RIV Capital Inc.

For the third calendar quarter of 2023, revenue net of excise taxes was $1.7 million versus $1.9 million in the prior-year period. Retail revenue was $1.5 million and wholesale revenue was $0.3 million. Cost of goods sold was $1.9 million, the effect of fair value items on gross profit was a positive $0.2 million, and gross profit was $0.1 million compared with $0.9 million a year ago. SG&A was $4.8 million, unchanged from last year. Other loss was $3.8 million versus $1.6 million last year, and net loss was $7.4 million versus $142.3 million last year, with the prior-year loss heavily affected by a goodwill impairment charge. Cash on hand was approximately $85 million as of September 30, 2023. Management expects to begin wholesale into adult-use dispensaries by the end of the year and transition into adult-use sales at its first co-located dispensary at the beginning of 2024.

Mike Totzke struck an upbeat, execution-focused tone, emphasizing that the company is moving from preparation to launch in New York adult use. He highlighted successful completion of five harvests at Chestertown, above-expectation initial yields and quality, and the tripling of cultivation capacity after the expansion. He also said the Buffalo facility is progressing well and is intended to support high-quality indoor flower once approvals are received.

Eddie Lucarelli focused on the quarter’s financial drag from market pressure and underutilization of new capacity. He said the revenue decline reflected competition in New York medical cannabis and the growing illicit market, while gross profit was pressured by underused expanded facilities and an inventory write-down on intermediate oils. He also pointed to $3.6 million of noncash accretion and interest expense tied mainly to the Hawthorne Collective convertible notes, and said the roughly $85 million cash balance should be enough to fund expansion, optimization, and other growth opportunities.

There was no formal analyst Q&A in the transcript. Management instead addressed timing and go-to-market plans, saying it has submitted the adult-use transition application, is working with regulators, expects wholesale before year-end, and expects the first co-located retail store in early 2024. They also referenced broader industry questions by pointing to positive regulatory momentum, including the HHS rescheduling recommendation and the Senate Banking Committee’s passage of the SAFER Banking Act.