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Confidential Corporate Presentation
July 2018
Innovative, Pharma-Grade
Cannabinoid-Based Medicine
2FORWARD-LOOKING STATEMENTS AND ADVISORIES (“Scientus Pharma”, “Scientus”, “we”, “us”, and “our”)
When used herein, “Scientus” means HydRx Farms Ltd. and includes reference to its affiliates, as applicable.
This presentation contains certain forward-looking statements and forward-looking information (collectively referred to herein as “forward-looking statements”) within the meaning of applicable Canadian securities laws.
All statements other than statements of present or historical fact are forward-looking statements. Forward-looking information is often, but not always, identified by the use of words such as “could”, “should”, “can”,
“anticipate”, “expect”, “believe”, “will”, “may”, “projected”, “sustain”, “continues”, “strategy”, “potential”, “projects”, “grow”, “take advantage”, “estimate”, “well positioned”, “intend”, “plan”, “predict” or similar expressions
suggesting future outcomes, the results of which are uncertain. In particular, this presentation contains forward-looking statements including, but not limited to, those relating to the implementation of operations,
licensing, production, sales and revenue generation, medical cannabinoid market size and trends, average monthly prescription value, penetration rate, the timing and next steps in Scientus’ business
commercialization plan, employee and sales force growth, future trials, product launches and business opportunities, business strategies and competitive advantages. The forward-looking statements regarding HydRx
Farms Ltd. are based on Scientus’ current views, key expectations and assumptions regarding future events, plans and objectives, including anticipated financial performance, maintaining necessary licences to
conduct Scientus’ business, the ability to adequately outfit its production facility, prospects, strategies, the sufficiency of budgeted capital expenditures in carrying out planned activities, that there will be no adverse
regulatory or political developments with respect to medical marihuana production, sales or consumption and the ability to obtain financing on acceptable terms, all of which are subject to change based on market
conditions and potential timing delays. Although management of Scientus considers these assumptions to be reasonable based on information currently available to them, they may prove to be incorrect.
By their very nature, forward-looking statements involve inherent risks and uncertainties (both general and specific) and risks that forward-looking statements will not be achieved. Undue reliance should not be placed
on forward-looking statements, as a number of important factors could cause the actual results to differ materially from the beliefs, plans, objectives, expectations and anticipations, estimates and intentions expressed
in the forward-looking statements. These include, but are not limited to, the risks set out herein in Appendix A.
Readers are cautioned that the foregoing list and the factors identified herein under “Appendix A - Risk Factors” are not exhaustive.
The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this presentation are made as of the date of this
presentation and Scientus does not undertake and is not obligated to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise unless so required by applicable
securities laws.
Market and Industry Data
Market data and industry forecasts contained in this presentation have been obtained from industry publications, various publicly available sources and subscription based reports as well as from management’s good
faith estimates (including, in particular, our expectations regarding the medical cannabinoid product market size and trends), which are derived from management’s knowledge of the industry and independent sources
that management believes to be reliable. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. We have not
independently verified any of the information from third-party sources nor have we ascertained the validity or accuracy of the underlying economic assumptions relied upon therein. Scientus hereby disclaims any
responsibility or liability whatsoever in respect of any third party sources of market and industry data or information.
Notice to Investors
In making an investment decision, prospective investors must rely on their own examination of Scientus and the terms of the private placement offering, including the merits and risks involved. Prospective investors should not
construe the contents of this presentation as legal, tax, investment or accounting advice by Scientus or any of its directors, officers, shareholders, agents, employees or advisors. This presentation does not take into account
the particular investment objectives or financial circumstances of any prospective investor. Each prospective investor who reviews this presentation must make its own independent assessment of Scientus after making such
investigations and each prospective investor is strongly urged to consult with its own advisors with respect to legal, tax, regulatory, financial and accounting consequences, including the merits and the risks involved, of any
investment in Scientus. In particular, any estimates or projections or opinions contained herein necessarily involve significant elements of subjective judgment, analysis and assumption and each prospective investor should
satisfy itself in relation to such matters. Investment is suitable only for sophisticated investors and requires the financial ability and willingness to accept the high risks and lack of liquidity that are characteristic of an investment
in a private company. Purchasers of Scientus’ securities will be required to execute subscription agreements, which will contain representations, warranties, covenants and acknowledgments of the purchasers required by the
relevant regulatory authorities and Scientus to establish the availability of such exemptions and to ensure compliance with applicable securities legislation.
Confidentiality
This presentation contains highly confidential information regarding the investments, strategy and organization of Scientus. Your acceptance of this document constitutes your agreement to (i) keep confidential all the
information contained in this document, as well as any information derived by you from the information contained in this document (collectively, “Confidential Information”) and not disclose any such Confidential
Information to any other person, (ii) not use any of the Confidential Information for any purpose other than to evaluate the purchase of securities of Scientus, (iii) not copy this document without Scientus’ prior consent,
and (iv) promptly return this document and any copies hereof to Scientus upon Scientus’ request.
3INVESTMENT HIGHLIGHTS
Proprietary Technology
• Multiple patents pending & proprietary technology platform
• Highly scalable production and manufacturing, to meet growing demand
• Decarboxylation and extraction platform creates a standardized, consistent API within
very low tolerance levels (internal QC standards include 100% decarboxylated resin,
<5% reject rate and yield between 97-101%)
Multiple Near-Term Product
Launches
• Multiple products ready for commercial launch over next 18 months
• Differentiated presentation formats to meet patient and physician requirements
(i.e. patients with difficulty swallowing, inhalation issues such as asthma, etc.)
Barriers to Entry
• First mover advantage in areas where such advantage can be protected (patents or
setting industry standards)
• Greater predictability of patient outcomes > instilling confidence and loyalty from
physicians and patients
• Scaled production of consistent resin (Resicann® resin = Standardized API -100%
decarboxylated Resin) is the foundation for all Scientus formulations and cannabinoid-
based medicines (patent pending continuous flow production process vs. industry
standard batch process)
Scientific Research
• Scientific papers and inputs from Key Opinion Leaders (“KOLs”)
• Research and clinical trials
• Supported by pharmacokinetic / pharmacodynamic data
Recognized Scientific
Personnel & Infrastructure
• Highly regarded Scientific Advisory Board and Medical Advisory Board
• Full access to University Health Network (“UHN”) research facilities
Strong Management
& Board
• Seasoned management team
• Depth of experience in life sciences and public companies
• Track record of growing companies at this stage of development
4
Long Term Focus on Unmet Medical Needs
COMPANY SNAP SHOT
Manufacturing
HydRx Facility
Full-Time Staff and
Consultants
• 26 Staff
• 4 Consulting Teams
Growing Capabilities
• Goal to reach 40
employees by Q1 2019
R&D
UHN Research Facilities
Research Team from UHN
• Led by Lakshmi P. Kotra
(BPharm & Ph.D.) & team
of 5 scientists (4 Ph.D.s)
UHN is the leading life
sciences research
organization in Canada
Clinical Studies
UHN (5 Hospitals)
Pharma-grade products
supported with clinical
data
Team of M.D.s & Ph.D.s
• Led by Hance Clarke
(M.D. & Ph.D.)
First mover advantage with
proprietary technology
5
While the therapeutic benefits are well established, cannabis has proven to be
a challenging active pharmaceutical ingredient (API) to harness
Difficult API to Harness
THE CHALLENGE
Barriers Our Solution
Batch-to-batch variability (growth cycle and
extraction technology/process)
Consistency, Solubility, Bioavailability, Stability
Each cannabinoid works a different way; lack of
mechanism data
Building proprietary library of cannabinoids with
supporting data
In natural state, cannabis is inactive Complete activation of phytocannabinoids
Decarboxylated when consumed via smoking or
vaping
Activated resin is necessary for commercial scale
dosage forms
Resin is a glue-like, sticky substance – tough to
deal with for many dosing forms
Scientific bench strength in medicinal chemistry
has solved particle size, absorption and other
problems
6
• Decarboxylation of cannabinoids in cannabinoid-based medicines matters
due to higher potency
• CB1 and CB2 Receptor respond to decarboxylated phytocannabinoids
(THC and CBD)
• Consistency in cannabinoid “content” and their complete decarboxylation:
vital for cannabinoid-based medicines
Essential for Physiological Activity
DECARBOXYLATED CANNABINOIDS
“Kotra et el., University Health Network, Toronto, 2015-18.(Sponsored by CannScience Innovations, Inc.)”
7
THC is more potent agonist compared to THCA at CB1 receptor
Agonistic mode screening Antagonistic mode screening
High
potency
Inactive
CB1 Receptor
THCA – weak agonist
THC – potent agonist
CB1 Receptor
RECEPTORS RESPONSES
“Kotra et el., University Health Network, Toronto, 2015-18.(Sponsored by CannScience Innovations, Inc.)”
8
CB2 Receptor
RECEPTORS RESPONSES
 CBD is more potent antagonist compared to CBDA at CB2 receptor
Agonistic mode screening Antagonistic mode screening
CB2 Receptor
CBDA – very weak antagonist
CBD – moderate antagonist
“Kotra et el., University Health Network, Toronto, 2015-18.(Sponsored by CannScience Innovations, Inc.)”
9
Δ9-THC and Δ9-THCA in Commercial Oils – Patients Samples
CURRENT STATE OF CANNABINOID-BASED MEDICINES
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
100.00
THC Content (%) THCA Content (%)
Pain Patients’ Samples
Scientus Pharma Funded Research at UHN
“Kotra et el., University Health Network, Toronto, 2015-18.(Sponsored by CannScience Innovations, Inc.)”
10
CBD and CBDA in Commercial Oils – Patients Samples
Pain Patients’ Samples
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
100.00
CBD Content (%) CBDA Content (%)
CURRENT STATE OF CANNABINOID-BASED MEDICINES
Scientus Pharma Funded Research at UHN
“Kotra et el., University Health Network, Toronto, 2015-18.(Sponsored by CannScience Innovations, Inc.)”
11
Industrial Scale to Meet Demands of Patients World Wide
MEDICINES – BEYOND “TRADITIONAL CANNABINOID-BASED MEDICINE USERS”
Scale-up Accomplished
US Patent Application# 62/609,708 (Dec 22, 2017): Apparatus for extraction and decarboxylation
of phytocannabinoids
Scale-up results: 99.5% decarboxylation consistently reproduced
12
Platform Technology
PROPRIETARY EXTRACTION METHOD
Notes:
(1) Due to consistent 100% decarboxylation from extraction process
(2) Source: Management
Proprietary Method Supercritical Fluid Extraction (LP Method)(2)
Up to 70-90% savings versus LP method Energy consuming processes
Up to 70-90% savings versus LP method
(reagents recycled)
Needs constant supply of liquid CO2
30-50 min. operator time /
2 hour elapsed time
2 hour operator time and 8-14 hour
elapsed time
100% decarboxylation 60-95% decarboxylation
Minimal due to proprietary
processing method
Inferior QA due to
high processing variability
Consistent chemical composition
(1)
of the
Resicann® resin = Standardized API
Not Applicable
Continuous Flow Production Process
(scalable/consistent)
2 cycles/day
(maintenance/replacements)
Energy Costs
Reagent / Solvent
Costs
Labour
Active Pharma
Ingredient (API)
Yield
Batch-to-Batch
Variability
Consistency
Capacity
Comparison
13
Protecting First Mover Advantage
PATENT STRATEGY
Methods Claims
• Use of microwave reaction for extraction and
decarboxylation of cannabinoids
Design and Apparatus Claims
• Design of closed system to extract cannabis resin in
a continuous flow process
Composition of Matter Claims • Decarboxylated cannabis resin
Formulations Claims • Range of dosing forms
US Patent Application# 62/609,708 (Dec 22, 2017)
Decarboxylated Cannabis Resins, Uses Thereof and Methods of Making Same
PCT/CA2017/050788
WO 2018/000094
29 June 2016
14
Initial “Rx Switch”
Market Focus
Target Indications
THE OPPORTUNITY
 Myoclonus
 Migraines
 Epilepsy
 Sleep Disorders
 Crohn’s & Colitis
 Nausea & Vomiting
 Lupus
 Tourette Syndrome
 Cancer
 Dravet Syndrome
>$1B(1)
Addressable
Market by
2019(2)
Subsets of
• Epilepsy / Seizures
• Pain
• CNS Related Disorders
 Anorexia
 Inflammatory Bowl Disorder
 Hepatitis C
 Parkinson’s Disease
 Eating Disorders
 Alzheimer’s
 Spinal Cord Damage
 Huntington’s Disease
 PTSD
 HIV / AIDs
Target Condition Universe
Notes:
(1) Addressable Market: patients being treated with prescription drugs for Pain, Seizure and CNS in Canada
(2) Management estimate based on analysis of Canadian prescription data from IMS Health for various pain, CNS and seizure related indications. See “Forward-Looking Statements and Advisories – Market and
Industry Data”
15
Target to Switch Sales from Existing Prescriptions
THE GOAL
Canada’s Market Expectation
& Target Market
Scientus
Target Market
Market Participants in
Canada
Licensed Producers
Total Addressable Market (3)
$250M(1)
Market Participants in
Canada
Licensed Producers
Total Addressable Market (3)
$1.8B - $2.4B (2019-2020)(1)
Market Participants in Canada
Specialized Licensed Dealers
Integrated Licensed Producers
Total Addressable Market (3)
$1.0B+ in Canada (2019)(2)
Market growth potential with
expansion of product definitions
LP
LD
CURRENT
MEDICAL MARKET
FUTURE
RECREATIONAL MARKET
SWITCH
MEDICAL MARKET
Notes:
(1) Based on GMP Research estimates
(2) Management estimate based on analysis of Canadian prescription volumes for various pain, CNS and seizure related indications. See “Forward-Looking Statements and Advisories
– Market and Industry Data”
(3) Addressable Market: patients being treated with prescription drugs for Pain, Seizure and CNS in Canada
16
Growing evidence that Cannabinoid-based medicines may offer opioid sparing
properties and are growing in adoption in treatment guidelines
INCREASING CLINICAL EVIDENCE
Neuropsychopharmacology.
2017 Aug;42(9):1752-1765. doi: 10.1038/npp.2017.51. Epub 2017 Mar 22.
Opioid-Sparing Effect of Cannabinoids: A Systematic Review and
Meta-Analysis.
Nielsen S1,2, Sabioni P3, Trigo JM3, Ware MA4, Betz-Stablein BD5, Murnion B6,7, Lintzeris N2,6, Khor KE8, Farrell M1, Smith A9, Le Foll B3.
Abstract
Cannabinoids, when co-administered with opioids, may enable reduced opioid doses without loss of analgesic efficacy (ie,
an opioid-sparing effect). The aim of this study was to conduct a systematic review to determine the opioid-sparing potential
of cannabinoids.
New York State Department of Health Announces Opioid Use to be Added as a
Qualifying Condition for Medical Marijuana
Opioid Use Joins 12 other Qualifying Conditions Under the Compassionate Care Act
ALBANY, N.Y. (June 18, 2018) - The New York State Department of Health today announced it will develop a regulatory
amendment to add opioid use as a qualifying condition for medical marijuana.
"The opioid epidemic in New York State is an unprecedented crisis, and it is critical to ensure that providers have as
many options as possible to treat patients in the most effective way," said New York State Health Commissioner
Dr. Howard Zucker. "As research indicates that marijuana can reduce the use of opioids, adding opioid use as a
qualifying condition for medical marijuana has the potential to help save countless lives across the state."
17
Cannabinoid-based medicines are growing in adoption in treatment guidelines
and offer a potential solution to current drug abuse crisis
OPIOID WEANING – SCIENTUS SCIENTIST AT THE FOREFRONT
Liver transplant patient post-op 40mg hydromorphone per day
Initiated cannabis indica dominant (Medreleaf: THC 0.79%, CBD
17.08%) 1g smoked TID, 0.4g PO OD
Currently taking hydromorphone contin 3mg BID
Howard Meng, MD · John G. Hanlon, MD · Rita Katznelson, MD ·
Anand Ghanekar, MD, PhD · Ian McGilvray, MD, PhD · Hance Clarke, MD, PhD
18
Science Focus
RESEARCH AT SCIENTUS
• Endocannabinoids are a major class of
neuromodulators, acting through CB1 and CB2
receptors
• CB1 primarily located on CNS neurons
• CB2 mainly located on immune cells in the
periphery
• Cannabinoids exert their effects by interacting with
these innate systems – neuro and inflammatory
systems in various disease conditions
• Scientus has conducted in vitro and in vivo preclinical
studies and is currently conducting clinical studies
(UHN 4 hospitals, CAMH and Rouge Valley Clinic).
See Appendix A for supporting data
Data with receptor level and
biochemical certainty, brings
patient safety to the forefront
19
Clinical Strategy
RESEARCH AT SCIENTUS PHARMA
Observational Studies:
Profile cannabis and correlate clinical diagnosis
• Chronic Pain (UHN) – REB approved; 56 patients, patient enrollment has
commenced
• PTSD (CAMH/UHN) - REB approved; 44 patients; patient enrollment has
commenced
• IBD – under development
• Driving study: Safety and Bioavailability Studies – Clinical Trial approved;
Study to commence soon
Prospective RCTs (for 2018/2019):
Including single and multiple ascending dose studies
• Chronic Pain
• IBD
• Arthritis
Scientus-UHN-CAMH:
Products Efficacy using PET Scanning under discussions with unique trial designs
20
Clinical Trials Projected Commercial Launch Timelines
Pharma Grade Dosing Forms
PRODUCT DEVELOPMENT PIPELINE
* Currently not permitted to sell in Canada under existing ACMPR regulations. See “Forward-Looking Statements and Advisories”
TYPE DESCRIPTION
2018 2019 2020
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
ACMPR
Capsule
Phase I Study
Healthy Volunteers, Goals: Safety, BA
N= 20 – 30; SAD
SCIENTUS
CAPSULES:
*non-ACMPR
(strength) /
*DR / ER Capsules
Phase I Study
Healthy Volunteers, Goals: Safety, BA
N= 20 – 30; SAD
RAPID
DISSOLVING
SUBLINGUAL
TABLET*
(RDST)
Phase 1 Study
Healthy Volunteers, Goals: Safety, BA and PK
N = 25; SAD/MAD; positioned for OMC after
satisfactory data
Phase IIb / III
Chronic pain patients, RDST; Goals:
Reduction in pain by 30%
N = 100 – 150; 4 Weeks
BUCCAL
SPRAY*
Phase 1 Safety
Healthy Volunteers, Goals: Safety BA / PK
N = 20; SAD/MAD; positioned for OMC after
satisfactory data
Phase IIb / III OMC / TPD (discussions
pending)
30%; N = 100 – 150, 4 months
RDST*
Phase I
DR ER
GelCaps*
non-ACMPR
GelCaps*
ACMPR
GelCaps
Projected
Commercial Launch
Buccal Spray*
CommercialLaunch
RDST*
Buccal Spray
Phase I
Commercial Launch
DR/ER Capsules*
Commercial Launch
Non-ACMPR Capsule*
RDST*
Phase II
Buccal Spray
Phase Iib / III
Commercial Launch
ACMPR Capsule
21
Filtering Out The Noise
SCIENTUS BRAND LEVERS
Product Differentiation
• Full decarboxylation
• Batch consistency
• Safety (drug interactions)
Credible Associations
• UHN scientific team
• Relationships with other world-
class medical research
institutions
Superior Service Model
• Patient management focus
• Reliable education platform
1
2
3
Clinical Development Plan
• Disease-Specific Steering Committees
• Dosing, Pharmacokinetics and Safety
Unique Pipeline Assets
• Value proposition suited to medical
community
• Extended Release
Unique Brand Attitude
• Build an emotional connection
• Medical community
co-creation
• Sophisticated and new
4
5
6
22
Learn, Revise and Then Ramp Up
COMMERCIALIZATION STRATEGY
• 3 mg and 10 mg Softgel Capsule
• Physician detailing reps + MSL +
patient education
• PR based marketing strategy
• Top pain management centres
• Opioid weaning strategy
• Observational studies, dose-finding
and PK data and self reported
patient experience data
Soft Launch
• Product refinements – Gen 2
• Dosing and formulation optimized
• Maintain targeting for pain
management KOL’s
• Hard launch supported with clinical
data
• Expand to epilepsy and CNS
• Expand sales force to 20-25
Hard Launch
• New dosing forms launched
• 5-10 SKU’s
• Expansion into international
markets
Focus on Revenues
23
Har Grover
Chairman & Chief Executive Officer
• Life Sciences entrepreneur with track record of taking companies through all stages of
growth, from startup to going public and past the $1 billion revenue mark
• Former public company executive (MDS), with extensive strategic planning (Deloitte),
M&A and operational roll out experience including several major medical product
launches (Cryocath, Visualsonics)
Phillip Hemans
Chief Operating Officer
• Experienced financial executive with capital markets, M&A and corporate re-organizational
experience
• Significant operational and manufacturing experience in regulated environments
• Leadership in capital markets, operations, finance and corporate development
Rav Grover
Chief Financial Officer
• Experienced financial professional with significant experience in corporate
development, private equity, capital markets, M&A, operational and finance activities
• Leadership in finance, corporate development, legal and investor relations
Lakshmi P. Kotra
Chief Scientific Officer
• Chief of Scientus’ SAB and internationally recognized as one of Canada’s top
medicinal chemists
• Author/co-author of over 100 publications and patents
• Director, Center for Molecular Design and Pre-formulations, UHN
• Professor of Medicinal Chemistry, University of Toronto
Hance Clarke
Chair of Medical Advisory Board
• Chair of Scientus Medical Advisory Board
• Medical Director, Pain Research Unit, TGH
• Staff Anaesthesiologist, Department of Anesthesia and Pain Management, Toronto
General Hospital
• Assistant Professor at the University of Toronto
• Leading KOL in pain management, cannabis and opioids
Management
LEADERSHIP TEAM
24
Corporate Board
LEADERSHIP TEAM
Har Grover
Chairman
• Life Sciences entrepreneur with track record of taking companies through all stages of
growth, from startup to going public and past the $1 billion revenue mark
Bruce Cousins
Lead Independent Director
• Experienced public company CFO (TSX and Nasdaq) in biotech and renewable
energy sectors, Arbutus, Aspreva, Ballard Power Systems
Mike Cloutier
Chair Compensation Committee
• Executive leader & human resources strategist (Santen, PTC Therapeutics, InterMune)
• Former CEO of Astra Zeneca Canada
Don Morrison
Chair Audit Committee
• Experienced board director, former OMERS Co-Head North America Private Equity
Greg Gubitz
Independent Director
• Former Senior Vice President, Corporate Development and General Counsel of Biovail
• Current CEO of HLS Therapeutics
Domenic Serafino
Independent Director
• Serial entrepreneur, current Chairman CEO of Venus Concepts, former President
Syneron
25
Scientific Advisory Board
LEADERSHIP TEAM
Eleanor Fish
Ph.D.
• Immunologist and arthritis researcher at the University of Toronto
• Previous appointments include Director of the Arthritis and Autoimmunity Research
Centre, Canada Research Chair in Women’s Health and immunobiology, a Senior
Scientist at the Division of Advanced Diagnostics at the Toronto General Research
Institute, and the Associate Chair of International Collaborations and Initiatives
Barry Greenberg
Ph.D.
• Held a series of positions internationally within the biotechnology and pharmaceutical
industries
• Directly involved with Alzheimer’s disease research and drug discovery since 1985
• PhD in Genetics and Molecular Biology at the University of North Carolina, and post-
doctorate work at Stanford University
Atul Humar
M.Sc., M.D.
• Professor in the Department of Medicine, University of Toronto
• Director of the Multi-Organ Transplant Program at the UHN and the University of
Toronto Transplant Institute
Donald Weaver
Ph.D., M.D.
• Physician, researcher, drug designer, multiple patent holder, and multiple award
recipient
• Currently a Director of the Krembil Research Institute, a prestigious research arm of
the Toronto Western Hospital
• Chair of Tier 1 Neuroscience Canada Research
• Former Research Director of medicine at Dalhousie Medical School and Capital Health
• Former Chair of the Division of neurology and Chief of Clinical Neurology at Queen’s
University
Orlando Hung
B. Pharm., M.D.
• Focuses on airway management, clinical pharmacology and drug delivery systems
• Collaborates on research with other clinicians and scientists at Dalhousie, Stanford,
and the University of Toronto
• Developed and patented a number of innovative drug delivery systems and medical
devices
• Professor in the Department of Pharmacology at Dalhousie University
26
July 30, 2018
CAP TABLE
Common
Shares
%
Convertible
Debenture
Warrants Options
Precursor
Issuance
Fully Diluted %
HydRx Securities
Common Shares 45,809,875 45,809,875 81.0%
Convertible Debenture (1) 4,181,818 4,181,818 7.4%
Warrants (2) 2,761,548 2,761,548 4.9%
Options (3) 2,948,925 2,948,925 5.2%
Precursor Issuance (4) 863,905 863,905 1.5%
Total 45,809,875 4,181,818 2,761,548 2,948,925 863,905 56,566,071 100.0%
Significant Holdings
Insiders 14,488,302 31.6% - 76,923 2,274,425 16,839,650 29.8%
Others 31,321,573 68.4% 4,181,818 2,684,625 674,500 863,905 39,726,421 70.2%
Total 45,809,875 100.0% 4,181,818 2,761,548 2,948,925 863,905 56,566,071 100.0%
(1) Convertible Debenture - $11,500,000 convertible into common shares at $2.75 per shares (4,181,818 common shares), maturing August 14, 2019.
(2) Warrants - exercisable into common shares on a one to one basis with an exercise price of $1.50, with the majority expiring September 22, 2021.
(3) Options - exercisable into common shares on a one to one basis with exercise prices ranging from $0.75 to $4.00 with varying expiry dates through May 2022. Any exercise of options
will make new grants available under Scientus’ 10% rolling stock plan.
(4) Pursuant to Reasons for Judgement dated July 10, 2018 in respect of Precursor Capital Corp. v. HydRx Farms Ltd. (the "Precursor Judgement"), Scientus has been ordered
to issue 863,905 Common Shares (the “Precursor Issuance”) and pay costs to Precursor Capital Corp. (“Precursor”). At this time Scientus is in discussions with its legal counsel
with respect to its options in respect of the Precursor Judgement, including how it may structure the Precursor Issuance and otherwise address and comply with the Precursor
Judgment, but it does not intend to appeal the Precursor Judgement. See “Risk Factors”.
27
March 31, 2018
FUNDING HISTORY
Date Share Price Gross Proceeds Notes
September 2014 $0.65 $2,210,620
April 2015 $0.75 $1,676,688
November 2015 $0.75 $1,000,000 Convertible notes that were converted in February 2017
May 2016 $0.75 $1,050,000 Convertible notes that were converted in February 2017
October 2016 $1.30 $1,785,732
February 2017 $2.60 $6,065,886
March 2017 $2.65 $513,000
August 2017 $2.75 $1,287,523
August 2017 $2.75 $11,500,000 Convertible debenture maturing August 2019
February 2018 $4.00 $15,698,000
TOTAL $42,787,449*
* Excludes $1,785,000 raised in December 2014, September 2015, April 2016 and November 2016 in CannScience Innovations Inc, a predecessor company.
28
March 31, 2018
BALANCE SHEET
* This statement of financial position has been prepared by management and has not been audited or reviewed by any external auditor. Please see slide 26 for share capital as of July 30, 2018.
HydRx Farms Ltd.
As at, March 31, 2018 December 31, 2017
$ $
Assets
Current assets
Cash 13,773,066 3,107,598
Other receivables 1,958,525 1,840,748
Prepaid expenses and deposits 333,181 472,726
16,064,772 5,421,072
Intangible assets 34,381,409 35,808,023
Goodwill 16,072,080 16,072,080
Property, plant and equipment 13,151,027 12,459,630
79,669,288 69,760,805
Liabilities
Current liabilities
Trade and other payables 846,123 1,279,575
Convertible debentures 230,000 350,356
1,076,123 1,629,931
Deferred tax liability 9,111,073 9,489,126
Convertible debentures 10,426,059 10,263,548
20,613,255 21,382,605
Shareholders’ equity
Common shares 71,828,585 57,341,691
Warrants 11,628,353 11,430,027
Contributed surplus 7,430,988 7,365,546
Deficit (31,831,893) (27,759,064)
59,056,033 48,378,200
79,669,288 69,760,805
Condensed interim consolidated statements of financial position
[expressed in Canadian dollars]
[Unaudited]
29
Net Cash Proceeds from the Offering will fund the following:
▶ Research/Development and Clinical Studies
▶ Sales, Marketing and Education Platforms
▶ General Corporate Purposes
($CAD in million) March 31, 2018 Pro Forma
Cash $13.8 $37.0(1)
Cash Runway July 2019 Q2 2020
Use of Proceeds, Run Rate and Milestone Goal
FINANCIAL OVERVIEW
Note:
(1) Assumed offering size of $25.000 million with a gross spread of 7.0% for net proceeds of $23.250 million.
30APPENDIX A
SELECT SUPPORTING DATA
31
Major Cannabinoids in Various LP Samples
Super Fluid Extraction (SFE) EXTRACTIONS
Strain 1 Strain 2 Strain 3 Strain 4 Strain 6 Strain 7 Strain 8
Yield of resin
(% wt/wt)
28 15 26 26 24 23 19
Δ9-THCA :Δ9-THC
(% wt/wt in resin)
22.1 : 5.1 1.1 : 0 45.5 : 1.6 47.5 : 1.7 10.9 : 0.9 23.0 : 2.6 44.4 : 3.6
CBDA : CBD
(% wt/wt in resin)
52.8 : 5.8 62.3 : 2.9 - - 20.1 : 0.5 44.0 : 1.3 -
CBGA : CBG
(% wt/wt in resin)
- - - - - - 24.5 : 0
Incomplete decarboxylation
“Kotra et el., University Health Network, Toronto, 2015-18.(Sponsored by CannScience Innovations, Inc.)”
32
Major Cannabinoids Using Scientus Extraction Process
µW (Microwave) EXTRACTIONS
Strain 1 Strain 2 Strain 3 Strain 4 Strain 6 Strain 7 Strain 8
Yield of resin
(% wt/wt)
21 18 23 27 22 27 21
Δ9-THCA :Δ9-THC
(% wt/wt in resin)
0: 29.4 0: 1.9 0: 49.8 0 : 42.5 0 : 37.0 0: 28.8 0 : 41.1
CBDA : CBD
(% wt/wt in resin)
0 : 33.8 0 : 37.6 - - 0 : 37.8 0 : 40.0 -
CBGA : CBG
(% wt/wt in resin)
- - - - - - 0 : 25.5
Complete (100%) decarboxylation
US-2018-0000857-A1 (June 29, 2016): Decarboxylated cannabis resins, uses thereof and methods of
making the same; PCT pending.
“Kotra et el., University Health Network, Toronto, 2015-18.(Sponsored by CannScience Innovations, Inc.)”
33
Efficacy Trials in Chronic Constriction Injury (CCI) Rat Model – Chronic Pain
PHARMACOKINETIC AND PHARMACODYNAMICS DATA
Time (days)
0 5 10 15 20 25 30
Responsetostimulation
+/-stdev(g)
0
5
10
15
20
25
Before dose (left foot)
After dose Treatment 1
After dose Treatment 2
Before dose (right foot)
After dose Treatment 1
After dose Treatment 2
CCI Foot
Normal Foot
Treatment
• Slight improvement in pain response
after dosing – Dose Escalations for
Pharmacodynamic Effect In Progress
• Behavioral changes observed after the
drug administration (increased thirst,
increased food uptake, sleepiness or
abnormal behavior)
Continuing Efficacy Studies in 2018
“Kotra et el., University Health Network, Toronto, 2015-18.(Sponsored by CannScience Innovations, Inc.)”
34
Pharmacokinetics in Dogs
PHARMACOKINETIC AND PHARMACODYNAMICS DATA
Beagle male dogs (14 months old)
Drug administration: CDS-ML-IV-23-2A
• Liquid Formulation: 80 mg/mL resin
containing CBD = 35.7 ± 0.2%,
THC = 31.7 ± 0.1%
• Dosing: sublingual; 0.5 mL of
formulation/dog
• Dose: Extract with
CBD = 0.95 mg/kg
THC = 0.85 mg/kg
Time (min) Dog 1 Dog 2 Dog 3
Before
dose
Very active, noisy,
trying to get out from the
cage.
Very active, noisy,
trying to get out from the
cage.
Very active, noisy,
trying to get out from the
cage.
0 Active Active Active
15 Active Calm and quiet Calm
30 Sleepy Sleepy Calm and sleepy
60 Sleeping Sleeping Calm and sleepy
120 Awake but quiet Awake, normal Awake, normal
180
Active, refuses food
and water
Active, refuses food
and water
Active, refuses food
and water
300
Very active, noisy,
trying to get out from the
cage.
Very active, noisy,
trying to get out from the
cage.
Very active, noisy,
trying to get out from the
cage.
Time (min)
0 60 120 180 240 300
Concentrationinplasma
(g/mL)
0
0.5
1
1.5
2
2.5
Time (min)
0 60 120 180 240 300
0
0.5
1
1.5
2
2.5
Time (min)
0 60 120 180 240 300
0
0.5
1
1.5
2
2.5
CBD
THC
Dog # 1 Dog # 3Dog # 2
Continuing Pharmacokinetics in Dogs in 2018
35APPENDIX B
RISK FACTORS
36APPENDIX B – RISK FACTORS
Appendix B - Risk Factors
There are a number of risk factors that could cause future results to differ materially from those described herein.
An investment in the common shares (the “Common Shares”) of HydRx Farms Ltd. (“Scientus”) involves significant risks. Investors should carefully consider the risks described below and the other information
elsewhere in this presentation before making a decision to buy the Common Shares.
The risks and uncertainties described herein are not the only ones that Scientus faces. Additional risks and uncertainties, including those that Scientus does not know about now or that it currently deems immaterial,
may also materially adversely affect its business, financial condition or results of operations.
Risks Relating to Scientus’ Business
• Scientus is subject to many of the risks common to early-stage enterprises, including limitations with respect to personnel, financial, and other resources and lack of significant revenues. There are risks
associated with Scientus’ growth strategy, and such strategy may not succeed, as they can be adversely affected by a variety of factors, including but not limited to the factors set out herein.
• Scientus is not currently revenue producing and may never be profitable.
• Preclinical testing and clinical trials for Scientus' products may not achieve the desired results. The results of preclinical testing and clinical trials are uncertain and a product candidate can fail at any stage of
clinical development.
• Scientus intends to seek Health Canada and analogous foreign approvals for certain of its products. Product approvals are subject to a number of contingencies and in any event timelines are often longer than
expected.
• Even if Scientus is able to commercialize its product candidates, the products may not receive adequate reimbursement from government or private pay insurers, which could affect its business.
• Scientus products may not attract a following among patients and/or providers.
• Scientus’ production is sourced from its own growing facility and through wholesale purchase from other Licensed Producers. If Scientus cannot source sufficient material to meet customer demand, it could have
a material adverse effect on the business, results of operations and financial condition of Scientus.
• Scientus’ ability to grow, store, process, manufacture and sell pharmaceutical cannabinoid products in Canada is dependent on maintaining its licences as a Licensed Producer and a Licensed Dealer with Health
Canada. There can be no guarantee that Health Canada will allow Scientus to maintain each of these licences. Additional government approvals, licences or permits may be required in the future.
• Failure to obtain export licenses or delays or disruption to transportation systems could materially adversely affect Scientus’ business and financial condition.
• Most countries are parties to international convention which may preclude such countries from permitting the import on sale of cannabinoid products.
• The success of Scientus is dependent upon the ability, expertise, judgment, discretion and good faith of key individuals including persons in charge and quality control personnel in respect of Scientus’ licences. If
such individuals cannot be retained, or if replacements cannot be found on a timely basis, it could have a material adverse effect on Scientus’ ability to execute on its business plan and strategy.
• The operations of Scientus are subject to a variety of laws relating to the manufacture, processing, import, export, management, packaging/labelling, advertising, sale, transportation, storage and disposal of
cannabinoid-based medicine but also laws and regulations relating to drugs, controlled substances, health and safety, land use, the conduct of operations and the protection of the environment. Any changes to
such laws, regulations, guidelines and policies, including the enactment of the Cannabis Act (Canada), may have a material adverse effect on Scientus’ business, financial condition and results of operations.
• There is potential that Scientus will face intense competition from other companies, some of which can be expected to have longer operating histories and more financial resources and manufacturing and
marketing experience than Scientus. There are currently several hundred applicants for licences and Scientus expects to face additional competition from new entrants. To remain competitive, Scientus will
require a continued level of investment in marketing, sales and organizational infrastructure.
• There are many factors which could impact the demand for Scientus’ products, including but not limited to the ability to attract and retain clients and customers, Scientus’ ability to continually produce desirable
and effective products, the continued growth of the number of patients selecting cannabinoid-based medicine and the extent of competition in the market.
• Scientus is dependent on its Whitby Facility and adverse developments regarding the facility may adversely impact Scientus.
• Scientus holds finished products in inventory and its inventory has a shelf life. Any write-down of inventory could have a material adverse effect on Scientus' business, financial condition and financial
performance.
• The price of production, sale and distribution of cannabis may fluctuate widely due to how nascent the industry is and is affected by numerous factors beyond Scientus’ control including international, economic
and political trends, expectations of inflation, currency exchange fluctuations, interest rates, global and regional consumptive patterns, speculative activities and increased production due to new production and
distribution developments and improved production and distribution methods. The effect of these factors on the price of product produced by Scientus and, therefore, the economic viability of Scientus’ business,
cannot accurately be predicted.
37APPENDIX B – RISK FACTORS
• There has been a marked increase in the use of social media platforms and similar channels that provide individuals with access to a broad audience of consumers and other interested persons. The availability
and impact of information on social media platforms is virtually immediate and many social media platforms publish user-generated content without filters or independent verification as to the accuracy of the
content posted. Information posted about Scientus may be adverse to Scientus’ interests or may be inaccurate, each of which may harm Scientus’ business, financial condition and results of operations.
• While Scientus believes its insurance coverage addresses all material risks to which it is exposed and is adequate and customary in its current state of operations, such insurance is subject to coverage limits and
exclusions and may not be available for the risks and hazards to which Scientus is exposed. Moreover, there can be no guarantee that Scientus will be able to obtain adequate insurance coverage in the future.
• While Scientus conducts and plans to continue to conduct its business in a manner consistent with good corporate governance practices, there can be no assurance that events, including events beyond the
control of Scientus, will not occur that may damage Scientus’ reputation.
• Scientus expects to face an inherent risk of exposure to product liability claims, regulatory action and litigation if the products it distributes are alleged to have caused loss or injury. There can be no assurance
that Scientus will be able to obtain or maintain product liability insurance on acceptable terms or with adequate coverage against potential liabilities.
• If any of Scientus’ products are recalled, Scientus could be required to incur the unexpected expense of the recall and any legal proceedings that might arise in connection with the recall.
• Scientus’ operations are subject to environmental regulations. There is no assurance that future changes in environmental regulation will not adversely affect Scientus’ business, financial condition and results of
operations.
• Scientus’ business involves the growing of an agricultural product and is subject to the risks inherent in the agricultural business, such as insects, plant diseases and similar agricultural risks. Although Scientus
expects that any such growing will be completed indoors under climate controlled conditions, there can be no assurance that natural elements will not have a material adverse effect on any future production.
• Scientus believes the cannabinoid-based medicine industry is highly dependent upon consumer perception regarding the medical benefits, safety, efficacy and quality of the cannabis distributed for medical
purposes to such consumers. There can be no assurance that future scientific research or findings on the medical benefits, viability, safety, efficacy and dosing of cannabis or isolated phytocannabinoids,
regulatory proceedings, litigation, media attention or other research findings or publicity will be favourable to the cannabinoid-based medicine market or any particular product, or consistent with earlier publicity.
• If Scientus is unable to maintain effective patent rights for its product candidates, Scientus may not be able to effectively compete in the market. If Scientus is not able to protect its proprietary information and
know-how, such proprietary information may be used by others to compete against Scientus.
• Scientus may not be able to identify infringements of its patents and accordingly the enforcement of its intellectual property rights may be difficult. Once such infringements are identified, enforcement could be
costly and time consuming.
• Third party claims of intellectual property infringement may prevent or delay Scientus’ development and commercialization efforts.
• Scientus’ operations depend, in part, on how well it protects its information technology systems, networks, equipment and software from damages from a number of threats. Events such as cable cuts, power
loss, hacking, computer viruses and theft could result in information system failures, delays and/or increase in capital expenses for Scientus. While Scientus implements protective measures to reduce the risk of
and detect cyber incidents, cyber-attacks are becoming more sophisticated and frequent, and the techniques used in such attacks change rapidly.
• The development of Scientus’ business and operating results may be hindered by applicable restrictions on sales and marketing activities imposed by Health Canada. For example, under the proposed Cannabis
Act (Canada), marketing and advertising for recreational cannabis would be significantly limited.
• The success of Scientus is highly dependent upon the ability, expertise, judgment, discretion and good faith of its limited number of senior management. Any loss of the services of such individuals could have a
material adverse effect on Scientus’ business, financial condition and results of operations.
• Scientus’ ability to compete and grow will be dependent on it having access, at a reasonable cost and in a timely manner, to skilled labor, equipment, parts and components. No assurances can be given that
Scientus will be successful in maintaining its required supply of skilled labor, equipment, parts and components.
• Scientus is exposed to the risk that its employees, independent contractors and consultants may engage in fraudulent or other illegal activity. The precautions taken by Scientus to detect and prevent this activity
may not be effective in controlling unknown or unmanaged risks or losses or in protecting Scientus from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with
such laws or regulations. Such misconduct may result in legal action, significant fines or other sanctions and could result in loss of Scientus’ regulatory licenses.
• Scientus may be subject to security breaches at its facilities or in respect of electronic document or data storage, which could lead to breaches of applicable privacy laws and associated sanctions or civil or
criminal penalties.
• Events, including those beyond the control of Scientus, may damage its operations. In addition, these events may negatively affect customers’ demand for Scientus’ products. Such events include, but are not
limited to, non-performance by third party contractors; increases in materials or labour costs; breakdown or failure of equipment; failure of quality control processes; contractor or operator errors; and major
incidents and/or catastrophic events such as fires, explosions, earthquakes or storms. As a result, there is a risk that Scientus may not have the capacity to meet customer demand or to meet future demand
when it arises.
• Scientus intends to develop brand/product differentiation strategies to retain and/or grow brand market share. The potential for success of these strategies is uncertain, dependent on various factors, and subject
to various challenges.
• Scientus will incur ongoing costs and obligations related to compliance with employee health and safety matters. Failure to comply with health and safety laws and regulations may result in additional costs for
corrective measures, penalties or in restrictions on Scientus’ manufacturing operations.
38APPENDIX B – RISK FACTORS
• Scientus may be subject to growth-related risks including capacity constraints and pressure on its internal systems and controls.
• Deficiencies in legal and regulatory compliance discovered by Health Canada on any audit of Scientus could subject Scientus to regulatory or agency proceedings or investigations, fines, penalties and
reputational harm, and inhibit the operations of Scientus.
• Scientus expects that it will need to raise substantial additional funding before it expects to become profitable. This additional financing may not be available on acceptable terms, or at all. Failure to raise such
capital could result in the delay or indefinite postponement of current business objectives or Scientus going out of business.
• Scientus may need to make periodic interest payments and may impose restrictive covenants on the conduct of Scientus’ business. A failure to obtain additional funding (on terms favourable to Scientus, or at all)
could prevent Scientus from making expenditures that may be required to grow or maintain its business.
• Certain of the directors and officers of Scientus are also directors and officers of other companies, and conflicts of interest may arise between their duties as officers and directors of Scientus and as officers and
directors of such other companies.
• Scientus is also subject to ongoing litigation and may become party to litigation from time to time in the ordinary course of business. Zidane Capital Corp. (“Zidane”) is suing Scientus for alleged breach of contract
with respect to an amalgamation agreement (the “Amalgamation Agreement”) dated January 12, 2016 and is seeking specific performance (in addition to seeking costs, interests and damages). Specific
performance could require, among other things, that a meeting of the shareholders of Scientus be called to consider and vote in respect of the approval (or rejection) of the transactions contemplated under the
Amalgamation Agreement. In such a scenario, if the shareholders were to then vote to approve the transactions contemplated under the Amalgamation Agreement, Scientus would be required to issue 855,621
Common Shares to Zidane. An order of specific performance could also require Scientus to issue 855,621 Common Shares to Zidane without the holding of a shareholder meeting. If the transactions
contemplated under the Amalgamation Agreement are not approved by shareholders or if the court determines that the Amalgamation Agreement was validly terminated, Scientus could be required to provide
Zidane with a termination fee of up to $250,000. With respect to Zidane’s alternative claim for damages, Zidane has not provided particulars of the quantum of damages sought. Scientus is vigorously defending
this suit, however, the ultimate outcome of any litigation is uncertain. In addition, Jacob Securities Inc. (“JSI”) has alleged damages in connection with certain advisory fee arrangements. The quantum of
damages claimed by JSI is unknown at this time and no statement of claim has been filed by JSI. Management disputes JSI’s allegations. Should any of the foregoing matters or any new claim ultimately be
determined against Scientus, such determination could adversely affect the value of our Common Shares and/or result in the issuance of additional Common Shares. Even if Scientus is involved in litigation and
wins, litigation can adversely impact the business, results or financial position as it may redirect significant company time, attention and resources or result in negative publicity.
• Scientus is currently in discussions with its legal counsel with respect to the Precursor Judgment, including how to structure the Precursor Issuance. Scientus cannot specify with certainty the ultimate structuring
of the Precursor Issuance and the expected effect on the Company, its corporate and capital structure and its business, including whether, as a result of the said issuance, Precursor will become a subsidiary of
Scientus. To the knowledge of management, and subject to the ability of Scientus and its advisors to conduct complete due diligence on Precursor, Scientus does not believe Precursor has conducted any
business or activities other than to invest in and work with Scientus towards pursuing a “go public” transaction and subsequently to pursue its claim against Scientus for the Precursor judgement. There can be no
assurances at this time as to whether or not Precursor has, or is subject to, any existing or contingent liabilities or claims and if such liabilities or claims exist whether or not they are material.
• Prospective purchasers are cautioned not to place undue reliance on forward-looking statements. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and
uncertainties, of both a general and specific nature, that could cause actual results to differ materially from those suggested by the forward-looking statements or contribute to the possibility that predictions,
forecasts or projections will prove to be materially inaccurate. There is no representation by Scientus that our estimates of the future medical cannabinoid product market size or the actual results achieved by us
in the future will be the same, in whole or in part, as those included in this presentation.
• While Scientus has no current operations in the United States and does not currently plan to enter the U.S. market, certain stock exchanges have raised concerns that activities with respect to U.S. businesses
may violate listing requirements. If Scientus is found to be engaging in business related to the cultivation, distribution or possession of marijuana in the U.S., or has a commercial interest in, or arrangement with,
third parties who do so, it could have a material adverse effect on any potential exchange listing.
• There is no assurance that any of Scientus’ existing personnel who presently or may in the future require a security clearance from Health Canada will be able to obtain or renew such clearances or that new
personnel who require a security clearance will be able to obtain one.
Risks Related to the Offering
• A purchase of Scientus’ securities is highly speculative and involves significant risks. Scientus’ securities should not be purchased by any person who cannot afford the loss of his or her entire purchase price.
• This is a commercially reasonable best efforts offering. No person has agreed to purchase any of the securities offered hereby. No assurance can be given that all, or even a substantial portion, of the securities
will be sold in this Offering.
• The Subscription Receipts are being offered on a private placement basis pursuant to exemptions from the prospectus requirements under applicable Canadian securities legislation. Accordingly, the transfer or
resale of the securities will be subject to restrictions under applicable securities laws and any resale must be made in accordance with applicable securities laws. A holder of securities may not trade the securities
before the date that is four months and a day after the later of (a) the distribution date of the securities and (b) the date on which Scientus becomes a reporting issuer in any jurisdiction of Canada, unless the
trade is permitted under securities laws. Scientus is not currently a “reporting issuer” in any jurisdiction of Canada and may never become one. Thus the hold period may never expire. During the hold period, any
resale of the securities must be made under an available statutory exemption from the dealer registration and prospectus requirements or under a discretionary exemption granted by the applicable securities
regulatory authority. Investors are advised to seek legal advice before re-selling the securities.
• The Subscription Receipts will not be qualified investment under the Income Tax Act (Canada) for registered plans. The Income Tax Act (Canada) imposes penalties on the acquisition or holding of non-qualified
investment by registered plans. Accordingly, Scientus’ securities may not be suitable investments for all investors.
39APPENDIX B – RISK FACTORS
• There is currently no public market for Scientus’ securities. Even if the securities are listed on a stock exchange, there can be no assurance that an active and liquid market for such shares will develop or be
maintained, in which case securityholders may have difficulty selling their securities. The market price of the securities may materially decline below the offering price of the private placement.
• The market price for the securities may be volatile and subject to wide fluctuations in response to numerous factors, many of which are beyond Scientus’ control; accordingly, the market price of the securities may
decline even if Scientus’ operating results, underlying asset values or prospects have not changed.
• Scientus does not anticipate paying any dividends or distributions on any of its securities in the foreseeable future. Dividends paid by Scientus would be subject to tax and, potentially, withholdings.
• Scientus cannot specify with certainty the particular uses of the net proceeds it will receive from the private placement. Management of Scientus will have broad discretion in the application of the net proceeds.
Accordingly, securityholders will have to rely upon the judgment of management with respect to the use of the proceeds, with only limited information concerning management’s specific intentions.
• Holders of Subscription Receipts are not holders of Scientus common shares and have only the rights set out in the agreement governing the Subscription Receipts.
• Certain proceeds of the offering are being delivered in escrow to the Subscription Receipt agent. There can be no assurance that the escrow release conditions will be satisfied or waived (to the extent permitted)
prior to the deadline for such conditions to be satisfied. In such event, the escrowed proceeds of the offering shall be used to pay the holders of the Subscription Receipts an amount equal to the issue price per
Subscription Receipt. If the proceeds of the offering held in escrow are not sufficient to satisfy the aggregate issue price paid for the then issued and outstanding Subscription Receipts (plus an amount equal to a
pro rata share of the interest earned thereon), Scientus will contribute such amounts as are necessary to satisfy any such shortfall. Although Scientus believes that it would have sufficient funds to cover such
payments, there is no guarantee that Scientus will be in a financial position to cover such payments at such time.
• Should Scientus become a reporting issuer in any jurisdiction of Canada and list its common shares on a securities exchange, Scientus will not have control over who owns its common shares. A holder of a
substantial number of common shares may be able to exercise a controlling influence on Scientus and the effect of this control may be to limit the price that investors are willing to pay for such common shares. In
addition, a sale of Scientus common shares by such shareholders, or the perception of the market that a sale may occur, may adversely affect the market price of the shares.
40APPENDIX C
PURCHASERS RIGHTS
41APPENDIX C – PURCHASER’s RIGHTS
The following statutory rights of action for damages or rescission will only apply to a Canadian purchaser of securities of HydRx Farms Ltd. (the “Corporation”) in the event that this presentation (the
“Presentation”) is deemed to be an offering memorandum pursuant to securities legislation in the applicable province or and territory of Canada. These remedies, or notice with respect thereto, must be exercised,
or delivered, as the case may be, by the purchaser within the time limits prescribed by the applicable securities legislation. Purchasers should refer to the applicable securities legislation for the complete text of
these rights or consult with a legal advisor. Where used in this section, “misrepresentation” means an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that
is necessary to make a statement not misleading in light of the circumstances in which it was made.
The rights of action discussed below are in addition to and without derogation from any other rights or remedies available at law to the purchaser of securities.
Ontario
In the event that this Presentation contains a misrepresentation, a purchaser of securities resident in Ontario who purchases securities offered by this Presentation during the period of distribution has, without
regard to whether the purchaser relied upon the misrepresentation, a right of action for damages against the Corporation or, alternatively, while still the owner of any securities purchased by that purchaser, for
rescission provided that:
(a) if the purchaser exercises its right of rescission, it shall cease to have a right of action for damages as against the Corporation;
(b) the Corporation will not be liable if it proves that the purchaser purchased the securities with knowledge of the misrepresentation;
(c) the Corporation will not be liable for all or any portion of damages that it proves do not represent the depreciation in value of the securities as a result of the misrepresentation relied upon; and
(d) in no case shall the amount recoverable in an action for damages exceed the price at which the securities were offered.
No action shall be commenced to enforce these rights more than:
(a) in the case of an action for rescission, 180 days after the purchase of the securities; or
(b) in the case of an action for damages, the earlier of:
(i) 180 days after the date that the purchaser first had knowledge of the facts giving rise to the cause of action; or
(ii) three years after the purchase of the securities.
The Corporation will not be liable for a misrepresentation in forward-looking information if the Corporation proves that this Presentation contains: (i) reasonable cautionary language identifying the forward-looking
information, and identifying material factors that could cause actual results to differ materially from a conclusion, forecast or projection in the forward-looking information; and (ii) a statement of the material factors
or assumptions that were applied in drawing a conclusion or making a forecast or projection set out in the forward-looking information.
Alberta
In the event that this Presentation contains a misrepresentation, a purchaser of securities resident in Alberta who purchases securities offered by this Presentation during the period of distribution has, without
regard to whether the purchaser relied on the misrepresentation, a right of action for damages against (i) the Corporation (ii) every director of the Corporation at the date of this Presentation, and (iii) every person
or company who signed this Presentation, but may elect (while still the owner of any securities that they purchased) to exercise a right of rescission against the Corporation, in which case the purchaser shall have
no right of action for damages, provided that:
(a) neither the Corporation nor any other person or company will be liable if the Corporation or such person or company proves that the purchaser purchased securities with knowledge of the
misrepresentation;
(b) in an action for damages, neither the Corporation nor any other person or company will be liable for all or any portion of such damages if the Corporation or such person or company proves that they do
not represent the depreciation in value of the securities as a result of the misrepresentation relied on; and
(c) in no case will the amount recoverable under this right of action exceed the price at which the securities were sold to the purchaser.
No person or company, other than the Corporation, will be liable:
(a) if the person or company proves that this Presentation was sent to the purchaser without the person’s or company’s knowledge or consent, and that, on becoming aware of its being sent, the person or
company promptly gave reasonable notice to the Corporation that it was sent without the knowledge and consent of the person or company;
(b) if the person or company proves that the person or company, on becoming aware of the misrepresentation, withdrew the person’s or company’s consent to this Presentation and gave reasonable notice to
the Corporation of the withdrawal and the reason for it;
(c) with respect to any part of this Presentation purporting to be made on the authority of an expert or purporting to be a copy of, or an extract from, a report, statement or opinion of an expert, the person or
company had no reasonable grounds to believe and did not believe that (i) there had been a misrepresentation, or (ii) the relevant part of the presentation did not fairly represent the position of the expert
or was not a fair copy; or
42APPENDIX C – PURCHASER’s RIGHTS
(d) with respect to any part of this Presentation not purporting to be made on the authority of an expert and not purporting to be a copy of, or an extract from, a report, opinion or statement of an expert,
unless the person or company (i) did not conduct an investigation sufficient to provide reasonable grounds for a belief that there had been no misrepresentation, or (ii) believed there had been a
misrepresentation.
In Alberta, no action may be commenced to enforce such right of action described above unless the right is exercised:
(a) in the case of an action for rescission, no later than 180 days from the date the purchaser purchased the securities; or
(b) in the case of an action, other than an action for rescission, not later than the earlier of (i) 180 days from the day that the purchaser first had knowledge of the facts giving rise to the cause of action, or (ii)
three (3) years from the day the purchaser purchased securities.
The rights of action discussed below are in addition to and without derogation from any other rights or remedies available at law to the purchaser of securities.
Saskatchewan
If this Presentation, or any amendment thereto, or any advertising or sales literature used in connection therewith contains a misrepresentation, every purchaser of securities resident in Saskatchewan shall be
deemed to have relied on the representation, if it was a misrepresentation at the time of purchase, and will have a right of action, in addition to any other rights they may have at law, for damages against:
(a) the Corporation;
(b) every promoter and director of the Corporation at the time the Presentation, or any amendment thereto, was sent or delivered or at the time the advertising or sales literature was disseminated as the
case may be;
(c) every person or company whose consent has been filed respecting the offering, but only with respect to reports, opinions or statements that have been made by them;
(d) every person or company that signed this Presentation or any amendments thereto; and
(e) every person or company that sells securities on behalf of the Corporation under this Presentation or amendment thereto, or in respect of which the advertising or sales literature was disseminated, as the
case may be.
Alternatively, where the purchaser purchased securities from the Corporation, the purchaser may elect to exercise a right of rescission against the Corporation, and, when the purchaser so elects, the purchaser
shall have no right of action for damages against the Corporation.
No person or company, other than the Corporation, will be liable:
(a) if the person or company proves that this Presentation, or any advertising, or sales literature was sent or delivered, or disseminated, as the case may be, to the purchaser without the person’s or
company’s knowledge or consent, and that, on becoming aware that it was sent and delivered or disseminated, the person or company promptly gave reasonable general notice that it was so sent and
delivered or disseminated;
(b) if the person or company proves that after the filing of this Presentation, or after the dissemination of the advertising or sales literature, and before the purchase of the securities by the purchaser, on
becoming aware of any misrepresentation, the person or company withdrew the person’s or company’s consent to this Presentation, or to the advertising or sales literature and gave reasonable general
notice of the withdrawal and the reason for it; or
(c) for any part of the Presentation, or any amendment thereto, or any advertising or sales literature not purporting to be made on the authority of an expert and not purporting to be a copy of or an extract
from a report, opinion or statement of an expert, unless the person or company (i) failed to conduct a reasonable investigation sufficient to provide reasonable grounds for a belief that there had been no
misrepresentation; or (ii) believed there had been a misrepresentation.
Note all defences upon which the Corporation or others may rely are described herein. Please refer to the full text of The Securities Act, 1988 (Saskatchewan) for a complete listing.
In addition, where an individual makes a verbal statement to a prospective purchaser that contains a misrepresentation relating to the securities and the verbal statement is made either before or
contemporaneously with the purchase of the securities, the purchaser is deemed to have relied on the misrepresentation if it was a misrepresentation at the time of purchase and the purchaser has a right of action
for damages against the individual who made the verbal statement. No such individual will be liable if:
(a) that individual can establish that he or she cannot reasonably be expected to have known that his or her statement contained a misrepresentation (this defence is also available to every person or
company that sells securities on behalf of the Corporation where there is a misrepresentation in the advertising or sales literature used in connection with the offering of securities under this Presentation);
or
(b) prior to the purchase of the securities by the purchaser, that individual notified the purchaser that the individual’s statement contained a misrepresentation.
43APPENDIX C – PURCHASER’s RIGHTS
Neither the Corporation nor any other person or company referred to above will be liable, whether for misrepresentations in this Presentation, advertising or sales literature or in a verbal statement:
(a) if the Corporation or such promoter, person or company proves that the purchaser purchased securities with knowledge of the misrepresentation;
(b) in an action for damages, for all or any portion of the damages that the Corporation or such promoter, person or company proves do not represent the depreciation in value of the securities as a result of
the misrepresentation relied on
In no case will the amount recoverable by a purchaser for a misrepresentation in this Presentation, advertising and sales literature, or a verbal misrepresentation exceed the price at which securities were sold to
the purchaser.
In Saskatchewan, no action may be commenced to enforce a right of action for rescission or damages unless the right is exercised:
(a) in the case of an action for rescission, no later than 180 days after the date the purchaser purchased the securities; and
(b) in the case of any action, other than an action for rescission, no later than the earlier of (i) one (1) year after the purchaser first had knowledge of the facts giving rise to the cause of action or (ii) six (6)
years after the date the purchaser purchased the securities.
Manitoba
In the event this Presentation contains a misrepresentation, every purchaser of securities, resident in Manitoba shall be deemed to have relied on the representation if it was a misrepresentation at the time of
purchase and has a right of action for damages against:
(i) the Corporation;
(ii) every director of the Corporation at the date of the Presentation; and
(iii) every person or company who signed the Presentation.
Alternatively, the purchaser may elect to exercise a right of rescission against the Corporation, and, when the purchaser so elects, the purchaser shall have no right of action for damages.
Neither the Corporation nor any person referred to above will be liable for misrepresentations in the Presentation if the Corporation or the person proves that the purchaser purchased securities with knowledge of
the misrepresentation.
No person or company, other than the Corporation will be liable:
(a) if the person or company proves that this Presentation was sent to the purchaser without the person’s or company’s knowledge or consent, and that, after becoming aware that it was sent, the person or
company promptly gave reasonable notice to the Corporation that it was sent without the person or company’s knowledge and consent;
(b) if the person or company proves that, after becoming aware of the misrepresentation, the person or company withdrew the person’s or company’s consent to the Presentation and gave reasonable notice
to the Corporation of the withdrawal and the reason for it;
(c) with respect to any part of this Presentation purporting to be made on the authority of an expert or purporting to be a copy of, or an extract from, a report, statement or opinion of an expert, the person or
company had no reasonable grounds to believe and did not believe that (i) there had been a misrepresentation, or (ii) the relevant part of the presentation did not fairly represent the position of the expert
or was not a fair copy; or
(d) with respect to any part of this Presentation not purporting to be made on an expert’s authority and not purporting to be a copy of, or an extract from, an expert’s report, opinion or statement, unless the
person or company (i) did not conduct an investigation sufficient to provide reasonable grounds for a belief that there had been no misrepresentation, or (ii) believed there had been a misrepresentation.
In an action for damages, the Corporation, any director of the Corporation and any person or company who signed the Presentation is not liable for all or any portion of the damages that they prove does not
represent the depreciation in value of the securities as a result of the misrepresentation relied on.
In no case will the amount recoverable by a purchaser for a misrepresentation in this Presentation exceed the price at which securities were offered under this Presentation.
In Manitoba, no action shall be commenced to enforce these rights more than:
(a) 180 days after the date the purchaser purchased the securities, in the case of an action for rescission; or
(b) The earlier of
(i) 180 days after the day that the purchaser first had knowledge of the facts giving rise to the cause of action, or
(ii) two years after the date the purchaser purchased the securities, in any other case.
44APPENDIX C – PURCHASER’s RIGHTS
Newfoundland and Labrador
In the event that this Presentation and any amendment thereto contains a misrepresentation, an investor to whom this Presentation was delivered and who purchases securities offered under it will be considered
to have relied on the misrepresentation, if it was a misrepresentation on the date of investment, and will have, subject as hereinafter provided, a right of action for damages against (i) the Corporation, (ii) every
director of the Corporation at the date of this Presentation, and (iii) every person or company who signed this Presentation, and a right of action for rescission against the Corporation. Where the purchaser elects
to exercise a right of rescission against the Corporation, the purchaser shall have no right of action for damages.
Neither the Corporation nor any other person or company will be liable if the Corporation or such person or company proves that the purchaser purchased securities with knowledge of the misrepresentation.
No person or company, other than the Corporation, will be liable:
(a) where the person or company proves that this Presentation was sent to the purchaser without the person’s or company’s knowledge or consent, and that, on becoming aware of its being sent, the person
or company promptly gave reasonable notice to the Corporation that it was sent without the person’s or company’s knowledge and consent;
(b) if the person or company proves that, on becoming aware of the misrepresentation, the person or company withdrew the person’s or company’s consent to this Presentation and gave reasonable notice to
the Corporation of the withdrawal and the reason for it;
(c) with respect to any part of this Presentation purporting to be made on the authority of an expert or purporting to be a copy of, or an extract from, a report, statement or opinion of an expert, the person or
company had no reasonable grounds to believe and did not believe that (i) there had been a misrepresentation, or (ii) the relevant part of the presentation did not fairly represent the position of the expert
or was not a fair copy; or
(d) with respect to any part of the Presentation not purporting to be made on the authority of an expert and not purporting to be a copy of, or an extract from, a report, opinion or statement of an expert,
unless such person or company (i) did not conduct an investigation sufficient to provide reasonable grounds for a belief that there had been no misrepresentation, or (ii) believed there had been a
misrepresentation.
In an action for damages, neither the Corporation nor any other person or company will be liable for all or any portion of the damages that it proves do not represent the depreciation in value of securities as a
result of the misrepresentation relied upon.
In no case shall the amount recoverable under the right of action described herein exceed the price at which securities were offered in this Presentation.
No action shall be commenced to enforce a right of action unless such action is commenced:
(a) in the case of an action for rescission, not later than 180 days from the date the purchaser purchased the securities; or
(b) in the case of an action for damages, not later than 180 days after the person had knowledge of the facts giving rise to the cause of action or in any other case not later than three (3) years from the date
the purchaser purchased the securities.
New Brunswick
If this Presentation or any information relating to the offering provided to the purchaser of the securities thereto or any advertising or sales literature used in connection therewith contains a misrepresentation,
every purchaser of securities resident in New Brunswick purchasing securities pursuant to this Presentation shall be deemed to have relied on the representation, if it was a misrepresentation at the time of
purchase, and will have a right of action, in addition to any other rights they may have at law, for damages against the Corporation. Alternatively, the purchaser may elect to exercise a right of rescission against
the Corporation, in which case the purchaser shall have no right of action for damages against the Corporation.
In addition, if advertising or sales literature is relied upon by a purchaser in connection with a purchase of securities, the purchaser shall also have a right of action for damages against every person who was a
director of the Corporation at the time the advertising or sales literature was disseminated.
In addition, where an individual makes a verbal statement to a prospective purchaser that contains a misrepresentation relating to securities and the verbal statement is made either before or contemporaneously
with the purchase of securities, the purchaser shall be deemed to have relied upon the misrepresentation if it was a misrepresentation at the time of purchase, and has a right of action for damages against the
individual who made the verbal statement. No such individual will be liable if:
(a) that individual can establish that he or she cannot reasonably be expected to have known that his or her statement contained a misrepresentation; or
(b) no individual is liable if, prior to the purchase of the securities by the purchaser, that individual notified the purchaser that the individual’s statement contained a misrepresentation.
Neither the Corporation nor any other person referred to above will be liable, whether for misrepresentations in the Presentation, any advertising or sales literature or in a verbal statement:
(a) if the Corporation or such other person proves that the purchaser purchased securities with knowledge of the misrepresentation;
(b) in an action for damages, for all or any portion of the damages that the Corporation or such other person proves do not represent the depreciation in value of securities as a result of the misrepresentation
relied on.
45APPENDIX C – PURCHASER’s RIGHTS
No person, other than the Corporation, is liable for misrepresentations in any advertising or sales literature if the person proves:
(a) that the advertising or sales literature was disseminated without the person's knowledge or consent and that, on becoming aware of its dissemination, the person gave reasonable general notice that it
was so disseminated,
(b) that, after the dissemination of the advertising or sales literature and before the purchase of the securities by the purchaser, on becoming aware of any misrepresentation in the advertising or sales
literature the person withdrew the person's consent to it and gave reasonable notice of the withdrawal and the reason for the withdrawal, or
(c) that, with respect to a false statement purporting to be a statement made by an official person or contained in what purports to be a copy of, or an extract from, a public official document, it was a correct
and fair representation of the statement or copy of, or extract from, the document, and the person had reasonable grounds to believe and did believe that the statement was true.
No person, other than the Corporation, is liable with respect to any part of the advertising or sales literature not purporting to be made on the authority of an expert and not purporting to be a copy of or, an extract
from, a report, opinion or statement of an expert unless the person:
(a) failed to conduct such reasonable investigation as to provide reasonable grounds for a belief that there had been no misrepresentation, or
(b) believed there had been a misrepresentation.
Any person who at the time the advertising or sales literature was disseminated, sells securities on behalf of the Corporation with respect to which the advertising or sales literature was disseminated, is not liable if
that person can establish that the person cannot reasonably be expected to have had knowledge that the advertising or sales literature was disseminated or contained a misrepresentation.
In no case will the amount recoverable by a purchaser exceed the price at which securities were sold to the purchaser.
In New Brunswick, no action may be commenced to enforce such right of action unless the right is exercised:
(a) in the case of an action for rescission, no later than 180 days after the date the purchaser purchased the securities; and
(b) in the case of any action, other than an action for rescission, no later than the earlier of (i) one (1) year after the purchaser first had knowledge of the facts giving rise to the cause of action or (ii) six (6)
years after the date the purchaser purchased the securities.
Nova Scotia
If this Presentation or any amendment thereto or any advertising or sales literature (as defined in the Securities Act (Nova Scotia)) used in connection therewith contains a misrepresentation (meaning an untrue
statement of material fact or an omission to state a material fact that is required to be stated or that is necessary in order to make any statement contained herein not misleading in light of the circumstances in
which it was made), any purchaser to whom such Presentation is sent or delivered who purchases securities referred to herein shall be deemed to have relied on the misrepresentation, if it was a
misrepresentation at the time of purchase, and has a right of action, in addition to any other rights they may have at law, for damages against (i) the Corporation, (ii) every director of the Corporation at the date of
the Presentation, and (iii) every person who signed this Presentation, but may elect (while still the owner of any of the securities that they purchased) to exercise a right of rescission against the Corporation, in
which case he or she shall have no right of action for damages.
Neither the Corporation nor any other person or company will be liable if the Corporation or such person or company proves that the purchaser purchased the securities with knowledge of the misrepresentation.
No person or company, other than the Corporation, will be liable:
(a) if the person or company proves that this Presentation was sent or delivered to the purchaser without the person’s or company’s knowledge or consent, and that, on becoming aware of its delivery, the
person or company promptly gave reasonable general notice that it was delivered without the person’s or company’s knowledge and consent;
(b) if the person or company proves that after delivery of this Presentation, and before the purchase of the securities by the purchaser, on becoming aware of any misrepresentation, the person or company
withdrew the person’s or company’s consent to this Presentation and gave reasonable general notice of the withdrawal and the reason for it;
(c) with respect to any part of this Presentation purporting to be made on the authority of an expert or purporting to be a copy of, or an extract from, a report, statement or opinion of an expert, the person or
company had no reasonable grounds to believe and did not believe that (i) there had been a misrepresentation, or (ii) the relevant part of the presentation did not fairly represent the position of the expert
or was not a fair copy; or
(d) with respect to any part of the Presentation not purporting to be made on the authority of an expert and not purporting to be a copy of, or an extract from, a report, opinion or statement of an expert,
unless such person or company (i) failed to conduct a reasonable investigation to provide reasonable grounds for a belief that there had been no misrepresentation, or (ii) believed there had been a
misrepresentation.
In an action for damages, neither the Corporation nor any other person or company will be liable for all or any portion of the damages that it proves do not represent the depreciation in value of securities as a
result of the misrepresentation relied upon.
In no case shall the amount recoverable under the right of action described herein exceed the price at which the securities were sold to the purchaser.
No action shall be commenced to enforce these rights more than 120 days after the date on which payment was made for the securities.
46APPENDIX C – PURCHASER’s RIGHTS
No action shall be commenced to enforce these rights more than 120 days after the date on which payment was made for the securities.
Prince Edward Island
If this Presentation contains a misrepresentation, a purchaser resident in Prince Edward Island who buys securities during the period of distribution, has, without regard to whether the purchaser relied on the
misrepresentation, a right of action for damages against (i) the Corporation, (ii) every director of the Corporation at the date of this Presentation, and (iii) every person or company who signed this Presentation, but
may elect (while still the owner of any of the securities that it purchased) to exercise a right of rescission against the Corporation, in which case the purchaser shall have no right of action for damages, provided
that:
(a) neither the Corporation nor any other person or company will be liable if the Corporation or such person or company proves that the purchaser purchased the securities with knowledge of the
misrepresentation;
(b) in an action for damages, neither the Corporation nor any other person or company will be liable for all or any portion of such damages if the Corporation or such person or company proves that they do
not represent the depreciation in value of the securities as a result of the misrepresentation relied on; and
(c) the amount recoverable under this right of action must not exceed the price at which the securities purchased by the purchaser were offered.
In an action for damages, no person or company, other than the Corporation, will be liable:
(a) if the person or company proves that this Presentation was sent to the purchaser without the person’s or company’s knowledge or consent, and that, on becoming aware that it was sent, the person or
company had promptly given reasonable notice to the Corporation that it was sent without the person’s or company’s knowledge and consent;
(b) if the person or company proves that on becoming aware of the misrepresentation, the person or company had withdrawn the person’s or company’s consent to this Presentation and had given
reasonable notice to the Corporation of the withdrawal and the reason for it;
(c) with respect to any part of this Presentation purporting to be made on the authority of an expert or purporting to be a copy of, or an extract from, a report, statement or opinion of an expert, the person or
company had no reasonable grounds to believe and did not believe that (i) there had been a misrepresentation, or (ii) the relevant part of the presentation did not fairly represent the position of the expert
or was not a fair copy; or
(d) with respect to any part of this Presentation not purporting to be made on the authority of an expert and not purporting to be a copy of, or an extract from, a report, opinion or statement of an expert,
unless the person or company (i) failed to conduct a reasonable investigation to provide reasonable grounds for a belief that there had been no misrepresentation, or (ii) believed there had been a
misrepresentation.
No action may be commenced to enforce such right of action described above more than:
(a) in the case of action for rescission, 180 days from the date the purchaser purchased the securities; or
(b) in the case of any action, other than an action for rescission: (i) 180 days from the day that the purchaser first had knowledge of the facts giving rise to the cause of action, or (ii) three (3) years from the
day the purchaser purchased the securities, whichever period expires first.
Neither the Corporation nor any other person or company will be liable with respect to a misrepresentation in forward-looking information if (i) the Presentation also contains reasonable cautionary language
identifying the information and a statement of the material factors or assumptions applied and (ii) there was a reasonable basis for drawing the conclusions or making the forecasts or projections
British Columbia and Quebec
Purchasers in British Columbia and Quebec are not generally entitled to statutory rights of action such as the ones described above. However, in consideration of their purchase of securities, the Corporation
hereby grants such purchasers a contractual right of action for damages or rescission that is substantially the same as the statutory right of action that is available to residents of Ontario who purchase securities.

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Hydrx Farms Ltd (dba Scientus Pharma) Investor Presentation August 2018

  • 1. Confidential Corporate Presentation July 2018 Innovative, Pharma-Grade Cannabinoid-Based Medicine
  • 2. 2FORWARD-LOOKING STATEMENTS AND ADVISORIES (“Scientus Pharma”, “Scientus”, “we”, “us”, and “our”) When used herein, “Scientus” means HydRx Farms Ltd. and includes reference to its affiliates, as applicable. This presentation contains certain forward-looking statements and forward-looking information (collectively referred to herein as “forward-looking statements”) within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward-looking statements. Forward-looking information is often, but not always, identified by the use of words such as “could”, “should”, “can”, “anticipate”, “expect”, “believe”, “will”, “may”, “projected”, “sustain”, “continues”, “strategy”, “potential”, “projects”, “grow”, “take advantage”, “estimate”, “well positioned”, “intend”, “plan”, “predict” or similar expressions suggesting future outcomes, the results of which are uncertain. In particular, this presentation contains forward-looking statements including, but not limited to, those relating to the implementation of operations, licensing, production, sales and revenue generation, medical cannabinoid market size and trends, average monthly prescription value, penetration rate, the timing and next steps in Scientus’ business commercialization plan, employee and sales force growth, future trials, product launches and business opportunities, business strategies and competitive advantages. The forward-looking statements regarding HydRx Farms Ltd. are based on Scientus’ current views, key expectations and assumptions regarding future events, plans and objectives, including anticipated financial performance, maintaining necessary licences to conduct Scientus’ business, the ability to adequately outfit its production facility, prospects, strategies, the sufficiency of budgeted capital expenditures in carrying out planned activities, that there will be no adverse regulatory or political developments with respect to medical marihuana production, sales or consumption and the ability to obtain financing on acceptable terms, all of which are subject to change based on market conditions and potential timing delays. Although management of Scientus considers these assumptions to be reasonable based on information currently available to them, they may prove to be incorrect. By their very nature, forward-looking statements involve inherent risks and uncertainties (both general and specific) and risks that forward-looking statements will not be achieved. Undue reliance should not be placed on forward-looking statements, as a number of important factors could cause the actual results to differ materially from the beliefs, plans, objectives, expectations and anticipations, estimates and intentions expressed in the forward-looking statements. These include, but are not limited to, the risks set out herein in Appendix A. Readers are cautioned that the foregoing list and the factors identified herein under “Appendix A - Risk Factors” are not exhaustive. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this presentation are made as of the date of this presentation and Scientus does not undertake and is not obligated to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise unless so required by applicable securities laws. Market and Industry Data Market data and industry forecasts contained in this presentation have been obtained from industry publications, various publicly available sources and subscription based reports as well as from management’s good faith estimates (including, in particular, our expectations regarding the medical cannabinoid product market size and trends), which are derived from management’s knowledge of the industry and independent sources that management believes to be reliable. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. We have not independently verified any of the information from third-party sources nor have we ascertained the validity or accuracy of the underlying economic assumptions relied upon therein. Scientus hereby disclaims any responsibility or liability whatsoever in respect of any third party sources of market and industry data or information. Notice to Investors In making an investment decision, prospective investors must rely on their own examination of Scientus and the terms of the private placement offering, including the merits and risks involved. Prospective investors should not construe the contents of this presentation as legal, tax, investment or accounting advice by Scientus or any of its directors, officers, shareholders, agents, employees or advisors. This presentation does not take into account the particular investment objectives or financial circumstances of any prospective investor. Each prospective investor who reviews this presentation must make its own independent assessment of Scientus after making such investigations and each prospective investor is strongly urged to consult with its own advisors with respect to legal, tax, regulatory, financial and accounting consequences, including the merits and the risks involved, of any investment in Scientus. In particular, any estimates or projections or opinions contained herein necessarily involve significant elements of subjective judgment, analysis and assumption and each prospective investor should satisfy itself in relation to such matters. Investment is suitable only for sophisticated investors and requires the financial ability and willingness to accept the high risks and lack of liquidity that are characteristic of an investment in a private company. Purchasers of Scientus’ securities will be required to execute subscription agreements, which will contain representations, warranties, covenants and acknowledgments of the purchasers required by the relevant regulatory authorities and Scientus to establish the availability of such exemptions and to ensure compliance with applicable securities legislation. Confidentiality This presentation contains highly confidential information regarding the investments, strategy and organization of Scientus. Your acceptance of this document constitutes your agreement to (i) keep confidential all the information contained in this document, as well as any information derived by you from the information contained in this document (collectively, “Confidential Information”) and not disclose any such Confidential Information to any other person, (ii) not use any of the Confidential Information for any purpose other than to evaluate the purchase of securities of Scientus, (iii) not copy this document without Scientus’ prior consent, and (iv) promptly return this document and any copies hereof to Scientus upon Scientus’ request.
  • 3. 3INVESTMENT HIGHLIGHTS Proprietary Technology • Multiple patents pending & proprietary technology platform • Highly scalable production and manufacturing, to meet growing demand • Decarboxylation and extraction platform creates a standardized, consistent API within very low tolerance levels (internal QC standards include 100% decarboxylated resin, <5% reject rate and yield between 97-101%) Multiple Near-Term Product Launches • Multiple products ready for commercial launch over next 18 months • Differentiated presentation formats to meet patient and physician requirements (i.e. patients with difficulty swallowing, inhalation issues such as asthma, etc.) Barriers to Entry • First mover advantage in areas where such advantage can be protected (patents or setting industry standards) • Greater predictability of patient outcomes > instilling confidence and loyalty from physicians and patients • Scaled production of consistent resin (Resicann® resin = Standardized API -100% decarboxylated Resin) is the foundation for all Scientus formulations and cannabinoid- based medicines (patent pending continuous flow production process vs. industry standard batch process) Scientific Research • Scientific papers and inputs from Key Opinion Leaders (“KOLs”) • Research and clinical trials • Supported by pharmacokinetic / pharmacodynamic data Recognized Scientific Personnel & Infrastructure • Highly regarded Scientific Advisory Board and Medical Advisory Board • Full access to University Health Network (“UHN”) research facilities Strong Management & Board • Seasoned management team • Depth of experience in life sciences and public companies • Track record of growing companies at this stage of development
  • 4. 4 Long Term Focus on Unmet Medical Needs COMPANY SNAP SHOT Manufacturing HydRx Facility Full-Time Staff and Consultants • 26 Staff • 4 Consulting Teams Growing Capabilities • Goal to reach 40 employees by Q1 2019 R&D UHN Research Facilities Research Team from UHN • Led by Lakshmi P. Kotra (BPharm & Ph.D.) & team of 5 scientists (4 Ph.D.s) UHN is the leading life sciences research organization in Canada Clinical Studies UHN (5 Hospitals) Pharma-grade products supported with clinical data Team of M.D.s & Ph.D.s • Led by Hance Clarke (M.D. & Ph.D.) First mover advantage with proprietary technology
  • 5. 5 While the therapeutic benefits are well established, cannabis has proven to be a challenging active pharmaceutical ingredient (API) to harness Difficult API to Harness THE CHALLENGE Barriers Our Solution Batch-to-batch variability (growth cycle and extraction technology/process) Consistency, Solubility, Bioavailability, Stability Each cannabinoid works a different way; lack of mechanism data Building proprietary library of cannabinoids with supporting data In natural state, cannabis is inactive Complete activation of phytocannabinoids Decarboxylated when consumed via smoking or vaping Activated resin is necessary for commercial scale dosage forms Resin is a glue-like, sticky substance – tough to deal with for many dosing forms Scientific bench strength in medicinal chemistry has solved particle size, absorption and other problems
  • 6. 6 • Decarboxylation of cannabinoids in cannabinoid-based medicines matters due to higher potency • CB1 and CB2 Receptor respond to decarboxylated phytocannabinoids (THC and CBD) • Consistency in cannabinoid “content” and their complete decarboxylation: vital for cannabinoid-based medicines Essential for Physiological Activity DECARBOXYLATED CANNABINOIDS “Kotra et el., University Health Network, Toronto, 2015-18.(Sponsored by CannScience Innovations, Inc.)”
  • 7. 7 THC is more potent agonist compared to THCA at CB1 receptor Agonistic mode screening Antagonistic mode screening High potency Inactive CB1 Receptor THCA – weak agonist THC – potent agonist CB1 Receptor RECEPTORS RESPONSES “Kotra et el., University Health Network, Toronto, 2015-18.(Sponsored by CannScience Innovations, Inc.)”
  • 8. 8 CB2 Receptor RECEPTORS RESPONSES  CBD is more potent antagonist compared to CBDA at CB2 receptor Agonistic mode screening Antagonistic mode screening CB2 Receptor CBDA – very weak antagonist CBD – moderate antagonist “Kotra et el., University Health Network, Toronto, 2015-18.(Sponsored by CannScience Innovations, Inc.)”
  • 9. 9 Δ9-THC and Δ9-THCA in Commercial Oils – Patients Samples CURRENT STATE OF CANNABINOID-BASED MEDICINES 0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00 100.00 THC Content (%) THCA Content (%) Pain Patients’ Samples Scientus Pharma Funded Research at UHN “Kotra et el., University Health Network, Toronto, 2015-18.(Sponsored by CannScience Innovations, Inc.)”
  • 10. 10 CBD and CBDA in Commercial Oils – Patients Samples Pain Patients’ Samples 0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00 100.00 CBD Content (%) CBDA Content (%) CURRENT STATE OF CANNABINOID-BASED MEDICINES Scientus Pharma Funded Research at UHN “Kotra et el., University Health Network, Toronto, 2015-18.(Sponsored by CannScience Innovations, Inc.)”
  • 11. 11 Industrial Scale to Meet Demands of Patients World Wide MEDICINES – BEYOND “TRADITIONAL CANNABINOID-BASED MEDICINE USERS” Scale-up Accomplished US Patent Application# 62/609,708 (Dec 22, 2017): Apparatus for extraction and decarboxylation of phytocannabinoids Scale-up results: 99.5% decarboxylation consistently reproduced
  • 12. 12 Platform Technology PROPRIETARY EXTRACTION METHOD Notes: (1) Due to consistent 100% decarboxylation from extraction process (2) Source: Management Proprietary Method Supercritical Fluid Extraction (LP Method)(2) Up to 70-90% savings versus LP method Energy consuming processes Up to 70-90% savings versus LP method (reagents recycled) Needs constant supply of liquid CO2 30-50 min. operator time / 2 hour elapsed time 2 hour operator time and 8-14 hour elapsed time 100% decarboxylation 60-95% decarboxylation Minimal due to proprietary processing method Inferior QA due to high processing variability Consistent chemical composition (1) of the Resicann® resin = Standardized API Not Applicable Continuous Flow Production Process (scalable/consistent) 2 cycles/day (maintenance/replacements) Energy Costs Reagent / Solvent Costs Labour Active Pharma Ingredient (API) Yield Batch-to-Batch Variability Consistency Capacity Comparison
  • 13. 13 Protecting First Mover Advantage PATENT STRATEGY Methods Claims • Use of microwave reaction for extraction and decarboxylation of cannabinoids Design and Apparatus Claims • Design of closed system to extract cannabis resin in a continuous flow process Composition of Matter Claims • Decarboxylated cannabis resin Formulations Claims • Range of dosing forms US Patent Application# 62/609,708 (Dec 22, 2017) Decarboxylated Cannabis Resins, Uses Thereof and Methods of Making Same PCT/CA2017/050788 WO 2018/000094 29 June 2016
  • 14. 14 Initial “Rx Switch” Market Focus Target Indications THE OPPORTUNITY  Myoclonus  Migraines  Epilepsy  Sleep Disorders  Crohn’s & Colitis  Nausea & Vomiting  Lupus  Tourette Syndrome  Cancer  Dravet Syndrome >$1B(1) Addressable Market by 2019(2) Subsets of • Epilepsy / Seizures • Pain • CNS Related Disorders  Anorexia  Inflammatory Bowl Disorder  Hepatitis C  Parkinson’s Disease  Eating Disorders  Alzheimer’s  Spinal Cord Damage  Huntington’s Disease  PTSD  HIV / AIDs Target Condition Universe Notes: (1) Addressable Market: patients being treated with prescription drugs for Pain, Seizure and CNS in Canada (2) Management estimate based on analysis of Canadian prescription data from IMS Health for various pain, CNS and seizure related indications. See “Forward-Looking Statements and Advisories – Market and Industry Data”
  • 15. 15 Target to Switch Sales from Existing Prescriptions THE GOAL Canada’s Market Expectation & Target Market Scientus Target Market Market Participants in Canada Licensed Producers Total Addressable Market (3) $250M(1) Market Participants in Canada Licensed Producers Total Addressable Market (3) $1.8B - $2.4B (2019-2020)(1) Market Participants in Canada Specialized Licensed Dealers Integrated Licensed Producers Total Addressable Market (3) $1.0B+ in Canada (2019)(2) Market growth potential with expansion of product definitions LP LD CURRENT MEDICAL MARKET FUTURE RECREATIONAL MARKET SWITCH MEDICAL MARKET Notes: (1) Based on GMP Research estimates (2) Management estimate based on analysis of Canadian prescription volumes for various pain, CNS and seizure related indications. See “Forward-Looking Statements and Advisories – Market and Industry Data” (3) Addressable Market: patients being treated with prescription drugs for Pain, Seizure and CNS in Canada
  • 16. 16 Growing evidence that Cannabinoid-based medicines may offer opioid sparing properties and are growing in adoption in treatment guidelines INCREASING CLINICAL EVIDENCE Neuropsychopharmacology. 2017 Aug;42(9):1752-1765. doi: 10.1038/npp.2017.51. Epub 2017 Mar 22. Opioid-Sparing Effect of Cannabinoids: A Systematic Review and Meta-Analysis. Nielsen S1,2, Sabioni P3, Trigo JM3, Ware MA4, Betz-Stablein BD5, Murnion B6,7, Lintzeris N2,6, Khor KE8, Farrell M1, Smith A9, Le Foll B3. Abstract Cannabinoids, when co-administered with opioids, may enable reduced opioid doses without loss of analgesic efficacy (ie, an opioid-sparing effect). The aim of this study was to conduct a systematic review to determine the opioid-sparing potential of cannabinoids. New York State Department of Health Announces Opioid Use to be Added as a Qualifying Condition for Medical Marijuana Opioid Use Joins 12 other Qualifying Conditions Under the Compassionate Care Act ALBANY, N.Y. (June 18, 2018) - The New York State Department of Health today announced it will develop a regulatory amendment to add opioid use as a qualifying condition for medical marijuana. "The opioid epidemic in New York State is an unprecedented crisis, and it is critical to ensure that providers have as many options as possible to treat patients in the most effective way," said New York State Health Commissioner Dr. Howard Zucker. "As research indicates that marijuana can reduce the use of opioids, adding opioid use as a qualifying condition for medical marijuana has the potential to help save countless lives across the state."
  • 17. 17 Cannabinoid-based medicines are growing in adoption in treatment guidelines and offer a potential solution to current drug abuse crisis OPIOID WEANING – SCIENTUS SCIENTIST AT THE FOREFRONT Liver transplant patient post-op 40mg hydromorphone per day Initiated cannabis indica dominant (Medreleaf: THC 0.79%, CBD 17.08%) 1g smoked TID, 0.4g PO OD Currently taking hydromorphone contin 3mg BID Howard Meng, MD · John G. Hanlon, MD · Rita Katznelson, MD · Anand Ghanekar, MD, PhD · Ian McGilvray, MD, PhD · Hance Clarke, MD, PhD
  • 18. 18 Science Focus RESEARCH AT SCIENTUS • Endocannabinoids are a major class of neuromodulators, acting through CB1 and CB2 receptors • CB1 primarily located on CNS neurons • CB2 mainly located on immune cells in the periphery • Cannabinoids exert their effects by interacting with these innate systems – neuro and inflammatory systems in various disease conditions • Scientus has conducted in vitro and in vivo preclinical studies and is currently conducting clinical studies (UHN 4 hospitals, CAMH and Rouge Valley Clinic). See Appendix A for supporting data Data with receptor level and biochemical certainty, brings patient safety to the forefront
  • 19. 19 Clinical Strategy RESEARCH AT SCIENTUS PHARMA Observational Studies: Profile cannabis and correlate clinical diagnosis • Chronic Pain (UHN) – REB approved; 56 patients, patient enrollment has commenced • PTSD (CAMH/UHN) - REB approved; 44 patients; patient enrollment has commenced • IBD – under development • Driving study: Safety and Bioavailability Studies – Clinical Trial approved; Study to commence soon Prospective RCTs (for 2018/2019): Including single and multiple ascending dose studies • Chronic Pain • IBD • Arthritis Scientus-UHN-CAMH: Products Efficacy using PET Scanning under discussions with unique trial designs
  • 20. 20 Clinical Trials Projected Commercial Launch Timelines Pharma Grade Dosing Forms PRODUCT DEVELOPMENT PIPELINE * Currently not permitted to sell in Canada under existing ACMPR regulations. See “Forward-Looking Statements and Advisories” TYPE DESCRIPTION 2018 2019 2020 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 ACMPR Capsule Phase I Study Healthy Volunteers, Goals: Safety, BA N= 20 – 30; SAD SCIENTUS CAPSULES: *non-ACMPR (strength) / *DR / ER Capsules Phase I Study Healthy Volunteers, Goals: Safety, BA N= 20 – 30; SAD RAPID DISSOLVING SUBLINGUAL TABLET* (RDST) Phase 1 Study Healthy Volunteers, Goals: Safety, BA and PK N = 25; SAD/MAD; positioned for OMC after satisfactory data Phase IIb / III Chronic pain patients, RDST; Goals: Reduction in pain by 30% N = 100 – 150; 4 Weeks BUCCAL SPRAY* Phase 1 Safety Healthy Volunteers, Goals: Safety BA / PK N = 20; SAD/MAD; positioned for OMC after satisfactory data Phase IIb / III OMC / TPD (discussions pending) 30%; N = 100 – 150, 4 months RDST* Phase I DR ER GelCaps* non-ACMPR GelCaps* ACMPR GelCaps Projected Commercial Launch Buccal Spray* CommercialLaunch RDST* Buccal Spray Phase I Commercial Launch DR/ER Capsules* Commercial Launch Non-ACMPR Capsule* RDST* Phase II Buccal Spray Phase Iib / III Commercial Launch ACMPR Capsule
  • 21. 21 Filtering Out The Noise SCIENTUS BRAND LEVERS Product Differentiation • Full decarboxylation • Batch consistency • Safety (drug interactions) Credible Associations • UHN scientific team • Relationships with other world- class medical research institutions Superior Service Model • Patient management focus • Reliable education platform 1 2 3 Clinical Development Plan • Disease-Specific Steering Committees • Dosing, Pharmacokinetics and Safety Unique Pipeline Assets • Value proposition suited to medical community • Extended Release Unique Brand Attitude • Build an emotional connection • Medical community co-creation • Sophisticated and new 4 5 6
  • 22. 22 Learn, Revise and Then Ramp Up COMMERCIALIZATION STRATEGY • 3 mg and 10 mg Softgel Capsule • Physician detailing reps + MSL + patient education • PR based marketing strategy • Top pain management centres • Opioid weaning strategy • Observational studies, dose-finding and PK data and self reported patient experience data Soft Launch • Product refinements – Gen 2 • Dosing and formulation optimized • Maintain targeting for pain management KOL’s • Hard launch supported with clinical data • Expand to epilepsy and CNS • Expand sales force to 20-25 Hard Launch • New dosing forms launched • 5-10 SKU’s • Expansion into international markets Focus on Revenues
  • 23. 23 Har Grover Chairman & Chief Executive Officer • Life Sciences entrepreneur with track record of taking companies through all stages of growth, from startup to going public and past the $1 billion revenue mark • Former public company executive (MDS), with extensive strategic planning (Deloitte), M&A and operational roll out experience including several major medical product launches (Cryocath, Visualsonics) Phillip Hemans Chief Operating Officer • Experienced financial executive with capital markets, M&A and corporate re-organizational experience • Significant operational and manufacturing experience in regulated environments • Leadership in capital markets, operations, finance and corporate development Rav Grover Chief Financial Officer • Experienced financial professional with significant experience in corporate development, private equity, capital markets, M&A, operational and finance activities • Leadership in finance, corporate development, legal and investor relations Lakshmi P. Kotra Chief Scientific Officer • Chief of Scientus’ SAB and internationally recognized as one of Canada’s top medicinal chemists • Author/co-author of over 100 publications and patents • Director, Center for Molecular Design and Pre-formulations, UHN • Professor of Medicinal Chemistry, University of Toronto Hance Clarke Chair of Medical Advisory Board • Chair of Scientus Medical Advisory Board • Medical Director, Pain Research Unit, TGH • Staff Anaesthesiologist, Department of Anesthesia and Pain Management, Toronto General Hospital • Assistant Professor at the University of Toronto • Leading KOL in pain management, cannabis and opioids Management LEADERSHIP TEAM
  • 24. 24 Corporate Board LEADERSHIP TEAM Har Grover Chairman • Life Sciences entrepreneur with track record of taking companies through all stages of growth, from startup to going public and past the $1 billion revenue mark Bruce Cousins Lead Independent Director • Experienced public company CFO (TSX and Nasdaq) in biotech and renewable energy sectors, Arbutus, Aspreva, Ballard Power Systems Mike Cloutier Chair Compensation Committee • Executive leader & human resources strategist (Santen, PTC Therapeutics, InterMune) • Former CEO of Astra Zeneca Canada Don Morrison Chair Audit Committee • Experienced board director, former OMERS Co-Head North America Private Equity Greg Gubitz Independent Director • Former Senior Vice President, Corporate Development and General Counsel of Biovail • Current CEO of HLS Therapeutics Domenic Serafino Independent Director • Serial entrepreneur, current Chairman CEO of Venus Concepts, former President Syneron
  • 25. 25 Scientific Advisory Board LEADERSHIP TEAM Eleanor Fish Ph.D. • Immunologist and arthritis researcher at the University of Toronto • Previous appointments include Director of the Arthritis and Autoimmunity Research Centre, Canada Research Chair in Women’s Health and immunobiology, a Senior Scientist at the Division of Advanced Diagnostics at the Toronto General Research Institute, and the Associate Chair of International Collaborations and Initiatives Barry Greenberg Ph.D. • Held a series of positions internationally within the biotechnology and pharmaceutical industries • Directly involved with Alzheimer’s disease research and drug discovery since 1985 • PhD in Genetics and Molecular Biology at the University of North Carolina, and post- doctorate work at Stanford University Atul Humar M.Sc., M.D. • Professor in the Department of Medicine, University of Toronto • Director of the Multi-Organ Transplant Program at the UHN and the University of Toronto Transplant Institute Donald Weaver Ph.D., M.D. • Physician, researcher, drug designer, multiple patent holder, and multiple award recipient • Currently a Director of the Krembil Research Institute, a prestigious research arm of the Toronto Western Hospital • Chair of Tier 1 Neuroscience Canada Research • Former Research Director of medicine at Dalhousie Medical School and Capital Health • Former Chair of the Division of neurology and Chief of Clinical Neurology at Queen’s University Orlando Hung B. Pharm., M.D. • Focuses on airway management, clinical pharmacology and drug delivery systems • Collaborates on research with other clinicians and scientists at Dalhousie, Stanford, and the University of Toronto • Developed and patented a number of innovative drug delivery systems and medical devices • Professor in the Department of Pharmacology at Dalhousie University
  • 26. 26 July 30, 2018 CAP TABLE Common Shares % Convertible Debenture Warrants Options Precursor Issuance Fully Diluted % HydRx Securities Common Shares 45,809,875 45,809,875 81.0% Convertible Debenture (1) 4,181,818 4,181,818 7.4% Warrants (2) 2,761,548 2,761,548 4.9% Options (3) 2,948,925 2,948,925 5.2% Precursor Issuance (4) 863,905 863,905 1.5% Total 45,809,875 4,181,818 2,761,548 2,948,925 863,905 56,566,071 100.0% Significant Holdings Insiders 14,488,302 31.6% - 76,923 2,274,425 16,839,650 29.8% Others 31,321,573 68.4% 4,181,818 2,684,625 674,500 863,905 39,726,421 70.2% Total 45,809,875 100.0% 4,181,818 2,761,548 2,948,925 863,905 56,566,071 100.0% (1) Convertible Debenture - $11,500,000 convertible into common shares at $2.75 per shares (4,181,818 common shares), maturing August 14, 2019. (2) Warrants - exercisable into common shares on a one to one basis with an exercise price of $1.50, with the majority expiring September 22, 2021. (3) Options - exercisable into common shares on a one to one basis with exercise prices ranging from $0.75 to $4.00 with varying expiry dates through May 2022. Any exercise of options will make new grants available under Scientus’ 10% rolling stock plan. (4) Pursuant to Reasons for Judgement dated July 10, 2018 in respect of Precursor Capital Corp. v. HydRx Farms Ltd. (the "Precursor Judgement"), Scientus has been ordered to issue 863,905 Common Shares (the “Precursor Issuance”) and pay costs to Precursor Capital Corp. (“Precursor”). At this time Scientus is in discussions with its legal counsel with respect to its options in respect of the Precursor Judgement, including how it may structure the Precursor Issuance and otherwise address and comply with the Precursor Judgment, but it does not intend to appeal the Precursor Judgement. See “Risk Factors”.
  • 27. 27 March 31, 2018 FUNDING HISTORY Date Share Price Gross Proceeds Notes September 2014 $0.65 $2,210,620 April 2015 $0.75 $1,676,688 November 2015 $0.75 $1,000,000 Convertible notes that were converted in February 2017 May 2016 $0.75 $1,050,000 Convertible notes that were converted in February 2017 October 2016 $1.30 $1,785,732 February 2017 $2.60 $6,065,886 March 2017 $2.65 $513,000 August 2017 $2.75 $1,287,523 August 2017 $2.75 $11,500,000 Convertible debenture maturing August 2019 February 2018 $4.00 $15,698,000 TOTAL $42,787,449* * Excludes $1,785,000 raised in December 2014, September 2015, April 2016 and November 2016 in CannScience Innovations Inc, a predecessor company.
  • 28. 28 March 31, 2018 BALANCE SHEET * This statement of financial position has been prepared by management and has not been audited or reviewed by any external auditor. Please see slide 26 for share capital as of July 30, 2018. HydRx Farms Ltd. As at, March 31, 2018 December 31, 2017 $ $ Assets Current assets Cash 13,773,066 3,107,598 Other receivables 1,958,525 1,840,748 Prepaid expenses and deposits 333,181 472,726 16,064,772 5,421,072 Intangible assets 34,381,409 35,808,023 Goodwill 16,072,080 16,072,080 Property, plant and equipment 13,151,027 12,459,630 79,669,288 69,760,805 Liabilities Current liabilities Trade and other payables 846,123 1,279,575 Convertible debentures 230,000 350,356 1,076,123 1,629,931 Deferred tax liability 9,111,073 9,489,126 Convertible debentures 10,426,059 10,263,548 20,613,255 21,382,605 Shareholders’ equity Common shares 71,828,585 57,341,691 Warrants 11,628,353 11,430,027 Contributed surplus 7,430,988 7,365,546 Deficit (31,831,893) (27,759,064) 59,056,033 48,378,200 79,669,288 69,760,805 Condensed interim consolidated statements of financial position [expressed in Canadian dollars] [Unaudited]
  • 29. 29 Net Cash Proceeds from the Offering will fund the following: ▶ Research/Development and Clinical Studies ▶ Sales, Marketing and Education Platforms ▶ General Corporate Purposes ($CAD in million) March 31, 2018 Pro Forma Cash $13.8 $37.0(1) Cash Runway July 2019 Q2 2020 Use of Proceeds, Run Rate and Milestone Goal FINANCIAL OVERVIEW Note: (1) Assumed offering size of $25.000 million with a gross spread of 7.0% for net proceeds of $23.250 million.
  • 31. 31 Major Cannabinoids in Various LP Samples Super Fluid Extraction (SFE) EXTRACTIONS Strain 1 Strain 2 Strain 3 Strain 4 Strain 6 Strain 7 Strain 8 Yield of resin (% wt/wt) 28 15 26 26 24 23 19 Δ9-THCA :Δ9-THC (% wt/wt in resin) 22.1 : 5.1 1.1 : 0 45.5 : 1.6 47.5 : 1.7 10.9 : 0.9 23.0 : 2.6 44.4 : 3.6 CBDA : CBD (% wt/wt in resin) 52.8 : 5.8 62.3 : 2.9 - - 20.1 : 0.5 44.0 : 1.3 - CBGA : CBG (% wt/wt in resin) - - - - - - 24.5 : 0 Incomplete decarboxylation “Kotra et el., University Health Network, Toronto, 2015-18.(Sponsored by CannScience Innovations, Inc.)”
  • 32. 32 Major Cannabinoids Using Scientus Extraction Process µW (Microwave) EXTRACTIONS Strain 1 Strain 2 Strain 3 Strain 4 Strain 6 Strain 7 Strain 8 Yield of resin (% wt/wt) 21 18 23 27 22 27 21 Δ9-THCA :Δ9-THC (% wt/wt in resin) 0: 29.4 0: 1.9 0: 49.8 0 : 42.5 0 : 37.0 0: 28.8 0 : 41.1 CBDA : CBD (% wt/wt in resin) 0 : 33.8 0 : 37.6 - - 0 : 37.8 0 : 40.0 - CBGA : CBG (% wt/wt in resin) - - - - - - 0 : 25.5 Complete (100%) decarboxylation US-2018-0000857-A1 (June 29, 2016): Decarboxylated cannabis resins, uses thereof and methods of making the same; PCT pending. “Kotra et el., University Health Network, Toronto, 2015-18.(Sponsored by CannScience Innovations, Inc.)”
  • 33. 33 Efficacy Trials in Chronic Constriction Injury (CCI) Rat Model – Chronic Pain PHARMACOKINETIC AND PHARMACODYNAMICS DATA Time (days) 0 5 10 15 20 25 30 Responsetostimulation +/-stdev(g) 0 5 10 15 20 25 Before dose (left foot) After dose Treatment 1 After dose Treatment 2 Before dose (right foot) After dose Treatment 1 After dose Treatment 2 CCI Foot Normal Foot Treatment • Slight improvement in pain response after dosing – Dose Escalations for Pharmacodynamic Effect In Progress • Behavioral changes observed after the drug administration (increased thirst, increased food uptake, sleepiness or abnormal behavior) Continuing Efficacy Studies in 2018 “Kotra et el., University Health Network, Toronto, 2015-18.(Sponsored by CannScience Innovations, Inc.)”
  • 34. 34 Pharmacokinetics in Dogs PHARMACOKINETIC AND PHARMACODYNAMICS DATA Beagle male dogs (14 months old) Drug administration: CDS-ML-IV-23-2A • Liquid Formulation: 80 mg/mL resin containing CBD = 35.7 ± 0.2%, THC = 31.7 ± 0.1% • Dosing: sublingual; 0.5 mL of formulation/dog • Dose: Extract with CBD = 0.95 mg/kg THC = 0.85 mg/kg Time (min) Dog 1 Dog 2 Dog 3 Before dose Very active, noisy, trying to get out from the cage. Very active, noisy, trying to get out from the cage. Very active, noisy, trying to get out from the cage. 0 Active Active Active 15 Active Calm and quiet Calm 30 Sleepy Sleepy Calm and sleepy 60 Sleeping Sleeping Calm and sleepy 120 Awake but quiet Awake, normal Awake, normal 180 Active, refuses food and water Active, refuses food and water Active, refuses food and water 300 Very active, noisy, trying to get out from the cage. Very active, noisy, trying to get out from the cage. Very active, noisy, trying to get out from the cage. Time (min) 0 60 120 180 240 300 Concentrationinplasma (g/mL) 0 0.5 1 1.5 2 2.5 Time (min) 0 60 120 180 240 300 0 0.5 1 1.5 2 2.5 Time (min) 0 60 120 180 240 300 0 0.5 1 1.5 2 2.5 CBD THC Dog # 1 Dog # 3Dog # 2 Continuing Pharmacokinetics in Dogs in 2018
  • 36. 36APPENDIX B – RISK FACTORS Appendix B - Risk Factors There are a number of risk factors that could cause future results to differ materially from those described herein. An investment in the common shares (the “Common Shares”) of HydRx Farms Ltd. (“Scientus”) involves significant risks. Investors should carefully consider the risks described below and the other information elsewhere in this presentation before making a decision to buy the Common Shares. The risks and uncertainties described herein are not the only ones that Scientus faces. Additional risks and uncertainties, including those that Scientus does not know about now or that it currently deems immaterial, may also materially adversely affect its business, financial condition or results of operations. Risks Relating to Scientus’ Business • Scientus is subject to many of the risks common to early-stage enterprises, including limitations with respect to personnel, financial, and other resources and lack of significant revenues. There are risks associated with Scientus’ growth strategy, and such strategy may not succeed, as they can be adversely affected by a variety of factors, including but not limited to the factors set out herein. • Scientus is not currently revenue producing and may never be profitable. • Preclinical testing and clinical trials for Scientus' products may not achieve the desired results. The results of preclinical testing and clinical trials are uncertain and a product candidate can fail at any stage of clinical development. • Scientus intends to seek Health Canada and analogous foreign approvals for certain of its products. Product approvals are subject to a number of contingencies and in any event timelines are often longer than expected. • Even if Scientus is able to commercialize its product candidates, the products may not receive adequate reimbursement from government or private pay insurers, which could affect its business. • Scientus products may not attract a following among patients and/or providers. • Scientus’ production is sourced from its own growing facility and through wholesale purchase from other Licensed Producers. If Scientus cannot source sufficient material to meet customer demand, it could have a material adverse effect on the business, results of operations and financial condition of Scientus. • Scientus’ ability to grow, store, process, manufacture and sell pharmaceutical cannabinoid products in Canada is dependent on maintaining its licences as a Licensed Producer and a Licensed Dealer with Health Canada. There can be no guarantee that Health Canada will allow Scientus to maintain each of these licences. Additional government approvals, licences or permits may be required in the future. • Failure to obtain export licenses or delays or disruption to transportation systems could materially adversely affect Scientus’ business and financial condition. • Most countries are parties to international convention which may preclude such countries from permitting the import on sale of cannabinoid products. • The success of Scientus is dependent upon the ability, expertise, judgment, discretion and good faith of key individuals including persons in charge and quality control personnel in respect of Scientus’ licences. If such individuals cannot be retained, or if replacements cannot be found on a timely basis, it could have a material adverse effect on Scientus’ ability to execute on its business plan and strategy. • The operations of Scientus are subject to a variety of laws relating to the manufacture, processing, import, export, management, packaging/labelling, advertising, sale, transportation, storage and disposal of cannabinoid-based medicine but also laws and regulations relating to drugs, controlled substances, health and safety, land use, the conduct of operations and the protection of the environment. Any changes to such laws, regulations, guidelines and policies, including the enactment of the Cannabis Act (Canada), may have a material adverse effect on Scientus’ business, financial condition and results of operations. • There is potential that Scientus will face intense competition from other companies, some of which can be expected to have longer operating histories and more financial resources and manufacturing and marketing experience than Scientus. There are currently several hundred applicants for licences and Scientus expects to face additional competition from new entrants. To remain competitive, Scientus will require a continued level of investment in marketing, sales and organizational infrastructure. • There are many factors which could impact the demand for Scientus’ products, including but not limited to the ability to attract and retain clients and customers, Scientus’ ability to continually produce desirable and effective products, the continued growth of the number of patients selecting cannabinoid-based medicine and the extent of competition in the market. • Scientus is dependent on its Whitby Facility and adverse developments regarding the facility may adversely impact Scientus. • Scientus holds finished products in inventory and its inventory has a shelf life. Any write-down of inventory could have a material adverse effect on Scientus' business, financial condition and financial performance. • The price of production, sale and distribution of cannabis may fluctuate widely due to how nascent the industry is and is affected by numerous factors beyond Scientus’ control including international, economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates, global and regional consumptive patterns, speculative activities and increased production due to new production and distribution developments and improved production and distribution methods. The effect of these factors on the price of product produced by Scientus and, therefore, the economic viability of Scientus’ business, cannot accurately be predicted.
  • 37. 37APPENDIX B – RISK FACTORS • There has been a marked increase in the use of social media platforms and similar channels that provide individuals with access to a broad audience of consumers and other interested persons. The availability and impact of information on social media platforms is virtually immediate and many social media platforms publish user-generated content without filters or independent verification as to the accuracy of the content posted. Information posted about Scientus may be adverse to Scientus’ interests or may be inaccurate, each of which may harm Scientus’ business, financial condition and results of operations. • While Scientus believes its insurance coverage addresses all material risks to which it is exposed and is adequate and customary in its current state of operations, such insurance is subject to coverage limits and exclusions and may not be available for the risks and hazards to which Scientus is exposed. Moreover, there can be no guarantee that Scientus will be able to obtain adequate insurance coverage in the future. • While Scientus conducts and plans to continue to conduct its business in a manner consistent with good corporate governance practices, there can be no assurance that events, including events beyond the control of Scientus, will not occur that may damage Scientus’ reputation. • Scientus expects to face an inherent risk of exposure to product liability claims, regulatory action and litigation if the products it distributes are alleged to have caused loss or injury. There can be no assurance that Scientus will be able to obtain or maintain product liability insurance on acceptable terms or with adequate coverage against potential liabilities. • If any of Scientus’ products are recalled, Scientus could be required to incur the unexpected expense of the recall and any legal proceedings that might arise in connection with the recall. • Scientus’ operations are subject to environmental regulations. There is no assurance that future changes in environmental regulation will not adversely affect Scientus’ business, financial condition and results of operations. • Scientus’ business involves the growing of an agricultural product and is subject to the risks inherent in the agricultural business, such as insects, plant diseases and similar agricultural risks. Although Scientus expects that any such growing will be completed indoors under climate controlled conditions, there can be no assurance that natural elements will not have a material adverse effect on any future production. • Scientus believes the cannabinoid-based medicine industry is highly dependent upon consumer perception regarding the medical benefits, safety, efficacy and quality of the cannabis distributed for medical purposes to such consumers. There can be no assurance that future scientific research or findings on the medical benefits, viability, safety, efficacy and dosing of cannabis or isolated phytocannabinoids, regulatory proceedings, litigation, media attention or other research findings or publicity will be favourable to the cannabinoid-based medicine market or any particular product, or consistent with earlier publicity. • If Scientus is unable to maintain effective patent rights for its product candidates, Scientus may not be able to effectively compete in the market. If Scientus is not able to protect its proprietary information and know-how, such proprietary information may be used by others to compete against Scientus. • Scientus may not be able to identify infringements of its patents and accordingly the enforcement of its intellectual property rights may be difficult. Once such infringements are identified, enforcement could be costly and time consuming. • Third party claims of intellectual property infringement may prevent or delay Scientus’ development and commercialization efforts. • Scientus’ operations depend, in part, on how well it protects its information technology systems, networks, equipment and software from damages from a number of threats. Events such as cable cuts, power loss, hacking, computer viruses and theft could result in information system failures, delays and/or increase in capital expenses for Scientus. While Scientus implements protective measures to reduce the risk of and detect cyber incidents, cyber-attacks are becoming more sophisticated and frequent, and the techniques used in such attacks change rapidly. • The development of Scientus’ business and operating results may be hindered by applicable restrictions on sales and marketing activities imposed by Health Canada. For example, under the proposed Cannabis Act (Canada), marketing and advertising for recreational cannabis would be significantly limited. • The success of Scientus is highly dependent upon the ability, expertise, judgment, discretion and good faith of its limited number of senior management. Any loss of the services of such individuals could have a material adverse effect on Scientus’ business, financial condition and results of operations. • Scientus’ ability to compete and grow will be dependent on it having access, at a reasonable cost and in a timely manner, to skilled labor, equipment, parts and components. No assurances can be given that Scientus will be successful in maintaining its required supply of skilled labor, equipment, parts and components. • Scientus is exposed to the risk that its employees, independent contractors and consultants may engage in fraudulent or other illegal activity. The precautions taken by Scientus to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting Scientus from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. Such misconduct may result in legal action, significant fines or other sanctions and could result in loss of Scientus’ regulatory licenses. • Scientus may be subject to security breaches at its facilities or in respect of electronic document or data storage, which could lead to breaches of applicable privacy laws and associated sanctions or civil or criminal penalties. • Events, including those beyond the control of Scientus, may damage its operations. In addition, these events may negatively affect customers’ demand for Scientus’ products. Such events include, but are not limited to, non-performance by third party contractors; increases in materials or labour costs; breakdown or failure of equipment; failure of quality control processes; contractor or operator errors; and major incidents and/or catastrophic events such as fires, explosions, earthquakes or storms. As a result, there is a risk that Scientus may not have the capacity to meet customer demand or to meet future demand when it arises. • Scientus intends to develop brand/product differentiation strategies to retain and/or grow brand market share. The potential for success of these strategies is uncertain, dependent on various factors, and subject to various challenges. • Scientus will incur ongoing costs and obligations related to compliance with employee health and safety matters. Failure to comply with health and safety laws and regulations may result in additional costs for corrective measures, penalties or in restrictions on Scientus’ manufacturing operations.
  • 38. 38APPENDIX B – RISK FACTORS • Scientus may be subject to growth-related risks including capacity constraints and pressure on its internal systems and controls. • Deficiencies in legal and regulatory compliance discovered by Health Canada on any audit of Scientus could subject Scientus to regulatory or agency proceedings or investigations, fines, penalties and reputational harm, and inhibit the operations of Scientus. • Scientus expects that it will need to raise substantial additional funding before it expects to become profitable. This additional financing may not be available on acceptable terms, or at all. Failure to raise such capital could result in the delay or indefinite postponement of current business objectives or Scientus going out of business. • Scientus may need to make periodic interest payments and may impose restrictive covenants on the conduct of Scientus’ business. A failure to obtain additional funding (on terms favourable to Scientus, or at all) could prevent Scientus from making expenditures that may be required to grow or maintain its business. • Certain of the directors and officers of Scientus are also directors and officers of other companies, and conflicts of interest may arise between their duties as officers and directors of Scientus and as officers and directors of such other companies. • Scientus is also subject to ongoing litigation and may become party to litigation from time to time in the ordinary course of business. Zidane Capital Corp. (“Zidane”) is suing Scientus for alleged breach of contract with respect to an amalgamation agreement (the “Amalgamation Agreement”) dated January 12, 2016 and is seeking specific performance (in addition to seeking costs, interests and damages). Specific performance could require, among other things, that a meeting of the shareholders of Scientus be called to consider and vote in respect of the approval (or rejection) of the transactions contemplated under the Amalgamation Agreement. In such a scenario, if the shareholders were to then vote to approve the transactions contemplated under the Amalgamation Agreement, Scientus would be required to issue 855,621 Common Shares to Zidane. An order of specific performance could also require Scientus to issue 855,621 Common Shares to Zidane without the holding of a shareholder meeting. If the transactions contemplated under the Amalgamation Agreement are not approved by shareholders or if the court determines that the Amalgamation Agreement was validly terminated, Scientus could be required to provide Zidane with a termination fee of up to $250,000. With respect to Zidane’s alternative claim for damages, Zidane has not provided particulars of the quantum of damages sought. Scientus is vigorously defending this suit, however, the ultimate outcome of any litigation is uncertain. In addition, Jacob Securities Inc. (“JSI”) has alleged damages in connection with certain advisory fee arrangements. The quantum of damages claimed by JSI is unknown at this time and no statement of claim has been filed by JSI. Management disputes JSI’s allegations. Should any of the foregoing matters or any new claim ultimately be determined against Scientus, such determination could adversely affect the value of our Common Shares and/or result in the issuance of additional Common Shares. Even if Scientus is involved in litigation and wins, litigation can adversely impact the business, results or financial position as it may redirect significant company time, attention and resources or result in negative publicity. • Scientus is currently in discussions with its legal counsel with respect to the Precursor Judgment, including how to structure the Precursor Issuance. Scientus cannot specify with certainty the ultimate structuring of the Precursor Issuance and the expected effect on the Company, its corporate and capital structure and its business, including whether, as a result of the said issuance, Precursor will become a subsidiary of Scientus. To the knowledge of management, and subject to the ability of Scientus and its advisors to conduct complete due diligence on Precursor, Scientus does not believe Precursor has conducted any business or activities other than to invest in and work with Scientus towards pursuing a “go public” transaction and subsequently to pursue its claim against Scientus for the Precursor judgement. There can be no assurances at this time as to whether or not Precursor has, or is subject to, any existing or contingent liabilities or claims and if such liabilities or claims exist whether or not they are material. • Prospective purchasers are cautioned not to place undue reliance on forward-looking statements. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, of both a general and specific nature, that could cause actual results to differ materially from those suggested by the forward-looking statements or contribute to the possibility that predictions, forecasts or projections will prove to be materially inaccurate. There is no representation by Scientus that our estimates of the future medical cannabinoid product market size or the actual results achieved by us in the future will be the same, in whole or in part, as those included in this presentation. • While Scientus has no current operations in the United States and does not currently plan to enter the U.S. market, certain stock exchanges have raised concerns that activities with respect to U.S. businesses may violate listing requirements. If Scientus is found to be engaging in business related to the cultivation, distribution or possession of marijuana in the U.S., or has a commercial interest in, or arrangement with, third parties who do so, it could have a material adverse effect on any potential exchange listing. • There is no assurance that any of Scientus’ existing personnel who presently or may in the future require a security clearance from Health Canada will be able to obtain or renew such clearances or that new personnel who require a security clearance will be able to obtain one. Risks Related to the Offering • A purchase of Scientus’ securities is highly speculative and involves significant risks. Scientus’ securities should not be purchased by any person who cannot afford the loss of his or her entire purchase price. • This is a commercially reasonable best efforts offering. No person has agreed to purchase any of the securities offered hereby. No assurance can be given that all, or even a substantial portion, of the securities will be sold in this Offering. • The Subscription Receipts are being offered on a private placement basis pursuant to exemptions from the prospectus requirements under applicable Canadian securities legislation. Accordingly, the transfer or resale of the securities will be subject to restrictions under applicable securities laws and any resale must be made in accordance with applicable securities laws. A holder of securities may not trade the securities before the date that is four months and a day after the later of (a) the distribution date of the securities and (b) the date on which Scientus becomes a reporting issuer in any jurisdiction of Canada, unless the trade is permitted under securities laws. Scientus is not currently a “reporting issuer” in any jurisdiction of Canada and may never become one. Thus the hold period may never expire. During the hold period, any resale of the securities must be made under an available statutory exemption from the dealer registration and prospectus requirements or under a discretionary exemption granted by the applicable securities regulatory authority. Investors are advised to seek legal advice before re-selling the securities. • The Subscription Receipts will not be qualified investment under the Income Tax Act (Canada) for registered plans. The Income Tax Act (Canada) imposes penalties on the acquisition or holding of non-qualified investment by registered plans. Accordingly, Scientus’ securities may not be suitable investments for all investors.
  • 39. 39APPENDIX B – RISK FACTORS • There is currently no public market for Scientus’ securities. Even if the securities are listed on a stock exchange, there can be no assurance that an active and liquid market for such shares will develop or be maintained, in which case securityholders may have difficulty selling their securities. The market price of the securities may materially decline below the offering price of the private placement. • The market price for the securities may be volatile and subject to wide fluctuations in response to numerous factors, many of which are beyond Scientus’ control; accordingly, the market price of the securities may decline even if Scientus’ operating results, underlying asset values or prospects have not changed. • Scientus does not anticipate paying any dividends or distributions on any of its securities in the foreseeable future. Dividends paid by Scientus would be subject to tax and, potentially, withholdings. • Scientus cannot specify with certainty the particular uses of the net proceeds it will receive from the private placement. Management of Scientus will have broad discretion in the application of the net proceeds. Accordingly, securityholders will have to rely upon the judgment of management with respect to the use of the proceeds, with only limited information concerning management’s specific intentions. • Holders of Subscription Receipts are not holders of Scientus common shares and have only the rights set out in the agreement governing the Subscription Receipts. • Certain proceeds of the offering are being delivered in escrow to the Subscription Receipt agent. There can be no assurance that the escrow release conditions will be satisfied or waived (to the extent permitted) prior to the deadline for such conditions to be satisfied. In such event, the escrowed proceeds of the offering shall be used to pay the holders of the Subscription Receipts an amount equal to the issue price per Subscription Receipt. If the proceeds of the offering held in escrow are not sufficient to satisfy the aggregate issue price paid for the then issued and outstanding Subscription Receipts (plus an amount equal to a pro rata share of the interest earned thereon), Scientus will contribute such amounts as are necessary to satisfy any such shortfall. Although Scientus believes that it would have sufficient funds to cover such payments, there is no guarantee that Scientus will be in a financial position to cover such payments at such time. • Should Scientus become a reporting issuer in any jurisdiction of Canada and list its common shares on a securities exchange, Scientus will not have control over who owns its common shares. A holder of a substantial number of common shares may be able to exercise a controlling influence on Scientus and the effect of this control may be to limit the price that investors are willing to pay for such common shares. In addition, a sale of Scientus common shares by such shareholders, or the perception of the market that a sale may occur, may adversely affect the market price of the shares.
  • 41. 41APPENDIX C – PURCHASER’s RIGHTS The following statutory rights of action for damages or rescission will only apply to a Canadian purchaser of securities of HydRx Farms Ltd. (the “Corporation”) in the event that this presentation (the “Presentation”) is deemed to be an offering memorandum pursuant to securities legislation in the applicable province or and territory of Canada. These remedies, or notice with respect thereto, must be exercised, or delivered, as the case may be, by the purchaser within the time limits prescribed by the applicable securities legislation. Purchasers should refer to the applicable securities legislation for the complete text of these rights or consult with a legal advisor. Where used in this section, “misrepresentation” means an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. The rights of action discussed below are in addition to and without derogation from any other rights or remedies available at law to the purchaser of securities. Ontario In the event that this Presentation contains a misrepresentation, a purchaser of securities resident in Ontario who purchases securities offered by this Presentation during the period of distribution has, without regard to whether the purchaser relied upon the misrepresentation, a right of action for damages against the Corporation or, alternatively, while still the owner of any securities purchased by that purchaser, for rescission provided that: (a) if the purchaser exercises its right of rescission, it shall cease to have a right of action for damages as against the Corporation; (b) the Corporation will not be liable if it proves that the purchaser purchased the securities with knowledge of the misrepresentation; (c) the Corporation will not be liable for all or any portion of damages that it proves do not represent the depreciation in value of the securities as a result of the misrepresentation relied upon; and (d) in no case shall the amount recoverable in an action for damages exceed the price at which the securities were offered. No action shall be commenced to enforce these rights more than: (a) in the case of an action for rescission, 180 days after the purchase of the securities; or (b) in the case of an action for damages, the earlier of: (i) 180 days after the date that the purchaser first had knowledge of the facts giving rise to the cause of action; or (ii) three years after the purchase of the securities. The Corporation will not be liable for a misrepresentation in forward-looking information if the Corporation proves that this Presentation contains: (i) reasonable cautionary language identifying the forward-looking information, and identifying material factors that could cause actual results to differ materially from a conclusion, forecast or projection in the forward-looking information; and (ii) a statement of the material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection set out in the forward-looking information. Alberta In the event that this Presentation contains a misrepresentation, a purchaser of securities resident in Alberta who purchases securities offered by this Presentation during the period of distribution has, without regard to whether the purchaser relied on the misrepresentation, a right of action for damages against (i) the Corporation (ii) every director of the Corporation at the date of this Presentation, and (iii) every person or company who signed this Presentation, but may elect (while still the owner of any securities that they purchased) to exercise a right of rescission against the Corporation, in which case the purchaser shall have no right of action for damages, provided that: (a) neither the Corporation nor any other person or company will be liable if the Corporation or such person or company proves that the purchaser purchased securities with knowledge of the misrepresentation; (b) in an action for damages, neither the Corporation nor any other person or company will be liable for all or any portion of such damages if the Corporation or such person or company proves that they do not represent the depreciation in value of the securities as a result of the misrepresentation relied on; and (c) in no case will the amount recoverable under this right of action exceed the price at which the securities were sold to the purchaser. No person or company, other than the Corporation, will be liable: (a) if the person or company proves that this Presentation was sent to the purchaser without the person’s or company’s knowledge or consent, and that, on becoming aware of its being sent, the person or company promptly gave reasonable notice to the Corporation that it was sent without the knowledge and consent of the person or company; (b) if the person or company proves that the person or company, on becoming aware of the misrepresentation, withdrew the person’s or company’s consent to this Presentation and gave reasonable notice to the Corporation of the withdrawal and the reason for it; (c) with respect to any part of this Presentation purporting to be made on the authority of an expert or purporting to be a copy of, or an extract from, a report, statement or opinion of an expert, the person or company had no reasonable grounds to believe and did not believe that (i) there had been a misrepresentation, or (ii) the relevant part of the presentation did not fairly represent the position of the expert or was not a fair copy; or
  • 42. 42APPENDIX C – PURCHASER’s RIGHTS (d) with respect to any part of this Presentation not purporting to be made on the authority of an expert and not purporting to be a copy of, or an extract from, a report, opinion or statement of an expert, unless the person or company (i) did not conduct an investigation sufficient to provide reasonable grounds for a belief that there had been no misrepresentation, or (ii) believed there had been a misrepresentation. In Alberta, no action may be commenced to enforce such right of action described above unless the right is exercised: (a) in the case of an action for rescission, no later than 180 days from the date the purchaser purchased the securities; or (b) in the case of an action, other than an action for rescission, not later than the earlier of (i) 180 days from the day that the purchaser first had knowledge of the facts giving rise to the cause of action, or (ii) three (3) years from the day the purchaser purchased securities. The rights of action discussed below are in addition to and without derogation from any other rights or remedies available at law to the purchaser of securities. Saskatchewan If this Presentation, or any amendment thereto, or any advertising or sales literature used in connection therewith contains a misrepresentation, every purchaser of securities resident in Saskatchewan shall be deemed to have relied on the representation, if it was a misrepresentation at the time of purchase, and will have a right of action, in addition to any other rights they may have at law, for damages against: (a) the Corporation; (b) every promoter and director of the Corporation at the time the Presentation, or any amendment thereto, was sent or delivered or at the time the advertising or sales literature was disseminated as the case may be; (c) every person or company whose consent has been filed respecting the offering, but only with respect to reports, opinions or statements that have been made by them; (d) every person or company that signed this Presentation or any amendments thereto; and (e) every person or company that sells securities on behalf of the Corporation under this Presentation or amendment thereto, or in respect of which the advertising or sales literature was disseminated, as the case may be. Alternatively, where the purchaser purchased securities from the Corporation, the purchaser may elect to exercise a right of rescission against the Corporation, and, when the purchaser so elects, the purchaser shall have no right of action for damages against the Corporation. No person or company, other than the Corporation, will be liable: (a) if the person or company proves that this Presentation, or any advertising, or sales literature was sent or delivered, or disseminated, as the case may be, to the purchaser without the person’s or company’s knowledge or consent, and that, on becoming aware that it was sent and delivered or disseminated, the person or company promptly gave reasonable general notice that it was so sent and delivered or disseminated; (b) if the person or company proves that after the filing of this Presentation, or after the dissemination of the advertising or sales literature, and before the purchase of the securities by the purchaser, on becoming aware of any misrepresentation, the person or company withdrew the person’s or company’s consent to this Presentation, or to the advertising or sales literature and gave reasonable general notice of the withdrawal and the reason for it; or (c) for any part of the Presentation, or any amendment thereto, or any advertising or sales literature not purporting to be made on the authority of an expert and not purporting to be a copy of or an extract from a report, opinion or statement of an expert, unless the person or company (i) failed to conduct a reasonable investigation sufficient to provide reasonable grounds for a belief that there had been no misrepresentation; or (ii) believed there had been a misrepresentation. Note all defences upon which the Corporation or others may rely are described herein. Please refer to the full text of The Securities Act, 1988 (Saskatchewan) for a complete listing. In addition, where an individual makes a verbal statement to a prospective purchaser that contains a misrepresentation relating to the securities and the verbal statement is made either before or contemporaneously with the purchase of the securities, the purchaser is deemed to have relied on the misrepresentation if it was a misrepresentation at the time of purchase and the purchaser has a right of action for damages against the individual who made the verbal statement. No such individual will be liable if: (a) that individual can establish that he or she cannot reasonably be expected to have known that his or her statement contained a misrepresentation (this defence is also available to every person or company that sells securities on behalf of the Corporation where there is a misrepresentation in the advertising or sales literature used in connection with the offering of securities under this Presentation); or (b) prior to the purchase of the securities by the purchaser, that individual notified the purchaser that the individual’s statement contained a misrepresentation.
  • 43. 43APPENDIX C – PURCHASER’s RIGHTS Neither the Corporation nor any other person or company referred to above will be liable, whether for misrepresentations in this Presentation, advertising or sales literature or in a verbal statement: (a) if the Corporation or such promoter, person or company proves that the purchaser purchased securities with knowledge of the misrepresentation; (b) in an action for damages, for all or any portion of the damages that the Corporation or such promoter, person or company proves do not represent the depreciation in value of the securities as a result of the misrepresentation relied on In no case will the amount recoverable by a purchaser for a misrepresentation in this Presentation, advertising and sales literature, or a verbal misrepresentation exceed the price at which securities were sold to the purchaser. In Saskatchewan, no action may be commenced to enforce a right of action for rescission or damages unless the right is exercised: (a) in the case of an action for rescission, no later than 180 days after the date the purchaser purchased the securities; and (b) in the case of any action, other than an action for rescission, no later than the earlier of (i) one (1) year after the purchaser first had knowledge of the facts giving rise to the cause of action or (ii) six (6) years after the date the purchaser purchased the securities. Manitoba In the event this Presentation contains a misrepresentation, every purchaser of securities, resident in Manitoba shall be deemed to have relied on the representation if it was a misrepresentation at the time of purchase and has a right of action for damages against: (i) the Corporation; (ii) every director of the Corporation at the date of the Presentation; and (iii) every person or company who signed the Presentation. Alternatively, the purchaser may elect to exercise a right of rescission against the Corporation, and, when the purchaser so elects, the purchaser shall have no right of action for damages. Neither the Corporation nor any person referred to above will be liable for misrepresentations in the Presentation if the Corporation or the person proves that the purchaser purchased securities with knowledge of the misrepresentation. No person or company, other than the Corporation will be liable: (a) if the person or company proves that this Presentation was sent to the purchaser without the person’s or company’s knowledge or consent, and that, after becoming aware that it was sent, the person or company promptly gave reasonable notice to the Corporation that it was sent without the person or company’s knowledge and consent; (b) if the person or company proves that, after becoming aware of the misrepresentation, the person or company withdrew the person’s or company’s consent to the Presentation and gave reasonable notice to the Corporation of the withdrawal and the reason for it; (c) with respect to any part of this Presentation purporting to be made on the authority of an expert or purporting to be a copy of, or an extract from, a report, statement or opinion of an expert, the person or company had no reasonable grounds to believe and did not believe that (i) there had been a misrepresentation, or (ii) the relevant part of the presentation did not fairly represent the position of the expert or was not a fair copy; or (d) with respect to any part of this Presentation not purporting to be made on an expert’s authority and not purporting to be a copy of, or an extract from, an expert’s report, opinion or statement, unless the person or company (i) did not conduct an investigation sufficient to provide reasonable grounds for a belief that there had been no misrepresentation, or (ii) believed there had been a misrepresentation. In an action for damages, the Corporation, any director of the Corporation and any person or company who signed the Presentation is not liable for all or any portion of the damages that they prove does not represent the depreciation in value of the securities as a result of the misrepresentation relied on. In no case will the amount recoverable by a purchaser for a misrepresentation in this Presentation exceed the price at which securities were offered under this Presentation. In Manitoba, no action shall be commenced to enforce these rights more than: (a) 180 days after the date the purchaser purchased the securities, in the case of an action for rescission; or (b) The earlier of (i) 180 days after the day that the purchaser first had knowledge of the facts giving rise to the cause of action, or (ii) two years after the date the purchaser purchased the securities, in any other case.
  • 44. 44APPENDIX C – PURCHASER’s RIGHTS Newfoundland and Labrador In the event that this Presentation and any amendment thereto contains a misrepresentation, an investor to whom this Presentation was delivered and who purchases securities offered under it will be considered to have relied on the misrepresentation, if it was a misrepresentation on the date of investment, and will have, subject as hereinafter provided, a right of action for damages against (i) the Corporation, (ii) every director of the Corporation at the date of this Presentation, and (iii) every person or company who signed this Presentation, and a right of action for rescission against the Corporation. Where the purchaser elects to exercise a right of rescission against the Corporation, the purchaser shall have no right of action for damages. Neither the Corporation nor any other person or company will be liable if the Corporation or such person or company proves that the purchaser purchased securities with knowledge of the misrepresentation. No person or company, other than the Corporation, will be liable: (a) where the person or company proves that this Presentation was sent to the purchaser without the person’s or company’s knowledge or consent, and that, on becoming aware of its being sent, the person or company promptly gave reasonable notice to the Corporation that it was sent without the person’s or company’s knowledge and consent; (b) if the person or company proves that, on becoming aware of the misrepresentation, the person or company withdrew the person’s or company’s consent to this Presentation and gave reasonable notice to the Corporation of the withdrawal and the reason for it; (c) with respect to any part of this Presentation purporting to be made on the authority of an expert or purporting to be a copy of, or an extract from, a report, statement or opinion of an expert, the person or company had no reasonable grounds to believe and did not believe that (i) there had been a misrepresentation, or (ii) the relevant part of the presentation did not fairly represent the position of the expert or was not a fair copy; or (d) with respect to any part of the Presentation not purporting to be made on the authority of an expert and not purporting to be a copy of, or an extract from, a report, opinion or statement of an expert, unless such person or company (i) did not conduct an investigation sufficient to provide reasonable grounds for a belief that there had been no misrepresentation, or (ii) believed there had been a misrepresentation. In an action for damages, neither the Corporation nor any other person or company will be liable for all or any portion of the damages that it proves do not represent the depreciation in value of securities as a result of the misrepresentation relied upon. In no case shall the amount recoverable under the right of action described herein exceed the price at which securities were offered in this Presentation. No action shall be commenced to enforce a right of action unless such action is commenced: (a) in the case of an action for rescission, not later than 180 days from the date the purchaser purchased the securities; or (b) in the case of an action for damages, not later than 180 days after the person had knowledge of the facts giving rise to the cause of action or in any other case not later than three (3) years from the date the purchaser purchased the securities. New Brunswick If this Presentation or any information relating to the offering provided to the purchaser of the securities thereto or any advertising or sales literature used in connection therewith contains a misrepresentation, every purchaser of securities resident in New Brunswick purchasing securities pursuant to this Presentation shall be deemed to have relied on the representation, if it was a misrepresentation at the time of purchase, and will have a right of action, in addition to any other rights they may have at law, for damages against the Corporation. Alternatively, the purchaser may elect to exercise a right of rescission against the Corporation, in which case the purchaser shall have no right of action for damages against the Corporation. In addition, if advertising or sales literature is relied upon by a purchaser in connection with a purchase of securities, the purchaser shall also have a right of action for damages against every person who was a director of the Corporation at the time the advertising or sales literature was disseminated. In addition, where an individual makes a verbal statement to a prospective purchaser that contains a misrepresentation relating to securities and the verbal statement is made either before or contemporaneously with the purchase of securities, the purchaser shall be deemed to have relied upon the misrepresentation if it was a misrepresentation at the time of purchase, and has a right of action for damages against the individual who made the verbal statement. No such individual will be liable if: (a) that individual can establish that he or she cannot reasonably be expected to have known that his or her statement contained a misrepresentation; or (b) no individual is liable if, prior to the purchase of the securities by the purchaser, that individual notified the purchaser that the individual’s statement contained a misrepresentation. Neither the Corporation nor any other person referred to above will be liable, whether for misrepresentations in the Presentation, any advertising or sales literature or in a verbal statement: (a) if the Corporation or such other person proves that the purchaser purchased securities with knowledge of the misrepresentation; (b) in an action for damages, for all or any portion of the damages that the Corporation or such other person proves do not represent the depreciation in value of securities as a result of the misrepresentation relied on.
  • 45. 45APPENDIX C – PURCHASER’s RIGHTS No person, other than the Corporation, is liable for misrepresentations in any advertising or sales literature if the person proves: (a) that the advertising or sales literature was disseminated without the person's knowledge or consent and that, on becoming aware of its dissemination, the person gave reasonable general notice that it was so disseminated, (b) that, after the dissemination of the advertising or sales literature and before the purchase of the securities by the purchaser, on becoming aware of any misrepresentation in the advertising or sales literature the person withdrew the person's consent to it and gave reasonable notice of the withdrawal and the reason for the withdrawal, or (c) that, with respect to a false statement purporting to be a statement made by an official person or contained in what purports to be a copy of, or an extract from, a public official document, it was a correct and fair representation of the statement or copy of, or extract from, the document, and the person had reasonable grounds to believe and did believe that the statement was true. No person, other than the Corporation, is liable with respect to any part of the advertising or sales literature not purporting to be made on the authority of an expert and not purporting to be a copy of or, an extract from, a report, opinion or statement of an expert unless the person: (a) failed to conduct such reasonable investigation as to provide reasonable grounds for a belief that there had been no misrepresentation, or (b) believed there had been a misrepresentation. Any person who at the time the advertising or sales literature was disseminated, sells securities on behalf of the Corporation with respect to which the advertising or sales literature was disseminated, is not liable if that person can establish that the person cannot reasonably be expected to have had knowledge that the advertising or sales literature was disseminated or contained a misrepresentation. In no case will the amount recoverable by a purchaser exceed the price at which securities were sold to the purchaser. In New Brunswick, no action may be commenced to enforce such right of action unless the right is exercised: (a) in the case of an action for rescission, no later than 180 days after the date the purchaser purchased the securities; and (b) in the case of any action, other than an action for rescission, no later than the earlier of (i) one (1) year after the purchaser first had knowledge of the facts giving rise to the cause of action or (ii) six (6) years after the date the purchaser purchased the securities. Nova Scotia If this Presentation or any amendment thereto or any advertising or sales literature (as defined in the Securities Act (Nova Scotia)) used in connection therewith contains a misrepresentation (meaning an untrue statement of material fact or an omission to state a material fact that is required to be stated or that is necessary in order to make any statement contained herein not misleading in light of the circumstances in which it was made), any purchaser to whom such Presentation is sent or delivered who purchases securities referred to herein shall be deemed to have relied on the misrepresentation, if it was a misrepresentation at the time of purchase, and has a right of action, in addition to any other rights they may have at law, for damages against (i) the Corporation, (ii) every director of the Corporation at the date of the Presentation, and (iii) every person who signed this Presentation, but may elect (while still the owner of any of the securities that they purchased) to exercise a right of rescission against the Corporation, in which case he or she shall have no right of action for damages. Neither the Corporation nor any other person or company will be liable if the Corporation or such person or company proves that the purchaser purchased the securities with knowledge of the misrepresentation. No person or company, other than the Corporation, will be liable: (a) if the person or company proves that this Presentation was sent or delivered to the purchaser without the person’s or company’s knowledge or consent, and that, on becoming aware of its delivery, the person or company promptly gave reasonable general notice that it was delivered without the person’s or company’s knowledge and consent; (b) if the person or company proves that after delivery of this Presentation, and before the purchase of the securities by the purchaser, on becoming aware of any misrepresentation, the person or company withdrew the person’s or company’s consent to this Presentation and gave reasonable general notice of the withdrawal and the reason for it; (c) with respect to any part of this Presentation purporting to be made on the authority of an expert or purporting to be a copy of, or an extract from, a report, statement or opinion of an expert, the person or company had no reasonable grounds to believe and did not believe that (i) there had been a misrepresentation, or (ii) the relevant part of the presentation did not fairly represent the position of the expert or was not a fair copy; or (d) with respect to any part of the Presentation not purporting to be made on the authority of an expert and not purporting to be a copy of, or an extract from, a report, opinion or statement of an expert, unless such person or company (i) failed to conduct a reasonable investigation to provide reasonable grounds for a belief that there had been no misrepresentation, or (ii) believed there had been a misrepresentation. In an action for damages, neither the Corporation nor any other person or company will be liable for all or any portion of the damages that it proves do not represent the depreciation in value of securities as a result of the misrepresentation relied upon. In no case shall the amount recoverable under the right of action described herein exceed the price at which the securities were sold to the purchaser. No action shall be commenced to enforce these rights more than 120 days after the date on which payment was made for the securities.
  • 46. 46APPENDIX C – PURCHASER’s RIGHTS No action shall be commenced to enforce these rights more than 120 days after the date on which payment was made for the securities. Prince Edward Island If this Presentation contains a misrepresentation, a purchaser resident in Prince Edward Island who buys securities during the period of distribution, has, without regard to whether the purchaser relied on the misrepresentation, a right of action for damages against (i) the Corporation, (ii) every director of the Corporation at the date of this Presentation, and (iii) every person or company who signed this Presentation, but may elect (while still the owner of any of the securities that it purchased) to exercise a right of rescission against the Corporation, in which case the purchaser shall have no right of action for damages, provided that: (a) neither the Corporation nor any other person or company will be liable if the Corporation or such person or company proves that the purchaser purchased the securities with knowledge of the misrepresentation; (b) in an action for damages, neither the Corporation nor any other person or company will be liable for all or any portion of such damages if the Corporation or such person or company proves that they do not represent the depreciation in value of the securities as a result of the misrepresentation relied on; and (c) the amount recoverable under this right of action must not exceed the price at which the securities purchased by the purchaser were offered. In an action for damages, no person or company, other than the Corporation, will be liable: (a) if the person or company proves that this Presentation was sent to the purchaser without the person’s or company’s knowledge or consent, and that, on becoming aware that it was sent, the person or company had promptly given reasonable notice to the Corporation that it was sent without the person’s or company’s knowledge and consent; (b) if the person or company proves that on becoming aware of the misrepresentation, the person or company had withdrawn the person’s or company’s consent to this Presentation and had given reasonable notice to the Corporation of the withdrawal and the reason for it; (c) with respect to any part of this Presentation purporting to be made on the authority of an expert or purporting to be a copy of, or an extract from, a report, statement or opinion of an expert, the person or company had no reasonable grounds to believe and did not believe that (i) there had been a misrepresentation, or (ii) the relevant part of the presentation did not fairly represent the position of the expert or was not a fair copy; or (d) with respect to any part of this Presentation not purporting to be made on the authority of an expert and not purporting to be a copy of, or an extract from, a report, opinion or statement of an expert, unless the person or company (i) failed to conduct a reasonable investigation to provide reasonable grounds for a belief that there had been no misrepresentation, or (ii) believed there had been a misrepresentation. No action may be commenced to enforce such right of action described above more than: (a) in the case of action for rescission, 180 days from the date the purchaser purchased the securities; or (b) in the case of any action, other than an action for rescission: (i) 180 days from the day that the purchaser first had knowledge of the facts giving rise to the cause of action, or (ii) three (3) years from the day the purchaser purchased the securities, whichever period expires first. Neither the Corporation nor any other person or company will be liable with respect to a misrepresentation in forward-looking information if (i) the Presentation also contains reasonable cautionary language identifying the information and a statement of the material factors or assumptions applied and (ii) there was a reasonable basis for drawing the conclusions or making the forecasts or projections British Columbia and Quebec Purchasers in British Columbia and Quebec are not generally entitled to statutory rights of action such as the ones described above. However, in consideration of their purchase of securities, the Corporation hereby grants such purchasers a contractual right of action for damages or rescission that is substantially the same as the statutory right of action that is available to residents of Ontario who purchase securities.