First Quarter Financial Results Show Net loss of $237.3 million, or a loss of $1.38 per share, which included a $199.4 million impairment loss, and a failure to make Applicable Interest Payments.
iAnthus Capital Holdings, Inc. (CSE: IAN), which owns, operates, and partners with regulated cannabis operations across the United States, reports its financial results for the first quarter ended March 31, 2020. The Company's condensed interim financial statements for the first quarter ended March 31, 2020. Amounts are in U.S. Dollars, unless stated otherwise.
First Quarter 2020 Financial Updates
Reported revenues of $30.4 million, up 12% from the prior quarter
Gross margin for the quarter was 49.2%, down from 56.4% in the prior quarter
Net loss of $237.3 million, or a loss of $1.38 per share, which included a $199.4 million impairment loss
Due to liquidity constraints experienced by the Company, the Company did not make applicable interest payments due on its Secured Notes (as defined below) and Unsecured Debentures (as defined below) due on March 31, 2020. This non-payment of interest triggered an event of default with respect to these components of the Company's long-term debt, consisting of principal amounts at face value of $97.5 million and $60.0 million and accrued interest amounts at March 31, 2020 of $3.2 million and $1.2 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 $12.5 million in excess of the aforementioned amounts that are further detailed in the Company's Financial Statements.
Proposed Recapitalization Transaction
On August 7, 2020, the Company announced that the Supreme Court of British Columbia had issued an interim order authorizing, among other things, the holding of the following meetings: a meeting of holders of 13% senior secured convertible debentures issued by iAnthus Capital Management, LLC, the Company's wholly-owned US subsidiary; a meeting of holders of 8% convertible unsecured debentures issued by the Company; and a meeting of holders of the Company's common shares, options and warrants, in each case to consider and vote upon a corporate plan of arrangement under the British Columbia Business Corporations Act to implement the previously announced recapitalization transaction. As disclosed in the Company's news release dated July 13, 2020 (a copy of which is available under the Company's SEDAR profile at www.sedar.com), the Recapitalization Transaction will be implemented pursuant to the Plan of Arrangement, or, only if necessary, the Companies' Creditors Arrangement Act (CCAA). If the Recapitalization Transaction is completed through the Plan of Arrangement, the existing holders of Common Shares at the time of completion will retain approximately 2.75% of the ownership of the Common Shares.
If the Recapitalization Transaction does not obtain the required support from the Company's shareholders, the Recapitalization Transaction will be implemented through proceedings under the CCAA. If implementation of the Recapitalization Transaction occurs through CCAA Proceedings, Existing Shareholders will not retain any ownership of Common Shares or receive any recovery (i.e., 0% of the ownership of the Common Shares) and the Common Shareholder Interest will instead be allocated equally as among the Secured Noteholders and the Unsecured Debentureholders.
Q2 2020 Filing Extension
The Company is relying on the general order of the Ontario Securities Commission made under Ontario Instrument 51-505 entitled "Temporary Exemption from Certain Corporate Finance Requirements", dated May 20, 2020, to postpone the filing of its financial statements and related filings for the second quarter ended June 30, 2020, as a result of logistical issues and delays caused by the COVID-19 pandemic. The OSC and other securities regulatory authorities in Canada have granted coordinated blanket exemptions allowing issuers an additional 45-day period to complete their regulatory filings that will otherwise be due during the period from June 2, 2020 to August 31, 2020. Under OSC Instrument 51-505, the Interim Filings are due on or before October 15, 2020.
As required by OSC Instrument 51-505, the Company discloses the following:
The Company expects to file the Interim Filings on or before October 15, 2020; and In the interim, the Company's management and other insiders will be subject to a trading black-out policy that reflects the principles in Section 9 of National Policy 11- 207 – Failure-to-File Cease Trade Orders.
The Company confirms that since the filing of its financial statements and related
management discussion and analysis for the year ended December 31, 2019, there have been no material business developments other than those disclosed through news releases.
Cease Trade Order Update
The OSC issued a cease trade order against the Company on June 22, 2020 for failure to file financial statements. The CTO affects trading in all securities of the Company by securityholders of the Company, in each jurisdiction in Canada in which the Company is a reporting issuer. Now that the Company has filed its financial results for the first quarter ended March 31, 2020 and related filings, such filing constitutes the Company's application to have the CTO revoked.
To find out more about iAnthus, visit the company HQ here.
Disclaimer: Past performance is not an indicator of future performance.
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