- Retail revenue growth of 145% compared to Q1 Fiscal Year
2021 with 78% in same-store sales increases year over year
- Completion of the acquisition of its sixth location in
British Columbia
- Completion of a $3M financing,
and a resulting increase in working capital and execution of
acquisitions
- Signing a definitive agreement to acquire a licensed store
in Ontario, and three eCommerce
businesses including international revenues in the
USA and Australia
VANCOUVER, BC, June 28, 2021 /CNW/ - Kiaro Holdings Corp. (TSXV:
KO) ("Kiaro" or the "Company") is pleased to announce
its first-quarter financial results for the three months ended
April 30, 2021, and 2020. All
amounts, unless specified otherwise, are expressed in Canadian
dollars.
"With the majority of our retail stores being open for over a
year, it is exciting to be able to report same-store sales results
with an incredible 78% increase year-over-year," said Janet Hoffar, Chief Financial Officer.
"Same-store sales is a financial KPI retailers rely on, and our
results are remarkably impressive. This is a testament to the
strength of our operations and retail teams in surpassing forecasts
and continuously improving our customer experience while ramping up
new stores in a changing environment."
Daniel Petrov, Chief Executive
Officer of Kiaro states "As the industry continues to grow and
evolve, revenues are expected to dramatically increase for
retailers in the regulated market. Kiaro has proven that its
approach to community, customer experience, and financial
performance has been well demonstrated with another record-breaking
quarter"
Summary of the First Quarter Financial Results
For the three months ended April 30,
2021, Kiaro recorded revenues of $5.17 million, comprised of $3.82 million from the retail segment and
$1.35 million from the wholesale
segment. Comparatively, in the three months ended April 30, 2020, the Company recorded total
revenues of $2.67 million, comprised
of $1.56 million from the retail
segment and $1.11 million from the
wholesale segment. The 94% increase in revenue in comparison to the
prior year is primarily due to the opening of two new retail
locations, a full quarter's results from a third new location,
same-store sales increases of 78%, and an increase in the total
addressable market and market presence for the wholesale
segment.
For the three months ended April 30,
2021, Kiaro recorded a gross profit of $1.56 million, representing a 118% year-over-year
increase when compared to the three months ended April 30, 2020, where gross profit was
$0.72 million.
Total operating expenses for the three months ended April 30, 2021, were $2.46
million compared to $1.90
million in the three months ended April 30, 2020. The increase in operating
expenses was primarily the result of having two additional retail
stores, and a full quarter's results from a third new retail store
compared to the same quarter in the prior year. Salaries and
employee benefits decreased as a percentage of revenue from 28% to
21% in the three months ended April
30, 2021.
Kiaro improved its adjusted EBITDA from negative $0.49 million in the three months ended
April 30, 2020, to $0.18 million in the three months ended
April 30, 2021. Strong revenue
increases combined with fundamental management of operating
expenses relative to revenue growth resulted in improvements
towards profitability. Adjusted EBITDA is a non-GAAP financial
measure and is not a recognized, defined, or standardized measure
under IFRS. Refer to "Cautionary Note Regarding Non-GAAP Measures"
below.
As at April 30, 2021, the Company
had positive working capital of $2,626,453, an improvement since the last
financial reporting period of January 31,
2021, of $1,108,870, which
helped improve the Company's short term liquidity by strengthening
its current ratio to 2.18 from 1.45 last quarter.
Select Financial Information
|
Three months
ended
April 30,
2021
|
Three months
ended
April 30,
2020
|
$
Change
|
% Change
|
|
$
|
$
|
$
|
%
|
Revenue
|
5,167,064
|
2,666,711
|
2,500,353
|
94%
|
Gross
profit
|
1,557,611
|
715,285
|
842,326
|
118%
|
Operating
expense
|
(2,457,900)
|
(1,899,298)
|
(558,602)
|
-29%
|
Loss from
operations
|
(900,289)
|
(1,184,013)
|
283,724
|
24%
|
Other
expenses1
|
(79,682)
|
(2,626,818)
|
2,547,136
|
97%
|
Net loss and
comprehensive loss
|
(979,921)
|
(3,810,831)
|
2,830,910
|
74%
|
Adjusted
EBITDA2
|
(179,964)
|
(494,016)
|
314,052
|
64%
|
Notes:
|
(1)
|
In the three months
ended April 30, 2021, other expenses include accretion and interest
expense on debt, and right of use depreciation.
|
(2)
|
Adjusted EBITDA is a
non-GAAP financial measure and is not a recognized, defined, or
standardized measure under IFRS. Refer to "Cautionary Note
Regarding Non-GAAP Measures."
|
First Quarter Highlights and Recent Developments:
- On March 11, 2021, the Company
completed a bought deal private placement of 18,750,000 units of
the Company at $0.16 per unit, for
aggregate gross proceeds of $3,000,000. Each unit consisted of one common
share of the Company and one-half of one common share purchase
warrant. Each warrant entitles the holder to purchase one common
share at an exercise price of $0.23
at any time before March 11, 2024.
The warrants are subject to the right of the Company to accelerate
the expiry date of the warrants when certain conditions are
met.
- On March 15, 2021, the Company
completed the acquisition of the assets of Grasshopper Cannabis Co.
for $695,000. The acquired assets are
located in the City of Kelowna, British
Columbia and the Company expects the store to be operational
by this summer.
- On May 31, 2021, Kiaro announced
that it had entered into a definitive agreement with Sculthorpe SEO
Inc. ("Sculthorpe"), which currently operates both a highly
desirable retail location in Toronto, and three eCommerce business
platforms. The transaction provides an entry into the Ontario retail market; access to Canadian,
American, and Australian consumers through Sculthorpe's digital
assets; and adds to Kiaro's cash-generating assets while providing
additional high-margin revenue streams.
Cautionary Note Regarding Non-GAAP Measures
This news release refers to certain financial performance
measures that are not defined by and do not have a standardized
meaning under IFRS (termed "Non-GAAP measures"). These
Non-GAAP measures are defined in the MD&A. Non-GAAP measures
are used by management to assess the financial and operational
performance of the Company. The Company believes that these
Non-GAAP measures, in addition to conventional measures prepared in
accordance with IFRS, enable investors to evaluate the Company's
operating results, underlying performance, and prospects in a
manner similar to the Company's management. As there are no
standardized methods of calculating these Non-GAAP measures, the
Company's approaches may differ from those used by others, and
accordingly, the use of these measures may not be directly
comparable. These Non-GAAP measures are intended to provide
additional information and should not be considered in isolation or
as a substitute for measures of performance prepared in accordance
with IFRS.
- Adjusted EBITDA is calculated as net loss excluding finance
income (expense), income taxes, depreciation, amortization,
share-based compensation, loss on modification and extinguishment
of debt, foreign exchange, changes in fair value of financial
instruments, inventory write-down, lease termination loss, and loss
on sublease and non-cash impairment of equity investments, loss on
sale of financial instruments, impairment of long-lived assets,
goodwill, and other assets, and the transaction cost of certain
transactions. Adjusted EBITDA is intended to provide a proxy for
the Company's operating cash flow and is widely used by industry
analysts to compare Kiaro to its competitors and derive
expectations of future financial performance for Kiaro. Adjusted
EBITDA increases comparability between comparative companies by
eliminating variability resulting from differences in capital
structures, management decisions related to resource allocation,
and the impact of fair value adjustments on financial instruments,
which may be volatile and fluctuate significantly from period to
period.
Consolidated Financial Statements and MD&A
The results discussed herein are a summary and are qualified in
their entirety by reference to the Company's unaudited interim
condensed consolidated financial statements and accompanying notes
(the "Financial Statements") for the three months ended
April 30, 2021, and April 30, 2020, and related MD&A (the
"MD&A") of financial condition and results of
operations, copies of which are available under the Company's
profile on SEDAR at www.sedar.com and the Investor
Relations section of the Company's website at www.kiaro.com.
Readers of this press release are encouraged to refer to the
Financial Statements and the MD&A for complete details about
Kiaro's financial results for the period ended April 30, 2021.
Kiaro Holdings Corp.
Based in Vancouver, British
Columbia, Kiaro is an independent, omni-channel cannabis
retailer and distributor. Through existing storefronts across
British Columbia and Saskatchewan, a wholesale distribution
division servicing Saskatchewan,
and immediate plans for national expansion, Kiaro is driven to
introduce new and experienced consumers to a lifelong exploration
of cannabis. With more than 40 years of collective retail-focused
experience, Kiaro's leadership team has a proven track record of
growing retail brands across North
America and plans to open multiple retail locations
nationwide over the coming year.
Forward-Looking Information
This news release contains statements that may constitute
"forward-looking information" within the meaning of applicable
Canadian securities legislation. Forward-looking information may
include, among others, statements regarding the future plans,
costs, objectives or performance of Kiaro, or the assumptions
underlying any of the foregoing. In this news release, words such
as "may", "would", "could", "will", "likely", "believe", "expect",
"anticipate", "intend", "plan", "estimate" and similar words and
the negative form thereof are used to identify forward-looking
statements. In this news release, forward-looking statements
relate, among other things, to: proposed retail expansion plans and
management's ability to execute on same, overall growth of the
Canadian cannabis market and retail opportunities, the award of new
operating permits and licenses in various jurisdictions, and the
timing and amount of any dispositions of the Company's common
shares. Forward-looking statements should not be read as guarantees
of future performance or results, and will not necessarily be
accurate indications of whether, or the times at or by which, such
future performance will be achieved. No assurance can be given that
any events anticipated by the forward-looking information will
transpire or occur. Forward-looking information is based on
information available at the time and/or management's good-faith
belief with respect to future events and are subject to known or
unknown risks, uncertainties, assumptions and other unpredictable
factors, many of which are beyond Kiaro's control. These risks,
uncertainties and assumptions include, but are not limited to,
those described in filing statement of the Company dated
September 29, 2020, a copy of which
is available on SEDAR at www.sedar.com, and could cause actual
events or results to differ materially from those projected in any
forward-looking statements. Furthermore, any forward looking
information with respect to future expansion plans is subject to
the qualification that management of Kiaro may decide, and the
assumptions that any construction or conversion would not be cost
prohibitive, required permits will be obtained and the labour,
materials and equipment necessary to complete such construction or
conversion will be available. Accordingly, readers should not place
undue reliance on the forward-looking statements and information
contained in this news release. Kiaro does not intend, nor
undertake any obligation, to update or revise any forward-looking
information contained in this news release to reflect subsequent
information, events or circumstances or otherwise, except if
required by applicable laws.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
For more information, visit: www.kiaro.com
SOURCE Kiaro Holdings Corp.