RIV Capital Reports First Quarter Fiscal Year 2022 Financial Results
RIV Capital reported a cash balance of $212.5 million as of June 30, 2021, following significant monetization events. The company settled the PharmHouse Credit Facility and anticipates receiving approximately $6.5 million post-CCAA proceedings. A strategic investment of $150 million from The Hawthorne Collective enhances RIV's balance sheet. However, RIV recorded a net loss of $30.4 million for Q1 2022, compared to a loss of $3.4 million in the prior year, marking a total comprehensive loss of $30.9 million.
- Cash balance increased to $212.5 million.
- Strategic investment of $150 million from The Hawthorne Collective to bolster growth.
- Settled PharmHouse Credit Facility, enabling a potential $6.5 million distribution.
- Net loss of $30.4 million, significantly higher than the $3.4 million loss in Q1 2021.
- Total comprehensive loss of $30.9 million compared to a comprehensive income of $7.3 million in the prior year.
Cash balance of
PharmHouse Credit Facility fully settled; Company anticipates receiving ~
Strategic investment from The Hawthorne Collective announced subsequent to quarter end, further strengthening the Company's balance sheet and allowing for future platform differentiation
Company continues to focus on acquisition and investment opportunities to establish and develop multistate cannabis operating and brand platform
/PRNewswire/ - RIV Capital Inc. ("RIV Capital" or the "Company") (TSX: RIV) (OTC: CNPOF) today released its unaudited condensed interim consolidated financial statements and management's discussion and analysis ("MD&A") for the three months ended June 30, 2021 ("Q1 2022").
TORONTO, Aug. 16, 2021 "Throughout the first quarter, we remained focused on identifying and evaluating opportunities in the US cannabis market," said Narbé Alexandrian, President and CEO, RIV Capital. "Last week's announcement of a US
"In the coming quarters, we plan to work through our pipeline of near-term prospects with the goal of executing our US launch strategy to provide sustainable, long-term value and contribute to the development of a leading multistate cannabis operator and brand platform," added Alexandrian.
Q1 2022 Financial Results1
Select Summary of Quarterly Results | Three months | Three months | ||
30-Jun-21 | 30-Jun-20 | |||
Operating income (before equity method investees and fair value changes) | $ | 439 | $ | 2,662 |
Operating expenses | 2,510 | 2,669 | ||
Net operating loss (before equity method investees and fair value changes) | (2,071) | (7) | ||
Equity method investees and fair value changes(1) | (36,532) | 2,063 | ||
PharmHouse-related charges (recovery) | (1,935) | 4,418 | ||
Net operating loss | (36,668) | (2,362) | ||
Net loss | (30,421) | (3,426) | ||
Other comprehensive income (loss) (net of tax) | (492) | 10,701 | ||
Total comprehensive income (loss) | (30,913) | 7,275 | ||
Basic loss per share ("EPS") | $ | (0.21) | $ | (0.02) |
Diluted EPS | $ | (0.21) | $ | (0.02) |
Cash flows used in operating activities | (20,247) | (807) | ||
Cash flows provided by (used in) investing activities | 104,816 | (1,927) | ||
Cash flows provided by (used in) financing activities | 1 | (78) | ||
(1) Excludes the Company's share of loss on its investment in PharmHouse common shares, which is reflected in "PharmHouse-related charges (recovery)" | ||||
"One of our primary objectives during the first quarter was optimizing our balance sheet for our strategic shift to the US," said Eddie Lucarelli, Chief Financial Officer, RIV Capital. "With approximately
________________________ |
1 The financial highlights in this summary are presented in CA$ thousands, unless otherwise noted. |
Operating Income and Expenses
Three months ended | Three months ended | |||
30-Jun-21 | 30-Jun-20 | |||
Royalty, interest, and lease income (before provisions) | $ | 566 | $ | 2,667 |
Provision for credit losses on interest and royalty receivables | (127) | (5) | ||
Operating income | $ | 439 | $ | 2,662 |
General and administrative expenses | $ | 1,666 | $ | 1,342 |
Consulting and professional fees | 394 | 376 | ||
Share-based compensation | 400 | 909 | ||
Depreciation and amortization expense | 50 | 42 | ||
Operating expenses | $ | 2,510 | $ | 2,669 |
Net operating loss | $ | (2,071) | $ | (7) |
The Company reported operating income (before equity method investees and fair value changes) of
Operating expenses were
Equity Method Investees and Fair Value Changes
Three months ended | Three months ended | |||
30-Jun-21 | 30-Jun-20 | |||
Share of income (loss) from equity method investees | ||||
PharmHouse | $ | - | $ | (4,418) |
Other | (347) | 433 | ||
Net change in fair value of financial assets at FVTPL | (36,185) | 1,630 | ||
Other PharmHouse-related charges | ||||
Change in provision for credit losses on financial guarantee liability | 1,935 | - | ||
Equity method investees and fair value changes | $ | (34,597) | $ | (2,355) |
The Company's share of loss from equity method investees was
The Company also reported a net decrease in the fair value of financial assets that are reported at fair value through profit or loss ("FVTPL") of
Net Change in Fair Value of Financial Assets at FVTOCI
Three months ended |
Three months ended | |||
30-Jun-21 |
30-Jun-20 | |||
Nova Cannabis | $ | (267) | $ | - |
Headset | (100) | (200) | ||
Zeakal | (200) | (600) | ||
Other | - | 11,524 | ||
Gross change in fair value of financial assets at FVTOCI | $ | (567) | $ | 10,724 |
OCI income tax recovery | (75) | - | ||
Net change in fair value of financial assets at FVTOCI(1) | $ | (492) | $ | 10,724 |
(1) In addition to the fair value change noted above, the historical net change in fair value of financial assets at FVTOCI also includes FX gains/losses related to certain equity method investees denominated in USD currency | ||||
The Company reported a total comprehensive loss of
As at | As at | |||
Period ended | 30-Jun-21 | 31-Mar-21 | ||
Cash | $ | 212,452 | $ | 127,882 |
Equity method investees | 7,019 | 7,366 | ||
Financial assets at FVTPL | 27,500 | 164,030 | ||
Financial assets at FVTOCI | 21,200 | 23,218 | ||
Other assets | 14,933 | 12,866 | ||
Total assets | $ | 283,104 | $ | 335,362 |
Financial guarantee liability | $ | - | $ | 3,000 |
Other liabilities | 2,112 | 20,902 | ||
Total shareholders' equity | 280,992 | 311,460 | ||
Total liabilities and shareholders' equity | $ | 283,104 | $ | 335,362 |
RIV Capital ended the quarter with
The Hawthorne Collective Investment Summary
Subsequent to Q1 2022, the Company announced that it entered into a definitive agreement with The Hawthorne Collective, a newly-formed cannabis-focused subsidiary of The Scotts Miracle-Gro Company ("ScottsMiracle-Gro") (NYSE: SMG) for the purchase of a US
Any investments or acquisitions in the US cannabis market may be inconsistent with the rules and policies of the Toronto Stock Exchange (the "TSX"). The completion of the Investment is conditional on the Company's ability to delist its common shares from the TSX and list its common shares on the Canadian Securities Exchange (the "CSE"), which it intends to complete prior to the closing of the Investment in order to compliantly execute its go-forward corporate strategy. Accordingly, the Company has submitted an application to voluntarily delist its common shares from the TSX and has received conditional approval to list on the CSE. The Company expects the common shares to be delisted from the TSX at the close of market on August 24, 2021, and for trading on the CSE under the symbol "RIV" to commence on or before August 24, 2021. The Investment is expected to close on or around August 24, 2021, following the completion of the stock exchange transition.
PharmHouse Update
During the quarter, PharmHouse Inc. ("PharmHouse"), through its Sale and Investor Solicitation Process, closed the sale of its greenhouse facility (the "PharmHouse Sale"). Concurrent with the closing of the PharmHouse Sale, the Company made a payment of approximately
As a result, the PharmHouse Credit Facility was terminated and cancelled, and the Company is entitled to any cash available for distribution upon termination of PharmHouse's proceedings under the Companies' Creditors Arrangement Act ("CCAA"). Accordingly, the Company recognized a financial asset on its statement of financial position as at June 30, 2021, based upon the proceeds expected to be available for distribution of approximately
Q1 2022 Portfolio Updates
The following represents a brief summary of other developments in the RIV Capital portfolio during and subsequent to Q1 2022:
- Headset Inc. ("Headset") launched its Insights Premium platform in Pennsylvania, marking the first time a full market read of consumer insights has been available for the state. Headset notes that Pennsylvania's medical-only market brought in approximately US
$909.0 million between April 2020 and March 2021. Headset also released several reports highlighting trends and growth in the broader U.S. market. In April, it projected that cannabis sales in the U.S. will reach approximately US$23.0 billion in 2022. Finally, Headset raised US$1.8 million to expand its market-leading data platform into new markets. - Subsequent to the quarter, Gage Growth Corp. announced that COOKIES, one of the best-known cannabis brands in the world, will be grown and distributed in Canada by NOYA.
- ZeaKal, Inc. ("ZeaKal") announced that its PhotoSeed™ technology is the first plant trait proven to enhance the oil profile of hemp. According to ZeaKal's analytical chemistry data, PhotoSeed increased oil composition in hemp biomass by up to
50% relative to controls, comprising up to8% of the plant's dry weight. - Greenhouse Juice began distributing its products at Costco locations in Manitoba, Saskatchewan, Alberta, and British Columbia and announced a new retail location at Stackt Market in Toronto. Subsequent to the quarter, Greenhouse Juice announced a partnership with Too Good To Go to combat food waste.
- Dynaleo Inc. began distributing its Sunshower and DYNATHRIVE CBD in British Columbia, Saskatchewan, Alberta, and Ontario. It also completed a
$9.7 million oversubscribed equity financing.
This press release should be read in conjunction with the Company's unaudited condensed interim consolidated financial statements and MD&A for the three months ended June 30, 2021, which are available under the Company's profile on SEDAR at www.sedar.com and on the Company's website at www.rivcapital.com/investors. All financial information in this press release is reported in Canadian dollars, unless otherwise indicated.
For more information regarding the Company and its portfolio companies, please refer to the MD&A and the Company's annual information form dated June 28, 2021 ("AIF"), also available under the Company's profile on SEDAR at www.sedar.com and on the Company's website at www.rivcapital.com/investors.
About RIV Capital
RIV Capital is an investment and acquisition company specializing in cannabis with a portfolio of 13 companies across various segments of the cannabis value chain. We believe that bringing together people, capital, and ideas raises the potential of the entire cannabis industry. By leveraging our industry insights, in-house expertise, and thesis-driven approach to investing, we aim to provide shareholders with exposure to specialized and disruptive cannabis companies.
Forward-Looking Statements
This news release contains statements which constitute "forward-looking information" within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of RIV Capital and its portfolio companies with respect to future business activities and operating performance. Forward-looking information is often identified by the words "may", "would", "could", "should", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" or similar expressions and includes information regarding the timing and availability of the financial results of the Company and the Company's earnings call; the Company's expected credit losses; the anticipated termination of the CCAA proceedings relating to the PharmHouse Credit Facility and the proceeds and timing related thereto; the Company's plan to invest in, launch and/or develop U.S. assets to build a multistate cannabis operating and brand platform and the value to be derived therefrom; whether and when the Investment will be consummated; the anticipated benefits of the Investment; the Company's expectation that it will be ScottsMiracle-Gro's preferred vehicle for investments not under the purview of The Hawthorne Gardening Company; the anticipated proceeds from the Investment net of transaction costs; the delisting of the Company's securities from the TSX and the anticipated listing of its securities on the CSE and the timing related thereto; the Company obtaining and/or satisfying customary approvals and conditions; and expectations for other economic, business, and/or competitive factors .
Investors are cautioned that forward-looking information is not based on historical fact but instead reflects management's expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although RIV Capital believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of RIV Capital or its portfolio companies.
Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information are the following: the parties' ability to consummate the Investment; the ability of the parties to satisfy, in a timely manner, all conditions to the closing of the Investment; the Company's ability to execute its go-forward strategy; credit, liquidity and additional financing risks for the Company and its investees; the Company's ability to delist from the TSX prior to the completion of the Investment and list its securities on the CSE; stock market volatility; changes in the business activities, focus and plans of the Company and its investees and the timing associated therewith; the timing of any changes to federal laws in the U.S. to allow for the general cultivation, distribution, and possession of cannabis; regulatory and licensing risks; changes in cannabis industry growth and trends; changes in general economic, business and political conditions, including changes in the financial markets; the global regulatory landscape and enforcement related to cannabis, including political risks and risks relating to regulatory change; risks relating to anti-money laundering laws; compliance with extensive government regulation, including RIV Capital's interpretation of such regulation; public opinion and perception of the cannabis industry; divestiture risks; and the risk factors set out in RIV Capital's annual information form for the year ended March 31, 2021 filed with the Canadian securities regulators and available on RIV Capital's profile on SEDAR at www.sedar.com.
Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although RIV Capital has attempted to identify important risks, uncertainties and factors that could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. RIV Capital does not intend, and does not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.
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SOURCE RIV Capital Inc.
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