Comprehensive income of $82.2 million driven by significant increase in
value of investment in TerrAscend
Announced transformative and accretive
transaction with Canopy Growth, expected to close by the end of
February
Anticipates being in strong financial and
strategic position to pivot to the U.S. market following the
closing of CGC Transaction
TORONTO, Feb. 10, 2021 /PRNewswire/ - Canopy Rivers
Inc. ("Canopy Rivers" or the "Company") (TSX: RIV)
(OTC: CNPOF) today released its unaudited condensed interim
consolidated financial statements and management's discussion and
analysis ("MD&A") for the three and nine months ended
December 31, 2020 ("Q3
2021").
"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."
Q3 2021 Financial
Results1
|
|
|
|
|
Select Summary of
Quarterly Results
|
|
Three months
ended
31-Dec-20
|
|
Three months
ended
31-Dec-19
|
Operating income
(before equity method investees and fair value changes)
|
$
|
3,003
|
$
|
5,021
|
Operating
expenses
|
|
3,390
|
|
3,860
|
Net operating income
(loss) (before equity method investees and fair value
changes)
|
|
(387)
|
|
1,161
|
Equity method
investees and fair value changes
|
|
4,524
|
|
(3,208)
|
Other
PharmHouse-related charges(1)
|
|
(13,700)
|
|
-
|
Net operating
loss
|
|
(9,563)
|
|
(2,047)
|
Net income
(loss)
|
|
1,406
|
|
(2,679)
|
Other comprehensive
income (loss) (net of tax)
|
|
80,759
|
|
(37,244)
|
Total comprehensive
income (loss)
|
|
82,165
|
|
(39,923)
|
|
|
|
|
|
Basic earnings (loss)
per share ("EPS")
|
$
|
0.01
|
$
|
(0.01)
|
Diluted
EPS
|
$
|
0.01
|
$
|
(0.01)
|
|
|
|
|
|
Cash flows used in
operating activities
|
|
(953)
|
|
(3,523)
|
Cash flows provided
by (used in) investing activities
|
|
944
|
|
(30,391)
|
Cash flows provided
by financing activities
|
|
76
|
|
813
|
|
|
|
|
|
|
|
Nine months
ended
31-Dec-20
|
|
Nine months
ended
31-Dec-19
|
Operating income
(loss) (before equity method investees and fair value
changes)
|
$
|
(130)
|
$
|
9,333
|
Operating
expenses
|
|
7,615
|
|
15,819
|
Net operating loss
(before equity method investees and fair value changes)
|
|
(7,745)
|
|
(6,486)
|
Equity method
investees and fair value changes
|
|
(34,042)
|
|
(3,905)
|
Other
PharmHouse-related charges(1)
|
|
(84,456)
|
|
-
|
Net operating
loss
|
|
(126,243)
|
|
(10,391)
|
Net loss
|
|
(112,402)
|
|
(10,051)
|
Other comprehensive
income (loss) (net of tax)
|
|
114,877
|
|
(71,280)
|
Total comprehensive
income (loss)
|
|
2,475
|
|
(81,331)
|
|
|
|
|
|
Basic EPS
|
$
|
(0.59)
|
$
|
(0.05)
|
Diluted
EPS
|
$
|
(0.59)
|
$
|
(0.05)
|
|
|
|
|
|
Cash flows used in
operating activities
|
|
(2,815)
|
|
(6,980)
|
Cash flows used in
investing activities
|
|
(5,910)
|
|
(48,420)
|
Cash flows provided
by (used in) financing activities
|
|
(4)
|
|
895
|
(1)
Excludes the Company's share of loss from its investment in
PharmHouse common shares, which is captured in "Equity
method investees and fair
value changes"
|
"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."
|
|
|
|
|
|
|
Three months
ended
31-Dec-20
|
|
Three months
ended
31-Dec-19
|
Royalty, interest,
and lease income (before provisions)
|
$
|
5,853
|
$
|
5,021
|
Provision for credit
losses on interest and royalty receivables
|
|
|
|
|
PharmHouse
|
|
-
|
|
-
|
Other
|
|
(2,850)
|
|
-
|
Operating
income
(before equity method investees and fair value
changes)
|
$
|
3,003
|
$
|
5,021
|
|
|
|
|
|
General and
administrative expenses
|
$
|
981
|
$
|
1,755
|
Consulting and
professional fees
|
|
441
|
|
929
|
Share-based
compensation
|
|
80
|
|
1,133
|
Depreciation and
amortization expense
|
|
50
|
|
43
|
Restructuring
costs
|
|
1,838
|
|
-
|
Operating
expenses
|
$
|
3,390
|
$
|
3,860
|
|
|
|
|
|
Net operating
income (loss)
(before equity method investees and fair value
changes)
|
$
|
(387)
|
$
|
1,161
|
|
|
|
|
|
|
|
Nine months
ended
31-Dec-20
|
|
Nine months
ended
31-Dec-19
|
Royalty, interest,
and lease income (before provisions)
|
$
|
12,586
|
$
|
9,333
|
Provision for credit
losses on interest and royalty receivables
|
|
|
|
|
PharmHouse
|
|
(8,939)
|
|
-
|
Other
|
|
(3,777)
|
|
-
|
Operating income
(loss)
(before equity method investees and fair value
changes)
|
$
|
(130)
|
$
|
9,333
|
|
|
|
|
|
General and
administrative expenses
|
$
|
3,610
|
$
|
5,300
|
Consulting and
professional fees
|
|
1,168
|
|
2,604
|
Share-based
compensation
|
|
434
|
|
7,787
|
Depreciation and
amortization expense
|
|
137
|
|
128
|
Restructuring
costs
|
|
2,266
|
|
-
|
Operating
expenses
|
$
|
7,615
|
$
|
15,819
|
|
|
|
|
|
Net operating
loss
(before equity method investees and fair value
changes)
|
$
|
(7,745)
|
$
|
(6,486)
|
Canopy Rivers reported operating income (before equity method
investees and fair value changes) of $3.0
million for the quarter. This includes royalty, interest,
and lease income (before provisions for credit losses) of
$5.9 million from the Company's
various royalty, convertible debenture, and loan agreements, among
other items. Offsetting this gross income was a provision for
credit losses on interest and royalty receivables of $2.9 million for the quarter relating to the
Company's royalty investment in Agripharm Corp.
("Agripharm"), which is currently ramping up sales to
provincial distributors subsequent to the receipt of its sales
licence amendment.
Operating expenses were $3.4
million for the quarter, compared with $3.9 million for the same period last year.
Operating expenses included $1.0
million of general and administrative expenses relating to
employee and director compensation, marketing and business
development, and other public company costs; $0.4 million of professional fees relating to
general legal, audit, tax, accounting, and other regulatory
advisory fees; and $1.8 million of
restructuring costs relating to professional and advisory fees
incurred in connection with the CGC Transaction (as defined
below).
|
|
|
|
|
|
|
Three months
ended
31-Dec-20
|
|
Three months
ended
31-Dec-19
|
Share of loss from
equity method investees
|
|
|
|
|
PharmHouse
|
$
|
-
|
$
|
(543)
|
Other
|
|
(728)
|
|
(764)
|
Net change in fair
value of financial assets at FVTPL
|
|
4,790
|
|
(1,901)
|
Other
PharmHouse-related charges
|
|
|
|
|
Provision for credit
losses on loans receivable
|
|
(6,200)
|
|
-
|
Provision for credit
losses on financial guarantee liability
|
|
(7,500)
|
|
-
|
Gain on disposition
of equity method investee
|
|
462
|
|
-
|
Equity method
investees and fair value changes
|
$
|
(9,176)
|
$
|
(3,208)
|
|
|
|
|
|
|
|
Nine months
ended
31-Dec-20
|
|
Nine months
ended
31-Dec-19
|
Share of loss from
equity method investees
|
|
|
|
|
PharmHouse
|
$
|
(37,025)
|
$
|
(1,238)
|
Other
|
|
(845)
|
|
(1,719)
|
Net change in fair
value of financial assets at FVTPL
|
|
3,366
|
|
(948)
|
Other
PharmHouse-related charges
|
|
|
|
|
Provision for credit
losses on loans receivable
|
|
(51,956)
|
|
-
|
Provision for credit
losses on financial guarantee liability
|
|
(32,500)
|
|
-
|
Gain on disposition
of equity method investee
|
|
462
|
|
-
|
Equity method
investees and fair value changes
|
$
|
(118,498)
|
$
|
(3,905)
|
|
|
|
|
|
The Company's share of loss from equity method investees was
$0.7 million for the quarter, which
includes the Company's equity investments in Canapar Corp.
("Canapar"), LeafLink Services International ULC
("LeafLink"), and Radicle Medical Marijuana Inc.
("Radicle").
Canopy Rivers also reported a net increase in the fair value of
financial assets that are reported at fair value through profit or
loss ("FVTPL") of $4.8 million
for the quarter. The net increase was primarily driven by an
$11.4 million increase in the fair
value of the Company's investments in the TerrAscend Canada Inc.
("TerrAscend Canada") term loan and TerrAscend Corp.
("TerrAscend") warrants, and a $1.0
million increase in the fair value of the Company's
investment in the preferred shares of Les Serres Vert Cannabis Inc.
("Vert Mirabel"), while
partially offset by negative changes in the estimated fair values
of the Company's royalty investments in Agripharm and The Tweed
Tree Lot Inc. ("Tweed Tree Lot"), call option investment in
Canapar, and convertible debenture investment in Civilized
Worldwide Inc.
The Copany also updated its recoverability assessment relating
to PharmHouse Inc. ("PharmHouse") to determine the quantum
of any charges to be recognized in respect of its various
PharmHouse-related financial assets, as well as any charges related
to PharmHouse's $90.0 million
non-revolving syndicated credit facility (the "PharmHouse Credit
Facility"), which the Company has guaranteed (the
"PharmHouse Guarantee") (collectively, the "PharmHouse
Recoverability Assessment"). Based on the updated PharmHouse
Recoverability Assessment, the Company recognized an additional
provision for credit losses on the Company's loans receivable with
PharmHouse of $6.2 million,
representing the full amount advanced to PharmHouse pursuant to the
DIP Financing (as defined below) during the quarter, as well as an
additional provision for credit losses on the PharmHouse Guarantee
liability of $7.5 million, resulting
in an estimated liability on the Company's statement of financial
position related to the PharmHouse Guarantee of $32.5 million as at December 31, 2020.
After consideration of operating income, operating expenses,
equity method investees, FVTPL fair value changes, PharmHouse
charges, and expected tax recoveries, among other items, Canopy
Rivers reported net income of $1.4
million for the quarter.
|
|
|
|
|
|
|
Three months
ended
31-Dec-20
|
|
Three months
ended
31-Dec-19
|
TerrAscend
|
$
|
105,000
|
$
|
(21,000)
|
Vert
Mirabel
|
|
(9,500)
|
|
(15,642)
|
YSS
|
|
(55)
|
|
(1,252)
|
Headset
|
|
(200)
|
|
(82)
|
Zeakal
|
|
(600)
|
|
(255)
|
BioLumic
|
|
(100)
|
|
-
|
Dynaleo
|
|
-
|
|
-
|
Other
|
|
-
|
|
(3,118)
|
Gross change in
fair value of financial assets at FVTOCI
|
$
|
94,545
|
$
|
(41,349)
|
OCI income tax
expense (recovery)
|
|
13,786
|
|
(4,154)
|
Net change in fair
value of financial assets at FVTOCI(1)
|
$
|
80,759
|
$
|
(37,195)
|
|
|
|
|
|
|
|
Nine months
ended
31-Dec-20
|
|
Nine months
ended
31-Dec-19
|
TerrAscend
|
$
|
138,500
|
$
|
(51,000)
|
Vert
Mirabel
|
|
(3,400)
|
|
(14,498)
|
YSS
|
|
(273)
|
|
(2,449)
|
Headset
|
|
(500)
|
|
(118)
|
Zeakal
|
|
(1,500)
|
|
(501)
|
BioLumic
|
|
(39)
|
|
-
|
Dynaleo
|
|
835
|
|
-
|
Other
|
|
(976)
|
|
(11,961)
|
Gross change in
fair value of financial assets at FVTOCI
|
$
|
132,647
|
$
|
(80,527)
|
OCI income tax
expense (recovery)
|
|
17,748
|
|
(9,350)
|
Net change in fair
value of financial assets at FVTOCI(1)
|
$
|
114,899
|
$
|
(71,177)
|
(1) In
addition to the fair value change noted above, net change in fair
value of financial assets at FVTOCI also includes FX gains/losses
related to equity method investees denominated in USD
currency
|
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 ("FVTOCI"). The
Company 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 the Company's exchangeable share
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.
|
|
|
|
|
Period
ended
|
|
As
at
31-Dec-20
|
|
As
at
31-Mar-20
|
Cash
|
$
|
37,995
|
$
|
46,724
|
Loans
receivable
|
|
-
|
|
42,450
|
Equity method
investees
|
|
6,413
|
|
50,543
|
Financial assets at
FVTPL
|
|
82,780
|
|
80,170
|
Financial assets at
FVTOCI
|
|
201,450
|
|
64,599
|
Other
assets
|
|
10,661
|
|
15,899
|
Total
assets
|
$
|
339,299
|
$
|
300,385
|
|
|
|
|
|
Financial guarantee
liability
|
$
|
32,500
|
$
|
-
|
Other
liabilities
|
|
4,321
|
|
2,107
|
Total shareholders'
equity
|
|
302,478
|
|
298,278
|
Total liabilities
and shareholders' equity
|
$
|
339,299
|
$
|
300,385
|
|
|
|
|
|
CGC Transaction Update
On December 21, 2020, Canopy
Rivers entered into a definitive agreement with Canopy Growth
Corporation ("Canopy Growth") (TSX: WEED) (NASDAQ: CGC)
pursuant to 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 shares2 in
Canopy Growth, and the cancellation of Canopy Growth's multiple
voting shares and subordinated voting shares of Canopy Rivers (the
"CGC Transaction"). 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 CGC Transaction, the Company
expects to have approximately $310
million in net cash and liquid securities on a pro forma
basis.3
The Company believes the CGC Transaction will propel it to its
next phase of growth. Among the numerous benefits it provides to
shareholders, the CGC Transaction unlocks value and provides
significant liquidity for the Company, eliminates the Company's
dual-class share structure, and enables the Company to access
previously unavailable investment and acquisition opportunities in
the U.S. In the weeks following the announcement of the CGC
Transaction, the market reacted favourably, with a significant
increase in the Company's share price. As the Company reviews
its corporate strategy and considers potential material investments
in, or acquisitions of, established operating businesses in the
U.S. cannabis market, its priority remains delivering value for its
shareholders.
There will be a special meeting of shareholders on February 16, 2021 to approve the CGC Transaction.
The Company is encouraged by early voting results, which signal
strong support for the CGC Transaction, and expects that the CGC
Transaction will close shortly after receiving shareholder
approval. Following approval, the Company's corporate name will
change to RIV Capital Inc., and further updates on the CGC
Transaction and other corporate events will be communicated under
this name. The Company is also initiating the process to delist its
shares from the TSX following the completion of the CGC Transaction
and 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.
The Company's operating results and financial position for the
quarter include estimates of fair value for the assets being sold
or transferred to Canopy Growth in connection with the CGC
Transaction. Given that the CGC Transaction has not yet closed, the
Company's fair value estimates as at December 31, 2020, are based upon valuation
methodologies, inputs, and assumptions that reflect current
circumstances and are consistent with prior reporting periods, and
may result in fair value estimates that are different than the
actual values ascribed to these individual assets pursuant to the
plan of arrangement in respect of the CGC Transaction. The Company
anticipates that the full impact of the CGC Transaction on the
Company's financial position and future outlook will be reflected
in its financial results for the quarter ending March 31, 2021.
_______________________
|
1
|
The financial
highlights in this summary are presented in CA$
thousands.
|
2
|
The actual number of
Canopy Growth common shares issued pursuant to the Transaction are
subject to a downward adjustment in the event that certain rights
of first refusal in respect of the Vert Mirabel common shares are
exercised.
|
3
|
Based on estimated
net cash proceeds from the CGC Transaction, the Company's current
adjusted cash balance, and the implied value of 3.75 million Canopy
Growth common shares based on the closing price of $62.35 per share
on February 9, 2021, net of the estimated liability in respect of
the PharmHouse Guarantee. This estimate is based upon a significant
number of assumptions and will be updated as additional information
becomes available.
|
PharmHouse Update
Resolving PharmHouse's restructuring proceedings under the
Companies' Creditors Arrangement Act ("CCAA") in a manner
that maximizes value preservation for the Company's shareholders
continues to be a top priority.
As previously disclosed, the Sale and Investment Solicitation
Process ("SISP") to identify interest in, and opportunities
for, a sale of, or investment in, all or part of PharmHouse's
assets or business remains underway. Phase one of the SISP
concluded on November 30, 2020, and a
number of parties were selected by PharmHouse (with the assistance
of the monitor and the SISP advisor) to continue into phase two.
Binding offers for phase two of the SISP are due on or about
February 16, 2021, and the Company
expects to provide an update on the SISP shortly thereafter.
Day-to-day operations at PharmHouse have continued throughout
its restructuring, and the Company believes that PharmHouse has
taken significant steps forward in its operations over the past few
months. PharmHouse continues to source new opportunities in the
Canadian cannabis sector and ramp up its cannabis growing
operations, and the Company continues to support PharmHouse with a
debtor-in-possession interim, non-revolving credit facility (the
"DIP Financing"). During the quarter, the maximum amount
available to be drawn pursuant to the DIP Financing was increased
by approximately $2.5 million to a
total of $9.7 million, and the
maturity date was extended from December 29,
2020, to February 28, 2021.
The court-ordered stay of proceedings with respect to PharmHouse
was also extended to February 28,
2021.
The Company continues to work collaboratively with the syndicate
of lenders under the PharmHouse Credit Facility during the CCAA
proceedings. No repayments of principal have occurred and the
current outstanding balance remains $90.0
million, with interest payable by PharmHouse monthly.
Subsequent to the quarter, on February
10, 2021, the Company received a statement of claim (the
"Claim") filed by the PharmHouse majority shareholder
concerning certain disputes relating to PharmHouse. 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.
Q3 2021 Portfolio Updates
The following represents a summary of other key developments
within the Canopy Rivers portfolio during Q3 2021:
- Agripharm, pursuant to its exclusive licence to distribute
SLANG products in Canada, shipped
the first O.pen line of vape products to British Columbia in October, followed by
Ontario in December. Agripharm
also distributed SLANG's Firefly Mini products for sale in
Ontario.
- Canopy Rivers sold its 49% interest in Italy-based Canapar to RAMM Pharma Corp. for
consideration of up to $9.0 million,
including a cash payment of $7.0
million and contingent consideration of $2.0 million.
- Dynaleo Inc. received its sale licence from Health Canada,
enabling it to supply and sell cannabis edibles to provincial,
territorial, and private wholesalers across Canada.
- Greenhouse Juice Company ("Greenhouse Juice") announced
that its products are available at IGA and Fresh St. Market
locations in the Vancouver area.
Greenhouse Juice also expanded its home delivery service, including
extended shelf-life guarantees and carbon offsetting all
deliveries.
- Headset Inc. launched Headset Insights in Saskatchewan. In Canada, Headset Insights is also available in
Alberta, British Columbia, and Ontario.
- High Beauty, Inc. entered into a co-development and commercial
partnership with Lygos, Inc., a vertically integrated provider of
safe and sustainable specialty ingredients.
- TerrAscend announced its third quarter results, reporting sales
of approximately $51.0 million and
adjusted EBITDA of approximately $17.8
million, and announced the close of a US$120.0 million debt financing.
- YSS Corp. ("YSS") announced its third quarter results,
reporting a 24% revenue increase quarter-over-quarter. YSS also
announced the opening of several new stores during the quarter,
bringing its total to 19 in Alberta and Saskatchewan. Subsequent to the quarter, YSS
entered into an agreement with Alcanna Inc. to combine cannabis
retail businesses to form Nova Cannabis Inc., which will target the
value-conscious consumer, an under-served segment of the market
that is estimated to account for approximately 70% of the total
recreational cannabis market in Canada (both legal and illicit).
This press release should be read in conjunction with the
Company's unaudited condensed interim consolidated financial
statements and MD&A for the three and nine months ended
December 31, 2020, which are
available under the Company's profile on 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.
For more information regarding the Company and its portfolio
companies, please refer to the MD&A and the Company's annual
information form dated June 2, 2020 ("AIF"), also
available under the Company's profile on SEDAR at www.sedar.com and
on the Company's website at www.canopyrivers.com/investors.
About Canopy Rivers Inc.
Canopy Rivers is an investment and acquisition company
specializing in cannabis with a portfolio of 17 companies across
various segments of the cannabis value chain. We believe that
bringing together people, capital, and ideas raises the potential
of the entire cannabis industry. By leveraging our industry
insights, in-house expertise, and thesis-driven approach to
investing, we aim to provide shareholders with exposure to
specialized and disruptive cannabis companies.
Forward-Looking Statements
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. To
the extent any forward-looking information in this news release
constitutes "financial outlooks" within the meaning of applicable
Canadian securities laws, the reader is cautioned that this
information may not be appropriate for any other purpose and the
reader should not place undue reliance on such financial outlooks.
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: the Company's expectations regarding
legislation, regulations, and licensing related to the Canadian and
global cannabis markets and product offerings in Canada and internationally; the evolution of
cannabis markets globally and the potential for global investment
opportunities to arise; the potential outcomes for the cannabis
sector as a result of the U.S. election; expectations regarding the
Company's ability to capitalize on the opportunity in the United States once it is federally
permissible to do so; the estimated recoverable amount of
PharmHouse's assets en bloc; the expected amount of the Company's
liability in respect of the PharmHouse Guarantee; expectations with
respect to the SISP; the expectation that PharmHouse will require
additional capital beyond that available pursuant to the DIP
Financing prior to the conclusion of the CCAA Proceedings;
expectations with respect to the Claim, including the merits
thereof; the supply of Dynaleo's products to the Canadian adult-use
market by the end of the calendar year; the closing of the
transactions contemplated by the CGC Transaction; the Company's
financial position following the completion of the transactions
contemplated by the CGC Transaction; the anticipated timing and
occurrence of the shareholder meeting to approve the arrangement
contemplated under the CGC Transaction; the anticipated benefits,
costs and risks associated with the CGC Transaction, including the
implied value of, or anticipated proceeds from, the CGC
Transaction; the anticipated benefits of the collapse of the
Company's dual-class share structure in connection with the CGC
Transaction; the attractiveness of the Company's shares as
acquisition currency following the CGC Transaction; the anticipated
de-listing of the Company's securities on the TSX and the
subsequent listing of its securities on a stock exchange that does
not prohibit investments or acquisitions of companies with business
activities related to marijuana operations in the U.S.; the
Company's ability and position to pivot to the U.S. market
following the completion of the CGC Transaction; the benefits
associated with an entry into the U.S. cannabis market; the
Company's expected focus and priorities for the coming quarters;
the Company's ability to sustain its current momentum; the
Company's belief that it is well-positioned for U.S. market
development through its investment in TerrAscend as well as its
expectations regarding the conversion and implied value of its
TerrAscend exchangeable shares; and expectations for other
economic, business, and/or competitive factors.
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. Financial
outlooks, as with forward-looking information generally, are,
without limitation, based on the assumptions and subject to various
risks as set out herein. Our actual financial position and results
of operations may differ materially from management's current
expectations. Among the key factors that could cause actual results
to differ materially from those projected in the forward-looking
information are the following: the possibility that the CGC
Transaction will not be completed on the terms and conditions, or
on the timing, currently contemplated, and that it may not be
completed at all, due to a failure to obtain or satisfy, in a
timely manner or otherwise, the required shareholder approval or
approval of the court, or other approvals and other conditions of
closing necessary to complete the CGC Transaction, or for other
reasons; the occurrence of any event, change or other circumstances
that could give rise to the termination of the CGC Transaction; the
delay of implementation of the CGC Transaction or failure to
complete the CGC Transaction for any reason; the Company's ability
to alter its capital structure on the anticipated terms; the entry
into the U.S. market by the Company, including by way of investment
or acquisition; the profitability of engaging in investments or
operations in the U.S.; the potential for the company's board of
directors and shareholders to be prosecuted for aiding and abetting
violations of U.S. federal law; enhanced scrutiny of the Company's
investments and operations if the Company invests in or operates
U.S. cannabis businesses; the effect of operating or investing in
the U.S. on the Company's existing contractual arrangements and
business relationships; the risks associated with U.S. banking and
anti-money laundering laws and regulations; the classification of
the Company's income as proceeds of crime and the ability of the
Company to declare or pay dividends or effect other distributions
or the repatriation of funds back to Canada; risks associated with the termination,
renegotiation and enforcement of material contracts; credit,
liquidity and additional financing risks for the Company and its
investees; litigation risks; stock market volatility; regulatory
and licensing risks; cannabis pricing risks; changes in cannabis
industry growth and trends; changes in the business activities,
focus and plans of the Company and its investees and the timing
associated therewith; the Company's actual financial results and
ability to manage its cash resources; changes in general economic,
business and political conditions, including challenging global
financial conditions and the impact of the novel coronavirus
pandemic; competition risks; 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 investees;
changes in applicable laws; compliance with extensive government
regulation, including the Company's interpretation of such
regulation; changes in the global sentiment towards, and public
opinion of, the cannabis industry; reliance on material contracts;
risk of default by investees; divestiture risks; 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.
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SOURCE Canopy Rivers Inc.