4Front Ventures Corp. FFNT FFNTF announced Monday several management and corporate changes, including layoffs, in order to reach positive cash flow in the second half of 2020.
The cannabis company has named Leo Gontmakher, previously COO, to the position of CEO. Current CEO Josh Rosen will become executive chairman of the board of directors.
Nicolle Dorsey, 4Front's executive vice president of finance, will step into the CFO role.
To minimize expenses, 4Front Ventures has reduced its corporate staff by 40% and headcount connected to overhead at its Mission stores by 45%, over the last four months.
These moves are expected to help the Vancouver, Canada-based company save between $7 million and $8 million per year, without interfering with its previously set financial objectives, the company said.
"We continue to take considered and decisive measures to streamline our operational platform and think there are still more efficiencies to be achieved. While making difficult personnel decisions is never easy, a leaner headcount is consistent with our corporate philosophy of low-cost, efficient operations," Gontmakher said in a statement. "Particularly in uncertain times, maximizing the amount of revenue growth that translates directly to increased EBITDA and cash flow is a high priority."
4Front will also postpone the launch of its manufacturing facility in Commerce, California, and sell its subsidiary, PHX Interactive LLC, for $6 million in cash.
4Front Ventures projects it needs an extra $5 million to become cash-flow positive in the second half of 2020.
"We are in the process of finalizing a private placement to raise at least $5 million consisting mostly of insiders and existing shareholders," said Rosen.
Furthermore, the company noted it still stands behind its 2020 guidance of adjusted EBITDA in the range of $10-$15 million, reported revenue for $100-$140 million, and systemwide pro forma revenue of $140-$180 million.
4Front Ventures’ shares were trading 0.93% lower at 31 cents on Tuesday.
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Photo courtesy of 4Front
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