EFTA00796608.pdf

ACKRELL VENTURES ACV OPPORTUNISTIC FUND I, LP EFTA00796608 DISCLAIMER This Overview Presentation is furnished on a strictly confidential basis to a limited number of sophisticated investors for the purpose of providing certain information regarding an offering of limited liability company membership interests (the "Interests") in ACV OPPORTUNISTIC FUND I, LP (the "Fund"). This presentation may be used solely to evaluate an investment in the Fund and not for any other purpose. Except with the express prior written consent of Ackrell Management, LLC (the "Manager"), a recipient of this presentation may not reproduce or distribute this presentation and any other information or document furnished in connection with the offering of Interests (collectively, "Fund Information"), disclose any contents of the Fund Information or otherwise make any communication regarding the offering of Interests, to any person other than its professional representatives in connection with its consideration of an investment in the Fund. Upon determination that a prospective investor will not pursue an investment in the Fund, or at any time upon the request of the Manager, each recipient of this presentation will promptly return all Fund Information to the Manager. By accepting this presentation, each recipient agrees to the foregoing. In making an investment decision, investors must rely on their own examination of the Fund and the terms of the offering, including the merits and risks involved. The Interests have not been approved or disapproved by any U.S. or non- U.S. federal, state, local or other securities commission or regulatory authority. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of this presentation. Any representation to the contrary is a criminal offense. This presentation does not constitute an offer to sell, or the solicitation of an offer to buy, any Interests in any state or other jurisdiction in which such an offer or solicitation is unlawful. The distribution of this presentation and the offering of Interests may be restricted in certain jurisdictions. Persons receiving this presentation are required to inform themselves about and to observe any such restrictions. The offer of Interests can be withdrawn at any time before consummation. The Manager reserves the right to reject, accept or condition any subscription in whole or in part in its sole discretion. In addition, this presentation is qualified in its entirety by the Fund Agreement, the Subscription Agreement and other Fund Information, copies of which must be reviewed carefully prior to any subscription for any Interest. The Manager reserves the right to modify any of the terms of this offering and the Interests. No person other than the Manager and the Fund has been authorized to make representations, or give any information, with respect to Interests except the information contained herein and the Fund Agreement and Subscription Agreement, and any information or representation not contained herein or therein otherwise supplied by the Manager or the Fund must not be relied upon as having been authorized by the Fund, the Manager or any affiliate of the Manager. Any distribution of this presentations other than by agents of the Manager is unauthorized. There are significant risks associated with an investment in Interests. Investment in Interests is speculative and may not be suitable for all investors. Interests are intended solely for sophisticated investors that can accept the risks associated with such an investment, up to and including a complete loss of their investment. There can be no assurance that the Fund will achieve its investment objective. Certain owners and principals of the Manager (the "B-D Related Persons") who control or are engaged in the Managers offering of the Interests also are owners and/or principals of Ackrell Capital, LLC, a registered broker-dealer that acts as a placement agent for issuers of securities. Ackrell Capital, LLC has not acted and will not act as a placement agent of the Interests, and Ackrell Capital, LLC has not offered or recommended and will not offer or recommend investment in the Fund. Under FINRA rules, however, Ackrell Capital, LLC may have responsibility for the activities of the B-D Related Persons who perform services for the Manager in connection with the Managers offering of the Interests. Ackrell Capital, LLC will therefore monitor and supervise those activities by the B-D Related Persons to the extent required by FINRA rules. Investors in the Fund should not assume, however, that because for regulatory purposes Ackrell Capital, LLC supervises the activities of the B-D Related Persons when performing services for the Manager and the Fund that Ackrell Capital, LLC has any responsibility to investors for their decision to invest or not invest in the Fund, and investors should not rely on Ackrell Capital, LLC's involvement for regulatory purposes in making their decision whether or not to invest in the Fund. ACKRELL CONFIDENTIAL & PROPRIETARY 2 VENTURES EFTA00796609 INDUSTRY RISK FACTORS Risks Related to Federal Prohibition • The manufacture, distribution, dispensing and possession of cannabis in any form is illegal under federal law • The federal government could choose at any time to enforce such laws, which could result in business assets being seized or the arrest and criminal prosecution of cannabis company principals, employees, agents and investors • The federal prohibition of cannabis precludes interstate commerce in cannabis • Federal income tax regulations do not allow businesses that traffic in cannabis to deduct certain operating expenses for income tax purposes, resulting in higher effective tax federal income rates compared to companies in other industries • Due to the federal prohibition of cannabis, cannabis-related companies may not be able to open a bank account or access commercial banking services such as credit facilities and payment processing • Due to the federal prohibition of cannabis, cannabis-related companies may not be able to obtain federal trademark registration for certain products, and may not be able to avail themselves of the federal bankruptcy process • Due to federal cannabis prohibition, there is a significant black market for cannabis and cannabis-related products Risks Related to State and Local Laws and Regulations • States and local jurisdictions could reverse their positions and make cannabis illegal • Significant taxes may be imposed on commercial cannabis activity • Some state laws limit the number of participants that may have a license Risks Related to Product Use • Cannabis companies are subject to a variety of product-related risks and potential liabilities, including risks related to: adulterated products, insufficiently packaged or labeled products, and risks related to product use by underage consumers A C' K LL CONFIDENTIAL & PROPRIETARY 3 \ - L\ EFTA00796610  ACKRELL VENTURES Ackrell Ventures provides an institutional investment platform to gain access to risk-adjusted investment opportunities in the rapidly growing regulated cannabis industry ACKRELL CONFIDENTIAL& PROPRIETARY VENTURES EFTA00796611 INVESTMENT HIGHLIGHTS Structured senior secured investments in leading cannabis companies • ACV Opportunistic Fund I, LP is a $420M investment fund focused on making opportunistic structured investments in the regulated cannabis industry $420m Cannabis • The premier institutional investment platform to gain access to investment Investment Fund opportunities in the rapidly growing regulated cannabis industry Sponsored by Ackrell Capital, a leading boutique merchant banking firm with a dedicated cannabis investment banking practice Publish the annual "Cannabis Investment Report," an industry recognized investment publication on the cannabis industry Proprietary database of 3,000+ companies operating in the cannabis industry Cannabis Market Insights • Industry thought leaders and active participants in public policy discussions • Highly respected and utilized by mainstream companies seeking entry points to the cannabis industry • Approach the cannabis industry as institutional venture capital and private equity investors Asset-Backed Focused • Identify opportunities with companies that are market leaders, operate financially Investing sound business plans and possess defensible market positions post-prohibition • Structure investments to minimize downside risks and maximize upside potential Experienced management team with experience across investment banking, venture capital and private equity in emerging growth companies Experienced Highly knowledgeable of the regulated cannabis industry through proprietary in- Management Team depth market analysis covering various aspects of the industry Senior level network and access to companies and CEOs in the industry ACKRELL CONFIDENTIAL & PROPRIETARY 5 VENTURES EFTA00796612 ACKRELL VENTURES OVERVIEW Ackrell Ventures possesses unique market advantages in the cannabis industry = • • • I Industry Thought Proprietary Network Former Bulge-Bracket Network of Strategic Leaders and Experts and Database of 3,000+ Investment Banking Global Relationships with Published Reports Cannabis Companies Experience Active Participants in Emerging Growth and Highly Active Legal and Transaction Legal and Policy Venture Stage Management of Structuring Experience I Discussions Investment Experience Portfolio Companies ACKRELL CONFIDENTIAL & PROPRIETARY 6 VENTURES EFTA00796613 ACKRELL VENTURES INVESTMENT TEAM Mike Ackrell • Over 30 years of investment banking experience across various industries in Silicon Valley and New York • Head of Technology Investment Banking at ABN AMRO, Head of Investment Banking at WR Hambrecht, Senior Vice President Investment Banking at Donaldson, Lufkin & Jenrette • B.S. Economics (summa cum laude) from the Wharton School of the University of Pennsylvania Bryan Castillo n1 • • Over 10 years of investment banking experience across various industries Focused on cross-border capital raising and transactions between the U.S., Asia and Middle East • Senior Vice President at Enverra Partners get • B.S. Economics from the Pennsylvania State University Jeff Mathews • Over 15 years of investment banking experience across various industries in Silicon Valley • Experience across capital raising and transactions • Director at Seven Hills Partners, Associate at Deutsche Bank, Associate at Lehman Brothers • B.A. Economics from the University of Chicago Tim Coxon • Over 10 years of corporate securities law experience across venture capital and transactions • Experience advising firms on fund formation, management-level structuring and portfolio company transactions • B.A. Mathematics from the University of Texas at Austin, M. Mathematics from San Francisco State University and M. from the Santa Clara University School of Law A C K R I I. L CONFIDENTIAL & PROPRIETARY 7 EFTA00796614 CANNABIS THOUGHT LEADERSHIP • Ackrell Capital publishes a comprehensive report CKIII I I 2018 CANNABIS VS (ANNAN% INVISTBIENT BROR 2014 INVBSIMIN1RIP= on the cannabis industry Ti.. 'Ginn Gold Rude GLOBAL CANNABIS CONSUIAtt5 • The report features top private companies, and • •• •• •..•rr • •rer provides in-depth analysis of industry segments, s•• ••••••• •••••• •• ••• fti.ruafter•v ••• • •Adim.••••••••••MS4••••• • •••••.••••••• ••••••n•••. legal issues, market estimates and capital -n-- rill•••••••• ••••• ••••••••• tel•Im••••••••••••••••••••••••• 12 / •• ••••••••••••••••1••••••••••• • markets for cannabis companies .••••••••••1..•••••••••••••••••••• ...,•••••••=e••••••••••••••• an•m•••m•Pi . •••••••••• ••.4m••••••• .....•••••••••••=•••••• 0• •••••••••••••••••••••••••••• ••••••••.••••••••ama • Om•••••00••••••1 •• ••••• mr h• • yi,••••••••••••. • ••••flImilimiwil... • ai••••••••• • r=== mnen•••••••••••••••••••••••• 410.0ffeegtol i••••••.••• • Ackrell Capital has met with over 3,000 4. 1•41•••4•01S companies in the cannabis industry and has developed experience and unique insights into the regulated cannabis industry • Ackrell Capital continues to be on the forefront of Forbes THOMSON REUTERS creative financial structures and transactions for cannabis companies Seeking Alpha a ktrhemotleyFool. ACKRELL CONFIDENTIAL & PROPRIETARY 8 \ - I, N I EFTA00796615  CANNABIS INDUSTRY TRANSITION Investment theme is focused on long term secular trends of the cannabis industry • I Prohibition Period a Possible Future Product Categories Product Branding Product Availability Product Consistency Product Safety Product Quality "Stoners" Recreational Pharmaceutical State-Legal Domestic Illegal Global Supply Chain Legal Global Supply Chain Supply Chain $40B illegal market' $12B legal market' $75B+ legal global market' 1. Rand 2. Brightfield Group 3. Cowen and Co. ACKRELL CONFIDENTIAL & PROPRIETARY VENTURES EFTA00796616 VALUATION ARBITRAGE Cannabis industry valuations driven by inefficient and constrained capital markets Efficient markets value companies within a tighter range Private Private Public Listed Placements • Cannabis capital markets are highly inefficient, resulting in valuation discrepancies and multiples not aligned with fundamental financial metrics • Potential opportunity for multiple expansion and arbitrage between private and public company valuations • While potential for equity upside exists, Ackrell plans a risk adjusted approach for downside protection ACKRELL CONFIDENTIAL & PROPRIETARY 10 VENTURES EFTA00796617 CANNABIS INDUSTRY SUPPLY CHAIN Focused on identifying defensible business strategies in post prohibition environment Regulation Key Themes • Cannabis industry supply chain is comparable to established agricultural products and commodities Retail • Myriad of regulatory hurdles are negatively impacting and currently constraining the entire global cannabis supply chain Distributio • Majority of cannabis companies today are categorized by being vertically integrated across the supply chain • Investment opportunities focused on defensible business models in the Manufacturing most constrained areas of the cannabis supply chain • Areas of supply chain that provide highest value add to a commodity product are attractive • Anticipate that industry will move away from vertical consolidation to horizontal consolidation as companies realize operating efficiencies • In post prohibition environment, few areas of supply chain will retain their Processing defensible barriers • B2B ancillary products and technologies are focused on addressing a relatively small TAM Cultivation and Nurseries • Hemp supply chain is significantly more mature than current regulated THC supply chain ACKRELL CONFIDENTIAL & PROPRIETARY 11 VENTURES EFTA00796618 INVESTMENT APPROACH Structured investments focused on generating risk-adjusted returns Sourcing Diligence Structure Operations • Actively seeking companies • Thorough due diligence of • Focused on structured debt • Extensive network that allows with transformative and companies and their founders investments that provide for strategic business scalable business models • Comprehensive due diligence maximum coverage for development • Senior level relationships with process that spans operations, downside risks while allowing • Implement operational and Tier 1 cannabis companies tax, legal and financial for maximum upside potential financial reporting procedures seeking follow-on investment • Identifying market leaders well • Proprietary valuation data • Operational activities focused • Special situation investment positioned for eventual end of points of financing and on increasing revenue and opportunities with short time cannabis prohibition activity in the cannabis margins frames industry ACK RELL CONFIDENTIAL & PROPRIETARY 12 L.N I l •RI S EFTA00796619  INVESTMENT STRATEGY Proprietary deal sourcing of special situation investments Target Opportunity Description Target IRR Allocation I Event Driven / Special • Specialty senior secured lending • Pre-RTO financings 30%1 50% Situations r r Private Lending • Privately negotiated debt issuances 30%+ • Equipment financing Asset Backed Investing 20%+ • Inventory financing Portfolio designed to capture windows of opportunity and seeks to optimize risk/return through appropriate transaction structuring of investments in leading cannabis companies There con be no assurance that target portfolio exposures will be achieved. Such targets ore provided as indicators as to how Ackrell intends to manage the Fund and ore not intended to be viewed as any form of binding investment limitation or portfolio concentration or diversification measure. There is no guarantee that such on investment opportunity will be available in the future. References herein to target IRR and/or target equity multiple or other variations thereon or comparable terminology ore provided as indicators as to how Ackrell intends to manage the Fund and are not intended to be viewed as indicators of likely performance returns to investors. Target IRA and target equity multiple information is based upon estimates and assumptions that o potential investment will yield o return equal to, or greater than, the target. There con be no assurance that target returns will be met. The estimate of potential return from o potential investment is not a guarantee os to the quality of the investment or o representation os to the adequacy of the methodology or assumptions used in estimating returns. ACKRELL CONFIDENTIAL & PROPRIETARY 13 VFNIL S EFTA00796620  PROPRIETARY DEAL SOURCING Our deep understanding of companies allows for developing unique investment opportunities Investment Sourcing Process Key Attributes of Target Companies' Leading management teams Preliminary Evaluation High free cash flow Detailed Review and Due Diligence Above market growth prospects Formal Evaluation and Pre- Screening with Investment Appropriate capital structure Committee Ackrell has lead role Complete Due Diligence Final Defensible business model in post-prohibition Memo/Issue Term Sheet Key intellectual property or technology investment Scalable business models • Seek to invest in defensible and scalable cannabis businesses with attractive growth prospects and high free cash flows • Seek to be the only or lead investor with voting control to have the ability to impact outcomes • Be proactive managing investments and utilizing our network and process to preserve capital and create value 1. Not every investment will meet each of the criteria. ACKRELL CONFIDENTIAL & PROPRIETARY 14 VENTURES EFTA00796621 ACV OPPORTUNISTIC FUND I, LP TERMS Focus: ACV Opportunistic Fund I, LLC (the "fund") is focused on making opportunistic investments in cannabis companies utilizing a senior secured note plus warrant security Investment Type: Senior secured note plus warrants Geographic Focus: Primarily North America with select international markets Fund Size: $420 million Fund Term: 7 years Investment Period: 2 years Management Fee: 2% Carried Interest: 20% ACKRELL CONFIDENTIAL & PROPRIETARY 15 VENTURES EFTA00796622 ACKRELL VENTURES EFTA00796623