Inner Spirit Holdings to Put Primary Focus on Spiritleaf Brand and Become Pure-Play Recreational Cannabis Retailer
December 2, 2019
Inner Spirit Holdings to Put Primary Focus on Spiritleaf Brand and Become Pure-Play Recreational Cannabis Retailer
Largest retail cannabis brand in Canada to strengthen its position in the recreational cannabis sector with more store openings and wind-down of Watch It! retail operations
CALGARY, Alberta (December 2, 2019) – Inner Spirit Holdings Ltd. (“Inner Spirit” or the “Company”) (CSE:ISH), a Canadian company establishing a national network of retail cannabis stores under its Spiritleaf brand, today announced it is putting its corporate focus solely on its Spiritleaf retail cannabis brand and will be voluntarily winding-down its corporate Watch It! retail operations by the end of the year.
Inner Spirit went public in July 2018 and leveraged the experience that the management team gained from operating the Watch It! franchise system since it was started in 1999. The Company’s Watch It! division, which sells watches and accessories at select retail locations in Canada, provided the Company with infrastructure, retail experience, an effective approach to training and franchise relations, real estate connections, marketing knowledge and brand expertise. As Inner Spirit has evolved and with the Spiritleaf brand representing 84 percent of the Company’s system-wide retail sales1 in third quarter 2019 financial results, the Company is executing on its plan to become a pure-play cannabis retailer.
“We are advancing the Company’s business strategy by rapidly opening Spiritleaf cannabis retail stores in locations across Canada where permitted by regulation. We are the industry leader in Canada with 38 Spiritleaf branded stores operating and we want to continue to build on this momentum. We are preparing to open additional stores in British Columbia, Alberta, Saskatchewan and possibly Ontario in 2020. For these reasons, we are voluntarily closing our corporate Watch It! retail business so we can train our sights fully on the recreational cannabis business moving forward. We want to be focused solely on expanding the Company’s cannabis retail store network, enhancing our financial performance, and creating value for our shareholders as a pure-play recreational cannabis retailer,” said Darren Bondar, President and CEO of Inner Spirit.
The Company plans to close its corporate Watch It! operations as of December 31, 2019. On November 29, 2019, Watch It! Consolidated Ltd. (“WIC“), the wholly owned subsidiary of the Company that runs the Watch It! retail operation, filed a Notice of Intention to Make a Proposal (the “Notice of Intention“) pursuant to the provisions of Division I of Part III of the Bankruptcy and Insolvency Act (Canada). Additionally, A. Farber & Partners Inc. has been appointed as trustee in the proposal proceedings. The Watch It! trademark and website are anticipated to be sold, and it is expected that a number of Watch It! franchise locations will continue to operate independently under the brand without any further connection to the Company or to WIC.
Bondar noted, “Over the last 20 years, Watch It! has played a special role in helping thousands of customers mark timely moments and celebrate important milestones. I’d personally like to thank the customers, staff, suppliers and franchise partners who have all been part of this family and wish everyone success in the next chapter. Watch It! has also played an instrumental role as the foundation for us to build the Spiritleaf network. We’ll now focus our efforts exclusively on Spiritleaf and continue to build it as the premier retail cannabis brand in Canada.”
The Company has a total of 38 retail cannabis Spiritleaf stores open and operating in Alberta, British Columbia, Saskatchewan and Ontario. This includes the recent opening of a franchised Spiritleaf store on November 27, 2019 in Calgary’s Sunridge Mall. Additionally, store openings projected for the coming week include franchised locations in the Hillhurst community of Calgary and in Cochrane, Alberta as well as the Company’s ninth corporate-owned store located in Edmonton’s Garneau community near the University of Alberta campus. The Company will be entering the busy holiday shopping season with more than 40 Spiritleaf store locations serving local communities. Please see www.spiritleaf.ca for more information, including store locations, opening dates and operating hours.
(1) System-wide retail sales are a Non-IFRS measure. For more information, see “Non-IFRS Financial Measures” section below.
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) and Tilray, Inc. (NASDAQ:TLRY). Learn more at www.innerspiritholdings.com and www.spiritleaf.ca.
Non-IFRS Financial Measures
In this news release, the Company reports “system-wide retail sales”, a financial measure that is not determined or defined in accordance with the International Financial Reporting Standards, as issued by the International Accounting Standards Board (“IFRS“). Such non-IFRS financial measure does not have a standardized meaning prescribed by IFRS and Inner Spirit’s methods of calculating this financial measure may differ from methods used by other companies. Accordingly, such non-IFRS financial measure may not be comparable to similarly titled measures presented by other companies. This measure is provided as additional information to complement IFRS by providing a further understanding of operations from management’s perspective and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
System-wide retail sales, when presented: (i) on a consolidated basis for the Company, represents the sum of the revenue reported to the Company by franchisees of Spiritleaf-branded retail cannabis stores, by Company-owned Spiritleaf-branded retail cannabis stores, by franchisees of Watch It! retail stores and by Company-owned Watch It! retail stores; (ii) for the Company’s Spiritleaf retail cannabis operations, represents the sum of the revenue reported to the Company by franchisees of Spiritleaf-branded retail cannabis stores and by Company-owned Spiritleaf-branded retail cannabis stores; and (iii) for the Company’s Watch It! retail operations, represents the sum of the revenue reported to the Company by franchisees of Watch It! retail stores and by Company-owned Watch It! retail stores. This measure is useful to management and the investment community in evaluating brand scale and market penetration, and is used by management of Inner Spirit to assess the financial and operational performance of the Company.
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 may include financial and other projections, as well as statements regarding future plans, objectives or economic performance, or the assumption underlying any of the foregoing. In some cases, forward-looking information can be identified by terms such as “may”, “would”, “could”, “will”, “likely”, “except”, “anticipate”, “believe”, “intend”, “plan”, “forecast”, “project”, “estimate”, “outlook”, “potential”, or the negative thereof or other similar expressions concerning matters that are not historical facts. Examples of such statements include, but are not limited to, statements with respect to: the objectives and business plans of the Company; the Company’s intentions to voluntarily wind-down its Watch It! retail operations by and as of December 31, 2019; the Company’s plans to open additional stores in British Columbia, Alberta, Saskatchewan and possibly Ontario in 2020; the Company’s intentions to focus solely on expanding its cannabis retail store network, enhancing its financial performance, and creating value for its shareholders as a pure-play recreational cannabis retailer; the anticipated sale of the Watch It! trademark and website; the expectation of the Company that a number of Watch It! franchise locations will continue to operate independently under the brand without any further connection to the Company or to WIC; the anticipated opening of additional retail cannabis stores next week; the Company entering the busy holiday shopping season with more than 40 Spiritleaf store locations. 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 will not be able to voluntarily wind-down its Watch It! retail operations as anticipated or at all; the risk that the Company or its franchisees do not receive retail cannabis licenses or are not able to open additional retail cannabis stores; the risk that the licensed Spiritleaf retail cannabis stores intended to be opened do not open as anticipated or at all; the risk that the Company will not be able to sell the Watch It! trademark and website; the risk that corporate-owned and franchised Spiritleaf retail cannabis stores do not perform as anticipated; the risk that Ontario does not adopt an open retail cannabis licensing framework, and if adopted, the risk that the Company and its franchisees do not benefit from such system as anticipated or at all; and other factors outside of the Company’s control. Readers are cautioned that the foregoing list of factors and risks is not exhaustive. Although the Company believes that the expectations and assumptions 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 they will prove to be correct. Since forward-looking information addresses future events and conditions, by its very nature it involves inherent risks and uncertainties. The Company’s actual results, performance or achievements could differ materially from those expressed in, or implied by, the forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits the Company will derive therefrom. 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.
For further information
Darren Bondar, President & CEO
Phone: 1 (403) 930-9300