Inner Spirit Holdings - Corporate Presentation - CSE:ISH
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CSE:ISH
Inner Spirit Holdings
Corporate Presentation
November 2019
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.
NOVEMBER 2019 | 02
The start of something incredible.
Inner Spirit Holdings Ltd. is applying a successful franchise and corporate
retail model to the recreational cannabis industry. With 37 stores currently
operating and a group of more than 100 franchise partners, select corporate
retail locations, and a proprietary brand portfolio under development, Inner
Spirit is positioned as Canada's industry leader.
NOVEMBER 2019 | 03
Investment Highlights
Canada's largest retailer in the recreational Low-cost and highly scalable franchising Highly experienced team and proven
cannabis market by store count. The model to maximize ROI – more than 100 model with significant expertise in the
Canadian adult use market is currently franchise locations either in operation or cannabis, branding, consumer retail,
worth up to $5.0B and is projected to grow being developed in jurisdictions where real estate and franchising industries.
to $7.0B by 2022. permitted in Canada. Franchise system
is being supported by corporate-owned
stores in select markets.
Proven ability to license, open and Strategic partnerships and Proprietary house brands being
operate cannabis store locations in collaborations with premium producers developed to offer consumers premium
efficient manner. 37 stores located in to create a fully integrated business product options and a market-leading
AB, SK, BC. and ON with more than 40 model. retail experience.
projected by end of 2019.
NOVEMBER 2019 | 04
Meet the Team
Darren Bondar Chris Gulka Cecil Horwitz Jeremy Lee
President & CEO CFO Business Development Controller
∙ 20 years experience in retail ∙ CPA and CFA with > 25 years ∙ Extensive experience in retail ∙ Experience across financial
and franchise industries business experience sales since 1999 reporting, controlling and
finance functions
∙ Previously founded retail franchise ∙ President of Working Capital ∙ Founder and clinical director of
system in 1999 Corporation since 1999 Whole Family Health ∙ Previously at Big 4 accounting
firms and in industry roles
∙ MBA from University of Alberta ∙ Founded Passport Energy Ltd., ∙ Cannabis advocate for both
and Bachelor of Arts from Western and was the CFO of Rochester health and recreational use ∙ Chartered Accountant
Ontario University Energy Corp. designation in 2000
Michael Ginevsky Christine Kitz Alisa Kuzmina Christine Smith
Corporate Secretary Operations Creative Manager Marketing & Communications
∙ Corporate securities lawyer ∙ Oversees business systems and ∙ Overseas ISH’s commitment to ∙ 10 years progressive marketing &
with experience in capital markets, operations at ISH creative excellence sales experience with tier 1 global
corporate finance and M&A companies
∙ Previously held financial, strategic ∙ Significant experience working
∙ Since 2016, actively involved in and human resources in the retail and franchise ∙ Significant experience in brand
advising businesses in the positions within the retail sector industries execution with a track record of
cannabis industry excellence in delivering results
∙ Degree in Communications
∙ Law degree from the University with a Major in Information Design ∙ Bachelor of Management degree
of Alberta with a major in Marketing from the
University of Lethbridge
NOVEMBER 2019 | 05
Board of Directors
Darren Bondar Chris Gulka David Margolus Jeff Tung
President & CEO CFO Director Director
∙ 20 years experience in retail ∙ CPA and CFA with > 25 years ∙ Former Managing Partner of ∙ COO of Auxly Cannabis
and franchise industries business experience Witten LLP
∙ Formerly co-founder of CPS
∙ Previously founded retail franchise ∙ President of Working Capital ∙ Served on boards of Edmonton Management Partners
system in 1999 Corporation since 1999 Regional Airports Authority,
Liquor Stores N.A. Ltd., PowerComm ∙ MBA from the Richard Ivey
∙ MBA from University of Alberta ∙ Founded Passport Energy Ltd., Inc. and The XS Cargo Income Fund School of Business and Bachelor
and Bachelor of Arts from Western and was the CFO of Rochester of Computer Engineering from
Ontario University Energy Corp. ∙ Bachelor of Arts and Law from the the UBC
University of Alberta
Larry Wosk Craig Steinberg
Director Director
∙ 15 years experience at the ∙ Former partner at Miller
Sauder School of Business Thomson LLP
∙ 25 years in senior ∙ >10 years experience as a
management positions private mortgage banker
and corporate counsel
∙ President and CEO of companies
across retail, real estate ∙ Law Society of Alberta,
development, hospitality Canadian Bar Association and
and consulting Real Estate Council of Alberta
NOVEMBER 2019 | 06
Corporate Highlights
ISH Formed CFA Membership Granted Retail Store Concept Unveiled Franchise Concept Proven Initial Public Offering
Completed
Inner Spirit Holdings Ltd. is Spiritleaf is first retail cannabis ISH unveils its Spiritleaf design ISH awards its 100th franchise Inner Spirit is first cannabis
founded in Calgary, AB on company granted membership on January 29, 2018. in February 2018 as it prepares retail and franchise company
March 16, 2017. in Canadian Franchise for recreational cannabis to complete an IPO and listing
Association on June 16, 2017. legalization in Canada. Plans in Canada. IPO raises ~$3.75
also established to operate million. Common shares begin
complementary corporate trading on the CSE under the
stores in select locations. symbol “ISH” on August 1, 2018.
Strategic Partnerships Delivered Stores Begin to Open Corporate Stores Added to the Financing Achieved Stores Opening at Rapid Clip
Mix
ISH develops strategic With legalization on October Spiritleaf opens corporate ISH completes a brokered ISH continues to open stores
partnerships, collaborations 17, 2018, ISH opens Spiritleaf stores in 2019 in high-profile offering of secured convertible in AB and B.C. and now has 37
and investments with cannabis franchised stores in Alberta locations in Calgary, Edmonton, debenture units for aggregate stores operating across Canada.
industry leaders such as and Saskatchewan. Additional Canmore and Jasper to further gross proceeds of ~$10 million Legalization of edibles, extracts
Auxly Cannabis Group, HEXO stores follow in 2019 with B.C. build out its retail footprint as on June 7, 2019. Key investment and topicals began October 17,
Corp, Tilray and High Times and Ontario markets added. regulatory restrictions ease in support comes from strategic 2019 as Cannabis 2.0 phase.
magazine. Company’s first store in Ontario Alberta. partners Auxly and Tilray.
opens to fanfare on April 1, 2019
in Kingston.
NOVEMBER 2019 | 07
Canada’s New Growth Industry
Substantial Market Population of Adult Annual Consumption Price per Gram = $7.0B by FY22
1 Consumers X Volume in Grams X of Cannabis
Size per Consumer
Estimated Total Adult
Use Market Size
∙ Current consumers are expected to buy nearly two-thirds of products from legal retailers
Shift Towards Legal ∙ Legalization has attracted a more conservative experimenter – typically one who is aged 35-54, has a university
2 education, and has family or other responsibilities
Consumption
∙ With legalization, current frequent cannabis consumers are able to buy products more often
∙ Edibles, extracts and topicals entering market in late 2019, will drive further demand
∙ Current and likely consumers are purchasing the majority of products at physical retail locations
Demand For Retail
3 ∙ Consumers are demanding high quality products at a range of competitive price points
Experience
∙ Privacy and security when purchasing are key considerations for consumers
1 . G T R e s e a r c h , “ C a n a d i a n L e g a l R e c r e a t i o n a l C a n n a b i s M a r k e t ”, 2 0 1 8 NOVEMBER 2019 | 08
2 . 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 r e a d y t o b l o o m – 2 0 1 8 c a n n a b i s r e p o r t ”
The Inner Spirit Strategy
Build an iconic Canadian brand and a Sell select brands together with our Utilize a low Cap Ex franchise and
network of recreational cannabis stores proprietary licensed brands through streaming strategy to maximize ROI
across Canadian jurisdictions where our own retail store network and other and scalability
private distribution of cannabis is legal distribution channels
Franchising to maximize ROI
$25,000 upfront franchise fee
5% royalty on gross sales
1% of gross sales allocated to Spiritleaf’s advertising fund
NOVEMBER 2019 | 09
A National Retail Network
Spiritleaf is Canada's leading recreational cannabis brand by store count
BRITISH COLUMBIA ALBERTA SASKATCHEWAN ONTARIO
∙ 4 stores currently open (Castlegar, Maple Ridge, ∙ Currently tied as market leader in retail stores with 31 ∙ Province moves to open licensing market in 2020 ∙ Retail partner store open in Kingston
Penticton and Vernon) locations open. with Spiritleaf expected to expand retail presence ∙ Secured prime locations and leases throughout
∙ 2 stores in final stages of licensing ∙ Corporate stores in Calgary, Edmonton, Canmore & ∙ Moose Jaw store open Province
∙ Expected to reach Province's 8 store maximum Jasper ∙ E-commerce sales platform being developed ∙ Multiple franchises ready for licensing to open
∙ Additional licenses expected on regular basis with ∙ Projecting to reach Province's 75 store maximum
over 40 expected to open through 2019
NOVEMBER 2019 | 10The Space
Open spaced opportunity to re-imagine the typical
retail environment of a cannabis store
The Retail Brand
Stores offer an impressive selection of products,
knowledgeable staff and a welcoming and
comfortable environment
Franchise Model
First Cannabis company to receive membership in
the Canadian Franchise Association
Best in Class
Best in class retail experience with more than 100
franchise partnerships with local entrepreneurs
NOVEMBER 2019 | 11R E TA I L P E R F O R M A N C E : S Y S T E M W I D E
Spiritleaf experiencing month over month
growth in system-wide retail sales.
4,500,000 4,421,439
4,000,000 3,772,194
System-Wide Retail Sales
3,500,000
(Canadian Dollars)
3,034,706
3,000,000
2,500,000
2,228,264
2,00,000 1,602,510
1,500,521
1,500,000
1,000,000
500,000
0
May Jun Jul Aug Sep Oct
NOVEMBER 2019
8 | 1 21FLOWERS / PRE-ROLLS / OILS & EXTRACTS
We Source, Create and Curate Quality
Cannabis Brands
The Spirit Joint Disposable Vaporizer
Anticipated 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.
NOVEMBER 2019 | 13NOVEMBER 2019 | 14
Strategic Partnerships
Collaboration on retail initiatives including product acquisition and in-store
marketing and branding
Auxly holds ~13% of the outstanding ISH common shares
TSX.V: XLY
Retail distribution of Up Cannabis products and the creation of Up Cannabis-branded
customer lounges in select Spiritleaf stores
HEXO holds ~8% of the outstanding ISH common shares
TSX: HEXO
Partnered and invested in ISH
Collaboration agreement with Spiritleaf stores for High Park products and they
support our charitable endeavours
Tilray holds ~9% of the outstanding ISH common shares
NASDAQ: TLRY
ISH licensed to distribute and sell all High Times magazines in Spiritleaf stores
ISH holds 11,000 shares of class A common stock of High Times Holding Corp.
NOVEMBER 2019 | 15Where we’ve come from,
where we’re going.
Investment Opportunity
Opportunity to participate in Canada’s emerging recreational cannabis market through
largest national retail brand
Platform to invest in a proven revenue-generating business model with more than 100
franchise agreements with local entrepreneurs in place supported by corporate-owned
stores in select high-traffic markets
Bringing 20 years of franchise, branding, retail, marketing & real estate experience and
a proven model to the recreational cannabis retail market
Aligned with key strategic partners to create a fully integrated business model
NOVEMBER 2019 | 16Trading commenced on August 1, 2018 (CSE:ISH)
Capital Structure (Q4 2019)
Top 5 shareholders own ~40%
Common Shares 206,236,295
Options and Warrants 69,341,977
Capital light business model
Convertible Debentures 40,000,000
Share Purchase Warrants (ISH.WT)
Total Equity Shares (fully converted) 315,578,272 and 12% Senior Secured Convertible
Debentures (ISH.DB) listed May 24, 2019
NOVEMBER 2019 | 17Headquarters Contact
#102, 5740 - 2nd Street SW Darren Bondar, President & CEO
Calgary, AB invest@spiritleaf.ca
T2H 1Y6 403-930-9300
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