Firm is attempting to get into the adult-use market.
RIV Capital Inc.‘s (CSE: RIV) (OTC: CNPOF) CEO Mark Sims left the corporate, efficient instantly. The corporate made the announcement alongside its monetary outcomes for the quarter ending Dec. 31, 2022.
Income for Riv Capital’s fiscal third quarter (which is basically gross sales from New York medical operator Etain) was $2 million, solely a slight enchancment over second-quarter income of $1.9 million. No gross sales had been recorded for a similar time interval in 2021.
The corporate recorded a internet lack of $9.8 million, a giant bounce over final 12 months’s internet lack of $2.7 million for a similar time interval. This compares to the online loss within the second quarter which was $144 million. The loss per share for the third quarter was $0.06.
Mark Sims, former president and CEO, left the corporate. Sims was instrumental within the acquisition of Etain, which price the corporate greater than $200 million and to date has solely delivered $5.4 million in gross sales over the 9 months ending in December 2022.
The board of administrators appointed Chief Working Officer Mike Totzke as interim CEO whereas it searches for a everlasting substitute. Totzke has been with the corporate since June 2022 and can proceed to give attention to constructing out the corporate’s New York State cultivation, dispensary, and gross sales operations, amongst different administration duties beforehand carried out by Sims, who additionally resigned from the board.
“We consider we have now ample capital to facilitate each our development goals in New York and growth into different geographies,” Eddie Lucarelli, chief monetary officer, mentioned. “Now we have an enviable steadiness sheet, an awesome strategic associate, and one in every of solely 10 vertical licenses in New York, which we consider will probably be among the many most fun hashish markets within the U.S. over the subsequent 5 years. In our view, these property characterize important intrinsic worth that we plan to capitalize upon.”
The corporate reported $125 million in money on the finish of December 2022.
“Riv Capital’s market capitalization shouldn’t be indicative of the true worth of the Firm, particularly given its stable money place,” mentioned Chris Hagedorn, a board member and president of Hawthorne. “By realigning its strategy to technique and execution at each the manager management and Board ranges, we consider the corporate will strengthen its potential to unlock that worth to the good thing about all stakeholders.”
Riv additionally introduced that the board is within the course of of creating a strategic development committee to develop and lead development methods, together with potential strategic M&A. Hagedorn will chair that committee, which additionally consists of board members:
- Daybreak Sweeney
- Amy Peckham
- Richard Mavrinac
“The corporate believes that its money sources, New York property and positioning, and strategic partnership with Hawthorne create a number of avenues for realizing worth that’s not presently mirrored within the firm’s share value,” Riv mentioned in a press release.
The corporate just lately settled a bruising battle with one in every of its buyers over the Riv Capital acquisition of Etain. JW Asset Administration and its founder Jason Wild complained that the corporate overpaid for the acquisition and sought a change within the board members.
Riv fought the declare and as an alternative acquired JWAM’s funding the corporate – basically shopping for him out.
Since Etain is shut out of the adult-use market within the state of New York, it has turned its focus to wholesale hashish. Etain will be capable of present hashish to conditional adult-use (CAURD) dispensaries in that state that open this 12 months.
The wholesale plan can also be primarily based on ending and equipping the Chestertown growth, finishing the event of the Flagship Facility, and absolutely transitioning to serve each the wholesale and retail adult-use markets in New York.
Presently, the corporate can’t take part within the adult-use market since it’s a vertical operation, which isn’t allowed. Nonetheless a lot of the language within the MD&A filed on Sedar instructed that it was working with the New York Workplace of Hashish Administration to have the ability to enter the market.
The corporate famous that such an growth would require further capital expenditures within the vary of $35,000 to $40,000.
Grownup Use in New York?
The corporate’s submitting said, “These projected capital expenditures embrace estimates for one-time charges that Etain LLC could also be required to pay to the OCM to function in New York’s adult-use hashish market. The Firm’s estimates are primarily based upon proposed laws for New York’s adult-use hashish market that had been filed by the Hashish Management Board on December 14, 2022. As mentioned above, these proposed laws haven’t been finalized as of the date of this MD&A. The proposed laws presently prescribe that one-time charges associated to an RO’s transition to New York’s adult-use hashish market could possibly be roughly $19,000 in whole, together with $5,000 payable upon entry into the adult-use wholesale market, with one other $5,000 payable in levels over a five-year interval, and $3,000 payable for every co-located medical and adult-use dispensary (ROs are permitted to co-locate a most of three services below the proposed laws, however the co-location can’t happen till December 29, 2025, which is three years from the date of the primary authorized sale of adult-use hashish within the State of New York).”
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