Beleagured cannabis company iAnthus Capital Holdings Inc. (OTC: ITHUF) has extended its debt payments and told investors that it will have to restate its third-quarter earnings filing.
Need more time
iAnthus amended the terms of its senior secured bridge notes issued on February 2, 2021, to parties including Gotham Green Partners, LLC, Oasis Management Company, Ltd., and Senvest Management along with others. At the beginning of February 2024, the lenders agreed to a short-term extension of the maturity date from February 2, 2024, to February 16, 2024. The maturity date of the Bridge Notes was then extended from February 16, 2024, to February 16, 2026, and the interest will remain the same 12% per year, but interest accruing after February 16, 2024, will be payable in quarterly cash payments.
“We are pleased with the terms of the Amendment because it allows the Company to continue to invest and expand within the State of New Jersey as planned, which is a key initiative for the Company in 2024,” said Richard Proud, Chief Executive Officer of the Company.
According to the company statement, the aggregate principal amount outstanding on the Bridge Notes is approximately $15.8 million. iAnthus also said it has agreed to use 25% of Non-Operational Cash Receipts over $5 million to make payments towards the principal amount outstanding under the Bridge Notes, without penalty.
In December, iAnthus settled a complaint from Hi-Med LLC, the former holder of an unsecured debenture of the company in the principal amount of $5 million, in the U.S. District Court for the Southern District of New York. Hi-Med sought damages and other remedies against iAnthus for, among other things, alleged breaches of the Unsecured Debenture and the related Debenture Purchase Agreement. H-Med agreed to take 20 million shares of stock to settle the litigation.
Oops we goofed
On Friday after the markets closed and before a three-day weekend, iAnthus told investors that it had identified an error related to its financial reporting process for the third quarter earnings. The mistake was in connection with an “intercompany consolidation of two wholly-owned subsidiaries and the valuation of inventory, both resulting in an overstatement of inventory” in its previously issued unaudited interim condensed consolidated financial statements for its fiscal quarter ended September 30, 2023, filed with the Securities and Exchange Commission on November 9, 2023.
Ianthus said that the error has no impact on the cash balance as of September 30, 2023, and results in no net change in cash flows.
The company statement said that the mistake resulted in an overstatement of ‘inventories, net’ and ‘accrued and other current liabilities’ on the unaudited interim condensed consolidated balance sheet as of September 30, 2023, and an overstatement of ‘income tax expense’, and an understatement of ‘cost and expenses applicable to revenues’, on its unaudited interim condensed consolidated statements of operations for the three and nine months ended September 30, 2023.