After the markets closed on Monday, RIV Capital Inc. (CSE: RIV) (OTC: CNPOF) released its financial results for the three months that ended June 30. Due to a change in Riv‘s fiscal year end from March 31 to Dec. 31, the company noted that its current fiscal year will be comprised of three quarters for a total of nine months, beginning on April 1 and ending on Dec. 31.
Riv Capital, whose main business is the Etain medical cannabis company in New York, reported revenue of $1.9 million for the second quarter versus last year’s $1.4 million for the same time period. The company reported retail revenue of $1.7 million was generated from Etain’s medical dispensaries in Manhattan, Kingston, Syracuse, and Yonkers, and wholesale revenue of $0.2 million was generated from sales of Etain-branded medical cannabis products to other registered organizations in New York.
The cost of goods sold for the quarter was $1.5 million, but the company expenses were $5.3 million in the quarter leading the company to a net loss of $9.1 million. This was higher than last year’s net loss of $3.4 million.
“With our continued progress on the development of our flagship Buffalo facility, as well as the operational enhancements we have completed in Chestertown, we have rapidly advanced our core strategy of deepening our operations within New York ahead of our anticipated entry into the adult-use market,” said Mike Totzke, COO and interim CEO of RIV Capital. “We continue to optimize our wholesale channels, and we expect products cultivated and produced in the expansion facility to hit the market by the end of the year. In Buffalo, we received regulatory approval for the facility and expect to complete construction in the third quarter of 2024.”
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Despite the current lackluster medical sales, Riv said that it expects to be on track to enter the adult-use wholesale market in the fourth quarter of calendar year 2023, with a first retail dispensary expected to open by January 1, 2024, followed by two additional retail dispensaries expected to open on or around July 1, 2024.
The company noted that progress is gradually being made in New York, and while certain legal hurdles have emerged regarding the revised proposed draft regulations. Riv also stated that it is considering buying other properties in New York.
“While the market rollout in New York has not been as smooth as we had hoped, we are encouraged by recent developments, including enhanced enforcement actions to combat the illicit market and continued movement towards the proposed opening of the state’s adult-use market,” said Totzke. “It is still our firm belief that New York is well on its way to being one of the most exciting and significant adult-use markets in the country, and we look forward to making a notable mark there when it opens.”
Riv reported that the Chestertown, New York facility expansion is now operational, and the company is ramping up usage of the new greenhouse bays. A statement read, “With the completion of this project, the company is well on pace to begin introducing products cultivated and manufactured in Chestertown to medical patients over the next 3 months, ahead of the company’s planned entry into the AU wholesale market in CQ4 2023.”
The new cultivation and manufacturing facility in Buffalo will focus on the production of premium flower and will significantly expand Riv’s cultivation and manufacturing capabilities in the state. Completion of the construction and commissioning of the facility is expected to occur by CQ3 2024. The company said it will require additional OCM approval prior to the commencement of commercial operations.
The company still has a robust cash cushion of $90 million, however, it’s a big drop from last year’s cash of $171 million for the same time period. The company also has over $9 million in financial obligations due over the next year. Still, the bulk of its financial obligations stretch to the four and five-year range, where it is on the hook for $177 million.
Eddie Lucarelli, CFO of RIV Capital, added, “A core focus of the business continues to be the thoughtful deployment of capital in New York, where we expect to benefit from a first-mover advantage in the wholesale market and aim to establish our position as a leading operator in the state. Our liquidity position remains strong, and we anticipate executing on additional opportunities to further expand our geographical footprint with the core goal of driving sustained shareholder value.”