RIV Capital Reports Financial Results for the Third Quarter Ended September 30, 2024
PR Newswire
TORONTO, Nov. 29, 2024
Company reports record quarterly revenue of $4.9 million
Adjusted EBITDA(1) loss improves; net loss primarily driven by non-cash pre-tax impairment charge on intangible assets
Ended the quarter with $50.7 million of cash to support growth initiatives in New York and Florida
Cansortium Business Combination anticipated to close in the coming weeks
TORONTO, Nov. 29, 2024 /PRNewswire/ - RIV Capital Inc. ("RIV Capital" or the "Company") (CSE: RIV) (OTC: CNPOF), a firm dedicated to developing a leading multi-state platform with a strong portfolio of cannabis brands focused on key strategic markets in the United States ("U.S."), today released its financial results for the third quarter ended September 30, 2024 ("Q3 2024"). All financial information in this press release is reported in U.S. dollars unless otherwise indicated.
Management Commentary
"Since the launch of adult-use sales in New York this year, we have achieved significant growth, driven by our ongoing enhancements to customer retail experiences and commitment to delivering exceptional customer service," said Dave Vautrin, Chief Retail Officer and Interim Chief Executive Officer of RIV Capital. "With our operations scaling as patient and consumer demand continues to build, we experienced significant acceleration in the third quarter results, demonstrated by our record net revenue of $4.9 million. We now proudly operate three co-located adult-use and medical retail dispensaries, plus an additional medical-only location, across our footprint, and customer response has been great, with especially strong enthusiasm following the launch of the highly popular MOODS brand by FLUENT into the New York market."
Mr. Vautrin added, "As we continue to improve our retail network, we're also scaling our wholesale operations, with a growing pipeline of approximately 60 retailers. With the recent strategic distribution agreement with Nabis, we're well-positioned to support this rapid growth across the state. This momentum has continued into the fourth quarter."
Mr. Vautrin concluded, "Since announcing the proposed Business Combination with Cansortium, we've identified and captured substantial synergies, and our joint integration efforts are progressing smoothly. With Cansortium, we're poised to complete this transaction on a solid foundation and positioned to quickly capitalize on the combined expertise and experience of our teams in some of the most dynamic markets in the cannabis industry."
(1) Adjusted EBITDA is a non-IFRS financial measure that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. A reconciliation of net loss to Adjusted EBITDA is provided in the table "Supplemental Information -- Non-IFRS Financial Measures" below.
Regulatory Update
New York State continues to undertake efforts to combat illicit market activities, which the Company believes will positively impact the ability of the legal market to establish a stronger and safer footprint. The Company continues to work closely with the Office of Cannabis Management ("OCM") and foster its strong relationship with New York stakeholders. At the federal level, the Company continues to monitor developments regarding the rescheduling of cannabis from a Schedule I to a Schedule III substance under the Controlled Substances Act (the "CSA"), as rescheduling is anticipated to lead to the removal of 280E taxes and provide support for further potential federal reform. Additionally, this change has the potential to expand institutional access to invest in the cannabis sector and accelerate opportunities for research into the medical benefits of cannabis.
Business Combination Update
The Company anticipates being in a position to complete the previously announced business combination (the "Business Combination") with Cansortium Inc. (CSE: TIUM.U) (OTCQB: CNTMF) ("Cansortium"), a vertically integrated, multi-state cannabis company operating under the FLUENT$(TM)$ brand, in the coming weeks. Closing remains subject to, among other things, the requirement for RIV Capital to maintain a certain minimum cash balance as of a specified date prior to closing, and the satisfaction of certain other closing conditions customary in transactions of this nature, all of which are expected to be completed during this quarter. Further details regarding the Business Combination, including the principal closing conditions and the anticipated benefits for RIV Shareholders, can be found in RIV Capital's management information circular dated July 12, 2024 in respect of the RIV Meeting (the "Circular") and in the joint press release issued by RIV Capital and Cansortium on May 30, 2024, both of which can be found under RIV Capital's SEDAR+ profile at www.sedarplus.ca.
Financial Results for the Third Quarter Ended September 30, 2024
The following is a summary of the Company's unaudited financial results for the three and nine months ended September 30, 2024, and 2023. As previously announced, the Company has changed its fiscal year end from March 31 to December 31. Accordingly, the comparative period presented for the nine months ended September 30, 2023, had not previously been reported in historical unaudited condensed interim consolidated financial statements published by the Company. Further details regarding the change in fiscal year end, including the length and ending dates of the Company's financial reporting periods, are available in the Company's Notice of Change in Year End prepared in accordance with Section 4.8 of National Instrument 48-102 and filed on the Company's SEDAR+ profile at www.sedarplus.ca.
Unless otherwise indicated, all financial highlights summarized in tables in this press release are presented in thousands of dollars, except share and per share amounts. All references to "$" are to United States dollars.
Summary Operating Results ------------------------------------------------------------------------------ Three months Three months Nine months Nine months ended Sep. ended Sep. 30, ended ended 30, 2024 2023 Sep. 30, 2024 Sep. 30, 2023 (unaudited) (unaudited) (unaudited) (unaudited) --------------- ------------- -------------- -------------- -------------- Revenue, net $ 4,859 $ 1,697 $ 10,786 $ 5,211 Cost of goods sold 5,737 1,851 12,571 5,038 ------------- -------------- -------------- -------------- Gross profit excluding fair value items (878) (154) (1,785) 173 Unrealized gain (loss) on changes in fair value of biological assets (520) 214 (598) 493 Realized fair value amounts included in inventory sold 238 (9) 271 (10) ------------- -------------- -------------- -------------- Gross profit (1,160) 51 (2,112) 656 Selling, general, and administrative expenses 4,583 4,804 16,613 15,442 Impairment of intangible assets 67,372 - 67,372 - Operating loss (73,115) (4,753) (86,097) (14,786) Other loss (3,832) (3,785) (8,348) (27,511) ------------- -------------- -------------- -------------- Loss before taxes (76,947) (8,538) (94,445) (42,297) Income tax recovery (13,588) (1,152) (17,816) (2,199) Net loss $ (63,359) $ (7,386) $ (76,629) $ (40,098) --------------- ------------- -------------- -------------- -------------- Other comprehensive income (loss) (1,332) 732 (1,347) (994) --------------- ------------- -------------- -------------- -------------- Total comprehensive loss $ (64,691) $ (6,654) $ (77,976) $ (41,092) --------------- ------------- -------------- -------------- -------------- Net loss per share -- basic $ (0.46) $ (0.05) $ (0.56) $ (0.28) Net loss per share -- diluted $ (0.46) $ (0.05) $ (0.56) $ (0.28) --------------- ------------- -------------- -------------- -------------- Supplemental Information -- Non-IFRS Financial Measures(1) ------------------------------------------------------------------------------ Three months Three months Nine months Nine months ended Sep. ended Sep. ended ended 30, 2024 30, 2023 Sep. 30, 2024 Sep. 30, 2023 ---------------- ------------- ------------- -------------- -------------- Net loss $ (63,359) $ (7,386) $ (76,629) $ (40,098) Income tax recovery (13,588) (1,152) (17,816) (2,199) Accretion and interest expense, net 3,608 2,610 10,030 7,595 Depreciation and amortization(2) 1,629 692 3,585 2,103 ---------------- ------------- ------------- -------------- -------------- EBITDA $ (71,710) $ (5,236) $ (80,830) $ (32,599) ---------------- ------------- ------------- -------------- -------------- Impairment of intangible assets 67,372 - 67,372 - Fair value items
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