CannaRoyalty Corp. d/b/a Origin House, a North American cannabis products and brands company, today announced its financial results for the three months ended March 31, 2019. All figures are reported in Canadian dollars ($), unless otherwise indicated. Origin House’s financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”).
As previously announced, the Company will hold a Special Meeting of shareholders on June 11, 2019 in connection with its previously announced statutory plan of arrangement pursuant to which Cresco Labs Inc. (“Cresco Labs”) will acquire all of the issued and outstanding shares of Origin House (the “Arrangement”).
Marc Lustig, CEO and Chairman of Origin House commented, “This was a milestone quarter for Origin House, as the team drove solid organic growth within our Californian distribution and brands platform and completed meaningful strategic merger and acquisition-based initiatives including the addition of 180 Smoke in Canada. Moving forward through the balance of the year, we are confident that, once completed, the combination of Cresco Labs’ scale and Origin House’s California-wide distribution footprint will further accelerate growth and build significant value for the shareholders of both companies.”
Financial Highlights for the first quarter ended March 31, 2019
The following are financial highlights of Origin House’s operating results for the three months ended March 31, 2019, compared to the three months ended March 31, 2018:
- Revenue was $11.2 million as compared to $0.6 million;
- Gross margin was $1.7 million as compared to $nil;
- Operating expenses were $18.2 million as compared to $4.5 million;
- Adjusted EBITDA loss of $12.7 million as compared to adjusted EBIDTA loss of $0.9 million.
The following is a summary of key balance sheet items as at March 31, 2019, compared to December 31, 2018:
- Cash was $39.3 million as compared to $69.2 million;
- Total assets of $269.4 million as compared to $230.7 million;
- Current assets of $68.7 million as compared to $86.0 million;
- Current liabilities of $34.2 million as compared to $26.2 million; and
- Long-term debt financing of $nil as compared to $16.0 million.
If the 180 Smoke acquisition had occurred on January 1, 2019, management estimates that for the three months ended March 31, 2019:
- Pro-forma consolidated revenue would have been $13.1 million; and
- Pro-forma consolidated net loss would have been $17.7 million.
Corporate Highlights subsequent to the quarter ended March 31, 2019
For a more comprehensive overview of these recent developments, please refer to Origin House’s Management Discussion and Analysis of the Financial Condition and Results of Operations for the Three Months ended March 31, 2019.
- On May 28, 2019, Origin House subsidiary Trichome Financial (“Trichome”) announced that 22 Capital Corp. and Trichome received conditional approval from the TSX Venture Exchange for their previously announced amalgamation under the provisions of the Business Corporations Act (Ontario) that will result in a reverse take-over of 22 Capital by the shareholders of Trichome (the “Transaction”). The closing of the Transaction is expected to take place on or around July 5, 2019 or such other date as 22 Capital and Trichome may agree, subject to a number of conditions.
- On May 15, 2019, Trichome entered into a $4.5 million trade finance facility and a $1.5 million mortgage loan with Blissco Holdings Ltd., a wholly owned subsidiary of Blissco Cannabis Corp. (CSE: BLIS), a licensed producer under the Cannabis Act and a Canadian Wellness cannabis brand based in British Columbia.
- On May 14, 2019, Origin House filed its management information circular, letter of transmittal and related proxy materials, pursuant to its statutory plan of arrangement with Cresco Labs.
- On May 3, 2019, the Company obtained an interim order from the Ontario Superior Court of Justice (Commercial List) in connection with its previously announced statutory plan of arrangement pursuant to which Cresco Labs will acquire all of the issued and outstanding shares of Origin House.
- On May 2, 2019, the Company closed the acquisition of Cub City LLC (“Cub City”), a licensed premium craft cannabis producer based in Sonoma County California.
- On April 10, 2019, FloraCal and Cub City received permit approvals from Sonoma County, California, to commence facility expansions.
- On April 1, 2019, the Company entered into a definitive agreement to be acquired by Cresco Labs for approximately $1.1 billion, creating a North American cannabis powerhouse.