RIV Capital Reports Financial Results for the Fiscal Quarter and Nine-Month Transition Period Ended December 31, 2023
Etain received
Ended the year with
Reported net loss of
Subsequent to period end, Etain opened first co-located adult-use and medical dispensary in
Management Commentary
"During the quarter, RIV achieved a crucial milestone thanks to the years of dedicated efforts of the Etain team in a market we consider to be one of the most promising and significant in the country," said
Strategic and Operational Update
New York Adult-Use Retail
On
In connection with this transition, following its fiscal year end, the Company achieved another significant milestone with the opening of Etain's first co-located adult-use and medical dispensary in
Etain's ROD License permits opening two additional co-located adult-use and medical dispensaries in the state later this year, which it plans to do.
Marketing and Product Development
Etain's ROD License also permits wholesaling to other adult-use and medical dispensaries in
The Company is focused on utilizing the full capabilities of its new operational enhancements, technological improvements, and expanded customer base to identify opportunities to further diversify its product and brand portfolio to best serve its wide-ranging spectrum of customers and patients in the state.
Cultivation and Manufacturing Facility Updates
With the recent launch of adult-use operations in
Also, in 2023, Etain received regulatory approval from the
New York Regulatory Environment
The state has also continued to ramp up enforcement efforts in a bid to combat ongoing issues related to the state's illicit cannabis market. These efforts include authorizing the OCM and authorities from counties and cities, including
The Company commends state officials for their continual effort toward displacing the illicit
Strategic Growth Committee
The Company's Strategic Growth Committee ("SGC") has continued its work to identify opportunities that it believes will best achieve its strategic goals of unlocking the full value of its
Financial Results for the
The following is a summary of the Company's financial results for three months and nine-month transition period ended
As noted above, the Company changed its fiscal year end from
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
Summary Operating Results |
||||
|
Three months
(unaudited) |
Three months
(unaudited) |
Nine-month
(audited) |
Fiscal year ended
(audited) |
Revenue |
|
|
$ 5,876 |
|
Excise taxes |
(107) |
(123) |
(328) |
(443) |
Total revenue, net |
2,065 |
1,885 |
5,548 |
6,807 |
Cost of goods sold |
1,542 |
1,087 |
4,984 |
4,372 |
Gross profit excluding fair value items |
523 |
798 |
564 |
2,435 |
Unrealized loss on changes in fair value of biological assets |
(1,150) |
(13) |
(739) |
(31) |
Realized fair value amounts included in inventory sold |
53 |
(2) |
45 |
2 |
Gross profit (loss) |
(574) |
783 |
(130) |
2,406 |
Selling, general, and administrative expenses |
5,524 |
4,801 |
15,634 |
20,502 |
Impairment of goodwill and intangible assets |
48,650 |
- |
48,650 |
138,937 |
Operating loss |
(54,748) |
(4,018) |
(64,414) |
(157,033) |
Other loss |
(6,784) |
(6,305) |
(14,858) |
(25,142) |
Loss before taxes |
(61,532) |
(10,323) |
(79,272) |
(182,175) |
Income tax recovery |
(14,216) |
(432) |
(15,428) |
(2,916) |
Net loss |
$ (47,316) |
|
|
|
Other comprehensive loss not subsequently reclassified to net loss Net change in fair value of financial assets at FVTOCI, net of tax expense or recovery |
(2,281) |
(3,073) |
(2,286) |
(2,813) |
Other comprehensive income (loss) subsequently reclassified to net loss Foreign currency translation adjustment |
(737) |
299 |
(598) |
(5,248) |
Total comprehensive loss |
$ (50,334) |
|
|
|
|
|
|
|
|
Net loss per share – basic |
|
|
|
|
Net loss per share – diluted |
|
|
|
|
Summary Cash Flows and Financial Position Data |
||
|
Nine-month
|
Fiscal year
|
Net cash flows from operating activities |
|
|
Net cash flows from investing activities |
17,407 |
(234,899) |
Net cash flows from financing activities |
(1,831) |
18,892 |
Net increase (decrease) in cash |
|
|
Effect of foreign exchange rate movements on cash held |
403 |
(1,873) |
Cash, beginning of fiscal period (1) |
77,468 |
318,706 |
Cash, end of fiscal period |
|
|
|
|
|
|
As at
|
As at
|
Current assets |
|
|
Non-current assets |
120,831 |
149,912 |
Total assets |
|
|
|
|
|
Current liabilities |
|
|
Non-current liabilities |
157,353 |
146,143 |
Total liabilities |
|
|
|
|
|
Total shareholders' equity |
|
|
(1) At the beginning of the fiscal period for the nine-month transition period ended |
- Revenue, net of excise taxes, was
$2.1 million for the three months endedDecember 31, 2023 ("CQ4 2023"), compared to$1.9 million for the three months endedDecember 31, 2022 ("CQ4 2022"). Retail revenue of$1.9 million was generated from Etain's medical dispensaries inManhattan ,Kingston ,Syracuse , andYonkers , and wholesale revenue of$0.3 million was generated from sales of Etain-branded products to other medical dispensaries inNew York . The Company's reported revenue for CQ4 2023 does not include any contribution from sales to adult-use retail or wholesale customers as the Company did not commence sales in the adult-use market until the first quarter of 2024. - Cost of goods sold (which excludes unrealized fair value changes included in biological assets and realized fair value changes included in inventory sold) was
$1.5 million for CQ4 2023, compared to$1.1 million for CQ4 2022. Cost of goods sold has increased as a percentage of net revenue as the Company has scaled operations at the expanded Chestertown Facility and not yet optimized its productive capacity. - The Company reported an unrealized loss on changes in fair value of biological assets of
$1.2 million for CQ4 2023, compared with a nominal amount for CQ4 2022. During CQ4 2023, Etain reduced its estimated selling price for wholesale bulk flower in its biological assets valuation analysis, which contributed to the unrealized loss described above. - Based on the foregoing, the Company reported a gross loss of
$0.6 million for CQ4 2023, compared to a gross profit of$0.8 million for CQ4 2022. - Selling, general, and administrative ("SG&A") expenses were
$5.5 million for CQ4 2023, compared to$4.8 million in CQ4 2022. - The most significant factor impacting the Company's reported net loss for CQ4 2023 was an impairment charge of
$48.7 million related to the goodwill and intangible assets that the Company had recognized in connection with its acquisition of Etain in 2022. The Company tests its goodwill for impairment annually and when indicators of impairment are present, and tests its finite-life intangible assets for impairment whenever indicators of impairment are present. The impairment charges, which were allocated to goodwill, cannabis license rights, and brands, were primarily driven by a reduction in the Company's projected cash flows for Etain'sNew York operations due to slower-than-expected market development and illicit market competition, among other factors. Upon the acquisition of Etain, the Company had recognized intangible assets and goodwill of$250.8 million and has since recognized cumulative impairment charges of$187.6 million . - Income tax recovery was
$14.2 million for CQ4 2023, compared with income tax recovery of$0.4 million for CQ4 2022. The income tax recovery for CQ4 2023 was largely driven by the deferred tax impact of the impairment charges. - Based on the foregoing, the Company reported a net loss of
$47.3 million , and a basic and diluted net loss per share of$0.35 , for CQ4 2023, compared with a net loss of$9.9 million , and a basic and diluted net loss per share of$0.06 , for CQ4 2022. As noted above, the primary factor impacting the net loss for CQ4 2023 was the pre-tax impairment charge on goodwill and intangible assets of$48.7 million . - The Company reported other comprehensive loss of
$3.0 million for CQ4 2023, compared with$2.8 million for CQ4 2022. Amounts included in other comprehensive loss generally relate to the Company's legacy portfolio and foreign currency items. - Total comprehensive loss was
$50.3 million for CQ4 2023, compared with$12.7 million for CQ4 2022. As noted above, the primary factor impacting the comprehensive loss for CQ4 2023 was the pre-tax impairment charge of$48.7 million .
An audio-only recording of
This press release should be read in conjunction with the Company's audited consolidated financial statements and management's discussion and analysis ("MD&A") for the three months and nine-month transition period ended
About
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
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
Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information are the following: the Company's ability to execute its go-forward strategy; stock market volatility; changes in the business activities, focus and plans of the Company, Etain and the Company's investees and the timing associated therewith; the timing of any changes to federal laws in the
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
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