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Parent of Vermont medical cannabis firm releases 1Q18 results

Submitted by tim on

Vermont Business Magazine iAnthus Capital Holdings, Inc (CSE:IAN, OTCQB: ITHUF), which owns, operates, and partners with licensed cannabis operations throughoutthe United States including a plant inBrandon (Grassroots Vermont), with plans to open a second dispensary in Williston, has announced its financial and operating results for the first quarter of 2018. All amounts expressed are in USD.

Hadley Ford, CEO of iAnthus, provided the following statement on the Company's Q1 2018 results:

"With the continued development of licensed operations and assets, iAnthus has successfully transitioned to an owner and operator in the U.S. regulated cannabis sector. In the East Coast states ofNew York,Florida,Massachusetts, andVermont, iAnthus now holds licenses to operate up to four cultivation and processing facilities and 34 dispensaries. The Company has made significant investments in building out its cultivation operations and dispensaries across each of these states, resulting in increased production capacity and competitive retail locations. As we look ahead to the next quarter, we expect iAnthus to continue to be aggressive in ramping up production and dispensary openings across each of our operations."

Financial Highlights

  • The Company recorded$3.2 millionof revenues in Q1 2018, compared to$0.3 millionin Q1 2017. Total revenues include the Company's inaugural cannabis revenues totaling$0.2 million, as the Company transitions to an owner and operator of licensed assets in the cannabis sector, in addition to$2.6 millionin fair value adjustment on biological assets, which represents results from the Company's cultivation operations;
  • The net loss for the quarter endedMarch 31, 2018was approximately ($0.6 million), or($0.01)per share compared to a loss of approximately ($1.9 million), or($0.07)per share for the quarter endedMarch 31, 2017. The decrease in the net loss for Q1 2018 compared to the prior period is primarily due to increases in deal related expenses including legal, professional and transaction fees relating to the acquisitions inFloridaandNew York, which were offset by a significant non-cash fair value adjustment on the derivatives attached to the debentures that were issued inJanuary 2018;
  • Assets increased to$124.0 millionatMarch 31, 2018from$45.8 millionatDecember 31, 2017, an increase of 271% that was primarily due to the acquisitions of Citiva and GrowHealthy; and
  • The Company received$5.1 millionrepresenting two principal repayments of$2.0 millioneach plus accrued interest from The Green Solution, LLC, in February andApril 2018, respectively. The remaining$3.5 millionbalance and accrued interest is expected to be received inJuly 2018.

Developments Subsequent to the Quarter

  • OnMay 14, 2018, the Company received a$50.0 millioninvestment from Gotham Green Partners ("GGP"), of which$40.0 millionwas in the form of high yield senior secured notes, which bear a 13% coupon and are exchangeable into shares of the Company ("HY Notes"). The Company concurrently issued$10.0 millionin the form of Class A shares. The proceeds of the financing were allocated to repay principal and interest on the$20.0 millionof unsecured debentures issued inJanuary 2018. In addition, the proceeds will be allocated to continued cultivation and dispensary build-outs in the Company's key markets ofNew YorkandFlorida, with the remainder to be utilized for potential expansion activities consistent with the Company's strategic objectives. Net cash proceeds to the Company were approximately$46.0 millionafter deducting various fees and structuring costs.

Business Update

Massachusetts–Mayflower Medicinals Highlights:

  • Mayflower received its final certificate of registration from the Department of Public Health and began operations at its 36,000 square-footHollistoncultivation and processing facility; the facility has the capability of producing 2,625 kg of product annually;
  • Mayflower received and planted its first shipment of clones in the first weeks of 2018, accelerating the production process and culminating in Mayflower's first harvest onApril 20, 2018;
  • At the close of Q1 2018, Mayflower was cultivating 2,670 plants, representing 15 different strains. The Company recorded a gain on transformation of biological assets of$0.5 millionfor Q1 2018, compared to $Nil for the same period in 2017;
  • Mayflower's flagship dispensary in the popularAllston-Brightonneighborhood ofBostonhas received the Approval to Sell from the Massachusetts Department of Public Health and is expected to open in the summer of 2018;
  • A second dispensary lease has been signed in another state-approved location, with a third dispensary location currently awaiting regulatory approval; and
  • TheMassachusettsrecreational cannabis program is expected to begin in Q3 2018.

Florida–GrowHealthy Highlights:

  • Revenue in Q1 2018 totaled$15,783through GrowHealthy's recently launched delivery program, compared to $Nil for the same period in 2017;
  • More than 25,000 square-feet of the cultivation and processing facility inLake Waleshas been built-out, with an additional 175,000 square-feet of space available for continued cultivation expansion, supporting approximately 18,000kg of annual cannabis production;
  • At the close of Q1 2018, the cultivation facility housed over 2,400 plants representing 70 different strains. The gain on transformation of biological assets associated with GrowHealthy for the period totaled$2.4 million, compared to $Nil for Q1 2017;
  • The Company signed leases for dispensary locations inWest Palm Beach,Orlando,Tampa Bay, andDeerfield Beach, representing an aggregate retail space of 13,500 square feet; and
  • OnMay 25, 2018, Judge Gievers of the Florida Circuit Court inLeon Countyruled thatFlorida'scurrent ban on smokable medical marijuana is unconstitutional. While the Florida Department of Health has appealed the ruling, resulting in an automatic stay, the Company believes that this is a step in a positive direction for increased patient access to medical marijuana and accelerated growth in theFloridamarket.

New York–Citiva Highlights:

  • Acquired 8.5 acres of land inWarwick, NY, the location of the Company's planned 39,500 square-foot modular cultivation and processing facility, which will support in excess of 2,200 kg of annual production and which is expected to be completed in the first half of 2019;
  • Signed a lease on the Company's flagship 2,000 square-foot dispensary inBrooklyn, located in the high-traffic area directly across from Barclays Center. The dispensary is expected to be one of only three competitors operating withinBrooklyn, a borough of approximately 2.6 million residents; and
  • Negotiating leasing agreements for dispensaries inStaten Island,Dutchess County, andChemung Countywith a combined population of approximately 860,000 residents.

Vermont–Grassroots Vermont, Brandon, Highlights:

  • Revenue for Q1 2018 totaled$0.2 million, representing a 4% decrease compared to the same period last year. This was due to a facility-wide upgrade during Q1 2018 which resulted in approximately 50% of the cultivation capacity going offline. The upgrades are now complete and include a new commercial kitchen, improved processing facilities, and additional grow space that has doubled capacity to allow an estimated production of 200kg annually;
  • The Company recorded a gain on transformation of biological assets of$150,696for the period, compared to $Nil for the comparable period in 2017; and
  • A lease for a second dispensary location to be located inWilliston, VT, has been executed and is pending state approval.

Colorado–Organix Highlights:

  • Revenue in Q1 2018 totaled$1.5 million, representing a 17% increase from Q1 2017;
  • Achieved record sales of approximately$0.6 millionin the month ofMarch 2018; and
  • Current state regulatory restrictions prevent the Company from consolidating the financial results of Organix. However, pending legislation inColorado, if passed and signed into law, may permit the Company to consolidate Organix's financial results in the future.

New Mexico–Reynold Greenleaf& Associates Highlights:

  • Revenue in Q1 2018 totaled$3.2 million, representing a 32% increase from the comparable period in 2017; and
  • The Company has invested$2.3 millionto-date and currently owns 24.6% of RGA. As this does not represent a controlling interest in RGA, the financial results of RGA or its affiliates have not been consolidated into iAnthus' financial statements.

Conference Call and Webcast Details

The Company will hold a conference call for financial analysts and investors at 8:45am ET onThursday, May 31, 2018to discuss The Company's first quarter financial results. The call will be archived and available on iAnthus' website for replay. Please visithttp://ir.ianthuscapital.com/to access the archived conference call.

Dial-In Number:(888) 231-8191 or international: (647) 427-7450
Webcast:https://event.on24.com/wcc/r/1677342/18165D3FC49109044A30048492E622F0

A replay of the call will be available for 7 days by dialing:(855) 859-2056

Additional information about iAnthus may be accessed on the Company's website atwww.ianthuscapital.comand under the Company's SEDAR profile atwww.sedar.com.

About iAnthus Capital Holdings, Inc.
iAnthus Capital Holdings, Inc. owns and operates best-in-class licensed cannabis cultivation, processing and dispensary facilities throughoutthe United States, providing investors diversified exposure to the U.S. regulated cannabis industry. Founded by entrepreneurs with decades of experience in operations, investment banking, corporate finance, law and health care services, iAnthus provides a unique combination of capital and hands-on operating and management expertise. The Company uses these skills to support operations across six states. For more information, visitwww.iAnthusCapital.com.

SOURCE NEW YORKandTORONTO,May 30, 2018/PRNewswire/ -iAnthus Capital Holdings, Inc.