Inner Spirit Holdings Ltd., a Canadian company establishing a national network of retail cannabis stores under its Spiritleaf brand, has filed its interim Financial Statements and corresponding Management’s Discussion and Analysis for the quarter ended September 30, 2019. The filings are available for review on the Company’s SEDAR profile at www.sedar.com and on the Company’s website at www.innerspiritholdings.com.
“We are advancing our business strategy by efficiently opening Spiritleaf recreational cannabis retail stores in locations where we have secured licences. System-wide retail sales1 from our cannabis retail stores operating in the third quarter exceeded $9 million. We opened more than 25 stores during the quarter and are now the industry leader in Canada with 37 Spiritleaf stores operating,” said Darren Bondar, President and CEO of Inner Spirit.
“The effort from our staff, franchise partners and suppliers to open these stores has been truly exceptional. Our business model with Spiritleaf franchised locations complemented by corporate-owned stores in jurisdictions where they are permitted is enabling us to grow very effectively. We remain highly focused on expanding the Company’s cannabis retail store network, enhancing our financial performance and creating value for our shareholders,” said Darren Bondar, President and CEO of Inner Spirit.”
During the third quarter ended September 30, 2019, Inner Spirit reported the following highlights:
- System-wide retail sales1 was $10,783,152, an increase of 375% from $2,270,798 in the third quarter of 2018. This included $9,035,164 from operating Spiritleaf stores and $1,747,988 from the Company’s Watch It! retail operation.
- Total revenue was $3,991,640, an increase of 158% from $1,544,779 for the same period of 2018.
- Retail revenue was $2,053,446, an increase of 81% from $1,133,625 in the third quarter of 2018.
- Royalty revenue was $400,776, an increase of 937% from $38,637 for the same period of 2018.
- Gross margin improved to 47.6% compared with 41.0% in the third quarter of 2018.
- Total net loss was $2,490,323, or $0.01 per share, which includes an unrealized loss on marketable securities of $970,656, compared with a total net loss of $940,605, or $0.01 per share, in the third quarter of 2018.
- The Company opened additional franchised and corporate-owned retail cannabis stores in Alberta as well as franchised stores in British Columbia during the quarter and had 33 stores open and operating by the end of the third quarter. This included 27 stores (19 franchised, 8 corporate-owned) in Alberta, 4 franchised stores in British Columbia, one franchised store in Saskatchewan, and one retail partner store in Ontario.
- The Company was recognized in the 2019 Canadian Cannabis Awards competition with CEO Darren Bondar nominated for Entrepreneur of the Year and Mona Pinette of Spiritleaf’s Calgary Chinook store nominated for Budtender of the Year.
- The Company recorded more than $23 million in system-wide retail sales1 and served more than 577,000 customers in its Spiritleaf operations since the legalization of cannabis in Canada on October 17, 2018.
Following completion of the third quarter ended September 30, 2019, Inner Spirit has achieved the following additional highlights:
- The Company opened franchised retail cannabis stores in Banff, Calgary (Penbrooke), Edmonton (Clareview Crossing) and Sexsmith, Alberta.
- The Company received cannabis retail store licences from Alberta Gaming, Liquor and Cannabis (the “AGLC“) for franchised locations in Cochrane, Calgary (Sunridge) and Calgary (Hillhurst), and for a corporate-owned location in Edmonton (Garneau). For Alberta, this brings the total number of licences awarded to Spiritleaf locations in Alberta to 35 and applications for the seven remaining stores needed to achieve the AGLC’s stated maximum of 42 have been submitted to the AGLC, with the locations all currently in final development stages.
- The Company received a cannabis retail store licence from the British Columbia Liquor and Cannabis Regulation Branch (the “LCRB“) for a franchised location in West Kelowna, British Columbia.
- The Company launched a cannabis retail e-commerce platform at sk.spiritleaf.ca to provide online sales across the province of Saskatchewan and resumed franchise sales activity in Saskatchewan based on the Province’s announcement that a phased-in open market system for cannabis retail licensing will begin in the spring of 2020.
In recognizing the recent challenges facing the overall Canadian cannabis sector, Bondar noted, “We see that cannabis companies are being severely challenged in the past few weeks, and Inner Spirit’s share price has been impacted. We don’t believe the current price reflects our market value nor represents what we are building as a company. The action we’re taking is to continue doing what we do best: opening Spiritleaf stores, providing consumers with a premium retail shopping experience with superior product choices, and working towards achieving profitability.”
“With 10 corporate-owned stores and 40 franchises projected to be operating by the end of the first quarter of 2020 and Spiritleaf store revenues anticipated to be further enhanced with the introduction of Cannabis 2.0 products, we expect system-wide retail sales1 for Spiritleaf operations to continue growing in the next fiscal year. We have shown a vibrant private retail cannabis sector is positive for this industry and for consumers of recreational cannabis. We have developed Spiritleaf to be a leading cannabis retail brand in the country and expect an open licensing system in Ontario, if and when implemented, to be another significant catalyst for our company and for the Canadian cannabis industry as a whole.”
System-wide retail sales is a Non-IFRS measure. For more information, see the “Non-IFRS Financial Measures” section below.
Inner Spirit Holdings Ltd. (CSE:ISH) has established a growing network of recreational cannabis stores across Canada under its Spiritleaf brand.