RIV Capital's Largest Shareholder, JW Asset Management, Requisitions Special Meeting to Address Necessary Leadership Changes

• Immediate Board refresh is needed to preserve shareholder value and maximize the Company's potential
• Current leadership team recklessly pursued and closed on overpriced and risky acquisition without shareholder vote or fairness opinion
• Transactions with related parties and lack of independent oversight need to be addressed for Company to be successful over time

NEW YORK, Dec. 20, 2022 /CNW/ - JW Asset Management, LLC (the "Concerned Shareholder"), the largest shareholder of RIV Capital Inc. (CSE: RIV) (the "Company" or "RIV Capital"), controlling and directing approximately 19.77% of the issued and outstanding Class A common shares of the Company (the "Shares"), today announced it has requisitioned (the "Requisition") a special meeting of shareholders of the Company ("Shareholders") for the purpose of replacing five of the seven directors on the board of the Company (the "Board").

An immediate overhaul of the Board with independent and experienced directors is necessary to prevent further value destruction and to construct an effective strategy for growth moving forward.

"It's clear that change is required at RIV Capital, and I am confident that the independent and experienced individuals nominated to join the newly constituted Board will provide the judgement, oversight and business acumen required to change course and build value", commented Jason Wild, President and Chief Investment Officer at JW Asset Management.

BACKGROUND TO THE REQUISITION

As Shareholders, we must recognize that the current Board and management team have failed to create value. In fact, value has been destroyed. Since the listing of the Shares on the TSX Venture Exchange in September 2018, upon Canopy Rivers Inc.'s reverse takeover of AIM2 Ventures Inc., the Share price has declined by approximately 97%[1] from an opening price per Share of $10.75. More recently, since August 9, 2021, the day before the initial investment by The Hawthorne Collective, Inc. ("Hawthorne") was announced, the stock has fallen approximately 82%¹ from $1.77. 

Throughout this most recent period of rapid share price decline, the Concerned Shareholder has continuously expressed its concerns to the Board regarding the strategic direction of the Company. Rather than address these concerns, the Board opted to move ahead without a coherent strategy or business plan, while handing over significant Board representation and management positions to individuals associated with Hawthorne, which holds no equity in the Company.

To make matters worse, the leadership team pushed ahead with an ill-advised acquisition of a significantly over-priced New York asset when all signals in the marketplace were flashing caution. The Company made the questionable decision to sign and close on this egregiously overpriced asset, a transaction riddled with major uncertainties, ignoring repeated arguments from the Concerned Shareholder to abandon the transaction or at least lower the valuation ascribed to a New York cannabis license.  

Unfortunately for Shareholders, the Company disregarded the Concerned Shareholder's comments and analysis and proceeded to sign a purchase agreement that completely altered the business model of the Company and required over $200m in cash payments. The total consideration paid by the Company was equal to over three times the value of any prior New York license acquisition ? a valuation made even more indefensible in light of the material ongoing declines in value for publicly-traded cannabis companies and the high level of uncertainty surrounding the New York cannabis market regulatory structure. While the Company was essentially betting its future on this acquisition, the Board, for reasons we simply cannot understand, does not appear to have engaged a banker to represent the Company, obtained a fairness opinion, or given Shareholders the opportunity to vote on the matter.

And yet, in spite of what can only be considered dismal performance over the last twelve months, the Board just recently pushed through an increase in the annual retainer compensation for non-employee directors for 2023 from $120,000 to $225,000.

THE REQUISITION

The Concerned Shareholder is seeking to replace five of the seven current Board members with five independent, diverse, highly-qualified and accountable directors, who are ready to represent the interests of Shareholders by providing new strategic viewpoints for the Company and exercising appropriate governance and oversight with respect to Company management. The Concerned Shareholder is also seeking a mandate from Shareholders for the newly constituted Board to establish a special committee composed of each of the elected Concerned Shareholder Nominees (as described below) to investigate the actions of Hawthorne and its Board nominees (the "Hawthorne Nominees") to determine whether there is any cause for the Company to bring an action or other claim against any of them.

Additionally, the Concerned Shareholder will request that the newly constituted Board vote on a compensation structure more in line with levels from 2022.

Given the current Board's historical record of value destruction and a series of continued irresponsible decisions that have resulted in the market discounting the value of the Shares, the Concerned Shareholder requests that the special meeting be held promptly, and by no later than March 15, 2023.

Fully Independent, Highly-Qualified and Accountable Nominees

In light of what we see as the mismanagement, self-interest, and ineffectiveness of the Board, the Concerned Shareholder seeks the removal of Joseph Mimran, Laura Curran, Christopher Hagedorn, Richard Mavrinac, and Mark Sims from the Board and the nomination of the following individuals (the "Concerned Shareholder Nominees") to fill their vacancies:

Raymond Edward Boyer

Raymond Boyer is the Chief Executive Officer of Missouri Leasing & Consulting and co-founder of Organic Remedies Missouri, a licensed grower, processor and retailer of medical marijuana in Missouri. Prior to founding Organic Remedies Missouri, Mr. Boyer was co-founder and Chief Financial Officer of PurePenn, LLC, a licensed grower and processor of medical marijuana in Pennsylvania. Under his leadership PurePenn achieved exceptional financial performance and was acquired by Trulieve in 2020. Mr. Boyer was also previously the Chief Financial Officer of SDC Nutrition, Inc., a fast-growing branded manufacturer and marketing company of protein powders and pills, and continues to serve the company as a board member. He joined SDC after a 38-year career with Westinghouse Electric Corporation and Bechtel Corporation. He was Chief Financial Officer, Vice President, Corporate Controller, and Treasurer of Bechtel Plant Machinery, Inc., building nuclear reactor components for submarines and aircraft carriers for more than 38 years. Mr. Boyer is a Partner of Mercedes Advisors, a family investment and consulting firm, providing investment and consulting services, including providing advice regarding business operations, investor relations, financial management, and corporate governance.

Mr. Boyer graduated from Penn State University and received a Masters of Business Administration from Katz Graduate School of Business, University of Pittsburgh with a concentration in finance and cost accounting, and has extensive board experience with various for-profit and not-for-profit entities.

Samuel Brill

Samuel Brill has served as the President and Chief Investment Officer of Seventh Avenue Investments ("SAI") since August 2017. SAI is the private equity arm of a single-family office in New York City with a multibillion-dollar asset portfolio. At SAI, Mr. Brill is focused on direct investing in debt and equity securities of a wide range of both growth-oriented and distressed private companies.

Before joining SAI, Mr. Brill was the Chief Investment Officer and Portfolio Manager of Weismann Capital, a single-family office in Stamford, CT, where he was responsible for all long and short investments in public equities and credit. Prior to joining Weismann in November 2003, Mr. Brill was the Chief Operating Officer and a Director of Amedia Networks (formerly TTR Technologies), a publicly-traded technology company.

Chad Bronstein

Chad Bronstein serves as Chief Executive Officer and Founder of Fyllo Inc., a company providing compliance-first SaaS solutions for highly regulated industries. He also serves as Co-Founder and Chairman of the Board for Tyson 2.0 Inc., and has been a director of Jones Soda Co. since February 15, 2022. Previously, Mr. Bronstein served as the Chief Revenue Officer of Amobee Inc. after it was acquired by Adconian Media Group, where he served as Senior Vice President of North American Sales and Partnerships. Mr. Bronstein is also a strategic advisor at OpenWeb.

Christopher Leggett

Christopher JWB Leggett, MD., FACC is a highly esteemed clinical academic interventional cardiologist. He spent nearly three decades practicing interventional cardiology throughout the Atlanta metropolitan area and in rural North and South Georgia. Dr. Leggett established the first interventional cardiology program in rural South Georgia at East Georgia Regional Medical Center, providing much-needed access to life-saving cardiovascular care. In 2017, Dr. Leggett was named Director of the Interventional Cardiology program at Doctors Hospital in Augusta, Georgia.  Dr. Leggett has remained intentionally involved in local and national boards, numerous medical societies, civic groups and private healthcare companies and foundations. Dr. Leggett is the youngest recipient of the prestigious American Heart Association's Physician of the Year Award at the celebrated Atlanta Heart Ball event. He served on the board of directors of BioMed Investors Network, evaluating and funding emerging technology companies and was appointed by the Secretary of the Department of Health and Human Services, during the Bush Administration, to serve on the National Practicing Physician Advisory Council. In addition, he has served as a member of the Center for Disease Control Board of Visitors, the Johns Hopkins Medical and Surgical Society, the American Heart Association (AHA) National Board, the National Coalition for the Advancement of Cardiovascular Health, the National Vascular Biology Working Group Faculty, and the Fellow of the American College of Cardiology. Dr. Leggett graduated from Phillips Academy, Princeton University and received his M.D. from Case Western Reserve School of Medicine in 1986. He completed his internal medicine internship and residency at the world renown Johns Hopkins Hospital and his cardiology fellowship at Emory University School of Medicine. His distinguished interventional cardiology fellowship was completed at the University of Alabama at Birmingham.

Stevens J. Sainte-Rose

Stevens J. Sainte-Rose has expertise across a diverse range of industries including consumer goods, retail, hospitality, food service, manufacturing & production, managed services and cannabis. Stevens previously served as Senior Vice President of HR at The Coca-Cola Company International as Chief Human Resources Officer at Walgreens Boots Alliance, Inc., as Chief Transformation and HR Officer at Dawn Food Products, Inc. (a producer and distributor of bakery products), as Chief HR Officer at Parallel Inc. (a vertically-integrated and multi-state cannabis company), and currently serves as Chief People Officer at Wheels Up Experience Inc., a leading international private aviation and services company. He holds a Master of Arts degree from the University of Pennsylvania in Organizational Dynamics and an undergraduate degree from Cornell University in Industrial & Labor Relations.

Shareholder Warning: The Board is Likely to Spend Shareholder Money Mounting a Smear
Campaign to Distract from Performance

The Concerned Shareholder fully expects the Board to spin the focus of the Requisition and the campaign for change by mounting an aggressive and costly smear campaign against the Concerned Shareholder. However, given what we understand was underwhelming support of the Board at the recently held annual general meeting of Shareholders, we believe that the Concerned Shareholder is just one of many Shareholders who are legitimately concerned about the Board's actions.

In connection with the Requisition, the Concerned Shareholder urges the Board not to take any steps to further entrench themselves.

Jason Wild, on behalf of the Concerned Shareholder and the Concerned Shareholder Nominees, welcomes the opportunity to engage with fellow Shareholders. Mr. Wild can be reached at 212-446-5361 or [email protected].

Advisors

Carson Proxy is acting as strategic shareholder, communications and proxy advisor and Norton Rose Fulbright LLP is acting as legal advisors to JW Asset Management, LLC.

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INFORMATION CONCERNING THE CONCERNED SHAREHOLDER NOMINEES

As set out in the Requisition, the Concerned Shareholder Nominees are Raymond Boyer, Samuel Brill, Chad Bronstein, Christopher Leggett, and Stevens J. Sainte-Rose. The table below sets out, in respect of each Concerned Shareholder Nominee, his or her name, province or state and country of residence, his or her principal occupation, business or employment within the five preceding years, and the number of Shares beneficially owned, or controlled or directed, directly or indirectly, by such Concerned Shareholder Nominee.

Other Boards of Reporting Issuers

As at the date of this Requisition, Chad Bronstein is a director of Jones Soda Co. (CSE: JSDA) and Samuel Brill is a director of SLANG Worldwide Inc. (CSE: SLNG). No other Concerned Shareholder Nominee is currently a director or trustee of any other reporting issuer.

Other Information Concerning the Concerned Shareholder Nominees

To the knowledge of the Concerned Shareholder, no Concerned Shareholder Nominee is, at the date hereof, or has been, within ten (10) years before the date hereof: (a) a director, chief executive officer or chief financial officer of any company that (i) was subject to a cease trade order, an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation that was in effect for a period of more than thirty (30) consecutive days (each, an "order"), in each case that was issued while the Concerned Shareholder Nominee was acting in the capacity as director, chief executive officer or chief financial officer, or (ii) was subject to an order that was issued after the Concerned Shareholder Nominee ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer; (b) a director or executive officer of any company that, while such Concerned Shareholder Nominee was acting in that capacity, or within one (1) year of such Concerned Shareholder Nominee ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or (c) someone who became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or became subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of such Concerned Shareholder Nominee.

To the knowledge of the Concerned Shareholder, as at the date hereof, no Concerned Shareholder Nominee has been subject to: (a) any penalties or sanctions imposed by a court relating to securities legislation, or by a securities regulatory authority, or has entered into a settlement agreement with a securities regulatory authority; or (b) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable securityholder in deciding whether to vote for a Concerned Shareholder Nominee.

ADDITIONAL INFORMATION

Information in Support of Public Broadcast Solicitation

The information contained in this press release does not and is not meant to constitute a solicitation of a proxy within the meaning of applicable securities laws. Although the Concerned Shareholder has requisitioned a special meeting of Shareholders (the "Meeting"), there is currently no record or meeting date set for the Meeting and Shareholders are not being asked at this time to execute a proxy in favour of the Concerned Shareholder Nominees or any other resolution set forth in the Requisition. In connection with the Meeting, the Concerned Shareholder may file a dissident information circular in due course in compliance with applicable securities laws.

Notwithstanding the foregoing, the Concerned Shareholder is voluntarily providing the disclosure required under section 9.2(4) of National Instrument 51-102 ? Continuous Disclosure Obligations ("NI 51-102") and section 112(1.2) of the Business Corporations Act (Ontario) in accordance with Canadian corporate and securities laws applicable to public broadcast solicitations. In connection therewith, certain information regarding, among other things, the Concerned Shareholder Nominees has been provided in this press release under the section entitled "Information Concerning the Concerned Shareholder Nominees".

The Concerned Shareholder is an SEC-registered investment adviser with more than 20 years of experience. The Concerned Shareholder seeks to invest with innovative and entrepreneurial management teams in order to provide the capital and strategic resources necessary to accelerate growth and drive long-term value. The Concerned Shareholder has not been a dissident with respect to any other solicitation of proxies within the preceding 10 years. 

As of the date hereof, the Concerned Shareholder controls and directs 33,433,334 Shares, representing approximately 19.77% of the issued and outstanding Shares through funds that are controlled or directed by the Concerned Shareholder (the "Funds"). The Funds are the registered owners of Shares as follows:

• 24,333,334 Shares are held by JW Partners, LP;
• 9,000,000 Shares are held by JW Opportunities Master Fund, LTD.;
• 70,000 Shares are held by JW Growth Fund, LLC; and
• 30,000 Shares are held by Insight Wellness Fund, LLC.

The Shares listed above have been held by the Concerned Shareholder for greater than two years, originally as subordinated voting shares of the Company, which became Class A voting shares upon the closing of the Company's arrangement on February 23, 2021. The Concerned Shareholder is not a party to a contract, arrangement or understanding with any person in respect of securities of the Company.

The information contained herein and any solicitation made by the Concerned Shareholder in advance of the Meeting is, or will be, as applicable, made by the Concerned Shareholder and not by or on behalf of the management of RIV Capital. All costs incurred for any solicitation will be borne by the Concerned Shareholder, provided that, subject to applicable law, the Concerned Shareholder may seek reimbursement from the Company of the Concerned Shareholder's out-of-pocket expenses, including proxy solicitation expenses and legal fees, incurred in connection with a successful reconstitution of the Board.

The Concerned Shareholder is not soliciting proxies in connection with the Meeting at this time, and Shareholders are not being asked at this time to execute proxies in favour of the Concerned Shareholder Nominees (in respect of the Meeting) or any other resolution set forth in the Requisition. Proxies may be solicited by the Concerned Shareholder pursuant to a dissident information circular sent to Shareholders after which solicitations may be made by or on behalf of the Concerned Shareholder, by mail, telephone, fax, email or other electronic means as well as by newspaper or other media advertising, and in person by directors, officers and employees of the Concerned Shareholder, who will not be specifically remunerated therefor. The Concerned Shareholder may also solicit proxies in reliance upon the public broadcast exemption to the solicitation requirements under applicable Canadian corporate and securities laws, conveyed by way of public broadcast, including through press releases, speeches or publications, and by any other manner permitted under applicable Canadian laws. Any such proxies may be revoked by instrument in writing executed by a Shareholder or by his or her attorney authorized in writing or, if the Shareholder is a body corporate, by an officer or attorney thereof duly authorized or by any other manner permitted by law. The Concerned Shareholder may engage the services of one or more agents and authorize other persons to assist in soliciting proxies on behalf of the Concerned Shareholder. 

The Concerned Shareholder has retained Carson Proxy Advisors ("Carson Proxy") to provide advisory services to the Concerned Shareholder. Carson Proxy's responsibilities will principally include advising the Concerned Shareholder on governance best practices, where applicable, liaising with proxy advisory firms, developing and implementing Shareholder communication and engagement strategies, and advising with respect to meeting and proxy protocol.

To the knowledge of the Concerned Shareholder, none of the directors or officers of the Concerned Shareholder, or any associates or affiliates of the foregoing, or any of the Concerned Shareholder Nominees or their respective associates or affiliates, has: (a) any material interest, direct or indirect, in any transaction since the commencement of the Company's most recently completed financial year or in any proposed transaction which has materially affected or will materially affect the Company or any of its subsidiaries; or (b) any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter proposed to be acted on at the meeting, other than the re-constitution of the Board.

There are no contracts, arrangements or understandings between any of the Concerned Shareholder Nominees and any other person pursuant to which the Concerned Shareholder Nominees are to be elected.

The registered address of RIV Capital is located at 40 King Street West, Suite 2504, Toronto, Ontario M5H 3Y2. A copy of this press release may be obtained on the Company's SEDAR profile at www.sedar.com.

Additional Disclosure Required Under Early Warning Reporting Requirements

In connection with the Requisition and this press release, the Concerned Shareholder has filed an early warning report (the "EWR") in accordance with applicable Canadian securities laws, which will be available on SEDAR at www.sedar.com and can also be obtained by contacting Jason Klarreich, the Chief Financial Officer of the Concerned Shareholder at [email protected]. The address of the Concerned Shareholder is 14 North Lake Rd., Armonk, NY 10504 United States.

In addition to the Requisition, the Concerned Shareholder may, alone and/or with others, from time to time have discussions with the Board or management of the Company and may make suggestions concerning the Company's operations, prospects, business and financial strategies, assets and liabilities, business and financing alternatives and such other matters as the Concerned Shareholder may deem relevant to its investment in the Shares.

As further described in the EWR, the Concerned Shareholder commenced court proceedings against the Company in May 2022, in which the Concerned Shareholder alleged that the Company had oppressed the Concerned Shareholder by entering into agreements to acquire ownership and control of Etain LLC and Etain IP LLC using funds provided by Hawthorne, without properly complying with applicable laws and rules.

From time to time the Concerned Shareholder, depending on market and other conditions, may acquire or dispose of additional securities of the Company or may continue to hold the securities.

SOURCE JW Asset Management LLC