iAnthus Archives - Green Market Report

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.

After the markets closed on Monday, iAnthus Capital Holdings, Inc. (OTC: ITHUF) reported its financial results for the quarter ending September 30, 2021. Revenue for the third quarter was $49.3 million, up 21% from the same quarter in the prior year, but it dropped 9% sequentially. The net loss was $15.8 million, or a loss of $0.09 per share, compared to a net loss of $25.5 million, or a loss of $0.15 per share, in the same quarter in the prior year.

Debt Payments Not Made

iAnthus said it did not make the applicable interest payments due on its 13% senior secured convertible debentures and its 8% convertible unsecured debentures due during 2020. As previously disclosed, 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 September 30, 2021, consisted of principal amounts at face value of $97.5 million and $60.0 million, and accrued interest of $26.9 million and $8.4 million, on the Secured Notes and Unsecured Debentures, respectively. In addition, as a result of the default, as of September 30, 2021, the company has accrued additional fees and interest of $15.0 million in excess of the aforementioned amounts that are further detailed in the company’s financial statements.

Update on Class Action Suit

Shareholders weren’t very happy with the restructuring agreement that occurred in July 2020 that effectively took their shares and gave them to the creditors. On September 1, 2021, iAnthus announced the dismissal of the previously disclosed consolidated actions (which included the shareholder class action claim and a complaint filed by Hi-Med) in the United States District Court for the Southern District of New York. The plaintiffs though were granted the right to file a proposed second amended complaint by September 30, 2021. Each plaintiff moved for leave to file second amended complaints, and the Court granted the plaintiffs’ motions for leave to file second amended complaints. iAnthus said it will continue to vigorously defend its interests in court.

Still Waiting On States

In addition, the regulatory approvals by state-level regulators in Massachusetts, New York and Maryland necessary to close the Recapitalization Transaction remain outstanding. In New Jersey, a change of control approval is not required at the present time because the company is awaiting approval by the Cannabis Regulatory Commission (“CRC”) for the Company to close its acquisition of 100% of the equity interests in New Jersey license holder MPX New Jersey, LLC, pursuant to certain contractual agreements. The company said it has a reasonable expectation that approval of the Amended Permit Application will be listed for consideration by the CRC on its monthly agenda in the next sixty (60) days or sooner and, upon any such approval thereof and the closing of the acquisition within no later than five (5) business days thereafter, as set forth in the Agreements, prior regulatory approval for the change of beneficial ownership of MPXNJ that would result from the Recapitalization Transaction will be required as a condition to closing under the Restructuring Support Agreement.

iAnthus Capital Holdings, Inc . (CSE: IAN) (OTCPK: ITHUF) reported its financial results for the three ending June 30, 2021 as revenue increased 57% to $54.2 million. The company trimmed its net losses to $15.3 million, or a loss of $0.09 per share, versus a loss of $24.8 million, or a loss of $0.14 per share, in the same quarter in the prior year.

Despite a gross profit of $31 million, iAnthus did not make interest payments due on its 13% senior secured convertible debentures and its 8% convertible unsecured debentures due during 2020. As previously disclosed, 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 June 30, 2021, consisted of principal amounts at face value of $97.5 million and $60.0 million, and accrued interest of $22.9 million and $7.2 million, on the Secured Notes and Unsecured Debentures, respectively. In addition, as a result of the default, as of June 30, 2021, the Company has accrued additional fees and interest of $14.6 million (“Exit Fees”) in excess of the aforementioned amounts that are further detailed in the company’s financial statements.

Restructuring Continues

In 2020, iAnthus entered into a restructuring support agreement that was amended on June 15, 2021 with the holders of its Secured Notes and a majority of the holders of its Unsecured Debentures to effectuate a proposed recapitalization transaction to be implemented by way of a court-approved plan of arrangement under the Business Corporations Act ( British Columbia ). The company is required to issue an aggregate of 6,072,579,699 common shares upon the extinguishment of (i) $22.5 million of Secured Notes (including the Exit Fees) plus interest accrued thereon, (ii) $40.0 million of Unsecured Debentures plus interest accrued thereon, and (iii) interest accrued above the principal amount of $14.7 million of the interim financing provided by the Secured Lenders.

iAnthus said in its statement that on February 23, 2021, the Nevada Cannabis Compliance Board approved the proposed change of ownership and control of the Company’s wholly-owned subsidiary, GreenMart of Nevada NLV, LLC, contemplated by the Recapitalization Transaction. On June 17, 2021, the Massachusetts Cannabis Control Commission approved the proposed change of ownership and control of the current licenses held by the Company’s wholly-owned subsidiaries, Mayflower Medicinals, Inc., and Cannatech Medicinals, Inc. contemplated by the Recapitalization Transaction. Similar state-level regulatory approvals are being sought in Florida, Maryland, New York, New Jersey, and Vermont.

After the market closed on Monday, iAnthus Capital Holdings, Inc .  (CSE: IAN) (OTC: ITHUF) reported its financial results for the three months ended March 31, 2021. iAnthus said that revenue rose 70% to $51.8 million. The net loss was $19.5 million, or a loss of $0.11 per share versus a loss of $236.3 million, or a loss of $1.38 per share, in the same quarter in the prior year.

The company noted that due to liquidity constraints it did not make applicable interest payments due on its 13% senior secured convertible debentures and its 8% convertible unsecured debentures due during 2020. The non-payment of interest in March 2020 triggered an event of default, which, as of March 31, 2021, consisted of principal amounts at face value of $97.5 million and $60.0 million, and accrued interest of $19.0 million and $6.0 million, on the Secured Notes and Unsecured Debentures, respectively.

As a result of the default, iAnthus has accrued additional fees and interest of $14.2 million. Most shareholders are aware that in July 2020 iAnthus entered into a restructuring agreement with its debtholders to begin a proposed recapitalization transaction in Canada. However, some of the transactions that the company wants to undertake have triggered the requirement for approval by state-level regulators in certain U.S. states with jurisdiction over the licensed cannabis operations owned, in whole or in part by iAnthus in such states. In February, the Nevada Cannabis Compliance Board approved the proposed change of ownership and control of the company’s wholly-owned subsidiary, GreenMart of Nevada NLV, LLC, contemplated by the Recapitalization Transaction. Similar state-level regulatory approvals are being sought in Florida, Massachusetts, Maryland, New York, New Jersey, and Vermont.

If the Recap plan is consummated, iAnthus said it intends to issue up to an aggregate of 6,072,579,699 common shares upon the extinguishment of (i) $22.5 million of Secured Notes (including the Exit Fees), (ii) $40.0 million of Unsecured Debentures, including interest accrued thereon, and (iii) interest accrued on the interim financing in the amount of $14.7 million provided by the Secured Lenders.

iAnthus Capital Holdings, Inc . (OTCPK: ITHUF) reported its financial results for the fourth quarter and year ending December 31, 2020. The company delivered revenue of $46.0 million for the quarter with a net loss of $27.3 million, or a loss of $0.16 per share. 

For the full year, iAnthus delivered revenue of $151.7 million, up 93.5% from the prior year with a net loss of $309.8 million, or a loss of $1.81 per share. The company became a U.S. reporting company effective February 5, 2021, and all the financial statements are reported in accordance with U.S. Generally Accepted Accounting Principles (GAAP). All currency is expressed in U.S. dollars.

Recapitalization Plan Still Ongoing

The company also noted that it did not make applicable interest payments due on its 13% senior secured convertible debentures and its 8% convertible unsecured debentures due during 2020. 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 December 31, 2020, consisted of principal amounts at face value of $97.5 million and $60.0 million and accrued interest of $15.1 million and $4.8 million on the Secured Notes and Unsecured Debentures, respectively. In addition, as a result of the default, the company has accrued additional fees and interest of $13.8 million in excess of the aforementioned amounts that are further detailed in the company’s financial statements.

iAnthus entered into a restructuring support agreement with its debtholders to effectuate a recapitalization transaction to be implemented by way of a court-approved plan of arrangement under the Business Corporations Act ( British Columbia ). On September 14, 2020, the company’s security holders voted in support of the Recapitalization Transaction, and on October 5, 2020, the Plan of Arrangement was approved by the Supreme Court of British Columbia.

If consummated, iAnthus said it intends to issue up to an aggregate of 6,072,579,699 common shares upon the restructuring of (i) $22.5 million of Secured Notes (including the Exit Fee), $40.0 million of Unsecured Debentures, including interest accrued thereon and (ii) interest accrued on the interim financing in the amount of $14.7 million provided by the Secured Lenders. “The Recapitalization Transaction remains subject to the receipt of all necessary regulatory approvals and approval by the CSE. Specifically, certain of the transactions contemplated by the Recapitalization Transaction have triggered approval by U.S. state-level regulators in the states in which the Company operates. Where required, iAnthus has commenced the review and approval process.”

iAnthus (OTC: ITHUF) stock popped over 57% to lately sell at 29 cents after the company was able to close on an $11 million bridge financing funded by certain lenders affiliated with the counterparties to the previously announced restructuring support agreement dated July 10, 2020. They are the holders of all of the 13% senior secured convertible debentures issued by iAnthus Capital Management, LLC and the holders of 91% of the principal amount of 8% convertible unsecured debentures issued by iAnthus.

Randy Maslow, Interim Chief Executive Officer and President of the Company said in a statement, “We are very pleased to have closed this bridge note financing. The net proceeds from the financing will be used exclusively for our operations in New Jersey for the continued construction and completion of improvements at our New Jersey cultivation, manufacturing, and dispensary facilities. We expect to sublease these facilities to MPX NJ once construction is complete and the facilities are ready to commence licensed operations.”

MPX NJ Battle

The battle between MPX New Jersey and iAnthus NJ continues even as iAnthus secured the financing. which will be used primarily for the construction and improvements of certain New Jersey facilities leased and/or owned by iAnthus NJ. These facilities are expected to be subleased to MPX New Jersey, with which the company has entered into several contractual agreements as described below. These facilities include the cultivation and manufacturing facility currently under construction in Pleasantville and the current dispensary located in Atlantic City, as well as two prospective satellite dispensaries expected to be leased and/or purchased and improved by iAnthus NJ pursuant to satellite approval applications filed with the New Jersey Department of Health on December 31, 2020.

However, the Monmouth County Superior Court is allowing iAnthus to continue construction at the Pleasantville facility. Maslow said, “We are pleased with the Court’s ruling today in iAnthus’ favor, giving the Company the green light to continue its ongoing build-out of the Pleasantville cultivation and processing facility, which is important to New Jersey’s goal of providing additional supply as quickly as possible to the state’s medical cannabis patient population. The Court recognized iAnthus’ substantial interest in completing the construction of the cultivation facility, especially given the Company’s contractual rights to acquire full ownership of MPX NJ, subject to regulatory approval. The Court’s ruling today, together with our closing yesterday on an $11 million financing earmarked solely for our NJ operations, gives us tremendous confidence in our ability to complete the cultivation, processing and associated dispensary facilities in a timely fashion for the benefit of New Jersey’s patients.”

Shareholder Battle

Last week, the company announced that in a unanimous decision, the British Columbia Court of Appeal dismissed the appeal of Walmer Capital Limited, Island Investments Holdings Limited, and Alastair Crawford of the order of the Supreme Court of British Columbia made October 5, 2020, approving a plan of arrangement to implement the Company’s previously announced recapitalization transaction. Thus, effectively ending the shareholder fight.