Element Lifestyle Retirement Inc (ELM)

TSXV:ELM - Element Lifestyle Retirement Inc.
Price: $0.025 CAD
Common Shares: 70,478,299
Warrants/Options: Nil (Expired September 2022)
Insider Holdings: 10,090,000 or 14.3% - From last information circular on Sedar
Institutional Holdings: 25,200,000 or 35.7% - From last information circular on Sedar
Market Cap: $1.76M CAD – As of November 3, 2022

Company Description

Element is a retirement living specialist that exists to improve quality of life for seniors and their families. Collectively, Element’s leadership team has well over 100 years' experience in real estate and master-planned community development, with specialization in hospitality management, and retirement community development and operations.

Element’s key objective is providing two primary types of services to its client companies: (a) development services and (b) management services. Element is providing services to retirement communities owned by third parties. Element’s strategy is to grow with fiscal prudence but seeks to minimize risk and investment in capital expenditures. To achieve this, Element’s primary focus in the short term will be to offer its development and management expertise to third party owners and independent operators and to place asset ownership as a secondary priority. Element does not have an ownership interest in the three projects, OPAL by element, OASIS by element and Aquara by Element.

*Note* - New deal announced October 3, 2022 to work with Cedar Living. More Information below.

Most Recent Financial Results (Ending August 31, 2022)

ASSETS
Cash: $814,910
Accounts Receivable: $83,318
Prepaid Expenses: $9,250
Due From Related Parties: $19,413
Long Term Investment: $355,283
Long Term Note Receivable: $565,233
Property & Equipment: $25,037
Trademarks: $27,147
Total Assets: $1,899,659

LIABILITIES
Accounts Payable: $74,207
Convertible Debenture: $2,510,000 – Extended to August 29, 2025. More Info Below.
Total Liabilities: $2,584,207

Quarterly Results – Q3 2021, Q4 2021, Q1 2022

Q3 2021
Revenue: $746,667
Expenses: $500,830
Net Income: $245,837

Q4 2021
Revenue: $1,099,487
Expenses: $695,123
Net Income: $404,364

Q1 2022
Revenue: $263,846
Expenses: $492,708
Net Loss: -$214,223

Management Discussion Highlights

(a) Development Services The Company’s development consulting services include property selection, assembly and acquisition; building and community design; municipal approval and land entitlement processes; financing; marketing, sales and leasing, and construction project management. The development stage of a seniors’ residence project is critical to the success, reputation and long-term sustainability of the business. When a residence has an optimal blend of suite mixture, layout and design, the business operates more effectively and efficiently. Purpose-built design can contribute greatly to overall resident and family satisfaction which in turn may contribute to reduced vacancy and increased profitability.

(b) Management Services The Company can also provide expertise in day-to-day operations that ensure growth, profitability and retention. With its extensive expertise, Element is skilled in addressing every aspect of the daily operations of a seniors’ living community, with services tailored to meet a resident’s needs. Once the development stage is completed, Element will be providing long-term management of the facilities. The Company manages the administration, operation and financing of retirement communities and physical facilities. Under its model, Element will provide care and supportive services, activities programming and extensive amenities for various lifestyles, from Independent Living, Assisted Living, Complex Care to End-of-Life Care. The model aims to enable holistic wellness (mind, body and spiritual) and quality of life for seniors.

In summary, the Company oversees the entire development process and commits for the long term to manage ongoing operations and administration once development is completed. This vertically integrated concept is unique and sets the Company apart from other retirement operators in the industry.

Business Highlights

The Company is currently engaged in the development of three seniors’ retirement communities, Opal Vancouver (“Opal”) (formerly Opal by Element), Opal Victoria (“Aquara”) (formerly Aquara by Element),.and Opal Langley (“Oasis”) (formerly Oasis by Element). Opal, Oasis and Aquara are owned by related parties (see “Related Party Transactions”).

Opal Project

Element is the development and operations consultant to Opal Vancouver (Opal Development Limited Partnership). The approximate 142,000 square feet community is comprised of 44 seniors’ residential condominium units, 56 seniors’ rental units and 30 seniors’ Licensed Care units. As at October 26, 2022, Opal Vancouver is currently engaged in leasing up the rental units. Licensed Care units are fully occupied.

Oasis Project

The project is a master-planned community on 17 acres of land in the Township of Langley, conveniently located across from the Langley Events Centre. The development is expected to be completed in phases and to consist of approximately 721,000 square feet of gross floor area for residential use with 835 residential units and 26,000 square feet of gross floor area for commercial use. The rezoning application for the 17 acres of land and the development permit application for the first 20-storey lifestyle retirement community with 70 seniors' residential condominium units, 84 seniors' rental units and 42 seniors' licenced care units were submitted to the Township of Langley and third reading was given by council on February 5, 2018, currently working towards achieving the final reading.

Aquara Project

The Aquara Project is located 2 minutes' walk from Victoria Harbour's waterfront boardwalk and new Victoria International Marina, and 5 minutes' drive to Downtown Victoria. It is part of a master planned community, which includes several existing highrise residential towers. Over the next few years, this vibrant, progressive neighbourhood will see the development of a cultural hub, a hotel, retail stores, trails and parks. Aquara is a fivestorey concrete development consisting of approximately 153,000 square feet of gross floor area with 155 units with a mixture of condo, rental and licenced care units. Excavation has been completed. The project engaged in some value engineering to reduce the construction cost. A Delegated Development Permit application to reflect the value- engineered items has been approved by the City of Victoria. Updates on building plans are in progress to reflect changes resulting from the value engineering exercise. Foundation Permit application was submitted to the City of Victoria was submitted on September 16, pending approval, with target to commence work before end of 2022.

Subsequent Events

On September 27, the Company signed a consulting agreement with 530 Real Estate Investment Inc. for the proposed Cedar Living Project in West Vancouver, B.C. The services will include advise on numerous facets of the project which will include (but not limited to) design, development, and suite mix of the approximately 300 rental independent supportive private retirement units. This project is at arms length to Element and is consistent with the Company’s plan to provide its management expertise to projects in Western Canada.

On September 28, 2022, 400,000 stock options expired.

Future Business Opportunities

The management team continues to explore numerous business opportunities. The Company has made a significant investment in its people and strongly believes that this key asset is very important when building its corporate brand and engaging with prospective future business partners. The Company believes that it is critically important to have a strong operational team to not only properly investigate future business opportunities but also to ensure that development designs meet operational needs when projects are transitioned to long-term management contracts.

Outlook and Strategy

The Company’s key strategic priorities are:

• continuing managing the operation of OPAL Project in the core of Vancouver’s vibrant Cambie Village;
• taking the Company’s award-winning 17-acre master-planned project, OASIS in Langley, through to fourth reading in calendar year 2022; and
• commencing development activities on the proposed $88 million AQUARA project located on 1.96 acres along the harbourside of Victoria at Bayview Place that will comprise approximately 155 elegantly accommodated units.

The Company’s directors and management believe that these priorities are formulating a solid foundation for Element Lifestyle Retirement Inc., and its shareholders, as it continues working towards building a prosperous, well respected and long-term seniors’ retirement development and management services organization.

The Company continues to be focused on taking significant measures to reduce its monthly cash burn by eliminating non-essential expenditures and preserving its cash position.

The Company will continue to evaluate potential acquisitions to create a strong portfolio of projects, either owned or managed.

Management believes that the Company is well-positioned for both organic and external growth, supported by favourable demographics of a growing seniors’ population, the strong demand for seniors’ services and keeping in mind the operational and regulatory challenges to the seniors’ living sector.

Debenture Information

Element Lifestyle to extend debenture maturity
2022-08-19 14:47 MT - News Release
Mr. Michael Diao reports
ELEMENT EXTENDS CONVERTIBLE DEBENTURE
Element Lifestyle Retirement Inc. has reached an agreement in principle with the holders of its debentures issued in 2017 to extend their maturity from Aug. 29, 2022, to Aug. 29, 2025. The extension of the maturity date of the 2017 debentures remains subject to finalizing and executing definitive documentation between the Company and the holders of the 2017 debentures. The terms of debenture remain the same at 7% per annum on the principal amount, payable semi-annually with a conversion price of $0.30 per common share. As consideration for the extension, the Company has agreed to prepay the debenture holders 10% of the value of the debenture in cash thereby reducing the total amount of the debenture from $2,510,000 to $2,259,000. The extension is also subject to the Company's filing requirements with the TSX Venture Exchange because of the convertibility feature of the debenture.