CNPOF - RIV Capital Preps For New York Adult Use Sales
RIV Capital Inc. (CSE: RIV) (OTC: CNPOF) reported its financial results for the fourth quarter and fiscal year ending March 31, 2022. For the fourth quarter Riv Capital reported a net loss of $17 million versus last year’s net loss of $21 million for the same time period.
The company had an operating loss in the fourth quarter of $2 million. Riv said the loss was primarily driven by an increase in the provision for expected credit losses on interest and royalty receivables.
For the full year, Riv Capital had an operating loss of $3 million. The net loss was $52 million, which was an improvement over the previous year’s net loss of $133 million.
“We spent the second half of the 2022 fiscal year preparing for our entry into the U.S. cannabis market, ending the year with a transformative agreement to acquire ownership and control of New York-based Etain ,” said Mark Sims, President and CEO of RIV Capital. “We are excited to launch our U.S. strategy in the Empire State, which represents one of the largest legal cannabis market opportunities in the U.S. as it approaches the implementation of adult-use sales. With the potential to become the second-largest cannabis market in the U.S., second only to California, we believe the state will be vital to the success of our U.S. platform in the long term.”
Etain Acquisition
“We are so confident in the potential of this market that we intend to further strengthen and expand our presence in New York ahead of adult-use sales. RIV plans to invest in four additional dispensaries and a new state-of-the-art flagship indoor cultivation facility, specifically tailored to support the premium New York market, as soon we are permitted to do so. We are thrilled to be working with Etain as a top-tier brand partner and are looking forward to completing the license transfer as soon as possible.”
The company said its near-term plans include completing the expansion of Etain’s current cultivation capacity by tripling the existing canopy size at its Chestertown facility to support the adult-use market at its outset, and preparing its existing retail locations for the expected increase in sales. RIV Capital is also in advanced discussions to construct a new, state-of-the-art flagship indoor cultivation facility that will house premier cultivation and production infrastructure specifically tailored to support the premium New York market.
Additionally, Riv said it has plans to build out four new dispensaries as soon as the company is permitted to do so under the state’s regulations, bringing the total New York footprint to eight retail locations, three of which will be co-located for adult use.
Once adult-use sales are in effect, Riv said it expects a significant ramp in business to occur through the second half of the calendar year 2023, with its expanded operations coming fully online during the first half of the calendar year 2024.
Financial Health
Rive reported $169 million cash on the books. “We have entered this next fiscal year in an enviable liquidity position, with sufficient funding to complete the Etain Acquisition and finance our expansion plans in the state of New York,” said Eddie Lucarelli, Chief Financial Officer of RIV Capital. “We believe that in light of the ongoing challenging backdrop in capital markets, the strength of our balance sheet is a key differentiator that will enable us to build a market-leading U.S. platform.”
Having said that Riv also reported a net decrease in the fair value of financial assets of $3.8 million for Q4 2022, compared with a net decrease of $19.8 million for the same period last year. The net decrease was primarily driven by the negative changes in the estimated fair value of the company’s investments in the Greenhouse Juice secured convertible debenture of $2.1 million and Agripharm royalty interest of $1.0 million.