Investor Presentation May 2016 1 1
DISCLAIMER This Confidential Presentation (the Document ) on the proposed financing ( the Transaction ) by Mettrum Ltd. ( Mettrum or the Company ) has been compiled by management of the Company solely for information purposes. The Document has been prepared and dated as of October 3, 2014 and the information contained herein is current as of such date only. The Document is for the confidential use by the recipient in order to assist such recipient in deciding whether to proceed with an in-depth investigation of the Transaction contemplated herein. The Document is not, and under no circumstances is to be construed to be, an offering of securities. Neither this Document, nor its delivery to the recipient shall constitute an offer to sell, or the solicitation of an offer to buy the assets described herein. It is provided solely for use by prospective investors in considering their interest. The information contained herein has been prepared to assist interested parties in making their own evaluation of the Company and its business and does not purport to contain all the information that prospective investors may require. Prospective investors should conduct their own investigation and analysis of the Company and its business and the information contained in this Document as well as any additional information provided by the Company. This Document includes forward-looking statements within the meaning of certain securities laws, including the safe harbour provisions of the Securities Act (Ontario) and other provincial securities law in Canada. These forward-looking statements include, among others, statements with respect to our objectives, goals and strategies to achieve those objectives and goals, as well as statements with respect to our beliefs, plans, objectives, expectations, anticipations, estimates and intentions. The words may, will, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and continue (or the negative thereof), and words and expressions of similar import, are intended to identify forward-looking statements. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, which give rise to the possibility that predictions, forecasts, projections and other forward-looking statements will not be achieved. Certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements. The Company strongly cautions readers not to place undue reliance on these statements, as a number of important factors, many of which are beyond our control, could cause the Company s actual results to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to: general economic conditions; pending and proposed legislative or regulatory developments in Canada including the impact of changes in laws, regulations and the enforcement thereof; reliance on funding models in Canada; operational and infrastructure risks including possible equipment failure and performance of information technology systems; intensifying competition resulting from established competitors and new entrants in the businesses in which the Company operates; insurance coverage of sufficient scope to satisfy any liability claims; fluctuations in total patients and customers; technological change and obsolescence; loss of services of key senior management personnel; privacy laws; structural subordination of common shares; leverage and restrictive covenants; fluctuations in cash timing and amount of capital expenditures; tax-related risks; unpredictability and volatility of the price of the Company s securities; dilution; and future sales of the Company s securities. The foregoing list of important factors that may affect future results is not exhaustive. When reviewing the Company s forward-looking statements, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by Canadian securities law, the Company does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by the Company or on the Company s behalf. Such statements speak only as of the date made. The forward-looking statements contained in this Document should not be relied upon as representing the view of the Company or its management as of any date subsequent to the date of this Document. Neither the Company nor its management is under any obligation, and neither undertakes, to update any of this information at any particular time. Neither the Company nor its management assumes any obligation to update or revise forward-looking statements should circumstances or estimates or opinions changes. None of the Company or its affiliated or related partnerships and corporations or their respective directors, officers, partners, employees, agents or representatives makes any representation or warranty as to the accuracy or completeness of the Document or any statements, estimates or projections, and none will assume any liability for any representations (express or implied) contained in, or for any omissions from, the Document, or for any other written or oral communications transmitted to prospective investors in the course of their evaluation of the Company and its business. An investor will only be entitled to rely on those representations and warranties contained in the definitive agreement or agreements which constitute the financing. Use of this Document is restricted to parties to whom the Company delivers the Document and the recipient and its representatives shall keep confidential all information contained herein or otherwise provided in connection with the proposed financing which is not already public or which is not subsequently made public, and will use the Document only for the purpose set forth above. In addition, each recipient will not copy, reproduce or distribute the Document in whole or in part to others, at any time, without the prior express written consent of the Company. NON-IFRS MEASURES There are a number of non-ifrs measures used in this Document, including EBITDA (earnings before interest, taxes, depreciation and amortization). For the purposes of this Document, EBITDA is calculated as revenue less cost of sales and operating expenses. The Company believes that these non-ifrs measures are appropriate measures of the operating performance of the Company. The Company s calculation of these measures may differ from the methodology used by other issuers and, accordingly, may not be comparable to such other issuers. The Company believes that these measures are appropriate measures of the Company s operating performance because they facilitate an understanding of operating performance without giving effect to certain non-cash and overhead expenses. None of these measures are equivalent to net income or cash flow from operating activities determined in accordance with IFRS 2 2
METTRUM AT A GLANCE LISTED TSXV-MT Established October 2012 Facilities Licensed Capacity Number of Clients 3 Facilities Licensed Under MMPR Bowmanville (2), Creemore 1 Facility Licensed to Produce and Sell Industrial Hemp Products Barrie Current licensed production capacity of 3,500 kg per annum License to produce and sell cannabis oil Potential for expansion to 12,000 kg in current facilities 6,145 Continued robust referral and patient registration growth Over 1,400 physicians have referred their patients to Mettrum Recent Share Price $1.53 (May 25, 2016) Shares Outstanding Market Capitalization 39,561,275 (Basic) 43,174,795 (Fully Diluted) ~$61 MM (Basic) ~$66 MM (Fully Diluted) Insider Ownership ~30% 3 Cash & Cash Equivalents ~$11 MM (as at December 31, 20) Debt Capacity ~$3.5 MM (~$3.5 MM drawn as at December 31, 20) 3
MILESTONES ACHIEVED TO DATE Event Licensed Production Capacity (kg) Event Licensed Production Capacity (kg) Oct. 2, 2014 Commences trading on TSXV 650 Aug. 31, 20 Receives cannabis extraction license 2,350 Dec. 12, 2014 Receives production license for Creemore 1,0 Sep 23, 20 Launch of Mettrum Originals 2,350 Jan., 20 Increase in licensed sale capacity to 1,200 kg 1,0 Dec. 17, 20 Receives license for Bowmanville South facility 2,350 Feb. 4, 20 Enters hemp cannabis based functional foods market (Oilseed Works) 1,0 Dec. 24, 20 Receives license to sell cannabis extracts 3,500 Mar. 16, 20 Launch of physician / client portal & online store 1,0 Jan. 26, 2016 Launch of premium cannabis oils product line 3,500 Jul. 20, 20 Increase to production capacity at Creemore 2,350 May 10, 2016 Share offering raised $8.6M 3,500 4 4
2016 OBJECTIVES Achieve cash flow break-even Stabilize cost of sales in the $2.00 - $2.25 / gram range Pursue recreational / retail strategy pending legislation Leverage Mettrum Originals brand for increased retail sales Rapidly expand client growth now that all facilities are licensed 5 5
THE INDUSTRY IS GROWING RAPIDLY 29 licensed producers; ~1,300 applications received 5 licensed for production + sale of extracts Already grown to ~$70 MM market Patient Growth (20) Kg Sold (20) Patient Count 36,000 28,000 20,000 Patients growing on average at 8.2% month-over-month 30,537 Up 135% year-over-year 27,928 26,010 23,930 22,004 20,277 18,512,545 16,63217,046 33,838 36,594 Kg Sold 800 700 600 500 400 300 313 Product sales growing at 10.2% month-over-month 292 374 4 430 526 577 599 696 761 797 12,000 Dec. 14 Jan. Feb. Mar. Apr. May Jun. July Aug. Sep. Oct. Nov. 200 Jan. Feb. Mar. Apr. May Jun. July Aug. Sep. Oct. Nov. 6 6
CLIENT & SALES GROWTH ACCELERATING Accelerating patient and sales growth with consumption figures normalizing 2016 YTD net client additions of ~29 / day vs. ~12 / day in 20 (1),000 Capacity: 3,500 kg Capacity Constrained 10,000 Capacity: 2,350 kg 6,000 5,000 Capacity:1,0 kg # of Clients 4,000 3,000 Capacity: 650 kg Capacity Constrained 2,000 1,000 7 565 1,591 1,644 1,9 2,514 3,036 4,331 5,032 6,145 0 Mar-14 Jun-14 Sep-14 Dec-14 Mar- Jun- Sep- Dec- Feb. 23, 2016 Ending Clients Production Capacity 7 (1) Estimated based on number of working days since Jan. 1, 2016 (YTD) and between Jan. 1, 20 and Dec. 31, 20 (20)
PRODUCTION CAPACITY POISED FOR GROWTH Total potential expansion capacity of 26,000 kg at 3 licensed facilities Currently licensed for 3,500 kg of 6,000 kg of capacity Licensed Built Capacity Fully Developed (current structures) Expansion Potential Production Capacity 3,500 kg 6,000 kg 12,000 kg 26,000 kg Implied # of Clients (1) ~14,000 ~23,000 ~45,000 ~100,000 Implied Revenue Potential (2) $25 - $30MM $45 $50MM $90 - $100 MM $200 - $210 MM (1) Estimated based on 0.7 grams per client per day for 365 days per year (2) Estimated based on 0.7 grams per client per day for 365 days per year at a sale price of $7.90 per gram 8 8
OUR APPROACH - PHYSICIANS Mettrum is the most physician centric, research, technology and data-driven LP. The Mettrum Spectrum A simplified, responsible, dialogue between physicians, their patients and Mettrum s CSR Ranks products based on relative THC and CBD content Mettrum CEMR Proprietary Cannabis EMR and Rsrch Tool Simplifies paper work redundancy and streamlines patient registration Manage and update patient profiles for easier collaboration Data capture for research purposes 9 9
OUR APPROACH - CLIENTS If you choose cannabis for your health, Mettrum helps you live your way. Mettrum Extractions Mettrum Dried Cannabis available in both 5g and g bottles Differentiated strains grown and handtrimmed to perfection Vapourizers and extracts July 20: Health Canada issued guidelines allowing licensed producers to produce and sell cannabis oil and fresh marijuana in addition to dried marijuana (extracts) Mettrum received its license in December 20 and began to produce and sell extracts in January 2016 Implications for Mettrum: Increase the Market Greater Efficiency Topline Growth Standardization Market Awareness Reinforces the Mettrum Spectrum Advantage 10 10
NEW: METTRUM ORIGINALS 30 SKU Product line launched: September 20 Mettrum Originals is currently available in approximately 2,000 stores across Canada / U.S. Locally sourced, and designed with a focus on nutrition and great taste www.mettrumoriginals.com 11 11
LEGALISATION WHAT COULD IT MEAN? Aggressive timeframe: two years (although interim expansion of MMPR could be sooner) In the meantime, the medical market will continue to grow and possibly accelerate due to greater cultural and political acceptance in the interim Medical market will operate in parallel to the retail market when established $110 Average Monthly Revenue/Person/Month US$50mm Colorado Estimated July 20 Revenue $4B Canadian Market (3.6mm adults: ~13% of adult population) US$3.9B Annually Canadian Market is 6.5x Colorado Mettrum is exceptionally well positioned with existing available capacity to service a retail cannabis market 12 12
LEGALISATION POTENTIAL SCENARIO Federally regulated production and provincially regulated sales and distribution with a possible parallel federal distribution system similar to the current MMPR mail order system Continue to be highly regulated to ensure safety, quality, protect vulnerable populations, educate and to prevent and deter diversion to the illicit market Packaged goods industry with similar guidelines for advertising / packaging, distribution and promotion as alcohol Highly taxed Greater local enforcement of regulations. Illegal grow operations will be shut down. Colorado will collect over $125 mm in taxes this year; Canada is 6.5x population It will not be sold in corner stores (according to Liberal Platform) or in dispensaries as they currently exist (however, normalisation of dispensaries through lack of enforcement could challenge this position) Canada will continue to lead the way with best practices. We think it will look more like Washington and Oregon (LCBO model) than Colorado (dispensary model) given our geography and much larger population Grow your own? Colorado yes (up to 5 plants) Washington no. Either way, not a significant impact on the market 13 13
SALES GROWTH WITH CAPACITY Accelerating sales growth with increased capacity Sales Growth Capacity Increase 250 231 200 Capacity Increase 212 161 0 Capacity Increase Kg Sold 100 100 108 95 1 50 0 24 Mar-14 Jun-14 Sep-14 Dec-14 Mar- Jun- Sep- Dec- kg Sold 14 14
REVENUE ACCELERATING; CASH FLOW IMPROVING ~193% YoY revenue growth for quarter ending Dec. 31, 20 Improving cash flow profile: operating leverage & lower costs Quarterly Revenue & EBITDA $2,500 ($1,200) $2,000 $2,017 ($1,250) ($1,300) $1,711 ($1,338) ($1,350) Revenue (C$000) $1,500 $1,000 $848 ($1,522) $1,249 ($1,400) ($1,450) ($1,500) EBITDA (C$000) ($1,550) $500 ($1,612) ($1,622) ($1,600) ($1,650) $0 Mar- Jun- Sep- Dec- ($1,700) Revenue (C$000) EBITDA (C$000)
COST & MARGIN PROFILE IMPROVING Declining cost of sales resulting in improving gross margin profile Cost of Production Per Gram & Gross Margins Last 4 Quarters (1) $3.60 60% $3.48 $3.40 Production Cost / Gram $3.20 $3.00 $2.80 $3.16 $3.21 48% 55% 55% 50% Gross Margin % 45% 45% $2.60 $2.55 42% $2.40 Mar- Jun- Sep- Dec- Production Cost / Gram Gross Profit % 40% (1) Production cost per gram includes the cost of production excluding fair value gain on biological assets, amortization, laboratory testing and packaging; gross margins are on a cash basis 16 16
PUBLIC COMPANY COMPARABLES Total Current Mkt. Net Ent. Registered Production Annualized Company Cap Debt / (Cash) Value Licenses Clients Capacity Sales (C$000s) (C$000s) (C$000s) (#) (#) (1) (kg) (1) (C$000s) (2) $291,598 ($,745) $275,853 3 ~8,200 ~19,000 $13,924 $76,032 ($13,796) $62,235 1 ~3,800 ~7,500 $8,108 $41,124 $642 $41,766 1 ~2,000 ~7,500 $4,118 $8,293 ($72) $8,221 1 N.A. ~2,500 $30 $56,774 ($7,181) $49,593 3 ~6,145 ~12,000 $8,067 (1) Source: Company filings where available and Cormark equity research report (2) Last fiscal quarter annualized Note: Last reported quarter amounts adjusted for subsequent events As at February 24, 2016 17 17
EXPERIENCED MANAGEMENT & BOARD Senior Management Michael Haines CEO & Director George Scorsis President Peter Kampian CFO Trevor Fencott Chief Legal Officer & Director Grant Koehler EVP Sales & Marketing A founder and director, CEO of Mettrum since May 2014. Founder of HIP Interactive (1999) in which he helped build sales to $500+ million; Chairman of Blammo Games Ltd. (2011 2014) President of Red Bull Canada Until October 2, 20. Instrumental in restructuring the company from a geographical and operational perspective while working closely with Health Canada on the guidelines regulating the energy drink category. Prior to joining Red Bull, Mr. Scorsis held an executive role at Bacardi CFO of Mettrum since May 2014. Former CFO of Algonquin Power Income Fund (TSX:AQN) and experience with various capital market initiatives on the TSX, including a cross border income trust initiative A founder and director, CLO of Mettrum since January 2014. Former IP and corporate lawyer at Goodmans LLP and former Head of Business & Legal at Fuse Powered Inc. EVP Sales and Marketing since January 2014. Former National Sales Manager Pain Specialty for Valeant Canada and Regional Sales Manager for Valeant Pharmaceuticals (TSX:VRX) Board Independent Directors Don Wright (Chairman) Former Chairman & CEO of TD Securities Norman Inkster Former Commissioner of the Royal Canadian Mounted Police William Assini Former Partner and SVP of PricewaterhouseCoopers LLP and current Director and Chair of Audit Committee of Investors Group Investment Management Ltd. Dr. Joshua Tepper President & CEO of Health Quality Ontario Jack Cashman Former Chairman of Vectura Group plc U.K. (LSE:VEC) and current Director of Telsat 18 18
THANK YOU For more information please contact: ALI MAHDAVI: amahdavi@mettrum.com (416) 962-3300 19