Adam Jackson
RIV Capital Inc. (CSE: RIV) (OTC: CNPOF) released its financial results for its fiscal second quarter ended Sept. 30, showing a mixed performance as it prepares to expand into the New York market.
The company posted net revenue for the quarter of $1.7 million, a decrease from $2 million in the same period last year. The decline was primarily linked to competitive pressures in the medical cannabis retail business, influenced by the troubled launch of the adult-use market in New York and the expansion of the illicit market in the state.
The company experienced a net loss of $7.4 million for the quarter, though that was a stark improvement from the $142.3 million loss in the same period last year.
For the six-month period ended Sept. 30, the net loss was $16.5 million on revenue of $3.7 million, compared to a loss of $145.8 million on revenue of $3.4 million in the previous year.
RIV Capital’s total comprehensive loss for the three and six months was $6.7 million and $16.4 million, respectively, versus losses of $141.9 million and $150 million in the same periods last year.
The company reported a gross profit of $51,000 for the quarter, a sharp dive from $889,000 in the same period last year. For the six-month period, the gross profit was $444,000, compared to $1.4 million in the previous year.
The cost of goods sold for the quarter was $1.9 million, significantly higher than the $906,000 reported in the same period last year. That rise was due to the ramp-up of operations at Etain LLC’s Chestertown facility, ahead of its expected entry into the adult-use wholesale and retail markets in New York. The company also recognized an inventory write-down of $490,000 during the quarter.
New York
Interim CEO and COO Mike Totzke said in a statement Wednesday that the company submitted its application to transition to an adult-use license in New York. RIV and other registered organizations (New York’s category for the medical operators) had previously been shut out of the licensing rounds for recreational stores.
“We were thrilled to advance this latest step in the process and remain eager to launch adult-use sales in the state,” Totzke said. “To prepare for our entry, we have significantly bolstered our New York footprint with our Chestertown facility expansion successfully coming online in the quarter.”
CFO Eddie Lucarelli added: “Disciplined capital management continues to be at the forefront of our strategy, and with our pending adult-use entry in New York, we believe that we continue to be sufficiently capitalized to execute on our growth strategy.”
Operating expenses for the three and six months were $4.8 million and $10.1 million, respectively, showing a consistent trend compared to the same periods last year.
The company’s cash flow from operating activities also reflected a net use of $8.8 million for the six months, compared to $7.3 million in the same period last year.
As a reminder, the firm’s transition to a December fiscal year-end has condensed its financial reporting into a nine-month window, a move that aligns its business cycle more closely with industry norms.
