High Tide Reports Financial Results for Second Quarter 2019 Featuring a 325% Increase in Revenue over the Same Period of the Previous Year
High Tide Inc. (“High Tide” or the “Company”) (CSE:HITI, OTCQB:HITIF, Frankfurt:2LY), an Alberta-based, retail-focused cannabis corporation enhanced by the manufacturing and wholesale distribution of smoking accessories and cannabis lifestyle products, has filed its financial results for the second fiscal quarter of 2019 ending April 30, the highlights of which are included in this news release. The full set of Condensed Interim Consolidated Financial Statements and Management’s Discussion and Analysis can be viewed by visiting High Tide’s website at www.hightideinc.com, its profile page on SEDAR at www.sedar.com or the Company’s CSE profile page at www.thecse.com.
Second Quarter 2019 Financial Highlights
(In thousands of Canadian dollars)
- Revenue for the three months ended April 30, 2019 increased by 325%, to $6,596 from $1,554for the same period in the previous year. Revenue for the six months ended April 30, 2019increased by 159%, to $11,596 from $4,477 for the same period in the previous year. The increases are primarily due to the acquisition of Grasscity, the retail cannabis operations of Canna Cabana which began generating revenue on October 27, 2018 and sales made to new customers in the Company’s Wholesale Segment.
- Gross margin for the three months ended April 30, 2019 increased by 181%, to $2,351 from $835 in the same period in 2018, primarily due to an increase in sales volume. Gross margin for the six months ended April 30, 2019 increased by 67%, to $4,141 from $2,473 in the same period in 2018 as a result of increased sales volumes.
- For the six months ended April 30, 2019, the Company generated a loss of $7,140 (2018 – loss of $71) and had net operating cash outflows of $7,104 (2018 – outflows of $10,552). The loss and cash outflows are primarily driven by start-up costs to incorporate and staff High Tide and Canna Cabana, as well as from an increased amount of professional fees and rent paid.
- For the quarter ended April 30, 2019, the total assets of the Company increased by 84% to $47,677 from $25,922 on January 31, 2019.
- High Tide had a working capital surplus of $16,163 for the three months ending April 30, 2019(October 31, 2018 – $14,920), mainly due to an increase in liabilities resulting from expanded operations as Canna Cabana began to operate and Grasscity was acquired.
Second Quarter 2019 Corporate Highlights
(In thousands of Canadian dollars – except for number of shares)
- On February 4, 2019, High Tide was selected by a winner of one of the 25 opportunities to apply for an operator’s licence as a result of the Alcohol and Gaming Commission of Ontario’s(the “AGCO”) Expression of Interest Application Lottery (the “Lottery”).
- On February 12, 2019, High Tide was selected to assist with the establishment and operation of a retail cannabis store by a second winner of one of the 25 opportunities to apply for an operator’s licence as a result of the AGCO’s Lottery.
- On February 14, 2019, High Tide opened its 8th Canna Cabana retail store located in Beaumont, Alberta.
- On February 21, 2019, High Tide opened its 9th Canna Cabana retail store located in Calgary, Alberta.
- On February 27, 2019, High Tide opened its 10th Canna Cabana retail store located in Calgary, Alberta.
- On March 21, 2019, High Tide was selected to assist with establishing and operating a retail cannabis store by a third winner of one of only 25 opportunities to apply for an operator’s licence as a result of the AGCO’s Lottery.
- On March 28, 2019, High Tide opened its 11th Canna Cabana retail store located in Okotoks, Alberta.
- On April 3, 2019, High Tide shares were upgraded by the OTC Markets Group for trading on the OTCQB Market under the stock symbol “HTDEF”, which was subsequently changed by the Company to “HITIF”.
- On April 8, 2019, High Tide opened its 13th Smoker’s Corner retail store located in Edmonton, Alberta.
- On April 10, 2019, High Tide closed the sale of unsecured convertible debentures of the Company under the brokered private placement, pursuant to which it issued 8,360 debentures at a price of $1,000 per debenture for gross proceeds of $8,360. Of the offering, Aphria Inc. subscribed for 4,500 debentures, accounting for $4,500 of the total gross proceeds.
- On April 30, 2019, High Tide granted 2,647,500 stock options to various employees, directors, officers and consultants of the Company, exercisable at $0.50 cents per option.
- Subsequent to the end of the second fiscal quarter of 2019, in chronological order, High Tide:
- Opened its 14th, 15th Canna Cabana retail stores in Fort Saskatchewan and Lacombe, Alberta;
- Received approval from the Depository Trust Company (the “DTC”) to make the Company’s common shares eligible to be electronically cleared and settled through DTC, making High Tide’s shares more accessible to investors in the United States;
- Announced that Canna Cabana was granted membership into the Canadian Franchise Association (the “CFA”), subsequent to which High Tide now possesses a Certificate of CFA Membership for both the Smoker’s Corner and Canna Cabana businesses;
- Announced that Canna Cabana was selected by random algorithmic draw as the successful retailer for the community of Niverville during Manitoba’s Cannabis Retail Opportunities Draw held on May 15, 2019, which will permit Canna Cabana to operate a bricks-and-mortar retail store in Niverville as well as e-commerce sales serving the entire province;
- Acquired Dreamweavers Cannabis Products Inc, a retail cannabis store and e-commerce business currently operating in Swift Current, Saskatchewan;
- Appointed Rahim Kanji as the Chief Financial Officer of the Company effective May 28, 2019;
- Announced the opening of the third Canna Cabana-branded location Ontario, located on Yonge St. in downtown Toronto;
- Closed the final tranche of its oversubscribed convertible debenture offering, with gross proceeds raised of $11,560, significantly over the $10,000 target;
- Opened its 14th Smoker’s Corner retail store located in Edmonton, Alberta; and
- Upgraded the Grasscity business to the Magento 2 e-commerce platform.
SUMMARY OF KEY FINANCIAL MEASURES
For the six months ended April 30:
SUMMARY OF QUARTERLY MEASURES
About High Tide Inc.
High Tide is an Alberta-based, retail-focused cannabis corporation enhanced by the manufacturing and wholesale distribution of smoking accessories and cannabis lifestyle products. It is a vertically-integrated company in the Canadian cannabis market, with portfolio subsidiaries including RGR Canada Inc., Famous Brandz Inc., Kush West Distribution Inc., Smoker’s Corner Ltd., Grasscity.com, Canna Cabana Inc. and the majority of KushBar Inc. High Tide’s strategy as a parent company is to extend and strengthen its integrated value chain, while providing a complete customer experience and maximizing shareholder value. Key industry investors in High Tide include Aphria Inc. (TSX: APHA) (NYSE: APHA), Aurora Cannabis Inc. (NYSE: ACB) (TSX: ACB) and FSD Pharma Inc. (CSE: HUGE) (OTC: FSDDF) (FRA: 0K9).
Representing the core of High Tide’s business, RGR Canada Inc. is a high-quality and innovative designer, manufacturer and distributor of cannabis accessories. Famous Brandz Inc. is a dominant manufacturer of licensed lifestyle accessories, through partnerships with celebrities and entertainment companies including Snoop Dogg and Paramount Pictures. Famous Brandz’ products are sold to wholesalers and retailers around the world. Founded in 2009 and approved by the Canadian Franchise Association, Smoker’s Corner Ltd. is among Canada’s largest counter-culture chains with 14 locations. Kush West Distribution is in the process of becoming a cannabis wholesaler in the province of Saskatchewan. Based in Amsterdam since 2000, Grasscity.com is the world’s preeminent and most searchable online retailer of smoking accessories and cannabis lifestyle products with approximately 5.8 million site visits annually. With the deregulation of recreational cannabis for adult use across Canada, Canna Cabana Inc., with 17 currently-branded locations, is in the process of becoming a sizeable retail brand with a sophisticated yet playful customer experience, while KushBar Inc. is a retail concept that will also be focused on the valued Canadian cannabis consumer.
Certain statements in this news release are forward-looking information or forward-looking statements. Such information and statements, referred to herein as “forward-looking statements” are made as of the date of this news release or as of the date of the effective date of information described in this news release, as applicable. Forward-looking statements relate to future events or future performance and reflect current estimates, predictions, expectations or beliefs regarding future events. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (generally, forward-looking statements can be identified by use of words such as “outlook”, “expects”, “intend”, “forecasts”, “anticipates”, “plans”, “projects”, “estimates”, “envisages, “assumes”, “needs”, “strategy”, “goals”, “objectives”, or variations thereof, or stating that certain actions, events or results “may”, “can”, “could”, “would”, “might”, or “will” be taken, occur or be achieved, or the negative of any of these terms or similar expressions, and other similar terminology) are not statements of historical fact and may be forward-looking statements.
Such forward-looking statements are based on assumptions that may prove to be incorrect, including but not limited to the ability of High Tide to execute on its business plan and that High Tide will receive one or multiple licenses from Alberta Gaming, Liquor & Cannabis, British Columbia’s Liquor Distribution Branch, Liquor, Gaming and Cannabis Authority of Manitoba, Alcohol and Gaming Commission of Ontario or the Saskatchewan Liquor and Gaming Authority permitting it to carry on its Canna Cabana Inc. and KushBar Inc. businesses. High Tide considers these assumptions to be reasonable in the circumstances. However, there can be no assurance that any one or more of the government, industry, market, operational or financial targets as set out herein will be achieved. Inherent in the forward-looking statements are known and unknown risks, uncertainties and other factors that could cause actual results, performance or achievements, or industry results, to differ materially from any results, performance or achievements expressed or implied by such forward-looking statements.
The forward‐looking statements contained herein are current as of the date of this news release. Except as required by law, High Tide does not have any obligation to advise any person if it becomes aware of any inaccuracy in or omission from any forward-looking statement, nor does it intend, or assume any obligation, to update or revise these forward-looking statements to reflect new events or circumstances. Any and all forward-looking statements included in this news release are expressly qualified by this cautionary statement, and except as otherwise indicated, are made as of the date of this news release.