Canopy Rivers Archives - Green Market Report

Debra BorchardtFebruary 10, 2021
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Canopy Rivers Inc. (OTC: CNPOF) released its unaudited condensed interim consolidated financial statements and management’s discussion and analysis for the third quarter ending December 31, 2020Canopy Rivers reported an operating income of $3.0 million for the quarter. The company said this included royalty, interest, and lease income (before provisions for credit losses) of $5.9 million. The net income was $1.4 million.  Operating expenses were $3.4 million for the quarter, compared with $3.9 million for the same period last year.

Other comprehensive income was $80.8 million for the quarter, driven by the increase, net of tax, in the fair value of financial assets that are reported at fair value through other comprehensive income. Canopy Rivers reported a gross increase in the fair value of financial assets at FVTOCI of $94.5 million for the quarter, which was primarily attributable to the positive change in the fair value of its investment in TerrAscend. This was driven by a significant increase in TerrAscend’s share price during the quarter and a lower estimate of the liquidity discount used in the exchangeable share valuation due to positive cannabis regulatory reform momentum in the U.S., including support for cannabis legalization at all three levels of government and the success of five cannabis ballot initiatives at the state level. Partially offsetting this material increase was a decrease in the estimated fair value of the Company’s investment in Vert Mirabel common shares of $9.5 million, driven primarily by lower expectations about long-term wholesale cannabis pricing in Canada. This led to a total comprehensive income for the quarter of $82 million.

“Our quarter was highlighted by the announcement of our milestone transaction with Canopy Growth, which we believe will provide substantial value to our shareholders,” said Narbé Alexandrian, President, and CEO, Canopy Rivers. “Our portfolio companies continue to gain momentum, and we are further encouraged by the potential for regulatory reform in the U.S. given recent progress at the state level and the new administration’s position on cannabis reform. We believe that we will have the opportunity to enter the U.S. market at an ideal point in time and that our balance sheet, simplified share structure, strategic flexibility, and deep domain expertise will enable us to deliver value to shareholders as we consider potential material investments or acquisitions in the U.S.”

Canopy Growth

In December Canopy Rivers entered into an agreement with Canopy Growth Corporation  (NASDAQ: CGC) in which Canopy Rivers agreed to sell its interests in TerrAscend and TerrAscend Canada, Vert Mirabel, and Tweed Tree Lot to Canopy Growth for $115.0 million in cash, up to 3.75 million common shares in Canopy Growth, and the cancellation of Canopy Growth’s multiple voting shares and subordinated voting shares of Canopy Rivers. The CGC Transaction represents a return on invested capital of approximately 5.6x and an internal rate of return of approximately 101% as at the time of announcement. Following the anticipated close of the transaction, which is expected to be reflected in the March quarter, Canopy Rivers said it expects to have approximately $310 million in net cash and liquid securities on a pro forma basis.

“After a challenging September quarter during which we recognized material charges on our investment in PharmHouse, we ended the calendar year with significant positive momentum, as evidenced by our financial results,” said Eddie Lucarelli, CFO, Canopy Rivers. “We expect to sustain this momentum during the current quarter as we work towards closing our transformative transaction with Canopy Growth. By redeeming shares at a discount to net asset value and successfully monetizing assets that carried significant liquidity restrictions, the financial merits of the transaction are clear. Fundamentally, we believe that the accretive nature and strategic value of this transaction will unlock substantial value for our shareholders and optimally position the Company to execute on new opportunities in the U.S., the world’s largest cannabis market.”

Canopy Rivers said it expects to use the proceeds from the Canopy Growth deal to invest in more cannabis companies within the U.S. As part of that strategy, the company said it is also starting the process to delist its shares from the TSX so that it can list its securities on an alternate stock exchange that does not prohibit listed Canadian companies to invest in or acquire legal U.S.-based cannabis businesses.

Pharm House

The company also gave an update on the restructuring of Pharm House. Assets were identified for sale and parties that were interested in buying have put forth offers. Day to day operations have continued under DIP financing. Canopy Rivers said no repayments of the principal have occurred and the current outstanding balance remains $90.0 million, with interest payable by PharmHouse monthly.

On February 10, 2021, the company said it received a statement of claim filed by the PharmHouse majority shareholder concerning certain disputes relating to PharmHouse. Canopy Rivers said in a statement, “The claim is substantially similar to a claim previously filed in September 2020, which was subsequently discontinued. The Claim makes a number of allegations against Canopy Rivers, Canopy Growth, TerrAscend, and TerrAscend Canada. As with the previously filed statement of claim, Canopy Rivers views the Claim as it relates to its actions to be completely without merit and intends to vigorously defend its position at the appropriate time and in the appropriate forum.”

 


Debra BorchardtDecember 21, 2020
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Canopy Rivers Inc. (TSX: RIV) (OTC: CNPOF) has entered into an agreement with Canopy Growth Corporation (NASDAQ: CGC) in which Rivers will transfer three portfolio assets to Canopy Growth in exchange for $115 million in cash and 3,750,000 common shares of Canopy Growth and the cancellation of all 36,468,318 Multiple Voting Shares and the 15,223,938 Subordinate Voting Shares of Rivers held by Canopy Growth.

“This is a transformative transaction for our Company that we believe provides substantial value to our shareholders through an enhanced cash position and strategic flexibility, and the collapse of our dual-class share structure,” said Narbé Alexandrian, President, and CEO, Rivers. “Following the closing of the Transaction, we intend to shift our focus to pursuing other opportunities in the global cannabis market, where we believe that our new strategic focus and substantial balance sheet will allow us to successfully execute our revamped strategic plan.”

In doing so, Rivers will receive significant additional cash resources, which the company said would enable it to pursue opportunities in the global cannabis market, including the United States. With this money added to its coffers, Canopy Rivers will have $243 million on hand. The company said it believes that its significant cash position and single-class share structure will make it an attractive transaction partner for cannabis operators, including those in the U.S., looking for access to capital and a path to liquidity.

Transaction Details

The company outlined the following details of the deal in a statement:

  • Rivers will terminate the royalty agreement between its wholly-owned subsidiary Canopy Rivers Corporation (“CRC”) and The Tweed Tree Lot Inc., and will sell the following assets, all owned by CRC, to Canopy Growth (collectively, the “Transferred Assets”):
    • 19,445,285 exchangeable shares in the capital of TerrAscend Corp. (“TerrAscend”);
    • a loan in the principal amount of approximately $13.2 million owed by TerrAscend Canada Inc. (“TerrAscend Canada”) to CRC;
    • warrants to purchase 2,225,714 common shares in the capital of TerrAscend at an exercise price of $5.95 per share, exercisable upon the federal legalization of cannabis in the U.S.;
    • warrants to purchase 333,723 common shares in the capital of TerrAscend at an exercise price of $6.49 per share, exercisable upon the federal legalization of cannabis in the U.S.;
    • its 26% common share interest in Les Serres Vert Cannabis Inc. (“Vert Mirabel”), subject to certain rights of first refusal; and
    • its 15,000,000 Class A preference shares in the capital of Vert Mirabel.
  • The consideration to be received by Rivers in connection with the Transaction will be satisfied by:
    • payment by Canopy Growth of $115 million in cash;
    • issuance of 3,750,000 common shares of Canopy Growth, which will be freely tradeable on the TSX and Nasdaq as of the closing of the Transaction; and
    • cancellation of all of the 36,468,318 MVS and 15,223,938 SVS held by Canopy Growth.
  • Rivers and Canopy Growth will also terminate the agreements that govern their relationship, including the Investor Rights Agreement, Memorandum of Understanding, and Trademark License Agreement.
  • Rivers and CRC will also change their corporate names to reflect the new direction of the Company.

“As a long-time shareholder of Rivers, I am pleased to support this transaction”, said Jason Wild, chairman of JW Asset Management which, on closing, will own 23.9% of the common equity of the Company. “As an active investor in the U.S. cannabis market, JW Asset Management recognizes the generational opportunity for value creation in the world’s largest and most attractive cannabis market. With a significant infusion of cash and liquid securities, and a new strategic focus, we believe that Rivers will be well-positioned to further explore and potentially capitalize on this vast opportunity.”

“The financial and strategic merits of the Transaction to the Company and our minority shareholders are clear,” said Joseph Mimran, Chair of the special committee of independent directors that Rivers’ board of directors established in connection with the Transaction. “On behalf of the Board, we look forward to writing the next chapter in Rivers’ history.”


Debra BorchardtNovember 9, 2020
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Canopy Rivers Inc. (OTC: CNPOF) today released its unaudited condensed interim consolidated financial statements in Canadian dollars and acknowledged taking a $112 million hit for its PharmHouse investment.  The total comprehensive loss for the quarter was $87.0 million. On a positive note, its investment into TerrAscend has appreciated implying an investment value of $214 million.

The company reported that its royalty, interest, and lease income (before provisions for credit losses) was $4.1 million for the quarter. It included income from its various royalty, convertible debenture, and loan agreements, among other items. Other comprehensive income was $23.4 million, net of tax, for the quarter, which included a net increase in the fair value of financial assets of $27.4 million attributed to the positive change in the fair value of the investment in TerrAscend. TerrAscend’s share value increase from $2.87 on June 30, 2020, to $9.75 as of the close of markets on November 6, 2020.

Offsetting this income was a provision for credit losses of $9.9 million for the quarter, which was primarily related to interest accrued on the company’s $40.0 million shareholder loan to PharmHouse Inc. of $8.9 million. Operating expenses were $1.6 million for the quarter, compared with $6.2 million for the same period last year. For the quarter, Canopy Rivers reported a net operating loss of $7.4 million.

PharmHouse

Canopy Rivers owns 49% in the joint venture of PharmHouse, which was formed in May 2018. The company partnered with Canopy Growth Corporation (CGC) and TerrAscend Canada Inc. which provided strong support for the company’s significant investment in PharmHouse’s automated production facility, as well as its guarantee of the PharmHouse Credit Facility.

“Our quarter was framed with a sharp focus on PharmHouse. We provided debtor-in-possession financing to enable PharmHouse to remain operational as it commenced its CCAA process and our team has been working towards securing the best possible outcome for our shareholders,” said Narbe Alexandrian, President and CEO, Canopy Rivers. “While supporting PharmHouse has been our priority, we are confident we will put this challenging situation behind us and remain encouraged by the progress across our portfolio. This quarter, we participated in Headset’s bridge round as it continues to bring its industry-leading analytical tools to new markets, High Beauty launched a new product line, and BioLumic’s most recent cannabis field trials showed promising gains in dried flower mass and cannabinoid content.”

Canopy Rivers detailed the charges as follows:

  • Share of loss from investment in PharmHouse common shares (due to impairment adjustments) of $32.6 million;
  • Provision for credit losses on the Company’s loans receivable with PharmHouse of $45.8 million; and
  • Provision for credit losses on the PharmHouse Guarantee liability of $25.0 million.

TerrAscend

During the quarter, TerrAscend opened an Apothecarium location in Berkeley, California. TerrAscend also received approval to cultivate cannabis at its New Jersey facility and open its first Apothecarium dispensary in the state. Finally, in August, TerrAscend announced strong second-quarter results, reporting net sales of $47.2 million. The company owns 19,445,285 exchangeable shares of TerrAscend that are convertible into common shares upon the occurrence of certain events.

“Most notably, the value of TerrAscend’s common shares increased by 101% during the quarter, and the implied value of our investment in TerrAscend is now approximately $214 million,” added Alexandrian. “After a U.S. election that potentially spells good outcomes for the cannabis sector, including the legalization of adult-use cannabis in New Jersey, we are pleased to have our U.S. exposure through our holdings of exchangeable shares in one of the nation’s leading multistate operators. We believe that we will be well-positioned to capitalize on opportunities in the U.S. once we are permitted to do so.”

More Writedowns

Canopy Rivers also reported a net decrease in the fair value of financial assets of $3.1 million for the quarter. The net decrease was primarily driven by negative changes in the estimated fair values of its royalty investment in Agripharm Corp. and convertible debenture investments in Greenhouse Juice Company and was partially offset by positive changes in the estimated fair values of the company’s royalty investment in The Tweed Tree Lot Inc. and term loan investment to TerrAscend Canada Inc. along with the associated warrants issued by TerrAscend Corp. Agripharm secured a supply agreement to provide the Ontario Cannabis Store with dried flower (and edibles at a later date) from Green House Seed Co., for which Agripharm holds an exclusive license in Canada.

“Naturally, we are extremely disappointed by the recent developments at PharmHouse and their impact on our financial results for this quarter, which reflect significant charges across various financial instruments we hold,” said Eddie Lucarelli, CFO, Canopy Rivers. “While the Company’s underlying net asset value continues to be supported by the sustained appreciation of our investment in TerrAscend, we remain critically focused on resolving PharmHouse’s current situation and maximizing value preservation for our shareholders.”


Debra BorchardtSeptember 16, 2020
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PharmHouse is costing Canopy Rivers Inc. (OTC: CNPOF) millions as it works to keep it afloat after the company missed its cash flow goals. The problems have led to a deterioration among the partners causing counterclaims of bad behavior. Canopy Rivers said it will act as a debtor-in-possession lender for PharmHouse and will provide up to $7.2 million in DIP financing. This will allow PharmHouse to continue its day-to-day operations throughout the anticipated restructuring. The Joint Venture Partner (2615975 Ontario Inc.) has indicated that it will not contribute financially to address PharmHouse’s near-term liquidity issues.

Canopy Rivers owns 49% in the joint venture of PharmHouse, which was formed in May 2018. The company partnered with Canopy Growth Corporation (CGC) and TerrAscend Canada Inc. which provided strong support for the company’s significant investment in PharmHouse’s automated production facility, as well as its guarantee of the PharmHouse Credit Facility.

PharmHouse has been granted creditor protection under the Companies’ Creditors Arrangement Act. Ernst & Young Inc. has been appointed by the Court to act as the Monitor of PharmHouse in the CCAA proceedings while PharmHouse explores a restructuring of its business and operations. Canopy Rivers said it views PharmHouse’s decision to seek creditor protection as an important step forward in addressing its liquidity and capital resource concerns.

Canopy Rivers said in August that PharmHouse failed to generate cash flows according to the agreed-upon timeline from the Offtake Agreements and the ultimate timing and receipt of cash flows became uncertain, creating liquidity and capital resource issues at PharmHouse.

Accusations Fly

Discussions regarding the potential renegotiation of the Offtake Agreements were unsuccessful and led to a significant deterioration in the relationship between the parties. Earlier this week, Canopy Rivers disclosed that the partner 2615975 Ontario Inc. had made a number of allegations against the it, Canopy Growth Corporation, and TerrAscend Corp. and TerrAscend Canada Inc., including claims relating to bad faith, fraud, civil conspiracy, breach of the duty of honesty and good faith in contractual relations and breach of fiduciary duty, and claims relating to PharmHouse’s offtake agreements with Canopy Growth and TerrAscend. Canopy Rivers said it considered the claim to be completely without merit and intended to vigorously defend its position at the appropriate time and in the appropriate forum.

Impairment Charges

In connection with the Restructuring, Canopy Rivers said it expects to record certain adjustments on its statement of financial position for its upcoming fiscal quarter ending September 30, 2020. In a statement, Canopy Rivers said it expects to record a full impairment charge on its investment in PharmHouse common shares, which had a carrying value of $32.6 million as at June 30, 2020. The carrying value as at June 30, 2020 reflected the cash investment of $11.0 million made by the company in July 2018 and January 2019, the value of non-cash consideration paid to the Joint Venture Partner upon the formation of PharmHouse, and the company’s cumulative share of PharmHouse’s comprehensive loss, as required by International Financial Reporting Standards.

In addition, Canopy Rivers may recognize impairment charges in respect of all or a portion of the balances relating to shareholder loans advanced by Canopy Rivers to PharmHouse, which were recorded at $50.2 million as of June 30, 2020. Furthermore, the company is a guarantor of PharmHouse’s syndicated credit agreement, which provided PharmHouse with a non-revolving credit facility of $90.0 million. If PharmHouse is unable to service its obligations pursuant to the PharmHouse Credit Facility, the company may be required to recognize a financial liability relating to its guarantee.


Debra BorchardtJune 3, 2020
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Cannabis venture capital firm Canopy Rivers Inc. (OTC: CNPOF) reported its fourth quarter and fiscal year results for the period ending March 31, 2020. Revenue was flat at $2.5 million for the quarter in 2020, while the net losses ballooned to $30 million from 2019’s net income of $3.5 million.

For the full fiscal year, Canopy Rivers reported an operating income of $11.9 million versus 2019’s operating income of $4.8 million. The net loss for the year was $40 million versus last year’s net income of $3.9 million. The basic earnings per share were ($0.22) versus $0.03 for 2019.

“The global economic uncertainty brought on by COVID-19 capped off a volatile and challenging year for the cannabis sector. Despite these challenges, I am pleased with what our team achieved last year. However, we were not immune to this volatility, and following a strategic and operational review of our business, we recently announced a number of changes aimed at strengthening our financial discipline and positioning Canopy Rivers for sustained success moving forward,” said Narbé Alexandrian, President, and CEO of Canopy Rivers. “Reflecting on the past year, there were several significant achievements that make me optimistic for fiscal year 2021. First, our portfolio companies reached new milestones, including the licensing of PharmHouse, the expansion of TerrAscend’s U.S. operations, and ZeaKal’s successful trials of its PhotoSeed™ technology. Second, our graduation to the TSX and the launch of our Strategic Advisory Board signalled our company’s continued maturation. Finally, we made four new investments, including two in ag-tech, which we believe is a critical component of the value chain that is poised to disrupt the cannabis sector.”

Operating expenses were $3.5 million for the quarter, of which $1.2 million (or approximately 36% of the total) related to share-based compensation, a non-cash expense. Following the compensation boost,  the company announced a series of organizational changes focused on generating net positive cash flows from operations. This included layoffs, a cut in directors’ compensation, marketing expenses, and general corporate expenses.

“While headwinds persist, we remain positive as we evaluate new opportunities that we believe will ultimately create value for our shareholders and help build the cannabis industry of tomorrow,” added Alexandrian.

The company’s share of loss from equity method investees was $3.2 million for the quarter. This included equity interests in Canapar Corp.,  Herbert, High Beauty, Inc., LeafLink Services, PharmHouse, and Radicle. Canopy Rivers said it expects these investees to continue to generate net losses in the near term due to the early-stage nature of these businesses as they continue to ramp-up operationally.

Canopy Rivers also recognized impairment charges of $11.2 million for the quarter The charges were attributed to economic and regulatory uncertainty caused by COVID-19, a slowdown in retail distribution in both Canada and the United States, and a slower-than-expected ramp-up of commercial activities for certain entities.

The company also said it took a hit from the decline of share price for its investment in TerrAscend and James E Wagner Cultivation Corporation, the latter of which recently filed for protection under the Companies’ Creditors Arrangement Act.

“Looking back on FY 2020, it is clear that cannabis companies encountered challenging conditions in the capital markets over those 12 months, and the impact of this shows in our financial results for the fiscal year,” said Eddie Lucarelli, CFO of Canopy Rivers. “However, we believe that this is more of a function of the slower-than-expected pace of development of the cannabis economy, rather than its long-term potential, which we continue to believe is significant. Based on our available cash resources and deep sector insights, we believe we are well-positioned to capitalize on the current market conditions and strengthen our portfolio of cannabis disruptors.”


StaffMay 28, 2020
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Canopy Rivers Inc. (OTC: CNPOF) is laying off employees and cutting back on spending as the company focuses on positive cash flow. The venture capital firm that specializes in cannabis companies said that it is streamlining its operations to preserve its cash on hand.

However, Canopy Rivers said it is still planning on repurchasing some of its subordinated voting shares and that is can buy up to 10% of these shares. The stock was lately trading at $1.02 per share.

The company said in a statement that it is making the following changes:

  • A material reduction in the Company’s operating cash outflows, including a reduction in headcount, directors’ compensation, marketing expenses, and general corporate expenses of a minimum of 35% from the Company’s fiscal 2020 operating cash outflows on a normalized basis;
  • A focus on generating positive cash flow from operations for fiscal 2021 (year ended March 31, 2021); and
  • A focus on maximizing returns on existing assets.

“We believe that sharpening our focus on financial discipline, operational excellence, and opportunistic capital deployment on our investment pipeline will yield long-term results for shareholders,” said Narbe Alexandrian, President & CEO. “In addition, the strategic utilization of our NCIB could be an important tool to provide attractive returns to shareholders.”

“Our cash on hand from our prior capital raises and returns from certain investments will allow us to deploy capital opportunistically moving forward, both towards new investment opportunities and in conjunction with our NCIB,” continued Alexandrian. “These unprecedented times, while difficult, are revealing investment opportunities at attractive valuations, and we intend to actively execute on our investment pipeline during this time. Our expectation is that our efforts to achieve positive operational cash flow, conserve and deploy capital on a strategic basis, and focus on our core business objectives will better align our share price with our underlying net asset value.”

The company is still active in the investing side. Just a couple of weeks ago Canopy Rivers made a C$2 million investment in Dynaleo Inc., an Edmonton -based company focused on white-label manufacturing edible cannabis gummies for the Canadian market. In a statement, the company said, “Through this investment in what the Company anticipates may become a leading industrial scale Canadian gummies manufacturer, Canopy Rivers believes it is capitalizing on a significant opportunity in what is currently an underserved and underdeveloped segment of the cannabis market. Once Dynaleo receives the required licensing from Health Canada, it expects to begin operating its 27,000 sq. ft. purpose-built facility with the goal of producing enough gummies to take a sizable bite out of the projected edibles market.”

The company will report its financial results for the fourth quarter and fiscal year ended March 31, 2020, before markets open on Wednesday, June 3, 2020.


Debra BorchardtFebruary 14, 2020
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Cannabis venture capital firm Canopy Rivers Inc. (TSX: RIV)(OTC: CNPOF) reported its third-quarter financial results in Canadian Dollars for the three and nine months ending December 31, 2019. The operating income for the quarter was $1.8 million, a big drop from last year’s $8.3 million for the same time period.  The company also delivered a net loss of $2.6 million versus last year’s net income of $1.4 million. The earnings per share were a negative $0.01 versus last year’s earnings per share of $0.01.

“It was a challenging end to 2019 for the valuations of publicly-traded cannabis companies, which naturally impacted our results for the quarter,” said Eddie Lucarelli, CFO, Canopy Rivers. “However, we continue to believe that these headwinds for the cannabis sector are temporary and that the strength of our balance sheet positions us well to weather the storm. A strong pipeline of global investment opportunities, positive trends in supply chain and retail developments in Canada, and impending milestones at our portfolio companies truly excite us for what’s to come in 2020.”

Revenue Sources

The company’s revenue was primarily driven by royalty, interest, and lease income of $5.0 million from Agripharm Corp., 10831425 Canada Ltd. d/b/a/ Greenhouse Juice Company, James E. Wagner Cultivation Corporation, Radicle Medical Marijuana Inc., and The Tweed Tree Lot Inc. In addition to that, revenue came from a loan agreement with TerrAscend Canada Inc., a shareholder loan agreement with PharmHouse, Inc. and a lease agreement with Tweed Tree Lot.

The company noted that the income was partially offset by a $1.9 million net decrease in the fair value of certain financial assets that are reported at fair value through profit or loss. Operating income was further offset by a $1.3 million share of loss from the company’s equity method investees. This share of loss was recorded one quarter in arrears, which includes the company’s common equity positions in Canapar Corp., Herbert, High Beauty, Inc., LeafLink Services International ULC, PharmHouse, and Radicle. The company said that it expects these equity method investees to continue to generate net losses during the remainder of the fiscal year as the companies continue to ramp up operationally.

“In the third quarter, we continued pursuing our goal to become the leading venture capital firm building the cannabis industry of tomorrow,” said Narbé Alexandrian, President & CEO, Canopy Rivers. “We focused primarily on follow-on investments in our existing portfolio of innovative companies, further developing the Canopy Rivers ecosystem through collaborative partnerships, and evaluating where we think the next wave of disruption will come from as the global cannabis market continues to evolve and mature.”

Civilized

Canopy invested $5 million into cannabis media company Civilized and then this past October it gave the company an additional $120,000. This was after Civilized announced that it was being bought by New Frontier Data at the New West Media Summit in San Francisco and at a time when the company was cutting back. Now Canopy Rivers says its current ownership interest is zero. However, there is still a debt. Both the convertible debenture and warrants are currently exercisable and, if exercised, would together represent approximately 26% of the equity of Civilized on a fully diluted basis as of December 31, 2019.

Rivers also stated that it is now expected that the convertible debenture interest receivable will not be recovered until maturity or conversion. “The company no longer recognizes interest receivable on the instrument, which was reported at $629,000 as of March 31, 2019. ”

Even though Rivers says it has no current ownership interest, As of December 31, 2019, the company said it owned 221,239 common share purchase warrants of Civilized (March 31, 2019 – 221,239). The warrants represent a derivative financial instrument that is initially measured at fair value and is subsequently measured at FVTPL. As of December 31, 2019, the warrants were estimated to have a nominal value (March 31, 2019 – $760).

Civilized was recently called out on The Black List for not paying a writer. In the comment section Civilized’s Terri Riedle, the Co-founder & President allegedly wrote in an email,”Thank you for the patience you’ve afforded Civilized over the last few months. As you may be aware, Civilized is in the process of being acquired by New Frontier Data. As a follow-up to their October announcement to that effect, we’re continuing to work in partnership with them and other advisors on a shared strategic and capital plan for 2020. I wanted to give you a heads-up today that the acquisition due diligence process has led us to the joint conclusion that the best path forward is to suspend Civilized’s day-to-day operations until January 2020. This is news you may catch in the media in the coming weeks. By hitting pause, we’re minimizing costs while we work with New Frontier Data to move into the new year with the resources we need in order to achieve our goals, including honouring our commitments to you. We regret that our vendors are in a difficult position and want to assure you that despite the delays, New Frontier Data prioritizes these important relationships and will be in a position to remedy the situation with vendors as soon as possible. We expect to re-launch a stronger and more powerful media company in a few weeks and appreciate this is an uncomfortable, even if necessary, transition for all. If you have any questions or wish to get in touch with me or New Frontier Data to discuss, we’re available to you.”

The Rise

Apparently Canopy Rivers hasn’t gotten its fill of media. The company has announced its launching its own news site called The Rise, whose Editor-in-Chief will Jameson Berkow. Berkow most recently helped The Globe and Mail launch its cannabis industry coverage. He was previously a senior reporter for BNN Bloomberg (formerly the Business News Network), where he led live daily coverage of major business news from the television station’s Toronto headquarters.

The Rise is described as a publication that will dive into these stories and speak directly to the modern entrepreneur. “Here you will find thoughtful content that strips away the fluff and gets to the heart of what it means to be an entrepreneur: the challenges, journeys, successes, and failures. You’ll find these stories alongside resources, thought leadership, economic insights, and emerging trends.”

There is no launch date as of yet.

 


StaffNovember 14, 2019
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Canadian-based venture capital firm Canopy Rivers Inc. (TSX: RIV)(OTC: CNPOF) reported that it generated operating income of $930 thousand in Canadian dollars versus last year’s $23 million for the same time period. The company also delivered a net loss of $4.4 million versus last year’s net income of $10.9 million. The stock dropped over 6% to lately trade at USD$1.

The company said that the income was “primarily driven by royalty, interest, and lease income of $2.2 million from: royalty and debenture agreements with Agripharm Corp., Greenhouse Juice Company, James E. Wagner Cultivation Corporation and Radicle Medical Marijuana Inc. a lease agreement with Spot Therapeutics Inc. and a shareholder loan agreement with PharmHouse, Inc. This income was partially offset by a $559 thousand net decrease in the fair value of certain financial assets that are reported at fair value through profit or loss.”

The company went on to say that the “Operating income was further offset by a $682 thousand share of loss from the Company’s equity method investees. This share of loss was recorded one quarter in arrears, which includes the Company’s common equity positions in Canapar Corp., Herbert Works, High Beauty, Inc., LeafLink Services International ULC, PharmHouse and Radicle.” Canopy Rivers said it also expects to continue to generate losses during the remainder of the year.

“Headlined by our graduation to the TSX, our business matured during the second quarter as we launched our Strategic Advisory Board and continued to work closely with our portfolio companies as they achieved new milestones,” said Narbé Alexandrian, President & CEO, Canopy Rivers. “There were numerous achievements for our portfolio companies this quarter. Several of these companies received licenses and amendments from Health Canada for the sale of cannabis oils, while others made key acquisitions, launched their Canadian business, or brokered agreements with companies both inside and outside of the Canopy Rivers ecosystem.”

Expenses Decline

The company noted that its operating expenses for the quarter were $6.1 million, which dropped from last year’s $8.9 million.  $3.0 million of that was related to share-based compensation. Other operating expenses, which include consulting and professional fees and other general and administrative expenses, were $3.2 million, representing an increase from the comparative quarter last year due to the build-out of the Company’s management team and employee base and enhanced public company compliance, marketing and business development, and regulatory costs.

Other operating expenses also increased from the previous quarter due to certain non-recurring costs relating to the Company’s graduation to the Toronto Stock Exchange and the launch of a formal branding and marketing campaign.

Other comprehensive income, which captures the net changes in fair value of financial assets that are reported at fair value through other comprehensive income, was a loss of $28.3 million, net of tax. The fair values of Canopy Rivers’ investments in Eureka 93 Inc., JWC, YSS Corp., Les Serres Vert Cannabis Inc. and TerrAscend Corp. were negatively impacted by downward trends in public market valuations for cannabis companies during the period.

The company made no mention of its investment in the cannabis media outlet Civilized, which is said to be merging with New Frontier Data. Civilized recently laid off several staff members and moved to smaller offices in California. The rumor is that the planned combination will try to go public, which would attempt to make investors whole.

 

 


Video StaffOctober 4, 2019
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Green Market Report thanks the ArcView Group for allowing us to tape Marijuana Money from their event this week. 

Constellation Brands (NYSE: STZ) wrote down its Canopy Brands (NYSE: CGC) investment to the tune of almost half a billion dollars. Constellation, which also owns Modelo beer and Robert Mondavi wines, said its share of equity losses from its roughly $4 billion investment came to $484.4 million. 

 Canopy Growth Corporation  (TSX: WEED) (NYSE: CGC)  has completed an all-cash transaction to purchase a majority stake in sports nutrition company BioSteel Sports Nutrition Inc. The amount of the acquisition was not disclosed. The deal gives Canopy a significant entry into the sports nutrition and hydration category and lays the groundwork for cannabidiol (CBD) products to be sold in the U.S.

Venture capital firm Canopy Rivers Inc.  (TSX: RIV)(OTC: CNPOF) completed a $10 million investment ( in TerrAscend Canada Inc., a subsidiary of its portfolio company.

Gotham Green Partners has invested an additional $20 million in iAnthus Capital Holdings, Inc. (CSE: IAN)(OTCQX: ITHUF) through the purchase of senior secured convertible notes. Green Gotham said it was part of a broader $100 million financing plan to support the buildout of all existing markets in which iAnthus currently operatesTerrAscend Corp. 

TILT Holdings Inc.  (CSE: TILT) (OTCQB: TLLTF) has negotiated an agreement with six of its remaining founders regarding the immediate forfeiture of all 60,217,088 stock options granted at the time of the merger. Adjusting for the subsequent forfeiture, TILT’s Q2 2019 net loss of $48.9 million would have been almost entirely reduced, bringing the Company close to break-even.

Fire & Flower Holdings Corp. (TSX: FAF) its financial results for the second fiscal quarter ending August 3, 2019, with total revenue of $11.1 million versus $9.5 million for the same time period in 2018. The net loss for the quarter was $6.4 million.

High Tide Inc. (CSE:HITI) (OTCQB:HITIF) announced financial results for the third fiscal quarter of 2019 ending July 31. Revenue in the third quarter increased by 281%, to C$8 million from C$2 million last year. 

48North Cannabis Corp. (TSXV: NRTH) delivered net revenue of $4.8 million marking 48North’s first full year of revenue, but a net loss of $8.1 million. In fiscal 2019, the company raised over $48 million and at the end of the year had $52.7 million in cash and cash equivalents on hand.

Arizona-based DNA testing technology company PathogenDx, Inc. announced $7.5 million in Series B funding. 

And finally HeavenlyRx Ltd. Acquired CBD company PureKana. 


Debra BorchardtOctober 2, 2019
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Canopy Growth Corporation  (TSX: WEED) (NYSE: CGC)  has completed an all-cash transaction to purchase a majority stake in sports nutrition company BioSteel Sports Nutrition Inc. The amount of the acquisition was not disclosed. The deal gives Canopy a significant entry into the sports nutrition and hydration category and lays the groundwork for cannabidiol (CBD) products to be sold in the U.S.

BioSteel was founded in 2009 and focuses on premium natural ingredients with a reputation for being the hydration beverage of choice for high-performance athletes. According to the company statement, BioSteel products have been purchased by over 70% of the teams in North America’s four major sports leagues and ambassadors of the brand include: Ezekiel Elliott, of the Dallas Cowboys; Connor McDavid, of the Edmonton Oilers; WTA player, Eugenie BouchardAndrew Wiggins with the Minnesota Timberwolves; Tyler Seguin with the Dallas Stars; Jalen Ramsey, with the Jacksonville Jaguars; NHL Hall of Famer, Wayne Gretzky; Gleyber Torres, with the New York Yankees; and Smiths Falls very own, LPGA golfer Brooke Henderson. In particular, Elliott’s agreement with BioSteel allows them to activate the star running back as the leading endorser of CBD products once permitted by the NFL. To date no active player has been able to do so.

“BioSteel has a reputation for being a best-in-class provider of natural sports nutrition products and all of its products are well positioned to benefit from the increasing trend of plant-based and all-natural products, preferred not only by professional athletes, but active consumers as well,” commented Mark Zekulin, CEO, Canopy Growth. “This acquisition allows us to enter the sports nutrition space with a strong and growing brand as we continue towards a regulated market of food and beverage products that contain cannabis. We view the adoption of CBD in future BioSteel offerings as a potentially significant and disruptive growth driver for our business.”

“The use and acceptance of CBD-based products in the professional sports landscape has changed. We have witnessed the negative effects of prescription painkillers and athletes are looking for healthier alternatives,” said Michael Cammalleri, Co-Founder and Co-CEO, BioSteel Sports Nutrition. “Its presence is already commonplace amongst NHL players and as a regular CBD user myself, I couldn’t be more proud to champion BioSteel’s evolution and leadership in this space.”

In addition, BioSteel has national organizational partnerships with USA Hockey, Canada Basketball, Athletics Canada and the Professional Hockey Players Association. The company has 10,000+ points of distribution in Canada and the U.S. and continues to expand in both markets and into Europe.

Canopy Rivers

Venture capital firm Canopy Rivers Inc.  (TSX: RIV)(OTC: CNPOF) completed a $10 million investment ( in TerrAscend Canada Inc., a subsidiary of its portfolio company TerrAscend Corp. (CSE: TER)(OTCQX: TRSSF). The investment includes the purchase of 13,243 units, with each unit consisting of: (i) one unsecured convertible debenture of TerrAscend Canada with a principal amount of CA $1,000, and (ii) 25.2 common share purchase warrants of TerrAscend exercisable until October 2, 2024.

“We think TerrAscend is uniquely positioned to meet the evolving consumer demands in the three largest cannabis markets worldwide,” said Narbe Alexandrian, President & CEO of Canopy Rivers. “We strongly believe in TerrAscend’s ability to execute on its global strategy, market a diversified brand portfolio, and build on its recent acquisitions, and this additional investment is an affirmation of that belief.”

“We are privileged to have the continued confidence and support of Canopy Rivers, one of the preeminent investment firms specializing in cannabis,” said Michael Nashat, CEO of TerrAscend. “This growth capital enables us to accelerate our organic and acquisition-driven investments in our key markets across the globe, as we execute our strategic vision of being a truly global cannabinoid company.”

Canopy Rivers, along with Canopy Growth Corporation, first invested in TerrAscend in November 2017. In October 2018, both parties restructured their investment in TerrAscend. This restructuring enabled TerrAscend to pursue strategic international transactions in the cannabis space while ensuring all parties remained compliant with industry and securities regulations.

The investment was part of a larger raise of approximately $25 million through the issuance of units of each of TerrAscend and TerrAscend Canada Inc. The first tranche of the Canadian Offering was the $10 million lead order from Canopy Rivers Inc. The company expects to close on additional tranches by mid-October 2019


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