December 15th, 2015

Trichome Financial Reports Financial Results for Q2 2020

  • Increased loan principal to $24.9 million as of June 30, 2019 at an effective interest rate of 16.7%
  • Received Court authorization to complete the purchase of substantially all of JWC's assets
  • Launched Trichome Financial Private Credit LP, a fund for third-party investors, and concurrently closed an $8.0 million receivables purchase facility with Auxly Cannabis
  • Successfully closed an upsized $6.2 million convertible debenture offering

TORONTO, ONTARIO / ACCESSWIRE / August 27, 2020 / Trichome Financial Corp. (the "Company" or "Trichome Financial") (CSE:TFC) today announced its financial results for the three and six months ended June 30, 2020 ("Q2 2020"). The complete Financial Statements and Management's Discussion and Analysis for the three and six months ended June 30, 2020, along with additional information about the Company and all of its public filings are available at www.sedar.com.

Business highlights

Highlights during Q2 2020:

  • Advanced an additional $0.6 million to Good Buds, at a rate of 11.5% plus 222,340 common share purchase warrants, for the purchase of equipment;
  • Received authorization from the Ontario Superior Court of Justice (Commercial List) to complete the purchase of substantially all of the assets of James E. Wagner Cultivation Corp. ("JWC"), with closing expected in the current quarter;
  • Expanded the Trichome Financial platform of financial solutions to the global cannabis sector through the launch of Trichome Special Opportunities ("TSO") to provide private equity solutions and Trichome Advisory Partners ("TAP") to assist operators, lenders and investors optimize their financial interests through advisory services; and
  • Increased loan principal advanced to $24.9 million with a weighted average effective interest rate of 16.7%.

Highlights subsequent to Q2 2020:

  • Closed a $6.2 million upsized convertible debenture on July 23, 2020, with $5.0 million of the net proceeds to be on-lent to Trichome JWC Acquisition Corp. to fund JWC's working capital, with the balance of the proceeds to be used for the Company's general working capital;
  • Launched Trichome Financial Cannabis Private Credit LP (the "Fund" or "Trichome Private Credit"), a fund for third-party investors with Trichome Financial acting as the general partner, diversifying the Company's revenue base to include fees as an originator and administrator for the Fund;
  • Closed the Fund's first investment, an $8.0 million receivables purchase facility with Auxly Cannabis Group Inc. (TSXV:XLY); and
  • Increased loan principal advanced to $27.1 million with a weighted average interest rate of 17.6%, with unfunded commitments of $0.1 million as of August 27, 2020.

Financial results Q2 2020

In Q2 2020, interest revenue increased to $1,014,178, as compared to $223,802 for the period ended June 30, 2019. This is the result of the par value of total advances increasing to $24.9 million, from $6.3 million as of June 30, 2019.

Trichome Financial realized an adjusted loss per share of $(0.02), as compared to $(0.05) for the period ended June 30, 2019. The variance between periods in adjusted loss per share is attributable to increased interest revenue and a higher weighted average share count, offset by increases to operating expenses. Adjusted loss is calculated by excluding certain non-cash and non-recurring revenues and expenses from net loss as calculated under IFRS.

Cash and cash equivalents totaled $3.9 million as of June 30, 2020, however, increased by $6.2 million subsequent to quarter-end in connection with the Company's convertible debenture offering.

Active loans as at June 30, 2020:Market segmentMaturity date Coupon Interest rate  Effective interest rate1  Loan principal    Committed  Fair value of warrants or equity held4 
JWC - Initial loanPremium cultivator8/31/2020  9.3%  13.9% $3,500,000    $-  $- 
JWC - Tranche 1Premium cultivator8/31/2020  9.3%  13.3%  2,850,000     -   - 
JWC - Tranche 2Premium cultivator8/31/2020  9.3%  13.8%  1,150,000     -   - 
JWC - DIP loanPremium cultivator8/31/2020  10.0%  22.5%  5,889,000 8   -   - 
Good BudsPremium cultivator9/1/2020  11.5%  17.5%  2,350,000         101,124 
Good Buds 2Premium cultivator9/1/2020  11.5%  25.7%  550,000     -   26,226 
CrescoMSO - cultivation, distribution, retail7/31/2021  12.7%  14.8%  2,725,600 3   -   - 
HeritageExtraction, medical, cultivation1/31/2022  9.5%  14.6%  4,875,000     -   - 
HelloRetail (Ontario)8/28/2021  10.5%  13.1%  1,000,000     -   - 
Portfolio Weighted Average2 / Subtotal    10.2%  16.7%  24,889,600     -   127,350 
Loans issued after June 30, 2020 and up to date of MD&A: Maturity date Coupon Interest rate  Effective interest rate1  Loan principal    Committed  Fair value of warrants or equity held5 
JWC - DIP loanPremium cultivator8/31/2020  10.0%  28.4%  2,204,000 8   107,000   - 
Subtotal            2,204,000     107,000   - 
                       
Portfolio Weighted Average2 / Total    10.2%  17.6% $27,093,600    $107,000  $127,350 
                       
Loans fully repaid during the six-month period ended June 30, 2020: Settlement date Coupon Interest rate  IRR6  Loan amount    MOIC7  Fair value of warrants or equity held4 
Pure AlphaRetail (Ontario)2/19/2020  0.0%  0.0%  50,000     -   - 
Settled Weighted Average2 / Total    0.0%  0.0% $ 50,000     -  $ - 
                       

(1) Annualized effective return excludes the impact of warrants, equity, royalty, or transaction costs.

(2) Weighted average based on loan amount.

(3) Cresco loan is denominated in USD. Foreign exchange rate on June 30, 2020 was used to calculate balance in Canadian dollars.

(4) As at June 30, 2020. Note: JWC ceased trading on TSXV on April 7, 2020 therefore value will have subsequently decreased.

(5) As at date of loan issuance.

(6) Internal Rate of Return on the loan.

(7) Multiple on Invested Capital.

(8) Commitment increased by additional $1.0 million after June 30, 2020, offset by additional funding against commitment.

  Three months ended  Six months ended  
  June 30, 2020  June 30, 2019  June 30, 2020  June 30, 2019 
Consolidated Statements of Net Loss            
Interest revenue $1,014,178   $223,802  $1,649,257   $281,064 
Other revenue  23,182    -    23,182    -  
Operating expenses  1,662,666    674,835   2,875,133    1,279,198 
Operating loss  (625,306)   (451,033)  (1,202,694)   (998,134)
Other expenses (income)  (173,543)   658,732   54,015    1,031,185 
Total net and comprehensive loss  (451,763)   (1,109,765)  (1,256,709)   (2,029,319)
Net loss per common share - basic & diluted  (0.02)   (0.16)  (0.05)   (0.29)
Adjusted loss  (580,586)   (350,301)  (1,099,096)   (665,544)
Adjusted loss per share $(0.02)  $(0.05) $(0.04)  $(0.10)
                 
Weighted average common shares - basic & diluted  25,074,828    6,960,000   25,074,828    6,960,000 

Director Resignation

Trichome Financial has also announced the resignation of Bradley Young as a director of the Company effective August 24, 2020. The Board of Directors of Trichome Financial thanks Mr. Young for his service and wishes him well.

About Trichome Financial Corp.

Trichome Financial is a specialty finance company focused on providing creative capital solutions and advisory services to participants in the global legal cannabis market. Trichome Financial was created to address the lack of credit availability in the increasingly complex cannabis market and has since broadened its platform to offer private equity solutions and advisory services. Trichome Financial's experienced management team and founding partners have a unique edge to capitalize on proprietary deal flow and insight while developing an early-mover advantage as a global cannabis focused specialty finance company. With the depth and breadth of knowledge Trichome Financial has obtained, the Company is well positioned to weather the uncertainties brought-on by the everchanging North American cannabis industry.

For further information about Trichome Financial please visit us at www.trichomefinancial.com or @trichomefinance on Twitter and refer to the joint information circular of Trichome Financial and 22 Capital dated May 29, 2019 which is available on the Company's SEDAR profile at www.sedar.com.

READER ADVISORY

This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this news release, forward-looking statements relate to, among other things: the timing of the closing of JWC. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; and the delay or failure to receive board, shareholder or regulatory approvals. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. Except as required by law, Trichome Financial assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change.

This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws and may not be offered or sold within the United States or to United States Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Non-IFRS Financial Measures

The Company reports non-IFRS financial measures, including adjusted loss and adjusted loss per share, as key measures used by management to evaluate performance of the business, to compensate employees and to facilitate a comparison of quarterly and annual results of ongoing operations. While used to assist in evaluating the operating performance of the Company, readers are cautioned that adjusted loss as reported by the Company may not be comparable in all instances to adjusted loss as reported by other companies. For a detailed explanation of how the Company's non-IFRS measures are calculated, please refer to the Company's MD&A filing for the year ended December 31, 2019, which can be accessed via the SEDAR Web site (www.sedar.com).

Contact Information

Michael Ruscetta, CEO
Telephone: (416) 467-5229
Email: info@trichomefinancial.com

Marc Charbin, Investor Relations
Telephone: (416) 467-5229
Email: marc.charbin@loderockadvisors.com

SOURCE: Trichome Financial Corp



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