RIV Capital Inc. Announces Fiscal Year 2023 Results and Updates on New York Cannabis Market

LOS ANGELES– RIV Capital Inc., an acquisition and investment firm focused on building a leading multistate cannabis platform, released its financial results for the fourth quarter and fiscal year ended March 31, 2023. Despite the slower-than-expected progress in the New York cannabis market, the company remains optimistic about the long-term prospects and is committed to establishing a strong presence in the state’s adult-use sector.

Mike Totzke, the COO and interim CEO of RIV Capital, acknowledged the challenges faced in the New York market but expressed confidence in its potential. He cited the recently unveiled draft regulations as a positive step in the right direction. The company aims to enter the adult-use market later this year and aims to achieve an early leadership position in this critical market.

Eddie Lucarelli, the CFO of RIV Capital, highlighted the company’s favorable liquidity position, with approximately $97.9 million in cash and short-term investments at the end of the fiscal year. Despite significant investments planned for the New York market, RIV Capital expects to maintain a strong financial position to pursue mergers and acquisitions and other investment opportunities to further enhance shareholder value.

The company has actively participated in providing feedback on the proposed adult-use cannabis regulations in New York. The revised draft regulations allow medical operators to enter the retail tier of the adult-use market earlier than previously outlined. RIV Capital anticipates that its subsidiary, Etain, will enter the adult-use wholesale market in the fourth quarter of 2023, with the first retail dispensary opening by January 1, 2024, followed by two additional retail dispensaries around July 1, 2024.

While the company recognizes the progress made with the revised proposed regulations, it acknowledges the need for further improvements to establish a successful, safe, and equitable cannabis market in New York. The recent adoption of broader enforcement legislation to combat the illicit cannabis market is welcomed by RIV Capital, and the company encourages further enforcement actions to ensure a level playing field for licensed operators.

Regarding its operational updates, RIV Capital’s expansion of Etain’s cultivation and production infrastructure in Chestertown, New York, is almost complete, and the facility is expected to triple Etain’s existing cultivation capacity. The company has also made progress in developing its flagship indoor facility in Buffalo, New York, with the metal frame erected and interior commissioning scheduled to start in the fall.

To drive growth and unlock shareholder value, RIV Capital has established a Strategic Growth Committee focused on strategic mergers and acquisitions. The company believes that its strong balance sheet, New York assets, and partnership with The Hawthorne Collective, Inc. provide multiple avenues for realizing value and growth.

In terms of marketing, Etain products are available in nearly 80% of medical dispensaries across New York. The company continues to invest in the community, supporting various initiatives and events that promote cannabis education and inclusivity. In celebration of Pride month, Etain launched its Motif Pride pen battery, with a portion of the proceeds being donated to Callen-Lorde, a leading LGBTQ+ healthcare organization.

Turning to financial performance, RIV Capital reported revenue of $1.7 million for the fourth quarter of 2023, with retail revenue generated from Etain’s dispensaries and wholesale revenue from sales of Etain-branded products to other registered organizations in New York. The company faced challenges due to the proliferation of the illicit market, leading to declining medical cannabis revenue across the state.

Cost of goods sold for the quarter was $1.6 million, impacted by the expansion of Etain’s operations and certain expense reallocations. RIV Capital reported a gross profit of $0.2 million for the quarter. Selling, general, and administrative expenses increased to $5.3 million, primarily due to the scaling up of operations and increased support for the U.S. cannabis market.

The company reported a net loss of $23.6 million for the quarter and a net loss of $179.3 million for the fiscal year. RIV Capital remains focused on its growth strategies, including potential strategic mergers and acquisitions, to drive value for its stakeholders. The company is actively searching for a permanent CEO and looks forward to updating stakeholders on its progress.

In terms of cash flows and financial position, RIV Capital reported net cash flows from operating activities of -$23.4 million for the fiscal year. Net cash flows from investing activities were -$234.9 million, primarily due to investments in infrastructure and expansion. Net cash flows from financing activities were $18.9 million, and the company reported a net decrease in cash of -$239.4 million. RIV Capital ended the fiscal year with a cash and short-term investments balance of $97.9 million.

With total assets of $261.8 million and total liabilities of $153 million, RIV Capital’s shareholders’ equity stands at $108.8 million.