RIV Capital Ends Q2 With $400M Cash On Hand And Plans To Launch US Platform

Cannabis-focused venture capital firm RIV Capital Inc. RIV CNPOF reported its financial results Thursday for the three and six months ended September 30, 2021.

The Toronto-based company announced a strategic investment from The Hawthorne Collective, Inc., a newly formed cannabis-focused subsidiary of Scotts Miracle-Gro SMG, during the second quarter.

In August, The Hawthorne Collective invested $150 million in RIV Capital pursuant to an unsecured convertible note issued by Hawthorne to be used for general corporate and lawful purposes that will help accelerate the launch and expansion of its US cannabis operating and brand platform.

In addition, the investment also established RIV Capital as The Hawthorne Collective's preferred vehicle for investments not currently under the purview of The Hawthorne Gardening Company, ScottsMiracle-Gro's subsidiary, which focuses on indoor and hydroponic growing supplies.

"Following the close of the convertible note investment from The Hawthorne Collective, we have been solely focused on narrowing our pipeline of potential acquisition targets in strategic US markets," Narbé Alexandrian, president, and CEO of RIV Capital said. "We continue to advance discussions with a select number of target companies that we believe embody the qualities we are looking for in our US operating and brand platform, and look forward to making an announcement further to this in the coming months."

Q2 2021 Financial Highlights

• Operating loss, before equity method investees and fair value changes, totaled $1.7 million for the quarter, net of a provision for expected credit losses of $2.1 million.
• Operating expenses were $5.1 million.
• General and administrative expenses were $3 million.
• Share of loss from equity method investees was $0.5 million net increase in the fair value of financial assets that are reported at fair value through profit or loss of $0.7 million for the quarter.
• Total comprehensive loss of $1.1 million, compared to a total comprehensive loss of $87 million, which was primarily attributable to several charges related to the company's former investment in PharmHouse Inc.
• In September, the company received roughly $6.5 million, and that termination of PharmHouse Inc.'s proceedings under the Companies Creditors Arrangement Act and PharmHouse's assignment into bankruptcy under the Bankruptcy and Insolvency Act is expected soon.
• Ended the quarter with $404.2 million of cash on hand compared with $127.9 million at the end of its most recently completed fiscal year.

Portfolio Updates During And Post Q2

• The company entered into an asset purchase agreement with TREC Brands Inc. for the sale of the company's financial assets in Agripharm.
• Dynaleo Inc. introduced Pocket Fives, its new value brand of edible cannabis products.
• Gage Growth Corp GAGE GAEGF announced that cannabis brand COOKIES will be grown and distributed in Canada by NOYA.
• Greenhouse Juice announced a partnership with Too Good To Go to combat food waste, as well as a retail collaboration with BIO RAW.
• Headset expanded its competitive intelligence tool, Headset Insights Premium, to Michigan.
• High Beauty, Inc. announced that it successfully closed its oversubscribed US$4.2 million convertible bridge financing round.

CNPOF Price Action

RIV Capital's shares traded 1.17% lower at $1.25 per share at the time of writing Thursday afternoon.

Photo: Courtesy of Chris Briggs on Unsplash