CALGARY, Alberta, April 29, 2019 (GLOBE NEWSWIRE) -- Solo Growth Corp.™ (the “Company” or “Solo Growth”) (SOLO.V) (WKN:A2PBMC), a cannabis retailer operating as YSS™ with the vision to become a premier retailer and the trusted destination for cannabis in Canada, is pleased to announce the financial and operating results for the two and eleven months ended December 31, 2018, along with an operational update. Selected financial and operational information is outlined below and should be read in conjunction with Solo Growth’s consolidated audited financial statements for the two and eleven months ended December 31, 2018, related management’s discussion and analysis (“MD&A”) and annual information form (“AIF”), which are available on SEDAR at www.sedar.com.
Highlights Subsequent to Year End 2018
- On March 20, 2019, Solo Growth closed the acquisition of a licensing agreement on an established operating retail cannabis store in Red Deer, Alberta, which has been operated as “Green Town” since opening on November 22, 2018. This location continues to operate under its existing brand, but through the second quarter, will be rebranded and commence serving customers under the YSS™ banner early in the third quarter of 2019.
- The Red Deer location provides revenue equal to store-level cash flow and continues to meet management expectations generating, on an annualized basis, over $4 million of revenue and $1.2 million of cash flow. The location generated $50,000 in cash flow during the 12 days following Solo Growth’s closing of the licensing agreement acquisition.
- In April, the Alberta Gaming, Liquor and Cannabis Commission (“AGLC”) completed the inspection of the Company’s first Calgary location at Woodbine Square, which will now be added to the AGLC licensing queue. Six of the Company’s Alberta stores have been inspected by the AGLC and will obtain licenses, subject to the Canadian cannabis supply dynamic and AGLC timing.
- Construction is ongoing at the Company’s first Edmonton location. The Company has an incremental 15 AGLC license applications submitted with development permits in place and future construction plans are being prioritized.
- In April, AGLC granted an additional 26 retail licenses, which built on the ten new licenses granted in January 2019 and brings the total to 101 across the province. Management views this development as a positive indicator that both the supply dynamic is improving and AGLC is doing everything within their control to continue the issuance of new licenses.
2018 Financial & Operating Highlights
During the second quarter of 2018, the Company obtained approval to exit the mining business to become a premier retailer of cannabis. For the third and fourth quarters of 2018, the Company’s efforts and resources were directed to advancing the retail cannabis strategy. The date and nature of this change of business should be considered when reviewing Solo Growth’s financial and operating results for 2018.
- For the two and eleven months ended December 31, 2018, the Company invested $1.5 million and $3.2 million, respectively, in capital costs associated with the design, licensing and leasehold improvements of seven retail store locations currently awaiting licensing. In addition, these investments include technology implementation across the stores, development of a robust product catalogue, and extensive staff training and development tools, all of which define an exceptional retail experience within a highly regulated industry. We anticipate these investments, coupled with a strong balance sheet that featured $19.6 million in cash as at December 31, 2018, will help drive future profit and are aligned with the Company’s goal of being a trusted and responsible supplier of cannabis in Canada.
- Total G&A expenses were $357,986 for the two months ended December 31, 2018, with costs largely allocated to start-up expenses associated with advancing the Company’s YSS™ retail cannabis business, including adding experienced and talented human capital to help execute the Company’s long-term vision.
- A net loss was recorded for the two months and eleven months ended December 31, 2018 of $1.8 million ($0.00 per share), and $16.1 million ($0.0.5 per share), respectively. The two-month losses are attributable to expenses associated with the start-up of the cannabis retail business which commenced June 28, 2018 coupled with the terminated leased asset costs described below. For the eleven-month period, losses are due to the terminated leases, a stock-based compensation expense of $13.5 million and the write off of E&E assets associated with the previous mining business. Excluding the impact of the stock-based compensation expense and the write off of the E&E assets, Solo Growth’s net loss would have been $2.4 million for the eleven months ended December 31, 2018.
- In response to the ongoing uncertainty within the regulatory environment, the Company proactively pivoted the business strategy and high-graded the portfolio of locations, particularly in Ontario. This resulted in the Company recording $1.3 million in terminated leased asset costs representing forfeited lease deposits, lease termination fees, third party service provider fees and a provision for estimated lease costs to the termination dates in early 2019. This decision helps set the stage for 2019 and supports the Company’s strategy as we believe Alberta continues to represent a transparent jurisdiction with great potential within which to focus our near-term operations, as demonstrated by the recent additional retail licenses granted by AGLC, bringing the total to 101 licenses across the province. The Company remains committed to executing an Ontario retail strategy when the regulatory environment permits.
Annual Meeting of Shareholders: May 29, 2019
- Solo Growth will be holding the annual meeting of shareholders on Wednesday, May 29, 2019 at 2:00 p.m. MT at the office of Stikeman Elliott LLP, the Company’s legal counsel, located at 4300 Bankers Hall West, 888 – 3rd Street S.W., Calgary, Alberta, during which several key resolutions will be brought forth; all shareholders and other interested parties are invited to attend. Details of the agenda will be included in the Company’s Management Information Circular expected to be mailed to the Company’s registered shareholders and filed on SEDAR on May 2, 2019.
About Solo Growth Corp.™
Operating as YSS™, the Company is a cannabis retailer with the vision to become a premier retailer and the trusted destination for cannabis in Canada. Since its launch in June of 2018, the Company has built a strategic portfolio of locations while managing financial commitments. The Company has a licensing agreement on one operating store in Red Deer, Alberta; has built and received AGLC inspections on six additional Alberta stores, and has another Alberta location nearing completion of construction. An additional 15 AGLC applications are being reviewed for construction priority within the current regulatory environment. YSS™ management brings excellence across capital markets, financial management and a strong commitment to deliver shareholder value by leveraging high-quality opportunities within this exciting new industry. The YSS™ retail experience is built on our five fundamental pillars: convenience, value, selection, team, and above all else, trust.
Investor or Media Contacts:
|Theo Zunich |
President, Chief Executive Officer
Phone: (403) 455-7656
Solo Growth Corp.™
Suite 1000, 350-7th Ave SW
Calgary, AB T2P 3N9
5 Quarters Investor Relations, Inc.
(403) 231-4372 or email@example.com
|Stephanie Bunch, CA |
Vice President, Finance and
Chief Financial Officer
Phone: (403) 455-7656
Forward-Looking and Cautionary Statements
This news release may include forward-looking statements including opinions, assumptions, estimates, the Company’s assessment of future plans and operations, and, more particularly, statements concerning : Solo Growth’s retail cannabis business strategy, including organic growth and strategic activities; the operating location in Red Deer, Alberta, including the licensing agreement, market presence and customer base in respect of the location; the ability to build, own and operate retail cannabis stores; the receipt of necessary permits and licenses to open stores; the ability to capitalize on potential opportunities that may arise and the ability to exercise thereon; the annual meeting of shareholders and the mailing date of meeting materials; and enhancing value for shareholders. When used in this document, the words “will,” “anticipate,” “believe,” “estimate,” “expect,” “intent,” “may,” “project,” “should,” and similar expressions are intended to be among the statements that identify forward-looking statements. The forward-looking statements are founded on the basis of expectations and assumptions made by the Company. Forward-looking statements are subject to a wide range of risks and uncertainties and, although the Company believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will be realized. Any number of important factors could cause actual results to differ materially from those in the forward-looking statements including, but not limited to: regulatory and third party approvals not being obtained in the manner or timing anticipated, including AGLC inspections and licenses; the ability to implement corporate strategies; the state of domestic capital markets; the ability to obtain financing; changes in general market conditions; industry conditions and events; the size of the recreational cannabis market; changing customer habits; the availability of cannabis-retail products from licensed producers; government regulations, including future legislative and regulatory developments involving recreational cannabis; competition from other industry participants; and other factors more fully described from time to time in the reports and filings made by the Company with securities regulatory authorities. Please refer to the AIF and MD&A for additional risk factors relating to the Company. The AIF and MD&A can be accessed under the Company’s profile on www.sedar.com.
Except as required by applicable laws, the Company does not undertake any obligation to publicly update or revise any forward-looking statements.
This news release contains future-oriented financial information and financial outlook information (collectively, “FOFI”) about the Company’s, investments, balance sheet, expenses and profit and revenue and cash flow in respect of the Red Deer location, which are subject to the same assumptions, risk factors, limitations, and qualifications as set forth in the above paragraphs. FOFI contained in this document was made as of the date of this document and was provided for the purpose of providing further information about Solo Growth’s future business operations. Solo Growth disclaims any intention or obligation to update or revise any FOFI contained in this document, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law. Readers are cautioned that the FOFI contained in this document should not be used for purposes other than for which it is disclosed herein.
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