Toronto – Canopy Rivers Inc. (the “Company” or “Canopy Rivers”) (TSXV: RIV, OTC: CNPOF) today released its financial results for the three
months ended June 30, 2019. The Company’s unaudited condensed interim consolidated financial statements for the three months ended June 30, 2019 (“Q1 2020”), and its management’s discussion and analysis (the
“MD&A”) for Q1 2020, are available under the Company’s profile on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com and on the Company’s website
at www.canopyrivers.com/investors. All financial information in this press release is reported in Canadian dollars, unless otherwise indicated.
“In Q1 2020, we made several exciting investments in plant sciences and cannabis brands, two areas that we think are primed for real growth in the cannabis sector,” said Narbe Alexandrian, President and Chief Executive Officer of Canopy Rivers.
“In addition to our new investments, as lifecycle investors, it was also rewarding to see so much positive news coming from our portfolio companies this quarter. From PharmHouse entering into a significant supply agreement with Canopy Growth
to TerrAscend becoming, to our knowledge, the first and, so far, only cannabis company with sales in Canada, the U.S., and the European Union, our portfolio companies were busy creating significant value.”
“We continue to maintain financial focus and discipline while looking to seize on exciting opportunities during a period of operational ramp-up in our portfolio and the cannabis sector more broadly,” said Eddie Lucarelli, Chief Financial Officer
of Canopy Rivers. “While some of our financial results are linked to the public markets and therefore subject to volatility, we believe that several factors – including significant business catalysts within our portfolio, operational improvements
that translate into increased production at our royalty investees, and an operating expense base that is low by cannabis sector standards – position us well to create value for our shareholders in the long term.”
During Q1 2020, Canopy Rivers generated operating income of $2.7 million, primarily driven by royalty, interest, and lease income generated from the following: royalty and debenture agreements with Agripharm, Greenhouse Juice, JWC, and Radicle (each as
defined below); a lease agreement with Spot Therapeutics Inc.; and a shareholder loan agreement with PharmHouse (as defined below); as well as a $1.5 million net increase in the fair value of certain financial assets that are reported at fair value
through profit or loss. These items were partially offset by Canopy Rivers’ $1.0 million share of loss from its equity method investees, which includes its common equity positions in Canapar Corp., Radicle, and PharmHouse. As these equity method
investees continue to ramp-up operationally over the coming quarters, management expects to continue to recognize its share of net losses during the remainder of the fiscal year.
Operating expenses for Q1 2020 were $5.8 million, of which $3.7 million (or approximately 64% of the total) related to share-based compensation. A significant portion of this non-cash expense relates to options granted to non-employees, which occurred
at an early stage in the Company’s growth and requires remeasurement each period. Other operating expenses, which include consulting and professional fees and other general and administrative expenses, were $2.0 million, representing an increase
from last year due to the build-out of the Company’s management team and employee base and enhanced public company compliance and regulatory costs.
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 $5.8 million, net of tax. The fair values of Canopy Rivers’ investments
in Eureka 93 Inc., JWC, and YSS (as defined below) common shares and TerrAscend (as defined below) exchangeable shares were negatively impacted by downward trends in valuations for public cannabis companies during the period.
Canopy Rivers continued to capitalize on investment opportunities during the quarter, deploying $18.8 million to new investments in High Beauty, Biolumic, and Zeakal (each as defined below), and contributing a total of $6.0 million to existing investees
Agripharm and Greenhouse Juice Company.
Canopy Rivers currently has a diversified portfolio comprised of 18 companies (see Figure 1), each with its own point of differentiation. Management believes that this creates an ecosystem of complementary cannabis operators that are able to leverage
the strengths within the portfolio in order to accelerate individual paths to success and create value for Canopy Rivers.
The following represents a brief summary of the milestones achieved by Canopy Rivers and/or its portfolio companies during Q1 2020:
Subsequent to the end of Q1 2020, Canopy Rivers and its portfolio companies reported several significant achievements:
For more information regarding the Company and its portfolio, please refer to the MD&A and the Company’s annual information form dated July 15, 2019 (“AIF”), filed with the Canadian securities regulators and available on Canopy Rivers’
profile on SEDAR at www.sedar.com.
Canopy Rivers is a unique investment and operating platform structured to pursue investment opportunities in the emerging global cannabis sector. Canopy Rivers identifies strategic counterparties seeking financial and/or operating support. Canopy Rivers
has developed an investment ecosystem of complementary cannabis operating companies that represent various segments of the value chain across the emerging cannabis sector. As the portfolio continues to develop, constituents will be provided with opportunities
to work with Canopy Growth (TSX: WEED, NYSE: CGC) and collaborate among themselves, which Canopy Rivers believes will maximize value for its shareholders and foster an environment of innovation, synergy and value creation for the entire ecosystem.
This news release contains statements which constitute “forward-looking information” within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of the Company with
respect to future business activities and operating performance. Forward-looking information is often identified by the words “may”, “would”, “could”, “should”, “will”, “intend”,
“plan”, “anticipate”, “believe”, “estimate”, “expect” or similar expressions and includes information regarding: anticipated areas of growth in the cannabis sector; the expected future focus
and activities of the Company; the anticipated impact of capital markets volatility; expectations for the Company’s creation of long term shareholder value; management’s expectation that the Company will continue to recognize its share
of net losses during the remainder of the fiscal year; the ability of the Company’s investees to leverage strengths within the Canopy Rivers ecosystem in order to accelerate individual paths to success and create value for the Company; the anticipated
benefits of ZeaKal’s PhotoSeed™ technology; the planned sale of cannabis oils by TerrAscend through its medical marketplace, Solace Health; JWC’s supply of cannabis flower and oils to TerrAscend and the availability of such products
on Solace Health; PharmHouse’s plans to ramp up its entire 1.3 million square foot greenhouse by the end of 2019; the expected increase in Radicle’s production capacity; and expectations for other economic, business, and/or competitive
Investors are cautioned that forward-looking information is not based on historical fact but instead reflects management’s expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates
of management considered reasonable at the date the statements are made. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue
reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the Company. Among the key factors that could cause actual results to differ
materially from those projected in the forward-looking information are the following: regulatory and licensing risks; competition; changes in cannabis industry growth and trends; changes in the focus, plans and business activities of the Company and
its investees and the impact and/or benefits thereof ; the Company’s actual financial results and ability to create shareholder value; the ability of Canopy Rivers’ investees to collaborate; changes in general economic, business and political
conditions, including changes in the financial markets; potential conflicts of interest; the regulatory landscape and enforcement related to cannabis, including political risks and risks relating to regulatory change; changes in the Company’s
relationship with Canopy Growth and its portfolio companies; changes in applicable laws; compliance with extensive government regulation; changes in the global sentiment towards, and public opinion of, the cannabis industry; and the risk factors set
out in the Company’s AIF, filed with the Canadian securities regulators and available on the Company’s profile on SEDAR at www.sedar.com.
Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed,
estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors that could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended.
The Company does not intend, and does not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
The financial highlights in this release are presented in CAD$ thousands.1
For further information:
Sr. Director, Investor Relations & Communications
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