Inner Spirit Holdings Announces Corporate Updates and Additional Strategic Investment
April 23, 2020
Canada’s premium retail cannabis brand raises additional funds to support Spiritleaf expansion from coast to coast
CALGARY, Alberta (April 23, 2020) – Inner Spirit Holdings Ltd. (“Inner Spirit” or the “Company”) (CSE:ISH), a Canadian company that has established a national network of Spiritleaf retail cannabis stores, today announced a number of corporate updates, including a meaningful additional investment by an existing institutional shareholder.
The Company has closed a private placement offering (the “Offering”) for aggregate gross proceeds of $600,000, issuing 6,000,000 common shares of the Company (the “Common Shares”) at $0.10 per share to a UK-based independent private equity firm. The Common Shares are subject to a four-month hold period in accordance with applicable securities laws. This is the second private placement financing completed with the UK-based firm and increases its total amount invested to $1,685,454.
“We are grateful for the additional support from our institutional partner and are very pleased with our financial position as today we have approximately $5.1 million in cash and cash equivalents on hand to fuel our coast to coast franchise and corporate store expansion. We have 46 stores operational and have created a strong base to nurture and grow with over 1,286,000 Spiritleaf customers served since the legalization of recreational cannabis in Canada,” said Darren Bondar, Founder and CEO of Inner Spirit.
POSTPONEMENT OF YEAR-END 2019 FILINGS
The filing of the Company’s audited annual financial statements (the “Financial Statements”) and corresponding management’s discussion and analysis (the “MD&A”) for the year ended December 31, 2019 are being postponed due to delays caused by the COVID-19 pandemic. In response to the pandemic, securities regulatory authorities in Canada have granted a blanket exemption granting issuers an additional 45 days to complete certain regulatory filings (the “Exemption”). Inner Spirit is relying on the Exemption to postpone the filing of the Financial Statements required by section 4.4 of National Instrument 51-102 and the filing of the MD&A required by subsection 5.1(2) of National Instrument 51-102.
The Company expects to complete the year-end 2019 filings on or about May 13, 2020. Until such time as the Financial Statements and MD&A are filed, management and other insiders of the Company are subject to an insider trading black-out policy that reflects the principles in Section 9 of National Policy 11-207 – Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions.
An update of material business developments since the filing of the Company’s third quarter 2019 interim financial statements and corresponding management’s discussion and analysis on November 21, 2019 has been provided in prior press releases as follows:
• The filing by Watch It! Consolidated Ltd. (“Watch It!”), a wholly owned subsidiary of the Company that operated its Watch It! retail business, of a Notice of Intention to Make a Proposal pursuant to the provisions of Division I of Part III of the Bankruptcy and Insolvency Act (Canada) on November 29, 2019. Watch It! was deemed bankrupt on December 31, 2019 and the remaining assets and trademark were sold to a former franchise owner who continues to independently operate two stores and the related e-commerce business;
• The closing of a private placement offering on January 9, 2020 whereby the Company issued 10,854,542 Common Shares to a UK-based independent private equity firm for gross proceeds of $1,085,454;
• The entering by the Company into a binding asset purchase agreement, effective March 6, 2020, to acquire the existing Kingston Spiritleaf-branded retail cannabis store that was being operated under a retail agreement with an Ontario lottery winner and a retail operator licence;
• The closing of a private placement offering on March 9, 2020 whereby the Company issued 6,000,000 Common Shares to Prairie Merchant Corporation (“Prairie Merchant”), a company controlled by W. Brett Wilson, for gross proceeds of $600,000, and the concurrent purchase by Prairie Merchant of an additional 6,000,000 Common Shares (together with the private placement, the “Prairie Merchant Transaction”) from a shareholder of Inner Spirit that is a licensed producer that is authorized by a licence issued under the Cannabis Act (Canada) to produce cannabis for commercial purposes (any such authorized licensed producer, a “Licensed Producer”). The Prairie Merchant Transaction effectively reduced the ownership of the Company by Licensed Producers to less than 25%, enabling the Company to be eligible under applicable Ontario cannabis regulations to apply for a retail operator licence and to submit retail store authorizations for corporate-owned Spiritleaf retail cannabis stores in the Province of Ontario;
• The announcement on March 23, 2020 of the appointment of Manjit Minhas as Strategic Advisor to the Board of Directors of the Company;
• The signing by the Company of a master agreement with a wholly owned subsidiary of Atlantic Cultivation Limited (“Atlantic Cultivation”) for the operation of franchised Spiritleaf branded retail cannabis stores in Newfoundland and Labrador. Pursuant to a supply, development and retail agreement previously entered into with the Government of Newfoundland and Labrador and Auxly Cannabis Group Inc. (“Auxly”), Atlantic Cultivation is eligible to apply to be granted five retail licenses to operate retail cannabis store locations in the province; and
• The closing of the Offering.
ANNUAL GENERAL MEETING AND BOARD COMPOSITION
The Company’s Annual General Meeting (the “AGM”) is planned for May 15 at 9:30 am MT in Calgary. Due to social distancing measures in place to mitigate the COVID-19 pandemic, Inner Spirit is asking shareholders to vote by proxy in advance of the AGM and not attend in person. Shareholders and others who might otherwise attend the meeting in person can access login information included in the Management Information Circular which has been distributed to all shareholders and posted under Inner Spirit’s profile on SEDAR.
The Company will be putting forward a strong and experienced slate of Directors at the AGM. Management nominees include CEO Darren Bondar and CFO Christopher Gulka. Returning director nominees include David Margolus and Craig Steinberg. New director nominees to the Board include Andrew MacMillan, an executive with Auxly; Manjit Minhas, co-founder and CEO of Minhas Brewery and Distillery; and Russell Wilson, an executive with Prairie Merchant.
RETAIL STORE NETWORK UPDATE
“Our Spiritleaf retail cannabis stores across the country recorded extremely strong sales to celebrate 420 this week. Along with our franchise partners, we have been very careful to institute the appropriate measures to protect the safety and security of our employees and customers at our stores. We have maintained our operations during the COVID-19 pandemic and have tried to deliver a safe shopping experience to the communities we serve. We have taken this responsibility very seriously, and I’m proud of what Spiritleaf has accomplished during such a challenging time,” said Bondar.
The Spiritleaf retail cannabis store network currently includes 46 franchised, licensed and corporate-owned stores operating in British Columbia, Alberta, Saskatchewan and Ontario. Locations are also planned for Newfoundland and Labrador through the Company’s recently announced master franchise agreement with Atlantic Cultivation for that region. Two additional licences for franchise stores have also been received for Kelowna, British Columbia and Calgary (Kensington), Alberta with the stores now in their final stages of preparation for opening. More than 30 additional stores across the country are in development with plans to open in 2020, including a number of corporate-owned and franchised stores in Ontario.
Please visit www.spiritleaf.ca for up-to-date information on all store locations and operating hours. Due to the COVID-19 pandemic, Spiritleaf stores will continue to operate at varying hours to accommodate staffing needs and with enhanced customer service processes that include the Spiritleaf Select & Collect service to help ensure the safety of employees and customers.
About Inner Spirit
Inner Spirit Holdings Ltd. (CSE:ISH) has established a growing network of recreational cannabis stores across Canada under its Spiritleaf brand. The Spiritleaf network includes franchised and corporate-owned stores as well as an Ontario retail partnership, all operated with an entrepreneurial spirit and with the goal of creating deep and lasting ties within their local communities. Spiritleaf aims to be the most knowledgeable and trusted source of recreational cannabis by offering a premium consumer experience and quality curated cannabis products. The Company is led by passionate advocates for cannabis who have years of retail, franchise and consumer marketing experience. Key industry partners and shareholders include Auxly Cannabis Group Inc. (TSX.V:XLY), HEXO Corp (TSX:HEXO), Tilray, Inc. (NASDAQ:TLRY) and Prairie Merchant Corporation. Learn more atwww.innerspiritholdings.com and www.spiritleaf.ca.
This news release contains statements and information that, to the extent that they are not historical fact, may constitute “forward-looking information” within the meaning of applicable securities legislation. Forward-looking information is typically, but not always, identified by the use of words such as “expects”, “plans”, “will” and similar words, including negatives thereof, or other similar expressions concerning matters that are not historical facts. Forward looking information in this news release includes, but is not limited to, statements regarding the expected filing of the year-end 2019 filings and the plans to open additional stores across the country, including in Ontario and Newfoundland and Labrador. Such forward-looking information is based on various assumptions and factors that may prove to be incorrect, including, but not limited to, assumptions with respect to the ability of the Company to execute on its business plan and the receipt of necessary licences from regulatory authorities. Although the Company believes that the assumptions and factors on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because the Company can give no assurance that it will prove to be correct or that any of the events anticipated by such forward-looking information will transpire or occur, or if any of them do so, what benefits the Company will derive therefrom. Actual results could differ materially from those currently anticipated due to a number of factors and risks including, but not limited to, the risk that the Company and its franchisees do not receive the necessary retail cannabis licences or that they are not able to open additional retail cannabis stores, including in Ontario or Newfoundland and Labrador, as anticipated or at all. The forward-looking information included in this news release is made as of the date of this news release and the Company does not undertake an obligation to publicly update such forward-looking information to reflect new information, subsequent events or otherwise, unless required by applicable securities legislation.
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