corporate presentation - inner spirit holdings...entry into cfa. cfa membership granted january 8,...
TRANSCRIPT
Inner Spirit HoldingsCorporate Presentation
February 2019
CSE:ISH
LEGAL DISCLAIMER.
The information provided herein is not intended to provide financial, tax, legal or accounting advice. This Corporate Presentation and the contents herein do not constitute or form part of any advertisement, any offer to sell or any
solicitation of an offer to buy or subscribe for securities of Inner Spirit Holdings Ltd. (the “Company” of “Inner Spirit” or “ISH”) or represent an intention to induce any person to make an investment in the Company or to assist any person
in the making of an investment decision. This Corporate Presentation and the contents herein shall not form the basis of or be relied on in connection with, or act as any inducement to enter into, any contract or commitment whatsoever.
This Corporate Presentation includes statistical information that the Company has obtained from independent industry publications, government publications, market research reports and other published independent sources. Such
publications and reports generally state that the information contained therein has been obtained from sources believed to be reliable. Although the Company believes these publications and reports to be reliable, it has not independently
verified any of the data or other statistical information contained therein, nor has it ascertained or validated the underlying economic or other assumptions relied upon by these sources. The Company has no intention and undertakes no
obligation to update or revise any such information or data, whether as a result of new information, future events or otherwise, except as, and to the extent required by applicable securities laws. Readers should also be advised that the
watch, sunglasses and related accessories business of the Company is carried out through its wholly-owned subsidiary, WATCH IT! Consolidated Ltd., and any reference herein to “WATCH IT!” is a reference to such subsidiary.
FORWARD LOOKING INFORMATION
This Corporate Presentation contains “forward-looking statements” and “forward-looking information” (collectively, “forward-looking information”) within the meaning of applicable securities legislation. Forward-looking information
in this Corporate Presentation include, but are not limited to, statements or information with respect to: the Company’s intended strategy; the Company’s ability to execute its strategy and ensure success; the expected legalization of
recreational cannabis; market expectations; intended products, delivery systems and partnerships; and other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. Actual
results, performance or achievement could differ materially from that expressed in, or implied by, any forward-looking information in this Corporate Presentation, and, accordingly, readers of this Corporate Presentation should not place
undue reliance on any such forward-looking information. Forward-looking information involves significant risks, assumptions, uncertainties and other factors that may cause actual future results or anticipated events to differ materially
from those expressed or implied in any forward-looking statements and accordingly, should not be read as guarantees of future performance or results. Forward-looking information involves numerous risks and uncertainties including,
but not limited to, the ability of management to execute its business strategy, objectives and plans; that the Company will have sufficient capital to fund its business plans; general economic and business conditions; changes to laws,
regulations, rules, rulings, policies, procedures and other instruments applicable to the Company and its business; the risk of disruptions to the Company’s supply chain; risks associated with the Company’s reliance on key personnel;
and changing consumer sentiments. Forward-looking information contained in this Corporate Presentation is based on the Company’s current estimates, expectations and projections, which the Company believes are reasonable as of
the current date. The Company can give no assurance that these estimates, expectations and projections will prove to have been correct. Historical statements should not be taken as a representation that such trends will be replicated
in the future. No statement in this Corporate Presentation is intended to be nor may be construed as a profit forecast.
FUTURE-ORIENTED FINANCIAL INFORMATION
This Corporate Presentation also contains future-oriented financial information and financial outlook information (collectively, “FOFI”) including, but not limited to, prospective annual revenue, prospective net profit, prospective system
wide sales, and components thereof, all of which are subject to the same assumptions, risk factors, limitations, and qualifications as set forth in the above paragraphs. FOFI contained in this Corporate Presentation was made as of the
date of this Corporate Presentation and was provided for the purpose of providing information about management’s current expectations and plans relating to the future, and for certain illustrative purposes. The Company disclaims
any intention or obligation to update or revise any forward looking statements or FOFI contained in this Corporate Presentation, whether as a result of new information, future events or otherwise, unless required pursuant to applicable
securities law. Readers are cautioned that the forward-looking information and FOFI contained in this Corporate Presentation should not be used for purposes other than for which it is disclosed herein. The forward-looking statements
and FOFI contained in this Corporate Presentation are expressly qualified by this cautionary statement.
THIS CORPORATE PRESENTATION MAY NOT BE REPRODUCED, FURTHER DISTRIBUTED OR PUBLISHED IN WHOLE OR IN PART WITHOUT WRITTEN PERMISSION FROM THE COMPANY.
F E B R U A R Y 2 0 1 8 | 0 2
The start of something incredible.
Inner Spirit Holdings Ltd. is applying a successful franchise and retail model to the
recreational cannabis industry. With a group of over 100 franchise partners, corporate
retail cannabis locations, and a proprietary brand portfolio under various stages of
development, Inner Spirit Holdings is positioned to be an industry leader.
F E B R U A R Y 2 0 1 9 | 0 3
Investment Highlights
Proprietary house brands to offer
consumers a market-leading retail
experience
Highly experienced team with
significant expertise in the cannabis,
branding, consumer retail, real estate
and franchising industries
F E B R U A R Y 2 0 1 9 | 0 4
Leverage to Canadian legal recreational
cannabis market. The Canadian adult use
market is currently worth up to $5.0B and
is expected to grow to $7.0B in FY22 1
Low-cost and highly scalable franchising
model to maximise ROI – more than 100
corporate and franchise locations under
development across Canada
Strategic partnerships with premium
producers creates a fully integrated
business model
Meet the Team
Darren Bondar President & CEO
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20 years experience in retail and franchise industries Previously founded WATCH IT! in 1999 Bachelor of Arts from Western Ontario University and MBA from University of Alberta
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Chris Gulka CFO
CPA and CFA with > 26 yearsbusiness experience
President of Working CapitalCorporate since 1999
Founded Passport Energy Ltd., and was the CFO of RochesterEnergy Corp.
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Cecil HorwitzBusiness Development
Extensive experience in retailsales since beginning of WATCH IT! in 1999
Founder and clinical director ofWhole Family Health
Cannabis advocate for bothhealth and recreational use
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Jeremy LeeController
Experience across financial reporting, controlling and finance functions
Previously at Big 4 accountingfirms and in industry roles
Chartered Accountantdesignation in 2000
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Robert VerbuckLegal & Capital Markets
Corporate securities lawyerwith 20 years experience
Since 2014, actively involved in advising businesses in the cannabis industry
Law degree from the University of Toronto
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Christine KitzOperations
Oversees business systems and operations at ISH
Previously held financial, strategic and human resources positions within the retail sector
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Alisa KuzminaCreative Director
Overseas ISH’s commitment tocreative excellence
Significant experience working within the retail and franchiseindustries
Degree in Communicationswith a Major in Information Design
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Board of Directors
Darren Bondar President & CEO
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20 years experience in retail and franchise industries Previously founded WATCH IT! in 1999 Bachelor of Arts from Western Ontario University and MBA from University of Alberta
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Chris Gulka CFO
CPA and CFA with > 26 yearsbusiness experience
President of Working CapitalCorporate since 1999
Founded Passport Energy Ltd., and was the CFO of RochesterEnergy Corp.
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David MargolusDirector
Former Managing Partner ofWitten LLP
Served on boards of Edmonton Regional Airports Authority,Liquor Stores N.A. Ltd., PowerComm Inc. and The XS Cargo Income Fund
Bachelor of Arts and Law from the University of Alberta
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Jeff TungDirector
CFO & COO of Auxly Cannabis
Formerly co-founder of CPS Management Partners
MBA from the Richard Ivey School of Business, Bachelor of Computer Engineering from the UBC
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Larry WoskDirector
15 years experience at the Sauder School of Business
27 years in sernior manageent positions
President and CEO of companies across retail, real estate development, hospitality and consulting
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Craig SteinbergDirector
Former partner at Miller Thomson LLP
>10 years experience as a private mortgage banker and corporate counsel
Law Society of Alberta,Canadian Bar Association andReal Estate Council of Alberta
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March 16, 2017
Corporate Highlights
Inner Spirit Holdings Ltd. was founded in Calgary, AB.
ISH Formed
June 16, 2017
Spiritleaf is first and only cannabis company granted entry into CFA.
CFA Membership Granted
January 8, 2018
ISH announces cross-investment and strategic alliance with Auxly (TSXV:XLY), which closes on February 6, 2018.
Auxly
February 6, 2018
ISH grants its 100th franchise and completes its $4.5 million private placement equity financing.*
100th Franchise and $4.5M Equity
June 4, 2018
ISH announces its support of the Gord Downie & Chanie Wenjack Fund (DWF) via a five-year charitable commitment and the establishment of a DWF Legacy Room. This support is part of an ongoing agreement to collaborate with Newstrike Brands Ltd. & Up Cannabis.
Inner Spirit Holdings Ltd. is Honored to Support the Gord Downie & Chanie Wenjack Fund
July 31, 2018
ISH closes IPO on maximum gross proceeds of $3,750,000 and issued 25,000,000 Units. Its common shares began trading on August 1, 2018 on the CSE under the symbol “ISH”.
Inner Spirit Holdings Ltd. Closes IPO
* I n c l u d e s A u x l y ’ s $ 3 5 0 , 0 0 0 e q u i t y i n v e s t m e n t o n J a n u a r y 8 , 2 0 1 8 , A u x l y ’ s a d d i t i o n a l $ 1 5 0 , 0 0 0 e q u i t y i n v e s t m e n t o n F e b r u a r y 6 , 2 0 1 8 , a n d G re n v i l l e ’ s $ 1 M e q u i t y i n v e s t m e n t o n J a n u a r y 1 8 , 2 0 1 8 .
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January 29, 2018
Spiritleaf unveils its concept retail store design.
Retail Store Concept
May 23, 2018
Newstrike Brands Ltd. (TSXV:HIP), formerly Newstrike Resources Ltd. announces cross-investment and strategic alliance with ISH.
Newstrike
November, 2018
ISH opens first 4 franchise locations in Brooks, Lethbridge, St. Albert & Moosejaw.
Franchise Store Openings
December 3, 2018
ISH announces $4.5 million investment by Tilray, Inc. (NASDAQ: TLRY) and formation of strategic partnership.
Tilray
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Canada’s New Growth Industry
Current consumers are expected to buy nearly two-thirds of products from legal retailers
Legalization expected to attract a more conservative experimenter – typically one who is aged 35-54, has a
university education, and has family or other responsibilities
After legalisation, current frequent cannabis consumers expect to buy products more often
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Current and likely consumers expect to purchase the majority of products at
physical retail locations
Consumers to demand high quality products at a range of competitive price points
Privacy and security when purchasing are key considerations for consumers
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Shift Towards Legal
Consumption 2
Demand For Retail
Experience 3
Substantial Market
Size 1
Population of Adult Consumers
Annual Consumption Volume in Grams
per Consumer
Price per Gram of Marijuana
X X$5.0B in FY18$7.0B in FY22
Estimated Total Adult Use Market Size
=
1 . G T R e s e a rc h , “ C a n a d i a n L e g a l R e c re a t i o n a l C a n n a b i s M a r k e t ”, 2 0 1 82 . D e l o i t t e , “A s o c i e t y i n t r a n s i t i o n , a n i n d u s t r y re a d y t o b l o o m – 2 0 1 8 c a n n a b i s re p o r t ”
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The Inner Spirit Strategy
Build an iconic Canadian brand and
a chain of recreational dispensaries
across Canadian jurisdictions where
private distribution of cannabis is legal.
Sell select brands together with our
proprietary licensed brands through
our own retail network and other
distribution channels.
Utilize a low CAP X franchise and
streaming strategy to maximize ROI
and scalability.
Franchising to maximize ROI
$25,000 upfront franchise fee
5% royalty on gross sales
1% of gross sales allocated to Spiritleaf’s advertising fund
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Over 110 franchise agreements executed and 75 locations secured across Canada
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Alberta
∙ 3 Spiritleaf store openings in November 2018 with 20 additional stores under construction∙ 48/50 sites have been secured and have received municipal permits
Manitoba
∙ Prequalified for the next Manitoba lottery for cannabis retail licenses
Ontario
∙ Opened Ontario office, and secured prime locations∙ Granted first 20 franchises and secured leases for up to 20 locations∙ Contonuing due diligence on numerous additional franchise applications∙ Plans to pursue the maximum 75 stores available to operators
Saskatchewan
∙ Moose Jaw store opened on November 19, 2018
British Columbia
∙ 6 Spiritleaf locations conditional on municipal and provincial approvals
The Space
Open spaced opportunity to reimagine the typical
retail environment of a dispensary.
The Retail Brand
Stores will offer an impressive selection of products,
knowledgeable staff and a welcoming and comfortable
environment.
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First Cannabis company to receive membership in the
Canadian Franchise Association
Best in class retail experience
Over 100 franchise partnerships entered into with local
entrepreneurs
Corporate stores and joint ventures
ISH utilising existing WATCH IT! infrastructure platform
Current ISH team has significant retail and franchising
experience at WATCH IT!
WATCH IT! Has $10m+ existing system wide sales with 8
stores across Canada
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Retail & Franchise
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F L O W E R S / P R E - R O L L S / O I L S & E X T R A C T S
We Source, Create and Curate Quality Cannabis Brands
The Spirit Joint Disposable Vaporizer
nticipated to be one of the most discreet, disposable vaporizers
on the recreational cannabis market. 150 puffs of pure CO2
cannabis oil. No smell, no lighter, no charging, no prep, no hassle.
F E B R U A R Y 2 0 1 9 | 1 3
F E B R U A R Y 2 0 1 9 | 1 4
Tilray announced its newly-formed partnership with Inner Spirit’s retail network
Tilray to subscribe for $4,500,000 of ISH shares, comprised of $2,250,000 in cash and $2,250,000 in Tilray common shares
On December 10, 2018 ISH and Tilray completed the cash tranche at price of $0.1985 per ISH share. The second tranche is to be
completed on June 20, 2019.
ISH and Tilray have entered into a collaboration agreement which includes, among other things:
(i) guidance for promoting High Park’s products, for each retail location of Spirit Leaf which, will represent 20% of the retail
space at each Spirit Leaf location; and
(ii) general terms for Tilray to support the charitable endeavours of ISH and Spirit Leaf.
About Tilray and High Park
Tilray is a global pioneer in cannabis research, cultivation, processing and
distribution with operations in 12 countries spanning 5 continents
High Park is a wholly owned subsidiary of Tilray, Inc. (NASDAQ: TLRY), and is led
by a team with deep experience in cannabis and global consumer brands
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Key Terms
Strategic Partnership
TSX.V: XLY
Collaboration on retail initiatives including product acquisition and in-store marketing
and branding
Auxly currently holds ~15% of the outstanding ISH common shares
TSX.V: HIP
Retail distribution of Up Cannabis products, and the creation of Up Cannabis-branded
customer lounges in Spirit Leaf stores
Newstrike holds ~9% of the outstanding ISH common shares
ISH licensed to distribute and sell all High Times magazines in corporate & retails stores
ISH holds 11,000 shares of class A common stock of High Times Holding Corp.
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Where we’ve come from,where we’re going.
Bringing 20 years of franchise, branding, retail, marketing & real
estate experience to the recreational cannabis market
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Opportunity to participate in Canada’s emerging recreational
cannabis market
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Platform to invest in a proven revenue-generating business model
Experience comeswith time. Success comes with passion.
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Trading commenced on August 1, 2018 (CSE:ISH)
Capital Structure (February 5, 2019)
Basic Shares Outstanding 193.3 million
Recent Share Price (February 4, 2019) $0.23
Current Market Capitalization $44.4 million
Warrants and Options Outstanding 47.6 million
Weighted Average Strike Price $0.18
Top 5 shareholders own ~45%
Capital light business model
No debt on balance sheet
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Headquarters#102, 5740 - 2nd Street SW
Calgary, ABT2H 1Y6
403-930-9300
www.innerspiritholdings.com