iAnthus Continues to Operate and Not Pay Debt

Despite the ongoing battle with the booted shareholders, iAnthus Capital Holdings, Inc.  (CSE: IAN) (OTCPK: ITHUF) continues to operate and deliver earnings. The company had first-quarter revenue of $42.8 million, a sequential decrease of 10% from the fourth quarter and a decrease of 17% from the same period in the prior year. iAnthus reported a net loss of $10.1 million, or a loss of $0.06 per share, compared to a loss of $26.9 million or a loss of $0.16 per share in Q4 2021, and compared to a loss of $19.5 million, or a loss of $0.11 per share, in the same period in the prior year.

iAnthus said in a statement, “Due to liquidity constraints experienced by the Company, the Company did not make applicable interest payments due on its 13% senior secured convertible debentures (“Secured Notes”) and its 8% convertible unsecured debentures due during 2020. As previously disclosed by the Company, the non-payment of interest in March 2020 triggered an event of default with respect to these components of the Company’s long-term debt, which, as of March 31, 2022, consisted of principal amounts of $97.5 million and $60.0 million, and accrued interest of $34.8 million and $10.8 million, on the Secured Notes and Unsecured Debentures, respectively. In addition, as a result of the default, as of March 31, 2022, the Company has accrued additional fees and interest of $15.8 million (“Exit Fees”) in excess of the aforementioned amounts that are further detailed in the Company’s financial statements.”

As of March 31, 2022, iAnthus had unrestricted cash of $14.1 million (December 31, 2021—$13.2 million), an accumulated deficit of $811.7 million (December 31, 2021—$801.6 million), and a working capital deficit of $255.7 million (December 31, 2021—$231.7 million).

Co-founder Maslow is out

Last week, iAnthus announced the resignation of its Co-Founder and Interim Chief Executive Officer, Randy Maslow from his executive positions with the company, including all positions with the company’s subsidiaries and its affiliates, and from the company’s Board of Directors and committees, effective as of May 6, 2022. Maslow will continue to serve the company in a consulting role for a period of six months following the Resignation Date. Maslow will receive total cash compensation in the amount of $12.2 million, of which $5.1 million was paid out on May 6, 2022.

On May 6, 2022, the company announced the appointment of Robert Galvin as Interim Chief Executive Officer and member of the Board, effective May 6, 2022. Galvin served as the company’s Interim Chief Operating Officer and has held a number of executive positions with iAnthus and previously served as a member of the Board following the completion of the company’s transaction in February 2019 with MPX Bioceutical Corporation, where Mr. Galvin also served as a board member.

Shareholder Lawsuits

While some shareholders continue to file complaints about losing their shares to the lenders, the courts have continued to side with the lenders. It seems that some of the disgruntled common stock shareholders when they get cases dismissed, retool and come back. The shareholders continue to insist that the debt payments could have been made when the company instead chose to default and thus handing the company over to the lenders. The latest move was in March when the company and the lender Gotham Green both as a New York judge to toss the shareholder’s latest claims. they say the case should be in Canada, not New York. The investors say they bought their shares in New York and so the case should be there.

Debra Borchardt

Debra Borchardt is the Co-Founder, and Executive Editor of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Master's degree in Business Journalism from New York University.

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