Meta Growth Announces Fiscal Third Quarter 2020 Financial and Operational Results

Published: September 16, 2020

Meta Growth Announces Fiscal Third Quarter 2020 Financial and Operational Results

Meta Growth Corp., a Canadian recreational cannabis retailer, today announced its financial and operational results for the third quarter of fiscal 2020 ended May 31, 2020.

Highlights:

  • Divestiture of Non-Core Medicinal Cannabis AssetsResults in META being a pure-play recreational cannabis retailer with a portfolio of greater than 30 operating stores across Canada.
  • Progress in Ontario Roll-OutSubsequent to the end of its third quarter, META completed the acquisition of a recreational cannabis retail store in Waterloo, and executed an asset purchase agreement to acquire a recreational cannabis retail store in Kitchener. The closing of the Kitchener store is subject to the Alcohol and Gaming Commission of Ontario approving the transaction.
  • Quarter over Quarter Gross Profit Increased by 24%META’s gross margin from its recreational cannabis retail operations increased from 30% in Q2 2020, to 36% in Q3 2020. Coupled with a 2% quarter over quarter revenue increase, META’s Q3 gross profit increased by 24% versus its Q2 gross profit.
  • Quarter over Quarter Loss from Operations reduced by 47%: META reduced operating expenses by 15% in Q3 2020 vs Q2 2020, which contributed to quarter over quarter loss from operations reducing by 47%.
  • Creating Canada’s Largest Recreational Cannabis Retail Network: Subsequent to the end of its third quarter, META executed a definitive arrangement agreement with High Tide Inc. (“High Tide”) pursuant to which High Tide will acquire all of the issued and outstanding shares of META. It is expected that the transaction will close in early November 2020.

Selected Summary of Quarterly Financial Results

Statement of Loss Highlights

Three Months Ended

Q3

Q2

%

Recreational Retail Financial Results

May 31, 2020

Feb 29, 2020

Change

Total Revenue

$13,715,367

$13,474,115

1.8%

Gross Profit

$4,951,711

$3,982,752

24.3%

Gross Margin

36.1%

29.6%

n/a

Operating Expenses

$7,594,626

$8,928,439

-14.9%

Loss from Operations

$2,642,915

$4,945,687

-46.6%

For a more comprehensive overview of the financial highlights presented in this press release, please refer to Meta Growth’s Condensed Interim Consolidated Financial Statements for the three and nine months ended May 31, 2020 and May 31, 2019, and the Company’s Interim MD&A – Quarterly Highlights for the three and nine month period ended May 31, 2020. Both of these documents are available on the Company’s SEDAR profile at www.sedar.com.

“In Q3, we saw improvements in our revenue, gross margin, and operating expenses,” said Mark Goliger, CEO of Meta Growth. “These improvements resulted in quarter over quarter loss from operations from our recreational cannabis retail business reducing by 47%. Having now divested of all of our medicinal cannabis assets, our strategic focus is on recreational retail. In order to be successful in recreational retail, we need scale.”

“After evaluating numerous strategies and alternatives, we determined that it was in our shareholders best interest if we achieved this scale via a merger with High Tide. The merger is expected to create Canada’s largest cannabis retail network
with greater than 60 operating stores, and the combined entity is expected to be adjusted EBITDA positive on a post-synergies basis.”

Meta Growth is a leader in secure, safe and responsible access to legal recreational cannabis in Canada. Through its Canada-wide network of Meta Cannabis Co.™, Meta Cannabis Supply Co.™ and NewLeaf Cannabis™ recreational cannabis retail stores, Meta Growth enables the public to gain knowledgeable access to Canada’s network of authorized Licensed Producers of cannabis.