CF_Brands_Horizontal_NoCup_WHITE_2021-01
(C S E : C H A L   |     O T C Q B : C H A L F)

C O R P O R A T E   P R E S E N T A T I O N

D O W N L O A D   P D F   V E R S I O N                 

A Best-In-Class Multi-State Operator

Chalice Brands is an Adjusted EBITDA1 positive, financially disciplined MSO focused on building a leading brand presence in the west coast.

High level competencies in retail, marketing, and craft cultivation supported by fully integrated processing and distribution.

Investment Highlights

Market Focus

A leader in one of the most competitive, innovative and mature markets in North America with a growing presence in the largest cannabis market in the world: California.

Disciplined Growth

Growth and scale in home market accretive to EBITDA at run phase. New markets follow crawl, walk, run path until proven viable.

Integration

Production, processing, wholesale distribution, and retail.

Competitive Advantage

Consolidated and efficient retail, distribution and branding presence in fragmented saturated industry.

Competencies

Retail Excellence, Brand Awareness, Scale, Regulatory Expertise, Network Benefits, and Technology.

Brand Identity

Trademarked and recognized brands include Chalice Farms, Elysium Fields, Private Stash, RXO, and Fifth & Root.



Chalice Today

Chalice Brands Ltd. is an adjusted-EBITDA positive, undervalued MSO with with presence nationally through Fifth and Root, as well as operations in Oregon and California.

Chalice Brands' operational footprint:
  • A combined workforce of over 250 employees.
  • A combined retail portfolio of 16 locations in Oregon, representing 5% market share.
  • Significant market share in 3 key Oregon metro areas: Portland , (8 locations), Salem (3 locations), and Eugene/Springfield (2 locations).
  • Statewide wholesale distribution covering every corner of Oregon, with distribution to over 350 dispensaries in 2021.
  • Fully-vertical capabilities covering every part of the cannabis supply chain, with indoor cultivation, an extraction facility, edibles manufacturing, in-house distribution, and 16 dispensaries.
  • 3,000 pounds of annual cultivation capacity at Bald Peak.
  • A growing wholesale operation in the state of California which distributes Chalice and Elysium Fields branded products. 
 

Brands: Why they matter (and always will)

The Company is committed to developing a dynamic brand portfolio with a focus on health and wellness.

Chalice-Farms-Block
Elysium-Fields-Block
PS_Logo
Fifth&Root-Block
RXO-Block


P R I V A T E   S T A S H


C H A L I C E   F R U I T   C H E W S

Gluten, vegan, dairy and soy free. Made with real fruit puree, beet sugar and sunflower lecithin. No artificial colors or flavors.



E L Y S I U M   F I E L D S


E L Y S I U M   F I E L D S  B L A C K  L A B E L

elysium-black-label-social-media-campaign

R X O

RXO-Product6622

F I F T H  &  R O O T

FifthandRootCover

Cannabis Platform

We specialize in brand creation and immersive storytelling married with best-in-class technology.

Our cannabis platform places brands at the forefront of innovation with multiple consumer touch points to an audience reach of +1.5M.

 
Screen+Shot+2021-04-15+at+2.52.28+PM-2

“The Chalice Farms team executes all aspects of a campaign beautifully and flawlessly. Their incredible team produced some of the best assets and displays across the GLOBE for PAX. The successful work that was done is now used as a case-study and metric of success for other retailers across the US and Canada. ”

— L I V   N A G L E R,   PAX


Where We Come From

+45 years

of combined cannabis experience

+20 years

of combined cannabis supply chain experience

+50 years

of Fortune 25 experience

+85 years

of combined retail experience

Executive Management

Jeff-Yapp

JEFF YAPP
President & CEO

John-Vargese

JOHN VARGHESE
Executive Chairman

Megan

MEGHAN MILLER
Chief Operating Officer

Jane-Sullivan

JANE SULLIVAN
Chief People Officer

Joel-Klobas

JOEL KLOBAS
VP of Production


Board of Directors

JOHN VARGHESE, Executive Chair

Professional experience ranges from private equity, venture capital and investment banking to senior management and board of director roles in various industries in both public and private companies. He has served on over 20 boards, acting as Chairman on 9 of those, as well as chairing multiple compensation committees and participating on numerous audit committees.

RICK MILLER, Lead Director

Seventh-generation Oregonian with a prominent local presence as an entrepreneur, highlighted by his co-founding of Rogue Venture Partners. He was the founder and serves as CEO of the Avamere Group. Currently serves on the boards of Diabetomics, Invivo Biosystems, Enviral Tech, Oregon Healthcare Association and is the Lead Director of the Corporation.

BOB MCKNIGHT, Director

Co-founded Quiksilver, Inc. in 1976 and has served as the corporation's President, CEO and Chairman of the board of directors from its inception until 2015. Today, Mr. McKnight serves as a consultant and ambassador to the Corporation and manages the Boardriders Foundation.

LARRY MARTIN, Director

Successful CEO and entrepreneur, with a unique background which includes over 39 years of domestic (i.e., United States) and international business experience in more than 11 different industries, including outdoor hospitality lifestyle, consumer branding, real estate and the medical industry.

SCOTT SECORD, Director

A lifelong entrepreneur, has been a founder, executive, advisor and board member of multiple successful startups leading to various liquidity events. Currently serves as Managing Partner of Shore Capital Sports & Entertainment. He also continues to serve as a director on a number of public and private company boards.

JEFF YAPP, Director

Accomplished corporate executive and entrepreneur with an extensive retail, entertainment, and marketing background, he has been committed to bringing innovation and growth to the corporate environment including Microsoft, Kraft Foods, PepsiCo, Newscorp/20th Century Fox, and Viacom/MTV. He has applied his strategic marketing and consulting skills with various clients, including Microsoft, Vice Media, XBOX, and Windows.


O U R   S T O R Y

We Heal. We Share. We Come Together.

At Chalice Farms we pursue this mission by telling great stories, creating captivating content and leading the industry forward
through education, experiences and collaborations.


M A R K E T I N G

It's all about collaboration!

We specialize in brand creation and immersive storytelling married with best-in-class technology.

Partnerships

Community is at the heart of everything we do.


W O R L D   C L A S S   G R O W

Sustainable & Organic Farm 

Award winning director of cultivation with over 15+ years of cannabis experience


F U T U R E   S T A T E


Crawl - Walk - Run

“The crawl phase validates, the walk phase starts to invest in acceleration and run is to invest in margin”

— J E F F   Y A P P,   P R E S I D E N T   &   C E O

Crawl_Walk_Run_Slide

Oregon

A Leader in the U.S. Cannabis Industry
Proven track record of success in the most competitive cannabis market in the U.S.

Why Oregon Matters?

  • First state to decriminalize small amounts of marijuana. In 1998, Oregon legalized medical marijuana along with Washington, Arizona, and Nevada.

  • Mature & Competitive market #1 in retail stores per capita (16.5 dispensaries per 100,000 residents) with a stable cultivation & supply chain

  • Billion $ market - 3rd largest market in per capita consumption with $275 annual cannabis spend per capita

  • Optimal climate for growing best in class cannabis globally

  • Leading Federal legalization effort - OR Senator Ron Wyden and OR Congressman Earl Blumenaur are leading the federal legalization efforts in WA.

Oregon_Market

Chalice Retail Operations

16 Retail Stores in Oregon (Portland, Salem, Albany, Eugene, and Springfield).
12 Owned, with 7 operating under the Chalice brand and 4 under management services agreement until receipt of all regulatory approvals.


Homegrown Oregon

5-Store retail chain anchored in Salem, Oregon.

Well-run, profitable, turn-key and accretive.

  • Run rate of $11 million in first quarter 2021 with 49% gross margin and Adjusted EBITDA1 of $2 million based on unaudited results. 
  • All locations are easily accessible from Chalice HQ in Portland, with no overlapping markets.
  • Further leverages the Chalice flower supply from Bald Peak, allowing for further penetration of the strain selection produced at Bald Peak.
  • On a pro-forma basis, had Homegrown been included, first quarter 2021 revenues for CHAL would have been US$8.2 million with a 47% gross margin and Adjusted EBITDA of approximately US$722,000.

Introduction to Cannabliss & Co.

4-Store retail chain anchored in Portland,
Eugene, and Springfield , Oregon.

  • Effective September 16, 2021, operating 4 stores acquired from Acreage Holdings, Inc. under management services agreement until all regulatory approvals in hand. Chalice will deploy its world class retail management best practices and immediately boost top line, bottom line, and restore lost market share as well as optimize vertical margin contribution.
  • Two of the store locations are on the national registry of historic places. Firestation 23 location was the 1st adult use dispensary to open in Portland and was Oregon's first medical marijuana dispensary.
  • Cannabliss is expected to carry Chalice Brands products providing the opportunity to increase total gross margins gradually from approximately 42% to at least 52% within a year. Vertical sales of Chalice branded products is expected to be approximately 25% of products sold within a year.

Objectives

2020

Q1

  • Leadership team in place

Q2

  • Record growth of 40% YoY in Oregon

Q3

  • Surpassed total fiscal 2019 revenues by end of Q3
  • First ever cash-flow positive quarter

Q4

  • Adjusted EBITDA positive

2021

Q1

  • Recapitalized balance sheet
  • Raised equity of C$13.5 Million

Q2

  • Expand retail footprint in Oregon by 75%
  • Corporate name change
  • Share consolidation

Q3

  • Add scalable next generation
    e-commerce platform

Q4

  • Full year EBITDA positive

2022

Q1

  • Optimized Oregon Vertical integration

Q2

  • “Run Phase” launch of California retail stores
  • Expansion to crawl in additional west coast market

Q3

  • Another new market
    (4 total markets)

Q4

  • 10% market share in Oregon



Progress Towards Profitability

Continuing trend of positive Adjusted-EBITDA* Results        

Quarterly EBITDA

Postive Adjusted-EBITDA

 


Peer Analysis

Chalice Brands’ Peers with Highlights on Brands and Relevant Metrics (as of March 31, 2022)

Company

Ticker

Enterprise Value
(USD millions)

Market Cap
(USD millions)

Brands/ Products

Price/ Sales

EV/ Sales

Planet 13 Holdings Inc.

CSE:PLTH
OTCQX:PLNHF

$452.47

$504.91

TRENDI, HaHa, Medizin, Dreamland Chocolates, Leaf & Vine, Planet M

4.22x

3.78x

MedMen Enterprises Inc.

CSE:MMEN
OTCQX:MMNFF

$593.33

$183.62

MedMen Red, LuxLyte

1.15x

3.73x

iAnthus Capital Holdings Inc.

CSE:IAN
OTC:ITHUF

$238.65

$22.80

CBD for Life, MPX

0.12x

1.25x

C21 Investments Inc.

CSE:CXXI
OTCQX:CXXIF

$83.13

$69.03

Silver State Relief, Eco Firma Farms, Phantom Farms, Swell Companies

2.08x

2.55x

Lowell Farms

CSE:LOWL
OTCQX:LOWLF

$87.33

$41.03

Lowell Herb Co., MOON, Cypress Cannabis, Kaizen Medicinals, Humble Flower

0.68x

1.45x

Driven By Stem

CSE:STEM
OTCQX:STMH

$22.44

$15.06

TJ's Gardens, Yerba Buena, Cannavore, Dose-ology, Everyday California, Hi-Tec

0.77x

1.14x

1933 Industries Inc.*

CSE:TGIF
OTCQX:TGIFF

$33.25

$21.18

AMA Flower, Distillate and Concentrates, Canna HempTM, Canna Hemp XTM

2.69x

4.22x

Grown Rogue International Inc.

CSE:GRIN
OTC:GRUSF

$12.40

$12.56

NA

0.83x

0.82x

Chalice Brands Ltd.

CSE: CHAL
OTCQB: CHALF

$32.24

$21.55

Chalice Farms, Fifth & Root, Elysium Fields, RXO, Private Stash, Cannabliss

0.61x

0.91x

Median

0.83x

1.45x

Minimum

0.12x

0.82x

Maximum

4.22x

4.22x

Source: Morningstar, SEC filings, SEDAR filings and companies’ websites
Note: The Price/ Sales and EV/ Sales metrics are calculated based on annualized revenue from the most recent and available quarterly results
*For 1933 Industries P/S and EV/S metrics are calculated based on revenue in USD terms using conversion rate of 0.80 USD/CAD as of March 31, 2022

Capital Structure

Chalice Brands Ltd. (CSE:CHAL) as of 2022/1/17

C$0.43

Total Shares Issued and Outstanding

67.16M

Reserved for Issuance

27.69M

Market Cap

C$28.88M

Less: Cash

C$5.25M

Add Debt:
OTM November 2021 Convertible Debt Financing1
OTM November 2024 Convertible Debt Financing2
Cannabliss Debt3*
HGO Debt4
Tozmoz Debt5
Other Debt6

C$21.72M

Enterprise Value

 C$45.35M

(1) Unsecured convertible dentures convertible at the option of the holder at $1.00 per Common Share. Debt bears interest at a rate of 10% per annum payable in cash or common shares, at the option of the company.
(2) Convertible debenture converting at $1.38, maturing November 16, 2022.
(3) Debt issued in connection with [Cannabliss] due 10 months from close. 5% interest for first 5 months, 10% for the following 5 months. [NTD: confirm currency] .
(4) Secured promissory note in conjunction with the acquisition of Homegrown in May 2021. The note carries 8% interest payable over the first year of its two-year term expiring in May 2023.
(5) Debt issued in connection with [ Tozmoz ] due 48-month from close bearing 6% interest.
(6) Chalice Earn out of USD$2.5M repayable over 60 months starting May 22.
*Assumes closing of Cannabliss acquisition

 

Investment Highlights

Market Focus

A leader in one of the most competitive, innovative and mature markets in North America with a growing presence in the largest cannabis market in the world: California.

Disciplined Growth

Growth and scale in home market accretive to EBITDA at run phase. New markets follow crawl, walk, run path until proven viable.

Integration

Production, processing, wholesale distribution, and retail.

Competitive Advantage

Consolidated and efficient retail, distribution and branding presence in fragmented saturated industry.

Competencies

Retail Excellence, Brand Awareness, Scale, Regulatory Expertise, Network Benefits, and Technology.

Brand Identity

Trademarked and recognized brands include Chalice Farms, Elysium Fields, Private Stash, RXO, and Fifth & Root.


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D I S C L A I M E R

CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION:

This presentation includes forward-looking information and forward-looking statements within the meaning of Canadian  and United States securities laws. Statements containing the words “believe”, “expect”, “intend”, “should”, “seek”, “anticipate”, “will”, “positioned”, “project”, “risk”, “plan”, “may”, “estimate”, “historical”, “expected performance” or,  in each case, their negative and words of similar meaning are intended to identify forward-looking information. Forward-looking information involves risks and uncertainties including, but not limited to, that the proposed acquisitions shown herein will occur on the terms set out herein, projected revenues and EBITDA for the Company and the proposed acquisitions (including on a combined pro forma basis), projected gross margins of the proposed acquisitions, anticipated synergies from the acquisition of the proposed acquisitions, expectations regarding integration of the proposed acquisitions, and the IRR and payback period for the acquisition of the proposed acquisitions. Projected revenues and EBITDA also constitute “financial outlooks” within the meaning of Canadian securities laws.  In addition, certain forward-looking information also constitutes future oriented financial  information (or FOFI) within the meaning of Canadian securities laws on the slides titled “Target Financials and Projections -2020-2021 ”, “Financials – Annual Proforma,” “Chalice Consolidated – Revised Forecast With Cannabliss and Proposed Transaction,” “Chalice Consolidated – Base Case.” Forward looking information is subject to numerous risks that could cause actual results or events to differ materially from those expressed or implied by the forward-looking information.  Forward-looking  information contained in this presentation is based on the Company’s current estimates, expectations and projections, which the Company believes are reasonable as of the current date. The Company can give no assurance that these estimates, expectations and projections will prove to have been correct. You should not place undue reliance on forward-looking information, which is  based on the information available as of the date of this presentation.

Forward looking information is based on certain assumptions and factors and is subject to certain risks, of which the material assumptions, factors and risks are set out below. Readers are cautioned that the assumptions used in the preparation of forward-looking information, although considered reasonable at the time of preparation, may prove to be imprecise. The Company's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and accordingly there can be no assurance that such expectations will be met. These risks could adversely affect the outcome and financial effects of the plans and events described herein. In addition, even if the outcome and financial  effects of the plans and events described herein are consistent with the forward-looking information contained in this presentation, those results or developments may not be indicative of  results or developments in subsequent periods. Although Chalice has attempted to identify important risks that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors and risks that cause actions, events or results not to be as anticipated, estimated or intended.

Forward looking information is also subject to general business, economic and competitive uncertainties, regulatory risks, market risks, risks associated with acquisitions, risks inherent in manufacturing operations, other general risks of the cannabis industry as well as those risk factors disclosed elsewhere in Chalice’s public disclosure, including but not limited to, the Company’s Management’s Discussion & Analysis of Financial Condition and Results of Operations for the Nine months Ended September 30, 2021, that could cause actual results or events to differ materially  from those expressed or implied by the forward-looking information.  Such statements are based upon the current beliefs and expectations of the Company’s management and are subject to significant business, social, economic, political, regulatory, competitive  and other risks, uncertainties, contingencies and other factors.

Forward-looking information contained in this presentation is as of the date of this presentation. FOFI contained in this presentation was approved by management as of the date of this presentation and was provided for the purpose of providing further information to potential investors about future business operations and describing the anticipated effects of the proposed acquisitions thereon. The Company disclaims any intention or obligation to update or revise any forward-looking information contained in this presentation, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law. Neither the Company’s independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the FOFI contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the FOFI contained herein. Readers are cautioned that the FOFI contained in this presentation should not be used for purposes other than for which it is disclosed herein.

Forecast risks and assumptions:

- Forecasts assume no material change in selling prices of the Company’s products. If the price of the company’s primary input materials were to materially change, there is a risk that the company could not realize the revenues and expenses currently assumed.

- Operating expenses increase primarily due to increased staff required to operate the Company’s expanding retail store chain, both in response to organic growth and expansion of retail footprint

- The Company is largely relying on raising external capital in order to acquire additional retail dispensaries. If the Company is unable to raise additional capital on reasonable terms, its ability to achieve the expansion forecasted may be limited.

NON-IFRS MEASURES

EBITDA and Adjusted EBITDA is a non‐IFRS financial measure and does not have any standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to similar measures presented by other issuers. See “Non‐IFRS Measure” below for additional information.

Adjusted EBITDA is a supplemental, non-IFRS financial measure. EBITDA is defined as earnings before interest, income taxes, depreciation and amortization. In addition, Adjusted EBITDA as presented excludes impairment charges, all other non-cash items and one-time transaction fees. Management believes providing Adjusted EBITDA is useful to investors’ understanding and assessment of the Company’s ongoing continuing operations and prospects for the future and it is a used by the financial community to evaluate the market value of companies considered to be in similar businesses. Since Adjusted EBITDA is not a measure of performance calculated in accordance with IFRS, it should not be considered in isolation of, or as a substitute for, measures of performance prepared in accordance with IFRS. Adjusted EBITDA, as calculated in the table above, may not be comparable to similarly titled measures employed by other companies. In addition, Adjusted EBITDA is not necessarily a measure of our ability to fund our cash needs.

CURRENCY:

All references to $ in this presentation are references to United States dollars, unless otherwise indicated. 

RISK FACTORS:

Investing in the securities of the Company involves a high degree of risk. Before investing in the securities, prospective purchasers of the securities should carefully consider the other information contained in this presentation and the risks disclosed in the Company’s public disclosure available under Chalice’s SEDAR profile at www.sedar.com, including  but not limited to, the Company’s Management’s Discussion & Analysis of Financial Condition and Results of Operations for the Nine Months Ended September 30, 2021 (the “MD&A”). If any such risks occur, the Company’s business could be materially harmed. The risks and uncertainties described in the MD&A are not the only ones  that the Company faces. Additional risks and uncertainties, including those of which the Company is currently unaware or that the Company deems immaterial, may also adversely affect its  business.​

The U.S. Federal Controlled Substances Act classifies “marijuana” as a Schedule I drug. Accordingly, cannabis-related activities, including without limitation, the cultivation, manufacture, importation, possession, use or distribution of cannabis and cannabis products are illegal under U.S. federal law. Strict compliance with state and local 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 prosecution which may be brought against the Company with respect to adult-use or recreational cannabis. Any such proceedings brought against the Company may adversely affect the Company’s operations and financial performance.