Post by
cudjo on Aug 28, 2019 10:48am
From MD&A
some notes pulled from MD&A, financials from 24 pot stores and the watch division (IMO should be dumped totally, but I'm not management). Of the 24 in the jingle, 2 corporate stores openned late June so had zero impact on the quarter.. 33 Stores ecpected to be in the mix by December. Ontario and BC are slow to roll out so that will take time.
Some paragraphs from MD&A pulled below that I see as interesting.
"The decline in consolidated retail revenue from the three and six month periods ended June 30, 2018 to the same periods in 2019 was driven by the decline in retail revenue earned by the Watch It! Division, which resulted primarily from the closure of two corporate-owned Watch It! retail stores. Two corporate-owned Spiritleaf-branded retail cannabis stores opened on June 26 and June 28, 2019, but did not materially add to the consolidated retail revenue for the periods
Total operating expenses for the three and six month periods ended June 30, 2019 were $3,651,360 and $6,213,843, compared to $1,619,507 and $2,871,049 in the same periods in the prior year. The significant increases from comparable periods were driven largely by the Company's continued growth and expansion into the retail cannabis industry to take advantage of the market opportunities created by the legalization of recreational cannabis use across Canada on October 17, 2018. This required the Company to incur significant costs to build-out and open corporate-owned retail cannabis stores, hire retail staff for corporate-owned retail cannabis stores that were opened and that are anticipated to be opened by the Company, and to hire managerial and administrative staff to support the Company's growth.
Significant costs were also incurred by the Company for the Debenture Financing (as defined herein) that closed on May 25 and June 7, 2019 and for carrying leases for potential locations for corporate and franchised retail cannabis stores. The adoption of IFRS 16 (as defined herein) with respect to the accounting treatment of leases resulted in right of use asset depreciation increasing to $309,715 and $798,044 in the three and six month periods ended June 30, 2019 from $Nil in the same periods in the prior year."
Some additional thoughts IMO:
We are still 5/6 quarters away from any idea of how things will settle in Canada with respect to retail pot sales.
With a quarter of the stores of the 100 expected (signed franchises), we are beginning to see the type of revenues expected moving forward. Below is pure speculation and just my opinion.
Pot revenues, both franchise and corp was 10 million, doing the math for 100, runs about 40M per quarter, 120M year.
Revenue 1.7 for the quarter, up 45%, doing the math for 100... roughly 40 million. For my book, 3 times earnings is fair market, putting the company worth 120 million when the dust all settles. This will change as we see the corporate stores contributions (remebering that most of the loss is coming from these as they build them out etc.).
120+M valuation is a realistic target for me sometime in 2022/23 with current float. My expectation is there will be a target on Inners back sometime in 2021 or early 2022 by deeper pockets if current trends hold and the 100 target becomes reality.
This is my DD, do you own, discussion on the facts, good and bad, is welcomed, Good luck.
Comment by
toohip on Aug 28, 2019 11:57am
so what u mean is Tooo Daaaa Mooooon?