering or distribution of this presentation together with the Prospectus in

any jurisdiction where action for that purpose is required, other than in Canada. An investor is required to inform itself about and to observe any restrictions relating to the planned public offering and the distribution of this presentation and of the

Prospectus.

No securities regulatory authority has expressed an opinion about the securities of the Corporation discussed in this presentation and it is an offence to claim otherwise. The securities of the Corporation discussed in this presentation have not been,

and will not be, registered under the U.S. Securities Act, or the securities laws of any state of the United States and, subject to certain exceptions, may not be offered, sold or delivered, directly or indirectly, in the United States except pursuant to an

exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws. This presentation does not constitute an offer to sell or solicitation of an offer to buy any of the securities of the Trust in the United States.

An investment in the securities offered by the Prospectus must be considered speculative as the securities are subject to certain risk factors as set out under the heading “Risk Factors” in the Prospectus or otherwise described in the Prospectus. An

investment in Units of the Corporation is appropriate only for investors who have the capacity to absorb a loss of some or all of their investment. Investors should also review the financial statements included in the Prospectus.

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cgocorp.com 3

Our Value Proposition

The Opportunity:

Long-term Cannabis Investing with Reduced Risk

• Exposure to publicly traded companies in both Canada and the US

• Unique exposure to the private US Cannabis sector –the future of legalization will drive growth

• Ability to invest globally and be a first mover in the global emerging markets

Ultimately this diversification results in less volatility and ability to invest across the broad spectrum of Cannabis companies from producers to retailers, and everything in between

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cgocorp.com 4

The CGOC Team

Experienced leadership and operational team

Jamie Blundell

Director, President & COO

25+ years of experience in senior leadership roles, extensive experience with M&A, private equity firms and

large corporate divestitures.

Paul Andersen, CPA, CA

Director & CFO

Over 20 years of experience as a senior officer and/or director of numerous public and private. Cannabis-

specific experience and currently serves as director of Canada House Wellness Group Inc., and has worked as

a consultant with a privately owned Oregon-based cannabis company.

Bruce Campbell

Portfolio Manager

24+ years of investment management experience and an active cannabis investor since 2013. Founder and

Portfolio Manager of StoneCastle Investment Management. A go to professional in the space from media such

as Bloomberg, The Globe and Mail and Small Cap Power.

Nick J. Richards

Independent Director

Practicing tax attorney, adjunct professor of law and legal specialist to the United States cannabis industry,

advising businesses and owners throughout the U.S., and is licensed to practice law in California and

Colorado.

Brayden Sutton

Independent Director

Co-founded and served as EVP for Supreme Pharmaceuticals from 2013 – 2014 and played an instrumental

role in the early days of Invictus MD Strategies Corp., Aurora Cannabis Inc. and CannaRoyalty Corp.

Throughout his career, Mr. Sutton has played a major role in restructurings, reverse takeovers, IPOs and

M&As

John Durfy

Independent Director

25+ years of senior investment and financial management experience. Previously CIO at a hedge fund and

prior to that, Managing Director of Global Equities for the Ontario Municipal Employees Retirement System

(“OMERS”) from 2008-2011.

Gary Yeoman

Independent Director

From 2005 to 2011, Mr. Yeoman served as the CEO of Altus Group, and led the company through a seven-

year growth period. Previously Chairman of the board of Golden Leaf Holdings and Executive Chair of

iLOOKABOUT.

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The Cannabis Industry Opportunity

Canada leading a unique value-creation opportunity

Canadian MarketBy 2025, Canadian Cannabis market is

forecasted to be on par with the size of beer &

tobacco today.(1)

8.6x over 7 years

2018 est.

$1.4B(2)

2025 proj.

$12B+(2)

US MarketWhile the current regulatory environment

remains challenging, change is happening

fast. New research estimates suggest

increasing long-term industry potential.

Canada in the Global MarketCanadian companies and investors have

tremendous opportunities globally, given

Canada’s current position as a change

leader in the global industry.

9.7x over 11 years

2016

$5.9B

2027 proj.

$57B(3)

Canada leading the world

ACMPR legislation

becoming a standard

framework globally

Canadian companies

expanding globally:

14 companies expanding

across 13 markets

(1) Source: Eight Capital

(2) Source: Latest Research reports from Cowen and Company

(3) Source: Arcview

Global medical market growth:+21% CAGR 2018-2022 (3)

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Future Catalysts

Canada• M&A

• Supply agreements / retail distribution

• Extracted Products – legalization of extracted products expected October 2019

• Investment by pharma / alcohol / tobacco companies

International• Supply agreements and Canadian partnerships

• Medical program adoption – WHO’s drug committee

reviewing its cannabis policies, including de-

scheduling CBD

• In 2019, Mexico is expected to join Canada and

Uruguay in legalizing recreational use marijuana

United States• M&A

• Continued public offerings

• FARM Bill – was passed in November

2018 removing the regulation of Hemp

and CBD derived products

• STATES Act – expected to be voted on

in 2019

• 5 additional recreational use states

expected by year end 2019

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The Cannabis Industry Challenge

An early, volatile and complex industryIn order to effectively manage risk requires dedicated experts actively managing a

diversified portfolio

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The CGOC Difference

The Cannabis Growth Opportunity CorporationAccess to the knowledge and expertise needed to build and grow a diversified portfolio of public and private investments globally, to minimize downside risk, while participating in the long-term upside.

A portfolio of

Public Cannabis Businesses

• Diversified to minimize downside

• Actively managed

• Global focus

• ~60% of invested capital

A portfolio of

Private Cannabis Businesses

• Unique access

• Global focus

• Target 12-24 month liquidity

• ~40% of invested capital

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The Cannabis Industry Opportunity

Investing across the whole ecosystem multiplies the potential• $12B Canadian Cannabis industry estimate based on base market business models: cultivation and

extraction(1)

• The whole ecosystem projected to reach $23B, after factoring in ancillary services shown below(2)

(1) Source: Latest Research reports from Cowen and Company

(2) Source: Deloitte

Suppliers

Seeds, fertilizers,

etc.

Production

CultivationResearch and

developmentExtraction

Analytical

equipment &

services

Production

equipment,

security &

infrastructure

Software

Retail and Distribution

Online /

ecommerce

Stores,

consumption

locations

Consumer Products

Flower and

oil extracts

Edibles, tinctures,

topicals, infused

etc.

Delivery Systems

(vaporizers,

pipes, rolling

papers, etc.)

ApparelPackaging &

distribution

Services

Buildings,

equipment

Business,

regulatory, legal,

etc.

Marketing Pharmaceuticals Nutraceuticals Fiber, seeds, food

Cannabinoid

TherapeuticsFinance

Real

EstateHemp

Capital,

structuring

CGOC has also

invested in

Traditional

Industry

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cgocorp.com 10

US Investments

CGOC is your gateway to the US cannabis market• Unique access to private US Cannabis investment opportunities

• Strong industry connections providing proprietary deal flow

• CGOC Network Effect in full force south of the border

Private US Investments

8 investments across 18 states

7 investments across 7 states in pipeline

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A Changing Environment Requires ContinuousMonitoring of Information

Keeping up to date on a fast-changing environment on the regulatory as well as investor sentiment side – We stay in the know!

Rapid regulatory change (local & global)

Implication

Key investing behaviors required to succeed:

Active management, access to privates,

timing investments

US market attractiveness increasing

Reasons

Experienced operators + meaningful REV & EBITDA

US capital is starting to increase rapidly

Implication

Need to focus & actively invest in US privates

Privates need help navigating capital markets

Implication

Continue to focus and build capabilities to help

privates access, navigate and succeed with the capital

markets and M&A opportunities

CGOC network effect working

Implication

Continue to connect investors, publics and privates and

drive the CGOC network effect: trust

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The CGOC Network Effect

CGOC

Creating value that results in proprietary deal flow

Investors

Private

Co’s

Public

Co’s

Gain exposure to more

sophisticated institutional

shareholders

Gain name exposure

to public markets

Partnerships and

M&A opportunities

Gain access to

professionally

managed diversified

portfolio

Gain access to

private investments

Gain strategic advisory

from CGOC

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CG

OC

:CS

E

Portfolio Overview• Geographic Breakdown

• Top 10 Public & Private Investments

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Portfolio Breakdown

CGOC helps bring access to key investments in Canada, USA and International markets, driven by its private portfolio.

*Portfolio breakdown at cost

Geographical Breakdown of Public and Private

Portfolios

Breakdown of Investment

Split across the Public and

Private Portfolio’s

33%

53%

13%

Private Portfolio Public Portfolio Cash

50%45%

4%

US Canadian International

36%

55%

8%

US Canadian International

PUBLIC PORTFOLIO PRIVATE PORTFOLIO

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Top 10 Public Investments

A diversified portfolio of public companies focused on maximizing long-term growth. The public portfolio is actively managed by a seasoned Portfolio Manager, with a focus of staying ahead of the curve.

TSX: ACB (Canadian)

A vertically integrated

producer & distributor

CSE: CXXI (USA)

Acquisitions of vertical

operations

CSE: CNNX (USA)

Service provider to US

operators

TSX: TRST (Canada)

Federally regulated LP

TSX-V: OGI (Canadian)

East coast leader,

internationally expanding

CSE: CANN (Canada)

Currently has 2 LP’s,

looking to become a

vertically integrated

provider

CSE: PLTH (USA)

Vertically integrated

cannabis leader in Nevada

CSE: VGW (Canada)

Extraction and testing

TSX: VFF (Canada)

Vertically integrated

greenhouse producer

TSX-V: VIVO (Canada)

Pharma and recreational

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Private Portfolio

A diversified portfolio focused on early access, whole ecosystem and US/International markets to deliver long-term growth opportunities

Initial

InvestmentCompany Name

Total Investment

(C$)

Current Value

(NAV)

Weighting

(at cost)

Apr 2018 Global Cannabis Innovators Corp. $ 3,025,000 $ 5,691,094 23%

Feb 2018 Scientus Pharma Ltd. $ 2,000,000 $ 2,000,000 15%

Jul 2018 Vireo Health Inc. $ 1,971,710 $ 2,011,307 15%

Mar 2018 Jushi Inc. $ 1,962,090 $ 2,737,746 15%

Nov 2018 Norcal Cannabis Company $ 1,328,520 $ 1,346,317 10%

Apr 2018 Green Relief Inc. $ 1,000,000 $ 1,000,000 8%

Apr 2018 Bhang Corporation $ 646,150 $ 667,100 5%

Dec 2018 Tokr LLC $ 468,531 $ 465,173 4%

Apr 2018 Herbs Holdings Ltd. $ 320,150 $ 2,901,885 2%

Apr 2018 Bien Ventures Ltd. $ 300,000 $ 265,247 2%

May 2018 I.M.C Holdings Ltd. $ 250,000 $ 236,962 2%

Apr 2018 Avalon Bridge Capital Inc. $ 25,000 $ 25,000 0%

$ 13,297,151 $ 19,327,849

46% Portfolio return based on current NAV

Notes:

a) Value for NAV is a non-IFRS (international financial reporting standards) measure and was calculated based on the estimated carrying value of CGOC's private investments used to calculate the monthly

NAV. The term does not have any standardized meaning according to IFRS and therefore may not be comparable to similar measures presented by other companies. Management believes that the Value

for NAV as provided can provide useful information to its shareholders in understanding the performance of the portfolio.

b) As at March 15, 2019; some investments are denominated in USD; Forex (CAD:USD) 1.3342; Investments are common shares, preferred shares, warrants or some combination thereof.

c) Value for NAV of warrants is calculated using the Black-Scholes Model which requires six key inputs: risk-free interest rate, exercise price, market price at valuation date, expected dividend yield, expected

life remaining in the term of the warrant and expected volatility. Certain inputs are estimates, which involve considerable judgment and are or could be affected by significant factors that are out of the

Corporation's control.

d) Herbs Holdings Ltd. underwent a 10 for 1 stock split

e) The decrease in carrying value of Bien Ventures Ltd. common shares is due to CGOC's second unit subscription in June 2018 where the warrants were allocated a higher value than the common shares

compared to the first unit subscription in April 2018. Overall, the Corporation has not marked down the investment.

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Private Portfolio Investments

Our private portfolio companies have seen enormous success and have and continue to positively impact our NAV.

Canada

A vertically integrated

producer & distributor

Canada

Next generation R&D

biopharmaceutical

company

US

Vertically integrated

cannabis company

US (California)

Building the largest

vertically integrated and

direct-to consumer

business platform

Canada

A licenses LP furthering the

science of medical cannabis

through research

CSE: CANN (Canada)

Currently has 2 LP’s,

looking to become a

vertically integrated

provider

Jamaica

Among the lowest cost

producers globally, located in

an ideal natural climate

Canada & US

Cannabis wellness and

lifestyle brand

Israel

Agricultural company

licensed to produce and

supply medicinal cannabis

Canada

Merchant bank, actively

investing in new and

innovative US enterprises

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Private Portfolio Success Stories

RECENT RTO’s TO GO PUBLIC

CB2 completed its RTO

transaction and

commenced trading on

the CSE under the symbol

“CBII”, on March 6, 2019

ACQUISTION ANNOUNCED

On March 4, 2019,

Aurora Cannabis

confirmed that it will

acquire all of the issued

and outstanding shares

of Whistler Medical in

three tranches, subject to

certain milestones.

As this is a multi-level

process, the exact ROI

cannot be calculated at

this time.

Vireo completed its RTO

transaction and

commenced trading on

the CSE under the symbol

“VREO”, on March 20,

2019

PENDING RTO’s TO GO PUBLIC

Bhang is in the process of

completing a Reverse Takeover

Transaction to go public

(expected to be completed within

Q1/19).

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CG

OC

:CS

E

Valuation & Performance• Overview of CGOC performance over time

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Valuation & Performance

CGOC NAV• NAV as of March 15th = $3.21, performing well against our benchmarks

• NAV increase of 39% since IPO in January 2018

Comparison to select Indices and ETF’s

where the average gain for CGOC since

Jan/26/18 was 39%

*HMJR from February 14, 2018,

**Jan 26 starting NAV after agents fee $2.3171

HMMJ HMJR (Feb 14) NAMMAR CGOC NAV

Mar 15 VS Inception 1% -23% -17% 39%

1%

-23%

-17%

39%

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CGOC Relative Performance

CGOC strategy has resulted in portfolio gains and reduced downside through industry volatility

* MJJ from February 1, 2018, SEED from February 12, 2018,

**Jan 26 starting NAV after agents fee $2.3171

Valuation & Performance

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Sep 17 VS Aug 13 Oct 15 VS Sep 17 Nov 15 VS Oct 15 Dec 17 VS Nov 15 Jan 15 VS Dec 17 Feb 15 VS Jan 15 Mar 15 VS Feb 15

HMMJ HMJR NAMMAR CGOC NAV

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CGOC Share Price Return

Share price has increased significantly since the start of 2019 closing at $2.00 on March 15, 2019.

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$2.00

$3.21

CGOC SP CGOC NAV

Valuation & Share Price

NAV Vs Share Price• While the NAV continues to appreciate, the discount gap remains.

• The company has embarked upon a number of initiatives to close the gap, and ensure the share price is more reflective of the positive gains achieved through the actively managed portfolio

• As well, there are number of positive milestones expected from within the private portfolio which will positively impact the NAV, and further illustrate the value for CGOC investors

-38% discount

to NAV$2.50

$1.57

$1.88 $1.88$1.65

$1.95 $1.85

$1.49

$0.95

$1.57$1.83

$2.00

$2.32 $2.27$2.44

$2.28 $2.28

$2.96 $3.03

$2.63$2.40

$2.77$2.99

$3.21

CGOC SP CGOC NAV

-31%-23%

-18%

-28%-34%

-39%-43%

-60%

-43%-39% -38%

Discount to NAV

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CG

OC

:CS

E

Summary

CGOC.COM

• Share Price has trended upwards since start of 2019, increasing upwards of 100%

• NAV continues to trend well, however we remain undervalued with a ~38% discount to NAV

• Several options under review in order to address discount to NAV and create value for shareholders

• Private holding near-term liquidity events yet to be rated, which will positively impact the NAV