iAnthus Capital Holdings, Inc. (“iAnthus” or the “Company”) (CSE: IAN), (OTCPK: ITHUF), which owns, operates, and partners with regulated cannabis operations across the United States, reports its financial results for the fourth quarter and year-ended December 31, 2020. The Company’s Annual Report on Form 10-K, which includes its financial statements for the year-ended December 31, 2020 and the related management’s discussion and analysis of financial condition and results of operations, can be accessed on the Company’s SEDAR profile at www.sedar.com, the Securities and Exchange Commission’s (“SEC”) website at www.sec.gov, and on the Company’s website at www.iAnthus.com. The Company became a U.S. reporting company effective February 5, 2021. As such, the Company’s financial statements are reported in accordance with U.S. Generally Accepted Accounting Principles (GAAP). All currency is expressed in U.S. dollars.
Full Year 2020 Financial Highlights
- Revenue of $151.7 million, up 93.5% from the prior year
- Gross profit of $86.7 million, up 232.2% from the prior year
- Net loss of $309.8 million, or a loss of $1.81 per share
- 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 (“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 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 (“Exit Fee”) in excess of the aforementioned amounts that are further detailed in the Company’s financial statements.
Fourth Quarter 2020 Financial Highlights
- Revenue of $46.0 million
- Gross profit of $21.8 million
- Net loss of $27.3 million, or a loss of $0.16 per share
- As disclosed in the Company’s filings with the applicable Canadian securities regulators and the SEC, the Company entered into a restructuring support agreement with the holders of its Secured Notes (the “Secured Lenders”) and certain holders of its Unsecured Debentures (the “Consenting Unsecured Debentureholders”) to effectuate a recapitalization transaction (“Recapitalization Transaction”) to be implemented by way of a court-approved plan of arrangement (“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, the Company 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 $14.7 million provided by the Secured Lenders. The Recapitalization Transaction remains subject to the receipt of all necessary regulatory approvals and approval by the CSE. Specifically, certain of the transactions contemplated by the Recapitalization Transaction have triggered approval by U.S. state-level regulators in the states in which the Company operates. Where required, iAnthus has commenced the review and approval process. The foregoing 2020 financial highlights do not give effect to the consummation of the Recapitalization Transaction.
|Table 1: Full Year 2020 Financial Results|
|in thousands of US$, except share and per share amounts||2020||2019|
|Net loss per share||(1.81)||(1.93)|
|Table 2: Q4 2020 Financial Results|
|in thousands of US$, except share and per share amounts||Q4 2020|
|Net loss per share||(0.16)|
Filing of Second Amendment to the Company’s Registration Statement on Form 10
The Company today also announced that it has filed a second amendment to its Registration Statement on Form 10, initially filed with the SEC on December 8, 2020, as amended on February 5, 2021 (as amended, the “Form 10”). The Form 10 became effective on February 5, 2021. The Form 10 provides detailed and audited information about the Company’s operations, including an overview of the business strategies, risk factors and financial statements. The Form 10 is available on the Company’s SEDAR profile at www.sedar.com, the SEC’s website at www.sec.gov and on the Company’s website at www.iAnthus.com.
iAnthus owns and operates licensed cannabis cultivation, processing and dispensary facilities throughout the United States. For more information, visit www.iAnthus.com.
COVID-19 Risk Factor
The Company may be impacted by business interruptions resulting from pandemics and public health emergencies, including those related to the novel coronavirus disease 2019 (“COVID-19”). An outbreak of infectious disease, a pandemic, or a similar public health threat, such as the outbreak of COVID-19, or a fear of any of the foregoing could adversely impact the Company by causing operating, manufacturing, supply chain, and project development delays and disruptions, labor shortages, travel, and shipping disruption and shutdowns (including as a result of government regulation and prevention measures). It is unknown whether and how the Company may be affected if such a pandemic persists for an extended period of time, including as a result of the waiver of regulatory requirements or the implementation of emergency regulations to which the Company is subject. Although the Company has been deemed essential and/or has been permitted to continue operating its facilities in the states in which it cultivates, processes, manufactures, and sells cannabis during the pendency of the COVID-19 pandemic, subject to the implementation of certain restrictions on adult-use cannabis sales in both Massachusetts and Nevada, which have since been lifted, there is no assurance that the Company’s operations will continue to be deemed essential and/or will continue to be permitted to operate. The Company may incur expenses or delays relating to such events outside of its control, which could have a material adverse impact on its business, operating results, financial condition, and the trading price of its common shares.